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Retail Nirvana The Keys to Capturing Customer, Employee & Shareholder Value
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Keynote presentation at the 2013 Retail Executive Summit. ...

Keynote presentation at the 2013 Retail Executive Summit.
http://bradycap.com/retail-nirvana/

Day One Closing Keynote
Retail Nirvana: The Keys to Capturing Customer, Employee, & Shareholder Value

Speaker
Gary A. Williams, Founder & CEO, wRatings Corporation
* With additonal content provided by Barbara Gray, CFA, Equity Analyst, Brady Capital Research

The level of differentiation from a product, experience, or service level in today's retail environment can make the difference between success and failure. While innovation is important, the most successful retailers also have to execute better and understand more effectively their social ecosystem. In this dynamic session hear from Gary Williams, with additional content provided by Barbara Gray, as he highlights the business, social, and technology requirements that today's retailers need to build value and succeed.

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Retail Nirvana The Keys to Capturing Customer, Employee & Shareholder Value Presentation Transcript

  • 1. © 1999-2013 wRatings Corporation & Brady Capital Research. All rights reserved. The wRatings research methods in this report are protected by US Patent 6,658,391 and other patents pending. All trademarks are the properties of their respective owners. Gary A. Williams The wRatings Corporation, Founder & CEO Barbara Gray, CFA Brady Capital Research, Equity Analyst Retail Nirvana The Keys to Capturing Customer, Employee & Shareholder Value
  • 2. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 2 Wikipedia Says . . . “Nirvana” refers to the stillness of mind after the fires of desire, aversion and delusion have been finally extinguished. DESIRE Customers AVERSION Employees DELUSION Shareholders
  • 3. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 3 The Great Divide: Today’s Capitalism is Broken Customers The Real View Shareholders Employees Wall Street’s View Shareholders Customers Employees
  • 4. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 4 A New Way of Valuing Companies Gary A. Williams wRatings Author & Competitive Research Barbara Gray Brady Capital Award-Winning Equity Analyst & CFA Jeffrey Cherry Porter Group Hedge Fund Manager & Investment Banker The Customer Value Index 200 (CVI 200) selects companies based on competitive strength, social strength, and authentic core values. www.cvi200.com
  • 5. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 5 Lululemon Annual Report 2011 Video Source: lululemon.com
  • 6. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 6 Customer Value Index 200 6-Month Performance: CVI up 25.5%, S&P500 up 21.8% Source: Bloomberg, BradyCap Analysis
  • 7. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 7 Today’s Discussion . . . 1. A New Form of Capital . . . Drives Whether Companies Fail or Succeed The Power of Purpose . . . Shifting from What to Why 2. Social Strength ≠ Size or $ . . . The Top Retailers in Social Strength 3.
  • 8. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 8 1. Find Your Greater Purpose
  • 9. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 9 Shift from Material Want to Meaning Want THE SEED Purpose (Shell→Heart→Soul) THE SOIL Core Values & Culture: Where SEED is cultivated and guides daily behaviors THE ROOTS Community that sprouts from SEED and grows in SOIL to form stakeholder ecosystem with a cult- like following Chip Wilson in 1998 “To create components for people to live a longer, healthier, and more fun life” Source: Barbara Gray
  • 10. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 10 The Silent Majority Become a Revolutionary Force Social Media connects a company’s customers, employees, & partners to empower them Influence, expose, and disseminate their views Self-organize & join forces on a common cause Create new communities to enable advocacy, learning, collaboration Source: Barbara Gray
  • 11. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 11 It’s All About Controlling Risk Economic Lose share of wallet Gain share of wallet Pricing No connection so reduces pricing power Deepening connection increases pricing power Supplier Supply chain disruption slows down/ stops productions Opportunity for higher integration & savings DECREASING RISKINCREASING RISK NEGATIVE SOCIAL CAPITAL RISK FACTOR POSITIVE SOCIAL CAPITAL Source: Barbara Gray
  • 12. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 12 Retailers Can Increase their Growth Profile How LULU uses Social Media to build strong and trustworthy stakeholder relationships Grow Comparable Sales $1,700 per Sq Ft $2,058 per Sq Ft Pre-Recession 2012 Expand Geographic Footprints Over 40% of LULU’s 2,650 Employees On LinkedIn Launch New Concepts Source: Barbara Gray
  • 13. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 13 2. We know what you sell; Now we want to know . . . WHY?
  • 14. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 14 20 Years Ago vs. Today Source: KPCB, Mary Meeker / Liang Wu, D11 Conference 2013 1993 On the Internet, nobody knows you’re a dog. 2013 On the Internet, everybody knows you’re a dog.
  • 15. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 15 The Shift from What to Why Social Strength Is . . . Consistency Simplicity Time-Sensitive Stability Trust Precision Useful Coolness Variety Social Strength Is NOT . . . Leadership Fair-Pricing Quality Competence Availability Unique Safe Detached At wRatings, we track 12 functional and 5 emotional attributes with customers.
  • 16. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 16 Relationships form Communities Social Strength is a company’s ability to create authentic, engaging, long-term and emotional relationships with customers . . . And management's consistent ability to do so in an economically profitable manner.
  • 17. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 17 Losing Their Way . . . And Tracing History to Rediscover It Time Sales in $ “Why” a Company Does It “What” a Company Does Source: Adapted from Simon Sinek The Founder’s Flounder
  • 18. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 18 Apple 1990s PowerBook Commercial (no Steve Jobs)
  • 19. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 19 Shell Heart Rediscover Your Identity Layers of Stakeholder Relationships Soul •Shell Utility value proposition (financial and delivery elements) that its product or service offers to stakeholders. • Heart Emotional connection stakeholders have with the company’s brand. • Soul Strong psychological attachment that stakeholders have for the company’s greater purpose. Source: Barbara Gray
  • 20. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 20 Starbucks Changes the World
  • 21. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 21 3. First Why, Then Show Me The Money!
  • 22. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 22 Top 20 Social Strength Retailers RANK TICK NAME Industry Social Strength W Score™ Sales TTM in $M Net Income TTM in $M 1 LULU lululemon athletica inc Retail‐Softlines 88.9% 95.5 $1,370.0  $271.0  2 CRI Carter's Inc. Retail‐Softlines 85.5% 88.2 $2,382.0  $161.0  3 COH Coach Inc. Retail‐Hardlines 81.6% 96.1 $4,929.0  $1,051.0  4 BBY Best Buy Co. Inc. Retail‐Hardlines 80.4% 55.7 $49,621.0  ($231.0) 5 BKE The Buckle Inc. Retail‐Softlines 79.7% 94.5 $1,124.0  $164.0  6 VRA Vera Bradley Inc. Retail‐Hardlines 79.4% 93.7 $541.0  $69.0  7 ZQK Quiksilver Inc. Retail‐Softlines 79.1% 76.3 $1,995.0  ($12.0) 8 URBN Urban Outfitters Inc. Retail‐Softlines 78.7% 91.7 $2,795.0  $237.0  9 NILE Blue Nile Inc Internet   78.5% 57.7 $400.0  $8.0  10 EBAY eBay Inc. Internet   78.3% 48.6 $14,072.0  $2,609.0  11 FOSL Fossil Inc Retail‐Hardlines 78.0% 90.8 $2,858.0  $330.0  12 SCSS Select Comfort Corp Retail‐Hardlines 78.0% 88.9 $935.0  $78.0  13 TIF Tiffany & Co. Retail‐Hardlines 78.0% 88.3 $3,794.0  $416.0  14 BBBY Bed Bath & Beyond Inc. Retail‐Hardlines 77.9% 82.4 $10,245.0  $1,015.0  15 GNC GNC Holdings Retail‐Hardlines 77.9% 88.2 $2,430.0  $240.0  16 JOSB Jos. A. Bank Clothiers Inc Retail‐Softlines 77.8% 79.8 $1,041.0  $95.0  17 GPS Gap Inc. Retail‐Softlines 77.8% 88.2 $15,651.0  $1,135.0  18 HIBB Hibbett Sports Inc Retail‐Hardlines 77.7% 80.5 $819.0  $73.0  19 AEO American Eagle Outfitters Inc. Retail‐Softlines 77.7% 87.5 $3,476.0  $279.0  20 ARO Aeropostale Inc. Retail‐Softlines 77.7% 86.6 $2,386.0  $55.0  Source: wRatings, as of March 29th, 2013
  • 23. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 23 Building Social Strength: Luck or Skill? Source: Michael Mauboussin, The Success Equation Gary A. Williams analysis Pure Luck Pure Skill “Greater Purpose” Social Strength
  • 24. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 24 Retail Nirvana is within your reach . . . 1. A New Model for Capitalism Drive success by building social strength Find Your Greater Purpose Trace your history to rediscover the why 2. If You’re a Dog, Everyone Knows It Already Be authentic and transparent 3.
  • 25. © 2013 wRatings & Brady Capital Research. All rights reserved. Page 25 Thank you . . . Gary A. Williams gawilliams@wratings.com To obtain the Greater Purpose white paper, go to: www.bradycap.com/research To obtain a copy of this presentation, send a note to: