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Jennifer Convertibles: a lesson in failure PDF Print E-mail
Written by Alixe MacRae   
ImageA few days ago, I read a very interesting article headlined quite simply ‘Several factors drove Jennifer Convertibles into Chapter 11'. When I was finished, I was reminded of the basic of rules of retail, which any merchant ignores at his own peril. If they sound like old adages, well they are - but that doesn't diminish their power and relevance.

Click here to read the article, written by Furniture Today retail editor Clint Engel.

The lesson to be taken away from the article is also basic to the theory of retail: "If you fail to plan, you plan to fail".

In the story, senior executives for the Woodbury, New York-based retailer blamed a number of things for the decision to seek Chapter 11 protection. But the factors they cite are challenges that are common to all businesses, and particularly to furniture retailers.

Everyone is faced with a poor business climate - this is something that usually comes about once a decade, if we're lucky. So, a smart retailer scrutinizes the fixed expenses and where possible converts them to variable expenses.

You can reduce taxes - particularly during those downturns - by closing off an area of your store or warehouse (cold and dark) to reduce your useable facility. You should ensure most of your staff is part-time as this gives you flexibility to react swiftly to downturns. Negotiate "sell/buy" (you buy the item after you have sold it) arrangements with local vendors to adjust inventory with demand. It's interesting to note that Jennifer Convertibles' inventory increased 10.3% in 2009 over 2008 - a sure recipe for disaster considering the economic environment.

"Don't put all your eggs in one basket" is not advice for the Easter Bunny. Buying roughly 40% of one's inventory from a single supplier is suicidal. In any category, a good retailer should have three vendors and warm relationship with other potential sources. It doesn't matter whether the vendor is your best friend from college or a close relative. You need a base that can react when you are growing or shrinking. Big retailers were stung many years ago because of single sourcing. They learned to never do that again.

"A man who is his own lawyer has a fool for a client" - even Conrad Black would never do that.

Company management also cited "has been unable to get out of leases" as a factor in the decision. This is a telling statement. Who wrote these leases? A reasonable escape clause is required. Good retailers remember they must never fall in love with a location or property. Make sure your lease reads like a pre-nuptial agreement; you don't want to be skinned when the times are tough.

Delays in receiving goods from China are to be expected and planned for. What is the ‘Plan B' when this happens, because it always does? Develop a contingency plan which can cover the gaps and price your goods accordingly. A volunteer hostage will create problems for the bottom line, always.

"Fire at will" may be an effective battle strategy but can result in nasty and expensive lawsuits. Always keep a diary of performance issues, share them with the employees and have the document signed whenever possible. Don't skimp on severance pay. Understand both the law and common practice. The legal minimum is frequently lower than the industry standard. Saving a few thousand dollars can cost you two to three times as much when the jury's verdict is in, which will also damage your reputation.

William Shakespeare once wrote: "Who steals my purse steals trash.....but he that filches from me my good name...." Retailers really need to remember this and hold it dear. In today's world, you can be skewered on the Internet by an unhappy customer in mere moments. What she writes about you on Facebook, Twitter and the rest of those social media sites will never go away.

Companies used to scour newspapers for press information. Now they need to monitor their electronic image or die a painful death from a thousand sharp postings.

While there are many reasons why a company is driven into bankruptcy, there is really one factor - a failure to plan so that when bad things happen, management is ready and can react swiftly and correctly. The leadership at Jennifer Convertibles really needs to relearn those lessons.

If you want more insight into what went wrong, and find out how poor customer service will get you stung on the ‘Net, click here.

A regular contributor to Home Goods Online, Alixe MacRae is one of this country's best known merchandisers, having held senior positions at a variety of well-known Canadian retailers including Stoney Creek Furniture, Sears Canada and The Bay. She recently started her own business Concierge Relocation ( Her company specializes in move management, especially for those dramatically downsizing seniors and their overwhelmed children.

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