The Lessons Of Summer

During l0 days this summer, two of America's household-name retailers released some startling news: Montgomery Ward & Co. was filing Chapter l1 bankruptcy, Woolworth Corp'-was closing 400 of is U.S. five-and-dime stores' How and why these retail giants arrived at such straits holds a message for everyone in this business'

The quick answer is that they failed to change as their iustomers and the competition changed'

In Montgomery Ward's case, it was wrong responses to competitive challenges. Category killers, such as Home Depot, had burst upon the scene, complete with a wider selection and lower prices. Montgomery Ward cut p-rices, but couldn't match the discounters. Additionally' they dropped traditional lines to enter new fields like electionics, only to come up against Circuit City and the like. They drifted away from their tralitional inventory and those customers, only to fail to lure new buyers to a new and changed inventory of offerings. Drifting out of focus, they lost custbmers and their identity. Quite a blunder for a former retail Powerhouse.

While Woolworth was taking the seemingly drastic step of closing those 400 storcs' a closer examination revealed the move to be one of successful coping. Seeing changes coming for general merchints, Woolworth had established and acquired a number of specialty retailers, lry! a" Kinney Shoes, so that when the five-anddimes had exhausted their earning power' they represented only a small percentage of overall corpG rate revenues.

The successful mall-anchors, like Sears' Roebuck & Co., made the transition from near bankruptcy to their present strength by realizing how their customers had changed, why they changed, and what they now needed and wanted.

The convolutions of these famous companies hold valuable lessons for those in our business who have the desire and acumen to find the answers to survival and then successfully put them in place.

Like so many things in business, it's easier said than done.

Bankruptcy Laws Hurt Dealers

Current bankruptcy laws, especially Chapter 1 I proceedings, adversely affect lumber dealers, past National Lumber & Building Material Dealers Association chairman B. Harold Smick Jr. argued before the National B ankuptcy Review Commission.

He explained that since dealers sell mainly to contractors with no unencumbered assets, they are often the first and biggest losers in bankruptcy cases. "We get nothing! Debtor-contractors walk away with our lumber