Jane Elfers has delivered several years of industry-leading shareholder returns since joining The Children’s Place as president and CEO in 2010. But how did she do it, especially since the company had been on a downward trajectory for several years when she joined? According to a discussion Elfers had with Robin Lewis, CEO, The Robin Report during a Retail Marketing Society breakfast event in New York City on May 2, the key was a strategic plan she created with with four specific pillars: superior product, business transformation through technology, alternate channels of distribution, and fleet optimization. During the discussion, Elfers detailed each of the pillars.
Pillar No. 1: Superior product: Elfers said when she started at The Children’s Place, the product had become stale and, as a result, the company “was losing a lot of customers in the nine-year-old, 10-year-old and 11-year-old range.” The company researched demographics and learned that births had been declining since 2008, and were on a trajectory to continue that way for years to come. Therefore, “a focus on product and marketing for an older kid was a priority.”
Pillar No. 2: Business transformation through technology: Elfers said this pillar is comprised of two parts: inventory management and digital transformation. As for inventory management, when Elfers came on board, there were no inventory systems at all at the company. “We didn’t even have an ERP system when I arrived in 2010,” Elfers said, adding that The Children’s Place was “doing manual allocations with no assortment planning tool. It was really a mess.” Elfers and her team implemented the right technology to get the job done.
“We were able to deliver the foundational ERP systems without the major missteps we’ve seen from so many other companies, which was a very important step in our transformation,” Elfers said.
As for digital transformation, The Children’s Place hired a chief digital officer (CDO) who had spent many years working in digital at retail companies. The CDO then hired a team, and together they’re working towards the goal of true one-to-one personalization. Elfers said besides overseeing digital marketing, the CDO also oversees IT, since both groups collaborate so closely. The move “has been a sea change for the company,” Elfers noted.
Pillar No. 3: Alternate channels of distribution: Elfers said this pillar focuses on international strategy and wholesale strategy. When Elfers got to The Children’s Place, for example, there was no international strategy in place. After doing a lot of research and bringing in some partners, “we realized we had a huge opportunity internationally,” Elfers said. The Children’s Place opened up an international franchise business in 2012, starting in the Middle East, and according to Elfers it has been “a smashing success.”
As for wholesale distribution, The Children’s Place decided to partner with Amazon.com. “We went knocking on Amazon’s door way before anyone else did,” Elfers said, adding that she knew there were a lot of millennial moms (The Children’s Place key demographic) on Amazon, and understanding that the products Amazon sells for children are very different than what The Children’s Place sells. The Children’s Place has had a great working relationship with Amazon. “We’ve learned a lot from them and they’ve learned a lot form us, and we continue to do a lot of work with Amazon,” Elfers said.
Pillar No. 4: Fleet optimization: Upon Elfers’ arrival at The Children’s Place, there was no fleet optimization strategy in place. “The previous management team had opened hundreds of stores that were way too large, way too expensive to build, hard to navigate, and with very high rents,” Elfers said. To remedy this situation, Elfers challenged the the team to develop a store infrastructure at less than half the cost of the previous one. After that, “we focused on opening stores off-mall — that would give us the opportunity to replace volume at much lower build-out and occupancy costs, while at the same time giving us the ability to start getting out of oversized stores and overpriced leases.” Elfers said The Children’s Place doubled down on this strategy over the past few years and now plans to close to 300 stores by 2020.
The Children’s Place’s successful turnaround and bright future is a result of Elfers vision and, more importantly, its people. As Elfers puts it: “The team is gritty. The team is scrappy. The team is focused. The team is tenacious. The team is impatient. The team is candid. The team holds their peers responsible. The team communicates cross-functionally. In addition, the people who are most successful at The Children’s Place have one speed — win speed.”