A former top marketing officer for such department store chains as P.A. Bergner, Saks Inc., Bon-Ton and Carson Pirie Scott & Co. in the Midwest, Ed Carroll has chaired the Retail Advertising and Marketing Association and the Global Retail Marketing Association. Now consulting as Enabling Growth from his Tierra Verde condo, the 63-year-old Carroll has strong views about whether department stores are endangered, how retailers cannot ignore mountains of shopper data they gather and how technology does not change the holy grail of retailing: Know thy customer.
You were a field infantry officer in Vietnam. What was the most important leadership lesson?
Never ask anyone to do something you wouldn't do yourself. After the Army, I got my MBA and had offers from St. Regis Paper, Xerox and a company that owned food and department stores. I went with something familiar and found I have a real passion for retailing. I recall Allen Questrom at JCPenney saying, "Our job is making people happy."
You survived eight department store chain consolidations. Any advice?
That it takes at least two years to fully integrate after an acquisition. Stay focused on the brand promise because a lot of the assimilation outcome has to do with the surviving corporate culture. The most disruptive merger I experienced was a Swiss-owned department store chain based in Peoria that bought a bigger century-old Chicago department store. We learned too late that we inherited dated suburban stores, the restaurant concession at O'Hare and a resort.
Department stores once tried to be all things to all people, but it's been a declining industry for 30 years. Are they an endangered species?
They are transforming themselves. The key is identifying market segments you can realistically appeal to, then becoming the destination for a complementary collection of them big enough to achieve economies of scale. That means an incredible amount of research to identify and learn everything about the customer. Stores have massive amounts of information about her — and I say her because that is 75 percent of customers — in their credit card purchase history. We also surveyed 25,000 customers a year, then verified they actually did what they said. You buy third-party information to identify households by lifestyle using lists like magazine subscriptions and buying history from other cards. Vendors will quantify unfilled opportunities by store by comparing what they sell at your competitors in the same neighborhood. When you test something new, it costs little to mail, e-mail or use social media to inform the most likely prospects directly. Retailers intuitively blame the weather for a bad weekend. Today they can buy a weather forecast months ahead tailored for each store and actually know what happened.
How about ad spending?
We once thought the more pages of newspaper ads, the better. We tested more targeted, impactful messages on a one-page ad, an eight-page insert instead of 16. Sales didn't change much. Spending on newspapers has been reduced from, say, about 70 percent of ad spending to more like 50 to 60. Most of the difference went to inexpensive online and social media. But online is no silver bullet. You still need mass media like print and TV to deliver customers. Once you lose a customer, it's very hard to get her back.
How does all this information gathering affect privacy?
Privacy is a government debate, but it's really a trust issue. Once you have people's permission and they trust you to respect them, it can be an incredible engagement tool.
How can department stores wean customers off deep discounting?
By using research to identify their best customers, then reward them. Department stores always will need a certain amount of discounting. But it's really about getting the right offer for the right product in the hands of the right customer.
Who are today's top retailers?
Costco, because what they do is very simple and they execute it so well day in and day out. For instance, they know good people are a good investment, so they offer a top salary and health plan. People single out Nordstrom for the customer service. Most important is their merchandise and family ownership that has taken the long-term view. They understand what the customer between Dillard's or Macy's and Saks or Neiman wants. And they stock it in enough sizes so if it's not there today, they can have it for you the next day.
So is super-attentive customer service that critical in today's self-service oriented, moderately priced department store?
We beefed up customer service in some stores and compared sales in stores where we did nothing. Results were the same.
Mark Albright can be reached at firstname.lastname@example.org or (727) 893-8252.