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Bloom Where You're Planted: Terry Lundgren's story to build Macy's as Retail Powerhouse
26 Plays18 days ago
Success rarely begins with a perfect plan.
When Terry Lundgren was a student at the University of Arizona, becoming the CEO of a Fortune 500 company was the farthest thing from his mind. But one pivotal moment — a tough phone call from his father — forced him to take responsibility for his future.
That moment changed everything. From working full time while finishing school to rising through the ranks of retail, Lundgren built a career defined by discipline, curiosity, and a relentless commitment to doing every job better than anyone else. E
ventually, that mindset carried him all the way to the top — leading Macy’s as Chairman and CEO and overseeing more than 140,000 employees during one of the most transformative periods in retail history. In this episode of Voice of Growth, we explore leadership, responsibility, innovation, and the mindset required to navigate massive change.
From launching macys.com before the internet boom to managing culture across thousands of stores, Lundgren shares lessons that apply far beyond retail. At the heart of his philosophy is one simple idea: Bloom where you are planted.
Master the opportunity in front of you. Do it better than anyone else. And over time, the path forward will reveal itself.
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Transcript
Introduction of Terry's Journey to CEO
00:00:04
Speaker
The voice of growth, mastering the mind and market.
00:00:10
Speaker
It was the farthest thing from my mind that I was going to be the CEO of a very large corporation. I grew up at the University of Arizona. I ultimately became the chairman and CEO of of what Federated Department Stores, which we ultimately changed the name to macy Macy's Inc.
00:00:31
Speaker
Having, like you said, at one point 140,000 employees, you know, that they're counting on me.
Macy's Early Online Presence and Customer Trends
00:00:41
Speaker
So we we always embraced, you know, where the customer was headed. We always thought about that.
00:00:49
Speaker
We actually started Macy's.com before Google was launched.
00:00:56
Speaker
but We're growing by like a billion a year without adding any new stores. wow A double digit earnings increase, you know, billion this year, billion growth next year, billion next year. Sears should have been Amazon.
00:01:10
Speaker
Do it better than anybody's ever done it before. People will notice. And when they do, you know, that's when your career will start to move.
College Struggles and Career Choices
00:01:21
Speaker
Bloom where you're planted.
00:01:24
Speaker
Terry, you have reached the pinnacle of what many in business and in school reach for, the CEO of a Fortune 500 company. This is a two-part question.
00:01:36
Speaker
The first part is, what drove you to such success And the second part of the question is, when you got there, was it what you expected it to be?
00:01:49
Speaker
How long you got, Manny? Because the first part is is is sort of a winding road. Because i you know when I was going to college up the road here at University of Arizona, it was the farthest thing from my mind that I was going to be the CEO of a very large corporation. I was you know sort of struggling to figure out what I wanted to do. I really didn't have a clue. that When I talk to students here that are like, so I'm gonna be an engineer, I'm studying to be engineer, I'm gonna actually do that. I'm like, wow, you you were were so much more prepared than I was at your age. So it was a bit of a winding road, but but I ended up you know taking a job because of, i had a lot fortunately it was a good time and I had a lot of job offers when I graduated. And and I ended up taking a job because of the people that I met in the interview process. And I looked up at them and I said, you know, maybe I could be like that person in 10 years, 15
Managing Teams and Delegating Responsibilities
00:02:43
Speaker
years. And I really, that's how I tried, that's how that's sort of how I chose my my career based on people. And and I still think that's good advice that I give today. um and And long story short, I just ended up getting, you know, ah doing the job that was...
00:02:58
Speaker
you know given to me and trying to do it better than anybody had ever done it before. And i that's all I cared about. I just focused on doing that job that I was in. And I think that helped me in my career ultimately keep getting promoted. And I did. I was president when I was 35 at Bullock's Wilshire. CEO of Neiman Marcus when I was 37. And then I ultimately became the chairman and CEO of of what, Federated Department Stories, which we ultimately changed the name to macy Macy's Inc. So when I got there, answer part B of your question, ah you know I was sort of like you know moving and grooving on my all all all the way along this this path. It was kind of happening to me so fast that I didn't really have time to reflect on you know how I was going to do it, what it should look like and the like. I just i just needed to you know figure out how to get the work done. right and And I'll tell you, as I was moving I think the first time I realized that I needed...
00:03:53
Speaker
to do ah to to hire, work with people that were smarter, more capable than me, ah and surround myself with really talented team of people was when I became a store manager. Really? Yeah, because I was a buyer, you know, and I was you know did these various jobs on my way up, assistant buyer, different, I was a college recruiter for a little while. They were all individual jobs, me, and maybe one other person next to me or or above me or something. when i became a store manager of south coast plaza and i was 29 years old in orange county california um i was supervising 400 people all of a sudden and i was like you know instead of supervising an assistant uh a buyer i was supervising 400 people i'm like holy cow yeah i am and and and i didn't even know you know two-thirds of the of the products the business because i grew up in one category and i had to supervise a whole store so
00:04:45
Speaker
That's when I realized, man, I better make sure I got good people around me who can help me figure all this out. And I carried that with me on and on and on to every job that I had as I i went on. So when I got to the top,
00:05:00
Speaker
That was my first priority. Do I have the right people in the right place? And is is this their time? And and are they gonna gel and work well with me and together to create the best possible like you know working experience we can have?
00:05:16
Speaker
Yeah, that's that's crazy about that journey that managing those 400 people was somehow a little bit different than managing 140,000 employees, right um And I talk with folks about people is what really makes the business at the end of the day.
Financial Independence and Academic Improvement
00:05:34
Speaker
Let's rewind the clock a little bit, Terry, and talk about your time here in Tucson. I know that what got you moving was that phone call from your dad basically cutting you off from yeah the supply chain there. Yeah. um But let's let's go a little deeper. And what was that like to... like What happened in that moment? And how did you really get yourself aligned? Because I know that...
00:05:59
Speaker
ah my own children and a lot of folks today are struggling with that that that impetus, that momentum. How'd you get moving? Yeah. So it's it does back up a bit. So um when I When I graduated from high school in Orange County, California, um you know I was one of six kids in my family. I was number four.
00:06:25
Speaker
And my three older siblings didn't go to college. um so So my parents didn't go to college. My dad worked two jobs. He worked assembling speakers in a factory, and and he worked selling real estate nights and weekends.
00:06:39
Speaker
And my mom raised you know six unruly kids. And everything was fine. We had a great, wonderful, loving family, and everything everything was fantastic. we you know We're still tight.
00:06:53
Speaker
um But college was not something we talked about at the dinner table. It just wasn't a conversation. When um I graduated from high school, my friends were going, Terry, where are you gonna go to college? And I like, what? you know And so what? Okay, and so so that's why I went to college, because my friends were going to college. And one of them was going to the University of Arizona. Really? One of my closest friends, yeah. And so...
00:07:20
Speaker
ah That was it, that was the that was really the motivation. So i went to my parents, I said, hey, you know what, I really wanna go to college. and And they go, well, real, wow, okay. And um I forget what it costs, but,
00:07:31
Speaker
ah You know, on today's dollars, it was a fraction, right? But it was a lot to them. And it was a big decision. But they said, you know, we will support you on this because it was just like a good timing, you know, for the kids Three of my sibs were were already moving on. and and And there I was having this opportunity at this right moment. So my parents could say, we' we'll support you. So they did. I quickly, my friend who was I was following to University of Arizona joined a fraternity, so I did too. Okay. And ah joined a fraternity, SIGEP, and man, I was really good at that. you know I became pledge class president. you know I was having the time of my life. I was away for the first time, not with sharing a room with my brother. I mean, man, I had i was having a blast. Nice.
00:08:17
Speaker
I was having so much fun, Manny, that my parents called me at the end of the school year ah and sophomore year and and said, hey, got your report card. Back then, you be used to mail them home. And and it looks like you're having a good time, but you're not doing so great in school, are you? And I and and i was a pretty good school student in a high school, and I became a very, very average student at University of Arizona.
00:08:43
Speaker
Long story short, got the phone call. um Parents cut me off. ah My dad said, you know you know, good luck. I hope you finish. I said, Dad, you can't do that.
00:08:53
Speaker
You know, you can't do this. I'm having the time of my life. I mean, you're ruining my life if you cut me off. He's like, son, if that's how you feel, it's you who's running your life, not me.
00:09:04
Speaker
And he hung up. I could hear my mom crying in the background. We only had one phone in our house. and and And she was like whimpering in the background, like, how can you do that? and Boom. There wasn't like a, and I knew my dad. There was not a follow-up conversation, right? This is it. So I went, got a job.
00:09:21
Speaker
And fortunately, I got turned down a few times, but I kept going and I got a job. And and it just get to the bottom if end of it is ah I worked full time, went to school full time, carried 40 units back then, and and and it took me an extra half, and an extra semester But two and a half years later, I graduated. I was getting straight A's and I was working full time and I ended up getting promoted to manager of the restaurant. So, I mean, when I when i had no time, when my back was against the wall, that's when I realized right I could do this because I was desperate. well I was determined to stay in college and to stay with my friends and to have this
Supporting Students and Retail Studies Contributions
00:09:58
Speaker
social life. But now I had to do it on on my own terms and I had to do it i had to do i had i had to I had to figure out how to get it done. And the only way to get it done was to just put my head down, stop the partying, focus on grades, focus on my work, and and make it happen. And I did. And that's when I knew maybe I could do more you know in a job than i was that I set myself up for originally. Well, that determination, Terry, is really what, in my exploration and our research,
00:10:27
Speaker
kind of led you to all the success. I mean, you were really a prime mover in taking these this retail space, which is wasn't really explored as much as it as it could have been, and elevating it um to acquiring different companies, doing some M&A work, innovating I mean, some of your early retail work was quite innovating innovative on how you actually looked at the personalization, localization, branding. i mean, you're a big branding guy And so you can see the roots of the tree back at U of a um And I'll ask a quick question about U of A.
00:11:05
Speaker
and and then we'll we'll go from there. So do you still have roots at U of A? Oh yeah. Kind of a softball question. Oh yeah, definitely I have roots at U of A. Because I i say this all the time, but i as I just revealed, I grew up at the University of Arizona between my sophomore and senior year. That's when I grew up. And again, back to the wall, had to make it happen on my own. I didn't talk to my parents for six months. you know i mean And that was because of me, just like being stubborn, that I'm gonna show you. And best thing that ever happened to me. my
00:11:41
Speaker
That phone call from my from my dad was the single best thing that ever happened to me. I wonder what would happen if I didn't get that phone call, but I just would've continued to goof around and they kind of tolerated that. what what would ah what would I have accomplished?
00:11:56
Speaker
and and And so that, I grew up at the University of Arizona. So the answer is yeah to your question. We now have the Terry J. Lundgren Center for Retail School here, ah which I'm very involved with. um I'll be you know I get to campus with some regularity and I talk to our students, talk with our faculty. We have ah a ah scholarship program where I i help ah students who can't financially make it, which is where my family was at. at that point, and I'm particularly now focused, ah I'm just starting to build this, but I already started it with some success and I'm gonna expand it, is these kids from ah Pima College or from the the community colleges.
00:12:36
Speaker
ah Because to me, those those are those young people if they're doing well in school after in in ah in a two-year program, yeah that tells me that they have the ability and they have the hunger and they have the desire, but most of most of them don't have the money.
00:12:53
Speaker
yeah that to And so if I can help them, you know bridge that gap for their next two years and get them help them accomplish the degree, that they've proven that they have the wherewithal to to to make things happen. That's a good bet to me. Absolutely. yeah So so i'm I'm particularly excited about that. so i'm participating there. We had the Lundgren Collaborative at the Eller School.
00:13:14
Speaker
m um I'm very excited about that and it's largely a combination of, right we just did a paper, a white paper on the AI and the benefits of the retail industry there. We have a fantastic professor there who works in collaboration with our retail school professors and and and we work on retail related marketing projects and and and with the business school. um you know and We're doing some scholarship work there as as well. And then I'm involved now in the Honors College. I spoke to the athletes recently, um and I'm gonna do more of that. you know ah the ah
00:13:48
Speaker
The athletic director invited me to speak to the broad group of of athletes and talk about my my background, knowing that most of them are not gonna go to professional sports, right? And so what are they thinking about next for them? And so so yeah'm I'm very involved in the University of Arizona and and i owe I owe this university ah a lot and and i'm I'm happy I'm in a position to give back.
Reflecting on Past Decisions and Parental Influence
00:14:12
Speaker
That's amazing, yeah. i um Have you ever heard of the yeah the butterfly effect? I have, but tell me more about it. Yeah, the butterfly effect is these little minute things that happen in your life that change the course of your entire life.
00:14:25
Speaker
I have a few of those of my own, ah moments where I decided to go left where I thought I was going to go right, and that really defined the rest of my life. And that's kind of what happened to you with with U of A. Did you have a chance to tell your dad how important that call was? Oh, yeah.
00:14:41
Speaker
I did. When I graduated my senior year and I was very proud of my straight A report card and again while I was working full time and like I said they offered me the night manager job at the Solarium restaurant which is burned down. I didn't do it but i' I'm told later on in life it it burned out after I was gone.
00:15:00
Speaker
ah that ah you know he was, I said, I just want to thank you for that phone call. I really needed that. And he he was like wondering, are are you okay, son? Because you know having that emotional conversation, my mom was, you know she was like a very strong Irish Catholic leader. you know We were dragged us to church when we were kids every Sunday morning.
00:15:23
Speaker
and and and my And my dad was just working all the time. and and But that that that foundation that they provided to me, I told them how grateful I was. And um and and i and and it just was magical. And my parents and got a chance to see me... um have a lot of success in my life, including when I'm CEO of Neiman Marcus, and they were you know they were very you know quite proud of all of that. And so so the answer is, yeah, I got a chance to thank them and and and and tell them just how much they meant to me for my entire upbringing and that of all my siblings, whom are still really super tight, all of us. And um that's because of my parents.
00:16:07
Speaker
That's great. Yeah, a good foundation like that really means a lot.
Retail Evolution and Technology Adoption
00:16:11
Speaker
um Let's kind of take the lens out a bit and and talk about Is there a particular moment during your tenure as either CEO, chairman, any any role where you doubted yourself?
00:16:27
Speaker
You had a moment where you're like, I don't know if I can do this. Yeah, sure. i mean, sometimes it's just overwhelming, you know, and some of the the challenges that you you face. And you're kind of a, you know, you get to the CEO role. You're basically alone. You have a board of directors.
00:16:43
Speaker
ah Certainly, but sometimes you're a little nervous about telling them them that you don't feel confident, right? Because they might want to get somebody else in there who is confident. So so you're kind of out there on your own. And ah there are plenty of times when I had to really dig deep and think about you know how I was going to get through these these these challenges. But i never ah I never was defeated. I was just...
00:17:07
Speaker
concerned, yeah um some nervous sometimes, but never never was I defeated. I was always, there's got to be a way. There's got to be a way. And I'm not going to i'm not going to you know sleep until I figure out what that way is and and and how to lead the organization. And I honestly, big part of it, man, I felt responsible for my employees. And you know having, like you said, at one point 140,000 employees, you know,
00:17:35
Speaker
they're counting on me to make good decisions so that they continue to be employed, so that they can perform well, so that so that they can thrive and feed their families. And so so i I took that very personally, and it became a real motivating call for me to perform well so that they could have the livelihood that you know our company was providing for them.
00:17:57
Speaker
Yeah, that that sentiment of ah being a CEO is is lonely at the top there. I mean, i i don't have 140,000 employees. I have like 15 employees. We're a way different company. But I still have the same issue same issues, right? It's just like, how do I deal with these these moments that occur? um These challenges that come up, these opportunities and these ah you know these employees and their families rely upon my decisions.
00:18:23
Speaker
Right, 100% get that. Now let's talk about retail a bit in particular. Retail has gone through a lot of changes. And of course the customer is finicky. The whole marketing machine is way different now than it was 30, 40 years ago.
00:18:41
Speaker
ah AI of course is the the new gorilla in the block here. How do you see ai AI and these new challenges evolving retail?
00:18:55
Speaker
Yeah, well, first of all, you know as you've said, and so I've watched the business change rather dramatically. you know when I started in the business, there wasn't an online business. There wasn't an internet. um And so so you know I've watched the whole evolution of this business.
00:19:12
Speaker
But I did embrace... it very early on. We actually started Macy's.com before Google was launched. you know So we were really early days. And we started as a website, and we turned it into Macy's.com. Of course we lost some money. Of course it was complicated. And then when the year, this is in the mid-90s, and then in the year 2000, when everything blew apart and all the online businesses you know went out of business, basically not all, but 95% almost. because And the reason was is because the investors said, I'm tired of putting money behind this because there's no forecast for ever making money. yeah I mean, it's one thing to grow, but there's no forecast ever making money for most of these businesses. And that's when they all went out of business, the dot-gone era, we call it, in the year 2000, when it blew up.
00:20:05
Speaker
I stayed with it. And I told our guys, that look, we're losing money, but we're going to actually figure this out because this is how consumers are going to want to shop. I mean, you could see that. You couldn't see how to make money, but you could see that consumers are going to want to shop yeah this way. So we had to figure out. That was our problem.
00:20:24
Speaker
our problem how to make money consumers want to do this they're going to find a way to do so other companies are going to find a way to to satisfy consumers so we have to be there and that and i that gave us ah a head start because we were in it while others were getting out and stayed with it so i could build on it i left that off my office was in new york i left my online business in san francisco where i where i had a division originally but when we ended up consolidating our divisions into new york I left the online business a team, which is ah it' it's a ah separate building and very talented group of people in San Francisco because back then that's where the hub of talent was. They wanted to be in Silicon Valley or San Francisco. They didn't want to necessarily be in New York. they didn't Now you're in Austin. Now they're in Boston. They're in other places. But then the talent was there. That was the hub. so
00:21:17
Speaker
So and that's why we kept it. And it really worked. So we had a head start. That's just a quick background on why i why why our company was so strong. we were When I retired, we were the fourth largest online retailer in America, only behind Amazon, Walmart, and eBay back then. And then we were fourth. We were ahead of Target, ahead of Costco. had have All these companies are much bigger than Macy's, but we were bigger than them online because we were so... so strong and in in our early development. So so we we always embraced you know where the customer was headed. We always thought about that. and And I think that's what kept us in the game. Now you've got AI. And so, um you know and again, i've been I've been retired for a bit in them and and there's been ah a second CEO since I retired that's now in place. Tony Spring, I think, is doing a terrific job. And he worked for me. He ran our Bloomingdale's division when I was there. and And he quickly has embraced all of the new technology. And you have to. You you you have to say, how is this going to affect me? And how can i how can I utilize it better than my competitors? And what you know and and yes, it's going to cost money. Yes, it's going to be an investment. And you're going to say, okay, so what am i not going to do?
00:22:28
Speaker
I mean, because I have to do this. I have to stay on top of of of this momentum. and and i'm And I've told Tony this, and he's he's embraced it. let others spend money on it let you know let that let the googles and the and and the and the metas uh and the microsoft of the world let them keep investing billions and billions of dollars on this subject you don't have to do that what you do have to do is stay in close relationship with them to know which of their technologies that they are investing in is right for retail and in particular right for macy's bloomingdale's and blue mercury and make sure we're taking advantage
Continuous Change in Retail Industry
00:23:03
Speaker
of that. And that's how I think we're going to make this work for us in the most effective and productive way is let others spend the money, let them be the experts on it, but make sure we're embracing it having a partnership so that we can take advantage of it.
00:23:18
Speaker
Yeah, there's a quote by Matthew Shea, the CEO of the National Retail Federation, that said, before anyone else was doing it, Terry was thinking about it. Matt Shea is brilliant. He's the head of the National Retail Federation, as you said, and so he has 26,000 retail companies that we kind of report in into him and from all over the place, and from from a mom-and-pop store on the main street to Walmart, you know every that and everything in between. um So... that's ah That's a nice comment. We were always, you know I always thought, up we you know it's funny, I used to have these, our fiscal year ended the end of January every year, like the you know last Saturday in January. And and we and we were like,
00:24:03
Speaker
doing a particular period and you know from 2009, 2010, 2011, 2012, 2014. We just like kill it. We're growing by like a billion a year without adding any new stores. wow A double digit earnings increase, you know, billion this year, billion growth next year, billion next year. and And we kept going. and And we had five, six years constantly growing. was like killing it. It was like everything was working. And and every year I would say,
00:24:27
Speaker
okay, we gotta make some changes. And I'm like, they like oh why are we making changes? It's working. I said, no, no, because that worked last year. So we in order to get better, we have to make changes to improve on last year. So we have to make changes. And it got to be a funny thing. I remember this guy who's our chief operating officer, Tom Coley, walked in and he Jerry, it's Dirt Week of January.
00:24:50
Speaker
Everybody's nervous. yeah We just had the most amazing year again. What changes are you going to make now? And I said, oh, Tom, we got some big changes we got to make. we come And he's like, oh, God, please don't don't do this. But you have to you have to keep changing. You have to keep reiterating. You have to continuously improve constantly. And that that rings true. and I talk about that a lot, so I'm glad you're echoing that. um especially when you see big companies making tons of money and then they decide to go in a different direction and the investors and the shareholders and the and the ah the board are like, what's happening?
00:25:27
Speaker
But then you wait some time and you see what was happening. Like for instance, Netflix. Right, initially they they were selling the diverb you know yes the DVDs in mail, and then they went into doing streaming, and then they went into creating their own studio.
00:25:42
Speaker
i mean, those are giant shifts that took a lot of money to get to the next level, but now now it's just clear of, you know, we look backwards, it's 2020. Yes.
00:25:52
Speaker
They're all giant shifts, but they're still in the same business. They're still in the same business of bringing consumers joy with ah you know with programming, right? And so they've just they just kind of stayed ahead of the game. And I think people are nervous about how expansive they have become and how good they have become you know at this that that the original subject matter that they you know embarked on, which is to bring... entertainment into the homes and the hearts of of the consumer. Absolutely. Talk to us about culture and why it's so important.
00:26:31
Speaker
I mean, you had a massive ship, but somehow the the culture was strong. People loved working there. a Your turnover was pretty low compared to your peers. Tell us about what culture is to you and and how you actually got it to be ah so innovative and so progressive.
00:26:50
Speaker
Yeah, i start I start with the belief that you know when you have a big organization or so even a smaller organization, that people that you've, assuming you've hired the right people, you've got the right group of people working around you, which is like step one, critically, critically important, um that organization.
00:27:08
Speaker
they want to do well, that they want to perform well. They want the company to succeed. But sometimes they don't even know what that means. And it's the CEO's job to clarify that and to make sure that everyone understands what their role is, what their particular job assignment is in order to support the overall goals of the company. And I was passionate about that. We had a strategy.
00:27:38
Speaker
you know After the 2008 financial crisis, we had to change everything. we did Massive changes. and ah It's a long story, but it you know there was many components. But the whole idea was consolidate the the buying power, ah but at the same time, localize the experience and the assortments by location. Tucson assortments. You're going to have cactus on the...
00:28:06
Speaker
you know, sheets and pillowcases, but you're going to have palm trees in Miami Beach and and and you'll have something completely different in Minneapolis. And so, so you know, but localize at some portion of the of the experience and and of the the product. That was a hard thing to do, to be big, yeah consolidate, and then localize. But I needed to explain that to 140,000 people. And I felt like if the person that was loading the boxes on the dock, you know, off the truck yeah and breaking them open and putting it out on the sales floor didn't understand what his or her role was in how we were going to have localized strategies in that store, then I wasn't doing my job. And so I made tried to make it really simple. We called it...
00:28:59
Speaker
um the mom strategy, first M for for for my Macy's, meaning the product in the store is be localized. The experience is going localized. The O for mom stood for omni-channel, meaning she could buy it online, use her phone, pick it it up in the store, the whole omni-channel experience, and then magic selling. You know, at the point of sale, that communication is really critical. And maybe it's Not even at the point of sale, maybe it's the person shipping the product from the online purchase, just that little extra touch or a little note to make that customer feel like it's personalized.
00:29:33
Speaker
And so that mom strategy was really key. And I said to every one of the 140,000 employees, what's your role? Pick a letter. and if Maybe you've got two. Maybe it's O and M. maybe But what's your what's your letter? What's your role? And how can you define you know what what you're doing is supporting the mom strategy? Because if you're not working on the mom strategy, you're probably not working on what I want you to work on.
Employee Engagement and Customer Experience
00:30:00
Speaker
that's and And when I got...
00:30:02
Speaker
people understand that. And I talked about it over and over and over again, simplified strategy, but they could understand their role. I really think that is what drove our culture.
00:30:14
Speaker
And everybody said, you know, i'm part of this. that's i'm part And then we then we kept telling them, by the way, here's our results. This is how good it's it's working. And then i would, every, ah Every week, every single week, basically, I was in stores. I just felt like I had to be in our stores. Sometimes I was in a fulfillment center, but I was in our stores. And I wanted to see what our what our consumers, our customers were seeing.
00:30:40
Speaker
I wanted to see. And I didn't tell them I was coming. I was showed up always showed up. I didn't, I purposely didn't. Because when I was a store manager, I mentioned that a store manager when I was 29. I remember they said they said, Terry, the president of the company is coming to visit you in two weeks. right And so we wanna send a crew out there, we're gonna paint the walls, we're gonna get some flowers and plants. I'm like, going what are you gonna do that for? That's not what my customer sees every day. Why do we wanna make it special for this guy? and And I said, if I get a chance, I'm never gonna let that happen. and and And so I showed up ah for that reason,
00:31:14
Speaker
unannounced But the other reason is, I found out, was they told me. They didn't they weren't prepared. So they just told me the truth. yeah they didn't They didn't fabricate anything. you know They didn't hide anything. They just told me, Mr. Long, we don't we don't have you know these ah you know size four and six you know dresses, you know they keep sending us the size eights through fourteens. I can't i don't have ah that big a customer here. Now, on the other hand, if you go to Brooklyn, they didn't have enough twelves and fourteens, and they didn't need the the the twos and fours. And so so you know they were we were sending packs.
00:31:50
Speaker
just packs as opposed to customized. And I thought, we are big enough. We can change the supply chain with our vendors. so But I got had to be out there to see it and to see what was left over on the sale racks. And it you know became really obvious to us when we when we when we got out there. And once I would do it, then I saw other um management members. They started doing surprise visits. Then they started getting the feedback. And so, so I mean, know. It's all about that. It's about getting out there and making the team feel like you're on their side. And then you then you give examples of how you've helped them. You listen to them. You follow up and you help them. And then word gets around. That's what really creates the culture that I thought was so critically important to our company. And man, it it really had a positive impact for us. Yeah, I know. The yeah the the CEO of Costco, i don't know if you know this. I do. Go ahead.
00:32:45
Speaker
he He actually tries everything they sell. So if it's a if it's a hose reel, he puts it in his house. If it's a kind of dog food, he gives it to his dog.
00:32:57
Speaker
Every product that goes in there, he he checks to make sure against his own quality standard. Yeah, I love that. I do. Well, the what the guy who was one of the early, i don't know what his title was, founder, early founders, his name, Jim Senegal. i I love this guy. I had so much respect for him. And he's retired now. He's um he's ah much older than I am, actually. and But I had him come to the University of Arizona and speak to our students. Yes. I had everybody come. I had the CEO of Walmart, Doug McMillan. He came and and spoke. i had the CEO of Target. i i brought the ceo I brought everybody here. I brought Vera Wang here. I brought Allison Olivia, Stacey Bendit here. I i kept, you know, i because I wanted them all to to see. And Jim Senegal was absolutely fantastic when was talking to the students because he he had just retired and he was, ah or maybe he was just about to retire. And he he was so passionate about this narrow, very narrow assortment. They don't carry two different types of ketchup. They carry the one. And that's what you're going to have. and Maybe they'll carry that one and a Kirkland ketchup, private label. But that's it. And and he is very, very specific about they have to earn their keep on that space in that store. you know and And, man, he was just passionate about his his business. And and and you know so, yeah, i can see that that culture Yeah. continuing on by trying all the products that come into their assortment.
00:34:24
Speaker
Okay, the next question is we're going to do some pretending here. Okay. All right, and you're probably the most qualified person in some ways to to pretend with me. Okay.
00:34:35
Speaker
Think about Sears in 2005, 2004, in What would you have done differently or what...
Retail Industry Analysis: Amazon vs. Traditional Retailers
00:34:44
Speaker
what did they miss, I used to love Sears as a kid. I mean, I'm from a small town, few hours away from here. We'd come up to the big city, Tucson, and we'd go to Sears, and it was a whole experience. And now they're pretty much gone, right? What'd they miss?
00:35:00
Speaker
ah Sears should have been Amazon, okay? they Because Sears had the biggest catalog ah and when when catalog was the was the big thing. We talked about Netflix. yeah They didn't evolve the catalog into the online business. And they should have.
00:35:17
Speaker
They had the customer. They had the distribution. They had the fulfillment, the delivery system. They had it everything. And they missed it. And they totally, totally blew that opportunity. And then when they sold sold out to to Eddie Lampert, he's ah he's a very smart ah investment guy, but he was going to take it for $100.
00:35:40
Speaker
He squeezed it for cash. yeah And so he sold off all the real estate. And so he sold off the the key stores, the key locations, and he made money for himself and for his investors, but there was no chance, no future for the stores. And so they stopped they stopped putting staff in the stores. there was no there You walk through a you know ah Sears store and and like you know you could roll a bowling ball down and and not hit a salesperson. There was nobody there. i mean, it was it was easy to see that this was going to be doomed for for failure over time.
00:36:11
Speaker
and But you know and the the the private equity investment you know hedge fund of Eddie Lampert and his group, they made money. They made money for himself. He paid himself a dividend every quarter, and then the company lost money, but he paid himself a dividend first. And so they got what they wanted out of it. um they made made made They made a lot of money for themselves, but it was a complete...
00:36:34
Speaker
disaster for the customer yeah and for the ah for for that retail business. They missed the boat completely. But I start with they should have been the Amazon because they had all the tools to to make it happen.
00:36:48
Speaker
Yeah, I'm glad you're saying that. It's stuff I talk about as well, that they could have taken a store, cut it into fifths. The first fifth could be the the front end and the four fifths in the back. Could be the all the fulfillment, all the warehouse, right? Yeah, exactly. um What do you think about Amazon war on that subject?
00:37:04
Speaker
I think Amazon, look, they they yeah they had a trick play, if you will. And the trick play was ah they would lose money ah selling against us and other retailers. and And it didn't matter because they had something that made a lot of money called AWS.
00:37:26
Speaker
Amazon Worldwide Services ah and the cloud services business. And those businesses made a ton of money. ah And so investors were patient, allowing them to lose money when they're selling selling you a coffee pot or selling you a T-shirt. They were losing somewhere around 20% on every transaction that they were selling. And they were giving...
00:37:52
Speaker
but they People think it's free delivery, but it's not. It's not. Because you pay ah whatever it is, $100, $110 for Prime services to get your free delivery and then free free returns. But the consumer viewed that. it was brilliant on Amazon's part. I give them tons of credit. It was brilliant on their part.
00:38:11
Speaker
the the consumer believes they're getting free delivery, even though they've already paid the $110. And so that means that you, as a retailer, who do not have cloud services, who do not have logistic services that you can so sell off and and get money income from, ah you have to just make money on that that same product that they're losing money on. It's very difficult, when particularly when you're giving it free shipping. And so consumers got to a point...
00:38:38
Speaker
where they were buying online and they were buying three dresses or three pair of shoes, a size six, a size eight, and a size 10, knowing full well that two of them are going to come back. exactly And it's going to be free delivery both directions. And then when that happens at you know at Walmart or that happens at Target or other stores, they don't have the cloud services to cover that overhead. Now I think Amazon has evolved rapidly. in a very smart way where they've gone more to what we call marketplace. So they don't own the inventory any longer for the most part. I think there's some portion of the inventory that they still do own, but a lot of it is owned by Nike as an example. So you go to Amazon, you buy Nike, Nike owns the inventory, Nike ships you that that product, and if you don't want it, then it goes back. And so that's
00:39:27
Speaker
Amazon's getting a percent of that sale but has a far less risk. ah So they're not losing money any longer on that. So I think, again, they're another example of how they have evolved to to become a very, very powerful yeah ah retailer. I think they've done a great job. They haven't done well in the...
00:39:47
Speaker
physical store environment, I don't think. I don't think they've done much, honestly, with Whole Foods. Whole Foods has not been impressive to me. um And and and i thought I really thought that they could have done a much better job and much been much more innovative than they've been on the on the on the physical side, I still think there's a chance for Amazon to do that because even today, 75% of all business is still done in a physical store. And so Amazon has half of that 25% of online business, half. They've got 50% of the business. So they are
00:40:20
Speaker
powerful and dominant. But my guess is at some point they're going to want to dig into that physical store retail. And I wouldn't be surprised if they end up buying somebody because they haven't been successful on their own. So my guess is eventually they'll they'll finally admit to that. They'll buy somebody who does know how to run a successful physical store business and then use their expertise online to really create the omnichannel experience that I think they're missing.
00:40:49
Speaker
Yeah, so I buy things on on Amazon, you know cables or whatever for my podcast. And recently, um after i I'm about to check out, they say, would you like some avocados? Would you like some some eggs? would you like So now they're offering grocery services, which I was sort of very reluctant, but I'm like, you know what, let's check this out.
00:41:09
Speaker
So I bought some avocados. I bought some other things thinking that they're going to bring these brews avocados. They brought everything that was pristine. And I know that they're sort of that's a loss leader, right? They're trying to get people sort of hooked on that. But I thought that was very interesting that they're they're trying that out, you know. Sure. Well, I think about the largest retailer in the United States, maybe the world is is ah for for food, ah groceries, is Walmart. Yeah.
00:41:35
Speaker
And that's their biggest head-on head-on competitor. and And Walmart now does about half of their entire business is on grocery. Wow. Yeah. That's remarkable. Yeah.
00:41:46
Speaker
All right, Terry, if you had a a way to spend half a day with somebody, somebody that you admire and you can have dinner with them, you can hang out with them, you can ask them questions.
Influential Figures and Current Mentorship Activities
00:42:00
Speaker
and This is through to all time, you can you know Marcus Aurelius or whoever. Who would you choose and why? Yeah, that's a good question. you know Because I'm very lucky that I actually spent time with some interesting people already. And so i'm I've been quite fortunate and lucky to be able to to do that. But, I mean, who do who didn't I get a chance to spend time with? You know, the i i was fortunate.
00:42:30
Speaker
I was the the first person who was not named Neiman or Marcus to run Neiman Marcus Really? And and and I replaced ah Stanley Marcus's son. and and And I got to... So I brought Stanley Marcus back. he did He'd retired for several years, but I brought him back into the business. got to learn from him. He was a genius and you know the true merchant prince. I mean, I just admired him so much. And he said, who would you like to meet? Is there anybody you'd like to meet? And I said, I'd like to meet Sam Walton.
00:43:02
Speaker
but of really love Walmart. That's who I really wanted to meet. And because here I was running the most upscale luxury business, but I wanted to see what Sam Walton, how he he was doing the mass business. and And I had such admiration for him. And I never got a chance to do that. And so that was that that would be in the retail world the one person that i I regret. And we literally had agreed and we were going to organize the the the meeting. And shortly after that, he went into the hospital and...
00:43:34
Speaker
and and eventually succumbed ah to to his his health challenges. So so never he never came out. So ah that's that would be the you know clearly one person. And then I would probably think of somebody like, don't know,
00:43:50
Speaker
i that was Gandhi or some so somebody who was just like, you know, was like sort of almost, you know, and at ah at a different yeah realm, different different level that I could just kind of listen and and learn from about the you know the secrets of life, if you will, would be my sort of other choice.
00:44:11
Speaker
Where do you, I know that you've got the retail school. i know you've got a lot of other things going. You still are active in your consulting business. You're on boards. Where do you see yourself playing in the 10, 15
00:44:26
Speaker
You know, I'm really in a good place right now because I'm quite active. um I travel quite ah quite a bit. I travel about 40% of the time. And that's a combination. I just got back from the Winter Olympics. I was in Milan for really for eight days. and Nice. and got a chance to you know experience the best in the world at what they do.
00:44:46
Speaker
And so I have got a really nice balance in my in my life here, and and and it's far, far less stressful than my old life of being a CEO. And and and I also have time for my family and my and personal hobbies and events that I like to do. And so this is kind of a really good place for me right now. I see myself as time goes on to be less involved with with boards, more involved with mentoring young executives, young CEOs, ah students here at the University of Arizona, as well as I'm involved with, I'm an executive in residence at Columbia Business School in New York City. um and and And then I have, like you said, I have some so some companies that i that i work with. And I particularly enjoy um working with these ah these younger founders who are are just looking for you know advice about dealing with um you know making hard decisions and dealing with the stressful circumstances, balancing life, which I wasn't particularly good at, with work and family and other other obligations. But You know, I'm at a point in my life where I can give this that this advice basically for free. yeah And and if if it meet if it helps them, meaningful to them, that makes me very happy.
00:46:15
Speaker
Yeah, this is why this forum here and the other forums you have, is is they're just so... focused and they drive so much change. you know like We're talking on the way over here that we didn't have the the social media to to help us along, but there's the other side, there's a lot of noise as well out there on what it takes to quote unquote get rich or whatever. There's a lot of noise. And so it's nice to hear from somebody who has risen the ranks and gone through the process of kind of what it takes So the the last question here, Terry, is really more of ah of ah of a pulpit for you to share with us in the audience and maybe a 25-year-old out there who is ah just out of college and trying to figure out what they want to do. They have this drive. What would you say to them to help them along their path?
00:47:09
Speaker
Yeah, i ah i I have a phrase that i that I use. I didn't invent it, but I've guy've copied it and used it um for many, many years. And it's bloom where you are planted. And I remember being an assistant buyer at the Los Angeles-based department stores, now called Macy's, um and And I remember going to the guy who recruited me off campus at University of Arizona, and and Gene Ross is his name. and and and And I went to his office. said, you know, Mr. Ross, I'm not really being utilized you know to my fullest. I think I could do so much more. And he's I'm like 23 years old or whatever. And and you know I don't know. I thought I could do much more. and And he's like shaking his head. And he points to a sign. He says, you know, it's a pot with a
00:48:03
Speaker
tree growing in it. And he said, bloom where you're planted. You're in that job for a reason because that job needs to be done. Instead of complaining about it and thinking you could be doing something else, why don't you do that job better than anyone's ever done that job before? For two reasons. One is you're going to learn something. And two is you might supervise that job and later and you'll know...
00:48:31
Speaker
when somebody's slacking off or if they're really being innovative and and and and and performing well. And so that just struck a chord. That just connected with me. And I say that now because I never look back.
00:48:46
Speaker
i Every job I got from that point forward, I said, you know what? I'm going to do this job better than anybody's ever done this job before. And I'm going to be very innovative. I'm gonna be very creative. And I'm going to figure out, these are the lines that the job description is in, I'm going to go outside these lines. going do that. But then I'm going to go here in here and here. I'm going to expand on it. And I'm going to make it better than anybody's ever done that before. Every time I did that, I got promoted.
00:49:11
Speaker
And I got promoted before I was ready. Sometimes i'm saying, you know, I'm not ready to go because I'm still working on this particular. And they said, Terry, get out of here. You're getting promoted to the next job. and And so I really, that really truly happened to me. I believe if you embrace the roles you're given, the opportunities you're given, don't don't don't think every job you're going to get is going to be the ideal position. um Do it better than anybody has ever done it before. People will notice. And when they do, you know, that's when your career will start to move.
00:49:40
Speaker
Yeah, there's a great, you know, part of this podcast is about stoicism and stoic philosophy and all that. And there's a a phrase called amor fate, which means love your fate, which is exactly... you Love your fate. it's nice Same version, I mean, different color of that the Bloom Warrior podcast. Yeah.
00:49:57
Speaker
Thank you, Terry. This has been great talk, conversation with you, and I wish you all the best in the world. Thanks, Manny. My pleasure. Best of luck to you as well. Thanks. Cheers.