From the source: Alice Barbery, Universal Store

Alice Barbery isn’t one to make excuses. Shopping centre rents may be going up, and consumer confidence may be falling, but the success or failure of a retail business, the Universal Store CEO firmly believes, rests in the hands of its people.

This is not altogether surprising, given Barbery’s background in educational psychology. How people learn, and how they interact, is her area of expertise, and at Universal Store she has used that knowledge to create an environment where employees are listened to, valued and motivated to put in what she refers to as ‘discretionary effort’.

This, Barbery says, has been the key to Universal Store’s growth in recent years. The fashion player geared towards millennials has delivered several years of consecutive same-store sales growth at a time when others in its category have seen sales stall.

This feat recently caught the attention of some of Australia’s biggest private equity investors, including Brett Blundy’s BB Retail Capital, Trent Peterson’s Catalyst Direct Capital Management and Adrian MacKenzie’s Five V Capital, which acquired the company in September from its founders for an undisclosed sum. Barbery and other senior management came out of the deal with a one-third stake.

Here, she talks about what makes Universal Store different, how she approaches discounting and the one retail question she’s been answering for 20 years.

Inside Retail Weekly: What were the highlights of 2018 for Universal Store?
Alice Barbery: It has certainly been a growth story for us. The most exciting change, and clearly a wonderful change that has positioned us for further growth moving forward, is the acquisition. We opened eight stores [in 2018]. All of them have been great additions to the portfolio, so we have 60 stores now. We expanded our office to accommodate all the wonderful, intelligent, brilliant people we’ve had to bring on board to achieve the growth strategy. And there have been a lot of wonderful internal promotions within the business. Enabling people to step into growth [positions] and growing the footprint externally were the two biggest highlights of the year.

IRW: How did the acquisition come about?
AB: The Josephson family, who started Universal Store and had owned it for 20 years, gave us the indication they were interested in pursuing an acquisition, so we enlisted the support of KPMG a few years ago. We really took our time finding the perfect partners to help us achieve our next-level goals, and we’re really excited to have done that now.

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We do things a little differently at Universal Store, and we weren’t interested in finding a retailer who was going to try to alter the way we do things. We really wanted to find an equity team that recognised us as a well-run business with a positive trajectory that is beating every previous KPI and budget. We’re heading in the right direction and have a team of people who know how to get us where we want to go; we just wanted to partner up with a group that was keen to allow us to continue to maximise the potential of this business. That took some doing. We met a lot of people – a lot of really great people – but I refer to it as the worst speed-dating experience of my life.

IRW: What do you mean when you say that Universal Store does things differently?
AB: I should probably be cautious about that type of language. Perhaps I don’t know whether other people do things the way we do them – the people I worked for [in the past] didn’t – but we’re a very culture-based business. I know a lot of people say that, but we absolutely consider every choice we make in terms of how it will impact the health of the business across all sectors. We don’t stop at the financial and process implications; we consider how it will impact long term, not just short term, on our people and our customer. All of it sits at equal footing and that is a unique approach, according to the equity teams we met with.

We also don’t make decisions around short-term fixes when we recognise they could have long-term negative implications. By that I mean high discounting. Over the five years I have been in this business, we have been faced with moments of the marketplace going into serious discounting pre-Christmas. It’s tempting to follow suit, but I think it creates difficulty in the long run because it then becomes very hard to convince customers that paying full price is a good idea. For us, it’s very much sticking to our discount policies of the four major school holidays and centre VIP nights. Outside of that, we have not gone into discounting for the sake of discounting. This harkens back to the fact that we have very disciplined buying, so we don’t find ourselves in the position where we have a stock issue.

To be frank, every aspect of the business has to be executed to the best of its ability at any given time. You just can’t catch your breath in retail. Every morning you wake up, you’re at zero dollars. You’re either someone who loves that, or you hate it, but you can’t think, ‘We’ve arrived’. There’s never a point where you can take your foot off the pedal, from marketing to buying, to design, to store operations, to store execution, to distribution centre…if one of those parts of the ecosystem falls over, then the whole thing suffers. That’s why all the choices and decisions we make are very carefully considered.

IRW: How do you avoid that temptation, especially given consumer demand for shopping events like Black Friday. Does it just take strong leadership?
AB: I don’t mean to mislead you; we participated in Black Friday. If it’s a centre VIP night, if it’s an event, we absolutely participate. But outside the school holidays, the customer doesn’t have to be fearful that we’ll run a ‘spend and save’, or a ‘buy this, get that free’, or that we’ll just randomly start marking down stock. I can recall thinking when I worked for previous businesses, ‘Why would you pay full price for this when in two to three weeks, they’ll run some sort of discount?’

I don’t find Black Friday a trap, I find it an opportunity. We didn’t do it [in 2017], and we decided to see what happens [in 2018], and it was absolutely brilliant. Black Friday and Cyber Monday were excellent opportunities. It’s not the sort of thing you would want to do once a quarter, but once a year is great.

It’s also what our customer wants. We didn’t do it because we needed to; we didn’t do it because we had a stock problem. We did it because of our demographic, and our customer was excited about that opportunity. To me, it was almost a customer service expectation.

IRW: You’ve talked in the past about how Universal Store differentiates from other fashion players through its customer service, which creates more of a boutique feeling. What is the customer service offering like, and how do you ensure that it is being executed faithfully by the team?
AB: Like any customer service program, you hope and pray it will succeed. I think we do a pretty good job. We have a values-based customer service discussion with our team members. It’s all from the customer’s perspective. As opposed to rules, they’re more like guidelines to help team members think on their feet and make good decisions based on what the customer expects. That doesn’t happen unless you engage in a conversation with people and support their choices and understand what it is that brought them into your store. We feel very strongly about creating a welcoming environment; not the sort of environment where people feel like they have to be cool enough to come in. You are cool enough, and you’re welcome.

We see [customer service] as welcoming people into our space and making sure they feel they have enough options to make the best decision for them – even if that decision is to walk away with nothing – that they feel they’ve had a really good view of the products we have available and haven’t missed out on anything, because if we can engage them in conversation, we can say, ‘Wait a minute, we have one of these left sitting back here; let me get your size’.

So the team members need to know the stock, they need to understand the product and they need to be able to interact with the customer in a very genuine, authentic and meaningful way.

IRW: How do you ensure that customer service offering is the same online as in-store? And in general, how are you trying to achieve a “seamless” retail offering?
AB: Our head of customer service is an employee I hired in my first stint at Universal Store 14 years ago, and she’s a customer service guru. She and her team are the best of the best at solving problems and reaching out to customers who have a parked order. So the ethic when we talk to our [online] customers is exactly the same that exists in-store. As far as anything new and techy, we have some interesting things in the pipeline that we’re looking at for 2019 and 2020. They’re not ready to be discussed yet, but we are looking for ways to engage with our customer in the online space that provides the customer with a sense of feeling welcomed.

IRW: What percentage of sales occur online?
AB: A growing percentage, and that’s all I’ll say.

IRW: What does the behaviour of your customers tell you about the future of bricks-and-mortar stores?
AB: The more high-tech the world gets, the more I’m seeing people craving high-touch and keen to have physical interaction. I don’t think bricks-and-mortar is in peril, and I don’t think it’s dying. A lot of our very high-tech customers enjoy the conversation and the very tactile nature of retail. It’s easy to purchase items that you’ve tried on already online, but when it comes to things like denim, we find most of our customers actually like to come in and have a conversation about how they’re going to wear it. Denim is such an emotional purchase, it’s up there with swimwear; you’ve really got to be in the right head frame to get it. It’s certainly easier when you’re with someone who is there to help you find the best pair of jeans for you. Our customers come in and tell us that we helped them last time, can we help them again. After they’ve had it once or twice, they come to expect it.

IRW: What about the costs of running a bricks-and-mortar business? A few retailers that have closed recently cited the rising cost of rent as a major factor in their demise.
AB: The two biggest costs for any retailer anywhere are wages and rent. Absolutely nothing has changed along those lines, except for the fact that – like most real estate – rents can increase. But I refuse to ever give up the power of how we run this business, or the success of this business, to anything external. I’m not going to stand and point fingers at landlords or Amazon. Maybe if I were in a commodity business, that would be different. But I really think the grass is always greener on the side of the fence you water it, not just because it’s somewhere else.

Relationships with landlords are important. You have to work closely with them, you have to communicate with them. When any relationship becomes adversarial, it becomes much harder to achieve mutually beneficial outcomes. It’s always a challenge to get the right deal for business. There are plenty of centres that we should be in that we’re not in because we’ve not yet been able to strike the right deal. So I think there has to be some discipline on the retailer’s side, to not accept the deal and not open a store if it’s not right for your business.

IRW: What’s your strategy for growing your online business in a way that doesn’t cannibalise store sales?
AB: I remember in about 2000, people asked me if bricks-and-mortar would die if you had an online store. So it’s kind of the same question 20 years down the track. It’s like, here we go again.

I think with everything we do, if it’s good for our customer, it’s good for our business. Online is another store, it’s part of the business, and if we can really look at this business as pure omnichannel, then we’ll be improving the tech in-store as well. It’s about the experience people have. If they do something online, they can come into store, and the whole customer is being cared for. I don’t see that bricks-and-mortar has to compete with online; it’s an ecosystem, and if one evolves, so must the other.

IRW: One reason I think the question is still being asked today is that retailers are still hungry for examples of businesses doing omnichannel really well. Who do you think is doing it well?
AB: I’m so uninterested in what other people are doing…I shouldn’t say it like that, but I don’t look externally for inspiration. I think the only way you get constant and consistent growth for your business is through the discretionary of your team. And the way you get discretionary effort from people is if they feel valued and appreciated, if they feel there’s a growth trajectory for them in the business, or if they’re not interested in growing with the business, but the time they spend with you is valued and valuable. If you have a great relationship with your store team, they will have great relationships with your customers.

We continue to do that well, and we continue to build an online store that reaches customers that can’t get access to our stores. Regional Australia is an extraordinarily important market, and there just aren’t Westfield shopping centres everywhere in those areas. Other people just physically have difficulty getting into a store, so to me, online is opening a door to customers who may not necessarily be coming into our stores, as well as people who are time-poor. It’s just another way to serve the customer.

IRW: The focus in retail is so much on the customer, but it sounds like you’re just as focused – if not more so – on your employees.
AB: They’re my number one priority, because I can’t look after every customer. I just completed a road show around the country, where I visited every business in every state and literally talked about our strategy going into Christmas. We got everybody together for the evening, put on some nibbles and drinks and talked about how their job plugs into the whole of the business. As a salesperson in Doncaster, how does the job that you do for six to 12 or 14 hours a week actually impact the rest of the business and what does it mean? It’s incredibly important for us to talk about these things with everyone who works for us as often as possible. Our store managers all go through leadership training every year. It’s actually a program that I designed, and it’s so culturally rich, I don’t think you can get that from an external business. I think that’s really hard to do.

My background is in educational psychology; how people learn and how they interact and work together is a huge part of how they run things. My CFO is the chief financial officer in every term, whereas my project is the people who work here.

IRW: What goals are you working towards in 2019?
AB: Refining and growing are the two big buzzwords for us. You can’t hope to realise all of the potential of the growth you achieved in a year, so you grow and then you refine. The first quarter of the year is going to be spent making sure we’ve got all the right people in all the right places and making sure we’re resourced appropriately for the business to achieve what we want to achieve for the rest of the year.

We have a desire to open more stores, so we’ll continue our negotiations with landlords. I don’t have a number that I’m going to commit to opening, because if I get enough good deals I’ll do it, if I don’t, I won’t. Every store has to wash its face and contribute to the bottom line, and thus far they all do, I’m happy to report that. But if I don’t think the deal stacks up, even if it’s a centre I really want to be in, we won’t open.

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