Terry
2008-07-02 05:41:10 UTC
(TO COMPARE PRICING, CHECK OUT WWW.OEMDEPOT.COM AND WWW.OEMEXPRESS.COM)
OEM DEPOT aka OEM EXPRESS COLLAPSING, A CAUTIONARY CASE HISTORY ON HOW
TO SUCCESSFULLY SLOWLY RUN A COMPANY INTO THE GROUND
Last week on June 25th, 2008, OEM Depot (better known as OEM Express
in Ontario) closed it's last store in Calgary. It was done quietly,
silently and without a whimper. With Memory Express in the NE moved
to their new location on 34th St NE, people who would go play both
stores against one another no longer appeared at OEM's doors. As
such, only the few remaining loyal clientele would have discovered the
sudden loss of the store, and be greeted with a simple paper sign
announcing the white flag of surrender to Memory Express and a
hollowed out storefront. This is the latest store to fall in a once
growing seven strong, to a muted 3 ½ (as I fully expect Montreal to be
the next to fall soon).
Why am I writing about this? I myself only discovered this closure a
week after the fact, though it didn't surprised me in the slightest.
I ran that store, and the original store on Macleod Trail SW from
summer 2003 until I was forced out in early 2007. In retrospect, it
was probably more like escaped, but I'll get into that story a little
later. But again why? Probably because upon seeing the carcass, it
brought back a fair amount of memories, some admittedly pleasant, but
eventually leading to simply pity and regret for a company and owner
that lost its way (or maybe never found one to begin with), and wasted
incredible potential and opportunity in so many ways.
COMING INTO AGE
OEM Express, still primarily based in Ottawa, but registered under
various numbered companies or under PC Parts and Periphreals in
Markham, Ontario, had achieved in Ottawa what Memory Express achieved
in Calgary, or Bcom in Edmonton. In fact, every major city in Canada,
had a single player that had struck it lucky in the beginning of the
tech boom in the mid-90s, and managed to forge a hammer lock on what I
call, the “hearts and minds” stage of their respective cities. At
that level, the company is virtually a household name on the same
level as a Future Shop, and required minimal advertising and
occasional care for their customers. Memory Express is that in
Calgary. OEM Express is that for Ottawa, Micro-Bytes in Montreal,
ATIC in Vancouver and Canada Computers in Toronto. Everyone else, to
survive and to remind that there is an alternative to those stores,
would have to keep their name out there in any way, mean or form
possible to simply remain competitive let alone successful. Look at
Computer Rack in Calgary, a distant second to Memory Express, and
constantly advertising in local papers. Toronto's papers are filled
with the ads of all the up and comers struggling in the shadow of
Canada Computers.
OEM's mercurial owner, known as “Chi”, had seen his baby grow in
Ottawa without a single page of ads ever. Despite an unfinished
building and poor visibilty, he had admirably managed to overcome
those problems with better pricing than the next guy, and simple word
of mouth. Within a year or two, OEM Express became the predominant
store of Ottawa, so much so that from my native Montreal, even I heard
of the store and would occasionally shop there during my then monthly
visits to the capital to see friends. Literally at the same time, 2
brothers in Calgary were selling sticks of memory from a safe in a
dingy office, and thought about opening an actual store. In Montreal,
one store deep in the west of Montreal, miles away from the downtown
core, decided to take a chance and open a second store.
Ottawa was experiencing the beginning of the tech boom, as a center of
high-end companies such as Nortel, JDS Fitel (later JDS Uniphase) and
Corel growing into multinational corps large enough to rival AT&T,
Cisco and even Microsoft. Add the guaranteed income from the
government employees that filled the city's coffers, and OEM was
probably in the one place in Canada that could make money blindly
under almost any circumstance. OEM stayed in it's home, gathered it's
resources, and entertained thoughts of expansion into greener
pastures. Memory Express had a similar boom as oil and gas had begun
to recover from the lows of the 80s and early 90s, and Alberta's
friendly business environment started to attract a multitude of head
offices from across Canada.
Over the years, each store in each city consolidated their hold on
their respective markets, and opened new stores, or gathered resources
for whatever reason they chose. Once so held, a competitor in “their”
market would be at a significant disadvantage, and would have to
overcome all sorts of problems, most of all the literal total lack of
recognition of their brandname in the new market.
In 2003, that's what OEM Express did. They came into Edmonton, and
then Calgary, and strove to conquer their new markets from Bcom and
Memory Express. And for a time, OEM actually did make a serious dent
into their new markets. With advertising, good pricing and a bold
attitude, it was starting to gather a loyal clientele. The new staff,
trained in Ottawa, but sent forth to do battle in for the hearts and
dollars of Albertans, strove to give the fledging venture a fighting
chance. And that's where I came in, as well as certain others.
Each person strongly believed in the vision of OEM conquering Canada,
and relocated across country in the belief that their leader, Chi, was
sending them on a holy mission. And admittedly, all were blinded by
his promises of future riches and rewards, all in exchange for loyalty
and fanatical work week hours. Over time, each of us would find
ourselves betrayed and see through the lies and empty promises, and
either leave on our own accord or be forced out.
THE FIRST PROBLEM – THE GREATEST STRENGTHS ARE THE GREATEST WEAKNESSES
Chi had understood one thing quite well from his years in computers
and electronics, price is king. Give a good price, and the people
will come. I myself often shop based on price if it's an
inconsequential item, or compare pricing between stores for something
more important when quality is preferred. With an incredible blowout
starter special, Edmonton opened with a bang and continued running.
But that initial excitement soon subsided, and leveled off after the
big bang into silence.
Calgary then opened, with less fanfare and worse pricing, and fizzled
quickly in no time. Days would pass with little or no customers, and
Memory Express and Bcom found that they had little or no worries and
the new challenger had emerged as virtually no threat at all. Neither
company was advertising, OEM Express / Depot was not on the lips of
people anywhere, or even an afterthought for that matter.
PRICING = PROFITS?
Seeing that something was needed, OEM Express in the West had to
disguish itself from OEM Express East in order to be at least mildly
competitive. What was decided was something memorable for the Calgary
and Edmonton computer parts market, a price war.
OEM Express became OEM Depot with it's own website and image, and
offered pricing slightly above cost. Most computer stores were used
to margins in the 20-30% profit range. OEM decided to shake things up
by offering pricing in the 10% profit range, and squeezed key
suppliers to sell their goods to OEM at barely above cost.
This shook up the market, and even without advertising, this did bring
in people into the door, though not in the hordes that was hoped for.
The problem was plainly apparent to the people manning the stores.
Good pricing was fine and well, but how would people benefit if they
didn't know you even existed. From the start, this strategy was
fatally flawed. At such low margins, quantity was now needed to make
up the costs. Edmonton had the advantage of cheap real estate and the
actual ownership of the land that the store inhabited. This made it's
fixed costs relatively low with little possible shocks that might ruin
that profit-loss spreadsheet. Calgary's red hot real estate market
was much different, with almost no buildings in ready access available
for sale, and had to be rented. This made Calgary's costs much
higher, despite taking up only a fifth of the total space of Edmonton.
As such, Edmonton still managed to maintain profitability despite the
low customer turnouts, but this would be problematic for Calgary's
survival, especially when in competition with a much stronger opponent
as Memory Express.
KNOWLEDGE IS POWER
As explained before, pricing may be king, but brand name and knowledge
is queen. How can a customer take advantage of cheap pricing if the
brand is virtually unknown. In fact, in the early days, OEM Express
was more likely than not to be assumed to be a car parts store as the
acronym “OEM” was better known for such merchandise.
When I came into Calgary, I was asked to devise a $30,000 ad campaign
to get the name out. Incredibly bored by hours of empty tedium (I
would see one, maybe two customers a day those early weeks), I plunged
into this task eagerly with images of dollar signs and customers
dancing in my head. I spoke to radio stations, bus companies and
newspapers. Fliers would be found in every parked car in every
parking lot. Tournaments would be sponsored with the OEM Express
banner flying high above the crowd.
Imagine my surprise when the boss came into town, looking forward to
spend his Ottawa riches for a new Honda Pilot, and cut the ad budget
from $30k to $3k. It was then I was also told about the low OEM Depot
pricing strategy would be the path, and I immediately saw all those
dreams screetch to a halt.
Like every leader, once a decision is made, the followers should
follow. But every follower had agreed then unanimously that is was
incomplete. The pricing was needed, but with no one spreading the
word, it was doomed to failure from the start. And as such, the error
was compounded as every attempt to at least try to flesh out the
strategy by combining it with advertising had fallen on deaf ears.
The leader, so absolutely sure in his strategy, refused to take any
further comment, which probably would be the same as Napoleon saying,
“Gee, Waterloo looks like a great place to fight.”
The funny thing is that on the occasional times that advertising was
allowed, and only after torturing the poor sales staff and the
Edmonton Sun or the Calgary Sun, sales did actually increase in
general. There were weeks that the ads did little, and some that the
ad results were phenomenol, but overall, the name was finally being
reached. And just when we were finally starting to get a name, the ad
money suddenly stopped as suddenly as it began, and OEM would fall
back quickly into obscurity. Is it any coincedence that the best
sales year for Calgary was also the year that a good deal of
advertising was spent?
LOYALTY, TREACHERY AND PARANOIA
Employees work best when they are treated with respect. Any Fortune
500 company can attest to the fact that an employee that felt like
they were important, vital and/or needed is a valuable productive
employee. OEM never seemed to learn that lesson, and even now
continues to lead the way in proving that a revolving employee door by
underpaying your staff, treating them with disrespect, subjugating
them to slave hours and finally subjecting them to an atmosphere of
paranoia and fear is no way to run a company.
Employees would be directly and indirectly insulted for their lack of
character for various reasons, oblivious to how petty and even crude
this would make the attacker seem. And despite claims of trust
between the boss and the staff, everyone was overtly observed at all
times by cameras, and even listened to despite privacy criminal laws
disallowing audio surveillance.
Employees would find themselves dreading to go to work, or be in
constant fear whenever the boss would be in town. Worse, he would
psychoanalyze every action, every movement by the employee, whether it
be optionally wishing private time instead of going out for dinner, or
a yawn or avoidance of the camera as an act of defiance or possible
treachery. The other needs of employees would be completely ignored,
except for the rare moment of clarity (as finding an apartment with a
kitchen for staff as opposed to forcing them to live in a hotel, and
literally spend all their money on far more expensive restaurants).
As such, the company could not expand, or barely manage to run their
existing stores. Very often, some stores would have one employee
only, with the bigger stores barely managing 2 to 3 staff. Any
further expansion would be impossible as as soon an employee was even
barely trained, someone would leave. So many would join and leave
within weeks that the main office would often run out of Record of
Employment (ROE) forms each month and had to request more.
Worse, some staff would also find that promises would be broken almost
as soon as they were made. One staff member sold his own computer
company to join OEM, only to find that all of the pre-existing
conditions agreed to were immediately thrown out. The company would
refuse to sign any formal contract for any employee, which made it
easier to make and break promises routinely. For employees that
seemed to be worth the effort, initial promises would be kept just
long enough to put the person into an untenable situation and unable
to leave without incuring huge losses. Still, there were those who
did just that. Some claimed to incur losses in the tens of thousands,
not to mention a uniform steady breakdown of their general health due
to the combined toll of restaurant meals, lack of exercise (computer
retail isn't exactly strenuous) and being stuck indoors all day with
no sunlight or fresh air seven days a week.
THE EVENTUAL BURNOUT AND HOW TO STOKE THAT BURNOUT FIRE HOTTER
Imagine having to do 70-80 hours a week, and be on call 24-7.
Statuatory holidays were ignored, and all Sundays would be is a
reduced work schedule. If anyone complained, it would be a black mark
on his or her record, and would eventually factor into his dismissal
or resignation. Now imagine this 51 weeks a year, as most staff would
only take a week off.
The company would claim only 63-70 hours tops per person, but the
added hours in special projects given to the staff member, not to
mention all of the extra duties that running a store would usually
entail such as general upkeep, supplies, deliveries, orders and more
would take. All of this would be unpaid, and expected from each staff
member. It would actually get far worse when the boss would come
around, as one long departed staffer put it, “A cold wind of dread
would descend on us.” On top of our duties, we would also have to put
up with worries of the boss seeing us close and personal, and make any
observations or comments that would be totally inappropriate. That
same saffer had endure a lecture stating that he had no strength of
character, and did not have any because his parents were divorced, and
then had that topped off with the comment that this was all told to
him to make him “a better man.”
When you add the company's need to economize even the smallest things,
such as how to unload trucks, the stress levels would become
unbearable to most. Imagine being the only staff member in the store,
and being told to empty an 18-wheeler truck full of computer cases
(over 1500+) in the middle of a -25C day, with no help, and not be
allowed to close the store. Worse, all the cases were loose instead
of on easy to unload pallets or even with a handtruck. The final
cherry on top was that this particular staffer was only 5' 4”, and the
piles would each almost 6' tall, so every time he tried to unload the
cases, some would literally fall on top of him, incurring some harm.
People burned out quickly, some sooner, some later. I lasted maybe 2
years before burnout set in, and then probably coasted for the
following year. Others burned out in months, and some would become
virtual zombies and avoid computers altogether for years after
leaving. And with the company dedicated to keeping labour costs as
low as possible, employees would see the ongoing strain of the hours,
the work and the stress, with no relief in sight.
Replacements would be subjected to an initially low salary of the
hourly minimum wage. There was no accounting in difference for the
cost of living for the staff, and while some might prosper a little,
most would suffer a lot. One particularly brightly skilled star,
requested a slight increase, which worked out to maybe $100 a week.
Just enough to cover his bills and pay for his growing family. This
was refused, and worse, treated as an act of a devious traitor.
This was not Silicon Valley. At least there, long hours were
tolerated, even encouraged, as the passion was mutually understood by
all that there would be an eventual enrichment to everyones' lives.
But with work conditions quickly deteriorating, open abuse and fear
prevalant, and a long trail of broken promises thousands of miles
long, the initial passion and dedication most of the staff came with,
soon fell into a heap of broken bodies and spirits. If you look at
OEM now across Canada (and the ever quickly diminishing number of
stores), only 1 out of probably dozens of sales and support employees
remain (even the office staff has had a high turnover). In a healthy
company, an expected attrition rate of 15-20% is expected. But an
attrition rate of over 95%?
This was, and is, no way to run a company.
ANY THING YOU NEED, SO LONG AS WE TELL YOU WHAT YOU NEED WHETHER YOU
LIKE IT OR NOT
The choice of inventory was often a matter of contention among the
staff and head office. Advanced computer cards would become available
only long after price drops, often weeks or even months. Trying out
new product would be allowed occasionally, only with begging or
pleading. Sure there would be the odd mistake that the staff member
would make, but these would be mistakes in the tens of dollars.
Understandably, the need to keep inventory down is always necesarry,
but how could anyone assess what might be hot or not without the staff
being able to at least bring in samples?
The company also had the unfortunate curse of overpurchasing when the
price was too good. Edmonton and Calgary had purchased literally
truckloads of 17” monitors in expectation of crowds beating down the
doors. It took almost a year to unload all of them, but it was done
however agonizingly slow. The leadership would assume that a given
item would draw in the crowds, STILL with no advertising, and
sometimes in direct competiton with the blowout deals that other
companies would also do such as Future Shop. Another memorable
mistake was the overpurchasing of USB flash memory drives to the tune
of tens of thousands of dollars, all having to eventually be sold at
discounted prices.
Time and again, customers would request one thing or another, and time
and again they would be turned away to the welcoming well stocked arms
of Memory Express or Computer Rack. Time and again, sales would
suffer, and the staff would remain helpless to do anything, and
eventually even cease to care over time. We would be instructed that
these requests were probably from “problem” customers anyways and it
was “our way or no way.”
THE CUSTOMER, WELCOMING WITH CONTEMPT AS A POLICY
I've always had a personable approach to sales in general. Being well-
informed, helpful and friendly, I probably and definately did my best
to let my customers know they were appreciated. If they tried to take
advantage of that, some may have gotten away with it so long as we got
paid, but I would also fight back just as often for those who
overreached their demands. For especially large contracts, I often
drove to customer offices and homes on my own free time and cost to
ensure satisfaction. To me, that was natural.
To the company, this was almost unheard of, even anathema. As I was
instructed, I was supposed to see the customer as the enemy, with
contempt and suspicion. Every customer is a potential thief and liar,
and while that might be true for some, I refused to believe it for
all. And in some aspect, I've been rewarded with customers that even
now exclusive buy from me (despite my not even having a store front).
Worse, I was guilty of the worse crime, taking the extra mile for a
customer. One particular customer, who was sadly disabled due to a
car accident, needed especial aid in finding the parts he needed for
his computer reseller business. He bought almost exclusively from me,
and his account easily numbered in the thousands, even tens of
thousands in a year. As soon as I left, his loyalty to OEM was
treated with disdain, even arguably disgust and that was but one of
many loyal customers who voted with their feet down to Memory
Express.
THE EXPECTED FALL
In all honesty, I really did once believe in the company. I believed
in the leadership and the vision of a glorious new day and challenge
of building a retail empire, and left years of public service because
I thought it would be wonderful to build something new and lasting.
Now, almost 17 months since my departure, and hearing word from former
employees were still being abused by arguably unethical, but
definately ill advised business practices, I just simply see it all as
an end of an era of sorts. Calgary closing it's final doors will be
blamed by the office as probably increased rental rates, or poor
staffing or the falling drop of computer pricing and sales, but at the
heart of it all, it's the problem of the company as a whole and the
directionless mercurial leadership that is the true fault. This isn't
written as an act of spite, or not even glee or perverse pleasure,
simply an observation from within and without, for a company that by
pure blind luck and timing became into a minor national computer
power, and now falling to earth and imploding as quickly as it grew.
OEM DEPOT aka OEM EXPRESS COLLAPSING, A CAUTIONARY CASE HISTORY ON HOW
TO SUCCESSFULLY SLOWLY RUN A COMPANY INTO THE GROUND
Last week on June 25th, 2008, OEM Depot (better known as OEM Express
in Ontario) closed it's last store in Calgary. It was done quietly,
silently and without a whimper. With Memory Express in the NE moved
to their new location on 34th St NE, people who would go play both
stores against one another no longer appeared at OEM's doors. As
such, only the few remaining loyal clientele would have discovered the
sudden loss of the store, and be greeted with a simple paper sign
announcing the white flag of surrender to Memory Express and a
hollowed out storefront. This is the latest store to fall in a once
growing seven strong, to a muted 3 ½ (as I fully expect Montreal to be
the next to fall soon).
Why am I writing about this? I myself only discovered this closure a
week after the fact, though it didn't surprised me in the slightest.
I ran that store, and the original store on Macleod Trail SW from
summer 2003 until I was forced out in early 2007. In retrospect, it
was probably more like escaped, but I'll get into that story a little
later. But again why? Probably because upon seeing the carcass, it
brought back a fair amount of memories, some admittedly pleasant, but
eventually leading to simply pity and regret for a company and owner
that lost its way (or maybe never found one to begin with), and wasted
incredible potential and opportunity in so many ways.
COMING INTO AGE
OEM Express, still primarily based in Ottawa, but registered under
various numbered companies or under PC Parts and Periphreals in
Markham, Ontario, had achieved in Ottawa what Memory Express achieved
in Calgary, or Bcom in Edmonton. In fact, every major city in Canada,
had a single player that had struck it lucky in the beginning of the
tech boom in the mid-90s, and managed to forge a hammer lock on what I
call, the “hearts and minds” stage of their respective cities. At
that level, the company is virtually a household name on the same
level as a Future Shop, and required minimal advertising and
occasional care for their customers. Memory Express is that in
Calgary. OEM Express is that for Ottawa, Micro-Bytes in Montreal,
ATIC in Vancouver and Canada Computers in Toronto. Everyone else, to
survive and to remind that there is an alternative to those stores,
would have to keep their name out there in any way, mean or form
possible to simply remain competitive let alone successful. Look at
Computer Rack in Calgary, a distant second to Memory Express, and
constantly advertising in local papers. Toronto's papers are filled
with the ads of all the up and comers struggling in the shadow of
Canada Computers.
OEM's mercurial owner, known as “Chi”, had seen his baby grow in
Ottawa without a single page of ads ever. Despite an unfinished
building and poor visibilty, he had admirably managed to overcome
those problems with better pricing than the next guy, and simple word
of mouth. Within a year or two, OEM Express became the predominant
store of Ottawa, so much so that from my native Montreal, even I heard
of the store and would occasionally shop there during my then monthly
visits to the capital to see friends. Literally at the same time, 2
brothers in Calgary were selling sticks of memory from a safe in a
dingy office, and thought about opening an actual store. In Montreal,
one store deep in the west of Montreal, miles away from the downtown
core, decided to take a chance and open a second store.
Ottawa was experiencing the beginning of the tech boom, as a center of
high-end companies such as Nortel, JDS Fitel (later JDS Uniphase) and
Corel growing into multinational corps large enough to rival AT&T,
Cisco and even Microsoft. Add the guaranteed income from the
government employees that filled the city's coffers, and OEM was
probably in the one place in Canada that could make money blindly
under almost any circumstance. OEM stayed in it's home, gathered it's
resources, and entertained thoughts of expansion into greener
pastures. Memory Express had a similar boom as oil and gas had begun
to recover from the lows of the 80s and early 90s, and Alberta's
friendly business environment started to attract a multitude of head
offices from across Canada.
Over the years, each store in each city consolidated their hold on
their respective markets, and opened new stores, or gathered resources
for whatever reason they chose. Once so held, a competitor in “their”
market would be at a significant disadvantage, and would have to
overcome all sorts of problems, most of all the literal total lack of
recognition of their brandname in the new market.
In 2003, that's what OEM Express did. They came into Edmonton, and
then Calgary, and strove to conquer their new markets from Bcom and
Memory Express. And for a time, OEM actually did make a serious dent
into their new markets. With advertising, good pricing and a bold
attitude, it was starting to gather a loyal clientele. The new staff,
trained in Ottawa, but sent forth to do battle in for the hearts and
dollars of Albertans, strove to give the fledging venture a fighting
chance. And that's where I came in, as well as certain others.
Each person strongly believed in the vision of OEM conquering Canada,
and relocated across country in the belief that their leader, Chi, was
sending them on a holy mission. And admittedly, all were blinded by
his promises of future riches and rewards, all in exchange for loyalty
and fanatical work week hours. Over time, each of us would find
ourselves betrayed and see through the lies and empty promises, and
either leave on our own accord or be forced out.
THE FIRST PROBLEM – THE GREATEST STRENGTHS ARE THE GREATEST WEAKNESSES
Chi had understood one thing quite well from his years in computers
and electronics, price is king. Give a good price, and the people
will come. I myself often shop based on price if it's an
inconsequential item, or compare pricing between stores for something
more important when quality is preferred. With an incredible blowout
starter special, Edmonton opened with a bang and continued running.
But that initial excitement soon subsided, and leveled off after the
big bang into silence.
Calgary then opened, with less fanfare and worse pricing, and fizzled
quickly in no time. Days would pass with little or no customers, and
Memory Express and Bcom found that they had little or no worries and
the new challenger had emerged as virtually no threat at all. Neither
company was advertising, OEM Express / Depot was not on the lips of
people anywhere, or even an afterthought for that matter.
PRICING = PROFITS?
Seeing that something was needed, OEM Express in the West had to
disguish itself from OEM Express East in order to be at least mildly
competitive. What was decided was something memorable for the Calgary
and Edmonton computer parts market, a price war.
OEM Express became OEM Depot with it's own website and image, and
offered pricing slightly above cost. Most computer stores were used
to margins in the 20-30% profit range. OEM decided to shake things up
by offering pricing in the 10% profit range, and squeezed key
suppliers to sell their goods to OEM at barely above cost.
This shook up the market, and even without advertising, this did bring
in people into the door, though not in the hordes that was hoped for.
The problem was plainly apparent to the people manning the stores.
Good pricing was fine and well, but how would people benefit if they
didn't know you even existed. From the start, this strategy was
fatally flawed. At such low margins, quantity was now needed to make
up the costs. Edmonton had the advantage of cheap real estate and the
actual ownership of the land that the store inhabited. This made it's
fixed costs relatively low with little possible shocks that might ruin
that profit-loss spreadsheet. Calgary's red hot real estate market
was much different, with almost no buildings in ready access available
for sale, and had to be rented. This made Calgary's costs much
higher, despite taking up only a fifth of the total space of Edmonton.
As such, Edmonton still managed to maintain profitability despite the
low customer turnouts, but this would be problematic for Calgary's
survival, especially when in competition with a much stronger opponent
as Memory Express.
KNOWLEDGE IS POWER
As explained before, pricing may be king, but brand name and knowledge
is queen. How can a customer take advantage of cheap pricing if the
brand is virtually unknown. In fact, in the early days, OEM Express
was more likely than not to be assumed to be a car parts store as the
acronym “OEM” was better known for such merchandise.
When I came into Calgary, I was asked to devise a $30,000 ad campaign
to get the name out. Incredibly bored by hours of empty tedium (I
would see one, maybe two customers a day those early weeks), I plunged
into this task eagerly with images of dollar signs and customers
dancing in my head. I spoke to radio stations, bus companies and
newspapers. Fliers would be found in every parked car in every
parking lot. Tournaments would be sponsored with the OEM Express
banner flying high above the crowd.
Imagine my surprise when the boss came into town, looking forward to
spend his Ottawa riches for a new Honda Pilot, and cut the ad budget
from $30k to $3k. It was then I was also told about the low OEM Depot
pricing strategy would be the path, and I immediately saw all those
dreams screetch to a halt.
Like every leader, once a decision is made, the followers should
follow. But every follower had agreed then unanimously that is was
incomplete. The pricing was needed, but with no one spreading the
word, it was doomed to failure from the start. And as such, the error
was compounded as every attempt to at least try to flesh out the
strategy by combining it with advertising had fallen on deaf ears.
The leader, so absolutely sure in his strategy, refused to take any
further comment, which probably would be the same as Napoleon saying,
“Gee, Waterloo looks like a great place to fight.”
The funny thing is that on the occasional times that advertising was
allowed, and only after torturing the poor sales staff and the
Edmonton Sun or the Calgary Sun, sales did actually increase in
general. There were weeks that the ads did little, and some that the
ad results were phenomenol, but overall, the name was finally being
reached. And just when we were finally starting to get a name, the ad
money suddenly stopped as suddenly as it began, and OEM would fall
back quickly into obscurity. Is it any coincedence that the best
sales year for Calgary was also the year that a good deal of
advertising was spent?
LOYALTY, TREACHERY AND PARANOIA
Employees work best when they are treated with respect. Any Fortune
500 company can attest to the fact that an employee that felt like
they were important, vital and/or needed is a valuable productive
employee. OEM never seemed to learn that lesson, and even now
continues to lead the way in proving that a revolving employee door by
underpaying your staff, treating them with disrespect, subjugating
them to slave hours and finally subjecting them to an atmosphere of
paranoia and fear is no way to run a company.
Employees would be directly and indirectly insulted for their lack of
character for various reasons, oblivious to how petty and even crude
this would make the attacker seem. And despite claims of trust
between the boss and the staff, everyone was overtly observed at all
times by cameras, and even listened to despite privacy criminal laws
disallowing audio surveillance.
Employees would find themselves dreading to go to work, or be in
constant fear whenever the boss would be in town. Worse, he would
psychoanalyze every action, every movement by the employee, whether it
be optionally wishing private time instead of going out for dinner, or
a yawn or avoidance of the camera as an act of defiance or possible
treachery. The other needs of employees would be completely ignored,
except for the rare moment of clarity (as finding an apartment with a
kitchen for staff as opposed to forcing them to live in a hotel, and
literally spend all their money on far more expensive restaurants).
As such, the company could not expand, or barely manage to run their
existing stores. Very often, some stores would have one employee
only, with the bigger stores barely managing 2 to 3 staff. Any
further expansion would be impossible as as soon an employee was even
barely trained, someone would leave. So many would join and leave
within weeks that the main office would often run out of Record of
Employment (ROE) forms each month and had to request more.
Worse, some staff would also find that promises would be broken almost
as soon as they were made. One staff member sold his own computer
company to join OEM, only to find that all of the pre-existing
conditions agreed to were immediately thrown out. The company would
refuse to sign any formal contract for any employee, which made it
easier to make and break promises routinely. For employees that
seemed to be worth the effort, initial promises would be kept just
long enough to put the person into an untenable situation and unable
to leave without incuring huge losses. Still, there were those who
did just that. Some claimed to incur losses in the tens of thousands,
not to mention a uniform steady breakdown of their general health due
to the combined toll of restaurant meals, lack of exercise (computer
retail isn't exactly strenuous) and being stuck indoors all day with
no sunlight or fresh air seven days a week.
THE EVENTUAL BURNOUT AND HOW TO STOKE THAT BURNOUT FIRE HOTTER
Imagine having to do 70-80 hours a week, and be on call 24-7.
Statuatory holidays were ignored, and all Sundays would be is a
reduced work schedule. If anyone complained, it would be a black mark
on his or her record, and would eventually factor into his dismissal
or resignation. Now imagine this 51 weeks a year, as most staff would
only take a week off.
The company would claim only 63-70 hours tops per person, but the
added hours in special projects given to the staff member, not to
mention all of the extra duties that running a store would usually
entail such as general upkeep, supplies, deliveries, orders and more
would take. All of this would be unpaid, and expected from each staff
member. It would actually get far worse when the boss would come
around, as one long departed staffer put it, “A cold wind of dread
would descend on us.” On top of our duties, we would also have to put
up with worries of the boss seeing us close and personal, and make any
observations or comments that would be totally inappropriate. That
same saffer had endure a lecture stating that he had no strength of
character, and did not have any because his parents were divorced, and
then had that topped off with the comment that this was all told to
him to make him “a better man.”
When you add the company's need to economize even the smallest things,
such as how to unload trucks, the stress levels would become
unbearable to most. Imagine being the only staff member in the store,
and being told to empty an 18-wheeler truck full of computer cases
(over 1500+) in the middle of a -25C day, with no help, and not be
allowed to close the store. Worse, all the cases were loose instead
of on easy to unload pallets or even with a handtruck. The final
cherry on top was that this particular staffer was only 5' 4”, and the
piles would each almost 6' tall, so every time he tried to unload the
cases, some would literally fall on top of him, incurring some harm.
People burned out quickly, some sooner, some later. I lasted maybe 2
years before burnout set in, and then probably coasted for the
following year. Others burned out in months, and some would become
virtual zombies and avoid computers altogether for years after
leaving. And with the company dedicated to keeping labour costs as
low as possible, employees would see the ongoing strain of the hours,
the work and the stress, with no relief in sight.
Replacements would be subjected to an initially low salary of the
hourly minimum wage. There was no accounting in difference for the
cost of living for the staff, and while some might prosper a little,
most would suffer a lot. One particularly brightly skilled star,
requested a slight increase, which worked out to maybe $100 a week.
Just enough to cover his bills and pay for his growing family. This
was refused, and worse, treated as an act of a devious traitor.
This was not Silicon Valley. At least there, long hours were
tolerated, even encouraged, as the passion was mutually understood by
all that there would be an eventual enrichment to everyones' lives.
But with work conditions quickly deteriorating, open abuse and fear
prevalant, and a long trail of broken promises thousands of miles
long, the initial passion and dedication most of the staff came with,
soon fell into a heap of broken bodies and spirits. If you look at
OEM now across Canada (and the ever quickly diminishing number of
stores), only 1 out of probably dozens of sales and support employees
remain (even the office staff has had a high turnover). In a healthy
company, an expected attrition rate of 15-20% is expected. But an
attrition rate of over 95%?
This was, and is, no way to run a company.
ANY THING YOU NEED, SO LONG AS WE TELL YOU WHAT YOU NEED WHETHER YOU
LIKE IT OR NOT
The choice of inventory was often a matter of contention among the
staff and head office. Advanced computer cards would become available
only long after price drops, often weeks or even months. Trying out
new product would be allowed occasionally, only with begging or
pleading. Sure there would be the odd mistake that the staff member
would make, but these would be mistakes in the tens of dollars.
Understandably, the need to keep inventory down is always necesarry,
but how could anyone assess what might be hot or not without the staff
being able to at least bring in samples?
The company also had the unfortunate curse of overpurchasing when the
price was too good. Edmonton and Calgary had purchased literally
truckloads of 17” monitors in expectation of crowds beating down the
doors. It took almost a year to unload all of them, but it was done
however agonizingly slow. The leadership would assume that a given
item would draw in the crowds, STILL with no advertising, and
sometimes in direct competiton with the blowout deals that other
companies would also do such as Future Shop. Another memorable
mistake was the overpurchasing of USB flash memory drives to the tune
of tens of thousands of dollars, all having to eventually be sold at
discounted prices.
Time and again, customers would request one thing or another, and time
and again they would be turned away to the welcoming well stocked arms
of Memory Express or Computer Rack. Time and again, sales would
suffer, and the staff would remain helpless to do anything, and
eventually even cease to care over time. We would be instructed that
these requests were probably from “problem” customers anyways and it
was “our way or no way.”
THE CUSTOMER, WELCOMING WITH CONTEMPT AS A POLICY
I've always had a personable approach to sales in general. Being well-
informed, helpful and friendly, I probably and definately did my best
to let my customers know they were appreciated. If they tried to take
advantage of that, some may have gotten away with it so long as we got
paid, but I would also fight back just as often for those who
overreached their demands. For especially large contracts, I often
drove to customer offices and homes on my own free time and cost to
ensure satisfaction. To me, that was natural.
To the company, this was almost unheard of, even anathema. As I was
instructed, I was supposed to see the customer as the enemy, with
contempt and suspicion. Every customer is a potential thief and liar,
and while that might be true for some, I refused to believe it for
all. And in some aspect, I've been rewarded with customers that even
now exclusive buy from me (despite my not even having a store front).
Worse, I was guilty of the worse crime, taking the extra mile for a
customer. One particular customer, who was sadly disabled due to a
car accident, needed especial aid in finding the parts he needed for
his computer reseller business. He bought almost exclusively from me,
and his account easily numbered in the thousands, even tens of
thousands in a year. As soon as I left, his loyalty to OEM was
treated with disdain, even arguably disgust and that was but one of
many loyal customers who voted with their feet down to Memory
Express.
THE EXPECTED FALL
In all honesty, I really did once believe in the company. I believed
in the leadership and the vision of a glorious new day and challenge
of building a retail empire, and left years of public service because
I thought it would be wonderful to build something new and lasting.
Now, almost 17 months since my departure, and hearing word from former
employees were still being abused by arguably unethical, but
definately ill advised business practices, I just simply see it all as
an end of an era of sorts. Calgary closing it's final doors will be
blamed by the office as probably increased rental rates, or poor
staffing or the falling drop of computer pricing and sales, but at the
heart of it all, it's the problem of the company as a whole and the
directionless mercurial leadership that is the true fault. This isn't
written as an act of spite, or not even glee or perverse pleasure,
simply an observation from within and without, for a company that by
pure blind luck and timing became into a minor national computer
power, and now falling to earth and imploding as quickly as it grew.