If there’s a conflict in the power-sharing arrangement between Jonci Cukier and Jim Gundell in their roles as co-chief operating officers of Eileen Fisher, they’ve certainly done an admirable job of keeping it hidden.
This story first appeared in the November 18, 2014 issue of WWD. Subscribe Today.
“Luckily, we’re collaborative by nature, and, like everyone at this company, we’re accustomed to working in a collaborative manner,” said Cukier. “We very quickly realized that we couldn’t be involved in everything.”
As often happens in their tandem management arrangement, Gundell finished the thought: “A lot of this comes from Eileen, who has never believed in ‘the power of one voice.’ She believes in the power of many voices and that the best things happen when you tap into the wisdom of a group of people who are in the know and really have an understanding of what the opportunities and issues are and find a path to work together.”
And there is never a shortage of voices at Eileen Fisher. The firm has operated under an employee stock ownership plan since 2005. Fisher owns 60 percent of the company that bears her name, and the employees, including the two co-chief operating officers, own the remainder, with vesting taking place after five years.
Cukier and Gundell joined the company within weeks of each other in 2004 and have shared the chief operating officer role for the past five years, bringing an unusual division of labor to a company that, taking cues from its founder, has no reservations about doing things differently from others in the New York fashion market and setting higher priorities than simply beating last year’s numbers.
Cukier initially came on board as a consultant to work with the design studio but stayed on as facilitating leader of the area. While she generally focuses on design, merchandising, product development, manufacturing and production, Gundell’s official duties incorporate brick-and-mortar and e-commerce retailing, visual merchandising, technology and global enterprise. Both are part of the company’s eight-person facilitating leadership team that’s involved in all major decisions — all part of a culture that seems deliberately opposed to the idea of fortified silos with thick walls separating departments.
“We know it’s very important for Jim and me to stay connected, and we miss it when we’re not,” Cukier said just hours before the start of a vacation in which she was intent on not being tethered to her smartphone.
Cukier and Gundell arrived at the company with department store backgrounds, and both took detours in the years before they became a part of Eileen Fisher.
Gundell, a native New Yorker raised in Rye, N.Y., spent 19 years at Bloomingdale’s in roles that included general manager of the 59th Street flagship and general merchandise manager of women’s accessories, intimate apparel and footwear; he also worked at Ralph Lauren Corp. as divisional president of its factory outlets. But he stepped outside the corporate retail world to become president of retail for the Museum of Modern Art.
A native of Detroit, Cukier moved to Minneapolis after college and spent 10 years with Dayton’s department store, including time as divisional merchandise manager of better sportswear. She and her husband, David, operated a small chain of petite specialty and contemporary shoe stores prior to relocating to Cincinnati in 1994, when she became president of the Easy Spirit footwear stores owned by U.S. Shoe Corp. After the stores were purchased by Nine West, she landed in New York.
Cukier and Gundell both take pride in Eileen Fisher’s growth trajectory over the 10 years they’ve been with the firm: Sales this year are on pace to reach $430 million from $178 million a decade earlier. About 60 percent of the business is conducted with wholesale accounts, while the other 40 percent manifests through its own retail operations, just over a quarter of which are attributable to e-commerce and the rest coming through its network of 67 stores in the U.S., Canada and in and around London.
It’s the steadiness, rather than the speed, of the ascent that they find most gratifying.
“There are a few years when there’s been an exception, but if you look at this company over a 30-year span, it’s been a steady climb — year in, year out, of nice single- to low-double-digit growth,” said Gundell. “It really reflects the way Eileen and now our entire design team look at the essential issue each season: how are we going to build our relationship with the customer? How do the clothes work and fit? It’s always been about taking the customer to the next level and making sure that we give her new reasons not just to embrace the clothes but the values behind them. It’s always been evolution, never revolution.”
Eileen Fisher is coming off two very strong years in 2012 and 2013, when it had about 25 percent growth, “and some of it reflected that we’d deepened our relationship with our wholesale accounts and also expanded our stores and e-commerce, too,” Gundell said.
That might help explain one of the feats of which the management team is proudest: its flat performance in 2009 in the aftermath of the financial meltdown of late 2008.
“We knew very well that our major competitors and a lot of the people we hang with in stores had double-digit decreases,” Gundell stated. “We landed pretty much where we started and felt very grateful about it.”
Major accounts — then and now — include Nordstrom, Neiman Marcus, Bloomingdale’s Macy’s, Dillard’s and Holt Renfrew.
In a way, the post-recession results verified something Fisher had told her two co-ceos and others at the company for some time: “We learn more from our difficult times than from the easy moments.”
Among the reasons for the company’s strong showing in the immediate aftermath of the worst financial contraction since the Thirties was a decision to bring in Ideo, a design and branding company, to help it emerge from the financial crisis in better shape than it entered it.
Cukier noted that Fisher, who never had formal business training, “has an instinct about when to take a risk and sometimes it’s at the times when other companies are pulling back. She hired Ideo and we began to look at the business in ways we just hadn’t before. We evaluated our relationships with our customers, the visual elements of the business. We asked ourselves how we can continue to broaden our customer reach.”
While Eileen Fisher remains focused on the baby boomer, it hasn’t backed away from other opportunities, providing they’re consistent with the company’s mission. To celebrate its 30th anniversary, the company developed the Icons Collection, updated items based on pieces designed by Fisher when the company was in its infancy.
“We found that those pieces were appealing to women of all ages, more than virtually anything else in the collection,” said Cukier. “It wasn’t a matter of, ‘We need to design for a younger customer.’ There’s something about our design message and the message of the company that resonates across all ages. It’s not universal — it’s still a niche — but it’s broader than just the women who were brought up with Eileen.”
Gundell noted that there’s a tendency to underplay the fashion savvy and even the purchasing power of the female baby boomer.
“Don’t underestimate her,” he said. “She’s got disposable income and she also wants to feel relevant in ways that her mother probably didn’t. She’s with us and shes going to be with us for a long time, and it seems her daughter will, too. We’re seeing the daughters of our ‘classic customers’ coming into our stores and going online and loving what we’re doing.”
Another example of Eileen Fisher’s ability to reach beyond its core customer — while at the same time addressing its core values as a socially responsible apparel marketer — is the Green Eileen initiative begun five years ago.
Customers were invited to bring in pieces from their wardrobe — delicately referred to by Gundell and Cukier as “gently worn” — and receive a $5 gift card in exchange. The company then had the returned clothes dry-cleaned and sold for prices in the mid- and high-$40 range, with the profits going to benefit initiatives to help needy women and girls.
“Suddenly, we had a vintage collection,” Gundell exclaimed. “Women in their 20s and 30s love the look and they also loved the price point. It was the perfect Eileen Fisher concept — a brilliant way to recycle and repurpose clothes, and at the same time reinforce the timelessness of our clothing and our mission and serve an emerging customer.”
“We do not start with bottom-line goals here,” Cukier said. “We begin by putting our customers’ needs in the center and making our decisions from there.”
The executives have pursued a measured growth strategy in the configuration of the retail business, with 18 of its 50 U.S. full-price stores in mall locations and the rest split among lifestyle centers and suburban street-front locations.
While the firm designates its stores as either “retail,” or full-price with an average size of about 2,500 square feet, or “company,” a synonym for “factory” or “outlet,” at between 4,000 and 5,000 square feet, there’s mixing and matching throughout the chain. The company opened a 3,000-square-foot company store in Manchester, Vt., this year that has liquidated merchandise, some “system pieces” featuring core shapes and fabrics at regular prices and other items at lesser discounts. The store’s sales are running 60 percent ahead of plan.
“The high-low approach reflects the way women are shopping today,” Gundell said, “So why not set it up that way within the Eileen Fisher brand?”
The company’s international expansion at retail has been relegated to the English-speaking world, with two stores in Canada (Calgary and Vancouver) and three, soon to be four, in and around London. While its wholesale operations in the U.K. are handled by a distributor, it operates its own stores there.
The Eileen Fisher story began with garments being sewn and sold in New York and there’s still a healthy domestic component to its business, with U.S. manufacturing accounting for between 20 and 25 percent of production, depending on the season, and factories recently added in California. The remainder comes primarily from six factories in China, with additional items imported from India, Peru and Turkey.
“We could be 50 to 80 percent of a plant’s production,” Cukier noted, “and we’ve had relationships stretching back 20 years or more with some of those plants. We really do look at them as our overseas partners.”
But the ties to the home market are clear. “Today, 97 percent of garments sold in the U.S. are made elsewhere,” proclaims the company’s Web site. “We produce 20 percent of ours in New York and Los Angeles.”
Under Amy Hall, the company’s director of social consciousness, the firm has gone well beyond standard operating procedures to monitor its impact on workers in the plants that produce its merchandise, as well as the environments from which its raw materials are derived, its fibers and fabrics produced and its finished garments made and sold.
Besides strict monitoring of its relatively compact supply chain to guarantee worker safety and fair treatment, the company has been among the first apparel companies to endorse sustainability initiatives such as organic cotton, certified dyeing and recently the pledge promoted by Canopy, the not-for-profit conservation group out of Canada, to eliminate the use of fabrics containing fibers from endangered forests. It received Bluesign Technologies certification for the silk it sources in China, meaning they are dyed and finished using fewer chemicals, less water and less energy.
Cukier and Gundell — like Fisher herself — don’t spend time boasting about their commitment to corporate social responsibility, viewing it as being totally consistent with a corporate culture in which pleasing customers has laid the groundwork for higher sales.
Both Gundell and Cukier became somewhat serious in tone when pressed about why Eileen Fisher hadn’t moved more aggressively to take advantage of what is obviously a loyal customer base anxious to see more from the designer.
Why, for instance, are there only two licensees — Chainson for footwear and Garnet Hill for bedding — when the brand could easily support, among other classifications, multiple accessories categories? Why hasn’t international expansion carried the company into more markets, like those outside the English-speaking world?
“We do and will consider other markets and classifications, but our focus is on trying to understand how to properly scale something outside the U.S., as we’re doing with our stores in London, or outside our core products,” Gundell said. “That doesn’t happen overnight.”
Cukier added, “We don’t do fast well.”
Gundell replied, “That’s true, but we do slow really, really well. When we take our time, when we’re thoughtful, we make the best decisions.”
Everything they do at Eileen Fisher needs to increase the brand’s outreach and generate income, “but it also has to abide by this incredible relationship of trust that’s existed between Eileen and her customer for 30 years,” Cukier said.
“Are we leaving money on the table? We probably are,” Gundell said, his tone becoming noticeably more passionate. “But you have to remember: Eileen didn’t start this business to sell anything to anyone. She started it to solve a problem —first her own problem of getting dressed, and for the 30 years since, the customer’s.
“For 30 years, we’ve been working on solving [the customer’s] problem of how to dress comfortably and stylishly within her understanding of those ideas,” he concluded. “And when we solve her problem, she buys our clothes.”