Street Fighter: Jim Inglis writes a no-nonsense treatise on strategy in retailing and how passionate belief makes things happen

If you only have time to read one book on retailing strategy, James Inglis’ Breakthrough Retailing: how a bleeding orange culture can change everything is the one you should read. It is without question a blueprint that will help EVERY retailer (in fact, every business owner) become a better one.

Inglis’ book will inspire you and your company to think differently, as it spells out why you need an underlying belief in yourself, your people, and your mission – a mission which is ALWAYS to outsell the competition.

Breakthrough Retailing is NOT a disguised management guru just giving lip service to ideas: this book is by a street fighter who has not only taken a punch but given one and knocked out competition his entire career. It is exceptionally written and reminds me of the handful of books on sales strategy that have lasted the test of time.

How Inglis Knows

Jim Inglis spent fifty years in the retail home-improvement industry and each second of those years comes through each word loud, clear, and with profound insights that will stimulate your thinking as well as the subsequent actions that you will take because of that thinking.

It’s not so much that Inglis repeats some of the knowledge that’s out there already (i.e., your people are important). What he does is reshape that knowledge through his own hard-fought experiences. That reshaping is what makes you rethink your own positions on these topics. As Albert Camus once said, “it’s not the soundness of the argument that’s important, but for it to make you think.”

And thinking is exactly what Inglis will make you do when you read his book.

Punching Six Sigma

For example, we’ve all probably heard of Six Sigma. Some of us have gotten tangled up in it. Yet, when Inglis writes, “thousands of employee hours were spent evaluating minutiae instead of taking care of customers” about that process, something rings awfully true for people in the street and not in a boardroom. Challenging a management technique like Six Sigma takes a street fighter, which is what Inglis really is.

In other words, regardless of what you or I think about a topic, Inglis puts his point of view out there bluntly. In each section, he gives the topic his imprint, directed by his life-strategy of winning within a culture that was created to disrupt and win: The Home Depot.

I’m reminded of the quote from Jim Lovell, commander, Apollo 13 as I read Inglis’ book: “There are three kinds of people in the world: those who make things happen…those who watch things happen…and those who wonder what happened.”

Inglis was and is a guy who made things happen, and by writing this book, he can turn all of us into those type of people.

Orange Culture

This remarkable book is about The Home Depot, where all the employees bled orange. They lived, ate, drank the almost cult-like culture of the company they worked for. They reflected a passionate, almost unnatural belief that they can do anything.

And they did: they changed the home improvement market forever.

That orange passion was behind the rise of The Home Depot. Inglis paints an extraordinary picture of how it succeeded, failed, and then re-emerged into the shape it is in today. Using a collection of unique personal experiences, he shares his journey with the reader. As a result, he produces deep insights into why things happened, and how they happened.

He teaches all of us (because his narrative transcends retailing into almost every industry) by giving us a blueprint of how to pull it off for our own company. Almost without trying, his book brings out the specific strategies that can be applied to situations all business people find themselves confronting, from pricing, to hiring, to competing, to promotion and to merchandising.

In short, it is a collection of strategic essays on how to survive in this ever-changing world.

Breakthrough Retailing is divided into four parts for your study (I took 38 pages of notes while reading). Part one talks about the basis of his observations: The Home Depot culture. In part two, Inglis discusses the foundational cracks of the retailers, including how the culture was shattered by a new CEO. In part three he talks about the rebuilding of Home Depot’s dominance. Perhaps readers will find part four the most useful because it spells out a blueprint for not just a successful retail operation, but ANY business operation (i.e., his discussion of a brand and branding sprinkled throughout the book is relevant, real and will demonstrate just how important your brand should be).

Breakthrough Retailing is NOT just a “compilation of essential words of wisdom of the retail trade” or “an excellent blend of business information” as some superficial reading might conclude. It is without question one of the best books you’ll find on helping you succeed not just in retailing, but in business. Maybe the sub-title should have been: “Notes from Underground,” which is a short novella by Dostoevsky. Dostoevsky dealt with the deep psychology of human beings; Inglis deals with the deep psychology of retail warfare.

Here are a couple of examples to prove this point.

Kohler

There’s probably not a person in this country or other countries who have not heard the name Kohler. Inglis’ section – Kohler Opens Distribution and Wins – discusses how the company was resisting bringing their brand into the Home Depot because of their traditional wholesale distribution partners’ reaction to that kind of move. They offered Home Depot their Sterling brand instead.

In our experience, this is typical of most every manufacturer at that time. Like Kohler, they were afraid of disturbing the distribution channel that existed. To overcome this hesitation, Inglis tells us that Home Depot asked if there was “any regional market in the U.S. where they were not pleased with their market distribution channel.”

Once they identified that market, Home Depot initiated a test program in the local store in that area and produced “incredibly positive results for the Kohler brand.” It was incremental to Kohler’s business and forced the distributors to renew their commitment to Kohler to defend their own market positions. The formula repeated itself as other recognized name brands saw these results.

This is an example of a strategic move behind Inglis’ narrative. Incremental sales increases are what the game is all about. As Sergio Zyman the former Coke marketer put it, “The sole purpose of marketing is to get more people to buy more of your product, more often, for more money. You don’t make any money until you sell the stuff, and you can’t sell the stuff until you’ve gotten people to want it.”

I learned a long time ago that recurring volume is what comes through the door because of inertia — because of your current way of doing business. Incremental volume is that order that emerges from cross-relationships (or testing new markets like in this instance). There is nothing wrong in sustaining or aiming at recurring volume. True growth, however, comes from volume that is incremental or cross-related. And it takes strategy to make that happen. Home Depot was an incremental sales producer on steroids.

Blue Ocean

Another example of the deep psychology of retail warfare in Inglis’ book is what Home Depot did when it first entered the home center market: it flipped it on its back. In the “red ocean” of homecenters everywhere, Home Depot created something new, something entirely different, and as a result, a blue ocean. By changing from the current model– from pricing to the size of a physical store – Home Depot followed what has become known since then as the classic blue ocean strategy. This was expressed in BLUE OCEAN STRATEGY by W. Chan Kim and Renee Mauborgne. The idea of a blue ocean is to create uncontested new market space that makes the competition irrelevant, whereas the Red Ocean is “bloody” with competitors. And that’s exactly what Home Depot did: made their home center competition irrelevant.

For example, the leading traditional home center in Central Florida was a firm called Scotty’s. Here is how Home Depot dealt with them. Scotty’s published a semi-annual full-color catalog of their entire product assortment. Inglis tells us that they gathered hundreds of Scotty’s catalogs and hung them with chains on every counter in the Home Depot stores. “We wrote in felt pen on the covers: ‘Our Price: 20% On Any Identical Item in this Catalog.’” Two years later Scotty’s was out of business.

This kind of street fighting built his company, and such examples abound in the book.

It’s About the Customers, Stupid

One of the over-riding ideas (perhaps overused today) Inglis drives home is that Home Depot’s success was a focus on their customers. Consider the following at the heart of the strategy:

“We knew what the competitors did not know. We understood the benefit of generating real gross profit dollars. We were looking for tangible dollars, not some abstract gross margin percentage goal… Our competitors were fixated on maintaining high gross margin percentages, while we were fixated on generating a high count of customer feet in our stores.”

It sounds simple enough, but Home Depot put their beliefs into actions, continually.

He writes: “People are not blind or stupid, and they are always looking for value. It was amazing to see how some of the larger traditional home centers with huge resources were checkmated as our relatively smaller team of Bleeding Orange zealots entered their market.”

But the book is much more than documenting the track record of Home Depot’s domination of the market category. He warns of growing too quickly (“The Home Depot strategy was to pace our growth in order to perform well and maintain our dynamic culture”).

His side bar of the Failure of Sears is outstanding.  It reflects the wisdom he gained from being in that retailing space (“In the Sears deck of cards, gross margin percentage was king, and the customer was the joker.’). Even when Sears implemented EDLP (Home Depot’s core strategy, Every Day Low Pricing), Inglis points out what Home Depot did to deal with it: “We had an army of The Home Depot people at the doors of Sears stores. We wanted to see what new price points they would set so we could quickly discount our prices and discredit this new initiative. We quickly realized that Sears had not seen the light.”

Feet on the Street

A final example I wanted to mention is having people there, on the scene. In his book, Call Sign Chaos, Jim Mattis writes: “Digital technologies can falsely encourage remote staffs to believe they possess a God’s-eye view of combat. Digital technologies do not dissipate confusion; the fog of war can actually thicken when misinformation is instantly amplified.” One of Mattis’ secrets was to have officers in the field who would report directly back to him about the real-life conditions.

One of the recurring pieces of wisdom that Inglis gives us is that is important to see firsthand what is happening when a situation occurs. I remember in my own experience, a major builder of condos in the U.S. was taking one of his project managers to task on the phone. It was a meeting where there were about ten executives around the table during that call. The CEO was inquiring about why the windows were being delayed for the structure.  The project manager (on the phone calling in from Miami, we were in Chicago) was making an excuse – something about the vendor being delayed and other circumstances “beyond our control.”

“That’s not true,” the CEO said sternly. “I was there yesterday.”

The project manager hesitated, “When? I didn’t see you. You didn’t tell me you were coming to the site.”

“You weren’t supposed to see me or now,” he replied, “but I know what’s really going on there.” He then proceeded to tell the project manager, much to his embarrassment, what was really going on.

This “gathering first-hand intelligence” was one of the core drivers of Home Depot’s success and should be for all of us.

For example, Inglis tells us in the book about Levolor mini blinds, which were experiencing a 35% return rate. Levolor was threatening to pull their product away. Inglis told his manger to spend time at the store at that department. What the manager learned saved the account, because he found customers opening the box, which was wrapped in cellophane film to see if all the parts were there, and then taking another unopened one to buy. The store would then return the opened ones for credit. Eliminating the cellophane wrapping solved the problem and kept Levolor their customer.

I remember when I received a call from a client about our direct response mailing producing zero. In direct response, there is rarely zero. And when there is, I have always found that there is a reason for it. I drove to the client and asked to see the non-deliverables. She called the mailroom and brought in a four-inch-high rubber-banded stack of envelopes. I pulled one out and immediately knew what had happened. I slit the envelope open with my finger and pulled out the letter, which had been sliced by the folding machine, cutting off the response portion of the mailing. There was no way for the target to respond. Embarrassed, the client apologized and said let’s do the test again.

Don’t Give Me a Reason to Fire You

Inglis says: “Home Depot’s philosophy was simple, ‘Don’t give the customer any reason to ever shop anywhere else for home improvement products.’”

The intensity of retail or any market boils down to customer retention. Since COVID-19, retention has been further disrupted and will continue to be so. But then, according to Inglis, change is one of the constants in retail.

Change is a constant in all businesses, and how you deal with it makes, or break you.

Having Breakthrough Retailing by Jim Inglis along for your journey gives you insider trader information on how to deal with ongoing change, which is just another word for disruption.

For example, in Chapter Three, Creating Believers, he talks about corporate overreach, saying “It sometimes seems that the loss prevention team would be happy if we simply kept the customers out of the stores. They typically work to prevent theft or assure safety without considering the realimpact on the shop ability of the store or the efficiency of the salespeople.”

I remember early in my career sitting with two application engineers for a large electrical distribution equipment manufacturer. They were discussing circuit breakers, and suddenly began laughing almost uncontrollably. I asked what was so funny. One of the engineers answered. “We just left a meeting where the bean counters were trying to save money by taking out the lugs of a circuit breaker and in all seriousness, telling the room how much money they could save if they did this.” I joined in the laughter. You know of course, that without lugs, you can’t connect the wire to the circuit breaker.

This kind of disconnect is what a street fighter like Inglis attacks at every opportunity. So, when he says that “Retailing is a race with no finish line,” he means it.

I’m reminded of a pricing seminar from one of my consultant friends who told the story of the difference between Chinese and American baseball. “Everything is the same,” he said. “But in Chinese baseball, you are allowed to move the bases.” It was a stunning, imaginative story to show the volatility of market conditions at that time, and the need to understand the rules changing for pricing were changing constantly.

On my desk, I have a saying in front of me I read each morning as I sit down to work: “A cautious person, when it is time to act suddenly, does not know how to do so and is consequently ruined.”

Inglis’ book describes the only way to overcome this fate: through practice, and passion for selling by translating your culture – your fever – to everyone in the company. And that passion makes his stories especially useful in understanding strategy or pricing and deals.

Because in the end, when you lose focus of the customer, you lose. When you forget your core competency, you lose. It may not be immediate, or it may be sudden. But you will lose when that happens. Unless you create the fever and spread the fever among your co-workers.

One of his reference quotes is from William Hazlitt: “Rules and models destroy genius and art.”

Any guy who quotes Hazlitt is someone to listen to in my book.