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Ruling Banana Republic
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February 11, 1998: 12:03 p.m. ET
Clothing CEO Jeanne Jackson explains BR's retail makeover and success
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NEW YORK (CNNfn) - Jeanne Jackson, CEO of Banana Republic, has been honored by Business Week as one of the best corporate managers of 1997. She joined CNNfn anchor Deborah Marchini on "Before Hours" to talk about her management style and forecasts for the retail sector. Here is a partial transcript of her comments.
DEBORAH MARCHINI: Banana Republic is the Gap for grownups; right?
JEANNE JACKSON:: Yes. We tend to offer a modern, versatile wardrobe.
MARCHINI: Modern and versatile, but not necessarily casual.
JACKSON: No. When we started down the path of really getting to know our customers better and listening to what they had to say about what would make us relevant for them, we found out that there is this clothing crisis in their closet somewhere between the serious suit and blue jeans. They needed clothes versatile enough to wear to work, but are also versatile enough to pair with a sweater for dinner out Saturday night. So, the versatile clothing in the middle is where we have staked our claim.
MARCHINI: That's what you are giving them. Now, not more than a decade ago Banana Republic used to sell safari ware. We used to think of these as fun clothes, goofy clothes, not anything anybody would be seen in a serious situation wearing. You haven't changed name but you have completely remade the merchandise.
JACKSON: Well, I think Tom Peters talks about this in his book on innovation ["The Circle of Innovation"]. He actually uses us as an example of somebody who responded to the times and valued innovation in moving forward. [We] just really completely changed who we were.
The things that were good about our heritage -- which is that we offered great quality at accessible price [and a] terrific shopping experience -- were the things we kept. And what we changed was our interest in really responding to today's working wardrobe.
MARCHINI: What's next?
JACKSON: Well, by the end of `98 we will have doubled sales, square footage, our presence in the marketplace and we will have more than doubled our market share. We have ambitions to double yet again.
MARCHINI: Are you going to do it by opening new stores or does it reach a point where America is saturated? That happened to Benetton (BNG), for example.
JACKSON: We're nowhere near saturated. At end of '98, we will only have 295 stores. So, there's lots of markets out there still need a Banana Republic.
One of our most successful new venues has been to open flagship stores which are very large, almost 5 times the size of our bigger normal stores. Each of these flagships generate the sales of 5 or 6 stores, so, while it counts as a single location, the volume's quite responsive.
MARCHINI: Are you coming out with a catalog?
JACKSON: We are coming out with a catalog in August.
MARCHINI: Why?
JACKSON: A couple of reasons. It is really again in response to the customer. We have lots of customers in lots of markets where there isn't a store, and [the catalog] is about being accessible, about being able to let them have access to our great products.
And secondly, we want to be able to better articulate our wardrobe's versatility. If you can see a women's suit broken up into the pants with the sweater, the jacket with the pants, the skirt with a blouse, then you really understand versatility. The catalog will lets us say that clearer.
MARCHINI: You run a big retailing empire, so I need to ask you what you see out there in the U.S. economy. First of all, in the service sector there is a lot of worry about wages rising. Are you finding you have to pay more?
JACKSON: Well, I'll tell you there is good and bad news about wages rising.
The good news about wages rising is that means our customers have more money to spend, and if they are employed they need clothes for work. So, for us there is a lot of good news in that piece of data.
On the side of employing people, of course, we are all having to fight for the best people, but I think there is an advantage today in being at the top of the market and being someone who is considered a terrific employer. You know, the employees who invest in our stock program get a tremendous amount of wealth out of stock price.
MARCHINI: Can you find qualified people, or are you having to up the ante and pay more?
JACKSON: We already pay at higher levels than [average] in most our malls and clearly we pay corporate staff more than most of the rest of the industry does. The studies we have run show us in the top percentile in terms of what we already pay. So, honestly, the ability to attract people is more about the environment they work in, the values of the company they work for, and the ability to build long-term wealth. 
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The Gap
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