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THE TURNAROUND

Bone Appetite Owner Gets A Turnaround

Aired July 9, 2005 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
ALI VELSHI, HOST (voice-over): Next on THE TURNAROUND, a dog lover who's tried to take a bite out of the American dream.

DAVID GARDENHOUR, OWNER, BONE APPETITE: We've got everything from art work to calendars. There's Whoopy Pies (ph), full dog bars...

VELSHI: A retail titan who has turned one clothing store into a multimillion-dollar chain.

GLEN SENK, PRESIDENT, ANTHROPOLOGIE: I've had a good track record of creating a compelling store environment.

VELSHI: Can this merchandising whiz teach this struggling entrepreneur how to succeed in the dog-eat-dog world of business?

SENK: I have to say, this really turns me off.

VELSHI: THE TURNAROUND begins now.

They're cute, they're cuddly and they're man's best friend. When it comes to pets, canines are top dog. Forty-three-and-a-half million U.S. households own a dog, and there are almost 74 million pet pups in the country. And if you think the poochers aren't being pampered, think again. In 2005, pet spending is expected to reach more than $35 billion.

(END VIDEOTAPE)

VELSHI: Welcome to THE TURNAROUND. I'm Ali Velshi in Chestnut Hill, Pennsylvania. It's part of Philadelphia.

And this week our small business owner is David Gardenhour. He runs the Bone Appetite. He describes it as a dog bakery and boutique. It's the kind of store for the dog or dog owner who has everything.

But David's drifted from what his vision of his business originally was. It's become the kind of place where a dog or dog owner can pretty much get anything they want. So we're going to help him get on track. And to do that, we're going to introduce him to a man with 25 years in the retail industry. And after three days together, we'll see if David can take the blue ribbon home.

(BEGIN VIDEOTAPE) GARDENHOUR: There's nothing in here that you're going to find at PETCO. We've got everything from artwork to calendars to neck ties and a lot of gifty-type items in here. There's Woofy Pies (ph), Bulldog Bars (ph), Tummy Yummies (ph).

VELSHI (voice-over): David keeps a fridge fully stocked with mouth-watering, freshly-baked desserts for dogs. In 2003, he opened his first store in Wayne, Pennsylvania. And last year, he opened up a second location in Chestnut Hill. It's an upscale Philadelphia neighborhood.

Now, the store is not like anything else, but when you ask David what it is, he's not really sure. Figuring that out is going to help him with his bigger goal.

GARDENHOUR: Increasing the customer base and letting people know what we do here and how we do it, and how we're different from, you know, your regular pet store.

VELSHI: What David wants is a mentor who can help him become the big dog.

Glen Senk is the president of Anthropologie, a division of Urban Outfitters. This is a chain of boutique style women's clothing and accessory stores. Glen joined the company in nane 94 when it had just one store. Glen played a key role in turning that into an expanded success. Sales reaching upward of $3250 million in 2004. Before that, he was a senior vice president at Williams Sonoma.

SENK: I have some 25 years of retail experience.

VELSHI: Anthropologie is a chain of boutique-style women's clothing and accessories stores. Glen joined the company in 1994, when it had just one store in nearby Wayne. Glen played a key role in turning that one store into an expanding retail success, 61 shops nationwide, with sales reaching upward of $350 million in 2004.

Before that, Glen was a senior vice president at Williams Sonoma. He got his start in the retail game at Bloomingdales, where he worked his way from being a buyer into the executive suites.

SENK: I over time had a good track record of putting together compelling concepts, putting together a compelling product assortment, creating a compelling store environment, a compelling marketing message.

Hello. How's my baby?

VELSHI: Glen is a dog owner, and unbeknownst to David, he's a Bone Appetite customer. He's fond of the dog boutique concept, and he thinks it's got potential.

SENK: I believe the pet business is growing. I think people are spending more and more money on luxury things for their pets. I think I can help David think more about how to position Bone Appetite relative to the rest of the world that sells pet supplies. VELSHI: That's been Glen's formula for success. Even though it's a chain, each Anthropologie store has a keenly-crafted identity.

SENK: When I went to business school, one of the marketing tenets that I learned was unique selling proposition. So what that means to me as a merchant is that each and every successful retail concept has a unique reason for being. And I think he needs to really verbalize and understand what his unique reason for being is. Once he knows that, and who he knows his customer is, that will drive his product content, that will drive the visual merchandising, that will drive the marketing, and so on.

VELSHI: But after 25 years in retail, does he think like an executive or as the all-important customer?

SENK: When you're in a store like David's, or any store -- I wonder if this will spoil the shopping experience for you. When I walk I walk into a retail store, I always try to experience the store as a customer. So I try to leave Glen the retailer at home and go in as Glen the customer.

VELSHI: Back at the Bone Appetite, David takes a deep breath to consider this turnaround and to wait for his mentor.

(on camera): David, your turnaround has started. Good to meet you. How are you doing?

GARDENHOUR: Nice to meet you.

VELSHI: You've got a beautiful shop here.

GARDENHOUR: Thank you.

VELSHI: I'm a pet lover like you are, and it's just a tremendous, tremendous place. What are you hoping for out of this turnaround?

GARDENHOUR: Well, a new set of eyes on the business I think would be great.

VELSHI: Right.

GARDENHOUR: Anybody that can give us some sort of imput to what we're doing right or what we're doing wrong. Just help us expand our business and increase sales.

VELSHI: You said something interesting, somebody who can tell us things that we're doing well and criticism. How good are you at taking criticism?

GARDENHOUR: Well, I'm good. I mean, I hear a lot of it. The best thing you can hear is for your own customers to tell you what they like and what they don't like.

SENK: Hello. How are you? David?

GARDENHOUR: Yes.

SENK: Hi. I'm Glen Senk. How are you?

GARDENHOUR: Nice to meet you.

SENK: How are you? Good to meet you.

GARDENHOUR: Pretty good.

SENK: Great, thank you. Thanks for having me.

VELSHI: Glen's going to be spending a few days with you. Do you know where Glen's from? He runs Anthropologie.

GARDENHOUR: Anthropologie. Fabulous.

SENK: And I'm actually a customer of yours. So I've been in this store quite a bit.

GARDENHOUR: Oh, that's good.

SENK: But I'm not clear as a dog owner what you stand for. So one of the first things I wanted you to do is get you to kind of talk to me about. So what do you stand for?

GARDENHOUR: That's something -- I never really thought of it that way.

SENK: Who's your competion?

GARDENHOUR: It's probably a pet supply place about a quarter mile away. We also have a PETCO, which has not really (ph) opened up. They moved in about six months ago. So those are our competitors.

SENK: I would like to challenge that assumption.

VELSHI (voice-over): Glen thinks David is missing the point. Bone Appetite customers aren't likely to be shopping at PETCO. They're looking for a different level of service and product.

SENK: I'd like to get you to think about your business so that it's more unique, so that the PETCOs of the world or the pet supply stores of the world are less of a threat to you.

GARDENHOUR: OK.

SENK: Does that make sense?

GARDENHOUR: Sure.

VELSHI: David shows Glen around, starting with a gimmick that he thinks is pretty ingenious, a water bowl for passing dogs, a toilet.

SENK: I'd I have to say, this really turns me off.

GARDENHOUR: Oh, does it? SENK: I'm offended by it.

GARDENHOUR: I don't. I just thought it was kind of fun. If it's got to go, it's got to go.

SENK: Yes.

VELSHI: Coming up, Glen tells David just how important a positive outlook is.

SENK: I would rather deal with pee once a week, personally, than have a negative store.

VELSHI: Next on THE TURNAROUND.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

VELSHI (voice-over): 3:15 p.m.: day one of this turnaround.

Earlier, Bone Appetite owner David Gardenhour met his mentor, Glen Senk, Anthropologie. Glen and David didn't waste too much time on pleasantries.

SENK: I'm not clear as a dog owner what you stand for.

This really turns me off.

GARDENHOUR: Oh, does it?

SENK: I'm offended by it.

VELSHI (on camera): Tell me how you feel so far.

GARDENHOUR: Fine. I think it's great. I mean, like I said, any imput that he can give us, whether I like it or not.

VELSHI (voice-over): David doesn't really know what he wants Bone Appetite to be. He hasn't identified his target customer. When David began, it was all about the dogs. But now, is it the dog, the home, or the human?

GARDENHOUR: I'm not really sure where I'm headed here with the customer.

VELSHI: Unfortunately, he's heading in too many directions.

(on camera): If I were putting out a store, I would want to not turn away a dollar. So I would want to be able to have something for as many people as possible who could potentially be my clients and make sure it's all there so that they all know that it's there and available to me.

SENK: That actually is not a good way to be.

VELSHI (voice-over): Why not? Because either Bone Appetite is a boutique or it's a variety store. And Glen sees warning signs everywhere.

SENK: Tell me about the signs here.

GARDENHOUR: Obviously the one is self-explanatory.

SENK: Is that important to have?

GARDENHOUR: Yes.

SENK: How often does that happen?

GARDENHOUR: A good -- a good bit.

SENK: Once a week, twice a week?

GARDENHOUR: At least once a week.

SENK: OK. I don't like negativity in a store.

GARDENHOUR: Right.

SENK: That's just something for you to think about. I would rather deal with pee once a week personally than have a negative store, because I think you have to develop your business, design your business for the 99 percent of the people who prevent their dogs from peeing in your store.

I think negative signs, especially first impressions, are everything. You know, that's not something that you want someone to see first off.

VELSHI: David now introduces Glen a few staff members, Helen, Melissa, and Mercedes, the store dog.

GARDENHOUR: Hello, baby.

VELSHI: Glen's focus is on Mercedes. He thinks David should find his focus thinking exclusively about dogs, not about doggie decor and not about dog-themed gifts for humans.

GARDENHOUR: We try to have a few home things in the front of the store, like pillows and, you know, like a golf club cover, and, you know, some things like that.

SENK: Do these sell well?

GARDENHOUR: Yes.

SENK: How many a week do you sell?

GARDENHOUR: I couldn't tell you that.

SENK: OK. But you have the ability to tell me?

GARDENHOUR: Sure.

SENK: OK. I think you win when you tighten your focus.

GARDENHOUR: Right.

SENK: Because you probably know one of the basic tenets of retail is that 20 percent of your customers drive 80 percent of your sales, 20 percent of your product drives 80 percent of your sales. I don't that I believe that literally, but it could be 30 or 40 percent of your customers drive 80 percent of your sales and 30 to 40 percent of your product mix drives 80 percent of your sales.

And I believe that you can really drive your business by doing a better job with that 30 to 40 percent and paying less attention to the peripheral product.

You need to make sure that the fuel on your floor is high-test. And the minute the fuel gets soiled, or the minute the inventory is unproductive, you want to get rid of it. And most people kind of treat it like it's throwing money away. It's not.

The way to make money is to increase your productivity. And the way to do that is to make sure you have the best inventory content possible.

VELSHI: Glen wants to dig deeper into David's inventory and sales.

GARDENHOUR: We sold 128 of these particular cookies. We can check the stock at the other stores. Those collars, 280, 300 (INAUDIBLE).

VELSHI: By minding his data, Glen thinks David can make better choices about what products he sells. To further illustrate the point, Glen offers a hypothetical example.

SENK: I'll throw out some numbers. In the month of April, he did $15,000 in pet clothing. He has $100,000 of inventory. He has $10,000 of inventory on hand.

Within that $15,000 of sales, maybe he did $5,000 in pet coats, $5,000 in collars, and so on. So he can start to get a sense of where his business is coming from and what his sell-through is, what his inventory productivity is.

VELSHI: Glen's point? David makes most of his money from just a small percentage of his inventory. And knowing what his sellers are will help him define his focus.

SENK: If you're doing $400 sales on $600 inventory, that's a lot better than doing $400 sales on $4,000 inventory, because you have, like everybody else, you have cash constraints. So we have to figure out a way to get your cash more productive.

GARDENHOUR: Right.

SENK: And my guess is that part of the way you can get your cash more productive, your inventory investment more productive, is to have a tighter point of view in your store. And, you know, maybe after I look at everything, the store should be about toilet bowls and golf club covers. I won't shop here anymore, but maybe you'll get rich.

VELSHI: Before Glen leaves, he assigns David a couple of tasks. The first, develop a unique proposition. Does David want to sell things for dogs, homes or humans? The second task is to figure out where he makes his money.

SENK: So one of the things I'd like to ask you to do tonight is what I call the Post-it exercise. Go around the store and place Post- its on each and every fixture with last week's sales on them so we can start to visually understand what part of the store is productive and what part is not, because that might help us understand where the store is generating business and where it's not. But I hope I wasn't too strong.

GARDENHOUR: Thanks. No. You know, it's good.

SENK: All right.

GARDENHOUR: I need to hear it from somebody.

SENK: OK.

VELSHI (on camera): I think he wants a rough sense of these sell like hotcakes, this doesn't.

GARDENHOUR: Exactly, yes.

VELSHI: We're going to have to figure out what you can generate that gives that...

GARDENHOUR: I don't think that will be a problem.

VELSHI (voice-over): David has taken some shots today. But despite all the criticism, he's still up beat.

GARDENHOUR: He let us know what he liked and what he didn't like. So I do agree with a few things he had said. But I certainly am not going to say no to any possibility of his input.

SENK: I think he's incredibly receptive. I think he's a lovely guy. I think he's smart, I think he's open minded. He obviously has a great work ethic.

VELSHI (voice-over): Coming up, David learns what's been selling.

GARDENHOUR: The jewelry, the pins and the necklaces and things were $1,000.

SENK: Right. VELSHI: And what hasn't.

GARDENHOUR: I guess we just need to make the decision whether it's the right product for here.

VELSHI: Next on THE TURNAROUND.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

VELSHI: Welcome back to THE TURNAROUND. We're in Philadelphia this week.

It is day two, and our small business owner is David Gardenhour. He runs the Bone Appetite. It's a canine bakery and boutique.

Our mentor is Glen Senk...

(BEGIN VIDEO CLIP)

VELSHI (voice-over): ... president of the apparel and home furnishing retailer Anthropologie.

(END VIDEO CLIP)

VELSHI: Now, David has been open in this location for about a year. He faces the same struggle that a lot of small business owners face. In order to make ends meet, he started carrying and selling things that may not represent what he thought his business should be. So Glen has asked him to mine through his data, find out what sells and what doesn't.

So last night, David stayed up late working on his computer. This morning, he's working with pen and paper.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): It's a brand new day, and David is in task mode, placing Post-its on various items throughout the store.

GARDENHOUR: Glen gave me a task of going through the store and picking out certain categories where we sold items. And then we had to put a number on how much of that item we sold during a specific time period.

VELSHI: The Post-it exercise will show David which product categories sell well and which ones don't. Glen feels strongly that it's the dog categories that should be getting priority.

GARDENHOUR: Last night I kind of was thinking about kind of a focus or a vision. I actually used the words "dog," "home," and then "human" in that order.

VELSHI: Right.

It's 11:00 a.m. when Glen arrives at the Bone Appetite. He's ready to go over the results of the Post-it exercise.

GARDENHOUR: The jewelry, the pins and the necklaces and things were $1,000.

SENK: Right.

GARDENHOUR: The necklaces for the dogs was $100. Some of the magnets were $470. The golf club covers were $690.

SENK: How about this, David?

GARDENHOUR: $2,000.

SENK: Wow. OK.

GARDENHOUR: The shirts, just these particular denim embroidered with the breed on it were $270. A hat from the same company was $4.50. So I'm looking at this now and saying, do I want to give up all or any. You know what I mean? It's like, for sure the shirts, but I would hate to get rid of the bags.

VELSHI: The big question now, how much money did those products generate over the last three months?

SENK: How much had you done, $33,000?

GARDENHOUR: $33,000.

SENK: $33,000 for the first quarter. So let's understand the big chunks of business, the five or six categories that matter the most.

VELSHI: Now Glen wants to see if Pareto's Law, a basic principle of retailing, applies to the Bone Appetite.

SENK: One of the basic tenets of retail is that 20 percent of your product drives 80 percent of your sales. So let's get to it.

GARDENHOUR: Let's do that.

SENK: All right. So the collars?

GARDENHOUR: The collars...

SENK: $5,400. Sixteen percent. That's fantastic. What else is big?

GARDENHOUR: The food in back.

SENK: OK. The food was $5,700.

GARDENHOUR: Sventeen percent.

SENK: OK.

If we combine the treats, yes, so $1,800, $19,00 for treats. GARDENHOUR: Six percent.

SENK: OK. And the toys?

GARDENHOUR: $2,800.

SENK: OK -- 8.5 percent. OK.

And then these treats were $4,500.

VELSHI: OK. You know where you are? You're at 80 percent, 81.5 percent right there.

SENK: There you go. That's the 20/80.

GARDENHOUR: How many items do we got there? One, two, three, four, five, six...

SENK: Seven categories.

VELSHI: Seven categories.

GARDENHOUR: Right, 80 percent.

SENK: How much of your floor space do you think these seven categories take up?

GARDENHOUR: Well, considering everything that we picked is up against the wall, probably not much.

SENK: How many Post-its did we put up today?

GARDENHOUR: Quite a few.

VELSHI: Yes, how many categories, roughly?

GARDENHOUR: There were a lot. It's all on a sheet over there. There's got to be at least 30.

VELSHI: Right.

SENK: So seven out of your 30.

VELSHI: Yes. OK.

GARDENHOUR: But some of them broke down just...

SENK: Less than 25 percent of your categories are doing more than 80 percent of your business.

GARDENHOUR: Right.

VELSHI: OK. So that's the 20 -- that's the 20/80 rule.

SENK: 20/80, yes.

VELSHI: Yes.

He did a great job with the Post-it exercise.

SENK: Yes, he really did.

VELSHI: He did a fantastic -- and I next expected him to do such a good job.

GARDENHOUR: Well, I think it will allow us to expand on the things that are selling well, and then that way we can adjust some of the things that aren't that we would still like to keep.

SENK: It's always important to look at thing on the extreme. So it's important to look at the best sellers, but I also think it's important to look at the worst sellers.

VELSHI (voice-over): By doing the Post-it exercise, David discovered that the two best-selling items in the store are collars and leashes. And he got confirmation that he should prioritize his targets as dog, home, and then human.

(on camera): It maybe does sound like you're a store for serious dog owners.

(voice-over): Coming up, David meets his target customer.

GARDENHOUR: What's his name?

UNIDENTIFIED FEMALE: Eli. We browse every Friday.

VELSHI: Next on THE TURNAROUND.

(COMMERCIAL BREAK)

ROB MARCIANO, CNN METEOROLOGIST: I'm Rob Marciano in the CNN weather center. We're tracking Hurricane Dennis, which continues its march into the Gulf of Mexico, just passing to the west of Key West, missing it by about 90 miles. That's a good thing. Because most of the hurricane force winds were just inside that 90 mile radius.

But, there were gusts over 74 miles an hour. So possibly some damage in and around the keys. And they're not out of it because the back side, the southeastern quadrant of the storm is still seeing gusty winds. That's the strongest part according to the last recon report from the aircraft flying in and out of there.

Look at the expanse of this. Already, the cloud canopy from a squall earlier this morning going into the Tallahassee area. Panama City area, the Apalachicola area and this squall earlier today brought a tornado just south of Tampa and did some damage.

All right. Winds of 100 miles an hour. We're moving northwesterly at 14. That will bring it into the northeastern Gulf of Mexico tonight. And tomorrow afternoon, just offshore Pensacola tomorrow afternoon. The landfall is expected to be made. Somewhere, Mobile, Pensacola, maybe Panama City. Somewhere in there. Tomorrow afternoon. So we're still holding on to that track out of the National Hurricane Center.

It should come ashore as a strong category two or a category three. 96 mile and hour winds to 110. That's the category - or the range for a category 2. Storm surge of six to eight feet and considerable damage to week structures including mobile homes. And there will be some storm surge before the storm arrives.

Now, if it is upgraded to a category 3, it would make it a major hurricane and substantially more damage. We only need to do that by one or two miles an hour. So we'll see if that actually happens. Ivan last year, which came along a similar track was a category three when it made landfall.

All right. This is one of our computer models. Note the yellows. That's tropical storm force winds. The orange is hurricane force winds and even stronger than that, the red. And this is tomorrow morning just south of Pensacola. So most of the computer models are converging on that area. And we're fairly confident at this point.

That's the latest from the weather center. More of the THE TURNAROUND right now.

ALI VELSHI, CNN HOST: Welcome back to THE TURNAROUND. I'm Ali Velshi and we're in Philadelphia this week. We're at the Bone Appetite. It's a doggy bakery and boutique. The owner is trying to make more of this business. So, over the last day and a half, he's gone through exercises to find out what moves and what doesn't. Well, what he has learned is things like this canine cannoli are one of his biggest sellers, but this doggy paperweight doesn't move at all. So his job this afternoon is to go through the store, scour the shelves and get rid of the losers.

Doing the Post-It exercise not only proved bought the best and worst selling items were, but it also proved that, that basic rule of retailing, Pareto's Law, that 80/20 rule does apply to the Bone Appetite.

SENK: Less than 35 percent of your categories are doing more than 80 percent of your business.

GARDENHOUR: OK, so that's the 20/80 Rule.

VELSHI: Now Glen asks to see David's other assignment.

SENK: So, what's the position statement.

GARDENHOUR: I worked on it last night.

SENK: OK.

The Bone Appetite Canine Boutique and Baker is an exclusive purveyor of canine items. We carry dog items that distinctively reflect the pet and the owner's lifestyle. Unique and custom-made accessories for the dog, home and owner. Your dog is the best customer, and as always, owners on leashes are welcome. I think it still may be a little broad. You have to start with a very pure vision, and if you want to relax that vision a little bit, you can do so. But you need to be conscious about it. One of the most important things is what you don't buy. What you don't buy is far more important that what you do buy. Most people don't understand that. Because the customer, they want choice, but they want an edited choice.

VELSHI: Yesterday, you came across with a point of view that there is perhaps a blurring of the focus and that we need to refocus. And that focus needs to be boutique. It needs to be a little bit exclusive or customer specialized or whatever words one comes out to use. And I felt there was a little resistance from you on that. It was the, but that's where I started. I know that. That's where I wanted to be. And you know, we needed to sell stuff. And we've got to make ends meet. And people needed this. And this sells. And it's not what I had in mind in my original vision. But this sells and then this sells. Then we got some of this and people ask for that. And now I'm selling stuff. And why I had my vision I wasn't selling as much stuff.

Is that kind of what happened?

GARDENHOUR: That's right.

VELSHI: So we're -- We're talking the same language.

SENK: That's a fantastic point to discuss. Because you may be selling things, but you only did how much last month in this store?

$14,000.

So you're still on a run rate.

VELSHI: Suddenly, the discussion gets interrupted by a group of pugs and their owner Karen.

GARDENHOUR: Is this a focus group?

VELSHI: For Glen it is. He takes advantage of this opportunity to survey the customer.

SENK: Karen, what do you like best about the store.

UNIDENTIFIED FEMALE: I like the fact it's accessible, that the inventory constantly changes, and maintains things they like. It's centralized, high-end. And that's what you want. You have a high-end product here. You want all of the ...

SENK: So, what do you tend to buy here.

UNIDENTIFIED FEMALE: Right now, I have one of those water dishes in the back of my car. You can buy beds here.

VELSHI: This brief eater (ph) mission was filled with valuable information. One of the things she liked, high-end. She's buying into that. You can see what she spends on her dog. You can she's a dog lover. And as you said ...

SENK: And also, when you asked what she bought, it sounded 85 percent of what she bought she was buying for her dogs. Dog beds, collars, food, treats, greenies. She mentioned one thing her son bought which was a home item.

GARDENHOUR: Customer input is where a lot of these things showing up from. So I guess we need to make the decision where it's the right product for here.

SENK: You have to think about where it's coming from. Is it coming from your target customer? Or is it coming from the periphery? You want to take advice from your target.

VELSHI: One of the things David and I were talking about last night is that a lot of people are very afraid to go to a specific mission statement because it seems to mean you can't do something else. And I think it's important for David and anybody watching this to understand that coming up with a mission statement doesn't mean you'll never be able to do something that is exciting and interesting and different. What's your fear, what's your reluctance to narrowing it down?

GARDENHOUR: There's no reluctance. Maybe I just didn't want to not to cover an area. Like you said. Maybe less is more for us.

VELSHI: Just then, another customer enters the store.

SENK: Look, we have another visitor.

UNIDENTIFIED FEMALE: He's a Friday customer.

SENK: Friday.

UNIDENTIFIED FEMALE: Every Friday.

SENK: Is that your name, Friday?

UNIDENTIFIED FEMALE: No, Eli.

VELSHI: Always on the lookout for useful business input, Glen uses this opportunity to again survey the customer.

SENK: What are you coming in for?

UNIDENTIFIED FEMALE: We browse every Friday.

SENK: What do you like most about the store?

UNIDENTIFIED FEMALE: The staff is very nice.

SENK: OK. People. UNIDENTIFIED FEMALE: And Greekfletching (ph) collars. I add more collars when I choose. I don't have kids so I spoil him in every way I possibly can. He comes in and does a loop, sniffs everything.

VELSHI: While Eli does a little shopping, Glen gives David some assignments for day three. Glen wants David to refocus and redefine the store.

SENK: I tend to be a visual person. I'll take a room and put all of the best sellers on one side and put all of the worst sellers on the other side of the room. And I'll look for visual consistency amongst the bestsellers and the worst sellers. And very often you'll see it's an aesthetic, it's a color, maybe a material, maybe a price point. So you can start to see the patterns that way. You want the store almost to be like a pinball machine. When the customer comes in, it's like the ball coming out of the chute.

And you want the fixture placement to be like the little prongs that push the customer around the store.

VELSHI: David's next assignment is to have a sidewalk sale to get rid of items that brought in less than $500 over the last three months.

SENK: Don't just box it, get rid of it, sell it, put it on the sidewalk and get rid of it so you can generate $10,000 or $15,000 or $20,000 of cash.

GARDENHOUR: Get something for it.

SENK: Absolutely. Never box up anything.

I never think it's a good idea of confuse regular priced business with sale business. So I think the best way to dispose of merchandise is to take it out of the store, put it on the sidewalk, it communicates to customers that there is a sale going on.

GARDENHOUR: Still a lot of stuff to do tonight. Too bad you guys aren't sticking around to help me.

VELSHI: Day two of this TURNAROUND is over for me. Not for David Gardenhour. He learned an important lesson today. 80 percent of his revenue comes from seven different categories that he sells. So he spent the day cleaning out those things that don't make money and replenishing those that are real moneymakers. One of the moneymakers, the toy section. It's back there, you can't see it very well.

So before he goes home tonight, David is going to move this table and the product on it somewhere else so that he's got a clear line of sight to the things he sell well.

After he comes back tomorrow morning, his mentor will join him and together they'll come up with a plan to make the store more profitable.

Coming up, Glen gets a big surprise.

SENK: I'm in shock.

VELSHI: Next on THE TURNAROUND.

(COMMERCIAL BREAK)

VELSHI: It's the final day of this TURNAROUND in Chestnut Hill, Pennsylvania. Bone Appetite owner David Gardenhour has been challenged by his mentor, Glen Senk, to focus on a target customer. He's been given the task of redefining his boutique and getting rid of items that aren't selling. 9:15 a.m., it's been a busy morning at the Bone Appetite. Gone are the "Pee on it, you buy it" sign and the toilet water bowl. Both things that Glen found distasteful.

GARDENHOUR: I moved the dog watering station, as I like to call it. And as I'm pouring the water out, the base cracked and I was like, oh great.

So then there are these people out on the sidewalk. This guy says, are you getting rid of that? I think it's great. Where is Glen now to hear this? Know what I mean?

VELSHI: Now David and Melissa, his store manager, are moving displays around the store in order to create the pinball machine effect Glen talked about.

SENK: When the customer comes in, it's like the ball coming out of the chute. You want the fixture placements to be like the little prongs that push the customer around the store.

GARDENHOUR: I'm going to put those purses and needlepoint in this. And I'm going to take that rug (ph) work and going to take all those off the wall and loop them through that thing.

UNIDENTIFIED FEMALE: Sounds great.

VELSHI: He embraced the idea of THE TURNAROUND. He gets that things need to change. SO I think you'll see change. Whether it's the right change. Whether he will take the list and do it, what are you looking for?

What's important with regard to the changes that he's made is that he starts to measure the results. So if he learned that the post-it exercise, if he does that every two weeks or every four weeks, he can start to evaluate how the changes he made impacted his business. Then to go around with the pad of paper and add up the big sellers.

And I think we were down to seven of them. And you just said to me just stop and add that up. And I added it up and it was 81.5 percent out of seven of 30 categories.

You just had an instinctive sense for it.

SENK: Interestingly, what I felt, and as I customer what I felt, and as a retailer, I felt that it needed to be a store for dog owners to buy things for their dogs.

So, it was kind of vindication that the peripheral product was really noise. And I think what he's going to learn in terms of increasing his overall revenue is that if he gets rid of the noise and presents a clear vision to his customers that his business is going to go up exponentially. I have seen that happen over and over and over again.

VELSHI: Let's go in and see, have a look at that vision.

SENK: All right.

Oh, my God. What a difference. What do you think, Mercedes?

UNIDENTIFIED FEMALE: I love it.

SENK: You love it. I love seeing the dog beds there. And this. Hey, David. What an improvement. Oh my. I'm in shock. What do you think?

GARDENHOUR: It looks great. It looks great. How are you?

SENK: Good. How are you?

Do you really think it looks great?

GARDENHOUR: Yeah. It looks great. A lot of stuff is in its infant stages of being done.

SENK: It looks so much cleaner and clearer. I can read the store much more easily.

VELSHI: It's much better.

Before, the store felt overstuffed and crowded. Now, the store looks more streamlined. It has an open feel to it.

SENK: Do you see how much better this looks?

GADENHOUR: Sure, yeah.

SENK: It's like now I want to shop it. Where before i wanted to go away from it.

GARDENHOUR: I don't know if I'm 100 percent happy with this. It just cleaned up that area.

SENK: Right.

VELSHI: As Glen checks out the store, he notices the improvement. It reinforces his point to think about one target customer.

After Eli and his owner walked in yesterday, David knew he had identified the target customer. So the idea of a target customer doesn't mean you eliminate the possibility other people will shop in your store. It just means you're focusing your energies on ...

SENK: In order to have a tight vision, you have to think of one customer. You can't think from A to Z. You have to be maniacal. And Ali and I were talking about what I hope to leave you with and what I think will serve you well. One of the major things is if you can really take your positioning statement and just narrow it down with a laser like focus and keep one customer in mind. I think that's going to serve you so well.

VELSHI: Why don't we go sit down? Let's grab the mission statement and we'll work a little on that and we'll talk about marketing and advertising, and some of the ways, now that you have got this different look. And you're tightening your vision, how you now bring more people in the store, and how you get the people already in the store to give you more business.

Coming up, while some of Glen's advice is getting to David ...

GARDENHOUR: I can't say I'm not upset with some of the things that he's picked on.

VELSHI: He understands its value.

GARDENHOUR: We couldn't write him a check for it. If we could we probably couldn't afford it.

(COMMERCIAL BREAK)

VELSHI: It's the final day of this TURNAROUND.

(voice-over)Over the past two days, David Gardenhour, owner of the Bone Appetite Doggie Boutique and Bakery has had to endure tough criticism from his mentor, Glen Senk, the president of the multimillion dollar retail chain, Anthropologies.

GARDENHOUR: I can't say that I wasn't upset with some things - I was going to say, some things that he picked on. Some things he's made note of. That's why he does what he does. That's why getting his advice was great.

VELSHI: And Glen's advice seems to have paid off. Earlier, David showed off his store transformation.

It just looks so much cleaner and clearer.

SENK: We head over to the aptly named Labrador Cafe to dig into a conversation on marketing and advertising. David begins with his re-crafted unique proposition. This is how it read yesterday. The Bone Appetite Canine Boutique and Bakery is an exclusive purveyor of canine accessories. We carry dog items that distinctively reflect the pet and the owner's lifestyle. Unique and custom made accessories for the dog and owner. Your dog is our best customer, and as always, owners on leases welcome. VELSHI: Talk about focus, listen to this.

GARDENHOUR: It's a fun store for a serious pet owner.

VELSHI: You know something? That's not bad.

SENK: When it comes to the things that matter, safety and livelihood, you're very serious, and you have tremendous integrity and knowledge. That's one of the things I really like about your store.

GARDENHOUR: I was taken back by the word serious, and the more we thought about it, serious could be good.

VELSHI: You said something interesting. In the millions of things we've talked about in the last few days, how you deal with advertising, how you deal with getting new clients, and what the appropriate ways of doing that are.

SENK: In our company, we do virtually no advertising. And this philosophy really started with the founder who believes it was better to under-promise and over-deliver. His philosophy was to take that budge that most other companies spent on advertising and to put it back into the store. So to make the store so visually compelling and to make the staff so knowledgeable and so customer-centric that word would spread by word of mouth.

Advertising is one small part of marketing. Marketing is really about how you get your message out. And there's in-store marketing, and I would call in-store marketing anything from visual merchandising to really the way your staff communicates with the customer, to signage you may have in the store, to the music that you're playing. Everything should reinforce your brand image.

Let's going back to the store for a final look and any other last minute tips that you have got. Although I think you are well on your way.

As we return to the Bone Appetite, Glen is psyched to see the sidewalk sale that he suggested in progress.

SENK: Just an interesting bit of information. A lot of people have trouble calculating percent off. You may actually want to red line the merchandise with a pen and put the new price.

VELSHI: We walk to the back office. David, once a little resistant, is now all ears for his mentor's advice.

SENK: You get a high score. I think you have been fantastic over the last three days. You have been such a good student and have worked so hard, I was really shocked at how well you did the Post-It exercise. And it can't have been easy for you to do that. So a lot of information to pull together.

My sense is you took so much out of that. Then, I honestly never expected you to have had as much of a visual impact on the store. You got so much done. VELSHI: Do you think you got a good mentor?

GARDENHOUR: For sure. He's been great. As much as he thinks I might not have liked his input, I think it's fabulous. We can't write him a check for it. If we could we probably couldn't afford it. Just help me take care of my -- I think it's been great. And no complaints.

VELSHI: And you've enjoyed it?

SENK: I've had a blast. Absolutely. It's fun to be with a real entrepreneur. I'm with telephone numbers these days and it's fun to get back to the nitty-gritty.. My favorite place to be is always on the sales floor. Always -- connecting with customers.

VELSHI: Glen offers David one final piece of advice.

SENK: Make sure everything you do, marketing, visualizing, merchandising, product assortment, so on, always ties back to the mission statement and that ideal customer. I think you're just at the beginning. I would be genuinely surprised if your sales don't go up. Because you have such a clearer presentation now. It's much more obvious what the store is about.

VELSHI: And with that, David says good-bye to his mentor.

GARDENHOUR: Thanks so much.

SENK: Congratulations. Thanks. I'm going to come back in a week and see what the results are.

GARDENHOUR: That's what my assistant said. You know you better not put the bags up there. You know he's coming come back.

VELSHI: As this TURNAROUND comes to an end, David is eager for the advice he received. He's now eager to get back to pampering and indulging man's best friend.

GARDENHOUR: I'm looking forward to just really continuing what we started. I think so many times you get advice and then you just kind of like of take it and say we did it and now we're done. I think this gives us an opportunity to fix the areas that needed to be fixed.

VELSHI: Funny, a good back-scratcher is not something that this dog won't be able to get. Because while it is going to be fun, it's going top be a fun place for serious dog owners. David Gardenour has come around to the idea that his place will be a place for customization, specialization, food that's better for your dog than the stuff you use now. David has gone through a bit of a turnaround.

And while he's going to sit on how he wants to describe his store, he does realize that where he's going is where he wanted to be when he started the Bone Appetite. Well, he's got a lot of work to do but as we leave Pennsylvania, we think David Gardenhour is on his way to a TURNAROUND.

I'm Ali Velshi. See you next time.

(COMMERCIAL BREAK)

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