Corporate Store Strategies

OVERVIEW

Magazines such as Fortune, Business Week, and Working Mother annually list the best companies to work for. The companies that crack these elite lists typically take great pains to retain their employees rather than foot the high cost of turnover in the tightest labor market in 30 years. One perk that more companies are making available is the corporate store, which saves employees time and money by selling a variety of items at competitive prices. Time, of course, is a precious commodity in the workplace, as evidenced by a Families and Work Institute survey showing the average workweek has increased from 43.6 hours in 1977 to 47.1 hours in 1997.

Corporate stores carry such items as logoed wearables and novelties as well as convenience items - greeting cards, snacks, newspapers and magazines, books, and the like. Some also offer services such as dry cleaning, film processing, and video rentals, allowing employees to run basic errands during lunch or before or after work.

In this era of booming e-commerce, many corporate stores are virtual operations. The virtual store is an option for companies that lack the space for a physical store. Its key advantage is that employees at all company locations, as well as shareholders, distributors, and the public, have access to the merchandise. Some companies, such as Goodyear, have an Internet store for employees and the general public as well as an Intranet site for employees only.

Companies wishing to start a store don't have to go it alone. American Identity, for one, an integrated marketing services firm in Kansas City, MO, will help companies develop stores over the Internet or in a physical space. American Identity, which operates corporate logoed merchandise programs, will produce and stock merchandise, process orders, and in the case of physical stores, coordinate staffing. Joe Brooks, American Identity's vice president of corporate marketing, says the company receives about 150 requests annually to develop and operate complete corporate logoed merchandise programs; increasingly, these programs have an e-commerce component.

Whether a company goes the virtual or physical route, or a combination of the two, a corporate store is both a convenience for employees (and the public, if the public will have access) and an effective employee motivator. Gordon Bethune, former CEO of Continental Airlines, which has a store at its Houston headquarters, says corporate stores are useful to upper management as well. He notes that executives can gauge employee morale and loyalty through the volume of logoed items purchased. Contented employees, it seems, are only too happy to wear and use items bearing their company's logo.

DEFINITION

According to Employee Services Management Association of Oakbrook, IL, employee stores are sites available to employees and possibly others. Some "stores" are merely glass cases that display logoed apparel and other items; others are retail shops of traditional proportions where workers can stroll the aisles in search of necessities and gifts; still others are virtual sites.

STATISTICS

The Employee Services Management Association commissioned Arlington Heights, IL-based Research USA to survey 600 ESM members to learn more about them and their buying needs. The survey, released in September 1999, found that more than 25 percent of respondents operate a physical store, with an average of $71,000 a year spent on merchandise. Additionally, about 20 percent of companies surveyed have a Web site for employee services programs, which might include an e-store.

Favorite products sold at corporate stores are:

• Logoed clothes items, such as T-shirts, jackets, and caps
• Other logoed items, such as coffee mugs
• Discount tickets to area attractions and sporting events
• Snacks/candy/drinks
• Greeting cards
• Movie tickets
• Golf items
• Bags/briefcases
• Watches
• Toys
• Pens
• Vitamins
• Photo supplies
• Stamps
• Perfume/cologne
• Personal care products

CRITICAL ISSUES

The key to a successful corporate store is the support of senior management. If senior management is not fully behind the concept, the store will probably lack quality and not succeed.

Once the go-ahead is given, the decision must be made: Will the store be a physical site or a virtual site? The nature of each is different: A physical corporate store will carry convenience items as well as items bearing the company logo. A virtual store will carry only the latter.

Will the store operate on a for-profit or break-even basis? If the store is meant to be an employee benefit, break-even is the logical goal. If the goal is to turn a profit, the markup on merchandise must be set accordingly. Also, if there are profits, where will they be funneled? Sometimes, the profits help subsidize employee activities or pay for amenities that will enhance the work environment.

If a physical store, who will run it? In many cases, the store is part of the employee services department and is run by an employee services manager. But some stores are part of the human resources department; others are part of the facilities department. The person in charge of the store ideally should have a college degree or experience in retail management. Because these stores generally are skeletally staffed, the person should be able to serve multiple roles - buyer, accountant, marketer, decorator and clerk, among others. Additional staffing can come from the company's pool or retirees; for instance, at Honeywell Business and Commuter Aviation Systems' store in Glendale, AZ, 10 Honeywell retirees volunteer an average of four hours a week.

If a physical store, where will it be located? American Identity recommends a high-traffic, centrally located spot, such as near the cafeteria, fitness center, or human resources department.

If a physical store, who will be allowed to shop in it? Employees, of course. But visitors to the building? Employees' families?

What should the store carry? Items bearing the company logo, for one; they should be sold to employees at cost or a slight markup. As for convenience items, the possibilities are many, and the company should survey employees about what they want to see in the store. Rule of thumb: The farther the company from the nearest strip mall or business district, the greater the inventory the corporate store should carry. One challenge faced by these stores is appealing to a customer base that does not change. Some companies deal with this by having an area reserved for outside vendors; this area is rented out one or two weeks at a time so that the merchandise is constantly changing.

Will the corporate store offer services such as dry cleaning, video rental, or photo processing? Again, these services make sense if the company headquarters is far from retail districts. Employees should be surveyed about their preference. Of course, reliable vendors will have to be engaged.

By all means, a company considering a physical or virtual store should invest time in visiting other corporate stores and Web sites.

CASE STUDIES

At Nike's company store in Beaverton, OR, shoes and clothes are sold at discounts of up to 60 percent. Although the store is closed to the public, Nike, the smart marketer that it is, allows in "friends of the company." These include athletes and their agents. Retired National Basketball Association star Charles Barkley reportedly spent $10,000 during one visit, spurring Nike to set a $750 spending limit.

At WCVB-TV in Boston, the employee store consists of a glass case containing logoed merchandise. Popular items include WCVB caps, jackets, tote bags, shirts, and fanny packs. Employees make their purchases through the human resources department. The store operates as a service to employees and is not open to the public. Occasionally, news directors buy items such as hats and sweatshirts to distribute at events they cover. Linda Walsh, human services administrator, who runs the store, says the WCVB store barely makes a profit. The store was created by a former WCVB human resources director who imported the idea from her days at The Gillette Co., where employees can purchase Gillette personal care products at an in-house store.

Employee stores have long been popular in government circles. For example, CIA employees in suburban Washington shop for T-shirts, goblets, golf balls, jackets, sweatshirts, caps, and other items featuring the CIA logo at the on-site store. The FBI Recreation Association sells logo-emblazoned T-shirts, hats, jogging outfits, jackets, mugs, pens, and more. In the basement of the White House, a shop run by the Secret Service sells such items as Christmas ornaments with a rendering of the White House, golf tees with the words "The White House" etched on them, and teddy bears sporting White House T-shirts. The shop donates its profits to charity and to Secret Service officers needing assistance. At the John F. Kennedy Space Center in Florida, the National Aeronautics and Space Administration has four stores offering discounted shopping to employees. Among the merchandise: space-related memorabilia, greeting cards, giftware, clothing, sundries, magazines, and newspapers. Proceeds benefit Kennedy Space Center programs and events.

Ten years ago, Hewlett-Packard's corporate store in Palo Alto, CA, was limited to a small cubicle where discount tickets were sold to employees. Today, the computer maker has a sophisticated Web site -- http://www.hpstore.com -- that racks up more than $1 million in annual sales. The site features merchandise bearing the HP logo. The store went online in late 1996, and sales have increased "in the hundreds of percent," says Joe Giarrusso, Hewlett-Packard's employee programs manager. The majority of customers are HP employees who are purchasing logoed merchandise for their own use, says Giarrusso. Other customers are business units purchasing merchandise for prospective clients or to be used as awards, and the HP sales force. "Our store helps support the whole branding of the company," Giarrusso says. "For our sales force or resellers, it reinforces and puts the HP name in front of customers. And for our employees, it helps build a sense of belonging and pride." St. Louis-based Maritz Performance Improvement Company manages the Web site for Hewlett-Packard.

Xerox once had four corporate stores in the Rochester, NY, area, but closed them in a cost-cutting move. Today, as an overall plan to reach employees, Xerox has created a Web site offering employees worldwide an assortment of Olympic logoed merchandise. Xerox is a sponsor of the Olympics. This site was created with the help of American Identity.

ASSOCIATIONS

Employee Services Management Association, formerly the National Employee Services and Recreation Association, is a one-stop resource for how-to information, suppliers, and services for employee programs and an authority on the latest programs to recruit and retain top employees. It has helped many companies with the process of opening a store. Call 630-559-0020; fax 630-559-0025; go to http://www.esmassn.org.

The Incentive Federation was formed to protect the rights of organizations to motivate customers and employees through the intelligent and ethical use of incentive programs. Comprised of the leading associations, trade shows, and some of the top suppliers in the incentive field, the Federation monitors Federal regulations that could affect the proper use of incentive programs and lobbies against proposals that could hinder the ability of businesses to properly use incentive programs. As part of its industry services, the Federation also conducts the only regular research on use of incentives by U.S. organizations, and manages the Incentive Promotion Campaign, the industry-wide effort to promote professional use of incentives and that underwrote this Web site. For information, call 239-775-7527, e-mail mailto:incentivefed@aol.com; go to http://www.incentivecentral.org.

International Society for Performance Improvement. Call 301-587-8570; fax 301-587-3573; go to http://www.ispi.org.

Promotional Products Association International serves suppliers and distributors of promotional products, a mainstay in company stores. Call 972-252-0404; go to http://www.ppa.org/.

CONFERENCES AND TRADE SHOWS

Employee Services Management Association's Annual Conference and Exhibit, titled Employee Services: Practical Solutions to Work/Life Issues, will be held April 12-16, 2000, at the Adam's Mark Hotel in Denver, CO. Conference topics include: "Managing your employee store." The 2001 conference and exhibit is April 6-12 at the Fairmont Hotel in New Orleans. Call 630-559-0020; fax 630-559-0025; go to http://www.esmassn.org/.

PUBLICATIONS

Employee Services Management. Published 10 times annually, this association magazine focuses on popular employee programs. Free to Employee Services Management Association members; $48/year to non-members. Call 630-559-0020; fax 630-559-0025; go to http://www.esmassn.org.

Wearables Business is a monthly magazine focusing on the use of apparel in promotional product, incentive, and other corporate applications. Promotional apparel is one of the most popular items in company stores. $25/year. Call 303-741-2901; go to http://www.wearablesbusiness.com.  

Promotional Products Business. Published monthly by the Promotional Products Association International. Free to members; $56/year to non-members. Call 972-258-3104; go to http://www.ppa.org/.

BOOKS

1001 Ways to Energize Employees, by Bob Nelson, vice president of product development at Blanchard Training and Development, San Diego, CA. Reveals what companies are doing to get the very best out of their employees. 213 pp. Workman Publishing Company, 1997. $10.95; through Amazon.com, $8.76.

Contented Cows Give Better Milk: The Plain Truth About Employee Relations and Your Bottom Line, by Bill Catlette and Richard Hadden, makes the case that companies that treat their employees right make more money. 208 pp. Williford Communications, 1998. $30 through Amazon.com.

Motivating Employees, by Anne Bruce and James S. Pepitone, reveals how Southwest Airlines, Walt Disney Co., Ben & Jerry's, and other companies have turned themselves into "motivating organizations" that inspire employees to do excellent work. 160 pp. McGraw-Hill, 1998. $14.95.

Care Packages for the Workplace: Dozens of Little Things You Can Do To Regenerate Spirit at Work, by Barbara A. Glanz, is full of motivational ideas that will enliven communication, increase employee appreciation, and add fun to the workplace. 222 pp. McGraw-Hill, 1996. $14.95; through Amazon.com $11.96.

ON THE WEB

American Identity's Web site at http://www.americanidentity.com contains information about company stores.

At http://www.corporatestore.net you will findk links to several sample virtual corporate stores.

RELATED SMN ARTICLES

For more information about what keeps employees satisfied, see #9199, The People Principle, Maximizing Success By Investing in People.