E185: Michael Appel

Retail Recovery Tactics: Tips for Addressing Liquidity, Retail Challenges and Customer Needs

black and white headshot of michael appel

eCom@One Listen on Spotify

Podcast Overview

Is there no better feeling than turning around a struggling company and saving people’s livelihoods?

Michael reckons it is up there and this is the reason he has dedicated his career to retail.

“You got to fix the balance sheet as you fix the business.”

Find out how by listening to this podcast. 

Michael Appel

Is cash really king? Of course it is! In this podcast episode Michael Appel, Managing Director at Getzler Henrich and Associates, discusses how to turnaround a failing business. 

With over 40 years of experience leading and advising retail and consumer companies, working with the likes of Baccarat, Inc., Laura Ashley N.A., Caswell Massey, Ciro, Inc., MacKenzie-Childs, and Wilkes Bashford, Michael knows a thing or two about the challenges facing the retail industry.

He shares invaluable insights on the challenges and successes of retail businesses, emphasizing the critical importance of understanding and engaging with customers. 

Michael discussed his opinion on the future of retail, how to turn around a failing company and protect your mindset during a stressful period. With a focus on innovation, product offerings, and financial restructuring, this episode offers a wealth of knowledge for retailers navigating tough times.

Tune in to future proof your business for longevity and scalability. Listen now! 

Topics Covered

0:25 – Michael’s diverse and well respected career in retail 

05:52 – How he has saved companies from liquidation

09:56 – Analysing cash flow, managing assets, understanding customers

11:06 – Retail requires understanding diverse customer segments

14:55 – Retailers adapting technology to stay competitive and profitable

18:01 – Analysing merchandise sales with predictive analytics

21:28 – How he managed an eCom business that struggled with sales 

26:03 – Difficult to find the right people

28:41 – CEO from Target tried private labels at Bed Bath and Beyond

33:47 – Consumers engage in-store. Capturing feedback with focus groups and phone calls 

34:28 – Research, analysis, and customer feedback are crucial

38:19 – Retailers need to focus on omnichannel eCommerce

40:52 – Lululemon focuses on customer experience and retention

45:30 – Excite consumers with newness and innovation

47:48 – Book recommendation 

Richard Hill [00:00:04]:
Hi there. I'm Richard Hill, the host of eCom@One, and welcome to episode 185. Now in this episode, I'll speak with Michael Lapel, managing director of Getzler Henry. Working in retail, restructuring, and turnaround for the last 20 years, Michael steps us through his opinion on retail, the real winners in the market and his future retail predictions, reasons why companies fail, and the top three things to keep a tight eye on, future proofing your business as much as possible, turning about a company is a very stressful situation, how do you protect yourself and your mindset when going through this process, And so so much more in this one. Great episode. If you enjoyed this episode, hit the subscribe or follow button wherever you are listening to this podcast, so you're always the first to know when a new episode is released now. Let's head over to this fantastic episode. Hi, Michael.

Richard Hill [00:00:54]:
How are you doing?

Michael Appel [00:00:55]:
I'm great, Richard. How are you? I am fantastic.

Richard Hill [00:00:59]:
I'm a little bit jealous. So I think we're we're having a little chat before we came online, and you're sitting in Florida in an 80 80 2, 83 degrees. I'm sitting here in the not so sunny UK, but, hopefully, next few weeks, the weather's gonna get a lot better. But thanks for coming on the show.

Michael Appel [00:01:14]:
Yep. I'm delighted to to join you.

Richard Hill [00:01:17]:
So I think it would be great for you to kick off and introduce yourself to our listeners and how you got into the world of of retail, m and a, and ecommerce.

Michael Appel [00:01:24]:
Okay. Great. Thank you, Richard. Well, I I started my career in the seventies, I hate to say this, at Bloomingdale's as a merchant, and I spent about 20 20 years as a merchant operator, both at Bloomingdale's and at a large big box home furnishings retailer and then at a a series of specialty retailers. And then starting in the nineties, I started to work with challenge companies, and in all different categories. And I did a lot of work, for Goldman Sachs, where I actually ran 2 companies that they owned in New Zealand, and then, also was the the the interim CEO of Laura Ashley in North America, and, was involved with a lot of different retailers and also worked for for bondholders. And then I had my own restructuring firm and performance improvement firm and, and have worked for other ones. And, and most recently, just to do a fast forward, in 2017, I was asked to become chairman, and then I became chief executive officer of a 750 unit specialty retailer called Route 21, which was a sort of teen retailer, guys and gals, and that had just arrived from bankruptcy and led the charter round of the very successful charter round of the company.

Michael Appel [00:02:50]:
22,020, I left, and then got involved with another company called Ashley Stewart, which is a plush size, specialty retailer focused on women of color, where I'm, chairman of the board. And about 2 years ago exactly, I was asked by former colleagues of mine, whom I had worked with in the past to join Gatzler Henrich, which is, a, financial restructuring and performance improvement firm focusing on the middle market, and I lead their retail practice. Fantastic. That is quite a journey, Michael, isn't it? That's Yes. You can. A lot of journey. A lot of different companies. Buy several books, I think.

Michael Appel [00:03:34]:
They'll be a long trillion,

Richard Hill [00:03:35]:
you know, a bit like, Harry Potter versions 1 to like, films 1 to 8. I have a 20 years worth of or 30, 40 years worth

Michael Appel [00:03:44]:
of I probably have about you know, I probably got 3 books in there. Okay? And Yeah. Lots of interesting stories with, you know, with large companies, entrepreneurs, founders, you you know, fascinating. And and anywhere from the companies that I've been involved with have been anywhere from discounters to high end luxury like Baccarat crystal, etcetera. So in in every category, apparel as well as home furnishings. So

Richard Hill [00:04:12]:
You you meant you mentioned you're mentioning names and brands there that are sort of house old names, but I even guess when you you might have started working with some of those firms, they were lesser known. Like, Laura, you mentioned Laura Ashley. That's quite very well known here in the UK. You know, I think, you know, some of these brands, you know, obviously, they're they're huge companies, and you've got, obviously, a lot of experience from working in all different sizes and all different sort of manner of, situations you'd have managed. You know, what would you say looking back over that sort of 40, 50 years? Is it have you got sort

Michael Appel [00:04:44]:
of 1 or 2 defining moments that you're very proud of? Oh, wow. I mean, there there I I'll talk about 2. Okay? One was, and is an iconic specialty retailer in San Francisco called Wilkes Bashford. And Wilkes Bashford is was sort of the equivalent as, a a a smaller much, much smaller 4 or 5 unit equivalent of of what would be, Bergdorf Goodman in New York or, or or Selfridges, you know, and men men's and and ladies designer apparel. And when I got there, the company was the founder was still there. He's a brilliant merchant. He had brought many of the the iconic Italian brands to the United States, 40 years ago and got into trouble through overexpansion. That was at the same time that we entered the big recession of 2008, which I'm sure you remember where where luxury, for the first time ever, took a huge hit.

Michael Appel [00:05:52]:
And so, I got there and, really as a consultant, based on on the vendors asking me to to work with the company and it and ended up becoming the interim CEO of the company. We hadn't paid Suffice it to say, we hadn't paid our vendors for a year. Nobody was shipping. Nobody was buying at the same time, and we were you know, I was able to, utilize, their inventory to keep the company going long enough to get the vendors to ship again. And and then we were able to after a lot of hard work, we're able to to get the company sold to the the the, their largest competitor, called Mitchell's in Connecticut. And, it's been it's been phenomenally successful, acquisition. So and we saved a lot of jobs and saved, really, an iconic institution. And you know that when you look at it when you look at retailers and you look at, you know, the changes gone on, you know, the first thing we look at is is this worth saving or not? Right? And in this case, it was just a phenomenal phenomenal, retailer, and it would have been a shame to see that, you know, go away.

Michael Appel [00:07:15]:
So I'm very proud of that. And then the discussion that I had with about Route 21, which again had emerged from a bankruptcy. It was a much, you know, much, much bigger company. And, and everyone thought we were going to liquidate. And we were able to, you know, we we were able to turn it around in a fairly short period of time and save 12,000 jobs. So and, also, you know, obviously, the investors were very happy as well. So Yeah. So it was sort of a win win, but hard very hard to get from here to there.

Michael Appel [00:07:52]:

Richard Hill [00:07:53]:
Yeah. I can only imagine. I I was, very much deep into my, first main business in 2008, and, I remember it very well. It was very chime. Very, very, very challenging times. We managed to scrape through, but and, obviously, I know a lot of a lot of tough times for a lot of people trying to rescue, trying to keep moving through the months and the year or 2 that that was a very, very tough time. Obviously, that's just one one instance sort of thing. But must be very rewarding, Michael, when you get a, you know, a business that, as you put it, like an institution that, you know, you're trying to obviously, you've gotta you know, can we save it? How are we gonna save it? What we're gonna do? Where are we gonna save? Where are we gonna invest? Or maybe not invest.

Richard Hill [00:08:36]:
But maybe what would you say, you know, we're we're in a, you know, quite a challenging time again right now. You know? Or, you know, you could you could argue different things, but, you know, when you're brought into a company that is having challenges, what is sort of your do you have, like, a framework that you follow to try and

Michael Appel [00:08:54]:
Yes. I have a I have sort of. Yeah. I I have. Over the years, I've developed a playbook in that regard. Yeah. Yeah. And I've written and and spoken extensively about that.

Michael Appel [00:09:03]:
And I think, well, you know, assuming that once you get in there, you assume that that, you know, you've decided that this company can be saved and has a reason for being because, you know, there's quite a few companies out there that, you know, their time has passed. They they've Yeah. You know, the competitive environment has changed. But assuming that you believe that there's that the cup the company has a reason for being, I mean, the first thing that the first thing you have to think about, alright, in these situations is making sure you have enough liquidity. Okay? Yep. And, you know, as a merchant, at the you know, and and they started the business, that was somebody else's responsibility. But as you become, you know, CEO of a company or a financial adviser, you realize that, you know, you you can never make it work unless you have enough liquidity to buy you the time to fix the business. So that's the first thing that you address.

Michael Appel [00:09:56]:
And, of course, we look at in in our business at Gessler Henric, you know, the first thing we do is do a a 13 week cash flow, which tells us, okay. Yeah. What what you know, do we have enough cash, you know, for the next for the next 3 or 4 months, which then which then buy and and if we don't or if we have an issue with that, then we have to decide, do we need an injection of capital of the business, or are there things that we can do with the assets that we have to create liquidity? So so that's the first exercise you, you know, you you you go through. And then, you know, at the same time and and the thing about this is is that when you're involved in a turnaround, you have to do things in parallel. You can't do things in a linear fashion, okay, because you don't have the time to do it. So you've gotta you've you you know, you gotta fix the balance sheet at the same time that you're fixing the business. So what we find what I found in a lot of retailers and brands is the first thing you have to figure out is, is to really understand your customer. Okay? And and believe it or not, many of the companies that I've been involved with who might be household names or large companies have done very little consumer research.

Michael Appel [00:11:06]:
Retail is a little is quite different than, consumer packaged goods where in that in that environment, you know, in CPG, they live and die by by customer research. Right? Retail has has been a little bit different and a little bit slower to to understand how important that is. So the first thing I've done in many of these situations is, a, if they have research, try to understand that, and if not, to make sure that we do a deep piece of segmentation research that identifies who are the different customer segments that that are shopping up to you. And and are they and and, usually, you know, you have it's not one customer. This whole idea of a monolithic customer is not correct. Okay? And so if you've got you've got research and shows what your segments are, you can look at those segments and you can say, okay. Are those set which segments which segments are aligned with the brand and what the strategy is? And which segments are not really, you know, that that they're not gonna make a difference. At Rue, what we found out is that we had the the business was essentially, you know, a a fashion business, a fast fashion business for teens, alright, who were interested in fashion.

Michael Appel [00:12:22]:
And there were segments we had we had segments where they regarded clothing as utilitarian. Okay? The fashion is just something to put on your body, or or the only thing they cared about was buying something at the cheapest price. Well, those two segments, you know, are not gonna take you to the promised land. You're not gonna be profitable with them. So you have to price loop. Exactly. You have to focus you have to focus on on the segments that that really will will drive your business performance and will create loyalty and engagement with the brand. So so that's the first thing is, like, really understanding your customer and and understanding, you know, what's important to them.

Michael Appel [00:13:01]:
What are the most important things, and you know, and, for them? Is it fit? Is it price? Is it fashion or a combination of the 3? How important is value in that regard, etcetera. So so if you if you ask the right questions, you get a lot get a lot of really good answers that are going to inform your strategy. Okay? So that informs your strategy. The research informs your strategy. And then what what you you might have a great strategy, but, you know, it's all about execution, which means that you've got to assess the team that you have and decide whether you have the right people who can, as a team, execute against that strategy. And and once you have that, then what you're going to do is you're going to really make sure that the product is the product that that customer wants. And I think today and I I talk about this a lot actually. Is, you know, everybody's talking about AI.

Michael Appel [00:13:56]:
Everybody's talking about technology. Everybody's, you know, they're not talking about product. Well, the retail what do we do as retailers? We we're in the business of buying and selling product, and hopefully at a profit. Alright? And so so I think that, you know, once you've got the the research and you've got the team together, they can focus on making sure that you've got the correct assortments that are in the right places, okay, the right quantities to to drive your business. And that that's the same whether you're you know, and most retailers today have to be omnichannel. Okay? They can't consumers consumers expect, you know, to have bricks and mortar and expect that you to be online, and they also expect you to be online in social media. And now in social media, a lot of people are selling on social media today. So you've got you've got all you've got these 3 channels in a way where where you're where you're doing business.

Michael Appel [00:14:55]:
And so so, you know, once you've you've attacked the product piece of it, then then the issue becomes technology. Because what's happened today in the retail in retail, is that, you know, it used to be that, you know, most retailers were bricks and mortars retailers, and they might have had a catalog operation or something like that. But, primarily, the business was done in bricks and mortars, so that's where the focus was. But today, because you've got to play in all those arenas, alright, the cost of doing business has gone up, and it's gone up faster than, you know, overall macro retail revenues. So the only way to make out in this situation is to make sure that you're much more efficient, so that you can make money. And so and today, there are you know, embracing technology and the operation of your business as a retailer is absolutely critical. And if you look at the retailers who have been successful, they have been very progressive in that regard. And and so and and today, the other part of it is that in terms of technology is that, you know, used to be extremely expensive to to implement, technology platforms and businesses.

Michael Appel [00:16:12]:
And but today, because of the cloud and because of of, you know, the improvement in technology by a lot of these vendors is that it it's actually not that expensive and easy to install, and you get really great results. And that covers so many parts of of the, of of the retail ecosystem. So you know? And I could talk about that a long time and and what we did. And we we did that at Route 21 very successfully. So

Richard Hill [00:16:43]:
Yeah. No. I think, obviously, some of

Michael Appel [00:16:44]:
the things you stepped through there, a couple

Richard Hill [00:16:46]:
of things sort of stood out for me on one particular thing. So, obviously, when a business is having having challenges and they need to, you know you know, bring a company like yourself or, you know, need to make some it's clear they need to make some changes, and you step through there, Yeah. That initial piece of of, trying to make sure you've got, you know, that that first 13 weeks fairly nailed down. And if you and if it looks like there's gonna be some challenge there, which is quite often, I'm sure there is, if as we will be talking about it, so I think, you know, creating liquidity when it's quite difficult to do. Have you got any sort of creative ways or, you know, going back to your last 40 years, some creative ways how you create created and improved that

Michael Appel [00:17:26]:
cap the cash flow. Yeah. Exactly. Well, I mean, basically, you have to look at the assets that you own. Right? And the major asset that most retailers own is inventory. Right? So, therefore, you have to look you have to look at the inventory that you own, and you'll have to decide how to get much more productivity out of it. Is it the right inventory? Is it in the right quantities, in the right places? Do you have too much inventory that's that's, aged? Alright? And and if that's the case and you find that with most of them. Right? Especially Yeah.

Michael Appel [00:18:01]:
Especially, it's like, you know, they're in they're in love with the with the merchandise, except the problem is if it doesn't turn fast enough, okay, that can that can sink you. So you have to be very, you know, analytic about looking at that and say, okay. What can we do with this? And it's a combination of and one of the things that we did, in addition to just looking at the content of the inventory was looking at how do you buy. Alright? And are you buying stuff that's really gonna sell and that's gonna turn rapidly enough to create that cash flow that you need to, you know, to to to to, operate the business? And we used, you know, we used, predictive analytics in that regard in terms of, you know, if you're not buying the right stuff to begin with, what you're gonna end up with is Yeah. Marked out as in clearance and Yeah. And, and that's a problem. So we were able we worked with a company that had been in the business for a while that used predictive analytics to help the merchants choose the right products to buy and also to determine which products they're considering, would you know, we're not gonna sell. And they did it quite quite you know, it was really utilization of of AI, predictive analytics Yeah.

Michael Appel [00:19:18]:
To to, to do that, and they assembled panels of of of your consumer, okay, who had a history of picking the winners. Right? And when you assemble those consumer panels of of of people who pick the winners and you showed them product you were thinking of buying, there was a direct correlation between high scores and whether the product would sell and low scores, that that where you were buying markdowns. Okay? So if you've utilized if you utilize that technology, you're gonna buy more of the winners, drive more business more probably, and you're not gonna buy the losers. So it's just as important to not buy stuff that's not gonna sell in that regard. And Yeah. You know, especially in a when you see that at apparel. Okay? Because Yeah. If they don't like it, alright, it's there there's it's hard to find a price they're gonna buy it at, in, you know, in that regard.

Michael Appel [00:20:15]:
So so we were quite successful in doing that. Yeah.

Richard Hill [00:20:18]:
It's a big thing, is it? That sort of and you've got the returns element. Certain items are gonna return higher than others. You know, the the the the Right. We I used to run a technology business prior to the agency, and that was always a big problem for us. You know, technology, for example, you know, if somebody plugs it in there, it doesn't work. They send it back, and they might sit on the shelf. But if it's a £500 thing or a $500 thing, that's a that's a big that's a high value, high ticket item in ecommerce. Next thing you know, you've got 4 or 5% of your inventory sitting in returns or sitting in, you know, seconds, whatever you wanna call it.

Richard Hill [00:20:52]:
Obviously, that's a huge, huge percentage sitting

Michael Appel [00:20:55]:
up about yeah. And and the issue is this, is that what what I found over the years is is that, you you know, you're gonna know pretty soon, alright, whether the product is gonna perform. And so the the critical thing to do is to take appropriate action and not wait and and and sweep it under the rug because, you know, you're much better off, you know, you know, they always say your first markdown is your best. But if you wait too long to take it, right Yeah. You're gonna be in trouble. And Yeah. And it's really interesting. I'll never forget this.

Michael Appel [00:21:28]:
One of the first businesses that I was involved with as a president was a it was a it was a cutlery business. It was a gift business that specialized in in in cutlery and personal care items. So it was all, you know, hard line items. Right? And so the owners of the company you know, felt that, well, you know, it it's it's made out of metal or this or that and, you know, it's got some value no matter what. Well, guess what? If it's if it's not selling, alright, it doesn't make any difference. So, you know, what we had to do very, very aggressively was to to say, okay. These these are not selling. They're not turning, and they're tying up cash, and therefore, we can't buy the key items that are driving the business.

Michael Appel [00:22:16]:
So, you know, what we did actually, I'll never forget it with the the merchant that worked with me. You know, we just basically because because, you know, it was a it was a privately held business and, you know, the the the bank was only willing to go so far. We just said, we're we're gonna we're gonna not buy the bottom 25% of the assortment. Right? Yeah. And we're gonna take that money, and we're gonna pour it into the key items. And within a year, we went from, like, minus 10% comp store sales to 10 plus 10% comp store sales Yeah. Just by by focusing on the basics and having Yeah. You know, having the discipline to, you know, to do the right thing.

Michael Appel [00:22:57]:
And it that's it's fascinating. And, you know, these types of basic things still, it it hasn't really changed, okay Yeah.

Richard Hill [00:23:05]:
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Richard Hill [00:23:47]:
So, obviously, you work you you work with a lot of different firms and, obviously, still are. What are some of the common themes you see why companies fail, you know, on the sort of retail side of things?

Michael Appel [00:23:58]:
Okay. Well, I I think sometimes, okay, sometimes what happens is that a retail concept is no longer valid. Okay? So that can be the case. I remember many years ago, there was a type of retailer that was called the catalog showroom. Okay? And I don't know if you remember what those were, but, basically, you know, they'll you'd go into the store, and there were these sample, 1 of each, and then you'd, you know, you'd go to the counter and they'd get it for you for the back. Well Yep. That was

Richard Hill [00:24:30]:
Right? Well, you know that in this country, Argos was the big big brand. Really? Still anyway, still a thing, but it's a very it's a lot smaller thing.

Michael Appel [00:24:37]:
Right. So what what happened in the US was that all of a sudden, big box retailers came. Right? And, you know, they had bigger assortments, sharper prices, and they basically put the catalog showrooms out of business. So Yeah. You know, there there's that situation. Alright? Then there there are situations where, well, I think most of the reason why I would say if if there's a reason for being, alright, if the then it's usually management. Okay? Yeah. It's usually, you you know, they don't have the right management that that can that can fix the business.

Michael Appel [00:25:17]:
And very often, what happens is is that what you see is when you go in is you have a, you know, management group that, you know, they've been there for a while, and they were there when the business was growing. But then when they started to hit challenges, they couldn't they couldn't pivot. They didn't know how to operate in the turnaround environment. And so all they thought was, well, all we have to do is do what we're doing and do it better, and we'll be okay, as opposed to, no. You need to start doing things differently if you're going to turn this thing around. And and, you know, and and that's difficult because they don't know they just don't know how to how to move quickly enough and and, you know, reorient the strategy. Yeah. And so being And assemble.

Michael Appel [00:26:03]:
Yeah. Yeah. And bring and get you gotta get the right people in. And that's always difficult at times because you go in there and you because because I've seen so many businesses, alright, it's it it doesn't take me long to assess, the the quality of management. And and one of the other and one of the other problems too is is that you will have a situation where the board will decide to replace a CEO, and a new CEO will come in, and they will decide that they have to clean house, and they get rid of everybody in the c suite. And that's a huge mistake because in most companies, not everybody's bad. Right? And so you you have you have, you know, different skill levels, and and and so and, also, those people understand the DNA of the company. And if you get rid of everybody, you lose the DNA.

Michael Appel [00:26:56]:
Yep. And that could that can kill you, and we've seen this so many times. The other the other piece of it too, and we can talk about this with with 2 companies in the United States. 1 was JCPenney, and the other most recently is Bed Bath and Beyond, was they brought a new CEO in, and they decided to basically fire their customer and completely change the business model, you know, without testing it. And, you you know, and in both cases, it killed the business. I mean, JCPenney is only alive today because of the fact that the mall operators, you know, decided that it was cheaper for them to own those businesses and keep them, alright, than it than it would have been to to get rid of them, to close the company, and then and then you'd you'd you'd get your, you'd you'd lose your rent rolls for for

Richard Hill [00:27:51]:
your specialty retailers because when big hole in your, store with no tenants or whatever.

Michael Appel [00:27:56]:
Yeah. And and most of the leases in these malls say that if you lose your anchor, alright, they can go on percentage rent as opposed to paying the rents that they're paying. So that's a killer. So that's why JC Penney is alive. With Bed Bath and Beyond, that was really a tragedy because, again, activist investors, yeah, the company wasn't doing as well as it should have. Alright? But it wasn't wasn't going out of business. And they launched a successful proxy fight. They got rid of the entire board, and put in a new CEO who had come from Target.

Michael Appel [00:28:33]:
And, I don't know. Do you have Target in the UK? No. No. Okay. It was like Walmart. You know, it's Target or Walmart. I'm aware. Yeah.

Michael Appel [00:28:41]:
Yeah. Okay. So so, he came from Target, and he was he had never been a CEO before and but he had been very successful, building up their private label programs, their private brands programs. So he came to Bed Bath and Beyond, which was really known for you want you go to Bed Bath and Beyond for the brands. Right? So you've got a you're a big box retailer. You go all the categories of of home, and you're carrying all the brands that people want. And so he decided he decided to get rid of the brands and just put in and and produce all these private label programs, which did not resonate with with consumers and and didn't test the concept. And, you know, it amazed me when I saw it because they said I went in I went in one day to look for a a you know what a dust buster is? You know, a little cordless mini vac? Okay.

Michael Appel [00:29:38]:
Yeah. Yeah. And it's like it's like the most basic thing you can think about, right, around your house. So I went into their new concept store, and I said I'd like to get a Dustbuster. And and they said, well, we don't have a Dustbuster. I said, well, I don't really care. It doesn't have to be that brand. It could be just another version.

Michael Appel [00:29:56]:
They didn't have anything. And I said to my wife, these people are going out of business. Okay? And, unfortunately, they did. And there was no reason for it. They just needed to, you know, they needed to fix they they need to improve their merchandising, but they didn't need to change the the the business concept and the business model. And the board allowed them to do it. So Yeah. You you know, that that was a and that has happened more often than you think in apparel as well.

Michael Appel [00:30:26]:
You know? You have you have apparel retailers where they get rid of the and, you know, apparel is a tough business. Right? Apparel is a tough business because you're in especially in the fashion end of it is that, you know, not every season is going to be fabulous. Right? Yeah. Which means that you've gotta have enough liquidity, a capital Yeah. To survive, you know, the inevitable hiccups. But, you know, what happens, especially if you're a public company today in the United States, is that if you don't make your numbers, you know, the boards are not very, understanding. And so, yeah, you know, they get rid of the CEO. They bring a new CEO in, and, you know, and they they change the, you know, the the the the assortments the assortments

Richard Hill [00:31:08]:
and yeah. Yeah. I thought that was a well you know, a nice, you know, they they lose that DNA. You know, it's a brand that's been known for x, y, zed for, let's say, 20 years. Of course, things need to change, but to come in there and just completely wipe out the whole, say, c suite or the whole a certain level of management. Well, amongst those people are gonna be some fundamental key people that have made some very, very, very good decisions along the way. Of course, there's the challenges that you're now facing as a company. But to come along and then wipe out everybody or wipe out the call, it's just yeah.

Richard Hill [00:31:44]:
I see that in

Michael Appel [00:31:45]:
the call. Yeah. It it never works. And and and smart CEOs understand that that, you know, yeah, that they have to have the right balance in that regard.

Richard Hill [00:31:58]:
Because if you're coming if you're coming so if you're coming in as a new so let's say the CEO has to change or has changed, what would be a, you know, if you're if you're recommending and engaging a new CEO for a firm that you're helping restructure, what would his sort of first 90 days maybe look like? Would he then Repairs. Or rehearse? Yes. Sorry. Yeah. Of course. Of course. Yes. Of course.

Richard Hill [00:32:20]:
But his or hers. Of course.

Richard Hill [00:32:23]:
Yeah. What would that

Richard Hill [00:32:24]:
look like? What sort of key things would they be focused on?

Michael Appel [00:32:28]:
Well, I think I think successful successions have have said you know, in the 1st 90 days, it's like you you really should should dig in, understand the customer, and listen. Alright? Listen and learn. And and, of course, if it look. If you're running out of money, then at the same time that you're doing that, right, you you you know, you're you're listening and you're learning and you're you're, you know, getting a point of view about the business. And and I think that that will inform, you know, what your what your game plan is. Yeah. So Yeah. And I think and, also, I mean, look.

Michael Appel [00:33:10]:
If you're if you're and and and, look, whether you're bricks and mortar or ecommerce or omnichannel, it's talking to your customers. I mean, I think that any any, retailer that's got bricks and mortar I mean, if you wanna know I always used to say, if you wanna know what's going on at a business, in a retail business, you're not gonna find out at headquarters. You've gotta find it in the snores. Okay? Because shopper. Well You don't even have to be a secret shopper. Okay? You just have to be out there. And Yeah. And when you go to the stores, the the the staff will tell you what's right and what's wrong, and your customers will tell you what's right and what's wrong.

Michael Appel [00:33:47]:
Yeah. And most consumers, you know, if they're in the store, the the you know, they they have some level of engagement with the brand, and they will they will tell you what they think, what you're doing wrong, what they love, etcetera. And, you know, it's amazing how much you can learn. I was always I would be in the stores, like, as as as often as I could. If I could go one day a week, I would because you can you can learn a tremendous amount, about, you know, about the business, about the customer, etcetera. And if there's no and if and look. If if it's an ecommerce business, then you can get you know, you can do focus groups. You can get on on the phone with them.

Michael Appel [00:34:28]:
You can do, you know, you can do all sorts of free of research. You know, as long as you ask the right questions, you can get you can get those those answers. And, also, really looking at we did a lot at Roux with understanding, through a customer service engagement, what what was what they liked, what they didn't like, what you know, that that was really helpful. And we had we had a very, very smart guy who was our SVP of data analytics, and he was able to aggregate, all the customer service comments from all the different areas of the business so that we could tell overall what was, you know, what was the most important things to cons to to our consumer, and what were we doing well and what we weren't doing well, etcetera. And it's very useful to have that information, okay, instead of instead of, you know, assuming that we're great. Okay? And in some cases, we we we were. In other cases, we weren't. You know? And and, like, for example, with, I've been involved with a lot of businesses that have plus size assortments, you know, for Yeah.

Michael Appel [00:35:34]:
And in those in those businesses, fit is number 1. Okay? Because if the garment doesn't fit, doesn't make any difference if it looks great. If it doesn't fit properly and there are big and there are technical issues. And the companies that do it right, what's really interesting is the company that I'm involved with now, Ashley Stewart, has an extremely low return rate because the pro the product is well you know, the the the the the fit has been consistent, and, and the customers know they they know if they're a size 14, they're a size 14 regardless of what they'll put. Exactly. And and and return and returns have been a huge issue in the retail business today, and and it's tanking a lot of companies. Yeah. Between that and especially in apparel.

Michael Appel [00:36:27]:
You know? Between that, I think a lot of a

Richard Hill [00:36:29]:
lot of apparel companies have sort of reversed their you know, you get free shipping and then free returns. So then what a lot of company or customers were doing were buying 2 or 3 sizes, and then obviously trying whatever on, sending 2 back, but, obviously, you've got a you've got a cost of return, and then you've also got a couple of products that are obviously seconds or or used potentially, and it creates obviously a whole cash flow, you know, everything.

Michael Appel [00:36:55]:
If if it's if it's a seasonal apparel item, right, the season is short. So you don't you don't wanna end up with a lot of older, you know, aged merchandise in that regard. Yep. Those things today yeah. They they they impact profitability dramatically. So Yeah. You know, it's kind of like it's the devil's in the details. Alright? And and I think a lot of companies have gotten into the the mistake that they have to offer free shipping or free shipping at a very low threshold because they're all competing with Amazon, except except Amazon you know, you're not getting free shipping from Amazon.

Michael Appel [00:37:32]:
You're you've spent a $150 a year, right, to to be a a member. So Yeah. But but once you paid it, people forget it, and they think it's free. So so but the reality is that you have to figure out what you can, you know, what you can afford. What should the what should the shipping threshold be, and what should the return policy be? I mean, one of the things that we see too is, you know, we don't want customers returning garments that don't have the original tags on them because we know what that means. Right? They they've worn them I've worn them. And and they exactly. So, and and that's really that that's a problem.

Michael Appel [00:38:13]:
So and I think that that a lot of retailers are grappling with those issues now, finally. Alright? Yeah. And say Yeah.

Richard Hill [00:38:19]:
I think it's it's sort of gone full circle because it was, like, maybe even, like, 3 years ago. Free delivery, free returns, all free, but now hang on a minute. That's by that's biting everybody, you know, now in terms of that that extra 5, 10% that we all need or all our customers need. So I think, you know, we're we're gonna have a lot of we have a lot of retailer clients, a lot of retailer listeners, you know, omni omnichannel ecommerce. So for those that have the retail stores, you know, I we've got, you know, we've got a quite a lot of large retailers with 3, 400 stores that are are clients, their listeners. You know, what what would you say to those guys? What do they need to focus on in the next 12 months? They've got a they've got a heavy investment in retail and and the ecommerce as well, but they've got a heavy investment in the retail side. What would you say to those guys about having a successful sort of 2024 start of 2025? Yeah.

Michael Appel [00:39:10]:
I mean, I think it it you know, the UK is a little bit different than than the US. In the US, you know, the economy is not bad. Yeah. Yeah. However however, consumers have become much more discriminating in terms of who they shop with. So, you know, it all starts making sure you have the right product, right, and making sure you understand, you know, how important the value quotient is to that customer and and making sure that you, you know, you have the right balance of full price and promotional, I think, in that regard. But, again, making sure that you get get much more, you know, really into the the inventory content and inventory investment because, you know, I think that that it's still gonna be challenging. What's what's so interesting is you see this bifurcation in performance between the haves and have nots in the United States and that you have some retailers that are just going that are doing fabulous.

Michael Appel [00:40:13]:
Alright? You know? I mean, of course, Costco continues to, you know, do fantastic. Walmart is doing well now too because I think customers are very value focused. Yeah. And they're also having to spend more of their money on grocery, and Walmart's the biggest grocer in the United States. But then you've got, you know, people like Abercrombie and Fitch who have very successfully turned around that business. That's been a great transformation, and and they really have nailed the you know, who their customer is, what they want, and and they're doing, you know, they're doing really, really well. And so you see you see those and, of course, Lululemon continues to Yes. To do it.

Michael Appel [00:40:52]:
And they and they all continue the good ones continue to focus on their customer relentlessly, really work on the in store experience. You know, you go into a Lululemon store, and, you know, you have salespeople that are knowledgeable about the product, really helpful. Right? Yeah. And and you don't have the turnover that you have in some of the other retailers. And turnover frontline turnover can really kill you. And if you have in if you have engaged in you know, associates that are engaged with the brand and engaged with the customer, you're gonna do a lot of business. So Yeah. You know, it's kind of the bay it's kind of the basics, but Yeah.

Michael Appel [00:41:34]:
But, you know, you really you really have to to focus on that relentlessly. And So

Richard Hill [00:41:41]:
if I was, I'm I'm a I I am a bit of a hobby, investor. So if I was, obviously, I'm more got my ears to ground more on sort of my the tech side of things on and and tech companies and but if I was if you were, this is not professional advice. We're not financial advisers, but if you were to invest tomorrow in a couple of high street retail chains or brands, is Is there a couple of brands that spring to mind that you think could

Michael Appel [00:42:16]:
change as well? I like I'll tell you. I still like I like Lululemon because I think they continue to innovate. I like, I like Lululemon. I like, Aritzia, which is a great specialty retailer out of Canada. I I like Ulta Beauty. I like Sephora, which, of course, is part of LVMH. I mean, I think LVMH I think LVMH is is really that they really understand their customer, and they're not afraid to invest. And I don't know if you've seen you know, they bought Tiffany's recently.

Michael Appel [00:42:50]:
And Oh, okay. Yeah. The the tip they they invested at this $500,000,000 in their New York City flagship. And, you know, it it it will pay off. They they they play, you know, they have the capital structure to to play for the long ball and, you know Yeah. Those types of of people. And, you know, and they also own Laura you know, Laura Pianna. You know? Yeah.

Michael Appel [00:43:14]:
Classic luxury companies are are doing, you know, really well, and they own Sephora too, which is continuing to do really well.

Richard Hill [00:43:23]:
So so I will I'm I'll make a note I'll make a note of those in the next day or 2, 2, and then maybe we'll get you back on in 12 months' time.

Michael Appel [00:43:29]:
They did. Right? The IR. It's the IR prediction. Right. The thing that's interesting is is that, you know, you can't yeah. Yeah. You know, with some of these companies, you you know, from month to month, the the stock will go up or go down, but long long term, you know, you gotta do really you gotta do really well, because they really they they really understand their customer. They did they continue to invest in the business, which I think is critical for retailers and technology, and and the results show.

Richard Hill [00:44:00]:
Yeah. So I think, you know, that has been a it's been really fascinating listening to you. I feel like we could have a 2 or 3 hour, podcast. Fascinating. But I I think I'd I'd like to end on a couple of sort of more sort of personal touches to our the founders that are listening. You know, when when times are tough, you know, and the, you know, you know, the ups and downs of running a business and particularly a retail business, Now what would you say to those guys, that are running a a retail business now that, well, you know, when times are tough, you know, and that you've really gotta dig deep, have you got sort of a sort of a words of wisdom to those guys, you know, when, around sort of their mind mind

Michael Appel [00:44:39]:
set, mental health? Yeah. Yeah. Well, I mean, look. You you have you have to to not panic, number 1. Number 2, you've gotta really preserve liquidity. Alright? Because Yeah. It's just critical. I can't stress it enough.

Michael Appel [00:44:55]:
You know? Coming coming as a coming from my background as a merchant. Right? Yeah. You know, you learn that you can't do it without the the liquidity gives you the time and the tools Yeah. To to do to turn around the business. Okay? And and, also, I think at times like this, which is really interesting, I always say you can't afford too many retailers play it too safe in the sense that they they they don't focus enough on new exciting product, and they just, you know, like like, try to play it safe on Yeah. On the Internet. Stuff. Yeah.

Michael Appel [00:45:30]:
And you can't do that. You have to consumers in this environment, especially when money is scarce, you know, to get them to open their pocketbook, you've you've gotta excite them, and and make sure that that, you know, they there's newness, there's excitement, to get them to buy it. Because you know what? If you're in the apparel business, if, you know, if you have a blazer in your closet and a pair of black, you know, pants, well, you don't need more of that. Okay? Yeah. You need a great blouse. You need something a great, you know, great accessories or whatever. So I think that a lot of retails, particularly in the fashion business, sort of play when you play it too safe and you're not continuing to innovate and introduce new product and and excite the customer, you're gonna you're gonna suffer. And you just have to do it properly balanced.

Michael Appel [00:46:19]:
That's all in that regard. Yeah.

Richard Hill [00:46:21]:
I think that's fantastic, advice, Michael. Now thank you so much for coming on the show. I I think, you know, so many takeaways. We'll make sure everything's, highlighted up in the show notes. And for those that wanna reach out to you, Michael, find out more about yourself, more about, the practice, what's the

Michael Appel [00:46:36]:
best way to do that? So let I'll give you it's michael appel, appel, and I am the retail practice leader at Getzler Henrich. I'm not gonna spell that out, but my email add my email address is mapel@

Richard Hill [00:46:53]:

Michael Appel [00:46:53]:
Getzler henrick.com, and my direct line is 917 in the US, 917-789-36 15. And we're we're always we're open to chatting, with with the with the clients and retailers. We love to to meet them and and chat with them. And, hopefully, if they need help, we have a great team that that, you know, can do anything. And we also have our team also has IT experts and supply chain experts as well as, you know, financial, restructuring experts as well. So we like to say that we we we have the whole we have everything covered in that regard. Yep. Fantastic.

Michael Appel [00:47:38]:
Well, one more we'll link all the contact details up in the show notes. So one final thing from me then. I like to finish every episode with a book recommendation. Do you

Richard Hill [00:47:47]:
have a book to recommend to

Michael Appel [00:47:48]:
our listeners, Michael? Oh, gosh. Well, I like you know what you know which book I really like? I really like Leonard Lauder's autobiography. You know, the the, former CEO of of, Estee Lauder. I thought it was a fabulous book about you know? And he really he really built that business. And and his insights, I thought, were were fantastic. Yeah. And and, also, it's also kinda interesting because he was navigating you know, he took over from his mom who was a force of nature and, you know, how he how he was able to navigate through that and also to to to to build the the build the business model and how that model changed over time. And, you know, and one one of the things that I thought was fascinating was he thought at one time that that they couldn't that there was so much going on in the beauty business and that the best way to continue to innovate was to buy a lot of these young, up and eComOne, brands like Bobby Brown, etcetera, and as as a way and and keep the management there, alright, in order to to continue to grow the business and grow the portfolio.

Michael Appel [00:49:09]:
And I thought Yeah. You know, he had a lot of different of insights like that, which I that sounds

Richard Hill [00:49:13]:
fascinating, actually. I'm only I've got a little trip coming up in a couple of days. So I think I'll get that, delivered before then, and that'll keep me busy for a couple of 3 days while I'm Yeah.

Michael Appel [00:49:22]:
And I

Richard Hill [00:49:23]:
think it's sitting on my lap.

Michael Appel [00:49:24]:
It's it's by Leonard Lauder. I think it's called The Company I Keep. Alright? It's an excellent It's a it it's an excellent book.

Richard Hill [00:49:32]:
Fantastic. Well, Michael, thank you so much for coming on the show. We'll maybe touch base in 12 year 12 years.

Michael Appel [00:49:38]:
12 months. 12 years. Okay. Maybe we

Richard Hill [00:49:42]:
won't leave it quite that long. We'll maybe go 12 12 months. If I'm still podcasting in 12 years, that'll be, you

Richard Hill [00:49:49]:
know, episode 700 and something.

Michael Appel [00:49:51]:
So Right.

Richard Hill [00:49:52]:
I'm not sure I've got that many left with me, but, it's been fascinating, Michael.

Richard Hill [00:49:56]:
Thank you so much for coming on

Michael Appel [00:49:57]:
the show. Rich, it's my pleasure. Okay. Have a good day.

Richard Hill [00:50:07]:
Subscribe or follow button wherever you

Richard Hill [00:50:09]:
are listening to this podcast. You're always the first to know when a new episode is released. Have a fantastic day, and I'll see you on the next one.

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