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September/October 2002

NAGS Notes
HOWARD hot topics
nags@mitchell.com

Dinosaurs and Kmarts

by Catherine Howard

While listening to National Public Radio one morning on my way to work, I heard a segment about the recent Kmart bankruptcy filing and the impact of the company’s subsequent reorganization actions.

The segment focused on a small community that just five years earlier was elated to accept the $350K in tax revenue the new Kmart brought in. But it was now grappling with what to do with abandoned retail space the size of four football fields.

What was once a positive attraction drawing hundreds of shoppers from miles around to partake of all those blue-light specials and Martha Stewart goods is now a blighted area and an enormous eyesore screaming “Declining Community” to passersby.

As the radio droned on about the causes of Kmart’s collapse (including factors such as poor retail performance during the Christmas peak due to lack of consumer confidence) it reminded me of a bunch of paleontologists picking over a field of dinosaur bones trying to piece together the remains as well as the story behind their demise.

Before the Grand Opening
I thought about what that community looked like before the big, gray box moved in. In all likelihood, there was a bustling town center with many small retail outlets—several dress shops, a hardware store or two, shoe shops, drug stores, groceries, a bakery, furniture store, locksmith, tire shop, etc. You get the picture. Anyone driving through rural America in the last century has seen many of these places closing up as their customers, drawn by lower prices, migrated to the outskirts of town, where the new, bigger and better retail giant had set up shop.

At that time, there were plenty of stories about how this exodus might affect small communities, but all in all, the conclusion was that it was inevitable and even positive in many instances. The community gained more tax revenue, the consumers got better deals, the old retail spaces were converted to tea houses and craft shops, and even the displaced retailers could find work as Kmart greeters.

Facing the Desolation
Now the asteroid has hit, the super volcano has erupted and the shining sun of retail profits has been dimmed by dust and ash. The big, gray dinosaurs have fallen and their carcasses are rotting along the interstate highways.

What happens next? The community has a few options to consider: 

    • Try to entice another giant to take the space and set up shop;

    • Come up with a plan to convert the space into a youth center, sports complex, hospital or other community-service-type operation; or 

    • Knock it down and plant corn.

And what about the consumers? Where will they go for their blue-light specials if no Target, Walmart or Costco moves in? There are few options in some communities other than driving an hour and a half to the big city. Who is going to drive an hour or more to rent a video or pick up a gallon of milk? My guess is that those displaced stockers, cashiers and greeters will need to find other work.

Business, like nature, abhors a vacuum, and there likely will be a resurgence of the small retail outlets once again. But it won’t be the same as before. It never is. The life forms that dominated the earth before the dinosaurs didn’t come back. They were pushed out forever. 

Mammals survived because they were small and nimble and therefore able to remain hidden from the big predator species. They were only able to thrive once the landscape was no longer dominated by the behemoths. Then they only had to worry about being eaten by each other. Hmmm, we may be getting close to the point here.

What is the point? How does this relate to the auto glass industry? Well, if conditions change sufficiently in this industry to allow space for the small, independent retailer to once again thrive, it will be under different circumstances. It won’t be business as usual. There will be no room for free steaks, deductible waiving, slipshod workmanship, billing around, unsafe installations or other less-than-professional behaviors.

The Auto Glass Replacement Safety Standard (AGRSS) will need to be the gospel for every installer. The pricing will need to make some sense with reasonable prices for glass and appropriate labor charges. Every successful shop and every supplier will need to be automated and capable of electronic communications. Certifi-cation and even licensing will be the standard for all technicians. Efficient operations that can streamline processes and remove costs will be the survivors in this new environment. Until the next asteroid hits. 

 

Catherine Howard is vice president/ general manager of NAGS of San Diego.

 

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