Taylored Services’ CEO Jim DeVeau began developing his logistics management skills during several decades as a retailer. His career started with iconic luxury retailer Lord & Taylor — quite literally under a cloud.
“There was a hurricane hitting New York City on the day of my interview,” he recalls. When he arrived, crews were boarding up the building, and most of the staff had left, but the head of the HR department was still on-site. “He came over and shook my hand and said, ‘Anyone crazy enough to show up for an interview on the day of a hurricane has got a job.’”
DeVeau sat down to recall the career path that led from his “stormy” beginning to his current role as CEO at Taylored.
So you started in retail, but your focus shifted to logistics and distribution. Can you walk us through how that played out?
When I started, Lord & Taylor had three tracks: A retail track, merchandising track, and an operations track. So I took retail, which is the store side. I was assistant store manager twice, and then became store manager, and then as part of my development, the CEO called one day and said I was going to run a distribution center.
I thought it was a punishment; I thought I’d done something wrong.
“The DC sucks, their freight’s never on time, it’s always loaded incorrectly, it’s always short. I have to make a floor move at night, and they don’t show up until early in the morning, and I miss my floor move.”
He said, “Exactly. Go fix it.”
… and, for 20 years, I stayed in retail. I stayed with Lord & Taylor, worked my way up there, stayed through the hostile takeover by the May Company, then I left and went to AnnTaylor. That was fun. We were young, didn’t know what we were doing, and grew that little company from a $90 million chain to close to a billion.
From there, I went to the Charming Shoppes, which was the Fashion Bug chain. There were about 2,000 stores in strip centers catering to plus-size customers. Then I eventually went on to Footstar, which was the largest footwear company in America. I was there when you added them all up, about 20 years.
Why did you transition from retailers with in-house supply chains to working with 3PLs?
Oh, one too many CEO changes and Footstar was going into bankruptcy. In every one of those companies, when CEOs change, and you’re the head of operations, you’ve either had to start all over with the new person or you exit.
Those were my catalysts. Lord & Taylor, CEO change; AnnTaylor, CEO change; and then Footstar, we filed bankruptcy — grew too fast, too big, made some bad acquisitions, another CEO change. I said, “I’m done. One too many CEO changes.”
I wanted to get the bankruptcy under my belt because it’s a great learning experience to file as a $3 billion company and emerge as a $1 billion company. Part of it is that when I sold off the assets of Footstar, I met all these 3PLs who said, “Hey, you should come work on the 3PL side. You’re a retailer; you know this business, you were a customer, you know exactly what we’re selling.”
That’s how I migrated over. I was a retailer at heart, and I still believe I’m a retailer, but I switched over after 20 years of retail changes and fell in love with it.
You’d been in the 3PL business for a while when you came to Taylored in 2014, and Taylored, in turn, was an established company. Thinking back to 2014, when you had the opportunity to come in as CEO, what were your thoughts about the job in front of you?
Taylored was an established company — it’s 28 years old today [June 26, 2020].
I knew Mark Taylor when Mark originally founded the company. Mark founded Taylored on value-added services. He started in his garage providing all of those services none of us retailers wanted to do: all the rework, tagging, marking … we didn’t want to do any of that.
Mark … got pretty successful, started a facility on the East Coast, moved to the West, and that was Taylored’s forte. Over the years, Mark grew the company, [then] cashed out and sold the company to a Bostonian equity firm that didn’t know what they were doing. The company quickly ran down significantly in revenue.
When I came in, it was a fixer-upper. So we fixed it — we turned it around.
How did you approach that? What was your vision?
Our mission is always to “double in five.” That’s a comprehensive mission statement, “double in five”: Double the revenue, double the EBITDA, double our square footage [in five years] — that gives us many fun challenges.
The first thing we did, we wanted to double the EBITDA right from the get-go. Revenue took time to build, but we could manage labor, expenses, and accounts, and we attacked it that way.
Our vision was just to become a Top 100 3PL. That was important for us. Inbound Logistics magazine, [which is] a good trade journal, published the annual Top 100 3PLs every year, and I used that tool when I was a retailer for 20 years. That used to be our basis to go out to bid.
If I’m going to be a 3PL, I want to make sure we go right on top, and for the last 5 years, Taylored has been a Top 100 3PL. We take a lot of pride in that.
The big piece was to get in, fix the company, and do a “hockey stick” turnaround: Fix it in the first 18 months or two years and then continue to grow. And that’s what we’ve done. Our 2019 was our best revenue year in 20 years, and we continue to chase that “double in five” strategy.
You’re on the advisory board of Warehouse Exchange, and Taylored has become a FLEXE Premier Provider on your watch, so it strikes me that having flexibility “baked in” to the supply chain is something you’ve prioritized.
It’s fascinating that you picked up on the flexibility because, at one time, we used to have a Slinky [image] on our website because we prided ourselves on our flexibility. With the overhaul of our website, we dropped the Slinky, but the flexibility piece is pretty critical in our DNA.
I push a very customer-centric business. Being a former customer for years, I worked with customers; I know what I wanted from 3PLs, so we take a very flexible approach to the IT solutions. We take a very flexible approach to pricing, and as you mentioned, we partner with lots of virtual partners, with FLEXE being the biggest virtual partner that we use.
We see that as very important, but more important is our strategy to be an omnichannel provider. We don’t want to be just retail. We don’t want to be just wholesale. I would love to see a bigger and bigger percentage of my business be e-commerce, but I don’t want to be just e-commerce. I want to be all of that.
Supply chain flexibility is something that’s been in the news lately because of the COVID crisis. It’s been a real generational challenge in the logistics industry. How much breathing room did it buy for you and your clients?
When I look in that crystal ball, I think COVID-19 will be the catalyst that jumps the percent of retail … Depending on what trade journals you use, about 10 or 11 percent of all units sold were e-commerce, right? And now, with COVID-19, that number has skyrocketed, so I think the COVID-19 effect, long term, by what my crystal ball says, is that e-commerce will be about 30 percent of all supply chain units.
Our buildings are always in a state of transition. Now we’re reducing more for-rack and introducing more e-commerce, dropping in robots, much new technology. That’s key to the flexibility of being omnichannel.
For COVID-19, our retailers were closed for three months, so our customers who had retail stores only, if they were non-essential, were closed. Retailers we serve that were considered essential — the Walmarts, Targets of the world — did very well. Some of our wholesalers that were selling scarves and accessories and face masks — their business skyrocketed. And surprisingly, some of our electronics accounts also skyrocketed during COVID-19.
We were able to weather the storm for our blend, but like most folks, we borrowed down on our [revolving credit], applied for a PPP loan, and did all the right things to preserve cash. Flexibility is a crucial aspect of our thinking.
Many retailers that hadn’t been doing e-commerce and direct-to-consumer sales have had to pivot to that rather quickly and find ways to make the sales and get the products to consumers. I assume a percentage of your clientele looked to you for that kind of help?
Yes, and they were also trying to add additional SKUs during what I call the “panic period,” when COVID-19 first started. What became the critical standpoint was when states began issuing executive orders where people had to shut down if they were considered non-essential, so we had customers call us in panic mode — or future customers or prospects or recruits — [such as] customers that had their facilities in Ohio, and the Ohio governor shut them down. Now they can’t do their distribution.
Taylored is considered an essential employer. We also have a trucking division, and part of the U.S. government’s definition of “essential” is the moving of goods from the ports out to delivery, so we met the definition of an essential employer, and we had that spike where [companies] were calling us, saying, “Oh my God, the governor closed us down” — and they weren’t even customers — “Can you take over some e-commerce for us, can we transfer freight [to you]?”
Can you offer a specific example?
Great story: branded customers in the Carolinas on the home fashion side. They got shut down, so we transitioned all their essential business for Walmart to us immediately. Got transfer trucks down there, pulled it all out, and set them up on e-commerce and wholesalers so they could continue to serve their e-commerce customers and Walmart’s essential business needs.
That was interesting. Now they’ve become long-term customers; they’re going to stay with us. We saved that company, so that was a great story, you know? They were done.
Another big retailer in Ohio came to us to bail them out [and] get some e-commerce going that they were doing out of the stores. They were in a panic because they were closing stores, and then eventually, the governor let them do e-commerce fulfillment out of some of their stores. They’re now starting up some business with us in California as well.
Every time an executive order was issued, many customers that did in-house fulfillment went into panic mode. I think that’s going to be another significant future change that’s coming: I think retailers that did their distribution are going to have a COVID-19 learning lesson, and I think they’re going to be moving 90 percent of their business to 3PLs.
The trend in recent decades has been to “just in time” ordering and lower inventories throughout the system, and there were good business reasons for it at the time. Still, COVID has exposed the issue of fragile supply chains. Do you think many companies are reevaluating that strategy going forward?
Being an ex-retailer, I’m a freak on “weeks of supply.” When I was a retailer, and then [later] for our customers, we’d help them manage their inventory by tracking the SKU base by weeks of supply. When at one time they’ve got 26 weeks of supply, 49 weeks of supply, we’d reach out to them: “Mr. Customer, what are you doing? Your amount of inventory is so excessive.”
But those customers, during COVID? They were rock stars.
The sailing time from Asia to the West Coast is two weeks. By the time you get it unloaded and off the ports to your building, you have three or four weeks, so many retailers would go twice that and maybe three times that — eight to 12 weeks of inventory. Now COVID hits, and it was 13 weeks. They got hurt. I think the new rule of thumb will be more weeks of supply on hand.
Taylored has been earning many acclaims lately within the industry. Multichannel Merchant named you a Top 3PL in 2019, CIO Applications put you in its Top 10 in 2018, to name just two, so obviously, you’re now doing many things well. What do you think differentiates Taylored from your peer-group competitors?
Well, one of the biggest things, as I mentioned, is that we have a considerable retail focus. We try to stay in that niche. That niche is pretty broadly defined because we are even doing solar panel distribution, so … kind of stretching the word “retail,” but we do try to stay in retail.
We used to be in the food business but kind of migrated out. When I was a retailer, I would not want my high-end dresses and knits next to food products — no way — so back in 2014, we started to decide that “We’re going to be good at something, and we want to be good at retail.”
I think that’s what distinguishes us — that we are good at retail. We get the holiday; we get Christmas. It’s built into our DNA. Part of our culture is [from] Black Friday to the second Cyber Sunday; we all have to work in the distribution centers. I’m on the trucks. I’m on the docks. The white-collar and pink-collar jobs are all working; HR employees scan products, finance is on the docks picking and packing products.
It’s in our culture, and I think customers like [it that] when they talk to us, we get e-commerce, we get that retail is like a freight train. That train is moving down the track. The holiday is coming regardless. You have to be able to get your product on that train, or you miss it. We get that.
Santa Claus comes, and leaving two orders on the dock is not right, you know? Somebody didn’t get their gifts. We have that thinking, we have that DNA, and I think that’s what distinguishes us.
In addition to the significant awards, we also have a tremendous CIO in Tom MacCormack. I wish I’d met that guy earlier in my career; he’s fantastic. Today’s most CIOs are more administrators, but he can still code in 10 different languages, so when a project comes through Tom, it doesn’t take so many workers months to get it done.
I’ll give you an example: that company we had to bail out in the Carolinas. Typically, we ask for four to six weeks to do an integration; he did it in a couple of days. He has that capability, and we’re lucky to have someone of that talent.
I’m excited when I see the CIO acknowledgments and the technology side of the acknowledgments. Taylored Services has two top-10 WMS systems we use. We take a lot of pride in that, which ties back to our flexibility for our customers. We believe that the technology aspect of our business is pretty exciting. We’re also rolling out robots from Lucas for transportation savings to minimize walk time with all our employees and improve productivity. It’s exhilarating.
This interview is excerpted from a longer conversation. It has been edited for length and clarity.
