The Uncommonist: Highlights from Day Five of the ‘Big Show’

By Andrew Smith | Jan 22, 2021 | 0

Keynote Session Retail’s rethink moment: Reimagining business as UNusual with Saks Fifth Avenue and lululemon

11:00am–11:45am 

Marc Metrick, Saks Fifth Avenue, President and CEO
Celeste Burgoyne, lululemon, President Americas and global guest innovation
Colleen Taylor, American Express, President, Merchant Services – U.S.  

This presentation took the form of two separate interviews with Saks Fifth Avenue and lululemon 

Saks Fifth Avenue 

This was an interesting one for me given the dire performance of most US department stores over the last several years. Saks themselves avoided bankruptcy in 2020 but its parent Hudson Bay required a major bond offering to keep the business going. On the surface a pandemic is not ideal trading conditions for a luxury department store but nevertheless Saks won luxury retailer of the year in 2020. What were the strategies that made this happen? 

Marc Metrick has been with Saks since 1995. Marc said his key learnings from the pandemic were that; 

  • Stores are still important – Results were only slightly down in bricks and mortar for the year 
  • Digital is increasingly important (sales were up) but inextricably linked to stores– Digital sales went up when stores re-opened and a big driver of sales were in store stylists adapting to online consultations 
  • The Product cycle needs to adapt to consumers- Having restricted physical trading meant consumers weren’t exposed to the normal practice of seeing ranges in store well ahead of their intended season e.g. fur coats in the middle of summer. Instead, they saw them when the season actually started, and sales benefitted. This aligning of product cycles with actual seasonal selling is something Saks hope to continue into the future 

One of the quotes of the show for me. “The pandemic was not about figuring out what we are not and becoming that but figuring out who we are and being great at that” Marc feels all the great retail brands share that characteristic. 

There were three pandemic related implications for Saks strategy 

  • Don’t forget the fashion – “we are not a data business, we are not a technology business, we are a fashion business!” 
  • Making it easy for customers to interact 
  • Personalising the experience – a traditional mainstay of luxury but now can be enhanced with data. 

Another important issue was helping associates tough the pandemic. Marc said the keys were  

  • Empathy- Understand and act on what they are going through on a personal basis 
  • Communication- Keep articulating where the company stands on the big issues and its purpose.  

Marc said this is a great time to be in the industry because we all have the opportunity to change it for the better. 

A lot of innovation happened at Saks in the pandemic, but this was mainly the acceleration pf programmes that were already in place.  Marc said that successful innovation starts with people and having a culture on innovation where people feel free to bring their ideas for consideration. 

Finally, Marc was asked about competition. He said that he doesn’t spend much time thinking about other department stores. Retail brands that win understand their identity and are great at that (here here!) 

Session Rating  10/10  Must see. Very impressive retail leader with a clear vision and plan based on solid retail practitioner experience 

Lululemon 

The three priorities for lululemon during the pandemic were; 

  • Health and safety – team and customers 
  • Strengths – “leaning in” to what lululemon are already good at 
  • Future -building for the future through the acquisition of “Mirror” 

Some of the innovations introduced during the during the pandemic were; 

  • BOPIS on a 2-hour window 
  • Virtual consultations 
  • Digital education with live appointments 
  • Opening of more seasonal stores (pop ups) to meet increased demand and social distancing protocols 

An impressive part of what lululemon has been able to keep doing is its policy of encouraging diversity. 70% of their senior leadership team and 55% of their board are now women 

Session Rating  7/10  Some retail categories had a very good pandemic and athletic leisurewear is one of them. For that reason, the lululemon presentation was intrinsically less interesting to me than that of the existentially challenged Saks. Nevertheless some really interesting insights and worth a watch.  

 

Pursuing rapid digital transformation in response to market adversity
Thursday, January 21st
1:45 PM – 2:15 PM EST 

 Alberto Serrentino, Varese Retail, Founder
Jorge Faical, GPA, Retail President
Rachel Maia, RM Consulting, Founder and CEO 

 

This session featured two consultants and one retailer (GPA) and was focused on the Brazilian market. The most valuable part of the presentation were the contributions of Jorge Facial from GPA 

GPA is a large food retailer in Brazil who employs more than 100,000 associates. They were faced with government regulations during the pandemic that meant they were forced to stay open.  This caused a lot of trepidation among their team. The key word throughout was adaptation initially to make sure associates and customers were safe. 

Digital was the second stage for GPA .Jorge said that they managed 2-3 years of development in 2-3 months. The key to achieving that was finding different ways to work together. One example was to integrate all KPIs between the physical and digital channels.  

Online food sales represent a very low percentage of overall retail sales in Brazil . Whereas the food market overall is worth approximately $200bnonline sales are only about $1bn. It’s expected to grow 10x by 2025 but even then will only represent about 4%-5% of the total. This puts Brazil approximately 5 years behind the USA in ecommerce adoption 

Jorge was strong on the importance of CSR for him and his company’s purpose. He said CSR needs to be baked into every process in a retail organisation. “Retail is part of the life of the people. Collaboration is not enough; we have to change the life of the people 

 Session Rating  7/10  Good insight into the Brazilian retail market but light on detail and actionable insights 

 

Automated and adaptive supply chain planning: Big Lots’ successful forecasting and replenishment transformation 

1:00pm-1.30pm Exhibitor Big Ideas.  

Johan Hoover – Big Lots, VP, Allocation and Replenishment 

 Big Lots have 1,400 stores across the US and approximately $6 billion in sales, omnichannel operations, and a highly varied assortment ranging from furniture to food. They started as a “buy out” retailer specialising in distressed stock lots but now most of their range is planned categories that customers would expect to see each time they visit. They operate 5 x DCs and 1x online fulfillment centre. Most supplier deliveries go to DCs, but some go to direct to stores. 

This presentation was about Big Lots transaction form a replenishment system based on excel spreadsheets and manual forecasts to an automated system from RELEX 

Johan described the high amount of complexity and labour required  in their previous system. For instance, none of their DCs are temperature controlled. This meant that the category manager for chocolate had to manually direct deliveries to DCs during the winter months then switch to direct to delivery to stores when the weather became warmer. Lots of frustration, errors and waste were inherent. Now that task is automated, and all the metrics have been improved. 

Other tasks that have been automated include their frequent promotionally activity. Promotions were previously manually calculated and not integrated to the replenishment system. The system now assists by forecasting sell rates for each promotional line based on a ML algorithm. The new system also helped Big Lots cope with the scarcity experienced during the pandemic by adjusting stock allocations automatically. This helped during the initial run-on essentials then again when demand moved to household discretionary purchases.     

There was a pack presented in this session with more of the detail, but it is not available for download so you will have to watch the session to see the slides.  

Session Rating  7/10  Good session for any retailer with a manual stock replenishment system considering getting in to the 21st century. Unfortunately, the session is short (15 mins) and there was no opportunity to ask questions.    

Tech innovation: What consumers want and where retailers should invest

Thursday, January 21st
12:00 PM – 12:30 PM EST

This session was hosted by Euromitor’s Michelle Evans.  It was very data heavy, but in a good way, talking about the way consumers and retail industry leaders are thinking about what 2020 has shifted in terms of behaviours and focus.  It was based on a global survey of 20,000 consumers beginning in March 2020, as well as a group of industry professionals in November 2020.

Some highlights:

Industry Professionals view on progress in tech transformation:
  • 72% say the crisis accelerated digitalisation by 1-2 years,
  • 21% say it accelerated by at least 3 years.
  • Only 15% say they are keeping pace with peers
  • 41% launched or expanded digital payment capabilities in 2020
  • 51% saw delivery as a key capability in 2021
  • 74% of industry experts think the digital e-comm shift we saw in 2020 is going to be permanent, however consumer survey results show there will be some elasticity
Consumers shifting behaviour:
  • Free shipping was the clear favourite from consumers about desired online shopping experiences, with nearly 70% claiming it is important in making a buying decision.
  • Free return to store or by mail came in second most important online feature, with nearly 50% claiming it was important in their buying decision.
  • 1/3 would prefer any in-home deliveries to be completed by a robot rather than a human, and it’s growing quickly!

Michelle then shared the Euromonitor’s analysis and strategic advice after going through this data, including the key four areas of tech investment:

  • Online discovery, such as website product representation and personalisation
  • Digital payments
  • Delivery and collection, build a fulfilment and logistics platform aimed at improving efficiency
  • In store experience, more sophisticated use of tech in stores and a reimagining of how to use yourphysical assets

The Uncommon rating 8/10 (must see) This was a really helpful session to ground us with data around what to expect and where to focus in 2021.  It included a number of examples about how to respond, where to focus, and the data that backs that up.  A great session for anyone who gets frustrated by the panic decisions of strategic focus that may  have happened in 2020.

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