My
husband and I were watching one of our favorite movies the other
night, Rear Window, when one
of the characters made a really interesting remark. She was Stella,
the traveling nurse who pays regular therapeutic visits to “Jeff”
Jeffries for his broken leg. She told him that she had predicted the
stock market crash of 1929, and that it was easy to do so. But not
because she was an economic wiz. One of the Vice Presidents of GM
was a patient of hers, and he was having kidney trouble. “When
General Motors has to go to the bathroom 10 times a day,” she said,
“the whole country's ready to let go.”
Her
remark made me remember my experiences working for Borders Books & Music, at
a superstore in Phoenix. No one was running to the bathroom 10 times
a day (okay – sometimes I
was), but something else really revealing was going on. I did a lot
of work in the stock room, receiving, sorting, and stickering product
to be shelved. I also helped to throw away our gigantic pile of
trash every day. Eventually I realized that more paper was going
into that dumpster than was going out the front door as purchased
books.
This
was mind blowing. I tried to imagine businesses all over the
country, throwing away all that stuff. I think if all of us could
really see how much of it there is on a daily basis, we would decide
something had to be done about it. Why? Because that's energy we're
throwing away. That's cellulose, which could be converted back into
fuel, or fertilizer, or heat, and we're paying people to ship it
around the country and then throw it in dumpsters. In our case, it
was tons of cardboard: boxes and display materials. We re-used a small portion of those boxes to
ship returns to our distributor (more about that later), but most of
them went straight into the garbage. One of our line employees tried
to suggest that we could get paid for the cardboard by a recycler who
specialized in pick-ups from businesses. Our District Manager
dismissed his suggestion, and when he went over her head to suggest
it to the Regional Manager, he was warned that if he did that again
he'd be fired. Yes, it's not considered kosher to go over the head
of a superior. But our company used to have a system in place where
line employees could make suggestions to the Brass upstairs – but
they never accepted any of those suggestions, and eventually that
system went away.
Eventually
our company did, too.
Before
the crash, I watched an interesting progression take place. In the
early, halcyon days we got gigantic shipments of books, magazines,
movies, and music. We sold a lot of that stuff, but so much of it
was coming in, a lot of it never made it to the shelves. We didn't
have an efficient system for getting those books and CDs on carts and
then on the floor (let alone in the proper
alphabetical order in the right section). So when I trained as a
sales clerk, the rule was that if a customer came in looking for an
item, there were seven places you had to check before giving up and
admitting defeat (Can I order that for you, Ma'am?) – the sorting
bins were one of those places.
Returns
were also a challenge – we had a list of items we were supposed to
return every month. When we looked for that stuff, we often found it
in those bins. In the beginning, it was stuff that didn't sell very
well (sometimes because it never made it to the floor) and we
returned it so we could get stuff that did sell
well. By the end, we were using those returns to finance our new
stock purchases (instead of profit from sales). We would return
stuff one month, and order the same stuff for the next. It was
beyond bizarre.
What
it amounts to is that we used to sell more paper than we threw away.
We also used to sell more paper than what we shipped back to the
distributor. After 9/11/2001, the trend slowed, and then reversed.
But lest you think I'm blaming terrorists for the demise of Borders,
let me point out one other ugly trend, the one driven by customers:
returns at the register.
In
an ideal situation, customer returns are rare. You sell a good
product, they find it useful, they keep it. When I first began to
work at Borders, the return rate at the register was actually kind of
high already. A lot of it was driven by fraud (people would pull
items off the shelf and claim they were returning them so they could
use the credit to buy other items). Our return policy was
ridiculously lenient, and it didn't take long for termites to settle
in. But they weren't the only culprits, and in the end they weren't
even the majority of abusers. The majority were people engaged in
what I call Theft Of Services. These were folks who bought books,
read them, then returned them when they were finished. These folks
thought nothing was wrong with that, because the store could sell the
book, so where was the harm? The harm is that they returned the
physical book, but they stole the content. When the product is a
book, the physical copy is not the full extent of the product, it's
just the delivery system. The content is really the product. That's
why people can sell ebooks.
So
that's one of the major reasons that the ratio between the paper
going out the door as sold product and the paper being shipped back
or tossed into the dumpster got out of whack; paper started to come
back to us from another direction. Eventually, the number of people
coming to the register with returns went from 1 in 10 people to about
5 in 10.
By
that time, the economy had really tanked. A lot of folks were
returning those books because they couldn't pay their bills. But did
they do the honest thing and simply go to the library? Nope. And
because they didn't go to the library, they caused initial sales at our
stores to seem higher than they really were. Executives at our
company focused on those sales figures and mostly ignored return
rates.
These
same executives stepped up their merchandising campaigns. They paid Robert Sabuda, the wonderful designer of pop-up books, to design pop-up style
Christmas decorations for all the stores, paid to have them
constructed and shipped to the stores – then ordered us to throw
them all in the trash once the season was over. Chastened by
criticism from investors over this fiasco, they responded by paying
one of their colleagues in their own headquarters to design the
decorations for next year. His
designs were so creepy, we were actually grateful to throw them in
the dumpsters after Christmas.
You
might think some of that waste is necessary – after all, sometimes
you have to spend money to make money. That's what merchandising is,
and in stores you see it manifested as signs advertising the
products. Every month they sent us big packages of signage to put up
in the store. And it seemed like just about every other month
they e-mailed the managers and told them to throw out all that
signage instead of putting it up, because it was the wrong color.
That was about $60,000 that went into the trash for no good reason.
They could have just mailed us the money and told us to throw it
away.
So
to paraphrase Stella, if more paper is going into the dumpsters than
is being sold to customers, something's wrong. Most businesses
manage by numbers these days, but those numbers can be interpreted
different ways. They can be massaged. Our financial meltdowns in
1929 and 2008 prove that. So if you're thinking of investing in a
company that deals in physical products, you may want to check their
dumpsters. They may tell a tale that will make you change your mind.
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