If Dreaming Up A Fictional Customer Named “Jennifer” And Referring To Her No Less Than 23 Times An Earnings Call Is Wrong, Area CEO Doesn’t Want To Be RightBy Bess Levin
Maybe you’re a Wall Street chief exec who’s been accused of betting against investors. Maybe you couldn’t recall the first of John C. Whitehead’s 14 Business Principles, “Our clients’ interests always come first,” if you tried. Maybe you’ve been tasked with regaining your customers’ trust, and risk losing the support of the board if that doesn’t happen, stat. Maybe it’s simply a matter of feeling lonely and in need of a friend. A friend you can call just to say “Hey.” A friend who’ll be there for you in good times and in bad. A friend who will make you laugh but won’t judge you if you cry. A friend who will always have your back but won’t shy away from calling you out when you’re acting like a dickhead. A friend who you’d feel lost without. A friend who makes up one of the bodies in the “two bodies one soul” quote that applies to your life. A friend who shouldn’t have to hide in the shadows any longer. A friend who, compliance be damned, you’re going to go on this conference call and reference extensively to analysts and shareholders alike. A friend like Jennifer. And also, to a lesser extent, your buddy Chris.
Whatever reason you may have for coming up with your own Jennifer, David Campisi gets it.
Big Lots, Inc. Q2 2013 Earnings Call Transcript
Timothy A. Johnson – SVP and CFO: For our Canadian operations, for fiscal 2013, we now expect sales to be in the range of $165 million to $173 million, with a net loss in the range of $9 million to $14 million or $0.15 to $0.25 per diluted share. Now, over to David for his insights on the business.
David Campisi – President and CEO: Thanks T.J., and good morning everyone. With my first full quarter of business behind me now, I want you to know I’m extremely excited and even more convinced of the growth opportunities for Big Lots over the long term…Candidly, a lack of customer first mentality has hurt the business. The good news is, our core customer still loves us. She brags about us and we have a better understanding of who she is and how she shops. Her name is Jennifer and teaching this group how to see everything we do through the lens of Jennifer has been amazing. I’m confident in developing a new mentality to focus on her and all facets of our business will pay off and begin to drive positive comps over time.
From a merchandising perspective, I’m not going to go through each category with you and not share specific direction for the future. Frankly, we still have questions to answer and decisions to make. I will let you know I like the major categories we play in. Furniture and seasonal have been and will be consistent winners. Food and consumables are not consistent for Jennifer and we can and will do better.
Edit to Amplify is a merchandising strategy, you will hear about from me for many quarters and many years to come. It is important to understand Edit to Amplify is not a narrow and deep strategy. It is a strategy that edits categories or classifications where we are not top of mind with Jennifer and amplifies or provides additional resources either inventory or lineal footage to businesses where we are winning, or we are known for by our customer base. A good example might be jewelry or watches.
Are we really known for this category? Do we need to be in this category year around, or solely on certain holidays? Could we use this space for something we are becoming known for, like electronic accessories, earphones, earbuds or data storage? This is one small example, but there are many others. We must look at the store and think across categories with Jennifer in mind. We must amplify those businesses we are known for and winning at in our stores.
Additionally, how we source our allocator inventory is another big picture topic. Close-outs are an important part of our heritage, but if the close-out is not a meaningful brand or an item or category we are known for, it can be lost with the customer, lost in the store and not a good use of our cash. Our buyer should not be purchasing – close-outs they hit specific target or because we think we have to buy every deal. Again, thinking through Jennifer‘s lens, she wants quality, tasteful branded merchandise at great values. She does not necessarily know how or where we source product or whether it’s a closeout or a (never out). She knows what she likes and she wants great value.
Please don’t misinterpret this to mean, we are walking away from close-outs, we are not. We have an opportunity to provide more consistency for Jennifer through how we source our goods and at the same time, we can still provide her with surprises in every aisle, every day. By the way, more consistency to Jennifer applies not just a food and consumables, but also home, hardlines and even some of our smaller classifications.
Similar to the opportunities in merchandising, our marketing efforts had not evolved, nor have they kept up with the competition. Our marketing has to be ownable with a consistent brand message well into the future. Our marketing message also has to be easy to understand. A good example of that is our new rewards program set to rollout in October. It is simple and easy to understand, offers more frequent rewards for a broader cross-section of our loyal shoppers. Today, Jennifer gets her information from a number of sources, but she is becoming increasingly more dependent on social and online forms of media.
Seeing the store in the way our customers sees the store. Today, our operational execution store-to-store is inconsistent and the group learned how to see the store through Jennifer‘s eyes, from ticketing to signage and in-store communication to how our people provide friendly customer service and a clean store.
I started my commentary with Jennifer and the customer, so I’m not going to bring it back full circle to close with the customer and near-term, I am going to bring it back, I am sorry to talk about the near-term. There are some very exciting results from testing I want to share. Test focus on meeting Jennifer‘s needs and desires while driving traffic and sales to our stores.
Generally speaking, I like what remodel – I like what remodeling of market can do for Jennifer and for our brand, but I would like to feel a bit more comfortable with the sales lifts and financial returns, before we extend the program like this much further.
Nathan Rich – Citi Research: David, could you provide some more color on who Jennifer is and how she shops the store and also what the opportunity is to increase her loyalty to Big Lots?
David Campisi – President and CEO: Sure. First of all, we did a lot of research, both externally and internally, a lot of the demographics come from our Buzz Club Rewards program, as well as using data from Orbit and Simmons. What the whole focus on Jennifer was is, again, we just had our leaders meeting and we introduced Jennifer on stage as meet the new boss. Again, this is about focusing in on a woman who is 25 to 54 years old. The data told us her average age is 42. 56% of our customers are married, and 51% of them have kids at home and so on that household income range, annual household is a pretty broad range of between $30,000 and $100,000 with the average household income of $54,000. Obviously, there’s more demos on percent Caucasian, African-American, Hispanic, et cetera, but the real focus here guys is to get both our stores and our corporate office, which I’ve always believed in retail today is where the consolidation of retail has taken place and you have a centralization of buying, you lose focus on who you work for and that’s Jennifer. Jennifer, the name really came from the most popular name in our Buzz Club Rewards program as we rank them. We also have the other side of that coin is the customer. We haven’t forgotten about the guy. His name is Chris. But candidly, Jennifer controls 85% of the household spend and there’s lots of other data that I could share with you and I won’t go into detail. But we certainly want everybody in our Company from the DCs to our stores, to the corporate office to be focused on only one thing and that’s seeing everything through the eyes of Jennifer, and it is amazing. What you see and what you learn, when instead of merchandising, and I can just give you a little bit more color back to one of the questions, I think, came from Paul. It was, we merchandise things the way we buy them; as an example, we’ll put screwdrivers in three different locations in the same Gondola Run, our paintbrushes, there are many, many other examples in the electronics area as well as other businesses, because part of what we buy is an in and out, part of it’s a closeout and part of it’s a never out. That’s not how the customer shops. So she doesn’t care how we buy it. Those are the significant shifts and a significant paradigm shift that’s taking place as we speak. I can’t overemphasize how exciting it is to see our people. When I meet with the merchants and our storage guys, everything they talk to me about is Jennifer says or Jennifer this and it’s contagious and I think it’s going to deliver over time positive comps again.
Transcript Call Date 08/30/2013 [MorningStar]