Retail NaviGator

The Retail NaviGator - our communication to you about our research on retailing issues and the activities of the David F. Miller Center. This ongoing media change creates a direct connection to the retailing community in a way that keeps information current, direct and GREEN!

In this issue:


The Retail Revolution was Revolutionary!

To get the juices flowing for the event, Steve Kirn, executive director of the Miller Center, opened with a synopsis of the Center's annual activities featuring updates of the new Miller Center and the first retail study trip through China. This was immediately followed by Geoff Wissman, vice president of Kantar Retail who talked about the evolution of retailing throughout challenging times. Chairman and CEO of The Container Store, Kip Tindell, presented to the crowd about increasing sales by taking care of the associate. Michael Kercheval, president of the International Council of Shopping Centers shared how the shopping center is still relevant to the shopper even in the electronic age. Debbie Ferrée, vice-chairman and chief merchandising officer of DSW and Diane Sullivan, president and CEO of Brown Shoe, Inc. partnered together to discuss how creating a brand is about creating value. Yolanda Wang, consultant for IBM Global Business Services, enlightened the participants about retailing in China. Hal Lawton, president on-line for The Home Depot, talked about how he integrated on-line sales with existing merchandising channels. Shannon Bahrke, two-time Olympic medalist and owner of the Silver Bean Coffee Company thrilled the audience with how she developed into a world skiing champion and her evolution into becoming a retailer.

These amazing speakers were accompanied by a selection of concurrent sessions executed by retail professionals included a session run by Sharon Daniels, president and CEO of AchieveGlobal where she shared how associates can make the difference in customer experiences. Robert McCormes-Ballou, director of supply chain diversity for Office Depot discussed the common "cents" of supply chain diversity. Mary Beth Garcia, founder and president of Talent Optimization, Inc. and Jeff Sullivan, vice-president of talent management for the Brown Shoe Company, Inc. explored the challenges and opportunities of the multi-generational workforce. Michael Kercheval, president of the International Council of Shopping Centers, Steve Kirn, executive director of the Miller Center and Hyunjoo Oh, research director of the Miller Center talked about prospects and pitfalls when expanding into global markets. Geoff Wissman, vice president of Kantar Retail covered the implications of store successes in the future. Curt Johnson, senior vice president of retail services for Miller Zell, talked about great retail design. Chip Lane of Sealane Marketing discussed the importance of activities at the store level.

In addition to these presenters, students attending the event had presentations designed specifically for people aspiring to retail careers. Kathryn Collins, vice president associate recruitment and inclusion and diversity for jcpenney talked about the importance of networking in business. Jay Brown, lead staffing manager of the retail leadership development program for AT&T taught the students about selling merchandise and making a connection with the customer.


Retail Over the Years: Evolution or Revolution?

By Jonathan Mayen

In the early 90's, the United States entered an economic slump. Honda opened its first U.S. auto factory. Sears and other retailers were reporting slow sales and Super Nintendo hit the technology market. In 2001, Amazon.com increased sales and succeeded. Today, there is explosive growth in China, credit issues with Europe and deflation in the domestic housing market.

Every period in history has evolved and this evolution has forced retail to change to survive and grow. Baby boomers have driven retail in the past, but today the retail reference group is Generation Y (18 to 38 year old). Gen Y has a greater share of growth and sales as they use technology to make purchases through online media. Wissman explains that we cannot predict the future of retail as far as technology, but we do know that purchases will be mobile, more personal and much faster. Younger shoppers are adapting to technology that makes it easier for them to shop online and increase sales.

Wissman discussed how today's retail market is the age of the customer. In the past, we have been through the age of the manufacturer, the age of distribution and the age of information. Retailers had created a demand for the customer, but now retailers have to create a new path by observing user satisfaction. Social media is critical to the buying process as customers are increasingly using Twitter, Facebook, Amazon and other sources to partner with retailers. These sources offer information and learning opportunities for retailers. Online shopping is intercepting with the number of store trips and prices. Retailers are competing on prices to gain customers.

Wissman was amazed that there is a significant decline in the number of stores customers visit. He also said that smaller stores will grow and succeed more since they offer intimate and higher level of service versus what huge retailers offer. Wissman closed his presentation with asking the same question he asked in the beginning of the presentation: "Are we in a retail evolution or revolution?" He believes retail is in an evolution since stores should evolve to drive traffic by enhancing shopping experience and service.


Organizations with Heart

By Jordan Kress

Jamie Brooks, Senior Vice President of Sears Retail Services, spoke to the Retail Seminar class on Sept. 2 about his path in the retail world, tips on having a successful career and how advances in technology have impacted the corporation.

These items were never previously sold together in one store. The Container Store stresses great customer service. Tindell wants the atmosphere to be a place where a customer can state a problem and the associate provides a complete solutions based upon their training and life experiences.

Full-time employees of The Container Store receive 263 hours of formal training during their first year – compared to industry average of seven or eight. This training includes product training, company philosophy training and service training that is useful for the associate to be a successful in solving customers' storage and organization challenges. During this training associates learn about the company's seven Foundation Principles™. Using these principles to guide every decision made, helps to ensure that the needs of all stakeholders – employees, customers, vendors, the community – are properly met and balanced.

The Container Store believes in an employee-first culture. All of the training and pay that is 50-100% above industry standards, on an inverted basis, has helped to contribute to sales that are projected to be $650 million this year alone. As part of this employee-first culture, the company has avoided layoffs – even during trying economic times. This has resulted in fierce employee loyalty, and extremely low turnover in an industry where many employees don't even last a year. There are hundreds of employees throughout the company who are honored each year for service of 5, 10, 15, 20, 25 and 30 years. When hiring new employees the company follows its "1=3" Foundation Principle that says one great employee is equal to three good employees in terms of business productivity, so why not hire ONLY great people!. The retailer hires about 3 percent of applicants which ensures that these are the best employees possible.

This principled way of doing business has also been called Conscious Capitalism. It means there is purpose beyond the profits, that all stakeholders are cared for, there is conscious leadership and a conscious culture. As a result, the bottom line flourishes.

Over the years, many competitors have come and gone in the marketplace. The retailer says that everyone and no one is their competition – as many retailers carry a small assortment of storage and organization products, but no one offers the depth and breadth of The Container Store's collection coupled with a high level of customer service. With a strong foundation laid over thirty years ago, Tindell has ensured that his company is sustainable. With 49 stores, 10 more projected to open within the next 18 months, and sales to exceed $650 million in 2011 this company can't contain itself!


Embracing the Future

By Yoanna Romagosa

Michael P. Kercheval is the President and CEO of the International Council of Shopping Centers, which is the international trade organization for the shopping center industry. Kercheval's presentation at the Retail Smarter Conference titled "Embracing the Future" touched on three main topics involving the past, the present and the future of retail and the shopping center industry.

The retail industry has undergone various transitions of power in the last 60 years. Kercheval pointed out that in the 1950's the marketers held the power due to their access to television and radio. In the 1970's, the power shifted to the retailers. This occurred due to barcode technology that gathered massive amounts of customer data. In the 90's, the power shifted to the consumers. Consumers gained choice, control, and power through new technologies such as the Internet.

The three main players in the shopping center industry include the consumers, the retailers and real estate. Due to the current healthy state of these three elements, Kercheval predicts that the retail industry is entering a prolonged period of growth and prosperity. He commented that there is pent-up demand, lower debt balances and higher savings from the consumer. From the retailer perspective there has been greater cost cutting and more efficient and streamlined supply chain models. These positive developments have been brought about by the recent recession. A virtual absence of new construction has kept the real estate side from being oversupplied and close to being in balance with demand.

Kercheval touched on the importance of shopping centers among all the emerging shopping channels. Physical shopping centers still allow people to escape their daily lives, meet up with friends or just enjoy sitting and relaxing. These are aspects that online shopping cannot offer that are still desired by the consumer. The focus of all retailers should now be on how to transform the retail shopping center into a space that is still relevant and attractive to customers.


Branding Your Company. Engagement: Customer & Business Partnerships

By Bijan Banapoor

Retail giants, DSW Designer Shoe Warehouse (DSW) and Brown Shoe Company join together to discuss: "Branding Your Company. Engagement: Customer & Business Partnerships." Competitors, Diane Sullivan, CEO of Brown Shoe, and Debbie Ferrée, Vice Chairman & Chief Merchandising Officer of DSW, join other retailers at the Retail Smarter Conference 2011 in Orlando. With the theme of Revolution or Evolution, this topic illustrated the importance of successful branding throughout the evolution of one of the oldest industries.

DSW started out with one man and one vision, which meant selling shoes in a garage. Twenty years later, it now occupies the #2 position in adult footwear in the entire United States. Ferrée has been working for DSW since 1997. What is now a shoe-shopping destination for style conscious women and men who appreciate value was sparked from aggravation caused by going into a department store whose prices inflated regularly.

"It's important to remember that it's not all about cranking out money for stockholders; it's about creating value," Ferrée stated. Companies can do that by attracting and retaining great employees and always rewriting new chapters to keep consumers engaged with the brand. With breathtaking assortment, irresistible value and simple convenience, DSW is a nearly $2 billion corporation. It has 319 stores located in 39 states. Knowing customer service is a vital quality for successful retailers, DSW tries to be passionate and real. "It's not, 'can I help you?' it's, 'how can we help you?'" Their Rewards program consists of over 17 million customers.

On average, they have over 24,000 shoes and 2,500 styles, and their dot-com business has more than three times that amount and is the fastest growing part of their business. Diane interrupted, "Remember when people said you will never be able to buy shoes online because of fit?" They both laughed.

Sullivan was recently announced 8th CEO of the 133-year-old corporation and the first women elected that position. She reiterated the point that "it's not about selling shoes; it's about creating a brand." Brown Shoe has a complex business model unlike most other retailers. It's comprised of 70% retail and 30% wholesale. Its portfolio is comprised of over 1,100 Famous Footwear stores among a multitude of wholesale brands including Dr. Scholl's, Naturalizer, and Via Spiga to name a few. Recently, Brown Shoe acquired American Sporting Goods Company which has introduced a few new athletic brands. Diane distinguished Famous Footwear from DSW by saying in Famous Footwear it's "the thrill of the find" and in DSW it's "the thrill of the hunt." Sullivan classifies each brand owned or licensed in three "macrotrends" which are healthy living, family, and contemporary fashion. "Simplicity in how you tell your brand story is vital" she pointed out. The $2.7 billion Corporation has stores worldwide. "How you do business is just as important as how much business you do," Sullivan explained. So aside from the collage of brands, Brown Shoe as a corporation is a brand itself. It recently just designed a new logo that manifests with the company in a lot of different ways to help tell the story of Brown Shoe. Balancing such a large and diverse portfolio can be challenging, but each brand in Brown Shoe has a distinct handwriting and its own share in the marketplace.


Retailing in China

By Courtney Dolfi

The 2011 University of Florida Retailing Smarter Conference was held this past June with outstanding presenters such Yolanda Wang, a consultant with IBM Global Business Services. Ms. Wang provided an interesting take on the new age of retailing in China.

China currently has a population of over 1.3 billion people, making it one of the best opportunities for an emerging market in the retail industry. However, according to Wang, large retailers such as Walmart, The Home Depot and Best Buy have failed to dominate the market . The reason is that China is following a different developmental route. The strategies for marketing and distribution that work well in the United States and other parts of the world are no guarantees of success in China. The retail market in China is highly fragmented, and there is no nationwide means of distribution. Instead, each province of China has individual dominant retailers and suppliers. If a retailer is to succeed in the Chinese market, it must tailor its business to the need of the individual consumer.

Wang also discussed the cultural and economic development in China. The current initiative is to accelerate economic development, as part of a "five year plan", from "made in China" to "innovated in China". As China continues develop, the consumer mindset continues to evolve as well. Wang emphasized a strong sense of national pride amongst Chinese citizens. Chinese consumers' needs are moving from functional to emotional, and they are less loyal to individual brands than their global peers. They are becoming more and more connected to the digital world, and with a broadband base over 450M and mobile phone accounts in excess of 800M . Wang noted that the Chinese are becoming more "instrumented", meaning that they are willing use two or more technologies to shop. She believes the greatest opportunity retailers have in entering the Chinese market is around personalization of the consumer shopping experience.

Ms. Yolanda Wang was a great addition to the list of speakers at this year's Retailing Smarter Conference. Her perspective was fresh and highly detailed, and she is sure to continue to be a valuable source of information as the global retail market becomes more and more integrated.


Interconnected Retail with The Home Depot

By Sanchi Lunawat

The Home Depot is focused on four strategic areas – customer service, product authority, disciplined capital allocation, and interconnected retail. Hal Lawton, president of ecommerce for The Home Depot, is in charge of developing the interconnected retail experience for Home Depot customers.

The home improvement market is $240 Billion dollars in size and over 40% this spend is influenced by online resource. In fact, 45 percent of the visitors to Home Depot's website indicate that their next step is to go to a store. For these reasons, the Company has focused on integrating the online sales channel with existing merchandising efforts, making The Home Depot online the 11th most visited retail site in the nation.

Hal's priority is leveraging technology to create interconnected retail experiences for customers. To deliver an interconnected retail experience The Home Depot is focused on five key areas including website excellence; becoming the special order engine for the Company and making it easier for customers to purchase goods not stocked in a store; building multi-channel capabilities such as buy online pickup in store; creating new growth and accessibility platforms including mobile phone applications and simplifying complex projects such as kitchen installations, again making it easier for customers.

All of these priorities demonstrate how The Home Depot is approaching interconnected retail enabling customers to engage and purchase when, where, and how they want. Hal Lawton has made a significant impact embracing the interconnected retail strategy for his company.


A True Olympian

By Jennifer Chadbourne

Shannon Bahrke-Happe was born and raised in Lake Tahoe, California and had been skiing at the age of three. At age 12, she began the sport of freestyle moguls. She fell in love with the sport and knew she had found her passion. In 1998 she earned her place on the U.S. Ski Team and trained full time. At her first World Cup, she placed 2nd to last. She stated that one of the most humbling feelings was going from best skier in the country to last place on a global competitive circuit.

Despite difficult training and mental blocks, Shannon had made it to the 2002 Olympics. She described feeling very confident on the day of her run and earning the Olympic silver medal. She explained that after becoming an Olympic medalist, she was given special opportunities, such as meeting the President.

Following the Olympics, her training led her through some difficult times which included a broken jaw and two knee surgeries. Her miraculous recoveries were only part of what an Olympian can overcome. She continued to train and won yet another Olympic medal – the bronze! During her recovery from her second knee injury, she decided to think about her future and what her unique experiences could offer beyond skiing. She decided to open her own coffee roasting business. While healing, she developed the Silver Bean Coffee Company.

The U.S. ski team was so successful that year and she was a part of it, but Shannon knew to be better than the best, one had to go the extra mile. She observed how her training to be the best in the world was the same training as her teammates. Shannon knew to be better than her teammates; she would have to train more than them. This thinking led her to be the first U.S. women's freestyle skier to win multiple Olympic medals. After her professional skiing career ended, Shannon and her husband put this winning attitude into their coffee company. She wanted a place where athletes, friends and families could come together and talk about their successes. Shannon is very excited about the future of her coffee company and encouraged the audience to visit it so she could make everyone a latte. After her speech, I asked her if there was any advice she would give to students and she said, "...to try everything, so you can find your true passion."


Retail Navigator

This electronic newsletter from The David F. Miller Center for Retailing Education and Research is issued throughout the year to provide updates on what is happening in retailing at the University of Florida. Information regarding student outreach, jobs, internships, research and retailing connections throughout the country will be included. We hope you enjoy seeing what Gators are doing in the retail industry!

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