Kacey Fine Furniture – Consulting Proposal Letter
Kacey Fine Furniture
1201 Auraria Pkwy
Denver, CO 80204
May 3, 1996
Thank you for inviting ABS Consulting to submit a proposal for consulting services, and giving us an opportunity to introduce our company and the expertise we offer. We are confident that we will be able to come up with the effective solution for the challenges your company faces in the market now, as well as help you chart the course into the future, all the while saving you the money and giving you actionable recommendations to sustain and grow your business.
As you may know, ABS Consulting has been involved extensively in the strategy formulation and assistance with its implementation in the retail industry in the variety of markets. We specifically pride ourselves in the fact that we were able help a number of companies in the mid-size market, with revenues up to $50 million, to increase their revenue by 25-40%, and increase the profit margins by 10-15% even in the face of adverse market circumstances. ABS Consulting did this through comprehensive analysis of both internal and external environments, including customers’ existing organizational and cultural environment, operational processes and strategy, market and industry trends and opportunities. This integrative approach allows us to develop winning strategies based on the unique strengths of our clients. We believe that our previous experience and the expertise we have acquired in this niche will be a perfect match with Kacey Fine Furniture’s own cultural values and expectations.
BACKGROUND AND UNDERSTANDING
From your written request for proposal and our follow up phone conversations we believe that we have captured accurately the essence of the concerns that you have about your present challenges.
Based on the RFP and interviews with you and other executives of Kacey Fine Furniture we understand that you have requested consulting assistance due to the dramatic change of the market situation that effects your downtown store location. From the renewal of the lease in 1992 to present time the face of the immediate area surrounding the downtown store has changed drastically. The redevelopment of the neighborhood resulted in turning a formerly low-rent furniture district into a major high-rent entertainment area. This factor in combination with changing customer traffic pattern has put a tremendous pressure on the store’s profitability.
Among other findings of our team from preliminary communications with you and your executives is the decreasing morale of your sales personnel caused by the decrease in foot traffic to your downtown store, and consequently the decrease in sales. Given the fact that currently your sales staff’s pay plan has sales commission as significant component of their total pay, the low morale is understandable and expected. Therefore the declining motivation of your sales force in this turbulent market is of great concern to you and is a issue which requires immediate attention.
We understand that according to your observation the very viability of the store is under question because of the above mentioned two factors. Therefore, the two specific issues where you are asking for our assistance are:
Recommendation regarding what Kacey should do when current lease on the downtown location expires
How your management can keep the store profitable and the employees motivated at the present situation.
At the outset, after running initial analysis, our team strongly suggests that the proposed scope of the assignment be changed. We propose to eliminate the first part of the assignment entirely and focus exclusively on the task of keeping the store profitable and maintaining employee motivation given the present situation.
The primary reason behind such a suggestion is the inflexibility of the current lease terms, in which your company is locked for the next six years. As we learned from Tom O’Donnell, Operations Manager, it would take “at least two years to get a big full-size formal showroom up and running”. So, if any decisions need to be made for the lease, then four years from now would be the best time for evaluating the situation and giving recommendations. This way Kacey would have enough time to plan for a new store if the need be.
The second reason for skipping the recommendations related to the lease expiration is that the current situation is rather fast moving and unpredictable for the comparatively long run of four to six years. We believe that forming recommendations for an event which will occur six years from now is not the best use of time, human and financial resources at the present moment.
To illustrate our point, we should look at the situation with Kacey Fine Furniture. When the lease for the LoDo store was renewed in 1992, the business prospects for the store were looking very positive. However, in the span of 3 to 4 yrs the market situation in the downtown changed so dramatically that the company is not certain about the future prospect of the store anymore.
To summarize, regardless of the recommendations we could come up with now, your company would not be able to act on them in the next four years or these recommendations may turn largely irrelevant.
We are confident that our recommendations on keeping the employees motivated and the store profitable will bring about the positive change in the current situation. However, we would suggest you revisit the lease issue in four years to re-evaluate the progress made and to identify the best strategy for the remaining two years of the lease.
To find the best possible solution for the stated issues we are going to leverage the existing culture of employee involvement through the Great Game of Business. We believe this will allow us to attain the full benefit of Kacey’s existing organizational culture and competitive edge.