Retailers attribute success to out-of-box innovations - Center for Retailing Studies of Texas A&M University sponsors conference - Brief Article

DSN Retailing Today, Oct 2, 2000 by Debbie Howell

DALLAS -- Retailers that put customer service first and aren't afraid to rock the boat when change is needed, as well as create positive working environments for associates, will succeed. This was the consensus of retail executives who spoke at a two-day conference last month in Dallas sponsored by the Center for Retailing Studies of Texas A&M University. Executives from ShopKo, Home Depot, Zales, Garden.com, The Container Store, Zane's Cycles and Build-A-Bear Workshop shared their secrets to success at the 18th annual Retailing Summit.

David Szymanski, director of the Center for Retailing Studies, told the estimated 420 attendees that valuable lessons could be learned from these retail leaders. "These people actually lead change, they don't simply react to it. These are really idea people. They also have a tremendous amount of passion for what they do," Szymanski said.

For regional discounter ShopKo, the key to retail success involved differentiating itself from Wal-Mart, Target and Kmart, which over the past decade had encroached on ShopKo markets. "We no longer could be all things to all people, which we were seven years ago," said ceo Bill Podany.

ShopKo subsequently transformed itself into what it calls an upscale specialty discounter, providing trendy, deep assortments in select merchandise categories. It also provided an uncluttered, easy-to-shop format and made a commitment to having advertised items in stock.

Simplifying the shopping experience became another priority. Podany said both human resources and information systems departments were radically altered, and training was enhanced at all levels.

Meanwhile, Robert DiNicola came on board in 1994 as ceo of Zale Corporation at a time when the national jewelry chain was in bankruptcy. The answer for Zales involved standardization and diversification. Zales also decided to buck the industry trend by putting prices out front in jewelry cases.

The result was emergence from bankruptcy and a 94% increase in revenue to $1.79 billion in 1999 compared to five years prior. The average store's sales also grew to $1.4 million during this period, increasing from $700,000 in 1994.

Maxine Clark also appears to have a knack for breaking the mold in retailing. As chief executive bear and founder of Build-A-Bear Workshop, Clark in 1996 started up this unique mall-based store where customers create their own personalized teddy bears. The private company now has 35 stores in 21 states and intends to grow to 100 by year-end 2002. The average store generates $2.3 million in annual sales on a mere 250 skus--virtually unheard of in retailing.

The chain's overall customer satisfaction rating is nearly 90%, and individual workshops must achieve a rating of at least 80% to receive bonuses.

Although it stresses customer as well, The Container Store pushes the envelope in employee satisfaction. The chain, recently recognized by Fortune magazine as the "best company to work for in America," pays its associates up to double the industry average, provides part-time workers dental and medical benefits and has flexible shifts for associates who want to be home when their children get out of school. The Container Store also strives to hire "great" people--the equivalent to three "good" people, according to president Kip Tindell.

Taking customer satisfaction and service to the max is Zane's Cycles. Owner of a single-store operation in Connecticut generating $4.5 million in annual sales, Christopher Zane oversees one of the nation's top 25 retail bike stores. His store's success is due largely to unprecedented levels of customers service.

Zane said the shop provides "more service than you believe is reasonable" to establish a loyal customer base. Examples include free lifetime service and parts warranties on bikes purchased, as well as giving away any item in the store that is $1 or less.

A leader in the newest wave of on-line sales, Garden.com has been at the forefront in developing a comprehensive gardening destination that, like other dotcoms, has yet to show a profit. But founder and coo Jamie O'Neill said the company continues to build sales and a customer base. He said blending content, community and commerce are critical to any site's success, as is personalization.

One example using effective personalization is Bloomtimes, a regionally specific e-mail newsletter sent monthly to 1.2 million Garden.com members.

The final retail speaker at the conference was Jerry Edwards, president of Home Depot's southwest division. Edwards pointed to outstanding customer service as the most significant contributor to the company's financial success. The company that generated $38.4 billion last year has grown to more than 1,000 stores worldwide, including Home Depot stores and alternate formats Expo Design Centers, Villager's Hardware and The Floor Store.

The company's strengths include offering the lowest prices, wide assortments and outstanding customer service.

Edwards' quip that Home Depot would take stores to the moon if possible, captured the essence of the conference.