Jay Schottenstein was not only born into a retail family, he was born a retailer.
In the nearly fifty years since 69-year-old Schottenstein started working with his father in their furniture chain, he has expanded and modernized the family empire.
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He followed the example of previous generations: his great-grandfather bought goods and sold them from wagons, his grandfather then started a store in the early 1900s and his father’s generation expanded it into department stores, a furniture company and a real estate concern.
Schottenstein is now CEO of American Eagle Outfitters Inc. and executive chairman of DSW parent company Designer Brands Inc. – both listed companies. He also has a hand in furniture at American Signature Inc., real estate at Schottenstein Property Group, winemaking through Mayacamas Vineyards, and liquidation sales, dealmaking and more at SB Capital. He was also part of the group that backed supermarket giant Albertson’s $9 billion deal to acquire Safeway in 2015.
It’s a lot, but Schottenstein executes it with an easy, been-there-done 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 business without being a good optimist. If you’re not an optimist, you’re 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. Jean-Paul Agon, chairman of L’Oréal, and Supaluck Umpujh, chairman of The Mall Group in Thailand, were also inducted.
Ian McGarrigle, Chairman of Congress, said when the Class of 2024 was first unveiled: “Resilience and the ability to adapt quickly are key qualities for any business leader, but the three Hall of Fame inductees announced today have consistently been a been a step forward. anticipate challenges and discover opportunities, before others. Their careers are a testament to what it truly means to lead with foresight and agility.”
Schottenstein at least owes his foresight to his long experience.
Forty-seven years ago, his job was to be in the family’s furniture stores every week to make sure they were “arranged properly, to make sure the merchandise was displayed properly, to make sure making sure everything was priced appropriately. If the store wasn’t producing, you had to stay in that store until you got it right.”
In Columbus, Ohio, the company had four furniture stores under two different banners. The stores competed with each other for customers, but were more or less the same.
Schottenstein drew the ire of his father, Jerome, when the two chains ran nearly identical advertisements.
“I wasn’t even in town,” he recalled. “I said, ‘I didn’t know this was my job.’ My father gave me two words of advice. He said: ‘There are two things that drive the company: purchasing and marketing.’ It really changed my life because at that point I took over the marketing of the furniture operation. That was the biggest step…because I really got to understand the marketing side of the business, what made the business tick, and understand the merchandise better.”
The experience – which was followed by a stint as a store manager and other positions within the company – gave Schottenstein a holistic understanding of the industry, encompassing both the core truth and the high-tech evolution.
“The key to retail is you have to turn over your inventory,” Schottenstein said, bringing the company back to its roots. “You have to turn your inventory in a very efficient way. That has never changed. The companies that were successful years ago changed their inventory…or they wouldn’t be around.
“Not only did I grow up in this company, I had another division that I grew up in,” he said. “We have done 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. Over the years I have been involved with many companies that were going out and they had an investigation into why they were going out, how did that happen?”
While stores used to get into trouble due to a change in ownership or a generational change in leadership, today retailers are more likely to get into trouble due to technology.
“It used to be that someone could set up a business, set up a store, it could take 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 with the evolution of the e-tail business and the online channels, innovation is even more important than ever before. And you have to embrace these new technologies and you have to be able to use them… where the customer understands it, to get the benefits out of them.”
To stay ahead, Schottenstein brings together leaders from the various companies he is involved in for two- or three-day seminars with guest speakers.
“We let economists know what to expect,” Schottenstein said. “We bring in people who make predictions about the future, what it will look like in the future, and talk about what the relevant topic is. Today it is AI.” American Eagle has used machine learning to sharpen its inventory allocation predictions and has teased plans to use AI in stores to create a better shopping experience.
And there are other areas, such as RFID technology or government regulations, where the different companies can compare notes and collaborate.
The various companies gave Schottenstein a wide-angle lens on the pandemic, when he had to close 1,800 stores in one week only to later see a big increase in sales as consumers ventured outside again.
Now, after a few troubled years, things are returning to almost normal.
The good news, Schottenstein said, is that unemployment remains low, at 3.8 percent in March.
“People are working, that’s the most important thing,” he said. “You have to go back and make sure you’re a good merchant. That you can offer the products the customer wants, the quality he wants, at a price he is willing to pay. And you have to go back to what it was like in 2019, 2020 in the beginning, and hold that and then figure out how to get better at customer experiences.”
Course corrections were necessary at all Schottenstein’s companies.
“DSW was the king of the career and suddenly we had a transition to more casual in a very rapid period [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 some 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 get some of that back with expected growth in the low single digits this year.
He pointed to Designer Brands’ 2022 deal to buy Topo Athletic, founded by Tony Post.
“They are great running shoes,” Schottenstein said. “He has really developed a great product. You wear his shoes… they are the most comfortable running shoes. It is more comfortable than Hoka. It is the most comfortable. I’ve tried them all. It is the most comfortable shoe there is.”
Schottenstein said there are opportunities for “many more deals” in the coming years, in his retail world at large. “You’re not going to allow the government to hand out all the checks like the regular people do.” So now it’s about who are good operators. And there will be opportunities.”
American Eagle has also been busy: Its namesake Aerie, Offline by Aerie subbrand, Todd Snyder and Unsubscribed increased revenue 5 percent last year to $5.3 billion, with plans to grow to $5.3 billion in three years as much as $6 billion.
“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 sells everywhere, it’s amazing,” Schottenstein crowed. “We are the number one for 15 to 25 year olds and we are [the] number one brand for women.”
Schottenstein clearly enjoys boosting his various companies, but he’s also very aware that he doesn’t do it alone.
“One person can’t do everything,” he said. “And whatever success I achieve is thanks to the people I work with. It is because of their innovation, their vision, that we encourage people to become experts in what they do and that they are proud.
“Everyone in all my companies is in the leadership division,” he said. “They don’t wait for me. They know what to do. They all work well together and they all take pride in it, whether it’s furniture – my son runs the furniture department – he’s very proud of that; my other son runs our real estate division; I let my other son work on deals.
“The executives here at American Eagle under Jen and with Jen [Foyle, president and executive creative director for American Eagle and Aerie], they are winners. They are very proud. They love the company. They like merchandise. To work in this industry, you have to get excited about merchandise. I’ve always loved merchandise.”
It is a love affair that has caused Schottenstein few retail concerns.
“I sleep pretty well at night,” he said. “I have a lot of great people around me.
“If there’s one thing that keeps me awake, it’s the state of affairs in the world,” he said. “You have people there, you have governments that can really wreak havoc. The quality of leadership in the world is frightening. It’s really scary all over the world, not just in America. It’s all over the world.”
That is of course a problem beyond the scope of retail.
But Schottenstein does have a broader view of what it means to be a retailer and of his responsibilities.
‘I have always told all my managers that your responsibility is not only with yourself. There are people who depend on us,” he said.
“I have people who work with me, they’ve been with me for 40, 50 years at all my different companies, not just one or two people. It is awesome. It’s amazing the longevity. These people put their future in us and they put their presence in us. They have families to support and we have an obligation to them too.”
And that is retail according to Schottenstein.
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