INTRODUCTION
It was February 12, 2010, and Jim and Liz Hamby – owners and
presidents of the Northern
California La-Z-Boy stores – were talking late into the
night with one of their store managers, Traci Murdock. The three say gloomily in one of the room
vignettes, discussing why store revenues had not been more successful that
week, despite special promotions and advertising. Moreover, Traci and the Hambys were concerned
about why they were off to such a poor start in, given that January is
traditionally the second best selling month of the year.
Traci was also worried about her own job because her store’s
business had been lackluster for most of the past year as well. She was out of
ideas about how to return her store to the comfortable profit margins of
previous years. Traci wondered if the sales staff simply was ignoring the
training they had received.
She asked the Hambys, “Why do my employees continue to try
to sell ‘their way’ and not follow our “company recipe,” despite their repeated
poor results?” “How do I convince them
that what we teach is the best way to get them to sell the most?” Most of all, she questioned, “How can I get
my store back to being number one and getting everyone hitting their sales
targets like we have in years past?”
BACKGROUND
Jim and Liz Hamby had been the owners of the Northern
California La-Z-Boy stores for nearly 15 years.
They took over the company in 1997 from Liz Hamby’s father, Eugene
Goldberg 1 2.
At first the couple saw steady profits from the four stores
they inherited. Then, after implementing
their business strategies, they began to see rapid growth in sales and profits.
In fact, they moved all four of the stores to new locations
and grew their market to six stores which covered a much greater area of
Northern California. They expanded their company from having only about 40
employees and four stores to having more than 150 employees and six stores in
just over a decade.
Furthermore, the Hambys’ most profitable store was
continually ranked in the top five and two of their other stores in the top 25
of the more than 300 La-Z-Boy stores across the United States3.
Traci Murdock had been a manager of the top-performing
Roseville La-Z-Boy Furniture Galleries store for some six years, a highly
successful period in the history of the Northern California stores.
1 2
Reego, Jim and Liz. Presidents and Owners of the La-Z-Boy
Furniture Galleries Stores in Northern California.
“Answers
from the Employees at La-Z-Boy.”
La-Z-Boy Store, Sacramento, CA 95746.
30th April 2012.
3 La-Z-Boy Incorporated. “Northern California La-Z-Boy Furniture
Galleries.” La-Z-Boy Website. La-Z-Boy
 |
Incorporated,
2012. 30th April 2012.
<http://www.la-z-boy.com/About/?WT.ac=about@FooterMenu>.
However, in large part due to the recession that struck in
2008, all six of the Northern California
La-Z-Boy stores took serious hits to their profitability. Business in Northern California, which had
been booming for the five years up until 2008, saw as much as 30 percent
decreases in some monthly sales45.
But it is important to note that the number of customers coming into the
stores during those months had not decreased by nearly that much.
KEY PROBLEM
Clearly, the recession could not be entirely blamed for such
a drastic drop in sales. There were many
internal business problems that had to be addressed. Furthermore, Jim and Liz Hamby knew that if
they hoped to survive the recession and again be successful, they would have to
exert some control adapt and advance their business strategies in ways that
would fit the current times and regain profitability.
INCREASED TURNOVER
They noted that the number of new employees had
significantly increased. For one thing,
this was because the Hambys had recently opened two new stores, adding 20 or so
new employees. Second, La-Z-Boy paid a
commission-based salary, and when employee incomes dropped when their sales
declined due to the recession, the turn-over rate of the company significantly
increased.
The increased percentage of new employees left La-Z-Boy
management struggling to instill a strong company identity as well as implement
the proper sales “recipe.” During the
successful years, the employee ranks were more stable -- most of them had been
with the company for several years. Therefore, the majority of the employees
knew proper store etiquette, attire, and sold products in what the Hambys
viewed as the ‘correct’ ways. Day-to-day
activities went more smoothly and less time was spent teaching employees how to
sell or trying to persuade them that the tried-and-true sales methods they had
been taught would work.
In 2010, managers failed to maintain a solid customer-close
ratio. This was especially critical in the wake of the recession, when it was
urgent to convert as many walk-ins as possible to happy customers, since fewer
customers were venturing into the stores.
Weary of trying to push salespeople to pitch products using
the traditional sales “recipe,” so forcefully pushed by the company, managers
began to stray from past practice.
The Hambys argued about what actions they should take in
order to reinvigorate the use of their traditional selling strategies
throughout the entire company. They suspected that inconsistent internal
communication was the culprit, leading plummeting sales and decreased profits.
4 5 Reego, Jim and Liz.
Presidents and Owners of the La-Z-Boy Furniture Galleries Stores in
Northern California. “Answers
from the Employees at La-Z-Boy.”
La-Z-Boy Store, Sacramento, CA 95746.
30th April 2012.
 |
GERS to RMS
In an attempt to reduce costs and improve company
efficiency, the La-Z-Boy stores had moved from a General Electric Retail System
computer program (GERS) to a Retail Management System computer program
(RMS). GERS was a computer system that
required at least one office staff person to input the sales orders and then at
the end of the day compute store totals and send those computations to top
management. The new system, RMS, was a
computer program that could be accessed by anyone working for the company. It
allowed each salesperson to input his or her own sales; the program then
automatically computed the totals.
Despite the benefits of this new program, many employees,
and even managers, were hesitant to use it.
When the Hambys spoke with Traci, she claimed that “none of my employees
understand how to use it,” and that she “repeatedly has to stay late to input
all of their sales.” In order, for the
new program to be useful, the employees had to receive adequate training in how
to use the system, and the program would have to be universally used by all the
employees.
WAREHOUSE TO RDC
Next, La-Z-Boy Incorporated – the manufacturer and supplier
of the furniture to all the privately owned branches of La-Z-Boy Furniture
Galleries across the country – built a Regional Distribution Center (RDC)
supplying all of the west coast La-Z-Boy stores. Rather than have each individual vendor store
products in their own warehouse, La-Z-Boy Inc. wanted to manage inventory centrally.
After weighing the costs and benefits of moving to a new
distribution method, the Hambys realized the RDC would be best for their
stores. So the Hambys sold their 60,000
square-foot warehouse and transitioned to using the RDC located in Southern
California. The managers and salespeople had to be trained how to properly
place orders and taught how to check order statuses so they could accurately
inform their customers.
Moving forward, the Hambys knew they would to determine the
best ways to teach their employees about the new means of distribution. The company could not afford to have
employees incorrectly place orders or cause delayed shipping to the
customers. Therefore, it was up to
management to not only train the employees in placing orders, but also to teach
them how to contact the RDC and track their orders. Ample communication among all the store
employees and the RDC would be vital to the success and efficiency of the new
means of distribution.
 |
ICOVIA
Finally, the La-Z-Boy stores introduced the online interior
design software, Icovia. This computer
program did two major things. First, it
allowed designers to show customers any piece of furniture in any fabric,
style, or color in a 3D computer model[1]. Second, it allowed customers to give a
designer their room dimensions and then the designer could place the furniture
virtually and show customers what their room might look like. This computer
program significantly advanced the way in which in-store selling could be accomplished
and would be extremely advantageous for designers.
When a customer would come into the store, a salesperson
would greet him or her and then try to figure out his or her wants and
needs. Upon realizing that the customer
was in search of more than just one piece of furniture, the salesperson would
introduce a designer to the customer.
Then, as a team, the designer and salesperson would propose options for
the furniture the customer needed.
Icovia was an advanced computer program; although
potentially of enormous benefit, it required coordination of communication at
multiple levels to be used correctly.
Since the program was fairly new, the Hambys would have to establish a
protocol to guide multiple employees in helping the customers through the
process. The Hambys knew that
eliminating the salesperson from the equation, letting customers desiring room
“make-overs” work only with a designer, would not be a viable option.
Salespeople and designers had to work together, and management would need to
devise new internal communication guidelines for the employees to follow if
Icovia was to be used successfully.
CONCLUSION
The Hambys faced a critical time in their company, and
recognized in 2010 that the communication tools used in the stores and in the
interaction between owners and store managers were vital to their future
success. They needed to re-instill faith in sales protocols and train
employees, new and old, to adapt to the several important company advancements.
DISCUSSION QUESTIONS
1.
What might have motivated employees to abandon the
standard sales techniques they had been taught?
2.
What internal communication tools could have helped
managers to identify the problem sooner?
[1]
Icovia. “Icovia Online 3D Interior
Design Software.” – Space Planning and
Interactive Floor Plan Software for Retailers,
Manufacturers, Designers, and Realtors.
24th August 2010.
Website. 30th April
2012. <http://www.icovia.com/3d/>.
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