Retail’s Power Players

Some are merchants, with long careers in brick-and-mortar stores. Others are tech trailblazers, using new media to match merchandise and buyers. Others are influencing retail in less direct, but no less significant, ways. All share an ability to create new opportunities and, in their own way, are looking to reinvent the shopping experience. And all wield a great deal of influence in today’s complex retail landscape.

Chain Store Age calls this select group of leaders, who we limited to U.S.-based companies, “Retail’s Power Players.”

The Engineer
CEO, Wal-Mart
Bentonville, Ark.

As chief executive of the world’s largest retailer, Michael Duke continues to find new worlds to conquer. But he also spends considerable time fighting fires, both at home and abroad.

Trained as an industrial engineer and previously the CEO of Wal-Mart International, Duke’s background in logistics remains critical as the company forges expansion around the globe. At the same time, Duke pays attention to the details of retail. Nothing escapes his eye on his frequent store visits.

Under his leadership, the chain has emerged as a leader in e-commerce and digital innovations, and even forged an alliance with Facebook, while also investing in store expansion. On the domestic front, the company is accelerating the rollout of its smaller-sized Wal-Mart Neighborhood Market format to help it enter urban markets and take on the dollar-store format. Another new concept is Goodies Co., a monthly food subscription service that delivers gourmet and artisan foods for $7 per month.

Since being appointed CEO in 2009, Duke has proved that he is not afraid to make tough calls, from scaling back the chain’s overambitious SKU rationalization program to reshuffling top executives.

Duke has said he loves working for a company where past success and increasing size lead to high expectations. He will get his wish this year as Wal-Mart’s worldwide sales approach $500 billion. The chain is coming off a year in which same-store sales growth returned to positive territory at its U.S. business. It celebrated its 50th anniversary, and a long-dormant share price surged to new highs.

At the same time, however, Wal-Mart remains a lightning rod for controversy. The company found itself the focus of negative publicity at year-end, as organized labor sought to disrupt holiday sales by staging protests at stores, one of the retailer’s longtime apparel suppliers was caught using a factory in Bangladesh where 112 people were killed in a fire, and reports surfaced of a bribery scheme in Mexico.

Duke, now 62 and in his fifth year as Wal-Mart’s top executive, has faced controversy before. But the low-key and friendly executive always keeps his eye on the prize, exploring new ways to grow his enormous company in today’s uber-competitive, 24/7 retail marketplace.

The Tech Trailblazer
CEO, Amazon

The signs were there early on. By all accounts, Amazon founder and CEO Jeff Bezos was technically precocious — reportedly he took apart his crib with a screwdriver as a toddler. Armed with a computer science degree from Princeton University, Bezos went on to a successful Wall Street career. But in 1994, intrigued by the opportunities afforded by the Internet for commerce, he left the Street to devote himself to developing a website to sell books. It’s safe to say he never looked back.

The story of how Amazon morphed from an online bookseller to a $100 billion mega-retailer of anything and everything, and then to a tech manufacturer with Kindle, has taken on mythic proportions. What’s so impressive is how, under Bezos’ leadership, Amazon continues to reinvent itself and entire industries. The world’s largest online retailer, Amazon sells products in nearly every category imaginable. It now designs and builds an entire line of e-readers and tablets. And after expanding from selling content as physical product to selling digital product, it has emerged as a digital media powerhouse, with an offering of more than 22 million movies, television shows, songs, apps, games and books.

It’s hard to keep up with Bezos. Among recent ventures, Amazon signed a deal to stream movies from Paramount, Lionsgate and MGM. And the company is involved in content development via its two-year-old Amazon Studios.

Amazon also works with businesses around the world through its Amazon Web Services unit. The division offers outside companies the same sophisticated cloud-computing infrastructure that Amazon developed for itself. 

This is all just a small sampling of Amazon’s ongoing evolution. The company’s reach continues to grow — and to astound. Last March, it purchased Kiva Systems, a maker of robots that service warehouses, including some operated by leading retailers. The deal reflects Bezos’ never-ending quest to improve productivity and get more products to consumers faster.

Shipping is also part of it. Amazon is cutting shipping times and testing same-day delivery in some metro areas. And the company has not dismissed the addition of brick-and-mortar. Asked by PBS’ Charlie Rose about the possibility of an Amazon store, Bezos’ reply got to the root of how he has run his company from the start: “We would love to, but only if we can have a truly differentiated idea.”

Amazon has grown so diversified that to call it an online retailer no longer does it justice. And there is no predicting what the next five years will bring. But one thing that has never changed is Bezos’ unwavering focus on the customer. It’s the key to the company’s success — past, present and future.

The Caffeinator
CEO, Starbucks

Facing increasing competition this past year from the likes of McDonald’s, Dunkin Brands and even drug stores, Starbucks’ Howard Schultz did what he has done throughout his career: He forged onward, building upon his core assets while venturing into new territory. Say this about Schultz: The man always dreams big.

The story of how Schultz, raised in Brooklyn, turned a coffee shop into a national and global powerhouse is now legend. So is the story of how the chairman returned as CEO in 2008, following an eight-year hiatus, and successfully turned around the faltering retailer. Most recently, Schultz has been pushing hard to expand his empire beyond coffee. In 2011, Starbucks purchased premium juice maker Evolution Fresh, and in June 2012, the company acquired a small artisan bakery chain, Bay Bread and its 19-unit La Boulange bakery brand. In November, Starbucks announced plans to purchase Teavana Holdings, which offers loose teas in 300 mall locations. Expect the company to expand all three formats.

Under Schultz, the coffee giant also emerged as an early pioneer in mobile payments, with its own phone app for in-store payments. In August, it invested $25 million in Square, a start-up developer of a mobile payment application, and Schultz joined its board of directors.

Meanwhile, Starbucks continues to expand its banner brand, with plans for 1,200 new units this year, and 2,000 renovations. Longer term, look for 3,000-plus net new Starbucks cafes in the Americas by 2017, with more than half of those in the United States. Even more units will be renovated.

But the bulk of the expansion will come outside North America. Schultz is focused on the fast-growing Asia-Pacific region. The company will have 4,000 stores there by the end of 2013, including 1,000 in mainland China — and its first store in Vietnam. That’s a whole lotta lattes.

The Merchandiser
CEO, Macy’s Inc.

In most areas, $400 million allows you to build two or three quite posh super-regional malls. For Macy’s, that’s the cost to renovate its world-renowned, 1.1 million-sq.-ft. New York City flagship. Billed as the largest store renovation in U.S. history, the ongoing transformation reflects where Macy’s is headed, with the 154-year-old company boldly exploring new technology, while at the same time preserving the elements that made it a retail icon in the first place.

It isn’t surprising that the charge to keep Macy’s relevant in the digital age while staying true to its roots is led by Terry Lundgren, one of the few true merchants left in the business. A career retailer who began his trajectory at Bullock’s, rising through the ranks at then Federated Department Stores and later leading Neiman Marcus, Lundgren’s experience at all levels of retail clearly shows as Macy’s continues to lead the department store renaissance, consistently beating Wall Street expectations in the face of significant challenges.

Lundgren transformed Macy’s from a regional retailer to a national multichannel brand even as he undertook his sweeping “My Macy’s” initiative to offer a more localized and personalized customer experience. He has embraced technology, which figures prominently in his ambitious efforts to make Macy’s more relevant and appealing to Millennial shoppers.

From localized marketing to exclusive deals with the likes of Madonna and The Finish Line to the use of QR code marketing, Lundgren has made Macy’s a force to be reckoned with, both online and in brick-and-mortar. And that’s saying a lot in today’s competitive marketplace.

The Grocer
CEO, Kroger Co.
With small-town grocery retailing in his DNA and 30 years with a major supermarket company under his belt, David Dillon has married the two, transforming the nation’s largest traditional grocer with his unrelenting focus on the customer.

Dillon’s great-grandfather, J.S. Dillon, founded a self-service grocery in Sterling, Kan., with subsequent generations enlarging the chain. Kroger acquired the company in 1982, naming David Dillon president of that division.

Moving through the rapidly growing company, Dillon became Kroger CEO in 2003 and launched his “Customer First” strategy. The underlying philosophy—Take care of the customer first, and sales and profits will follow — marked a significant change in direction for the company. Under Customer First, Kroger invested funds in areas that mattered to shoppers, such as personalized loyalty programs, an extensive store-brand portfolio and everyday low pricing. The results: Despite a difficult environment for conventional grocers, Kroger has flourished, posting 35 consecutive quarters of increasing comp-store sales.

Throughout, Kroger has continued to grow by acquisition rather than major store construction, most recently purchasing most of Schnuck Markets units’ in Memphis, Tenn. Now, however, new store growth is in the offing. In October, the company announced plans to increase its capital expenditures by $200 million annually, increasing store square footage and unit counts in existing markets, and entering new markets in the near future. New store formats will be tested, and e-commerce will be enhanced through new platforms. 

The Social Networker
CEO, Facebook
Menlo Park, Calif.
He has never sold a piece of merchandise to a consumer in a store, and never run a retail company. Yet in less than 10 years, Mark Zuckerberg’s Facebook platform has arguably had as great an impact on traditional retailers as any e-commerce site, including the behemoth

Facebook’s influence comes from its ability to connect. Who among its younger users has not photographed an item in a fitting room or store, and asked for opinions? What retailer or shopping center does not have a Facebook page to disseminate information about promotions and openings, or merely to talk to its customers? More than one entrepreneur has started a retail company marketing only via Facebook. Call it f-commerce.

And now, Facebook is venturing into Amazon’s domain, adding Gifts, a service that allows U.S. users to buy presents for their friends via the platform. Orders are fulfilled from a rented warehouse in South Dakota, and proprietary software has been developed to track inventory and shipping.

Facebook took some heat this past year after having the most notoriously rocky initial public offerings in recent history, trading at $26.81 a week after its opening valuation of $38. (The stock was trading at $27.41 in early December). Still, the numbers continue to astound: Facebook hit the 1 billion monthly user mark in October 2012. It’s no wonder then that in a recent BDO USA survey, among the retailers who are incorporating social media into their marketing efforts, 99% said they are focusing on Facebook. What’s more, along with engaging with consumers and sharing promotions on the platform, more and more retailers are using it for e-commerce.

The Investor
CEO Pershing Square Capital Management Corp.
New York City
Many hedge fund managers buy their shares and let the experts run the business. Not William Ackman, who remains the epitome of the activist investor with his retail and real estate investments.

Ackman invested in shopping center giant General Growth Properties when it was in the midst of bankruptcy proceedings and traded for less than $2 per share. Today, with shares at about $20 per share (as of Dec. 7), Ackman is lobbying GGP’s board to put itself up for sale, arguing that Brookfield Asset Management’s plan to take the company private has hindered other offers, including a merger with Simon Property Group.

He is no less active with his retail holdings, with mixed results. One notable bust was his more than 40 million shares and warrants in now-defunct Borders Group. In the late 2000s, when Pershing was the third largest shareholder of Target Corp., Ackman campaigned unsuccessfully for the company to spin off its real estate from the store operations themselves, and to change the makeup of the board. He sold the last of his stake in the retailer in 2011.

Today, Ackman’s retail focus is on the struggling J.C. Penney Corp.; Pershing Square owns nearly more than 25% of the company, making it the majority shareholder. It was Ackman who lured Apple retail chief Ron Johnson to head the department store chain in November 2011. And it is Ackman who remains the most spirited defender of Johnson’s ambitous turnaround effort, expressing support for the transformational strategy even as the chain’s losses mount.

The Off-Pricer
CEO, The TJX Cos.
Framingham, Mass.
If bad times are good times for discounters, slow recoveries may be even better for off-price retailers. Indeed, customers looking for deals in the recovering economy have helped keep sales on the upswing at TJX Cos., where Carol Meyrowitz runs more than 2,900 discount retail stores in the United States and abroad. TJX, whose banners include TJ Maxx, Marshalls and HomeGoods in the United States; Winners, HomeSense and Marshalls in Canada; and T.K. Maxx and HomeSense in Europe, has been on a hot streak for several years. It reported strong sales and profit margin gains throughout 2012 on top of strong year-over-year comparisons.

Meyrowitz joined the company as a buyer in 1983 and eventually made her way to the top. Appointed CEO in 2007, she seized the day, taking advantage of the opportunities that the uncertain economy offered. Under her leadership, TJX stayed true to its formula, but, with a few adjustments, has taken on a more contemporary edge and added many more vendors to its mix. As some other retailers cut back on advertising, Meyrowitz raised TJX’s profile, even using network television to advertise the bargains it offered shoppers.

Meyrowitz sees plenty of room for expansion. She wants to grow TJX to as many as 4,500 locations long term. The company is also working to improve its in-store experience. Older units are being renovated to achieve more of a department store feel, with upgraded dressing rooms and flooring, a centralized checkout and a contemporary section.

And beyond brick-and-mortar, Meyrowitz is working on a plan for TJX to re-enter the online retail space. (The company shut down its sole U.S. retail e-commerce site, in 2005.) 

The Television Star
St. Petersburg, Fla.

Remember when TV shopping channels were the homes of the Cheap and the Cheesy? Now HSN, the very first shopping network, is one of the few true “department stores” left in the country, celebrating its 35th anniversary by offering brands found in brick-and-mortar, as well as exclusive lines in health and beauty, jewelry, home goods, apparel and electronics.

There is no question that HSN has undergone a massive change under the leadership of Mindy Grossman, the 30-year retail and apparel veteran who took the reins of the shopping network in 2006. Grossman shifted the network’s focus and image to a more upscale “curator of brands,” transforming it into a $3 billion multichannel media business, incorporating retail, entertainment, social networking and gaming technology, not to mention its television network.

Grossman is always looking for ways to expand HSN’s audience base. Technology is playing an increasing role. In 2011, HSN integrated QR codes on its TV screen presentations, allowing shoppers to purchase by mobile while watching the show. A retail gaming portal, HSN Arcade, was launched, offering prizes and rewards as shoppers play the various online games. Last year, new partnerships included licensing deals with HBO and Universal Pictures to offer products tied to “True Blood” and “Snow White and the Huntsman.”

Grossman is by no means finished. Under her watch, expect HSN to continue to push the envelope of retail and entertainment in ways that extend beyond television and the Internet.

The Pharmacist
CEO, Walgreens
Deerfield, Ill.

Trained as a pharmacist and accountant, Gregory Wasson is overseeing a revolution at Walgreens, one that reflects a dramatic shift in the chain he heads, as well as the drug store industry overall.

Wasson, who graduated pharmacy school in 1981, has spent his entire career at Walgreens, the nation’s largest drug store chain. Since being appointed CEO in 2009, he has proved himself not afraid to make bold moves in a conservative company that traditionally maintained a low profile. From the acquisition of New York-based drug store operator Duane Reade to the purchase of online player to the dispute with pharmacy benefits manager Express Scripts Holding Co., Wasson has taken some big bets.

But he upped the ante considerably last year when Walgreens, in a $6.7 billion cash-and-stock deal, acquired a 45% stake in the European pharmacy and health-and-beauty retailer Alliance Boots GmbH (with an option to buy the remainder of the stock in three years). Combined, the two companies rank as the global leader in pharmacy-led health-and-wellness retailing, with more than 11,000 stores in 12 countries. Together, they also make up the world’s largest buyer of prescription drugs.

Walgreens and Boots are sure to leverage — and profit from — the economies of scale resulting from the merger. But the deal is not without its challenges as Wasson takes on the task of putting together two big brands and also works to reinvent his home business. Walgreens is stepping out of the traditional drug store format, rolling out flagships with enhanced services and amenities. Also very much on Wasson’s agenda: The growing role that community pharmacy — and Walgreens specifically — can play in the future of health care.

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