The Promotional Idea Showcase - Winter 2002 - Updated Quarterly

Special Markets
Corporate Store Strategies
By Andrea Graham
The companies that magazines such as Fortune and Business Week list as the best to work for have several common traits. One is that they take great pains to retain employees rather than foot the high cost of turnover. Another, interestingly, is that most have a corporate store as a perk. 

Typically, corporate stores carry items like logoed wearables and other products, as well as convenience items such as greeting cards, snacks, newspapers, magazines, etc. Some also offer services such as dry cleaning, film processing, and video rentals. 

Corporate stores can be physical or virtual operations – or both. The virtual store’s advantage is that employees at all company locations, as well as shareholders, clients and even the public, have access to the merchandise. Some firms have an Internet store for employees and the public, in addition to an “Intranet” store just for employees. 

Companies wishing to start a store have help. Most promotional products counselors can assist in not only selecting the proper logoed merchandise, but in developing stores over the Net or in a physical space. Often, they can also arrange for processing orders and warehousing stock. A few even get involved in coordinating the staffing for physical stores. Joe Brooks, a Midwest counselor, receives about 150 requests a year to develop and operate corporate logoed merchandise programs.

Whether you go the virtual or physical route – or a combination of both – a corporate store is both a convenience for employees (and the public, if they have access) and an effective employee motivator. 

Gordon Bethune, CEO of Conti-nental Airlines, which has a store at its Houston headquarters, says corporate stores are useful to upper management as well. Executives can gauge employee morale and loyalty through the volume of logoed items bought. Seems that contented employees are only too happy to wear and use items bearing their company’s logo. 

Some Facts

The Employee Services Manage-ment Association commissioned Research USA to survey 600 of its members to learn more about them and their buying needs. The survey found that more than 25% operate a physical store, with an average of $71,000 a year spent on merchandise. Additionally, about 20% have a Web site for employee services programs, which might include an e-store.

The most-sold products at corporate stores? Logoed apparel (T-shirts, jackets, caps), followed by other logoed items like coffee mugs, golf items, briefcases, tote bags, watches, and pens. Nonimprinted items, such as drinks/snacks, discounted tickets, cards, stamps, personal-care items, were further down the list. 

Key Elements

The key to a successful corporate store is the support of upper management. If senior company officials aren’t fully behind the concept, the store will probably lack quality and ultimately fail.

Once the go-ahead is given, the first decision is whether the store will be physical, virtual or both. A physical store should carry convenience items as well as items bearing the company logo. A virtual store usually carries only the latter.

Next, will the store operate on a for-profit or break-even basis? If it’s meant to be an employee benefit, break-even is the most logical. If the goal is to turn a profit, the markup on merchandise must be set accordingly. Also, where will profits be funneled? They can help subsidize employee activities or pay for amenities to enhance the workplace.

If you go with a physical store, who will run it? In many cases, the store is part of the employee services and run by an employee services manager. But some stores are part of the HR department; others are part of facilities. The person in charge of the store should ideally have experience in retail management and be able to serve multiple roles - buyer, accountant, marketer, decorator and clerk. Additional staffing can come from the firm’s pool of retirees. For instance, at Honeywell Business and Commuter Aviation Systems’ store in Glendale, AZ, 10 retirees volunteer an average of four hours a week.

Other physical-store considerations: What about location? The best is usually a high-traffic, centrally located spot, such as near the cafeteria or fitness center. Who can shop there? Employees, of course. How about visitors or employees’ families? What should the store carry? Predominantly items bearing the company logo, which should be sold at cost or a slight markup. 

As for convenience items, be sure to survey employees about what they want. The farther your company is from the nearest mall or business district, the greater the inventory the corporate store should carry. Also, will the store offer services like dry cleaning, video rental, or photo processing? Again, this makes sense if your company is far from retail centers. And again, employees should be surveyed first. Of course, reliable vendors have to be engaged.

Some Examples

At Nike’s company store in Beaverton, OR, shoes and clothes are sold at discounts of up to 60%. The store is closed to the public, but Nike allows “friends of the company,” which include athletes and their agents, to shop there. Retired basketball star Charles Barkley reportedly spent $10,000 during one visit.

At WCVB-TV in Boston, the employee store consists of a glass case containing logoed merchandise. Popular items include caps, jackets, totebags, shirts and fanny packs. Employees make their purchases through the HR department. The store isn’t open to the public. Occasionally, news directors buy items like hats and shirts to distribute at events they cover. Linda Walsh, who runs the store, says it barely makes a profit – which is OK. 

CIA employees in suburban Washington can buy T-shirts, glasses, golf balls, jackets, sweatshirts, caps and other items with the CIA logo at their on-site store. The FBI Recreation Association sells logoed T-shirts, hats, jogging suits, jackets, mugs, pens, etc. And in the basement of the White House, a shop run by the Secret Service sells items like holiday ornaments with a rendering of the White House, imprinted golf tees and teddy bears sporting logoed T-shirts. The shop donates its profits to charity and Secret Service officers needing assistance. 

At the John F. Kennedy Space Center in Florida, NASA has four stores offering discounted shopping to employees. Among the merchandise: space-related memorabilia, greeting cards, giftware, clothing, sundries. Proceeds benefit Space Center programs. 

Ten years ago, Hewlett-Packard’s corporate store in Palo Alto, CA, was limited to a small cubicle where discount tickets were offered to employees. Today the computer-maker has a Web site that racks up more than $1 million in annual sales. The site features only logoed merchandise. 

The store went online in 1996, and sales have increased “in the hundreds of percents,” says Joe Giarrusso, employee programs manager. Most employees buy logoed merchandise for their own use, for prospective clients, or to be used as awards. “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 builds a sense of belonging and pride.” 

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, the company has created a Web site offering employees an assortment of Xerox- and, in certain years, Olympics-logoed merchandise. Xerox is, of course, an Olympic sponsor. 

In all, establishing a company store shouldn’t seem daunting. Remember, it’s only as large and diverse as you want it to be and should be tailored to best serve your corporate needs. 

Contact your counselor for a more in-depth discussion. 

Andrea Graham is a freelance writer based in Paramus, NJ.