The Best Words of Advice & Quotes from 6 Retail CEOs (Howard Schultz & More)

Picture of a journal, cup of coffee and flowers
 

By Tricia McKinnon

Being a retailer isn’t easy. One day you are on top but then technologies you haven’t invested in become en vogue, competitors you never thought would be successful emerge and are taking market share and because of all of this your customers are harder than ever to retain. If you are struggling to keep up here are some words of wisdom from six time tested CEOs in the retail sector. 

1. Howard Schultz former CEO of Starbucks

In 2008 Howard Schultz returned to Starbucks as the CEO of the company after an eight-year hiatus. Starbucks was in deep trouble at the time with its stock losing 50% of its value at one point. For any retailer trying to turn around a business Schultz provides insightful information during an interview with Harvard Business Review on what he did to get the company to get through a difficult period in its history.  

Take accountability

“When I returned, in January 2008, things were actually worse than I’d thought. The decisions we had to make were very difficult, but first there had to be a time when we stood up in front of the entire company as leaders and made almost a confession—that the leadership had failed the 180,000 Starbucks people and their families. And even though I wasn’t the CEO, I had been around as chairman; I should have known more. I am responsible. We had to admit to ourselves and to the people of this company that we owned the mistakes that were made. Once we did, it was a powerful turning point. It’s like when you have a secret and get it out: The burden is off your shoulders.”

Don’t take things for granted

“We had never had much competition. Everything we did more or less worked. And that produced a level of hubris that caused us to overlook what was coming. Big-time people began to notice that this coffee business is a good business and highly profitable.” 

Stick to what you believe in

“You have to have a 100% belief in your core reason for being. There was tremendous pressure in the first three or four months after my return to dramatically change the strategy and the business model of the company. The marketplace was saying, “Starbucks needs to undo all these company-owned stores and franchise the system.” That would have given us a war chest of cash and significantly increased return on capital. It’s a good argument economically. It’s a good argument for shareholder value. But it would have fractured the culture of the company. You can’t get out of this by trying to navigate with a different road map, one that isn’t true to yourself. You have to be authentic, you have to be true, and you have to believe in your heart that this is going to work. Someone said to me, ‘You are roasting 400 million pounds of coffee a year. If you reduce the quality 5%, no one would know. That’s a few hundred million dollars!’ We would never do that.”

Do what’s right

“Our health care costs over the past 12 months were approximately $300 million. [Starbucks offers health care benefits to any eligible employee who works at least 20 hours a week.] The thought that we would cut that benefit—I couldn’t do it. Within this past year I got a call from one of our institutional shareholders. He said, ‘you’ve never had more cover to cut health care than you do now. No one will criticize you.’ And I just said, ‘I could cut $300 million out of a lot of things, but do you want to kill the company, and kill the trust in what this company stands for? There is no way I will do it, and if that is what you want us to do, you should sell your stock.’ What I stand for is not just to make money; it’s to preserve the integrity of what we have built for 39 years—to look in the mirror and feel like I’ve done something that has meaning and relevancy and is something people are going to respect. You have to be willing to fight for what you believe in.”

2. Angela Ahrendts, former CEO of Burberry

Angela Ahrendts was hired by Burberry in 2006 to turn the company around which over time had lost its lustre and started to be seen as a more of a mainstream than luxury brand. In an interview with Harvard Business Review she shares her wisdom about some of the keys to her successful turnaround of Burberry. 

If your employees aren’t using your product you’re in trouble

“When I became the CEO of Burberry, in July 2006, luxury was one of the fastest-growing sectors in the world. With its rich history, centered on trench coats that were recognized around the world, the Burberry brand should have had many advantages. But as I watched my top managers arrive for our first strategic planning meeting, something struck me right away. They had flown in from around the world to classic British weather, gray and damp, but not one of these more than 60 people was wearing a Burberry trench coat. I doubt that many of them even owned one. If our top people weren’t buying our products, despite the great discount they could get, how could we expect customers to pay full price for them?”

Being different matters

“In luxury, ubiquity will kill you—it means you’re not really luxury anymore. And we were becoming ubiquitous. Burberry needed to be more than a beloved old British company. It had to develop into a great global luxury brand while competing against much larger rivals.”

Meet your customers where they are

“To strengthen our retail operation, we decided to focus on markets where our competitors already had a presence, signaling the right kind of consumers to support a luxury brand. As our first blueprint for expansion, we identified every market in the world where two of our peers had stores and we had none. In the past six years we’ve opened 132 new stores.”

Find the white space

“We also began to shift our marketing efforts from targeting everyone, everywhere, to focusing on the luxury customers of the future: millennials. We believed that these customers were being ignored by our competitors. This was our white space.”

“The decision was not without controversy; we were choosing to aim squarely at a generation that had no current knowledge of Burberry’s core product.” 

3. Hubert Joly, former CEO of Best Buy

When Hubert Joly joined Best Buy in 2012 Best Buy’s sales were declining as it lost customers to Amazon which was doing a better job in the eCommerce space. Joly successfully turned around the flailing retailer and during an interview with Business Insider he shared some of his insight into how he turned the company around.

Meet your competition head on

“We decided we were gonna be price-competitive, and that we were going to match online prices. We took price off the table. We had all these customers coming to us, towards our site — I thought these were well-intentioned people — and if they are not buying, and they're not buying online because of price, I could take care of that. If you're asked in your reporting job, "Who has killed showrooming?" I plead guilty — we've killed showrooming by taking price off the table.”

Focus on your why

“We've listened to Larry Fink. I think he's got a great point that, you know, that strategy starts with purpose, or Simon Sinek, strategy starts with why. Why do we exist? We don't exist to sell TVs or computers, we exist to enrich people's life with technology. Addressing their underlying need, and then matching solutions with their needs. And that's the angle we have, which we think is very unique.”

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4. Erik Nordstrom, CEO of Nordstrom

Understand the trends

In an interview with Bloomberg Erik Nordstrom, CEO of Nordstrom talks about the future of retail and what matters.

“Are we over-stored? Oh, sure, we’re over-stored. It’s not a big news flash that America has too many malls, too many stores. And people are online more. Now, are there going to be no stores? Well, of course not. There’s times where, especially what we sell, people like to touch, feel the sizes. I think it’s interesting that our online returns, the vast majority of customers choose to come in a store to do it. We have free shipping on our online returns. But they’d rather come to a store; it’s just easier than putting it in a box. So customers are going to do what they want to do. Our job is not to try to coerce them into a channel or a certain experience that we prefer. Our challenge is to give them options and let them do what they want to do.”

5. John Donahoe, CEO of Nike

In an interview with CNBC John Donahoe, CEO of Nike talks about Nike’s sustainability efforts and why it’s important to look at customers through a single lens.

Sustainability is leading the way

“Climate change is impacting sport. In fact, Tokyo is likely to be the warmest Olympics on record. And so, our athletes care about this topic. And so, Nike is investing heavily in sustainability.” “So, for instance, all the Olympic U.S. athletes that will be on the medal stand will be wearing a Nike jacket and Nike pants that are made of 100% recycled materials. And so, Nike, as I think you know, is the largest recycler of polyester in the world, over a billion plastic bottles are recycled each year into NBA jerseys or the jerseys that the U.S. women’s soccer team wore last year in the World Cup. So, the investment and commitment to innovating in a sustainable way is something that matters to our athletes and to Nike.”

Stop thinking about physical vs. digital

“I’ve said this several times in the first couple of weeks. We can’t be using words like physical and digital. Because that’s not how the consumer thinks. In many ways, every company is a digital company these days. We have the blessing of incredibly innovative products. And the simple question is: how do we allow consumers to get what they want, when they want it, how they want it? Whether it’s digital, whether it’s physical or any blend of the two. And the assets we have and the brand recognition we have, I think give us enormous opportunity to be one of the real leaders in doing that.”

“I think consumers are looking for experiences that get them, as I say it -- I’ll say it one more time, what they want, when they want it and how they want it.”

6. Mary Dillon, CEO of Ulta Beauty

In an interview with Fortune Mary Dillon talks about the importance of diversity and the importance of coming out of the COVID-19 pandemic stronger than ever.

Diversity and inclusion matters

“From day one, I was insistent that every single shoot that we did, every single piece of content and social media really reflected the beautiful diversity of our country. Whether it’s age or race or gender identity, male, female, everybody participates in beauty.” “As an industry, if we can’t be inclusive and diverse, I don’t know who can be.” 

Never let a crisis go to waste

“We are going to be judged coming out of this crisis on how we treated our people, how we treated our customers, and how we set our business up for long-term success.” “It’s about having humility to say, you don’t have all the answers, but the human connection and the trust and respect, to be as transparent as you possibly can.”

 

Tricia McKinnonStrategy & GrowthComment