Great Retail Executives Are Hard to Find. Here are Two.
Sir Philip Green, CEO of U.K.-based Arcadia Group and Bhs, has a unique interviewing method. Disdaining the usual reliance on resumes to gauge a person’s experience, Green suspends an interview by giving a candidate a wad of cash and a mission to return in two weeks with products missing from the mix in his stores. Some never return. Some do. It’s among the latter group that he finds the talent to drive his multibillion-dollar business forward.
In Barcelona last month to be inducted into the World Retail Hall of Fame at the World Retail Congress, Green shared the stage with fellow inductee Millard “Mickey” Drexler, CEO and chairman of J. Crew.
What makes a great retail executive?, asked moderator Elizabeth Nelson, London bureau chief of The Wall Street Journal. Vision, a touch for people and merchandise, and contact with the customer, said Green. All that, and extraordinary curiosity, added Drexler.
Both discounted appealing to shoppers on the basis of price. “You win on product, style and creativity,” said Drexler. “Is there a compelling reason to go there?” Sameness and the price footballing of brand names in many outlets are two reasons Drexler has shied away from including outside labels in his stores. “I never want to go to sleep depending on a supplier to build my reputation,” he said.
The two executives differed in their approach to global retailing. Green is a believer. His Topshop format, ?60 million in 2002 when he bought it, will do ?150 million this year. Topshop is scheduled to open a Manhattan outpost next October 10. Green currently operates 420 international stores on top of the 2,400 open in the United Kingdom.
At one time in his career as CEO of Gap, Drexler commented that Gap had the potential to be as global an operator as Coca-Cola. Those days are long past, as is his belief in international operations. Tacitly admitting the error in his prior judgment, Drexler explained he hasn’t observed any retail company, with the possible exception of Zara and some high-end designers, that have been able to run successful apparel businesses on a world stage. He has no plans to take J. Crew international (other than through the Internet) as he fears the “huge distraction” such a move would entail. You see, he’s what some would call a control freak, obsessed with having set times each week for meetings with store directors “in the same language,” a practice he fears would not be possible with stores outside the United States.
As the dialogue wore on, the discussion inevitably returned to the qualities of leadership. Current economic problems will weed out marginal leaders. “You didn’t have to be an Einstein over the last 10 years to make money,” said Green. “Now we’ll see who’s going to be able to keep any.”
Companies need executives with points of view, said Drexler. “More companies should take on the face of management. What’s missing in most companies is someone putting a stake in the ground and saying this is what I stand for,” he asserted. Known for his passion, that’s what he looks for in others. He interviews everyone applying to work at headquarters, even in areas he knows little about, such as technology. He doesn’t care about grades or credentials as much as high energy and passion.
In the end, what also is part of the executive mix is fear. A great retailer, said Drexler, “doesn’t realize it and is running scared all the time because they can be knocked off all the time.”
OfficeMax 1Q sales fall on weak economy
NAPERVILLE, Ill. OfficeMax announced that for its first quarter ended March 29, total sales decreased 5.5% to $2.3 billion compared to the first quarter of 2007. Net income increased in the first quarter of 2008 to $63.3 million, or 81 cents per diluted share, from $58.5 million, or 76 cents per diluted share, in the first quarter of 2007.
OfficeMax Retail segment sales decreased 5.5% to $1.11 billion in the first quarter of 2008 compared to the first quarter of 2007, reflecting a same-store sales decrease of 8.7% partially offset by sales from new stores. Retail same-store sales for the first quarter of 2008 declined across all major product categories due to weaker U.S. consumer and small business spending and the negative impact of the Easter holiday occurring in the first quarter of 2008.
IKEA to open first U.S. manufacturing facility
DANVILLE, Va. IKEA, through its subsidiary Swedwood, announced that it will open its first U.S. furniture manufacturing facility on May 21 in Danville, Va. The 930,000 square-foot Swedwood factory will produce a variety of wood-based IKEA products, the company reported.
“We made excellent progress on construction last year and our installation of equipment and machinery has gone very smoothly,” said Bengt Danielsson, North American president of Swedwood. “Now our primary objective is to complete appropriate operational training for 175 coworkers as well as to ensure a seamless production and packaging process.”