Wet Seal Second Chance: Perhaps Employee Engagement Should Be A Strategy

Wet Seal, the troubled fashion retailer catering to teenagers and young women, has filed for Chapter 11 bankruptcy protection. No surprise at that news. The company has been struggling for a while, and recently was ensnarled in controversy over its treatment of employees and handling of employee terminations upon closing of stores at the end of 2014. (See my prior post, Corporate Death With Dignity? Not At Wet Seal).

What is newsworthy is that Wet Seal may have a real shot at a second chance. A financing group, B. Riley Co., LLC, may come up with money to give Wet Seal the opportunity to reformulate itself. Filings with the bankruptcy court reveal the company would pursue a strategy of focusing on profitable stores and its online operations. Perhaps company executives should also consider the idea that truly embracing employee engagement as a strategy could help the company make it the second time around.

No doubt Wet Seal’s problems were long in the making and stem from numerous causes. Fashion retailers serving a customer base as fickle and fad-oriented as teenagers and young women are at a major disadvantage to start. And even upscale fashion retailers serving a well-established customer base have a rough road. Look at the recent financial results and outlooks reported by Kate Spade and Tiffany’s. But adding to Wet Seal’s woes were a long history of contentious employee relations.

Outstanding employee engagement can be the key to success for companies with challenging business models. Consider Starbucks. If you woke from a twenty-year coma—and had never heard of the 21,000 store chain—the premise of building a successful business by selling outrageously priced coffee on every corner would sound absurd. A major key to Starbucks’ success has been using employee engagement as a business strategy.

The company’s workforce turns over frequently. Yet the company has built customer loyalty through superior service, coming from fully engaged and well-trained employees. And the benefits accrue long after an employee has departed the company. Both former-employees and their family and friends have warm feelings for Starbucks, and that translates into real bucks.

Some years ago my then college-age daughter had a friend working at Wet Seal. He constantly griped about how much he hated his job. Perhaps that was just him, but I don’t think so. I think it was because Wet Seal was a place employees hated to work at. Hearing him complain about the company did nothing to instill the desire in any of his many female friends to want to visit the store.

One day after her friend was long-gone from the store, I was with my daughter as she was on a shopping mission. As we approached Wet Seal, I asked, “Do you want to try here?”

“No,” she replied. “Joey hated working there.”

Employee engagement can be powerful if it works well. Think Starbucks. And deadly when it doesn’t. Think Wet Seal. Employee engagement has a far-reaching and often not obvious impact on a business.

So with new life being breathed into Wet Seal, and the company getting a second chance, perhaps the strategy of creating true employee engagement will become part of the second-time around formula. It would be a shame if company managers don’t at least try.

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