The unlikely champion of Ashley Stewart
James Rhee is a tech-savvy numbers and operations guy, but the private equity investor-turned retailer relied on more than business smarts and technology to help revive Ashley Stewart. Realizing that the plus-sized brand inspired a deep love among its customers, he developed a core strategy of kindness and loyalty, a strategy that recognized Ashley Stewart represented respect, community and joy to its shoppers. And he proved extremely adept at using social media and mobile channels to get the message out and connect with customers in a way that many larger brands can only envy.
Rhee’s strategy, coupled with key business improvements, have breathed new life into the once-struggling Ashley Stewart, which was close to liquidation when he took the reins. (He took it through a Chapter 11 filing and reorganization in 2014.) Sales increased some 30% in 2015, with earnings of $20 million. It’s a remarkable achievement considering Ashley Stewart had been losing money for the previous five years. The company is now debt-free. It has closed underperforming locations, leaving it with 89 stores and a growing ecommerce division. It plans to begin opening stores in 2017.
Rhee’s core strategy extends to employees. He has brought a new culture to the chain. It’s a culture where everyone is meant to feel they have a stake, and where most of the employees at the home base in Secaucus, New Jersey work out in the open—including the CEO himself.
Chain Store Age caught up with Rhee, 45, who has not only captured the attention of the industry with his turn at Ashley Stewart, but emerged as a most unlikely champion of plus-size women.
After two years on Ashley Stewart’s board of directors, you resigned in the summer of 2013 to become CEO, at a time when the company was failing. Why did you decide to take on Ashley Stewart?
I did not want the company to liquidate. I had been a member of the board since 2011 and loved the brand and everything it stood for. Ashley Stewart had been founded to provide plus-size fashion for women in boutique-like settings in urban neighborhoods across the United States.
After listening to our customers, I came to realize that the brand stood for more than that — values like respect, empowerment, and joy. Despite the company’s history of failure, I believed that the brand could capitalize on several macro-cyclical trends with a reinvented business model.
How does your prior background as a private equity investor (and, before that, a high school teacher) play into running Ashley Stewart?
I always say at Ashley Stewart that we run this company like a hedge fund. That is the level of math that we are doing at the company on a daily basis. When we were re-writing all of the planning algorithms and business reports, the math and operational discipline was done at the level at which a blue-chip investment firm would operate.
As a high school teacher, I know the importance of creating a teaching culture which Ashley Stewart now has. I reinforce the most important messages, talk about value systems, and everyone gets the ‘James speech’. I instill in our team that every single person and expense should please our customer.
Looking back, what were the most important steps you took in turning the company around?
There were so many things that had to be done during the reinvention of the company… we redid every planning algorithm from scratch, created reports to properly analyze the business, relaunched the website, overhauled our supply chain, moved offices, documented all IT processes, and changed the culture.
All that being said, the most important thing we did was listen to our customer. We went back to the stores and talked to our customers and field team and asked them what they wanted from us. We then quantified those emotions with new pricing equations and portfolio math. We married EQ and IQ.
You have said your operating philosophy is “grounded in algorithms, lean processes and technology.” What does that mean”
We use measurements that are not prone to manipulation: time, return on investment, loyalty and return on capital. We use technology to amplify both the math and the emotion.
How do you define the Ashley Stewart brand?
Friendship, resolve, kindness and fun.
How important is company culture and values to the success of a retail brand?
It’s imperative that our company culture match that of the Ashley Stewart brand. If we’re going to empower our customers through innovation and kindness, we needed the same values internally to be successful. Kindness is not just about being nice, it implies a certain empathetic spirit. Throughout my career, the best results come from teams that are transparent with one another.
There are no people or ideas that are too small. We focus on mentoring and everyone is allowed to speak. This helped cultivate a fun, hardworking culture and establish a true team. This dramatic shift in the company’s overarching culture enables anyone to be innovative, and allows us to deliver a better experience to our shoppers.
How would you describe the current Ashley Stewart culture and value system?
High performance family that focuses on development and principles, rather than winning at all costs.
Motivating store employees can be a challenge. How does Ashley Stewart engage its store-level associates?
We have made significant investments in technology to facilitate real-time communication between store associates and the home office, not to mention between customers and the home office. But nothing replaces old-fashioned values like respect, transparency and meritocratic recognition.
We are currently rolling out a state-of-the-art time and attendance system, which serves as an example of our commitment to marry technology with good old-fashioned relationship building.
Tell us about the company’s social media strategy and how you engage customers online.
We are focusing on being her friend first. We are looking to build a relationship with her to build long term loyalty and we are doing this through a social and mobile first strategy. We just want to have a conversation with her throughout her day and be a true friend in a non-commercial manner.
What are the company’s key initiatives for 2016?
We are finding that there are many women out there do not know about Ashley Stewart despite its long history (it was founded in 1991) and national and international footprint. Fueled by our new technology and CRM driven culture, our E-commerce and social media efforts have taken this brand to new heights and visibility.
When I first parachuted in during the summer of 2013, the company did not even have wi-fi at its corporate offices. We are now on the cutting edge of digital engagement, boasting one of the most engaged social media efforts in the world and an E-commerce penetration of about 35% of total sales. Our loyal and expanding customer base is creating exciting licensing opportunities and real estate options.
As the company expands its online revenue, what role will its physical stores play?
With 89 stores across the country, our physical locations have played and will always play a vital role in our relationship with our customer. We are actively looking to expand our store base, and with our improved technological foundation, we are in a position to offer more experiences for our customers than ever bef