Magazine article Marketing

Texas Chain Store Massacre

Magazine article Marketing

Texas Chain Store Massacre

Article excerpt

If Philip Morris's slashing of its prices went down in history as Marlboro Friday, then Texas Homecare's culling of its suppliers deserves its own sobriquet.

Last week's news that Texas had embarked on a bloody exercise to halve the number of its suppliers will have sent shivers down the spines of brand owners everywhere.

The pressures on the DIY market that led to the Texas decision are prevalent throughout the retail sector. The search for greater operational efficiency is a need expressed across the board from BhS, through the House of Fraser to Woolworths, all of which have made moves to reduce their supply chain.

According to Mintel, the DIY market has seen relatively buoyant sales through the recession, but has still not been able to stem the closure of 20% of outlets between 1986 and 1993. There are now around 6700 stores left.

As the number two player in the market, Texas has escaped the disasters which befell Do It All, but has hardly got away unscathed.

New store openings have all but dried up and, last year, trading profits collapsed from [pounds]43.8m to [pounds]7.8m. According to Verdict Research, Texas had, in common with many retailers, allowed slack disciplines to develop during the rapid growth of the 80s.

The result was a new management team brought in from outside the DIY sector to overhaul the 238-strong chain. Chief executive John Coleman joined the group from Dorothy Perkins just over a year ago and proceeded to replace all but two of the company's board members.

Finance director David Adams and operations director Stephen Hibbert followed Coleman from The Burton Group. A buying director was brought in from Sainsbury and marketing director Peggy Cornwell joined in June from US food-to-batteries manufacturer Ralston Purina.

Since their arrival, product lines have already been reduced from 40,000 to 30,000 and supplier numbers have been reduced to around 225.

Real evidence of the new hard-nosed approach reached suppliers around two months ago, when a hefty binder thudded onto their desks outlining Texas's strategy for the future.

The document invites suppliers to fight for the right to continue supplying the chain. The winners stand to substantially increase business through Texas. The losers had better hope they have good relationships with Do It All, Fads and Wickes.

The document details which lines will be stocked in the new concept Texas, the prototype of which was unveiled in Scunthorpe last month. Items are set out in product categories and listed by the price which Texas expects to sell them at.

The retailer talks of the mass pitch as "a rigorous, criteria-based review".

The criteria on which suppliers will be judged include "business stability", potential for Texas own-label development (around 60% of lines in Texas are own-label) and "cost-reduction initiatives".

A buyer at Texas comments: "As well as margins, we are looking at whether manufacturers can provide more than one product range. If, for example, two suppliers of garden furniture are battling to be listed, and one could also offer a lawnmower, then that supplier would win."

With the squeeze on margins and the demands on breadth of product range, smaller manufacturers will either have to bankrupt themselves to compete or drop out of the race altogether. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.