Last week on June 25th, 2008, OEM Depot (better known as OEM Express in Ontario) closed it's last store in Calgary. It was done quietly, silently and without a whimper. With Memory Express in the NE moved to their new location on 34th St NE, people who would go play both stores against one another no longer appeared at OEM's doors. As such, only the few remaining loyal clientele would have discovered the sudden loss of the store, and be greeted with a simple paper sign announcing the white flag of surrender to Memory Express and a hollowed out storefront. This is the latest store to fall in a once growing seven strong, to a muted 3 (as I fully expect Montreal to be the next to fall soon).
Why am I writing about this? I myself only discovered this closure a week after the fact, though it didn't surprised me in the slightest. I ran that store, and the original store on Macleod Trail SW from summer 2003 until I was forced out in early 2007. In retrospect, it was probably more like escaped, but I'll get into that story a little later. But again why? Probably because upon seeing the carcass, it brought back a fair amount of memories, some admittedly pleasant, but eventually leading to simply pity and regret for a company and owner that lost its way (or maybe never found one to begin with), and wasted incredible potential and opportunity in so many ways.
OEM Express, still primarily based in Ottawa, but registered under various numbered companies or under PC Parts and Periphreals in Markham, Ontario, had achieved in Ottawa what Memory Express achieved in Calgary, or Bcom in Edmonton. In fact, every major city in Canada, had a single player that had struck it lucky in the beginning of the tech boom in the mid-90s, and managed to forge a hammer lock on what I call, the "hearts and minds" stage of their respective cities. At that level, the company is virtually a household name on the same level as a Future Shop, and required minimal advertising and occasional care for their customers. Memory Express is that in Calgary. OEM Express is that for Ottawa, Micro-Bytes in Montreal, ATIC in Vancouver and Canada Computers in Toronto. Everyone else, to survive and to remind that there is an alternative to those stores, would have to keep their name out there in any way, mean or form possible to simply remain competitive let alone successful. Look at Computer Rack in Calgary, a distant second to Memory Express, and constantly advertising in local papers. Toronto's papers are filled with the ads of all the up and comers struggling in the shadow of Canada Computers.
OEM's mercurial owner, known as "Chi", had seen his baby grow in Ottawa without a single page of ads ever. Despite an unfinished building and poor visibilty, he had admirably managed to overcome those problems with better pricing than the next guy, and simple word of mouth. Within a year or two, OEM Express became the predominant store of Ottawa, so much so that from my native Montreal, even I heard of the store and would occasionally shop there during my then monthly visits to the capital to see friends. Literally at the same time, 2 brothers in Calgary were selling sticks of memory from a safe in a dingy office, and thought about opening an actual store. In Montreal, one store deep in the west of Montreal, miles away from the downtown core, decided to take a chance and open a second store.
Ottawa was experiencing the beginning of the tech boom, as a center of high-end companies such as Nortel, JDS Fitel (later JDS Uniphase) and Corel growing into multinational corps large enough to rival AT&T, Cisco and even Microsoft. Add the guaranteed income from the government employees that filled the city's coffers, and OEM was probably in the one place in Canada that could make money blindly under almost any circumstance. OEM stayed in it's home, gathered it's resources, and entertained thoughts of expansion into greener pastures. Memory Express had a similar boom as oil and gas had begun to recover from the lows of the 80s and early 90s, and Alberta's friendly business environment started to attract a multitude of head offices from across Canada.
Over the years, each store in each city consolidated their hold on their respective markets, and opened new stores, or gathered resources for whatever reason they chose. Once so held, a competitor in "their" market would be at a significant disadvantage, and would have to overcome all sorts of problems, most of all the literal total lack of recognition of their brandname in the new market.
In 2003, that's what OEM Express did. They came into Edmonton, and then Calgary, and strove to conquer their new markets from Bcom and Memory Express. And for a time, OEM actually did make a serious dent into their new markets. With advertising, good pricing and a bold attitude, it was starting to gather a loyal clientele. The new staff, trained in Ottawa, but sent forth to do battle in for the hearts and dollars of Albertans, strove to give the fledging venture a fighting chance. And that's where I came in, as well as certain others.
Each person strongly believed in the vision of OEM conquering Canada, and relocated across country in the belief that their leader, Chi, was sending them on a holy mission. And admittedly, all were blinded by his promises of future riches and rewards, all in exchange for loyalty and fanatical work week hours. Over time, each of us would find ourselves betrayed and see through the lies and empty promises, and either leave on our own accord or be forced out.
Chi had understood one thing quite well from his years in computers and electronics, price is king. Give a good price, and the people will come. I myself often shop based on price if it's an inconsequential item, or compare pricing between stores for something more important when quality is preferred. With an incredible blowout starter special, Edmonton opened with a bang and continued running. But that initial excitement soon subsided, and leveled off after the big bang into silence.
Calgary then opened, with less fanfare and worse pricing, and fizzled quickly in no time. Days would pass with little or no customers, and Memory Express and Bcom found that they had little or no worries and the new challenger had emerged as virtually no threat at all. Neither company was advertising, OEM Express / Depot was not on the lips of people anywhere, or even an afterthought for that matter.
Seeing that something was needed, OEM Express in the West had to disguish itself from OEM Express East in order to be at least mildly competitive. What was decided was something memorable for the Calgary and Edmonton computer parts market, a price war.
OEM Express became OEM Depot with it's own website and image, and offered pricing slightly above cost. Most computer stores were used to margins in the 20-30% profit range. OEM decided to shake things up by offering pricing in the 10% profit range, and squeezed key suppliers to sell their goods to OEM at barely above cost.
This shook up the market, and even without advertising, this did bring in people into the door, though not in the hordes that was hoped for. The problem was plainly apparent to the people manning the stores. Good pricing was fine and well, but how would people benefit if they didn't know you even existed. From the start, this strategy was fatally flawed. At such low margins, quantity was now needed to make up the costs. Edmonton had the advantage of cheap real estate and the actual ownership of the land that the store inhabited. This made it's fixed costs relatively low with little possible shocks that might ruin that profit-loss spreadsheet. Calgary's red hot real estate market was much different, with almost no buildings in ready access available for sale, and had to be rented. This made Calgary's costs much higher, despite taking up only a fifth of the total space of Edmonton.
As such, Edmonton still managed to maintain profitability despite the low customer turnouts, but this would be problematic for Calgary's survival, especially when in competition with a much stronger opponent as Memory Express.
As explained before, pricing may be king, but brand name and knowledge is queen. How can a customer take advantage of cheap pricing if the brand is virtually unknown. In fact, in the early days, OEM Express was more likely than not to be assumed to be a car parts store as the acronym OEM was better known for such merchandise.
When I came into Calgary, I was asked to devise a $30,000 ad campaign to get the name out. Incredibly bored by hours of empty tedium (I would see one, maybe two customers a day those early weeks), I plunged into this task eagerly with images of dollar signs and customers dancing in my head. I spoke to radio stations, bus companies and newspapers. Fliers would be found in every parked car in every parking lot. Tournaments would be sponsored with the OEM Express banner flying high above the crowd.
Imagine my surprise when the boss came into town, looking forward to spend his Ottawa riches for a new Honda Pilot, and cut the ad budget from $30k to $3k. It was then I was also told about the low OEM Depot pricing strategy would be the path, and I immediately saw all those dreams screetch to a halt.
Like every leader, once a decision is made, the followers should follow. But every follower had agreed then unanimously that is was incomplete. The pricing was needed, but with no one spreading the word, it was doomed to failure from the start. And as such, the error was compounded as every attempt to at least try to flesh out the strategy by combining it with advertising had fallen on deaf ears. The leader, so absolutely sure in his strategy, refused to take any further comment, which probably would be the same as Napoleon saying, "Gee, Waterloo looks like a great place to fight."
The funny thing is that on the occasional times that advertising was allowed, and only after torturing the poor sales staff and the Edmonton Sun or the Calgary Sun, sales did actually increase in general. There were weeks that the ads did little, and some that the ad results were phenomenol, but overall, the name was finally being reached. And just when we were finally starting to get a name, the ad money suddenly stopped as suddenly as it began, and OEM would fall back quickly into obscurity. Is it any coincedence that the best sales year for Calgary was also the year that a good deal of advertising was spent?
Employees work best when they are treated with respect. Any Fortune 500 company can attest to the fact that an employee that felt like they were important, vital and/or needed is a valuable productive employee. OEM never seemed to learn that lesson, and even now continues to lead the way in proving that a revolving employee door by underpaying your staff, treating them with disrespect, subjugating them to slave hours and finally subjecting them to an atmosphere of paranoia and fear is no way to run a company.
Employees would be directly and indirectly insulted for their lack of character for various reasons, oblivious to how petty and even crude this would make the attacker seem. And despite claims of trust between the boss and the staff, everyone was overtly observed at all times by cameras, and even listened to despite privacy criminal laws disallowing audio surveillance.
Employees would find themselves dreading to go to work, or be in constant fear whenever the boss would be in town. Worse, he would psychoanalyze every action, every movement by the employee, whether it be optionally wishing private time instead of going out for dinner, or a yawn or avoidance of the camera as an act of defiance or possible treachery. The other needs of employees would be completely ignored, except for the rare moment of clarity (as finding an apartment with a kitchen for staff as opposed to forcing them to live in a hotel, and literally spend all their money on far more expensive restaurants).
As such, the company could not expand, or barely manage to run their existing stores. Very often, some stores would have one employee only, with the bigger stores barely managing 2 to 3 staff. Any further expansion would be impossible as as soon an employee was even barely trained, someone would leave. So many would join and leave within weeks that the main office would often run out of Record of Employment (ROE) forms each month and had to request more.
Worse, some staff would also find that promises would be broken almost as soon as they were made. One staff member sold his own computer company to join OEM, only to find that all of the pre-existing conditions agreed to were immediately thrown out. The company would refuse to sign any formal contract for any employee, which made it easier to make and break promises routinely. For employees that seemed to be worth the effort, initial promises would be kept just long enough to put the person into an untenable situation and unable to leave without incuring huge losses. Still, there were those who did just that. Some claimed to incur losses in the tens of thousands, not to mention a uniform steady breakdown of their general health due to the combined toll of restaurant meals, lack of exercise (computer retail isn't exactly strenuous) and being stuck indoors all day with no sunlight or fresh air seven days a week.
Oh, and how did I end up being forced out? I was offered verbally to take a 60% paycut with all of my employee perks taken away, with all and any staff hires out of my pocket. On top of that, advertising pricing probably (though admittedly wasn't discussed) might have been transferred to me as well. In exchange, I would get a 25% cut of all profits based on their numbers. Assuming that they were even reasonably honest, I would had to literally triple sales to just regain my salary, let alone the lost of the perks. But, I had already seen the writing on the wall and with the help of my now fiancee and former bookkeeper of the company, we had prepared for an expected attack by the company. Over the prior months, I had seen all sorts of staff fired, and I was cut out of the loop from all meetings. In part admittedly, I was a bit less than discreet when it involved plots against certain staff, but for the most part, it was because I also actively fought head office on behalf of employees. I even acquired a reputation as being the go to person when in trouble and needing help. Soooo, I was forced out, but in all honesty, I was prepared to leave at a moment's notice anyways.
Later, I successfully won a labour violation judgement and settled with OEM over the statuatory holiday violations. It wasn't much money admittedly with all of the other violations, and if this was Ontario instead of Alberta, I probably would have admittedly won in the tens of thousands, but what I wanted to do was to make sure that there was a ruling against OEM on the books here in Alberta, just like there's one on the books against OEM in Ontario. In all honesty, I probably wouldn't have bothered with the labour board at all just like many of the other staff who had left, quit or fired, but after 3 years of loyalty and then insulted with that obvious offer to be rid of me? Who could blame me?
Imagine having to do 70-80 hours a week, and be on call 24-7. Statuatory holidays were ignored, and all Sundays would be is a reduced work schedule. If anyone complained, it would be a black mark on his or her record, and would eventually factor into his dismissal or resignation. Now imagine this 51 weeks a year, as most staff would only take a week off.
The company would claim only 63-70 hours tops per person, but the added hours in special projects given to the staff member, not to mention all of the extra duties that running a store would usually entail such as general upkeep, supplies, deliveries, orders and more would take. All of this would be unpaid, and expected from each staff member. It would actually get far worse when the boss would come around, as one long departed staffer put it, "A cold wind of dread would descend on us." On top of our duties, we would also have to put up with worries of the boss seeing us close and personal, and make any observations or comments that would be totally inappropriate. That same saffer had endure a lecture stating that he had no strength of character, and did not have any because his parents were divorced, and then had that topped off with the comment that this was all told to him to make him "a better man."
When you add the company's need to economize even the smallest things, such as how to unload trucks, the stress levels would become unbearable to most. Imagine being the only staff member in the store, and being told to empty an 18-wheeler truck full of computer cases (over 1500+) in the middle of a -25C day, with no help, and not be allowed to close the store. Worse, all the cases were loose instead of on easy to unload pallets or even with a handtruck. The final cherry on top was that this particular staffer was only 5' 4, and the piles would each almost 6' tall, so every time he tried to unload the cases, some would literally fall on top of him, incurring some harm.
People burned out quickly, some sooner, some later. I lasted maybe 2 years before burnout set in, and then probably coasted for the following year. Others burned out in months, and some would become virtual zombies and avoid computers altogether for years after leaving. And with the company dedicated to keeping labour costs as low as possible, employees would see the ongoing strain of the hours, the work and the stress, with no relief in sight.
Replacements would be subjected to an initially low salary of the hourly minimum wage. There was no accounting in difference for the cost of living for the staff, and while some might prosper a little, most would suffer a lot. One particularly brightly skilled star, requested a slight increase, which worked out to maybe $100 a week. Just enough to cover his bills and pay for his growing family. This was refused, and worse, treated as an act of a devious traitor.
This was not Silicon Valley. At least there, long hours were tolerated, even encouraged, as the passion was mutually understood by all that there would be an eventual enrichment to everyones' lives. But with work conditions quickly deteriorating, open abuse and fear prevalant, and a long trail of broken promises thousands of miles long, the initial passion and dedication most of the staff came with, soon fell into a heap of broken bodies and spirits. If you look at OEM now across Canada (and the ever quickly diminishing number of stores), only 1 out of probably dozens of sales and support employees remain (even the office staff has had a high turnover). In a healthy company, an expected attrition rate of 15-20% is expected. But an attrition rate of over 95%?
This was, and is, no way to run a company.
The choice of inventory was often a matter of contention among the staff and head office. Advanced computer cards would become available only long after price drops, often weeks or even months. Trying out new product would be allowed occasionally, only with begging or pleading. Sure there would be the odd mistake that the staff member would make, but these would be mistakes in the tens of dollars.
Understandably, the need to keep inventory down is always necesarry, but how could anyone assess what might be hot or not without the staff being able to at least bring in samples?
The company also had the unfortunate curse of overpurchasing when the price was too good. Edmonton and Calgary had purchased literally truckloads of 17" monitors in expectation of crowds beating down the doors. It took almost a year to unload all of them, but it was done however agonizingly slow. The leadership would assume that a given item would draw in the crowds, STILL with no advertising, and sometimes in direct competiton with the blowout deals that other companies would also do such as Future Shop. Another memorable mistake was the overpurchasing of USB flash memory drives to the tune of tens of thousands of dollars, all having to eventually be sold at discounted prices.
Time and again, customers would request one thing or another, and time and again they would be turned away to the welcoming well stocked arms of Memory Express or Computer Rack. Time and again, sales would suffer, and the staff would remain helpless to do anything, and eventually even cease to care over time. We would be instructed that these requests were probably from "problem" customers anyways and it was "our way or no way."
I've always had a personable approach to sales in general. Being well-informed, helpful and friendly, I probably and definately did my best to let my customers know they were appreciated. If they tried to take advantage of that, some may have gotten away with it so long as we got paid, but I would also fight back just as often for those who overreached their demands. For especially large contracts, I often drove to customer offices and homes on my own free time and cost to ensure satisfaction. To me, that was natural.
To the company, this was almost unheard of, even anathema. As I was instructed, I was supposed to see the customer as the enemy, with contempt and suspicion. Every customer is a potential thief and liar, and while that might be true for some, I refused to believe it for all. And in some aspect, I've been rewarded with customers that even now exclusive buy from me (despite my not even having a store front).
Worse, I was guilty of the worse crime, taking the extra mile for a customer. One particular customer, who was sadly disabled due to a car accident, needed especial aid in finding the parts he needed for his computer reseller business. He bought almost exclusively from me, and his account easily numbered in the thousands, even tens of thousands in a year. As soon as I left, his loyalty to OEM was treated with disdain, even arguably disgust and that was but one of many loyal customers who voted with their feet down to Memory Express.
In all honesty, I really did once believe in the company. I believed in the leadership and the vision of a glorious new day and challenge of building a retail empire, and left years of public service because I thought it would be wonderful to build something new and lasting. Now, almost 18 months since my departure, and hearing word from former employees were still being abused by arguably unethical, but definately ill advised business practices, I just simply see it all as an end of an era of sorts.
Calgary closing it's final doors will be blamed by the office as probably increased rental rates, or poor staffing or the falling drop of computer pricing and sales, but at the heart of it all, it's the problem of the company as a whole and the directionless mercurial leadership that is the true fault.
This isn't written as an act of spite, or not even glee or perverse pleasure, simply an observation from within and without, for a company that by pure blind luck and timing became into a minor national computer power, and now falling to earth and imploding as quickly as it grew.
I wonder if the newest salvation plan is still underway. When I left, a local delivery service for computer parts, based from the Markham office for the Toronto market was in the works. Not trusting in credit cards and wanting to force people to use online debit or cash only, this struck me as an act of madness. This was in universal agreement by all staff in Edmonton and Calgary, but we all stayed silent at the insane plan as any dissent led to eventual dismissal as "not being part of the plan."
Just more poor planning piled upon paranoia and disastrous lack of vision. It's an honest shame. OEM really could have become something.