Retail's Mr. Fix-It, Allen Questrom, appears headed to Wal-Mart's board and he's got some strong opinions about the world's largest retailer.
Apparel is one area where Questrom, who has been nominated to the board and will stand for election at the annual shareholders meeting on June 1, believes he can be useful.
"They think they're not doing a good job with apparel and see that as an opportunity," he said in an interview Monday. "They're never going to be a leader in fashion apparel. That's not their calling. But can they improve on that, sure they can. Can they improve on other [methods] of presentation? They're not going to be seen as Target, nor is Target going to be seen as giving best prices because their margins are 10 points higher than Wal-Mart."
Repeating a company mantra, Questrom said, "Wal-Mart gives the lowest prices on everything and has made an impact on the standard of living of middle [income] America and lower [income households]. It's done more to keep inflation in check and that's what it will continue to deliver to the consumer."
In addition to contributing to strategy and merchandising, Questrom sees a public relations role for himself on the board.
"They have recently been beseiged by a lot of nonsense," he said, referring to criticism of health benefits, pay and other issues. "They are a lightning rod." Wal-Mart's critics don't know the facts, Questrom said, and the company hasn't done a good job of communicating the facts to the media and public. "They haven't done a lot of advertising or spent a lot of time on p.r."
This is the first time Wal-Mart has chosen a former retail executive to be a board member since 1993, the company said. If elected, Questrom will bring the number of directors to 15.
Questrom, who has more than 40 years of retail experience, engineered Federated Department Stores' takover of Macy's in the early Nineties and orchestrated the successful turnarounds of Barneys New York and J.C. Penney Co.
He is expected to lend credibility to the panel, along with expertise in fashion. Questrom is also seen as providing insight into relatively upscale products, a direction in which the company is moving as it approaches saturation in rural markets. To grow at a rate shareholders find acceptable, the $344.9 billion retailer is seeking to move into urban centers where customers demand higher quality, fashion-forward apparel and well designed home products."While at J.C. Penney, Questrom helped the company sell its Eckerd drugstore business," Deborah Weinswig, a retail analyst at Citigroup, wrote in a research note. "We believe he could be beneficial in helping Wal-Mart realize the value of Sam's Club."
Wal-Mart president and chief executive officer H. Lee Scott and Rob Walton, chairman and son of the founder, courted Questrom for years before he agreed to take a board seat. "About nine months ago I said I would consider it," he said. "I've always had a high regard for the company. I thought they did [certain] things better than any other retailer, especially operations. I thought I could learn from them, and they could benefit from some of my experience."
Retail experts stressed that the board, with a solid voting bloc of five Wal-Mart family members and former executives, will need to be more open and less insular and entrenched than it's been in the past.
Questrom has been a member of the Sotheby's board since 2004. He joined the board of Jones New York in 2005 and resigned his seat this year. Questrom has worked for Lee Equity Partners, a private equity firm, since August 2006. Asked whether he's working on any deals, Questrom said, "I couldn't tell you if I was."
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