The Baker Buzz Newsletter — June 2023
Welcome to the Summer 2023 edition of The Baker Buzz!
The Baker Retailing Center has had a productive Spring and I am pleased to share the highlights with you.
Firstly, our Spring board meetings were fruitful and covered timely issues surrounding generative AI, the collapse of Silicon Valley and Signature banks, and the ongoing supply chain issues still challenging retailers. Our discussions were lively and offered meaningful insights into what the future may hold for the retailing industry.
Secondly, we organized a number of thoughtful programs for our students that included our annual Wharton International Program trip, which took place in Seoul, South Korea, and a Philadelphia Industry Trek to the headquarters of Five Below and URBN. As part of the Baker Executive Speaker Series, our students heard from an impressive list of notable speakers.
Lastly, we focus the retail industry’s business of doing good with a look at Steven Silverstein (WG’85), CEO of Spirit Holdings. Steven encourages his employees to participate in activities that benefit the greater community. His own philanthropy has raised millions for child life services at over 150 hospitals in the U.S. and Canada. Closer to home, Steven and his wife Cathy have made a generous financial commitment to the Baker Retailing Center. This funding will be used to support programming focused on the intersection of retail and social responsibility where students will learn how the industry can recognize and address important issues affecting the greater community.
Scroll down to learn more about all of this.
I hope that you continue to enjoy a safe and relaxing summer.
Tom Robertson
Academic Director
Jay H. Baker Retailing Center
Joshua J. Harris Professor, Professor of Marketing
BOARD MEETINGS
BOARD MEETINGS
Ethan Mollick
Ralph J. Roberts Distinguished Faculty Scholar
Wharton Associate Professor of Management
Academic Director, Wharton Interactive
A friendly, distinguished-looking man appears on the Zoom call for the April Baker Retailing Board meeting. He intones, “Hello everyone. My name is Professor Ethan Mollick… I have been studying startups and entrepreneurship for over a decade and have some thoughts on the subject that I would like to share with you today…”
The real Ethan Mollick, who is attending the call, stops the video. “That is an entirely fake ‘me’,” he says. He explains that the video lecture was created by the AI program known as ChatGPT, in only seven minutes and at a cost of less than two dollars.
David Rubenstein
Co-Founder and Co-Chairman of The Carlyle Group
In March the financial world was rocked by two bank collapses: Silicon Valley Bank, which specialized in tech startups and possessed $209 billion in assets; and Signature Bank, New York's third largest commercial real estate lender. At the March Baker Retailing Center Board meeting, David Rubenstein, co-founder and co-chairman of The Carlyle Group, sat down with Tom Robertson, Wharton marketing professor and Baker’s academic director, to share his expert opinion on these disconcerting events. Rubenstein discussed the factors leading up to the bank failures as well as future impacts on the retail sector, the technology sector, and startups in general.
Inventory and Supply Chain Challenges
Santiago Gallino, Bryan Eshelman, Patrik Frisk, Matt Rubel
May’s Baker Retailing Board meeting featured a stimulating panel discussion among industry leaders and academics about today’s inventory and supply chain challenges. Santiago Gallino, Wharton professor of Operations, Information, and Decisions, talked with Patrik Frisk, the former CEO of UnderArmour; Matt Rubel, Chairman of MidOcean Private Equity Board; and Bryan Eshelman, Managing Director of AlixPartners LLP and Wharton lecturer.
The group discussed the inventory gluts brought on by inflation, and how businesses’ carrying costs are continuing to rise. The impact can be seen on sales, margins, and risk. What’s more, experts are expecting supply chain pressures to weigh on quarterly numbers. The panel identified the importance for leaders of taking the initiative now and finding creative ways to improve their operations.
WHARTON INTERNATIONAL PROGRAM
MAY 2023
Twenty-six Wharton undergraduate students descended upon Seoul, South Korea in mid-May for the Wharton International Program (WIP), a short-term international business course given in conjunction with the Baker Retailing Center and the Wharton Undergraduate Division. The program offers undergraduates an unparalleled global opportunity featuring business site visits, academic lectures, and cultural excursions. In addition, students get a chance to network with business contacts from the destination countries.
The group learned firsthand about some of Seoul’s industries including technology, beauty, traditional retail, gaming, and luxury. They visited companies such as AmorePacific, Hermes, MCM, Gentle Monster, Emart, Shinsegae, Hyundai, and Crocs, expanding their knowledge of local business practices. They were even treated to a K-pop dance class—check out the video here.
EXECUTIVE SPEAKER SERIES
Through the Baker Executive Speaker Series, Penn undergraduate and graduate students are given the rare opportunity to connect one-on-one with retail leaders and founders in a relaxed, intimate setting. Speakers that came to campus this spring included:
Raissa Gerona
Chief Brand Officer, REVOLVE
(in collaboration with Penn Fashion Week)
In February the Baker Retailing Center teamed up with Penn Fashion Week to host Raissa Gerona, Chief Brand Officer of the Revolve Group. Gerona treated the audience to an insider’s look at her career. She described how she developed Revolve’s brand identity as the next-generation fashion retailer for millennials and Gen Z. Since joining Revolve in 2014, Gerona has organized blogger and influencer trips to showcase Revolve’s pieces, to great success. But today she is looking to the future: “What are we to the young people? How can we stay relevant, always?” she asked.
Lawrence Berger
W'94, WG'00
Partner & Co-Founder, Ames Watson
Chairman, Lids
"If you’ve ever walked into a mall in America, you’ve probably seen a Lids store", says Lawrence Berger. Berger co-founded Ames Watson, the company that bought the struggling cap brand four years ago for $101 million. Today Lids is a 1,400-store worldwide retailer of hats and licensed sports goods, with over 9,500 employees and $1.7 billion in revenue.
INDUSTRY TREK
This past spring, 22 Penn undergraduate and graduate students got a behind-the-scenes look at the headquarters of URBN and Five Below. Students toured the URBN buildings in the Navy Yard and learned more about the company’s plethora of brands from a panel of 6 executives. A cool fact: URBN was founded in 1970 in a small space across the street from the University of Pennsylvania!
The next stop was the Five Below HQ, also know as "WowTown", where students were treated to a tour. By spending time with the senior executives who shared their thoughts and expertise, students were able to learn just why it is called "WowTown". An interesting fact: When you become part of the FiveBelow team, you get a basketball with the # of stores that were opened when you started. A few mottos they live by: “Hold the penny hostage.” “Wow our customers.” “Work hard, have fun, build a career”.
BAKER SUMMER SOCIAL
More than 50 enthusiastic Penn alumni, closely connected to the Baker Retailing Center, gathered last week at Il Buco Alimentari & Vineria in New York City. The event was an absolute delight, fostering engaging conversations about careers, exciting new ventures, and invaluable networking opportunities.
ALUMNI SPOTLIGHT
Dan Cataldi WG'23
Do you hate wearing shoes? Are you one of those people who can’t wait to kick them off after work or an evening out? You’re not alone. According to Dan Cataldi, WG’23, over 80% of U.S. adults report experiencing foot discomfort. “It’s not because our feet are broken,” he says. “It’s because our shoes are doing less for us than they should.”
Cataldi is out to change how we think about footwear. He says his startup groov will “bring luxury custom insoles to the mass market—affordably, conveniently, and fashionably.”
Are we talking about orthotics? Cataldi resists the word, which he calls a legacy term from the medical profession. Moreover, he asserts that groov inserts aren’t meant to correct foot problems but to prevent them. “We’re going to find that optimal position for your foot—we’ll keep it there in a stable way that maximizes comfort and allows you to have protection from injury.”
Cataldi’s target market is competitive athletes, followed by healthcare workers. Beyond that, he envisions reaching anyone who’s on their feet a lot: from retail and restaurant workers, to doormen, to white-collar employees who enjoy walking to work.
To order a groov insert, a customer needs a device with face ID. Groov utilizes a proprietary app that guides the customer through five minutes of foot self-scans.
FACULTY HIGHLIGHTS
Professor Gad Allon’s latest blog post, "Unraveling Shein’s Supply Chain: Foundation, Reshoring, and Controversy" examines Shein's use of micro-batching, supplier relationships, and data-driven decisions while also addressing the concerns about labor abuse, intellectual property, and sustainability.
In the Knowledge at Wharton article, "How Defining a Brand Purpose Can Build Consumer Trust", Wharton Marketing Professor Patti Williams explores the findings of her research paper, "Conceptualizing Brand Purpose and Considering Its Implications for Consumer Eudaimonic Well-being". Williams and her team investigate brand purpose in marketing, its impact on consumer well-being, and its differentiation from corporate social responsibility, emphasizing the importance of authenticity, credibility, and dedication.
With new AI developing daily, Wharton Professor Ethan Mollick discusses how multimodal AI and Whisper, a voice-to-text system, can reshape fields like design and education, underscoring the need to consider these advancements' implications in his most recent "One Useful Thing" newsletter. Read the article here: "On giving AI eyes and ears".
Wharton professors Christian Terwiesch and Karl Ulrich delve into the concept of 'innovation tournaments' in the article "How Innovation Tournaments Create Gargantuan Wins," illustrating how these tournaments, applied in various contexts, can lead to significant breakthroughs and advancements.
IN THE NEWS
Retail With Purpose: The Business of Doing Good
Wharton Alumni Magazine
The business of doing good is an ever-present — and increasingly urgent — theme in retail research, teaching, and practice. Forward-looking retail leaders understand that part of navigating a rapidly evolving industry is to support undergraduate and graduate students so they can hit the ground running when they enter their retail careers.
As an advocate for “doing good,” Steven Silverstein, WG’85, Chief Executive Officer of Spencer Spirit Holdings, Inc. — which operates two distinct experiential lifestyle brands, Spencer’s and Spirit Halloween — encourages his employees to participate in pro-social activities that benefit the community. The prosocial umbrella provides for the needs of communities through support, volunteerism, and social justice initiatives.
On the subject of giving back, Silverstein leads by example. The Spirit brand philanthropy, Spirit of Children, has raised over $110 million for child life services at more than 150 children’s hospitals across the United States and Canada since 2007. Silverstein is also especially proud of employee participation in its annual Halloween events that provide costumes and fun for hospitalized children.
The Jay H. Baker Retailing Center, established in 2002, is an interdisciplinary industry research center,
whose mission is to be the global leader in retail knowledge and education.
