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[22 comments]

Where have all the retail merchants gone?

June 20, 2014

For almost as long as I can remember, people in and around retailing have been wondering where all the creative talent has gone. I can distinctly remember one conversation about whether the rise of cookie cutter chain stores would spell the end for "merchant princes." (Yes, that was the term used.)

I recalled that particular conversation based on an insight from Lee Peterson, EVP creative services, WD Partners, shared on this site yesterday. He wrote, "The retail industry has been systematically eliminating (or driving off) what I would call 'natural' talent for years. Requirements for staff to have MBAs, the hiring of former CFOs as CEOs and the focus on data more than instinct are just a few of the factors that have caused that. People like Mickey Drexler, Grace Nichols or Les Wexner would have no chance in today's retail leadership scenarios."

While not directly applicable, I also thought about a Domino's commercial that introduced three employees that pursued art outside the workplace. One was watercolorist, another a glass blower and the third a muralist. The point of the commercial was to connect the talent these individuals display outside Domino's with the chain's hand crafted pan pizzas. I have to admit that after seeing the spot, I wondered if people bought the message. Terms like creativity, artisanal and hand-crafted are not what come to mind when I think of Domino's. Cookie (er, pizza) cutter is a term that does.

[Image: The Watercolorist]

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Discussion Questions:

Do you agree that much of the natural retail talent in society is finding work in other industries? What must retailers do to attract and retain the next generation of merchants?

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:

Do you agree or disagree that retail industry employment practices have been driving off natural talent for years?

Comments:

I totally agree with Lee on this. Of all the cool or sexy industries that young people or students would likely name as being of interest to them, I don't see retail on the list. Maybe as a near-term job, Apple stores or a couple of surf/skateboard chains, but still they would mostly be sales help in those places with no path anywhere. Someone with creative interests or wanting to challenge themselves will look to other industries.

The only hope of changing this in my view is to break the heavy top-down hierarchy and move creativity and individualism to individual stores where management/staff can run their own ship more. While this is unlikely due to the nature of supply chains and merchandise acquisition, doing so might not only attract more creative long-term help, but create better brick-and-mortar customer experiences.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

I remember reading Peter Glen's story of how Bloomingdale's sent their buyers to China to fill up a container-load of merchandise to sell. They created the marketing piece first, then went to find the merchandise.

I can't imagine a major store doing something like that today, as it doesn't pencil out: "How will we push it back on the vendor if it doesn't sell? Where's the co-op? We have no prior history with this line."

The bean counters are in control of much of retail now, which is telling, as so many are struggling and thinking that an interface with a machine is "engaging the customer."

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Bob Phibbs, President/CEO, The Retail Doctor

The real goal has to be attracting the next generation of thinking merchants. In my view, what is needed in retail are leaders asking just one question: "What is possible?" Until we realize there are viable possibilities far beyond our current reality we're doomed to race to the bottom.

Some industries are more resistant to new thinkers and new possibilities than others, governments for starters with universities coming in a close second. Let's hope retail isn't at that end of the continuum. I've often used the concrete industry (the most used man-made substance on the planet) as a bad example. According to their Strategic Development Council, it "typically takes about 15 years for new concrete technology to become widely available to the marketplace."

The funniest line ever is the next one: "Fortunately the industry is committed to reduce that time to two years by the year 2030." In other words, their "fix" for the lack of innovation and creativity takes longer than the problem they're trying to solve. And you think retail has problems?

I have a feeling that the most annoying thing to a store manager is some newcomer with a lot of ideas. The knee-jerk management response is to shut them up until they learn the old, tired ways. This may be the poster child for illogic.

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Ian Percy, President, The Ian Percy Corporation

Total agreement. Our data is showing us that today's merchant is very enamored with technology. On the surface that sounds great, except I think the art has most definitely suffered.

I think we're also, as an industry, so enamored with "brand" that we forget about that thing called "product."

But I also think the shift to product development in China, even outsourced to companies like Li & Fung, has stifled product innovation. It's always about going cheaper, rather than more interesting.

When the newest tech gadget makes a bigger fashion statement than the latest clothing styles, something has gone horribly awry.

It's time to let the pendulum swing back. Honor the artist. Let assistant buyers work "the numbers" and we'll eventually get back to the middle.

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Paula Rosenblum, Managing Partner, RSR Research

It's tough not to play it safe. However, those retail and CPG brands that do go out onto the skinny branches will sometimes fail, and most often succeed. Try something new. Look back 20 years ago at a failure and see if it was ahead of its time. I have seen that work countless times.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Talent will flow to fields where opportunities exist and creativity is valued. The rise of the Internet over the last 20-plus years is clearly siphoning off many creative types from more traditional industries. Smart retailers recognize this and are taking steps to provide those opportunities. For the ones that don't, their star will fade and new companies will emerge in their place. This is what Joseph Schumpeter would refer to as creative destruction.

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Bill Davis, Director, MB&G Consulting

The creative talent pool is there, but they are seeking self employment, such as food trucks, custom artwork and handbags. Others are seeking high-tech design services, and there are many others frustrated, who can't find their dream job. How many of us have a dream job where your only problem is, "what time is lunch?" and going to your favorite event (with VIP tickets provided for free of course)?

A dose of reality for the younger generation is hitting home, as the economy is not able to absorb the creative young talent into the workplace right now. The strong-willed, hard driven types will always succeed at some level, and the capital needed for a start-up business is extremely difficult to obtain, plus Mom and Dad are not able to co-sign on the loan these days, as they are hurting too.

There are some amazing retailers out there who are always looking for talented people, and the best ones always rise to the top. Keeping them happy is another story, as the money-plus-benefits to retain them is out of reach for most businesses, who do not have deep pockets. The food service industry is a great place for young chefs to build a career, and even start their own restaurant, and the demand for computer engineers far exceeds the supply right now.

Yes there is a demand for talent, and how the marriage works is the trickiest part, but it can be done.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Functions evolve as business evolves. Accounting may serve essentially the same goal of counting and consolidating widgets or dollars, but how that is done has dramatically changed over the decades. Similarly, being a merchant may remain essentially the same: buying goods based on anticipated demand at a price that allows for profit when sold; yet, how they go about doing that has dramatically changed. As long as there is uncertainty in demand and in identifying trends, there will always be risk. That risk is minimized by the experience of the merchant and identifying the right data and the "right" interpretation of that data.

That process has a lot of "swing and miss", with the occasional home run or even a grand slam. With enough of these successes, the merchant builds a mythical cult that is nearly impossible to sustain or to turn into a framework for developing future merchants/retail leaders. It becomes a repeatability issue.

Retail is not engineering or science in the sense of exact and repeatable cause-and-effect. If it were, that predictability would make it extremely boring and it would become a pure commodity at all levels. What I see is that merchants need to redefine their function (and it varies by segment and individual retailer strategy) in the current sea of technology and consumer power, to find that "balance" along the creativity-efficiency continuum.

So, while we may lament the creativity-efficiency dilemma, this tug of war will never go away. Merchants are caught in those crosshairs as they create a new generation of retail merchants.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

The problem is cultural—spelled with both an upper and lowercase "C".

Let's start with the meta-cultural issue. Creative people today are drawn to media, technology, software and other industries that—as my friend Ian Percy might say—expand the art of the possible.

Bill Gates never got his Bachelor of Science, let alone an MBA. Ditto for Steve Jobs or brilliant cyber-innovators like Jaron Lanier.

Why?

Because the digital revolution was built on talent, creativity, vision, passion and accomplishment; not credentials, abilities to climb ladders and conformity. Oh, and you don't have to spend 18 years on the night shift in order to advance.

Now for the lowercase "cultural"—as in, American business culture. My over-long stay in corporate America has confirmed a sad truth told to me decades ago by RetailWire's own Gene Hoffman—nobody in business ever gets fired for being negative. They only lose their jobs when they take a risk that doesn't work out.

As Gene told me when I was but a lad, if he has an idea and I vote against it, there are two possible outcomes. The first is that he tries it and it fails, in which case he is tossed out of the company and I am rewarded for my foresight. The other is that he tries it and it works. Now, in this case he may be promoted but I will most likely be seen not as a negative paragon of risk aversion, but rather has a prudent—if conservative—guardian of corporate assets; maybe even "the voice of sanity" in a world of crazed creatives.

Retailing is driven by consensus, imitation and a focus on short-term returns—hardly the stuff dreams, or dreamers for that matter, are made of.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

It's going back to the future. Consolidation leads to "bleh" experiences eventually.

The passion for making money from the value-added sale of merchandise is lost in a publicly-traded corporate world. The thrill of merchant retail is in creating money through building a base of customers who come and buy like crazy.

I put my faith in independents who design and source products and create a clientele who keeps coming back for more. It is difficult and near impossible to do this today, but that is what will inspire the next generation of true retail merchants.

Then the next generation will sell out to the big guys who'll destroy the passion and the cycle begins again. Back to the future all over again.

Sid Raisch, President, Advantage Development System

Retail talent and leadership was needed when Sam Walton was alive. He envisioned a great opportunity that wasn't being filled and he fulfilled it very well. That type of opportunity still exists today but highly-talented men and women—financial, entrepreneurial and opportunistic—are usurping large parts of the traditional retail world.

To attract and retain the next generation of merchants, those potential merchants must come out of their shielded shells and create new retail paradigms that inspire people to want to be included. Yes, someone will revolutionize the supermarket industry and other parts of the retail world.

Is that possibly one of our readers? We should encourage and finance such dreamers and let the next generation be part of helping to build that dream.

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Gene Hoffman, President/CEO, Corporate Strategies International

I believe that as the "Store of the Future" evolves, we are going to see more and more opportunity to entice the creatives back to retail. Look at Apple as only the tipping off point.

There are some great minds out there who are starting to look at what the store of the future just might look like, and it involves great customer experiences as well as services like never before. I recently visited Chick-fil-A's innovation lab called "The Hatch" and guess what, folks? It was conceived and run by a design school student.

My good friend Mike Wittenstein is one of the customer experience guys who is very involved in this thinking and it gets me pretty excited! And that is worth more than my two cents!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

I'm not going to name names, but the problem is many retailers have gone to a formulaic approach and this approach has proven to be no fun for creative talent to start in. I know this is why I do not work in the retail industry and was turned off in my early 20s and now in my late 20s have only seen the talent-crushing situation in retail get worse in the past 5-to-7 years.

The best people start at the store level. But too many retailers today look for the warm body to get hourly, then look for a manager who just takes orders from above and doesn't get to merchandize their store. The best merchants started in stores, but if you don't give people at store level a chance to make those key decisions how will you have anyone to promote up to regional or corporate positions? You won't. So you hire outsiders or inexperienced people at the corporate level who do not understand the stores or the customer. You can see why retail-at-large is not doing so well. Sure, in each industry, take grocery and take department stores, you have many struggling formula-based companies and a few outliers that are a bit more localized doing well and showing steady same-store sales gains.

It also doesn't help young people take retail seriously as a career when it's so hard to get over 20 hours a week working retail. Some younger early-20s people I know working retail at large clothing chains get as few as four hours a week sometimes. People don't like getting jerked around.

Mike B, Storewanderer, None

I believe this discussion gives too little credit to the online retail innovators, who may constitute the modern cadre of merchant innovators, big and small. What about Tony Hseih of Zappos? The co-founders of BaubleBar, Amy Jain and Daniella Yacobovsky? Even the dreaded Jeff Bezos?

Let's also not overlook the several fine university programs that are preparing young people for careers in retail leadership: University of Arizona's Terry J. Lundgren Center; The Center for Retailing Studies at Texas A&M; the Center for Retailing Excellence at University of Arkansas; Santa Clara University's Retail Management Institute.

These institutions and others like them are attracting and preparing talent for the current retail era. The funding behind these programs comes from the nation's largest retailers. Yes, Walmart, Target, JCP and Kohl's all recognize they have no future without them.

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James Tenser, Principal, VSN Strategies

No. Mickey Drexler, Grace Nichols, and Les Wexner all had the benefit of leadership from above to help them understand the larger aspect of the retail business—product, service, customer focus, merchandising quality, importance of location, price/value, hard work and hustle, building a team.

They didn't just wake up one morning and put pretty colors together. These "Merchant Princes" showed leadership, and an ability to get to the market and store, because they had leadership that was demonstrating that, and asking them to do it as well.

Retailing is a big casino game. Macy's is winning now because guys like Terry Lundgren are working to prepare the next generation of leaders. Sam Walton took that step. So did Kohl's leaders. They involved their people in the complete business. And then, they made certain their people grew professionally and financially—making work FUN.

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Roger Saunders, Managing Director, Prosper Business Development

I agree that's certainly the perception; and to the extent that it's true I think consolidation in the retail industry, and publicity given to the huge compensation in other fields can be blamed. (And THAT's an issue that's been a long time in coming: thirty years ago in college I can remember pointing to the hefty mass of Barker Bros—the accounting textbook had a picture of downtown LA on the cover, and quipped that the big money was in furniture...in response someone pointed to the skyscrapers behind it and said "no, the BIG money is in banking.")

But I'm dubious how true the perception really is; I think a more reasoned response would be that in every field, innovation has become much more data driven, and it's harder to succeed simply by being "naturally" talented.

'notcom'

The larger the number of stores, the fewer merchants, thanks to the indispensable cookie cutter mentality. This mindset has been made more indelible simply by renting high visibility in-store locations to vendors seeking to insure that every customer sees the new whatever it is. Are these sound business decisions? Well of course not. And the reason for that was discussed yesterday under the title "Where have all the retail CEOs gone?"

'gjarnoldjr'

There is natural talent at all ages. The opportunity for the talent to be found is difficult due to online applications. What happened to meeting the person and seeing their drive and enthusiasm?

I am a merchant and will mentor merchants. But for me to find a great career with my past experience, success, leadership skills, etc., these qualities have no weight with the current hiring process. They don't "see" I love the industry, love to coach and develop the next generation.

Most of the great merchants can't get past the process of getting an interview, hence no mentors are staying in the industry. I am ready to lead a company to success and train the team that when I leave they are the candidates for many of the next positions.

'zmw91'

Yes. Yet, most of it is due to financial pressures either from excessive debt or Wall Street. Those that flourish in the the face of the giants like Wegmans, Whole Foods, Sprouts, Costco, etc. still nourish that talent. Albeit a small group, they focus on fresh, unique, and creative merchandising and are still attracting talent.

Gary Doyle, Founder, The Doyle Group LLC

This is my experience of what has changed in retail since I started in the mid 1980s:

  1. Retailers no longer want to invest in extensive management training programs for management because of cost and fear that the well trained management will be sought out by the competition.
  2. Retailers are reluctant to properly train good hourly employees (potential natural talent) and promote them. The retailer is more likely just to promote them as a cost savings measure to the company rather than viewing it as an investment in the future of the company.
  3. Too much emphasis on degrees. We have too many examples of successful people such as Ralph Lauren, Bill Gates and Michael Dell to name a few who did just fine without one. This prevents good employees without degrees from moving further up to upper organization.
  4. The reason we may be losing people to other industries is because we're hiring the wrong people. The employee may have been educated in another field and/or really never had an interest in retail, but it was a just a job until something in their field of study came along.
  5. Retailers are being held hostage by shareholders. Decision making is not necessarily in the best interest of the retailer any more. We now have to change the board, fire the CEO and shake-up upper management whenever a mistake is made or they don't like the numbers rather than learning from our mistakes, implementing new plans and moving forward. Shareholders just have no patience for it; sales dropped...time to clean house. Shareholders don't allow us to retain good talent.

Through my 25+ years in retail, I have worked with some great people and what bothers me the most is that some of the best and most successful people in retail that I worked with wouldn't be given a chance today, and that is where our talent has gone.

'LarryEC'

There are few attractive opportunities in retail for college graduates. So why are we surprised about the lack of natural talent?

The answer to the question about attracting and retaining is obvious. Make retail careers attractive.

Regarding creativity, I have no doubt that the restaurant industry is creating paths for success. It seems every week a new chef breaks into the limelight. Sadly, in retail, the lights are often dim.

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Christopher P. Ramey, President, Affluent Insights

Unfortunately, I would have to agree. From a quick straw poll of some of the Millennials I know, most brick-and-mortar chains have lost their appeal to the younger, thriving generations of today. In fact, it's almost dreaded to get a job in retail now. There's barely any room for error, let alone creativity.

I think it really comes down to risk/reward. What is the retailer offering in terms of responsibility, growth, advancement, work/life balance, compensation and other factors, and how do those compare to the other options available? From what I can see, it is the successful retailers, and the innovative ones, that are most likely to attract great talent.

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Alexander Rink, CEO, 360pi

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