Retailing News - Spring 2012 by Mays Business School

Retailing News

Education. Research. Service. Spring 2012

From the Center for Retailing Studies Zale Corp CEO receives Zale Visionary Merchant Award Page 2

Cheryl Holland Bridges, Director

Sponsor Forum Page 3

Students always ask us what we do when summer rolls around. A lot is the answer! Right now, we are busy organizing a most dynamic program for the 2012 Retailing Summit in Dallas. The conference is scheduled for October 11-12 at the elegant Ritz-Carlton Hotel.

Center director wins top teaching award Page 4 Ags Sweep FSF competition Page 5 The Container Store endows scholarship fund Page 6 Executive Profile: Marc Echart Barnes & Noble College BookSellers Page 7 NYC Market Tour Page 8 Executive Profile: Rachel Bishop, VP, Walgreens Page 9

RETAILING SUMMIT Early Bird offer through May 15

Dear Friends of the Center for Retailing Studies,

This year’s theme is “Retail Points of Inspiration.” To some extent, all speakers will discuss what inspires them personally, and how their companies and products inspire customers and the greater global community. We look forward to seeing you there. We’d also love to welcome you on campus to learn what more the Center for Retailing Studies can do for you, your business, and the industry. Here are the confirmed keynote speakers for the 2012 Retailing Summit. The conference also includes additional breakouts and networking events. Register online at www.retailingsummit.org Craig Boyan, President, H-E-B Harold Mulet, VP of HR, Stores and Kelly O’Neill, VP of HR, HQ & DC, Toys R Us Kelly M. King, President, South Central Region, AT&T Mobility & Consumer Markets Ginger Hardage, SVP of Culture and Communication, Southwest Airlines Roy Spence, GSD&M Idea City, Author, It’s Not What You Sell, But What you Stand For Jim McIngvale, CEO, Gallery Furniture Jim Estepa, President and CEO, Genesco Retail Group Mary Beth McEuen, Executive Director, Maritz Institute

Special thanks to our sponsors:

BDO SAS Gardere Wynne Sewell brierley+partners

retailingsummit.org for more info

Donald Zale, son of Zales founder M.B. Zale, presents Theo Killion, current CEO of Zale Corp with the Visionary Merchant Award.

Zale Corp CEO receives Visionary Merchant Award Visionary merchants have one desire in common: to fulfill the dreams of others, said Zale Corporation CEO Theo Killion in a recent lecture at Mays Business School.

Prior to his lecture, Killion was presented with the 2012 M.B. Zale Visionary Merchant Award for leading the company’s turnaround plan and returning Zales to historic levels of profitability. He spoke on the company’s strategy and its commitment to providing outstanding products, service and value to the customers of the Zale Corporation brands: Zales Jewelers, Gordon’s Jewelers, Zales Outlet, Piercing Pagoda, and Peoples and Mappins Jewelers in Canada. Killion’s management style emerged before he was even hired. After a friend became CEO of the company and invited Killion to work there, Killion visited three stores. “The sales people all had their heads down. They didn’t want to be there. I found it really exciting to think about turning that situation around,” he recounted to more than 450 students, faculty and guests who attended his April 4 lecture in Ray Auditorium. “I saw this company that had unbelievable DNA, a great rich story and a founder who had vision. My challenge was, how do you pull that forward?” When Killion became CEO in February 2010, he focused on strategy, marketing, quality products and credit promotions, while improving the quality of the guest experience. He said he wrote a three-year plan – something he called “a bold step… There’s fire in the basement and fire in the ceiling, and we’re planning three years out.” Killion said he incorporated seven “P’s” in those plans: Product – “If the product is wrong, nothing else matters. If the product is right, everything else matters.” Price – “We have to be sure we are offering the price value proposition where our male customer can be the hero and she can fall in love with a beautiful piece of jewelry.” Promotion – Killion’s management team meets with consumers four times a year to “get their permission to be their diamond store.” People – Killion said the employees need to realize they work for the guests of Zales. Place – Zales invested in improving their stores, especially technology. Process – Do things smarter, not harder. Killion said his goal is to “Stamp out stupid.” Profit – You’ve got to make money. Under Killion’s guidance over the past two years, Zales’ bottom line improved $141 million and its reputation has improved. “Zales was a mile long and an inch deep,” he says. “We’ve been working methodically to build up our work force so that our guests feel valued and excited and they know we really care.” Killion’s career in retailing includes extensive experience in human resources. Prior to joining Zale Corporation, Killion was with the executive recruiting firm Berglass+Associates, where he focused on companies in the retail, consumer goods and fashion industries. He has held leadership roles in human resources strategies at Tommy Hilfiger Corporation, The Limited Inc. and the Home Shopping Network. Cheryl Holland Bridges, director of the Center for Retailing Studies, said this year’s award is particularly

Cheryl Holland Bridges, director of the Center for Retailing Studies, said this year’s award is particularly meaningful to her organization. “Thirty years ago, M.B. Zale, the founder of Zales, gave Texas A&M a grant to establish the Center for Retailing Studies,” she said. Donald Zale, M.B.’s son, presented the award to Killion, who Bridges called “an extremely talented CEO who exemplifies M.B. Zale’s success as an innovative merchant.” Killion says he is not a visionary merchant, but that he accepted the award to keep from making the same mistake twice – he passed up coming to Texas A&M when it was one of four choices for his college career. “I don’t think of this award as being my award,” he said. “It belongs to the 13,000 people who come to work every day to help people celebrate the magic moments in their lives with a piece of our jewelry.”

Center for Retailing Studies Sponsor Forum The rules of marketing have changed. “Content excellence has replaced creative excellence,” says Steve Moore, VP of Marketing & Communication for Texas A&M University. His message kicked off an afternoon of executive learning at the annual Forum for Center for Retailing Studies sponsor companies. Key questions retailers or marketers must constantly reevaluate include: “Who is my customer? How does he feel about me? How does she want to receive information?” Uniqueness is defined through dynamic story telling. Moore continued by contrasting some of the world’s most revered brands, and discussing which newbies are real competitors for market share. For example, Nike is no longer the fresh, young, nimble company of 30 years ago. Today’s kids want Under Armour, which has carefully cultivated a brand image of cool to customers in elementary school through early use of social media and heavy participation in kid-oriented events. He gives much credit to his teenagers for keeping him relevant. What does Aristotle have to say about retailing? Quite a bit. Over two millennia ago, he identified the three primal things humans seek: truth, beauty and joy. Customers will embrace your merchandise and brand if you incorporate all three, argues Will Clarke, Executive Creative Director at The Integer Group. The brain reacts to beauty in a biological way. Across cultures, from ancient times to modern day, beauty in facial features embodies Phi, the perfect mathematical proportion of 1.618. From architecture to anatomy, structures with foundations built on Phi offer visual harmony to the viewer. Visual discord, such as rotten fruit, elicits distain.

To marketers, this understanding means that beauty has real value and can be defined through a standard measurement. Clarke offered three tips for retailers to infuse their brands with truth, beauty and joy. #1 Hire artists to bring beauty to your assortments. #2 Hire mythmakers to build joy into your brand. #3 Hire jokers to tell the truth and put FUN into brands and shopping. For example, IKEA is truthful that customers may find assembling their products difficult. Ads throughout the store depict the well-intentioned customer overwhelmed at home. By laughing at the problem, IKEA also offers customers a solution that further engages them with the brand. There is no worry that IKEA will abandon you when your new bedroom dresser does not assemble as planned. Dr. Ricky Griffin, Department Head of Management, headed the next session on the complicated subject of workplace violence (WPV). Two million Americans are victims of WPV annually through incivility, bullying, sexual harassment, verbal abuse, physical violence or suicide. Griffin notes that retail stores are safer work environments than law enforcement or transportation. But, from 2003 to 2008, one-third of the 944 homicides and 8,700 non-fatal incidents that occurred in the retail trade sector were caused by workplace violence. Unfortunately, only 31.5 percent of retailers have established prevention programs. Dr. Griffin argues that organizational culture can cause WPV, especially if the culture “rewards” aggressive behavior, such as pitting workers against each other, receiving choice assignments after belittling colleagues, or getting a promotion for being aggressive. Employers can proactively prevent violence by creating policies and regulations, communicating them, and enforcing them. Structurally, they can also provide controlled access, security systems, and exterior security in parking areas. Most importantly, companies should audit their organizational culture to assess their embrace, tolerance or opposition to workplace aggression, which often triggers workplace violence. With humor and grace Dr. Ben Welch delivered an evening keynote address at Madden’s restaurant in Downtown Bryan. Whether in business, retailing or life, success is defined by ones choice to live life with integrity. The Sponsor Forum provides Center for Retailing Studies partner companies with exclusive executive education symposium to interact with leading campus academics and industry thought leaders. The intimate gathering also fosters relationship building among partner companies. The annual event precedes the M.B. Zale Visionary Merchant Lecture Series, the center’s major spring program.

Center director recognized with university-level teaching award Cheryl Bridges was notified by Dean Jerry Strawser, in the midst of teaching her Retail Merchandising class, that she had been selected to receive the 2012 TAMU Association of Former Students Faculty Distinguished Achievement Award in Teaching, the university’s highest teaching honor. It is a long standing Mays Business School tradition to involve students to celebrate their teachers who receive prestigious awards.

Congratulations! Spring 2012 Certificate in Retailing Recipients

Alexa Adams Ariel Bailey Matias Brizuela Abbie Brown Phillip Chu Katie Crutsinger Megan Green Alex Greene Chelbi Jackson Megan Kepler Emily McGrath Chelsea Sauder Molly Sherrod Bianca Stewart Jelesa Warren Lauren Wilkins Katherine Woelfel

Spring 2012 Retailing Scholarship Winners

Texas A&M President Bowen Loftin (left) and Porter Gardner (right), President of the Association of Former Students, present Cheryl Bridges with the Distinguished Achievement Award in Teaching. After a distinguished career in retailing, and service as Director of the Center for Retailing Studies since 2006, Cheryl’s love of teaching and retailing have combined to make her an outstanding instructor and mentor for students. Dr. Rajan Varadarajan, Head of the Department of Marketing, notes “Cheryl enjoys a reputation as a superior teacher who upholds high academic standards and demands greatness from her students. She demonstrates enormous commitment, dedication and passion for excellence in teaching, and is remarkably effective in motivating the students to be eager and committed learners. She employs a wide array of pedagogical tools to enhance the learning experience.” Dr. Stephen McDaniel, Professor of Marketing and Director of the M.S Program in Marketing remarks, “Cheryl Bridges is the consummate educator. Blessed with a high level of intelligence and with twenty-five years of industry experience, Cheryl is absolutely wonderful in the classroom. Her students also appreciate her caring nature and the extra time she spends with them. Cheryl works tirelessly to bring in senior-level retailing executives to speak, not only in her classes, but also the classes of other professors.” Kelli Hollinger, Associate Director of CRS, remarks “You’d be amazed at the number of students in touch with Cheryl years after graduation, still seeking her advice.”

Shelby Edmoundson Lauren Ray Lindsay Lell Wilson Vick Kylee Young Allison Miller Spring 2012 Outstanding Senior Award Chelsea Sauder

Chelsea begins her career in retailing as an Assistant Buyer for Academy Sports + Outdoors in Katy, Texas.

Ags Sweep Fashion Scholarship Fund Competition Our Mays Business School Marketing majors win AGAIN in a nation-wide Fashion Retail Case Study Competition! Four of Dr. Sandi Lampo’s students won the prestigious 2012 YMA Fashion Scholarship Fund Case Study Competition. The winners are Alexa Adams, Rhen Eichhorn, Kailah Gonzalez and Chelsea Sauder. They each won $5,000, an internship in the fashion industry in New York City, and a trip to NYC to attend the YMA Fashion Scholarship Fund Gala on January 10, 2012 at the Waldorf Astoria Hotel. Competing against schools such as Harvard, Cornell, Wharton, FIT, Parsons and many more, our students completed individual case studies requiring each to create an online retail business, a competitive SWOT analysis, a profitability plan, a marketing plan and a customer retention strategy. Along with the written case study, these students also had to engage in personal interviews with a fashion executive from New York. According to Dr. Sandi Lampo, “This is a very challenging, intense but also rewarding project. These students committed 110% of themselves to this case study, conducting secondary research, mystery shopping, focus groups, personal interviews, and survey research with both industry executives and their chosen target markets. They had to effectively communicate all of their ideas and research in both written and verbal formats. They also had to explain and justify all of their business decisions to a fashion industry executive…I am so incredibly proud of these students and their work. They definitely exemplified the excellence of our TAMU Mays Business School students on a national platform.”

2010-2011 was the first year Texas A&M University was invited to participate in this prestigious inter-university case competition. Over a two year period (2010-2011 and 2011-2012), nine of our students have been awarded a total of $45,000 in YMA FSF scholarships. The Master of Ceremonies of this YMA Fashion Scholarship Fund Gala, Alina Cho of CNN, called this competition the “Super Bowl of Fashion Scholarships.” Dr. Lampo attended the ceremony with students at the Waldorf Astoria Hotel. Designer Jason Wu, Executive Editor of Women’s Wear Daily Bridget Foley, and Chief Merchandising Officer of Macy’s Inc. Jeff Gennette delivered remarks. Fashion icons such as Yigal Azrouel, Iris Apfel, Sophie Theallet, supermodel Karlie Kloss, and over 850 other top executives from the fashion industry’s elite attended the star-studded event. Participating companies such as Geoffrey Beene, Calvin Klein, Li & Fung, Fishman & Tobin Apparel, Nike, Polo Ralph Lauren, Nordstrom, Perry Ellis International, Bloomingdale’s, Kenneth Cole, Lacoste and Tommy Hilfiger are just a few of the companies that helped raise over $1.5 million at this 2012 Gala.

Dr. Sandi Lampo with scholarship winners Rhen Eichhorn, Chelsea Sauder, Alexa Adams, and Kailah Gonzalez.

Finally, Dr. Lampo and the four scholarship recipients from Texas A&M were pictured in the January 15, 2012 New York Times – Sunday Style section in a photo taken by the iconic Bill Cunningham!

“Each university is limited to submitting five entries for the YMA FSF case competition. The fact that four of the five students were selected for the scholarship award speaks highly of the caliber of the students, as well as the dedication and commitment of Sandi Lampo who is the instructor for the Retailing Case Competition course,” says Dr. Rajan Varadarajan, Department Head of Marketing at the TAMU Mays Business School.

The Container Store supporters fund endowment honoring women in retail By Kelli Levey The Container Store is honoring the late Mona Williams by establishing an endowed annual scholarship for students of the Center for Retailing Studies, part of Mays Business School at Texas A&M University. The company contributed $25,000 to endow The Container Store – Mona Williams – Women Making a Difference in Retail Scholarship. Williams was a 30-year employee, former vice president of buying at The Container Store and a trailblazer in the retail industry. To honor the company’s employee base of 64 percent female, the scholarship will be awarded to one young woman each year. The Container Store Vice President of Visual Merchandising Peggy Doughty (left) and scholarship recipient Allison Miller ’14

The Container Store Vice President of Visual merchandising Peggy Doughty (left) and scholarship recipient Allison Miller ‘14

“Words can’t describe the tribute that Mona deserves as a result of contributions and work. She was an incredible friend and colleague,” says Chief Merchandising Officer Sharon Tindell. “We know Mona’s spirit and legacy will live with us forever, as she made such an indelible mark on our business, our brand, the retail industry and all of us who worked with her over the past 30 years.” Additional funds for the scholarship endowment have been donated by employees and friends of Williams, as well as vendors with whom she dealt at work. “The Container Store has been a strong supporter of our education in retailing,” said Mays Dean Jerry Strawser. “This tribute to Ms. Williams is one that will honor her achievements by supporting the next generation of female leaders in the industry.” The first recipient of the scholarship is Texas A&M marketing student Allison Miller ’14, who is involved with the Center for Retailing Studies at Mays as an M.B. Zale Leadership Scholar and a member of the Student Retailing Association. She is also involved in the business mentorship organization P.R.E.P (Progressively Reaching Excellence in Professionalism) and was honored with the Young Women in Excellence Award for completing 80 hours of personal progress and community service. Peggy Doughty, a 25-year employee of The Container Store, vice president of visual merchandising and longtime colleague and a friend of Williams, presented the scholarship at Department of Marketing Awards Ceremony on May 3

Executive Profile: Marc Eckhart Barnes & Noble at Texas A&M America’s total incoming freshman class of 2016 is 50,000 strong. Like with any of life’s major changes, the transition to college – with new friends, dorms, and no parents – marks a special time when student customers establish new brand loyalties. With the college textbook market topping $37 billion, Marc Eckhart, regional manager for Barnes & Noble College, described the company’s strategy to communicate the right message, at the right time to ensure the company is meeting student needs and building loyalty. Eckhart outlined a six-month courtship plan to Dr. Parish’s MKTG 321 honors students that draws in part from recent research from Mr. Youth, a leading Marc Eckhart, Regional social media marketing agency. Direct marketing emails start right after Manager for Barnes & Noble college acceptance in March, well before arrival to campus in September. While College, and CRS Advisory students may not be ready to buy books, they likely want to show school spirit by purchasing and wearing gear from their future university. Eckhart says, Board Member. “Everyone wants a T-shirt! You must understand the journey of an incoming freshman. They want to display school pride, build a social network before arriving to campus, post their class schedule, and then commit to buying $800 worth of textbooks.” “Freshmen are looking to connect, to celebrate their college acceptance. By focusing on them, right from the moment of their acceptance, we are showing that we understand what’s on their minds and what their needs are,” argues Eckhart. In addition, Barnes & Noble College works closely with the Fish Camp counselors, to help these campus influencers better understand the reasons why recommending the campus bookstore benefits all parties. “We have no off-campus strategy,” explains Eckhart. “Our student customer is very different from the traditional Barnes & Noble visitor and this program reflects that.”

By being seen as a solution-support center rather than just a bookstore, Barnes & Noble College is able to show its value in delivering textbooks at schools across the higher education market. At Texas A&M, the renovated store in the Memorial Student Center offers Starbucks, express textbook pick-up, guaranteed inventory, and excellence in service. “By stocking every book that all A&M instructors require, we make the shopping experience easy and efficient for Aggies so we have them as customers their entire college careers,” explains Eckhart. Eckhart continued to impress MKTG students by hosting the Student Retailing Association for a private tour before the MSC re-opened on April 21. SRA members evaluated the extensive assortment of Aggie gear, textbook pick-up system, and overall store flow before enjoying a complimentary Starbucks latte of their choice. Thanks Mr. Eckhart!

Student Retailing Association members tour the newly re-opened Barnes & Noble at the MSC.

Katie Crutzinger ‘12 and Phillip Chu ‘12 enjoy a free Starbucks latte at the bookstore.

Only Barnes & Noble College offers Aggies integration with the Howdy registration system. This new interface exports student schedules to the bookstore, allowing students to purchase all required books during the registration process. Eckhart proudly notes that this ease of selection produced twice the total orders for the retailer during its first semester of use.

New York City Market Tour With five minutes to spare before the cockpit doors closed, sixteen Aggies departed Houston’s busy Bush International Airport for a spring break in New York City. The annual Market Tour, organized by the Center for Retailing Studies, introduces students to work, play and culture in the retailing’s world headquarters. One third of students who attend this trip end up beginning careers in New York City. It is one of the Center’s longest running, experiential education programs for students. Below are reflections from student participants: Leadership Lessons…from Macey Cangelose Our group had the privilege of meeting with Redcats USA, an online and catalog retailer for men’s and women’s apparel, home living, sports and outdoor products. Naheed Adil, Director of Marketing, warmly welcomed us, which gave a great first impression for the company in a city not overtly known for hospitality. She stressed that to be successful at Redcats and in retailing, you need a strong understanding of finance, the workings of profit & loss, and how large organizations manage their business. It’s important to find the gaps in the market, be innovative, and devise strategies that drive sales. An unshakeable work ethic is essential. Adil continued by saying, “It is your responsibility to be curious, explore, and ask questions. Stay connected! Always know what is going on within and around your company. Be nosey about competitors, constantly evaluating their price points and new products.” In a rapidly evolving market, I left knowing much more about ecommerce strategies and overall business success. Big smiles, toys and retail-tainment…from Lindsay Lell “A very enthusiastic toy soldier greeted us when we arrived at FAO Schwartz at 8 AM on Tuesday morning. What differentiates FAO Schwartz from other stores is the quality and experience that it provides to customers of all ages. Guests can customize their own Muppets, baby dolls, train sets and even doll houses styled after their own homes.

“My favorite part of the tour playing on “The Big Piano,” made famous in the movie Big. It did not matter that we were wearing business suits, everyone enjoyed the spontaneous toytapping to favorite tunes. Let’s just say everyone had a “Big” smile on their faces.” “After the tour, Jane Baczynski, Manager, Campus Recruiting & University Relations discussed different career opportunities. Toys R Us acquired FAO in 2009; its portfolio includes other brands like Babies R Us, eToys.com, and others. Aggies have interned with Toys R Us in Dallas stores, and 2011 graduate Ridhi Lankhani joined the marketing team at the company’s Wayne, New Jersey headquarters. Ridhi has already been promoted, so we all know the amazing career potential with Toys R Us, and now with FAO.” On culture….from Phillip Chu

After a grand performance on the Big Piano, students pose with their tour guide, a real toy soldier.

“I was filled with wonder by the layout of the buildings, whirls of taxi cabs, gleaming city lights and amount of people out and about at midnight. Our hotel was filled with people from around the world. One Russian lady video chatted with family back home, while a Norwegian tourist discussed the day’s vacation plans.”

Bergdorf Goodman’s David Battane explains how the luxury retailer works with designers to merchandise the lines.

Executive Profile: Rachel Bishop If you think you know your neighborhood Walgreens, be ready for the 111 year old company to surprise you. Rachel Bishop, Divisional VP of Merchandising and Strategic Planning and Analysis, says its new strategy emphasizes delivering memorable shopping experiences that increase store visits to current locations and engage customers in fresh ways. Throughout the 1990s, the Deerfield, IL-based chain grew from 2,000 to 8,000 stores. At the peak of this real estate adventure, a new Walgreens opened every sixteen hours. Today, 80% of the American population lives within five miles of a store. This positions Walgreens to be America’s first choice for health and daily living.

Join Us! Retailing Career Fair September 12 Texas A&M campus Register at: crstamu.org

Retailing Summit October 11-12 Dallas However, the company stumbled when too many door-fronts threatened to cannibalize their own sales. With a Walgreens on every prime Main Street corner, further growth through real estate seemed bleak. The fast-expansion, cookie-cutter formats also failed when entering new markets, like New York City.

The Walgreens of 2012 offers unique and unexpected surprises for customers: sushi, gourmet cheese, fresh foods, premier beauty lines, $10 manicures, and a “connection corner” for photo sharing. Perhaps the crown jewel of an experience-centric Walgreens is the flagship store at State and Randolph streets in Chicago. The 27,350-sqaure-foot store’s updated layout moves the pharmacist to the center of the store, improving customer’s access to health advice. As the nation’s largest pharmacy chain, Walgreens is well positioned to be a major player in the national health care overhaul. Rachel Bishop lectured to Cheryl Bridges MKTG 425 Retail Merchandising class on March 21.

Bishop says the company has moved away from its predictable, history-based approach to doing business to highly analytical decision making. No longer would each store be an independent business unit; Walgreens would integrate its promotional campaigns at the corporate level. This holistic view ensured that an end-cap display on diabetes awareness would not sit adjacent to a tantalizing promotion for sugary, chocolate Easter candy.

CRS Staff Cheryl Holland Bridges

Director and Executive Professor

Kelli Hollinger

Associate Director and Lecturer

Regina Gomez-Vesey Program Coordinator

Center for Retailing Studies | Mays Business School 4112 TAMU | College Station,TX 77843 979-845-0325 | crstamu.org | retailingsummit.org