Retailing News CENTER FOR RETAILING STUDIES
Education. Research. Service. Fall 2011
From the Center for Retailing Studies Howdy! It was wonderful seeing so many of you at the 2011 Retailing Summit in Dallas. In this issue of the CRS newsletter, you’ll find highlights from the conference presentations.
CONTENTS: Profits with Principles Page 2 Hitting Bottom & Rebounding Page 3 Inflation Predictions Page 4 Connecting with Technology Page 4 Lessons Learned Page 5 Future of M-Commerce Page 6 Unique Recruitment Page 7 Calendar Page 7
Companies that offer higher purpose beyond profits are reshaping the future of retail. This theme was a recurring message of the 2011 Retailing Summit, the signature conference hosted in Dallas by Mays Business School’s Center for Retailing Studies. For two days, an international audience of almost 300 retailers from 92 companies heard 11 retailing experts explore current trends, economic forecasting, innovative case studies, and much more. Participants continue to applaud the Summit’s unique ability to connect retailers with C-level speakers in an intimate environment that encourages learning and networking. We know the Retailing Summit is not the biggest industry conference. But, by facilitating deep reflecting on key business challenges and solutions, we know it’s the most valuable forum for retailers seeking continued learning. Attendee feedback has already directed us to identify the 2012 theme: “Retail Points of Inspiration.” Next year, speakers will share their ideas for inspiration that transcend their own companies and offer objective perspective that benefits all retailers.
285 guests from 92 companies
The Retailing Summit will again be held at The Ritz-Carlton Hotel in Dallas, October 11 and 12. We have a larger block of rooms this year, but the attractiveness of this venue almost certainly guarantees another sell-out. Book your reservation early!
We wish you a successful, joyful and blessed holiday season and we look forward to seeing you here in Mays Business School on the campus of Texas A&M University soon.
Retailing Career Fair, February 1st Register online @ crstamu.org
RETAILING SUMMIT RECAP
KEY ISSUES & FUTURE VISION
OCTOBER 6 - 7 |DALLAS | THE RITZ-CARLTON
Profits with Principles John Mackey, co-CEO of Whole Foods Market is an ambassador for conscious capitalism. This group of CEOs practice “conscious leadership,” rejecting an exclusively profit-driven view of business. They seek win-win strategies that offer value in multiple dimensions for all stakeholders.
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Whole Foods Market is a leader in the movement “Conscious Capitalism.” John Mackey, co-CEO, says “poverty, not wealth is the problem.” Capitalism is a mutually beneficial exchange system that has lifted billions of people out of abject hardship. Capitalist societies are freer, wealthier, healthier and happier. By abandoning outmoded operational structures that emphasize shareholder profits above all else, companies can generate emotional, social and financial value. His describes Whole Foods Market stakeholders as SPICEE (Society, Partners, Investors, Customers, Employees and Environment.) Conscious Capitalism was co-founded by Mackey and Dr. Raj Sisodia of Bentley University, who also spoke. They advocate the embrace of free markets, competition, profits and trade. They recognize, however, that companies wield enormous power, and an obligation, to do good in the world. Sisodia says, “Southwest Airlines gives people the freedom to fly, REI connects families with nature, Google bridges the world with knowledge.” Mary Beth McEuen, vice president and executive director of The Maritz Institute, urged retailers “to clarify your brand promise and what you stand for.” In a world characterized by uncertainty and volatility, people are looking for organizations that care and contribute to society in meaningful ways. No longer is it good enough to focus on what a company delivers in terms of products and services. What people want is to know what an organization stands for. They want to be a part of something bigger that has meaning. McEuen, says organizations must express their brand promise through meaningful and motivating experiences for every group of stakeholders -- starting with employees. “One of the most powerful engagement strategies is recognition. Recognition is about celebrating people as they strive to deliver on the brand promise. Recognition focuses on what is right, and builds confidence and positive emotional contagion,” emphasized McEuen. Friday speaker Katrina McGhee, CMO for the Susan G. Komen Foundation, says cause marketing’s dramatic increase reflects businesses’ and consumers’ desire to do good in the world. However, too many companies “choose a flavor of the day.” Such diffusion of support hurts retail brands. To effectively use cause marketing retailers must be authentic, relevant, committed, and creative. Create products that reflect their brands, and connect with customers on a deep, personal level. Generic, do-good programs will not generate a meaningful relationship between the retailer, consumer and cause.
Hitting Bottom & Rebounding Between 2002 and 2006, Pier 1 Imports profits fell $400 million, plunging $225 million in the red. That staggering drop resulted when the world’s original source of unique, global décor and furnishings lost its way. Alex Smith took the helm as CEO of the troubled retailer in 2007 refocusing on company management, merchandise assortment, supply chain effectiveness, real estate reductions and building customer loyalty. However, the “Great Recession” made the turnaround even harder. Pier 1’s stock bottomed out at less than 10 cents a share in 2008. The company created the “Our Compass” concept to communicate its plan to return to profitability to every employee; they had to be on board. While eliminating non-core businesses, such as Pier 1 Kids and its e-commerce site, the 1,000 store chain rediscovered its defining position: to connect customers with exotic, colorful, global treasures. “Our Compass” included Pier 1’s purpose, goals, vision, values, and priorities. They are: 1) Developing the bestin-class buying organization, 2) Providing support to the merchandise buying team with equally best-in-class planning and allocation teams, 3) Improving all aspects of the supply chain, 4) Making the business more lean and efficient in every way possible, 5) Developing real estate strategies that protect both the short-term and longterm future of Pier 1, 6) Ensuring that the marketing strategy creates a balance between bringing customers in for the short-term and building brand for the long-term, 7) Surprising and delighting customers in every aspect upon their visits to stores, and 8) Modeling a performance culture that reflects the corporate vision and values. To convey the vitality the company exudes today, Smith – with the help of a speedy visual merchandising team – surprised and delighted conference attendees by transforming a plain speaker stage into an elegantly, whimsical holiday living room featuring metallic ornaments, scarlet pillows, and bejeweled vases. To further encourage conference attendees to shop Pier 1 Imports, each one received $25 gift cards.
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Legal Tip:
Successful Turnaround Alex Smith, CEO and President of Pier 1 Imports, says the profitability and nearly debt-free status the company now enjoys resulted from renewed corporate culture and direct acknowledgement of problems.
“HR professionals have the responsibility of keeping employees happy while keeping company goals in mind.” --from a panel discussion with Gardere Wynne Sewell
Inflation Predictions
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While all speakers acknowledged the recession’s challenges, Federal Reserve Bank of Dallas President and CEO Richard Fisher said “employers need to step on the pedal and engage the transmission” to get job creation moving forward. Fiscal policy will not correct the nation’s economic woes. Texas is doing its part, accounting for 20 percent of the nation’s overall net private-sector job creation. Fisher said retailers play a huge and necessary role in American society because of their ability to drive employment. Fisher expects inflation to gravitate toward 2 percent next year, a figure he describes as “tolerable.” Headline predictions of inflation too often focus on notoriously volatile items like food and energy prices. Instead the Dallas Fed uses its own Trimmed Mean PCE analysis to measure price movement of 178 items consumers regularly purchase. This eliminates high and low price fluctuations allowing policymakers “to better gauge the direction and speed of inflationary winds.” While retailers may have hoped to absorb soaring cotton costs with price increases, it remains unclear if consumers, still strapped by unemployment and wage stagnation, can or will tolerate the increases. .
Change Now! Dr. Raj Sisodia, co-founder of the Conscious Capitalism Institute, challenges businesses to change the way they do business. He noted that in 2009, only 16% of Americans trusted Big Business; trust in Congress garnered a higher approval rating at 17%.
Connecting with customers & employees through technology Technology has fundamentally reshaped how consumers shop and buy. While information is power, it’s also overwhelming. Tom Lamb, SVP of Marketing at Lowe’s, revealed a new planning tool for the do-it-yourself consumer: MyLowes.com. The site tracks purchases, like paint color, sheen and brand; downloads product manuals; sends reminders about lawn fertilizing; and maintains project lists. The new service eliminates hassles like finding lost warranties or rebate notices. Via technology, it brings simplicity to the sometimes frustrating world of DIY home improvement. The company’s 42,000 employees will receive iPhone 4s, enabling them to take customer orders and answer questions. Tom Nealon, who heads jcpenney’s $1.4 billion website jcp.com, advised “get rid of the idea of multichannel.” The shopping experience between store, web and mobile devices needs to be seamless as that is what customers expect.
Overheard:
Like all other retailers, the Plano-based chain is constantly updating its digital platform, abandoning its long-iconic catalog business. Today’s challenge for retailers is “to get the perfect mix of foundational technology the supports company operation. For example, jcpenney aims to be a destination for “fast fashion,” whereby merchandise evolves from design concept to sales floor in ten weeks, a process that is usually six months. This added complexity requires a flexible operation platform and highly integrated supply chain, something catalog business cannot offer. In-store technology adjustments include new kiosks, mobile checkout, and numerous location-based check-ins. He noted that customers are not at all intimidated by this technology; they demand it. Nealon concluded by recapping the jcpenney’s social media initiatives. They learned that the “build it and they will come” mentality is not a strategy. He said “social media needs to be incorporated into the overall marketing strategy, and it needs to be nurtured. It needs to be relevant and fresh. You can learn a lot by listening about your brand, your competition and your customers…it’s tough to measure.”
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Lessons Learned Gary Kusin, Senior Advisor at TPG, concluded the Retailing Summit by challenging companies to think differently. His “10 Lessons” for retailers reinforce following basic retail principles, such as constantly monitoring operating systems for effectiveness and remembering that retail is still theater requiring excitement, saying “under no circumstance should fine china and washing machines share the same aisle.” Successful retailers know they are in the customer-satisfaction business. This understanding occurs by front-line interaction with the customer or being a “consumer anthropologist.”
Beyond the Dress Bob Huth, CEO of David’s Bridal, describes the company’s growth strategy, which includes offering wedding invitations and photography services.
“Everyone needs a Darth Vader,” argues Kusin. “People by nature are competitive. To reach maximum potential, they need someone to take their lunch, or at the very least threaten to steal their dessert.” It is both humbling and motivating to appreciate that “there is always a faster guy.”
Proud 2011 Retailing Summit Sponsors:
Future of M-Commerce Gallery Furniture Director of Marketing Robert Williams demonstrates using a tablet as a sales tool to check out customers.
When it comes to Mobile Commerce, the phone has become the mobile mouse—it’s just a hyperlink now.
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Mobile commerce looks to eliminate carrying a wallet and keys. The new generation of phones would allow consumers to carry less stuff around altogether. Plus, it could also serve a purpose with consumer loyalty programs by not having to tote loyalty cards around, getting more benefits offered on a phone than in person, and eliminating consumer friction at the point of sale. This should also save employees time. There are some challenges associated with this technology, though. One obstacle to overcome is the issue of different operating systems and platforms. Not all software works on all devices. For example, Apple does not support Adobe’s Flash. This could be a problem in web site or advertisement designs. Another big problem is the privacy issue. Consumers can opt-in to marketing, but consumers can also opt-out.
Congratulations! The Center for Retailing Studies congratulates Stan Richards, founder of Dallas-based The Richards Group, one of the nation’s leading independent fullservice advertising agencies. On December 1, he will receive the McLane Leadership in Business Award on Texas A&M campus. We wish you continued success.
The question becomes: How do you promote relevancy while reducing/eliminating spam? Such a strategy requires one-on-one experimentation with consumers. There is also the concern of price checking with mobile commerce. Brick and mortar stores are the showrooms for Amazon. Finally, barcode scanning is not where many consumer adoptions are. People still use actual, tangible things like keys and boarding passes since they have a 100% success rate.
Unique Recruitment While the Retailing Summit’s target audience is the seasoned retailing professional, 27 Mays students also participated. With Texas A&M University’s emphasis on high-value learning experiences, these top students can boast about rubbing elbows with CEOs. Half were graduate students enrolled in the MS in Marketing program and the others are M.B. Zale Leadership Scholars. All understood contacts made at this conference can lead to a job. In fact, H-E-B hired three students from the 2010 conference. Two other recent graduates joined as participants this year. Natalie Robinson ’10 recalled, “I met Billy Payton of brierley+partners, a CRM consulting firm, in line for coffee at the Summit. We simply struck up a conversation.” After finishing her bachelor’s and master’s degrees in marketing, Natalie joined the company in June.
Select programs January 10
YMA Fashion Scholarship Award Ceremony, NYC
January 11
CRS Advisory Board meeting Dallas, TX
January 14-16
CRS attends NRF Big Show, NYC
February 1
Retailing Career Fair
February 28
Speaker: Scott McClelland, President, H-E-B Houston
March 2-3
Texas A&M Collegiate Sales Contest
March 8
Zale Scholar Teens in Retailing high school outreach program
March 10-14
New York City Student Market Tour
March 30
Scholarship application deadline
April 3
CRS Sponsor Forum
April 4
M.B. Zale Visionary Merchant Lecture Series
April 26
Stanley Marcus Retail Audit Competition
May 1
Retailing Summit Super Early Bird registration deadline
May 3
Awards banquet for Certificate In Retailing students
October 11-12
Retailing Summit
CENTER FOR RETAILING STUDIES 4112 TAMU | College Station,TX 77843 979-845-0325 | crstamu.org | retailingsummit.org
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Zale Leadership Scholar Chelsea Sauder introduces David’s Bridal CEO. Attendees receive student resume packets and are encouraged to meet students at the conference.
2012 Calendar of Events