Retail Relates
'Retail Relates' is not just a podcast; it's a journey into the heart of retail and commerce. Our episodes traverse the path from traditional marketplaces to digital platforms, highlighting the successes, trials, and invaluable lessons learned along the way. We're conversing with those shaping the industry—from the front lines to behind the scenes, the creative minds to the global strategists - offering a diverse 360-degree perspective. We're revealing the relationships and personal narratives that make retail engaging and accessible. 'Retail Relates' is an invitation to explore the world's interconnectedness through the lens of retail, encouraging listeners to discover the personal journeys and stories of those who drive innovation and unite us across cultures and continents.
Retail Relates
Building Teams to Lead Retail Transformation: A Conversation with Theo Killion
Send us a message and let us know what you think!
Join us for an inspiring journey with Theo Killion, a remarkable leader who transformed his life from a coal mining town in West Virginia to the pinnacle of retail success as a public company CEO. Theo’s story is a testament to resilience and adaptability, shaped by the profound influence of his grandparents and his early challenges at a prestigious New York private school. You'll uncover his rise through the ranks at Macy's, from a trainee to head of human resources, and his bold leap into new opportunities that defined his career. Immerse yourself in Theo’s world of retail wisdom, grounded in humility and the courage to embrace change.
Explore retail excellence and discover the foundational pillars that drive success: the customer experience, employee empowerment, and innovative product development. We reflect on Theo's shift from public school teaching to the retail industry, sharing transformative strategies that prioritize customer satisfaction and inclusivity. Delve into the integration of technology and AI in retail, reshaping supply chains and enhancing data recovery. Our discussion highlights inspiring leaders who've championed customer-centric approaches, showcasing how empathy and collaboration build high-performing teams.
Find inspiration through personal anecdotes and memorable experiences that illustrate quick decision-making and resilience. We celebrate transformative figures like Abraham Lincoln, Sam Walton, and others, drawing parallels between their humble beginnings and today’s retail success stories. Tune in to learn how these narratives shape the evolving landscape of retail, honoring modern-day leaders whose innovative visions have led to remarkable achievements.
Theo Killion's Biography
Theo Killion's career spans nearly five decades in the retail industry having served as a director for both public and private company boards of directors and in a variety of executive leadership roles for some of the most iconic retail brands in North America. Mr. Killion currently serves on the board of directors of Torrid Holdings Inc., a direct-to-consumer apparel and intimates brand, as well as Claire’s Stores, a jewelry and accessories retailer. He also previously served on the boards of directors of Tailored Brands, Inc., Libbey, Inc., Express, Inc. and The Zale Corporation. During his time as a retail executive, Mr. Killion served as Chief Executive Officer for The Zale Corporation and in a variety of other leadership positions for Tommy Hilfiger, Limited Brands, The Home Shopping Network and Macy’s.
Mr. Killion currently serves as a managing partner of the Sierra Institute, a Dallas based human resources consortium. In addition to his retail industry and corporate governance experience, Mr. Killion has deep expertise in all matters relating to human capital, including CEO succession planning, talent identification and leadership development, organizational design and effectiveness, building high-performance teams, and executive compensation and benefits. Mr. Killion is a member of the National Association of Corporate Directors. He is a Vice-Chairman of the non-profit A Better Chance program and a member of the Advisory Board of his alma mater, Tufts University.
Theo Killian's career spans nearly five decades in the retail industry, having served as a director for both public and private company boards of directors and in a variety of executive leadership roles for some of the most iconic retail brands in North America. Mr Killian currently serves on the board of directors of Torrid Holdings Inc. A direct-to-consumer apparel and intimates brand, as well as Claire's Stores, a jewelry and accessories retailer, and if you're like me, you absolutely know what Claire's is inside of the mall. He also previously served on the board of directors of Tailored Brands Inc, libby Inc, express Inc and the Zale Corporation. You know the diamond people.
Paula:During his time as a retail executive, mr Killian served as chief executive officer for the Zale Corporation and a variety of other leadership positions for Tommy Hilfiger, limited Brands, the Home Shopping Network and Macy's. Mr Killian currently serves as a managing partner of the Sierra Institute, a Dallas-based human resources consortium. In addition to his retail industry and corporate governance experience, mr Killian has deep expertise in all matters relating to human capital, including CEO succession planning, talent identification and leadership development, organizational design and effectiveness, building high-performance teams and executive benefits. Mr Killian is a member of the National Association of Corporate Directors. He is a vice chairman of the nonprofit A Better Chance Program and a member of the advisory board of his alma mater, tufts University.
Paula:Theo, thank you so much for being on the show. You have a very interesting background that most people would not associate with being the CEO of major retail companies, which we absolutely love, because it's these unique perspectives and voices that we want to highlight more, and yours is about as unique as they come. In your opinion, what were your three pivotal points in your career or in your life that brought you to where you are today?
Theo:Sure, first of all, thank you for inviting me to the podcast. It's terrific to talk about something that I love, which is the retail industry and all forms of commerce that serve customers, so this is absolutely a joy to do this. The first and foremost, most important thing that was transformative for me was being born and raised by my grandparents in West Virginia. From them I learned humility. I learned that listening and seeing were much more valuable than speaking. I learned that people who know don't talk and people who talk don't know. Many of those lessons I learned with a switch, but I quickly adapted, and so that was undoubtedly one of the foundational things that happened in my life that I would have never changed. My grandfather was a coal miner.
Theo:It was an amazing, amazing journey to begin my early career in retailing as a trainee stacking glasses and housewares in New Rochelle and Queen Store in Macy's, being an assistant buyer in tabletop and housewares, and having a career that lasted 19 and a half years in both human resources and also in operations. I had the opportunity there to become an associate buyer. I had the opportunity there to become a buyer of department 618 and 685, moderate women's active wear and coordinates, and I ultimately became the head of human resources and went through a leveraged buyout. I went through a growth period at Macy's from, call it, 1977 to 1987. Once we did the LBO I went through a bankruptcy. So I had this incredible journey to see business in all of its cycles.
Theo:I think then the next most transformative was leaving Macy's. When I left Macy's and frankly I thought I would be there for my whole career it was because I was being asked to go into a job that I thought was substantially less important than the job that I was in, and I sort of stepped into the wilderness and decided that I wanted to go and do a turnaround and I left Macy's, which was a fairly comfortable business at the time, but it was being taken over by Federated and my attitude was if I'm going to join a new company, I want to join a new company that's excited to have me. I don't have to learn how they do things and I'm going to go someplace that's wildly different. That was a transformative move in my life.
Gautham:What was it like coming from a coal mining town to get yourself to be a CEO of a public company? What were the challenges and the opportunities you faced to get yourself?
Theo:It was a journey, the idea of I had been accepted into a program for kids who showed some academic promise and had the opportunity to get a scholarship to go to private school. The first thing was I left my little bitty town in Montgomery, west Virginia, and I took a bus ride to New York City. So my town hit about 4,000 people. I'm going to New York City, I'm going to Port Authority and they said look for somebody who has a flower in their lapel. This is a late 60s. Everybody has flowers in their lapel, they have it in their hair. And I'm walking around looking like Jethro Bodine on the Beverly Hillbillies with these two pieces of luggage didn't have a piece of natural fiber in them my suit that I bought for $29.99, that had a reversible vest and two pairs of pants.
Theo:I ultimately fell my way to the people I was supposed to be with and I went to private school. Private school was like landing on another planet. Sons, it was all boys. There were general sons, there were people who were captains of industries, sons who were there. There was a whole different rhythm and talk to the business.
Theo:What that did was it put me into absolute shock. From an academic standpoint, I was able to catch up after a year. But what it also did? It gave me the confidence to say I can compete academically with anybody. Once I made that academic leap and understood that being impressed by who you were and where you came from wasn't as important as how you applied yourself, how you learned, how you use hard work and discipline. Once I understood those things, you know, my undergraduate career was relatively easy. I finished in three years, I went to graduate school and then I started after graduate school and, as Paula mentioned, my undergraduate majors were history and English, my graduate degrees in education. Each one of those three disciplines were hugely important in everything that I did after that I'm going to ask one follow-up question.
Gautham:A town of 4,000, you chose to leave that to go to one of the biggest cities in the world. What was the motivation? What was the drive? And you don't need to tell your age biggest cities in the world. What was the motivation Like? What is the drive? And you don't need to tell your age, but you're young. I left India to come to the US. I'm trying to think about what drove you to leave, where you probably knew every person in the street.
Theo:Yeah, if you left India to come to the US, you had some either thing that was in you or some group of people who believe that education was going to transform your life and potentially their lives. So my grandmother, who went as far as the fourth grade, my grandfather, who went as far as the seventh grade, had this fundamental belief that education was going to be my ticket out of the circumstances that we were in. They believed that was going to transform my life, circumstances that we were in. They believed that was going to transform my life. Imagine these people who are in West Virginia who are letting their little boy go it was just me with them into this incredibly foreign world that they could absolutely not even imagine. I'm going to private school, I'm going where. I'm going to do what? So they took an enormous leap of faith. The amount of love and commitment that they showed to me gave me the strength and the energy I can remember being in college.
Theo:One of the things that happened during my freshman year which I'm sure never happens with any other students is I kind of lost my mind that first semester. I can remember getting a grade. It was like a 1.8. And I saw that and it slapped me into reality because I said to myself this is going to break my grandparents' heart and I wound up graduating in three years with honors and really spending time focusing on the reason why I was there, which was to do the thing that they wanted. That was their dream. I was there the manifestation of their hopes, dreams and aspirations and had this opportunity to do this, so there was really never a question about it, I think probably, you know, when I came back talking funny without my Southern accent and growing an Afro, when I could actually do that, they probably thought I lost my mind, but they were just incredibly, incredibly proud of me.
Paula:I want to go back to something you said which I think is very important and a lot of people can't make that connection. How exactly did history, english and education help you further on in your career?
Theo:So first let me talk about history, charlie Munger, who recently passed away, who's famously the person who was a partner with Warren Buffett, berkshire Hathaway. What Charlie said was I make a habit of making friends of imminent dead people, and what he meant by that. If I study the past, if I learn from the people who are successful, and I curate, cultivate and think about what those lessons are for the problems that I'm trying to solve today, I'm going to be much better at what I do Throughout my professional career, throughout my personal life. My books are filled with stories of people in history. I have read the story of Sam Walton. I have read the story of Jeff Bezos. I have read the story of Josiah Wedgwood. I have read the story of Michael Dell. I have read the story of all of these amazing people. I've lived the story with Les Wexner and Ed Finkelstein Les famously being at the Limited, ed Finkelstein being at Macy's and I was able to pull through lines from what they talked about and what they did into what I did, so I didn't have to make those same mistakes. One of my favorite quotes is what we learn from history is that we don't learn from history. That will never, ever be something that I can be accused of, because I had that grounding and understanding that while history doesn't repeat itself, it rhymes, so there are things that are happening along the way that are instructive to what you do today.
Theo:English, if you are in business, being able to put together thoughts in an organized way, being able to think with a critical mind, being able to accumulate information and be able to translate that message so that you're giving articulate messages, is hugely important. That's an English discipline. The idea of storytelling, which I think is so critically important to being able to get an organization to join you on a journey, comes from being an English major and understanding all of those stories and all of the ways that they're put together and how you can bring them forward. When I was the CEO of Zales and we were losing money like crazy and it was about to go out of business, I talked about making a journey to the profit promised land and getting through the Red Sea of debt and use those biblical stories to be able to get people to think about something that's fairly universal in their references, but to then move with us to think about it. So English, hugely important.
Theo:Being an educator each of our obligations as leaders is to take the things that we have learned and impart them to the people who are with us. So I've never left education. Education has never left me. I push books into my mind and podcasts all the time. I won't live long enough to read or listen to everything that I'm interested in. I can't imagine a world without education. I can't imagine being a leader of any people without learning how to be an educator, and educator meaning the lessons that you teach are lessons that they can take and they can apply and they can make their lives better. So I thoroughly enjoy. When I thought about myself as a chief executive officer, I thought about myself as the head professor in the class, and my job was to be able to help people to get to where I was and be able to articulate the same things that we're trying to do on our mission to turn a business around.
Rich:So I want to follow up with that. Our paths have fortunately crossed on several occasions and I've always held you in the highest regard as a retailer and as an individual. And listening now at the way you connect the dots so thoughtfully, at what point did you connect the dot and decided retail?
Theo:All the way back to when I finished graduate school. I tested the water as a public school teacher and I had a wife and a child and I thought I really enjoy this. I was coaching, I was doing a bunch of other stuff, but I'm kind of getting back to being poor again. As much as I love what I did with those incredibly fantastic students, I thought you know, if I'm successful, I can continue to do that later on in life. So I started to interview with any number of organizations. I interviewed with banks, I interviewed with insurance companies. I interviewed with retailers.
Theo:The people in retail were a lot like me. They were people who came from, in many cases, humble beginnings. They were people who succeeded based on their creativity, their intellect and their hard work, and they were successful. They were people I could, based on their creativity, their intellect and their hard work, and they were successful. They were people I could relate to. There was a humor to the business. There was this opportunity at a very young age to manage a profit and loss statement and I thought this is amazing. This is absolutely magical. So going in and think about actuarial tables and the people that you would have to associate with wasn't really interesting. Banking was modestly interesting, but wasn't necessarily the kind of people. That club wasn't a club that I fit naturally in, a club of people who were working their way into middle class, who were working their way up sort of the ladder, where people I could relate to. So I fell in love with it, rich, at a really young age, and that love affair continues to this day.
Paula:That's beautiful. I think Rich fell in love with it too, given his background that we know. Let's move on to the lesson part, because we have a lot to learn from you here. So let's move on to the lesson part, because we have a lot to learn from you here. Something that we've heard you say is there are three important points and pillars of success for retail and commerce. What are those pillars? Can you talk us through that?
Theo:Sure, I think customer, I think people and I think product. There are a lot of other things, and how you mix that together in order to get to profit is your ultimate goal. It starts with having an appreciation of, and a love for, the people who pay the bills, no matter what form of commerce you're in. If you cannot put those people on a pedestal, then you will not do your business well. When I became a CEO, one of the first things I said to the first gathering we had of all of the people was we're going to do this, we're going to invert the pyramid. I'm going to be on the bottom, customer's going to be on top and the people who serve the customers are going to be the second most important people in our business. So what we did was we changed some of the terminology. Our customers stopped being customers. We promoted them to being guests. Our sales associates stopped being sales associates. They started becoming customers, jewelry consultants. Our headquarters stopped being headquarters. It became the store support center and we culturally started talking about what does that look like? To put the customer on top, to think about how we relate it to him or her in a different way, how we get into their thoughts, their hopes, their dreams, their aspirations. How do we get into that in a deep and meaningful way? And then how do we follow them on their journey so we're always relevant to who they are and what they do.
Theo:In studying history, one of the absolute through lines of many of the people that we've mentioned is their love, appreciation and understanding of how important customers are. Jeff Bezos famously used to keep an empty chair in his office when they had meetings that was for the customer, so that they never, ever, forgot the customer. Marshall Field's book is entitled Give the Lady what she Wants. Throughout all of these, they had an understanding and an importance of the people that they work for. Les Wexner, who was the CEO of the Limited, used to say never sell down to the customer, always sell up, Always give them something that elevates them and, whether or not they are buying $5 or $500, make them walk out of the store with an elevated experience. One of my many favorite expressions is what they walk out of the store with in the bag is the product. What they walk out with in their mind and their heart is the experience of the brand. That bridges over to this idea of the people. If you're going to elevate your customers, then the people who are most directly involved with those customers are the people on the front lines, the people who are managing your electronic commerce, and you have to elevate them. Howard Schultz talks about the humanity of work and talked about surprising the people who worked in that business. He famously gave part-time benefits to people. He gave equity and stock to them before they went public. But he talks about being able to surprise them and make them feel good so they would do the same thing for their customers. So those things connect closely. And then you have to build systems and processes that hold up those two things. That celebrates those two things.
Theo:We used to have celebrations twice a year where we brought in our store's leadership, who we changed from being district managers to district leaders, store managers to store leaders changed from being district managers to district leaders, store managers to store leaders. We anointed them and said you're no longer renters, you're owners of your business. We're going to give you your P&L and we're going to tell you how to use it to drive your business forward. But we used to bring in the people who sold a million dollars worth of jewelry every year. When we started out we had about 15 of those people by the time we started to fix the business. There were 40 of them. It was like going to graduate school, because I'd sit down with them and I'd ask them for information about how they ran the business, the things that we did that helped transform the business that I was in. I would say easily 70%. I learned from somebody in a store.
Theo:You go to Canada. They say you know, we really would love to have Canadian diamonds up here because people in Canada take, oh well, Canadian diamonds in Canada. That sounds like a really good idea. So you know, you go out there and you get these unbelievable pearls of wisdom from the people who were there and you lift them up In a company that had been suffering for a long time. You try to get to a point where they're proud of the place they work again, where they can go home and they can talk to their friends and their loved ones and say I work for this company and I'm really proud of it. Every one of them is an ambassador and if they're going home and their loved ones are saying get out of there, it's a terrible place to work. They're fighting for just giving them a paycheck, but you've lost their hearts and their minds.
Theo:The third thing is product, and I know that Rich can certainly relate to this. The expression in retail is when the product is right, everything else matters. When the product is wrong, nothing else matters. It's absolutely true. The interesting thing about product, though, when you have really great people, is, even when we went into a business that was about to go bankrupt, there were about 50 to 100 stores that were having positive comps. It's like, oh, that's interesting and they had the same bad marketing. They had the same bad product. They had the same lack of investments in their stores. They were dirty, the case lines weren't great, so part of my first diligence was to go to those stores and figure out what was going on. It reinforced this idea that great leaders of stores can lift people up and create a culture within that four wall space.
Theo:And then, if you start to listen, if you have old inventory that hasn't been replaced, if you don't get the product architecture of the business right good, better, best and be able to start to listen and give them great product, Most products are very similar to each other. If you're in the diamond business, Technically a diamond is a diamond. What they do functionally is absolutely the same. How it makes you feel emotionally is where the difference lies. When I was at the limited and we were selling, you know, Victoria's Secret, you could go anywhere and get what we sold. So technically same stuff, Functionally it did the same stuff. But the margin lives in emotion, how that product makes you feel.
Theo:And that's when you link once you get the product assortment right, marry it with great marketing, great storytelling, and you start to elevate it so that when people walk in your store they're getting great experience from the jewelry consultant, they're being treated like a guest right? So the mentality of having a guest in your home is you clean up differently, you serve differently. You want them going out with a positive impression. So if your job is to get ready to serve the guest, and when they're there, you don't rush them out, you spend time with them. You listen to what is the problem that you're trying to serve the guests, and when they're there, you don't rush them out, you spend time with them. You listen to what is the problem that you're trying to serve with the product that we have, and then you try to give them something that makes them feel great for themselves or for someone else that they love in their life. That's where the magic happens Elevating that guest experience so that it's special with unbelievable product, so that you feel like you have an affordable luxury when you walk out of there.
Theo:We were in the diamond business. We'd forgotten we were in a diamond business. Diamonds sit at the corner of love and happiness. What could be better than that as your selling proposition? Everybody was looking to make somebody happy for themselves or somebody in life. So if you're starting with that selling proposition, it's like how in the world did we screw this up through the years? And then you start to make people feel good about who they are and what they do. Things start to happen. I mean really, really special things start to happen.
Gautham:Theo, if we stop the interview now, it'll be great, but I want to ask you, specifically of those four years, 2010 to 2014,. Sales price was sales where I think was a dollar or a buck or something, and when okay, $1.39. And I think when you were done it was like $22 or something like that. You turn it from $120 million to about $19 million in profits. You talked about customers, you talked about people and you talked about product. In my opinion, the people, your employees, are critical to making that experience. When morale is down, when people are beaten down, how do you manage that turnaround to get them to walk around with their heads held high, go home saying I'm proud to work here? Can you talk about that? Give some secrets for our students who are learning those leadership skills.
Theo:You have to do a number of things. You have to make sure that you have the right people in the right jobs and when you have a business that hasn't done well for a very long period of time, you have people who really want to do well but don't know what to do. There are people who are kind of hiding and you have people who have just checked out and they're getting a paycheck. You tell them what the expectations are. You're very clear about what they need to do and then for the people who shouldn't be in the business, you help them to not be in the business. That had to happen literally at every level of the company. We did assessments in our field organization of the top 100 stores and the bottom 100 performing stores. We started to understand what the capabilities were like human resources background, what the capabilities were of the high performers and we started managing to hiring only people who showed those skills and abilities, hiring only people who showed those skills and abilities. What that meant was that many of those people came from a different industry and we had to fund 40 hours of training for every single person who came in in a leadership job so that they learned the easiest part, which is the jewelry business. The hard part is how do you learn empathy, how do you learn passion for the guest? How do you learn how to get people to dream big when they've been to your point, beaten down over a period of time? If you hire people like that, then you teach them the technical stuff right. The old saying the hard stuff is easy, the soft stuff is hard. If you hire the right people with the right soft stuff, train them on the technical stuff. So now we got a group of people who are ready to march into the future. We will take you on the journey if you have the right attitude. What I will not tolerate is a negative attitude. What I will not tolerate is backbiting. What I will not tolerate people who are on this team going after other people on the team. If you aren't ready to go on the journey, we will help you to make a journey someplace else. If you want to go with us, you are going to be included. You are an equal partner in all of the decision-making as we go forward, understanding that the board has a bull's eye on me. That's a lot larger than the bull's eye on you guys, but we're going to go forward in the journey together. And then I think the other thing that's pretty tactical is that first year we didn't give raises. Going to the second year we weren't probably going to give raises. The only thing that I could give them was hope. The only thing that I could give them was accessibility.
Theo:I sent messages to the field every single week. I was in stores every single weekend. I told hero story on all of my store calls. So I just went to Oklahoma City and the jewelry consultant there told me a story about how there was a customer who was a mall walker, who had walked this mall for years they have overalls, looked a little dirty, clearly a farmer in Oklahoma. But I asked him one day. I said you know, you're around here all the time. You've never come in to buy anything. And he said to me I actually have a 50th anniversary. I've never been able to buy my wife a ring and I'd like to buy her a ring. And he said would you help me? He came into the store with a box full of money True story Box full of money. True story Box full of money. And they picked out a ring and made him a hero.
Theo:So the lesson that was taught is don't assume that the person who's walking in the mall, don't assume the person who's come down, who's dressed a little differently, isn't a person, because this jewelry consultant in this store did it and every single week there'd be another hero story. These are the people who are the most important people in the business. So giving them hero stories. Every single district manager had my phone. Every single million dollar jewelry consultant had my phone. So I okay, what do you need? Let's talk.
Theo:But it's demystifying If I'm on the bottom and they're flowing information to me and that information is help us, helping us to run a business, and I can talk about changes that are significant changes in the business and I could say I learned this idea from and put a name to it. People go, wow, this is different, this is really different. And then when we started starting changing the assortment in the first year and our bridal business started comping positively in the first year and the business had its first comps in three years and then we had 14 straight quarters of positive comps and everybody started to get paid Like it was really easy to keep them. At that point we didn't lose anybody on a team that we wanted to lose. They were equal partners in the journey. The communication was there, so they understood that this isn't a me, this is a we and a us.
Rich:So you've mentioned the love of history and one of my favorite books is the Romance of Commerce by Harry Selfridge, so I wanted to ask a question about artificial intelligence, technology and what retail looks like today. Where do you think retailers today are getting it right and where do you think they're getting it wrong when it comes to incorporating technology into the retail experience?
Theo:Yeah, it's a little bit of a difficult question to answer only because different people are doing different things. I don't think that there's one answer to that question. The people who have shown the greatest amount of success early are using AI in supply chain. People who are using AI in data recovery are getting really good information to inform decisions that were largely based on instinct before. Instinct still has to be a part of it, but I think people are treading slowly on it to try to figure it out a little bit. There are lots of things that are being called AI that aren't necessarily AI, so I think we're still very much in the early stages of learning. Rich.
Theo:You'll remember, in the early days of the internet, there were a lot of resistors. There were people who didn't believe in not only the internet, but they didn't believe in this thing called electronic commerce. Nobody wanted to be the early adapter because it was an animal they'd never seen before, so they don't know how to talk about it, describe it. I'm all for change. You first was kind of the attitude that went into it. I think that's a little bit where we are in AI. I think it's enormously interesting. I think the opportunities could be vast. It's a little bit of go slow to go fast for most of the people that I work with or have some familiarity with.
Rich:I will share a very quick anecdote that you'll appreciate, given your history. So I was at Joe Bank early in my career, right around the time that you were seeing the first inklings of e-commerce. Right around the time that you were seeing the first inklings of e-commerce, and I'm the one that actually registered the josebankcom name because I thought it might be something when the company didn't want to, and a year later it was hey, we think we want that A little proud moment. That'll never go on my resume. But you are right, I remember those days where I distinctly remember executives saying this thing will never work.
Theo:It's not so long ago that people in other jewelry businesses didn't believe in e-commerce. Not so long ago, like when I was a CEO, I was like don't tell anybody about this and all we did was mint money. And, as you know, you know, among the many wonderful things about it is you get to test items there a lot more cheaply than you can test them anywhere else. We used to call it the long tail. What are people looking at? What search words are they putting in that we don't have? Let's buy a little bit of it, let's put it on the site. It was and is absolutely phenomenal. When you blend that into artificial intelligence, it can give you even more of an instinct in terms of what people are looking for and where they're going after they walk into your site. It can be extremely, extremely powerful.
Paula:We've gleaned a lot of great advice from you, so I want to ask you, as someone that always had to work harder I'm also a minority, oh, no kidding. I don't know if this was your experience, but from what I heard you say, you had to work harder, not necessarily differently, you just had to work harder in some occasions, right, either it was to fit in or to understand the culture or to understand the environment that you're in, because we didn't grow up in that there was always some element that we had to work that wasn't there for other people. In all of that, what do you think your biggest failure that stands out to you is, and what do you take away from that? What lesson is there?
Theo:There's a fair amount of failures along the way. I think, as I look at them in the rear view mirror, they were lessons and I was able to put them into the right place at the right time. When I left Macy's, I went to a place called the Home Shopping Network. That, at the time, was the next big thing. E-commerce really wasn't a thing at all. But, boy, this television shopping thing that gave you instant information, where you could have the sales that were going on in the studio registered on your computer in real time and you could look at it against gross margins. It was unbelievable. So when I left, I wanted to go into a turnaround. I wanted to do something wildly different. That was the future of the business. So I left and I joined Home Shopping Network. I joined in April. I was fired in December.
Theo:At the time, particularly coming off of 19 and a half years of being someplace where I was hugely disappointed that I didn't have the opportunity to stay, even though it was at my own volition and then being fired, you start to question yourself a little bit and you start to question your decision-making. What that did for me was a bunch of things. At Home Shopping Network, the CEO was fired. So I started in April. Ceo was fired in September. Like hmm, things aren't going that great. So the COO and I started looking at the business and what could I do and what could he do? So I had the stores, I had the call center. I had this much bigger job than I would have had anywhere else if I weren't in a turnaround. I was starting to rewrite strategy documents and so forth. Then my boss got called in in the morning I think it was eight o'clock he got fired. The head merchant got fired at 8.15 and I got called in and got fired at 8.30. And what I took away from that was it was disappointing. It was really difficult from an emotional standpoint. You go through all those stages of grief, anxiety, fear was disappointing. It was really difficult from an emotional standpoint. You go through all those stages of grief, anxiety, fear, hate. And then I thought wait a minute, let me take some time to Take e-commerce courses. Seems like it's the next new interesting thing. Let me take some time to spend time with my daughters because I was divorced at that point. So we took an incredibly long cruise. We still laugh about it today.
Theo:But if I go into turnaround, they give you a lot of stuff to do. You know, if you're reasonably smart, if you're calm and cool headed and you have this ambition to learn and grow, boy, you get a lot of stuff to do. So I mean, the good thing about it was I had the ability there to go to the University of Chicago and take finance courses, because I understood the P&L down to the gross margin level, but not below, and again I knew that that was something. If I was going to be an American business, I had to speak the universal language of business, which is finance. I did that and then I got a call from the guy with whom I'd worked at Home Shopping Network, who was a Tommy Hilfiger, and said hey, I want to see you when you're in New York.
Theo:Why don't you come in and see me? He showed me the strategy document and said do you want to do another turnaround? I said, dave, is it going to end better than the one we just did? He gave me a ton to do in the business. Helping him with strategy, helping him with part of the wholesale business Gave me great, great latitude. We had fun in the hiring process. He trusted me so that when I said, this is the right person to hire as a VP. They would come up and see him. They would come down to see me and I'd give them up. That happens in the turnaround. That doesn't happen in some of the businesses that they believe they have it all figured out.
Gautham:Maybe I'll ask a question on advice. You've given a lot of advice right and in your illustrious career, what stands out as an underrated value, like you talked about that innate curiosity and so forth? You talked about your grandparents saying like talk less, do more. I'm paraphrasing there, of course. What is the value that you would like to see instilled in your employees today that will make them stand out in a world of AI, in a world of ever-changing needs.
Theo:Part of the answer would be the idea that was instilled in me by my grandmother, which was God gave you two ears and two eyes for a reason, and one mouth. So it all starts with having an ability to do more than look but to see, do more than hear but to listen, to be able to understand what it is that's happening around you that then drives the decisions that you make and that leads to good questions. One of the things that I believe great merchants do and designers is they look at the world with childlike eyes. They look at the same stuff that we see and they see something different. They see possibilities. So I think understanding that listening and looking is critically important. One of the most important skills for me as a leader was reading the emotions on people's faces, trying to figure out what was on their minds, whether they were with me or they weren't with me, listening to whatever feedback that they would give me. Totally undervalued is this idea of listening and seeing Several of the people who I admire greatly. A woman named Grace Nichols, who used to run Victoria's Secret, is someone who, when we were in board meetings together, she would sit there relatively quietly while everybody else is talking about stuff or struggling with something, and she would offer this incredible pearl of wisdom that would just cut through everything because she's seeing and she's listening.
Theo:I was in a meeting once with the CEO of the Limited and we were in a Christmas meeting and there was a huge debate that was going on with the marketing person, the strategy person, the merchant, about what the Christmas promotion would be. This is in January and we always looked at our Christmas promotions at least 11, 12 months early. They would look to Les Flexner for the answer. Right, like you do with your dad, like we're arguing, I'm making all these great points looking at Les, and he never responded. And I had the opportunity after that meeting to sit with him and a group of executives and somebody said why didn't you say anything? He said well, my first responsibility is to hire really smart people that I respect.
Theo:If they're arguing about something and if they're having difficult and it's a strategic decision the best thing I can do is listen and think about it and not react in the moment, because this is a decision that's going to affect our business for the next year, because Christmas sets the table for the next year. The best thing I can do is hear what they were saying, what their tension points were, and then think about it. I need to go away and digest it because they're really really smart, that listening skill, that ability to separate am I in a tactical meeting where decisions are made, or a strategic meeting where maybe you ought to listen and drawing out the people who are quiet, right, still waters run deep. There's some really really smart people.
Theo:You know, you get confused by the people who have the biggest microphones, who are the most articulate, and you have to be able to separate what I used to call fibs, facts, inference and BS Again, just to put a pin on it. I think listening, I think seeing and understanding when to do those things, even when you are in a position of authority. Bringing out people understanding that there are people who are maybe on your front lines who know a heck of authority. Bringing out people understanding that there are people who are maybe on your front lines who know a heck of a lot more than you is hugely important.
Rich:What do you do personally to find inspiration today?
Theo:Spend time with my grandkids. They're amazing. They're amazing. It's looking at the world through childlike eyes. It's what you do, rich, when you listen to your daughter and she teaches you about the world that she lives in. That's different than the world you live in. I don't have to go to tiktok. All I have to do is ask questions to my granddaughters, who are amazing. I walk the mall and I ask them what they think about certain stores. They know all of the best-selling products at lululemon, at sephora, and it's remarkable. I ask, ask them what do they think about how they're treated when they walk in there? Are they treated with respect? So my store visits now are with these little ladies who are wicked smart and who can do things that they don't know, that they're doing, and teach an old dog a couple of new tricks. So talk about inspiration. Nothing like it.
Paula:Fantastic. All right, theo, are you ready? This is the most exciting part of the conversation. It has to be the first thing that comes to mind. We're each going to ask one Are you ready to start? All right, you've been in some really great commerce in retail companies. What's the most unusual item you've ever bought or sold?
Theo:I didn't prep for this. So, whatever it is, yeah, I think it was an item, that was a piece of jewelry that was the universal symbol for pedophilia that we didn't discover until well into the selling cycle. Not only was it unusual, it could have brought the business to its knees. So how we reacted and the way that we reacted was critically, critically important and the relationship obviously with the person who sold us that jewelry changed quickly, but everything around that was unusual.
Paula:Yeah, that's a whole Harvard business case study right there.
Rich:So I'm going to ask the next one Do you have a specific walk-on song or a style of music that hypes you up when you're getting ready to speak? Style of music that hypes you up when you're getting ready to speak.
Theo:It changes, Rich. It changes with kind of what's going on in the zeitgeist, but what I would say is the one and it's a wonderful sort of sonnet to James Earl Jones, the one that I like a lot is the Imperial March by I think it's James Collins. I absolutely love that song and if you play that before you walk out on stage it gets people's attention. I go, this guy's nuts, what is he doing, Darth Vader? It's phenomenal. I also like where is the love by the black IPs? You know, a question that everybody should be asking. So there's several, but let's go with the Imperial March.
Rich:I will absolutely take that answer and I'm going to take that back to a active duty commander that I work with who will absolutely love that answer because she used it in the most appropriate situation.
Gautham:No, wow, since you said you're a history buff, I'm going to ask the history question. If you could invite three people to dinner, who would those three people?
Theo:be and why. So there's going to be a thread here. One will be my grandmother to be able to thank her and to be able to do something that I didn't do when I had her, which is to ask about her journey, her life, how she got to where she was, what her influences were, how she became such an amazing inspiration. That's one that I really wish I had a do-over. I think a second one would be Saul Price, who was.
Theo:If you pull the thread through Costco and you go all the way back to FedMart, saul Price started FedMart, which became Price Club, which ultimately became Costco. And if you ask Jim Senegal, who ran Costco, where did he learn everything from? He'd say Saul Price. If you ask Jim Senegal, who ran Costco, where did he learn everything from? He'd say Saul Price. If you ask Jeff Bezos, where he learned a lot of his lessons, he would say Saul Price. If you ask Sam Walton, if he were still around In fact it's in his book that he stole a lot of ideas from Saul Price.
Theo:And if you think about Costco, which is one of the retailers, I have this huge admiration for that. Stuff started with Saul Price and, like so many people who I loved in retail, which is the reason why I joined retail. Saul had an amazing sense of humor. I think if I were to think of a third, it would be probably Abraham Lincoln, because it was such a transformation that took place in who he was. There was such a deep understanding of what was necessary to try to keep the country together, the compromises that needed to be made, the absolute intellect. Talk about a man who could tell stories for hours, those debates that he used to have with Douglas that lasted for three and four and five hours. And when I think about my humble beginnings, I grew up like the fresh Prince of Bel-Air, compared to Abraham Lincoln, who only had, I think, one year of formal learning and who was a voracious reader. So yeah, those probably the three people.
Rich:Well, before Paula closes it out, I'm going to say that you're actually a retail hero of mine Since the first time we had the chance to meet in an office in New York. I've followed you since that point and held you in the highest regard, and I shared with Paula and Gautam that when I interviewed withales I was so impressed that I did buy the stock under $2. Oh no, you really, oh heck. Yes, I know a good leader when I meet one. I bought it under two and my daughter thanks you.
Theo:So you know I wear the title of hero very uncomfortably. Let there be no doubt and I say this in all sincerity that the greatest satisfaction that I have in being able to have that Zales story is saving 13,000 jobs for 13,000 people and working with people in each functional area marketing, merchandising stores, finance who are much, much smarter than me and who hired the opportunity to bring together around a strategy and a focus and a discipline so that we can make it all come together and work. I love the people that I worked with during that journey, and it starts with the people on the front lines. But thank you, rich, I appreciate that the people on the front lines.
Paula:But thank you, rich, I appreciate that. Well, theo, thank you. We can't thank you enough for your time and your expertise, and thank you for everything. Thanks for the lessons and for staying over with us.
