JoeKefauver
OPERATIONS

Washington Spotlight: Retail Caught in the Middle – Here We Go Again

BY Joe Kefauver

With healthcare reform appearing to be placed on the back burner – at least for now – attention in Washington, D.C. is turning to corporate tax reform. Corporate tax reform is much sticker issue and many of the political dynamics that doomed the healthcare effort seem to be falling into place in much the same way in this conversation. And that could be a real problem for retail operators.

A critical component to the Trump-Ryan tax plan is the Border Adjustment Tax (BAT) that would tax imports at a proposed rate of 20 percent while exempting exports from taxation. Proponents argue that it would re-invigorate domestic manufacturing and make our products more competitive overseas.

Critics say it would significantly raise prices on thousands of domestic goods, disproportionately hurting lower income consumers – many of whom are a critical part of the Trump electoral coalition. Generally speaking, retailers are supportive of tax reform but have major issues with the BAT as it stands today.

Conservative groups backed by the Koch Brothers as well as the Club for Growth take issue with the BAT as well, and are gearing up to fight it. The problem for President Trump and Speaker Ryan is that this is same dynamic that doomed health care reform. And this fight won’t nearly be as tough.

Once again, retailers find themselves in the middle of a Republican civil war. That is becoming familiar territory for the industry. The tax nexus issue between online and bricks and mortar retailers split the party; as did the ongoing tussle with the banks and credit card companies over interchange fees; as did immigration reform; as did health care reform.

Here we go again – this time on tax reform. Retailers just cannot seem to avoid getting caught in the squeeze. Constantly being the political football in an ongoing intra-squad scrimmage is putting our brands and business models in the public spotlight in unprecedented ways.

There was hope in the industry that the election results would be a harbinger of good things to come and companies would have political and policy opportunities to grow their businesses. But at least for now, instead of seeing green, operators are still seeing red.


Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making. Align specializes in service sector industries.

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OPERATIONS

Washington Spotlight: Recess Isn’t So Fun Anymore

BY Joe Kefauver

With Congress in recess this week, legislators can finally take a break from the grind of D.C. politics – fighting with the other party, fighting with their own party, and of course, the spotlight of a relentless national media. But in a lot of cases, members may have it better in D.C. than back home.

Many of them return to disgruntled constituencies which are showing up in record numbers to town hall meetings, community events and other forums to blast members of Congress on issues all over the political landscape – healthcare, taxes, immigration, the environment and many others. For Republican members in particular, this is their first trip back to their districts since the healthcare debacle and they are preparing themselves for the wrath that is sure to come.

Moderate Republicans in the Northeast and Midwest are going to get slammed for not standing up to the Freedom Caucus “bullies” and letting an opportunity to repeal and replace Obamacare slip away.

Conversely, staunch conservatives will be forced to endure a verbal beat down by chamber of commerce-types for killing a repeal while being applauded by Tea Party activists for “staying the course.” And that’s just on the healthcare issue. Taxes and immigration will be front and center as well.

RETAIL: For retail operators, the tone and tenor of these meetings during the congressional recess could determine how ambitious Congress is when it is back in session. Either they come back with a renewed vigor to tackle some of the most pressing problems for employers – reasonable healthcare reform, a more competitive corporate tax system and some tough decisions on trade – or they are so beaten down that they fear the political backlash of even minor changes in policy.

While elected representatives and senators are back home in their districts, operators need to get out of their stores to make sure their voice is heard – that protecting job creators needs to be at the top of Congress’s priority list.


Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making. Align specializes in service sector industries.

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Analysis: Can Abercrombie course correct with key strategic changes?

BY CSA STAFF

Abercrombie & Fitch has been on a steady decline. In November of last year, the retailer’s shares plummeted 10%, completing 15 straight quarters of company-wide comparable sales decline. In February, the company’s merchandising head, Fran Horowitz, was promoted to CEO, and tasked with reversing course. To do so, Horowitz will need to devise a strategy that leverages her past experience and redefines the culture of Abercrombie & Fitch. Moving in this direction requires instilling a corporate mindset that encourages accelerated go-to-market strategies and effective talent recruitment and development.

The following are key elements of a plan that Abercrombie & Fitch should embrace to push past its continued decline and bring the brand back to prominence:

Quickly adapt to change

Consumers are often fickle and can lose interest in a brand overnight. Abercrombie & Fitch has experienced this first hand, losing its younger customers to competitors like American Eagle, which is swiftly responding to a shift in the needs of this demographic.

In 2016, American Eagle recognized that their younger audience had become more socially conscience. As a result, the retailer enlisted influencers like actress Hailee Steinfeld to promote the brand on social media with meaningful hashtags like “#Icanbeheard” or “#IcanlovewhoIwant.” This willingness to embrace a critical change in the marketplace played a major role in American Eagle enjoying its eighth consecutive quarter of revenue growth in the second quarter of 2016.

Horowitz must leverage her merchandising background and her skills to understand what the customer wants to bring young customers back to the brand and improve the company’s financial standing. In addition, she must surround herself with a management team that can execute her vision. In doing so, the retailer will be able to effectively reach its critical customer base and be rewarded with an uptick in sales.

Identify the right talent to ensure cultural fit

Attracting and retaining talent that can execute the core beliefs of Horowitz’s vision will be key to the company’s success. To ensure that the right talent is brought onboard, Horowitz should be involved with the hiring process for her direct reports and more junior employees. In this regard, the new chief executive can feel more confident that prospective employees can implement her strategy and bring unique skills and knowledge to the table to improve that strategy along the way.

It can be costly, if Horowitz isn’t able to ensure a good cultural fit among her employees. In fact, the result of poor cultural fit due to turnover can cost an organization between 50- to 60% of an employee’s salary. Ultimately, questions like, “What type of culture do you thrive in?” and “What best practices would you bring with you from another organization?” can help identify whether a candidate will bring added value, collaborate with colleagues and stick around for the long term. In addition, using candidate assessment tools that unearth the motivational factors of candidates should be utilized extensively.

Embrace an omnichannel strategy

A quality brick-and-mortar and online shopping experience is crucial to success in retail. In fact, a survey conducted by Retail Systems Research found that 84% of retailers believed that that creating a consistent customer experience across channels is extremely important. Bed Bath & Beyond agreed with this sentiment and recently started to enhance its shopping experience. In fact, the company now offers conveniences such as “click and collect,” which is an option that gives customers the ability to reserve an item online and retrieve that product at the nearest Bed Bath & Beyond retail location. In addition, customers can return online orders to a store.

For Abercrombie & Fitch to succeed, especially with younger customers, the company must develop and implement a seamless omnichannel strategy. Customers that have the same experience with the retailer online and in-store will return to the brand and demonstrate greater loyalty. A failure to do so will erode the company’s market share even further.

If Horowitz considers each of these elements as part of her turn-around plan, we have great confidence that she will be able to develop a culture and approach that can help the brand survive and thrive.


Umesh Ramakrishnan is a founding partner and member of the office of the CEO at executive search firm Kingsley Gate Partners. He was most recently vice chairman and chief innovation officer at CT Partners, one of the largest retained executive search firms in the world. He is author of the There’s No Elevator to the Top published by Penguin Worldwide.

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B.Wiggins says:
Apr-04-2017 01:11 pm

Article seems to be written by an individual who has absolutely no retailing background at all. What we have here is a recruiter creating an article to hopefully drum up some business by taking 3rd grade business tactics (Listen to your customer!!!! Wow, groundbreaking and innovative ideas!) and declaring themselves all knowing. I am disappointed that CSA did not vet this article or the author more thoroughly.

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