January 18, 2012
NRF: The Power of Conscious Capitalism
A Super Session Tuesday at the NRF convention touted the merits of building a retail business around “conscious capitalism,” or one providing value — whether emotional, social or financial — to all stakeholders in a business.
The most obvious stakeholders are local communities and consumers, who often become the loyal purchasers and word-of-mouth generators for a brand if their connection transcends the immediate store experience.
Kip Tindell, CEO of The Container Store, said customers “are more and more demanding with their pocketbooks and love when they can really agree with what a company stands for.”
The second group includes business partners, from suppliers to landlords and bankers. But vendors, the biggest day-to-day partner in the group, often favor value-driven retailers. Said Mr. Tindell, “Your vendors want to see that company win. Somebody gets the best price in the country; somebody gets the last pallet of the hot item of that holiday season. It’s usually us.”
Perhaps the most important stakeholder is the store’s employees.
“The challenge is to get spectacular performance out of relatively low-pay store-level people,” said Jonathan Sokoloff, managing partner at Leonard Green, a private equity firm that has invested in Whole Foods, Container Store and other socially conscious companies.
Mr. Tindell said employees are the cornerstone of Container Stores’ goal of having customers sense an “air of excitement” every time they enter one of the stores. Beyond regularly recognizing and rewarding employees, Container Stores in 2010 began recognizing Valentine’s Day as “We Love Our Employees Day.”
Said Mr. Tindell, “People want to go to work and work with great people and accomplish fabulous things and go home at night feeling wonderful at what they accomplished.”
Walter Robb, Whole Foods’ co-CEO, said the retailer’s workforce can appear “a little chaotic” at times. But that’s because staff members are allowed to express their individuality and creativity to hopefully better relate to customers’ needs. An associate at one store, for example, created brail tags in the produce, dairy and grocery section to enable a blind six-year-old son of a loyal patron to experience the Whole Foods shopping experience.
Said Mr. Robb, “That’s just one example of when you create the space for people to bring their full engagement, their full involvement, their full being to their work, what can happen. The company can move much faster, innovate, change and grow, and deliver great experiences when you help to create the room for them to do that.”
A final key stakeholder, actual shareholders, appear overwhelmingly happy as the session detailed stats showing how value-conscious firms have easily beaten the long-term returns on the broader market. Said Tindell, “I think the reason it works is the universe conspires to assist you.”
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Discussion Questions
Discussion Questions: Is conscious capitalism a reasonable goal for many retailers or only a select few? Which of the stakeholder groups — consumers, employees, investors, vendors, etc. — represents the biggest challenge in terms of getting them to embrace a retailer’s value-driven model?
Poll
Speaking from recent professional experience, it is my view that most investors today are looking for quick returns on their capital and have little empathy or understanding of the value of a retailer’s investment in employees, and community interaction. Of course there are exceptions, but conscious capitalism can be likened to marketing sponsorships in that these investments are not always easy to connect to a financial ROI.
One such exception is Whole Foods. I am heartened by what is being reported by Walter Robb at Whole Foods, but would add that employee development is more intrinsic to the Whole Foods customer proposition than many other retailers whose business models are predicated on logistics, efficiencies and low prices. It is those retailers that should truly be applauded when they create a “conscious capital” environment, as they must do so while maintaining the cost controls and efficiencies that produce the profits their investors demand.
“Conscious capitalism” is a great concept that many leading CEOs including Tindell and Robb have been studying and applying for several years. It is a pretty strong movement. Tindell once said something like it is simply the application of the Golden Rule in all the corners of a company. More is available at http://www.consciouscapitalism.org. Tindell for President?
There is a difference between conscious capitalism and capitalism with a conscience.
With all due respect, I think the speakers may have confused the two.
Retail employees may or may not benefit from the former, but they are — as a class — dying to see some manifestation of the latter.
Until retail workers have fundamental work rights such as reasonable advance notice of schedules; the ability to follow a clear path to gaining full-time employment; a living wage and, more importantly, decent medical benefits it’s hard to take the notion of universal conscious capitalism seriously.
In fact it seems a sort of apologia for the idea of capitalism which is that each investment deserves the opportunity for maximum reward. At scale retail can’t serve both masters — either people are ultimately more important than profits or vice versa.
When it comes to retail, again at scale across all sectors, you can’t really have both a conscience and consciousness.
“The challenge is to get spectacular performance out of relatively low-pay store-level people.”
Let’s hope someone retorted “you get what you pay for” after this statement was made.
I sat here in beautiful suspension unable to type after reading the last sentence of this piece. Has it happened? Is retail about to break out of Newtonian mindsets to embrace how the universe actually works? Are we really ready to finally see that it’s all about the energy, that it’s all one thing? Mark this day January 18, 2012 as the beginning of the beginning. Oh my goodness.
Kip Tindell, after commenting on the value of releasing the infinite possibilities in the lives of all stakeholders said: “I think the reason it works is the universe conspires to assist you.” We can now officially change “think” to “know.” Understanding how universal energy works to bring us untold innovation, prosperity, joy and meaning is the new frontier — for retail and every other endeavor.
Mr. Tindell strikes at the heart of this issue for retailers of all stripes. Happy people make happy places to shop. Happy places to shop make happy consumers. Define “happiness” any way you want. From the cheery “Hello!” every time you walk into a Jimmy John’s Sandwich Shop to the trademark entertainment value of Stew Leonard’s to the social statement of Whole Foods. Whatever trips your trigger. It’s all about creating a pleasant, productive environment.
This is the crux of what must happen to have a successful retail store — you must create an environment from which associates can come out of the shadows and shed the employee do’s and don’ts to be themselves.
The best retailers will allow these brand ambassadors to shine by creating an environment that welcomes the personality of the employee — not the lobotomized drones who shut up, put it out and scan the item then say, “Thank you for shopping x” with glazed eyes.
It is an exciting time to be in retail if you can set the intention to succeed using your #1 asset — your people.
Retailers must find a way to treat their employees as assets instead of expenses. Then the jobs we create will have far more meaning, and the customer will feel it.
Period.
Given the polarity of our political discourse, consumers are extending their cultural/value affiliation with the entities that serve /support their communities. This applies to NGOs and commercial entities. AARP/United Healthcare is one example, even-though there may be some dissonance in the relationship on certain policy issues. Whole Foods is a good example of this sentiment also.
Should it be a reasonable goal? Maybe. Is the most important factor employees? Absolutely. Is it only for a select few? Probably. Just take the following into account in evaluating that of the top 10 retailers defined by Supermarket News, only two might fit into the category of discussion — Costco and Publix. However, neither of the two fit in to the “Whole Foods” example.
The reality is that the top 10 retailers make up 66% of the total sales of the entire 75 retailers defined. The other 65 retailers battle for the remaining 33%. Whole Foods ranks #19 behind retailers such as Dollar General, 7-Eleven, and BJ’s Wholesale Club. They share the remaining one third share with other retailers like, Meijer, Trader Joe’s, Winn-Dixie, etc.
Is it nice? Absolutely. Does it feel great? Sure. Is it a bad thing? Not at all. Will it lift you to the top? Walmart is at $311 billion and Whole Foods at about $7 billion or about 2% of the sales.
Should they continue to do what they do? Absolutely. However, don’t expect it to put them into the group that captures 66% of the marketplace. It just isn’t that important to the overwhelming majority of consumers. Does that make it a bad thing to pursue? No. It works for them. Is it disappointing that the overwhelming majority of the consuming marketplace doesn’t care? Pretty much. The consequences of that are what make all the obstacles to achieving it much more difficult. The most obvious result is “relatively low-pay store-level people” as it is generally hard to be in the group that gets 66% of the market otherwise. There are a couple of exceptions to that, one of which is Costco.
Reading over these comments I’m struck by a simple observation: Knowing what to do and doing it are still two separate activities.
It may be a “new” revelation to some that it’s a good idea to treat retail employees as human beings, but isn’t the fact that we are all so busy writing about it a tacit indictment of past … and, sadly, current … retail “best” practices?
I’ve read a lot of studies detailing “best” practices and lauding benchmarks based on industrial metrics — sales per labor hour, throughput, sales per square foot, minimalist span and control models for coverage and staffing … but precious few on those “soft” metrics like employee satisfaction, ethical behavior, etc.
Sorry Ian, Newton is still alive and well at retail and too few understand the power of constructive creative chaos.
As long as the emphasis is put on the cost of the pie instead of growing it in ways consistent with the spirit and letter of Dan, Ian’s and Ben’s observations, much as I WANT to believe … and I really, really do … I’m still not buying that enlightenment represents the next wave of retail capitalism.
It ought to, but then again lots of good things ought to be true from world peace to real stewardship of the planet.
We need to move to a time when the notion of humane treatment of people and communities doesn’t make the news because it represents business as usual.
If the consumer doesn’t buy into the retailer as a community, then the retailer becomes a commodity and loses all value beyond convenience and location. The face of the company to consumers and investors is the retail employee, so I would agree with Mr. Sokoloff that employees are a critical stakeholder group.
However, obtaining performance of a low-level employee is the responsibility of the company. If the company empowers and rewards its employees beyond wages, employees will respond with enthusiasm that will be reflected in the customer experience, and when value-driven models become the standard, a positive customer experience will ultimately win out.
I believe the biggest challenge is corporate management. The focus should not only be on the output of the company in terms of profit, but on the positive and adverse effects of decisions at the retail level.
Conscious capitalism is probably most realistic for retailers who already have a brand image and customer base geared toward “doing good” — i.e., verticals such as organic food, outdoor equipment, youth-oriented apparel/accessories. Although Walmart has had success improving its image through its sustainability program, it is much harder for a large retailer with a broad customer base to compete on anything other than price and assortment.
“The challenge is to get spectacular performance out of relatively low-pay store-level people.”
Like Ed, I have trouble moving beyond this (unintentionally candid?) comment. I’m wondering if the convention also offered a seminar “Faking Sincerity” by speaker I.B. Lion.
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Speaking from recent professional experience, it is my view that most investors today are looking for quick returns on their capital and have little empathy or understanding of the value of a retailer’s investment in employees, and community interaction. Of course there are exceptions, but conscious capitalism can be likened to marketing sponsorships in that these investments are not always easy to connect to a financial ROI.
One such exception is Whole Foods. I am heartened by what is being reported by Walter Robb at Whole Foods, but would add that employee development is more intrinsic to the Whole Foods customer proposition than many other retailers whose business models are predicated on logistics, efficiencies and low prices. It is those retailers that should truly be applauded when they create a “conscious capital” environment, as they must do so while maintaining the cost controls and efficiencies that produce the profits their investors demand.
“Conscious capitalism” is a great concept that many leading CEOs including Tindell and Robb have been studying and applying for several years. It is a pretty strong movement. Tindell once said something like it is simply the application of the Golden Rule in all the corners of a company. More is available at http://www.consciouscapitalism.org. Tindell for President?
There is a difference between conscious capitalism and capitalism with a conscience.
With all due respect, I think the speakers may have confused the two.
Retail employees may or may not benefit from the former, but they are — as a class — dying to see some manifestation of the latter.
Until retail workers have fundamental work rights such as reasonable advance notice of schedules; the ability to follow a clear path to gaining full-time employment; a living wage and, more importantly, decent medical benefits it’s hard to take the notion of universal conscious capitalism seriously.
In fact it seems a sort of apologia for the idea of capitalism which is that each investment deserves the opportunity for maximum reward. At scale retail can’t serve both masters — either people are ultimately more important than profits or vice versa.
When it comes to retail, again at scale across all sectors, you can’t really have both a conscience and consciousness.
“The challenge is to get spectacular performance out of relatively low-pay store-level people.”
Let’s hope someone retorted “you get what you pay for” after this statement was made.
I sat here in beautiful suspension unable to type after reading the last sentence of this piece. Has it happened? Is retail about to break out of Newtonian mindsets to embrace how the universe actually works? Are we really ready to finally see that it’s all about the energy, that it’s all one thing? Mark this day January 18, 2012 as the beginning of the beginning. Oh my goodness.
Kip Tindell, after commenting on the value of releasing the infinite possibilities in the lives of all stakeholders said: “I think the reason it works is the universe conspires to assist you.” We can now officially change “think” to “know.” Understanding how universal energy works to bring us untold innovation, prosperity, joy and meaning is the new frontier — for retail and every other endeavor.
Mr. Tindell strikes at the heart of this issue for retailers of all stripes. Happy people make happy places to shop. Happy places to shop make happy consumers. Define “happiness” any way you want. From the cheery “Hello!” every time you walk into a Jimmy John’s Sandwich Shop to the trademark entertainment value of Stew Leonard’s to the social statement of Whole Foods. Whatever trips your trigger. It’s all about creating a pleasant, productive environment.
This is the crux of what must happen to have a successful retail store — you must create an environment from which associates can come out of the shadows and shed the employee do’s and don’ts to be themselves.
The best retailers will allow these brand ambassadors to shine by creating an environment that welcomes the personality of the employee — not the lobotomized drones who shut up, put it out and scan the item then say, “Thank you for shopping x” with glazed eyes.
It is an exciting time to be in retail if you can set the intention to succeed using your #1 asset — your people.
Retailers must find a way to treat their employees as assets instead of expenses. Then the jobs we create will have far more meaning, and the customer will feel it.
Period.
Given the polarity of our political discourse, consumers are extending their cultural/value affiliation with the entities that serve /support their communities. This applies to NGOs and commercial entities. AARP/United Healthcare is one example, even-though there may be some dissonance in the relationship on certain policy issues. Whole Foods is a good example of this sentiment also.
Should it be a reasonable goal? Maybe. Is the most important factor employees? Absolutely. Is it only for a select few? Probably. Just take the following into account in evaluating that of the top 10 retailers defined by Supermarket News, only two might fit into the category of discussion — Costco and Publix. However, neither of the two fit in to the “Whole Foods” example.
The reality is that the top 10 retailers make up 66% of the total sales of the entire 75 retailers defined. The other 65 retailers battle for the remaining 33%. Whole Foods ranks #19 behind retailers such as Dollar General, 7-Eleven, and BJ’s Wholesale Club. They share the remaining one third share with other retailers like, Meijer, Trader Joe’s, Winn-Dixie, etc.
Is it nice? Absolutely. Does it feel great? Sure. Is it a bad thing? Not at all. Will it lift you to the top? Walmart is at $311 billion and Whole Foods at about $7 billion or about 2% of the sales.
Should they continue to do what they do? Absolutely. However, don’t expect it to put them into the group that captures 66% of the marketplace. It just isn’t that important to the overwhelming majority of consumers. Does that make it a bad thing to pursue? No. It works for them. Is it disappointing that the overwhelming majority of the consuming marketplace doesn’t care? Pretty much. The consequences of that are what make all the obstacles to achieving it much more difficult. The most obvious result is “relatively low-pay store-level people” as it is generally hard to be in the group that gets 66% of the market otherwise. There are a couple of exceptions to that, one of which is Costco.
Reading over these comments I’m struck by a simple observation: Knowing what to do and doing it are still two separate activities.
It may be a “new” revelation to some that it’s a good idea to treat retail employees as human beings, but isn’t the fact that we are all so busy writing about it a tacit indictment of past … and, sadly, current … retail “best” practices?
I’ve read a lot of studies detailing “best” practices and lauding benchmarks based on industrial metrics — sales per labor hour, throughput, sales per square foot, minimalist span and control models for coverage and staffing … but precious few on those “soft” metrics like employee satisfaction, ethical behavior, etc.
Sorry Ian, Newton is still alive and well at retail and too few understand the power of constructive creative chaos.
As long as the emphasis is put on the cost of the pie instead of growing it in ways consistent with the spirit and letter of Dan, Ian’s and Ben’s observations, much as I WANT to believe … and I really, really do … I’m still not buying that enlightenment represents the next wave of retail capitalism.
It ought to, but then again lots of good things ought to be true from world peace to real stewardship of the planet.
We need to move to a time when the notion of humane treatment of people and communities doesn’t make the news because it represents business as usual.
If the consumer doesn’t buy into the retailer as a community, then the retailer becomes a commodity and loses all value beyond convenience and location. The face of the company to consumers and investors is the retail employee, so I would agree with Mr. Sokoloff that employees are a critical stakeholder group.
However, obtaining performance of a low-level employee is the responsibility of the company. If the company empowers and rewards its employees beyond wages, employees will respond with enthusiasm that will be reflected in the customer experience, and when value-driven models become the standard, a positive customer experience will ultimately win out.
I believe the biggest challenge is corporate management. The focus should not only be on the output of the company in terms of profit, but on the positive and adverse effects of decisions at the retail level.
Conscious capitalism is probably most realistic for retailers who already have a brand image and customer base geared toward “doing good” — i.e., verticals such as organic food, outdoor equipment, youth-oriented apparel/accessories. Although Walmart has had success improving its image through its sustainability program, it is much harder for a large retailer with a broad customer base to compete on anything other than price and assortment.
“The challenge is to get spectacular performance out of relatively low-pay store-level people.”
Like Ed, I have trouble moving beyond this (unintentionally candid?) comment. I’m wondering if the convention also offered a seminar “Faking Sincerity” by speaker I.B. Lion.