"We're in a really weird business. It's not predictable. It's about what you feel, what you see and what's coming down the road."
That's Millard "Mickey" Drexler, the J. Crew Group Inc. chairman and chief executive, opining on the fashion/retail industry during his speech at the WWD/DNR CEO Summit, his first appearance at the 11-year-old annual conclave. Discussing his hands-on, gut-instinct and sometimes controversial micromanagement style — and it's rare when he does publicly — he held back little.
At annual meetings and with Wall Street analysts, Drexler has preached the gospel of elevated standards that he and his team have implemented — from the design and fabrications of J. Crew products to some trading up to higher price points without sacrificing lower prices.
However, this was his moment to divulge what he called "the things I wish someone had told me before my first job — or during it — although I probably wouldn't have listened."
In a presentation that was essentially unscripted, Drexler unveiled his manifesto on how to manage a business and treat associates, and spelled out his priorities: accessibility as a ceo, creating offices with no walls, thinking small, having products and people that embody the "It" factor and regularly getting onto the selling floors to fix what's wrong or improve what's not.
He touched upon some of what the future for J. Crew holds, including expansion in the U.S. but not overseas, where he sees other retailers achieving little or no return on investment.
He also said he plans to test a few men's-only stores for the first time, and continue to tailor stores to specific locations. That entails extracting basic items from stores in affluent areas like East Hampton, N.Y. (the top store in the chain), as well as Manhasset, N.Y., and Short Hills, N.J., that are selling at higher levels and layering in better goods.
For the man who spent 18 years at Gap Inc., where he became ceo in 1995 and catapulted the company from $400 million to $14 billion in sales before getting shown the door in fall 2002 after some down seasons, his message really wasn't about his record for sales and store growth or brand development. It was more an occasion to be up-front and personal, and reflect on what he has learned over the years, about turnarounds, for example, or taking a company public, which he did with J. Crew in June 2006, just three years after taking its helm and bringing it back to life.Drexler even discussed the mistakes he's made, and what he fears most in business — launching a new one.
Mickey's Maxims Here, a few of Mickey Drexler's tips for running a successful business.
Don't look at your stock price every day. It will make you crazy. Be in it for the long haul…although I have to say, I look at it day-to-day.
Don't let people call you Mr. or Mrs. It creates a barrier.
Offices should not have walls. It's actually a lot more fun and it creates so much more creative spirit in a business.
Return phone calls in three hours. It sets an example for other people at the company and gets out that you're accessible.
Know what the "It" factor is. I can't explain the "It" factor or why I love it.
Make sure you hire those who have it.
Come to work every day thinking what can I do better?
It's better to make a lot of quick decisions with some mistakes than a few very slow ones.
It all begins and ends with what you're giving your customer. Product, design, color, service, quality.
Profits are the ticket to having fun. Without any profit, there isn't any fun — it kind of sucks.
"We started Hemisphere at Gap. It failed in two years. We shut it down and it was OK," he said. "We're starting Madewell now. If you don't think I'm shaking every day, I am."
Madewell, launched in fall 2006, has six stores operating, offers an edgier take on casual clothes and is inspired by the former New Bedford, Mass., workwear company that bore the Madewell name. The first Madewell store in Manhattan, a two-level unit at 486 Broadway by Broome Street, is expected to open in January.
Drexler said he could have secured a location for Madewell on Prince Street, next to a J. Crew store, and apparently regrets not taking it. "Is it a mistake or not? Don't go there. You'll never know."Another fear that he's overcome, albeit with the help of others, was operating catalogues and online businesses. "I was always very intimidated by the direct business," Drexler said.
The direct business was bankrupting J. Crew when he first joined the company in January 2003, but he hired people who understood the mechanics of "things I frankly don't understand." Currently, direct is J. Crew's number-one profit division and, not surprisingly, Drexler said he loves the business today. "There is nothing better than a catalogue," he said. "It's really even better than the Internet to express the emotion of who we are."
What he never wants to express is being big. "I've been big. I've been small. I've been middle. I don't see anything big about big. Bigger means more layers, more bureaucracy, less customer service and slower speed," he said.
Drexler then drew upon some personal encounters with people he's met in the 27 years he's been running companies to make his point. Like the one about Mario, his fit man.
"The first week I was at J. Crew, we had a lot of problems," he said. "And looking at fits, which are critically important, I said, ‘Will all those that own the fit of our pants please come to my office now?' When 24 people showed up, he declared: ‘Now I know why the pants don't fit.' It never works that way….Give someone ownership and let [that] someone run with it. It's amazing the difference it makes. Mario now owns fit in our company.
"You look at every great product in the world and there's a small group of people behind those products and that idea."
He emphasized basing decisions on gut instinct, rather than math or science or focus groups. "Until someone invents something better than instinct and gut, I will continue to rely on it," he said.
Despite the size of the businesses Drexler has supervised, from Gap at $14 billion to the $1.2 billion J. Crew as well as Ann Taylor, where he was president and ceo from 1980 to 1983, he's a shopkeeper at heart. He visits his stores three to four times a week, and he loves it when the stores are tight and crowded with merchandise, even if the customer isn't happy with that."You just look and you listen, and you ask, "What can we do better?'…So even if we have a lot of stores, if I answer the phone, if I come to work thinking it's one store and I'm here as the store person, and I can get it done for everyone else, it doesn't make it seem so large and complicated," he said.
For Drexler, retail is detail, and he illustrated that with another anecdote about when he was on a road show prior to taking J. Crew public. Undoubtedly working hard and getting hungry one day, Drexler recalled that an associate did a brilliant job ordering turkey and ham sandwiches. But then Drexler unwrapped a sandwich and had to ask: "Where's the mustard? Where's the mayo?" There was none. "It's the same thing in our business — it's all about the mustard — always — if that makes sense."
In late October, Drexler was in Europe with the Madewell design team and the display presentation team at J. Crew, visiting stores. Among them was Hermès — "my favorite store in the world" — and Dries Van Noten — "You could live there, you could dress there, you could do whatever there," he said.
He also spent an afternoon with Sir Philip Green, ceo of Topshop. "To me, he's not a Sir. He's just a good friend. But he owns Topshop and six other [businesses]. I was fascinated by what I learned in his store [that] evening. It was a phenomenal experience….The store was more crowded than any store I've seen a week [before] Christmas on a Saturday….It was worthwhile just touring around with him," apart from visiting other cities and stores in Europe.
"My last trip to Europe gave me more inside ideas than any focus group could," he continued. "You know what Europe taught me? Very simply, to keep editing out for the consumer. He or she is still going to buy better and better and better and we have an opportunity to keep making that stick.
"I am still learning," said the 63-year-old Bronx, N.Y.-born Drexler, who started his career at Bloomingdale's. "You learn every day you come to work."Though traveling overseas, J. Crew stores won't be exported. "Not while I'm running the company….I don't see many American merchants, or by the way, foreign merchants, making great returns." Higher rents, size issues, labor issues, language issues all work against achieving success. "We have stores in Japan. I won't even look at them. I went there once; I got sick."
Internet overseas, however, could be different. "We would like to, but what I like is having control — touch, feel, see and talk to and then know where the business can go. I'm looking at the American landscape for us and I frankly see so much opportunity here."
For anyone planning a startup or a new division, he's got a warning. "Don't start a new business because you have to get your stock price up," he said. "Do it because you have a vision, a passion and you know the business. When we started GapKids, my son was six years old then. I couldn't shop for him anywhere. I couldn't find nice clothes. I used to buy at Benetton in Europe. I love easy, simple and I'm always pleading with our team, ‘Less, less, less, less!'
"Seven years ago we had a Crewcuts business. It failed because there was no vision for it."
But the e-mails were pouring in to keep Crewcuts from permanently disappearing, so Drexler revived the line. "We decided that all we want to do is make it mini, and keep it simple," he said, referring to a miniaturized version of the adult J. Crew. He felt there was a void for "high-integrity, good-looking, quality kids clothes that you don't have to take a mortgage out on.
"What I've seen happen to the kids' business — everything becomes a price business. Now if you can do it with an angle, it's fine. But everything's not about cheap in the world. It's about quality, and I don't want to be the biggest. We don't want to have the largest business." While it doesn't have huge scale, Crewcuts, he said, does have the "It" factor for people who like the adult J. Crew.What it doesn't do is compete on price. "You cannot win on price alone. You must have a differentiating factor in your business because someone's going to get you on price and someone can always go lower….I learned this early on when I bought swimsuits at Bloomingdale's, and when Alexander's went on sale — they were still around then, now they're a much more profitable real estate company," Drexler said.
He's also learned a thing or two from turnarounds, having engineered them at J. Crew and Ann Taylor. "You must give up bad sales to get good sales," and it can take several seasons of biting the bullet. Sales and earnings must drop before achieving a turnaround. "You have to say, ‘I'm going to run minus-5 or minus-10 for a year or two, but over the next five years I'm going to return something to my investors or shareholders,' whether you're public or private. You must have the vision to do that, and I have to say, the strength. It's really painful to look at negatives."
At Gap, which he built into an empire, he couldn't right the ship after several down seasons, and some say he was prematurely removed by the board without finishing the assignment. "I could say it wasn't fun to leave Gap the way I did, and I thank every day that it happened," he said. "And I also think there is nothing wrong with getting a good kick, and things happening to you. It just makes you stronger….Yeah, there are mistakes every single day we make."
Beyond the companies Drexler has run, he's gathered a wealth of ideas and knowledge at Apple, as a member of the board for eight years. "I watch that company grow purely through great innovation and questioning. Always making it a little better or a lot better, and it's been fascinating to watch," he said. "But I think it's what everyone has an obligation to do. It's no surprise where the American automobile companies are today, it's just no surprise. Why it goes on this long, I have no idea. It's about good cars and design. I don't understand what is complicated."Apple excels, in a way, because it keeps things simple, and Drexler says he's envious of how many stockkeeping units that company has — hardly any — with a $20 billion-plus volume. "Do it well, get it focused and get famous for it," he said. "What you don't do is just as important as what you do, and most people don't know what we don't do. You must know how to say no. You cannot be a jack-of-all-trades and a master of none. It gets you nowhere in America today."
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