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Chic Chico's


  • By Mark Gordon
  • | 11:00 a.m. May 26, 2017
  • | 2 Free Articles Remaining!
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Shelley Broader stood in front of hundreds of Chico's FAS Inc. employees last November, iPhone in hand, with a request: Everyone download “Pokemon Go.”

Broader, in the company's sprawling 65-acre, 500,000-square-foot Fort Myers campus off Metro Parkway, wasn't searching for a Pokemon Egg or Charizard, one of the game's characters. She instead sought more information. How are people using “Pokemon Go?” How easy (or hard) is it to figure out? Why did it resonate with people from diverse ages and backgrounds?

“The frenzy of that app was a phenomenon,” says Broader, who took over as president and CEO of Chico's in December 2015. “The way they built that brand was really interesting.”

Broader says feedback from employees on something as non-Chico's as “Pokemon Go” helps her understand what motivates and inspires people. The nuggets she learned there, and in other similar reconnaissance missions, help guide her thinking at Chico's, which includes the Chico's, White House Black Market and Soma Intimates brands.

“The power has now switched and is in the hands of the customer, and we have to be astute to that customer,” Broader says. “It isn't business as usual.”

Like many retailing peers, Chico's is in a costly tussle brick-and-mortar retailers are fighting against an onslaught of online options consumers have at their keyboards and smartphones. Some retailers are trying something industry analysts call experience-based retail: an uber-personal customer service approach.

That could be having fresh pressed juice for customers or calling clients after an event to see how an outfit came off, says New York City pop-up store consultant Melissa Gonzalez. “There will always be transactions,” says Gonzalez, author of “The Pop-Up Paradigm: How brands build human connections in a digital age” and founder of The Lion'esque Group. “But now people crave experiences more and more. Selling requires a high touch.”

Customers covet more than feel-good experience, says Ken Perkins, founder of suburban Boston-based research and data analytics firm Retail Metrics Inc. To target millennials — today's 20- and 30-somethings are Chico's future customer base — retailers have to be relevant on social media. That goes for the company's own posts and providing experiences for customers to post and brag about.

Experience-based retail resonates with Broader, starting with the company's internal call to arms for managers and sales associates: Most Amazing Personal Service, or MAPS. While that mantra has been around the company for years, Chico's boosted it last year by providing tablets for all its stores. Now employees can easily access customer history and style preferences.

“Our stores can't just be a place where you go get something.” Broader says. “Their job isn't to sell you more stuff. Their job is to make you feel great about the apparel you just bought.”

The right count

The seismic shift in retail is a reality Broader, 53, has grown to accept.

“You can embrace that change or fight it,” she says. “I'm not out there hoping 1985 will come back and everyone will be shopping at malls again.”

The stakes are high. Chico's is a corporate leader in Fort Myers, with 1,230 employees at its main campus and 21,000 full-time and part-time employees companywide. In the top 20 in annual sales among all firms based on Florida's west coast, Chico's has some 1,500 stores in the U.S. and Canada. It also sells merchandise through franchise locations in Mexico.

Broader, nearing her 18-month mark as CEO, also takes on the e-commerce fight during a somewhat tumultuous period for Chico's.

The previous CEO, David Dyer, who retired, turned the company around from a loss in 2008 to profitability. He returned more than $1 billion to shareholders through dividends and share repurchases. Dyer also led the acquisition of catalog business Boston Proper, which didn't pan out. The Boston Proper purchase and later sale, within five years, led to an $83 million hit in impairment and restructuring charges in 2016, according to public filings.

Other cuts nicked Chico's in 2014 and 2015. Sales dropped slightly, from $2.66 billion in 2015 to $2.47 billion in sales in 2016. Takeover rumors were published in several Wall Street publications, including one deal that collapsed. The company launched a cost-savings plan to close stores and layoff 12% of its headquarters staff.

“Chico's rode a big wave of baby boomer spending in the '90s and 2000s,” says Perkins. “But now they need to make the smartest and best allocation of resources in order to compete” in the retail environment.

While sales are down, margins are up. Chico's officials, in a February earnings report, say the company anticipates “steady improvement in operating margin that will advance its progress toward its target of double-digit operating margin in 2019.”

Executives say there are several steps the company needs to execute on that goal. The list includes managing inventory better, cutting back on promotions and improving marketing decisions.

SunTrust Robinson Humphrey Inc. retail analyst Pam Quintiliano says Chico's has a lot going for it. Many of its stores are in Class A malls, she says, and standalone locations are in high-end areas. Its popular loyalty Passport Program has high-brand recognition. And its size model, where women get a 1 through 4, is a unique draw.

Quintiliano also says Broader and Chico's CFO Todd Vogensen make up a dynamic duo, and are the right leaders to navigate Chico's through industry and internal challenges. “I've been impressed by her so far,” Quintiliano says. “She's made some tough decisions since she's come on board. And she's focused on the core business without taking her eye off the long term.”

Sweet jobs

The down-to-earth Broader also fits Chico's FAS's easy-going roots. Marvin and Helene Gralnick founded the company in 1983, when they sold Mexican folk art and cotton sweaters from a small store on Sanibel Island. (FAS stands for Folk Art Specialty).

Broader grew up in Spokane, Wash., the youngest of four children. Her dad died when she was 14, and her mom turned from homemaker to breadwinner, which left a lasting impact on Broader. “Our mom was so encouraging and helped us believe we could do anything,” says Broader. “That much faith behind you all the time was tremendous.”

Broader studied journalism at Washington State University. Then, for a life adventure, Broader moved to Boston, where she worked in mutual funds and investment banking.” I didn't know a lot about stocks and bonds,” she says, “but I studied voraciously.”

One of the clients she worked with in banking was the Delhaize Group, a global grocery conglomerate. Broader eventually got a job at Delhaize, and stayed there 17 years. She worked her way up to president and COO of the Kash n' Karry chain. Broader, based in Tampa then, also led the conversion of Kash n' Karry to Sweetbay Supermarkets, and was president and CEO.

The grocery business was key development point for Broader in her career. With all the challenges — high volume, low margins, short shelf life and lots of employees — it has a succeed here, succeed anywhere element, says Broader.

'Invest heavily'

In chasing success, Chico's intends to do more than embrace experience-based retail. It also plans to “continue to invest heavily” in all its websites, according to a year-end report filed Jan. 28 with the Securities and Exchange Commission.

The goal is to have the websites complement, not compete with stores and vice versa. “To that end, we often refer to our brands' respective websites as 'our largest store' within the brand,” the company says in the report.

The company also regularly addresses store count. Officials, in another filing, say they anticipate closing about 50 stores companywide in 2017. The anticipated breakdown of closings is 14-18 net closures of Chico's stores; 14-18 net closures of White House Black Market; and six to 10 net closures of Soma stores. At the same time, there are plans to open at least a dozen stores this year. More than half of those are Soma Intimates, a sales and profit driver.

Broader says there are more elements that will drive Chico's success, beyond what it does to balance e-commerce and traditional stores. The company recently invested considerably in improving its data analytics unit, for example, with the hopes of using the information to increase store and web sales. Chico's also wants to be an employer of choice in specialty retail.

And while the retail industry is challenging, Broader says she believes “the opportunity is even greater.”

“This is a company that's been around for decades, and I want it to stay around for decades,” she says.

Inside look

Chico's President and CEO Shelley Broader answered some personal questions on a Soma Intimates blog post in March 2016, a few months after she was hired. Excerpts of the interview:

What tops your bucket list?

I want to go to Iceland. My kids did school reports on it, and I'm really fascinated by the northern lights.

What did you want to be when you were a child?
When I was really little I wanted to be a shoe salesman. I would put shoes on my dad and ask if they fit. Maybe it was my start in retail! When I was older, I wanted to be a journalist.

What are your favorite motivational songs?

I'm a rocker. “Wake Me Up” by Evanescence and “I Bet You Look Good On The Dance Floor” by the Arctic Monkeys.

What's the most meaningful item in your office?
My Inukshuk from my son. It's a spiritual rock figure that means a lot to me.

What are your guilty pleasures?
True crime TV, medical journals and websites — and champagne truffles.

 

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