In Business Q and A

Pamela Ring

By Mark Hansel

amela Joy Ring is a local retail consultant with more than 30 years of experience in the industry.

She is the founder of the Ring Retail Advisory and president of the Nevada chapter of the Turnaround Management Association, an international nonprofit association dedicated to corporate renewal and turnaround management.

Ring talked to In Business Las Vegas about the evolution of the retail industry in Las Vegas and the outlook for the holiday season as well as the effect of the economic downturn on retail in Las Vegas.

Retail Expert Pamela Ring, president of Ring Retail Advisory, is a veteran retail executive and consultant specializing in developing sales portfolios for retail and consumer goods and services.

SAM MORRIS / STAFF PHOTOGRAPHER

IBLV: How did you become a retail consultant in Las Vegas?

Ring: I'm a 25-year resident of Las Vegas. I grew up in Teaneck, N.J., and went to college at the Wharton School of Business at the University of Pennsylvania. I was in the second graduating class of women at that time and that was quite a breakthrough - there were very few of us at that time. I graduated with a bachelor of science in economics with a major in marketing. I was always intrigued by the world of business as it related to the consumer. I find myself being in a mix of two worlds: analytical and creative. After I decided that becoming an attorney wouldn't meld those two worlds I took up marketing at Wharton. I realized I had really found the love of my life: to be able to have a creative challenge, especially in terms of consumer-buying behavior, and to be able to come up with a compelling solution seemed to have melded those two interests of mine.

So, I moved to Manhattan and I apprenticed in the executive-buying program of Bloomingdale's at the time. In the world of retail back then - the Harvard and Yale of retail programs - were either the Macy's executive-buying program or Bloomingdale's. Bloomingdale's program at that time was under Marvin Traub, who was one of the geniuses of retail in the 20th century and is one of my heroes. He was so innovative in repositioning that store that I found being in that program more compelling than being in Macy's, which was more bread-and-butter retail, if you will.

There were a lot more exciting things happening in consumer marketing in the world of retail banking in New York relative to my being at Bloomingdale's, and the most exciting bank in the country at the time was Citibank. It was truly the forerunner of 24-hour banking and it was taking its branches and introducing the homogeneity feel and look of its branches as opposed to being the old-world, old-money stodgy feel for the consumer. I had the opportunity to join the marketing team supporting the branches of upper Manhattan, and I was responsible for in-branch programs for branches on the upper west side. I created a whole product delivery system geared toward seniors called Senior Service. I have a philosophy and a way of approaching my business in helping my clients called making chicken salad out of chicken feathers.

In this case, I took existing products that the bank had and repackaged them toward the needs of seniors, and it was an enormously successful program. As a result, I was made the youngest officer in the history of the bank up until that time.

I went back to New York University and got my (master's of business administration) in finance, knowing that it would give me a lot more opportunities in banking. When I graduated, I was one of 12 people selected from a field of 400 candidates for a fast-track executive program with Marine Midland Bank in New York. All of us were on the track to be vice presidents at Midland Bank.

Then I met my former husband, who had started a collection of autographs and manuscripts in Las Vegas, and we married and developed the Gallery of History, which was, at one time, the largest autograph and manuscript company in the world. We took the company public in 1985, and I saw an opportunity to take a collectible that had a niche audience appeal that was limited to about 300 people and broaden its appeal to the masses and create a whole new demand and industry for this collectible.

It became a whole retail innovation for the world of autograph and manuscripts. As a result, what you see at shops like Field of Dreams and what you see on eBay is all attributed to what we did all those years ago. We set the bar, and from there came the industry.

We had nine galleries in high-end malls and visitor-destination places throughout the United States, and we actually were a destination in and of ourselves. The salespeople who went through our sales program could probably teach history at a university. We were very innovative in training effective salespeople in our business.

Our business went through three generations. I retooled and repositioned the business three times throughout its course. For the first years of brick and mortar, we generated $35 million in sales. Then I took the business to two other sales channels. The direct business launched a catalog that sold the autographs and manuscripts, framed and unframed, which put more of our inventory to work. That's one of the benefits of sales channels for merchants. You don't have to be confined to brick and mortar and have to hold all of that inventory. The catalog was actually an auction format, and no one in the industry was doing auctions in a catalog and using the Internet at the same time. It was actually a mail, fax, phone and Internet auction. From there we developed a store site for the businesses. There were three different core businesses, and we were also a shop-at-home. We partnered with other retailers and the History Channel. With the catalog business, we did $14 million in seven years, so all told, in my time with the company I was responsible for generating $49 million in sales of 32,000 items sold, of a product nobody had a want, need or demand for.

I sold my position in Gallery of History three years ago and decided to take the benefit of what I did successfully and help fellow retailers and people in the consumer goods and services industry to be successful. That's what brings me to having founded the Ring Retail Advisory in 2007.

How has retail in Las Vegas evolved?

When I came to Las Vegas 25 years ago, the city, in terms of retail, was such a one-horse town for a girl coming from New York City to Las Vegas. The only place I felt that I could get my sophisticated fix for stores was at the Fashion Show mall, and it certainly was a shadow of what it is today and going to the stores at Caesars Palace. That was the extent of high-end shopping in Las Vegas, and the stores at Caesars Palace back then were called Appian Way and that still exists there. Of course, it has now morphed into an affiliation with the Forum Shops.

In New York, if you were working during the day, you could walk into any boutique gourmet food store, and boom, you could buy something and put it on your table. It was just wonderful.

I used to joke to my friends back East that when I went to a supermarket and was going to have people over for cocktails and appetizers, the most exotic cheese I could find here was Velveeta.

That really puts into perspective how limited shopping was in Las Vegas back then. And I'll take it back to a local level because Las Vegas back then was very middle market. You had the Boulevard mall, which was, at the time, one of the largest malls built in this region, and it catered to the middle market. So, shopping was very limited here, but what was here was sufficient to answer the demand of the overall marketplace, but the tourists really didn't think of shopping in Las Vegas because they had a very limited number of stores in the hotels. The most elaborate next to Appian Way was the Riviera back then, which had a line of boutiques in a hallway next to the casino. Nothing was integrated into the gaming experience back then and retail wasn't an integral amenity. The most important other amenity to a property back then was food and beverage and that was it. The most elaborate personal services, such as a salon, back then was the salon at Caesars, and eventually the Desert Inn put in a great spa, but that was about it. All of these amenities really grew up in these gaming properties in an organic and not a strategic fashion.

Shopping outside of the Strip, of course, was an outgrowth of the population boom of the mid-1990s - really in the last 12 years. There was a demand for goods and services in all of these brand-new neighborhoods that people were living in. So we saw an explosion of retail out in our neighborhoods, which was the good news and the bad news.

The reason I say that really goes to the heart of my issues with retail real estate development. Retail development did not grow up in this town in a well-planned fashion. It grew up in a reactive way rather than a proactive way. Developers come to the table with one thought, which is, "Let's make money as fast as we can and seize the wave of this boom."

What you have then is a patchwork of strip centers with some anchors very close to the same-said anchors and there is a major cannibalization of retail in our neighborhoods. So, one store is taking business away from a sister store two blocks away - the Starbucks model. How many Starbucks, Targets and Home Depots are you going to have and how close to each other?, From a business model point of view, there is an investment return formula involved in the equation and to be able get a return on the investment, you've got to consider the time it's going to take to get that return. You may get a faster return on the investment if you are a single store catering to a bigger area than if you had three of those same stores situated in that same area. The multistore model can be a very inefficient way of generating revenue.

We've just come to a point now in our economy where we have seen so many businesses expand for the sake of market share. They've gotten themselves in such tremendous debt that they have lost sight of the fundamentals of what really makes a business a success, which is to make sure that you are doing everything you can possibly do to maximize revenues and customer loyalty in the way of repeat purchases and make the best out of your business before you look to expand. If you don't run your business in a fundamentally sound fashion, then you are setting yourself up for what we have today, which is an economic disaster.

In terms of the Strip, when did we go from having just those few shops to being a shopping destination?

I think when the Forum Shops were built in the '90s we set the course. They were remarkably innovative on a number of different levels in terms of trying to create a total customer experience. Having a theme in the shopping center was very important because it made it a destination place, an entertainment amenity. All of a sudden shopping became entertainment and entertainment was shopping, so there became this seamless experience for the shopper, for the visitor to go to the Forum Shops. This had a devastating effect on the business at Fashion Show mall, including my business because my store was a destination place.

I called my store "the happy haven for wayward husbands." Guys hate to shop typically, and their wives would cart them over to the Fashion Show mall and they loved coming to us because guys love history. "Honey, you go shop, I'm going to stay here." I had a very high-end clientele, and when the Forum Shops came along, the high rollers stopped coming to the Fashion Show mall and they would go to the Forum Shops instead. You also had the Mirage having been built as a refreshingly new property, and so innovative and so revolutionary in what it had to offer to the visitor and to the guests that there was a true shift in terms of where the critical mass of high-end tourists would go. They went to the Mirage and the Mirage is connected to the Forum Shops and on the other side you had high-end Caesars, and so there was the epicenter of shopping. That had a true effect on Fashion Show mall and on the whole complexion of shopping here. Then real estate developers came in and refurbished and expanded on the Fashion Show mall and we were all off to the races in terms of shopping.

Where does Strip retail rank now?

We are a shopping Mecca now. Actually, coming from New York, I never thought I would see the day when I would say, everything that's in New York you can find here. You can find the best of shopping, the best of restaurants. You can get some really world-class entertainment, and it's all here in our back yard. So the town has really changed as a result of that. I will also say that Steve Wynn truly is a visionary, and I believe we have him to thank for creating so many amenities and dimensions into the visitor and guest experience. He was an advocate of introducing shopping and retail into the whole experience here.

It seems that there are an unprecedented number of retailers struggling now, would you agree and if so, why do you think that is?

I do agree, and I think it starts with something very fundamental. Retail overexpanded in years past and the supply of retail is greater than the demand for retail in a model that is geared toward economic efficiency. So it starts with that - then it goes into the overexpansion for the sake of market share. Businesses expanded using money that they didn't have. They incurred tremendous amounts of debt to fund this expansion. The cash flow from their operation, the revenue from their sales, did not support the debt that they incurred, and as a result, that's what we're living with today. I think this is a time of great economic correction, which will call upon all of our industries, and particularly retail, to consolidate and to be more effective in how their businesses are run. It's truly a wake-up call to go back to basics. My parents were children of the Depression, and I was taught three things: a penny saved is a penny earned, save for a rainy day and don't spend what you don't have. Well, I know we are talking on a very sophisticated level, but if we go back to those three core morals, this is really the way business should be run.

Hasn't the flawed concept you are discussing gone beyond retailers to include developers and real estate investment trusts, such as General Growth Properties?

It's the same pattern over and over again. Somehow or other money became very, very cheap, so all of these companies, all of these industries took advantage of it in the name of expansion. And I go back to the point of looking in your own back yard and making sure your fundamental model is sound before you build upon it. Unfortunately, what happened with General Growth Properties is that it expanded in a very aggressive way using a tremendous amount of debt. In my view, which is on the bench looking at the game - I certainly wasn't in the boardroom privy to the internal discussions, but as an observer - it appears that they did not execute in a strategic fashion. It might have had a strategic plan, but the execution was not followed through in a measured fashion. I have to believe there was a major disconnect in management in that company. The people that had the financing agenda for the company didn't necessarily communicate to the senior strategists of the company. What happened there is what has happened to all of these megacompanies: Citibank and Merrill Lynch, for example, and probably General Motors as we're speaking. It starts with a major breakdown in communication and managing the message on every level in an organization. When you have that breakdown, you have disparate departments not working in concert and you have chaos, and this is the result.

The major demise of all of these companies is that people didn't focus on a "what if" strategy.

Managing an organization is an art, not a science. To be able to navigate change in a balanced fashion is like conducting a symphonic orchestra with all its complexity so that it makes the music its composer intended in the synchronized fashion he created.

Let's talk about the cause. Did the economic downturn feed this rainy-day scenario that you say these companies have not prepared for?

In terms of retail, I go back to the fact that there was a frenzy of overexpansion. Expanding on an inherently weak business model portends disaster. Throw into the recipe the debt supply that fuels the expansion. If the business model is flawed, how can a company generate the cash flow and revenue to cover the debt?

Is there a sense of panic?

Well, let's talk about the consumer who is so critical to retail. The store and the shopper are partners and one can't live without the other. The consumer is in a panic. The government has injected a tremendous amount of money into what could be a market stream and people are just not rising to the bait because they're scared and it becomes a self-fulfilling prophecy. If you don't inject money into the economy, there is no economy, so people lose jobs and they have no money. It becomes a frenzy. The biggest challenge the government has today is to encourage people to spend money again. Institutions aren't doing it with each other and the consumer isn't doing it. So, in terms of a panic we are going through a very, very dark time and it's going to get worse before it gets better. There is going to be a major correction and the fallout from that is going to be, initially, a very stagnant economy and a very frightened consumer. We are probably heading into the most dismal holiday season in terms of retail in U.S. economic history short of the Depression.

Is there anything retailers can do in the short term or do they just have to ride it out?

Some of the best innovations in U.S. economic history have come when people were up against the wall and they had to start to be creative. They did it as a short-term survival mechanism, but they had a long-term positive impact on our way of life. If I were a merchant, here is what I would do to try to weather this storm: First of all, the people who have the highest probability of surviving this storm are those that have multiple sales channels in place. You just can't rely on brick and mortar. There are several core channels for sales in the world of retail, such as brick and mortar, e-commerce, direct mail, telemarketing and television home shopping It's just like managing a financial portfolio. The whole idea is to diversify your risk over a number of different types of investments. In the same fashion, a merchant has more channels at his disposal than ever. The more he can employ these channels, the higher the opportunity for sales and weathering this economic storm. The people who are going to be the hardest hit are those that are relying on a single channel. That said, if I am a brick-and-mortar tenant heading into the holiday season - whether it is a national chain or a single boutique - there is strength in numbers. This is the time to be collaborative and cooperative with other merchants and to be good neighbors together.

If you pool a lot of money together, there is a higher probability of creating an impact than if it is done on an individual basis. I would create a series of promotions that all retailers in theme would be participating in. I don't care if it's a sidewalk sale with consistent signage to bring people in and a consistent theme for the consumer, done in a measured fashion and heavily promoted.

If I were a consumer, a theme of one-stop shopping that is convenient and offers a tremendous amount of promotions and sales would be hard to pass up. The goal is to give the consumer value and convenience.

Merchants have to fight now for every dollar that is in the wallets of the consumer. They have to hear a value proposition from the retailer that will make it compelling for them to part with that dollar. In order to do that, the proposition has got to be value driven and it's got to be packaged in concert with other merchants.

I believe in cross-store sales. If I were a retail developer, I would strategically place stores that make sense to be next to one another so that one store can feed the sales of the other. In the same way, why can't one retailer take on some of the merchandise of another? In my speech at the Global Gaming Expo, I threw out the example of a shopping center with a boutique shop that sold beautiful housewares and ceramic dishes from Italy and a marquee Italian restaurant. It would make sense to have a special evening, such as a night in Tuscany at the restaurant and serve on the dishes from the retailer. The retailer could, in turn, promote the restaurant event to its customers. In these tough times, retailers have to stand together to improve our business prospects.

Internet retail and e-commerce retail still seem to be doing pretty well. Will brick and mortar have to integrate to survive?

That's the magic word: integration. Some retailers that are building a multichannel sales portfolio don't necessarily have them integrating and interrelating with one another. They are separate entities unto themselves. Whereas again, along the lines of the cross-store promotion, there are sales opportunities by utilizing cross channels. The whole portfolio should be built in an integrative fashion and I think that brick-and-mortar retailers that have Internet Web sites need to bring those sites into their brick-and-mortar environment and have more interactive kiosks. They need to have their salespeople more versed in inventory that might not necessarily be on site, but is accessible through the Web site. By the same token, the Web site needs to encourage people to go to the brick-and-mortar store and there are ways to do that. Pottery Barn is a wonderful operation with a very successful catalog, but the goods that are offered to the catalog are exclusive to the catalog and not available at the store. I understand the store can only hold so much inventory, but I should be able to access the catalog at the store. I think that is an example of a lost opportunity.

I'm sure you have seen the retail numbers for October. What does that mean going into the holidays?

This is going to be a very dismal holiday season for retailers. People are going to be doing their holiday shopping later, not because they are waiting for the sales, although there will be sales earlier. People are living paycheck to paycheck now and they are waiting to see how much they can spend on the holidays, so that's going to be a real blow.

Retailers traditionally hire a lot of seasonal employees during the holidays, but they are not going to do that as much this year. What effect will that have?

I saw a scary photo recently of a lineup that beckoned to the lines during the Depression. It was a lineup of beautifully dressed people applying for seasonal retail jobs. These were not college kids or moms trying to make some extra money, but people who had lost high-end jobs trying to get what they can to make it through the holidays and even those jobs are just not there.

People who have jobs in retail are going to be asked to work harder because stores are not going to be hiring on as they have in the past. They are going to ask more from people and I'm sure in this economy employees are going to be happy to take more on, especially if there is overtime involved, to make as much money as they can.

What about high-end retail? It has traditionally been a little more immune, but there are indications that it will suffer this holiday season.

People thought luxury retail would not be suffering, but it is getting hit very hard. There is only a certain segment of the population that is impervious to what's going on and it's a very small percentage. What has happened in the financial markets has hit everyone. Most of the people who patronize the high-end stores have felt it. There is a considerable percentage of consumers who go to that store to purchase the wannabe, high-end products. They can't shop there every day, but maybe once a year they will buy that $500 bag they have had their eye on. That whole element of consumer is pretty much gone for the luxury retail.

Wal-Mart on the other hand, has done fantastically well. It goes back to my earlier statement that people want value and convenience now. They are doing without nonessential things. Whatever economy we have left today is driven by what is essential.

How can a retail consultant such as yourself help merchants in a down economy?

A consultant is only as good as their clients' willingness to listen to them and that is true in any consultant-client relationship. They have to want to ask for help.

As president of the Nevada chapter of the Turnaround Management Association, I have learned that one of the most fundamental reasons why businesses get into trouble and need to be turned around is that the owners have lost objectivity in running their business. Many times they surround themselves with managers who feed the owner's flawed vision, and trouble begins. When a turnaround professional walks in, one of the first things they do is tell the president or the owner, as the case may be, "You are out of the mix right now." If we're going to turn things around we can't do it the old way because that isn't working or I wouldn't be there. I'm very fortunate - I love what I do and I love the world of retail and consumer goods and services. I've lived and walked in every shoe in the world of retail and retail experience. I bring to my clients the wisdom of experience and the first thing I do is listen. The best consultants don't walk in with predisposed ideas. They gather information with the goal of trying to identify the core cause of the problem.

Because of my experience, I know what questions to ask and in really short order I can get the answers that will help me identify what the core problems are. Then I take a very strategic approach to getting resolution to the problem and I design plans of action that are pragmatic and respectful of the finances and human resources my clients have at hand to get them on a sound business course. I know how to be a merchant, to build and develop a retail property and to interface with retail developers. I have a tremendous amount of experience on a lot of different levels, and I can take that and make it work in the best interest of my clients.

That includes not just retailers in the traditional sense of the word. They are consumer goods and services companies that depend on retailers for their point of sale. I also developed a home shopping platform for a television company, which I also did for my own company. The theme that ties them all together is to sell ultimately to the consumer, who is the end user for all of them.

Mark Hansel covers real estate and retail for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4069 or at mark.hansel@lasvegassun.com.

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