by Jay Schottenstein wasn’t just born into a retail family – he was born to be a retailer.
In the nearly 50 years since Schottenstein, 69, started working with his father at his furniture chain, he has expanded and modernized the family empire.
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It was a forerunner from previous generations: his great-grandfather bought goods and sold them from a wagon, his grandfather started a shop there in the early 1900s and his father’s generation developed that into department stores, a furniture company and in his real estate business.
Now, Schottenstein is chief executive officer of American Eagle Outfitters Inc. and executive chairman of DSW-parent Designer Brands Inc. — both public companies. He also has a hand in furniture with American Signature Inc., real estate with Schottenstein Property Group, winemaking through Mayacamas Vineyards, and liquidation sales, marketing and more with SB Capital. He was also part of the group that backed supermarket giant Albertsons’ more than $9 billion deal to buy Safeway in 2015.
It’s a lot, but Schottenstein carries it easily and easily, done-that attitude.
“You have to be an optimist,” he told WWD in an interview at American Eagle’s design studio in New York. “You can’t run a good retail operation without being a good optimist. If you are not successful, you are dead in this business. You have to believe that the world is getting better and that you can make it better.”
That retail-ready attitude and Schottenstein’s long history in the industry will be recognized Monday, when he is inducted into the World Retail Congress Hall of Fame.
He is in good company. Also inducted were Jean-Paul Agon, chairman of L’Oréal, and Supaluck Umpujh, chairman of The Mall Group in Thailand.
Ian McGarrigle, chairman of the Conference, said when the class of 2024 was first revealed: “Resilience and the ability to adapt quickly are key qualities for any business leader, but the three Hall of Fame inductees announced today are always a step ahead , anticipate challenges and find opportunities before others. Their careers are a testament to what it means to lead with foresight and agility.”
Schottenstein, at least, derives his foresight from long experience.
Forty-seven years ago, his job was to be in the family’s furniture stores every week to make sure they were “set up the right way, making sure the merchandise was displayed the right way, make sure everything is priced the right way. If the store didn’t produce, you had to wait in that store until you got it right.”
In Columbus, Ohio, the company had four furniture stores under two different banners. The shops competed with each other for customers, but they were almost the same.
Schottenstein drew the concerns of his father, Jerome, when the two chains placed almost identical ads.
“I wasn’t even in town,” he said. “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, buying and marketing.’ It really changed my life because at that moment I took over the marketing of the furniture operation. That was the biggest move… because I got to really understand the marketing side of the business, what drove the business, understand the merchandising better.”
The experience — followed by time as a store manager and other postings around the firm — gave Schottenstein a holistic understanding of the industry that encompasses the nuts and bolts of retail gear and high-tech evolution.
“The key to retail is you have to turn over your inventory,” Schottenstein said, taking the business back to its roots. “You have to turn your inventory in a very efficient way. That never changed. Those businesses that were successful years ago turned over their inventory…otherwise they wouldn’t be around.
“Not only did I grow up in this business, I also had another department where I grew up,” he said. “We did asset recovery liquidations. And we still do that. We have another division that specializes in running sales across the country, and we see the good and the bad on that side as well. Through the years I have been involved in many companies that went out and they studied why they went out, how did it happen?”
While it’s common for stores to stumble through a change in ownership or a change in leadership from generation to generation, retailers today are more likely to be in trouble because of technology.
“Maybe someone could set up a business, set up a shop, it could last a long time,” Schottenstein said. “The systems haven’t changed that much, have they?
“But today, in the last twenty years with all the new technologies and the evolution of e-tail business and online channels, innovation is more important than ever. And you have to embrace these new technologies and you have to be able to use them…when the customer understands it, to reap the benefits.”
To stay on the cutting edge, Schottenstein brings together leaders from the various companies he is involved with for two- or three-day seminars with guest speakers.
“We bring in economists about what to expect,” Schottenstein said. “We bring in people who forecast the future, what things will be like in the future, and talk about what’s relevant. Today, it’s AI.” American Eagle is using machine learning to sharpen its forecasting in the area of inventory allocation and is discussing plans to use AI in stores to create a better shopping experience.
And there are other areas, like RFID technology or government regulations, where the different businesses can compare notes and work together.
The various businesses gave Schottenstein a wide-angle lens on the pandemic, when he had to close 1,800 stores in one week only to find a big business boom later when consumers ventured back out.
Now, after a few turbulent years, business is almost returning to normal.
The good news, Schottenstein said, is that unemployment remains low, with a reading of 3.8 percent in March.
“People are working, that’s the most important thing,” he said. “You have to go back to make sure you’re a good merchant. That you will be able to offer the products the customer wants, the quality they want at a price they want to pay. And you have to go back to how it was in 2019, 2020 first, and keep that and then start figuring out how you get better at customer experiences.”
Things needed to be corrected throughout Schottenstein’s affairs.
“DSW was the king of the profession, and suddenly we had a transition in a very quick period to more of the casual events. [footwear styles] and the sneaker. They did a great job. Now they have to find the right balance there. We have also acquired many brands and recently brought in special people who understand product development. And we are very excited about it.”
Net sales at Designer Brands fell 7.3 percent to $3.1 billion last year, but the company is looking to regain some of that with projected low single-digit growth this year.
He highlighted Designer Brands’ 2022 agreement to buy Topo Athletic, founded by Tony Post.
“They make great running shoes,” Schottenstein said. “He has developed a great product. You wear his shoes…the most comfortable running shoes. It is more comfortable than Hoka. It is the most comfortable. I have tried them all. It’s the most comfortable shoe out there.”
Schottenstein said there is an opportunity to do “a lot more deals” over the next few years, in his retail life in general. “The government is not going to give out all the checks like the people used to do. So now it will be about, who are the good operators. And there will be opportunities out there.”
American Eagle has also been busy – with its namesake business, Aerie, the Offline by Aerie division, Todd Snyder and Unsubscribed growing sales by 5 percent to $5.3 billion last year, and plans to grow as high as $6 billion in three years.
“When you think of denim, you think of two companies. Levi’s and American Eagle, and when you look at where we sell our denim, in our stores, and Levi’s sells everywhere, it’s amazing,” said Schottenstein. “We are number one for 15 to 25 year olds and we are [the] number one brand for women.”
Schottenstein clearly enjoys boosting his various businesses, but he also understands that he’s not doing it alone.
“One person can’t do it,” he said. “And whatever success I have, it will be because of the people I work with. It is because of their innovation, their vision, that we encourage people to be experts in what they do and they are proud of it.
“Everybody in all my companies, they’re 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 they’re all proud, whether it’s furniture – my son runs the furniture department – he’s very proud of that; my other son runs our property division; I find my other son working on markets.
“The executives here at American Eagle about Jen and with Jen [Foyle, president and executive creative director for American Eagle and Aerie], they are winners. They are proud of it. They love the business. They love merchandise. To be in this business, you were excited about merchandise. I have always loved merchandise.”
It’s a love affair that left Schottenstein with little retail concern.
“I sleep well at night,” he said. “I’m surrounded by a lot of great people.
“If there’s one thing that keeps me going, it’s the state of the world,” he said. “You’ve got people out there, you’ve got governments that could really wreak havoc. The quality of leadership around the world is alarming. It’s really scary all over the world, not just in America. It’s all over the world.”
That’s a problem outside the purview of retail, of course.
But Schottenstein has a broader understanding of what it means to be a retailer and its responsibilities.
“I have always told all my executives that the responsibility is not yours alone. You have people who depend on us,” he said.
“I have people who work with me, they’ve been with me for 40, 50 years with all my different companies, not just one or two. It’s great. The longevity is amazing. These people put their future on us and they are putting their presence on us. They have families to support and we have a duty to them too.”
And that is, retail according to Schottenstein.
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