The Closing of Heathkit Stores

This is strictly a personal perspective story from my viewpoint. What I say here happened, but I can't say for sure what the motivation was up and down the command chain. Dates are believed accurate, based on bits of memory and piecing things together and looking at old calendars, but I can't point to a journal or official documents to prove it.

Background

Heathkit closed its retail stores (then using the name, "Heath/Zenith Computers") in March, 1992.

When I hired in 1982, the manager told me, "While computers are a small part of our sales floor, they are most of our business now", and that's how Heathkit had been throughout its history -- going from one "primary" product line to another -- audio, TV, amateur radio, etc. But this was a little different, any pretext that one could market kits in a cost-competitive way against machine assembled electronic products was long gone. By the early 1990s, the computer industry had standardized on the PC, with a little bit market still owned by Apple. Computers were mostly a commodity, there was huge need for support, but people bought the computers mostly based on price. The writing was on the wall for retail computer stores. Our "store" was very profitable, and making good sales, but calling it a computer store was somewhat inaccurate. We had turned most of the sales floor into corporate sales office space, the kits were gone. Our doors were open, private people could walk in, and could buy a computer, and we'd provide top-grade support, but our money was made in two and three digit quantity sales, not one computer to a private person for home use.

MY store's building was company owned and in a relatively "low-rent" area, but many of our stores were in prime retail locations...doing non-retail corporate sales. Things were going to change -- they had to. To Zenith's (Heathkit's owner) credit, they knew this and recognized this. A lot of people were sad and upset about this closing, but I was pretty sure retiring from Heathkit (at least in a form I recognized) was not going to be an option. They didn't ride the business down...they saw change coming and tried to get ahead of it.

Not sure if it is related, but ...

I worked with a great group of people at Heathkit -- both good employees and coworkers, but many also became friends. The store manager that I worked with the longest, R, had moved to Florida to manage a store there. I hadn't had a lot of business reason to talk to him. I had called him to tell him a former area manager we had both worked for had a stroke, then again to call him to tell him he had died. I then called him to tell him another coworker at our store had died in a plane crash. And one day, I figured I should give him a call for no bad reason whatsoever...just to say hi. So I did. Apparently, he was thinking the same thing, "Why would Nick call me unless something bad happened?" I could hear the concern in his voice until I said, "nothing is wrong, just wanted to say 'hi' for no particular reason."

We had a nice little chat, hung up. A few hours later, I got a call from another former coworker who had followed R down to Florida, "Nick! They just fired R!" That night, I called him at home, the first words out of his mouth were, "I don't think I want to talk to you".

As I recall, the termination was supposedly over an inventory discrepancy at the store, and as manager, he was responsible for all activity at the store. However, as someone who worked with him, I had no question about either his integrity nor his management of the store -- and if stories I have been told are to be believed, the "inventory discrepancy" was later found to be a total fabrication, or at least a corporate error -- the missing product never existed.

Stranger yet, the very day after R was fired, they shut his store down completely. This wasn't a failing store -- it was quite successful. The person who had my position at his store ("Systems Engineer" -- technical sales support, basically we made what the salesperson promised come true), was kept on the payroll as a "work from home" person. Most of the rest of the staff was terminated, though.

We thought this quite strange -- why would the company shut down a successful store after terminating the manager? This definitely didn't make me believe things were as simple as they were saying.

In retrospect, I think it was a "trial run".

First inklings

One of the commonly followed trade magazines ran a story in either late 1991 or early 1992 saying that Zenith was going to be terminating their contract to sell Apple products. This was strange, because while Apple products were not at all a majority of our sales, they were highly profitable and we did move a fair number of them. But, also not so strange -- we were owned by a computer manufacturer, and we were selling both their product and a kinda competitor's product. It would be a little like going into a Ford company display and finding out they also sold Kia.

There was an immediate corporate communications that came out saying this report was completely false, we had a strong and valued relationship with Apple, etc. All the stuff you would expect if the article was a total fabrication -- or completely correct but "too soon". And things continued as they had. But none of us forgot that article.

At this point, I had graduated from college, and was employed full time at Heath/Zenith. My job was sales support -- help customers figure out what they needed, help the sales people sell the right product, figure out solutions to technical problems...basically, make other people rich. And I did this pretty well -- I never asked for a raise while I worked there but got many, and I was told that I was the second highest paid person in my position at the Heath retail stores.

Change is coming

One Tuesday, late in March (Doing a little calendar analysis, I think it was March 23, 1992), we got a strange announcement from Corporate -- all store managers needed to get to Chicago for an important meeting Friday that week. It was JUST the store managers, not sales managers, not operations managers. As far as I am aware, there had never been an unexpected all-store-managers-in-one-place meeting like that called before, but then we were changing a lot of things about how we did business. We assumed it was related to the Apple announcement. Our sales manager called me into his office and told me, "Whatever this is all about, it is probably going to land on your shoulders, you haven't had much vacation...why don't you take the rest of the week off?" This sounded like some really good advice, so I did. I went home that evening, packed some stuff, and drove up to my favorite vacation spot.

At the time, we had a curious voice mail system -- we could dial a toll free number (and thus, use it for free from any pay phone), enter our account number, our passnumber, and send voice mails to anyone else in the company with the same service. I knew our sales manager used it extensively, so Friday evening, after I knew whatever had been told at the meeting was "out", I called into the voice mail system and left a message for our sales manager, "Hey M, Nick here. Any reason for me to come home?" Next morning, there was a response, "Oh definitely, we need you to come back Monday!"

So, Sunday, I pack up, drive home...I get home, and there is something like four messages on my answering machine from the store manager.

"Nick! C. here! Need you to come into the office today" (Saturday -- we weren't even open on Saturdays anymore).

"Nick! Can you come into the store? need you here."

"Nick! Call me at home ..."

"Nick, M just told me you were out of town. Well, call me at home when you get in."

This isn't good. Called C, he told me, "Good news, bad news. Good news, you have a job. Bad news, the store is closing, ALL the stores are closing. Most other people don't have a job. Don't tell anyone."

Well, good news, it's Sunday evening, don't have to keep the secret very long. Bad news is...one of those things you really want to talk to SOMEONE about. Heck, C had needed someone to talk to, and he'd brought M and me into the circle of awareness (and wasn't supposed to).

Closing day

That Monday was the oddest day of my career so far.

I walked into the store knowing most of my coworkers were about to become former coworkers...but I couldn't say anything. We all knew something was up, we had all known about the Friday meeting, we all knew we were about to find out what the reason for it was. We all had no idea what it was. Well, we weren't supposed to know. One of my coworkers had asked me to get something for her from my vacation destination, I did -- gave it to her and refused to take money for it (wasn't that much). But mostly, I tried to avoid 'em, slipped into my workshop/office until the meeting.

The meeting went as you would probably expect. Gasps of shock. Corporate "separation consultants" to help people put their resume together. Bla bla blah. Honestly, I don't recall much of that, even with warning, it was still a shock.

Besides, I was then sent across town to meet with my new boss. I had met "S" before twice -- first time, I thought he was a horse's ass. Second time, I had thought he was a horse's ass. Oh joy. Well, try to keep an open mind...listen to what he had to say.

Well, his message was basically, "Aren't you glad to still have a job? You will be supporting these companies, isn't that great? These companies really aren't important to Zenith, but it's great, you have a job!"

It was a strange experience...I just couldn't picture what "tomorrow" was going to be like in this job. The general message was that I was lucky, the company had a few "minor" customers they wanted to keep happy and keep buying our product, that was my job. I felt no feeling of respect from my new boss, there was an outright statement of disrespect for the importance of some of our store's largest customers. I was going to be doing three people's work, getting my old pay check, and telling customers, "we are still here to support you because I'm here".

It just felt wrong.

On the way back to the store (where else do I go?), it suddenly hit me -- it's my life, it's not required that I take this job. People had been telling me for a long time I should be self-employed...this is the time to do it! And suddenly, things felt right. I wasn't sure what I would be doing tomorrow, but I had a plan, I could "imagine" tomorrow and the rest of my life. It just felt like I had made the right decision.

I got to the store...most of the people who were "just terminated" had gone home. The people remaining were to stay on for a month or so as part of the clean-out crew, but three other people were retained by the company, and at one had been set up with a job with a local Zenith dealership, "you hire Steve, we'll send all Zenith repair work your direction". Steve was a top-notch technician, both in terms of skills and keeping customers happy, so it made sense to try to keep him fixing the company's computers.

I was met at the door by the salesperson who managed most of the accounts I was charged with supporting, "You met with your new boss?"
"yes"
"Looks like a good job?"
"no"
"But you are going to take it, right?"
"No, I'm going to resign from it right now, actually"
The look of panic on the salesperson's face was amusing... "What are you going to do?"
"Probably set up my own business"

I walked to my office, called my new boss. He wasn't available, so I identified myself, told the person who answered, "Just tell S I won't be taking the job". Quitting by telephone message is probably not the most professional thing around, but I also felt it was best to let them start planning the next steps as soon as possible. The person I left the message with was very matter-of-fact, no questions, just, "I'll tell him". I don't even recall how, but I recall someone telling me the message had been relayed, and that my new (not) boss had said something to the effect of, "oh, guess I came across badly". (Yes, you really did).

Minutes later, the store manager got a call from Corporate, "ESCORT NICK OUT OF THE STORE RIGHT NOW!" Seems people were VERY unhappy about my decision, I later found out that Zenith people had talked to our major customers to tell them that Big Changes were coming and that they need not worry, because "Nick was going to be still there to take care of you!", and make them happy. But I wasn't.

My boss laughed and said, "First, do you think that will piss him off? Second, do you really want to piss him off? Third, do you really think we can close this store down without him? He's been here longer than any of us!" (Yes, considering the relationship I had with our customers, I probably wasn't someone they wanted to piss off.)

Calmer heads prevailed, and a few minutes later, someone else from corporate called my boss and told him to add me to the close-out team, which I accepted. This was probably an error on my part -- since I had not taken the job they offered me, I was not eligible for the severance package everyone else who was terminated got, and I lost three weeks where I should have been starting my business, and since my business was going to be bootstrapped by companies that were abandoned by Heath/Zenith by the closing of the stores (I was NOT after the big accounts that Zenith wanted me to take care of -- those were Zenith's, not mine. I wanted the little ones Zenith did not want). But we did have an interesting time closing out the store, returning inventory.

So, as I said, weird day. I tell people I had five job transitions in one day, and really, I did:

Tuesday, a customer I had worked with called and asked what I would be doing after the closing of the store. "I'm on the clean-out team, then I'll be starting up my own computer service consulting company"
"When will you be done with the cleanout?"
"April 20 will be my first day of my new company"
"Be here"
I had my first client!

As it turned out, that wasn't exactly true -- John ended up being my first appointment, yes, but my first paying client was actually Zenith. Seems the other store in Detroit had just sold a big sale of Macintosh computers to a company, and delivered them days before the close down, with the understanding that the store would be there to set them up for the customer, and thus, it as my job to go out and take care of it. Except ... wasn't my sale, wasn't my store, likely hostile customer who just realized the full-support deal they were expecting just turned into a drop-and-run. Corporate told me to go out and set it up. I refused. They told me I'd lose my severance package if I didn't do what they said, I told them, too late, I had turned down the job they offered me, so I had already lost the severance package. If they want me to leave the building and employment now, that's fine, but I wasn't being paid enough to deal with other people's problems. (I had already figured out that joining the clean-up team was probably not my best business plan, while I was happy to fulfill my obligations, if they were done with me, that would be fine with me, too.) "What are we supposed to do for the customer, then?"
"I would think the proper thing to do would be to return the product, since they aren't going to get the service and support they expected"
"We can't do that!"
"Well, at the end of April, I'll be self-employed, you can pay me to do the setup"
and that's what ended up happening. It turned into a good bit of practice in business. One thing I had decided early on was all my clients would pay the same hourly rate. It is just easier that way, and much better if two clients talk to each other. My old employer protested about my $95/hr rate I quoted them, but I had no trouble saying, "ok, I'm sure someone else can help you out then. Goodb..." "WAIT!"

I ended up not only making the company happy and billing my former employer for a few hours, but I also landed the company for a lot of additional work over the next few years.


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