Word: sargent
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Dates: during 2000-2009
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...RONALD SARGENT: I think there is still lots of opportunity in this business. The top three--Office Depot, OfficeMax and us--only have about 20% of the U.S. market. Still, during the dotcom era, investors thought we were growing too fast, and I think Wall Street wanted to figure out who was going to win in this industry. The question for us was, How does a fast-growth company grow up from adolescence to become a little more of a mature company...
...SARGENT: We started with customers and said, "What's important to you?" They told us we weren't terribly differentiated. OfficeMax, Office Depot, Staples--all the same thing, same products, same prices, same service. We heard loud and clear that we had drifted more toward a casual consumer approach rather than our core, which was small business. We heard that our service was just O.K. and that maybe price wasn't as important as it used...
...SARGENT: We found that 67% of our customers accounted for 90% of profits. Rather than continue to pander to everybody, we decided to focus on the 67% primarily small-business or home-office power users. Small-business customers don't want to have to wade through the pens with feathers and the Britney Spears backpacks...
...SARGENT: Anytime you tell your merchandising team, "We're going to get rid of 800 items," they'll say, "Our sales are going to go down." My argument was, If you can be in stock in the good stuff that people really need and look for, maybe your sales will go up. The end result: we just had our 12th quarter in a row of more than 20% earnings growth...
...SARGENT: It's amazing. You want to change people's behavior, change the way you pay them. So we decided to pay hourly employees a bonus every month. It is self-funding, so that if a store doesn't perform better, the bonus goes to zero. Now we pay out bonuses to an average of 70% of the hourly workers a month. People making eight bucks an hour can get $2 to $3 extra on every hour they work...