F. Curtis Barry & Company » wall street journal

From the Dark Side of Productivity

Bob Betke — Mon, 02 Mar 2009 10:05:39 +0000

I’m with a firm that spends much of its time helping clients improve productivity and reduce costs. We are ever mindful of the negative side—the “dark side”—of productivity projects. What is the dark side? It’s what happens if we don’t take the human factor into account. As someone with 30 years of experience in industrial engineering, I can tell you that there is no way to achieve long-term success in a re-engineering project without considering the effect it will have on people.

Two articles in the Wall Street Journal serve as stark reminders of this reality. The first, “Retailers Reprogram Workers in Efficiency Push” (September 10, 2008) described installations of workforce management software at AnnTaylor Stores Corp. and other retailers. According to the article, workforce management systems are “sweeping the industry as retailers fight to improve productivity and cut payroll costs.” As the Journal noted, some workers aren’t happy about the trend, saying the systems leave them with shorter shifts, make it difficult to schedule their lives, and “unleash Darwinian forces on the sales floor that damage morale.”

The Ann Taylor system keeps track of the usual productivity metrics: average sales per hour, units sold, and dollars per transaction. The system schedules the most productive people during the busiest hours—and, because it awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things. And it’s worked, as far as the overall economic goals are concerned; the chain’s director of store operations said it has helped turn more store browsers into buyers. But, as the WSJ story made clear, it also resulted in the loss of some veteran salespeople who had developed long-term relationships with customers. By focusing strictly on the metrics that could be easily measured, the system actually penalized associates whose selling style depended on longer interactions with the customer—even though such relationships often assured continued customer loyalty. Others found their hours cut back to the point where they could no longer afford to make the trip to work. During busy times, the formerly congenial staff began competing for customers, sometimes stealing them away from one another. While productivity was, indeed, increased, perhaps the most surprising unintended result of the system was that this story, with all its unflattering aspects, was splashed across Page A1 of The Wall Street Journal.

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The “News” Is Good – But At What Cost?

Curt Barry — Thu, 04 Dec 2008 20:19:25 +0000

Early reports from Black Friday and the remainder of the post-Thanksgiving weekend seemed positive enough: “The holiday shopping season got off to a better-than-expected start” said The Wall Street Journal; “Consumers swarmed the nation’s stores over the weekend… giving retailers a little Christmas cheer” said the Washington Post. But beneath that cheery exterior are some realities that should give retailers pause. As The New York Times reported, “The bargains that drove shoppers to stores were so stunning, analysts said that retailers — already suffering from double-digit sales declines the last two months — would probably see their profits erode even further.”

Market research firm ShopperTrak reported that sales on Black Friday grew 3 percent to about $10.6 billion. Last year, sales on that day grew 8.3 percent. The National Retail Federation (NRF) said that about 172 million people have shopped in stores or online since Thursday; in a survey of 3,370 shoppers, NRF estimated shoppers spent an average of $372.57 over the weekend, for a total of roughly $41 billion—a 7.2 percent increase over the same weekend last year, when about 147 million shoppers spent $347.55 per person. And research firm ComScore reported online sales on Thanksgiving Day and Black Friday grew 2 percent from last year to $822 million.

However, ComScore also said sales this holiday season are down 4 percent from last year. ShopperTrak has predicted a 10 percent decline in mall traffic this holiday season and a meager 0.1 percent increase in overall sales, both record lows. An NRF spokesman acknowledged that “people were putting off a lot of purchases, waiting for the best deals, knowing that retailers would obviously reward them.”

And reward them they did, with “door-buster” deals and heavy discounting, some of which started as Black Friday deals earlier in the week. Retailers reeled in cautious shoppers with massive discounts like “buy one get one free” sweaters at Gap Inc. stores, $200 iPod Touch music players from Amazon.com Inc., and 26-inch LCD TVs at Target Corp. sites for $299. Yet even as unprecedented discounts lured shoppers into stores, momentum ebbed Saturday; NRF reported traffic trailed off by more than 16 million people on Saturday, and most retailers indicated that Saturday and Sunday traffic did not hold up anywhere near Friday’s. This raised concerns that shoppers were merely exploiting the “door-buster” deals and then walking out of stores. Other research sources confirmed that consumers bought only deeply discounted items. Analysts told The New York Times that the discounts that drew in shoppers over the weekend were so steep that many ailing chains might be no better off in the long run, with discounts of 50 to 70 percent off meaning retailers have to sell two to three times as much to break even.

The promotions came on top of already radical price cuts, with many retailers having switched early this year to marking down and moving though the inventory. According to Shop.org, this heavy discounting was to continue right through Cyber Monday (December 1st). The result is that profit margins will surely suffer. The question is, will any additional traffic make up for the long-term harm that’s being done?

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F. Curtis Barry & Co. works with multichannel businesses to increase catalog profitability through the evaluation and implementation of order management systems, inventory management systems, warehouse management systems that match client objectives.

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The Car That Changed America

Curt Barry — Tue, 07 Oct 2008 13:35:49 +0000

I opened the Wall Street Journal the other day and was surprised to learn that October 1st marked 100 years since Ford’s Model T went on sale. The article by Paul Ingrassia was called, appropriately, “This Car Changed America” and it certainly did. But the ways it changed America are much more far-reaching than just introducing the assembly line or making cars affordable for the average person, as huge as those developments were. As Ingrassia said, The Model T put America on wheels, created mass mobility, revolutionized mass production, established the American middle class and eventually reshaped the country’s physical landscape with suburban sprawl.

In the two decades after Henry Ford began selling the Model T on Oct. 1, 1908, more than 15 million were built, a number that would only be surpassed by the VW Beetle. The biggest reason for its success, of course, was the price. The first Model T cost about $850; a comparable Chevrolet went for $1,000 or more. By 1922 Ford had cut the price to $250, while competitors were charging closer to $300. What made that possible was Ford’s famous moving assembly line, which wasn’t actually invented until 1913. With it came modern mass production, as well as Henry Ford’s equally famous pronouncement that customers could have “any color they want, as long as it’s black.” Up until 1913, the Model T had also been available in red, green and blue. Uniformity was a side effect of greater production efficiency.

One thing we may find odd today is the fact that when Ford began paying his assembly-line workers $5 a day in 1923, it was a then unheard-of sum, and led directly to creation of the American middle class. Ironically, that same mass production efficiency that helped build both America’s middle class and its industrial economy has now mostly been lost because of the cost of labor.

At the same time the Model T was helping to build the middle class, it was giving people increased mobility, allowing American families and businesses to go anywhere and everywhere they wanted. Eventually, with the Interstate Highway System of the 1950s, we gained real long-distance mobility. But it was the Model T that started us on the road toward sprawling development, the long commute into the city from the suburbs, the decline of a lot of city centers, and many of the other problems we now face including vehicle exhaust and the cost of gasoline.

I don’t mean to say the Model T was a bad thing. We obviously have all benefited from an increased standard of living and the greater freedom it helped bring about. But even a great idea can have unintended consequences. Sometimes this calls for a course correction; ultimately we need more innovative thinking to help us move forward. As another story on the anniversary from the Associated Press points out, Henry Ford himself learned this the hard way. David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said that while the Model T was popular and offered an affordable car to the masses, Ford may have tried to ride it a little too long, as consumers came to expect more upscale models with a wider variety of colors. He innovated. He brought this into the market,Cole said of Ford. â€œThen he got hit by others who innovated.

Is there a lesson here for our direct businesses? I’d like to hear what you think!

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Is It Time For Free Shipping?

Curt Barry — Thu, 02 Oct 2008 18:49:18 +0000

As I started to write this, the House of Representatives had failed to pass the Bailout Bill, adding one more giant dent in consumer confidence.

Luxury retailers have finally starting feeling the pain that other retailers have been experiencing. Neiman Marcus posted a $35.7 million loss for the quarter ending August 2, and warned that the American luxury market is likely to be hit hard as wealthy and upper-middle class consumers change their attitude towards spending.

Last week, FedEx said it â€œexpects U.S. consumers will remain hesitant about spending in the months ahead and that the weakening world economy will continue into 2009 signaling a second consecutive lackluster peak season for transportation companies this fall, according to the Wall Street Journal.

At the same time, FedEx announced it will increase shipping rates by an average of 6.9% for U.S. and U.S. export services, effective January 5, 2009, reflecting the company’s need to squeeze more revenue from customers due to the continued shipping slowdown and high fuel costs. (These rate increases typically affect retail customers and small to medium-size businesses, with major customers getting substantial discounts.)

With all this in mind, we’ve been monitoring this year’s trends toward offering free shipping. The National Retail Federation’s Shop.org says 8 out of 10 online retailers offered free shipping during the past two holiday seasons, up from 60% in 2004. In just the past couple of weeks, we’ve seen catalogs from the following companies offering free shipping, some with certain restrictions:

Sears Leather Collection – free shipping
Cheryl & Company – free ground shipping
Office Depot – free delivery next business day, local delivery areas, orders over $50; fuel surcharge may apply
Terry’s Village – free delivery (ground) – orders over $60 – by Oct. 9
Oriental Trading – free shipping (ground) – orders over $60 – by Oct. 16
Lillian Vernon featuring Lilly’s Kids – free shipping (standard delivery) – orders over $59 – by Nov. 15
Current Kids – free shipping – with orders over $50 – by Oct. 31
Collections ETC. – free shipping – orders over $50
Rhode Island Novelty Importers – free delivery – orders over $50 – by Oct. 10
Miles Kimball – free shipping – orders over $40
L.L. Bean customers and VISA card – free shipping and returns
Doheny’s Water Warehouse – pool supplies delivered overnight free

We hate giving up margin with free shipping. We all know either we pay or the consumer pays. But maybe it’s better to use free shipping to try to entice customers in what is surely one of the bleakest holiday seasons of the last 20 years.

Blog readers out there: What are you doing to generate orders for the holiday in this crucial 4th quarter? We’d like to know.

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Everything but Champagn Online Couture Goes Haute With Virtual Trunk Shows

Curt Barry — Wed, 12 Sep 2007 15:09:51 +0000

Trunk shows cover a lot of territory these days, thanks to the Internet. A variety of artists and artisans, resellers, and even retailers, have been hosting online, or virtual, trunk shows for the last few years. At one end of the spectrum, this kind of show can represent a sort of Tupperware party held in cyberspace:

â€œYou can earn free jewelry by hosting a trunk show in your home. . . . Host a ˜virtual” trunk show and receive the same benefits of an in-home trunk show. A virtual trunk show involves placing a group order of 10 or more. . .

At the other end of the spectrum, until recently, haute couture has been noticeably lacking online. However, after the success in the last few months of virtual trunk shows held by Neiman Marcus, Saks Fifth Avenue, and Web retailer Net-a-Porter, with customers willing to pay hundreds and even thousands of dollars there’s a small wave of what the Wall Street Journal calls increasing interest. Higher-priced clothes do sell, it turns out, perhaps because the audience of buyers is more sophisticated, perhaps because the retailers that host the shows are showcasing the trunk shows as part of a thorough marketing program and a way to build store loyalty.

Virtual trunk shows offer several opportunities for designers to tap into larger markets: Older customers seem to be more accustomed to buying online; customers get to see an online preview of the complete seasonal line a store will carry; customer interest can alert designers to increase production.

Attendees at virtual trunk shows will not get to sip champagne, try on the clothes and have them individually fitted, listen to the gossip in the room, or feel part of a highly exclusive group. Actually, there’s nothing to stop you from sipping champagne while looking at a trunk show online, but you get the idea.

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Curt Barry is president of F. Curtis Barry & Co., a fulfillment consulting company assisting multichannel businesses with order management and inventory management systems evaluation and implementation; online at: http://www.fcbco.com.

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Middle East as Outsourcing Hot Spot

Curt Barry — Wed, 29 Aug 2007 20:48:24 +0000

We’ll just go out on a limb and guess that the Middle East is not the first part of the world that comes to readers’ minds as an up-and-coming hot spot for outsourcing. Middle East these days is likely to make U.S. readers think first of war in Iraq or Afghanistan or fighting in Israel and Lebanon. But an article written on August 21, 2007 in The Wall Street Journal suggests that some major outsourcing services companies Satyam Computer Services, Wipro, Tata Consultancy Services, are beginning to set up centers in the Middle East and North Africa, and that the trend is serious.

What’s up? The WSJ article cites rising costs in India, increasing need in the Middle East and Europe, and the flow of oil money in the region as some of the reasons for the shift in resources. Advantages of the new locations also include a more central time zone relative to North America, Europe, and Asia; geographic proximity to Europe; a multilingual labor force; and greater demand for Arabic speakers.

The Middle East and Africa Group of the technical and customer support professional association HDI hosted a regional conference in Cairo in May. The group is predicting a 30% annual increase in call center jobs in the regions it covers. Just this week (August 26-29) the 13th Middle East Technology Show, hosted by the Jordan Computer Society, with the support of the Jordanian Ministry of Information and Communications Technology took place in Amman, with initial estimates of 30,000 attendees. That’s a lot of interest in technology.

And consider the Global Peace Index study recently released by the Economist Intelligence Unit (May 2007). The study used two dozen separate data indicators to describe the stability of the countries surveyed in terms of the potential for violence to occur in each:

“The 24 indicators include internal and external factors such as levels of violence within a country, organized crime, the number of people in prison, and military expenditure.”

Using those criteria, Norway is number one of the 121 countries surveyed, with the highest stability index. The United States ranks 96th, just ahead of Iran but below Oman, Qatar, the United Arab Emirates, Tunisia, Ghana, Kuwait, Libya, Jordan, Egypt, Syria, Saudi Arabia, Turkey, and Yemen.

Thinking out of the box is usually touted as a positive, creative activity. Thinking in stereotypes basically obliterates your capacity to think creatively. So here’s a creative proposition: Maybe the Middle East and North Africa aren’t so unstable after all. Maybe those areas will provide attractive opportunities for investment over the next few years.

No matter what the trend may be, or who’s doing business where, what do you think?

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Brooks Brothers Goes Mod

Curt Barry — Wed, 01 Aug 2007 18:27:37 +0000

So there I was reading the Wall Street Journal (July 17, 2007, B1) and I turned the page to a headline and picture which really set me back: â€œBrooks Brothers Tries A Hip Line: Will It Suit?â€ Are they joking? What is that white-taped seam doing onâ€”a morning coat?

If Brooks Brothersâ€™ founders could see the â€œBlack Fleeceâ€ line just released by high-end designer Thom Browne, (â€œBlack Fleeceâ€ is a take-off on Brooks Brothersâ€™ traditional Golden Fleece logo), they would probably think of this as the Black Fleece of death. Browne claims to be interested in bringing the suit back into fashion. His collections have appeared at retailers like Bergdorf Goodman, Barneyâ€™s, and Jeffrey, and typically have featured high-water pants and capes (some observers have likened the look to Pee Wee Herman or Austin Powers), with a â€œskinnyâ€ cut and proportion. An estimated $7 million ad campaign for the Brooks Brothers collection will appear in GQ and Vogue. Suits range from $1,900 to $2,700.

Iâ€™m not the only one to think this fashion is hideous. A Washington Post article on the â€œBrowne Flannel Suit at Brooks Brothersâ€ (March 23, 2007) points out that â€Itâ€™s difficult to see how someone who envisions men going through their work day wearing a suit that looks like it was borrowed from a 12-year-old boy (admittedly with grown-up prices). Most emphatically, Brooks Brothers customers are not the sort who wear anything purely for the sake of fashion.â€ As reader â€œDonaldâ€ writes in the user comments on Web-based Fashionista.com, â€œBrooks is fine as isâ€”timeless, well-made wardrobe staples. If I wanted a tight short suit, Iâ€™d just gain some weight.â€

I worked for Garfinckels, Brooks Brothers, Miller & Rhoads, Inc., corporate data center from 1973â€“1983. What a world leader it was then. In many ways in their 189 years Brooks Brothers has been a leading force in menâ€™s fashionâ€”think of button-downs, polo shirts, Madras materials. Introducing ladies shoes and apparel in the mid 1970s was chaos. For a traditional retailer like Brooks Brothers (founded in 1818) to go so far to attract new, younger, means that customers will just push their typical customer to seek what they are looking for from other menâ€™s retailers such as Jos. A. Banks, The Menâ€™s Warehouse, Rochester Big and Tall, etc.

I also read the other day that baby boomers have 71% of the wealth in this country. I understand the need to appeal to a younger customer, but I just hope this doesnâ€™t destroy Brooks Brothers. Much of the business community has adopted more casual business attire, no suit required, companies like Brooks Brothers have expanded their offerings over the last 20 years to hold on to existing customers and attract new ones.

There is still a need to sell suits, as not all businesses have abandoned them, certainly not Wall Street and government officials. For the business man or woman who needs to have traditional business attire, they can find this at other major and specialty retailers.

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Curt Barry is president of F. Curtis Barry & Co., a warehouse consulting firm; online at: http://www.fcbco.com.

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Multichannel Shoppers Can Save Money

Tocky Lawrence — Wed, 18 Jul 2007 13:47:35 +0000

Itâ€™s not necessarily news, but if you shop online there are definitely some tips you can use to help you save money. Weâ€™ve been telling people for a while that there are ways to maximize savings by shopping cross-channel. The July 16 edition of NBCâ€™s Today Show addressed this topic with a segment on advantagesâ€”and disadvantagesâ€”of online shopping.

Most of the people shown in brief interviews on the show said that they basically shopped online because it was more convenient for them because online shopping offers home delivery. Since online retailers have often courted new customers by offering serious discounts, there is at least a perception that online prices can be much cheaper than store prices, and online searching offers shoppers the advantage of comparison shopping.

And yet, the Today Show referred to a recent article in The Wall Street Journal that claims online shopping rarely saves money. For commodity household and food items, for instance, prices are seldom cheaper online, especially when you include shipping charges in the total cost. In effect, Today suggests, shipping fees are the price you pay for the convenience of not having to drive to a store, find a parking place, and stand in line at the checkout counter.

If you are focused on saving money rather than paying for convenience, think of the process of shopping as more of a multichannel experience. For instance, you can do your research online, either by comparison shopping yourself, or by visiting such comparative sites as bizrate.com or techbargains.com. Once you find what youâ€™re looking for online, you can go to a retail store that carries the same item and negotiate the same price. Or you can buy an item online and pick up at store to save the shipping fee.

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Data Vanishes Into Thin Air

Jeff Barry — Fri, 04 May 2007 14:31:55 +0000

Itâ€™s beginning to sound like a James Bond movie: â€œ. . . hackers pointed a telescope-shaped antenna toward the store and used a laptop computer to decode data streaming through the air between hand-held price-checking devices, cash registers and the storeâ€™s computers.â€ This TJX security breach story just wonâ€™t go awayâ€”now The Wall Street Journal has published an article saying that the initial breach likely was made by hackers who first recovered data from the wireless network in a Marshalls store, then used that data to hack into a central database at the companyâ€™s headquarters, acquiring perhaps (the â€œpossibleâ€ number seems to get bigger every week) 200 million customer card numbers. In other words, Marshalls failed to protect data being transmitted over its internal wireless networks.

We started out blogging this story several weeks ago by pointing out that multichannel retailers need to take the possibility of PCI fines seriously, and this incident would inevitably intensify PCI audits. As the ripples spread from the TJX breach, retailers in all channels should definitely expect more and tougher PCI audits and fines, much more talk, and maybe legislation designed to make retailers more financially responsible for security breaches related to information about their customers.

What effect has this unfolding story had on your business? What can companies best do to protect themselves and their customers?

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Jeff Barry is Director of Marketing of F. Curtis Barry & Co., a multichannel operations consulting company focusing on the entire direct fulfillment process with expertise in order management systems.

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Bad News for Santa

Jeff Barry — Tue, 16 Jan 2007 21:15:45 +0000

Just how bad were holiday retail sales? It seems to depend on who you ask, or what set of figures you want to use, or when you want to ask. The National Retail Federation stuck throughout the holiday to its forecast of a 5% increase in holiday retail sales, and is waiting to reconcile that number with the U.S. Department of Commerce figures scheduled to be released Jan. 12. But the numbers being reported last week by various analysts and the mediaâ€”including The Wall Street Journal, the New York Times, and trade outlets such as DM News, Advertising Age, and Internet Retailerâ€”are in general agreement that it was at best a lackluster holiday season, at least for traditional retailers and department stores.

The average increase in December sales was 3.1%, down from 3.5% the previous year, according to the International Council of Shopping Centers. Some luxury retailers do appear to have done well: Nordstrom with a 9% increase in same-store sales, and Saks with an 11% increase; Costco had a 9% gain, Target Corp. gained 4.1%, and Federated Department Storesâ€™ same-store sales rose 4.4%. Wal-Mart, however, had the worst December sales in its history (a 1.3% increase), while Pier 1 sales dropped 10.7% in December.

One the one hand, analysts are citing as reasons for slow sales everything from the general economic climateâ€”fewer home equity loans being taken out by middle-income consumers, serious economic pressure on lower-income consumers because of job erosion and static income growth, rising gas pricesâ€”to the weather (an unusually mild winter in the Northeast kept consumers from buying cold-weather clothes).

On the other hand, the retail results posted in the last week donâ€™t even include online sales figures and sales of gift cards, which the NRF estimates accounted for $25 billion in holiday sales. According to comScore Networks, holiday online sales were 26% higher in 2006 than in 2005, at $102.1 billion. Gift-card redemptions in January could still raise overall holiday sales numbers.

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F. Curtis Barry & Company » wall street journal

From the Dark Side of Productivity

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