Tom Bazzone, newly-appointed chief operating officer at Restoration Hardware, is no stranger to the world of home improvement. As a teenager growing up in the Boston suburb of Waltham, Mass., he helped weekend do-it-yourselfers find wrenches and door knobs as an hourly sales associate at Grossman's, a now-defunct hardware chain. He picked up a bachelor's degree in marketing management from Syracuse University, then wound up back at Grossman's where he held various operations positions for the next several years.
Once there, Bazzone became something of a do-it-yourselfer himself: He and his wife gutted and remodeled an "ugly duckling" English cottage in the Boston area. The paint had barely dried in the last room when Bazzone accepted an offer in 1995 from San Francisco retailer Williams-Sonoma to oversee inventory for its growing chain of stores. He rose to vice president of merchandise operations two years later, responsible for planning and inventory management for the retailer's five catalogs.
By 1999, San Francisco's dot-com fever had finally infected Bazzone. He ditched his job at Williams-Sonoma and joined gift e-tailer RedEnvelope as president and chief operating officer. As second-in-command at the startup, Bazzone led merchandising, customer service, human resources, and other operations functions. Unlike other dot-coms that have imploded in recent months, RedEnvelope expects to turn a profit later this year. But Bazzone won't be there to pop open the champagne. He resigned in June to become the No. 2 guy at Restoration, joining CEO Gary Friedman, formerly the president at Williams-Sonoma, who arrived at the quirky home-products retailer in March.
Restoration, which attracts upscale shoppers with merchandise ranging from $55 retro cocktail shakers to $2,800 leather sofas, could benefit from having a couple of Mr. Fix-its in the executive suite. Sales at stores open at least a year declined 16% in the first quarter compared with the same period a year ago. Its stock trades around $4.70 at the moment, an improvement from last December when it dipped as low as 50 cents, but is still far off its high of $37 in July, 1998. And last month, chief financial officer Walter Parks resigned.
To reignite growth, Friedman has already shuttered three underperforming stores, and he plans changes to the merchandise mix. Today, the company operates 104 stores in 31 states, and also sells through catalogs and online.
All of which spells plenty of work for Bazzone, 34, who didn't take any time off before diving into his new role a few weeks ago. (He says he'll go on vacation after his wife gives birth to their first child, due around the beginning of August). BusinessWeek Online reporter Jennifer Gill caught up with Bazzone as he wrapped up his first week on the job and talked to him about, among other things, his decision to join Restoration and what's atop his to-do list. Here are edited excerpts from that conversation:
Q: Tom, you've been in retail since high school. Why did you stick with it?
A:I'm a firm believer that people get into retail and either love it or hate it. I loved it. It's a dynamic, fast-paced, people-centered business. Whether you're in the stores, the corporate office, a distribution center, or a call center, that's the nature of retail. I was very fortunate at such a young age to be involved with not just the store, but because Grossman's was a Boston-based company and I worked at the flagship store. The buyers and other folks from the corporate office spent a tremendous amount of time there. I had exposure to all of the executives at the company even before I attended college.
I just got off the road from three days of traveling to our stores. I spent two hours in a back room with a receiving clerk, looking at how our product comes from the warehouse. I'm not going to learn that looking at reports sitting here in my office in Northern California. [As a teenager] I got that same experience on the reverse side.
Q: What else have you been doing in your first few days on the job?
A:The first day was the meet and greet. As you can imagine, the company has gone through a lot of change. [CEO] Gary Friedman came on board about three months ago. Our CFO made the decision to leave the company a couple of weeks ago. Then I joined. So I think employees were in a bit of a pause. Now that they've gotten the chance to meet me and have at least a broad understanding of what I'm going to try to do, I think people are feeling pretty good.
Day two I [met] some of my key direct reports, and then on Wednesday morning I got on a plane to Southern California to tour stores with our regional manager. [Friedman and I] then gathered the two district managers that we have in Southern California and all of the store managers for that region and took them out to dinner. That was a great opportunity for me to be a sponge and learn from these folks about what's going on and what we could do better to help them help the customers.
Q: Why did you decide to join RedEnvelope?
A:I've tried to be a bit deliberate and a bit opportunistic in my career development. At both Grossman's and Williams-Sonoma, I had special experience in lots of different things around the store. [My bosses would say] "Gosh, we've got this problem getting merchandise to our stores or our commodity buying isn't as effective as it should be. Let's put Tom on the job."
I had reached a point in my career where I wanted to become more of a general manager. [But] there really wasn't that opportunity at Williams-Sonoma because of the way it was structured. The business had a retail division and a catalog division, and both of those were organized by function. There was a senior executive of planning, of inventory management, of merchandising, of marketing , and so on. I knew I needed to go to a smaller company. I couldn't go from being a line executive to being a general manager of a $1 billion company.
RedEnvelope [gave me] the opportunity to be a general manager and to learn about this new channel called the Web. I partnered with [RedEnvelope's former CEO and now chairman] Hilary Billings, who's an outstanding merchant. When I joined the company, she was seven and a half months pregnant. And four weeks after I joined, I literally was acting CEO. We had tremendous growth that first six months. For me it was great way to spread my wings.
Q: What did you find most challenging as a general manager?
A:There was more personal growth, and learning how to lead by example. When I saw one of my VPs or directors struggling with a problem, we talked conceptually about how to solve it, [but I] didn't solve it for them. People learn a lot better by doing. Kids don't learn that a stove is hot by you telling them it's hot. They learn two things when they touch the stove. One, they learn what hot is, and they learn that mommy and daddy aren't so stupid. The same is true in business. People don't learn that they have to plan further out [into the future] by me telling them that. They've got to miss a key event, and then they'll say, "Tom's right, we need to back that up a little bit."
When I started at RedEnvelope, I think I was employee No. 18. I quickly assembled strong people to head up my key functions. But even though they were experienced, they hadn't been in such a rapid growth environment. Our curve was literally vertical for the first 18 months. That was a challenge. I had to help them focus on doing the right things. Your to-do list never went away, but making sure that the right things were at the top was really important.
Q: So why did you leave RedEnvelope for Restoration?
A:It was a hard decision, [but] I took a step back and thought about my career development from a strategic standpoint. You have to do what's right for you. At RedEnvelope, I took on a general manager role at a small company, built a great team, secured quite a bit of equity financing, and positioned the business as a great brand in specialty retailing in two channels -- catalog and Web. I wanted to take that experience and bring it to Restoration Hardware to continue to move my career forward. If you look at my areas of responsibility at RedEnvelope vs. "Resto", they're almost identical, except that I dropped off merchandising and added information systems.
I also looked at the opportunity to work side by side with somebody like Gary and [Restoration founder and chairman] Stephen Gordon, who is an amazing entrepreneur. Gary was disappointed when I left Williams-Sonoma but wished me a lot of luck. Through the years, he has said, "Geez, we'd love to have you back." So when he got to Restoration Hardware, he called and said, "What do you think?"
I also felt strongly about the team I had built at RedEnvelope. These guys and gals can take the momentum that I've created in the organization and move forward very successfully. It wasn't a case where I felt that if I walked out the door, the place was going to fall apart. That's usually the sign of a weak leader.
Q: There have been a lot of management changes at Restoration recently. What's the biggest challenge you're facing right now?
A:I'll give you the four-day answer. I think the company is dying for information, strategy, a vision. Gary and I are used to having very formal presentations about the merchandise direction, and the strategic direction of the company. I don't think [our store managers] are accustomed to that. We're used to gathering all of the associates from the corporate office every quarter and talking about the business, and keeping people informed.
Q: Restoration went through a period of rapid growth. Now it seems as if the company is on the flat side of the curve. How do you reinvigorate the business?
A:The brand is still very well positioned and strong in our target consumer's mind. I've heard from hundreds of people in the last three weeks about my appointment and I've asked them what they've bought from us. For a fair amount of them, it was some of the smaller unique items, like this fun little game called Shoot the Moon.
We want to make sure that [merchandise] is balanced with a really strong presentation of furniture and hardware. Today you might walk into our store and see a beautiful $1,400 hardwood coffee table. You might [ask our salesclerk:], "I'd love to complement that with some new window treatments. Where are yours?" We have some, but they're lightweight cotton drapery that's not at the same quality level.
I've been on the job four days, and I walked through the fall merchandise offerings with our buyers. Some of them know me from Williams-Sonoma, but others had never met me. I walked into the hardware room, and I said, "This doesn't make any sense. This is not how a customer shops for this stuff. They want to see all of the round knobs in one place, they want to see all your poles in one place." They looked at me like, 'Who the hell is this guy?'
It's a balance between aesthetic and function. We have this paint that we're doing wonderful business with [but] where are the rollers and roller trays? And why are we carrying cheap [paint] brushes? We've got to extend the same level of quality to everything we do.
Q: Can an operations guy become CEO one day?
A:Absolutely. My resume is filled with operations experience. My strengths happen to be in getting goods to stores, planning out a business, capitalizing on opportunities, reducing costs, leading people. A lot of those things are really important for the corner office as well. What I need from a personal perspective is to be as balanced externally as well.
Q: What do you mean?
A:I haven't dealt extensively with Wall Street yet. Gary [has told me] that we're going to go to analyst meetings together and that I'm going to sit on [analyst] calls. That's important for me from a career development perspective.
Q: New job, new baby on the way. Sounds like a busy summer, Tom.
A:Gary told me, "We'll get all of these life changes out of the way at once. Just think of how relaxed you're going to be in January."