LO & Big layoffs LO5503

Rol Fessenden (76234.3636@compuserve.com)
10 Feb 96 12:48:07 EST

Replying to LO5426 --

Wolfgang Schmid wonders if Goldratt's hypothesis -- that business needs to
focus on growing sales, not limiting costs -- holds for mature businesses.
He refers to other literature that uses examples from industries
experiencing rapid growth or rapid change. I have the same questions.

In the apparel retailing industry, I too have difficulty understanding how
to attack this problem. And this is my major preoccupation. The
environment is over-stored, and highly competitive. Customer services
among the best companies are all virtually the same, and prices are as
well. Very few companies -- Bean being one exception -- avoid massive
liquidations. Price gains at this point can only be made by going
off-shore and losing American jobs. Not a pleasant prospect.

There is no value in Bean adding stores in the US, because there are
already too many. There are no more people who are likely to be mail
order shoppers that we can find. We do an incredible amount of research
looking for them. Our in-stock levels are at least the best in the
industry, and our customer services set the standard for all other
companies. We manage the company carefully and prudently, so we are not
financially at risk, but Macy's disappeared as an independent company in
about 24 months, so there are no guarantees.

Apparel retailing may be shrinking for demographic and lifestyle reasons.
Also, consumers are overly in debt, and they are voluntarily cutting back
on apparel purchases. Going into some other business -- like computers --
may work for some companies, but it does not fit with who we are or what
our mission is. Finally, consumer buying habits changed abruptly and
without warning last August. No time to prepare, no time to even know it
was coming.

In this environment, we have found some opportunities for growth, but
because of the added complexities, costs appear to be growing as fast as
revenues in these new areas. In other words we are not -- at least yet --
efficient and effective in these new sales environments. And these growth
opportunities are limited.

Goldratt's conjecture may be correct, but it is very difficult to see how
it actually gets implemented in a practical sense. Of course, this is
only one anecdote.

 Rol Fessenden
 LL Bean

Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>