To resign or to retire that is the question.

October 23rd, 2009

These terms have a lot more in common that just beginning with the letter R

Earlier this week I noticed an article that indicated that the Chief Executive Officer of one of the countries super market chains resigned. Another super market chain recently had their president retire suddenly. What both of these companies have in common beyond resignation and retirement of their leading executive is that their results suck.

It’s easy to blame the economy or the fact that consumers faced with fewer discretionary dollars are reducing their purchases and buying a less expensive product mix. Unfortunately, today’s results were born of plans that were developed in better times.

It would be interesting to take a look at these companies’ detailed Profit and Loss statements. Without looking it is fair to assume that their cost of goods and services are out of line with the industry norm as well as with the leaders in the space. Certainly insurance and healthcare costs are out of control. Payroll is most likely the largest expense on the P&L. There is however ways to reduce costs that many of the companies in this space are not taking advantage of. As a result they are not getting the discounts on products and services that they or their various constituents deserve.

What is incredible is that the rising cost of employee healthcare benefits is always the first excuse we hear. Many times this is followed by a layoff. One can be managed and the other avoided. This author has posted on how to do this a number of times.

Here are 5 previous posts with some suggestions as to how to avoid poor results. This may not be as glamorous as building a new store, creating a new format or adding new categories. One question to think about is what do your shareholders and stakeholders want. A good bet would be better results. Another and more important question is what do your customers want. A great bet would be lower costs.

1. Retailers have you ever really calculated the potential impact of using next generation e-procurement tools?
2. Is the Retail industry downsizing or right sizing? If so, how can e-procurement tools help reduce this huge loss of jobs?
3. Bankruptcy Sucks PartsI, II and III. But, it does happen to good companies with well intentioned leaders.

We look forward to and appreciate your comments.

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