Gary Hoover is a serial entrepreneur and a retail history buff. He began his entrepreneurial journey at an early age, and to quote his blog, he was “convinced that the best way to change the world (for the better) was to lead or create enterprises.” Gary started subscribing to Fortune Magazine when he was 12 years old, and while other kids were playing baseball, he was memorizing the Fortune 500.
He kick-started his entrepreneurial adventure by launching BOOKSTOP in 1985 – the world’s first book superstore, which eventually sold to Barnes & Noble and became the cornerstone of their nationwide retail chain. He later went on to found Hoovers.com, the world-renowned business information resource, which was acquired in 2003 by Dun & Brandstreet.
Today, Gary speaks around the world to entrepreneurs and Fortune 500 executives about the history of retailing and the future of entrepreneurship. I asked him a few questions about where retail is headed and how brands can become more customer-centric than ever by observing history.
You are a retail history buff. In your research, what is the determining factor of long-term success for retailers?
Great merchants are those who love people (especially customers) and love merchandise. Ultimately nothing has altered the time-honored concepts of the right item, at the right time, at the right price, at the right place, in the right quantity, for the right customer. Everything else is bells and whistles on this basic premise. Retailers who believe that the core of their business is about financing, real estate, mergers and acquisitions, distribution centers, etc., are usually distracted from what matters. All these things do matter — and for most retailers, being productive and efficient is critical.
But at the heart of the matter, we retailers buy things at one price and sell them at another, breaking bulk in the process. Strategic and other distractions cannot save bad experiences on the selling floor and at the cash register, whether virtual or bricks and mortar. Is your CEO on the golf course, behind the desk, at a seminar, in a meeting with investment bankers, or is he/she hanging out in the stores? That is the only place where real money is made.
The key is delivering value (not price). What does your customer get for what they pay? Does it exceed their expectations and your competitors? How clear and focused is your message and your offering? Retailing is not rocket science.
What are the indicators of a customer-centric brand?
I am not sure a brand can be customer-centric. Only people can focus on customers. And all businesses are customer-centric whether they think so or not. It’s just that some are focused on screwing their customers while others focus on making customers’ lives full of delight, and everything in between. Those who don’t cherish and respect and innovatively serve their customers will not be long for this world. Ask General Motors, which celebrated its 100th birthday by going bankrupt. I think the word brand is so overused that it has lost much of its meaning. Tide, Crest, Pampers, Colgate, Arm & Hammer, French’s — those are brands. Operating a store is a different trip, especially a general merchandise store like Macy’s, Wal-mart, or Target, selling a multitude of diverse brands within the house. Those who obsess about products, services, customers, their needs and wants, and their experience, win the battle. Buzz, market share, product or service reviews by experts and mortals alike, and shelf presence all factor into measuring the success of your efforts.
What are the most exciting announcements or developments in the retail industry?
I find Ron Johnson’s move to JC Penney very exciting. This is a great old company and he is a fine merchant, trained at Target and refined at Apple. Penney is big enough and it’s not too late to make it super-great again. His combination of customer experience experimentation (Apple Stores) and fundamental merchandising skills (Target) make him the ideal guy to rock and roll. But it won’t be easy and it won’t be overnight.
Outside of that, most big players are just playing out their hand or tweaking it. The recession has not been good for bricks and mortar retail innovation. The big news of the era is the globalization of retailing. Wal-mart is doing amazing things in China, Mexico, and elsewhere, as are many other players. Of course ecommerce continues to blaze new trails, like Zappo’s and Tom’s Shoes etc.
Apple is growing like crazy. What should they be cautious of?
Arrogance and hubris are often the downfall of great companies. Apple seems to have plenty of both, which they actually weave into their culture and positioning. Not unlike Rolex or BMW. It strikes me there is some risk there. Really great companies maintain some level of humility. Apple has had an uneven playing field in that none of their competitors has been focused on the customer experience. The other forces in hardware, except some of the Asians, seem to have peaked, as have most of the software companies. The cell phone makers, again outside the Asians, have been dead in the water, making generally poor substitutes for iPhones. But things likely won’t stay this easy, with the rise of Google’s Android and Amazon’s Kindle.
Their real risk, though, is that they turn their focus to short term profits rather than long term innovation, which seems riskier to some business leaders. GM, Sears, and many others led their fields when they were customer-obsessed, but when growth slowed they turned their focus to short-term thinking and secondary factors.
Can Steve Jobs imbue his company with his DNA the way Sam Walton left his mark on Wal-mart (which incidentally is an amazingly humble company for one that does $400+ billion in annual revenues).
Is 3D printing a threat or an opportunity for the retail industry?
Too early to tell. Should be an opportunity for retailers who figure out how to play a role in testing and delivery.
What is the single most important thing a retailer can do in the next year or two to meet the rapidly changing consumer demands?
Focus on the merchandise and the customer. Who are the cool, upcoming vendors? Who has something new and different? What are customers interested in, what do they spend their time on, and how is it changing over time? In some cases, the more things change, the more they stay the same. An aging baby boom will still be into music and lifelong learning, but most marketers are not paying much attention.