During the pandemic, the home retail category had a field day. It was a heady time during a maddening and confusing time in most people’s lives. So, opportunity knocks even under the worst of circumstances and business suddenly looks better than ever. CEO Ted Decker explains, “I’m incredibly impressed and thankful for the way our associates rose to the challenge posed by the Covid environment. Not only did they effectively support our customers and communities during the height of the pandemic, but they rallied during the ensuing growth we experienced, as customers focused on home improvement projects while spending more time at home. In fact, we’ve grown over $47B over the past three years, and we could not have done that without the dedication and hard work of our associates.”

But what happens when the crisis is over? If you are Home Depot, you do what you do best as part of your DNA. CEO Ted Decker leads a trusted team of 490,600 employees in 2300 stores in the U.S., Canada and Mexico who focus on customer experience and building a loyal, engaged workforce. In his words, “Our core values are not just something we post in our lobby. They define who we are and how we operate. Our associates, who live by them each day, are what set us apart as a truly special place to work and build a career.” He adds, “When you think about the past few years, it’s remarkable to step back and think about how much has changed and continues to change. Through all of that, our associates have continued to create a great experience for our customers. They create the buzz and energy that’s unique to The Home Depot.”

Anyone who has shopped at Home Depot experiences its strong employee culture. The distinctive orange-apron uniformed sales staff is knowledgeable, which is essential for home decorators, do-it-yourselfers, and contractors alike. For do-it-yourselfers, Home Depot is where you go to get power tools, kitchen faucets and assorted essentials but the retailer’s real sweet spot behind all those orange aprons are the professional builders and contractors who account for more than half of its overall revenue (versus only 25 percent at arch-rival Lowe’s). It’s why last year the company bought back HD Supply, a B2B wholesaler it had spun off a decade before and why next year it will open a flagship Home Depot PRO store in its Atlanta hometown catering just to that customer.

But Home Depot is about much more than hammers and drainpipes. It does more than $1 billion a year in home décor products, a sum it expanded with its purchase of soft home retailer Company Store in 2017. It has publicly talked about significantly upping its play in home furnishings so don’t be surprised to see more acquisitions and/or internal growth.

The other unexpected piece of Depot’s business comes in ecommerce. Its online business increased 10 percent in the last quarter and some 50 percent of its orders placed on the website are picked up in store, making it far above the omnichannel curve compared to other big-box operations.

How do they stay steps ahead of their customers? Decker says, “We have a team of highly skilled merchants who blend the art and science of retail to bring the most innovative products to our shelves at a value that fits the lives of our customers. Our merchants are true experts. They partner with our suppliers to anticipate and solve for our customers’ needs with new and helpful innovation, whether it’s a larger-than-life skeleton for Halloween, cordless power equipment that has similar power to gas alternatives, or products that help save professional contractors time.”

Systems Strength

Home Depot focuses on making operating processes more efficient including reducing repetitive store tasks which allows associates to focus on the customer and improve productivity. And high worker engagement pays off allowing for the company to deliver on its financial and strategic goals.

Decker is committed to Home Depot’s ESG (environmental, social, and corporate governance) initiatives, and the results are impressive. It plans to have 100% renewable electricity in all Home Deport facilities by end of 2030 and have its emissions reduction targets in line with the Paris Agreement goals by 2023. The stores offer in-store recycling programs and sustainable packing materials along with many other sustainable initiatives.

The company listens and responds to the customer. It delivers a hybrid shopping environment integrating its various channels to provide customer access to products and services when and how they want to interact with the company.

One more thing about Home Depot: Like most of the biggest Big Boxes in the retailing world like Walmart, Target, Kmart, Meijer’s, Bed Bath & Beyond and so many others that were founded in the 1950s, 60s and 70s, Home Depot stands alone in being able to transition from its entrepreneurial founders to multiple generations of subsequent insider and outsider managers barely missing a step. So many others lost much in the translation over the years, some to the point of collapse. But the company has endured with a business model, a market positioning and perhaps most of all with a culture that has served it well and allowed it to become the second largest retailer in America. Ant that’s what makes a retail radical.

Decker adds, “What customers want from retailers is not defined by the retail industry. It’s much broader than that, and we look at companies across industries, including technology, fast food, delivery, and hospitality to better understand how customer expectations are changing. At every touch point in any business, customers intuitively expect a frictionless experience. Retailers who can provide that will win.”

Money Matters

For fiscal 2021 the company reported over $150 billion in sales, which have grown over $40 billion over the past two years. The company has exceptionally strong relationships with its supplier and transportation partners giving it a long-term competitive advantage. The investments in supply chain have allowed the company to efficiently move products throughout the system which has plagued other major retailers. Home Depot operates a flexible and agile supply chain, building a supply chain ecosystem that is highly integrated with the stores and fulfillment centers allowing for an efficient process that delivers exceptional customer experience.

Home Depot’s locations are another long-term advantage for the company with a real estate footprint that serves its local and urban markets. Home Depot continues to leverage its data analytics to drive process improvements, merchandise assortments, customer services, and deeper collaboration with its suppliers. The company continues to expand its services offerings such as DIY classes, demonstrations, equipment rentals, and installation services.

Financial results for 2021 include a three-year CAGR of almost 12 percent with a profit margin last year at 10.8 percent. The return of assets in 2021 was 22.9 percent. Home Depot outperformed the industry standards across the financial indicators.

So, looking forward, what’s Decker’s prediction for the future? “Last quarter, 50 percent of our online orders were picked up in our stores. The quarter before that, we saw record downloads, traffic, and sales through The Home Depot mobile app. There’s no such thing as strictly offline or online retail. We’re running an interconnected retail business that blends the physical and virtual world, which makes retail more complex than ever. The secret will be hiding that complexity from the customer and delivering a simple and seamless experience, particularly as expectations continue to evolve.” And he adds, “As I look to the future, I’m particularly excited about the improvements we continue to make to give our customers a frictionless experience when they shop with us – online, in our stores, or (most often) both. We’re especially pleased with our improved customer checkout experience, both in-store and online. We are also focused on the expansion of our supply chain network, which will eventually reach 90 percent of our customers with same day or next day delivery for virtually everything we sell, including big and bulky products. We started these investments in 2017, and the work we did proved especially valuable by supporting the unprecedented growth in the business. And we are working on how we serve our professional customers through the ecosystem we’re building to make their jobs easier. We’re rolling out new digital tools and personalized experiences, all while expanding our product assortment with job-lot quantities and our service capabilities with a larger field sales force to support this important customer. Whether they’re planning ahead for what they’ll need for future jobs or stopping at The Home Depot on the way to a current project, we want to be the destination for Pros of all sizes.”

American Eagle Outfitters is an amazing success story, propelled by next gens who love it for its honesty and relevant, trending style. It’s the perfect example of a brand from the early aughts that managed to evolve into a Gen Z go-to –– it’s exactly what Abercrombie wishes it could be.

CEO Jay Schottenstein has led the brand to new heights as the pioneer in supporting body positivity, inclusive environments and connection with its customers and local communities. AEO came off the pandemic as a nonessential retailer with over $5 billion in revenue and the strongest profit in over a decade.

Sustained Success

Schottenstein says his secret sauce to sustaining such impressive success is, “We are a customer-centric company. Everything we do is with the customer in mind–and we believe in meeting them wherever, whenever, and however they choose to engage with our industry-leading brands. This mindset allows us to seamlessly serve the customer while delivering exceptional products, services, and experiences.”

“Even with the rise in digital, we have always believed in the value of physical retail stores. Success in today’s marketplace means having a significant digital business and capability, while combining this with a strong physical footprint. And it’s becoming increasingly important to develop an engaging virtual experience through the Metaverse. Yet, to be successful–all of these touchpoints have to work seamlessly and connect with customers.” Jay Schottenstein

Next Gen Fanbase

How did they do it? The darling of young consumers, the company added over 1.8 million new customers with an increase in customer spend. Schottenstein says they stay steps ahead of next-gens in keeping their products and services relevant and valuable by continuing to leverage strong engagement across social channels, while remaining intensely focused on exploring innovative ways to interact with customers. He adds, “Our marketing and commerce initiatives across TikTok and the Metaverse continue to be very successful. We have confidence in our brands and overall consumer affinity for great casual wear and lifestyle apparel is stronger than ever. We also deeply believe in building a better world for future generations–which resonates personally with our customers. Through three key areas of focus [Planet (Environment), People (Social) and Practices (Governance)], we are committed to creating positive change by advancing sustainability efforts, caring for our communities, and operating with the highest level of integrity. In 2022, we published our first ESG report to increase transparency and awareness for our efforts.”

Operational Innovations

Schottenstein describes the top initiatives AEO is most proud of: “In 2022, we have leveraged the strength of our operations and brands in an uncertain macro environment. We quickly responded early in the year to ensure we were best positioned for the second half of the year — and those efforts have paid off. Our portfolio of brands is strong and customer engagement continues at a healthy pace. Aerie remains a standout in the industry, and I’m very proud of the multi-year growth we’ve achieved, including the success of our activewear sub-brand OFFL/NE. American Eagle profit and margins improved compared to pre-pandemic, reflecting strong product assortments as well as the team’s dedication to customer-first experiences. Overall, I’m most proud of our ability to remain focused on our long-term strategies for growth, which sets us apart from our competition as we prepare to emerge from the current environment even stronger. “

AEO focused on inventory and real estate optimization strategies. Highly edited assortments and new product offerings increase full price selling. The company’s emerging brands Todd Snyder (menswear line) and Unsubscribed (slow fashion) performed well. And the company closed unproductive stores and invested in high quality stores and digital channels.

Two supply chain acquisitions, AirTerra and Quiet Logistics, improved in-market fulfillment and more cost-effective shipping. AEO has continued to invest in company-owned distribution centers and provides direct to store shipments which reduces transit times and lowers operating costs. AEO also increased its BIPOC representation across stores, corporate and distribution center locations.

Schottenstein states, “Even with the rise in digital, we have always believed in the value of physical retail stores. Success in today’s marketplace means having a significant digital business and capability, while combining this with a strong physical footprint. And it’s becoming increasingly important to develop an engaging virtual experience through the Metaverse. Yet, to be successful–all of these touchpoints have to work seamlessly and connect with customers.”

Workplace Culture

American Eagle leadership understand that young consumers are worker-first. Schottenstein says their workforce is engaged and resilient because “Caring for people is at the very core of how we show up. We have created a rewarding company culture that embraces optimism, inclusivity, and well-being. We know that by empowering our associates and amplifying their unique voices, we spark positive impact at AEO and within our communities.”

The enthusiastic workforce is supported by AEO’s Power of People initiative. The company introduced new communication tools and technology for workers to better operate in a hybrid working environment. The company provided additional benefits including mental health and student loan debt support. Three new AEO Real Care Health Centers opened in 2021 which brings the total up to four health centers located in corporate offices and distribution centers. And all AEO associates working at the locations that have the health centers have access to non-acute medical services. That is true commitment to a workforce, which makes AEO not only a great place to work, but a master of PR in the era of callout culture.

The AEO Community

The company’s charitable contributions hit a record high. AEO’s Human Rights Policy donated over $15 million to the community and the company established an Environmental, Social, and Governance (ESG) program and will provide its first report in fiscal 2022. Schottenstein is driving future growth with consistent focus on its brand ethos of Real People, Real Power, Real Growth.

Outstanding Results

Financial results for 2021 include a three-year CAGR of almost 7.5 percent, the profit margin last year was 8.4 percent, and the return of assets was 11.6 percent. American Eagle Outfitters outperformed the industry standards across these three financial indicators, proving that giving back is the best way for modern retailers to move forward… provided they make sure consumers know about it.

Staying innovative and radical in today’s disruptive retail marketplace is central to AEO’s success, Schottenstein says, “Innovation is one of AEO’s core values. Our associates are curious and change-oriented, constantly looking for ways to improve the business and our practices. We make decisions in the face of ambiguity, and we take calculated risks in order to better serve our customers, our communities, and protect our planet.”

How did I define the CEO of RH, Gary Friedman? As a true radical, and more. Perhaps even an iconoclast.

Friedman is unique and complex. A conversation with him can be surreal; he’s a philosopher, an uber-character, energizer bunny, stream-of-conscious rambling brilliant visionary, and unstoppable (until he hits a wall traveling at the speed of light – which is rarely). He’s the poster child for all radicals.

And he didn’t just become a radical; he’s been one his entire career. Sometimes he’s flirted dangerously close to failure, but more often to resounding success. In his own words, Friedman represents the best of radical retail thinking, “The lessons and learnings, the passion and persistence, the courage required, and the scar tissue developed by getting knocked down ten times and getting up eleven leads to the development of the mental and moral strength that builds character in individuals and forms cultures in organizations. Lessons that can’t be learned in a classroom, or by managing a business, they must be earned by building one. Or, by reaching the top of the mountain.” And reaching the top of the mountain is table stakes for Friedman.

Friedman is unique and complex. A conversation with him can be surreal; he’s a philosopher, an uber-character, energizer bunny, stream-of-conscious rambling brilliant visionary, and unstoppable.

RH Redefined

He describes the current iteration of RH, “The first two decades saw us evolve from a nearly bankrupt business with a $20 million market cap and a box of Oxydol laundry detergent on the cover of our catalog, to the leading luxury home brand in the world with a market value approaching $10 billion.”

His philosophy and leadership catapulted RH out of near bankruptcy in 2016/17. In true Friedman style, he says: “We believe in the rules of the jungle, where the big do not always eat the little, but the fast always eat the slow, and on Team RH, fast is as slow as we go. Leaders are taking people somewhere they’ve never been, doing things they’ve never done. They’re building things and they’re building value.” That’s the RH leadership ethos and the culture of his company.

Friedman’s marching orders for his management teams and employees, during the downturn in 2016/17 was, “We have to be willing to march through hell for a heavenly cause.” So, this was his clarion call, and the implementation of which has driven RH to its current winning model, enough so that The Robin Report has awarded RH as one of our 2022 Retail Radicals.

RH Manifest Destiny

Friedman’s vision going forward is to continue to expand his ultra-majestic lifestyle empire with galleries, (currently around 100 in the US, and never to be called stores), Guesthouses, luxury travel, and destinations. As he said in his shareholder’s statement. “Our strategy is to move the brand beyond curating and selling product to conceptualizing and selling spaces, by building an ecosystem of Products, Places, Services and Spaces that establishes the RH brand as a global thought leader, taste and place maker.”

Pam Danziger, (LINK) TRR reporter describes the four pillars of Friedman’s vision for the brand:

• Products: Interiors, Modern, Contemporary, Color, Beach House, Ski House, Baby & Child, Teen, and Waterworks
• Places: Galleries, Guesthouses, Restaurants and Residences
• Services: Interior Design, Architecture and Landscape Architecture
• Spaces: Plane and Yacht Design and Charter

She adds, “It’s a grand – some would say grandiose – plan to transform a furniture company into more than a lifestyle brand and into a ‘World of the RH ecosystem’ that is immersive and multi-dimensional. And now he is making good on his promises, first with the opening of the premiere RH Guesthouse (a.k.a. hotel) in New York City. And most recently in Aspen, CO, where RH is investing $105 million to develop the first RH ecosystem combining an RH Gallery, Guesthouse, Bath House and Spa and restaurants with the first-time, full-furnished RH Residences.”

TRR reporter Warren Shoulberg covered RH launch of RH Contemporary: “The rap against RH was that it was a one-trick pony, with just a single design look that wouldn’t allow it to grow beyond a limited base. With the introduction of its new RH Contemporary program this month – which may become its single largest collection ever – you can’t say that anymore. RH Contemporary is the long-awaited addition to the upscale home furnishing retailer’s assortment, a massive collection that consumes 320 pages of a virtual catalog that will is now joined by a print version that just dropped.”

Shoulberg also covered RHs new Guesthouse in New York: “You can’t really check in…but you’ll never want to check out. The RH Guesthouse, the (very) boutique hotel property that was years in the making is only the latest manifestation of the home furnishings retailer’s quest to become a luxury brand across any number of formats and disciplines. It also represents the newest entry into the hospitality space for companies in the home and fashion sectors looking to continue to build out their connections with their uber-upscale customers. RH Ups the Private Guest Experience Uber-upscale only”

The RH Lifestyle

Similar to the Ralph Lauren brand, RH has carved out its distinct lifestyle imagery, which means anything that Friedman conjures up. The RH ecosystem is not defined by a single product or category. Rather, it can expand and include any product or service that fits and mirrors his opulent worldview. In his words, “We believe most retail stores are archaic windowless boxes that lack any sense of humanity. There’s no fresh air or natural light, plants die in a department store and they’re not optimal for humans either. That’s why we don’t build retail stores. We build inspiring spaces that are a reflection of human design; they are a study of balance, symmetry and perfect proportions. They blur the lines between residential and retail, indoors and outdoors, home and hospitality. They are filled with natural light and fresh air, with garden courtyards, and rooftop parks. Many have seamlessly integrated restaurants, wine vaults and barista bars.”

Let the Good Times Roll

RH’s performance has been up and down like a roller coaster for over a decade. But Friedman stuck to his vision with a vengeance, even as it went through several life-threatening stages.

The numbers prove why RH has been included in TRR pantheon of retail radicals. Financial results for 2021 include a three-year CAGR of 14.5 percent with a profit margin last year at 18.3 percent. The return of assets in 2021 was 16.3 percent. RH out outperformed industry standards across the financial indicators.

What’s impressive is that Friedman and his RH lifestyle brand are shaping a new world, aspiration for some and necessities for others that connects emotionally. RH is perfectly positioned to live long and prosper.

A March to a Drummer

And a final word on Gary’s leadership philosophy: “We believe leaders have to be comfortable making others uncomfortable. We value team players, people who are more concerned with what’s right, rather than who’s right. None of us is smarter than all of us, and, we have to get all the brains in the game and the egos out of the room.” The term finally is incorrect. He’s just beginning. And all of this is why RH has been awarded a 2022 Retail Radical.

We are pleased to announce the winners of The Robin Report 2022 Retail Radicals. The annual awards program focuses on identifying radical thinkers and doers (innovators and entrepreneurial leaders) exclusively in the legacy (brick-and-mortar) sectors of the retail industry. These radicals are driving the major transformations within their respective retail brands. We celebrate traditional, legacy radicals because they face challenges that are much larger and more complex than those of the legion of tech-driven startups who are so often celebrated.

The awards are based on metrics for outperforming retail brands across various sectors in the industry which were measured through a systematic quantifiable analysis. Qualitative factors supporting the data were researched across publicly accessible reports covering their major innovations, including breakthrough technology strategies.

Like all strategic transformations, it requires enlightened leadership, major capital commitment, dedicated resources, innovative initiatives and extreme focus matched with a high level of financial discipline to achieve success in terms of revenue growth and profitability.

The Winners

As a result of our analysis, American Eagle Outfitters, Home Depot, Lululemon, and RH, Ross Stores are the 2022 Retail Radicals winners. Each represents a discrete sector of the retail industry. Based on all of the strategic initiatives and innovations, these companies have implemented capital investments in technology, resources and infrastructure focused on elevating the physical store experience and accelerating the integration of their digital experience with the physical store experience while outpacing their competitive peers in delivering the outperforming financial metrics.

Like all strategic transformations, it requires enlightened leadership, major capital commitment, dedicated resources, innovative initiatives and extreme focus matched with a high level of financial discipline to achieve success in terms of revenue growth and profitability. These factors define each of the five Retail Radicals of 2022. We believe the five brands have reached an inflection point activating a successful transformation that will accelerate a sustainable profitable growth curve going forward.

Again, this is a program unique to traditional retailing which is in the ongoing process of transforming itself to meet the demands of today’s digitally savvy customers of all ages. We believe that the innovators in traditional retail will be the forerunners that shape the sustainable future of retail.