10 top retail executives on the state of the industry
The role of a chief executive requires vision above all else. At Shoptalk, execs from Gap, Macy's, Nordstrom, Lowe's and a host of disruptors offered insights from a unique industry perch.
The 8,000 attendees at Shoptalk this year got to hear from a lot of executives, founders and industry specialists, all offering varying degrees of candor in diverse areas of expertise. Chief executives don't tend to offer the nitty gritty — their position requires vision above all else, and that won't necessarily tell you much about the ideal BOPIS operation or the value of shoppable images.
They do have a singular perch, though, and Retail Dive heard from several who made the trek to Las Vegas to share their insights into the state-of-the-art of retail and on the meaningful ways their companies are navigating its choppy waters.
Art Peck, CEO of Gap
"The historical model was: build a mall, tons of traffic, expensive rent and make it up in low conversion but highly productive traffic. The secret in the industry today is that traffic in many of these malls is not nearly as productive as it once was. The formula doesn't work."
In 2017, Gap Inc. grounded its growth strategy firmly in Old Navy, the value retailer that in recent years has run away with most of its sales. But that's no longer the plan, as the company has decided to corral Gap and the company's smaller lines into one company and let Old Navy go it alone as another. So, 50 years after its founding, the Gap brand is now adrift in more ways than one, without its steadfast performer to lean on and without much of a style proposition to offer. It remains to be seen how well the once-iconic American apparel label will fare or whether moving away from malls will help. Peck said he had the choice to either stick with Old Navy or take on the task of revitalizing Gap, and he's decided to give a Gap turnaround another go.
Paula Price, CFO of Macy's
"Sales per square foot is a historically traditional measure for evaluating store productivity, and it's still relevant today. But … you may have heard [CEO] Jeff [Gennette] say 'When we close a store, we fire a customer.' What he means by that is when we close a store we see our online sales in that particular market decrease. … So we have to expand the productivity metric of a store to include online sales."
Macy's said that it's nearly finished the dramatic shrinkage of its national U.S. footprint, moving closer to shuttering the last of 100 stores this year. Some analysts believe there are more closures to come for the department store company, but Macy's management has now moved on to updating the stores that remain. Macy's is developing three basic types — flagships, magnet stores and neighborhood stores — each with its own customer base and potential. The department store has also been ahead of its peers when it comes to e-commerce and omnichannel services, and holiday e-commerce sales grew double-digits while store comps rose 1.1%.
Erik Nordstrom, co-president of Nordstrom
"Our stores are long-term investments. Inevitably there are external forces in the environment that we can't control."
Nordstrom is known for its customer service and innovation, and, increasingly, for its off-price unit. The retailer has been able to keep its footprint rational, unlike the massive downsizing that Macy's has undertaken in recent years, because its expansion has been methodical and relatively minimal. But its flagships, which have partnered with a host of popular brands including digital natives like Bonobos and Away, appear to be ceding share to its own Rack stores. Full-year comparable sales last year rose 0.9%, with Rack comps rising 3.5%, and UBS analysts last month called the situation "concerning."
Matt Alexander, CEO and co-founder of Neighborhood Goods
"We describe ourselves as a department store, but it's really quite inaccurate. We're really not much of a department store. But it's a useful sort of organizational principal for how you might think about that experience inside that space. You can come in for a coffee, you can come in for a meal, you can come in and shop. It has all the hallmarks of a traditional department store experience, but certainly deviates quite significantly in terms of the financial mode behind it. We're not purchasing product at wholesale, we're not featuring products in the seasonal and more traditional basis. It's an ever-changing landscape of more interesting and relevant brands."
With a high turnover of merchandise from a constantly rotating sets of brands, Neighborhood Goods is intent on developing as the entity that builds trust with shoppers. The company's existing Dallas location, in a 255-acre open-air shopping center, Legacy West, showcases a series of cult and pure-play e-commerce brands, which has included sneaker marketplace Stadium Goods, Walmart's online mattress brand Allswell and Reese Witherspoon's Draper James, among others. The startup last month announced $8.8 million in expanded seed financing, bringing the venture's total to $14.5 million and will open its second store in New York later this year.
Victor Luis, CEO of Tapestry
"Too many companies, especially when it comes to creativity and innovation in the fashion world, everyone has an opinion about what beauty is. Putting the consumer at the center can help us solve a lot of that, obviously with testing and pilots, which we try to leverage. Culturally it’s really about a relentless drive."
Giving global consumers attention has paid off for Tapestry, although the luxury apparel and accessories house stumbled in its most recent quarter mostly because U.S. consumers were less interested in what its Coach and Kate Spade brands had to offer over the holidays. As it has mostly successfully done with its Coach brand, the conglomerate has been working to freshen up its Kate Spade merchandise in an effort to reduce promotions, attract younger, wealthier customers and earn a place in the top echelon of fashion.
Moiz Ali, CEO and founder of Native
"DTC – the feedback is instantaneous, you can communicate with every single one of your customers, you understand your marketing spend and customer acquisition costs, you understand what your customers want you to make next … With any brick-and-mortar store, you lose a lot of that. You lose the direct connection with your customers, you lose understanding repeat purchase rates, you lose the ability to have an immediate impact the day that you decide to have that impact. But what you gain is also something monumental: incredible distribution, incredible branding."
Channels are not straightforward for many retailers these days. Brick-and-mortar players have quickly realized that having a smooth online experience is a necessity, no matter how good the in-store experience, and traditionally online-only retailers are opening more and more stores, as well as partnering with big-box retailers. For Native, CEO Moiz Ali said partnering with Target has had both pros and cons — the distribution is hard to resist, but the direct connection with customers is lost.
Michelle Cordeiro Grant, founder and CEO of Lively
"Today we may sell bras, tomorrow we may sell concert tickets. We don't know, but our community's going to tell us."
The leader of the intimates brand said during a panel at Shoptalk that the company relies heavily on consumer feedback to decide which products to launch next and how to improve the ones they have. It's a sentiment that's echoed by a lot of other digital-first brands, which often pride themselves on the ability to form personal connections with shoppers and listen to their needs and wants. It's also become common for direct-to-consumer brands to start out with one product and expand their offerings to related categories, often in pursuit of being a lifestyle brand owning a given space.
Amy Shecter, CEO of Glamsquad
"You can't help it. The experience is so holistic, and you get such great tips about the product, it made so much sense for us to take our services business into selling the products that we use as opposed to doing it for everybody else."
While Glamsquad used to be focused solely around providing services to customers, CEO Amy Shecter said the level of data they're able to capture from both their clients and their beauty pros makes launching product a natural next step. The business already has a line of hair care products, which took 18 months of testing with clients, and Shecter told Retail Dive in an interview that the company is launching makeup in April. It also speaks to a larger trend in retail, of businesses using data to launch private labels that compete with name brands, especially from the likes of Target and Amazon.
Micky Onvural, CEO of Bonobos
"Bonobos was founded by a man who believed the world would be a better place if it were run by women and then he handed his baby, Bonobos, to a woman. He often says the success we've seen in the last year or so actually couldn't have been achieved by a man."
Onvural, who previously served as chief marketing officer of Bonobos, stepped into the CEO role last year after Founder Andy Dunn turned over the keys to focus on growing digitally native brands for Walmart. In the months since Onvural has doubled down on her push for bold social messages that challenge gender stereotypes and promote equality. At the core of her leadership philosophy is fostering a culture where everyone's input — down to the most junior members of the organization — helps build a brand that stands for inclusivity. Doing that from within the Walmart umbrella so far hasn't been an issue, Onvural told Retail Dive, but there also aren't currently plans for greater integration going forward.
Marvin Ellison, CEO of Lowe's
"Just be the best you, be your most authentic self. Embrace it. And whatever you do don't blend in because you'll always commoditize yourself, and no one wants a commodity because it's low price and easily accessible."
Within Ellison's short seven month tenure so far at Lowe's, he's begun to usher in a cultural change for customers and employees. The big-box home improvement retailer is shifting the way it does business by catering to three types of customers: the Do It Yourself-er, the "Do It For Me" and the professional, Ellison said during a keynote interview at Shoptalk. Catering to these different customers also requires training store associates to engage more on service. To Ellison, the key to Lowe's overall strategy hinges on clear communication of the greater message and answering every store associate email.