MARKET WATCH: A New Retail Model

Jeff Harbaugh

• March 30 2009
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An email from the Retail Owners’ Institute (www.retailowner.com) alerted me to a new strategy Kitchen Kaboodle has implemented. Kitchen Kaboodle is an upscale kitchen retailer with five stores in the Portland, Oregon area. It also sells online. It’s been around since 1975, so I assume they are a pretty good retailer. Obviously, they don’t do much with action sports brands, but faced with the same economic problems our industry’s specialty shops are dealing with, they decided to try something new.

Their stores are now open just four days a week (Thursday through Sunday) and they’ve passed the expense reductions along to their customers in the form of lower prices. They continue with their online business.

Their Web site is www.kitchenkaboodle.com.

Reports say that expenses have declined 30% and prices have been reduced 15% to 30% depending on the item. They sell the same merchandise they sold before reducing hours. Monday through Wednesday were always their lowest sales volume days.

Apparently they had already tried most of the traditional cost reducing, sales promoting steps other retailers are trying in this environment and it wasn’t enough.

I’ve said on numerous occasions that the biggest risk is often not taking a risk and I’m guessing that the people at Kitchen Kaboodle agree with me. Their action raises a number of interesting issues and assumptions that must have gone into their decision and are relevant no matter what industry you’re in.
First, they’ve decided that people want high quality but aren’t as willing to pay as much for it as they use to be. Second, I’d say they’ve decided that isn’t a short term condition. Third, they’ve decided that their customers’ purchasing decisions aren’t completely about price. If they thought it was, they would have just closed down.

It follows that the folks at Kitchen Kaboodle also believe they have a strong enough relationship with enough of their customers, and offer adequate value and quality of shopping experience, that enough of them will be willing to plan their shopping around the new schedule to make it work. Will those who show up Monday through Wednesday and find the store closed be willing to come back when it’s open? It would be interesting to know what percentage of their volume was done Monday through Wednesday and how much is done online.

I think this suggests an increasingly important role for a retailer’s web site. It’s now the source of product information and communication when the customer can’t call or go in. This may be a bit of a leap, but what Kitchen Kaboodle has done makes me think that the days when a specialty retailer could not have a quality web site (whether or not you sell through it) are over.

When I lived in Europe, and last summer wandering around Italy, I kept coming upon small specialty retailers of all kinds of products who seemed to manage to earn a living in spite of closing for a couple of hours in the afternoon, not opening early or on Sunday, I’m guessing not having web sites, and certainly not being the cheapest. How did they do it?

Well, certainly they seemed to have a relationship with their customers. But their product was also of a generally higher quality then you could find in the large markets (if you could find it at all), and they weren’t surrounded by half a dozen different stores carrying the same stuff.

One thing we don’t know about Kitchen Kaboodle is how many competitors are located close to them. We’re going through a period of retail retrenchment and, at the end of it, most retailers, including action sports, are going to have fewer competitors close by.

That will be good for the surviving individual retailer, but the process of getting there is painful.

Jeff Harbaugh is a consultant for the action sports industry and works with companies to identify and focus on critical business issues and opportunities fundamental to the bottom line. For more information, visit www.jeffharbaugh.com.