Interview with Ted Zimmerman on Bottom Line Leadership
In 1981 I had the honor of interviewing Ted Zimmerman. You might have a similar reaction to hearing the name as I did when I first heard it, because I had never heard of Ted Zimmerman. As a teenager Ted had been a clerk in the first self-service grocery store in America. Although there has been an unresolved debate concerning when the first self-service store actually opened, and by whom, I will go with the Safeway claim of being first, with Ted Zimmerman working as a clerk in that store on grand opening day.
S.M. Skaggs opened the store in early June 1915 in American Falls, Idaho, and within months sold the store to M.B. Skaggs, one of his six sons. Neither Ted, nor any other witness can pinpoint the date any closer than, “early June.” Prior to the advent of self-service, clerks assembled product orders from a customer provided list. But everything changed on that grand opening day in June 1915 and I was given the privilege of interviewing an elderly gentleman who was a personal witness to that historical event.
The reason for the interview was that Ted Zimmerman was in declining health and it appeared that his story might go forgotten and untold if it wasn’t documented. On the day of the interview near Tacoma, Washington Ted was in good spirits and seemed eager to have his participation in history documented.
After a few cordial preliminaries, I asked, “Is it true that on the first day a cigar box was used as a cash register?” Smiling, Ted said, “Yes, we couldn’t afford a real register for some time. In those early days a cigar box was all we had and it worked just fine, even as we opened more stores.” So the rumor I had heard about a cigar box was true.
Later in the interview I asked, “In the store’s early days how did the Skaggs brothers measure results or success?” Ted’s response was simple. He said, “At the end of each day we counted the cash in the cigar box and entered the total in a ledger we used to keep track of our sales. It was cash only in those days, because there were no checks or credit cards. That meant our sales for a day was the cash we had in the cigar box at closing time.”
Ted explained more about the ledger, “We kept track of daily sales in one column and added the days of the week into a weekly total in the next column. The weekly totals then added up to a monthly total, and so forth.”
I asked, “What other measurements were used in the early stores?” He said, “It didn’t take long to learn that when an owner isn’t managing the store that labor cost can get out of hand. So we divided the weekly labor cost in dollars, by the weekly sales dollars and called it Labor Percent. It was easy to know your labor dollars, because we paid the help in cash right out of the cigar box each Friday.”
I continued, “How was Labor Percent used to manage a store?”
He explained, “We figured out Labor Percent benchmarks so we could tell within a week or so if a manager was using too much labor. As you can suspect, there wasn’t much of a problem with a manager using too little labor. Figuring Labor Percent each week gave us an easy way to look at the biggest controllable expense we had.”
Overall Gross Margin
Ted described another bottom line measurement used in those early stores. He continued, “At first we kind of stumbled onto things as we opened new stores. By knowing our sales for a period of time, what it cost to purchase the products we sold, and how much inventory we had on hand, we could figure out an overall gross margin percent for the store. That made it possible for us to help a manager whose gross might be lower than other stores. If a gross was low it meant that something was wrong. It gave us something to look at and work on.”
My next question was, “How long did it take for the company to develop a Profit and Loss Statement?”
Ted wasn’t sure about the answer, but clarified, “I know it wasn’t for a while, because none of us had much accounting background. But after a while I think it was a bookkeeper that started to make them. When we got used to them, they came out every few months. Then, when the company got bigger the P&Ls came out each month.”
Measurements for Success
I summarized to Ted, “So what you are telling me is that the primary measurements for success in the early days of self-service grocery were:
1. Sales Per Week,
2. Labor Percent Per Week
3. Store Gross Profit Percent After An Inventory
4. A monthly Profit and Loss Statement.
Is that correct?” Thinking for a minute he said, “That’s about it and it worked pretty good for us in those days.”
Having heard this piece of history, consider this: “What has changed in measuring bottom line results or success in the grocery industry from 1915 until today?” The answer is: the cigar box, and not much else. That’s why, “The more things change, the more they stay the same.” The sad truth is that almost all retail stores today function with the same four primary measurements that were used almost a century ago. With the unbelievably sophisticated POS systems, scanning, computers, and expensive software, can’t we do any better than what Ted and his colleagues did so long ago?
Consider the cost of an empty cigar box and ledger, compared to the cost of today’s highly computerized POS systems. If Ted and the Skaggs brothers could get four critical measurements out of a cigar box, how much valuable information should we get and use from a POS system that can cost hundreds of thousands of dollars?
How well do you use the information supplied by your POS and accounting systems? Is your organization’s bottom line leadership and measurement strategies stuck in 1915, or have they progressed beyond the four standard measurements into more specific and motivational ways to measure results?
Pennies Lead To Profits, Dollars Lead To More Profits
In an industry where dollars of sales only produce a few pennies of profit, do you honestly believe that measuring bottom line results on a weekly and monthly basis, and only in a manner that hasn’t been improved in almost a century, is adequate? I don’t think so! Give these ideas some thought and then consider how much information coming from your front-end and accounting systems are being used, and how much is going to waste. Remember, if we don’t actually use the information that comes out of the POS system, we might as well use a cigar box.