Creative Leisure News - Business-Wise

Mike's often irreverent, thought-provoking analysis of the industry-- with an occasional guest columnist.

The Decade's Major Influences, Pt. II: Michael Rouleau

Imagine if Michaels had gone bankrupt?

by Mike Hartnett (August 6, 2007)

(Note: To celebrate Creative Leisure News' 10th anniversary, I've surveyed readers and chosen the people, companies, and events of the past decade that have had the greatest influence on our industry of today. In the 7/17 issue I wrote about the decade's most influential category: scrapbooking. This time it's the most influential person. In future issues I'll write about other major influences � Technology ... Media ... Changes In The Old Order ... Imports ... Investors ... New Generation of Consumers ... Lower Margins ... Yarn and Beads ... Wal-Mart.)

Michael Rouleau has been accused of being abrupt, dictatorial, egocentric, domineering, impatient, and holding a grudge. He was also a visionary, creative, focused, disciplined -- and he influenced the current state of our industry more than anyone.

When he arrived at Michaels shortly after I had launched CLN, Michaels was in serious financial trouble. The company had grown too fast � too many stores opened without the necessary infrastructure to support them. Two examples:

1. Individual store managers � and the central office � could order products. The result was chaos. More than one vendor told me they received a call from the central office asking, "How much have we bought from you this year?"

2. One vendor received a frantic call saying the company just realized they were virtually out of a particular product. The vendor had employees work overtime and air-freighted the order, only to receive another call, "Oh, we're not out after all; never mind."

Michaels' reputation for customer service was not good, either. When Michael and I talked for the first time, I told him many of the stories I'd heard about indifferent or untrained clerks. He didn't seemed particularly interested, as if he had more important problems. Later, when I learned how serious Michaels' financial problems were, I realized he was right.

It's hard to imagine what the industry would be like today if Michaels had declared bankruptcy. How many vendors, including important vendors to independent stores, would have gone down with Michaels? But Michael righted the financial ship and went about creating a strong infrastructure. The auto-replenishment system and other technological marvels allowed the company to move products from the manufacturer's factory (or ship) to the stores' shelves as well as anybody. (In fact, a vendor recently told me he thought Michaels' distribution system was now better than Wal-Mart's.).

A vendor comments.

When Rouleau announced his retirement a little over a year ago, I asked David Blumenthal, President of Lion Brand Yarn, to comment. David has known Michael longer than anyone in the industry. David's uncle, George Blumenthal, sold yarn to Michael in 1962 when Michael was a junior buyer at Target. "I look back at the last 10 years," David said, "and three words come to mind. The first is focus; he would focus on a problem until it was solved. The second is prioritized. And he was fair.

"He was a workaholic who loved his work," David added. "He was genius. He took a company on the verge of bankruptcy, and he's done a lot better in the last 10 years than Kmart, Home Depot, and a lot of other companies."

A personal memory.

Early in Michael's tenure he initiated some new policy for vendors. I don't remember what it was, but it would be a serious hardship for small companies, and my phone line lit up with manufacturers ranting and raving.

So I called Michael and told him I thought he didn't realize what this would mean to his small vendors. Michael had been at Lowe's and probably wasn't experienced dealing with very tiny manufacturers.

Toward the end of the conversation I said, "The ACCI show is coming up soon; why don't you have a meeting with your small vendors and let them explain it to you."

Michael kind of harumphed, and the call ended. About 15 minutes later his secretary called, saying Michael wanted to have a meeting with small vendors at the show, and could I suggest whom he should invite? I gave her a list.

Michael held the meeting. One attendee was a woman who had vented to me and convinced me to call Michael in the first place. This was still in the days when vendors were very worried about Michaels' financial stability.

According to others at the meeting, she stood up with tears in her eyes and said, "If you don't pay me, I'll lose my house."

Michael told her that if need be, he would pay her out of his own pocket.

Today, almost a decade later, her company has grown substantially and is still a Michaels' vendor.

I wouldn't want to be Michael Rouleau's employee or competitor, but nobody changed the industry in the past decade like Michael.

(Note: To comment on this or other industry issues, email CLN at mike@clnonline.com. To read the previous article in this "Influential" series, click on "The Decade's Major Influences, Pt. I: Scrapbooking" in the right-hand column.)

xxx