Crate & Barrel CEO Janet Hayes on Weathering Turbulent Times for Retail

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1:08Hi, and welcome to The New World of Work. I'm Adi Ignatius, Editor-in-Chief of Harvard Business Review. And each week on this show, I bring in a guest and we talk about some of the challenges in today's workplace. Our guest today is a major retailer, and we're going to talk about supply chain challenges, pandemic challenges, and how a big brand has kept afloat through all of this. But first, I want to read a word from our sponsor. Where some see barriers, Unisys sees breakthroughs. Unisys pushes what's possible across digital workplace, app modernization, cloud, and beyond. Unisys, keep breaking through.

1:48All right. And also, before I start, I want to tell people if you like this kind of content, check out our flagship podcast, the HBR IdeaCast. You can get IdeaCast wherever you get your podcasts. So it is now my pleasure to introduce our guest. This is Janet Hayes, who is the CEO of Crate & Barrel. She spent more than 25 years leading digitally-led and customer-centric organizations. She became Crate & Barrel CEO about two and a half years ago. Before that, she held senior positions at Williams-Sonoma, Pottery Barn, Nike, and The Gap. She has a lot to say about the transformation of retail businesses and about how she's handled the disruptions of the past couple of years.

2:31So, Janet, welcome to the show. Good morning. Thank you for having me. I've been a long-time fan user reader, and I'm honored to be here this morning. Thank you. Great. Long-time first time. I love that. That's right. Right. So so let's let's start by getting to know a little bit about about you and, you know, the path that has brought you to the CEO role. Can you talk a little bit about the journey that has led you to work for some of these very, very interesting retail brands? Yeah. You know, I've been in retail my whole life. You know, the day that I turned 16 and got my driver's license, my mom said, what job will you get to go along with that?

3:08And it began and it began the journey that I have been on. When I was in college, I studied to be a teacher. I really wanted to be a teacher. And about 30 days before I was going to graduate, I thought, God, I really don't want to do this. I want to go to where my passion is, what I'm interested in, what I'm curious about. And there weren't a lot of role models in front of me at that time for me to understand that retail could be a career and how many literally different industries are almost inside of a retail model. So I began right out of college and took off from there. And I found myself looking back really joining multi-brand retailers and learned wholesale.

4:00I've learned retail. I've learned vertical, B2B. and as I've gone through the retailers and brands that I've worked for, one thing has remained constant in all of them and in common is that they really were focused on the customer, and I'm passionate about that. So now if you're watching this, I urge you to put in your own questions for Janet in the chat. I'll try to get to as many as I can later in the show. All right, so let's fast forward. So two and a half years ago, roughly, you became CEO of Crate and Barrel. This is in the middle of the pandemic, where you're certainly getting ready, learning the job during the pandemic.

4:40Talk about that to the extent that that was a challenge, to the extent that that was an opportunity. Yeah. So I joined Crate and Barrel Holdings in August of 2020. And I'll say maybe the only thing harder than being a new CEO and in the middle of the pandemic. Star Wars The Mandalorian and Grogu is now streaming on Disney+. What are you waiting for? Hop on. The must-see galactic adventure comes home on Disney+. This is the way. Our only chance is to work together. I like this kid. Always wear your seatbelt. Star Wars The Mandalorian and Grogu. Now streaming on Disney+. Read PG-13.

5:27This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. Pandemic is getting a new CEO in the middle of the pandemic. So I walked into an empty building in August of 2020, and there was a board meeting on my second day.

6:04So logged into the board meeting and had a few people in the room. But remember, this is at the time where it was full lockdown. But the visibility on just that second day that I was able to listen to a board meeting for two days, and I saw my team role modeling, resilience, adaptability, flexibility, just fantastic leadership in the middle of a crisis, I knew that the reasons I came here were going to be validated. It was a collection of strong brands with a foundation that just needed a little energetic culture and we were able to take it from there. But walking in on that first day and seeing the opportunities validated right in front of me was a great first step to there.

6:58In the 90 days that followed, I look back at my notes and my notes are so clear and my notes are written with so much purpose. And I often reference those notes to go back and say, you know, before I had any real heaviness of what we had to take on, you can build a really clear purpose in those first 90 days. So I go back to those notes quite often and look at them. And I took a lot of notes on the resilience and adaptability of the team here was just incredible. It's what you want to see coming into a brand and coming into a company like that. So I want to talk more about those first 90 days.

7:44So many of us have suddenly become the boss, maybe coming in from the outside, or we've had a boss who's come in from the outside. What's your advice to somebody in that position, maybe even the first 30 days? I mean, what do you need to do to earn the respect, to figure out what the company does? What's your advice for that first month or two? Yeah, well, I think you said the word right there, respect. You know, I walked in with a tremendous amount of respect for Crate and Barrel Holdings and a tremendous amount of respect for the customer that they held. And the first 30 days, listen, listen with respect, listen with curiosity, ego down, and just ask questions, really listen.

8:28And I really tried to connect with people. And again, very difficult in an empty building, trying to do it through screens. But that's how our world is now. And you have to figure out how to get through the screen and you have to figure out how to connect. You know, I definitely led with empathy during those first 30, 60, 90 days. And I still continue to try and practice that every day. This team, these people, you know, all of us had been through a lot. So even what you come in thinking that you know, the world had changed dramatically. People's lives had changed dramatically. We had a re-centering on what was important to us during that time.

9:07So, you know, I had to let some of the things go that I knew had worked in the past because the circumstances had changed. So really listening, really respecting what people had gone through, and really connecting in those first 30 and 60 days. I think that's a practice that will all carry with me. Yeah, that sounds great. Now, again, if you're watching this, I'm talking to Janet Hayes, who's the CEO of Crate & Barrel. Love to hear from you. Tell us where you are. Pose your own questions for Janet that I'll try to get to later. All right. So we talked about becoming CEO in the middle of a pandemic.

9:44So the supply chain problems were bad then, probably got worse for a while, a lot of it pandemic-related. Star Wars The Mandalorian and Grogu is now streaming on Disney+. What are you waiting for? Hop on. The must-see galactic adventure comes home on Disney+. This is the way. Our only chance is to work together. I like this kid. Always wear your seatbelt. Star Wars The Mandalorian and Grogu. Now streaming on Disney+. Read PG-13.

10:23This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. You know, I can't imagine how you coped with that, but I'd love to hear sort of what was your experience with kind of the supply chain challenges of 2020, 2021, 2022.

10:59Yeah, well, we are still not out of the woods in the supply chain problems. And for us, we chose day one, stay focused on the customer. There was a lot going on, but we needed to stay focused on the customer. And with that, we started to use words like value and purpose and quality. And we realized that the real the equation was changing very, very fast for the customer. You know, they began to understand that maybe they weren't going to get things fast anymore. But what they wanted was reliability. What they wanted was trust and what they wanted was quality. So we took those words and use them as decisions and how we were looking at the supply chain.

11:45I think the other thing that this crisis has taught us is the supply chain is bigger than what you own, bigger than your backyard. It forced us to take a bigger look at the supply chain and whether it's commodity pricing or, you know, just how fragile really the supply chain was. It was a big learning for all of us. The role of technology became critical for us and became a focus for us during this crisis. Being able to see where things are, the accuracy of it, the visibility for my teams to be able to see everything they needed to see to make the right decisions for the customers. We learned a lot of valuable lessons through this, but we're not out of the woods yet.

12:35But what I will say is it has taught us the value of communication, the value of our customer, and really communication with our customer and focusing on that quality. So more on that, I'm interested whether you've had to adapt, whether you're trying to source materials closer to the sale point, where if you're not buying from certain places now, whether you've shifted supply, anything you can say about some of the concrete shifts that you've had to make? Well, our sourcing strategy was pretty solid when we walked in, but yes, we did have to adapt. And I think the relationships that we have with longstanding vendors really helped us through a lot of the crisis, being able to trust each other and understand and, again, give empathy on, you know, they were having a hard time sourcing materials, getting materials, getting their workers in.

13:36We understood that we were able to communicate that through to our customers. I think we strengthened up our care team here and the communication to our customers. We, you know, we felt the effects of it, you know, overseas and we felt the effects of it here domestically. There wasn't really any supplier that was immune to what was happening with the supply chain crisis. What it did do is strengthen up our planning for the future and highlight the opportunities that we have to, again, strengthen our foundation. We experienced just tremendous growth during this time, tremendous growth, particularly in the home sector where people were at.

14:20And redefining what was important to them, we were able to take that data very quickly and say, you know, they've maybe moved from urban locations to suburban locations, picked up more space in their house. They're ordering more sectionals than sofas. There's eight dining chairs going around their table rather than six. Their families are coming back home. How can we adjust to that? So we adjusted our...

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15:58What is the value equation that the customer would be able to withstand during this very difficult time? So lots of really good focus back here on the team on what's important for us and what's important for the customer. So that's interesting. So you're sort of a leading indicator in terms of how people are living and how they're sort of changing how they how they live and work. So that's interesting that you saw you were selling different products as people were adapting their their lifestyle to life under pandemic. So are you seeing are we coming out of that? Are you seeing, you know, whatever spiked is coming back down or something else is spiking as we evolve to the next stage?

16:38Yeah, we're seeing some changes happen. I think over the last, I mean, it was so fun during that time to see all the data come in and see what, it was almost boyeristic what was happening in the homes. And we can see where people were moving state by state and where the fast growth was coming from on the states. But we are seeing a change now. I think, you know, people have definitely feathered their nest and they're looking for, we think, probably less pieces, less purchases in the future, but ones that are made with more intention, decisions made with more intention, more purpose. We definitely know that they're telling us they want things that will last.

17:19They want quality. And they really are doing their shopping. They're doing their decision. And a lot of what we're seeing is based on quality and they want less, but for it to last longer. So we are seeing some changes in sizes. Again, sectionals versus sofas, sizes of dining tables. It's really interesting. Of course, home office has slowed down with some people going back into the office. So we watch those trends and react to them, not only with our assortment, but also with our inventory levels. So we're starting to get some good questions coming in from the viewers. And I want to go to one right now, which is, this is from Shane, who's in San Francisco, who says, you know, who imagines that your suppliers, that you're facing cost increases from your suppliers during this inflationary period.

18:12So the question is, you know, how have you handled the changes in your cost? And, you know, how are you passing them on to the consumer? Again, I'm going to go back to just touching on the value equation, because the value equation doesn't only come in that first cost, and not only in the retail price. It comes with how much is the delivery charge on top of it. When you take in the value of that, that's in one part. But then what are we offering with that? We've really amped up our design services, our help with the customer to make decisions, our engagement in the store. We've taken up our content and inspiration on the site.

18:52So we knew that those prices were going to, some of them were going to have to come through, some of them we would absorb. We really honestly went piece by piece and looked at it like that. But more importantly, we looked at the longer view of what the customer was experiencing. It wasn't only about the price. It was about the service and the experience we were offering. And we really began to work on that service and that inspiration and offered it as a full equation. So, you know, I think it would have been short-sighted if we only dealt with it on a price and said, this is exactly what we did.

19:26We needed to look at the whole journey and the whole value that we were offering to the customer. Sustainability concerns are probably, you know, very important in your business. How do you think about sustainability and what do your customers want in terms of sustainability? Passionate subject for me. This is one of the things I was most excited. Star Wars The Mandalorian and Grogu is now streaming on Disney+. What are you waiting for? Hop on. The must-see galactic adventure comes home on Disney+. This is the way. Our only chance is to work together. I like this kid. Always wear your seatbelt.

20:10Star Wars The Mandalorian and Grogu now streaming on Disney+. Read PG-13.

20:19This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. about when I became CEO of Crank and Barrel Holdings. You know, this is a passionate subject for me and certainly one for our customers.

20:56And our customers are telling this every day. This is a big decision point in who they purchase from and what they purchase. So in the last two and a half years, this team has done just a huge amount of movement in sustainable practices. and that's anything from FSC wood, organic cotton, just making the right choices. We have ignited a culture here that is excited about making those choices. I think in the past, we talked a lot about barriers to making those choices and those are gone for us now. Now we say, make the right choice, make it with do the right thing. It's put in the purpose of our company that we will be building products the right way, taking them through the supply chain the right way, educating and helping the customer make the right decision all the way through the product lifecycle.

21:50We've ingrained it in our culture, and it's really not only been informed by doing the right thing and the employees want to do it, but also informed by our customer. This is what they're demanding. And again, I'll say, you know, they're very, I think, signaling to us that they're going to be buying less. they want more value or more purpose in what they're buying. How would you define your customer? I'm sure there are many segments and persona that you think about, but who is the Crate & Barrel customer? Well, if we take it from the very top, Crate & Barrel Holdings has four brands inside of the company.

22:29There's the Crate & Barrel brand, there's Crate & Kids brand, there's CB2, and there's Hudson Grace. So we have a variety of customers. What I'll say is the common denominator in our customer is that, again, they want purpose in what they're buying. They want inspiration. They want experience. They demand quality. And they're very savvy in how they shop with us. They see the relationship of price versus value. And this team that works here works hard every day to bring that forward. So I would say that they are different by brand. The Crate and Barrel customer has been with us for 60 years almost now.

23:14We are celebrating our 60-year anniversary. We have a tremendous new influx of customers every year through a strong wedding registry business, which is really so much fun to run. Creighton Kids, we have new customers in Creighton Kids every year. And that is a customer that is very technology forward, very savvy with digital commerce. And so we run that in a different model. That's a mostly digital model. CB2 is very design led, design driven, a big trade business. So, but they never, they never come off of saying we want quality with that design. and Hudson Grace, you know, that's a whole other customer, one that's very in tune with entertaining and gift giving.

24:01But again, common denominator across all the brands is quality, value, design, beauty, purpose. That's great. Well, congratulations on 60. Harvard Business Review has just turned 100. Congratulations. Well, thank you. Most of the companies we have written about have not survived. So 60 is a big milestone. So congratulations. A big milestone. So I want to ask one more question about supply chain and then move on to more about kind of your thoughts on leadership. But this is from Gurvir from Barnala, India. And the question is, you know, as you look at the global economy, are there trends, are there warning signs you see that might suggest something about future supply chain bottlenecks?

24:51yeah again i i you know i think if anything what we've learned over over um the last couple years is again it it's fragile you we have to take care of our relationships out there and invest deeper in them we have to be agile um much more agile we certainly learned that as a company here we we need to be able to move our move our product or our sourcing um quickly and i and i think you know I think one of the biggest responsibilities of the companies going forward is to have full visibility in lifecycle and chain of custody. And I think that's going to cause a lot of disruption. That's going to cause a lot of work.

25:33And that's going to be important. That's what I want to see. It's what our customer wants to see. And it's what we need to work toward is really getting full visibility into the entire lifecycle product. Yeah. So I want to talk to you about retail sort of more broadly. And here's a question from Nicole from Charleston. So, you know, you've been in the retail business for, you know, for all these years, working for a lot of great brands. You know, what has surprised you the most about how retail has evolved over that period? Oh, what has surprised me the most? That is a good question. I think what excites me the most about it is that years ago, we would talk about what we were planning as a retailer, as a company.

26:24And now we're talking about how quickly the customer is evolving. And what has changed for a lot of retailers is technology used to be something that powered us. Technology used to say, you know, it used to be almost behind the curtain. What is your website run by? Or how does your POS system work? Or what is your supply chain powered by? And now it's what's in our customers' hand. Technology has become the center stage. It is what the consumer is demanding. Technology has now become the experience. And so for me, that's what's exciting. I would tell you, I think that's what's changed the most.

27:08is we are now being driven by experience. And while we'll say, you could say in some way, shape or form, retail, brick and mortar back in the day was the experience. And then we talk about what experience you can have in digital. Those two are not downplayed, but it's about the right model now and what technology can bring for an experience. And that's a big change from where retail used to be. So you've been in the top job now for two and a half years. is you talked about your first 90 days and how you were trying to get established and show empathy and kind of hit the ground running. So now two and a half years later, what have you learned about leadership?

27:51What does it take? And sometimes we hit the ground running, but then you have to keep it going and you have to keep refreshing your leadership style. So what would you say about what you've learned about leadership in this time? You know, a lot of it is building a big, courageous vision, but making it clear and simple, one that your team is inspired by to follow. I would say you've got to surround yourself with talent and keep the culture energized. There's no room for ego in this job. There's no room for ego. And respect is deserved at every level. And when you can build that big, bold, clear vision and keep your culture energized and engaged, the only other thing that I think is going to stop you is yourself.