Big Ego, Big Collapse

I am not sure if I am correct in my opinion here, but it is my opinion at the moment. The collapse of GI Joe's and Sportsman's Warehouse has less to do about the current market conditions than it does the bullheaded attitudes retail heads take when growth periods occur. Stop listening and providing your customers what they truly desire and suffer the consequences. Focus on rapid expansion at the expense of your solvency and be handed your fortune. True, market conditions exasperated the demise, but in the case of both organizations we observe the following critical mistakes:

Joe's - Poor merchandising throughout, inconsistency among stores, high pricing models and the typical retail 'big stick' when dealing with suppliers. Who's left holding the bill? - The supply chain, ancillary services, lessor, employees, etc., but Norm Daniels walked away paid in full in '07. It's no secret (after last week's financial disclosures) that these entities were stringing the supply chain to its limit and posturing for a distressed, well heavily damaged, sale to bail them out.

Sportsman's - Excellent store, poor methods. Living in salmon/steelhead country (OR,WA) and visiting my local store in Vancouver in January, I couldn't buy a steelhead float (they were sold out for 2 months), but the bass (you know, that warm water, runny-nose kid) section was 3 lanes wide and stocked full! Hey Stu, great purchasing model! Maybe if you paid attention to the geography and local interest things would be different. Oh, and you didn't need 92 stores. Focus on who you can serve best, not how many you can serve - like limit building a store across from Cabela's - they were barely breaking even with their footprint, how did you expect to take market share and do better? See Home Depot vs. Lowe's. Not working out so well either.

I know I am being a bit harsh, but I can't help it. Just putting up a store in a growth area using a generic retail stocking formula derived by an algorithm in the back room of Geek Squad's campus isn't always a recipe for success. Look, these companies were in trouble far before the recent derived economic 'crisis' our bankers and politicians created. They have been leveraged to the hilt with the thought that borrowing would get them out their recent troubles, when it only exponentially destroyed their ability to survive. Not a sustainable model folks. Sounds like Washington right now, huh? The analogy isn't far off.

THE GOOD NEWS!

My favorite entities, the mom-and-pop shops, local retailer, and specialized merchants should see their business increase. These small stores generally service their customer better, know more about the locale, and deliver a good customer experience that the big box guy always strives for but rarely makes good on. And of course, a direct-to-consumer company like 20sub3 will benefit as well!