Our guest this week is Christine Day, former CEO of lululemon athletica and Starbucks senior executive, who is now leading the growth of Russell Wilson and Ciara's remarkable retail company, The House of L,R & C. We learn about the inspiration for creating sustainable fashion brands, including the decision to organize as a B Corp.
Our guest this week is Christine Day, former CEO of lululemon athletica and Starbucks senior executive, who is now leading the growth of Russell Wilson and Ciara's remarkable retail company, The House of L,R & C. We learn about the inspiration for creating sustainable fashion brands, including the decision to organize as a B Corp. We delve into the challenges and the opportunities of driving social impact in the apparel industry and what it takes to combine sustainability with true fashion. We also get Christine's perspectives on how generate profitable growth in an omni-channel world and the criticality of being purpose led.
But first we give our hot-takes on the latest retail news, including a blockbuster U.S jobs report that drove unemployment down to 3.5%. But contrasting with that good news are layoffs from Walmart, Allbirds and Glossier, and downward earnings guidance from Under Armour. We also discuss the train wreck of an earnings report from Wayfair, before diving into Target's continuing roll out of its hybrid fulfillment strategy. We close with news of Best Buy's intriguing new "digital-first" small store test.
GroceryShop discount offer:
Valid for Retailers and Brands only, use code RBR1950 to access our special rate / ticket price is $US1950. Offer code expires 9/22/22.
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Christine Day is a Co-Founder and President of The House of LR&C where she brings 30 years of experience in scaling global retail brands to this new concept in fashion. Christine is known for bringing her whole self to work combining warmth and joy with vision and operational excellence. She is widely recognized as one of the greats in the evolving world of retail.
Christine brings her executive leadership experience to The House of LR&C from lululemon athletica, where she served as CEO for six years, as well as Starbucks, serving in various executive positions over a 20-year period. Concurrently, she is the CEO of Performance Kitchen, a forward-thinking food company creating the next generation of frozen food with a focus on great taste, convenience and nutrition. She earned her BA degree from Central Washington University and is a graduate of Harvard Business School’s Advanced Management Program. Christine and her husband enjoy a full life in Vancouver surrounded by her loving family of 3 children and 4 grandchildren.About Christine:
About Us
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption is now available at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks , The Food Professor with Dr. Sylvain Charlebois and now in its second season, Conversations with CommerceNext! You can learn more about Michael here or on LinkedIn.
Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue, his YouTube BBQ cooking channel!
Michael LeBlanc 00:05
Welcome to the Remarkable Retail podcast Season 5, Episode 5, presented by MarketDial. I'm Michael LeBlanc.
Steve Dennis 00:12
And I'm Steve Dennis.
Michael LeBlanc 00:13
Well, Steve, we are one degree away from celebrity here with our very special guest on the show Christine Day, Co-founder and President of The House of L, R & C. A fantastic apparel retailer based on love, care and respect and the celebrity element is football. Her partners in this, football star Russell Wilson and entertainer Ciara. combined their passion for design and fashion and Christine's deep, deep expertise. It's a really fantastic interview.
Steve Dennis 00:42
Yeah, we, we both heard Christine, when we were out at Shoptalk, and I honestly did not know too much about the brand at the time, I've learned a little bit more about it. And of course, people will hear more about it when we get to that interview in just a few minutes. But as people will also hear, she has some pretty amazing experience with a couple of brands that people might have heard about. So, I thought it was both a interesting story about an up and coming remarkable retailer, but also some really great leadership lessons for everybody. So, glad to get her on.
Michael LeBlanc 01:11
Speaking of Las Vegas, we're going to be back in Las Vegas at Groceryshop in September, and exclusive for our listeners, we've got a Groceryshop, discount code, RBR1950. We will put this in the show notes with all the terms and conditions and all the fun stuff and what you get and valid only for retailers and brands. But we look to see you all there. We're going to be doing interviews and chit and chatting. And so looking forward to being with you again, in Las Vegas. All right let's get to our news. So, as we have been doing for the past, I guess couple episodes, right? Let's start out with some economic news. I mean, we had some good news, which is nice this week, talk about what your impression is about the US jobs report.
Steve Dennis 01:53
Yeah, we're recording this on Friday and this morning, there was a very, very positive way better, I guess, than most people expected jobs report. The US created I think it was something like 525,000 new jobs, unemployment is down to 3.5%. So, we're in this weird vortex, we've talked about a couple of times where we've gotten this big slowdown in many aspects of spending two quarters of GDP going down. Yet this incredibly robust job market. In fact, one of the things I saw this morning was I think it's in about 20 months, we've gone from 17%, or something in that vicinity unemployment to 3.5%, 17 million new jobs. I mean, that part of the economic story is incredible, incredibly positive income also up yet, lots of inflation, lots of slowdown. So, it's, again, this really interesting combination of, of forces, and it's going to be interesting to see how that, that plays out.
Michael LeBlanc 02:54
Well, that kind of number 3%. I mean, thinking back to my basic economics that I learned in school, I mean, with frictional unemployment, you know, people moving around, that's basically full employment. And so, you'd, -
Steve Dennis 03:03
Right, -
Michael LeBlanc03:04
It's rare that you get these two things going together. And I guess it It harkens back when I saw the news back to our earlier episodes where we like, stay humble, stay agile, because this is this is something new and, and at the same time you, you read this great news, but for example, there's some not-so-great news with, with retailers starting with Walmart.
Steve Dennis 03:22
Yeah, Walmart announced, I guess, a couple of 100, which is not significant. I mean, obviously important to the people affected, but not huge to copy as big as Walmart, but they announced a couple 100 people being laid off at their corporate headquarters. As we talked about, I think last week, Walmart's been guiding lower in terms of their overall performance, we'll hear about their earnings in a couple of weeks’ time, I guess. And then another big retailer Under Armour, which had been doing pretty well, for a while also guided quite a bit lower. So, again, you know, we kind of get this tale of two cities of some things that which look quite positive. And then a lot of retailers, which are really, you know, tapping the brakes, in many cases are actually not doing so well.
Michael LeBlanc 04:03
Well. I think it's more than tapping the brakes. But I saw you on social media, talking about our friends at Wayfair, they're, they're more hitting the, than tapping the brakes at this point.
Steve Dennis 04:13
Yeah. Well, some people will know that I've, I've not been a fan of Way-, I mean, I think it's not that I'm anti-Wayfair. But I think the business model has been very questionable. In fact, I think I may have disclosed this on the some episode of the podcast, maybe the last time Wayfair had earnings, but, but, but I guess just to back up for a second Wayfair reported earnings, their sales were down quite a lot. Their active customer base was down quite a lot. They had a 300 and something million-dollar loss, which was a huge switch from a year ago. So, a very, very bad performance. I think it's not surprising, at one level given the, the slowdown in the home market overall.
Michael LeBlanc 04:53
I mean, RH is warning as well, right? (Crossover talk), it's not a similar, (crossover talk), -
Steve Dennis 04:56
So, it's not a great, -
Michael LeBlanc04:57
Sure, -
Steve Dennis 04:58
You know, not, not a great surprise that the top line wasn't so good. But, but here's a company that's been in business for almost 20 years, that hasn't come close to making a profit, except for a few quarters during COVID, where it turned out most of their competitors stores were closed. So, it turns out, that's actually pretty good for grabbing market share, (crossover talk). So, -
Michael LeBlanc 05:18
It is a tough strategy to replicate though, -
Steve Dennis 05:20
It is a tough, right, it's very hard, it's hard to say that that's sustainable. And stay out of jail. But, but I, I wrote an article for Forbes about four years ago, where I really questioned the Wayfair business model, because it seemed to me number one, that they were spending a crazy amount of money on marketing.
Steve Dennis 05:37
Number two, their gross margin was several 100 basis points below what seemed possibly sustainable. And, you know, I just questioned how big the addressable market was for their particular merchandise mix. Now they got, you know, to the extent you can say COVID gave them a gift, as I mentioned, they got this, this bump from the big shift to online. But really, since we've kind of opened up a bit more, the business or the news, financial performance has been terrible. And they're at a place where going forward, you know, doesn't look like the revenue picture is going to be very good for some period of time. So, it's a real question as to how they're going to write the ship. But it's, it's been several quarters now of really bad news. And I don't see that they've articulated anything that gives anybody a bunch of confidence that they're going to turn this thing around, stocks off, I think 75% year-to-date, something like that. So, -
Michael LeBlanc 06:31
yeah, yeah, -
Steve Dennis 06:32
Yeah, a trainwreck, -
Michael LeBlanc 06:32
That's not new news. But the new news about the loss in customers is particularly troubling or vexing or whatever you want to call it, right? Because that's, that, that downshifts growth. Let's talk about, what, what did you call them wobbly unicorns?
Steve Dennis 06:46
I heard I, I, I shouldn't, (crossover talk), -
Michael LeBlanc 06:49
Did you come up with that?
Steve Dennis 06:50
I didn't I didn't I'd like to say that I did. But that would not be honest, and you know, we try to have integrity, above all on Remarkable Retail podcast.
Michael LeBlanc 06:57
Yeah, -
Steve Dennis 06:58
I forget where I saw it. I should go, I should have gone on the internet to try to track it down. But yeah, I saw somebody referred to some of these digitally native, vertical brands that had very high valuations in the not too recent past that now look, quite wobbly. We're actually going to see, I think maybe the day that this comes out Warby Parker reports. Allbirds will report the (inaudible). So, we'll have earnings to talk about there next week.
Steve Dennis 07:20
But in the meantime, Allbirds, I think already signaled it's not going to be a good quarter by announcing some layoffs and some other strategies to improve and try to improve their performance. Glossier had some additional layoffs. They're also which I think is a good move for them going to be partnering up with Sephora to expand some of their products into wholesale. So, using Simeon Siegel's term, our friend, taking the D out of DTC, -
Michael LeBlanc 07:47
I love that, -
Steve Dennis 07:48
But not a new strategy. I mean, we've seen other brands including Allbirds, pursued, (crossover talk) partnership, (crossover talk), Casper, yes, (crossover talk), -
Michael LeBlanc 07:54
Long list of folks who, who give up on strictly going direct and, and partner with retailers. It's not a short shortlist and it's not a, a an incorrect strategy really for growth.
Steve Dennis 08:07
Yeah, I think, you know, it remains to be seen how it will work, work out. But as we talked about on some prior episodes, again, a lot of these brands that have gone public, have seen their valuations come down a lot. And going into these economic headwinds could be pretty interesting to see how they're going to navigate these probably pretty choppy waters for at least several more quarters. So, watch this space.
Michael LeBlanc 08:31
And but we are seeing some machinations and movement around logistics and savvy retailers, Target and Best Buy adjusting the way they're delivering that, that caught your attention. We were talking about this off mic, that caught your attention. We were thinking about our Nancy King episode from Season 4. Talk about your observations about what Target and Best Buy are up to?
Steve Dennis 08:53
Well Target is continuing to expand these sortation centers; I think they're sometimes called the new delivery hubs. So, we I would encourage people to go back and listen to our interview with Nancy King, because she really explains this, this story. So, just a quick backdrop there is Target has, I think roughly 20% of their business that's ordered online. But 96% or in that range, see next quarter when it looks like but a really, really high percentage that is fulfilled from stores. And so, they've been creating this hybrid distribution system that allows them to get products to customers more quickly and more cost effectively. And so, it looks like Target is leaning into this strategy by creating these local delivery hubs. And it's a really different strategy. I mean, you can kind of compare and contrast not to get too in the weeds.
Steve Dennis 09:41
But you know, Amazon has built this vast supply chain network with lots of distribution centers in major metro areas that allows them to do same day and next day. Most other eCommerce companies rely on regional distribution centers and are shipping most of their products through the mail, which makes it impossible to do same day, and makes it quite costly to even do next day. And Target has really adopted this kind of blend, which I think is super interesting. I think Walmart is largely following in, in their footsteps.
Steve Dennis 10:13
So, Best Buy is a little bit different deal. And I was doing a little bit more research on this before we got on air. So, they announced, Best Buy announced that they, I guess it's been open now about 10 days, they opened a small store in the suburbs of Charlotte, only about 5000 square feet. So, quite a bit smaller than a typical Best Buy store. And it's, it's called a digital-first store. And I think they're doing what we've seen, particularly in China with having stores that are basically, you know, integrated with an app that you use to conduct a lot of the services, get information, login for loyalty programs, those, those sorts of things. So, that's not wholly new.
Steve Dennis 10:53
But the other thing they're doing in Charlotte, and this is the thing I didn't pick up until I did a little bit more research is they're actually testing a bunch of different formats throughout the Charlotte market. So, they opened an outlet store, they offered to open to more upscale, or I guess they renovated an existing store to be a more upscale experiential store. So, what I think they're doing, which I would really encourage other retailers to look at, is to really think about their deployment. And we talked about this in the hybridization reconfiguration episodes last season, I guess that was of, you know, how do you reconfigure your market to meet the customers where they are? Deal with the blurring between figital, physical and digital? I almost said fidgital, (crossover talk), oh my God, -
Michael LeBlanc 11:36
Yeah, yeah, you,
Steve Dennis 11:37
Oh my God, oh, my God,
Michael LeBlanc 11:38
There's a penalty for that I believe, -
Steve Dennis 11:39
There is a penalty for that, yes, I have got to put $10 into a jar. A, and you know, and also, as we talked about with Target, figure out the best way to have customers get the product, whether they want that shipped to their home, or they want to pick it up, or just go into the store and take it home with them. So, I think it's, it's a really interesting portfolio strategy that, that they're putting into place. And I think we're going to see, and I know, we're going to talk about this some more in a few weeks.
Steve Dennis 12:03
You know, what is the role of small stores, particularly for some of these large retailers, you know, retailers that are large in their total size, but also have historically relying on very, very big stores that were really built for a different age, and how are they going to reposition and reconfigure themselves to be successful. So, I think the store format itself is interesting. But maybe even more interesting is what is the say for their portfolio approach going forward. And they're very public, the on the website, we'll put a link in the show notes as to what they're doing there. And what this is all about, which is interesting to see.
Michael LeBlanc 12:38
Also, in the news, late breaking news, today, Amazon, Hoover's up, so to speak, a vacuum company, I was a bit, in one way, I was taken surprised by this on another way, it reminded me of the last time I was in the SoHo 4-star store. These folks had a huge display. So, clearly there was already relationship. Tell the tell the listeners what, what you're thinking about the iRobot acquisition?
Steve Dennis 13:05
Yeah, I didn't, I did not have this on my dance card. This this. I think like you kind of surprised me. But as I'm sure many of our listeners know, Amazon's got a very big position already in a number of connected devices. You know, the home security device, (crossover talk), they've got the little robot. Yeah, they've already got a bunch of connected devices, and this will be another part of their portfolio. So, yeah, (crossover talk), -
Michael LeBlanc 13:32
Yeah, how much? How much was it?
Steve Dennis 13:33
I think it was a 1,000,000,007 or something. I don't have that in front of me. But it was, (crossover talk), -
Michael LeBlanc 13:37
No, no muffins for Tuesday at Amazon.
Steve Dennis 13:40
Well, you know, on the one hand, that's a good amount of money. On the other hand, for Amazon, it's kind of pocket change. So, -
Steve Dennis 13:48
You know, I think again, it gets back to things we've, we've touched on, you know, in the last episode, but many episodes before, you know, thinking of Amazon, as a retail company, in the more traditional sense, is just really misguided. You know, they're in so many different things, you know, I almost forgot that they were doing, like, oh, it's part of their connected devices. And I'm like, oh, yeah, (crossover talk), they got a lot of, (crossover talk), you know, the Alexa and they've got Ring. And, -
Michael LeBlanc 14:11
Yeah, -
Steve Dennnis14:12
You know, so that business, by itself would be a pretty sizable business, I would imagine. But it almost gets lost. Also, there was some news about adding value or adding new services to their Prime package. And in that article, it said that, you know, Amazon has close to 200 million Prime members paying in the new in most markets paying $139. And I was doing a little bit of math on how much money that is just for revenue from Prime subscriptions, you know, and it's bigger than most retailers in the world, right, just by itself. So, yeah, Amazon is such a diverse, interesting company where all these things or many of these things are really tied together into the famous flywheel effect. So, we'll see. I guess they basically made iRobot kind of like a private, private brand for them now.
Michael LeBlanc 14:13
It's muffin, its muffins, (inaudible), -
Alexa 14:57
Well, we'll see how it goes. Let's see if Alexa is connected to iRobot. Hey, Alexa, run my iRobot for me.
Alexa 14:57
Did you mean family room?
Michael LeBlanc 14:59
Oh, no, Ale-, Alexa does not know what I'm talking about. But I'm sure it will soon. I love, I love my iRobot actually, I am a big fan, big fan of the company and good for Amazon. That's a neat, that's a neat acquisition. All right, well, that's a wrap on our news of the week now, just before we get to our excellent interview with Christine, let's hear from our presenting sponsor, MarketDial.
Michael LeBlanc 15:30
MarketDial is an easy-to-use testing platform and emboldens great decisions leading to reliable, scalable results. With MarketDial, you can be confident in the outcome of your in-store pilot initiatives before rolling them out across your fleet. In a challenging retail climate of supply chain disruption, labor shortages and dynamic customer behavior. The need for reliable insights has never been greater. validate your remarkable ideas with MarketDial's in-store testing solution. Proof is in the testing. Learn more at marketdial.com, that's marketdial.com.
Steve Dennis 16:03
Well, we are delighted to welcome Christine Day to the podcast. Welcome, Christine. How are you doing today?
Christine Day 16:10
I'm great. It's, it's sunny here in Seattle. And it doesn't get much better than that.
Steve Dennis 16:14
All right, well, I am in Dallas, and it's boiling hot. So, I don't want to hear about the better weather you're probably having. But thanks, thanks for joining us. What we usually like to do before we jump into our litany of questions is just have our guests tell us a little bit about their professional and personal journey. So, why don't we why don't we start there if you don't mind?
Christine Day 16:34
Well, great. Let's see I, you know, graduated with a degree in business in IT and I went to work in the financial industry and private placement offerings and doing that I came across a gentleman named Howard Schultz, who asked me to help with his private placement offering for his concept Il Giornale, which was a small coffee shop and this was back in 1986, at this point, and so I went to work for him. He had one coffee shop at the time doing about $400,000 in sales. We ended up doing three fundraising rounds and bought Starbucks. And so, then we had about I think it was around, (crossover talk),
Christine Day 16:39
Whatever happened to them, by the way?
Christine Day 17:20
Yeah. So, let's see. So, so we had 13 stores when I started. And when I left, after 20 years, we were almost an $8 billion business, and I was running 10 countries in Asia Pacific and led the company owned operations into China. And spending about 320 night, 20 nights a year on airplanes and hotel rooms. So, that kind of got old. So, then I made the decision to to leave and see what else Christine could do.
Christine Day 17:40
They, they could be something someday, right?
Christine Day 17:55
And so, then I ended up at Lululemon Athletica as CEO and they were about seven months of public company at that point, around, you know, 200 million in revenue. And over the next six years, we grew that to about 1.6 billion that was quite a rocket ride.
Christine Day 18:17
Then I started a food as medicine company. And so, that sells food to insurance companies, for people with like, hypertension, heart disease, diabetes, etc. And actually, it is a benefit under Medicare, Medicaid, where people actually get, you know, between 200 and, and, and more meals delivered to their home. So, that's, that's rolling out now.
Christine Day 18:44
I left that a couple of years ago and started The House of L,R & C, which stands for The House of Love, Respect & Care, with Russell Wilson and his wife, Ciara. And that's all about sustainable fashion. So, that's kind of the cliff note journey it was incredible. I've had a good time, let in my professional career. Let's just say that.
Steve Dennis 19:08
Yeah, I mean, that's some amazing experience. One of the reasons we wanted you on the podcast is Michael and I heard you at Shoptalk. And I was just kind of blown away. I mean, it's super interesting about what you're doing now, which we're about to get to, but also just this incredible journey, working with two just iconic brands at really critical times in their in their growth trajectory. So, maybe we'll come back to some leadership lessons from that but, but tell us about this House of L,R & C and how that all came about and, and what, what really the company is or the brand is?
Christine Day 19:43
So, great, well, it stands for The House of Love, Respect & Care. It also stands for Love, Russell & Ciara. And so, it started out with the Good Man Brand, which is a men's clothing line, which was sold at Nordstroms. Russell started that with some partners. He asked me to take a look at it and it didn't really have much presence, or you know any business operations outside of Nordstrom. So, I helped build a DTC business and kind of really rebranded it and then moved it into the sustainability space.
Christine Day 20:14
And then Russell, of course, married Ciara and he said, okay, well, Ciara would like a brand. And the next thing I knew, I was developing a LITO, which is LOVE IS THE ANSWER by Ciara and HUMAN NATION, which is our gender-neutral Gen Z brand. And the whole purpose of The House and, and the brands is really to elevate the fashion industry, which is one of the third dirtiest industries in the world, and really behind other industries, including the food industry in terms of transitioning into not just sustainability, but all ESG practices. So, your environmental, social governance, you know, as a lot of room to level up, as Ciara would say. And so, that was really the mission is to make sustainable fashion, the effortless choice for the consumer by offering them brands they love. And they just have to love the clothing, and we've taken care of everything else.
Christine Day 21:09
So, we formed as a public benefit Corp. And then we received our B Corp certification within about 18 months of opening because we really designed the company right from the beginning to meet the UN sustainability and transparency goals to meet the B Corp standards to you know, get certifications like the leather works, you know, standard gold, which is what all of our leather product is made to and responsible gold standard, we looked at the textile exchange's, top rated fabrics. So, we really are a fabric first company. So, we start with that where it's made, then, you know, pick B Corp and sustainable green factories to manufacture in, then all the way we call it the true line.
Michael LeBlanc 21:57
Yeah, fantastic, -
Christine Day 21:57
So, from purpose and, and mission, all the way through our operating principles to our impact across the whole organization, to really create value by living values. So, you know, that's really what we're up to and the medium, of course, is clothing. But it's really about, you know, giving people the choice, and showing that you can still build a great business model, even though, you know, you are a sustainable, you know, company, and so far, it's, it's working so, we are really excited about it, (crossover talk), -
Steve Dennis 22:05
And maybe before I don't want to get too in the weeds on, you know, like the technicalities of a of a B Corp, but could you just maybe touch on why that's so important to, to what you're doing, and, and maybe some of the challenges it puts on, on building a, and growing a profitable brand?
Christine Day 22:48
Yeah, I mean, number one, it it's a very, you know, complex, you know, document and application process, you know, the average score of people who apply the first time is 50. We got a score of 94.9, you know, which puts us in, you know, the ranks of, of companies who's been doing it, you know, they're probably on the third or fourth renewal, because you have to improve 20% every time. But what you know, is important about B Corps, is it's a third-party verification of everything you do across that ESG spectrum. So, so, we can't just make random claims, we have to back everything up from our environmental claims, with measurements, with reports, with third party audits. And, you know, same thing on your social programs.
Christine Day 23:39
And then governance is important, too. So, it's, you know, one of the few, you know, certified programs from ESG. There are other ones that, that measure what you're doing, and you report against, but being able to use that certification in your marketing advertising. So, if you looked at our recently opened Denver store, we have big gold B Corp sign in the window. And really, that's also part about educating consumers as well. So, it, it keeps us honest.
Christine Day 24:09
And, you know, I think that's where it's really important, you know, the supply chain in this industry is, you know, is kind of archaic in a lot of ways. You know, even though it's global in terms of measuring impact, and moving in with kind of like, all the things from ESG that you want to be able to measure. So, you know, there are things like the Higg Index, which is controversial right now, which I think is a shame because, you know, reality is anybody who's measuring anything will get better. And we'll learn more, and you know, we'll adjust what we think good is as an industry, but we've got to start measuring. So, B Corp is one of those things that really does apply, and there are not very many apparel companies that have B Corp status, so we're really proud of it.
Michael LeBlanc 24:56
So, I guess it's like the ISO 9000 or 9001, -
Christine Day 24:58
Yeah, -
Michael LeBlanc24:59
Standards, right? It's the fact that you nailed it on the first try, tells me you architected the business in such a way, oriented into the built for good. And what the standards of , of the B Corp. Were, what, what came first for you? Was it the commercial opportunity? Or was it the idea or the ethics or the the concept of being built for good? How di-, how did you approach that? And why did it why did it matter for you? And, and why do you think it matters to us?
Christine Day 25:23
Well, honestly, I wouldn't have done this unless Russell and Ciara had agreed, you know, to do it as a public benefit Corp and a B Corp and the public benefit Corp is really important in today's world, in the US, in particular, the Canadian model is much more about you can as a corporation, you can take all stakeholders into account. In the US, we've shifted so much by the activist investors and, and case law to you know, short-term results. And you know, what's in the best interest of the shareholders of that particular moment? And, versus like the long-term health of companies and how they create value across the value chain, and sustainable value? And I don't mean, just sustainability, I mean, that, that is a sustainable economic chain. So, you know, for me, in, in doing business, what I really wanted to do was, make sure that anything I do, it, it makes the world a better place.
Christine Day 26:24
You know, I'm at that point, you know, I'm 60, you know, you kind of, you, you know, you've accomplished a lot, you know, I've had the CEO title, I've you know, done a lot of great things. But you know, it's about how do you teach that next generation, we can do business with values, and we can return capital to shareholders, and play the long game across the environment, the social causes, and then governance for shareholders. So, you know, it was really, you know, if this will, I doubt it will be the last thing I do, but I want to do something really meaningful, that shows the path, you know, I call it creating the type of company the future needs now.
Michael LeBlanc 27:04
Yeah, consumers are a bit of a paradox, right? I mean, it seems to me, sometimes they talk about, they're all about sustainability and issues yet, I look on the app store and I see, you know, retailers like Shein being a number one downloaded app, which is probably the opposite end of what you're doing, like, how do you how do you think through that? What's the what's your lens, when you think about consumers and their actual behavior versus their stated behavior?
Christine Day 27:30
Well, I think the gap in the fashion industry in sustainability has been and, and all due respect, like I love brands, like Patagonia, and Pangaia and brands that have been, you know, Everlane, that have been, you know, moving in this sustainable direction. But the thing they don't give the consumer is true fashion. And we're not going to change this industry, unless we actually give them true fashion plus true sustainability, they have to love the piece.
Christine Day 28:00
And then price is an important component of it, you know, so that's why we also did the HUMAN NATION brand, which is our most affordable, so like a hoodie at $78, which has a DWR wash on it, which is a durable water resistance, we call it drip shield, that makes the garment water resistant, stain resistant, anti-stink, so it's were more washed less for $78 with a really good gram weight in it you know, so that kind of price point makes it really affordable for the consumer. And it's organic cotton, and recycled poly-mix. There, the consumer just has to love that sweatshirt, it's affordable.
Christine Day 28:40
And then you know, then we're going to change the behavior. But fashion in particular clothing is people's emotional armor. Like if we're going to a wedding or an event or going back to school, we want new clothes, right? And we want to express ourselves, it's, it's a form of art and for many people. So, you know, that's where we have to get the emotional side of fashion, right with sustainability. And that's really what we're trying to do here at The House.
Michael LeBlanc 29:06
You've led a hyper-growth organization, Starbucks, Lululemon. What's the growth strategy for this brand, your online, direct-to-consumer? I think you're wholesale and I think you got some physical stores, where how do you see this evolving? What's the, what's the one plus one equals three? And what are the what are the roadblocks or challenges we see some, you know, digital, native, vertical brands struggling these days, and many are going to mix their, their, how they go to market? What's your approach?
Christine Day 29:30
Yeah, I really believe in the omni-channel approach because it's where the consumer is at. And, you know, in today's market, like, I always look at it and I think, you know, when I built Lululemon, you know, it was kind of what I call the rise of the mono-brands and the first merger of kind of eCommerce plus your digital footprint and we were doing it I mean, your, your physical footprint, and we were doing it right at the stage of growth. So, I was able to plan my digital footprint and my physical footprint at the same time, which a lot of the big, traditional model brands didn't really have that opportunity with DTC and they were kind of overbuilt in stores, you know, and wholesale wasn't something that we did because it was really, you know, in the days of like JC Penney's and Macy's, (inaudible), they were discounting like crazy, which ultimately, you know, ruined them. And so any wholesale or any mono-brand that sold to them, you couldn't control your price in the market.
Christine Day 30:27
But in today's world and then of course, you had DTC only for a while. But now you've got really this consolidation in with Google, Facebook, or Meta, (inaudible) we should say now, and it kind of an oligopoly. I mean, yeah, you've got TikTok, but the cost of digital advertising has soared. So, you know, you had brands that might have had good gross margins, but shipping costs have soared, digital costs have soared. So, it's not as an attractive business model. And the thing about doing a small amount of wholesale strategically is, it allows your business model to hit a better gross margin because you hit, you know, your fabric minimums, and you have a consistent basis. As long as you choose your partners wisely. You don't oversell and over buy. So, you get left holding the bag with inventory, and then having and you'd get brand awareness so you can grow your own DTC channels.
Christine Day 31:23
But people still love the art of shopping, I don't think, you know, we can grow as many stores as maybe brands have historically in the past. But, you know, smart stores where the social aspect of shopping, trying things on, the guest experience are important, but I think we'll see smaller stores, and more integrated stores, which is why we've used things like flow codes, where you can, you know, you can shop off our mannequins, if the stores closed, you can see with a flow code, which goes to an internet light landing page, as opposed to just a website, you can follow links, you can see our sustainability story. So, you know, I think the theater of shopping is still important. And then a seamless guest experience to shop online, keeping your stores kind of inventory light, delivered to stores, so that omni shopping experience is critical to today's world. So, that's what, what we're doing.
Christine Day 32:17
And, you know, we're, you know, we're, we're growing at, you know, our own channels at about 110% right now. So, in spite of I think the consumer slow down, you know, we feel pretty good about how our business has been responded to, and, you know, the brand stories that we're telling, certainly does not hurt to have people like Russell and Ciara posting (inaudible) having, you know, 1500, the extra customer, you know, percent increase in customer traffic. So, so, so, you know, I, I hope that we, you know, we're going to be one of those growth, success stories, we're certainly working very hard to make that happen.
Steve Dennis 32:53
Well, I love the way you've kind of pulled together this, you know, this decades long experience of, of how brands have grown with kind of the current trends of, of using social media and sustainability and all those kinds of things. I'm kind of curious, and I know we just got another couple minutes left, if, if we want to draw some lessons from your experience over, over the years for some broader leadership lessons for people that are that are listening, are there are there any other points you would make about how to tap into human potential just in general lead and what's, you know, pretty complicated and ever changing environment, -
Christine Day 33:31
I always look at it as like, no matter where I am, which is, you know, why I think I was successful in Asia as well, where you've got maybe, you know, $2.40 cent labor in Thailand, and in Australia, you've got $29 labor, and you've got to create the same guest experience and brand experience, but you've got a completely different Lego kit, you know, color set. So, it's like, how do you put the building blocks together? You know, every time is one of the ways that I always look at business.
Christine Day 33:59
But the second is, is really that whole, you know, purpose led journey, and when people come to work for you, because they love the purpose and, and passion, that ability to overcome problems and think in new critical ways, is, you know, as a team is, is so important. So, being purpose led, and then keeping that purpose, and that those values through all of your operating systems as you design them is so critical.
Christine Day 34:29
But you know, the last is, you know, I've been part of a lot of, you know, good entrepreneurial ideas, but if you don't shift from just ideas and concept and passion into scalable working business models, you need the technical expertise, you, you need to give the shareholders a return on their money. You've got to work on things like gross margin and product costs.
Christine Day 34:54
And, you know, you have to shift from kind of heroic muscle through things to planning for success as the business gets more complex. So, you know, for a lot of the early founders, you've got to manage risk as much as you manage opportunity. And you got to manage risk as much as you manage your, your passion. And that's where I think a lot of young entrepreneurs not valuing or respecting, really how hard it is to create a business model that works. And you've got to have that industry experience. Even though maybe you want to do things differently, you still have to compete in the business world.
Michael LeBlanc 35:33
Well, it's been such a treat catching up with you. I mean, I think we could, we could talk for a long time about this. You, you touched on so many things that the paradox of choice in the modern the, the course of modern retail, it's really amazing to see a I wouldn't call it a celebrity brand, but you really matched together the skill of, of being a merchant and, and the panache of a brand as you said, it's probably that it's that solution, right? How do we get people that and or, but it is that both and kind of both and thinking. So, you know, thanks so much for joining us on the Remarkable Retail podcast. It's Been a real treat to chat with you and, and I wish you continued success. Now are you LinkedIn person? What's the best way to kind of keep up with what's going on with your brand?
Christine Day 36:15
(Inaudible), I think I use LinkedIn as a social media channel. I'm always blasting on that. So, well, thank you for having me, though, was a real pleasure to have the conversation and to share just you know, a little bit of how I, I think about retail. So, thank you so much.
Michael LeBlanc 36:31
If you like what you heard, please follow us on Apple, Spotify, your favorite podcast platform, so you can catch up with all our great interviews, like our discussion with Seth Godin on what retailers can actually do to fight climate change. New episodes of season 5, presented by MarketDial will show up each and every week. And be sure to tell your friends and colleagues in the retail industry, all about us.
Steve Dennis 36:51
And I'm Steve Dennis, author of the bestselling book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. You can learn more about me my consulting and keynote speaking at stevenpdennis.com.
Michael LeBlanc 37:05
And I'm Michael LeBlanc, Consumer Retail Growth Consultant, keynote speaker and Producer and host of a series of retail trade podcasts including this one. Plus, the host of the popular YouTube cooking show Last Request Barbecue. You can learn even more about me on LinkedIn, or meleblanc.co.
Safe travels everyone.
SUMMARY KEYWORDS
brand, stores, sustainability, people, retailers, business, B Corp, talk, DTC, consumer, Ciara, big, growth, important, retail, Amazon, company, news, gross margin