In this wide ranging interview, Walter Lamothe, CEO of Bentley & Co., joins us to share his rich experience navigating the retail industry. We delve into how consumer behaviour will shift post COVID, and how businesses can use these insights to prepare themselves to have a massive rebound year once were all back into the normal world again.
Welcome to the The Voice of Retail , I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with Retail Council of Canada
In this wide ranging interview, Walter Lamothe, CEO of Bentley & Co., joins us to share his rich experience navigating the retail industry. We delve into how consumer behaviour will shift post COVID, and how businesses can use these insights to prepare themselves to have a massive rebound year once were all back into the normal world again.
“...there's been a shift, and there's it was happening before COVID. But I think COVID is kind of making things a little bit more. I'm not into expensive, but I'm not into cheap. And I think that there's value for money that customers are going to see that what they're buying, what they're putting their dollar on is going to have more value, whatever level that they're buying at..."
We also discuss Walter's perspectives on the history and evolution of the sector, learn about the insights he’s gained during the pandemic, and how businesses can better equip themselves to navigate tumultuous times.
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I’m your host Michael LeBlanc, President of M.E. LeBlanc & Company, and if you’re looking for more content, or want to chat follow me on LinkedIn, or visit my website meleblanc.co!
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Michael LeBlanc
Walter, welcome to The Voice of Retail podcast. How are you doing this morning?
Walter Lamothe
I'm doing great. How are you?
Michael LeBlanc
I'm fine. Thank you. I'm so excited to have the opportunity to chat with you. Such a retail veteran and your perspectives, both historically. And you're in it, you're in it now. So, you know, the chat that we're gonna have the discussion we're going to have around retail so, looking forward to.
Why don't we jump right in tell us about yourself, your personal, professional journey and what you do at Bentley & Co.?
Walter Lamothe
Well, I'm a married man with five kids and 12 grandkids. That kind of starts and ends with that when you when you look at it. Very, very interesting during the pandemic where you can't see anyone live, and you have to do everything by remote, but we're finding our ways.
And as far as a professional careers concern, well, I've been in retail for all my adult life, basically. And have held every job in retail, from stock boy to CEO. So, kind of seeing the workings and the and, the you know, every decade seems to bring its own challenge. And, and then transformation happens and has been no different for every decade. This is the one that's, impacting the most by all means.
But I've been basically, I've been a President of Mexx Canada, in 2005. And I've either had the job of President or CEO since then. And on the side, basically started some consulting work in 2018. And I've done a couple of, a couple of support gigs, where just helping people think about how to go to market or looking at how to build an organization not too fast, not too, not too slow. And so, we've been doing a bit of work there. But mostly since 2000, since I've started with Bentley, it's been, it's been just really focused on getting this business reorganized and repositioned in the marketplace. And we went through a filing back in 2019, as the world knows. And since then, just when we thought we had it all figured out, well COVID showed up so I've been working on that ever since.
Michael LeBlanc
Well, let's talk about Bentley & Co. just for the listeners who may not know of the retailer itself and give us an overview, you know, how many stores? And you mentioned you had a filing, you did a bit of a reorganization pre COVID. So, give us a bit of the background for that context.
Walter Lamothe
So Bentley was created in 1987. First store in Avalon Mall in Newfoundland. And it's interesting to note that at some point in 2021, we'll be renovating a brand-new store in Avalon Mall. It was, it was full circle.
Michael LeBlanc
Back to where it started.
Walter Lamothe
Yeah, that’s right, exactly. So, Bentley was always kind of redefining itself in the world of you know, everything to do with luggage or handbags or wallets. And the history of the business was really during the time where you piled it high and watched it fly. I don't want to diminish the model by saying it was a bit of a flea market, but it certainly was the mode of doing retail back in the 80s and 90s. And that worked until it didn't.
So, we've been, before I even got here, there was a there was a big move to close some of the banners. I think at some point there was up to four banners or five banners and close the banners and we went from 500 plus stores to we’re now sitting at 162 stores. And three are repair centers. One ecom and basically, we're a lot more focused and we will be a lot more focused as we go forward where we're looking at the life on the go for our customers and basically anything that they would transport from point A to point B. We're looking to be the solution for making that easier or safer. Whatever it takes.
Michael LeBlanc
Now you're mostly mall based? Or exclusively mall based? Do you have any standalone?
Walter Lamothe
Exclusively mall based we have. We have one experiment that's happening in just (inaudible) on beautiful store that we opened up but just as, as everything went for a second phase of COVID. But we do believe that there is certain types of outdoor malls that would be suited to us. But for the most part we're in enclosed malls.
Michael LeBlanc
So, and you know, we don't want to dwell too, too much on this COVID era, but it is a kind of defining moment in retail for a whole bunch of reasons. But as you, as you've experienced the first, let's call it the first phase, of the first year of the COVID era, obviously, travel has been curtailed, and back to school is a bit different. But from a customer perspective, how have you watched their behavior evolve over the past 10 months? And, it's a bit of a leading question as to what your expectations are for behaviors in the bounce of the COVID era, and then post COVID. But what has been your observation over the past 10 months about what and how customers shop?
Walter Lamothe
It's certainly been an interesting, interesting observation when you see how customers are turning to, I don't know if you remember the term “cocooning”. But it was, it was the new trend back then. And there's a whole new definition. I call it cocooning on steroids. I mean, this whole thing about everybody going to shop for home, for art, for sports, for cooking for all of these things, certainly took front stage.
But beyond that, I think that the longer lasting effects of these things is that the customers are appreciating the little things in life where they might have gone away from that. I think the, you know what, there's always going to be room for cheap and cheerful. But I think that there's a, there's been a shift, and there's it was happening before COVID. But I think COVID is kind of making things a little bit more. “I'm not into expensive, but I'm not into cheap”. And I think that there's value for money that customers are going to see that what they're buying, what they're putting their dollar on is going to have more value. Whatever level that they're buying at. Because I think that you need the whole thing about waste is, is become to the forefront. You know, this home cooking, just as a trend that will impact society, I think for a long term, is really talking about how do you maximize, you know, your grocery bill? How do you maximize by making everything at home? And that will transcend to how customers will see how their purchases. I'm sure.
Michael LeBlanc
So you think the lessons learned and, you know, the time as consumers really is, is informing other decisions? And as you said, you know, thinking about quality versus quantity, I guess, is what you're saying?
Walter Lamothe
Yeah, I think I think for sure. If I go back to the 80s and look at you know, the booms that we had in the 80s, it was consumption without any logic whatsoever. And as that came to terms, as we hit the, hit the 90s that whole shakeout that happened in the industry, you know, it just it took five or six years. But if you take a look at who was in business, and the type of business that was involved in 1985 versus 1995, the change was quite dramatic. I think the difference here is that there's an equal society change that is happening and it won't take 10 years, it's probably the only difference. I think the change, the forced reflection that everybody is going through, is going to change a lot about what is important. And as soon as that happens, you start changing those behaviors a lot.
Michael LeBlanc
How did you think about reflecting that in your assortment so far? You thinking differently about what you sell? You've already described how you sell it, how you merchandise would be a lot less of the, you know, as you said, “pile it high”, tough to get through the front door of the store and to more curated. But how have you flexed your assortment to, to adapt to, to the circumstances and to how you think customers are going to start behaving and are behaving?
Walter Lamothe
Well, the biggest thing that we did to look at this back in April, we saw that travel was going to be hit we didn't know it was going to be hit as hard as it was for sure. But what we said is that we have to pivot on what the customers are looking for, still staying within the realm of what we do for a living.
So, what we did is that we went to things such as COVID protection. So, we decided that we were not going to be in the masses we took a little bit longer than just jumping on the first bandwagon that came along as far as product is concerned. But we brought in which is considered probably the top 85 within the 85%, 90% effective mask and different paraphernalia that goes with protection. And that has worked quite well for us, quite frankly. It doesn't make up travel, don’t get me wrong. But it, what it did do, is that it brought that added, you know, solution to the customer.
Something that we've been in development and we're going to be starting in the spring and I wish we could have had a magic wand to do it quicker. But home office is also going to be a thing of the future. And so, we've always sold business but it was business traveler and we're shifting that to business at home. I will always have the business traveler but I think it's just a shift that's happening there.
But an Interesting thing that's happened, is that the day trips or the things that people do every day, so handbags, and wallets and leisure, quite frankly, have done quite well. Not, you can never make up the 70% drop in traffic that we've been getting, or stores close, but that all being equal has been, the customers are seeing the value, they're discovering us sometimes for the first time. A lot of times, and that's where we see a big shift is that we can continue to drive value in those commodities. It's an everyday thing. And when travel comes back, we'll have the wherewithal there to do the right thing.
Michael LeBlanc
How are you, let's pivot on malls a little bit. How are you thinking about the future of malls? I get asked this question by the media almost on a weekly basis. And you know, I'm still a big believer in malls, people, you know, people want to shop. It's not just a transaction, they like getting together. But I have the sense that with whatever percentage of customers or sorry, people go back to work, that the B and C malls might have another life to them, because people might be more shopping in their neighborhoods. How are you thinking about your, your real estate footprint? What do you what do you think about malls?
Walter Lamothe
I share, I share that thought. I think that there will be a focus on local. But you know, at the end of the day, it doesn't matter. If you look at a mall, and you say it didn't have anything to offer before COVID. And they don't do much about it, they're not going to be around. And whether we talk about, you know, six months or 18 months or whatever, there's malls that you know, had 35, 40% vacancy while things were supposedly going well. But that being said, there's a lot of regional malls that are fantastic malls. I mean, they're just great little malls. That really
Michael LeBlanc
LIke Avalon Mall
Walter Lamothe
Yeah, Avalon’s a wonderful mall. And you know, they're investing in the mall. I think that there's been great investments in the, in the bigger malls across Canada. Just haven't been able to profit from it. Some have taken a little too long to get going.
But that whole experience is going to be, it's going to be important. But you know, I think sometimes what happens is that we talk about experience like it's going to be, you know, dancing clowns or something in the malls.To me an experience is if I go to the mall, I want to be able to make a full purchase and not feel like I'm compromising no matter what store I'm going in. And I think that's probably how the mall and the merchant are going to have to figure out how to do this together. Whether it be having online, you know, social structures within the mall. Communications to customers that actually aligned to the tenants. But if they don't do that, it's going to be a big mess. But I think they will.
I think that, that's going to be the realization and I think there's also going to be this, this push on both landlords and on customers to have just one, no matter if I go to a mall, and I want to make my purchase, I want to make my purchase without compromise. So that means, I want to deliver it any which way, that's how it happens, the mall could participate in that. If that means that I need to shop on products that you don't have the space to carry it in your store, because I think smaller footprints are going to be more and more the reality, then we need to do that under, some a choice few that do that well. But I think everyone can learn to do that a lot better.
Michael LeBlanc
Well, it's interesting, because you have more mall owners, you know, Simon’s comes to mind who are doing deals to actually own retailers. I wonder if that's going to infuse them with the reality of being a retail partner. It's not like they don't know, retail, but it's different when you actually are running the retailers the mall. I mean, some of that is just, you know, let's own them. Because, you know, without our ownership, they're going to go away. But you know, if you were, if you are sitting down, I think you're getting into it now, if you're sitting down with your, your partners around the mall and say if you could do these one or two things better what would it be? Is it this integration with ecommerce, like get rid of the model that relies on a sales per square foot thing? You've got to be more, let's say holistic is that is that
Walter Lamothe
A 100%. You know, true partnership comes from saying the end in mind is mutually owne. But it's, the system is just not built quite that way. This dollar per square foot and based on the average selling dollars and with the, you know, the likes of the Apples of the world that have influenced, majorly the dollars per square foot in sales and everybody pays a price. That's an average right? So, for me, those models are dead and gone. But I think that there is, there's room for them all. I think that there's room for a different level of collaboration.
But you know, what's interesting is that when you take a look at the business model, so landlords getting into retail ownership, and it wouldn't matter if it's landlord or banks, or whatever. The one challenge that I think is prevalent for as long as I can remember, is that often the business context is so much front and center that the focus on what it is that you're selling and why it's matters in the first place kind of gets lost. And everybody's worried about the business model and the quick delivery and you know, I want to deliver it an hour before you even knew you were going to order it. And, and but you know, what's in the box in the first place? Is it worth it? And that whole full service and, can I trust you when I do buy something? That it's not jumping through hoops. And if I do return it to this big mammoth online retailer, they're going to throw it in the dump? And is that, there are an environmental cost to this. I think all of these things are certainly not yet at the forefront.
But I think that those are the things that malls need to step up and say, don't have to give your business away to, to the likes of Amazon and all these other big box, big box big online players, that we could be the perfect marketplace. And, and that's how it was designed to be if you look at the base. If any retailer forgets that the product is number one, then I think, I think we, I think that's, I think a lot of us. Yeah.
Michael LeBlanc
You know, it's interesting, you talk about returns, because, you know, there's some news out this week, we're talking here mid-January of some big retailers just saying, just keep it because we don't want it you know, even though you want to return it. So, I think returns you know, you know handling returns on lower priced items is a losing proposition sometimes, but it feels like I'm intersecting two points. One is, I looked at some research from Bain & co. who said that people are doing, consumers are doing curbside for five reasons. The fifth is safety. But one through four is convenience and all those other things. And then I look at returns and of course, naturally when you shop online returns go up not down just organically. Maybe there's that intersection there, how are you thinking about returns in your business? Obviously, a weird year because you're closed, you can't take returns back, but how are you thinking returns are going to are going to evolve? And is there opportunity there?
Walter Lamothe
I think returns you know there's really different, different realities for different businesses, you know. Cheap apparel could be up to 40% returns. I think, it's those are stats that are not unbelievable. And when you're already looking at these things, you know, returns is just part of a business model. What is your business model to start with? And when you are willing to lose money to be able to gain market share, and it doesn't matter who you are, returns are just another added negative.
So, when you when you hear in the, in the world of success in in ecom businesses, what you're never hearing really is, what is the success from a bottom line point of view? By the time you ship from multiple locations, by the time you return from multiple locations, by the time you centralize your, and get you know, especially if you're talking about fashion where you have time limited shelf life, there's no money in it.
And so, the consumer wants convenience. So, I think the only way that this can be done is that, is that (inaudible) channel. The store is my place, I return at any time, it's easy. If I don't have places to drop off because I don't have stores, I think that's where the inconvenience of just online has been and will continue. But returns are inevitable part of you know, I'm going to sell you four because you don't know what size. So, if I can be better at telling you how to figure out your size, then you'll only buy maybe two and I think a lot of them are death by 40% returns. Think about it. I mean, it's just it's how many people making wrong choices because they don't know how to choose.
Michael LeBlanc
And it, I wonder if you share my my perspective has always been the return is a great opportunity to to continue to build a great customer relationship, you know, returns done well. can be actually a great thing right?
Walter Lamothe
Returns done well are a fantastic way to build a relationship. The challenge is that when you have this nameless entity that you're sending it back to a warehouse, you're happy, you just got credited. But there's no relationship building there.
And so it's, and it's not about not being for or against, you know, big, big online companies, they the challenges that the consumers, if you're talking experience, the one experience is that it was seamless, it was easy to buy, it came when it said, right. And it was easy to return those components done. But if you don't look at what's in the box, I don't know how sustainable this is. And the models for profitability in many, many components are just not there. So, there's an acquisition of customer that's valued here. And there's, you know, there's all kinds of other benefits, but the pure profitability of online I mean, I know, I know, some online businesses in the US over $200 million and have yet to turn a profit. Yeah, yeah. Like, what is it?
Michael LeBlanc
Yeah. Yeah, at what point does the model, because the model is not, almost not built to turn a profit. But anyway, that's a whole other. But that's a whole other discussion.
Let's, let's turn our minds. And let's get to your experience. And for the listeners out there a couple of last questions. What lessons have you learned about running an operating business that you would that you would take for post pandemic? And you know, the other side of that coin, the other side of that question is what things should retail industry leaders leave behind post COVID? So, first of all, what have you learned about running the business that you didn't already know? You're such a veteran, but you know, life teaches us lessons every day. And then let's talk about what retailers should do less of post COVID and in, you know, 2022 and beyond?
Walter Lamothe
Yeah, I don't know that they were brand new lessons, I just think that some of them just become very, very amplified with, with challenges like this. I think, I think the one thing is keep your partnerships close you know, relationships with stakeholders, internal and external is very, very important during times of uncertainty. And you can't over communicate, even if you repeat yourself. You're better to do it every week, than, that they say, oh, they know, I told them before. And I think that that's even in good times. You have to, you don't know what the individual who's dealing with you is dealing with. And sometimes understanding that relationship, it helps a lot. But I think, I think the biggest things is that think like a startup, you know, you're far from a startup at 165 stores. But there's thinking that becomes institutionalized in every organization that you do because you've always done. And startups don't get those hang ups, they make other mistakes, but they don't have those hang ups. So, while being lean and agile has new meaning when cash is just not coming in with stores closed, you know. Creating a seamless experience for your consumers got to be you know, front of mind, and speed it up. We were always on that game plan. But truthfully, we were going too slow.
And I would say the last one, the last one of probably 1000 more. But is, lean also applies to inventory. I mean, retailers have a tendency to love inventory. And I think that the ability in faster turns and able to pivot is going to be key for many, many moons to come just because it's a, it's an essential part to being where the customer is and not where she was.
Michael LeBlanc
You know, that's an interesting last point, because I've talked to executives who say, essentially not the opposite, but are being more towards having more inventory because it allows them more certainty. In other words, they felt like they were playing it too close to the line. And when there's a disruption in the supply chain, as there has been, there won't always be at this magnitude that they're caught short. So how do you how do you balance those two things? How do you balance that efficiency versus, you know, in such uncertain times, how do you balance inventory and having the right amount of stuff in the right place? It's what's the approach that you would recommend?
Walter Lamothe
Yeah, it's, it's, there's, it's, it's a long it's a long-term question that retailers deal with all the time. But I gotta say that if you're looking at the difference between sitting on inventory that's aging by the minute or chasing inventory. I'll take chasing inventory any day. But there's a balance you gotta, you gotta cover your core and your core has to be solid within the supply chain, which gives you your, your meat and potatoes every week, no matter what business you're in. But beyond that, you need to chase and if you'll never go bankrupt by, unless you close the doors like we're doing now, but you'll never go bankrupt because you're short on inventory, but you can if you got inventory you can't sell.
And even the conservative retailers I know, have caught themselves in a position sometimes just to and if you have a running something that's that's that's driving and you have evidence of it, then go for it, there's no question. But to say overall, this is my safety net, I don't quite think that that's the case, because you said it cost money to hold inventory costs, cost money to have warehousing and whatever else we have. So, I just think that the agility of being where the customer is in supply chain by the nature of supply chain is not an easy thing. But I think it's the only way that that you can survive and grow is to have appropriate merchandise for the customers thinking now.
Michael LeBlanc
Last question for you, cast your mind forward, as you probably already are, because you buy well in advance to 2022. And what do you, what do you think, how do you think retail will look different in 2022? I mean, we've already talked about likely there'll be way more people working at home than going into the office, there might be in the short term ish, less business travel, but fundamentally, what do you think will be different about retail, in 2022?
Walter Lamothe
I think that the world is going to go through, you know, the end of cabin fever, and that's going to have all kinds of effects on, on trends of anything, anything in entertainment, anything in arts, anything in travel is, there's a pent up demand that this was, the people weren't traveling, because they hated it, they were traveling because they loved it. And we've taken that away from them. You know, they went to concerts, not because they couldn't hear it on the radio, that's because they love that live feeling. So, all of those things I think are going to are going to come at us fast and furious.
But I would think that the customer, generally speaking is going to be in a place where they say don't waste my time. Give me the experience I want, give it to me the way I want it. Don't overcharge me, and make sure that you know quality over quantity is going to be more and more the way we're looking at it.
So, as we look at, you know, 2022 for ourselves, you know, those who will survive this thing, and there will be a lot, are going to be quite strong actually. Because I think that they've learned all these lessons. And at least for the next five years, will use them appropriately. I think that there's going to be a lot more startups. I think that people are going to say, let's get, let's get let's fill this hole that somebody else left behind. I think that there's going to be a lot of pressure from technology to keep reinventing the next bells and whistles about, you know, what should be the next. The next thing that's going to make all the difference. But I would suggest that any business model that is not right to start with, technology is not going to fix it for you. So, I think cheap and cheerful,
Michael LeBlanc
I think your magic wand only work, if the magic wand only works.
Walter Lamothe
You know how much money was spent in retail and technology that was supposed to give us a three to one, four to one return that never happened. If those numbers wherever added up and really put into a bucket, you'd be, you'd be shocked you pay off the national debt.
Michael LeBlanc
Well, listen, I love the way we were kind of wrapping up our discussion on that positive note of you know if you can make it through these times that the industry and players in it will be stronger and there'll be new players and things will continue. So, Walter, it's been such a treat, having a discussion having you on the podcast. Thanks so much for making the time to chat with me on The Voice of Retail podcast.
Walter Lamothe
Well, this is great. Thank you very much and you’re a class act so I look forward to listening to many more of your podcasts.