Some Hope for Retail Execs
By Parija B. Kavilanz, CNNMoney.com senior writer
NEW YORK -- The recession has already claimed hundreds of thousands of store jobs in the past 12 months. Now it's slicing into the ranks of retailing's other talent pool -- white-collar professionals.
These are store managers, district managers, all the way up the corporate ladder to vice presidents and higher from now-defunct chains such as Linens 'N Things, Circuit City and Fortunoff.
But one company's loss is another business' treasure.
Until a few weeks ago, Kevin Rigsby was a former district service manager with Circuit City. Rigsby, 27, handled home theater sales and installation for the Chicago metropolitan area and parts of Wisconsin.
In January, the electronics seller announced it was going out of business.
But don't feel bad for Rigsby. He's one of the lucky ones who has bounced back.
He's now a Snap-on franchisee. Snap-on operates mobile stores that sell high-end professional hand tools and power tools to independent repair shops, auto dealerships and industrial manufacturers.
Rigsby said the transition to Snap-on from his retailing background first as a Best Buy employee and then with Circuit City "made perfect sense."
"I got a thorough education at Best Buy and Circuit City. I learned about P&L (profit and loss) management, customer service, solution-based sales," he said. "In many ways, it was like a top notch four-year business degree."
His advice to others who've been laid off from a similar retail job to his is this: "Just because you've been selling electronics before doesn't mean you can't learn to sell something else," he said. "That's the first thing they teach you in retail."
Barrie Young, Snap-on's president of worldwide sales and worldwide franchising, said 40% of the company's new franchisees over the last nine months have held prior management jobs with merchants such as Circuit City, OfficeMax and Home Depot.At the same time, his company has been courting these white-collar workers as well.
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"Our business requires people with certain professional skills," he said. "You can teach anyone about a product, but knowing how to service the customer is critical in any business."
Besides their retail expertise, Young said these are also folks who have the financial means to invest in a franchise, which can be a pricey endeavor. The out-of-pocket cost for joining the Snap-on franchise can range between $16,000 to $25,000, he said.
Coming up with the money was a challenge for Rigsby. His starting investment was $10,000, which he managed through credit and his own savings. And he's worked out a 27-month lease for his Snap-on mobile store van for which he pays about $1,600 a month.
So far, his business is off to a steady start. "Some weeks are better than others," he said, adding that the economy has slowed down demand for premium services and repairs.
Still, Rigsby said he's "making more than enough to pay my bills and keep my family secure."
According to employment tracking firm Challenger Gray & Christmas, the retail industry eliminated close to 5,000 management jobs in 2008 and another 1,750 white-collar jobs just in the last month.
These numbers look relatively miniscule compared to the 81,621 total retail-related layoffs last year and another 72,727 industry jobs lost so far in 2009.
However, analysts point out that the loss of expertise and intelligence associated with these professional positions is a critical blow to an industry that's already reeling from the recession.
"It'll be a real shame if these people can't keep doing what they are so well trained to do," said Craig Slavin, chairman and founder of consulting firm Franchise Architects.
Store closings to date have resulted in $37 billion in lost retail sales. The reality is that these stores aren't coming back, said George Rosenbaum, chairman of retail consulting firm Leo J. Shapiro.
So as the industry continues to contract, it will also see loss of major retail talent and intelligence, especially at the managerial level.
"Some white-collar jobs are transferable to a non-retail industry like health care. But it's not going to be easy. The job market isn't robust right now," said Rosenbaum.
Still, three things that retail professionals have going for them is that they are "smart and highly employable" and know how to work with large groups, he said.
Also, retail managers typically don't earn as much as their counterparts in other industries, making them attractive to employers focused on lowering payroll costs.
'The history of retailing'
Jason Dilaura, 36, quit as store manager of a Big Lots store in California six months ago. He wasn't laid off, but given the unraveling of his industry in this economic downturn, he wasn't taking chances.
What's more, he was burned out and felt "underpaid."
"I was working long hours with nothing to show for it," he said. And giving up on a steady paycheck was a risk, he was willing to take it in order to spend more time with his two young daughters.
Dilaura is also a Snap-on franchisee. "I'm working for myself now. I have more freedom," he said. Although he's still working long hours, he has the weekends off. More importantly he's still utilizing his retail skills, albeit in a slightly different setting.
For now, Dilaura is hitting his breakeven point in most weeks.
Both Rigsby's and Dilaura's stories don't have to be the exceptions, said Stevan Buxbaum, retail analyst with consulting firm Buxbaum Group.
"Many retailers are going out of business because the concept doesn't work anymore or because of financial problems. It's not because people working for them were incompetent," said Buxbaum.
For his part, Buxbaum thinks recessions are actually good for the industry.
"Retailing is like a disease. Either you have it in your blood or you don't," he said.
"Many people will lose their jobs and go elsewhere, but many others will find a way to create a new business or become entrepreneurs," he said.
"This is the history of retailing. From the ashes a phoenix will rise. This is how two guys years ago created a company called Home Depot," said Buxbaum.