Topics: Small Business

Small Business Management: How Radical Changes Worked

small business managementWhile writing my book, the Retail Doctor's Guide to Growing Your Business (Wiley,) I had lunch with Roger Leithead who told me how his dad, Barry Leithead board chairman led Arrow shirts to survive the Great Depression.

I share it here because succeeding in business regardless if you are a manufacturer or small business requires bold moves...

Open the doors

The Arrow shirt concept came about in the 1800’s because men only wore white dress shirts and they all went to work in a suit. Even the blacksmith would work in that white shirt.

This one guy was a singer and his wife didn’t like him coming home and changing into a clean shirt just to go out for choir rehearsal – especially since they only bathed on Saturday nights.

The idea of a detachable collar and cuffs made it easy to look presentable without all that washing.

This is the way Arrow built an empire of over 450 warehouses across the US filled with detachable collars and cuffs. It was a recipe for success: find out what the customer wanted and then give it to them.

A competitor, the Manhattan shirt company, had a shirt you could buy with an attached collar and cuffs but it was built like a tent with yards of fabric to tuck in.

Also, the sleeves were only one size - extra long. That’s why guys wore armbands, like you see in barbershop quartets, so their sleeves wouldn’t reach over their fingers.

Sales were dropping off and Barry, the Arrow CEO, saw the trend was changing to a complete shirt. He announced to his board of directors in 1930, “We will never get there doing what we’re doing now.”

That’s when something truly remarkable happened.

He went downstairs and gave instructions to open the doors of their main warehouse on River Street in Troy, New York, which bordered on the Hudson River. “Clear out the warehouse.”

Using pitchforks, the warehouse men threw all of the existing collars and cuffs into the river. (Forget the environmental consequences of such an act of over 1 million dozen collars and cuffs floating down the Hudson.)

He threw out their entire inventory in order to make the changes needed.

They came up with 64 combinations of neck and sleeve lengths so that Arrow shirt fit you properly, not like a sack. They changed from natural ocean pearl buttons that broke easily, to plastic and invented Sanfordizing, which meant a shirt wouldn’t shrink. They again became the leader in men’s shirts because of the CEO realizing they had to change or die.

You think it’s tough to compete now? Imagine going into a retailer in the Depression telling them they needed all this inventory to serve their customers; where three models could capture the market, now they needed 64.

The CEO then had marketing come up with the “Arrow Shirt Man.” Splashy ads in the best magazines touted how well an Arrow shirt fit. It created a need for the women who purchased their husbands’ shirts to go into retailers and ask for that “Arrow Shirt.” Retailers had no choice but to carry them and the rest is history.

Meaning for you today...

When I speak across the country I hear many people quick to tell their story of how their business is off, but they themselves are reluctant to change.

If things aren’t going your way, what radical change do you need to do to ensure your success? Does your business hurt bad enough to seek help? Do you have the guts to throw out what you’ve been doing and start over?

There is no level playing field - Wal-Mart will always be able to undercut your price, Starbucks will always be able to get a better location, Amazon is only going to get stronger.

Don't blame someone else. It is your responsibility to make a profit. If what you're doing isn't working, look at what others are doing and proactively change. If you need help, take a look at my retail consultant page.

The choice is yours, but the time to act is now!

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Topics: Small Business

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