West marine case study

Edmondson was brought in after the E&B Marine acquisition to execute a company turnaround. For more than four and a half years, he had been focused on rebuilding West Marine. The company installed a new senior management team, invested in new systems and processes throughout the organization, and initiated a major cultural change. Edmondson and his team were proud of West Marine’s recent achievements⎯particularly in the supply chain arena. Yet, on the eve of the company’s latest acquisition, he wondered whether they had done enough to effectively support another 62 BoatU.S. stores without experiencing the negative repercussions of the E&B Marine acquisition. Edmondson took a deep breath⎯savoring the “calm before the storm.” West Marine’s course had been set. Now he only needed to launch the journey and hope for smooth sailing.

SETTING SAIL: COMPANY BACKGROUND

Anchors Aweigh

Randy Repass founded West Marine in 1968. Repass worked briefly as a computer engineer in Silicon Valley, but found the high technology industry to be rather cold and impersonal. An avid boater, he sought refuge in his hobby and began selling nylon rope by mail order out of his garage. Driven by a desire to improve the way people shopped for boating supplies (and his personal dissatisfaction with service at his local boating store), Repass next opened a small boating outlet in Palo Alto, California in 1975. The store sold rope, as well as other miscellaneous boating supplies and accessories. Most importantly, it was dedicated to providing knowledgeable, friendly customer service to the boating community⎯a company of boaters helping fellow boaters. As the organization’s customer base grew, so did its business model. Repass began acquiring and opening boating supply stores along the West Coast. He also gradually expanded the company’s product line to include anchor and dock equipment, boat hardware, maintenance and safety products, electronics, boating apparel, water sports equipment, fishing supplies, and more (see Exhibit 1 for illustrative store and product photos). In 1978, West Marine founded its port supply business and began selling products to boat yards, boat dealers, and other wholesale customers. By 1987, the company had 15 stores. That same year, West Marine began producing its first catalog. In 1991, the company opened its first stores on the East Coast. In 1993, West Marine went public under the Nasdaq symbol WMAR (see Exhibit 2 for a more complete timeline of company milestones).

Making Headway in 2002

By late 2002, West Marine had become the largest boating supply retail chain in the nation, with operations in the U.S., Canada, and Puerto Rico, approximately 5,000 peak season employees, and annual sales of approximately $530 million. In total, West Marine offered more than 50,000 products through its stores, Web site, and catalog, including an extensive collection of private- label goods.

For the exclusive use of A. Bregante, 2018.

This document is authorized for use only by Anthony Bregante in SCM 800 Fall 2018 Aggon taught by NORMAN AGGON, The Pennsylvania State University from Aug 2018 to Jan 2019.

West Marine: Driving Growth Through Shipshape Supply Chain Management GS-34

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Channels The company had more than 250 stores, with retail operation accounting for approximately 82 percent of its business. West Marine had three primary types of stores. Most standard stores averaged 8,000 square feet, carried 8,000 to 10,000 stock keeping units (SKUs), and generated roughly $1.5 million in sales per year. The company also had a growing number of express stores that averaged 2,800 square feet, carried 2,500 SKUs, and generated $600,000 to $800,000 in annual sales. In its continued pursuit of growth, West Marine had recently begun experimenting with a third store format⎯the megastore. These outlets were located in large markets (like Fort Lauderdale), ranged from 24,000 to 30,000 square feet, carried 30,000 SKUs, and were expected to generate $10 to $15 million per year. Megastores were intended to be “destination stores,” featuring interactive displays, boater education, and an unparalleled in- house selection. The remaining 18 percent of West Marine’s business was generated via Internet and catalog orders, as well as sales to commercial customers. West Marine’s catalog was more than 1,000 pages, making it the most extensive in the industry. It offered retail and wholesale customers access to 35,000 of the company’s SKUs, featured full color photographs of the most popular products, and reached more than 1 million boaters a year. The company’s online store included all 50,000 SKUs, but mirrored the catalog to provide customers with a consistent experience across channels. Similarly, West Marine operated a call center that provided real-time customer support for catalog, Web, and in-store interactions. Like West Marine’s associates in the stores, call center representatives were known for having a depth of specialized boating experience and a strong commitment to customer satisfaction. Because they received a high level of service and a similar buying experience regardless of the channel, West Marine’s customers tended to shop freely between the stores, the Internet, and the catalog. For example, some customers relied on the stores for last minute purchases and to acquire products they wanted to “touch and feel.” However, they would use the Web or catalog to research, compare, and buy products when they had more lead-time, or to take advantage of special offers. “Our most profitable customers shop in all three channels,” explained Tony Gasparich, VP of direct sales. “We broke down the barriers between catalog, Internet, and our stores so that our customers can shop wherever, and whenever it’s most convenient for them.” 1