Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
E-commerce chiefs are gaining more prominence, though job responsibilities differ based on resources, time and vision at the top.
After years as a store manager with Dillard’s, Macy’s and Neiman Marcus, Kristen Montella knew retail merchandising. And after a few years as director of merchandising at the web sites of Direct Holdings Worldwide’s TimeLife and Lillian Vernon Inc., she knew what it took to make an e-commerce site run. Last June Montella discovered another skill: making the business case to new top management looking for operational efficiencies that the e-commerce group would fare best by continuing as a standalone department.
In May Sun Capital Partners acquired Lillian Vernon from Direct Holdings, separating it from Time Warner’s TimeLife music and video site. One idea explored by the new owners was whether Lillian Vernon’s online channel should be folded into the overall marketing function at the company. Montella believed that would hinder the channel’s performance, and it wasn’t long before she found herself marshalling information to prove it.
“I had a half-hour’s notice that our new CEO would be calling me for a discussion about the structure of the online group,” she says. The eventual outcome of that two-hour phone conversation and others that followed was that LillianVernon.com remains a separate department within a company with deep catalog roots.
“After thinking about it, it has to be,” says CEO Mike Muoio. “It is so different. There are so many things that are web-specific, and so many functions have to be managed that are external to the traditional distribution of catalogs.” In September Montella became Lillian Vernon’s vice president, online.
New management, the channel’s rapid growth in sales contribution and an increasing understanding of what it can do as a marketing vehicle are earning e-commerce a new place in the corporate structure at more multi-channel retailers. Oversight responsibility for the channel is being lifted out of where it once resided in departments such as marketing and I.T. and given its own dedicated top management with vice president or director status.
But that’s not to say every retailer that has made this move is defining the job function and title in the same way. Responsibility can be sliced into discrete job functions and parceled out accordingly-e-commerce site operation vs. online marketing, for example-or rolled up into a broader role in which one executive has oversight for all things digital. It’s a function of resources, demands on time, the talent on board and the vision at the top.
Lillian Vernon’s new owners and management, looking for economies and ways to spread the load, wanted to review all options before making any decision about corporate structure going forward, including that of folding e-commerce into the catalog marketing department. Under the previous ownership, Montella had helped develop a team she believed could keep driving performance out of the online channel-if it could keep operating as it had been.
Part of the strength of the site, she argued, was the collective experience and expertise of the team. Including those who had been handling online marketing as well as site operations, e-commerce also had its own dedicated I.T. staff, which meant it didn’t have to wait for six months to get new applications up and online.
“Because of that, we can turn on a dime. We can react to trends and catch the wave when we see it happen. The catalog group, because of the nature of catalogs, works at a very different pace, and they work much farther ahead. It’s just a different mentality,” says Montella.
She also had numbers to support her case. With steady sales growth over the past few years, Lillian Vernon’s web site this year is expected to account for well over 50% of overall sales. Ultimately, the decision was made to keep things as they were. With overall responsibility for merchandising, marketing and technology at LillianVernon.com, Montella’s dedicated team includes a designer, a copywriter, two merchandisers, two marketers, a producer and a tech team. Site quality assurance is outsourced.
Though an increasingly large share of total sales come in online, Montella notes that most web sales are catalog-driven and estimates only 20% of online sales volume is incremental. “There would be no web site without the catalog,” she says. Montella returns the favor as a member of the companywide leadership team, providing customer data uniquely available on the web that affects other departments as well. It’s an example of how Lillian Vernon’s new management is integrating the online channel more tightly with the rest of operations, even though e-commerce remains a separate unit.
A different arena
For a marketplace at first glance so similar to that of the U.S., Canada’s differences are significant. It doesn’t have the U.S.’s tradition of catalog sales, most of its population is clustered in urban areas within easy distance of major shopping centers and its mainstream population has been slower to embrace the Internet.
Those factors all play into how the role of e-commerce director has evolved at Toronto-based Roots Canada. Roots, perhaps best known in the U.S. for outfitting Olympic teams, has 130 stores in North America and 30 in Asia , and operates a wholesale and custom goods business in addition to its customer-facing web site. James Connell is the top e-commerce executive, reporting directly to the company’s founders and owners. But his job doesn’t stop there: for the last year he’s been director of e-commerce, digital marketing and new media, the first person at the company to hold that combined title.
Connell started at Roots in 1997 doing POS training and store openings. The web, though a personal interest of Connell’s, had no place in company operations at that time. Since then, Roots started an e-commerce site that sold cross-_border, shrunk that to an informational site that pushed visitors to buy Roots merchandise online at Sears Canada, relaunched e-commerce in the U.S in 2002 to distribute U.S. Olympic team products, and pulled out of the Sears Canada agreement to relaunch Roots’ own Canadian e-commerce site last June.