Retail Leader - RL 100 2018 by ensembleiq

SPECIAL REPORT: WOMEN CHANGING THE (retail) WORLD!

THE

RL 100

Our Annual Industry Ranking & Disruption Forecast

In collaboration with

BEYOND THE RETAIL APOCALYPSE MAP PRICING AND AMAZON RALEY’S SETS NEW NATURAL STANDARD WHAT’S NEXT WITH RILA’S SANDY KENNEDY

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Retail Leader SUMMER 2018 VOL. 8, NO. 4

21SPECIAL REPORT:

SVP, Group Brand Director Katie Brennan kbrennan@ensembleiq.com 917-859-3619

EDITORIAL Editor-In-Chief & Brand Director Mike Troy mtroy@ensembleiq.com 813-857-6512 Managing Editor Gina Acosta gacosta@ensembleiq.com 813-417-4149

Meet the women changing the (retail) world.

ADVERTISING SALES & BUSINESS Associate Brand Director Mike Shaw mshaw@ensembleiq.com Office 201-855-7631 Cell 201-281-9100 Senior Sales Manager Judy Hayes jhayes@ensembleiq.com 925-785-9665 Senior Sales Manager Theresa Kossack tkossack@ensembleiq.com 214.226.6468

EVENTS Vice President, Events Michael Cronin mcronin@ensembleiq.com

MARKETING Brand Marketing Manager Carly Kilgore ckilgore@ensembleiq.com

6 EDITOR’S LETTER

Labels the retail industry uses to categorize formats, channels and shopping centers never mattered to consumers and they shouldn’t concern retailers either.

8 FINANCE AND CAPITAL MANAGEMENT

35 MERCHANDISING AND MARKETING

Making sense of MAP policies in the age of Amazon.

36 GROWTH AND BUSINESS DEVELOPMENT

Malls and neighborhood shopping centers are going to look and feel a lot different in the future. Here’s how.

Raley’s unconventional approach and extreme measures allowed it to leapfrog natural and organic competitors to set a new natural standard.

10 COVER STORY

42 WHAT’S NEXT

The RL100 industry ranking and disruption forecast.

30 HUMAN CAPITAL

RILA President Sandy Kennedy on what it means to “Be Better,” on gender diversity.

Vice President, Production Kathryn Homenick khomenick@ensembleiq.com Creative Director Colette Magliaro cmagliaro@ensembleiq.com Custom Project Manager Kathy Colwell kcolwell@ensembleiq.com Custom Project Manager Judi Lam jlam@ensembleiq.com Production Manager Jackie Batson jbatson@ensembleiq.com Art Director Regina Loncala rloncala@gmail.com Subscriber Service/Single-Copy Purchases EnsembleIQ@e-circ.net

Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Operating Officer & Chief Financial Officer Richard Rivera Chief Brand Officer Korry Stagnito President, Enterprise Solutions Terese Herbig Chief Digital Officer Joel Hughes Chief Human Resources Officer Jennifer Turner Senior Vice President, Innovation Tanner Van Dusen

32 SUPPLY CHAIN

Girish Rishi, the CEO of JDA Software Group, speaks to Retail Leader about the autonomous, self-learning and prescriptive supply chain — and the role of humans.

32 Retail Leader.com SUMMER 2018

PROJECT MANAGEMENT/ PRODUCTION/ART

Reprints, Permissions and Licensing Contact Wright’s Media at ensembleiq@wrightsmedia.com or 877-652-5295

Walmart increased a robust veterans’ hiring commitment earlier this year and expanded support for a unique organization focused on an issue few knew existed.

AUDIENCE ENGAGEMENT Director of Audience Engagement Gail Reboletti greboletti@ensembleiq.com Audience Engagement Manager Shelly Patton spatton@ensembleiq.com

Retail Leader is published seven times yearly by EnsembleIQ: 8550 W. Bryn Mawyr, Chicago, IL 60631; Phone 224-632-8200 Fax: 224-632-8266. www.retailleader.com For address changes, send to Chicago, IL address or e-mail spatton@ensembleiq.com. © Copyright 2018

The only Retail and CPG event focused on the issue defining a generation:

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Save the Date October 2, 2018 Minneapolis Convention Center A symposium at the Path to Purchase Expo

PersonalizationIQ is the must-attend event of the year. To be part of this event, contact Retail Leader Editor and Brand Director Mike Troy at mtroy@ensembleIQ.com or 813-857-6512.

letter from the

EDITOR

Labels Don’t Matter Labels the retail industry uses to categorize formats, channels and shopping centers never mattered to consumers and they shouldn’t concern retailers either. The retail industry uses a lot of different names to define stores based on size, assortment, pricing philosophy and merchandising strategy. Food, drug, mass, club, supercenters and extreme value, dollar, hard discount, department and specialty stores are a few that come to mind. Aggregate stores at a single location and the result is a mall, a shopping center or a variant of the latter, such as an open air, lifestyle, community or strip center. A newer term, “consumer engagement spaces,” is described in a new report from A.T. Kearney called “The Future of Shopping Centers.” The logic behind the phrase is that there is a lot more happening at shopping centers than shopping because tenant mixes have evolved to include more dining, entertainment and experiential uses. That may be true, but don’t think we’ll be hearing, “Hey honey, I’m going to the consumer engagement space,” anytime soon. Shoppers don’t think of shopping centers, channels and formats the same way as those in the industry. This was true even when the distinctions were much clearer. Many of the labels were adopted during the last century as the phenomenon of chain store retailing expanded, enclosed malls were built and new types of shopping centers were introduced. They gave retailers a way to define their competitive set and helped suppliers organize sales and support teams. The labels didn’t serve a consumer purpose then and they still don’t today. When it comes to shopping, consumers talk about going to their Kroger or Publix, Walgreens or CVS or Walmart or Target, Dollar General or Family Dollar and so on. The individual retailer is the channel and the type of formats they operate increasingly defy classification based on traditional metrics of size, assortment and pricing. Even the notion of “I’m going,” which implies a trip, has been turned on its head in the digital age. Who says, “Hey honey, I’m going to Amazon,” and plops down on the couch with a tablet or oversize smartphone. Things get even stranger with the next evolution of shopping because it doesn’t even involve a trip to the couch. Voice enabled devices means shopping can happen while preparing dinner, walking on the treadmill or riding in an autonomous vehicle. Even though formats and channels have become irrelevant and new shopping modalities are maturing, retailers persist in segregating sales by online and in-store. Some recent examples of retailers who broke out online sales in quarterly results include Dick’s Sporting Goods, Ulta Beauty, Costco and Best Buy. Other retailers share metrics around online orders shipped from stores or picked up in stores and some attempt to assign a percentage to the volume of sales that are digitally influenced, a near impossibility because all sales are, or soon will be, digitally influenced. When physical retailers first began sharing their online sales figures it was from a defensive position. They had to show investors a physical presence was an asset rather than a liability and progress was being made toward providing a seamless experience. Now even the definition of a store is ambiguous. There are stores with no inventory and stores that function only as places where shoppers experiment with products and services. Some “stores” may not even be accessible to shoppers because they are essentially small distribution centers forward deployed in urban environments to fulfill online orders. Retailers and suppliers still thinking in terms of format and channel are at a disadvantage to those who understand consumers don’t think that way. Those who approach serving shoppers with a clean sheet of paper mentality — think of it as zero-based budgeting for the digital age — to innovate with new approaches unconstrained by labels will be those who remain on or advance up the ranks of the RL 100 list in the years ahead. RL MIKE TROY Editor-In-Chief mtroy@ensembleiq.com

Retail Leader.com SUMMER 2018

Honesty is the Best Retail Policy

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> SPECIAL REPORT

WHAT ABOUT BOARDS? Further declines in female senior executives is likely to have another long term consequence not specifically addressed in the analysis conducted by NEW, Mercer and Accenture; there will be fewer women with the desired business experience available for board service. This phenomenon is already somewhat evident and companies looking to appoint female board members are faced with the same challenges as companies looking to recruit senior female executives from a limited, and potentially shrinking, pool of talent. For example, data from Equilar, a provider of board intelligence solutions for recruiting, development and executive compensation, shows that women appointed to boards are more likely than men to already hold a board seat. Nearly a fourth (24.2%) of women directors in the Russell 3000 serve on multiple public company boards, compared to 17.3% of men, according to Equilar’s data. In the first quarter of 2018 alone, the more than 60% of women who took board seats already had board experience compared to 53.6% of men. In general, overall gender diversity at the board level is seen as improving. In the first quarter of 2018, Equilar’s data shows that 32% of new director seats went to women, an improvement from the 29.4% seen in 2017 and up sharply from the 17.9% of board seats that went to women in the 2014. Another noteworthy development evident in Equilar’s board diversity statistics is that the number of companies in the Russell 3000 index with all-male boards fell to 19.5% in the first quarter compared to 22.5% during the comparable period the prior year. Whether at the board level or in the C-suite, the research from NEW, Mercer and Accenture is the loudest and latest warning signal on the topic of gender diversity for an industry that has received numerous warnings previously.

Percent who agree there is “minimal favoritism where I work in distribution of work, promotions, etc.”

42% 36%

Overall

58%

37%

First-level manager

46%

42%

41% 35%

Mid-level manager

35%

Higher-level manager

37%

Executive and above

SOURCE: Mercer survey of NEW members and participating company employees.

Retail Leader.com SUMMER 2018

When it comes to gender diversity, the retail industry is in a better place than it was a decade ago, but clearly not where it wants to be positioned for the coming years. In addition, landmark research from the Network of Executive Women (NEW), Mercer and Accenture shows more action is needed or the next decade could see the industry regress substantially. While opportunities to preserve hard won gains and further enhance gender diversity remain, there is no denying a select group of women who occupy positions of tremendous responsibility are leading with distinction and oftentimes outperforming their male counterparts. At Retail Leader, we wanted to highlight these special individuals and the impact they are having on their organizations and the industry at large. To do so, we looked across the industry, consulted with colleagues at our parent company EnsembleIQ and reached out to industry partners and organizations. The goal was to identify women who met some or all of the following criteria: Displays leadership fundamental to the success of the organization and without which shareholder value will languish. Impacts organizational performance and industry dynamics in ways that are not always readily apparent. Faces unique challenges and company specific opportunities to transform business results. Is poised to have a lasting effect on the retail industry and further impact progress on gender diversity.

Men perceive less favoritism as they rise Females Males

MEET THE WOMEN CHANGING THE RETAIL WORLD > By Gina Acosta

Beyond this basic and admittedly subjective criteria we segmented the featured executives into the following areas: leadership, international, supply chain/operations, human capital, finance, information technology, e-commerce/digital, social responsibility and merchandising and marketing. The intent was not to create some sort of definitive ranking of the industry’s most powerful women, but to instead feature those who rightfully belong among the select group of female executives who are indeed changing the retail world. They are doing so by serving as role models for future leaders while addressing complex business challenges and thorny issues for their organizations.

LEADERSHIP

THE DEPARTMENT STORE SAVIOR Michelle Gass, CEO, Kohl’s

Gass has hit the ground running in her new job, which just happens to be one of the toughest in retail. The department store chain looking to reinvent itself in the digital age reported better-than-expected financial results on both the top and bottom lines just a few days after Gass became the company’s first female CEO in May. But Gass has been making her mark at Kohl’s ever since she joined the Wisconsin-based retailer in 2013 as chief customer officer and then as head merchant in 2015. She has been credited with securing the retailer’s partnership with Amazon, launching the successful Kohl’s loyalty program, and increasing apparel sales at a time when consumers jump from one fashion trend (and brand) to the next faster than ever. Now Gass will be tasked with leading a partnership with Aldi in an effort to drive traffic and fill up space in some Kohl’s stores. Prior to Kohl’s, she worked at Starbucks for almost 17 years, overseeing marketing, food and other functions. Gass had been a key lieutenant of Howard Schultz at Starbucks and most recently served as president of the coffee chain’s Europe, Middle East and Africa region. The 49-year-old also previously worked at Procter & Gamble Co.

CRAFTING A DIGITAL FUTURE Jill Soltau, President and CEO, Jo-Ann Fabric and Craft Stores

There is no retailer more challenging operationally than Jo-Ann Fabric and Craft Stores, a chain of more than 865 stores in 49 states with a vast assortment of low-turning items. Soltau joined Jo-Ann as CEO in 2015 and has been driving major growth and transformation ever since. Under her leadership, the company has undergone a revitalization of branding and product assortment, expanded digital and omnichannel capabilities, forged partnerships with Girl Scouts of the USA and 4-H Council, and recently launched a new program called Joann+. The multifaceted program, which offers bulk pricing, direct shipping and discounts, is designed for high-volume customers, including businesses, nonprofit and community organizations, and entrepreneurs. Soltau was recently appointed to the Board of Directors for AutoZone. She has 30 years of experience in retail, with a background in merchandising, marketing and customer experience, as well as organization and team development and executive management. Before Jo-Ann she served as President of Shopko, rising to that role after earning various executive positions of increasing responsibility since joining in 2007. Prior to her tenure at Shopko, Soltau held several senior level positions in merchandising, planning and private brand management at Sears and Kohl’s, after starting her career with Carson Pirie Scott.

ARCHITECT OF THE WALMART EXPERIMENT Vanessa LeFebvre, President, Lord & Taylor

Joining the company at a pivotal time with the department store category under pressure due to e-commerce is a huge operational challenge — and it falls to LeFebvre. Her parent company, HBC, just announced it plans to shutter 10 Lord & Taylor stores as it looks to create a new department store model less dependent on physical stores. If anyone can do it, it’s LeFebvre, who is a change agent with a track record of building new lines of business. LeFebvre will oversee the just-launched Lord & Taylor store on Walmart.com, which features more than 125 fashion brands not normally associated with Walmart. LeFebvre joins HBC from online retailer Stitch Fix, where she was VP of women’s buying and focused on data science and personalization. After spending the first 10 years of her career as a buyer and DMM at Lord & Taylor, LeFebvre went on to senior roles at several retailers including Macy’s, TJX Companies and Daffy’s. At Macy’s, LeFebvre was the architect of the Macy’s Backstage division, which she built into a multi-concept operation. LeFebvre actually began her career at Lord & Taylor in 1999 in the executive training program and eventually rose to divisional merchandise manager. This background, combined with her strong experience leading digitallyfocused strategies and understanding of department store retailing, makes her the right person to lead Lord & Taylor into the future.

SUMMER 2018 Retail Leader.com

> SPECIAL REPORT

INTERNATIONAL ON TRACK FOR GREATNESS

Judith McKenna, President and CEO, Walmart International

Before Walmart bought a controlling stake in online retailer Flipkart in May, McKenna traveled to India with Walmart CEO Doug McMillon and E-commerce CEO Marc Lore. Now that the deal is done, McKenna, as the new President and CEO of Walmart International, will oversee a division that serves more than 100 million customers every week in more than 6,200 retail units, operating outside the United States with 55 banners in 27 countries. If she can successfully navigate growth in the Indian retail market and Flipkart’s ability to ride the Indian consumer wave, McKenna could be the logical successor for McMillon, because the path to the corner office in Northwest Arkansas, with McMillon and his predecessor Mike Duke, has gone through the international division. McKenna was promoted to oversee Walmart International in February after serving as COO since 2014. McKenna’s career with Walmart began in 1996 at Asda, the company’s former U.K. operation, where she served as Chief Operating Officer and Chief Financial Officer. McKenna also served as Executive Vice President of Strategy and International Development for Walmart International. Upon moving to the Walmart U.S. division in April 2014, McKenna served as the business unit’s Chief Development Officer, where she led the strategy, development and growth of Walmart’s small format business and the partnership with Walmart.com to integrate digital commerce into the physical store presence. Several months later she was promoted to her expanded role as Executive Vice President and Chief Operating Officer for Walmart U.S., where she has been responsible for many successful launches, including grocery pickup.

A PHENOM IN A COFFEE CUP

Belinda Wong, CEO of Starbucks China

Wong is leading the company’s just-announced, hyper-aggressive growth strategy to serve China’s rapidly growing middle class. China is the fastest growing market for Starbucks, with a new store opening every 15 hours. The company recently outlined key drivers that will fuel China’s market growth at its first-ever China investor conference. During the seven years that Wong has been at the helm of Starbucks in China, first as president and for the last two years as CEO, she introduced a pioneering health insurance benefit that covered the parents of employees; she implemented a housing allowance for Starbucks employees in China; and she helped launch Starbucks China University to foster employees’ development opportunities. Wong and her leadership team have tripled the size of business since 2013. Now, with over 3,300 stores in more than 141 cities, the China business is positively positioned to continue to capture the enormous growth in that country, with a goal of having 6,000 stores in 230 cities in China by 2021. She started her career with Starbucks in 2000 as marketing director for the Asia Pacific region, where she served in brand and category management as well as marketing, public relations and corporate social responsibility. Before joining Starbucks, Wong was the marketing manager of McDonald’s China Development Company, where she was responsible for formulating marketing strategies and plans for the China market.

Retail Leader.com SUMMER 2018

ACCELERATING CPG INNOVATION

Kathleen (Kathy) B. Fish, Chief Research, Development and Innovation Officer, Procter and Gamble

Procter and Gamble’s portfolio of brands is unmatched by any CPG company, but even brands that generate billions of dollars in revenue annually can become albatrosses if they can’t deliver sales growth. As P&G’s innovation czar, it will be up to Fish to speed efforts to drive new capabilities and technologies to deliver product innovation that enables the long-term growth of the business. The global market for natural and organic personal care products is growing nearly 10 percent annually and projected to hit $17.6 billion by 2021, according to market research firm Technavio. Fish will have to tap into this growth trend by focusing innovation efforts on smaller, organic personal care brands. For now, Fish is driving efforts at P&G for more product transparency and to satisfy consumers’ demands for more natural ingredients. Fish leads the company’s innovation program and strategy; its $1.9 billion annual investment in R&D; and over 6,500 global R&D employees. She is a member of P&G’s Global Leadership Council and liaison to the Board of Director’s Innovation and Technology Committee. Fish joined P&G in Product Development (R&D). She has a strong track record of breakthrough innovation across P&G’s largest businesses (Fabric Care, Baby Care, Hair Care). Most recently, she led the Global Fabric Care R&D organization that identified the consumer need, completed the development of the products and platforms, and launched Tide and Ariel Pods and Downy/ Lenor Unstopables In-Wash Scent Booster.

SUPPLY CHAIN AND OPERATIONS A TRADE WARRIOR IN WASHINGTON

GROWTH IN THE COUNTRYSIDE

Hun Quach, Vice President, International Trade, RILA

Hun was key in efforts to the defeat the border adjustment tax (BAT), influencing a public policy matter that has a tremendous impact on all retailers. And while she was extremely vital on BAT, she is now even more so on the current White House proposal to impose $50 billion of tariffs on goods imported from China. Hun recently testified before a committee of the U.S. Trade Representative’s office that tariffs (and announcements about tariffs) should be avoided while trade negotiations continue between China and the United States. She leads the retail industry’s trade policy agenda in Washington and coordinates with RILA’s government affairs team to advance retailers’ priorities. RILA’s expert on international trade and customs, Hun acts as a liaison between RILA members and Congress as the industry voices its support for a U.S. federal trade policy that fosters economic growth. Prior to joining RILA in 2015, Hun served as Assistant United States Trade Representative (USTR) where she served as principal liaison to members of Congress on international trade negotiations. As head of the Congressional Affairs Office, she provided strategic policy and political guidance to USTR Ambassador Michael Froman and senior administration officials. In addition to her experience at USTR, Hun spent seven years on the U.S. Senate Committee on Finance, where she served as International Trade Advisor and led on international trade and customs issues while advising Finance Committee Chairman Max Baucus, senators and staff.

Letitia Webster, VP, Omnichannel, Tractor Supply Company

You won’t find anyone who has more vision or understanding of omnichannel than Webster. So it’s not surprising that Tractor Supply Company, the largest seller of rural lifestyle products in the United States, has tasked her with leading the retailer’s omnichannel strategy called ONETractor. Webster will be helping the company lay a solid foundation for future growth by combining the company’s physical and digital assets into one seamless shopping experience that allows customers to engage anytime, anywhere and in any way they choose. Webster will have her hands full: Tractor Supply recently opened its 1,700th store, with plans to open 80 new stores in 2018. The company will also be opening a new distribution center in Frankfort, N.Y., in June and an expansion on their existing distribution center in Nebraska, which will provide additional capacity once completed. And the retailer is also rolling out more buy online-pick up in store capabilities. Prior to her current role, Webster was Divisional Merchandise Manager for Tractorsupply.com, where she was responsible for the online customer experience as well as the expansion of brands and product offerings. Prior to joining Tractor Supply Company, Webster worked for Sears Holdings Corp. for 28 years and held a number of roles within different areas of the organization, including e-commerce, merchandising, marketing and inventory.

THE FULFILLMENT GURU Michelle Livingstone, Vice President, Supply Chain/Transportation, The Home Depot

The answer to the question of, “Would you like to pick this up in the store or have it delivered?” is quite challenging when the item being purchased is a door, a generator or a refrigerator. But it’s Livingstone’s job to build a distribution network to satisfy any answer to this question. Livingstone has restructured Home Depot’s supply chain to integrate the experiences of online and in-store shopping. That restructuring included the development and deployment of a network of distribution centers for store replenishment and, more recently, direct-to-customer fulfillment. Livingstone is responsible for the movement of all inbound and outbound shipment into and within Home Depot’s multi-channel supply chain, including imports, exports and store deliveries. Prior to joining the company in 2007, she was senior vice president of transportation for C&S Wholesale Grocers. She was also vice president of transportation for JCPenney, and senior director of transportation for Kraft Foods North America. Livingstone serves on the Executive Committee of the Board of Directors of The Transportation Institute of the University of Denver and the board of the Coalition for Responsible Transportation; she also chairs the Retail Industry Leaders Association (RILA) Transportation and Infrastructure Committee and is a member of their Logistics Steering Committee.

SUMMER 2018 Retail Leader.com

HUMAN CAPITAL

INSPIRING NEXT-GEN RETAILERS

Rachael Jarosh, President and CEO, Enactus

Jarosh leads an organization developing a future generation of entrepreneurs that will serve as the lifeblood of a retail industry on a quest to attract and retain top talent. Enactus, formerly known as Students in Free Enterprise, is an international organization supported by major retailers that connects student, academic and business leaders through entrepreneurial-based projects that empower people to transform opportunities into real, sustainable progress for themselves and their communities. Guided by academic advisers and business experts, the student leaders of Enactus create and implement entrepreneurial projects around the globe. Enactus, which counts Walmart, Unilever, Campbell’s and other retail/CPG firms as partners, leverages the power of entrepreneurial action to set trends for the treatment of workers and expectations for others to follow. Jarosh joined Enactus in 2016 after building a distinctive professional portfolio in strategy and communications counsel to clients in the media, technology and philanthropy sectors. Jarosh brough to Enactus 22 years of experience in branding, communications and philanthropy after beginning her career as an attorney. Previously, Jarosh served as president of the Pentair Foundation, led global corporate communications for Pentair plc and worked at the intersection of private and non-profit partnerships. As the CEO of Enactus, Jarosh’s top priorities will be accelerating the organization’s impact and advancing the Enactus mission to inspire students to improve the world through entrepreneurial action.

RETAIL INTELLIGENCE

Shelley Bransten, SVP of Retail Industry Solutions, Salesforce

When Bransten gave a presentation at NRF’s Big Show this year, she spelled out the challenges for retailers navigating the AI revolution. Bransten told the audience that technology has created a data deluge that in many ways has clouded retailers’ view of the person that matters most: the shopper. Bransten leads a team at Salesforce working to make sense of that cloud of data. She is responsible for developing and launching transformative business solutions that address the unique challenges facing the retail industry. In her previous role leading CRM for Gap, Inc., Bransten set the vision and execution of world-class CRM programs for Gap, Banana Republic and Old Navy. Bransten built out Gap’s CRM Strategy and oversaw the customer database and direct to customer marketing for the world’s largest specialty retailer. In addition to her 16 year tenure leading CRM for Gap, she served on the Board of Merchants Customer Exchange (MCX), a mobile payments and loyalty coalition with executives from leading retailers and brands such as Target, Walmart, Lowe’s Southwest Airlines, Best Buy, Exxon Mobile, etc. Bransten has also been an advisory Board Member for Loyalty One’s annual Loyalty Innovation Awards. Prior to Gap, she worked at Williams-Sonoma, Smith & Hawken and Visa USA. 24

Retail Leader.com SUMMER 2018

A STAR ON AMAZON’S ‘S-TEAM’ Beth Galetti, Senior Vice President, Human Resources, Amazon

If Amazon is a force in retail, Galetti is the force in charge of that force. As Amazon’s senior vice president of human resources, she oversees the retail industry’s largest and fastestgrowing workforce, which now numbers more than 570,000 people. Galetti, currently the only woman on Amazon’s “S-team,” an elite group of about a dozen senior executives who meet regularly with founder and CEO Jeff Bezos, has a say in the company’s most important decisions, which now includes the realm of health care innovation. Galetti was the one picked to represent Amazon on the Berkshire Hathaway-led task force working to address rising health care costs in the U.S. and she has a voice in determining the site of Amazon’s second U.S. headquarters location. Prior to joining Amazon in 2013 and becoming HR chief in 2016, Galetti worked for FedEx, holding a variety of roles including vice president of planning, engineering, and operations as well as the chief information officer for FedEx EMEA. Not only does Galetti have experience in recruiting for one of the most prominent companies in the world, she also has experience leading teams for huge projects. For example, while at FedEx, she led a team of 100 software developers for the package tracking system during the process of migrating the existing system to a new technology.

FINANCE REAL ESTATE REVOLUTIONARY Valerie Richardson, Chairman, ICSC

Richardson is the International Council of Shopping Center’s first chairman ever to come to the post from an active retail company, and her timing couldn’t be better. At ICSC, she will be leading a 70,000-plus membership base responding to the rise of online shopping by reimagining the way in which brick-and-mortar locations are used and the related investment retailers make. Rapid change in retail real estate runs the gamut, from pop-up shops, to store pickup stations, to redesigning space for experiential retail. As vice president of real estate for the Texas–based Container Store chain, Richardson is responsible for site evaluation and lease negotiation, and for coordinating store design and construction of the company’s nationwide store expansion program. Richardson will be leading new real estate initiatives in her own company as she launches a smaller store format to better serve today’s consumers. Before joining Container Store, in the fall of 2000, Richardson was senior vice president of real estate and development at Ann Taylor, Inc., where she administered the store expansion strategy of both Ann Taylor and Ann Taylor Loft. Before that, she was vice president of real estate and development for the superstore division of Barnes & Noble. Richardson began her real estate career at Dallas-based development firm Trammell Crow Co. She became an ICSC trustee in 2004.

PLAYING THE LONG GAME Cathy Smith, Executive Vice President and CFO, Target

In early 2017, Smith embarked on an ambitious plan to help Target reshape its business model. Today, traffic is growing as shoppers respond positively to investments in stores, supply chain, new brands and digital. Smith is overseeing an investment of more than $7 billion through 2020 on a series of initiatives; the company has also increased the minimum hourly pay of employees to $12. The moves are paying off. The company’s first quarter traffic growth of 3.7% and comps of 3% demonstrate that Smith has Target on the right track for sustained growth. Now that Smith has apparently solved Target’s omnichannel dilemma (it’s one of the few retailers seeing more customers both at its stores and online), her next challenge will be corralling expenses in order to improve profit margins. Prior to joining Target in 2015 as chief financial officer, Smith served as executive vice president and chief financial officer at Express Scripts, the nation’s largest pharmacy benefit manager with $100 billion in revenue. She has also held CFO positions at Walmart International, GameStop, and others. In addition to her Target responsibilities, Smith serves on the boards of Baxter International Inc. and the Carlson School of Management at the University of Minnesota.

SOLVING A $20B PROBLEM Paula Price, CFO, Macy’s

Priority Number 1 for this Harvard Business School professor will be maximizing the value of Macy’s real estate portfolio to satisfy investors while serving increasingly digital shoppers. With lower in-store sales, Macy’s doesn’t need as much floor space in each store as it did a decade ago. A growing proportion of Macy’s revenue now comes from e-commerce rather than in-store sales. The company’s vast real estate portfolio could be worth as much as $20 billion — more than Macy’s entire enterprise value. The company has raised more than $1 billion in the past few years from selling various properties, and Price will be focused on plans to sell more. Price, who starts her CFO job on July 9, will have to be extremely disciplined with capital management and opportunistic with these real estate sales. Price’s appointment comes as Macy’s snapped out of a three-year losing streak in same-store sales this year. Macy’s raised its 2018 outlook after firstquarter earnings beat analyst expectations, and now forecasts earnings for the year of between $3.75 and $3.95 a share, a 20-cent increase over its previous outlook. While Price hasn’t served as a company executive since her tenure as CFO of Ahold U.S.A. Inc., she is a director on several boards. Price is currently a full-time senior lecturer at Harvard Business School, a role she has held since 2014.

SUMMER 2018 Retail Leader.com

INFORMATION TECHNOLOGY

THE DATA DRIVEN ENTERPRISE

Karen Thomas, EVP, Sales and Services, Americas, Teradata

BLUEPRINT FOR NEXT-GEN RETAIL Angela Ahrendts, SVP, Retail, Apple

As hundreds of shopping centers look for ways to re-invent themselves, Ahrendts may hold the secret to brick and mortar success in the age of e-commerce. Her network of more than 500 Apple Stores are some of the most profitable retail real estate in the world thanks to datadriven thinking, ground-breaking store design and customer service. But Ahrendts thinks Apple can do better, by not only driving more sales in-store but by also providing a lifeline to smaller retailers and malls. Each Apple location, which Ahrendts calls “town squares” instead of stores, now features a “Forum” area with a large video screen and wood cube seating, dedicated to learning. About one-third to one-half the space in the stores serves as a place where people can meet up with friends or learn how to use Apple products. Ahrendts says the town square format is designed to attract not just Apple shoppers but people period, which drives sales at nearby retailers. Ahrendts joined Apple in 2014 and immediately made her presence felt. In her role, she has presided over the retailer’s “town square” approach to stores. She has also been credited for playing an integral role in Apple’s growth. Ahrendts joined Apple from Burberry.

Retail Leader.com SUMMER 2018

Thomas entered the data and analytics world 30 years ago in Canada way before data and analytics were cool. Now as EVP/Sales and Service at Teradata, Thomas helps companies evolve into a “sentient enterprise” as they reimagine what’s next for Big Data in the era of AI. The sentient enterprise concept at Teradata is a road map for businesses — even large multi-national corporations — to combine technology, governance and human engagement around data in ways that preserve startup-style agility. Leading global retail companies, including eight of the top 10 U.S. retailers and 15 of the top 20 global retailers, trust Teradata to leverage enterprise-wide data for insights and actionable recommendations. Thomas has more than 25 years of experience in the areas of sales, consulting, finance, and information technology. Prior to her current role, she was vice president and general manager of the Bay Area and California region. Previously, she held multiple roles at Teradata, including area vice president, U.S. Western Region, sales director for Canada and roles in finance, operations, marketing and customer service with Teradata Canada.

ENABLING THE FRICTIONLESS FUTURE

Kalyna Stiles, Global Retail Solutions Director, NCR

It’s been 30 years since self-checkout machines debuted. As retailers strive to reduce or eliminate friction from their physical and digital experiences in a constantly evolving market, Stiles is on the front lines of checkout innovation. Self-checkout has remained a steadfast solution in today’s retail space and it is evolving with shopper demands to stay relevant. While shoppers have embraced self-service, they’re starting to evolve past it, looking to start the journey at home on their mobile devices and then continue in the store, or by simply purchasing everything online and having it available for quick and easy pickup. Stiles is helping retailers navigate all of this path to purchase innovation and calls on 25 years of experience in physical retail store environments. She has been instrumental in bringing NCR’s Store Transformation solution portfolio into the market (in EMEA and APAC, and now globally). Her contributions have helped make NCR the market leader in self-service solutions by proving ROI to retailers. Stiles has worked for NCR in various roles for nearly 20 years. Prior to NCR, Stiles owned her own consulting business in Australia.

Collaboration Enhances Speed and Agility, Paves the Path to Growth in a Challenging Marketplace

apturing consumers and sales has become more complex than ever. Technology has spawned unprecedented retail disruption, completely redefining the competitive landscape and giving shoppers virtually unlimited options of where to shop and what to buy. Retailers of all sizes and formats are battling online and offline, making the path to purchase a complex web of buy moments. For retailers and CPGs intent on staying one step ahead of todayâ&#x20AC;&#x2122;s highly connected consumers, the journey to growth must be advanced, collaborative and in real time. STRATEGIC GROWTH JOURNEY

“The battlefield is a scene of constant chaos. The winner will be the one who controls that chaos.” — NAPOLÉON BONAPARTE

A Complex and Changing Atmosphere Increasingly Fragmented Ad Addressable Media

Rapidly Changing Purchase Format

1:1 Personalization Powered by Big Data, AI and ML

Rapidly Changing Consumer Behavior

“The Way We’ve Always Done It” Is Obsolete

To truly reap the benefits of collaborative growth, businesses must ensure they don’t limit their views. Often, traditional business practices limit the scope of personalization efforts and won’t allow a holistic approach to understanding consumers and marketing to them. And they don’t consider enough what the modern retail landscape and consumers really look like. In traditional retailer-supplier relationships, a major challenge is that each partner has a separate view of the customer — separate data sets, different performance goals and divergent ways of measuring impact. Certainly it’s important for retailers to look at how customers behave in store — what’s in the basket, trip missions — and manufacturers should look at drivers of product selection and switching behavior. But these myopic views limit the ability to understand all the influencers that sway shopping and purchasing behavior. By adopting a holistic view and shared goals and performance indicators, parties can create strategies that benefit both partners and react to tactical opportunities with speed and precision. While businesses should not silo their analysis of consumers, they also should not silo their organizational structures, with each group focusing only on their own areas of expertise. True collaboration means all parties come together, bringing synchronized expertise to their areas of influence.

STRATEGIC GROWTH JOURNEY

Technology — one of the single biggest changes in the CPG industry during the past decade — is setting a perfect stage for truly collaborative marketing programs. It is evolving at the speed of light, including voice technology — along with artificial intelligence and machine learning — which are the next evolution in how we interact in the digital world. These tools offer new ways to attract and retain consumers, a challenging but crucial feat because today’s consumers continue to be more selective in who and what they engage with — because they can be. They’re more demanding because they have more choices than ever before; they challenge marketers to win them over; and they vote with their wallets. As a result, seamlessly connecting with and continuously activating consumer impulses will be the keys to protecting and growing the business into the future.

Mastering the Data: A Key to Performance Growth

As a result of so much retail disruption and the depth of technology contributing to interpretation of consumer markets, the big data marketplace has exploded. Its complexity is marked by reams of disparate data from a variety of sources and often lacking insights. To take advantage of this advanced marketplace and make the most of the complex data world, the industry must master the data. The marketplace and the data are complicated, but by using trends and insights garnered, an understanding of how consumers respond to marketing information that is coming at them is possible. Analysis shows how marketing impacts shopping journeys, and then marketers can influence the path to purchase and, ultimately, buying behavior. CPGs and retailers can keep up with the speed of the market; they just need to approach it with a new mindset and the necessary tools.

Partners Engaging in Collaborative Customization Outperform Market Growth by 1 to 2 Points

To win, there needs to be a new approach to doing business — retail, CPG and media must:

Collaborate

Personalize

Measure Impact

Closer collaboration between manufacturers and retailers offers an underutilized path to growth:

Retailer Goals

Joint Goals

Same-store sales growth

Grow market share of categories

Better integrated, more actionable data

Drive revenue and margin growth

Conversion of high-value shoppers

Improve sales efficiency

Manufacturer Goals

“This is a transformational alliance that will give the Brands of Ahold Delhaize USA a more comprehensive understanding of their businesses, improve collaboration with suppliers and provide a holistic view of the customer.” — J FLEEMAN, EVP COMMERCIAL SERVICES AND STRATEGY, DELHAIZE AMERICA

Brand share growth in categories More effective and more efficient retail trade and execution

Perhaps the most challenging obstacle along the path to enhanced retailer-supplier collaboration is the reams of disparate — and often discordant — data swarming and always growing throughout the marketplace. For true collaboration to occur, both partners must have real-time access to fully integrated — and harmonized — data. Up until now, though, harnessing the data has been prohibitively expensive and painfully time-consuming.

A Universal Platform Democratizes Data, Sets the Stage for Collaboration and Personalization That Will Create A Powerfully Engaging Customer-First Experience

To set the stage for a collaborative retailer-supplier relationship that continually derives actionable insights from internal and external data sources, IRI has created a retailer insights gateway solution that is enabled by the IRI Liquid Data® technology platform. With this platform, partners can quickly integrate disparate data without sacrificing security and control, creating a simple and consistent way to access the data and the insights. Integrating data — IRI and third-party data from more than 40 data assets on the Liquid Data platform, plus the ability to integrate more than 125 additional data sources via IRI’s open API connectors — creates a rich, harmonized data pool in one place. These assets can be used in all internal decision-making processes, including joint business-planning sessions with suppliers,

STRATEGIC GROWTH JOURNEY

“We feel that there is real power and efficiency in connecting insights from our store shelves all the way back into the collective supply chain. This expanded agreement with IRI will allow us to collaborate in a more meaningful and real-time manner with our suppliers. We believe it will help us to provide more of what our customers want no matter when or how they shop.” — AMANDA MARTINEZ, GROUP VICE PRESIDENT OF CORPORATE PROCUREMENT FOR ALBERTSONS COMPANIES

STRATEGIC GROWTH JOURNEY

and they drive significantly easier and more effective collaboration with joint decisions. Users have more meaningful metrics and reports on hand to allow manufacturer and retailer partners to make faster, better, smarter decisions together. These harmonized data sets alleviate the need for manual efforts, and they significantly increase speed to insights. Further, integrated data provide a more efficient link between market demand and actual market behavior, keeping users aligned against categoryfocused/customer-first efforts.

Distribution Center Efficiency

Integrating Supply Chain Data with Point-of-Sale Market Data Allows Gateway Participants to Grow 4.1 Percent Faster Than Non-Participants With an integrated gateway solution, suppliers have real-time access to daily data — for inventory, shipments, planograms, purchase orders and daily point-of sale transactions — allowing them to precisely plan for supply, demand, labor and transportation across the supply chain, thereby reducing distribution-related inefficiencies and enhancing in-stock positioning. With this visibility, retailer-supplier partners can plan for not only day-to-day inventory levels, but also special situations, such as holiday/seasonal, promotional and/or new product launch initiatives. Suppose, for instance, a major drug retailer is looking to track in-stock positioning to ensure the successful launch of a new healthcare product. This effort requires having optimal stock at launch and proper scanning across the retail banner. Through the use of a retailer insights gateway, the supplier has real-time visibility into positioning in the store and across the supply chain, allowing for rapid assessment — down to the distribution center and/or store level — of potential distribution issues associated with any of the SKUs in question.

Supply Chain Optimization

Real-Time Alerts and Predictive Out-of-Stock Capabilities Reduce Out-of-Stocks by 7.2 Points The availability of integrated insights aligned against a single point of fact also sets a solid foundation for minimizing out-of-stocks. Utilizing advanced predictive analytics, retailers can identify at-risk scenarios ahead of time. With these insights, retailers and suppliers can make on-the-fly adjustments to inventory levels — even mid-supply chain — to enhance promotional campaign performance. These adjustments can be supply-chain based to improve efficiencies, and also strategic to overall growth activity. For example, suppose forecasts indicate that a major CPG beverage manufacturer’s national promotions will be soft one week into a major promotional event. Through an integrated retailer gateway solution, the retailer and manufacturer would share a daily data update to investigate consumption against current inventory. With an agreed-upon threshold, the daily report will alert when inventory is needed. Then, by sharing specific warehouse details — name and inventory level — the retailer is armed with the data and insights needed to replenish supply at at-risk locations, thereby reducing out-of-stocks at the shelf.

Shopper Loyalty Enhancement

Integrating Frequent Shopper Program (FSP) and Point-of-Sale (POS) Data Allows Gateway Participants to Customize Marketing Programs, Supporting Trip Growth That Is 2.5 Percentage Points Higher and Per-Trip Spend of $1.60 Higher Versus Non-Participants Through frequent shopper data, retailers possess broad and deep data on their most important customers — with customer, transaction and basket-level granularity — giving gateway partners the ability to run detailed diagnostic analyses like leakage, trial and repeat, and switching. This creates a better understanding of customer segmentations and trip types, arming gateway partners with the insights they need to customize marketing programs to a retailer’s own customer and defined customer segments. In today’s marketplace of increasing shopper diversity and intense competition, keeping pace with changing needs and wants is challenging, but critical. Changes in shopper behavior can happen quickly. Quickly getting an understanding is necessary to protect against share erosion. For example, suppose a beverage manufacturer identified weakness in Hispanic behavior in a key trading area. By diving deep into the retailer’s loyalty data, the partners can

Loyalty Data Arms Key Manufacturer Teams With Valuable Insights Sales / Category Managers • • • • • • • • • •

Increase sales by proactively targeting out of stocks (OOS) Mitigate risk via demand shaping Integrate planogram Understand inventory metrics across brands and categories Qualify greatest inventory opportunities by store Demonstrate how shipments align to sales during promoted weeks Identify excess inventory Measure sales against in stock inventory Analyze topline performance across store and Distribution Centers Prevent client lost trips

Marketing • • • • • • • •

Mitigate risk via demand shaping Drive excess inventory out the door Ensure on shelf availability of new item launch Target planograms more effectively Show how shipments align to sales during promoted weeks Understand inventory levels and optimize replenishment Compare stores by balance on hand Drive insights on brand sales forecasts

In today’s marketplace of increasing shopper diversity and intense competition, keeping pace with changing needs and wants is challenging, but critical.

Operations • Maintain Supply Chain scorecard − Turnover KPI − Days/week of supply • Decrease costs • Optimize supply planning • Improve new item delivery and planning • Demonstrate volume of shipment by store • Ensure on-time compliance around shipments and service level agreements (SLAs) • Compare service levels across distribution centers and categories • Forecast and identify excess inventory and out of stocks STRATEGIC GROWTH JOURNEY

determine what this target’s preferred flavor assortment looks like. By aligning their beverage assortment against these preferences across high Hispanic stores, the manufacturer could fight back against well-positioned brands and improve their portfolio fair share within the market.

Product Trips, Change

Average Dollars per Trip $1.6

+2.5%

10.2%

Non-Participating

12.7%

$4.0

$2.4

Participating

Non-Participating

Participating

SOURCE: IRI RETAIL GATEWAY PROGRAM SALES DATA; IRI ANALYSIS

Trip Growth

By Merging Customer Data With POS Market Data, Participating Manufacturers Outgrow Non-Participants by More Than 4 Percent Today’s shoppers thrive on customized shopping experiences. This impacts all elements of the purchase cycle, from need realization to product purchases. Messaging must convey knowledge and understanding of what matters most to each shopper — is it price, value, convenience, etc.? Where will the shopper buy — in-store or online? How should assortment reflect these needs and wants? The list goes on. By zeroing in on these preferences, retailer-supplier partners will encourage purchase behavior and loyalty while also driving mutually beneficial trip trends. Suppose, for instance, that a retailer has identified a category that is contributing disproporationately to overall snack sector growth and is looking for opportunities to bring maximum impact from this hot category. As a first step, the partners need singular visibility into dollars, penetration and trip trends to ensure that these trends are meeting or exceeding expectations. Another opportunity lies in identifying high-performing brands within the category and the key buyers of those brands. Through integrated insights on a shared platform, the partners can identify trip affinities that will enable development of co-marketing/co-merchandising programs that reflect an understanding of purchase behaviors, supporting trip and basket growth while enhancing loyalty among these high-value shoppers.

Driving Trip Growth

+ 6

STRATEGIC GROWTH JOURNEY

POS

Loyalty Giveaway

4.6%+

Growth vs. Non-Participants

Category-Focused/Customer-First Requires a True Collaborative Approach

A singular and shared understanding of today’s consumers needs to be at the center of business-building strategy and resulting marketing campaigns. Consumers today are motivated by better shopping experiences and more relevant marketing communications — brand and retail interactions that reflect and resonate against their individualized wants and needs will win. This customer-first focus must be the foundation for all workflows that define strategy to connect with consumers across the lifespan of a marketing campaign, building brand loyalty and growth. After putting the consumer in the center of the strategy, then all parties must align for true collaboration against consistent and aligned content that drives innovation. Collaboration supports a rising tide that lifts all ships. But there are rough waters when it comes to data, as true collaboration can’t happen without harmonized data, shared goals and common measures of success.

Retailer Programs – Value Proposition to Retailers Market Measurement (POS) Gateway • Preferred access

to POS through integrated platform

• IRI develops and manages hierarchies, ROM placement, RMA/ CRMA, daily data • Significant investment in team to support key priorities

Shopper Loyalty Gateway

Supply Chain Gateway

• Unique shopper insights data sharing program

• Suite of tools for store and warehouse inventory management

• Hundreds of reports for shopper-driven pricing, promotion, assortment, etc., decision-making • Insight in retailer-specific shoppers’ buying behavior

• Enables greater collaboration and supply chain management via controlled sharing of data with suppliers

Sophisticated, multimillion-dollar best-in-class ILD technology platform

Price & Trade Promo Gateway (New Product)

RCDC Program • 350M+ cards

• Retailer-driven, supplier-specific pricing and trade promotion application • Speed of pricing and promotion execution and analytics (from annual to monthly)

• Industry’s leading insightsto-activation platform • Deliver personalized customer insights targeting activation and measurement • Profit share to retailers from CPG media audiences and measurement

Agile, cross-functional team to support Retail Program

A shared workspace is critical to this journey. It allows for ongoing joint-business planning and thus fluid, real-time, impactful and profitable decisions happening all the time. The benefits of collaboration on a shared workspace are numerous, but key impacts are: Sharing of information/real-time discussion, analysis and reporting Measurement against agreed-upon goals Identification of tactical and strategic opportunities Rapid assessment of arising threats via prescribed alerts Insights and action have to move at the speed of consumers and retail — very fast! — and can and should be specific to customers, markets and place in time.

STRATEGIC GROWTH JOURNEY

Though the process is complex, building personalized marketing campaigns with collaborative efforts throughout the process — and big data supporting the programs — will take marketers on a new journey.

To win share, retailers and manufacturers must: Have a 360-degree view of the consumer, including digital and physical buy moments and the role of media influences Deliver personalization based on propensity to purchase Gain near-instant consumer feedback > traditional research Automate analytics, engaging with artificial intelligence and machine learning Have visibility to omnichannel coverage Though the process is complex, building personalized marketing campaigns with collaborative efforts throughout the process — and big data supporting the programs — will take marketers on a new journey. The journey will be challenging in an ever-changing retail landscape and with ever-demanding consumer groups affecting trends everywhere from product development through purchasing behaviors. But there are processes in place that can jettison marketing campaigns to new levels of effectiveness. Effectiveness that delivers results, profits and growth opportunities. But collaborative efforts can’t achieve best results unless they are specific to the retailers’ and manufacturers’ actual strategic, operational and tactical processes. Deploying generic collaboration processes doesn’t deliver results, which is why IRI delivers custom processes for unique stakeholders in an organization, all delivered through the same universal platform. IRI capabilities bring the entire process to life, putting marketers one step ahead in a collaborative, state-of-the-art, modern journey.

STRATEGIC GROWTH JOURNEY

To build a road map to execute, win and grow through collaboration and personalization, contact IRI. www.iriworldwide.com 866-262-5973

> SECTION

E-COMMERCE AND DIGITAL HEAVY DUTY SALES GROCERY 3.0

Noreen Bergin, CFO, Shipt

Now that Target has acquired Shipt, Bergin will have to help the retailer figure out how to transform the grocery delivery space while keeping operational costs at bay. Since the acquisition in 2017, Target has been busy expanding Shipt services to more Target stores and to additional retailer partners. But for now, a majority of shoppers still say that they are generally satisfied with the amount of time it takes for packages to get delivered, and they are not willing to pay extra for same day delivery services such as Shipt. The company charges members $99 per year, and is available to nearly 50 million households in more than 100 markets across the country. Bergin joined Shipt as CFO in 2017. She came from SurveyMonkey with extensive experience in finance, accounting and business operations primarily in the software and internet space. Most recently, Noreen spent eight years consulting with startups and working on community projects. From 1999 to 2001, she held the position as CFO for FusionOne, a synchronization software company. Prior to FusionOne, Noreen spent five years as SVP of Finance and Corporate Controller for Netscape, where she was responsible for all areas of worldwide finance, accounting, treasury, tax and customer operations.

Stephanie Pugliese, President and CEO, Duluth Trading Company

If women are catching the lure of Duluth Trading Co.’s rugged, casual apparel, it’s thanks to Pugliese, who joined an elite group of female executives when she was named CEO in 2015. The retailer’s women’s business grew 37 percent and topped the $100 million mark in its fourth quarter earnings report released in March. The company, which is based in Wisconsin and has 31 stores, continues to grow its brick-and-mortar footprint while many other apparel retailers are contracting. The retailer says that after opening a store in a particular city, its digital sales in that city tend to surge. Pugliese’s goals for 2018 include opening 15 new stores, accelerating digital expansion and growing the women’s business even more. Pugliese has served as President of the company since February 2012 and as Chief Executive Officer since February 2015. Pugliese joined Duluth in 2008 and previously served as Chief Operating Officer from February 2014 to February 2015, as Senior Vice President and Chief Merchandising Officer from July 2010 to February 2012, and as Vice President of Product Development from November 2008 to July 2010. Prior to Duluth, she served as a senior executive in several positions with Lands’ End, Inc. from 2005 to 2008, including General Merchandising Manager of Women’s Apparel, Men’s Apparel, and the Home Division. She also previously held the position of Vice President of Merchandising at Ann Inc. from 2000 to 2003.

OKAY GOOGLE, ORDER DOG TREATS

Ivy Chin, Senior Vice President, Digital, PetSmart

If PetSmart is to be successful as an omnichannel retailer fending off Amazon it will be due to the work of Chin. She leads efforts to deliver industry-leading, omnichannel shopping and engagement with enhanced fulfillment capabilities in support of PetSmart.com and its additional e-commerce platforms, such as Pet360. com, PetFoodDirect.com and Chewy.com. The company’s digital presence and omnichannel strategy has become a key focus as it looks to better serve its customers and adapt to new shopping behaviors. Currently Chin is focused on voice-enabled technology, in order to elevate the PetSmart digital experience to a completely different level in the next few years. Prior to joining PetSmart, Chin served as the senior vice president of e-commerce for Belk. She was also vice chair of the Omni-channel Task Force team at Belk charged to drive digital transformation. Before her time at Belk, she worked with QVC, Inc. as the vice president for QVC.com where she began her online career more than 20 years ago. Presently, she serves on the board for shop.org, Women in Retail Leadership Circle, National Federation Digital Council, and the editorial board for Integrated Solutions for Retailers.

SUMMER 2018 Retail Leader.com

> SPECIAL REPORT MERCHANDISING AND MARKETING WORKING MILLENNIAL MAGIC Karen Coppola, EVP, Chief Marketing Officer, TJX Companies Inc.

The retail industry is being disrupted by e-commerce, but you would never know it by looking at TJX Companies’ financial reports. The company in its latest report marked its 15th consecutive quarter of customer traffic increases at all of its banners. The company’s growth speaks to the resiliency of its treasure hunt business model in the face of relentless e-commerce threats and volatile economic and retail environments. And that success is due in no small part to the hard work of Coppola, who has been CMO at TJX for an astonishing 30 years. Coppola has been instrumental in setting the right marketing strategy to keep a long runway for growth ahead at TJX, both in its expanding store footprint and in sales at existing locations. Now Coppola will look to lure more millennials and Gen Z shoppers to stores by delivering a store experience that is much more fun and filled with anticipation than a routine vist to the mall or even online. With all the resources it needs to keep giving shoppers reasons to return, and with disruption in the industry widely expected to accelerate, the retailer is on track to achieve its 23rd consecutive year of positive comps in 2018 thanks to astute marketing, which consistently strikes the right tone.

WINNING THE ONLINE CPG WAR Jennifer Silverberg, CEO, SmartCommerce

Silverberg leads SmartCommerce, an e-commerce platform designed to deliver more conversions for CPG brands. Silverberg says her team wanted to take the same impulsebuying experience a shopper may have in-store and move it online. She works with an international team to help major CPG companies such as P&G, Unilever and Nestle own and drive their customers’ buying experience. She has more than 25 years of experience working with major CPG and other brands in senior marketing and leadership positions in companies ranging from startup to Fortune 50. Prior to leading SmartCommerce, Silverberg was the SVP of marketing at Channel Intelligence, a leading commerce technology partner that was acquired by Google in 2013. She was the CMO and VP of client services at myList, a platform that helped brands such as Campbell’s, Philips and Disney identify and connect directly with their fans.

Retail Leader.com SUMMER 2018

ACCELERATING OMNICHANNEL Jocelyn Wong, Chief Marketing Officer, Lowe’s

Wong will be working with newly appointed CEO Marvin Ellison in developing omnichannel marketing strategies that build loyalty for the Lowe’s brand and position the company for continued growth. A big chunk of that will involve leveraging how technology is changing the expectations that customers have of home improvement retailers in ways no one could have imagined just a few years ago. One of Wong’s most important duties will be to lead a team that can leverage a multitude of data points and consumer insights to help Lowe’s become more relevant with customers and engage with them anytime and anywhere they choose. Wong has been Chief Marketing Officer of Lowe’s Companies Inc. since 2017. She served as Senior Vice President and General Merchandising Manager of Seasonal Product Business at Lowe’s from 2015 to 2017. She served as Chief Marketing Officer and Senior Vice President at Family Dollar Stores from 2012 until 2015. She has more than 18 years of experience in marketing, merchandising, brand management and product innovation with well-known retail and consumer brands, including Family Dollar, Safeway and Procter and Gamble. She began her career with Proctor and Gamble where she held various roles including Associate Marketing Director, NA Oral Care. She served as Group Vice President, Shopper Marketing for Safeway, where she led the creation of a newly formed shopper marketing organization.

SOCIAL RESPONSIBILITY REIMAGINING THE CENTER STORE

IMPOSSIBLE GOES MAINSTREAM Stephanie Lind, SVP, Global Sales, Impossible Foods

Amanda Sourry, President, Unilever North America

A spate of recent acquisitions and divestitures in the CPG space illustrates how manufacturers are adjusting their portfolios to add product lines in fast-growing categories, such as natural and organic, to compensate for slower moving legacy brands, particularly in center store. Sourry’s Unilever has been busy acquiring natural personal care brands such as Sundial and Schmidt’s and has been rumored to be on the cusp of purchasing Jessica Alba’s ecofriendly Honest Co. Sourry is leading the company’s startup accelerator called the Foundry as it looks to acquire new or adjacent businesses that enable innovation externally. Sourry’s division also just launched a new personal care brand (Love, Planet and Beauty), one of more than a dozen planned for this year, that appeals to consumers looking to fulfill two wants: “brands with purpose” and all-natural. Sourry joined Unilever in 1985, held positions of increasing responsibility during a nearly 30-year career, including 17 years in the U.S., and was called on to lead the global company’s food business in 2015. She has also led Unilever’s Global Hair Business and been Executive Vice President of Unilever UK and Ireland. She has lived and worked in the UK, U.S., Belgium and Australia.

As consumers increasingly seek more plant-based foods, the bleeding, beefy, vegan Impossible Burger is landing on a new menu every week in more than 2,000 restaurants across America, and counting. California-based Impossible Foods has become one of the major innovators in the better-foryou food category, and it’s seeing so much business that it plans to double production at its Oakland, Calif., facility this year. It’s been seven years since the company raised its first $7 million investment, and it managed to amass another $389 million in financing as of May. As Senior Vice President of Global Sales, Lind is a major reason why Impossible Foods is soaring and why meatless meat is gaining traction with consumers. She is responsible for leading the growing startup’s sales team, overseeing food service, retail and e-commerce. Prior to joining the team at Impossible Foods in December 2017, Lind was the CEO of Elohi Strategic Advisors — the sales and marketing agency she founded in early 2015 — working closely with emerging natural and sustainable food and beverage companies. She has over 25 years of experience working in the retail and foodservice space for Fortune 500 companies including Sysco, McDonald’s supply chain partner Havi Logistics, PepsiCo and the Campbell’s Soup subsidiary Pepperidge Farm.

TAKING A LEAD ON DIVERSITY Julie Sweet, North America CEO, Accenture

Sweet wants to accomplish what most other executives at major retail and CPG firms have not: making sure men and women are represented equally in the company’s ranks. Her goal: to get to a 50% male-50% female workforce by 2025. As of last year, the firm’s U.S. employee base was 36% women and 64% men. Sweet is leading Accenture’s partnership with the Network of Executive Women to help foster a more flexible, collaborative and inclusive workplace for women in retail and consumer goods across North America. As part of the partnership, the company is helping NEW conduct research to examine gender equality in the retail, consumer goods, technology and financial services workplace. At Accenture, Sweet is responsible for leading the company’s business in North America and also serves as a member of Accenture’s Global Management Committee. Prior to assuming her current position in June 2015, Sweet served as general counsel, secretary and chief compliance officer. As general counsel, she had ultimate responsibility for all legal support to Accenture, serving as principal counsel to senior leadership and the board of directors and leading the company’s Legal department. Before joining Accenture in 2010, Sweet was, for 10 years, a partner in the Corporate department of the law firm of Cravath, Swaine & Moore LLP, which she joined in 1992. RL

SUMMER 2018 Retail Leader.com

> HUMAN CAPITAL

Women Warriors Unite WHEN WALMART INCREASED AN ALREADY ROBUST VETERANS’ HIRING COMMITMENT EARLIER THIS YEAR IT ALSO EXPANDED SUPPORT FOR A UNIQUE ORGANIZATION FOCUSED ON AN ISSUE FEW KNEW EXISTED. > By Mike Troy

A Tara Galovski

Acknowledging and discussing differences between men and women can be a delicate subject in a climate of political correctness and gender ambiguity. Not so for Tara Galovski, a Ph.D and leading authority on the differences between men and women as it relates to post traumatic stress disorder (PTSD). Galovski serves as Director of the Women’s Health Sciences Division of the Department of Veterans Affairs’ National Center for PTSD housed at the Boston Healthcare system, where she is focused on special issues of women’s health and PTSD. She also serves as an associate professor of psychiatry at the Boston University School of Medicine and has done extensive research in the field of gender differences in recovery from PTSD and the influences of anger, health complications and sleep impairment on recovery processes. “Women and men are different in all kinds of ways and that is certainly true of veterans,” Galovski said. “It is difficult for anyone to transition to civilian life from the military but the experience is more profound for women.” A key reason why relates to the fact that there are far fewer female veterans. The loss of unit cohesiveness that veterans tend to experience when exiting the service along with sensations of loneliness and isolation are amplified for women

Retail Leader.com SUMMER 2018

because it is difficult to connect with other women upon leaving the service, according to Galovski. And because there are fewer women they may not even be recognized as veterans. She describes situations where female veterans come to VA hospitals for service and the assumption of staff may be she is a caregiver. Another issue is some women may not regard themselves as veterans if they did not see active combat duty. Galovski wanted to address that situation and so did Walmart, or more specifically, the Walmart Foundation. That’s why the Walmart Foundation recently gave an additional $250,000 to Boston University’s Women Veterans Network (WoVeN) that was created by Galovski 15 months ago with initial funding of $469,000 from the Walmart Foundation. “WoVeN is designed to be a community for women veterans regardless of when they return from active military service and to help them form lasting connections with other women veterans both within their individual communities and around the country,” Galovski said. “The Walmart Foundation funded the entire development of this program from the ground up,” The grant funds a program which works with female veterans through a series of 10-week support groups that just launched in nine cities and is aimed at improving wellness, quality of life, family and supportive connections for other women veterans. The initial cities include Dallas, Fort Worth, San Antonio, Austin, Pittsburgh, Charlotte, S.C., and Warner Robbins, Ga., and Richmond, Va. The additional funding will help expand the program to new cities and includes a training component so women who have participated in the early support groups can help establish new chapters. The expansion comes at an opportune time because the number of women in the military has grown during the past decade and currently stands at around 15%. When those women leave the service Galovski’s vision

for the coming years is to have a nationwide WoVeN infrastructure in place to provide support. The Walmart Foundation, which has been doing work in the military space for a long time, recognized the emerging gap between the growing need and available resources and stepped up to fill the void. “We began an intentional journey to apply a gender lens to our military programs and that is where we engaged with Boston University,” said Kathy Cox with the Walmart Foundation. Walmart’s increased support for WoVeN is part of an overarching effort to support military causes that has long been part of the company’s DNA. Founder Sam Walton served in the Army near the end of World War II and his brother Bud was a Navy pilot who flew bombing missions in the Pacific. From those early days, Walmart had a proclivity to hire veterans and by 2008 its commitments and involvement with military initiatives had grown to the point the unique position of Senior Director of Military Programs was created and filled by former Brigadier General Gary Profit. Profit had spent 31 years in the Army and upon retiring in 2006 joined General Dynamics. Two years later when he made the decisions to join Walmart his group of golf buddies had a predictable reaction. “They pretty much said, ‘you are going where, to do what?’” Profit said. “(Joining Walmart) was a big change so they were surprised. I saw it as a great opportunity for me to add value and the people that hired me were very empowering.” Less than three years after he joined Walmart, the Walmart and the Walmart Foundation in 2011 committed to spending $20 million by 2015 to support veterans and their families with assistance for programs that provide job training, transition help and education. Then in early 2013, Walmart committed to hiring 100,000 veterans over a five year time frame and said it would hire any honorably discharged veteran. The thinking was, “if you fought for your country you shouldn’t have to fight for a job when you got home,” Profit said. In 2014, having already spent the $20 million it committed to in 2011 a year early, Walmart and the Walmart Foundation upped the ante by committing to spend another $20 million by 2019. The funds were allocated for things like job training, education and innovative public/private community-based initiatives that address the challenges veterans, men and women, face when returning to civilian life. By May 2015, the company realized it was on track to exceed its goal of hiring 100,000 veterans three years early

so it set a new goal of hiring 250,000 veterans by the end of 2020. The figure sounded ambitious at the time, but by May of this year 200,000 veterans had been hired since the initiative was first announced in 2013. “Our veterans bring dedication and value to our workforce, and we Gary Profit feel a great sense of duty to ensuring our men and women in uniform can find not just a job, but a fulfilling career, here at Walmart and beyond,” Profit said. Profit and Walmart are keenly aware that military veterans bring desirable attributes to the organizations such as discipline, punctuality and training specifically geared toward working in teams to solve problems. In a sense, military experience is a form of basic training for a career in retail where many of the same skills are essential. “These are really good people and we want them on our team,” Profit said. Walmart currently employs more than 100,000 veterans throughout all areas of the organization and while not everyone sticks around the company is retaining people at a statistically significant higher level than the average employee, according to Profit. A contributing factor to the lower turnover is Walmart’s Military Family Promise which guarantees a job at a nearby Walmart or Sam’s Club for all military personnel and military spouses employed by the company who move to a different part of the country because they or their spouse have been transferred by the U.S. military. Looking ahead, based on the changing composition of the military, Walmart is likely to see an increasing number of female veterans enlist in its cause of helping Americans save money and live better. “Despite the fact that women have served in the military before the founding of the republic, the story of women in military service is being written as we speak,” Profit said. “It was only in the very recent past that all specialties opened to women serving so the whole narrative is being written in real time.” With women comprising the fastest growing segment of the veteran population, Profit said Walmart is seeing, “lots and lots of very capable young women join us.” RL SUMMER 2018 Retail Leader.com

> SUPPLY CHAIN

Meet the Cool, New Autonomous Supply Chain Shopper expectations of a seamless interaction with retailers’ digital and physical presence has created new operational challenges and brought more complexity to already intricate business models. The burden of satisfying heightened expectations today, and in an uncertain future, will fall to a supply chain that is autonomous, self-learning and generates prescriptive solutions. That’s the future envisioned by Girish Rishi, the CEO of JDA Software Group. The former Tyco, Motorola and Symbol Technologies executive joined JDA in February 2017 to drive the supply chain software provider’s innovation agenda. He spoke with Retail Leader at the company’s annual Focus conference about moon shots, a new developer conference and a philosophy of co-creation that comes to life at the company’s new 13,200-sq.-ft. Customer Experience Center at JDA’s Scottsdale, Ariz., headquarters. > By Mike Troy

Retail Leader: Take me back to early 2017 and what your thoughts were about joining JDA. What was appealing about the company and the supply chain world? Girish Rishi: In the supply chain space, with everything happening from omnichannel, redesigning of networks, AI and machine learning and applications running on the edge, I was seeing that the space was only going to grow. The advent of technology was very attractive. Another reason is the JDA brand is very trusted and many years ago committed to an end-to-end supply chain transformation. It was an honor to receive a call to consider JDA and help build the company for the next decade. RL: How does this year’s Focus compare to last year? GR: These things should get better sequentially. I have worked with the team and deployed my fingerprints to the strategy. We have built internally a significant customer first culture. The number one value is an obsession to deliver customer value. We have evolved our field organization with a theme around customer first. Responsiveness to customers is now more empowered in the field for go to market teams to respond to customers. The other big changes are the presence of more attendees from the partner community and a more coherent product roadmap, which was something our community asked for. RL: You took a different approach with your opening remarks this year.

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GR: It was not a typical general session where we stood up and gave speeches. We had seven leaders involved and we called out autonomous suppy chain as our moon shot. We followed that up with details of our product roadmap and an ecosystem of partners demonstrating live applications. We concluded with an emphasis around customer first and how we are living that value. RL: Let’s talk about moon shots. The autonomous supply chain sounds intriguing. What is it? GR: If you look at how supply chain is run today it is primarily run on internal data such as pricing, historical and trend data. Increasingly the proportion of external data coming in and influence pricing, promotion, planning, forecasting deliveries and the categories offered will influence your supply chain. The autonomous supply chain as you look ahead will incorporate digital data and we will go from an analog world to a digital world. What that means is machine learning and IOT data will drive more visibility. There will be a predictive aspect to it and there will be a prescriptive aspect to it. Eventually it will become a self-learning supply chain and that will allow supply chain professionals to focus more on higher value added activities. RL: And those would be what? GR: Focusing on things like driving better quality top line results, responding to externalities like traffic disruptions and overseas shipment delays, areas where they can apply judgement

like strategic planning, where to deploy workforce and which suppliers to work with and where to open stores.

RL: Companies have been saying they have too much

RL: Co-innovation is another area you are talking a lot

GR: But the realization of data as a competitive advantage is recent. Some of that credit can go to Amazon, which is driving an anticipatory model where they know before you or I do what we will buy. Shoppers will go to where the product is available, and where the product isn’t available there is a failure of the supply chain.

about. Is that another name for collaboration?

GR: The world is changing so much when it comes to how shoppers decide what to buy. And manufacturers and retailers want to identify opportunities and problems with a technology partner and go to work on solutions. It could be the length of lead times, lost sales and slow moving inventory. Manufacturers and retailers are working with JDA and coming up with new solutions and additional capabilities in new products that can be deployed in a very agile way in two to four to six weeks and see results. All of us in the digital age have so little patience and expect instant gratification, so how do companies respond to that? Those solutions are not off-the shelf so you work together to co-innovate. Sometimes it will require software and sometimes it will require data science as a service. RL: Is co-innovation a new phenomenon? GR: I have used co-innovation with customers for two decades. The best way to understand an opportunity or a problem is sit with a customer and envision what the solution looks like. It is more pervasive and agile now, but not by everyone. In our space, we are offering it as a capability to our customers. RL: You also recently opened customer experience centers in London and more recently at your headquarters in Scottsdale. Why did JDA need to invest in those facilities?

GR: The model has been we travel to see customers and that is great. But, we wanted to create a platform that would be a magnet for customer to come in and sit with cross-functional teams. If we can attract customers to this platform that is conducive to collaboration but has experts from JDA available to go to work on their problems that can be very productive. The centers are conducive for collaboration and teams to become one team, go to work on things and potentially write applications together. It is a very vibrant, inspiring collaborative model to go solve problems. RL: If customers are relying on JDA to help them win in a future that is being disrupted, isn’t it incumbent on you as a solution provider, the enabler of customers’ future success, to peer further into the future than they are able to do on their own?

GR: It is a trust-based model where we work together to drive outcomes. Also, understand that companies are sitting on reams and reams of data and they have been sitting on it for years. If data is the new currency what can we go do with that to drive immediate impact.

data since the advent of scanning.

RL: There is a lot of buzz at Focus about Luminate, the new branding for your portfolio of solutions and core product enhancements. Sound like a good name for a set of solutions that enhance visibility. GR: We are literally lighting up the shelves and pallets and providing visibility, and AI and machine learning are providing all these insights that drive outcomes. As soon as I heard the name I thought it was so intuitive. We drive supply chain use case optimization but we are using contemporary technologies that enable illumination. RL: It’s great that JDA provides insights as long as the customer is able to take action on those insights, but sometimes a retailer can have more data than they know what to do with it.

GR: hat’s where the autonomous supply chain comes in. If you are running a retail store or a manufacturing company and I’m a technology provider, am I going to give you more data and 16 more screens to look at? What are you going to do with that? You don’t want to have to keep hiring people, but the predictable, repetitive decisions and tasks you want to drive through a predictive and prescriptive methodology. If you are looking at running four different promotions, you want a prescriptive algorithm that tells you that number three will generate the most volume, the most revenue and the most margin.

Girish Rishi, CEO, JDA Software Group.

SUMMER 2018 Retail Leader.com

> SUPPLY CHAIN RL: Supply chain historically was always very important but it was very linear. Now it is so much more complicated with e-commerce and goods flowing all different directions.

GR: We come at supply chain from a unique end-toend vantage point. We do planning, execution and retail. When you are collecting consumer insights you want those signals to connect through your entire supply chain. If the data is in silos and disjointed there will be latency in the response. Our promise is that because we are end to end we are supply chain platform company. RL: What does being a platform company mean to customers?

GR: It tells the customers that you will bring in an ecosystem of partners that will write to your platform. That’s why we also announced that starting next year at Focus we are going to add a developer conference. There is euphoria from the user community because there is no developer conference in the world of supply chain. RL: That’s interesting because companies like Apple, Facebook and Microsoft have done developer conferences for a long time.

GR: We are taking that mantle of responsibility so that next year we will have partners coming together with customers and writing applications. RL: Your bio says you read voraciously. Does that

mean the latest bestseller or are you reading code?

GR: I haven’t read fiction for years. I read three newspapers every morning – The Washington Post, The New York Times and The Wall Street Journal and I try to read The Guardian during the day. At any given time I am reading two or three books. Inherently, I am an introvert. I like to read, think and then engage. RL: Introvert and leading a big company and getting on stage at an event in front of a couple thousand people don’t always go together. GR: They don’t, but I’ve done it for a very long time. I’m conscious, not nervous and I’ve trained myself to do it. RL: You said during your opening presentation that supply chain is cool again. It wasn’t cool before? GR: Supply chain people used to operate in the back room and merchandising people were the cool people looking at fashion. Now the merchandisers are waking up and seeing the supply chain people know more about the customer. You are seeing the merchandising left hand side of the house work with the right hand supply chain side of the house because the supply chain people are touching the customer more than the merchants. It is very interesting the meetings we are having with good, forward looking retailers. RL

JDA CEO Girish Rishi (gesturing) with Arizona Governor Doug Ducey at the May 2018 opening of JDA’s Customer Experience Center in Scottsdale, Ariz.

Retail Leader.com SUMMER 2018

> MERCHANDISING AND MARKETING

Minimum Advertised Pricing Trends

MAKING SENSE OF MAP POLICIES IN THE AGE OF AMAZON. > By Ryne Misso If you’ve shopped on Amazon recently, you may have come across listings with the disclaimer “Discount provided by Amazon” posted prominently below the description. Of course, Amazon has started this practice in part for the consumer — who doesn’t love a good discount? But there is more going on here than consumers realize and much of it is in response to the minimum advertised price (MAP) policies Amazon’s vendors have in place. MAP policies have contributed to a lot of change in the retail industry, and as e-commerce cuts further into total retail sales, these policies will help shape the future of online retailing. With key online shopping events such as Amazon’s Prime Day, Back to School, and Holiday 2018 on the horizon, there are three key areas retailers should be watching with respect to MAP policies: 1) Amazon innovating around MAP Amazon has historically been notorious for not only putting a strain on MAP policies, but also for being too light on enforcement against third party sellers that may be damaging a brand’s value with their listings. In the past couples of years, however, Amazon has changed some of its own policies to help protect brands and their prices. Though brands have questioned the impact of these policies, Amazon continues to trial new behaviors that serve consumer interests, the brands’ interests, and their own. Among these changes were an overhaul of Amazon’s Brand Registry to help better protect brands from rogue sellers, and a more concerted effort on Amazon’s part to remove unauthorized and inauthentic product from their marketplace. Amazon is also continuing to push the envelope with such things as Guaranteed Margin Agreements on products sold directly to them, and providing discounts to end users out of its own pocket on offers made by third-party resellers on the Amazon. By advertising the discounts as “provided by Amazon”, they can maintain low price leadership, while technically staying within the confines of a brand’s MAP policy. Competing retailers should be taking note of these changes and looking for their own ways to innovate around MAP. The end goal should be finding a balance that allows the retailer to compete on price, without negatively affecting a brand’s value to the point where pulling the product becomes a consideration for the supplier. 2) Policies reflect mutual understanding MAP policies are known to put a strain on retailer-vendor relationships. If one retailer drops below MAP, brands may have a long line of retail accounts banging at their door for an explanation as

to how they are supposed to compete when others (often, Amazon) drop below MAP. This strain has resulted in an evolution of MAP policies that both protect brands from price erosion, and afford retailers some flexibility Ryne Misso on price. One trend seen more and more in MAP is the inclusion of “strike” clauses. At a basic level, brand manufacturers afford retail accounts a certain number of “strikes — or MAP violations — before taking some elevated action like pulling product. Knowing how volatile the competitive pricing landscape can be, “strike” clauses have brought some latitude to MAP policies, helping lighten the strain on the relationship between retailers and their vendors. MAP policies have also seen increasingly complex promotional grace periods. Leveraging data to understand when promotional pricing is likely to drive more traffic and conversion, vendors have built in periods of relaxed pricing, allowing their retailer partners to run deeper discounts without getting their hand slapped, or accumulating a “strike”. 3) No longer a durables-only conversation MAP and minimum resale price (MRP) have continued to expand into CPG products, both to prevent price erosion and, in some cases, to provide an adequate margin to online resellers that offer free shipping on relatively low-priced goods. Originally, MAP or MRP (minimum resale price) applied to higher ticket items — for example, health and beauty aids with price points of $10, $15 or more — but as more lower-priced items are being sold online and facing price erosion, MAP and MRP are being applied to them too. Many of the larger CPG brands already have MAP policies in place today, even for products priced as low as $2.99, knowing their e-commerce golden era may be just around the corner. At the same time, grocery stores continue developing their omnichannel offerings, and those that are establishing or will establish a full eCommerce offering will need to understand the implications of MAP on their pricing strategies. This includes opening discussions with their vendors about getting MAP relief during promotional periods, and assessing competitive online pricing patterns—especially on Amazon—to ensure their prices will remain competitive enough to keep shoppers coming to their site. RL Ryne Misso is Director of Marketing at MarketTrack. SUMMER 2018 Retail Leader.com

> GROWTH AND BUSINESS DEVELOPMENT

Setting A New Natural Standard HOW RALEY’S UNCONVENTIONAL APPROACH AND EXTREME MEASURES ALLOWED IT TO LEAPFROG NATURAL AND ORGANIC COMPETITORS. > By Mike Troy

Raising the bar in the natural and organic retailing world is not an easy task. There are many good specialists beginning with the obvious such as Whole Foods, Sprouts, Natural Grocers, Earth Fare and Fresh Thyme Farmers Market. However, Keith Knopf, President of Sacramento, Calif.-based Raley’s Family of Fine Stores, contends his company has surpassed the competition with a new format called Market 5-ONE-5. The concept is designed to build on the Raley’s mission of infusing life with health and happiness by changing the way people eat one plate at a time. “That purpose statement is how we are guiding the transformation of the existing Raley’s business,” Knopf said. “Market 5-ONE-5 is the full, bright expression of that purpose. We believe it is like nothing else out there.” The 11,000-sq.-ft. store on the edge of downtown Sacramento may not appear special at first glance, but Market 5-ONE-5 derives its uniqueness from a merchandising philosophy, senior leadership commitment and set of operating

Raley’s CEO Michael Teel at the May 2018 opening of the Sacramento, Calif.-based food retailer’s new Market 5-ONE-5 store, a small format focused on affordable natural and organic products and prepared foods.

Retail Leader.com SUMMER 2018

principles underpinning a cryptic name that instantly begs the question what does “5-ONE-5 mean?” The first five in the name refers to the five senses, ONE is an acronym for organic, nutrition and education and the second five refers to the five essential building blocks of nutrition. The name will take time to resonate with shoppers, but that is okay with Raley’s because even though it wasn’t looking for a catchy name it found one anyway with it alphanumeric approach. “Market 5-ONE-5, and what it stands for, has been a vision of ours for a long time,” said Raley’s owner and CEO Michael Teel. “Its purpose is to offer our community access to fresh, nutritious and affordable food. Its mission is to help people live healthy, vital lives by taking the guesswork out of understanding nutrition.” Market 5-ONE-5 is as much a mission statement as it is a banner for a new concept and that too is by design, according to Knopf who believes the name provides clear guardrails toward execution of the value proposition. “Market 5-ONE-5 is about conviction to a core set of principles. We don’t stock products we don’t believe in, so customers can trust everything on the shelves,” Knopf said. “Our team members know exactly where our products come from, what is in them, and how they were produced.” The store was developed specifically to meet the needs of people who are overwhelmed trying to decipher food labels and translate ingredient lists. As a result, shelves are stocked with items that meet the highest standards of health and nutrition, are minimally processed, organic and sustainably sourced and free of unrecognizable ingredients not found in nature. The store’s size and emphasis on fresh and prepared food means the number of center store items (7,000 to 8,000) is far less than found in a typical 50,000-sq.-ft. Raley’s which offers about 27,000 items. In addi-

A large offering of prepared foods (above) and an organic commitment in the fresh area are foundational elements of the Market 5-ONE-5 merchandising strategy.

tion, there is minimal overlap of center store items. Beyond the center store, Market 5-ONE-5 offers instore eating and socializing, including wine by the glass; beer and kombucha on tap; a coffee, tea and juice bar; and space for indoor and outdoor dining. The store also offers seasonally-prepared cuisine for in-store dining and delivery to local businesses. And one of the best things about being located in Sacramento is that Raley’s and Market 5-ONE-5 are able to offer the freshest produce due to their proximity to California’s prime growing regions. Should shoppers need help, the team members at Market 5-ONE-5 are billed as true food experts committed to providing exceptional service. They include chefs, foodies, urban farmers, nutritionists and a registered dietitian. The formula is a new one for Raley’s and Knopf concedes the company has a test and learn period ahead of it. However, he is quick to add, “it is our goal to have somewhere between 30 and 40 stores in the next several years.”

GETTING TO GREAT The opening of Market 5-ONE-5 in May 2018 was the culmination of a two-year journey that began shortly after Raley’s President Michael Teel was named CEO of the family owned company in May 2015. Just a few months earlier, Raley’s discontinued the sale of tobacco products as a precursor to a series of moves that would cement the company status as an innovator in the nature and organic world committed to helping shoppers make more informed and better food choices. One key to executing that strategy was to recruit senior executives from outside the food retailing industry to complement Teel’s vision for Raley’s evolving direction. A month after he was named CEO, Teel hired Knopf as COO. It was an interesting choice considering Knopf was a former Kohl’s executive who had spent the bulk of his retail career with department stores and apparel retailers such as the former May company and Limited Brand’s Victoria’s Secret division. The company made another non-traditional hire in early 2016 when

Deirdre Zimmeran joined as Senior “Its mission is Vice President of Marketing. She too had spent most of her retail career with to help people apparel and specialty retailers. Soon after Zimmerman joined Raley’s, Knopf live healthy, vital was given added responsibilities as lives by taking the President. guesswork out of As the development for Market 5-ONE-5 was getting underway, Raley’s understanding was making other moves consistent with the vision developed under Teel’s nutrition.” leadership to infuse life with health and —Michael Teel, CEO and happiness by changing the way people Owner, Raley’s. eat one plate at a time. The company started offering free fruit for kids to snack on when they came to stores and parents could also opt for a temptation free checkout experience by using a lane stocked with better-for-you items. In one of the boldest moves, Raley’s introduced its own “Shelf Guide,” system for helping shoppers identify products with attributes such as minimally processed, nutrient dense, gluten free, non-GMO, organic, vegan, kosher and no added sugar. Such product attributes are increasingly important to shoppers so Raley’s leadership in conjunction with Label Insight undertook the massive science-based initiative to create a Shelf Guide solution touted as, “like having an expert with you every time you shop.” While these customer facing initiatives were hitting the market, behind the scenes Raley’s had tasked one of its top district managers, Levi Wingo, to lead development of a new format that would reimagine what a natural and organic food retailing concept could be and potentially serve as a new growth vehicle for the SUMMER 2018 Retail Leader.com

> GROWTH AND BUSINESS DEVELOPMENT Raley’s built a shelf guide system (below) to help shoppers make informed choices and was among the first to offer omnichannel capabilities such as home delivery.

regional supermarket chain. Wingo was pulled from his day-today responsibilities stores to focus exclusively on a new concept, which didn’t yet have a name. “Levis is a unique and agile thinker so it was fun to basically turn him loose. We wanted to unleash pure innovation and not be anchored by incremental thinking,” Knopf said. “Mike definitely encouraged thinking on the fringe,” Wingo said of Raley’s owner and CEO Michael Teel. “Market 5-ONE-5 is a completely health centric version of grocery. A highly curated assortment focused on the fresh and perishable areas with a high concentration of prepared foods that are better for you. If you want to eat healthy and live in Sacramento this is the place to be. Our products are unadulterated. You don’t have to look at anything and wonder what is in it.”

OVERCOMING OBSTACLES Developing a new retail format is always a challenging process but it was made even more so by Raley’s choice of real estate. The company opted for a building adjacent to historic area of downtown Sacramento that originally served as a tire warehouse and then a carpet warehouse. “I grew up coming to the building because my dad was an upholsterer,” Wingo said. A rail line running in front of the building made it 38

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easy to offload tires and carpet to an elevated loading dock. The structure also had an elevated floor which 100 years ago may have simplified the manual process of unloading heavy and bulky materials but meant the space was ill-suited for life as a retail store. Converting the space to a shopper friendly food retail operation involved the removal of the existing six inch concrete floor, excavating four feet of dirt to get down to street level and then pouring a new slab. The building’s warehouse origins also meant insulation had to be added so the space could work as a food retail store. And the arched wooden trusses supporting the roof, well they were beautiful and lend an earthy feel to the space, but bringing the building up to code meant adding four large steel I-beams for structural support. From an operational standpoint, there is no loading dock at the rear of the building so deliveries come in through the same front entrance that shoppers use. “It does add to the theater of an urban grocery concept,” Wingo said of the process to receive daily deliveries of merchandise. Raley’s could have taken a simpler path to develop Market 5-ONE-% in an expanding suburb, but by shunning the easy course the company stayed true to one of its key objectives. “We want people from all walks of life to have access to the quality and healthy food we provide. It is why in part we picked an inner-city location. We don’t want to be elitist. This is about inclusion,” Knopf said. “We have priced it so it is approachable and affordable which means we are going to accept lower margins.” The location does have many redeeming qualities. For starters the location at 915 R Street means the store and its food service and catering capabilities are within roughly 100,000 employees. Many of the state’s government office buildings and the Capital and the headquarters of the California Public Employees Retirement System (CalPERS) are within walking distance. The store offers seating for 60 as well as free delivery of food prepared, picked and delivered by Market 5-ONE-5 employees. Raley’s newest concept must still prove itself, but if successful Market 5-ONE-5 will help the regional chain grow at an even faster pace. The operator of 129 stores under banners such as Raley’s, Bel Air Markets, Nob Hill Foods and Food Source has seven stores under design and construction and in June re-opened six recently acquired stores. RL

THE RL RESEARCH REPORT What Women Want When it comes to how people decide where and how to shop, women and men think differently. Research shows that simple changes to the marketing mix can make a big difference and add value. Stores can be more than a place where shoppers come to buy new and interesting foods. Increasingly, they are a place where shoppers seek education as this is particularly true of female shoppers. Women are interested in trying adventurous flavors and tend to learn about global foods and flavors by simply browsing the grocery store. So, in addition to adding interesting global foods both in and out of the perimeter of the store, retailers have an opportunity to educate. For example, add interesting facts on certain foods, where they come from, and how they would best be served. Informational cards placed on shelves or a recipe flyers that consumers can grab with items are great options. Global food areas are a prime opportunity to deliver on the experiential aspects that make physical retail fun. Since women are more likely to learn about new food trends and flavors simply by walking through stores, retailers have an opportunity to take the experience to the next level by providing more samples, especially for new and unique flavors. Consider providing some of these samples not just on the weekend, but on weekdays when many people shop after work. New flavors can be shared through “safe experimentation,” — using a familiar vehicle like a hamburger or pizza to introduce an unfamiliar flavor (ex. za’atar on a flat bread, harissa on chicken). Not only will shoppers be introduced to new tastes, the experience helps make the store a destination they are more likely to want to visit after a full day at work. Clean labels win women According to Datassential’s recent report on Meat & Poultry, women are significantly more likely

Winning with Meat Shoppers Besides lower price, what would motivate you to purchase more meat or new varieties of meat at the grocery store? Recipe suggestions

32%

How to prep/cook instructions on label

30%

Samples/sample station

29%

Tenderness rating on package

26%

USDA Grade explanation

24%

Nutrient & mineral benefits on label

24%

Featured beef cut of the week

21%

Story behind the meat: farm, local, how raised, etc.

21%

More refrigerated, packaged, pre-cooked entrées

20%

Pre-assembled meat entree kits

18%

Significantly higher than men (18% of men selected)

Significantly higher than men (20% of men selected) *Significantly higher than men (15% of men selected) Significantly higher than men (13% of men selected)

Base Size: 599 Notes: Significance is tested adn 955 level, Only the top 10 responses included

to pay more for items with clean labels. Boldly highlighting terms like all-natural, antibiotic-free, and organic and tried and true methods of engaging female shoppers. Other top terms include Dining out drives in-store behaviors no preservatives, local, When eating away from home, what aspects of the menu are most important to you? and raised without added hormones. Make these terms Female Female Female Female stand out and easily readable Total Generation Z Millenial Generation X Boomers+ wherever possible. The experience of tasting It is also important to 46% 37% 47% 47% 49% new flavors/ingredients understand what flavors Trying something I’ve only women love. The adjacent 17% 19% 20% 13% 16% read about/heard about chart shows the top ten flavors/foods that Trying something most 10% 18% 13% 11% 4% people have not tried yet Dataseential research shows women love the most. Trying the new thing 20% 22% 21% 22% 17% Consider these foods as everyone is talking about menus and dishes for the The excitement of trying 28% 36% 28% 33% 24% grocerant or prepared food something completely new to me sections are planned. Many Experiencing something from 19% 21% 20% 14% 18% of the items on this list have another region/part of the world a health-halo, making it easy Having a delicious dining to market delicious and 58% 47% 52% 58% 68% experience nutritious meals. RL

Retail Leader.com SUMMER 2018

Leading HEALTH & WELLNESS August 25 â&#x20AC;&#x201C; 27, 2018 Colorado Convention Center Denver, CO tse.nacds.org

> WHAT’S NEXT...

Agents of Change Wanted ADOPT A “BE BETTER” MINDSET TO MAKE A DIFFERENCE ON DIVERSITY AND INCLUSION. > By Sandy Kennedy

During a 25 year career as a female executive in the retail industry I have seen firsthand the strides made to attract, retain and promote women and people of color. Now, as I look ahead to the coming decades, there are two words that come to mind about the business imperative of diversity and inclusion: “be better.” As the nation’s largest private sector employer, the retail industry supports over 42 million American jobs. From our supply chain, to store, to c-suite, retail’s reach is wide and our impact broad. Retailers take pride in fostering career training, wage growth, workforce development, and innovation for employees of all ages, genders and backgrounds. We truly are an industry of opportunity where the barrier to entry is low and the opportunity of success is high. While we have made great investments in our people, retail must do more — we must be better — to further the representation of women and people of color at the highest levels. The 21st century workforce is evolving and so too are the customers we serve. Diversity and inclusiveness are essential to moving retail into the future. Women make up half the U.S. population and according to a 2018 report by the global nonprofit Catalyst, “by 2044, non-Hispanic whites will constitute less than 50% of the total population.” It is imperative that our workforce and our leadership reflect the changing face of our country. Women are the driving force in retail. They have long been the decision-makers when it comes to household spending, are the majority of retail’s customers — over 85%, and make up half of the retail workforce. Yet, women are underrepresented in the retail boardroom. While the industry has made strides in first and midlevel management (women account for 42 percent at S&P 500 retail companies), only 37 percent of women occupy executive positions. Less than 6 percent of retail CEOs are women. That last statistic is sobering. If women are the retail customer, who better to lead the industry than those who know the retail customer? What’s more, a study commissioned by the Network of Executive Women (NEW), Mercer, and Accenture found that women’s turnover rates in the industry are “far higher than those of their male counterparts” and that women at all levels are “exiting retail and consumer goods companies at higher rates than men.” This shows that while retail opens doors for women, the industry must do a better job of welcoming them inside. There are, however, bright spots within the industry. In a testimony before Congress last year, Gap executive Debbie Maples shared her success story and the story of her company’s commitment to promoting women within their ranks. More than 47 percent of Gap’s CEO executive leadership team and 68 percent of store managers are women. This past year Target announced

Retail Leader.com SUMMER 2018

that over half of its stores are women-led and women make up 36% of their board and 45% of the executive level. I am also encouraged to see women increasingly leading the way in retail operations. At the Retail Industry Leaders Association’s (RILA) annual Retail Law Conference, this past October, I was pleased by the number of women general and deputy Sandy Kennedy general counsel in attendance and am thrilled to see our “Women in Supply Chain” executive group continue to grow. Research has shown us that companies that invest in gender and racial diversity outperform those that maintain the status quo. Diversity in the c-suite is key to understanding and serving the retail customer. As the industry continues to focus on innovating the customer experience, so too should industry focus on diversifying the retail workforce. In January, upon becoming chairman of the RILA board of Directors, Target CEO Brian Cornell challenged RILA to tackle diversity and inclusion in the retail industry, saying “As retailers, we know how important it is for our teams to reflect the people who shop with us — from diversity in gender, ethnicity and race to including a broad range of cultural perspectives. Building the next generation of leaders in retail, from store teams to CEOs and everyone in between, will be an important step in ensuring the nimbleness and vitality of our industry now and in the future.” That is why RILA is working with retail leaders to define common diversity and inclusion metrics, identify industry needs, and promote opportunities for advancing women and people of color throughout the retail ecosystem. The effort will engage some of retail’s top CEOs to oversee the development and adoption of the initiative while retail CHROs and D&I executives will provide deeper substantive insights and guidance towards implementation. As we work to move the industry forward, we welcome engagement from all retail executives. Together, we can further retail’s work in creating cultures of inclusion and a workforce that is truly reflective of industry and the customers we serve. I challenge you to commit to the mission and together, retail will “be better.” RL Sandy Kennedy is president of the Retail Industry Leaders Association.

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