Beware of Letting Competitors Distract You From Customers!

How many of you remember a discount retailer called Bradlees? Operating stores from Maine to Virginia, Bradlees was the “Target of the northeast” in its day. With attractive stores and a solid reputation for its apparel, Bradlees leadership was convinced it had a winning formula.

In the mid 1980’s, I worked in the public affairs department for The Stop & Shop Companies (Bradlees parent company at the time). Among other things, I was charged with helping the operating companies with store openings and new market entries, and writing all the speeches for the corporate CEO and the various company presidents. Interestingly enough, there was probably no one else at corporate who spent more time in stores talking to customers and front-line employees, while at the same time thinking and writing about the business on a macro scale. It’s an experience that forever shaped how I approach my work. But I digress…back to the story.

I spent a great deal of time with Bradlees’ senior leadership team in those days, especially its president. As I remember it, Bradlees financial performance, regardless of how impressive, was always being compared to Wal-Mart and it really steamed the Bradlees leadership team. Gross margins was an especially sore subject, as Wall Street analysts kept asking why Bradlees couldn’t achieve Wal-Mart’s impressive results.  At that time, Wal-Mart still only operated in the more rural parts of the country.  Somehow Bradlees’ leaders  felt pressure to achieve Wal-Mart like margins, despite operating in a part of the country where the mathematics from an operating cost perspective were quite different from the rural South and Midwest.

Tired of the monthly badgering, and supremely confident about Bradlees’ standing in the market, they simply raised prices to improve margins.   The problem was, their customers didn’t miss the price hikes and responded by flocking to regional competitors Caldor, Zayre, and Ames.  Feeling betrayed by Bradlees, thousands of its customers simply left and never came back.

While Bradlees hung on for a number of years, it never fully recovered from the wound, going bankrupt in 2000 and closing all of its stores the following year. (Ironically, when Wal-Mart eventually opened stores in this part of the country, the company took over many of Bradlees former locations).

The poisonous combination of arrogance and lack of customer focus sent the company into a death spiral. Imagine going out of business because you tried to compete with another retailer that didn’t have a store within 500-1000 miles of you? Hard to believe, but that’s what happened.

The next time you think about taking your focus off your customers, even for a second, remember Bradlees.

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