The VigilanceVoice

Wednesday -- April 17, 2002—Ground Zero Plus 218

K-Mart's Blue Light Of Vigilance

Cliff McKenzie
Editor, New York City Combat Correspondent News

        GROUND ZERO, New York City, April 17--Below is a letter directed to James B. Adamson, Chairman and Chief Executive Officer, Kmart Corporation.   I offer the letter to my readers as an example of how Terrorism and Vigilance are sewn into the fabric of everyday life, and by looking for the silver lining, we can put Terrorism in its proper perspective, no matter how small it may seem, or how innocuous.

James B. Adamson
Chairman & CEO,
Kmart Corporation
3100 W. Big Beaver Rd.
Troy, Michigan.                                                               April 17, 2002

Dear Mr. Adamson,

      Each day, since September 11th when I was at Ground Zero during the Terrorist attack on the World Trade Center, I have written and published daily articles on the tension between Terrorism and Vigilance on my website, (also located at  
      My goal with the Vigilance Voice is to illustrate how insidious Terrorism is, and how one must battle it with constant Vigilance, vowing to fight the elements of Terrorism--Fear, Intimidation and Complacency--with the powers of Vigilance--Courage, Conviction and Action..
      Yesterday, April 16, I experienced both a wall of Terrorism and a flood of Vigilance from your Kmart store located at Astor Place in New York City.
       This letter is to alert you of the Vigilance your employees express in defending the Terrorism of previous mismanagement and my response to it.
       Before I proceed, my credentials to speak about this subject are primarily based on being a consumer--just an average Joe--one of millions who frequent your stores daily.   Besides being an "average Joe," I have an executive management background.  I was the original senior vice president of marketing for Century 21 International Real Estate responsible for maximizing market share at both the top and bottom line levels.   Our organization grew from 17 offices to over 7,500 in eight short years, generating gross product sales of residential properties of over $50 billion per year.  Our revenue was based on a franchise fee of 6% of the Realtor's commission.  At the peak of our growth, we boasted 100,000 sales associates, generated over 11% market share of residential real estate, and invested over a $250 million a year in both national, regional and local advertising.  
      After the company was sold in 1980, I then worked with a multitude of other franchise companies helping spearhead their marketing.
      I offer this information so you know my background includes dimensional viewpoints regarding critical management policies necessary to grow a company, especially one that has been previously mismanaged.   .
      This leads me to my Terroristic situation of April 16.
      My wife and I purchased a telephone from your store at Astor Place on 12/02/01 as a gift for our older daughter who is pregnant and completing her final year at Union Theological Seminary.  In May she will receive her Masters of Divinity, and a few weeks later, deliver her third child.
      My wife and I moved to New York City two years ago from Laguna Niguel, California, to assist our daughter and son-in-law with baby-sitting their two children while our daughter completed one of her life-long goals of achieving her Masters of Divinity.
     Her phone was acting up, so for Christmas we purchased her a new one from your Astor Place store.  It was a General Electric model, retailing  for $38.00.   As we were checking out, the clerk offered us "insurance" on the phone for $4.99.  The clerk briefly explained that it would cover any replacement of the phone for a full year, and emphasized all we had to do was bring the phone back and get a new one during that period with no questions asked.
     I queried her to assure the conditions of replacement:  "You mean we just bring it back and you give us a new one, no questions asked?" 
    "That's right!"
    We purchased the insurance.   The contract was oral, offered, accepted and consideration and benefit flowed to both parties.
     Normally, I don't purchase retail product insurance.  However, since the phone was for my daughter, her husband and family,  I wanted to add some protection around the product--a vital tool for any family, and even more critical to a pregnant woman on the go all the time.   I was being a Vigilant father.
       My normal reluctance to purchase product insurance was heightened by the then return policy at Kmart.  We had been pleasantly surprised to learn that you could return any product you purchased from Kmart without a receipt and exchange it for another if such product was still in stock.
      For two years we made purchases at your store, prompted in part not only by its convenience and pricing, but also by its "unconditional warranty" policy.   My wife was always promoting "buy it at Kmart because if there's a problem, you just return it and get another one."
     A few weeks ago the new phone acted up.   I forgot we had insurance on the phone and took it back to your Astor Place store without a receipt on the assumption I would just exchange it for a new one as I had other products over the past 24 months that were faulty.
     To my consternation, I found a new sheriff was in town.   I encountered a wall of Terrorism instead of sea of "unconditional exchange" tranquility.   A gentleman in customer service by the name of Clarence was called to the customer service desk after the clerk refused to exchange the phone without a receipt.   I was taken aback.  She pointed to the "new policy" effective in January that all returns required receipts, and must be conducted within thirty days of purchase.
    Clarence and I went round and round.   I insisted that the policy under which I purchased the product was under a "unconditional return" policy.  Clarence challenged that right, underscoring the policy had changed.   I maintained that the old policy should apply to purchases made prior to the new policy..  He insisted the new policy superceded the old policy.   
      Since I had no receipt, I was helpless to make my point.  
     Infuriated, I left the store to "cool off."   I'm six-foot four, weigh in at 260 pounds, am an former Marine with over a hundred combat operations in Vietnam, and try to  to control my sense of injustice, usually by extricating myself from tense situations.  
      My anger was fueled by the fact I was returning a defective phone used by a pregnant woman with a thousand obligations.  As a Father of Vigilance, I didn't want my daughter to not have a link with the world outside her apartment.   Phones become most valuable when yours doesn't work.  Also, having attended law school a few years ago as part of a "reconstruction of myself," I was more than familiar with contracts and consumer rights.  I believe the conditions under which I purchased the original product formed the foundation for my argument about being able to "exchange" a defective product without question.   Clarence reminded me times change, and so do interpretations of contracts, express or implied.
     I went back to my daughter's apartment and fiddled with the phone.  Miraculously, it began to work.   I was relieved.   The Terrorism of failing to return the phone as I had boasted to my daughter I would do, evaporated.   In its place was the Vigilance of a warrior who repaired the wounded instrument without help from the "corporate giant."
     Upon my return to my apartment, I asked my wife if we still had the receipt in case there were future problems.   She alerted me that not only did we have a receipt, but we had an "unconditional return policy."  She fished through her files and produced it.  We taped it to the phone box in case of an emergency.
     April 15 the emergency arouse.   The phone went out again.   I puffed out my chest and told my daughter I'd take care of it.   Confident I had the ammunition to leisurely return the old phone and get a new one, I dismantled the faulty instrument and marched to Kmart.
    When it was my turn at the Customer Service desk I proffered the receipt and warranty information.   Terror struck a second time.   The clerk told me the warranty wasn't valid for a exchange at the store.   She said I would have to call the number on the card and go through the warranty company.
     I insisted that when I purchased the "insurance" that I was told if there was a problem to just bring it back and get a new one, or one comparable.   She said that policy was no longer valid.
     Terrorism, I promote, is constituted by Fear, Intimidation and Complacency.   I felt all three of these demons as I stood chewing nails.   My "fear" was that my daughter wouldn't have a working phone if I had to maneuver through a third-party. I knew negotiating with a third party could take inordinate time and result in less than satisfying conclusions.   I was "intimidated" by the adamancy of the Kmart staff shielding the return under by holding up the new policy effected in January.  And, worse of all, I felt a sinking feeling of complacency that I was running in circles.
     My back stiffened as Clarence appeared after the clerk summoned him.  I knew his position on the phone exchange from our previous engagement.  He took a look at the receipt and restated the policy:  "This isn't valid!  You have to call this number."
      Clarence recognized me from our encounter a few weeks earlier.  I reiterated my position to him, that I was sold the policy on the grounds of being able to bring it back to the store and receive a new one in case of fault.  Clarence asked me if I had read the warranty, and I said no.  That the contract was an "unconditional return" presented by the clerk.   I wasn't required to read or sign anything, just to pay $4.99 additional.   At that time I asked Clarence to summon the manager, whose name and photograph was posted on the wall as Kellie, directly next to the words:  "Customers Rule!"
      Clarence disappeared.  I waited, trying to calm my ruffled feathers.   The clerk received a call from the main office and I corrected her comments about what I was requesting, reminding her that I was not trying to return something under the "new policy" but rather under the "old policy." After all, I had purchased the phone during the time of the "policy."
     More minutes passed.   Then a man named Marsalli came on the scene.   Marsalli  is about my size,  but with a much trimmer shape than mine.  He took the same posture as Clarence, adamant that the existing "new policy" was in force, and that to effect a return I must go through the procedure of calling the number and working with the third party.
     I stood my ground.  I insisted the contract wasn't with a third party at the point of sale.  As did Clarence,  he asked me if I had read the fine print. I restated that at the point of purchase at the cash register, I was offered an oral contract that included unconditional return within one year of purchase and that was the grounds for for purchasing the insurance.  I insisted the store should honor such an agreement.
     We see-sawed back and forth, neither of us giving any ground.  Marsalli stood nose-to-nose with me, the Kmart January policy firmly gripped in his hand.  I defiantly stood up to him with my "unconditional warranty" based  on the fact an express oral agreement had been proffered by the cashier when we paid $4.99 for unconditional return rights of the product for 12 months from date of purchase in December.
     Whether I had read the fine print or not was not an issue, I said.  What was at issue was the oral contract that induced the sale of the warranty, and the consideration from which both parties benefited.
     Marsalli was made of stone.   He refused to accept my argument that I had a valid right to return the product at his store for a like product.   However, he offered a compromise, "a favor" to me. He said he would return my money, but not on the grounds of there being a contract to do so, but rather would do so as a "consideration."  He continually made the point he was under no contractual obligation to perform a refund or exchange based on the new policy.
      I bit my tongue.    At this point, crossing swords was not my goal.  Winning points of an argument offered no phone for my pregnant daughter, even though my blood was boiling.  Reluctantly, I agreed, clipping my desire to pound on the counter and insist that words, "Customers Rule" on the display board behind the Customer Service desk should be replaced with "Policy Rules!"
      The refund was given to me.   I went downstairs to look for another phone similar to the one I had bought before.  There was none in stock.  So I went to Radio Shack and purchased a new one.  When the clerk at that store offered me a warranty, I declined.
      Now, up to this point, one might consider what I went through to be onerous and unfair since the item in question was a $38.00 product and I'm sure the cost to the store and my irritation far exceeded that value.   One might also consider what I was put through to be an act of Consumer Terrorism--where I was put through a series of untenable hoops, each one laced with fear, intimidation and complacency.
      This, however, isn't the case.
      As I installed the phone in my daughter's apartment and insured it worked properly, her husband, Joe, came home.  He apologized for the problems I encountered in returning the phone after I related my travails.
      I told Joe that I had learned some valuable lessons from the experience that made it more than worth the effort.   He wanted to know what those were..
      "Joe," I said, "If I was the CEO of Kmart, I would give Clarence and Marsalli a Medal of Valor for defending the bottom line."
      Joe scrunched his eyebrows quizzically, wondering where I was heading.   "I've been in business a long time and know how fragile profits are, especially in retail.   Kmart went financially bad because the prior leadership wasn't Vigilant.   Think about it.   You could buy anything and return it anytime for another product without a receipt.   If you really think about that policy, it's absurd.   Consumers could use something until it was worn, and then repack it in the original box and bring it back for an exchange.   There were no limits.   When something is returned it is written off, and that goes against the bottom line.   There is no profit on the exchanged item.   Kmart had over 1,200 locations and over a quarter million employees.  Imagine how many items were unfairly returned by consumers beyond a thirty-day period?    Millions of dollars flushed down the profit toilet.  If one customer in each store returned a $38.00 item each day that had gone past the thirty-day return policy  that's nearly $17 million dollars over a year--and it comes right off the bottom line, Joe.  That's a lot of money."
      Joe began to see where I was going.  He nodded.
      "So the new leadership, among many other changes, tightened the screws on the return policy.   They put up Sentinels of Profit Vigilance to protect their margins.   Returns, like theft or the return of overused items, strip the bottom line.   Those two guys, Clarence and Marsalli, were throwing their bodies in front of the bottom line.  I was a Bottom Line Terrorist to them.   I was trying to get a return on a policy that misrepresented good bottom line management.   Clarence and Marsalli simply drew battle lines and didn't budge, not against me personally as a consumer, but against a rampant wasteful policy of exchange without question."
      "Is that why you didn't get really mad, and really explode?"  Joe laughed, knowing my nature to confront until I win.
      "I grew to respect their adamant stand.   The more I thought about it, they were suffering from the sins of others.   Daily, the past mud of mismanagement was being slung in their faces.   They had to draw a clear and defined perimeter around their position.  I know, for example, without any doubt, what the current return policy is for Kmart.  It's a specific thirty-day return policy, just like the rest of the retail world."
      "But why are you so pleased about it and not angry," Joe asked, confused about my defense of the Kmart customer service encounter.
      "Well, I like Kmart.   I would hate to see the store here in New York City, or in any town, go under.   I'm a big proponent of keeping good businesses alive and well.  Kmart offers your family and mine a convenient, reasonably priced store with a vast inventory.   I would hate to see it close and have to shop all over town for things I can get just a few blocks from my apartment.    The big picture is that Kmart needs consumer support.   As I walked away from the store, I knew I would hire a Marsalli or a Clarence any day.   While they stood their ground, they also were professional.  They made their point.  They stood by store policy.  Even when Marsalli conceded to give me a refund, he made it clear it wasn't that I was right. He put the store's right to survive ahead of a customer with an "old policy" complaint.  Think about it, Joe.   If every employee made his or her decisions based on his or her feelings about each situation, you would have chaos.   Marsalli and Clarence didn't bend.  They were fighting for the right of Kmart to be around when you and I need it.  I respect that."
       "What about your rights as a consumer?"
       "I always have a right to shop or not shop at any store.   Businesses build reputations by repetition.   The past management build a reputation of Complacency, the new management is building one of Vigilance.   I prefer the later.   Vigilance will keep Kmart alive and strong, not cripple it.  Our families will enjoy shopping there because the management drives profitable policies into their employees.  I just got caught in the crossfire between old policy and new policy.   Marsalli and Clarence did their jobs superbly.   In fact, I'm going to write the CEO of Kmart and tell him why they should receive a Sentinel of Bottom Line Vigilance Award for the treatment of Cliff McKenzie on April 16th, 2002."
       "You're serious, aren't you?" Joe said.
       "Absolutely.   Leadership is about making policies that keep both the bottom line and consumer happy.   I am totally aware there is a clear cut policy on returns at Kmart.  There isn't all that mushy interpretation that lets the profits of the business leak out until there is nothing left.   Strong policies like the current one make me confident Kmart will overcome its financial problems, and reestablish itself as the retail leader."
       "Well, I'm sorry you had to go through all this for us," Joe offered.
       "No.  I learned a lot, Joe.   I learned that consumers and businesses owe each other a fair look at one another.  I was ultimately treated fairly, even through I underwent a lot of flack.   I'm glad Marsalli and Clarence work at Kmart.   I'm glad they taught me how important it is to stand up for what is right--even if a guy like me is screaming foul.  That took courage, conviction and action--the three elements of Vigilance."
      "Well, thanks again, Cliff," Joe said, shaking his head and my hand.
      "Don't thank me," replied, "Thank Kmart.  Thank Clarence and Marsalli.  Thank Vigilance!"

      Respectfully Submitted,

      Clifford A. McKenzie
      Editor, Vigilance Voice
      Semper Vigilantes (Always Vigilant)

      cc:  Julian C. Day, President and Chief Operating Officer; Randy L. Allen, Executive Vice President, Strategic Initiatives and Chief Diversity Officer; Ronald B. Hutchinson, Executive Vice President, Chief Restructuring Officer; Cecil B. Kearse, Executive Vice President, Merchandising; Janet C. Kelley, Executive Vice President, General Counsel; Albert A. Koch, Executive Vice President and Chief Financial Officer; Gregg S. Treadway, Executive Vice President, Store Operation; Clarence at Astor Place Kmart, Maurice at Astor Place Kmart and Kellie Marsalli, manager, at Astor Place  Kmart.

(Note:  hard copies of this letter will be sent to the above)

 Go To April 16--The Scream Of Terror

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