Name: Most Powerful Women Summit 2019: Michelle Gass Carves a New Path for Kohl's
Uploaded: 2019-10-23
Duration: 14 min 18 s
Description: Store closures and plummeting sales are the new normal for department stores. But Michelle Gass, a year into the job as CEO, is carving a different path for Kohl’s.

Good morning. Morning. Michelle, thank you so much for being with us. It's great to be here, thank you. So Michelle, you've been CEO of Coles now for a year and a half but you've been with the company for about six. Yes. But you were sort of an out of the box hire, as people like to say. Tell us a little bit about that. You know what advantage has that giving you that you did not come from traditional retail? Yeah, but so I think when I did join calls, it was positioned literally as out of the box. So just to set a little context I joined calls after 17 years with Starbucks. So coffee business into more traditional big box retail. And my Starbucks run was absolutely incredible. I joined in 1996 and as I often share, I joined and we had just about 1000 stores. When I left in 2013 we had 20, 000 stores. So it was a lifetime, but an amazing time. But when I got the call f from Kohl's, I was really curious. I loved retail. And Starbucks is retail as well, and a lot of that was transferable in terms of everything I learned over close to two decades at Starbucks. The passion for the customer, the importance of having a very strong culture, the sense of entrepreneurship and innovation, And I was excited to apply a lot of that as I [ UNKNOWN ] goals. So you have taken a pretty unconventional paths at [ UNKNOWN ], I mean one of the things that you've done is while we've seen the rest of the industry just close stores pretty dramatically, you've really not done that. You instead have these drugstores. So why that approach? Yeah so you know bets your earlier point, the benefit of coming in as I guess that this I'm an outsider although by the time I became the CEO, I was an insider, I had been with the company four plus years before I took on the role, but when you when you can come in as as someone new you do have the opportunity to have some fresh perspective, fresh thinking and And what the board and the CEO at the time, why they did bring me in is that they did wanna be challenged. And they wanted that fresh perspective, to see things differently. And so everything was, every Everything was on the table. And I was hired in at the time as chief customer officer and had responsibility for the marketing organization and the digital part of the business, which was the high growth continues to be a high growth part of the business. But what I quickly realized was to transform that part of the business, we had to actually transform the entire company. And so six weeks into the role, I mean Kevin Mansell, the CEO at the times office, saying Kevin, I can't do this unless we do this. And he teases me now and he says, gosh, he sort of took a big sign said, well, I did hire her to drive change, right. So I guess I better do this. So he signed up and away we went, and that created Our strategic framework we brought the leadership team together called it the greatness agenda and I think more than anything it really galvanized the organization against a new future with a very aspirational purpose to inspire and empower families to lead a more fulfilled life yes we sell stuff but it's what's our role in the world and a set of strategic moves. So all of that set the framework for the actions that we took, you know, starting in that 2013 2014 time period really up until present day. So to your specific question on, you know, the role of the store, I mean, we identified especially when we kind of did this deep look in the mirror, you know, who are we who do we want to be and what are our strategic assets. And we unequivocably declared that our stores are a strategic asset, even an environment that's feeling so pressured with store closures and my gosh is traditional retail dead. Like No, we're leaning into our stores. And we sit here now. Now five years later, and while many people that to pose a lot of stores We have it. Right. And we actually see stores as an opportunity. So specifically to kind of one of our bold moves, if you will, as we look forward, we do see our stores continue to play a very vital role, but they probably can be smaller because our customers and new customers are shopping in different ways. So We're happy if they buy online or buy through our app, but we still want that presence in the neighborhood because it creates that connection with the customer and top of mind. So one of the moves we're making is looking at can we actually instead of closing stores, can we shrink the store, shrink the square footage? Right. And so in comes partnerships like with all the [ UNKNOWN ] Planet Fitness, and others, Where they're looking to drive traffic, we're looking to drive traffic, so how can we do that together? Those are both high frequency visits. People go, hopefully, try to go to the gym frequently. They're going to the grocery store. No, that's exactly right. So we wanna have great neighbors. And some people have asked, wait, does it mean you're putting in Aldi inside the store? No, no, no, you're not getting your bananas with your sweater. But it's actually demising the space, so It looks like two separate storefronts. Right. But we create that destination to create that overlap with the customer base, very early days though. So I was talking earlier the importance of culture and some of the things I certainly learned in my days at At Starbucks is you gotta try lots of things. It has to be aligned with our vision strategy and in this case quite practically is, how do we drive traffic to stores keep our stores relevant? And we have a number of experiments going, this being one of them. So how do you decide what you take out? Obviously if you're shrinking the story, you can't have all of the options that you once did. So I'm guessing that's something that you're testing right now. Absolutely, in fact that's a capability that we've built of the last five years. So as we laid out our greatness agenda, there were very customer facing moves. Like one of the ones that's worked out really well for us. Is becoming a true player and active in wellness, so we were selling brands like Nike and Adidas there was an opportunity to bring under armour in the house which we did and it became a big strategic category that business has actually doubled for us it's a $ 4 billion business for us today. So that's been a great success. But also as part of the greatness agenda was a question of what capabilities do we need to build? A big one was around our data infrastructure and how to do localization at the store level literally have every store be customized. So you can have more or less of a category, or more or less of brands. So when we go in and kind of shrink these stores, every store is different depending on what The customer in the local area desires. Okay. So one of the things you did that was sort of unconventional, you invited Amazon to partner with you and I remember one person describes this as inviting the fox into the hen house a little bit here. So why did you make that decision? I mean, they are a competitor and how does the relationship work? Yeah. You know, I think as we think about retail All the rules are changing, and the way I think about this is looking for great partners and cuz we have so many great partners, whether they're technology partners or product vendors, etc. And it's something that the team for decades has done really well. And so, when we look at prospective partners and vice versa when we get calls, you look at where they're complementary strengths and where are their synergies, you know, in the case of the Amazon partnership, you, back to what we're trying to drive. We're trying to drive traffic to keep our stores vibrant and relevant as one of our key strategies. And from an Amazon standpoint, what Coles has is a strategic asset in our store base. So one kind of fun fact is that 80 % of America lives within 15 miles of a Coles, so we're accessible. And I think from a consumer insight standpoint with so much business happening online, I think everybody can relate to a friction point or pain point when you have to return something. Gotta package it up, you gotta find the tape, you gotta get it someplace. So we recognized, we get a lot of our own returns back into our stores because we're so convenient. And so hey, what if there's a possibility? As Amazon and Kohl's was having conversation, could we take Amazon returns and make it super easy? So the way it works is if you order something from Amazon and it's not quite right, you can bring it to Kohl's it's free and you don't need to package it. And it takes about 30 seconds in the store, it's really seamless and easy. So what Amazon gets is an incredible customer experience reducing all that friction. And what we get is we get some footsteps into the door. And if it happens to create a new purchase, or at least introduce a new customer, mean I do view this as a longer term strategic bat as we think about introducing calls to more customers. So is it working so far? We're still in the early days we just launched it out across all of our sorbets this summer. I will tell you that we tested it for over a year in a couple of markets and about 100 stores. both we and Amazon. We test wanna make sure it works and especially for something that's important, so early days, but really encouraged. Let's see if we have any questions for Michelle in the audience, anybody here? [ BLANK_AUDIO ] Okay. So one thing I want to ask you about is, you came to the company six years ago, and you were in a very public kickoff for the CEO role. I mean, it was no secret, it was out of a stressful situation, how did you handle that, and I mean, you continue to work together with your with your competitor for that for that spot? Yeah so, let me, you know, set a little framework around that, so, join the company and then Sona challah, who was the The other person who is a potential successor for the role who's phenomenal person, great leader, fantastic human being. And we both recognize the importance of succession planning. I mean, Cole's is a $ 20 billion company. I mean, any company of our size scale does succession planning. And, ours tended to be I guess a little bit more public than maybe than others. But she's great and we both needed it to work. So we went together or not, and I think both of our personalities being collaborative, both really putting the company first and wanting coals to win and And I had a lot of the front of house and she had some of the back of house and so we had to work together but I felt like our styles were really complimentary. And like I said, we worked against a common goal. And the way I sort of looked at things even as we're going through it is, you know, there's no bad outcome. So there's not gonna be a winner or a loser, no bad outcome and ultimately the board's going to decide what is the right skill set and experience to take the company to the next chapter. So, I am very grateful to have the opportunity Sona ended up staying on for two more years as our president, so she was promoted as well. And we had a great partnership over the last couple years. Right. So yesterday Tory Burch talked about embracing your ambition. And I asked Corey Barry this earlier, but at what point in your career did you know that you were going to be a CEO that you thought this was a possibility for yourself? That's a it's a really hard question to answer. I don't know that there's ever a day that you wake up going either I want it or I think I can do it. I mean if I look at over the course of my career. You know, first of all, I just had tremendous opportunities, had incredible mentors. Both from my early Proctor & Gamble days to, of course, all the time at Starbucks. And you know, and then a mentor in the previous CEO Kevin [ UNKNOWN ] at Kohl's. And I think what I learned, in terms of my career, was being in places where you feel like you can add the most value. But, also, that fills you up. And you're passionate about it. So, for me, I loved teams. And whether it was the small team I worked with, when I was the frappacino manager in 1996 To the team, I have Michelle for the [ UNKNOWN ] [ LAUGH ] No, I did not invent the frappuccino but ask the question but did bring a few whipped cream and drizzles and [ LAUGH ] that kind of stuff along the way. But no, I mean, I think regardless of your level, it's about creating a great culture and a great team environment and developing others. Having everybody bring their best self to solve problems, or create opportunities. And to me that's kind of threaded throughout my career. So at Kohl's and as things progress, ultimately there was a day at the Wow, I would love to be CEO of this company. I love everything it stands for, the value the people. And also continuing that thread of developing others. As a matter of fact, I'd say one of my proudest moments of late was just promoting our new chief financial officer. Her name is Jill Tim. She's been with the company for 20 years. And as I think the stats would suggest, we're in like a 1 % club of female CEO and CFO combinations. So very proud of that, but more than anything Anything. She's an amazing individual. And so I just I think constantly looking for those opportunities to elevate the team. And like I said, set the table for folks to do their best work. So very quickly tell us what's still the biggest challenge for the company. As you look ahead. Retail is ever changing. There's not a dull moment. And so I think for us in this culture that we're building, we're building around speed. Agility. Thinking out of the box, right. So we've now lots of evidence of new moves we've made. But as they say, it's tough out there. So, just thinking about what around the corner, how we can inspire. And then for us, our purpose is to serve families. I think in particular for cloths, it's making sure we are serving the most diverse set of families, of all generations. And so, it's something we are really focused on right now. Shell thank you so much for being with us. Thank you. Thanks that. [ APPLAUSE ] [ BLANK_AUDIO ]

Most Powerful Women Summit 2019: Michelle Gass Carves a New Path for Kohl's

Michelle Gass Carves a New Path for Kohl's

Leadership

Store closures and plummeting sales are the new normal for department stores. But Michelle Gass, a year into the job as CEO, is carving a different path for Kohl’s.