Plus-size fashion apparel brand Ashley Stewart was on the verge of going out of business in 2013. The brand had been unprofitable for years, lacked direction and talent, had a toxic culture, and was days away from a second bankruptcy filing in a little over three years – one that it would very likely never recover from. For most, there was seemingly nothing to like about the brand's future. But not for serial entrepreneur James Rhee.
In a keynote presentation yesterday at the eTail East conference in Boston, Rhee, Ashley Stewart's executive chairman and CEO, discussed why he bought the struggling company as well as the turnaround plan put into place that's led it to be one of the fastest-growing retail brands in the country.
Authentic Brand, Loyal Customers
When assessing which companies to invest in, Rhee looks at a brand's core values. In Ashley Stewart, he saw a brand that had lost its way, but one that stood for a lot of good things. It was an authentic brand with an extremely loyal customer base. Shopping at Ashley Stewart was more than just a commercial transaction for these women, Rhee said. It was about empowerment, and these customers had fought for the Ashley Stewart brand for 20 years.
After spending two years on Ashley Stewart's board of directors, Rhee resigned in 2013 to become its CEO. Things were bleak when he started on Aug. 28, 2013. The business was insolvent, “technophobic” (there was no Wi-Fi at the company's headquarters in Seacaucus, N.J.), “mathphobic” (decisions were made on feeling rather than data, Rhee said), had lost its mission, and operations were siloed.
Rhee knew that if he were going to succeed in turning Ashley Stewart around, the company had to return to its roots. Ashley Stewart was founded to provide plus-size fashion for African-American women in boutique-like settings in urban neighborhoods across the U.S. Everything the company did going forward had to be with serving that customer in mind.
The Makings of a Turnaround
Self-admittedly, Rhee was an unlikely candidate to rescue a fashion brand like Ashley Stewart. He had never before worked at a fashion brand or retailer – he spent the majority of his professional career as a private equity investor, and prior to that was a high school teacher.
Nearly seven months after Rhee took over CEO duties, and a month after Ashley Stewart emerged from its second bankruptcy filing, the retailer began to see signs of life. It received private equity financing, in part due to a relationship Rhee had formed as well as the financier taking a risk on Ashley Stewart. In addition, Ashley Stewart launched a new e-commerce platform, closed upwards of 100 underperforming brick-and-mortar stores, and rewrote every algorithm with the customer at the epicenter, from store design to product quantities to pricing, among others.
The plan is working. Ashley Stewart has reported organic top-line sales growth of 25 percent, e-commerce growth of 80 percent, mobile demand growth of 200 percent, and boasts one of the most engaged fan bases on Facebook.
"I truly believe we have the best and most loyal customer base in the world," said Rhee.
Tips for (Re)Building a Brand
Rhee ended his session by offering tips to the retailers in attendance on how to grow a stronger brand:
1. Have brand authenticity. Business isn't that complicated, Rhee said. It's about treating people the right way and remaining true to your company's core values.
2. “Disintermediation” of the company as we know it. Rhee ditched formal job descriptions at Ashley Stewart, eliminated C-suite offices and created a culture where all employees are part of the rebuild. Without firing a single person, Ashley Stewart's corporate headcount has decreased by 40 percent as a result of employees not being willing to adapt to the new professional services-type environment.
3. Different algorithms for different days. Our customers shop differently at certain times and on different days; our business must be able to adapt to their behaviors, Rhee said.
4. Practice empathic applied math. Math is useless without empathy and explaining why it matters, Rhee said. He's made it a practice at Ashley Stewart to be transparent with every decision and each step during the rebuilding process, which has helped engender trust with the company's employees.
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