Retail is a New York story, largely because retailers are a New York story.

Jay Baker is part of the fabric of that story. His irrepressible good will, and sharp mind propelled him forward in his career as a leader in American retailing. He continues today working with hundreds of young people in New York City and Philadelphia, introducing them to his wonderful world of retail with insights, with his friends and
always with a lighthearted laugh.

How did you get started in retail?

My mother had a hat store, Schissel’s Millinery, on Main Street in Flushing, Queens. My job was to greet people: “Thank you for shopping at Schissel’s,” not an easy to thing to say when you’re just a kid.

What was your path from Wharton to Kohl’s?

I was drafted into the Army for two years, right out of Wharton, and then when I came out, I took an aptitude tests, and retailing kept coming up as something I had a real interest in. So I joined Macy’s Training Program, and worked at Macy’s for 10 years. Then I went to work for Ohrbach’s department store in Manhattan, where I became assistant to Robert Suslow, the President at Ohrbach’s. Bob became my mentor, which was incredibly helpful for my career. When Bob became Chairman at Famous-Barr owned by May Company (now part of Macy’s), I went with him as General Merchandise Manager. When Bob became head of Saks Fifth Avenue, I was asked to be Director of Stores, a new position for the firm. Saks is where I first met Roger Farah, W’75, who was starting out in the men’s department. I then became a General Merchandise Manager at Saks, and then was later asked to join the parent company Batus (formerly British American Tobacco), which also owned Marshall Field’s, Gimbels, Kohl’s, Famous-Barr and other retail chains. Batus developed a new specialty store group, called Thimbles, which I took over. I kept that job, and then took over the corporate buying for all the corporations, which in total did about $2 billion in annual sales at the time.

In 1986, Batus was dissolved, and I had a chance to become a partner with Bill Kellogg and John Herma. We bought Kohl’s in a leveraged buyout with financial partners — including the Simons, the mall developers, who were terrific partners. And then, we really built Kohl’s!

Many midmarket department store chains no longer exist, or made serious missteps. What did Kohl’s do differently?

I have a T-shirt from 1987 after we purchased the company that says “164th Largest Department Store.” Today, amazingly, we’re No. 2 behind Macy’s. That’s how much the world has changed. There wasn’t any one person that made it happen — we worked as a team. My responsibility was to handle merchandise and marketing. Kohl’s had been a discount store; we made it a value department store. The only other store with this concept was Mervyn’s out in California. It is an interesting story: Mervyn’s was $4 billion in sales, and we were $285 million. We used to claim that we were the Mervyn’s of the Midwest. Today, Mervyn’s is out of business, and we are over $19 billion in revenue. The key to our success was great brands at great prices, convenient shopping and ease of shopping. We offered better prices than our competition, because we had a different cost structure, and I think we do the same thing today. In the 1990s, we were the hottest retailer in America, picking up 20% per year. Those 14 years Bill, John and I were together, we never had a down year. Kohl’s has continued to grow since we departed.

We were very fortunate. All three partners had really good people who worked under us, and all three left within a year of each other. We focused on building a great organization because a great concept by itself isn’t enough — you have to execute it. It’s all about the people.

Can you talk about your relationship to the customer, as a retailer? How important is it to have good intent toward the customer?

As you mature, you learn to recognize that the biggest boss you have out there is the consumer. The consumer votes every day if she likes you or doesn’t like you. And if she doesn’t like you, it doesn’t matter what you do. It’s not going to work, and your competition is going to beat you. So you better listen to the consumer — you better listen to what she wants. If you get high and mighty, and think you can choose the things that she wants, then you’ll find out over a period of time. And when you build a concept with the customer, which the customer comes to expect, and you do it well, then you do not deviate from it. You have to be true to what your mission is, true to what you believe, true to what you do and true to the consumer.

What was your management style at Kohl’s?

We had a philosophy; set the strategy for the company, and then we gave managers the authority and responsibility to get the job done. We then expected them to execute at a very high level. We had an open-door policy. We would visit stores, and sit down with the store manager to sales associates and ask, “What’s going right, and what’s going wrong? Do we need a stronger advertising presence? How’s the merchandise mix?” Then we would tweak our prototype to make it better. We always listened to our people on the firing line, and we learned a lot from them.

You have given generously not only to Wharton, but also to other educational institutions. What’s behind that?

My parents both worked very hard to make sure that I and my sister could attend college. We were not wealthy people. They wanted us to have a better chance to do more in our lives. Even though they didn’t have money, they always gave their time to people, and gave what they had to charitable causes. That was a lesson that I learned, and luckily, my wife, Patty and I have had a chance to carry that on. We are very involved with young people at the Wharton School and at the Fashion Institute of Technology, and Patty also does work at Hunter College. We want to be involved in the giving, to give the money while we’re alive. We think that’s important, because we want to see where the money is going to make sure it’s doing good.

What advice do you give to students?

Students often ask about their careers and what they should do. I always say, “Have a passion for what you do, because you’re going to spend an awful lot of time at work.” If you are doing something that you don’t have a feel for, it will be difficult to be successful, and you won’t be a happy camper. You’re going to be the person at 5:00 p.m. on Friday who says, “Thank God, it’s 5:00 on Friday!” and that’s sad. I had a lot of tough days in retail, but I never had a day that I didn’t want to get up and go to work.

Second, you have to be someone who can make mistakes. If you don’t step out of the box, then you won’t enjoy out-of-the-box success. And again, you really don’t have a choice but to listen to the customer. You need to be their first, second and third choice. If you’re their tenth choice, then you’re going to be in the graveyard with a lot of other names that were once great retailers.

Why did you create the Jay H. Baker Retailing Center?

Around the time I retired, a large retailer, that will remain nameless, couldn’t find anyone to succeed its CEO, so it hired someone outside the industry, and it was a total failure. So I thought, “We are not getting enough bright young people into this industry. We retailers had a reputation of working long hours and not making much money. Well, today, you can be financially successful, and at a very young age, you can be running a business! So I wanted to get bright young people into the industry.

I was fortunate to go to the Wharton School, and I do think it’s the best business school. Patty and I had already given a pretty sizable donation. We were providing scholarships to 13 people and had given a section of Huntsman Hall. As a result, they put me on the undergraduate board. It’s amazing — you give money, and your personality improves! One day, they called me and asked how I liked it. I said, “Well, it’s nice, but I don’t really do anything. I’m used to running things.” I had been thinking of this retail industry problem and how retailers did not recruit at Wharton because there was only one class related to retail. So I called them back and said, “Tell you what. I’d be interested in doing something in retailing.” They asked me to come down and meet the Dean, the Vice Dean and others. We had lunch in this big room. Their idea, though, was different from my idea, a lot different.

So I called them back and said, “Thank you for the lovely lunch, but we’re not on the same wavelength, so I’ll need to think about it.” They came back, and we had three or four more discussions, and finally President Judith Rodin wrote “We really want to do something with you,” and the Baker Retailing Initiative began. We set up a board of industry leaders. Roger Farah came on from the beginning, and Brendan Hoffman, C’90, WG’97, a little later. Both have been a tremendous help to the Center. The purpose of the board was to speak to the students, let them see what retail leaders are like, give them internships and get them started. Patty and I gave another donation, and it became the Jay H. Baker Retailing Center. Today, you can get a concentration in retail at Wharton. We are a research center — sponsoring curriculum development, industry outreach and cutting-edge programs accessible to both undergraduate and MBA students. When we started, we had only two students in the program. We now place over 100 students each year into full-time retail jobs or internships.

What’s a story that you like to tell, about retail?

You might talk about everything being great at this big company, Kohl’s. Well, two years after we bought Kohl’s, we had paid off all of our debt. So we bought a company called MainStreet, which came from Federated when it went into bankruptcy. It was a similar company to ours, with these great locations right where we wanted to be. We didn’t close any stores because we needed the cash to keep coming in.

To introduce ourselves to customers, we decided to launch these stores with the greatest sale that we ever put together. All three partners — Bill, John and I — attended the biggest opening in Chicago, and we were excited. People lined up to get in the store. There were mobs of people filling their carts with merchandise. Then, all the systems go down. We had no point of sale. It wasn’t only this store — it was the entire chain. Cashiers needed to look up the prices. Customers are throwing merchandise on the floor, and seeing us, wearing white flowers on our lapels, began yelling at us! It was probably the worst day of our lives. I remember calling the fellow at headquarters who was in charge of the data center, and he was telling me, “Oh, don’t worry! Everything looks much better now!” I told him, “If you were here, I’d probably kill you, or the customers would kill you. It’s not working!” And then, on top of that, this little boy pulls the fire alarm, so the fire department came. It was the first and last store opening my wife attended. She thought it was very exciting. Normally, you’d have a pizza party after a store opening, but we stayed there until 6 a.m. the next morning when the system finally got back up. Well, we had these customer cards asking “How do we rate?” and you can imagine what people wrote. They thought we were the worst bums in the world. Between Bill, John and I, we answered every letter from every one of those people, sent them a gift certificate and asked them to give us another chance. I think it paid off. Naturally, we got those stores working, and Chicago was soon our hottest market. So out of a disaster can come something good! Sometimes I tell that story because people think everything is so smooth, so successful. Well, that’s not true! That’s when I got my first gray hairs.