Article > Opinion

Personell Trumps Size

By Jon S. Owens

The biggest hurdle for store chains of any size remains the issue of retaining the best personnel.

In our annual review of the industry’s top 20 store owners, a recurring theme is reinforced: the big get bigger. This past year represented the largest growth (up 6.2 percent) in total stores owned since we began charting the growth of the top 20 in 2003. Looking ahead, we don’t see this trend subsiding anytime soon. The fact is, store ownership and store operations are among the most critical aspects and valuable assets in parts distribution. We’ve maintained that belief here at Counterman for nearly a quarter century.

What does all of this mean as we contemplate the future of parts distribution? First, I can suggest what it does not mean. It does not mean that in order to succeed you must own a bunch of stores. I firmly believe that the number of locations is not necessarily proportional to the level of success. The United States landscape is dotted with many, many successful one and two store operators.
There are efficiencies of size, however. Small-store owners across the country, frustrated by new competitors in their markets, often ask me, “How long can my competitors keep giving business away?” Depending on how large the competitors are, the answer may be “a very long time.”
That partially explains why the big want to get bigger. But while the big store owners have the advantages of buying power, marketing power, efficient warehouse support, sophisticated IT systems, etc., smaller operators still remain a force. In fact, about half of the stores in the country are part of a chain of 10 or fewer locations.

I believe there are two primary reasons why small operators will continue to succeed for many years to come. One reason — the more tangible of the two — is the Internet. The Internet enables small operators to conduct business on systems that are accessible, affordable, and every bit as effective as those that are run by larger corporations. Small operators who quickly adapt to this technology will find themselves empowered to perform at very high levels —  and able to compete in the fiercest of markets.

The other, more intangible reason, is personnel. Huge companies don’t necessarily have an advantage in retaining the best people. Some of the largest retailers like Wal-Mart and Home Depot have shown this to be true. Sure, some may argue that larger corporations can offer higher wages, better benefits, more training and other incentives. That may be true, but those things don’t necessarily correlate to employee satisfaction or retention. For years, human resources experts have maintained that recognition, positive working conditions and fair treatment are what attract and keep the most effective employees. Treat your people well, and you’ll be rewarded with the kind of loyalty that trumps business size. People buy  from people, not the size of a company’s store lineup.

That’s why successful store operations on a local, market-by-market basis are completely tied to the effectiveness and abilities of the store personnel, regardless of whether that store is part of a large, nationwide chain or just a local, single-operation merchant.

So, while the big will continue to get bigger, their biggest hurdle to overcome is the issue of finding and retaining the most effective store employees they can. This single challenge will dictate which among the biggest store operators will succeed. At the same time, it will also dictate who among the smallest will survive.

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