Jeffrey Yapp has one of the most daunting jobs in CE retailing.
Appointed seven months ago as retail group president of Cablevision Systems, it is his task to turn around The Wiz, a sprawling, 42-unit New York metro area A/V specialist that's been hemorrhaging cash since the entertainment conglomerate bought the bankrupt chain in 1998.
Despite Cablevision's reasoned strategy of using the stores as a consumer touchpoint for its broadcasting, Internet and entertainment services, The Wiz has run up well more than $400 million in operating losses as it closed stores, opened new ones, changed management, switched formats, changed management again, and mounted myriad marketing campaigns.
Also compounding The Wiz's woes is Best Buy, which began a 35-store assault on Cablevision's home turf two years ago.
Now, after conducting a sweeping assessment of his ailing charge, Yapp is ready to reintroduce a revamped Wiz, replete with a consumer-friendlier format, a new top lieutenant (former Linens 'n Things and Macy's exec Jeff Kaufman), a streamlined back-end, and improved pay incentives for sales associates. But his biggest challenge still lies ahead: a mandate from Cablevision to make it all work by Christmas.
Yapp, previously president/COO of Hollywood Video, shared his game plan with TWICE as his first Wiz retrofit debuted here earlier this month.
How much longer will Cablevision support a money-losing Wiz?
Consumer electronics retailing is a very, very tough business with narrow margins, and Cablevision has shown tremendous patience. But it would be naive to think it could go on forever. They're not going to support a money-losing operation. My job is to get this business profitable and my goal is to have a significant improvement in operations by the fourth quarter.
How do you accomplish that?
By completely restructuring the way we do business. We have literally gone through everything: warehousing, logistics, systems. Completely rebuilding the back-end part will translate to the bottom line. And we've assembled an amazing team to do it.
But we've still got our work cut out for us. We compare it to trying to change the engines on a jet in mid-flight.
What other problems have you identified?
The original misstep — that Cablevision and The Wiz were run as two separate companies with separate headquarters, separate payroll departments and separate accounts payable departments. So we integrated the two companies, and moved our headquarters from New Jersey to Cablevision's headquarters in Bethpage (N.Y.). Integration is always the hardest part, particularly between a cable company and a retailer.
We also needed to do the store experience better and smarter. So my commitment to Cablevision is to be in the market with a different concept by the holidays, one that narrows the gap between the promise and the reality of technology.
How will you define yourself in the marketplace?
The Wiz is a large box retailer, not a boutique operation. But I have no desire to copy Best Buy. If I copy Best Buy I will get killed. So the question is, how do you differentiate yourself from the competition? There are a lot of unmet consumer needs. Where do you go to learn about new technology? No one out there today satisfies those needs, although Ultimate does a good job.
So we're going to provide integrated solutions, and so much of what facilitates those solutions is what Cablevision offers, like high-speed Internet access and video on demand. I've totally bought into Cablevision's strategy of having a retail platform for the distribution of digital products and services.
Is the New York market large enough to support everyone?
Yes. It's an enormous market. It's just a question of size and share. The independents continue to be an extremely important part of the market. They're someone the consumer knows and trusts. The large retailers offer price. Is there a position that provides both? We think so.