6 Pop Songs Great for Audio Demos
Worst DIY Installs Ever Part 7
10 Must-Have Products for Your Next Install
6 Amazing High-End Home Theaters
Print
Email
Comments (57)
Share
The Rise and Fall of Tweeter
“What you see in those last few years is the handiwork of those experienced executives running the company right into the ground.”—Paul Shindler, former Tweeter vice president
It was Quye's responsibility to communicate some disheartening changes to store employees. The pay plan policies, for instance, changed in a way that Kamerzel says negatively affected many store employees.
"She would host conference calls, and her way of interacting with people, the way she spoke to us, was condescending," Kamerzel recalls. "We were told that we're going to make less."
It wasn't just salespeople that had issues with Quye. "Most employees, both at the store level and above, did not care for Judy," says Ken Schafter, a regional service manager for Tweeter (1997–2007).
Stone walked away from the company during this era and was replaced by chief financial officer Joe McGuire. Sandy, the "curator of Tweeter culture," the guy who initially emphasized that sales associates were the company's best resource, was still around to see it.
Sandy's leadership role had diminished, at least partially by choice. Also, he didn't like e-mail. So, his traditional way of doing business didn't gel with an increasingly paperless culture.
Sandy watched his company "hemorrhage good employees," as Shindler puts it. Kamerzel puts it this way: "Salespeople had been making a good living, and now they were not. It wasn't a career anymore."
Meanwhile, Tweeter's client base had to get used to new brands. This was partly by merchandisers' choice and partly because longtime vendors were shifting their distribution strategies.
Klipsch and Monster, two Tweeter mainstays, left.
Kamerzel describes a new product mix that included "inexpensive, entry-level junk, like very inexpensive Boston Acoustics speakers and an HP flat panel."
"Schizophrenic" is how Tovissi describes Tweeter at this time. "Out of one side of the mouth, they wanted to be a national integrator; out of the other, they wanted to sell more iPods," he says.
"There's not enough bandwidth to do both. It sent mixed messages to consumers, to employees, to vendors. And we lost our identity."
Tweeter employees' pride diminished, according to Kamerzel. Schlocky electronics chains were once regarded as a joke among Tweeter people, and then it became "a joke to work for Tweeter."
It wasn't just salespeople leaving; it was a mass exodus, explains Shindler. "Tweeter was a place with a very, very specific corporate culture, initially created by Sandy and solidified by Jeff," he says.
"The new senior team they brought in did not mesh with that culture and it [the culture] was devastated."
The wave of big-box-experienced executives was a disaster, according to Shindler. "Those people they brought in all failed miserably and repeatedly," he says.
"What you see in those last few years is the handiwork of those experienced executives running the company right into the ground. They failed, every one of them, to a person."
The Real Reason
There's no single wrong turn made by Bloomberg, Stone or McGuire that led to Tweeter's demise. Instead, it was "a confluence of factors," says a former executive.
During CES 2005, Tweeter unveiled a "concept store" outside Las Vegas. It was a departure from its traditional store design in that it broke the floor into lifestyle vignettes. The concept was built around selling systems as opposed to products.
This was a good idea, according to Shindler, but the company didn't roll the stores out quickly enough. Ultimately, it was little things like that -- little failures and various market circumstances -- that led to Tweeter's collapse, he says.
Failure became imminent in March of 2007 when Tweeter announced plans to close a third of its stores and lay off 20 percent of its workforce. Later that year, it filed for its first Chapter 11 bankruptcy and closed the Las Vegas "concept store." It wasn't long before Schultze Asset Management pounced.
Sandy Bloomberg's Tweeter, which had bought Sound Advice for $150 million in stock only six years earlier, was scooped up for $38 million. And Sandy was out of a job.
Shindler says he can't blame the wave of big-box executives. "No matter who was running it, the company was up against an incredible challenge. I don't know if anybody could have pulled it off," he says.
He does concede, however, that "it would be hard to have done worse than the people they brought in."
Click the image to see a larger version.
Subscribe to the CE Pro Newsletter
About the Author
57 Comments (displayed in order by date/time)
Having worked in Tweeter, much of what was written is very true. And while a lot of the blame does go toward the executive team that was brought in over the last decade, you have to mention that vendor loyalty went south and the “Drive to zero” that occurred once big box stores started carrying HDTV’s devastated Tweeter as well as the CE industry as a whole. I have no doubt that given the current economic climate, Tweeter would be gone by now no matter who was running the show. That said, it could have held on longer had their been some solid leadership at the top.
One other note(for those that knew Tweeter)...who’s really shocked that Judy Quye wouldn’t comment for this story??
Can we say “De-hired”
I am trying to contact Barry who worked in the Oak Brook store then the Orland Park store in IL. Any help would be appreciated.
I started with Tweeter when it was a 13 store chain and was there right up until the end. There were many passionate people that worked really hard to do the right things by the employees and the customers. There were many great ideas that did not get fully tested and brought to market. Maybe one of them would have saved Tweeter? Maybe we just ran out of time? Who really knows? I learned a lot and had the pleasure of working with many amazing people and for that I am thankful.
Tom:
This is a great and well balanced article. Well done.
It is so hard to read this…the truth and to sadly acknowledge that very good, talented people collaborated successfully for a long time and yet the end result is what it is.
The lesson here is,...while “Company Culture” is a tough metric that you cannot enter on to a CFO’s spreadsheet. Turnover can be measured.
The talent drain of the capable (who always have choices) was the most meaningful metric driven almost exclusively by turning the keys to the Ferrari over to those who did not understand and/or appreciate the value of that culture.
Operationally, a quicker embracement and refinement of the install model could have provided a relevant niche for the future or at least the value to BBY to absorb at a premium.
However, the “inferiority complex” that drove good people into hiring the “big three” was the key moment akin to Custer’s Little Round Top miscue. Two of them were survivable and actually brought some value, the third brought in and promoted sycophants who’s main talent lied in their support for their boss.
There is a significant difference between tactically astute bosses and true leadership acumen.
I agree with all of the above posts… Does anyone out there remember Tech-HiFi? Those who do not know history are doomed to repeat it.
Lastly, no matter how big a speaker is, the tweeter is the most susceptible driver to fail when it’s subjected to THD… Totally Horrific Decisions.
Great article, very well written.
Regarding the “drive to zero” It is nothing new as anyone with any real history in the business knows. Video prices never stabilize with margin. Any blame for any Company’s failure placed on Video margins is misplaced. The blame goes to the people that thought the initial margins would/will hold beyond the very short term. TV sets are commodities and have been since the early 70’s. An electronics merchant must have a business plan with this in mind.
Terrific journalism, Tom! One of the best investigative pieces I’ve ever seen in the custom channel. Next step: Someone needs to track this Schultze crumb down on behalf of everyone he screwed and get him on the record.
I was very close to both the Sound Advice group and Tweeter group. The switch to custom had to be done, but couldn’t be done in 150 stores. The leases on many of the big stores were ridiculous overhead and there hasn’t been a successful custom chain yet.
The real question is ....does anyone want a better goods retailer in CE anymore? Or salesmen to explain feature benefit?
We are heading to a Mass Merchant/Internet product chain coupled with an install labor force.
Good overview, but I think examination of one key factor that lead to the failure of Tweeter is missing. In an era where margins are shrinking, it becomes more critical to control costs. If you can’t increase your margins, you must cut your costs. One important reason the “last retailers standing” are the Best Buys, Amazons, and Wal-Marts of the world are that they wring every penny out of the cost structure of their businesses.
Providing good service is costly for any business. In my position at the bottom rung of executive management in charge of Service at Tweeter, I saw the red ink in the P&L;every month. I saw similar issues during my time in charge of Service at Magnolia Hi-Fi, another recent casualty.
Retailers can cut costs in many ways on the service side - from fully outsourcing it to limiting the services they provide. For a retailer whose market position is built on providing “exceptional” service, it’s hard to do either. You also can’t make these cost cutting efforts dependent on reducing staff or hiring “cheaper” people. Service is a very “hands on” process, a customer who has to wait 15 minutes to talk to someone or gets in the hands of a greenhorn who obviously understands less about the situation than the customer does is the kiss of death to that reputation.
Whether Tweeter or Mag could ever have survived in a low margin world with a high touch customer service model is questionable, but to even begin controlling costs and still accomplishing this one needs to make sure the service mission is clear to the staff, clearly defined to executive management, and supported in every decision made from top to bottom. The processes used to provide that service also need to be well designed and built in ways that make things that happen routinely actually HAPPEN routinely - so your high priced and well trained staff’s brains can be used to focus on the real problems, not making everyday tasks just work properly.
Tweeter, like most mid-level retailers I’ve dealt with, wasn’t close to having that “down.” Their systems did not support the routine flow of “normal business” in a way that ensured things would just happen when they needed to. This left the staff to either babysit everything they touched to make sure it went well (and quickly burn out chasing things that fell through the cracks) OR give up and go home to dinner at a normal hour - letting things fall through the cracks as they may…
For instance… A service department gets product in for repair every day, it’s the most routine thing there is for them. Repairing them is not just a matter of having good techs - the key issue is having the support systems set up to flow with each manufacturer. If your staff has never talked to anyone at the Widget Corp before, fixing a Widget model AV123 that just arrived isn’t just a matter of knowing what’s wrong with it - far more of the repair process is involved in knowing where to find a service manual, what the warranty terms are, who to call for parts, who to call for technical help, etc, etc.
So when that Widget arrives at the shop, do you commit to putting in the hours to figure that out for the customer, OR do you go home to dinner? Maybe the first time you go the extra mile for the customer, but how about the 20th time - especially when you’re starting to feel a little “stabbed in the back” by your own company since that crises is so avoidable?
One would think since the entire process leading up to selling that Widget AV123 involves many steps, one critical step would be to get the Service guy in the loop - early enough so when the first workorder was written all the remaining processes were already worked out and in place. Being that Service Guy, I’d even go so far as to suggest part of the buying department’s “due diligence” before signing would be to make sure the vendor supported the service model the company wants on their floor. If not there may still be good reasons to carry the product but at least you can then define how you’re going to take care of the customer when that Widget fails.
At Tweeter having “surprise” products show up at Service was almost more the norm than unusual. That left Service scrambling (and spending money very inefficiently) to get back ahead of the game so the customer didn’t suffer. There were cases where Service was involved early enough to get the ducks in a row before the first product arrived for repair - to be fair that did happen more frequently as time went on. But, all too often the process was not started by a buyer saying “I’m thinking about carrying the Widget line” but by a service staff member who tripped across a new box in the warehouse and asked his boss about it.
Another example. What’s more routine to a TV sales company than coordinating the delivery and setup of a product? At a time when the staff is becoming more and more short-term and less experienced does it make sense to put a delivery scheduling system in place that requires intensive training to operate, that’s not just a matter of pushing “schedule” in the POS system and coming up with a list of options? And even with the complex system a lot of the sales staff felt compelled to follow up their computer scheduling with a call to the delivery department to make SURE it was going to happen, because they didn’t want THEIR customer falling through the cracks.
Another example of expensive staff spending their brainpower babysitting processes that should be routine instead of using that time to generate sales or take care of customers.
There are many, many more examples I could give of this sort of inefficient system design, and while I don’t think it caused the final collapse of either Tweeter or Mag, I certainly think it helped strangle or negate a lot of the efforts by the staff to be more efficient and provide the exceptional service the customer expected. And it certainly helped drive the Service P&L;into red ink as well.
At Burger King they can say “have it your way” because the “ways” are limited. Pickles or not? Mustard or ketchup? Onions? Even with that limited selection of “SKUs”, if Burger King could not depend on the process of putting a bun with a patty on it in front of their employee and having pickles, mustard, ketchup, and onions within arms reach as a routine, even that wouldn’t work.
The Tweeter model of CE retail is far more complex than fast food, but failure on their part to make sure the patty was sitting there - on the bun, waiting for you to add the condiments the customer wanted - was a big part of their failure to execute and succeed.
I agree that this is a fantastic article, well written and balanced, and long overdue. But I believe it is only a “Part 1”. A “Part 2” followup is definitely in order, covering the time George Shultze took over till the present, and why it didn’t have to end the way it did. The recent Global Economic conditions may have been the nail in the coffin, but the ship did not have to sink the way it did. George Shultze is Truly shameless and needs to account for his actions!!! Also, of the many reasons pointed out as to why Tweeter failed, and the one that irritates me more than the others,and the one factor that doesn’t get nearly enough attention is the fact that many of the major vendors bailed on the specialty channel and went to Big Box or the Internet, and they need to acknowledge and accept their portion of the blame as to why the custom retail channel is in the condition that is is in today!! Having said that, like JR said,“I learned a lot and had the pleasure of working with many amazing people and for that I am thankful.” ASM0111
Please write an expose’ on George Schultze’s acquistion of Tweeter. He could have used the whole situation to the advantage of the company and not to his own self-interest. Beware of the phrases “Restructuring Plan”...“Aligning Operations and Resources”. Mr. Schultze listed the aquisition and management of Tweeter as one of his accomplishments at a recent Union League meeting in Phila. on Feb. 27th. He was listed as one of the “Restructuring Panelists”.
Thanks for explaining to us in integrator terms
Businesses are made up of people. Improper care and handling of people (a very challenging task at any level be it 1 or 1001)takes down a business when its people (not its brand)are the key to its success. Gobbling up people in the form of business acquisitions and treating everyone the same to further the balance sheet and stock price does not work, never has, never will. Thanks for getting these interviews, it shows there are people behind fall.