Jay Schottenstein talks about his retail business empire

Jay Schottenstein wasn’t just born into a family of retailers. He was born to be a retailer.

In the nearly 50 years since Schottenstein, 69, started working at the furniture chain with his father, he has expanded and modernized the business. family empire.

He received guidance from his predecessors. His great-grandfather bought and sold goods on a wagon, then his grandfather started a store in his early 1900s, and his father’s generation developed it into a department store, a furniture company, and a real estate company.

Currently, Mr. Schottenstein is the CEO of American Eagle Outfitters, Inc., and the chairman of the board of Designer Brands, Inc., the parent company of DSW, both of which are publicly traded companies. He also works in furniture with American Signature Inc., real estate with Schottenstein Property Group, winemaking with Mayacamas Vineyards, and liquidation sales and trading with SB Capital. He was also part of the group that helped supermarket giant Albertsons buy Safeway in 2015 for more than $9 billion.

It’s a big deal, but Schottenstein carries it with a light-hearted, over-the-top attitude.

“You have to be an optimist,” he told WWD in an interview at American Eagle’s New York design studio. “You can’t run a good retail business unless you’re a great optimist. If you’re not an optimist, you’re dead in this industry. You have to believe the world is getting better. , and we can do it better.”

That retail attitude and Mr. Schottenstein’s long history in the industry will be recognized Monday when he is inducted into the World Retail Council Hall of Fame.

he is good company. Jean-Paul Agon, chairman of L’Oréal, and Suparak Umpuji, chairman of Thailand’s The Mall Group, were also appointed.

Council leader Ian McGarrigle said when the Class of 2024 was first announced: Anticipate challenges and discover opportunities before others. Their careers are a testament to what it truly means to lead with vision and agility. ”

At least Schottenstein has some foresight from years of experience.

Forty-seven years ago, his job consisted of going into his family’s furniture store every week, “making sure it’s set up the right way, making sure the items are displayed the right way, making sure everything is priced the right way.” It was “to do.” If a store didn’t produce, you had to stay there until you got the right results. ”

In Columbus, Ohio, the company had four furniture stores under two different banners. The stores competed with each other for customers, but they were all pretty much the same.

Schottenstein drew the ire of his father, Jerome, when the two chains ran nearly identical ads.

“I wasn’t even in town,” he recalls. “I said, ‘I didn’t know that was my job.’ My father gave me two pieces of advice. He said, ‘There are two things that drive business. Purchasing and Marketing.” It really changed my life. Because at that moment, I took over the marketing of the furniture business. That was the biggest decision…because it gave me a deeper understanding of the marketing side of the business, what drives the business, and the product. ”

Mr. Schottenstein’s subsequent experience as a store manager and other business-related positions provided him with a holistic understanding of the industry, including both the fundamentals of retail and its high-tech evolution.

“The key to retail is that you have to rotate your inventory,” Schottenstein said, going back to business roots. “You have to rotate inventory in a very efficient way. That hasn’t changed now. Successful companies years ago rotated inventory…otherwise they wouldn’t exist. It would have been.

“Not only did I grow up in this business, but I grew up in other sectors,” he said. “We did an asset recovery liquidation. And we still do that. We have a separate division that specializes in sales across the country, and we have the good and the bad of that division. Over the years, I’ve worked with many companies that have gone out of business, and I’ve done research into why they went out of business and how they went out of business.”

Where in the past stores could stumble due to changes in ownership or generational leadership, today’s retailers are more likely to run into problems with technology.

“It used to be that if one person started a business and set up shop, it could last a long time,” Schottenstein said. “The system hasn’t changed that much, has it?”

“But today, with all the new technology and the evolution of e-tail businesses and online channels over the past 20 years, innovation is more important than ever. new technologies and be able to use them if the customer understands them.”

To stay on the cutting edge, Schottenstein brings together leaders from the various companies involved in two- to three-day seminars with guest speakers.

“We’re inviting economists to tell us what to expect,” Schottenstein said. “We bring in future forecasters to talk about what things will look like in the future and what the related subjects are. Today, it’s AI.” It has been used to refine predictions in the area of ​​inventory allocation and hinted at plans to leverage AI in stores to create a better shopping experience.

There are also areas where different companies can compare notes and collaborate, such as RFID technology and government regulations.

Various companies gave Schottenstein a wide-angle lens on the pandemic. Mr. Schottenstein had to close 1,800 stores in one week, but later realized that business boomed as consumers took the plunge.

After several years of uncertainty, business is now returning to near normality.

Schottenstein said the good news is that unemployment remains low, at 3.8% in March.

“People are working, that’s the most important thing,” he said. “You have to go back and see if you’re a good merchant. Being able to provide your customers with the product they want, the quality they want, at the price they want to pay. You have to go back to where you started, keep it that way, and then start thinking about how to improve the customer experience.”

Schottenstein’s entire business needed a course correction.

“DSW was the king of my career and then all of a sudden, very early on, I moved into a more casual field. [footwear styles] And sneakers. they did a great job. Now they have to strike the right balance there. We’ve also acquired a number of brands and recently brought in some special talent who understands product development. And we’re very excited about it. ”

The designer brand’s net sales fell 7.3% last year to $3.1 billion, but the company is hoping to claw back some of that with expected low-single-digit growth this year.

He pointed to a 2022 deal for Designer Brands to acquire Topo Athletic, founded by Tony Post.

“They make great running shoes,” Schottenstein said. “He’s developed a really great product. When you wear his shoes… they’re the most comfortable running shoes. They’re more comfortable than Hoka. They’re the most comfortable. I’ve tried them all. In this world. They are the most comfortable shoes.”

Schottenstein said there are opportunities for “many more deals” in the coming years across his retail industry. “The government isn’t going to write all the checks like it used to. So it’s going to be a question of who are the good operators. And there’s going to be an opportunity there as well.”

American Eagle also grew sales of its namesake business Aerie, Offline by Aerie sub-brands Todd Snyder and Unsubscribed, up 5 percent last year to $5.3 billion, marking a three-year He is currently busy with plans to grow the company to up to $6 billion later.

“When you think of denim, you think of two companies: Levi’s and American Eagle, and when you look at where we sell denim, in our stores, where Levi’s sells everywhere, it’s amazing. “That’s true,” Schottenstein exclaimed. “We are number one for young people aged 15 to 25, [the] The number one brand for women. ”

While Schottenstein clearly enjoys driving various ventures, he is also well aware that he is not doing it alone.

“You can’t do everything alone,” he said. “And whatever success I have, it’s because of the people I work with. It’s because of their innovation and vision, and we want people to be able to do what they do.” We encourage them to become experts in the field, and they take pride in that.

“Everyone in my company is in the leadership department,” he said. “They don’t wait for me. They know what they have to do. They all work well together and each one takes pride in their work, whether it’s the furniture. My son runs the furniture division, which he takes great pride in. My other son runs the real estate division. I have another son who works on deals. I am receiving it.

“Our executives here at American Eagle work for and with Jen. [Foyle, president and executive creative director for American Eagle and Aerie], they are winners. they take great pride. They love business. They love the product. To be in this business, you have to be excited about the product. I have always loved miscellaneous goods. ”

For Schottenstein, this is a love affair, so he has little to worry about in the retail industry.

“I sleep better at night,” he said. “There are so many great people around me.

“If there’s anything that cheers me up, it’s the state of the world,” he said. “There are people and governments out there that can really wreak havoc. The quality of world leadership is scary. It’s really scary, not just in America but all over the world. It’s all over the world.”

Of course, it’s an issue that goes beyond retail.

But Schottenstein has a broader sense of what it means to be a retailer and its responsibilities.

“I’ve always said to all of our executives that your responsibility is not just to yourself. There are people counting on us,” he said.

“I have people who work with me. They’ve been working with me, not just one or two, but for 40, 50 years in all my different companies. It’s amazing. Longevity. It’s amazing. They’re entrusting their future to us, they’re entrusting their existence to us. They have families to support, and we have obligations to them.”

And, according to Schottenstein, that’s retail.