Chicago-based Erehwon Mountain Outfitters' board has responded to lagging sales in a sluggish economy by mandating sweeping changes for the retailer.
For starters, the board moved the corporate headquarters to a larger facility near O'Hare airport, and installed a completely new buying team, with a very aggressive, value-centric, purchasing strategy. They also created a new position, director of stores, which marks a philosophical shift in how salespeople will interact with customers.
Three senior buyers, each with a 20-year history at Erehwon, have been relieved of their duties. Hardgoods buyer Steven Schmailing and clothing buyer Joanne Gabrielsen were given lateral transfers to store positions respectively at Erehwon locations in Madison, Wis., and Skokie, Ill. Accessories buyer Stanley Treadway is relocating to St. Louis, Mo., and will pursue other opportunities.
"Sure, I'm disappointed," said Schmailing when asked to comment. "Management has a certain vision of what they'd like to achieve. Of all the variables this is something they could control."
Having worked with all three buyers for many years, founder and president Rudi Meyer admits that it was a hard decision to make.
"I didn't want to see these people lose their jobs over this," said Meyer. "The board insisted that we take on a more aggressive and fashion-oriented buying structure, with buyers who are more aware and sensitive to open-to-buy."
Erehwon's new buyers will be encouraged to seek out-of-market sources for products their customers will find interesting.
Taking over as accessory buyer is Gina White, formally of EMS with 18 years experience as a merchandise manager. White will be charged with finding items that are not commonly found in traditional outdoor specialty stores, like unique Christmas gifts. Torrey Newman, formerly of urban fashion retailer Anthropology, will be in charge of buying sportswear, underwear and all fashion clothing. Randy Bhanik has been promoted from within Erehwon's ranks to buy footwear and outerwear. He will also serve as merchandise manager overseeing all the buyers. Robin Seyffert will continue to buy kid's clothing and will now also buy hats and gloves. Meyer himself will buy hardgoods. He plans to hire a full-time buyer to replace him at some point in the future.
While maintaining the integrity of a business that has always featured the most technically advanced recreational equipment, Meyer's new buyers will also be seeking lower price-point items that will appeal to a broader audience.
"We're here to try new things. Our purchasing will be narrower and deeper in core items, and we will be expanding our price selection. We will be offering sleeping bags for $50 and tents for $100," Meyer told SNEWS. "When you're selling shorts for $35, why would the average consumer drive past Wal-Mart and Shopko to shop at our store? We want a larger percentage of the market as a whole."
When we were told that Erehwon will feature shorts for $19 in spring 2004 as an example, we asked Meyer if he was concerned about losing his high-end customer. To that he cited the company's new sales philosophy and training program.
"We're going to jump on them (the store's consumers) with enthusiasm about a product we think is cool. Customers have no predisposition to buy that item," Meyer went on to say. "But we're going to reward stores that quickly adopt the program by offering spiffs and free products in relation to the sale of items we select."
Charged with implementing this program is new Director of Stores Eric Grundin. Erehwon's plan is to offer incentives to its sales staff to increase customer service. Grundin intends to create a sale environment in which his staff eagerly engages their customers to discover and fulfill as many of their product needs as possible. Sales performance will be carefully monitored and achievement will be rewarded. Special recognition will be paid to exceptional individual achievement, stores that meet their projected goals, and the store that outperforms the other five. Grundin believes that a system of reward, recognition and competition will provide the stimulus Erehwon needs to succeed.
"I'm primarily interested in increasing my number of units per transaction," said Grundin. "If we can get our salespeople to remember add-on purchases like socks and other accessory items, we can much more easily meet our goals."
"Our rate of conversion is already pretty high," said Meyer. "When we get customers through the door they usually buy something. We just need to get them to buy more."
Meyer also plans on doing more consumer-direct promotion by upping his commitment to local organizations like the Boy Scouts, and organizing more in-store consumer clinics. He told us that he will rely much less on promotion-driven consumer advertising, which has proven ineffectual in the past.
SNEWS View: Erehwon has been fighting an uphill battle for retail survival for more than a decade. With every multi-market retailer, from Galyan's to REI to EMS, beating on their door, not to mention strong local retail competitors, Erehwon's board clearly felt it needed to try something very new because simply being a specialty outdoor store was not working. Although the loss of veteran buyers is regrettable, an infusion of fresh blood could be just what the doctor ordered. Of greater concern may be the potential dumbing-down of an otherwise exceptional retail environment. By offering an increasingly wider spread of lower-priced items, and less choice in the high-end, Erehwon runs the risk of losing some of the luster from its specialty label -- and that could be costly in the long run. But this is a classic cautionary tale. When you hang your retail survival hopes simply on the promise of selling cheaper goods, sometimes all you have left is cheaper goods you can't sell. Just ask Kmart. If Meyer can gracefully walk the board-mandated line between high-end and low-end, by providing stellar customer service without alienating his core customer base, his stores may start to enjoy a profitable light at the end of the tunnel in the very near future. However, another caution here. With a staff that is motivated simply by incentives, including competition among the stores, there is a real danger customers will start to feel the staff is more interested in getting them to buy something, anything, than it is to help them to buy only what they need -- and that's not a healthy reputation for a specialty store seeking long-term survival.