Kitchen Retailer Survives Downturn by Closing 3 Days a Week
Snowy weather and the recession nearly forced 30-year-old retailer Kitchen Kaboodle of Portland, Ore., into bankruptcy in 2009. But the five-store chain reinvented itself in a move many people thought was crazy: It closed its doors three days per week rather than shutting them permanently.
Like many retailers, Kitchen Kaboodle experienced a sharp decline in sales when consumers started belt-tightening in late 2008. To make matters worse, the kitchenwares and furniture retailer faced increased compeition from Sur La Table, Ikea, and Crate & Barrel, which all had entered the Porland market in the past few years. Then a snowstorm hit in late December 2008, forcing downtown Portland to close for several days during the busy holiday season.
Just as Kitchen Kaboodle was about to record its first lost ever, co-owner John Whisler learned that the bank wanted to call in the company’s loans, too — a move that could have destroyed the business. But Whisler wasn’t about to let that happen. He and partner Lynn Becraft turned to Outcalt & Johnson Retail Strategists Patricia Johnson and Richard Outcalt for help.
Letting the Data Drive Decisions
“Thanks to Pat and Dick, we were able to carefully and thoroughly analyze the years of sales data we had,” Whisler says. “That analysis showed quite clearly that we did about 70 percent of our business in the Thursday through Sunday part of each week.”
Based on the data, Johnson and Outcalt asked a simple question, “Why open seven days a week when only four are profitable? So, in mid-2009 Whisler and Becraft decided to try going dark Monday through Wednesday, despite cries from critics who predicted they would commit retail suicide.
Passing Savings on to Customers
The temporary move, which included letting go employees, cut expenses by 30 percent. Kitchen Kaboodle passed those savings on to customers by marking down all of its merchandise.
“The whole basis of this strategy was not throwing a Hail Mary pass and hoping it would work,” Whisler says. “It was data driven. The hard part was convincing ourselves it would work, and second, convincing our employees.”
The effort took a tremendous amount of customer education. “It was somewhat surreal at first, to be closed when everyone else was open,” Whisler says. “The first couple of months were a difficult time, with a lot of uncertainty.”
But the strategy was a success, and Kitchen Kaboodle has since reinstated its store hours. The first store went to seven days last spring, a second went in June, and a third went in October. In November, all five Kitchen Kaboodle stores went to the seven-day-a-week schedule.
Reinstating Schedules as Sales Improve
After the 2011 holiday season, all stores will remain open seven days a week, with the possible exception of one location, Whisler says. “Business has improved somewhat to where we can offset the additional costs of being open with increased sales on those days,” he says. “The grand experiment is coming to an end.”
Whisler’s advice for struggling retailers: Analyze your financial data, with help if you need it. Pinpoint your optimal open hours and learn just how much it costs to stay open when sales are weak. The era of trying to capture every last sale by staying open longer is over, he says.
What strategies have helped you weather the recession? Would you consider closing several days like Kitchen Kaboodle? Share your comments below.