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[16 comments]

Modell's CEO gets stung for spying on competitor

March 3, 2014

Mitch Modell, the chief executive of Modell's Sporting Goods, knows something about going under cover. Back in 2012, Mr. Modell changed his appearance to participate in the "Undercover Boss" television show on CBS. But now, a lawsuit alleges Mr. Modell took his undercover work too far by pretending to be an executive with the Dick's Sporting Goods chain to gain access to confidential business information.

According to a lawsuit filed on Feb. 20 in Mercer Country Superior Court, Mr. Modell visited a Dick's location in West Windsor, NJ and claimed to be a senior vice president who was waiting to meet the chain's CEO Edward Stack. Mr. Modell, it is alleged, persuaded employees to show him around the store and answer questions about store operations.

Neither Modell's nor Dick's would comment on the suit.

Discussion Questions:

Are you surprised by the allegations made by Dick's Sporting Goods against Mitch Modell? How important is competitive intelligence to success in retailing today? What are the best legitimate ways to gain intelligence on competition?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How important is competitive intelligence to success in retailing today?

Comments:

If true, it rates up there with Hugh Grant hiring a hooker in Beverly Hills! "What were you thinking?!"

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Bob Phibbs, President/CEO, The Retail Doctor

In my opinion, you must be who you are to properly and fairly collect info from your competitors. I have been in the very competitive retail tech world for 33+ years and never "mis-represent" who I am. Many in retail say it is impossible for me to do that anyway.

The internet is packed with legal info that can help retailers learn about others who want the same chunk of their shoppers' wallets. No need to do things like the Modell move. I might guess that Mitch felt sneaky and like a 007 retail spy, and it hyped him up a bit - but still not legal and leave the heavy spying to movies and non-USA government hackers.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Bad form, Mr Modell! I'm sure he would like to go back in time and change his approach to gathering competitive intelligence. Nonetheless, this isn't a very ethical approach to doing business.

It's not too hard to learn what the competition is doing these days. Staff move around from retailer to retailer. Reporting requirements force retailers to put out a lot of info. And, best of all, you can shop anyone's stores at any time ... without a disguise!

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Kevin Graff, President, Graff Retail

If this allegation is true, it would be crossing the line in my opinion. Competitive intelligence is important, but can be gained through industry excepted and ethical means including mystery shopping and crowd sourced solutions like Rewardable (disclosure, I am an investor in Rewardable).

I also believe it is okay for an executive from one company to visit stores of a competitor as long as that executive does not impersonate someone or attempt to gain access to areas or information that would only be available to the employees of that company.

Store visits of your own stores as well as competitors is important and you can learn a great deal by just being a regular customer. No need to cross the line.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

I am surprised since what he allegedly did goes beyond looking at the public space of a store (which is fair game for everyone), there is no need for that given there are other ways of getting research. For a CEO to personally do this brings a lot of risk to the company.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

This is undoubtedly the strangest story to appear here for a while (except, of course, for any story about Sears).

If it's true (and I would assume it's not) it would show an almost reckless disregard for Modell's own public relations. Let's hope that Mr. Modell's calendar will show that he was anywhere other than West Windsor, NJ that day.

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Cathy Hotka, Principal, Cathy Hotka & Associates

So, Mr. Modell was curious about how Dick's runs its ship-from-store operations and he persuaded staffers to let him have a look in the back room. Clumsy of him to get caught in the act, when he might have easily sent a hired hand to impersonate a job applicant instead.

Lying about his identity is certainly sleazy, but probably won't result in any major consequences. I also doubt he learned a great deal.

Competitive intelligence is a business necessity in retail, since shoppers set performance expectations based on their experiences elsewhere. A good way to gather insights is to make periodic purchases from competing stores or online sites. It's legitimate to visit the public areas of stores and to hire third parties to make similar visits.

It's also probably a good idea to monitor competitor's social media streams and employee gripe sites, resources permitting. You never know what useful nuggets might surface.

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James Tenser, Principal, VSN Strategies

If it actually happened, it would be a dumb move. As a consultant who works in the retail field, I often go into company locations mainly to apply for a job just to see what the hiring process is like. (As an aside, most companies should shop the hiring process at the store level.)

My finding are that managers in stores will tell you almost anything if you ask them. For example, a few weeks ago I was contacted about doing a presentation for a retail organization. I want to learn more so went to a local store and told them I was a consultant and want to gather some information. I got more than I ever wanted to know.

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Mel Kleiman, President, Humetrics

What a bad move on his part, assuming the allegations are true. There have always been store visits by competitors to gain some competitive information. But this is going over the line.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Retail spy gate. I'm only surprised that this is news. Of course all retailers mystery shop competition and ask questions of the store team. It crosses the line when someone misrepresents who they are. I've shopped competitors in the past and many times you introduce yourself, who you are with, and have a business conversation with the management in the store.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

This is beyond embarrassment and will certainly play heavily on Modell's employees' long-term plans to stay with the company. It will also be the reason behind any difficulties the company has in finding high quality recruits willing to sign on.

As for the competition, I would be much more interested and in tune with what my customers' needs and wants are. The competitions' customers are a secondary priority.

'gjarnoldjr'

Most surprising - to me, at least - is that Dick's would want to admit to having been duped: what do they hope to gain from this...having Mr. Modell brainwashed?

'notcom'

Actually there are a lot of us out there that have made a career and a good living doing this. What surprises me is Mr. Modell did not hire a professional and risked doing it himself. I'm not so sure there are any real legitimate ways to gather good competitive intelligence. If there were, people like me would be unemployed.

Like Mel Kleiman says, most managers are more than willing to tell you what you want to know. The key is to get them to want to tell you.

I think most people who are reading this have no idea just how far competitors are willing to go to get information. Just how far does the CIA or the FBI go to gather intelligence on our enemies? Telling a little fib and asking questions is about as far as most need to go. Perhaps getting "lost" looking for a bathroom and taking a quick pic of data on the wall in the back room. Debriefing former employees is common. Social media is a great place to find find fired or retired execs willing to do some "consulting." In my opinion most of the intelligence info gathered is harmless to the victimized company.

David Livingston, Principal, DJL Research

As a journalist, I have found that over the years, Modells is one of the toughest retailers from which to obtain information. The fact that the boss relies on deceit to find out what is happening in the marketplace says a lot about his company's culture.

David Schulz, Contributing Editor, HomeWorld Business

With cameras everywhere, I'm a little surprised that Mr. Modell didn't reason it out that someone would "go to the videotape" upon second thought after his visit, or that this wouldn't be a topic of discussion with the District Manager. Executive visits are always communicated from store to store.

I'm also a little surprised that with all the policies against distributing proprietary knowledge, the employee or manager did not ask for ID.

As positive the public relations for Undercover Boss were, this just doesn't look good for him. He couldn't get an underling to do this? I don't believe it will have any impact on shaping his customers' buying decisions or his sales. Along with industry reporting services and media, having good relationships with vendors can be helpful in attaining credible information.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

It seems highly unlikely that this story as related is true. However, the perception that it could be true is highly damaging and is likely based on some kernel of truth. Competitor intelligence is very important, but as many here have stated, it is fairly simple to obtain through ethical means. In today's world of almost complete transparency, any actions of this nature are both stupid and irresponsible. Let's hope this is not another story of power creating a feeling of invincibility, leading to unethical behaviors.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

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