When Leslie H. Wexner opened the door of his first Limited shop in 1963, he touched off an American retail revolution that still reverberates.
This story first appeared in the December 13, 2013 issue of WWD. Subscribe Today.
Wexner pioneered the art of replicating vertically sourced chains of specialty stores selling affordable fashion in an era when department stores dominated. In addition to the Limited, he populated the retail landscape with a mushrooming array of nameplates, including Express, Lane Bryant, Lerner New York and Abercrombie & Fitch. As the appeal of the apparel business began to wane, Wexner turned to the magnetic attraction of lingerie with Victoria’s Secret. Finally, in 1990, he stepped into the personal care and beauty ring, with Victoria’s Secret Beauty and Bath & Body Works. At age 76, Wexner, founder, chairman and chief executive officer of L Brands Inc., has been at the helm for half a century and counting, and he has opened nearly 10,000 stores. Company sales topped $10.4 billion last year.
“It would be hard to find someone in the retail industry as smart or smarter than Les Wexner,” asserted Leonard A. Lauder, chairman emeritus of the Estée Lauder Cos. Inc., who developed a warm relationship with Wexner although the two titans never found common ground for a business partnership.
Wexner is singled out by people in the market for his unshakable grasp of what drives a successful retail business and how to set up an enterprise that will sustain itself, particularly when it comes to establishing a supply chain. His basic principles have never changed as he has moved from one kind of business to another, but the strategies to bring those beliefs to life have evolved, such as “patterning,” or analyzing the existing business for new product opportunities. Another prized skill is the agility needed to get to market quickly.
While some critics say he is much more of a merchant than a marketer—he described himself as a shopkeeper at the WWD Beauty CEO Summit in 2006—he is second to none when it comes to keeping a close eye on changing customer whims. Another friend, Dario Ferrari, founder and president of Intercos, attributed at least part of Wexner’s success to his penetrating sense of intuition—“to try to understand what the consumer wants, to anticipate the trend. When he sees a concept, he sees it already transformed [into a product] in the store. Already he can tell you how much money it can make. He’s able to know if it’s worthwhile or not. It’s never gray.”
What drives this is a voracious personal interest in the world around him. “He is endlessly curious and that is what keeps him young,” said one observer. “It keeps him engaged, it keeps him ahead of anyone else. It allows him to reinvent business models in both content and execution.”
Wexner’s competitive instinct has taken him a long way, with a net worth estimated at $5.7 billion by Forbes magazine. He also has been a strong proponent of philanthropy, with his first ground-breaking $1 million donation to the United Way, a $100 million gift to his alma mater, Ohio State University, and the creation of the Wexner Center for the Arts. This same man, however, can be so private about his business affairs that he almost seems secretive. But, boy, can he loosen up, blithely igniting controversy, as when he recently suggested that department stores are “irrelevant” and a brand like Coach “cut its own throat by growing its outlet channel.”
These barbed moments stand in sharp contrast to what some acquaintances say has been his biggest personality evolution: a sense of mellowness brought on by being the father of four children, the oldest of whom has entered college. Indeed, while passing time during a photo shoot for this article, Wexner asked a bystander to type “What Does the Fox Say” into the search engine of her phone. Wexner then had her play the nonsensical dance song by Norwegian comedy duo Ylvis, as he cajoled and teased passing fellow employees for not knowing about the viral sensation, which drew 230 million views on YouTube within two and a half months this fall. He, of course, had learned about it at home. Clearly delighted, the king of Columbus asked to hear the song again.
Congratulations on being named the winner of the WWD Beauty Inc Visionary Award. Last year’s winner was Yoshiharu Fukuhara of Shiseido, the year before that was Lindsay Owen-Jones of L’Oréal and the year before that was Leonard Lauder.
It’s interesting because when I was getting into the beauty business, I began talking to Lindsay Owen-Jones. I hadn’t met him, I just cold-called him because L’Oréal was so significant. I called Leonard Lauder, who I didn’t know, and said I had this idea about a specialty-store beauty business. And I wrote a letter and met Fukuhara. I also talked with whoever was running Revlon at the time, who kind of dismissed me. But OJ, Leonard and Fukuhara were all kind of interested. And none of them—and this is at the beginning of the beginning—were interested enough to do anything. They saw their channels through department stores and supermarkets. They were curious that I was thinking about it, but not curious enough to do anything.
Leonard was probably the most favorably disposed. I think he was intrigued to do something, to pursue it. We got down to real discussions and then one day I was in New York and I called him up for a cup of coffee. I thought we were dating. [Laughter] He said his mother said that they never had any partners and they didn’t want to have one now.
What gave you the idea of going into beauty?
By nature I’m curious, and everybody knows that the world is going to change. We pioneered multistore fashion retailing at a national level. I got to thinking, how will the world change? I saw a lot of people were opening multiple stores—popular-price fashion businesses in Europe, in the U.S., jean shops, apparel shops, Benetton and knitwear or whatever. There must have been 20 different people.
I was also seeing that apparel was deflating. You could buy a pair of jeans 25 years ago for $25 and you can buy a pair of jeans today for $25. There are very few things in the world where you’ve actually seen deflation.
I began thinking that fashion apparel wasn’t going to be as important in the future as it had been in the past, in terms of defining peoples’ personalities, and I didn’t foresee electronics defining personalities, or eyewear accessories.
In parallel, I believed that specialists and specialty retailing was really an interesting channel of distribution. There were bookstores and toy stores, businesses that had been carved out of the traditional department store business. Just walking through department stores, it occurred to me that the channel of distribution, which was through department stores, didn’t necessarily have to be.
When I met Fukuhara and OJ, they explained to me how the channel was in the U.S., but in Europe, it was different. There were specialty stores, perfumeries, if you will. I said, “That’s kind of interesting.” They weren’t interested in selling any of their branded product to compete with the department stores because that would have been disaster.
So I thought, well, we know how to run stores. We know how to do the real estate, we know how to design stores, we know how to buy stuff, control inventories, train people at retail. I began to speculate, could you take the skills we have in product, which was apparel, and take all the other skills, base of supply, marketing, merchandise, branding, and could you do it in beauty?
In the course of—I wasn’t spying, I really wasn’t—but in the course of meeting all these people in the beauty industry, they started telling me about efficacy and formulas and you don’t want to blind people or burn their skin. You know, as a fashion merchant, I never thought I was going to hurt or injure anybody. [Laughter] It was kind of daunting. Sweaters will never be life-threatening, no matter how loose or tight.
The idea of bottles and caps and labels and fragrance houses, all that stuff was pretty alien. But I knew about sweaters, and I didn’t know dink about knitting machines either, so I thought that the basic retail skills and being customer-centric, that stuff that a shopkeeper is, it would be worth a try.
The first bits of product we tried, we put on a few shelves in an Express store just to see what would happen. We put it in six or eight stores and people bought it. People say, “When you opened your first store, did you plan a hundred?” And it’s like, no, I just hoped I didn’t go out of business. When we got into the beauty business it was pretty much the same thing. There was no grand plan.
No grand vision?
No. I was a little bit influenced by Fred Segal in L.A. They had a little beauty department and I always noticed it when we’d go out there and sample shop and look for fashion trends. [I thought] if they sell beauty, I can sell beauty. They did it on a few shelves, we’ll try it on a few shelves and see what happens. It’s like, geez, it worked. [Laughter] People liked it. Maybe we could open up a store and see what happened. We started with Express and it worked. And then we tried with Victoria’s Secret, which we were just starting.
How has the customer changed over the years, both on the fashion and the beauty side? It seems like you’ve changed along with them.
People have different preferences. Fashion is an interesting business because we’re pack animals, but we don’t all want to look alike or smell alike or be alike. We always want to express our individuality, whether it’s in jeans or sweaters or beauty and cosmetics products. That’s just the human state. The question is, how do they express it? Do they express it in clothing or in which smartphone they have or the cover that’s on their smartphone? That’s been a constant and probably always will be.
The technology, whether it’s travel or communication technologies, the world has just gotten faster. The customer is the same, but they’re bombarded with so much information that they evolve quicker. Maybe 10 years ago the status-y thing was to have a Blackberry and then five years later it wasn’t.
Ideas go through society really quickly. Tom Friedman expressed it as the world being flat. So if you shop stores in Moscow, China, Columbus, Madrid, they’re all the same. The shopkeepers and the customers are about the same speed.
It’s happening in all products. This summer, I had a cup of coffee with Piero Ferrari. We were in Capri and somebody introduced me to him. He was saying that historically their big market was Italy, the West Coast of the United States and Germany. Now they sell as many cars in China as they do in America and Germany and everybody wants the same stuff at the same time. Ten years ago, it wasn’t that way. The half-life of ideas gets shorter.
Have you ever thought about doing multibranded beauty stores again, like Sephora?
We always think about different businesses, because I just do. But right now, the growth that we have in the existing businesses and that growth coming domestically in North America, let alone the rest of the world, has us pretty busy. There was a time when it was challenging even to be in the contiguous 48 states. Now being in business in North America is challenging, but less challenging than having a national business was 25 years ago.
You once said that you felt that retail formats really couldn’t travel. It’s hard to transplant an American retail store to Europe. But now you’ve got this experiment in Bond Street with Victoria’s Secret. What changed?
I was just looking at numbers. We have great admiration, say, for Inditex, but about a third of their stores are in Spain and Portugal. The bulk of their stores are in Western Europe and Eastern Europe. So Western Europe and Eastern Europe are about the same complexity as the United States from Moscow to Madrid or Miami to Seattle. You look at the map and you overlay Europe and the United States [in terms of] complexity, climates.
H&M is pretty much the same. They do very well in northern Europe—Sweden, Norway, Denmark, Germany, Austria, Poland. That’s just the orientation of their business. They are much less successful in the United States…
But they’re here.
They’re here. And they’re figuring it out. But, Inditex, I think, came to the U.S. in ’88 or ’89 and then stopped and went to Mexico because it was easier. There’s no pattern of European specialty stores coming to the United States and setting the world on fire. Americans understand more about soccer today than they did 20 years ago. But fantasy soccer isn’t going to replace the NFL and college and high school football. And the NFL plays a few exhibition games or regular-season games in Europe but I don’t think it’s taking Europe by storm.
I just think packaged goods, real packaged goods, cameras, cars, certain beverages, whether it’s beer or soft drinks, there are certain things that are standard and they’ve proven that those things sell around the world. I think fine fragrance might be that.
If you were going to start The Limited today, would it be a lot harder? Everybody is in love with the omni-customer now. Would it have to be on the Web?
The apparel businesses are tougher because everybody is in the same base of supply in terms of value, cost, the same raw materials. Everybody wants to make stuff in the same place.
When we started with our Limited stores, we could go to Italy and make things and they were unique because nobody else went to Italy making fashion goods. Then we went to Asia and started making fashion goods and five or seven years later people started making fashion goods. We had an edge because we knew the customer through our stores and we had a cost advantage because we could do some pioneering.
But everybody is making it and the apparel looks the way it looks today because everybody’s making the same stuff in the same places. There’s no cost advantage. You’ve also had the deflation in apparel. Forty years ago you had a couture business. It doesn’t exist and the designer business is really a bridge business.[There has been] enormous compression in apparel. Everybody wants to make things in the same place, from the same fabrics. You have a compression from the retail but also cost. I don’t think it’s as interesting. I have one son in college and three kids in high school and they are more concerned about what electronic device they have to express their personality than what clothes they wear. They are much more sensitive to whose athletic footwear they have and whose jeans they wear.
So the question about whether you regret leaving ready-to-wear is sort of a dumb question.
No, it’s not a dumb question. I just think as a buyer, when I was the apparel buyer in the business and when our businesses were really thriving, I made the decision that said you could ride a style till the bitter end or if you had to make a choice, maybe you’d get out early. Somebody said, “You know we could’ve sold this for another six months,” and I’d say, “Well, I’d rather fall forward, get out of things early,” and it forces me to the next. Thinking about the lingerie business and the beauty business—was there a next and could we transfer our skills to a different kind of merchandise and test it and see if it works? And it has, shockingly so, in beauty.
Why do you think that is?
It comes from just basically a shopkeeper point of view. There are good fashion merchants in beauty and otherwise that believe it comes from technology or wizards and witches in Paris that do this. I get all my inspiration from customers. Just watching customers, I think I can see and sense what they’re interested in and then bring that back to the store.
You’re known as a great ideas guy. Everybody preaches creative destruction and nobody does it except you. You’ve gone from your own ready-to-wear to beauty to lingerie without looking back. Where do you get your ideas from and what inspires you?
If you accept the fact that the world is going to change and you accept the fact that it isn’t just the world, it’s your world, and that much or perhaps everything you know will be obsoleted at some point, then I think that feeds curiosity and I think great business people are curious. Walt Disney was curious, Steven Spielberg is curious, Steve Jobs was curious. He said, “All this stuff that I’m seeing around me isn’t very good, what would the customer like?”
Sam Walton was curious in that way, whether it’s looking at other channels or how to redefine product or how to apply your skills. Sam Walton spent most of his formative years in a family dime store and he thought that they were obsolete. That’s how he earned his living, so he said, “Maybe I could take these skills and translate them to a different scale of business.” I met him when he had eight or 10 stores. He didn’t think he had a national business, he thought he had a regional business that was set for smaller cities and he was scared to death of going to Little Rock.
Part of it is curiosity, accepting the fact that your world is going to change and [asking] are your skills adaptable and do you have a customer sense? Some people think it’s intuition and that’s part of it, [but] part of it is structuring curiosity, watching people and saying, “Hmm, that’s interesting.”
The people who I’ve mentioned, and some of them I knew and some of ’em I’ve read about, could make observations about customers that were insightful into the future.
You are a voracious reader, always quoting people.
Harry Truman said all leaders are readers and not all readers are leaders. Readers read history and biography to get an insight into human behavior and an understanding of how people think. I deliberately decided 40 years ago not to read fiction because I thought reality was much more interesting.
I read history from a biographical point of view and biographies from a biographic—how did people think, what was going on and how did people deal with these issues, whatever they are.
One of the first books I read about retailing was a history of Marshall Field. Give the lady what she wants and be curious about going to base of supply. I thought, gee, that makes sense. Sam Walton went to base of supply, Inditex went to base of supply, H&M goes to base of supply, Leonard Lauder went to base of supply. It’s like, yeah, people do that.
I don’t know—I might have thought it anyway, but when I read it, I said, “What does this mean to me?” A fashion business is essentially, you’re creating merchandise that has emotional content. And I think emotional content probably means something you don’t have. Your eleven-thousandth McDonald’s cheeseburger is more sustenance but you see it today with Chipotle and Flip Side and Shake Shack, people redefining businesses, whether it’s Whole Foods redefining the supermarket or Costco redefining the supermarket or Wal-Mart.
Again, it’s a customer consciousness. People who anticipate change, whether it’s political or the stuff that we do, never get there with market research. The analytics is not going to predict the weather a year from today. Right now the sun is shining. I can guess in 10 minutes the sun is still going to be shining. A year from now, it’ll be something else. I respect people who are meteorologists and do long-range weather forecasting but I just want to pay attention [to the customer].
When you talk to young people, what do you tell them? What skills do they need? Do you have any rules to give them?
The way I explain it is, people say you have to innovate or you have to be creative. And I’m saying yeah, you do. Some people have the ability to innovate, some people are inherently creative. Like some people probably genetically are athletic, but you still have to have a sport or a coach and you have to work at it. So if you were born with fast twitch nerves you might have the aptitude to be an athlete, but if no one ever coached you, you might just be a bookworm with fast twitch nerves.
The fundamental part of it is really curiosity and cultivating in yourself the practice of curiosity. Curiosity isn’t a state of mind. It’s an active thing, whether it’s going out and seeing places, traveling, watching things.
In the last 20 to 25 years, I get great inspiration from watching TV, popular TV, watching the language and what’s in and what’s out. You watch a program like Two Broke Girls and go wow, that’s on prime time, 8:00 on Monday, on CBS. If that’s in bounds what does that tell me about other attitudes? I mean, Two Broke Girls compared to Friends—Friends almost looks Biblical.
You also have this ability to leave things behind, no matter how inured you were in it, and just to move on to the next thing. Do you find this at all difficult at times?
It’s not that I’m not sentimental. I live so much in the future that thinking back—I think some people are lucky because they can be more reflective about a lot of things and they reminisce. I am much more comfortable in tomorrow than I am [in] today, let alone the past. The future is always more interesting to me personally than the past. From a historical point of view, I look at the past for patterns, a little bit in myself but mostly to understand how other people negotiated from past to future.
The other side of the coin is people don’t do this not only because they don’t want to give up what they have but they’re terrified of the future. So I assume the terror is missing in this equation?
[Someone was talking to my wife, Abigail,] and she said, “You have to understand that change and scale just don’t frighten him, he doesn’t see it that way.” I used to say about my mom that if fear was a color, she was color blind. She was afraid of nothing.
There’s a balance. In business we have existed successfully for 50 years. Somebody who invested a thousand dollars in our business when we went public would be worth close to $40 million dollars today. We don’t talk about that very often. I think I’ve been in business 50 years, so 200 quarters of profitability.
I’m not afraid of or daunted by change. But I have a really good risk calculator. I don’t bet the ranch. Somebody said to me after the first store was open and I was thinking about the second, “Don’t screw up because you don’t wanna go back to square one.” I’ve never lost sight of that.
I’m challenged by change but in a positive way. I figure I can do this, we can do this, I can figure it out.
I look back, after being in business 50 years, and say I’ve either been extraordinarily lucky or I have a very good risk calculator. I understand the value of money, I understand the responsibilities to associates and stakeholders, whether they’re manufacturers or landlords and people in the business. And I take it seriously.
As you look back on the last 50 years, what are you the most proud of?
I made a decision, probably when the business was about 10 years old, that I wanted to find a balance between big and good. I always wanted to build a good business, good people, do good things. It’s evolved now to purpose. If it’s just size, then you might end up like Ali Baba or somebody. There are people who build very large businesses that if you measure financially are enormously successful but they don’t live their lives in the culture of their enterprises and balanced. It’s really neat that in the last 25 years or so, associates in the business have donated maybe a million hours of volunteer time to whatever they are interested in. I think that’s good.
You’ve always been big on giving back.
Yes, and encouraging people. That part of my definition of success is that you have to give something of yourself, so it’s time, and treasure and really encourage people at every level to think about their responsibilities, whether it’s to family or neighbors or an alma mater, whatever they’re interested in. Somebody said to me, “When you retire, you’ll be able to do all this good stuff”—maybe I was 35 years old. I thought, what if you get hit by a truck? Why would you wait to feel good about yourself?
That notion of being purposed and in a business that really finds purpose—I have an argument with these people who sign these giving pledges, when somebody will get all their money. What about all your brainpower? Why didn’t you help society for all those years and help solve problems [by] even just thinking about them, let alone giving resources? And [they] say, “Well it is generous if you give to somebody rather than just your children or your dog or something.”
If leaders, whether they’re leaders of family, educational institutions, businesses, if everybody were serious about working to make their world a better place, whether it was their neighborhood, their church, their synagogue, alma mater, neighborhood, hospital, schools, what a great thing that would be.
Is that how you would like to be remembered?
I asked myself that question when I was in my late 30s, what will they say about me when I’m gone? And I said, “Who cares? What do you say about yourself in the here and now?”
What do you think defines a successful life?
I put it in three buckets—yourself, friends and family, and then society. People are entitled to have personal, selfish motives, whether it’s promotions, rank, if you make money you can [have] more stuff. The second bucket is how do you think about friends and family? And then how do you think about societal responsibilities. Some people address it by running for public office, some by being on committees, volunteering time. I’ve decided to tithe in time and money. [That’s] very hard when you’re growing a business and you’re 35 years old and you’re working an 80-hour week, to give 10 percent of your time.
I asked Art Coleman, a business professor and a good friend, and he said, “Everywhere you go, your head goes with you so people can give you work to do while you’re traveling, you can make phone calls, you can write letters, you can do something. Just because you’re traveling doesn’t mean that you can’t do anything.”
I’ve tried to be thoughtful about how I balance my personal life, my business and my community life. I never get it right but you know, [I] work at it. It’s a project.
Every summer I think about what did I do and what am I going to do and what the priorities are to make sure that I’m trying to be balanced. I think what you’re remembered by is that you try to get your things in balance.
Are you satisfied? Do you think you’ve been able to do it to the best of your ability?
Pretty good, pretty good. In thinking about what is success, I’ve read a lot. When I was in my mid-30s, I wondered what people who made a lot of money, what did they do? I didn’t know any. [Laughter] I read about Andrew Carnegie and Andrew Mellon and John D. Rockefeller and others and said, “Wait, Rockefeller, he really put his mind into things.”
I admire John D. Rockefeller. The modern American medical school changed how medicine was taught globally and the quality of medicine, the idea of a standardized curriculum, that’s pretty imaginative. The idea that in the middle of the country there should be an Ivy League school. He volunteered to give that to his hometown in Cleveland and they didn’t want one. He was positive it was a good idea so he started the University of Chicago. That was a big idea.
Or Carnegie saying people ought to be healthy mentally and physically, so we’ll build libraries and swimming pools in every community that’ll maintain them. The swimming pools weren’t a great idea but the library is a pretty damn big idea. I read that and said, “This is really interesting. These guys really thought about this stuff and they thought about it as young men.”
In your integrated approach to life, do you ever think about retirement or is it not necessary?
At some point if you can’t do what you do, then you say, “OK, I’m going to hang it up.” But it’s like pro football players—Tom Brady is 36 and maybe he’ll be a great pro quarterback till he’s 40. When he can’t be a quarterback anymore is the time to quit.
I choose to think about age in centigrade rather than Fahrenheit. Some people are very old when they’re 40. I think curiosity and optimism are youthful attitudes. I can’t wait till I’m a hundred so I can look back. If you’re fortunate and your head works and you’re healthy and you like what you’re doing, just keep on doing it.
As long as you think young, you’ll act young.
I think so.
You have four kids. How has fatherhood affected you?
Abigail and the children give me a sense of responsibility. When you’re a bachelor and you do the kind of stuff that I was doing, whether you had success in business or community responsibility, and you go home you’re talking to the refrigerator.
I can remember right after Harry was born, I kept thinking, boy, I really have to wear my seat belt and don’t screw up because I don’t want to embarrass my wife or my children.
It fulfills you in obvious ways but also it’s kind of nice that the kids feel good about you. You know? “Dad that was really a good job.” It isn’t how many bottles of Sweet Pea we sold in Bath & Body, but that I feel good about myself because of Ohio State, because of Columbus Community.
You’ve had these tremendous successes, going from one world to another, but there’ve been some bumps in the road, like the launch of Aura Science. Do you learn from things like that?
We all learn more from those bumps in the road than the easy successes because you pause and say, “This seemed like a good idea at the time and it didn’t work out. What was it?”
That particular one, Shiseido, a wonderful organization, Fukuhara, his guys were just very cooperative, but instead of beginning with a merchandised marketing plan we began with technology. Shiseido has wonderful skin technology, they’re really good people, so let’s start with the technology and then we’ll invent a brand. In hindsight, I think you want to begin with a position and then say, “This is what it ought to be.” It was kind of seductive and fun to go to Tokyo and work with them. But when I took it apart, I said, “We began at the wrong end of the pipe, at least for us.”
So I said, “OK, don’t do that again.”
How do you define leadership?
Leadership has a lot to do with change: changing organizations, changing things to a different place and then being successful. Leaders typically take their organizations, their governments, wherever, to a place they would have otherwise not gone. And they take them there successfully. Part of leadership is recognizing the need for change and then having the courage to try to get followers, to lead people to a place they would not have otherwise been.