Nearly 250 retailing executives gathered at the elegant Adolphus Hotel in downtown Dallas, Texas for the annual Retailing Summit, hosted by Mays Business School’s Center for Retailing Studies at Texas A&M University. This event paired industry leaders with the latest research from the world of retail. Representatives from 92 companies in 21 states attended the summit October 2 and 3.
“It was a phenomenal presentation,” said one attendee, Gary Freedman, who owns a retail consulting firm in California. Freedman says that in the current economic climate, this event was timely. “Retailers are desperate for new ideas to grow their business, or sometimes just stay in business,” he said. Freedman felt that the summit provided a great forum for innovation in the industry. “I would recommend that anyone in retail attend,” said Freedman.
Next year’s summit will be held at the Westin Galleria in Dallas, October 1 and 2.
Didn’t make it to the summit yourself? Not to worry. Here is a collection of news you can use from each of the topics presented. Click on a speaker listed below to see a synopsis of his or her presentation:
- Linda Hefner, Executive Vice President, Wal-Mart Stores, Home Division
- Jack Mitchell, author and Chairman of Mitchell’s
- Carl Sewell, CEO, Sewell Automotive
- Kathleen Mason, President and CEO, Tuesday Morning
- Ed Holman, Chairman and CEO of Macy’s Central
- Terri Kabachnick, retail consultant and author
- Mike Ullman, chairman and CEO, and Michael Theilmann, chief human resources officer of JCPenney
- Chris Zane, founder and CEO of Zane’s Cycles
- Will Kussell, President and Chief Brand Officer, Dunkin’ Donuts Worldwide
- Shawn Achor, CEO of Aspirant and Harvard University Teaching Fellow
Linda Hefner – Executive Vice President, Wal-Mart Stores, Home Division
Hefner discussed Wal-Mart Stores’ new branding identity, “Save money. Live better,” and how that idea plays into the product offerings in the Wal-Mart home division. Hefner described the three consumer demographics that make up the 140 million shoppers that visit Wal-Mart each week:
- Price-value customers: those looking for everyday needs at the lowest price
- Brand aspirational: mid-range consumers interested in brand-name products and are willing to pay slightly more for them
- Price sensitive affluent: those interested in high-quality goods at a reasonable price
To cater to these segments of the market, Wal-Mart home division has launched two new brands this year, Canopy and Better Homes & Gardens, to accompany their basic store brand, Mainstays. They have also created a new signage and color-blocking system for their product shelving organization that makes it easier for customers to identify the brand they want on products across the department. Wal-Mart as a whole is changing store layouts to be more intuitive and convenient for shoppers, and the home division is driving that transformation.
Over the next three years, Hefner says every Wal-Mart in America will see some changes, from complete remodel to minor redesign.
Jack Mitchell, Author of Hug Your People and Hug Your Customers, chairman of Mitchell’s
Jack Mitchell recounted the humble beginnings of his business, which has been family owned for three generations. His parents opened the first Mitchell’s store in Westport, Connecticut, where they sold men’s and boy’s fashions to their friends and neighbors. Mitchell says their marketing research was a phone book and customer service included his mom bringing her coffee pot to the store. Running the business was something fun that the Mitchell family did togetherâ€”and today, 50 years later, it still is. They are built on a concept of serving customers as friends and caring for employees as family. Today, with 237 employees at three stores selling upscale clothing and accessories in the New York area, these concepts are what make the organization unique.
Mitchell has written two books based on his stores’ culture of caring, called Hug your Customers and Hug your People. He’s not talking about actual embraces, though he says that happens in his stores occasionally; rather, any small deed that makes a personal connection between store and employee or customer is a “hug.” When customers and employees experience that level of care, Mitchell says they become friends who are loyal to the store for life.
Mitchell says his HR principals are simple:
- Hire great people, not just ones who are competent. Look for those with genuine passion for what they do.
- Trust and empower your employees and involve them in the business so that they develop personal pride in the organization.
- Recognize your people by paying them well and by publically praising them for a job well done.
- Talk to your employees about their career, not their job, so that they know you want them there for a long time.
- Trusting your people instead of policing them creates loyalty. Check in with your staff, rather than checking up on them. Send birthday cards and other notes to let your people know that they are valued.
Mitchell encouraged the audience to practice being a hugger by looking for ways to meaningfully reach out to customers and employees, recognizing their needs and how you can meet them. He also warned them that “hugging” takes time. The personal relationships you create must have adequate care in order to be maintained.
Carl Sewell, CEO, Sewell Automotive, interviewed by Dr. Leonard L. Berry, Distinguished Professor at Texas A&M University
Carl Sewell owns nine dealerships in five major Texas cities, employing 1,400 people and selling $1.2 billion of cars and service annually. He says that the Internet and the ease of comparison shopping it affords has made price more import than service to most customers. However, he still values service, and advised those in the audience to do what they could to make customers happy; there is so much negativity in the world today that to make a customer smile is a very valuable thing.
Sewell was philosophical about the economic crisis facing the auto industry. “This too shall pass,” he said, expressing his confidence in American automakers.
Sewell says that most Americans will spend $700,000 on cars and service in their lifetime. He tells his employees to treat every customer as if they are $700,000 customers, as they have the potential to spend that much in the long run at your business if you provide them with excellent service and they return each time they have an automotive need. He advised everyone in retail to determine what an average customer will spend in a lifetime at their store and share that number with employees so that they will understand why every interaction is important to the business.
Other good advice from Sewell:
- Hire people you like. Ask yourself, do I enjoy being around this person? If the answer is no, chances are your customer won’t enjoy them either.
- Don’t associate yourself with a product if it isn’t great.
- Be in markets you can personally relate to so that you can understand your customers’ needs.
- Evaluate your team and put members where they can thrive and succeed.
- In this time of economic turmoil, retailers need to streamline their inventory and staff, and look for growth opportunities in every situation (for example, while car sales are down, he’s emphasizing service).
Kathleen Mason, President and CEO, Tuesday Morning
It’s no secret that retailers are feeling the pinch of the problems on Wall Street. As the economy continues to falter and more and more retailers file for bankruptcy and close their doors, Mason says it’s more important than ever before to understand what it is that customers want and how your business can deliver it.
Recent research indicates that consumers are looking for:
- Time savings
- Home delivery (especially if it’s free)
- Turnkey solutions (“Get it done right, right now.” A product or service where one step solves the whole problem.)
- Quicker to prepare (no-assembly or pre-cooked products)
- Smaller/more convenient
Ed Holman, Chairman and CEO of Macy’s Central
Since 2002, Macy’s Inc. has taken on one of the largest rebranding efforts in retail history. In the past several years they’ve bought out several other retailers and given the stores a Macy’s makeover, turning 400 locations of stores such as Foley’s and Famous Barr into red-star-emblazoned Macy’s chains.
The challenge for Macy’s through the acquisition of so many new stores is to mesh all of the regional brands into a cohesive national brand that sells as well in New York as it does in Nevada. As part of their branding, Macy’s has contracted with a handful of celebrities such as Martha Stewart, Donald Trump, Sean (Diddy) Combs, and Jessica Simpson, who each have their own lines of merchandise offered in the stores. Macy’s also stocks the stores regionally to give local flavor to their assortments.
Holman says that the $26 billion company with 850 stores in the U.S. is dedicated to building their brand one customer at a time, targeting their shoppers through promotional (sales) and emotional (famous brands) channels. Macy’s must “wow” new customers so that they don’t miss the store they just bought out and turned into a Macy’s, says Holman. Macy’s is committed to community service on a local level, and has several programs established to get employees out of the store and involved in service activities.
Currently the chain is celebrating its 150th birthday. On October 25, special promotions and activities were held across the nation. As part of this celebration, iconic 34th Street in New York City (forever tied to Macy’s through the holiday classic Miracle on 34th Street) will be renamed R.H. Macy Drive.
Terri Kabachnick, retail consultant and author of I Quit, but I Forgot to Tell You
Why is there such a disconnect between interview success and job performance and retention? In this break-out session, retailers compared notes on a topic familiar to all in the industry: employee turnover.
- There is a great challenge in finding people who are not only possess the technical skills needed for a job, but also are a match for the company culture.
- Retail is often not seen as a career path, but simply a job; this mindset leads to decreased retention.
- Most hires are made when there is a hole in the staff that needs to be filled quickly. Poor hiring decisions are made when not enough time is taken to find the best candidate.
- Kabachnick described “the seductive interview,” where individuals are wooed by a company that says they are one thing, but turn out to be another once the employee has signed the contract.
- The impact of a wrong hiring decision is huge. Monetarily, the Wall Street Journal says it is equivalent to 1.5 times the employee’s annual salary. It can damage a company’s reputation and can harm morale and cause others on the team to quit.
- Selection of products in retail is based on statistics, examination of trends, and hard facts about the marketplace. Kabachnick says that selection of people is still made primarily on emotion. She recommends giving assessments and hiring to benchmarks to remove human bias.
Mike Ullman, chairman and CEO, and Michael Theilmann, chief human resources officer of JCPenney
Mike Ullman had retired from a rewarding career with retailers such as Louis Vuitton, Macy’s, and IBM when he was offered the top spot at JCPenney in 2004. He says he wasn’t interested in another job, but the idea of transforming JCPenney stores excited him. The organization had become decentralized, with each store creating its own assortments and culture. One of Ullman’s first actions was to revamp the nation-wide merchandising and advertising efforts to create a more constant culture for employees and shoppers.
Theilmann, the chief HR officer at JCPenney, conducted an engagement survey to gauge how the culture was growing. When they saw a need for further leadership training, they implemented a retail academy, a one-week course for store managers and others in leadership positions. The academy gave 30 managers at a time a broad look at the company with personal attention. Theilmann said they hoped to change the culture of management so that the differentiating factor in all of their stores was the quality of the people. They’ve also strengthened their training program for associates.
Today Ullman and Theilmann say that JCPenney is not “hunkering down” to weather out the financial storm; they are using these tough times as an opportunity for growth and innovation.
Chris Zane, founder and CEO of Zane’s Cycles
Chris Zane has a simple illustration for his ideas about customer service: all the services you offer are like quarters in a bowl. When that bowl is held out to a customer, some retailers fear they’ll get ripped off. But, Zane says when you offer more service than people think is reasonable, they won’t take advantage of you. Instead, you’ll be rewarded with amazing loyalty. Zane’s talk focused on different service tactics he’s used to grow his business.
Zane says he’s ruthlessly competitive. He loves to put his competitors out of business, or at least really annoy them with his over-the-top service. Some of his most successful service offerings have been lifetime free service on bikes purchased in his shop; lifetime warranty on parts and products; 90-day price protection (which guarantees the difference in the price of the products, plus 10 percent); flat tire insurance; and a helmet program that provides kids with protective headwear at cost.
Zane encouraged retailers to consider what it is their customers are really looking for. His customers aren’t buying rubber and spokes, he says. They’re buying a relationship and an emotion. With that in mind, Zane practices relationship marketing, involving giving away small items (“no more nickel and diming customers!”), providing a fun area for kids to play in, a complementary coffee bar in his store, and data tracking to help customers buy the item that specifically meets their needs based on other items they have purchased.
Constant innovation has kept Zane ahead of the pack. Some of the more creative ideas Zane has employed over the years have been:
- A trade-in program for children’s bikes (buy a kids bike from him then trade it in and get 100% of its price back toward the purchase of a new bike. This sounds like it would be a poor business practice, except that fewer than 20% bring the bikes back for the upgrade.)
- Green construction on his new store (opening soon in Branford, Connecticut) will include solar panels and wind power. Elementary school groups are already calling to arrange field trips to see how it works.
- When a competitor goes out of business, Zane buys their phone number, so that when a customer sees the former competitor’s ad in a phone book and calls, they will get Zane’s store. He also puts signs for his business in their empty storefront windows.
- A live web-cam tech center that can help long-distance customers assemble their new bikes.
Will Kussell, President and Chief Brand Officer, Dunkin’ Donuts Worldwide
Kussell says that in recent years, Dunkin Brands has undergone much more than a brand transformation: they’ve had a makeover from the inside out. One bold step they took was to send every employee through an evaluation process that rated their values: honesty, integrity, responsibility, humility, fairness, respectfulness, and transparency. Hundreds of employees that did not fit with the company’s values were let go and 200 new people whose values were in line with Dunkin’s were hired.
Kussell said that identifying the company’s core principals and purpose was essential to their transformation. Though the brand had always been known for donuts, he said that by 2003 the business really was about coffee. The company sought to move beyond being a New England brand to have a larger presence nation-wide. They began a rebranding process marketing the idea “rituals that revive.”
A subculture had developed around Dunkin Donuts coffee, which the corporation sought to embrace more fully. They started running ads that identified their customers, who are not driven by status, but are average, no frills people, or in Kussell’s words: “The people who make America great.” In keeping with that market, Kussell says you won’t find couches and wi-fi in his stores, which are geared toward serving busy, working class people. They’ve latched on to that market with their newest slogan, “America runs on Dunkin.”
As Dunkin continues to expand across the nation and globe, Kussell says they are constantly updating their menu offerings to stay competitive. The company is also branching out with strategic alliances such as Proctor & Gamble (who has put their products in grocery stores), Sara Lee, and Jet Blue (which serves only Dunkin Donuts coffee on their flights). These alliances give Dunkin Brands exposure in markets where they may not yet have stores, which paves the way for their expansion into those markets.
Another part of their transformation has been a shift in franchisees. It is harder for individuals to find the financing needed to purchase a franchise today. Kussell says that the trend is shifting away from mom n’ pop owned-stores to fewer owners with more stores.
Shawn Achor, CEO of Aspirant and Harvard University Teaching Fellow
Everyone is aware that mental wellbeing has an effect on physical wellbeing and productivity, but Achor surprised the audience when he told them just how much of an effect it can have. Citing scientific studies, Achor told the audience that the power of the mind can affect flexibility, visual acuity, memory, intelligence, and even how young or old a person appears to others. Moreover, a positive mindset can make a person more successful in the business world.
One study Achor introduced involved two groups of four-year-olds. Each group was asked to complete a task, but before they began, one group was instructed to think of their happiest memory. Kids in the group that was “primed for happiness” were 50% faster and more accurate as they completed the test. Achor told the audience that we humans hard wired to perform best not in a neutral mindset, but rather, in a happy or positive mindset.
Achor says that happiness is a precursor to success, rather than the reverse. When you’re happy, you are actually smarter, faster, and better equipped to face challenges. This is significant in today’s bleak economy, as it’s the people that can think optimistically that will find success. According to studies, happy people are better at securing and keeping jobs, have superior productivity and greater performance, are more resilient, have less burnout and turnover, and are seen as more charismatic.
The good news is that the brain is a malleable organ; it can be trained to be positive, says Achor. He recommended five exercises have been show to increase happiness in sustainable ways. They are:
- Three “gratitudes”: writing down three things you’re thankful for each day
- Journaling about positive experiences (this has been shown to decrease pain and increase immunity in ill patients)
- Physical exercise (proven to release mood-altering chemicals into the blood stream)
- Random acts of kindness
Achor also suggests that cultivating relationships is key to happiness. Studies have shown that lack of a strong social network can be as predictive of longevity as smoking, obesity, and high blood pressure. Since we are wired for empathy (we naturally observe and internalize others feelings to a degree) it is important to surround yourself with positive people, as their happiness can be contagious.