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Country Market Collection: A Case of Channel Conflict

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In March 2011, Samantha Hodges, owner of Country Market Collection, a maker of antique-reproduction
furniture, received a phone call from Jill Turnberry, a manager from Ashton Thyme’s, an upscale furniture
boutique in Athens, Georgia, one of Country Market Collection’s biggest and longest-standing customers.

Turnberry was not happy that one of Ashton Thyme’s customers had just told her that he found Country

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Market Collection furniture cheaper at an online retailer. Like most of Country Market Collection’s customers,
Ashton Thyme’s enjoyed rights to an exclusive distribution territory that covered Athens through Atlanta,
where Ashton Thyme’s operated two new stores.

Even worse, from Turnberry’s perspective, was the fact that Country Market Collection had agreed to let
the customer pick up the furniture directly from a distribution center in Augusta, thereby saving the shipping
charge and making the online purchase that much more attractive.
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“Look,” said Turnberry, “we really need to talk about what ‘exclusive’ means. You never told us that you
were selling to websites. This severely reduces the value of our ‘exclusive’ territory. I don’t care how you do it,
but when sales are made to customers who live in Athens, we are supposed to get the business.” Hodges was
unprepared for the call, so she reassured Turnberry that she would look into the situation and get back with
her by the end of the week. This was going to be a tricky situation. Without knowing the details, she knew that
she had to keep selling through both channels: in store and online. But how?
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Background

Country Market Collection

After retiring from teaching in 1991, Hodges’s husband spent his time crafting his own custom pieces of
furniture and considered opening a small shop, but was encouraged by Hodges, a retired computer systems
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consultant, to design his own line and outsource the manufacturing. After the Hodgeses founded Country
Market Collection in 1994, they were able to generate early success with three styles of antique-reproduction
tables and ultimately began expanding their product line to include other types of furniture. In the beginning,
they used contract manufacturers throughout China, but in the fall of 2004, they opened their own
manufacturing facility in Xiamen, China, which offered easy access to the local shipping port and Xiamen Gaoqi
International Airport.

Country Market Collection’s customers were concentrated in the South near its Augusta headquarters and
distribution facilities. These retailers were given exclusive distribution rights to a geographic area around their
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This fictional case was prepared by Kimberly A. Whitler, Assistant Professor of Business Administration, and Randle D. Raggio, Assistant Professor,
Robins School of Business, University of Richmond. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling
of an administrative situation. Copyright  2017 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To
order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. Our goal is
to publish materials of the highest quality, so please submit any errata to editorial@dardenbusinesspublishing.com.

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stores. But the Hodgeses found that they could increase revenue by selling to several online retailers that
specialized in antiques and reproductions. Country Market Collection did not prohibit online sales to individuals
in the retailers’ exclusive territories. Hodges felt this would put an unnecessary burden on its online customers
since they would have to program special features into their e-commerce sites just for Country Market
Collection items. This would frustrate customers who wanted to purchase Country Market Collection items

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but could not, and that frustration would be expressed toward the web retailer, not Country Market Collection;
web-based retailers were not likely to suggest a local store where customers could find the item to relieve this
frustration.

Ashton Thyme’s

Ashton Thyme’s, founded as a dry-goods store in 1834, had developed a reputation as the go-to place in
Athens for exclusive furniture and upscale design advice. Design consultants would visit customers’ homes and

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give free advice on furniture, paint colors, and other decorating ideas.

Ashton Thyme’s was the first retailer that the Hodgeses reached out to when they considered starting
Country Market Collection. Managers and designers were excited about the designs and Turnberry put in a firm
order for six pieces when she received the first samples in 1994.

Many customers were second and third generations of families that had long-standing relationships with
the store. Ashton Thyme’s received a lot of word-of-mouth promotion from current customers, which was
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important, because many of the locals were university professors and other transients to the area. One such
new transplant was the customer who informed Turnberry that he could purchase Country Market Collection
furniture cheaper online.

The customer
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A marketing consultant who recently had moved his family to the area walked into Ashton Thyme’s on a
warm spring afternoon and found sitting at the front desk the salesperson who had helped him the week before.
“My wife and I have decided that we want to purchase the furniture we looked at last week,” he said. “We want
it all: the antique table, eight chairs, the bench, cushions, everything.” He paused for a moment and looked
around to make sure no one else was close to the desk before continuing. “But there’s one thing I want to talk
with you about. We were really excited when you showed us the Country Market Collection chairs and told us
the story about how they were made by a local Augusta company. So I went online to see what else Country
Market Collection produced. They’ve got some really great stuff. But I found that I could buy the chairs cheaper
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at GarlandLane.com.” (Exhibit 1 lists the retail prices of the chairs, bench, and cushions at each retailer.) “I’m
going to do what’s best for my family, but I wanted to let you have a chance to match the price if you want.
You don’t have to, but I just wanted to let you know.”

The salesperson immediately called for Turnberry so that she could make a decision about pricing.
Turnberry was extremely surprised that Country Market Collection was selling items online, so all three of them
walked into Turnberry’s office to look at GarlandLane.com on her laptop.

The customer explained his plan: “As you can see, I can get the chairs cheaper from GarlandLane.com,
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especially since I don’t have to pay tax or shipping, but I still want to buy the table, bench, and cushions from
you.”

Turnberry was trying to understand the economics of the situation. “It’s easy to see how you save the sales
tax (which was 7% in Augusta at the time), but how do you save shipping?” “Well,” the customer responded,
“I called the offices of GarlandLane.com and told them that I lived less than two hours from Country Market

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Collection’s headquarters and asked if I could buy the chairs from GarlandLane.com but pick them up directly
from Country Market Collection in Augusta. GarlandLane.com would get the sale, but wouldn’t have to do
anything but take my money. Somebody from GarlandLane.com called me back the next day and said that was
okay, so I’m just waiting to see what you decide to determine whether I should order from them or not.”

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Ultimately, Turnberry decided not to match GarlandLane.com’s price, but immediately after this
conversation, she called Hodges at Country Market Collection.

The Decision

After Hodges hung up with Turnberry, she sat back in her chair and pondered the situation. How could
she keep both channels happy? First, she realized that the particular situation that had precipitated the call was

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very unusual. “How many customers live within a couple of hours of our facility, and will look online for our
products, and will ask a web-based retailer if they can pick up their purchases? Probably not a lot,” she thought.
“Certainly, we will discontinue direct-to-consumer delivery. But what about the competition within the
territories? Is there a way to keep selling through both channels without creating unnecessary competition?”
She thought about increasing prices to the online channel, but if she did that, Country Market Collection could
lose customers. After all, the country was just recovering from a recession and higher prices were not likely to
spur increased sales. There had to be another way. It was late Wednesday afternoon and she had promised
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Turnberry a call by the end of the week.
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Exhibit 1
Country Market Collection: A Case of Channel Conflict
Retail Prices at Ashton Thyme’s and GarlandLane.com

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Source: Created by author.

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This document is authorized for educator review use only by MAZHAR IQBAL, Bahauddin Zakariya University until Jun 2021. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860