KEYNOTE: MICHAEL GOULD

Byline: David Moin

Have retailers bullied suppliers for too long? Is it time for a truce, for changing many of the ways stores and manufacturers conduct business?
Michael Gould, Bloomingdale’s chairman and chief executive officer, thinks so, and he said it straight out to 300 vendors, retailers, analysts and others connected with the apparel industry, during his keynote address opening the 2nd annual Fairchild CEO Summit here.
Displaying a candor rarely exhibited by industry officials in public forums, Gould urged his audience, “Look at our business with a new, broader perspective” in order to create more sales opportunities and value for consumers.
In just over 20 minutes at the podium, Gould covered a lot of ground, from what value will mean in the 21st century to the new realities of retailing and how to satisfy a more demanding public. He also criticized certain prevailing, yet counterproductive, industry operating procedures, such as delivery schedules that load fall fashion on the shelves in July, well before consumers really want it, and promotions that erode price credibility and strangle suppliers.
He cited plenty of opportunities in the seasons ahead, with consumer confidence “higher than it’s been for 29 years and accompanied by great optimism and a willingness to spend.”
Yet Gould also sees serious challenges for the immediate future.
“We department store retailers must own up to the fact that we have created undue pressure on the manufacturers to give value via price promotions,” Gould stated. “Our demands have forced our suppliers to artificially inflate the costs, thereby turning off the customers with over-priced merchandise.
“Unless we seriously address alternatives to this situation, we will eventually fail.”
Gould also believes retailers and suppliers are failing on other fronts, like not providing customers with products when they want them. “It represents a huge opportunity and will take a change in how we work together to pull this one off,” Gould said.
Gould echoed a theme often heard in the industry, including during last year’s CEO Summit, when Donna Karan berated retailers for insisting on products long before consumer demand sets in and putting undue pressures on designers to meet tough delivery schedules. Apparently her message has been heard by some, with Gould clearly recognizing that customers are shopping closer to need.
“For the most part, they want to buy summer merchandise through August, and think about fall only as the summer winds down,” Gould observed. “What can we all do to keep fashion newness in sync with this, so customers do not feel they are looking at ‘picked over goods’ in July. I know many of us want to stay on the leading edge with merchandise that is first and new, but how about defining it in our customer’s time frame, not just our own?
“Honestly, I do not know how to pull this off, but I challenge us to discuss this…because I truly believe it is only with such new thinking that we will indeed create new ways to provide value.”
Then Gould tackled what he considers to be serious issues about fit and styling. Though he stayed politically correct by not condemning any suppliers specifically, Gould was critical, in broad terms.
“Most of you represent strong brand names with very positive imagery and heritage that customers value and seek out. Solid reputations for consistent quality and styling has entrenched such brands as Ralph Lauren, Calvin Klein, Giorgio Armani, Liz Claiborne, Jones and others.” In a world with so many choices, “there’s something comforting and reassuring about familiarity,” Gould said.
But consumer confidence in brands is “easily eroded” if the quality and consistency of fit are not maintained. “At whatever price point you compete, make sure your product quality is at least at parity to others. More importantly, whatever you do, keep the sizing and fit consistent over time.”
Fit, Gould contended, is perhaps the top issue confronting retailers, since a size four from one designer one season, often becomes a size eight the next season — whether it’s due to production inconsistencies or designer whim.
Because of the industry’s operating flaws, and because of much faster growth in other industries such as computers, home office equipment, travel, leisure and financial services, the apparel industry, Gould said, is enjoying only modest growth.
Stated Gould: “These product and service areas — their successes and the dollars they capture — represent direct competition to us for customer dollars….The customer is telling us loud and clear that we are competing for their disposable income against a wide range of other products and services that they perceive add value to their lives, meet some needs or solve some problems.
“It means we must adopt a new perspective about what we are actually offering customers — what we are competing against and even just what is it that customers want and need.”
According to the Bloomingdale’s chief, successful companies identify and meet the needs of certain kinds of customers — not all customers — and remain focused and adopt a customer-driven point of view instead of being internally focused, process-driven and product-driven.
Steering his comments away from the apparel industry, Gould cited the Saturn car corporation for successfully competing in the marketplace and attracting customer patronage and loyalty by offering some style, reliable performance at an affordable price [under $20,000], flexible service programs and friendly showrooms, eliminating price haggling between shoppers and salesmen, and demonstrating a concern for family values. Saturn’s priority, as Gould sees it, is “not just selling cars, but selling a solution to customer needs.”
He also cited Starbucks for creating a stress-free and convenient experience, which customers value.
Then he cited Lands’ End for capitalizing on the time-saving aspect of shopping by phone, FAX, mail, or even at an outlet in an airport, where customers often have time to kill and can do that by shopping. He noted that one Lands’ End airport store opened in Minneapolis, and while it may be too new to judge, it’s evidence of “the right kind of thinking.”
Gould also praised Home Depot for making its warehouse-sized stores easy to shop with friendly staff, wide aisles, prominent signs and special services such as how-to classes that reduce the stress of home repair work. He characterized Home Depot stores as”neat, clear, clean and easy to access.” In addition, he complimented Barnes & Noble for driving book sales, adding coffee bars and seminars to capture consumers and providing informal entertainment that relaxes and retains customers.
“We should do more of that,” Gould acknowledged. “Customers are not tolerant of anything that adds complexity or adds to their time.” Time is “the most precious commodity of all,” he said, adding that from customers, there is a “growing demand that the shopping experience save time, or maybe even accomplish multiple tasks at once.”
“We have the ability to mitigate pressure on time and even entice customers to spend more time with us.” Some “frills and fluff,” but not too much or too extreme, can be still be offered, Gould noted, but he cautioned, “Woe is the vendor or retailer who does not deliver. There is little forgiveness for failing to deliver on the basics. If ever there were a place to apply the adage, ‘first impressions count,’ this is surely it.”

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