April 11, 2013
Do HQ Locations Have Anything to Do with Retail Success?
Location, location, location is one of the mantras for success in brick & mortar retailing. But does a company’s headquarters location also play a part in whether a given chain succeeds or fails?
Over the years, companies in various retail channels have moved headquarters for a variety of reasons including mergers, tax incentives, access to talent and infrastructure.
The latest retailer to announce a move to new digs is ALCO Stores. After more than 100 years headquartered in Abilene, Kansas, the broad-line retailer, which operates 217 stores in 23 states and targets smaller communities that have limited access to large chains, is moving to the Coppell, Texas on the outskirts of Dallas.
"Retailing today requires fast response, constant innovation and deep commitment from our vendor partners," Rich Wilson, president and CEO of ALCO Stores, said in statement. "Relocating to a more accessible location for our vendors is critical. In addition, our ability to attract and retain executive level leadership will be enhanced in the Dallas area."
BrainTrust
Recent Discussions
Discussion Questions
How important is the location of a retailer’s headquarters to its business performance? Do most corporate moves help or hurt performance over the short and then longer terms?
Poll
Location is important in being able to attract good people. In the long run, the move doesn’t hurt the company, but you might get the idea that it does. Usually by the time a company decides to move, other factors that cause a company to fail have already taken hold. Remember Fleming? By the time a company finally initiates a corporate relocation, it might be too late for the move to fix the problems.
Call me crazy, but I never thought of Bentonville, Walmart’s headquarters, as easily accessible for vendors and attractive to retain executive level leadership.
I do recall executives moving their headquarters to benefit their personal residence preferences. And I do recall moving headquarters to be nearer the source of goods used in manufacturing. All in all there are many reasons to move headquarters for business or personal purposes. It’s still up to the C-suite to make that move line up with a successful business.
Unless you are big enough to be a destination for things like top talent and vendors and infrastructure (former tiny town in rural Arkansas with virtually its own commercial airport today comes to mind), location can and does matter—not as much as stores, product, supply chain, pricing etc, but material nonetheless.
Location is important in direct relation to the quality and vision of the person who leads from it. Would anyone envision the world’s largest retailer putting its HQs in a small town in NW Arkansas? But Sam Walton did and his vision prevailed … and WM is still headquartered in bountiful Bentonville.
Location is also important, as David said, in hiring top talent. That’s why the Mayo Clinic is working to make Rochester, MN a more cosmopolitan, upgraded city so it can lure top medical clinicians now and in the future.
As to corporate moves, remember when the once-great Sears moved its HQs, and J.C. Penney, Beatrice Foods, General Foods as well as many others? That raises the question: Are all corporate HQ moves really made for the purpose of the company?
Moving is one factor. Moving to the outskirts of Dallas is something entirely different. There must be other considerations to move this far away from the main customer and store location base. My guess is it is what Dallas offers. The area is home to The Container Store, Michaels, RadioShack, Pier One, FedEx Kinko’s, Gold’s Gym, Cinemark, and several other Corporate HQs. The strength of the draw of the area and ability to get significant, strong personnel has to enter into the equation.
I would have agreed with Mr. Wilson if Walmart did not totally break that model. Who would have guessed that Bentonville, AR would be one of the capitals of retail? That said, Walmart may be an anomaly. I do agree that it is easier to attract talent when you are in a desirable location. This could be one of the reasons why Walmart.com is based in Brisbane, CA and not in Bentonville.
Some do the complete opposite of Alco. When Ahold moved its corporate team to Carlisle, PA, they lost some good people that could not make the leap from metro Boston to small town America. Overall, the loss was worth the gain in the eyes of Ahold.
Each organizations needs to consider their current team, where they are headed and the benefits/risks of moving. One size does not fit all.
For decades, I’ve been a strong advocate for the importance of a retailer’s leadership being in touch with their customers. One of the best ways is for HQ to be located in the retailer’s primary market, or at least one that has similar demographics.
When senior executives are surrounded by people who live with their customers, critical decisions are on target. When they are surrounded by people who do not know the retailer’s customers, the decisions start straying off the mark, sometimes just a little bit, other times you wonder what their smoking.
A move to lush surroundings is an alert to stockholders that soon the executives will want to spend more time in the office than in the stores. Remember American Stores grand tower and bronze statuary in Salt Lake City right before the C-floor totally lost interest in retailing and sold? Another clue to start selling short is when new executives never bother to move, but just commute on the corporate jet.
Interesting question (and I would think it could be asked broadly with regard to all companies, not just retail). Certainly HQ location can reenforce our image of a company: a “folksy” company in a small town, an impersonal big bank in NYC, etc. Doesn’t it just make so much sense that L.L.Bean is still in Freeport, ME? But there can be valid reasons for moves, and I’m reluctant to generalize whether they’re “usually” for valid reasons, or to stoke corporate egos.
Agree with Mr. Hoffman’s observation that “location is important in direct relation to the quality and vision of the person who leads from it.” Walmart is a perfect example. ALCO’s CEO shared his vision of wanting to be more accessible to vendors and offering a better quality of life for executives. Probably some tax incentives made the move attractive, too.
Corporate moves help to streamline which employees are onboard with company’s vision and, in the long run, this move will benefit ALCO.
The short of it is—maybe. The longer version is dependent of where they are now, what size they are, etc. I recently contacted a very qualified friend regarding a position that he was more than capable of filling.
One of his first questions is where is it? I told him and his immediate response was no way he was moving there (a rural location). This was not the first or is it likely to be the last time that I see this.
Walmart may be able to get people to move to Bentonville, but how many smaller retailers would be able to attract major talent to that market? If your answer is anything less than all, then HQ location matters.
I don’t think the location has anything to do with the success of the retailer. I also think the facts presented in this article are circumstantial in nature, and do not necessarily represent a trend.
If M&A and other activity occurs, the resulting storefronts play a larger part in the success of the merchant than the HQ site.
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Location is important in being able to attract good people. In the long run, the move doesn’t hurt the company, but you might get the idea that it does. Usually by the time a company decides to move, other factors that cause a company to fail have already taken hold. Remember Fleming? By the time a company finally initiates a corporate relocation, it might be too late for the move to fix the problems.
Call me crazy, but I never thought of Bentonville, Walmart’s headquarters, as easily accessible for vendors and attractive to retain executive level leadership.
I do recall executives moving their headquarters to benefit their personal residence preferences. And I do recall moving headquarters to be nearer the source of goods used in manufacturing. All in all there are many reasons to move headquarters for business or personal purposes. It’s still up to the C-suite to make that move line up with a successful business.
Unless you are big enough to be a destination for things like top talent and vendors and infrastructure (former tiny town in rural Arkansas with virtually its own commercial airport today comes to mind), location can and does matter—not as much as stores, product, supply chain, pricing etc, but material nonetheless.
Location is important in direct relation to the quality and vision of the person who leads from it. Would anyone envision the world’s largest retailer putting its HQs in a small town in NW Arkansas? But Sam Walton did and his vision prevailed … and WM is still headquartered in bountiful Bentonville.
Location is also important, as David said, in hiring top talent. That’s why the Mayo Clinic is working to make Rochester, MN a more cosmopolitan, upgraded city so it can lure top medical clinicians now and in the future.
As to corporate moves, remember when the once-great Sears moved its HQs, and J.C. Penney, Beatrice Foods, General Foods as well as many others? That raises the question: Are all corporate HQ moves really made for the purpose of the company?
Moving is one factor. Moving to the outskirts of Dallas is something entirely different. There must be other considerations to move this far away from the main customer and store location base. My guess is it is what Dallas offers. The area is home to The Container Store, Michaels, RadioShack, Pier One, FedEx Kinko’s, Gold’s Gym, Cinemark, and several other Corporate HQs. The strength of the draw of the area and ability to get significant, strong personnel has to enter into the equation.
I would have agreed with Mr. Wilson if Walmart did not totally break that model. Who would have guessed that Bentonville, AR would be one of the capitals of retail? That said, Walmart may be an anomaly. I do agree that it is easier to attract talent when you are in a desirable location. This could be one of the reasons why Walmart.com is based in Brisbane, CA and not in Bentonville.
Some do the complete opposite of Alco. When Ahold moved its corporate team to Carlisle, PA, they lost some good people that could not make the leap from metro Boston to small town America. Overall, the loss was worth the gain in the eyes of Ahold.
Each organizations needs to consider their current team, where they are headed and the benefits/risks of moving. One size does not fit all.
For decades, I’ve been a strong advocate for the importance of a retailer’s leadership being in touch with their customers. One of the best ways is for HQ to be located in the retailer’s primary market, or at least one that has similar demographics.
When senior executives are surrounded by people who live with their customers, critical decisions are on target. When they are surrounded by people who do not know the retailer’s customers, the decisions start straying off the mark, sometimes just a little bit, other times you wonder what their smoking.
A move to lush surroundings is an alert to stockholders that soon the executives will want to spend more time in the office than in the stores. Remember American Stores grand tower and bronze statuary in Salt Lake City right before the C-floor totally lost interest in retailing and sold? Another clue to start selling short is when new executives never bother to move, but just commute on the corporate jet.
Interesting question (and I would think it could be asked broadly with regard to all companies, not just retail). Certainly HQ location can reenforce our image of a company: a “folksy” company in a small town, an impersonal big bank in NYC, etc. Doesn’t it just make so much sense that L.L.Bean is still in Freeport, ME? But there can be valid reasons for moves, and I’m reluctant to generalize whether they’re “usually” for valid reasons, or to stoke corporate egos.
Agree with Mr. Hoffman’s observation that “location is important in direct relation to the quality and vision of the person who leads from it.” Walmart is a perfect example. ALCO’s CEO shared his vision of wanting to be more accessible to vendors and offering a better quality of life for executives. Probably some tax incentives made the move attractive, too.
Corporate moves help to streamline which employees are onboard with company’s vision and, in the long run, this move will benefit ALCO.
The short of it is—maybe. The longer version is dependent of where they are now, what size they are, etc. I recently contacted a very qualified friend regarding a position that he was more than capable of filling.
One of his first questions is where is it? I told him and his immediate response was no way he was moving there (a rural location). This was not the first or is it likely to be the last time that I see this.
Walmart may be able to get people to move to Bentonville, but how many smaller retailers would be able to attract major talent to that market? If your answer is anything less than all, then HQ location matters.
I don’t think the location has anything to do with the success of the retailer. I also think the facts presented in this article are circumstantial in nature, and do not necessarily represent a trend.
If M&A and other activity occurs, the resulting storefronts play a larger part in the success of the merchant than the HQ site.