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Speech by Robert Gronich, President of Garlan's Delivered 04/15/06

A new retail strategy at Garlan's

Garlan's vs. the new mall

Questions and Answers



Garlan’s is a department store located in Calexico Ca and right on the border with Mexico and the city of Mexicali. We are limited by space and looking for a new location. This September will be 46 years in business and we have been clients of Management One since 2004 through John Adams as our affiliate. Since we began working with John our volume has increased by 50% in volume. Before John the buyers looked at plans a couple times during the year. John brought the Winning@Retail process and OTB plans. Using planning we got more aggressive on marking down merchandise and we hired a merchandise manager that brought more buying talent. We have recently promoted the woman’s buyer to GMM in training and she will also do the woman’s buying. We also have a men’s buyer and children’s buyer and are looking for another buyer and several buyers’ assistants.

Without Winning@Retail and Winning@Business, I am not sure where Garlan’s would be today. Stephen Covey writes that a business has 3 assets- financial assets, physical assets and human assets. The most important asset at Garlan’s is the human asset. W@B has taught us how to maximize our most important asset. Winning@Business showed us how to give our people resources, tools and then we made them own their own process-Management One is constantly pushing us to work to new higher levels of performance. Management One made us realize how important the process is to find the right solution as opposed to solving a problem that may not exist or may not deserve the time, effort or resources it would take to solve the problem. Management One challenged us to be more innovative and look for more innovation from all levels of our company. Jim Meyer (one of the M1 affiliates) gave me a book called Managing Management Time. Running a business with no innovation is boring. Working bored is an incalculable tragedy. Salary is little more than compensation for the damages to one’s career if we do not allow our employees to be creative, contribute and work as part of the team. Someone came to work and said she did not want to be there. I told her to come to my office and we would figure out why. I don’t want anyone in the store that is not motivated and excited about being there.


How did W@B help Garlan’s?
Garlan’s is about 1 hour west of YUMA Arizona. Calexico has a population of 35,000 and Mexicali has over one million people over border in Mexico. Up to 2 years ago there was only one other good store to shop at in Calexico. In late 2003 I found out a regional mall was to open up 3 miles away. There was discussion about this before but now the situation was right and these developers were serious. We were a good mom-and-pop operation but we only have 15,000 square feet to use. In the mall there was to be 4 major chains in the mall to compete with us. The conditions were right to make it happen. I was approached by developers to be part of this mall. When I came back from this meeting I felt like a deer in the headlights of an oncoming semi! I stopped outside the store and just sat and thought. I was wondering about the future of this company we had built and I was worried. I was tortured for the next couple months. In May 2004 John Adams introduced us to the Winning@Business process. He brought the principles of Management One to meet with us and they told us the Winning@Business process would help us define and capitalize on opportunities. I was sold on the W@B process as I knew we had to change our business in order to survive. When we started the W@B process we immediately formed a mall team to develop a strategy, merchandising and financial projections. As we used the process to organize our efforts, my worry turned to excitement. We had a plan and we were considering two options, countering the mall and opening in the mall. This plan provided a lot of relief. My co-workers were now carrying the weight that I was carrying by myself before W@B. I always knew I had loyal employees but it was through W@B that I found out that they were willing, committed, dedicated and talented and could really help the company move forward. Later the family decided to pass on the option of opening in the mall for personal reasons. The process was successful and now my team saw each other in a different light and I saw them in a different light. Everyone is a valuable player in ways we never knew before we implemented the W@B process.

Example 1.
When we got into the process we decided to attack problems that existed. Problem one we went after was shrinkage. Although the national average for shrinkage is 1.5, ours had been .7%. In 2004 we found our shrinkage had jumped to 1.26% which was still less than the national average but became a more costly expense for us. We chartered a team with the goal to reduce shrinkage to .5%. This was our first steering team meeting and we had been at W@B for a month. Everyone was pumped up about solving the problem. I resorted to my old ways and was taking over control. I am the president and I felt like I have the answers. I recognized this was not the process we were learning so I stepped back and let my staff shine. The team hired a consultant on loss prevention to join the loss prevention team. The team took the next action which was to fire the security guards and my instinct was again to take over control. Next came installing a new surveillance system. The team implemented new procedures to control and manage shrinkage. One day I was leaving going out the back door. When I pushed on the door, suddenly an alarm went off. As I was looking around to see what happened, 3 members of the loss prevention team came running and informed me that anyone leaving through this door from now on must be accompanied by a member of management. I was promptly briefed on criteria for escorting people out and was given my own code to disarm the alarm. Next was a new rule that all garbage bags must be in clear plastic rather than black. A weekly audit of hot items in the store was initiated. All bags and purses, even mine (the president) must be checked. At end of year the team surpassed the goal of 0.5% shrinkage by reducing the shrink to .29%!!!

Example 2. Up until 2004 when we started working with John, we did not have a budget for expenses. The policy was always “buy it only if you really need it.” This was not a written policy. We felt if sales would rise to cover the expenses, everything would be ok. I know this was dangerous and we needed to get expenses under control but I did not know what to do. I felt that if I did not know the answer no one did. Using the W@B process we started the financial team. We gave them a 7-month window to achieve 85% of revenue and profit compared to LY, even after the mall opened. Under the direction of the team, we now were budgeting hours to each department to manage labor hours. Certain people were assigned to be in charge of particular expenses. Despite a decline in sales of 11% when the mall opened, the finance team was able to manager our expenses so that our profits only dropped by 1%. All members of these teams were employees of Garlan’s that had never been challenged. They now meet twice a month to review budgets and future budgets compared to expenditures. The best result from this team is that every month since this team was created, expenses have continued to drop.

Example 3.
Another team we created was the credit account usage team. The goal was to increase the value of credit sales and number of credit accounts for March, April, and May. Amazingly, this team was led by the person that coordinates and creates the window displays! One tenet of W@B is getting people to come forward and contribute in ways we never knew they were able to do. In the beginning the team came up with typical promotions. Someone suggested deferred billing which was mentioned before but never tried for many reasons that we see now, never made sense. Since we could not find measurable reasons that the deferred billing would not work, the team decided to go forward with it. The office manager offered to get the POS system to handle the deferred billing. The team developed the theme, “Show it off today, pay it off tomorrow”. The result of the work of this team was that they took credit average from $68 per account to $106. In March we tied the biggest month in the history of the company even though the mall was now opened. We all know that this team was responsible for this. None of this would happen without W@B.

Example 4.
This past fall we had a few customers that complained about not getting their credit billing. One Steering Team member expressed concern about accuracy of address list. She was sure over 50% of addresses were inaccurate. There was a great concern that advertisements and direct mailers were not reaching houses. After some intense discussion and a lot of enthusiasm for fixing this important problem, I asked her how she arrived at the 50% number. She said she was just sure and I didn’t respond. The team started discussing ways to solve this critical problem and someone suggested calling all 10000 people on our mailing list to confirm their address. Even with so much momentum about fixing this problem, I said “stop-- we don’t solve the problem just identify it. Before we do that let’s measure exactly what the inaccuracy rate is today.” The team established a process to ask customers at POS to verify their address while they are at the counter. This measurement did not cost a thing. After 10 days we had asked about 1000 customers and had enough data. At the next steering team meeting the first topic was a report on the results of the POS test. The person that raised the concern in the first place had now reviewed the analysis and said, “Apparently our address list is over 98% accurate. I guess we can scratch this item from the agenda” We avoided a very costly effort before spending time money and emotion to solve it.


From an owners standpoint it is comforting that major and minor problems will be handled properly. These are just a few examples of the kinds of successes we realized using the teams that were set up according to the W@B process. These results were accomplished because we are using the W@B process. I have no problems coming to share this with you. I am not sure where Garlan’s would be today without the process.

Questions and Answers:

: How many people are in your organization?
A: We have 60 people on average

Q: describe your organization
A: I am the president and I have 3 top managers-- GMM, VP sales and operati Administration manager nager

Q: Were there any changes in staff due to the process?
A: M1 helped us to reorganize our top team after 1.5 years. The original GMM had aggressive talent and was moved to VP sales. The woman hired as a buyer was given the opportunity to be the GMM. The administrative manager is taking on new responsibilities and is learning to be more effective in her management process. The process helped us recognize the ta and put it in the right place. ace.

Q: Did anyone leave due to the process
A: No one left the company when W@B was implemented.

Q: A new mall can attract employees from you. How many people left for the mall?
A: We expected a 25-30% drop in business with mall but didn’t see that big a drop. When a mall comes in they not only suck sales out of local economy but take people too. We have not lost a single person to the mall.

Q: Did you change your merchandising due to the mall?
A: We tweaked our merchandising when the mall started. We broke out classes to get better control. Current changes going on now. now.

Q: What do you see in the future?
A: Winning@Sales, job description, performance reviews could all be fo up processes. ses.

Q: have you been satisfied with the process?
A: W@R and W@B have taken us to the next level. There were only two stores in Calexico before the mall. Today we are doing well and the other guy will not make it. He has been there longer but he will not make it. His problem is control and not getting the help to make the business success

Q: Can you comment on the conference calls between you and M1 affiliates that were a part of the W@B process.
A: Conference calls. On the website a client said they see Management One as their board of directors. That is how I see John, Jim, Marc and Evan. Over the past 3-4 months we have had weekly or as needed conference calls to challenge me on the things I need to focus on and decisions I need to make. It was through the guidance on these calls that allowed me to make the top-level organization changes that we have made qui and smoothly. Nobody likes to be told what to do but being told the right things to do is critical.

Q: As you got more results from people, did you find you needed to pay them more?
A: Some have been compensated more but not for the money but rather for better results and performance. The window decorator, willing to take on the task, will get more due to his contribution. At other times people volunteered just to contribute. We got certificates, recognized people in the newsletter, and sent recognition to their house. These moves cost a minimal amount compared to giving more salary but they had more positive and lasting effect. We hosted a dinner party for loss prevention team. People recognize that these are the things that people need to do to com and stay in business. ess.

Q: As you think back, would you have done the W@B process if you did not have the mall as a looming issue?
A: Every business has some pain somewhere and consultants need to find that and create pain where they are not capitalizing on opportunities. Picture a field of scattered people and this process gets them organ with common goals and missions and gets them moving together. her.

Q: How much of the process has filtered to the bottom levels of the staff.
A: There has been a lot of positive emotion and excitement generated. We translated a lot of what we were doing into Spanish for the staff. The language barrier was not a great issue but several bilingual mana on the steering team helped a lot.