Buxton is the industry leader in customer analysis and retail site selection technology.

Lewis Kornfeld, president of RadioShack Corporation - the world's largest electronics retail chain in terms of number of stores - during its major expansion phase in the 1970s and 1980s, was happy to disclose the ways and means behind the firm's rise to greatness and his contribution to it, when questioned by Buxton.
He said, "Most of what we achieved is certainly not unique to us; it can be applied to most businesses, organizations and service providers, as well as retailers."
Kornfeld joined RadioShack as advertising manager in 1948 when it had only one store in Boston, later becoming VP advertising and merchandising, an unusual "two-hat" position that he says "made all the difference in my rise through the ranks because I became a Buyer as well as a Seller." When he retired in 1981, RadioShack had grown to over 5,000 company-owned and franchised stores, and its profitability was the stuff of legend. Having become a Tandy Corporation (RadioShack's parent since 1963) board member in 1975, Kornfeld finally resigned his directorship in 2003, closing a career that spanned 54 years!

"START WITH MY THREE PS"
What Kornfeld calls his three Ps seems deceptively simple when reduced to words on a page... but are they? His first P is Plan, i.e., The Business Plan, the primary rationale for being successful in any enterprise.
His second P is Product, which is "whatever you plan to sell, be it radios, insurance, education, faith, restaurant food, or the Brooklyn Bridge," although he admits that ranking Plan and Product is like trying to decide whether the chicken or the egg came first. Kornfeld's third P is People, and he's convinced that most of the failed startups and acquisitions he's seen were basically due to having the wrong people assigned to run them, as well as flawed business plans.

"WHY PROFITS AREN'T MY FOURTH P"
He explains thusly: "If you left Profits out of your Plan - my first P - you're already on shaky ground." Kornfeld recalled that when Charles Tandy (d/b/a/ Tandy Corp.) acquired RadioShack in 1963, his intention was to make it No. 1 in profits, not necessarily in size.
The question before him was: How to accomplish this in an industry notorious for skimpy markups? He asked Kornfeld how he planned to achieve 50% gross margins in electronic parts and equipment when less than 30% was typical of perceived competition. The Tandy/Kornfeld response involved five programs: (1) Expansion of the Shack's already profitable private label line, and self-manufacturing; (2) Reduction of the number of SKUs to a more manageable level, and weeding out low gross margin SKUs; (3) Pursuit and powerful promotion of closeouts from suppliers; (4) Increasing the ad budget and sharpening brand identity; and (5) Most of the 'departments' were turned into Profit Centers, with the result that managers "were forced to think profits and knew their income depended upon their own bottom lines." Even RadioShack's ad department, which Kornfeld in 1971-2 changed into an accredited in-house ad agency, became a profit center via store contributions.

"GOOD MERCHANDISING VERSUS 'ME, TOO'"
"Being a 'me, too' business is an almost certain recipe for boredom, resignation and potential failure," Kornfeld insists. What to do?
"You have to innovate," he says, "but by innovation I don't necessarily mean on a grand scale comparable to RadioShack's startling production of one of the very first PCs in the world [TRS-80 Model I, in 1977], but rather by the creation of small differences between your enterprise versus others marketing similar merchandise." When you think 'me, only' instead of 'me, too,' he says, it puts more fun and profits into what you're doing and contributes to longevity."A small difference can be as miniscule as putting shell buttons on your shirts instead of plastic, or giving your customers a better shopping bag. That's what 'Brand' is all about!"

"IS YOUR ADVERTISING A VALENTINE...OR A YELLOWPAGE?"
It took Kornfeld just two seconds and a big smile to explain the essence of good advertising: Either it's a valentine you're sending to your actual or potential sweetheart, or it's only a little more useful than your listing in the yellow pages.
At RadioShack, he says, he tried to mail or otherwise publish 10 million valentines a month, "every month, not just during February or your so-called Golden Quarter." He likens each of his promotional efforts to an invitation you'd send to friends (mailing list), or prospects (potential or former customers). "A sincere invitation is akin to journalism's six required inclusions: Who, What, When, Where, Why, and Under What Condition (price, terms, etc.). Plus, when useful to the reader and space permits, add such details as benefits, size, color and weight." Under his leadership, RadioShack spent 5% to 6% of gross sales on advertising, "none of which was co-op." Outlays for TV and/or radio were never more than 1% of his ad budget. Advertising - i.e., sales promotion - is like tonic water, Kornfeld says; without it a business dies on the vine. "Merely saying, 'Hey, come in, I'm still here,' is simply whistling in the dark. Advertising that doesn't A.F.T.O. - Ask For The Order - wouldn't have helped RadioShack expand from the nine-store chain Tandy bought in 1963 to its present size and ubiquity," Kornfeld avers, pounding his desk for emphasis.

"THE BENEFITS OF SIZE, AND HOW TO GET THERE"
As noted, RadioShack's first goal was profitability, not size. But once the Plan was seen to be working and could probably be duplicated again and again, the company began opening new stores, always expecting and demanding a profit after the first year, and after running Grand Opening ads which rapidly cost less to each store as their city, town or SMSA was populated with more RadioShacks. The Product becomes cheaper because of bulk buying, and everyone is on the same page, so to speak, which at least at that time didn't require changes in product lineup due to territorial and demographic differences. Therefore the single ad or flyer page layout, terms and cost became cheaper to produce and disseminate, and easier to measure. "More is more," Kornfeld claims, "not less, because the price of one ad in a one-store market is the same as for a ten-store market, reducing each store's cost from 100% to 10% of the whole." Between 1970-1981, RadioShack thought nothing of opening 300-400 new Shacks per annum; to Kornfeld "it was almost a no-brainer." Of course you can't get there without good People which, in RadioShack's master plan, included trained salespeople, accountants, district and regional managers, carefully selected warehouses and talented managers, buyers, engineers, repair personnel, lawyers and so on. Kornfeld in 1970 quickly centralized warehousing, accounting, merchandising and advertising, to avoid duplication of effort and firmly control a rapidly expanding system and supply chain. The three Ps were in charge! And what about their competition? Here's what Kornfeld had to say about them: "Almost all of the companies we looked upon as competitors in the '70s and '80s were out of business by the time I retired. Of my three Ps, I'd say People was the decisive factor in their demise, and here by 'people' I mean Top Management - the decision makers, the location and product pickers, the hirers; they either just plain got tired, or died, or turned the business over to a son-in-law or charismatic MBA type, or let the board pick their successor - often one of their own members. That's where the buck stops, and the company is made or flops, unless you have a better idea."

"THINK CUSTOMERS FIRST"
The deceptively obvious platitude, Kornfeld says, is in use today by current RadioShack management, but then he points out what he thinks may prove to be a risky move: terminating its collection of customer names and addresses and relevant data. Kornfield learned the value of information - Who, What, When, Where - in his early career as a reporter for Denver's Rocky Mountain News. Add to this list of information Recency, Frequency and Monetary to determine the value of the customer. An up-to-date and regularly culled mailing list ranked very high on the minds of Charles Tandy and Lewis Kornfeld in the matter of "thinking customers first." Ultimately, Kornfeld feels, "If you don't think customers first, there won't be any second," although he spreads a wider net than mere mailing list accumulation and promotion, including in his assortment the following: store signage, both exterior and interior; training of salespersons; housekeeping; stationery; packaging, including stuffers; return policies; freebies (he's very high on Fort Worth's Central Market 'taste-it' promotions), and as he says, "The list goes on."

Site Designed by Venturemark, Inc.