'Undercover Boss' Mitchell Modell Accused of Corporate Spying

CBSMitchell Modell in Undercover Boss
CEOs traditionally set strategy, watch over performance, work with investors, and other high level concerns of a company. Some executives like to "get their hands dirty" and become more involved in the day-to-day activities. Then there's Mitchell Modell, chief executive of Modell's Sporting Goods.

Modell went on the CBS program Undercover Boss to get in touch with the daily experience of his workers. He even gave $250,000 to one employee who had been living in a homeless shelter so she could move her family into a new home. Now a rival of Modell claims that going undercover has become a habit, and that the CEO went undercover as an executive of Dick's Sporting Goods to obtain competitive information, according to the North Jersey Record.

Queue the Mission Impossible theme.

Last week, Dick's filed a lawsuit accusing Modell of having pretended to be a senior vice-president of the chain while visiting a store in Princeton, N.J. He reportedly told employees that he was there to meet Edward Stack, the CEO of Dick's, and convinced them to show him around back rooms and talk about store operations.

According to the Associated Press, Modell asked about online sales and a program that had products ship from the nearest store to get goods to customers more quickly.

Both Dick's and Modell's have declined to discuss the case, which is in litigation, although the former sent a statement to the Record that it "takes seriously the protection of its confidential and proprietary information."

This isn't a case of complaining to the ref about being off-sides in hopes of getting a penalty, as the Record reported. Dick's is looking for an unspecified amount of financial damages and a ruling that would prevent Modell or any of his employees from entering non-public parts of the chain's stores.

Modell's says that it was founded in 1889 and that the family-run business has 150 stores throughout the Northeast in 10 states and the District of Columbia. Dick's was founded in 1948. Although a publicly-held company, the CEO and chairman of the board is the son of the founder. As of last November, the company had 558 Dick's Sporting Goods stores in 46 states and 82 Golf Galaxy stores in 30 states.

Retailers have regularly spied on each other for years, according to an Associated Press report of the case. Executives from one store or chain will go to a rival's location to look at prices, selection, physical layout, and other factors in public view that can be telling.

"What happens all day every day is retailers go to their competitors' stores and probably and certainly don't disclose who they are," said RBC Capital Markets analyst Sean McGowan. "But I can't think of any instances where a retailer represents he is an executive to gain access."

When Modell shaved his head and added a big moustache in 2012 to go undercover in his own company, understanding the difficulty of physical work in the warehouse "led to staffing and workload changes throughout the company."

The question is, was the experience so transformative that Modell now has his martinis shaken, not stirred?

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