Academic journal article Entrepreneurship: Theory and Practice

Kacey Fine Furniture: Human Resource Management in the Face of Change

Academic journal article Entrepreneurship: Theory and Practice

Kacey Fine Furniture: Human Resource Management in the Face of Change

Article excerpt

Leslie Fishbein, president of Kacey Fine Furniture in Denver, Colorado, was not pleased with the recent city council approval of a new basketball stadium in the area bordering her flagship store. In 1992, when she had renewed the lease for the seven-story brick building in Denver's lower downtown (LoDo), she had been confident that this location put her company in a prime position to take advantage of the redevelopment planned for the neighborhood.

By 1995, though, events had changed her outlook. During a quarterly meeting with her employees, Leslie spoke candidly about the problems and challenges that lay before them:

We're at a major decision point for our company. We need to decide where we want to be and what we want to look like. We have six more years on the downtown store lease. Can we keep our energy high and make these six years pay off? Or will we faint and die on the vine? If we can keep the momentum up, we can look at these six years as planning years. But we have to share the same vision and work to achieve the same goals. We have a shared responsibility here. One hundred sixty families depend on you. If we work together, we can accomplish anything. But we can only succeed if we all play the game.

Conditions had not improved by the spring of 1996, and Kacey Fine Furniture faced six more years on an inflexible lease. Leslie was unsure how to keep her employees motivated, knowing that sales levels (and therefore their sales commissions and bonuses) would be increasingly difficult to maintain. Her plans for the company's growth were being threatened as she was diverted to a plan for its survival. Leslie lamented:

Our downtown store is our biggest concern right now. We are the front yard of the largest entertainment complex in a five-state area. Selling furniture is harder than it used to be, especially because downtown is no longer the furniture district that it used to be. When sales decline, employees become non-motivated and are reluctant to initiate changes or take on new responsibilities. We need to keep the energy level high and make sure that all our employees share the same vision so that we're all contributing to the same goals.

THE DENVER FURNITURE MARKET

There were over 250 retail furniture stores in the greater Denver metropolitan area in 1995 serving a population of about two million people. Also in competition with Kacey were the more than 50 establishments that sold used furniture, as well as the many stores that competed in specialty or accessory goods, such as electronics, carpet & floor coverings, artwork and knickknacks. The ten largest furniture retailers in the Denver metropolitan area are listed in Exhibit 1.

Denver, described by Tom Edmonds of Furniture/Today as a "boom-or-bust town" (Edmonds, 1995a) was the fastest-growing furniture market in the U.S. in 1993, and new housing starts promised continued increases over the next several years. In 1993, the six-county Denver metropolitan area furniture sales hit $514 million, with the top four independent furniture retailers commanding 74% or about $380 million (Edmonds, 1995a). In 1994, Denver area furniture sales reached $639 million, a 27.3% increase over 1993 (Conklin, 1995b). Pre-tax profit margins for full-service retailers typically hovered below 4.5%, as companies increasingly competed on price. Edmonds remarked, "The action here is fast and furious to the point that abandoned service stations are finding second lives as sleep shops and futon stores" (Edmonds, 1995a). Contributing to Denver's growth was a population boom fueled by the construction of a new airport and a new baseball stadium. However, most of the population growth was in the outlying suburban areas, as far as 20 miles away from downtown through increasingly heavy traffic. While economists predicted a slowdown, Rick Pederson, of real estate development firm Frederick Ross, had expected Denver's furniture market to remain strong. …

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