“Change or Fail”

These words cast an indelible impression on me as Don Fisher, Co-founder of Gap, Inc. sat on a solitary stool alone on a stage in front of over 3000 store managers and senior management from around the world in Las Vegas, Nevada in the late nineties. This was his mantra and he wanted to share it with everyone in the company. His deep baritone cast a spell on the audience as the white on black words appeared on three screens surrounding him on that stage.

He spoke about the humble beginnings of the Gap concept in San Francisco in 1969 and how he and Doris decided to go into the retail business after being in real estate for his entire career. Now, at 41, he decided to make his first big CHANGE.

His next big CHANGE came as he reached an inflection point in the Gap brand life cycle. He had built a terrific business based on being in stock in Levi’s jeans and he knew he needed to do something to drive his company further 16 years later. Being a real estate visionary and not necessarily a merchant, he decided what he needed was to hire himself a crackerjack merchant, and that he did. Mickey Drexler (now of J. Crew),  from Ann Taylor, was convinced to move from New York to San Francisco and become Don’s “partner” as they liked to call themselves. That was a brilliant move as Mickey effectively turned the company into what it is today, a multi-billion dollar, multi-national concern with four apparel brands (Gap, Old Navy, Banana Republic and Athleta), a burgeoning online business named Piperlime, and brand identities others crave to own.

There were many CHANGES in the business as Mickey helped steer the ship. Purchasing Banana Republic and re-positioning the brand. Conceiving of Old Navy and turning it into one of the largest specialty retail brands in the world. Pushing an online business which is the envy of the industry in performance and functionality. Occupying the best real estate in the country. Expanding internationally one step at a time in Europe and Asia and now licensing in several other countries.

Don was never afraid of CHANGE and as an entrepreneur, one can’t afford to be. He implored everyone in the company to embrace CHANGE and become a CHANGE agent, seeking it out before it is foisted upon us. He was our mentor, our father figure and our friend at the same time. I will never forget him calling me (when I was running Canada for Gap) several times to tell me how much he and Doris  appreciated my efforts on behalf of the company and that he was so proud of me. I will never forget him as long as I live and I will try to do him proud from this day forward.

Don Fisher passed away on Sunday, September 27th at his home in San Francisco, with his family by his side. His incredible legacy endures not only in the company he conceived and continually transformed, but in the San Francisco community, in the world of modern art and in his charitable work, specifically trying to revolutionize the educational system in the U.S. one step at a time. His story is one of humility, of fearlessness, of strength of convictions and of charity.

The true measure of his impact is that his message and his efforts have been and will continue to be felt by literally millions of people. What a life’s work. Rest in peace Don, you have earned it.

TheRetailTherapist

Optimal Retail Part 3

My last installment in this “pause” I am pursuing is regarding the need for productivity. Heaven knows that rents and those dreaded “extras” are making retailers small and large weep on a daily basis. The notion of improving productivity (and its cousin efficiency) must be woven into every initiative a retailer undertakes.

As an example, the easiest one to pinpoint is the largest store expense, (along with the label as its largest “bugaboo”) staff payroll. Almost always measured as a percent to sales, the old fashioned way of detecting an increase in productivity is having the percentage go in a downward direction (often what I call a “death spiral”). This does more damage to your brand and any increases in productivity from a sales perspective than anyone can tabulate.

It is an easy thing to do: Decree to “cut payroll”. The Brick and Sears are living examples right now of what happens to sales and profits when a short-sighted leader announces that it is necessary to cut back hours on the sales floor and that the stores must “hit a number without fail”. I wish it were that simple. The Brick has since come back from the brink of insolvency to add more hours and ensure that customers are looked after and sold some merchandise. What a revolutionary notion!

To be honest, if you operate stores, they are your faces to the consumer. This is what the consumer can touch and feel and see. Why mess it up with some arbitrary goal of payroll percent? If you want to talk productivity, then give each staff member a Sales Per Hour (SPH) dollar goal and track it. Once each sales person accomplishes these goals, you have more than paid for their services, added sales and made customers happy. You have therefore improved your brand position.

Or, you can track conversion, which is my favourite statistic. If you increase conversion (increase the number of purchasers from the actual number of people that wander into your store aka traffic), you are improving productivity. That is a goal worth pursuing in store.

Productivity of inventory is another form of generating cash flow and ensuring smart investments and returns. It is obvious that if the wrong merchandise is bought and is therefore not selling, that affects productivity (not to mention Gross Margin per Square Foot productivity as well after you have to take massive markdowns to clear the slow moving merchandise). But you could have the right merchandise, just not in the right quantities. Or you could have the right merchandise but not in the right places (ie what is selling well in Vancouver is not in Halifax and vice versa, therefore you are sitting with productive merchandise but in the wrong places). This makes the art of allocation, planning and distribution very important. Personally, they should be the smartest people in the room.

Productivity in the distribution centres is critical to ensure timely deliveries of fresh merchandise as well as replenishment of fast selling merchandise. But can your distribution centres turn on a dime, re-route, change their daily and weekly routines based on the trends and needs of the business? A flexible system, along with a very clever and sophisticated software package to analyze the business will yield higher productivities as well.

The final element I want to mention regarding productivity is based on the marketing dollar spent in a particular season or campaign. The question usually isn’t whether the campaign worked or was effective, but how does the campaign get measured? How can we tell whether it was effective or not? How do we pinpoint the exact cause of the dip or surge in sales? Those are questions that should be asked before designing and deciding on a particular marketing program.

In today’s retail reality, productivity is king. Every dollar must be squeezed out of every asset from people to real estate to size, colour and style of merchandise, not to mention vendor.

TheRetailTherapist