Reconciling Reality in Retail
Week 2: Theories in Action
This past Wednesday morning, myself and all the interns arrived early at the Bloomingdale’s flagship store for the monthly central address with hundreds of other employees. The CEO (Tony Spring), the CFO, the buying department for the shoe department and the chairs for the Employee Resource Groups presented on upcoming events such as the NYC Pride Parade and accelerator businesses. However, the main topic of the central address was the offer for Saks Fifth Avenue, a competitor in the retail business, to go public. This offer is mostly likely a result of a struggling retail industry in which Saks’ owner, the Hudson Bay Company, faces “sluggish sales and a depressed stock price”, according to the Wall Street Journal Article, “Hudson’s Bay, Owner of Saks, Gets Offer to Go Private”.
In light of existing concerns about the struggling retail industry and now the offer for Saks to go private, the executive committee, particularly Tony Spring (CEO) and Charles Anderson (EVP), continued their adaptive work. According to Ronald A. Heifetz, there are 5 steps in this adaptive challenge: identifying the adaptive challenge, not getting distracted by other issues, keeping the stress levels for followers tolerant, putting the work back on the people and protecting the voices that don’t have power. Tony and Chalres need to reconcile the demands of this changing retail environment and the vision and direction of the employees of this historical retail store. In a chat between Charles and our intern group, Charles highlighted the need to adapt to this new technological environment through the website while also maintaining the core values of the Bloomingdale’s brand which focuses on customer relationships and the in-store experience.
This combination that Bloomingdale’s is now targeting is called the Omnichannel experience or the omnichannel customer. Bloomingdale’s seeks to acquire new customers online but to get them to come to the physical store through initiatives such as buy online pick-up in store. He thinks it is important to get customers into the store because they will interact and build a relationship with a sales person or a stylist (a program that they are also growing). Bloomingdale’s has conducted research that proves that although more people do shop online, customers who go to the physical store spend significantly more money because they have a sale associate helping him/her. Overall, the message from Charles to our intern group was that Bloomingdale’s does need to accept the reality of the changing retail landscape by developing their .COM and their technologies but that they cannot sacrifice their in-store experience and the quality of their in-store salespeople which is evident through not only high investment in online programs such as Salesfloor but also in a complete renovation of the Bloomingdale’s flagship store.
According to Heifetz 5 steps, I believe that the executives are conducting adaptive work effectively and that they are successful. The adaptive challenge they have is addressing the reality of the retail industry while maintaining their followers’ motivation to keep Bloomingdale’s physical retail locations thriving. They keep the stress levels manageable and put the work on the employees through creating new initiatives to implement and by still investing in their physical stores. Additionally, they encouraged their employees to not be distracted by Saks when they should be focusing on Bloomingdale’s sales and projections for the year. Overall, adaptive work, particularly the recent renovation of Bloomingdale’s, has been successful in at least portraying to the customer and the salespeople that their is hope that retail stores such as the flagship has a future despite concerns about the retail environment. The store is bright, happy and incredibly forward looking with lots of technology. It is constantly bustling with energy and has expanded from just a retail store to a true shopping experience. One way that the theory could fall short is that most of the employees are incredibly well-educated and have access to how Bloomingdale’s stores are actually performing. It could actually appear as if the executives are sugar-coating the situation to keep stress levels low. Charismatic leadership could perform better or could be a great supplement to adaptive work as it could help followers recognize the reality yet motivate the followers to overcome the challenge.
Nice reflection. I think you are on to something here as the in-store retail versus on-line issue is not a technical challenge; there is not an obvious solution (other than caving and moving exclusively to on-line, which some companies have). If indeed the leaders are approaching this as an adaptive problem, it seems that if they successfully navigate through this with its employees and its customers, than can be real trend setters in the industry. Your point is well taken, however, that employees can look and evaluate how the company is doing; the leadership does need to be conscious of that – but again, if they are really doing adaptive work, they are working with employees (and customers) and so things should be transparent.