Recorded live on the main stage at RCC's Toronto STORE 2022 conference in June, Ron Wilson, President of Best Buy Canada and Mat Povse, Senior Vice President Retail, Geek Squad Services & Best Buy Business, sit down with me for a lively, wide-ranging discussion covering the nature of the post-COVID era consumer, retail marketplaces, new format locations and talk about enriching retail through technology.
Welcome to The Voice of Retail. I'm your host Michael LeBlanc. This podcast is brought to you in conjunction with Retail Council of Canada.
Recorded live on the main stage at RCC's Toronto STORE 2022 conference in June, Ron Wilson, President of Best Buy Canada and Mat Povse, Senior Vice President Retail, Geek Squad Services & Best Buy Business, sit down with me for a lively, wide-ranging discussion covering the nature of the post-COVID era consumer, retail marketplaces, new format locations and talk about enriching retail through technology.
Thanks for tuning into this special episode of The Voice of Retail. If you haven’t already, be sure and click subscribe on your favourite podcast platform so new episodes will land automatically twice a week, and check out my other retail industry media properties; the Remarkable Retail podcast, the Conversations with CommerceNext podcast, and the Food Professor podcast. Last but not least, if you are into BBQ, check out my all new YouTube barbecue show, Last Request Barbeque, with new episodes each and every week!
I’m your host Michael LeBlanc, President of M.E. LeBlanc & Company & Maven Media, and if you’re looking for more content, or want to chat follow me on LinkedIn, or visit my website meleblanc.co! Have a safe week everyone!
About Ron
Ron Wilson is president of international for Best Buy Co. Inc. In this role, he guides the vision and strategic direction for the company’s operations in Canada and Mexico. Mr. Wilson began his career at Best Buy more than 25 years ago on the front lines of a Future Shop store in Edmonton, Alberta. Since then, he has worked in numerous leadership areas of the company, including merchandising, operations, marketing, and e-commerce. Since March 2013, Mr. Wilson has overseen a strategic plan that has driven the company toward providing a seamless “Total Retail” experience for customers’ connected worlds. His leadership has been instrumental in introducing and implementing an in-store and online experience that builds long-term relationships with customers and provides excellent support and service before, during and after purchase. Mr. Wilson continues to lead the charge through introducing innovative ideas, including the company’s recent growth into expanded product assortment online, reserve and pick-up in store program, and optimizing the company’s delivery and fulfillment systems. Most recently, he led the successful consolidation of Future Shop into the Best Buy brand.
About Mat
Mat Povse is the Senior Vice President of Best Buy Retail Stores and Operations, Geek Squad Services, and Best Buy Business at Best Buy Canada. In this role, he is responsible for the employee and customer experience, sales and profits for over 180 retail stores across Canada as well as the development and fulfilment of Geek Squad programs and services. Mat joined Best Buy in March of 2014 as Vice President of Merchandising responsible for Home Theatre, Audio, Wireless, Digital Imaging, Geek Squad, and was instrumental in the development and execution of the Major Appliances expansion plan in Canada. Since then, he has held numerous leadership roles, most recently as Vice President of Geek Squad Services. Mat has a passion for inspiring people and teams, and has a knack for facilitating productive alignment between organizations. Mat’s multi-faceted experiences and work including service centric organizations has proven valuable in areas of convergence where he leads the optimization of current capabilities for future state, develops new and innovative partnerships, and integrates services at retail - all of which have helped to enhance Best Buy’s Total Retail experience and set foundations for future growth. Prior to Best Buy, Mat was Vice President of Sales for LG Electronics and has also held key positions at Compaq, TELUS & XM Satellite Radio. Mat holds a Bachelor of General Studies, Business and Liberal Arts from Simon Fraser University in Burnaby, British Columbia.
About Michael
Michael 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. He has delivered keynotes, hosted fire-side discussions with C-level executives and participated on thought leadership panels worldwide. Michael was recently added to ReThink Retail’s prestigious Top 100 Global Retail Influencers for a second year in 2022.
Michael is also the producer and host of a network of leading podcasts, including Canada’s top retail industry podcast, The Voice of Retail, plus the Remarkable Retail with author Steve Dennis, Global E-Commerce Tech Talks and The Food Professor with Dr. Sylvain Charlebois. Most recently, Michael launched Conversations with CommerceNext, a podcast focussed on retail eCommerce, digital marketing and retail careers - all available on Apple, Spotify, Amazon Music and all major podcast platforms. Michael is also the producer and host of the “Last Request Barbeque” channel on YouTube where he cooks meals to die for and influencer riches.
Michael LeBlanc 00:05
Welcome to The Voice of Retail. I'm your host Michael LeBlanc. This podcast is brought to you in conjunction with Retail Council of Canada.
Michael LeBlanc 00:10
Recorded live in the main stage at RCC's Toronto STORE 2022 conference in June, Ron Wilson, President of Best Buy Canada, and Mat Povse, Senior Vice President of Retail, Geek Squad Service and Best Buy Business, sit down with me for a lively, wide-ranging discussion covering the nature of post-COVID era consumers, retail marketplaces, new format locations, and talk about enriching retail through technology.
Michael LeBlanc 00:36
Good morning, gentlemen. How are you doing?
Ron Wilson 00:38
Excellent and you, -
Michael LeBlanc 00:38
All right, well, let's tuck in. We've only got about three hours together we got a lot of room to cover. So, so, let's tuck in, -
Ron Wilson 00:44
I’ll get comfy.
Michael LeBlanc 00:45
All right, get comfy. All right, so, I wanted to start with the COVID era and this isn't a history lesson. But Ron, I wanted to get from you an idea, reflecting on the past three years of changes that are more structural to the business, to your business and to retail in general. And then we'll talk about changes in consumer behavior, Mat, as we kind of meander through our conversation. So, as you reflect on the past three years, what's, what's changed?
Ron Wilson 01:12
It's hard to separate those things. I think if, if you start with a customer, customer expectations have completely changed. You know, if you think about three years ago, you'd see these long lines in, in Tim Hortons, whether it's in the store, or in the drive thru now. I mean, I have my Tim Hortons coming in the next five minutes Uber Eats is going to deliver it. I mean, why wouldn't they deliver a $3 coffee, right?
Michael LeBlanc 01:35
Right, right, -
Ron Wilson 01:36
People expect that that's they now think that this is normal to just have everything delivered. So, you know, customers have completely changed their expectations of what convenience looks like, they should get everything whenever they want it, however, they want it, delivered right to them when they want it. And you know, that's completely changed everything.
Michael LeBlanc 01:57
Is, is there a business model for that? I mean, I, I see the rapid 15-minute delivery services the same day that there's that's a bite of the apple, right? I mean, they're taking a fair bit of cost our consumers going to pay for that convenience, or (crossover talk), or are we have to absorb, -
Ron Wilson 02:10
Some do, some do. And I thing again, what every, every retailer, every business has to choose, they have to decide, you know, do you want to be able to have the best store, do you want to be able to deliver to people, order in-store, pickup in-store, delivered to their home? What level, one day, two days, three days depends on how complex what it is that you’re trying to deliver.
Ron Wilson2:29
But, you know, it's not just the, the customer. I think the, the team has changed, employees have changed, the workforce has changed, the expectations there have changed, you know, whether it be work from home, more and more and more, especially in the last three years.
Ron Wilson 02:46
You know, a company's values are extremely important. How you how you treat the workforce, what the workforce looks like, can they see themselves? Are they proud of working for the company? When they tell other people where they work what kind of reaction do they get? You know, is it one that I'm proud to work for this company because of the values that this company represents? Or, I really need to find somewhere else that's become more important. It's not just employees, but customers as well want to shop where they (crossover talk), see themselves. And there's an alignment in those in those values.
Michael LeBlanc 03:18
Right. Mat, the COVID era has been called actually by one of our fellow speakers today, Carl Boutet, "The Great Acceleration".
Mat Povse 03:26
Yeah, -
Michael LeBlanc 03:27
So, I guess my question is, was this coming, anyway? I mean, there's some things that were on the way anyway, eCommerce, for example, you guys are the, you know, you've been in eCommerce longer than most and, and you've lived through peaks, super peaks. So, you know, that's, that's day in day out for you. So, this, this alignment to values, this idea that was that coming anyway, and just accelerated versus, you know, -
Mat Povse 03:50
I think, I think the way to explain that is, you know, Ron touched on it, customers want to spend their time and their resources, their money, in places where their values are aligned with, you know, and, and we, we, we can't distinguish our customers from our employees, they're both human beings. Our stores are meeting places, or humans to interact with other human beings, whether you're an employee, customer, a customer, to a customer, an employee, to an employee, so to, to speak to whether or not COVID accelerated that. I think, if you think about the priorities that we had to think about when COVID came, you know, the word safety comes to the, the forefront of our minds, right?
Michael LeBlanc 04:31
Sure, sure, -
Mat Povse04:32
And safety is interesting because you think about safety in the it's for the core sense of social distancing and masks and, and Plexiglas screens and wiping down keypads. But, you know, we thought much more deeply about that and said safety is about safety of mind. How do people feel when they come to this place that we call Best Buy, whether you're a customer, or whether you're an employee, and, and that spans into the topics of diversity and inclusion and you know, accepting people for you know who they are. So, they can they can come in, they can feel creative and be at their best without judgment, and absolute respect for human dignity in all cases. And when you get underneath that, that sort of table stake, all sorts of other great things start to happen. I think just COVID helped us really get behind that in a more meaningful way, because it was happening on mass to everybody, not just in the workplace, but in our own homes in our own personal lives.
Ron Wilson 05:24
But may-, maybe just to add to that a little bit and answer part of what you were saying there. If you just take one example, that being, you know, what, the customer's expectations of having their product either delivered or picked up in store, going into COVID, you know, we would deliver approximately 20% of our, our sales it would be digital sales. And every year that was growing by, you know, a few percent, maybe two 3%. So, now, you would expect our sales would be somewhere in the 28% range, if it had went normal.
Ron Wilson 06:00
As we all know, we had stores opening, closing on mass closing, not allowed staff, you name it. At one point we were doing 100% of our business was online 100%. It was double the previous years sales with stores. So, that required a complete reengineering of everything that we did, because that's what the customer expected. And at that point needed, whether it was laptops or what have you. And so, now that COVID is kind of over, you know, we've settled in at around 40-45% digital, but that's radically different than the trajectory that we were originally on.
Michael LeBlanc 06:43
Sure, sure, -
Ron Wilson 06:44
And you see that whether it's in the things that Mat had talked about, but we could go through 30 different areas in the organization that that exact same thing has happened, and there's just this huge acceleration. So, yeah, it's been, it's been it's busy.
Michael LeBlanc 06:59
Cyber Monday, every day kind of volume, more, (crossover talk), more,
Ron Wilson 07:03
Significantly more, you know, it's cra-, it's crazy.
Michael LeBlanc 07:06
And, and let's talk about that a little bit more. Because when I look at the eCommerce numbers today, industry wide, latest numbers have eCommerce dropping 25% year over year, right. So, the retailers I've talked to across a broad spectrum are saying, listen, people are loving going back to the stores, their eCommerce is going down. Now the water line hasn't receded. But their growth year over year has gone down. I mean, this time last year, a couple of months ago, the stores were closed. So, people are, -
Ron Wilson07:33
Yeah, -
Michael LeBlanc07:44
You know, you're going to have a high eCommerce number. So, is this, is just a math game. I mean, where's this going to settle out? I mean, there's the industry kind of you know, this, this there's a couple of magic numbers out there. 25 by 25, right. 25% of all onli-, of all retail core retail, right? So, X cars and gas is going to be done online. You guys are at the front tail of that because of the assortment that you have and the expertise. Where do you think it's going to settle out? I've, I've heard 50% I just can't imagine it. But right now, we think we're I don't know, wh-, wha-, what do you think we think we're in the 15 range after COVID in general. But, (crossover talk), -
Ron Wilson 08:07
To your, to your, your point. I mean, I think the numbers are deceiving, because, you know, for us, we had 50 stores. Last year, this exact day, we had 50 stores closed completely. So, it distorts what the year-over-year eCommerce numbers. But given true freedom of choice, consumers have definitely accelerated their desire to have some form of a digital experience, whether that's order online, delivered to home, order online, ship it into the store and pick it up there, be in the store, order something that's not in the store, have it shipped to home, so on and so forth. So, that, that now is in the, call it 40% plus range. You know, maybe Mat can speak a little bit more to what I'm about to say.
Ron Wilson 08:44
But we're reengineering our stores to be kind of the hub of all things. So, whether the customer comes in to have an experience in the store, which is what we're trying to more deliver is that experience. I want to come and experience something new, or whether they just want to pick up an order, (crossover talk). The store is, is, is part of the process. And I think it's a huge differentiator for us along with services. But there are, other pure-play online retailers that don't have that.
Ron Wilson 09:15
And so, whether you order online, have it delivered and then want to it's not what you wanted, so you want to be able to return it. The store is the most convenient way to do that or even ship from store every single one of our stores are now warehouses. And so, if you're in you know, Lethbridge, is it more efficient for us to have the store ship it directly to you in Lethbridge or our distribution center in Vancouver, -
Michael LeBlanc 09:38
Right, -
Ron Wilson 09:39
right. So, stores are at the center of everything that we're doing, the percentage is becoming less relevant. It's just making sure that we have the capability to service a customer whatever way they want to interact with us.
Michael LeBlanc 09:52
You know, Mat, I want to pick up on that point. I've you know, the more and more I think about eCommerce, when we have this conversation about store I mean you, you said store, Ron, many, many times. It feels more and more like a, a distinction without a difference, right? It's all just retail, you're pulling these things together.
Mat Povse 10:07
Yeah, -
Michael LeBlanc 10:08
But from a store perspective, there's this spectrum of experience to efficiency, right? If we think about modern retail, where do you where do you see yourself fitting? I guess you're on almost all points of that.
Mat Povse 10:18
Yeah, I mean, just picking up again, it's, it's, you migrate away from this idea that we've got a network of over 130 stores across Canada. And it's really easy to think that every single store is engineered and built the same. And it was, because it was serving a trade area, it's the same as a store, you know, on the West Coast is doing the same as the store on the East Coast, -
Michael LeBlanc 10:38
Yeah, -
Mat Povse10:39
You know, operationally the same, you know, process is the same inventory is the same. And when you step back, and you think about it as more of a digital, physical, home ecosystem of sorts. You take a step back at a macro level, and you say to yourself, customers engage with us in a myriad of ways. And our first message is to our people, take a person in a store who, who goes from the idea that they're just there to service somebody who walks through the front door.
Mat Povse 11:06
And, and we, we migrate from this ni-, notion of just omni-channel retailing to what we what we characterize as one Best Buy. And the idea there is to tell all of our employees, no matter if they're at C-HQ, or head office, or they're standing behind a, a terminal in our store, but their duty is to service a customer, whether they can see them or not. That a customer may come in the form of an order that's printed out inside of the back warehouse of a store. And their duty is to get that best experience to the customer, even if they can't see the pupils in their eyeballs.
Mat Povse 11:38
And then you take another step back and you say we can start to characterize stores and give them different personalities within a larger trade area, a, a mark-, a micro-market as it were. And you can give stores different personalities, you can connect those stores together with intra-day delivery, shared teams, you know, the, these sorts of concepts so that they work as a team of stores.
Mat Povse 11:59
We can introduce new store concepts, they don't all have to be 30,000, 35,000 square foot stores, they can be small format stores, with, with just as, as, as mighty an outcome, stacks of inventory behind the scenes, very cost efficient to run. And we can place those and feather those in within the market servicing communities that might be under served, complementing the network of stores, and you've got now a system of stores working as a team. And customers can choose to drive 20 kilometers to a store that's more elaborate on experiences and authority and demonstrations in high-end service. And then you've got another store who's go in, you already know what you want, pick it up and get out, (crossover talk), -
Michael LeBlanc 12:42
Friction, removed all friction, (crossover talk), -
Mat Povse 12:43
Or we can roll a Geek Squad to your home and have it all delivered and so, (crossover talk), there there's an infinite number of ways customers can engage. And they can, that the most important thing that we can do is make sure that in that moment when the customer needs their product, it's seamless. It's that frictionless experience that it's just they're not guessing how to shop with us, they've just decided to do it and we've made it ea-, easy for them to do.
Michael LeBlanc 13:05
Ron, let's talk about back of the house for a bit. Let's talk about supply chain. So, I don't think I've said the word supply chain as many times in my life in the past year as I have, the consumers know what it means. On a scale of one to five, one being kind of normal, because it's still weird, five being critically bad. Where do you assess this situation today? And then I am going to ask you to assess it for the rest of the year. But today, as we sit here, again, not a history lesson, we all know supply chains has been back and forth. But how would you see it today? So, one is fine, five is really critical.
Ron Wilson 13:40
Right this minute, I'd say a two, you know, compared to the early days where, you know, our laptop business went up by five times. So, there's no way we're going to be able to satisfy demand. And, you know, everybody hears about all the things that are going on in the, the shipping industry and (crossover talk), back micro-chip, (crossover talk), -
Ron Wilson 14:00
But you know, our teams have done a good job of understanding what's required. And we've adjusted slightly, we've been working very closely with our partners to make sure that we have a good understanding of what to expect. And so, in some cases, you know, we've extended our days that we would normally have on hand, you know, we always call laptops, the lettuce of the (inaudible), if you have for longer than 14 days in your system, it's it goes bad. So, in some cases, we'll take it up to 45 days, right or 30 days just to buffer anything that, that might go wrong. But I think the other thing that is helping us is that we have a, a marketplace, as you know, so, -
Michael LeBlanc 14:39
Yeah, yeah, -
Ron Wilson 14:41
We've invited all of our vendor partners, our competitors, other retailers, they all have the capability of being able to put their product on our website. So, that's also helped significantly, -
Michael LeBlanc 14:51
Like distributed inventory almost amongst an eco-system, (crossover talk), -
Ron Wilson 14:53
It, it is like I mean, I don't know if you look at let's say Dyson, right. Dyson has a store on our site, we have other retailers that sell Dyson product on our site and then we sell Dyson products. So, you know, as it gets allocated out, everything is always out of stock, whether it's Apple, Dyson, or Sony, -
Michael LeBlanc14:55
Sure, sure, -
Ron Wilson14:57
PlayStation, or what have you. From a Best Buy perspective, if you're a customer, you're going to a Best Buy website. And they're going to be, should be product. If it's if it's out on Best Buy, then it means generally speaking, it's not going to be, -
Michael LeBlanc 15:24
Yeah, yeah, yeah, -
Ron Wilson 15:25
Available.
Michael LeBlanc 15:26
So, where do you assess it for the rest of 2022, in terms of on a scale of one to five? So, we've Shanghai looks like, for an example, pick one, it looks like it's loosening up a bit. There's still lots of boats off the coast of Vancouver waiting to get docked. And, and you know, we could bring costs into this as well, fuel surcharges and whatever. So, does, does your ranking change for holidays or back to school?
Ron Wilson 15:49
It's really hard to predict. And again, I think we, we, we do business in so many different areas. You know, you're always going to have challenges with Apple, that was before and it's still is. Something comes out new and it's sold out instantly. If, -
Michael LeBlanc 16:03
Yeah, -
Ron Wilson 16:04
You know, if we get any of the brand-new Xbox or PS5s, it’s sold out right away, -
Michael LeBlanc16:05
Yeah, -
Ron Wilson 16:06
Video cards. So, some of these things are they've always been that way.
Michael LeBlanc 16:13
Is it worse now, though, is you know, off mic we were talking about, is this the end of globalization? Is this the end of just in time inventories is this, you know, back almost back to my first question, is this a, a permanent change of the way you two are thinking about how you manage your supply chain? Or is this something we're just going to buffer through, (crossover talk), -
Ron Wilson 16:33
I don't think that's a new problem. I think marrying your inventory to the demand, you know, to the closer and the faster the inventory can get from production to its future owner has always been the problem. The same is true for labor, (crossover talk), -
Michael LeBlanc 16:48
Are you carrying more safety stock? Are you like tactically, listen, (inaudible) maybe we've gone too close to the line, because, you know, many retailers tell me they think they got too close to the line. And, you know, once you know, it could be bad weather in the West, it could be whatever. And the supply chain snaps, maybe it's too efficient. Is there such a thing as too efficient?
Ron Wilson 17:08
I don't think so. I don't know if I'm sure that's a thing. But again, I mean, when it first happened, anytime something happens that you haven't seen before it catches you off guard, it surprises you. And of course, there's going to be, -
Michael LeBlanc 17:21
Sure, -
Ron Wilson17:22
A challenge. And again, I'm not talking about things that are globally gone, but you just can't get them. That that's, I mean, you can't fix that. -
Michael LeBlanc 17:30
Yeah, -
Ron Wilson 17:31
But if assuming it's available, and you know, what's going on, which I believe we're all now very aware of what's happening. And I think you have to plan for it. And, and we are and so our inventory today is roughly the same as it was a year ago relative to sales. So, we're not making massive adjustments from, from that perspective.
Michael LeBlanc 17:53
And, and it's the last question on this, before I beat it into the grave kind of thing is, is do you have more resources, better ERP systems a-, a-, against the supply chain, more resources to accomplish the same thing, (inaudible).
Ron Wilson 18:05
We've put the majority of our resources facing the customer, we have the same resources working with our vendor partners that we had before. And, again, that was that for us has always been a critical part of our business. I mean, when you're moving the amount of inventory that we are, and again, like I wasn't joking when I said laptops are like lettuce. So, you, you have to be good at that we wouldn't be where we are today, if we weren't good at that already.
Michael LeBlanc 18:28
Right, -
Ron Wilson 18:29
The, the part that's changed more is our ability to deliver to the customer in multiple different ways, much more efficiently. So, we've taken down our del-, delivery time from order by almost 60%. You're never going to be able to predict, I don't know, a typhoon and a factory goes off and then you have to re-, so that's just part of what we do.
Michael LeBlanc 18:51
Yeah, yeah, -
Ron Wilson 18:52
Part of what we do, -
Michael LeBlanc18:53
Day-to-day stuff, -
Ron Wilson 18:54
Yeah, -
Michael LeBlanc 18:55
Table stakes basically now, really, -
Ron Wilson 18:56
You have to you have to you have to be able to do that, yeah.
Michael LeBlanc 18:57
Mat, let's, let's move off supply chain and let's get back to this digital enhanced employee and customer how is how is how is it changed? So, you know, the customer behavior when they're walking into your stores, what do you what do you do differently? If you kind of dig into that a little bit, as you think about customers that walk in and, you know, they're maybe browsing less. We know during COVID They were kind of laser like focused, they didn't really want to dwell much.
Mat Povse 19:21
Yeah, -
Michael LeBlanc 19:22
But now they're coming in. They've been on TikTok, they've been on Insta-, they've been on wherever. How are you kind of adapting the store environment to the, the modern customer?
Mat Povse 19:32
Wow, how much time do we have?
Michael LeBlanc 19:34
Three hours, right? (Crossover talk), -
Mat Povse 19:37
I will speak slowly. I think the first thing to r-, really recognize is to your point, during COVID There was much more expressed intent from the customer just to get in and get out.
Michael LeBlanc 19:40
right, -
Mat Povse 19:49
And we know measure that in conversion. How many customers come in? How many actually bought that number was is best as it's ever been for the obvious reasons. There wasn't time for you to peruse and shop you had to just get in and get out. You know, we're starting to see that soften, which basically puts the onus on our associates to really engage and take that time with the customer. We've got a mantra at Best Buy, you know, and you've heard this before from other companies. You know, Amazon calls it a frictionless experience. You know, Apple, it just works, right? That, that really intuitive, this thing didn't waste my time, right, it was really slick.
Mat Povse 20:21
Customers on the digital side, we have to first recognize that digital consumes a huge amount of our mindshare. And we only have 24 hours in a day, and we're probably sleeping for half of that. And so, when customers walk in, we, we have a duty to make sure that we acknowledge that they've chosen to spend some time with us. And we have an obligation to make sure that when they're done with us that they leave with this feeling of absolute satisfaction and that time was well spent. And it really encourages us to have a thoughtful conversation around the customer, which starts with our non-commissioned sales environment. Our interests are theirs, they're not our own, -
Michael LeBlanc20:58
Yeah, -
Mat Povse 20:59
Right. We're not we're not lining our pockets with commissions and, you know, incentives, we hire great people who love being part of, (crossover talk), -
Michael LeBlanc 21:05
You would still have up-sell, cross-sell initiatives and metrics on the store floor. I mean,
Mat Povse 21:10
So, we, we certainly watch it, but it's, it's a result of an organic set of behaviors, -
Michael LeBlanc 21:14
Okay, -
Mat Povse 21:15
You know, we never sit down and say, Jimmy, you need to sell a million dollars this year, or you're out, right. You, you know, you just need to have, we need to observe you having appropriate, intelligent, thoughtful and care-, caring conversations with our customers. Look, you, you can all relate to this, you walk into a store, if you feel like we don't have it in stock, we didn't have what you wanted. But we actually took the time with you to figure out your problem, you're happy, -
Michael LeBlanc 21:39
Yeah, -
Mat Povse 21:40
Right, and you're going to come back every time, you've, you know, whether you got what you wanted or not, we do a great job of making sure you've got we-, we-, we've got what you wanted. And so, and, and it's not just product, it's an accompanying sort of, you know, we've got the services programs that make the product better. And now we've got the membership program, which is just crazy, awesome. Customers really, we you know, we want them to leave feeling time was well spent. You know, if they came in researched online, and they already zeroed in, let's take them there, why, why waste their time selling them something they didn't really want. So, to me, this is all very sort of common sense, you know, and I think customers appreciate that when they walk into our stores.
Ron Wilson 22:17
But they're there, I mean, there are subtle changes, right? Mat had talked about a new store format, one of the things that we started looking at, given how far things had shifted to digital was new store format. So, we opened up a brand-new store in, in Edmonton, our typical stores 30 to 36,000 square feet, it's got maybe a 2000 square foot warehouse, and the rest is retail space. A lot of the inventory is on the floor. In this store, the total store is 5000 square feet, there's only about 2500 square feet, dedicated to retail. And the rest is warehouse and the warehouse is very efficiently organized.
Ron Wilson 22:55
And the goal of this store is to be able to have the exact same amount of inventory selection as a 36,000 square foot store but in 5000 feet, I know it sounds crazy, but it is. And the reason why is because what happens is the customer is starting their journey online, and they look on our website and they determine in my market, my store, do they have it in stock? So, as long as it shows that it's in stock, and I can go pick it up. What does it matter if it's a 5000 square foot store, or it's a 36,000 square foot store.
Ron Wilson 23:30
And what we're seeing is that the, the, the customer is responding like that, (inaudible) the percentage of online business that we're doing out of the market is the same as a 36,000 square foot store, there's no difference, the customer doesn't see the difference. And so, where I'm going with that is and so now what's the mindset of the employee?
Michael LeBlanc 23:50
Yeah, yeah, -
Ron Wilson 23:51
It's, it's different, it's slightly different. So, you know, it's not right, we're still Best Buy, we're still selling what we sell. But their thought process is a little bit different, the vast majority of the customers that they're dealing with are people who have ordered something online, and they're now coming to pick it up in the store, or they're coming in and doing this online experience they would have otherwise done in their living room with the help of an advisor in the store.
Michael LeBlanc 24:12
(Crossover talk), one is more experienced and the other is more efficiency, right.
Ron Wilson 24:14
And so, the things that are in the store, though are things that you can't do at home, like in some cases, so it's a little bit more difficult to activate a wireless phone. So, we have that there. And, -
Michael LeBlanc 24:23
Yeah, -
Ron Wilson 24:24
But so, there's these things that have changed just a little bit.
Michael LeBlanc 24:26
When you think of stores, both of you, when you think I, I talked to retailers, some of these digitally native vertical brands, for example, are opening stores for customer acquisition. They find it as a better, more efficient, jury's out on this, by the way, but they find it as a very efficient way of acquiring new customers and, and continue relationships. Do you have other metrics for your stores like that or is all based on sales?
Ron Wilson 24:49
Say that again, is it so, measuring stores for acquisition of customers?
Michael LeBlanc 24:54
So, instead of giving another dollar to the platform's, retailers are saying well, I could give X number of dollars to a social media platform or I could put a store into a shopping mall and I'm better off, (crossover talk) and the jury's out on (inaudible).
Ron Wilson 25:09
I mean, we haven't seen that. But you know, I think it depends on the brand, it depends on the type of product that you're selling. It depends, (crossover talk), -
Michael LeBlanc 25:14
But you don’t think of it that way, like that, that it doesn't sound like that it is really like you wouldn't open a store, like a flagship showcase store of any size in a downtown area to make people to make sure people think of Best Buy when they walk by a very busy place like that wouldn't be, (crossover talk), -
Ron Wilson 25:30
Ability to interact. And (crossover talk), so the answer is no, not at this stage in, in our life cycle. But again, I think saying that to a group like this without understanding each business, I, I wouldn't there are businesses that that would be a thing, right, depending on how well known your business is, what is your website? I mean, for us, we have I think we're the third or fourth largest website in Canada. So, we have we spend the vast majority of our time making sure eyeballs go to the website. And, and from an efficiency perspective, that's a million times more efficient than just opening up a store. But again, it's there's a brand recognition issue there. So, I think every retailer might be a little bit different in their stage of growth. It depends, -
Michael LeBlanc 26:13
Scale and scope, yeah.
Ron Wilson 26:14
Like if I don't know if Walmart were I, I don't think Walmart would open up a store for brand recognition, everybody knows what they are. There's either a store or there isn't.
Michael LeBlanc 26:21
Well, it just, (crossover talk), you know, recently it may be kind of the death of irony when Meta opened up a store to sell the metaverse, right. (Crossover talk), I mean, it was very quite interesting that, you know, their sole purpose of that is not unlike yours, which is engagement and awa-, look, we're in SoHo, New York. We exist, nobody, -
Ron Wilson 26:38
But this is a good point, right? I mean, it, it this proves that the store is always going to be important.
Michael LeBlanc 26:43
Yeah.
Ron Wilson 29:44
So, I'm not saying that stores aren't important, they are, they're absolutely critical. They're a differentiator, but we already have 135 of them. So, we're saying, do we need more? I mean, to Mat's point, I think there's some infill with smaller stores and things like that for convenience.
Michael LeBlanc 26:57
Yeah, yeah, -
Ron Wilson 26:58
But it's more about how do I get the product to customer faster. And I think what you're seeing with, you know, whether it's Amazon or Meta or whatever, they're realizing that, that there is an experience element to a lot of things. And if you don't have the ability to deliver that you're missing out on a huge portion of, of the market.
Michael LeBlanc 27:17
Let me get back to the Marketplace for a bit. And I, I want to get beyond the efficiencies around supply chain. What, what role does it play strategically in your merchandising strategy?
Ron Wilson 27:26
You know, the reason we started Marketplace a while ago, was we were starting to recognize that even though we had let's say 300 laptops between store and online, we'd have 300 laptops, we were not necessarily number one when it came to assortment. And our expectation as a technology retailer is that if there's any technology that you want, you should be able to go to Best Buy, and we would have it. And people were starting their search online, you go to Google, they realize they want this particular laptop, they'd come to our site, and we wouldn't have it. And you know, we would lose that customer, -
Michael LeBlanc 28:00
Right.
Ron Wilson 28:01
But buying, putting an inventory all of it didn't make any sense. So, that's why we started up the Marketplace. We knew we had the eyeballs already. But now it is about being able to make sure we had the breadth of assortment. And if you look at it today, depending on the time of the year, we'll have anywhere from 20 to 70,000 laptops, different laptops, I'm not talking about inventory, but different skews.
Michael LeBlanc 28:23
Yeah.
Ron Wilson 28:24
And so, th-, the point being is if, if you're thinking of technology, a-, at no point, should you not be able to find it at Best Buy. And that's what Marketplace has been able to do it we've (crossover talk) talked about, (crossover talk), -
Michael LeBlanc 28:36
Commodities too, right. I mean it you know, when you think I remember when you launched baby products, for example, -
Ron Wilson 28:42
Yeah, -
Michael LeBlanc28:43
Right. You know, I don't think of Best Buy. I didn't at the time, but I do more now of for commodities like that outside of the scope of the brand essence, right? So, it has it fulfilled that objective for you as well. Like how far can you stretch that is it different retailers take different approaches to Marketplace, some are very curated (inaudible), like have added everybody can kind of put product in. But does it achieve that kind of, hey, you know what, maybe that's a category we can put in the store. Because we seem to be getting some traction in the marketplace.
Mat Povse 29:13
So, even if you walk into our store today, you know, to Ron's point, Marketplace started as an idea. We've played with it, you know, we've tested a couple of things. It's so easy to think that you could be all things to all people and all categories like Amazon is, -
Michael LeBlanc 29:27
Yeah, -
Mat Povse 29:28
That seems futile. And so, you, you narrow down your scope and say what kind of marketplace do we want to be but you can say technology and limit yourself to just the core products you sell today just have more of them, which, (crossover talk), -
Ron Wilson 29:33
Or you can walk into our store and you can see that there's a baby stroller inside of our store now that is technology enabled, self driving and it attaches to your smartphone. That's a product that you'd expect to find at Best Buy. We went from being not in the thermostat business to be Canada's number one thermostat company with Nest, right?
Michael LeBlanc 29:41
Yeah, yeah, -
Ron Wilson 29:42
You know, so there’s, there’s a lot of (inaudible) and so we’re getting ourselves into new categories like, you know, e-bikes and fitness gear and so forth, that is all digitally enabled, that you would expect to buy at Best Buy and Marketplace because it’s an online platform to really reach out and, and grow those assortments bigger than we could in a physical environment.
Michael LeBlanc 29:49
And, and it's that the anchor, right? There has to be a component of technology based into the I mean, Dyson is great example, (crossover talk), -
Ron Wilson 30:00
Well, I think yes, but the I think the most important thing is the experience. So, we spend more time making sure that the, our partners are Marketplace partners provide an experience that would be equal to Best Buy's experience. That's the most important thing, -
Michael LeBlanc 30:35
Is that a big team like it's, it's like a compliance team, that, (crossover talk), -
Ron Wilson 30:37
It is, our Marketplace team is over 100 people now. And a lot of what they do is making sure that the experience is the same because even though we say in big bold letters that it is a Marketplace item, it not Best Buy. People still thing it’s Best Buy, (crossover talk), -
Michael LeBlanc 30:38
They still hold you accountable for it, right (crossover talk), -
Ron Wilson 30:39
They still hold us accountable. They come back into the store and they like you said it's a baby stroller and it's not even tech-enabled, and they weren't happy with it, they can return it to the store. So, we spend more time on that making sure that the, the service levels are there.
Ron Wilson 31:03
But second, would be we're, we're focused on technology enabled product or tech product. But there are, a huge categor-, baby would be one of them. We sell more baby product. We don't we don't really have any in stores. But we sell more baby product than we sell digital camera product.
Michael LeBlanc 31:19
Unbelievable, (crossover talk), it's been unbelievable, right?
Ron Wilson 31:21
Yeah.
Michael LeBlanc 31:22
Let's stick with vendors for a little bit. Advice for the vendor, you mentioned Dyson, you got you know, you have l-. a large swath of vendors, you got a pretty big pencil. So, you're not the average retailer. But talk about for the vendors sitting in the audience, and how to do you know how to grow the business. First of all, with, with Best Buy, but also, what's the best way to manage relationships with a modern retailer these days? What, what do you look for, you know, mercenary versus you know, mercenary versus partner kind of, okay, that's table stakes. But what is, you know, when you when you, you know, meet with vendors, what differentiates the, the ones that are you're going to grow with and the ones that are going to be successful?
Ron Wilson 32:01
That's a broad question. I think that the first thing is, is almost all of our vendor partners we have been doing business for years and years. So, you have to have this idea that it wh-, would, it has to be good for both parties, right? You don't go into a negotiation thinking I'm going to win this one and it's at their expense. So, that's the first thing, (crossover talk), but going back to Marketplace. A lot of the product on the Marketplace is vendor assortment. So, I, I don't know, you take Lenovo, Lenovo, we used to buy 15 laptops, but I think we have over 100 and some odd laptops now on our site that are Lenovo, they, they have the ability to put and manage their own product on our site. That's the first thing.
Ron Wilson 32:43
The second thing is sustainability is becoming a bigger and bigger thing. And so, our ability to be able to sell products that have been refurbished either by the manufacturer or by Geek Squad, and then being able to resell it on our Marketplace, is more efficient for our vendor partners.
Ron Wilson 33:02
And it's, it's just good for the environment, because in a lot of cases that was either going to landfills or whatever, you know, some whatever other country. And you see that with Dyson, for example, Dyson, all the returns that are happening, they, they have their own store now and a lot of the product that is on there is product that they themselves have completely refurbished, -
Michael LeBlanc 33:21
Yeah, -
Ron Wilson 33:22
They're putting it back on the site.
Michael LeBlanc 33:24
Is that is that a big part of your return strategy, that kind of the managing channel A, B, and C and D, the refurb,- part? And I mean, you know, returns, you guys are used to handling returns, I don't think, you know, they've gone up industry wide, because there's a little more sales online, but you guys are already there. I mean, you know, as I reflect on our conversation this morning, I think about a business that, you know, I don't know how to say this. But if any businesses built for the, COVID era, it was it was Best Buy, you are already agile, you're already ready for super peaks. You already had an organization or you already had you already going in all the directions. You almost kind of saw the future. But is there any elements there that, that resonate with you?
Ron Wilson 34:01
Well, I think that to be returned, specifically, I think before what used to happen is, is that returns would come back to the store, they get rebought somehow the (inaudible) agents touch and put it back in the box and sell it there. But a lot of times it would sit there because people didn't even know it was there. But with our Marketplace now you can actually search for that. And you could expose that box to the entire Canadian Marketplace. And so again, whether you're a vendor or one of our stores, the same thing, almost every retailer has a return privilege with their vendors. So, they'll get back in amount and as long as it doesn't go over a certain percentage, you can then return that back to your vendor partner.
Ron Wilson 34:39
Well, now they have this inventory, what do they do with it? And that used to be a big problem. But now they refurbish it, they put it back up on our website and expose it again to the entire Canadian population. And it sells like crazy and it's again it's it gets it attracts a completely different customer. So, I don't know if I was abou-, in the Marketplace to buy A $500 laptop, I can either buy a $500 laptop that has this performance, or I can get a refurbished one that has this performance. And, (crossover talk), good for the environment, good for the customer more efficient for our vendor partners.
Michael LeBlanc 35:15
And may-, and maybe as we're seeing some pressure on discretionary incomes with price of gas and the price of food kind of positions you well. Last question for you, how long you've been with Best Buy?
Ron Wilson 35:31
30, I think 31 years, (crossover talk), -
Michael LeBlanc 35:33
So, you started when you were about 12, (crossover talk). Now, okay, so have you 30 years, have you ever been ex-, as excited as you are today, I mean, that you're, you're you know, you're, you're very refreshed, and you're very engaged is, is this period, and the period ahead, challenging and, and you're looking forward to it?
Ron Wilson 35:54
Why I am actually more excited than ever before, I think that, at least in this business, and I think for a lot of folks, it's you know, when you're, when you're dealing in the technology industry, the retail industry, the consumer behavior, all of these things are changing faster than they ever have before. So, there isn't a single day where you wake up and think, wow, I don't have anything to do or anything to, (crossover talk), -
Michael LeBlanc 36:19
Nothing on the to do list, (crossover talk), -
Ron Wilson 36:20
It's like you know, every single day, there are opportunities to listen to people in the organization who have absolutely incredible ideas, how we can better service, our customer, new profit pools, new areas of business. And, you know, I've been fortunate enough to be able to work for a company that is very thought forward, and gives us the opportunity to be able to bring ideas to life. And there's never been a time like today where you, you can make it happen, genuinely.
Michael LeBlanc 36:54
Right on.
Ron Wilson36:55
And so, so yeah, it's been good.
Michael LeBlanc 36:56
All right, -
Ron Wilson 36:57
It's been really good, I'm excited.
Michael LeBlanc 36:58
Fantastic. Mat, last question to you. Let's talk about advice to the retailer sitting in the audience, two starts and one stop, two things they should start doing. And one thing they should stop doing not maybe because it was wrong, but maybe it's not going to work anymore, or times have moved on from your perspective and your expertise?
Mat Povse 37:18
Sometimes those answers are the same, -
Michael LeBlanc 37:20
That could be the case, that could be the case , -
Mat Povse 37:23
Stop. Look, you know, I think you've probably picked up on my sense around the human element of retail. My belief system, personally, this is what I hold, is that businesses are nothing more than a group of human beings who have been given tools and a logo and a building to go and create value. Without those humans, you, you know, without, without a dignified experience, where they can roll it a bed and actually look forward to coming and spending a good portion of their day, with their teammates with their boss, you're, you're, you're making a massive mistake. You can not be tolerant to anything that stands in the way of an exceptional environment where people can be their very best.
Mat Povse 37:26
Our number one mantra at Best Buy is that you have to love it here. You ask people, whether they started for two weeks, or whether they've been with us for 300 years. How do you like it here? Hopefully, the answer is because I love it here, -
Michael LeBlanc 38:20
Right, -
Mat Povse 38:21
And, and everything else becomes easy after that, you know, if you're I'm, I'm going to answer two, stop, start, are the same thing. Leadership, on top of that is probably the most paramount thing you can do. This notion of retail is customer first is, is BS the customer will never be first if your employees do not come first. And your employees do not come first if your leadership isn't installed and proper and engaged and equipped to do that job.
Mat Povse 38:51
So, now look, you can add all on top of that the processes, you know, very efficient, you can add to that the right tools, the technology, you know, the brand, the (inaudible), the clean unifor-, all that stuff is all bonus. If you don't have that as your core, whether you are and let me just finish with this. You know, it's interesting to listen to, to, to the, the recipient yesterday who talked about, you know, a small business an intimate group of, you know, five or six people who are feeling like a family in a small business. This is easy to foster, right? You're all friends, you're, you're in it together. It's dynamic, Y'all know what's going on. I believe and we're doing this today that we can scale this across 130 stores with 12,000 people that you can have as intimate and special in experience on mass. And we're doing it today and that is absolutely at the core of our success.
Ron Wilson 39:41
I wanted to add to what you'd asked before and what Mat said, going into the pandemic. We were toying with and experimenting on work from home.
Michael LeBlanc 39:51
Yeah.
Ron Wilson 39:53
And I remember that the senior leadership, myself, we're all sitting there thinking, Okay, well, let's test it. But secretly we're all like eh, people are going to be lazy. I don't know how the technology there's like a million reasons not to do it all those reasons, subtle, prevent you from making the type of leap forward that you need to make.
Ron Wilson 40:16
One of the biggest things I took away from, from what happened was on a single day, we were required to take 1500 people and have them work remote. If, if you asked me two weeks before, could we do it, I would have said no. But forced to do it, we did it instantly and it worked better than we could have ever imagined. And so good that we're now at work first or sorry, a remote work first environment, we're not going to be going back to the office full time we're not even requiring part time. And, and to me, it was a lesson to say all those things that you're thinking about doing. But you have these reasons why you might not, just I always go back to that example. There were a million reasons why I thought it was a terrible idea to have everybody work from home. And, -
Michael LeBlanc 41:07
In one day, -
Ron Wilson 41:08
In a single day, the organization was able to make it happen.
Mat Povse 41:12
I like that you just admitted you might have been wrong about something, (inaudible).
Michael LeBlanc 41:15
All right, all right, let's leave it right there, exactly. That's a great place to leave it. Gentlemen, thanks for the sharing the insights, a great conversation and look forward to hearing more from both you. Thanks again so much, (crossover talk), -
Michael LeBlanc 41:30
Thanks for tuning in to this special episode of The Voice of Retail. If you haven't already, be sure to click and subscribe on your favorite podcast platform so new episodes will land automatically twice a week.
And check out my other retail industry media properties, the Remarkable Retail podcast, Conversations with CommerceNext podcast, and The Food Professor podcast with Dr. Sylvain Charlebois.
Michael LeBlanc 41:50
Last but not least, if you're into barbecue, check out my all-new YouTube barbecue show Last Request Barbecue with new episodes each and every week.
I'm your host, Michael LeBlanc, President of M.E. LeBlanc & Company and Maven Media. And if you're looking for more content or want to chat, follow me on LinkedIn or visit my website at meleblanc.co.
Have a safe week everyone.
SUMMARY KEYWORDS
customer, store, Ron, stores, Mat, retail, Marketplace, buy, retailer, business, people, inventory, talk, product, sell, laptops, supply chain, vendors