Stephen Younane started his career the old-fashioned way: through a training program in retail management at the now-defunct Grace Bros department store. Younane spent 12 years at Myer, which acquired Grace Bros in 1983, working in store operations and buying, which he says gave him a good “cross-section” in the business.
He left Myer to open Nike’s first Niketown concept store outside North America in Melbourne 1998, and later was offered a job at Nike in the US overseeing all Niketown stores North America. Younane eventually became Nike’s retail director, overseeing all Niketown stores and Nike factory stores, and worked on a project to open Nike’s first women’s stores.
After returning to Australia, Younane joined Luxottica, as general manager of the Sunglass Hut business, which included OPSM, and oversaw the launch of the brand in Hong Kong. He was CEO of Jeanswest for five years, before leaving to start his own company, Retail Prodigy Group (RPG), in 2011.
An official retail partner of Nike in Australia and New Zealand, RPG is the brand’s biggest franchise partner in the market. This February, RPG signed distribution deals with two more US brands, Toms and Timbuk2, and is opening the brands’ first bricks-and-mortar stores in Australia in September.
Inside Retail Weekly: It sounds like you came up through a traditional retail training program where you learned the ins and outs of the business. Do you think these pathways are still available to young people looking to get into retail today?
Stephen Younane: I consider myself fortunate that I was able to take this path into retail, and it’s probably not as prevalent today as it was back then. This frustrates me because I think the issues we have in Australia when it comes to our retail development and the customer experience are because these pathways are more limited than they were when I was young. Unfortunately, many retailers don’t invest enough in training and development, particularly around management and leadership. That was one of our priorities when we set up RPG in 2011. In some small way, it’s how I give back to the industry.
One of the challenges the industry faces is that we’re starved of talent, and I think that’s because not enough retailers are investing in development for young up-and-coming managers. The reason I know this is that we ask the people we employ about their previous training, and it’s very rare that they would rattle off a number of different training programs.
IRW: Do you know of any retailers that still offer true training programs?
SY: There’s Apple, Mecca and Cotton On University. And I think some of the big retailers like Coles and Myer and David Jones still have them, at least they did up until a couple of years ago. To be honest, it’s hard. The very fact I’m struggling to come up with names… I’m sure a lot of companies are doing things around development, but it’s not like before when these programs were highly promoted and sought after. It felt like a real recognition if you were selected.
IRW: Why do you think retailers aren’t investing as much in training and development these days?
SY: I actually believe the culture stems from the CEO of the business, and whatever the CEO deems important is what the company will invest in. If you’re a company that believes in a customer-obsessed culture and if it’s fundamentally of value to the CEO, then it’s highly likely they will lead work around a service culture that will include some element of learning and development. That’s where it starts.
A company’s performance is the other thing that gets in the way. Unfortunately, when times are tough, training and development programs are one of the first things to be cut because they are seen as a cost. But this creates a downward spiral. If a sports team isn’t performing, they don’t back off training, they do more training.
IRW: So, how has the last year been for RPG?
SY: It’s been a busy and exciting year for us. It started with the launch of our three-level Nike flagship store in George Street Sydney last August. It’s the biggest Nike store in the country. The basement is dedicated to sneaker lovers and we built an assortment around sportswear, basketball, NBA and Jordan to create a whole different environment down there. Men’s performance is on the ground floor and the top level is dedicated to women. We’re really proud of the store and have been doing a lot of work to bring different services to life.
It’s also been a big year in terms of product launches for Nike, with VaporMax and React being two key innovations that have launched in the last six months. And let’s not forget the work we’ve done to bring two new brands to Australia, Toms and Timbuk2. We just finalised the distribution deals for them in February.
IRW: Was it always part of RPG’s plan to work with other brands besides Nike, or has there been a strategic shift in the company’s focus?
SY: The original plan was to have a portfolio of brands. We were blessed to have Nike as the brand that kick-started this for us, but it was always our plan to be a multi-branded business. Because of the number of Nike stores we’ve opened, it felt like it was the right time to bring other brands in for diversification, which is a proven strategy for growth. And when I say diversification, I’m not just talking about new brands or categories, I’m also talking about new channels. With Nike, the only channel we manage is the bricks-and-mortar channel. They manage online and wholesale. With Toms and Timbuk2, we’ll have control over the whole omnichannel offering, which puts us in the driver’s seat.
When it comes to adding new brands to the portfolio, it’s all about finding the right brands. There’s no shortage of brands that want to find a home here in Australia, the tricky part is finding brands that are going to work. We’re very particular; we look for brands that are distinct, authentic, interesting and have a greater purpose.
IRW: Tell us about your partnership with Nike.
SY: Nike has three direct-to-consumer (D2C) channels. There’s Nike-owned retail, Nike-partnered retail, which is where RPG sits, and online, which is owned by Nike.
Formally, we have a retail franchise partnership, but informally it’s like we’re part of Nike’s retail division. We work together well and collaborate on many things, which is important because we need to embrace the brand’s DNA and reflect it to consumers. There is a high degree of trust placed on us and we take it very seriously.
We’re the biggest Nike franchise partner in Australia and New Zealand, although we operate in the marketplace with other independent franchisees that were already partnering with Nike when we came on the scene in 2011.
IRW: Nike came out last year and said it would be looking more closely at its retail partners, and even scaling back the number of retail partners around the world. What’s happened since then?
SY: Mark Parker, the CEO of Nike, did come out and say it was going to be a process that they’ll work through. I’m not a spokesperson for Nike, so I can’t tell you what has happened internally, but I haven’t noticed any significant changes here in Australia.
IRW: Nike is often the example people use when they talk about the rise of brands going D2C. What has your experience of this trend been? How do you see it developing?
SY: Brands are adopting this D2C strategy globally through mono-branded stores. This is because the brand wants to control the consumer experience and [a mono-branded store] enables them to ensure there’s a seamless experience between online and offline. This actually bodes well for us because RPG is part of Nike’s D2C play. Mark Parker has come out and said that Nike as a business globally will grow to US$50 billion by 2022. I believe the majority of that growth will come through D2C.
IRW: What do you think is behind the rise of D2C?
SY: Most of these global brands didn’t start in retail, they started in wholesale. They sold to other retailers to present their product to the consumer. Where you’re seeing most of the change is among those brands that started off in the wholesale space that want to take control of their customer experience. A lot of these brands are going down the mono-branded path to ensure the brand DNA gets expressed as they want it to. That’s why a lot of brands are going into Myer and David Jones as concessions, because it gives them more control over how their brand comes to life in department stores.
IRW: From a practical point of view, how does RPG’s partnership with Nike work? How are decisions made around local store launches/design, stocking, marketing, etc?
SY: Because whatever we do has an impact on the Nike brand, everything has to have Nike approval, not just locally, but sometimes globally. Every store we open has to have Nike approval, particularly a flagship store like George Street in Sydney, which had many people within Nike globally reviewing and approving those store designs.
IRW: How does it work when it comes to things like click-and-collect, since Nike owns the online channel?
SY: We’re doing a little bit of click-and-collect in our stores through endless aisle, which gives customers access to a greater range of products than we can present in-store. Nike always puts the consumer first and so do we, so it’s about figuring out together how we can give the customer the best possible experience between physical and online. Ultimately, both parties want a seamless customer experience. We’re also working with Nike on things like early releases and exclusive products for members, and we are currently testing customisation in our George Street store.
It will be different with our two new brands, Toms and Timbuk2, since we signed distribution deals with them. We’ll have more control over the decisions and things like omnichannel. It won’t require the same level of approval. The beauty of the partnership with Nike is that they bring a lot to the table, whereas we’ll have to be doing a lot of the thinking and innovating ourselves with Toms and Timbuk2. Hopefully, we can lead the way with those brands and become best practice for them, whereas it would be pretty hard to keep up with the pace of innovation at Nike.
IRW: How would you describe the quintessential Nike store experience?
SY: I was quite fortunate to join Nike when they launched the Niketown concept in the 1990s. It was around the time when true experiential retailing came to the forefront and Niketown was really held up as global best practice, but the world has changed a lot since then.
What Nike has been able to do recently is incorporate digital into the store experience in a really personalised and human way. I think they have absolutely nailed it with this concept called Nike by Melrose, which takes the ultimate customer experience to a whole new level again. They’re using membership data to personalise the product offering in that specific store location.
They’ve also opened up a store in SoHo in New York City, which is a real brand experience store that brings to life what Nike is all about. The great thing about these stores is that it’s not just selling products. It’s as much about the experience, the service, keeping things personal, accessibility…
Nike will use those stores as trial concepts so we can learn from them, and hopefully we can capitalise on their learnings in Australia. We are working towards a full remodel of our Melbourne Central store right now. I can’t share what the plans are, but it will be the first of its kind. We’re hoping to open in the second quarter of next year.
IRW: RPG is in the process of opening bricks-and-mortar stores for Toms and Timbuk2. What is the look and feel of these stores?
SY: We open our first Timbuk2 store on Little Collins Street in Melbourne on September 7, and we’re opening our Toms store on September 17 on Little Collins Street as well, right behind David Jones. They’re both going to bring to market some pretty unique experiences. In Toms, we’re providing a coffee experience, which is part of the brand experience that they offer in their flagship stores. We’re also bringing the full suite of men’s, women’s and kids’ footwear, as well as sunglasses to customers, whereas their experience with Toms was probably limited to the basic core product in the past.
With Timbuk2, we’re bringing to market their Factory2 concept, which is their customiser. So customers have the opportunity to design their own bag. There are eight different options, from totes to backpacks to duffels and messenger bags. They can choose their own design, colours, trims, and zips, and the bags get produced at Timbuk2’s manufacturing plant right behind their office in the Mission District in San Francisco.
IRW: Toms and Timbuk2 are both “story” brands. How important do you think that is in the retail landscape today, compared with other customer demands like price or convenience?
SY: It’s extremely important. Toms is not just another shoe brand and Timbuk2 is not just another bag brand. Both of these brands have a story. I love that you can share that story, but even more so, these are brands that also have a heart and a soul, and that’s the key difference.
I think consumers today, particularly millennials, are looking for brands that are about more than just the commercial, or the product. They want to know why the brand exists, what their purpose is. Toms’ whole mantra is they want to use business to improve lives. The fact that [founder and well-known philanthropist] Blake Mycoskie is still actively involved in Toms … and his unwavering pursuit of giving is what makes that really unique.
To give you an example, we’ve only been online with Toms for a couple of months, but we’ve sent out a few EDMs [electronic direct mail] to our database. We sent one that was a price offer, and a few weeks later we sent one that reminded people about the giving aspect, that for every shoe purchased, Toms gives a pair to a child in need. The traffic on our site went up threefold after that message compared to the one about a discount. It tells you that consumers care about brands that care.
IRW: Do you have your eye on any other new-to-Australia brands?
SY: Yes. We’re in discussions with several brands, some that have a presence in Australia, and some that don’t. But they all have to meet that criteria of being authentic, unique, interesting and having a purpose.
