Take big risks. This was the big takeaway message from Terry Jones during his keynote session at this year's NRF Big Show. Jones, the chairman of Wayblazer, founder of Travelocity.com, and founding chairman of Kayak.com, spoke of the giant risk he took when he was younger, leaving American Airlines to launch Travelocity.
And indeed, it paid off.
Then Jones spoke of how later in life, with a few more responsibilities, he took a slightly smaller risk in selling Travelocity and starting Wayblazer—but still a risk. "Technique follows technology," he told the crowd.
Behind many great technological retail innovations and start-ups are employees, executives, venture capitalists and retailers that are willing to take a risk in order to find the "next great thing" and change the way consumers shop.
So is a big risk necessary in order for a start-up, or any already established name, to become the next great retailer? Amazon (NASDAQ:AMZN) Founder and CEO Jeff Bezos seems to think so and is leaving no retail stone unturned in his quest for dominance. In 2014, he launched Prime Photos, one-hour delivery, the Elements brand, Takeout and Delivery service, Dash for grocery delivery, and Local Register—to name a few. Although I'm sure with the company's growing profit loss of $126 million as of last summer, some might argue the big payoff is still to be seen.
It's easy to tout taking risks, but actually taking the plunge is another thing. I'm not one to talk. Though I found Jones' speech infectious, it didn't change the fairly sound decisions I make on a daily basis to keep the life and family that I've built intact. I go to work, save some money, put helmets on the kids. I once considered myself a big risk taker, as I ran off to Paris at age 21 without a job or a place to live and ended up calling it my home for the next year. Almost a decade later, I married a man who was the opposite of risk, with every movement carefully calculated.
So today, we live our lives, like most people, somewhere in between risk and conservatism. And dare I say, so do many retailers.
But which are the retailers that really stand out, grow and change with the consumer yet keep shoppers loyal for years on end? It's often the risk takers. But what about the retailers who just bite off more than they can chew? As the holidays come to an end, retailers are looking at their 2015 strategies and hoping they are not the next victims in the growing list of bankruptcy filings and store closings.
As a prime example, earlier this month Target (NYSE:TGT) announced it would shutter all 133 of its Canadian stores. Target Canada never recovered from its initial blunders. CEO Brian Cornell said the brand had missed the mark from the beginning, "taking on too much too fast."
And Mike Rogers, chief customer officer for JCPenney (NYSE:JCP), seemed to discount the efforts of previous CEO Ron Johnson on several accounts during his keynote presentation at the Big Show.
The company tried to recover from a plan to reinvent itself under the former CEO. Johnson's struggles are well documented, and despite the progress made since Mike Ullman's return as CEO, it looks like the retailer isn't out of the woods just yet.
Rogers acknowledged that the company was going through tough times, and earlier this month announced it would close 40 stores in the next year, or 4 percent of its 1,060 locations. The company will also cut about 2,250 jobs as it tries to raise profits.
The company "shifted strategy" and "got away from our core values," under other leadership, he told the crowd at NRF. The leadership had taken a risk to reach out to a new generation of customers, and it did not, in the short run, pay off.
So now the department store chain, around since 1902, is returning to what it believes loyal customers want most—high value merchandise at great prices. And just the other day, JCPenney announced it would start mailing out a paper catalog again for the first time in five years. While the company is integrating omnichannel strategies in 2015, and was one of the first brick-and-mortar retailers to open a Web store in 1984, the strategy will remain coupons and promotions. "Everyday low pricing doesn't work for Penney's," Rogers added.
And taking risks not only applies to changing and integrating technology into the physical and e-commerce world, but to expansion into new markets, whether they be in new shopping center developments or partnering for overseas expansions.
At the Big Show, William Taubman, COO, Taubman Centers, spoke on a panel about how the shopping center industry is thriving around the world, even though recent reports will have people thinking the mall is dead in the United States. The developer owns 18 high-end shopping centers around the country and employs some 100 people in Asia who are working on new projects to add to the existing three centers in China. But in order to expand globally and to remain profitable while other malls slow down, Taubman had to take risks. In turn, retailers need to take risks. Retailers will need to pay a premium price to get into new developments that emphasize technology and social interactions.
So who will be the risk takers in retail in 2015? And will these jumps into technology and innovation pay off? This reporter looks forward to finding out. -Jacqueline