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| Mr. Filene |
Been having several Edward Filene Moments over the last few days as the discussion gained heat on risk-based lending, but not the type you might suspect.
'Course everyone associated with credit unions knows that Mr. Filene was the principal benefactor and key driving force behind the creation of the credit union movement in the U.S.
What many forget is that Mr. Filene was also a truly world class innovator in "retailing" - the "Steve Jobs-like, marketeer extraordinare" of his era. His flagship store was Filene's in Boston and his "guy in a garage" retailing innovation incubator was the famous Filene's Basement.
Filene's was a creative sensation with an entrepreneurial spirit, which introduced many of the core sales techniques still used today, including "fixed price/same price" for all merchandising, "% OFF" discounts, "two-fers", closeout sales, and lay-away plans. Filene knew how to create sales excitement in the department store space and shopping frenzies! 
Part of Mr. Filene's great interest in the credit union movement was to help create a source of credit for working men and women, so that they could purchase some of the "small luxuries" in life "on installments." Fair and reasonably priced credit gave workers greater purchasing power, at places like Filene's Basement! Filene most certainly understood his business, but more importantly he understood human nature, which made his fortune!
Are we actually following in Filene's historical footsteps or have we become something quite different, but not different at all?
Y'know "the business" no longer works,
if you no longer really matter...
[Filene's Basement - R.I.P. - Dec. 29, 2011]
if you no longer really matter...
[Filene's Basement - R.I.P. - Dec. 29, 2011]
4 comments:
The problem is that the innovators are leaving the industry. There are no new ideas. As an example, look at this years and last years news releases from CUNA and/or NAFCU.Aside from the date, they read basically the same. Look at your trade publications. In the last 12 months have you seen just one idea credit unions can run with? Most of your CEO's are coasting from vacation to vacation from conference trip to conference trip from salary adjustment to salary adjustment from bonus to bonus....you get the message, its fun and games. No work just play. Nothing is the same in credit union land. New, strong, smart leadership is needed. Is it out there.
Filene's Basement was an iconic institution in the Boston area. In addition to its discounting, the store bought seasonal 'close-outs' from high-end retailers and resold them for a fraction of the sticker price. Fashionistas scoured 'the Basement' for great values, and there were lots of them.
The store was most notorious for its annual wedding gown sale, which featured the same high-end apparel, and came to be known as 'the Annual Running of the Brides' because of the large crowds that would form at the door before the store opened, and the mad dash that would take place toward the racks of wedding gowns when the doors swung.
Filene's Basement was victimized by its own success as many of their retail partners set up their own close-out operations (discount mall shops), and other discounters like TJX grew more well tuned to changing consumer tastes. Plus, Filene's Basement over-expanded, at one time opening a store in Washington D.C. of all places!!
As Alan Bernstein perhaps warns us all: "... victimized by its own success..."
Filene had his bargain basement and everyone who bought there paid the same price. He liked credit unions because they made affordable loans to working class folks so the members could afford to purchase some of the small luxuries of life. Many years ago credit unions may have charged the same interest rate for loans to all members but only of a type. Risk factors were applied which is why you have different rates for real estate loans, car loans and, signature loans. And, in many cases, they required several co-signers on everyone's loans. That is risk mitigation at its very basic level. With modern technology, we are able to individualize the risk through risk based pricing and all members get the rate their personal habits and credit worthiness deserve. Our sub-prime car loans are made at interest rates 10% or more less than the buy-here pay-here dealers which seems to me what credit unions should be all about.
Georgia Birddog
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