Business pioneers in fashion & retail

Technology may define the future but service has always marked out the leaders

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For the first mass-market retail pioneers, it was all about the shop. Jack Cohen, founder of Tesco, the supermarket chain, started with a market stall in London’s East End in 1919. But it was a decade later, when he opened his first shop in Edgware, and began buying up stores in expanding London suburbs, that the growth of Tesco really took off.

It was the same for the Sainsbury family, which transformed its small dairy shop in London’s Drury Lane into one of the UK’s biggest grocers. Meanwhile, Sir Ken Morrison built his family’s three egg-and-butter stalls in postwar Bradford into the Wm Morrison supermarket chain.

One of the most significant innovations in retail was in 1916, when Clarence Saunders opened Piggly Wiggly, which is regarded as the world’s first self-service supermarket, in Memphis, Tennessee. According to Piggly Wiggly’s official history, Saunders, “a dynamic and innovative man”, noticed the method of clerks gathering goods for customers wasted time, so he had shoppers serve themselves.

The idea spread around the world; Sainsbury opened one of the UK’s first self-service stores in Croydon in 1950.

It is no coincidence the fast-food craze, exemplified by McDonald’s burger bars, was gathering pace at the same time.

Meanwhile, in France, Carrefour was pioneering the concept of the hypermarket — a giant one-stop shop that combined food and non-food goods. The first one opened in 1963, near Paris. A year earlier, Sam Walton had opened the first Walmart store in Rogers, Arkansas, followed a quarter of a century later by the first Walmart Supercenter, combining general merchandise and groceries in one shop.

There were other innovations along the way, such as Tesco’s Clubcard loyalty card, launched in 1995, which gave the chain vast quantities of data about its customers. “Why did Tesco get that enormous advantage over the early years of the 21st century? It was because their information was better,” says Andrew Seth, author of The Grocers and Supermarket Wars.

The next wave of innovation involved not stores, but shopping online, led by Jeff Bezos, who created Amazon, which started as a bookstore in 1994 before moving into hundreds of other categories.

Neil Saunders, managing director of Conlumino, the retail research group, says developments in online retail were driven by pioneers from outside the industry such as Bezos and Steve Jobs, founder of Apple, which is now a significant retailer of consumer electronic products and music. Indeed, Apple’s retail business is led by Angela Ahrendts, former chief executive of Burberry, which pioneered fashion’s links with technology and social media.

Social media are increasingly influential in retail. Shopping activity on Facebook may have fallen short of the excited predictions of those who dubbed it “F-commerce”, but Pinterest, a digital pinboard that fuses interests and things, offers greater potential. Some retailers, including Burberry, have begun to sell through Twitter, but retail analysts say shopping via Instagram, the photo-sharing site, may be the holy grail in the blending of shopping and social media. Meanwhile, other disrupters are overlapping with retail, such as ride-hailing company Uber, which is moving into grocery deliveries in the US.

Similarly, in fashion the next wave of pioneers might come from the sphere of technology, rather than the world that gave us the likes of Coco Chanel and Miuccia Prada. Wearable technology is already fusing fashion and functionality. But Apple is set to shake up the field further with the launch of its watch.

Richard Hyman, however, an independent retail consultant, predicts the next wave of retail pioneers will be those who hark back to the early days of retail, by understanding their customers and offering them what they want. “Ultimately, you can have all the great technology you want,” he says. “But if you are not able to have a relevant offering, you will fail.”

Seth agrees that at the heart of the next wave of innovation will be the consumers — and how they want to shop. “Entrepreneurs have to give customers what they want. That is what Sam Walton did and what [Sir Terry] Leahy did at Tesco. They were giving customers a much better deal than anybody had given them before,” he says.

Jeff Bezos

Jeff Bezos

His rivals call him one of the most aggressive and terrifying men in the technology industry, writes Sarah Mishkin. Jeff Bezos, founder of Amazon, would probably agree. When brainstorming names for the company back in 1994, he first registered the URL “relentless.com” for the then new online bookseller.

Since then, Amazon has branched out far beyond books, reshaping the entire ecommerce and most of the publishing industry in the process. It has pushed into selling cloud computing services to other tech companies, helping to make it cheaper and easier for entrepreneurs to launch start-ups. It has also begun publishing books on its own and producing its own creative series, threatening to shake-up existing TV networks and film studios.

Bezos had his start at DE Shaw, the quantitative hedge fund notable for its early adoption of computers. He thought of the idea for Amazon while still at Shaw, but left the firm to give himself the freedom to pursue it on his own. It started with books — a straightforward product to market online, with the advantage that no physical bookstore could stock everything.

But Bezos envisioned Amazon from the outset as something much more and gradually it became that. The retailer added jewellery, clothing, music and DVDs. Eventually it pushed into digital sales, notably ebooks, the market for which Amazon all but created with its cheap Kindle reader.

That expansion has come with substantial controversy around its method of dealing with its competitors and partners. Famously, Amazon noticed a smaller start-up, Quidsi, succeeding in selling nappies online. Amazon responded by cutting its prices substantially. Quidsi, which could not sustain losses like Amazon, ultimately felt cornered, and sold out to its bigger rival.

Amazon has also locked horns with publisher Hachette over how the pricing of print and digital books. A seven-month fight ended with an agreement that Hachette could retain pricing power, but Amazon would incentivise it to keep prices low. Amazon also put pressure on the publisher by substantially delaying shipments of Hachette books or making them unavailable for sale.

Those tactics inflamed a publishing industry wary of Amazon’s market dominance and willingness to force through better deals from the publishers that supply it. Amazon was unapologetic and willing to fight hard. In an open letter to Amazon customers, the company criticised Hachette on pricing — the publisher paid a fine to the US government to settle a lawsuit alleging anti-competitive behaviour with other publishers to keep prices high.

Coco Chanel

Coco Chanel

Coco Chanel stamped her mark on women’s dress in the 20th century by overturning fashion norms — mirroring the unorthodox nature of her own climb to fame and fortune, writes Scheherazade Daneshkhu.

The French designer recognised that women’s role in society had been changed by the first world war and that the strictures of the past no longer applied. She dispensed with corsets and structured clothes in favour of clingy but comfortable jersey knit and casual, collarless two-piece suits. Her simple lines and functional styles were distilled in the little black dress, a staple in many western women’s wardrobe.

The dress, with a skirt ending just above the knee, was described by French Vogue in 1926 as “Chanel’s Ford” — a fashion that was, just like the American car, available to the masses and was the “new uniform of the modern woman”, as the magazine described it.

But in 1926, black was still reserved for funerals, prompting Chanel’s fashion rival, Paul Poiret, mockingly to enquire: “For whom, madame, do you mourn?”

Gabrielle Bonheur Chanel was born in 1883 into poverty and brought up in a convent orphanage, where she learnt to sew. As an adult, she received help from wealthy or aristocratic boyfriends to set up boutiques.

She started selling hats on Paris’s Rue Cambon, where she was later to maintain a sumptuous apartment while living in style at the nearby Ritz. She used to recount that her fortune was built on a dress she had made for herself from an old jersey on a cold day in the French coastal town of Deauville. After a couple of women asked her where she had got the dress, she offered to make one for them.

Her rags to riches experience — she picked up the name Coco as a café singer around the turn of the century — may have helped liberate her from convention.

She pioneered costume jewellery and made it acceptable to mix faux with authentic jewels. Menswear provided inspiration — she was influential in establishing unisex dressing. Her relationship with the Duke of Westminster led to sporty sweaters, tweeds and tartan fashion for women.

She had already achieved success by the 1920s, but her business was hit by the 1930s depression and she shut up shop altogether during the second world war. Her relationship with a German officer left her tainted by scandal, though she made a fashion comeback in 1954 at the age of 71.

Chanel embodied her own style, epitomising chic in the way she wore her designs and in the double intertwined “C” that became her logo.

“Fashion,” she said, was “not something that exists in dresses alone”. Her money-spinning Chanel No 5 fragrance and the many iterations of her hugely successful quilted chain bag are testament to that.

Ingvar Kamprad

Ingvar Kamprad

Ingvar Kamprad revolutionised the world of design, bringing affordable but stylish furniture within the grasp of the masses, writes Richard Milne. The founder of Ikea, the Swedish flatpack furniture maker, he commercialised Scandinavian style and built a business empire that today employs almost 150,000 people in more than 300 stores worldwide.

He developed an impressive insight into consumer behaviour, coming up with ever more ways to keep customers inside an Ikea store, from a labyrinthine layout to play areas for children He also changed the logic of the furniture business, pressing prices lower by making people assemble their own furniture, having stores out of town and reducing transport costs by flatpacking goods.

Kamprad’s own story is almost a classic entrepreneur’s tale. Born in 1926 in the wooded countryside of Småland, the southern Swedish region that is the country’s bible belt, Kamprad started selling matches at the age of five, buying them in bulk in Stockholm and selling them individually, making a small profit on each one.

He founded Ikea — which takes its name from the initials of his name, farm and village — in 1943 and five years later added furniture to a plethora of objects sold such as jewellery, pens and stockings. In the 1950s a slew of innovations that would define Ikea swiftly followed: a catalogue in 1951, a store in 1953 and, after customers complained about how much they were charged for transporting furniture by train, the first flatpack table in 1956.

Kamprad was famed for his frugality: tales abound of him reusing teabags, taking bags of salt and pepper from restaurants or driving a decades-old car. That rubbed off on Ikea’s corporate culture and its deflationary mindset for its products, with average selling prices falling year after year as small improvements are found. For instance, a Lack table that sold for SKr259 in 1990 now sells for SKr79 ($9.20).

Kamprad’s life was not without controversy. A friendship with a pro-Nazi leader in Sweden led to him issuing an apology to staff entitled “the greatest mistake of my life”. He also lived in tax exile for four decades.

But his success is illustrated by Ikea’s continuing expansion to new countries. There are plans to open dozens of stores in India. And impressive results in China, where customers are even allowed to nap on beds in stores.

Ray Kroc

Ray Kroc

Ray Kroc did not become a burger man until he was 52. But when he did, his conversion was absolute, writes Neil Munshi. The first time he set foot in a McDonald’s car park in 1954, it was filled with cars, a long queue of people and a pretty woman who looked like she could have been a movie star. But “it was not her sex appeal but the obvious relish with which she devoured the hamburger that made my pulse begin to hammer with excitement”, Kroc wrote in his 1977 memoir, Grinding it Out.

He was hooked. He had dinner with the McDonald brothers that night to understand the system they used at their burger joint in San Bernardino, California. “Each step in producing the limited menu was stripped down to its essence and completed with a minimum of effort,” he later wrote. “The burgers were all a tenth of a pound, all fried the same way, for 15 cents. You got a slice of cheese on it for four cents more. Soft drinks were 10 cents, 16oz milk shakes were 20 cents, and coffee was a nickel.”

The US was then full of one-off, small-town soda fountains and burger joints. But that night Kroc had visions of “McDonald’s restaurants dotting crossroads all over the country”. The next day he flew back to Chicago with a contract to begin opening new franchises. Within nine years there were 500 US outlets. In 1967, the first international restaurants opened. Today the 36,000-plus McDonald’s in more than 100 countries are — if not the paragon of high quality that Kroc envisioned — a global cultural force.

In recent years the chain has been threatened by upstarts such as Chipotle and consumer tastes that have swung away from greasy burgers and fries. It has become the posterchild for both the obesity epidemic and the fight for a higher minimum wage. But some 69m people still eat at McDonald’s every day.

One of the main reasons is the consistency that Kroc first fell in love with at the original McDonald’s, and which he and his protégé, Fred Turner, codified in the company’s operating manual in 1958. French fries can be no thicker than 0.28 inches, A Quarter Pounder with Cheese has two pickles, while a regular burger has one. This is why a Big Mac in Paris, Texas, tastes the same as one in Paris, France. It is the reason a piano-playing paper-cup salesman became perhaps the world’s most influential — if sometimes reviled — restaurateur.

Estée Lauder

Estée Lauder

“I didn’t get here by dreaming or thinking about it. I got here by doing it,” wrote Estée Lauder in the autobiography that relates how she transformed beauty into big business, writes Scheherazade Daneshkhu.

Her success derived from hard work and persistence to the point of pushiness. Ambition defined her, according to her son Leonard Lauder, and, as she once explained, she never worked a day in her life without selling.

Lauder died 11 years ago, but the cosmetics empire she launched 58 years earlier saw off competition from the other big names in beauty — Elizabeth Arden, Helena Rubenstein and Charles Revson’s Revlon.

While these businesses either fell into financial disarray or were taken over, Estée Lauder has thrived with annual sales of $11bn and remains under family control despite a stock market listing in 1995 that values the company at $31bn.

Josephine Esther Mentzer was born in Queens, New York, to Jewish immigrants from Hungary and Czechoslovakia. She was embarrassed by her modest origins, changing her name to Estée to sound French and periodically inventing a wealthy background more suited to the high society to which she aspired and succeeded in penetrating.

She was fascinated by her chemist uncle’s home-concocted skincare creams and she helped market them to local pharmacies, proving herself to be a good saleswoman. “To sell a cream, you sold a dream in the early days,” she said. Her company was later to devise other innovative marketing ploys that became industry norms, such as giving free samples with purchases.

After setting up the Estée Lauder brand in 1946 with her husband Joseph Lauter, a textile salesman who smoothed out his name, she decided to sell her own creams, cooked up on a stove at home, to upmarket department stores, as she could not afford a flagship shop.

Her breakthrough came when Saks Fifth Avenue placed an order that sold well and her company started growing. Sales accelerated with the launch in 1953 of Youth Dew, a highly scented bath oil and perfume that was a big hit and lived up to the Estée Lauder maxim: “If you can’t smell it, you can’t sell it.”

Miuccia Prada

Miuccia Prada

At 65, Miuccia Prada remains arguably the world’s most influential living fashion designer, writes Rachel Sanderson. She wrestles into her runway shows season after season a panoply of ideas and influences that — love them or loathe them — set the bar for the industry and have made her a billionaire many times over.

Prada’s “creative combustion” — in the words of one rival luxury senior executive — has given rise to trends that have had a global impact, including the industrial canvas black knapsack, wallpaper-motif pleated skirts, tie-dyed dresses and thick high-heeled wedge shoes, to name a few.

She was named one of the 100 most powerful women in the world last year by Forbes, which puts her personal fortune currently at $4.7bn.

Prada has an unusual background for a fashion designer. She has a PhD in political science, spent five years training as a mime artist and was a fierce feminist in the 1970s, even photographed at anti-establishment marches in Italy. She created her eponymous brand out of her grandfather’s luggage store in Milan’s Galleria Vittorio Emanuele II shopping centre. The store is now the flagship for the group worldwide.

Together with her husband Patrizio Bertelli — whom she first met at a trade fair in Milan in 1977 — Prada has built Prada Group into a global luxury juggernaut encompassing the Prada, Miu Miu, Church’s and Car Shoe brands, €3.6bn sales in 2014 and 594 directly owned stores worldwide.

Prada and Bertelli took the company public in Hong Kong in 2011 where the shares have had a volatile ride in the past two years, being hit by falling demand in China.

Prada, who credits her famously fiery rapport with Bertelli for driving her forward, opened her first New York store in 1986 selling handbags and smart luggage. Two years later, she started designing womenswear and five years later moved into menswear.

Her influence on global trends and ability to produce new ideas season after season has conferred on Prada the status of being more an artist than a fashion designer. An avid contemporary art collector, she nevertheless told New York magazine in 2012: “Art is for expressing ideas and for expressing a vision. My job is to sell. And I like very much my job.”

Anita Roddick

Anita Roddick

Dame Anita Roddick was the public face of The Body Shop, the UK’s best-known natural cosmetics chain, set up in 1976 to sell peppermint foot lotion, hemp hand butter and papaya body scrub, writes Scheherazade Daneshkhu. The products and their presentation in plain plastic bottles were innovative in their own right and, eight years after her death, she is still the country’s best-known female entrepreneur.

Where she was ahead of her time was in tenaciously pioneering a form of corporate social responsibility well before the term became the fashion in annual reports.

Labelled the “Queen of Green”, she viewed commerce as an agent of social change and anger as a more useful business qualification than an MBA.

To that extent she was an activist, espousing environmental sustainability, fair trade, human rights, local farming and an end to animal testing in cosmetics — becoming a multimillionaire along the way.

Shareholders who lost money during The Body Shop’s badly executed US expansion did not thank her. She was also accused of compromising her principles in 2006 when she sold The Body Shop to L’Oréal, the biggest company in the beauty industry. She had previously lambasted the sector as “a monster selling unattainable dreams” that “exploits women”.

Nevertheless, critics who saw this as a sellout or the downturn in The Body Shop’s financial fortunes in the 1990s solely as evidence of the incompatibility of running a business with social activism, miss the point.

In the three decades between the establishment of the first Body Shop in Brighton in 1976 and its sale to L’Oréal, ethical consumption moved from the hippy fringes to the mainstream, in part due to Roddick’s disruptive force.

The daughter of Italian immigrants, she opened the first Body Shop with a £4,000 loan. She understood the importance in marketing of telling a story, and customers liked the idea of environmentally friendly cosmetics with a narrative in tribal origins, the stance on animal testing and reducing waste through refillable bottles.

Roddick’s entrepreneurial flair was not in question, but she was the first to admit the business acumen came from her husband, Gordon Roddick. Using a franchise model, a new shop opened every two and a half days, sales and profits grew by more than 50 per cent a year and the group floated in 1984, despite her distaste for the City and admission that “finance bores the pants off me”.

Though the relationship with the stock market started well enough, it ended unhappily in the face of competition from new entrants and a failed US adventure. In 1998, Roddick quit as chief executive, becoming co-chair with her husband instead.

The Body Shop today has 2,600 outlets in 65 countries. Her own view of the sale to L’Oréal was that: “Enemies are now our staunchest supporter. I have spent my life trying to change the beauty industry from the outside. Now I can change it from within.”

She did not get the chance to demonstrate this, however — she died a year later at the age of 64.

Sam Walton

Sam Walton

Sam Walton did not invent penny-pinching, writes Barney Jopson. But what helped Walmart to become the world’s biggest retailer by sales was the way he embedded his skinflint instincts so emphatically throughout the business he founded.

Keeping costs down enabled Walmart to keep prices low — and it is the retailer’s simple ability to undercut its competitors that drove its growth from the first store in Rogers, Arkansas, in 1962 to more than 11,000 in 27 countries today.

Walton was born in Oklahoma in 1918, and the poverty of backwoods America in the mid-20th century helps explain Walton’s ruthless focus on low prices and logistical efficiency. But he was also canny enough to build a folksy corporate culture to mask some of the hardheadedness.

Even today, 23 years after Walton’s death, Walmart continues to nurture the evangelical cult of “Mr Sam”, a figure whose earthy values and down-home charms the company tries to inculcate into employees with varying degrees of success.

It was a remarkable achievement for Walmart to conquer most of America with its giant Supercenters while operating from an isolated home base of Bentonville, Arkansas, which was far from anyone’s idea of a commercial hub.

Perhaps the greatest testament to Walton’s business tenets is that the company that now poses the gravest threat to Walmart — online retailer Amazon — has gone a long way towards mimicking the older retailer.

Jeff Bezos, Amazon’s founder, has built his business on ultra-low prices and squeezing costs out through efficiencies (plus technology), and an early Amazonian says managers once read Walton’s biography at a corporate book club.

There is a darker side to the ethos Walton inculcated. Walmart is reviled by a not insignificant portion of generally better-off Americans who do not like its reputation for bullying suppliers, steamrollering mom-and-pop stores and paying stingy wages.

To address the last of these criticisms, Walmart this year announced it would give 500,000 workers a rise to ensure all of its 1.4m workers are paid at least $9 an hour.

Walton also nurtured a certain cowboy bravado that dictated “get it done today, we don’t care how”. But foreign markets are proving to be a particularly stern test for the company. Even if many consumers in Brazil, China and elsewhere also want the lowest prices, Walmart has learnt that it cannot just copy and paste its US model.

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