Duncan Mac Naughton, Executive Vice President,
Chief Merchandising and Marketing Officer
for Walmart U.S.
Change. Engagement. Values. Passion. Omni-channel. These themes emerged prominently from the 2013 Retailing Summit recently hosted by Texas A&M University’s Center for Retailing Studies at Mays Business School.
Below is an overview of key takeaways:
Building a Company with Heart
Retail veteran and entrepreneur Maxine Clark, founder of Build-A-Bear Workshop, opened the conference on a cheerful note with an outline of the teddy bear shopping experience. The chain’s brightly lit stores, happy staff and playful assortment of stuffed animals offer children of all ages more than cuddly products. Instead, Build-A-Bear Workshop transformed traditional retail toy sales into a fun, entertaining, and memorable shopping experience. Clark followed her passion to delight customers, and the company she founded, grew and thrived because its heart-felt foundation cultivated extraordinary customer loyalty and profits.
Hiring and Rewarding “Nice”
Dahna Hull outlined AT&T’s reinvented retail strategy that starts with engaged employees.Â “You can’t teach nice. We hire nice,” said Hull. The leader of South Texas store operations said the company interviews more than 1,000 people for 40 positions. To hire, train and retain the right people, AT&T’s new corporate policy emphasizes:
- Magnify employee success: Praise employees for achievements, no matter how small, to encourage positive behavior.
- Make it personal:Â Respect that employees have friends, families and bad days just like managers do.
- Give it meaning: Make employees feel like their accomplishments provide real value to the company’s overall performance.
- Keep it cool: Cultivate a casual dynamic between corporate and front line employees. Team members work harder for leaders they relate to.
Michael Stallard, author of “Fired Up or Burned Out,” said leaders need to understand the equation: “vision + value + voice = connection.” Like Hull, he emphasized that leaders need to develop positive work environments. This creates a culture of connection that bonds committed employees with managers who are servant leaders. Employees in such workplaces know that their managers trust them to interact with customers; are committed to helping them achieve their career goals; and will give them challenging work that fits their strengths. He concluded that energized, engaged employees are more productive and improve company profits.
Reinventing Loyalty at Walgreens:
Walgreens’ Graham Atkinson also addressed themes of change and employee engagement.Â Atkinson joined the 107-year-old pharmacy chain from the airline industry to launch the Walgreens’ loyalty program. He is currently the Chief Marketing and Experience Officer. With more than half of American households visiting Walgreens each week, and the health care needs of an aging population expected to soar, the retailer wanted to understand its customers’ buying behaviors beyond demographic points. The Balance Rewards system launched in September 2012 merged 42 IT systems to offer comprehensive shopper insights. Employees piloted the system. They learned its benefits, such as cash-back, Rx refill reminders and customer-supported weight-loss programs and then supported the program’s social media launch. By the end of 2013, Walgreens is on track to enroll 83 million members in Balance Rewards, all through a paper-free registration process.
Atkinson concluded that this program marked a major change for the retailer. IT, which had always been a support service, now had a major seat at the table in understanding customers.Â Change management is hard, but essential, to staying relevant in an increasingly competitive marketplace.
Neiman Marcus President Jim Gold also credited technology with helping the historic retailer maintain a competitive advantage. Neiman Marcus was the first luxury brand to offer a loyalty program and e-commerce site. Today, he said, “there are no boundaries where you can shop.” The lines between brick-and-mortar, online and mobile shopping have blurred. By offering a seamless omni-channel experience, Neiman Marcus protects its brand and delivers a consistent customer experience. In-store, staff members now use iPhones to pull up detailed customer profiles and suggest new items to shoppers. Through neimanmarcus.com, the company delivers its couture items to a global customer base.
Jim Gold started at Neiman Marcus as an intern and rose through the ranks to be President of Bergdorf Goodman in New York City before returning to Dallas. His mentors included former CEOs Stanley Marcus and Burt Tansky and current CEO Karen Katz. They all taught him different and important lessons about focusing on quality, customer service, and innovation. He believes these core values will keep the company unique and help ward off new competitors, “like Amazon.”
Save Money. Live Better.
This year’s conference featured keynote presentations from six of the nation’s top 100 retailers including the largest of them all, Walmart. Duncan Mac Naughton, EVP and Chief Merchandising & Marketing Officer of Walmart U.S., said the company’s 1.3 million domestic associates help people save money and live better by enacting Sam Walton’s four price leadership principles:
- Reframe the Value Equation: Walmart believes it is important to communicate its price leadership and broad assortment while also highlighting the importance of the customer. Mac Naughton said putting customers first is a “simple business model” that should always be followed.
- Shift the Quality Paradigm: Campaigns like “Fresh Over” communicate the company’s initiative to deliver high quality products and foods. To remain relevant to today’s customers, Walmart must rely on its powerful momentum surrounding quality and local sourcing.
- Stay Connected and Innovative:Â Customers are empowered in more ways than ever. They demand real-time answers and transparency. Walmart communicates with customers across all relevant social media platforms.Â It is the #1 brand on Facebook (even overshadowing Facebook itself) with 34 million followers.
- Have a Shared Purpose: Walmart’s “Jobs in America” campaign commits the retailer to bring jobs back to the U.S. by reducing use of foreign vendors. Its “Welcome Home” initiative guarantees a job to any veteran who has been honorably discharged from the U.S. military within the last 12 months. On Veteran’s Day, Walmart announced 20,000 returning veterans had been hired.
Serving Customers in Changing Times:
Although Sam’s Club falls under the Walmart portfolio, Jason Kidd, SVP, addressed how Sam’s Club serves its more affluent club members. Through continued innovation and technology, Sam’s Club creates new value for its customers. Beyond aisles of bulk merchandise like toilet paper, Sam’s Instant Savings book showcased differentiated merchandise, such as Nikon camera bundles, home surveillance systems, and leather furniture sets. More than half of shoppers purchased items promoted in the Instant Savings book. Many also took advantage of store innovations, such as self-checkout, convertible registers, and the Click-n-Pull service that lets you order online and pick up items in the club.
In March, the retailer collaborated with Living Social to offer a one-year membership, a $20 gift card, and several fresh items. The results were staggering. In 48 hours, more than 157,000 people signed up for membership and generated significant social media buzz. This enhanced membership offering grew the bottom line.
Lessons from Healthcare
While many speakers addressed the theme of change, Dr. Len Berry of Mays Business School reflected on the value of stability. In a discussion titled “Lessons from Health Care,” he explored the culture of high performance health systems in Wisconsin. Stability offered leaders time to build trust in the organization, confidence to act boldly, and the ability to lead, rather than follow. He also reflected on the importance of functioning, mutually beneficial, and accountable relationships between hospital management and the board of directors. Such collaboration nurtures learning, innovation and increased employee effort and results in attracting top talent. He mused, “People don’t move to Wisconsin for the weather.” The valued, enabled and trusted health care providers then often commit to improving the quality of life in the broader community.Â The “social profit” created, often through volunteerism, completes a virtuous cycle which he says are the common factors driving success of the top-ranked health systems he observed … Lessons all retailers can apply to their operations.
Surviving and Thriving in Franchising
Companies franchise in order to rapidly expand, increase recognition, and maintain brand consistency. Gold’s Gym, the leading fitness chain historically associated with overly-muscled body builders, now boasts 50 percent female membership and comprehensive wellness programs for customers at its 700 locations. The company’s growth was mostly fueled by franchising, which Tim Hicks, SVP of Marketing and International, explained as “simply a method of expansion and distribution.” Franchisees can benefit from systems, support and unit economics that individual entrepreneurs lack when starting a business. They can also understand cultural norms critical to international success, as with the case of Eiji Tezuka, a master franchisee in Japan. Gold’s Gym currently franchises in more than 30 countries, including Saudi Arabia, Peru, India and Poland.
The Retailing Summit is the largest annual outreach program hosted by the Center for Retailing Studies. Proceeds from the sell-out crowd of 300 retail executives fund the Center’s campus programs for students.
About Mays Business School
Texas A&M University’s Mays Business School educates more than 5,000 undergraduate, master’s and doctoral students in accounting, finance, management, management information systems, marketing and supply chain management. Mays consistently ranks among the top public business schools in the country for its undergraduate and MBA programs, and for faculty research. The mission of Mays Business School is creating knowledge and developing ethical leaders for a global society.