Six years later, under the name The Mercantile, the owners hired Mike Brown as the company’s COO and began implementing retail-focused, operational best practices.
Because of this timely move, 2009 will be The Mercantile’s first year to make a profit. But like any good business, the improvements of the past year are only the beginning.
Back to basics
When Brown arrived at The Mercantile, he and the rest of the executive team developed a four-phased plan to get the company back on track. The first phase was implementing the basics at all of the locations, which are spread across Colorado, Nebraska, Wyoming, and South Dakota.
“The company already had a vision and a plan, but it was in need of restructuring,” said Brown. “The customer was always the number one focus and on the original plan, so we put together a strategy with the customer continuing to be the number one focus.”
That’s not to say The Mercantile’s customer service approach was bad to begin with. Many employees are ranchers and farmers themselves and know almost all of their customers by name. However, Brown said having a clean, safe environment in each of the locations is another way of showing customers how much they are appreciated.
“We want our customers and our associates to be proud to be a part of their local store and what it stands for,” he said. The Mercantile executive team worked with the managers and employees of each location to zone the merchandise, giving the locations more of a uniform look, as well as cleaning up the stores, parking lots, and receiving bays of each—what Brown calls getting consistent.
Phase one also included establishing an open-to-buy program based on sales. The Mercantile had excess of $2 million of inventory sitting in warehouses, and by trimming back on orders, making sure the items in stock are the ones that consistently sell, and looking at the sales trending of what the company was projecting in sales, inventory was reduced to gain cash flow.
The Mercantile also streamlined its advertising approach, making sure the communities in which TV ads ran were those where brands needed to be established rather than those where the company was already a recognized name. “When we talk about the first phase as the basics, we’re talking about developing budgets that are appropriate for each store, as well as cleaning, zoning, signing, and merchandising,” said Brown. “Phase one prepared us for the launch of phase two: mastering the basics.”
Mastering the basics
The next step in The Mercantile’s restructure started with in-depth training of store managers. Once a quarter, the company’s executive team brings in all store managers to train about what’s important at the moment, what to look for moving ahead, and what they can do to take the company to the next level.
“We start each meeting by going over our vision and plan, making sure all managers understand that although the goal is to be a profitable and successful world-class agri-business, it’s also important to have fun,” said Brown. “By re-establishing those goals at each meeting, we can develop solid benchmarks to continue moving forward.”
Cross training is another element in phase two, as well as putting mentor programs in place to help store managers get comfortable with effectively communicating their sales plans. In addition, the company implemented basic recycling programs, created shrink awareness, put category audits in place, and educated the store managers on how to report lows and outs to buyers to ensure merchandise is always fully stocked.
“We want to give managers the ability to ensure they have the items that sell well and that they can get them quickly so we don’t have an out,” said Brown. “Empty shelves only cost us sales.”
Phase three is what Brown calls developing a competitive edge. Although the company is well established in each of its communities, he wants to make sure there is no chance for a competitor to come in and steal marketshare.
The executive team kicked off this phase by looking at wage reporting and tracking, as well as finalizing the company’s new employee handbook to ensure all company associates were aware of and abiding by HR policies. Building on the purchasing improvements in phase two, The Mercantile also implemented weekly calls from buyers looking for feedback and started training buyers on how the stores operate, how to ring up product, and how to receive product.
“With that understanding, buyers have a better understanding of how product comes in so they can make it easier for the stores and for the customers,” said Brown. “We’ve also started establishing sub-classes in the system to develop more consistency in how merchandise is laid out in every store.”
View from the top
Phase four is what Brown refers to as a view from the top. The Mercantile already began implementing a new computer register system last year and has upgraded the company server to handle inventory management and sales figures. To follow up, it’s developing a remodel strategy and is expanding its private label product line.
Down the road, Brown hopes to upgrade The Mercantile’s Web site enough to support a robust e-commerce platform capable of building on the in-store and catalogue businesses. But no matter what changes take place, The Mercantile’s motto of sharing values with neighbors will always be the number one priority.
“The farmers and ranchers who bought these stores invested in them because it was important to their communities,” said Brown. “Being farmers and ranchers themselves, they wanted to make sure they could get the best possible value out there because in these small communities, farmers and ranchers are neighbors. It’s important to give them high-quality merchandise at a value.”