Jay Schottenstein wasn’t just born into a retail family; Born to be a retailer.
Schottenstein, 69, has expanded and modernized the family empire in the nearly 50 years since he started working with his father in the furniture chain.
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He took his lead from previous generations: His great-grandfather bought goods and sold them from the wagon; his grandfather later opened a department store in the early 1900s, and his father’s generation grew it into department stores, a furniture company, and a real estate company.
Currently, Schottenstein is chief executive officer of American Eagle Outfitters Inc. and chief executive officer of DSW’s parent company, Designer Brands Inc., both publicly traded. He is also a member of American Signature Inc. He is involved in furniture with Schottenstein Property Group, real estate with Schottenstein Property Group, winemaking with Mayacamas Vineyards, liquidation sales, deals and more with SB Capital. It was also part of the group that supported supermarket giant Albertson’s more than $9 billion deal to acquire Safeway in 2015.
It’s a lot, but Schottenstein carries it with ease, a “been there done that” attitude.
“You have to be optimistic,” he told WWD in an interview at American Eagle’s New York design studio. “You can’t run a good retail operation without being a good optimist. If you’re not optimistic, you’re dead in this business. “You have to believe that the world is getting better and that you can make it better.”
This retail-ready attitude and Schottenstein’s long history in the industry will be recognized when he is inducted into the World Retail Congress Hall of Fame on Monday.
He is a good friend. Jean-Paul Agon, president of L’Oréal, and Supaluck Umpujh, president of The Mall Group in Thailand, were also appointed.
Convention president Ian McGarrigle said when the 2024 class was first announced: “Resilience and the capacity to adapt quickly are essential qualities for any business leader, but the three Hall of Fame inductees announced today have consistently been one step ahead. Anticipating challenges and recognizing opportunities before others do.” “Their careers are a testament to what it truly means to lead with foresight and agility.”
At least Schottenstein draws his foresight from long experience.
Forty-seven years ago, his job was to walk around the family’s furniture stores every week and make sure they were “set up the right way, make sure the merchandise was displayed the right way, make sure everything was priced right.” If the store wasn’t producing, you had to stay in that store until they made the right product.”
In Columbus, Ohio, the company had four furniture stores under two different brands. Stores competed with each other for customers, but it was more or less the same.
Schottenstein drew the ire of his father, Jerome, when he ran nearly identical ads in two chains.
“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. ‘There are two things that drive the business, purchasing and marketing,’ he said. 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 really understood the marketing side of the business, what drives the business, I understood the products better.”
This experience, followed by my time as a store manager and other company-related positions, gave Schottenstein a holistic understanding of the industry, encompassing both retail realities and high-tech evolution.
“The key to retail is rotating your inventory,” Schottenstein said, taking the business back to its roots. “You have to turn your inventory very efficiently. This has never changed. Businesses that were successful years ago changed their inventory…otherwise they wouldn’t be around.
“Not only did I grow in this business, but I also had another part of it that I grew in,” he said. “We did asset recovery liquidations. And we still do this. We have another division that specializes in nationwide sales execution, and we see the good and bad of that side, too. “I have been involved in many companies that closed down over the years, and they did a study on why they closed and how it happened.”
While stores used to get stuck due to a change of ownership or a generational change in leadership, retailers today are more likely to run into trouble with technology.
“It used to be that one person could start a business, open a store, and it could last for a long time,” Schottenstein said. “The systems haven’t changed that much, have they?
“But today, with all the new technologies that have emerged over the last 20 years and the evolution of the e-retail business and online channels, innovation has become more important than ever. And you need to be able to embrace these new technologies and use them where the customer understands them to reap the benefits.”
To keep up with the latest technology, Schottenstein brings together leaders from the various companies it is involved with for two- or three-day seminars with guest speakers.
“We’re calling on economists about what to expect,” Schottenstein said. “We bring in people who are making predictions about the future, what things will look like in the future, and we talk about what the relevant issue is. Today, there’s AI.” American Eagle is using machine learning to sharpen its forecasts in inventory allocation and touting plans to use AI in stores to create a better shopping experience.
There are also other areas where various businesses can compare notes and work together, such as RFID technology or government regulations.
Various businesses gave Schottenstein a wide-angle view of the pandemic, when he was forced to close 1,800 stores in a week, only to later get a big business boost as consumers backed off.
Now, after a few unstable years, things are almost back to normal.
The good news, according to Schottenstein, is that unemployment remained low at 3.8 percent in March.
“People are working, that’s the most important thing,” he said. “You need to go back to make sure you are a good trader. You can offer the products the customer wants, the quality he wants, at the price he wants to pay. And you have to go back and continue that, as you did in 2019 and 2020 in the beginning, and then start to figure out how you can get better at customer experiences.”
Course corrections were needed at Schottenstein’s workplaces.
“DSW was the king of careers and suddenly we moved into more casual sports in a very rapid period. [footwear styles] and sneakers. They did a great job. Now they need to establish the right balance there. We have also acquired many brands and recently brought in some special people who understand product development. And we’re very excited about it.”
Designer Brands’ net sales fell 7.3 percent to $3.1 billion last year, but the company plans to claw back some of that with projected low-single-digit growth this year.
He highlighted Designer Brands’ 2022 deal to acquire Topo Athletic, founded by Tony Post.
“They make great running shoes,” Schottenstein said. “He developed a really great product. You wear his shoes… they are the most comfortable running shoes. More comfortable than Hoka. This is the most comfortable. I tried all of them. “This is the most comfortable shoe there is.”
Schottenstein said there are opportunities for “a lot more deals” in the retail world in general over the next few years. “You’re not going to let the government hand out all the checks like we used to. Now the question of who is the good operator will come to light. And there will be opportunities there.”
American Eagle was also busy; Its eponymous business, Aerie, with its Offline by Aerie sub-brand, Todd Snyder and Unsubscribe, grew sales 5 percent to $5.3 billion last year and plans to grow to $6 billion within three years.
“When you think of denim, two companies come to mind. “When you look at Levi’s and American Eagle, we sell our denim in our stores and Levi’s sells it everywhere, it’s amazing,” exclaimed Schottenstein. “We’re number one for 15-25 year olds and [the] “The number one brand for women.”
Schottenstein clearly enjoys growing his various businesses, but he’s also very aware that he’s not doing it alone.
“One person can’t do everything,” he said. “And whatever success I have had is due to the people I have worked with. We encourage people to specialize in what they do because of their innovation, their vision, and they take pride in it.
“Everyone at all my companies is involved in leadership,” he said. “They are not waiting for me. They know what they have to do. They all work well together and every single one of them takes pride, whether it’s furniture – my son runs the furniture department – he takes great pride in that; My other son runs our real estate division; I also have my other son working on deals.
“Executives at American Eagle under Jen and with Jen [Foyle, president and executive creative director for American Eagle and Aerie], they are winners. They feel great pride. They love the job. They love goods. To be in this business, you need to be excited about the goods. I’ve always loved the merchandise.
It’s a love affair that leaves Schottenstein with few retail concerns.
“I sleep pretty well at night,” he said. “I have a lot of great people around me.
“If there’s anything that can keep me going, it’s the state of affairs in the world,” he said. “There are people out there, there are governments that can create real destruction. The quality of leadership in the world is frightening. This is truly scary, not just in America but all over the world. All around the world.”
This is, of course, an issue beyond the scope of retail.
But Schottenstein has a broader understanding of what it means to be a retailer and his responsibilities.
“I have always told all my managers that your responsibility is not just your own. “There are people who trust us,” he said.
“There are people who work with me; They are not just one or two people, they have been working with me for 40, 50 years in my various companies. This is great. Its longevity is surprising. These people give us their future, and they give us their existence. “They have families to care for and we have a responsibility to them.”
According to Schottenstein, this is also retail.
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