Retail Success Strategies

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As Seen in CFO Studio Magazine Q3 2015 Issue

CHALLENGES AND OPPORTUNITIES OF SELLING IN AN INTERNET-CONNECTED WORLD

The rapid adoption of online shopping by consumers worldwide has opened new sales opportunities to retailers, and in many cases, has helped to cut selling costs.

But online sales have also forced companies to reexamine the way they drive traffic to stores, integrate online and retail channels, and maintain customer loyalty in a connected world, according to CFOs who took part in a panel discussion entitled, “Retail Success Strategies and Managing Business.” The panel took place at the CFO Innovation Conference, attended by over 400 CFOs and other executives, and held recently at MetLife Stadium in East Rutherford, NJ.

Online retailing offers companies more ways to interact with consumers, but it can also create operating headaches, reported Michael Mardy, CFO of Tumi Holdings, Inc., a South Plainfield, NJ-based company that offers a comprehensive line of travel and business products and accessories in multiple categories. “We compete on quality, but the Internet allows people to immediately do price comparisons with competitors, and this can make it difficult to ensure that reseller partners maintain the manufacturer’s suggested retail price.”

Other companies face similar challenges. Steve O’Connell, CFO of Lenox Corp. — a Bristol, PA-based leading tabletop and giftware brand — noted that his company has minimum advertised pricing (MAP) policies, with a tiered structure that varies by selling outlet; but he also reports problems with discounters. “However, brand quality can help a product to stand out,” he said.

Godiva Chocolatier, Inc., a New York City–based luxury sweets company, gets that concept. Godiva CFO David S. Marberger said his firm continues “to work on ways to drive people to our stores,” offering bright, splashy website graphics designed to tempt customers to make a trip to a Godiva shop, while giving them the convenience of online ordering.

“Either online or at a store, you’ve got to make the shopping trip a positive, convenient experience for them,” he added.

Part of creating the shopping experience involves brand management, which can be challenging in a global environment.

Godiva has a global brand, “but we tailor it to local tastes,” said Marberger. “A big seller in Japan is our ‘diamond’ piece, which retails for $25. The U.S. is a bit more price-competitive, so we have to be aware of that, but we are able to achieve leverage from our global presence by importing some practices when it makes sense to do so.”

For its part, Lenox maintains the consistency of its brand while tweaking the product mix to meet national demands, according to O’Connell.

Companies are also using big data — huge amounts of structured, semi-structured, and unstructured data that can be mined for information — to stay ahead of trends and to stay connected with individual customers, noted panel moderator Mark Mishler, a veteran CFO who has held positions with publicly traded and private equity companies.

Tumi, for example, achieved some unexpected insights after analyzing the “tremendous amount of information” on its customers, said Mardy. “We always thought we were a men’s brand, but it turns out that women account for more than 60 percent of the purchase decisions about our products.”

But integrating the information from all sources in a useful way can be a challenge.

Marberger, for example, said that Godiva sometimes struggles to patch legacy systems together. Lenox’s O’Connell said that his company is investing heavily in IT reporting systems, “though not so much in big data activity.” —Martin Daks

Global Expectations

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As Seen in CFO Studio Magazine Q4 2015 IssueScreenshot (57)

SETTING UP AND GROWING A MULTINATIONAL BUSINESS HAS ITS CHALLENGES

Screenshot (58)The CFO Studio World-Class Companies Executive Dinner Series met in June at Roots Steakhouse in Morristown, NJ, for a discussion of “Challenges and Opportunities for the Global Company CFO: What’s Next?” led by Richard Veldran, CFO of Dun & Bradstreet, who manages a global finance team of 490. In an interview, he named a number of challenges and opportunities that apply to his company’s global model.

Dun & Bradstreet’s commercial database, the world’s largest, includes 240 million companies. “In any given country I need to have the best data, and therefore, a leading presence in every country,” Mr. Veldran explained.

The prize for breaking into an emerging market is enormous, but the risk is real, so Dun & Bradstreet’s strategy varies. Where it makes sense, D&B owns and operates facilities in emerging markets; in other scenarios it has created partnership models.

“Take China and India; there’s lots of potential for growth, but it’s helpful to have a local player to help us navigate the effort,” he said. In these cases, D&B has created a majority-owned joint-partnership structure.

In markets with slower domestic growth, the relationship formed will be strictly a partnership. “With a partnership, we have access to data globally, including markets where we don’t own a business.”

The challenges of gaining a global footprint include currency exchange risks. “The strength of the dollar has made it difficult to drive growth and profit outside the U.S.,” said Mr. Veldran.

Enterprise risk management has also taken on added importance. “You must understand the primary risks at a detailed level, on a global scale, and monitor those risks,” he said. “A culture of transparency and compliance will be a benefit. If you see something unusual, say something. … [Otherwise] it could bring a company down.”

Cast In A Different Mold

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As Seen in CFO Studio Magazine Q4 2015 Issue

SCHOOLED IN CHEMICAL ENGINEERING, BURKHARD ZOLLER LEARNED TECHNICAL CONTROLLING ON THE JOB AND LIKED IT

BY JULIE BARKERScreenshot (48)

Perfectly at home discussing methacrylates and performance polymers, Burkhard Zoller, CFO for Evonik Corp. – North America, has spent 30 years with the chemical company based in Essen, Germany, starting right out of college as a plant engineer. Three decades and 11 jobs later, he is experienced at running plants and business units. He has also run finance and strategic projects, and was controller for two different business units for about seven years. All this serves him well day-to-day in his current job.

And when he scrutinizes acquisition targets, he gives them the once-over in two ways. He examines the financials and the balance sheets, as all CFOs do, but he also evaluates the firm’s technology to ensure that it’s not only capable of what the target company claims, but is also a good fit with Evonik’s extraordinarily broad portfolio of applications. Zoller, whose master’s degree is in chemical engineering, is a different type of CFO for our times. But he’s not unique in this particular regard. According to a Bank of America report titled “Evolving Role of the CFO,” 63 percent of CFOs are taking on strategic responsibility for technological advances.

For Zoller, having such a skill set is useful with the Board of Directors when presenting the reasons for a proposed acquisition. “You can only put so much information into a paper and present it to the chairman, or in our case, chairwoman. In the meeting, additional questions pop up and I’m in a good position to know about the environmental issues, about the technical issues, about the market access, about the competition, and so on. And that way, I’m very helpful in the decision-making process.”

Diverse Products and Skills

With historic roots dating from the beginning of German industrialization in the first half of the 19th century, the contemporary Evonik Industries was established in 2007 from a lineage of predecessor specialty-chemical companies. Its products, says Zoller, “are in everybody’s life.” Its chemicals are in consumer products like toothpaste and soap. Its polymers are in pill coatings for delayed release of the drug as well as taste masking and moisture protection to make pharmaceuticals more palatable and long acting. Evonik products also make spices more free-flowing and make airplane wings more lightweight.

To keep the inventions coming and to tap into megatrends, R&D is essential. “We spend more than 3 percent of our revenue on R&D,” says Zoller. “We always have projects in the innovation pipeline. Evonik has an intellectual property department here in North America because we had too many ideas to have it done in the central patent department in Germany.” As CFO, one of his focuses, he says, will be to keep money flowing to innovation.

Prior to stepping into his CFO job in 2014 — overseeing finance, tax, IT, and several service units, including energy management, for Evonik’s U.S., Canada, and Mexico operations from offices in Parsippany, NJ —Zoller had several notable shifts in responsibility and title. One of the most important was when he became vice president and controller for the Methacrylates business unit of Degussa AG (an Evonik predecessor). For the first time his job was to look at numbers and think of probabilities. “Accounting is describing what happened last year, putting it in a financial statement. But controlling is looking forward,” he says. “That’s an important part of today’s business. You can’t wait until it’s too late. You have to correct the direction the company’s going, and that’s what controlling is about.”

In that role, he also headed up strategy, and in consultation with the business unit’s head, contributed to decision-making and business development. He advised pursuing acquisition of a company that is still a major part of Evonik’s U.S. business, Evonik Cyro. The acquisition was completed in 2005. “We were on a growth path,” he says. “From then on, we grew.”The methacrylates business expanded from a largely European one to North America and Asia. “It was a very interesting time. We were touring, doing the roadshow to get the approval for this big expansion course, and we actually succeeded. When I started as the controller in that unit we had 270 million euros in revenue, and when I left seven years later, we had 1.4 billion.”

Deeply Involved

Besides his dual background in chemistry and finance, Zoller is an atypical CFO in other ways, as well. To clear his head, he might take off on a motorcycle trip for several days. In early summer, he and a friend rode touring bikes from New Jersey, where he lives, to the White Mountains of New Hampshire, and up Mount Washington for the view. “I’ve driven motorcycles all my life,” he says. “It’s my way to get a fresh mind. You can’t think of anything else when riding a motorcycle.”

One might guess there’s a bit of a risk-taker in such a personality, but he is certainly not that. Asked about the most beneficial contribution a CFO can make to his company, he says, “Keep the company out of financial trouble. That’s the core. The old traditional CFO tasks are still the most important.”

He says the most exciting part about his job is “being involved in everything. Having this broad knowledge about the company, and being able to talk to everybody in the company and outside.” Recently, he says, he enjoyed a lengthy conversation with a major tire manufacturer’s head of innovation and was able to speak knowledgeably about a green tire ingredient Evonik makes.

In July, a new Evonik innovation hub opened in Richmond, VA. “We’ll create new jobs there — and I also want to bring more manufacturing to North America. The United States has an advantage in raw material, in energy costs, and it is a steady, growing market, one of the biggest in the world,” says Zoller. “I’ll try to get more investment over here.”

Copyright 2017