Guest Editorial: Bring Back the Merchants!
Fred Rosenfeld argues that apparel companies like Gap and JCPenney would be more successful if they were run by merchants instead of executives from outside the apparel world.
I openly admit that I am prejudiced. I’m a garmento and proud to be a garmento. My ego tells me that I am also a merchant, the highest compliment for a garmento. I am naïve enough to believe that apparel companies should be run by garmentos, and more specifically, by merchants. So I always wonder why larger public apparel companies think that non-merchants should run them. The common refrain is that apparel people are too close to the apparel business and are not open to new ideas. Duh…these are apparel businesses.
At Gap, the legendary merchant Mickey Drexler was replaced by Glenn Murphy, who had a tremendous reputation running a Canadian drug store chain. He did an amazing job managing Gap, except the business had its ups and downs, and is dramatically inconsistent. Currently Old Navy is great and Gap stores are awful. But the systems are great. Murphy is being replaced with Art Peck, another highly regarded operations guy. In my opinion, Gap does not need another expert in management; they simply need to fix the product in their stores. They need a merchant.
JCPenney was led by the legendary merchant Alan Questrom. Then when he retired, Mike Ullman, a highly regarded operations guy, proceeded to lead the company on a slow path to nowhere. Ullman “resigned” to be replaced with Ron Johnson. While Johnson was absolutely a merchant, he was an egomaniac who was simply in the wrong place, at the wrong time, with the wrong ideas. So Johnson was replaced by Ullman again, who stopped the slide by going directly back to the product and strategy which forced his departure in the first place. Now Ullman is being replaced with Marvin Ellison, who did a great job running the stores for Home Depot. Home Depot? In my opinion, JCPenney doesn’t need another management guy to tell them how to run the stores: they need a merchant to give them a strategy to survive.
In the glory days, not long ago, the A’s of Abercrombie, American Eagle and Aéropostale were run by the old school merchant trio of Michael Jeffries, Roger Markfield and Julian Geiger. Geiger retired and was replaced with Tom Johnson, a capable operations guy but not a merchant. While all three companies are having problems, Aéropostale’s very existence is questionable. They brought back Geiger, the merchant.
The epitome of them all is Liz Claiborne. Once one of the most powerful and largest apparel companies in history, they named Bill McComb from Johnson & Johnson the CEO. With a sterling background of selling Band-Aids, he told the industry they didn’t understand the consumer, the retailers and the market. He proceeded to sell, close or decimate all of these iconic brands. After changing the name of the parent to Fifth and Pacific, he resigned, proudly announcing that his mission had been accomplished. He simply destroyed a great company.
Oddly, when I discussed this opinion with one of my hedge fund clients, he replied, “We love operations people,” explaining that operations people, particularly from non-apparel companies, can quickly see problems and quickly fix them, delivering quick results. When I questioned the longevity of such actions he admitted, “We don’t care about the long term. If they can deliver short-term results we’re happy; we’re not concerned at all about the long-term health of the companies.”
As for me, bring on the merchants. Better still, bring on the garmentos!
Fred Rosenfeld is an industry consultant. He can be reached at frosenfeld@comcast.net.
