Listening to Signet CEO Gina Drosos’ recent conference call, it’s clear that a) she plans big changes for the company, and b) she isn’t happy with how things are going.
Here are the issues Drosos (pictured) says she uncovered while making a “deep dive” into the company’s operations, according to a SeekingAlpha transcript:
– “We did not invest fast enough in omnichannel initiatives, particularly mobile.”
– “We have been too slow to capture our fair share of the online channel both in terms of traffic and conversion.”
– “We have had less effective product innovation success and did not invest enough in differentiated products. As product life cycles have shortened, our innovation pipeline has not been robust enough to offset a natural decline of some of our larger collections.”
– “Our banner brand equities have become less relevant and our in-store experience and communication platforms need updating.”
– “Across banners we have relied too heavily on the promotional lever, which has incentivized customers to buy on deal and created a value perception problem in non-heavy promotional periods.
– “Employee morale has suffered as we have experienced organizational change, headcount reductions, negative press, and complications from the outsourcing of credit.”
– “We’ve gotten into a situation of sameness across our banners over the last couple of years, where the merchandise looks very similar across our banners.”
Plus there’s the company’s continuing issues with credit and the larger retail climate, which she says, “we have been slow to respond to.”
She’s also told vendors that she wants to be more cognizant of the issues that they face and give them more chance to make a profit.
Now, she did also mention that Signet is working from a “strong foundation,” citing its leading place in the market, store footprint, and strong bridal business. Even so, that’s a pretty significant list of issues, encompassing marketing, merchandising, and pricing, among other areas. And, to be fair, they are all valid.
The good news, she told investors, is the problems are all “fixable.” The way the company aims to fix these things is, seemingly, with a lot of research.
For instance, it’s using “deep data analytics” to help differentiate the store banners. It’s doing a study of its pricing issues, to determine whether its stores are too promotional. Another study focuses on the needs of millennials.
At the same time, the company is also trying to speed up its metabolism, introducing “new and faster idea screening approaches” as well as an “innovative engine” that will come up with new “disruptive ideas.”
This marks a big shift. Signet used to be run by people who knew how to sell jewelry based on decades of experience. They didn’t want to “disrupt” the jewelry market. They built it.
Now, a lot (though not all) of those folks are gone, and it’s not clear whether they will be replaced.
While it’s precarious to make generalizations, it does seem that the new Signet will be guided more by data, less by experience. Although, on the other hand, it’s also trying to speed up the one area where it was known to be meticulous, notoriously so—its “test before you invest” approach, which subjects products to extensive testing before they are introduced to the larger Signet chain. And on top of that, it also hopes/expects to make $200 million in spending cuts.
All of which could be a tricky balancing act. Signet has informed the investment community that it expects its comps to be negative for the next year. It clearly wants time out of the spotlight to work on what it views as a long list of problems.
(Image of Gina Drosos courtesy of Signet)