Ruling the Common Area
In this tight-knit community of specialty retailers, certain leaders dream up the concepts that propel the industry forward. Linda Johansen-James, CEO of American Kiosk Management, is one of those people. I recently had the opportunity to sit down with her in Chicago to talk about her company and what the future holds for specialty retail.
What you’ll immediately notice about Johansen-James is her passion for changing peoples lives for the better—the lives of her employees, the lives of her customers and the lives of children and individuals who benefit from AKM’s many charitable programs.
SRR: Tell us a bit about the history of your company.
LJJ: American Kiosk Management has been involved in specialty retail for 17 years. Max [Max James, Executive Chairman] started out with Metabolife. At one point he had 78 locations and, really, after he dipped his toe in specialty retail, he said, “I really like operating in the common area
of the mall.”
He brought a lot of products to market including yo-yos and Avon and he tried a lot of different things. He ran across the Proactiv brand and we’ve been operating carts and kiosks with that line for 16 years.
We’re actually the largest owner-operator in the world in specialty retail, but we’re also a management company. We help bring other companies to specialty retail—whether they’re seasonal or year-round concepts.
SRR: How many locations does your company run?
LJJ: We have almost 900 in the U.S. and Canada. As well as our Zoom [vending machines].
SRR: What’s the most important lesson you’ve learned over the years about managing people?
LJJ: It’s all about the people that you choose to bring on your team and work with you. Our people don’t work for us; they work with us.
SRR: AKM has a very extensive employee-training program. What specifically do you do to bring people up to speed?
LJJ: We really believe that knowledge is power. The more we educate our people about our products, the more that they can help our guests. Our training program is not only
hands-on but it’s also very technical.
We have a very rich and detailed on-boarding program that we take our employees through. The minimum is seven days. Either our divisional directors or vice presidents are there holding your hand every step of the way. Then there’s follow-up. We do a lot of site visits, but we also provide a lot of online videos about product knowledge, policies and procedures. Our people love it. Our videos [many in cartoon format] are not longer than two-and-a-half minutes because we don’t want to take the attention away from the guests. So when the guests walk up [to the kiosk] our employee can pause the video. When they’re not busy with customers you will never see our people standing around. They are doing online training.
SRR: How many employees do you have on your team?
LJJ: We have about 650.
LJJ: We look for people that are self-motivators. We believe that you can lead a horse to water but you can’t make him drink. We look for people who want to run their own business. Even though they’re under the corporate umbrella, it’s really important that they be able to make decisions on their own when we’re not there. Let’s face it, in specialty retail you don’t have five or six people working at the same time; you have one.
SRR: What are some of the new directions that AKM is headed in for 2015?
LJJ: We recently partnered with SolarCity, the largest residential solar company. The chairman of the board is Elon Musk from Tesla. They’re just launching in specialty retail now. We’re helping them vet new locations en masse. They’re rolling out in seven states.
In the common area they’re not going sell anything. As you can imagine, we can’t put solar panels on a cart, but we’re doing lead generation. This year we’re hoping to open anywhere between 50 and 150 locations. We have a lot of other new concepts that we’re working on that I’m not at liberty to discuss just yet. I believe there are lots of new things that are coming to specialty retail this year.
SRR: Many retailers believe that choosing the right locations can make or break a retailer. Do you agree?
LJJ: In all of the businesses that we have tested over the last couple of years, location makes all the difference in the world. You can be in a great mall but if you’re down the hallway that gets minimal traffic, it doesn’t matter how great your cart looks. As you know, we only have three seconds to gain a customer’s attention.
We spend a lot of time reviewing demographics. With Proactiv we know what stores we need to be around and also where the traffic is. As we work with new clients we spend a lot of time with them going over their demographic information and really working with the developers. If I choose a location that’s not right, they’ll tell me: “You know what, Linda, that’s not the right location. I think you need to be here instead.” Every client is different, and so you have to mirror where that client’s demographics are in the mall.
SRR: Do you have a certain formula or does that really vary from market to market?
LJJ: It varies. We like to be away from the crowd for the Proactiv business. We’re a demonstrative product. We don’t want to be around a lot of carts; we like to be away. There are other concepts that want to be right in the throes of where everything is going on. I think it just depends on your client and the product.
SRR: Over the years AKM has sold lots of different types of products. Can you share any lessons about product selection?
LJJ: I’ve learned that not every product should be in specialty retail. You have to take the time to set expectations with the entrepreneur that you’re working with. As with any business, specialty retail takes a while for people to know that you’re there in the mall.
SRR: How can cart operators make sure customers learn about their existence in the mall?
LJJ: Developers have marketing tools that can help but a lot of developers don’t tell you it’s there. When you sit down with them ask, “Can I be on your Facebook page? What about being on the website? Can I be on the mall directory? What options are there for me? Can I do table tents? What do you have for the standees in the mall?” There are lots of opportunities.
SRR: AKM has stayed very committed to the specialty retail industry over the years. What does the common area offer to you? What keeps you in specialty retail?
LJJ: It’s that everybody in the mall has to waltz by me. We’ve helped a lot of our clients do pop-up and inline. We’re excited about that too. However, operating in the common area gives us an opportunity for everyone to see us. People always ask me, “Why aren’t you in a store?” I say, “You know what, when you’re walking by an inline store you have to like what you see to walk into the store. People don’t have to like what I’m selling to walk by me every day.”
I love the excitement of the common area. We love launching in the common area. We think that for a lot of the products that we represent, that’s the place to be; everybody sees you there.
SRR: How do vending units fit into AKM’s strategic plan?
LJJ: Automated retail is a huge part of our strategic plan. We’ve been very blessed to be partnered with Zoom, who is the largest automated retailer in the world. They represent some really great products. Ours is the largest network that they have. It allows us the opportunity to roll out in malls that just don’t make sense to us from an economic standpoint [or] from a staff location. It allows us the opportunity to help our clients grow their brands in an interactive situation that makes sense.
Years ago Max and I both said, “Automated retail? Nobody’s going to buy our products out of an automated retail unit.” Now we have 700 units.
SRR: Can you share a challenge that you’ve had to overcome at AKM and tell us how you got through it?
LJJ: Wow! I think the toughest challenge for us has been what’s transpired with the economy over the past four or five years. We’ve had to close a lot of locations—not because we wanted to but because the mall demographic changed. The traffic changed. The economics for us changed.
For us, an organization, and for me personally, closing a location is like losing a child. You have to lay people off… people that have been with me for years and years and
years that I like and respect and are an important part of
We’ve overcome it by doing more on the training and hiring side to look for those folks that can help us increase our sales and profits. We’ve saved money where we could; we’ve cut costs. We’ve done everything that we can because this business is important to us.
SRR: I know you believe in giving back to the community. How does AKM participate in that practice?
LJJ: We believe and live by the saying, “To whom much is given, much is expected.” Max and I have both been involved with St. Jude Children’s Research Hospital for years and years. We’ve raised over a half a million dollars for St. Jude through employee and customer donations. We’re one of the only specialty retailers that participates in the Thanks and Giving program. I also sit on the CEO Advisory Board
with St. Jude.
Then eight years ago we founded Camp Soaring Eagle [campsoaringeagle.com], which is a medically supervised camp that helps children that are chronically, critically and, unfortunately, sometimes terminally ill. We have a camp in Cornville, Arizona. We’ve sent thousands of kids to camp [at no cost to their familes]. It gives them an opportunity to play and have fun and be kids. We just purchased our own camp and we’ll be starting up sessions there in April.
We are also actively involved and contributed to the Center for Character and Leadership Development at the United States Air Force Academy.
SRR: Female CEOs have been telling me, specifically over the last year, that they feel like there’s a lot of momentum right now with women in the workplace. Any observations as a female CEO yourself?
LJJ: Yes. I definitely think that women are gaining momentum. Women are more comfortable launching their own businesses.
There are a lot of great groups for women entrepreneurs. I myself have been to classes at Stanford and Harvard for women business owners and women entrepreneurs. I don’t think women are as afraid anymore to dip their toe in the entrepreneurial water. Specialty retail is a great place to do that. It’s very inexpensive for us to try business in the specialty retail arena. I think it’s a great place for
SRR: What tips would you give to aspiring entrepreneurs who are getting ready to open their first location?
LJJ: Negotiate your lease. This is serious business. Entrepreneurs think that it’s easy operating a cart in the middle of the mall. They don’t think about the backend part of running their business. They don’t think about, “Okay, what POS system am I going to use? What about policies and procedures? What about insurance? What about all of these things that it takes to operate?”
I think that for entrepreneurs starting out, you need to do your due diligence. Look into that business and what it’s going to take to be successful. Also give yourself enough time for it to be successful. It’s not going to happen in 30 days, probably not 60 days; it’s probably going to take you 90 days. You need to have enough money in the bank so that you’re not stressed out.
SRR: Looking ahead, where is AKM headed in the next three to four years?
LJJ: Definitely looking at the Zoom business and how to maximize that. Obviously we’re very blessed to represent the number-one selling acne treatment product. We’ve been able to serve over 50-million guests with Proactiv and
change their lives in the common area in the mall. We’re very blessed in looking at continuing to maximize that business. Maybe reopen some locations as the economy changes.
SRR: One of the buzzwords in specialty retail right now is omni-channel. Retailers are looking at how they can maximize the customer’s experience at the cart or the kiosk. How do they then continue to do business with that customer after a transaction’s been made?
LJJ: We’ve been doing that for five years. We have a VIP marketing program where—with our guest’s permission, of course—we get their name and email. We communicate with them often. We send them a welcome email after they buy Proactiv and it looks like it comes right from the cart. We send them a follow-up email: “How are things going? We’re looking forward to seeing you again.”
Then we send them an email when it’s time to come back in the mall again. It’s helped us when the mall traffic has been down. We as a retailer have to be in charge of our own traffic. When retail was struggling we had our repeat guests that we stayed in contact with that drove traffic to the mall. That’s really a huge part of our business.
SRR: Any tips on work-life balance?
LJJ: Let me tell you how I get work-life balance. You hire people that are better than you. I’ve done that. I have a phenomenal team of direct reports. A phenomenal team company-wide that if I need to take a break or if I need to take vacation, I don’t worry about my business at all.
SRR: The International Council of Shopping Centers recently acquired SPREE—the world’s largest show for the cart, kiosk and temporary retail industry. As an industry expert, what do you think the acquisition represents for SPREE as a trade show now that it will be included as part of RECON in 2015?
LJJ: I think it’s a huge opportunity for us. What [SPREE’s] been able to do from the educational standpoint, from a tradeshow standpoint … it is a huge plus for us specialty retailers. I’m really excited about this. It allows us the opportunity to work closer with the International Council of Shopping Centers. We’re not a segmented industry anymore. We’re part of the broad scope of the retail industry.
I’ve been involved with ICSC for years. I actually helped to write a lot of the courses for the certification programs. It’s been a real benefit for Max and I. I think news of the acquisition is going to drive retailers from around the world to SPREE that wouldn’t have come before because it’s now part of RECON. We get to tag-team.
I’m excited about the opportunities it’s going to bring to the specialty retail industry.