In our final episode recorded live at the World Retail Congress in Barcelona our guest is Martin Urrutia, Global Head Retail Experience & Innovation for the Lego Group. Martin takes us inside the innovation process at one of the world's most beloved brands.
In our final episode recorded live at the World Retail Congress in Barcelona our guest is Martin Urrutia, Global Head Retail Experience & Innovation for the Lego Group. Martin takes us inside the innovation process at one of the world's most beloved brands. He shares how Lego's process has evolved and how they incorporate customer insight, consumer trends, technology disruption and brand vision to bring a steady stream of new concepts to market. We also discuss the important of a 'test and learn' culture and building a portfolio of innovation initiatives along a continuum from refresh to blue sky.
We kick-off the episode with the week in retail news, including our analysis of several pieces of macro-economic data, which present a bit of a mix picture ahead of the US Fed's decision on interest rates. We then shift into earnings from Lululemon (remarkable), Dollar General (surprisingly sluggish), Nordstrom (demonstrably awful), and Macy's (more running to stand still).
Steve's Forbes article: Macy's and Kohl's Keep Running to Stand Still
We will be taking the Remarkable Retail podcast on the road to the Lead Innovation Summit, where BMO Managing Director Simeon Siegel will be joining on stage to discuss what's new and what's next for DTC. If you want to join us, take advantage of our special discount code....RRxTheLeadSummit
About Marin
With a career of 25 years on Retail and Innovation that allowed me to gain global experience due to the different assignments to work with different FMCG to bring their brands alive anchoring actions on consumer, shopper and retail insights. I believe that if its not measured there is no impact, therefore in most of the programs that I have driven I add a strong focus on measuring commercial and marketing impact that creates an ecosystem that constantly strives for innovation, continuous improvement and challenges the status-quo.
I joined The LEGO Group in 2010 as responsible of the Global In-Store Agenda as part of the Global Shopper Marketing team based at the HQ in Denmark, currently with the role as Head of Retail Innovation, and responsible for our internal Global Retail Network.
My vision to offer the best shopping experience at any location and retail channel where our products can be found. This will allow us to bring our brand alive and to inspire shoppers and consumers at the point of sale and point of experience; as retail plays a fundamental role on the path to purchase, therefore my passion to develop retail experiences that are memorable, delightful and available to all consumers and shoppers around the world
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 eCommerce Leaders podcast, and The Food Professor with Dr. Sylvain Charlebois. 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!
Martin Urrutia 00:05
Welcome to the Remarkable Retail podcast, Season 6, Episode 21. Presented by MarketDial. I'm Michael LeBlanc.
Steve Dennis 00:11
And I'm Steve Dennis.
Michael LeBlanc 00:13
Well, Steve, things really connect for us in this episode as we sit down with Martin Urrutia, Global Head of Retail Experience and Innovation, the LEGO Group.
Steve Dennis 00:21
Yeah, it was such a, we did this back in the World Retail Congress, I guess what, five weeks ago or something, it seems like seems like forever, but it was such a fun interview. He's such an interesting guy, but of course, everybody knows LEGO and it's a fun brand, but it was so great to just really get into the innovative creative process there. So, I think, I think our listeners will really enjoy it and learn a lot from it. Hey, speaking of events, nice segue. Weren't you just this past week at Canada's big event, the Store conference, how was that?
Michael LeBlanc 00:57
That's right, Store was, the big kahuna, as I call it, here. It's kind of like as you imagined, like the NRF Show up north, and it was great. Lots of people, saw tons of our fellow RETHINK Retail influencers, and I was onstage twice, once on the main stage with Loblaws, talking with Alfredo Tan talking about retail media networks, which is, of course, a big buzz and many of the grocers here are looking very closely and other retailers and then secondly, bracing discussion about shopping centers, the future of shopping centers, so me and a bunch of other talking heads, so to speak, talking about shopping centers. And for, big news for the first time, I actually met in person and got a picture with them from Salesforce, Rob Garf. So, we-
Steve Dennis 01:43
Ou, la Garf-y.
Michael LeBlanc 01:45
We-, never met him in person and he's taller in person, actually and so that was a real treat and got to sit and chat with him. So, lots, lots of people from the, from the industry and it was a great show. So, so yeah, so thanks for asking. All right, well, let's face together the retail news of the week. So, there's some good news, just came into our inbox from some, some economic good news around jobs, but there's all kinds of you know, as these things go, there's some ups, downs and sideways. What do you think or what do you make of the latest economic news?
Steve Dennis 02:18
Yeah, just really quickly, because we haven't talked broadly about macro stuff in, in a bit. Yeah, we got the US jobs report and it's so interesting, just how the economy just keeps producing a lot of new jobs. The unemployment rate did tick up a bit, but it's still at 3.7%, which is, you know, almost unheard of in the last few, few decades.
Michael LeBlanc 02:43
What is it, as an economist, you would call that, you know, there's always frictional unemployment even in full, like, it never gets to zero, right people around but 3% is, it's like nothing literally, but from an economist’s point of view, right?
Steve Dennis 02:56
Yeah, yeah, I think, you know, it's terrific and now I think the thing that folks will be talking about for the next week or so is, what the Federal Reserve here is going to do, as well as just generally, I know, Bank of Canada and, you know, in the UK, there's a lot of conversations about where interest rates are going to go. So, we'll see what happens there. I think it's kind of a mixed bag right now, some people saying they're going to pause just to kind of see how things are playing out. Others are saying, well, as you know, this job report’s pretty strong. Some food, you know, some inflation is moderating food inflation is actually starting to decelerate quite a lot. Gas prices have been, you know, much more moderate. So, there's some positive picture in terms of inflation and then, you know, you got kind of these storm clouds on the horizon.
Steve Dennis 03:44
Wages are not keeping pace. With inflation, even though the job market is strong, consumer debt, starting to go up. I think about earlier, last week, we got a report about US consumer confidence, which dropped to a six-month low. This new debt deal that we just got here in the States, I think it's still a little bit uncertain, but student loan debt had been paused. That's going to restart I think, in September. So, you know, there's just a lot of things that are putting pressure on lower and middle income, income folks, which sort of gets to the next topic I just wanted to mention, just kind of pulling this together.
Steve Dennis 04:22
I kind of feel like and I hate to just keep you know, there's like the great acceleration, the great moderation, there's all these things, but I feel like we're in this era of this great reprioritization because so much of what we see, and we'll talk about earnings briefly in a second, but I think so much of what we see in terms of retailers results, and at least their near term strategies has to do with these shifts in spending and you know, so much more money going to essentials and this trading down phenomenon, even folks like Walmart reporting the growth in consumers that make more than $100,000 a year, we've started to see some report words about even the luxury market, which had been pretty strong and I, a lot of people think is immune from these forces, which I know for my Neiman Marcus experience is not is not true.
Steve Dennis 05:09
But, and the thing with luxury, I think just quickly, people don't understand is yes, there's sort of the uber luxury customer and the uber luxury segment, but then there's what I'd call just sort of the working affluent and these people have, you know, very, very nice incomes, but they're not so fabulously wealthy, that when they start to get squeezed, they don't start to cut things and things like luxury products are pretty easy to cut. So, I think it's a, it's still a lot of churn. You know, it's one of the reasons why we kind of headline this, this season is when the tide goes up because lately, we're seeing that the tide is not continuing to go out.
Michael LeBlanc 05:43
Thinking back to Barcelona, where Scott Galloway, he said, hey, you know, it's supposed to be the recession next month, we've heard that for the past 18 months. So, he was feeling like, you know, this negative news kind of feeds into negative news, but there's, what would you describe it as? There's trailing indicators and leading indicators, right, and I think some of the leading indicators are pointing to more economic chop than less.
Steve Dennis 06:03
I think, for sure, the consumer has shown more resiliency than many people have thought, myself included and the fact that we've got largely full employment is definitely helpful to, to consumers being able to spend, but you know, we're still kind of rolling off, as we've talked about before, the, this, you know, we're into this post COVID period where you don't have stimulus payments, and people will spend a lot of money on big ticket stuff.
Michael LeBlanc 06:29
You know, I think the thing that, and, and maybe we'll do, I'd love, I think I've mentioned it before, I'd love to get an urban planning type person on, I was reading a recent study that said Americans have saved 60 million hours of commuting time in 2022.
Steve Dennis 06:42
Yeah.
Michael LeBlanc 06:46
That's money too, right. So, I don't think I don't think we're taking that into account as much as we should. I'm not sure anyone quite knows how but I think a lot of people are saving a lot of money, like real cash that, that is buoy-ing, buoy-ing. That is keeping the economy a little more buoyant than they might if they-
Steve Dennis 07:03
Nice, work around.
Michael LeBlanc 07:04
Before I hurt myself. Let's shift, shift gears into earnings Vancouver based Canadian company international powerhouse Lululemon puts out results that are just knock the cover off the ball results. Talk about your impressions.
Steve Dennis 07:18
Yeah, well, what I was gonna say, last week overall was kind of a downer for earnings. We'll talk about a few that were, that were really disappointing, but once again, if you are a remarkable retailer that is not necessarily facing so much of the macroeconomic headwinds, you can, you can put up some good numbers. So yeah, Lululemon, 24% sales growth, a lot of that was propped up by almost 80% year over year growth in China. Now, obviously, companies with a big presence in China are starting to, you know, they're comp-ing against really weak numbers. So that's not totally shocking. But that also-
Michael LeBlanc 07:51
It's a stretch so to speak, right?
Steve Dennis 07:53
Oh, I see what you did there, but their profit performance was outstanding, 290 million versus 190 million last year, which was a pretty good number by itself.
Michael LeBlanc 08:04
Right.
Steve Dennis 08:05
They raised their guidance. So, you know, here's one of you know, maybe like 5% of the companies that are really reporting very strong results and being optimistic about the future. We also had a, you know, not quite as powerful but, but Chewy, the online pet supplies retailer, which we had previously had in kind of the wobbly unicorn corner seems to be breaking out from that, at least in the last couple of quarters, they had pretty nice sales growth, I think close to 15%. They did make a small profit, it's their second straight quarter. So, you know, some good, good momentum there.
Steve Dennis 08:40
Then you go from the good. Well, the outstanding and the good to, you know, a little less good with Dollar General. So, Dollar General. You know, it's interesting, a lot of these dollar stores, which of course, had been this amazing growth category for a long time, are starting to show some, some weakness. They had, you know, decent sales growth. Comps were kind of flattish, but overall sales were up almost 7%, but their operating profit is down, and they talked a lot about margin pressures and just decelerating sales and subcategories. So maybe we're, you know, even with all this training down and value orientation, you know, I don't know why that's a function of just there's so many dollar stores that-
Michael LeBlanc 09:24
Yeah.
Steve Dennis 09:24
You know how much left, is left in the tank, so to speak.
Michael LeBlanc 09:27
Yeah.
Steve Dennis 09:28
The other thing they said is they, I think we talked about on the podcast last year, some time is that they have this newer concept called popshelf, that they had opened a bunch of locations, and we're talking about opening quite a few more. They're still going to open, I think, 90 in the next year, but that's down quite a lot from what they originally thought so it's definitely tapping the brakes a little bit and then when we shift to the department store sector, Nordstrom, which I'm not sure what's going on there.
Michael LeBlanc 09:58
What did you describe it on social media, there's a few folks who did post and you just said it's demonstrably awful. I mean, there's no-
Steve Dennis 10:05
Yeah, I mean, it's a big sales decrease, a pretty sizable loss, I went back and looked at because I think, you know, it's important to kind of benchmark some of these numbers to pre COVID and the revenues essentially flat to 2019, which is better than some, including one we'll talk about in a second but yeah, they've just really hit a wall. So, you know, I do think some of this is caught up in the discretionary spending issue, you know, people pulling, pulling back,
Michael LeBlanc 10:34
And they took a financial hit for their, their move to close down in Canada, right. So there's a bit of that, a little bit of that in the numbers.
Steve Dennis 10:41
So a lot of issues and one thing I was just gonna say briefly, and maybe we'll come back to this in a future episode, I think sometimes because of the way I talk about some of these retailers, you know, I think we have to separate out what is a fundamental business design issue, you know, what is your, what is it about their value proposition that is not remarkable and is not well fit to the market, then there are these issues of, you know, how well are they executing against their value proposition and then there's just, you know, kind of the macro-economic conditions. So just to use the example of RH, which we talked about last week.
Steve Dennis 10:41
Yeah, there is though, they guided, they guided down for the balance of the year in earnings, taking that out. So, it's not a very optimistic picture. Then we get to Macy's, you know, which I am sure people are tired of hearing me, hearing me pick on Macy's, I wrote an article about Macy's and Kohl's, essentially, the idea of running to standstill, you know, spending all this time talking about all these exciting strategy things and similar to what we talked about on Kohl's last week, if you look at Macy's and you go back to 2019, their sales are down a lot, their earnings are, you know, down to flat and so they, they also guided to not a very optimistic number going forward.
Steve Dennis 11:58
RH, I think, has a remarkable value proposition. I have some questions as to how high is ‘up’, in terms of its expansion potential because it’s, you know, focused on a, on a niche, essentially, they clearly have not executed well, the last few weeks and they're facing economic headwinds. I think that's a different thing than talking about Macy's where I think their, their model is just fundamentally broken as, as the Kohl's model. So yes, they are being hurt by some economic headwinds. I certainly think Macy's could and Kohl's could execute better, but the reason why I make such a big point of it is it feels so much to me, like the way I felt at Sears 20 years ago, which is this model is broken and we're doing, you know, we're putting cosmetics on a short stocky domesticated animal and so-
Michael LeBlanc 12:44
No matter how well you execute, very smart people can execute. If the model is fundamentally broken or flawed, you're just going to continue to execute yourself into a brick wall.
Steve Dennis 12:55
Well, and I will go out on a limb, and I'm sure this will come back to bite me, but I believe that because of the general issues in the moderate department store sector, and the things that are currently in play for Macy's and Kohl's, I think it's going to be difficult for them to ever run a revenue increase again, unless we have like, Argentinian inflation or something.
Michael LeBlanc 13:14
No.
Steve Dennis 13:15
But I think I just think that, or you know, maybe though, they'll do something, promote so heavily or spend so much in marketing, that they eke out a, a real sales increase in a quarter or something, but I think, you know, nothing they're doing is, is really going to fundamentally cause them to gain relative market share and if they can't gain relative market share, as well as do some other things. You know, it's just a business that, that is, you know, slowly liquidating, essentially. So, I'm gonna be a little bit provocative and put that out there, but end of rant.
Michael LeBlanc 13:42
Alright, well, very good. That's a wrap on the news and now just before we talk to Martin from LEGO, who's going to take his brick by brick through the retail innovation process at LEGO, let's hear from our presenting sponsor.
Michael LeBlanc 13:54
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Steve Dennis 14:28
Well, Martin, thanks for joining us live from the World Retail Congress in Barcelona. How are you today?
Martin Urrutia 14:34
Excited to be here. Thanks for inviting me and enjoying beautiful Barcelona, the little things that we can see.
Steve Dennis 14:39
Yeah.
Martin Urrutia 14:40
A little bit of sunshine in the morning, sunset in the afternoon, but always exciting to be in beautiful Barcelona.
Steve Dennis 14:45
Yeah, and plenty of inspiring content as well of course from the, from the event catching up with people. Well, we're delighted to have you here. What we'd love just to start off with is just a little bit about who you are, your personal and professional journey and the work you do at LEGO, a brand that I think is probably known to just about everybody but perhaps not.
Martin Urrutia 15:04
Yes, thank you. Thank you for having me. My name is Martin Urrutia. Born and raised in Mexico, but been through different places I will call myself a global citizen, love traveling, have lived in different places when I finished my career studying industrial design, but I was always curious about marketing and curious about retail and I discovered my passion and confirmed my passion that is retail, I'm love retail in any shape and I'm growing I was I was able to have different experiences.
Martin Urrutia 15:32
But now working as a professional, I started my journey and I think that's probably the best start that I could wish. Working on the agency side. I work with different agent-, global agencies in retail, it was fantastic because the learning is, it's amazing, you know, every day, a new project, a new challenge, sometimes actually were the same challenges just from a different company and then moving forward, then I joined LEGO 12 years ago, had to move together with my family and 20 suitcases from Mexico City to Denmark and since that time, we've been exploring and evolving our retail experience.
Michael LeBlanc 16:06
That's neat. How did the LEGO opportunity come up, did they find you or you find them or?
Martin Urrutia 16:10
I think it was, we found each other, let me call it destiny, destiny is something that you know, it is, it is there for to be, so telling you quickly the story that is actually a good anecdote, I was watching a movie, not the best movie and I was a little bit bored and I was just browsing LinkedIn and I received a message from somebody that asked me if I was interested in applying for the role. I remember telling my wife to put a pause to the movie, this could have implications. Are you ready to move with the kids to Denmark and I made her say, yes, we are can you go back and put play to the movie again and literally 12, 15 weeks after that we were moving with everyone, everyone to start a new life in Denmark, so it was a very interesting journey but that's how it happened.
Steve Dennis 16:54
So, as I mentioned, I think just about everybody probably has some knowledge of LEGO as a, as a product. Maybe not so much as a global business, could you just give us maybe a little bit sort of fun facts about the company, the size, the breadth kind of some of the key things that are going on?
Martin Urrutia 17:11
First of all, the LEGO Group is, it's a family-owned business. That is great. You know, we have a big commitment and belief from, from the owners. The ownership has been passed from generation to generation. It was established and founded in Denmark, in Billund in 1932. So very soon, a few years, we're gonna reach our 100th anniversary and yeah from being a small toy company in Denmark, actually, that started with the wooden toys. Not many people know that, if you're curious to know more, you can find in some of the video platforms, you can find the LEGO story there's, of course, an official one and then you can see, you can see in this small movie, all the things that happened, right, they were started with a wooden toys, then the factory got burned, then it was rebuilt, then he got burned again.
Martin Urrutia 17:57
And you know all this drama behind the company, but you know, the tenacity and the creativity from the, from the founder, then they discovered plastic and they were curious about the power of plastic creating a new toy and they were very curious on creating a system for playing, because in the, you know, if you look at the rest of the toys, they're great in isolation, they don't work together. So, the founder had a dream of creating a system in play and that's where everything started and then we started to expand. We have now facilities and manufacturing locations around the world.
Martin Urrutia 18:32
We just announced our, our two new ones to string up or bolster our, our presence around the world. We just started the construction of our new manufacturing facility in Vietnam. That will be our second in Asia, we have in China one location that we have Vietnam, and we are going to support also the Americas with a new factory coming into the US in a couple of years. So, it's been great. In terms of retail, we have plus 800 stores around the world. We have stores in more than 80 countries. Many of them are owned and operated by us but also, we have many stores with our partners that they open also LEGO certified stores and then we have presents with great other retailers, you know, in department and grocery and other channels.
Michael LeBlanc 19:12
The wholesale business, yeah.
Martin Urrutia 19:14
Yeah.
Michael LeBlanc 19:14
I've been, I've been to your flagship in, on Fifth Avenue in New York City. Just a wonderful store.
Martin Urrutia 19:19
You know, I love that store. It's our first from what we call the retail taming concept and it's a concept that we use launching through that store, to provide more play, to bring more digital to have different kind of experience and keep evolving and that's part of the culture of the company innovation and keep evolution but actually now that we're in Barcelona if you haven't seen it, we have not far away from the World Retail Congress, a store in Barcelona.
Michael LeBlanc 19:43
We walked by it yesterday on the tour actually looking at it, yeah, yeah, yeah.
Martin Urrutia 19:46
It's beautiful. We say we celebrated Gaudi; we actually have you know Park Güell, we have the Sagrada Familia Cathedral. We have many other icons that will celebrate the Catalan Cauldron and Spain, it's a fantastic store, it's one of my favorites. That store really, really has a lot of love from our fans too.
Michael LeBlanc 20:05
Like New York.
Steve Dennis 20:06
You've worked in innovation, retail experience for quite some time. Maybe just start very kind of basically like, what, what is your definition of innovation or what does innovation mean for the LEGO Group?
Martin Urrutia 20:20
Yeah, I've been, of course, working with retail for 25 years. So I will tell you the evolved version, right, because in the past, maybe that's a good inspiration for our listeners, but um, innovation, sometimes, it's only a good idea, we have a good idea and we think we're gonna innovate, but actually, the evolution of a good idea to innovation is when, when you actually have a purpose, when you have a problem that you're solving, when you are linking to a need. So, I think, you know, my personal journey in evolution has been from just brainstorming to give good ideas that actually at the end, we have great ideas to now look into what are customers needing, what are the shoppers missing, what can we do better in our stores, and then innovate through that.
Martin Urrutia 21:01
So that will be my innovation. Probably the, the additional take that I will, I will give to that is now I don't see that it's enough that, you know, you can solve a problem, you can solve a challenge, but I don't think at least when I look at innovation, I don't think that is the end or the final step. What my team and I were doing is we're looking into a roadmap on how that innovation will, will stay fresh, will stay relevant, will still feel as new for a period of time because we know that from day one, when we launch it is going to be great, but there's going to be tweaks we need to learn we need to vast-, vastly iterate.
Martin Urrutia 21:38
So, if we are saying that the project is done on day one, I think that's a miss. We need to think that actually, day one is an important milestone, but not the end date and then when we develop innovations, we look into how does this looks in the next month, how does that looks in the next years and we actually, already, from the beginning deliberately put milestones in year one, this is how it's gonna look 1.5, 2 year, this is the evolution and that has helped us to, to make our innovations more relevant, meaningful, and to scale a more mature and evolved version than just what we developed for day one.
Steve Dennis 22:15
It's, it's hard enough to figure out where technology is going where customers’ needs and wants are going to go, but there's also I'm sure you've heard this famous quote from Henry Ford, about if I had asked customers what they wanted, they would have said a faster horse, not, you know, a whole new way. So, you know, sometimes it's great to think about well ask the customers figure out a problem and solve it, but sometimes customers can't express what they want in a way that actually leads to tangible innovation is that you see that as a challenge and if so, how do you accommodate that in your in your roadmap?
Martin Urrutia 22:50
Great point and because you know, when we just look into insights, we are answering to a sentence, right, where we're answering to data and, and, and nowadays, you know, there's many factors, and there's the ones that you can predict, and the ones that you need to be ready that you cannot predict. So, when we look into innovation, we actually look into three areas. One is the what customers want, as you're saying, but we also want to look into what are the latest trends from the market, are shoppers, you know, using their phone in the stores, how do they feel about contact less experienced and know not when you were not comfortable touching something, but we also use a third factor.
Martin Urrutia 23:25
So if you look into this, you know, chart with three circles, we're looking into the sweet spot in the middle, where you have data on one side, you have trends, and you know, movements that you will see happening in the industry, not only in toys, it could be pet food, luxury, whatever, but then we have a third one that is very important and is the vision, right and as you were saying that quote from, from Ford, probably he used the data to know that people were ready to change and have a new way to transport, but he had the vision. Some people call it the gut feeling the, you know, the hands on how to do that and in our projects, we actually use that a lot and some of the wording that I use with our leadership team, when we look into an experience is instead of saying will you do this, will you agree to doing that very often we use the word will you bet on this idea, will you agree that the, you know, we try this.
Michael LeBlanc 24:15
Oh, that's interesting, and what are the big bets we're making around any particular innovation, right?
Martin Urrutia 24:18
Of course, by saying bet, first of all, you know, we know that they could work, win, we're actually not, right and so using the, using bets, or proposals is a good way to also engage them and take them on the journey, on the risk that we're taking together.
Michael LeBlanc 24:32
Right.
Steve Dennis 24:33
Because it's not such a black and white one time, or you know, all or nothing kind of-
Martin Urrutia 24:35
Yeah.
Steve Dennis 24:36
Kind of a proposition.
Martin Urrutia 24:37
Yes.
Michael LeBlanc 24:38
Let's talk about the difference in your mind. Over your experience, both in LEGO and in your career between innovation and transformation. Is it a spectrum or is, are they different things, how do you, how do you view that?
Martin Urrutia 24:51
Yes, it's a good question. So, I'll tell you the, my answer and then how we work with that because we actually have a model that works on that one. So, I think my personal take is that innovation is it something that is new to you, you never seen it before, but also has a new purpose and it will, it will give you the 'wow', it will, it will, it will make you, you know, have that expression of you know, surprise. For transformation, it's actually changing or adapting, or a mix between all of those to make sure that you meet the next vision and the next problem. So, I think I will, I will see them as two different paths, because definitely just because we're innovating and you're not transforming, or just because we're transforming, it doesn't mean that you're innovating.
Martin Urrutia 25:34
So, they're both different, probably innovation. I will see it more on the, on the experience, on the, on the way we present to our consumers, our experiences for transformation will be probably more on the business model for the operation. Now, how do we do that in my team, and in our company, we actually have a framework that it has to respect or maybe the words are different, but it's similar to that. So first of all, we have the bottom layer called renovation. We don't need to change everything all the time, but it's maybe as what, as I was saying, a small tweak is more just like your phones get an update every certain period of time.
Martin Urrutia 26:10
We will evolve our, our, our, our platforms that were experiences. So that will be renovation, then we have innovation in the center, probably the, the one where we put our, our biggest focus, there will be nice, fast, agile, productive innovations that we could do, it could mean something that we got inspired from other categories. So, from things that we've done in the past, and that's probably where we will put our biggest focus on, then we have on the very, very top, what we call the blue sky ideas. This is something that you have never seen before anywhere else, not from LEGO, not from any other retailer and you will see that from, from us for the first time and actually, it will help us to keep building on the, on the innovation value proposition that the LEGO brick has.
Michael LeBlanc 26:10
Right.
Michael LeBlanc 26:56
You're a subject matter expert, I would say in innovation, when you look around whether it's retail companies or others what, what do you say companies typically get wrong about their approach you've articulated quite well, your approach and how you see the multi, your Venn circles, or intersecting circles, but when you look around, is there any commonalities about what you see, those could be a contributor to failure in innovation?
Martin Urrutia 27:24
Yeah, first of all, I think there's two things, maybe, if you allow me to do two, I'll give you the bonus with two. So one is that I think we, we are a little bit scared about failing. You know, I don't think everybody's, it's okay telling to your managers, to your board, to whoever support you, look, didn't work, sorry, we need to take it down and you know, you're just accepting that that's even part of the journey, right, and you you're not going to have everything standing forever. Not even, you know, the old buildings, things need to go down and to live. So that's accepting failure, I think it's an important one and it's, it's part of the learning.
Martin Urrutia 27:59
The other one will be having a purpose to what retailers are doing. I've seen many stores with great experiences, both when you really think are our shoppers gonna remember this from a store visit, how does this fit with your brand and maybe just making that example, you'll see mine you know, coming to, to a shoe store that is full of you know, dark spaces, and all that is, is really helping you to buy those shoes, or you're just enjoying the moment and there is many examples of that and technology is one of those places where we or I see a lot of technology with no purpose, you know, you've been almost forced to try and experience or to get out your phone for something that I don't understand and I cannot relate that to the brand. So, purpose is probably one of the questions that we should ask, what is this for, but you know, we should avoid the technology showroom that we're starting to see in some places.
Martin Urrutia 28:50
Like personally, I feel lonely in a store with no associates and you know, I'm happy with the fast checkouts and you know, reduce friction and that, but I love you know getting the, the, the experts maybe because I work in retail, but you know having a conversation with someone, what will you recommend going to a restaurant and asking what will you eat, you know, you have your aunt come in and visit you in Barcelona, what will she eat, things like that. You establish a relationship and now technology, it's almost taking away or reducing that relationship that you can get with the associates and at least I can tell you from the LEGO stores one of our biggest and if not the strongest, you know, values that we have is our store associates. They're fantastic.
Martin Urrutia 29:33
During COVID they engage with all the social with all our guests and shoppers, you know with a smile even when they were wearing a face mask they were smiling behind. We also know that they lean down and play with children, any age and help them to have a great moment. They help parents to decide what is the best, you know, toy for that afternoon or for that birthday. Can you do that through a chatbot, probably some but it's not as engaging, it's, coming back to the purpose is that are you gonna go visit that store more because they have a fast chat bot that answer your questions, I'm not sure yet-
Steve Dennis 30:05
Right.
Martin Urrutia 30:06
We're ready for that as humans.
Steve Dennis 30:07
Yeah, I think sometimes I say this in my book where one of my least favorite things is where retailers say, you know, we're a technology company and I'm like, no, you're not. You're not a technology company. That's just the thing to say, you know, to and maybe investors like this idea that we're fully embracing technology, but I always say, no consumer buys technology, you're, you're buying, you know, a joyous moment, or you're buying, you know, you're trying to get some sort of feeling or sense, ultimately, technology can be hugely important in making that possible or making it faster or better, or whatever, but this kind of chasing technology for technology's sake, I'm not sure there really any companies that can point to lasting success based on that philosophy. But.
Martin Urrutia 30:53
You know, and now, now that you mention philosophy, I'll share with you the way I speak, at least internally and, and with my colleagues and in the company about retail, we consider I consider that our all the LEGO stores are theaters, right, they're, we, we have more than 800 theaters around the world and I'm coming back to the technology part, I have never heard anybody saying, I cry this, you know, this evening on that show because the lighting was perfect, or the toilets have warm water, or the velvet in the seats were amazing. People cry because the Phantom of the Opera makes them you know, bring them tear down.
Steve Dennis 31:28
Right.
Martin Urrutia 31:29
They, they posted 20 pictures because Bruce Springsteen was singing to them, or because you know, they could remember a memory. That is actually the philosophy behind retail. So, technology it shouldn't be like that. I don't know, if the sound system is made, you know, in Asia or America, I don't know if your lights are new, or they're 20 years old, however, I will remember is experienced, but, this is the 'but', if the seats are bad, if the water is cold, or the sound is terrible, then, then you put friction into the experience and that's the way I think on technology, it's helping us to make the theater be better for the place that all the LEGO stores and marketing and my team are preparing.
Steve Dennis 32:09
Sure. So, one thing you guys obviously have got a great track record of innovation. One of the things that comes up a lot in, I think, both Michael and my consulting work, but also comes up on the podcast a lot, is how do you create a sense of urgency for innovation? So, in early COVID times, you know, a lot of people were sort of high fiving themselves about how much innovation occurred, but that was sort of like, you know, if we don't innovate, we're dead kind of crisis mentality, right, you're forced to do it by circumstances. As opposed to lots of retailers have gotten themselves into trouble over a long period of time, by not innovating because it can always be you know, we'll do it tomorrow, we'll do it a year from now. We'll do it when we get past putting in our new point of sale system or whatever. So how does LEGO create that, that sense of urgency because it's not like you're doing this because you're about to go out of business and if you don't, you're filing for bankruptcy and, you know, saving the company from extinction?
Martin Urrutia 33:06
Yeah, that's interesting you mentioned that, that last comment, because that's probably in the culture. We, we've been through, also, bad times, beginning of the 2000s, you know, we, we were really, you know, down in financial situation, however, we've seen the benefit of innovation and we've, that's part of the culture in the company, where we, we actually see that innovating fast answering to the passion points that our, our customers have, you know, playing, you know, in the way kids are playing today, we need to react fast. So having that innovation, or innovative mindset is vital, it's been very key for us, and we react fast.
Martin Urrutia 33:42
Probably the way I-, we approach that in my team and with everyone that works with us is that we, we, we innovate more by doing than by thinking about it. Of course, we prefer the right PowerPoints and the right you know, documents, but we learn more, just by trying different things, we sometimes build, you know, we're going to do something in retail, we build quickly a mockup in, in foam board or in cardboard, and then we find out that the height was not correct. So, discovering that six months later, after you do drawings, you refer-, you receive the first sample from a factory. It is complicated, but acting fast doing this in cardboard, getting information. However, we could see that in, the in the good times. We started to be creative, and we put in more processes, and we need to put in more documentation. So, it is probably being agile, being, being fast and trying, and trying to just have the right, you know, documentation that is required for that without overdoing it.
Steve Dennis 34:41
Yeah, so it sounds like it's embedded in the culture kind of this culture of experimentation and then because you've seen the rewards from it that kind of keeps the momentum. It's a self-fulfilling kind of model, so.
Martin Urrutia 34:52
Plus, maybe, building on the culture that we have in the leadership team and in each of us that you know, trying our best and putting our best effort as long as we learn it's okay to have, you know, a failure and make sure that we iterate everything because I know in some companies, this is, this is quite difficult, right. Everything is to work perfectly from day one. So that's, of course, we have a big motto. I don't know if you heard before in LEGO, we say, only the best is good enough, but sometimes we need to think what is the, what is the right thing for that moment, what is made for purpose and what is not.
Michael LeBlanc 35:23
Right. Now, have you, are you going to be on stage or are you coming off stage?
Martin Urrutia 35:27
Coming out, we had a great session this morning, a very interesting session because through different, you know that's the great thing when you come to Congress, as you network, you meet people.
Michael LeBlanc 35:36
Right.
Martin Urrutia 35:36
I met in the last Congresses, three fantastic peers, and I will call them friends now, a person Alex Genov from Zappos, who brings the Psychology of Shopper and he's an expert on that. We have Elizabeth Oates, also from Ulta, who is head of research and insights and then we have Elsa Pedro, who is looking into data at Mars. So, you have these four companies, Mars, Ulta, Zappos, and LEGO coming together and we have, we had a lot of conversations online, you know, that's something that I will encourage everybody, network with other people. Elsa reached out to us on LinkedIn, very cool. Just asking us if we want to talk and then we started to build a conversation and movement and the four of us believe on the importance of humanizing retail, want to make sure that we all we all believe that, you know, we should not look only into data in retail, we shouldn't look into everyone, as a, as a profile or as a number or as the data point.
Martin Urrutia 36:36
We need to make sure that we have individuals and we spoke to them about different cases on how we, we see people differently, but at the end people is at the center and we had a great session, the four of us talking about data and how we humanize retail and make sure that most of the decisions are database, of course, and there are insight based, we make sure that we have the human factors, we had a workshop, we also had some fun, I brought some LEGO bricks. Everybody had to build a LEGO dock, in 60 seconds and it was amazing, everyone who had the same brick, everybody had the same number of LEGO bricks and it was great to see that after 60 seconds, everybody thought they had the best dock and they were amazing, but you could see how different it is and it was a good example on how we could interpret the data and insights in different ways even though we probably all have you seen a dock before.
Steve Dennis 37:25
Right.
Martin Urrutia 37:25
But the expression of that was different and yeah, fantastic session today.
Michael LeBlanc 37:29
Fantastic. Well, what's, what's next for you and what's next for LEGO? What are you working on, if you can give us a glimpse into the, into the near longer-term future?
Martin Urrutia 37:37
Perfect. Yeah, exciting times in LEGO, exciting times in general in retail. So, we're looking into, into different areas. So first of all, we are looking to, to meet and reach more families and children around the world and the LEGO store is a great place to be closer to them. So, we're looking into a couple of new stores that will open this year with some more news to come, expanding that around the world.
Martin Urrutia 37:59
In regards to the stores, of course we are we are on the journey of bringing more digital to play, bringing more digital to the experience on how we fulfill the requirements that shoppers would have and expectations and then the other part is how do we, we elevate more even the, so we have focus on experience. We want to do that even more. We know that today when in, in retail, it's making sure that we provide a fantastic or best in class brand experience right where the LEGO store is. So, if you're looking for the best place to know how LEGO is, what LEGO is about, it will be in our, in our theaters.
Michael LeBlanc 38:34
I mean, it's, it's interesting, because, you know, it's a high bar that you've set, right, so I think both amongst, internally and I feel with you and the customers as well. So, innovation has to really be on point right, iterative, but yeah, pretty on point, right?
Martin Urrutia 38:49
Yes, probably one of the best ways, just to close on that comment, to do it is that on most of the experiences that we develop, they are not intentionally created to be, you know, self-explanatory or self-maintained, we actually build most of our experience with intention on making this as an interaction with our store associates
Michael LeBlanc 39:12
Oh, interesting.
Martin Urrutia 39:13
So, we have training for them to facilitate experience. They, they love engaging with our shoppers and consumers, but we really put a lot of focus on having everything manned because we know that the moment our shoppers interact with our assoc-, interact with our associates, we establish a relationship, we'll get feedback, we'll get in no better relationships, and then you create that link. So, then we will become your favorite store. You know who you're talking to, you know that he's passionate or she's passionate about LEGO and we build that relationship. So, experiences are almost enablers of, or icebreakers for store interaction.
Steve Dennis 39:49
So fascinating and interesting and insightful. I feel like we could talk for hours, but obviously we'll have to let you go at some point, but thanks so much, Martin, for joining us. Thanks for that, sharing your wisdom and enjoy the rest of the World Retail Congress.
Martin Urrutia 40:03
Fantastic and I'm definitely excited to be in Word Retail, a lot of boss-, a lot of conversations on retail. Definitely think if you love shopping if you love retail, I think the best is just about to come.
Michael LeBlanc 40:15
If you liked what you heard, please follow us on Apple, Spotify or your favorite podcast platform so you can catch up with all our great interviews, including Judith McKenna, President International, Walmart, new episodes of Season 6, presented by our friends at MarketDial will show up each and every Tuesday and be sure to tell your friends and colleagues in the retail industry, all about us.
Steve Dennis 40:34
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 40:49
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. You can learn even more about me on LinkedIn and you can see both of us at the Lead Innovation Summit in July, live on stage in New York with our friend of the pod, Simeon Siegel from BMO.
Until then, safe travels everyone.
SUMMARY KEYWORDS
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