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Blaine Callard: It has been hectic. It has been crazy and it’s been deeply satisfying, all at once. We launched that roadmap in March 2020. It was a huge change agenda. That’s all been set against the most volatile retail environment any of us have ever seen.
But we’ve managed to keep forward momentum on that, which is good. I mean, most retailers have just focused on keeping going, but we’ve been transforming through the disruption. The change was about reimagining the brand. I think the business has really started to transform. Let’s just say we’ve chopped a lot of wood.
A lot of new talent has come into our business and into our product and design teams, retail teams – particularly in visual merchandising. Gathering together some of the best people across the industry was always going to be very important with this project in mind. We’ve completely overhauled our assortment and the supply chain. We’ve regained this unique handwriting. Now there are thousands of new beautiful products throughout the assortment. We’ve also rationalised that global factory base and halved our factory network, which has been excellent. It was just a sprawling mess of dealing with too many people and not being relevant to enough suppliers.
We’ve also reimagined our brand, and our storefront, starting with a new logo, which we revealed last year. It’s more energetic, with a fresher, new positioning. We’ve re-platformed and upgraded our digital platforms, both in Australia and New Zealand.
We’ve made significant inroads in terms of cultural change. Typically loss-making businesses and particularly loss-making retailers have deep cultural problems. And I think Freedom’s culture had a lot of positivity, but it still had the challenges that come with an underperforming business. We’ve changed a lot about what we value, what we talk about. We’ve been working hard on transparency and trust, our employee engagement scores and buy-in is up and up and all that is important to driving change. You can’t drive change in an organisation where people aren’t engaged and aren’t buying into that. You’re just pushing it down and it’s not sticking, and that’s why I guess a lot of change sort of fails. We’re going through this sort of deep root-and-branch reinvention and in many ways, we’re playing catch up for a lost decade, but we’re awake now and we’re not sitting still.
IR: I feel like the companies that have done well throughout the pandemic are the ones that had already invested in culture.
BC: I couldn’t agree with you more. You know, there’s this war for talent now, which is raging. And the pandemic has made that even more fierce. I think people increasingly are looking for meaning and purpose in where they work and they want to work for brands that are values-driven, people-centric, transparent and empowering; brands that value their people and allow employees to express themselves. I think that’s actually just good business as well, it’s not just about attracting talent. So many companies try to solve their problems from the top, out of the C suite, and they just dictate solutions downwards. I think that’s really inefficient, compared with an empowered, engaged workforce, which drives agility.
Teams can reinvent a business from inside. We’re trying to create a unique culture, where people will want to work for us. We think that’s going to help attract top talent, but that’s about saying people are really, really important at a time when everyone’s talking about technology. I don’t want to say we’re not thinking a lot about technology, but you know, more than ever, retail is people-centric these days, and I think the pandemic is accelerating that.
IR: There are so many large-format stores I’ve been into where the staff are disinterested and bored. Is there something about the large-format retail business that lends itself to that kind of culture?
BC: I think there are a couple of things going on there. I think the first thing is just the curse of big business. If you think about a startup in a garage, the culture is awesome. It’s pizza every night and the founders stay up till 4 in the morning talking about how to make the company better. And then at the other end of the spectrum, we’ve got this huge corporate bureaucracy, where no-one speaks their mind and they’ve got to put in an innovation department and win innovation awards, just to get people to think creatively.
I think the magic trick is how do you get big, but stay small in terms of culture? And I think the trap that a lot of large-format retailers fall into is they’re overwhelmed by this idea that, “Oh, my god, we have this massive network of stores. We’ve got all these people and people are so messy and difficult to control, and how are we going to do that?” And then everything just becomes a system instead of empowering people, which is a little bit risky, but that’s how you’re going to get the best out of them.
These companies are just so big that they resort to just this bureaucratic machine-like functioning of how everything’s going to work and there’s just no life in it anymore. There’s no soul.
If you think about that in terms of interior retail, when you go into a great boutique, you can get incredibly personalised service. And we all love that right? I want to replicate that at scale. I’m only going to do that through culture.
But I also think commentators in the industry have a lot to blame. There’s just been so much talk about technology and we’ve become so enamoured with Amazon stores with no checkouts. You just walk in, get what you want and walk out. But buying and shopping are not the same thing and shopping is a recreational experience. Buying is acquisition, just getting the stuff you need, like buying a sandwich at lunch. When we shop, we want to interact with people and have social experiences. So if you obsess about tech-automated mirrors in change rooms and self-service checkout, you’re just…Sometimes I think Amazon is just working out how to strip all the people out of the business, then everything just becomes an algorithm. But I don’t think we want to shop that way.
IR: In recent years, we’ve seen quite a few retail brands go through major changes, from going into voluntary administration, through to undergoing huge turnarounds. Some have been successful, others haven’t.
BC: Australian retail had a 25-year bull run, it was amazing. You could open anything in Australia and do well, the economy has been so incredibly vibrant. Australia was hardly hit by the GFC. There’s not a lot of experience with downturns in Australia, but this pandemic has made everyone lift their game, I think.
But not all retailers can be saved, technology will disrupt some. Some are just irrelevant. Some have deep structural change going on. I’m very bullish about furniture and interiors retail. You’ve got to touch it and feel it. It’s very tactile. I don’t think cyber penetration online is ever going to be more than about 10 or 15 per cent. Who’s going to buy a sofa you haven’t sat on? I mean, there are people who’ll do it, but I think ultimately – and this is why I’m so bullish on bricks-and-mortar – the retailers that are dying, are dying because they’re fundamentally boring. I do not believe in this sort of retail Armageddon that online is killing retail. I don’t believe in that narrative at all. I have very strong views on that, which are well-know, and I think that boring retail is dying.
IR: Yes, 100 per cent. Well, no-one has any patience for it anymore.
BC: Consumers have all this choice. Why would you go into a shop where you’re not inspired and there’s nothing going on?
IR: How has Covid changed shopping habits and how has it affected the physical store experience?
BC: My view is the pandemic has only strengthened the role of physical retail. We’ve all been locked in our homes and all we want to do is go and shop. That’s the difference between shopping and buying. Shopping is experiential. It’s exploratory. I discover I am inspired, I socialise, I get out of the house. You just don’t get that in a digital experience. Digital is really just about acquiring the thing you’ve already decided you wanted to buy.
For us, omnichannel is now the only game in town. We’re seeing native-only brands opening physical stores globally. They’re being disrupted. That’s inevitable, in my view. I mean, even Amazon now operates 600 physical stores globally, under a bunch of brands. We believe in that really powerful combination of deep experience with brick-and-mortar, plus strong digital capability.
Just think about this. Is it easier for a bricks-and-mortar retailer to develop a strong digital capability? Or is it easier for a pureplay to work out how to run shops? You need 10, 20, 30 years of experience to learn how to run stores, whereas a lot of retailers already have pretty sophisticated digital operations. So I’m going to back an omnichannel retailer over a pure-play anytime. Stores are the billboards for the brand.
I think with a lot of those pure-play brands, there’s something still faceless about many of them. People want that connection. For us, the key is to connect on- and offline experiences to make sure they’re linked. If I’m going to come into a store, you’re going to know who I am just as much as if I’m on your website. I can be at home and see what a product will look like physically in my house through augmented reality. Connecting digital to physical and leveraging the best of both of those in one place is a powerful cocktail.
IR: Especially if you’re talking about an industry like furniture and interiors, which is all about style, I feel like you cannot get an algorithm to tell you if X matches with Y. You want to go into the store and have an expert tell you about the trends and what’s happening. You don’t want a machine spitting out information at you.
BC: It’s really interesting that you say that, because we’re doing quite a bit with data at the moment. Big data is pretty sexy right now but the problem is it can be really impersonal. Data should be the opposite of that.
Big data has been around for a long time, when you think of that country town butcher. You walk in, he knows your name, he asks how your son enjoyed his birthday on the weekend and he says he’s put aside some of those sausages you like. That’s the original big data. It’s really human.
We’re doing some stuff at the moment around building out a lot of data capability, linked around the My Freedom program. We launched it two years ago and we already have just under half a million members. This has been an incredible journey for us and there’s a whole lot of data in customer intel and automation sitting behind that. We’re working out if we can use data to understand people’s tastes and aesthetic profiling. Most retailers’ data programs track all those usual things, like visitations, spend, demographic, and shopping patterns, but we want to track taste. Not so that it can be automated, but so our sales people can say, “Hey, I know you. You’re John Smith from our loyalty program, and you like this kind of furniture. Come on, I’d like to recommend these things.”
Let’s think of it as assisted recommendations. This is on the bleeding edge in Australia. I don’t think anyone in fashion is thinking about data and taste and how those two things interact right now.