I Want That Business

The stereotype of a CEO is a stuffy old man in a suit, focused on the big picture and thus hidden away from employees and out of touch with customers.

But Peter Harris, West Marine’s new CEO, doesn’t fit this. He’s the very definition of a people-person, with an infectious enthusiasm for his job, this industry, and, most of all, his customer.

It doesn’t take long to realize his career - including stints as a top executive at a toy store chain and a football franchise - is no mistake. Harris likes to have fun. And he wants West Marine employees - and their customers - to have fun too.

He advises store managers to “play” with customers, “Visit with them. Schmooze with them. Talk to them about what is boating.” Harris certainly does. As of mid-summer, he had visited more than 120 stores, spending most of his time with customers.

But what isn’t fun is reading West Marine’s recent earnings reports. Profits and sales are down, and the company has lowered its earnings guidance for the year. Some of this can be attributed to unfavorable weather early in the season, but part of Harris’ plan for the company involves taking a short-term earnings hit.

During an exclusive interview with Boating Industry, Harris shared his vision for West Marine’s future and how it will impact the company’s suppliers. The interview, which lasted well over an hour, took place during West Marine’s Media Cruise, which left from Chelsea Piers, New York City, on July 21st.

While he had been in his new position for six months, the cruise was the first opportunity the media had to get to know Harris, and Boating Industry was the first trade publication to secure an interview with him.

What we learned is that while the retailer’s new chief executive wants West Marine to retain the characteristics it is best known for by customers, employees and industry partners, he expects to deliver a bright new future for the company. The following interview, which has been edited for brevity and clarity, dives into the issues that West Marine faces, Harris’ plan for growing the company, and the personality behind the CEO.

The full transcript of the interview is available online at www.boatingindustry.com.

There has been quite a change in leadership at West Marine. You’ve come on board. There was the departure of your president and COO. Can you tell me what this new leadership means to the company?

The change that is me arriving is a fundamental move from infrastructure attention at the top of the list to the customer at the top of the list. It’s finding the soul of the customer in a way that we can deliver to their expectations and enhance their whole life, not just a particular supply they need because something is broken.
We actually moved back to something that is a classic West Marine organization design approach. We now have an upside down organization chart, and I’m at the bottom. At the top are our customers. They are the bosses. They are the ones we want to understand, get in their head and then satisfy with every single thing we do.

How would you describe your leadership style and how will that impact the company culture?

This is the only place I’ve ever been in my life where I walked in and felt like the culture and the values I believe in were already in place. This is a culture that is teamwork, has high integrity, is respectful of each other, is open minded, is high energy and enthusiasm. There are autocratic managers in this world, and there are very participative managers. That’s what I am. I think great success comes from reaching out to everybody in the organization and saying, “What’s the best way to do things?” and hearing them. I also believe in taking risks and trying new things. And I think this is a group of people that embraces that as well.

What we know of you is that you were a chief executive of a football team and a toy store chain. How do you take those experiences and bring that to West Marine?

I think two things that are consistent is a focus on the customer. And in both of those organizations, we really defined who our customer was in a way that we really got in their heads and then built a whole success story around giving them what they want. The second thing – those are both entertainment businesses, as is West Marine.

Nobody is involved in boating unless they love it. They make an emotional connection to being on the water, to having fun, to the joys of boating. And with that then, they say how can I live that connection out? And the answer is with the kinds of things West Marine has to help them maximize that emotional connection.

If I’m running a West Marine store, how does this new leadership have an impact on me?

I have a leadership that listens. I have a leadership that gives me the opportunity to be great and the room within which to define what great means in taking care of my customers. It is one that allows me to mix my passion for boating with work. Most people that run a store love customers. We’re saying, “Play with them. Visit with them. Schmooz with them. Talk to them about what is boating. Give them a place they want to come in January in cold weather markets because they just want to talk about boating.”

Do you think they will see much of a change in the way they might operate their store?

I think the answer is fundamentally no – because we were doing so well already. But there is a change in that it’s less about operating the store and more about taking care of the customer.

What about as a West Marine supplier? What do you see in my future?

We are really recommitted to vendor partnerships. We are now defining those partnerships in a way that’s freshly saying, “We can learn from our vendors.” Our vendors know their business better than we do. And we want to reach out and say, “You tell us how we can best serve the customer. You guide us into the things you’ve learned about your product that make a difference.” We are the biggest folks in the industry, and we don’t want to act like a bully. We want to act like we care about them, and we want them to make money. And we want them to help us be super successful in dealing with our customers.

What does that translate into?

It means more discussions that are rooted in what’s best – higher level strategic thinking rather than can we get an extra 1-percent discount on this one thing. We’re still good businesspeople so we’re going to still want to work with them to maximize our ability to buy product well and offer it to the customer. But we are going to ask our vendors to allow us to introduce product even more. We can become the vehicle that all the customers look to to see what is newest, hottest, freshest, coolest.

In one of your press releases, you talked about trying to get a constant cycle of new products in front of the customer so there is always something new for them to come and see at the store. Do you think this opens up some new opportunities for suppliers?

I think it’s a huge opportunity for suppliers. We are committed to the lifestyle of a boater in addition to being a supply source. That means a whole vast array of new people who have merchandise that will enhance the quality of life a boater has and their emotional connection to boating, whether it’s something they would play with on the shore when they’re boating, or whether it is something in their home that reflects their passion for the marine lifestyle or whether it’s a new cool electronics piece or safety piece. We’re going to be out there looking for new suppliers – vendor partners – to help us identify, define and work on something that will help the customer.

One of the other things that you’ve been talking about recently is expansion.

We are committed to continuing to grow the number of stores. We will, this year, open somewhere between 45 and 50 stores. And we are really committed to growing everywhere in the country where there are boaters that have the need state for our kind of product and being there for them, being their authority that they can look to to get them the right product.

One of the things we’ve noticed a lot of is a growing number of destination stores - places like Gander Mountain, Bass Pro Shops, Cabela’s. How do you compete with businesses like that?

The answer is clear. Have a better assortment than they do, better people at talking about boating that are boaters that are terrific. We are closer to where the customer is. And we are the destination, big combination store for boaters.

It’s not a direction that West Marine is moving in or that it feels poses a threat?

I don’t feel any threat, but you’re talking to someone who absolutely believes that entertainment retailing is fundamental to great success. And you’re talking to someone who has defined it. FAO Schwartz really defined that whole delivery mechanism for retailing in general when we did it in the 80s.

We are committed to building great destinations that people love to come to, even if they don’t want to buy something or don’t think they want to. That’s one of the measurements. You get people to come to your store to play. That’s a good thing. And we will do that.

Recently, West Marine’s comparable store sales numbers have been flat or down in some cases. Some people might be surprised to hear of your expansion plans given that.

Number one, the lack of comp store growth is not a problem. We have opened so many additional stores where we have stores in place. Some of the new business is coming out of existing stores. So it makes the comp store sales look less. My second point is our store model is enormously profitable when we don’t have comp store growth. And so the way I look at it is that if we can build new stores, move some business but serve a lot more customers and both stores are profitable, then we’re doing what we want, which is serving customers, and that ought to be the measurement.

More important than comp store growth is market share and our market share continues to grow dramatically. Having said that, we intend to get some comp store growth with some things we’re doing to more than cover for the business that we move to other stores. It’s also been a difficult winter and a much longer winter. The last six months results were heavily influenced by the fact that people didn’t put their boats in the water until way later.

Bigger isn’t always better. How will your expansion improve your business? How does it meet your goals? To what extent is it an effort to satisfy Wall Street?

It’s not an effort to satisfy Wall Street at all. In fact, we’ve done some things since I’ve been there to reduce earnings in the short term as we recommit to the customer. And Wall Street embraced it. It’s all about customers and serving them. New store growth is not driven by a need to have some number of stores.

Can you share any information about how or when you’ll be satisfied in terms of expansion? Is this a five-year plan?

We will not stop expanding until customers tell us by their behavior with us that there are no more places to go. I’ve been a retailer for almost 40 years – the hard number is 39 years – and I’ve never seen a business model that didn’t always keep raising the bar of how many stores they could do as they discover more and more customers and ways to do it.

Do you feel like you compete with boat and engine dealers?

I think that anyone that sells anything to satisfy a boater’s lifestyle or supplies’ need is in some form a competitor. And I want that business. We are a very different destination experience for customers. We’re going to work hard to be the best place for someone to buy oil, even if the gas station down the street from the marina is selling it. We’re going to be such a cool place to come that they’d rather buy it from us.

How have you gotten to know the company?

My first day as CEO of West Marine, I went to the store in Long Beach and waited on customers and worked alongside everyone else. And that in itself is symbolic and reflective of my view of what I’m about and what this company is about and the best way to learn. Over the past six months, I have been in 12 states and in 120 stores, and in every one of them, spent more than half my time talking to customers. That’s how you run a great business, by staying focused on the customer.

Can you tell me what expansion means to your suppliers? Does it mean your suppliers will need to be bigger? Does it mean they will have to expand their businesses to keep up with you?

I think the answer is there are a whole bunch of customers out there that we’re going to take care of, and we want our vendor partners to grow with us. And we recognize there will be some that chose not to build their capacity in a way that they will be in a position to serve a greater number of customers.

Do you think that means that you’re going to be working with fewer, bigger suppliers?

No, the best case would be to have our smaller suppliers continue to be this nimble, quick, creative, imaginative group of people and simply help them, support them and their successes as they grow to be able to handle more customers. I would rather have a base that is broader of suppliers and support those smaller guys that just want to be better. And I think we can help them.

When you say you can help them, what does that mean?

We can provide market for them. We can help guide them by giving them forecasts. American business success is rooted in little guys with a dream, and I really, really, really believe in being there for them.

You talked earlier about constantly surprising customers with new products. What would you recommend to suppliers that would like to receive that business?

Continue to focus on the customer, to figure out what they want in their life and then design products that fit their needs. That could be a classic supply item that can be built better, last longer, easier to install. Or it could be something as extreme as a lifestyle thing.

Given the number of products that West Marine produces or that it outsources to be produced, how do you decide when you’re going to make something yourself?

We want our customer to tell us. If a manufacturer can build a product that the customer wants, boy, that’s where we want to be. And one of the elements of the customer wanting it is the price value relationship. If a vendor says I’m going to build it, but I’m going to make the customer pay way up here for it and there’s another way to do it so that it’s a lower price and a better value for the customer, then we’re going to try to find another way to make it a better value. We really want our product development program internally to fit vendors, not to kill vendors.

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