Innovation in Omni-Channel Retail

Michael Krigsman: Welcome to Episode 195 of CXOTalk. I’m Michael Krigsman, I am an industry analyst, and really have the pleasure and the honor of hosting this CXOTalk series.  CXOTalk brings together the most innovative, creative business leaders so we can learn from their wisdom, their insight, their experience. And, I want to say thank you to NetSuite for sponsoring today’s episode. It’s a very exciting episode and we are grateful to NetSuite for sponsoring this episode. It is a very exciting episode and we are grateful to NetSuite for being involved. Today we are talking about innovation in retail, and retail marketing, and retail operations. And, our guest is Erica Stevens, who runs IT, who runs supply-chain, and is really responsible in a sense for operations in Dylan’s Candy Bar. Erica, how are you?

Erica Stevens: I’m great! How are you?

Michael Krigsman: I am excellent! And thank you so much for joining us! Erica, so tell us about Dylan’s Candy Bar.

Erica Stevens: We’ve been around for almost 15 years now. We started in 2001, Dylan Lauren pioneered the creation of the largest confection emporium and lifestyle brand. Our mission is to merge the world of art, fashion, and pop culture with candy, and Dylan has innovated the way we see and experience candy today. We have seven stores; free standing stores. We have nine licensed shops, two shop-in-shops: you can find us in Nordstrom, Nieman-Marcus, Barnes and Noble; and we have big plans to move into other areas both domestically and internationally.

Michael Krigsman: So when you say that you merge lifestyle, fashion, with candy, what does that mean? Elaborate on that for us.

Erica Stevens: Sure! So, in our stores, in each one of our stores, you can see a giant-sized lollipop train, spinning candy canes, and six foot tall rock candy sticks. So, lots of pop art in our stores. And also, through our products, carry both lifestyle brands such as tote bags, and tech equipment like whirly pop ear buds and phone cases, and things like that. Anything candy-related in mediums not just in candy. But we carry lots of candy as well.

Michael Krigsman: You carry lots of candy as well. Like, 7,000 different kinds of candy, as I understand it.

Erica Stevens: Yeah, we do. So we have about 7,000 SKUs total, so that ranges from … Nostalgic candy is very important to us, so Goo Goo Clusters and the nostalgic packaging for our Hershey’s almond bar, but then we also carry international candies; all over the world, lots from Asia and Europe; so lots of new finds there. And we have more traditional chocolates. We have sea salt caramel chocolate bars, and pizza-flavored chocolate bars, and potato chips and fun foods like that. So, we do the whole gamut.

Michael Krigsman: Ok, well, next time we’re going to do CXOTalk from one of your stores.

Erica Stevens: Yes!

Michael Krigsman: So, how many stores do you have right now? I just want to get a sense of the context, and we’ll talk about your store experience and the interesting things you’re doing with retail and online. So how many stores do you have right now?

Erica Stevens: We have seven free-standing stores. And nine licensed, and nine when you have some shop-in-shops as well.

Michael Krigsman: And I know that you’re expanding pretty rapidly at the same time.

Erica Stevens: We are, we are. We hope to open up at least 4-5 a year! So we are on-target for 2017 to go on to some new cities.

Michael Krigsman: Ok, so you have said that you have tried to create a Disney kind of experience in the stores. How do you do that? What do you mean by that, and what is the experience that you’re creating for the consumer?

Erica Stevens: It is ultrasensory. So you walk into a store and see vibrant colors, you’ll see… you’ll smell some amazing smells, partially from our chocolate fountain that you can try. Candy-themed music playing in the background, we’re gonna hitch in in all directions with [an] exciting, Disney-type experience, so it’s not just the traditional shopping.

Michael Krigsman: And why is it so, so deeply important to Dylan’s candy bar in what you’re trying to achieve?

Erica Stevens: For us, it’s as much of an experience as it is in just selling the product. You could buy candy, frankly, anywhere. A Kit-Kat bar can be found within a block of most of us. So, to us it’s not just that we’re buying traditional candy, it is the candy world. You can form people into…it is as if they’re feeling like they’re in Willy Wonka’s Chocolate Factory when they come into our stores.

Michael Krigsman: And what are the … how do you create that experience and I know online is an extremely important part of your business as well, so how do you make the translation from a physical retail store to the online environment?

Erica Stevens: It’s obviously different. We are seen as leaders in retail-tainment. It’s very hard to bring some of those components like the crazy music that’s all about candy, and the smells we can’t translate online. But what we do there is we still have the vibrant colors, the amazing products, and then we have Dylan’s World. So it’s an insider’s view into Dylan’s inspiration. She is a quintessential candy queen, the brains behind the operation, the creative force, the visionary that has brought this company to where it is. So she has amazing ideas and Dylan’s World, we can see what inspired her to do this amazing collection, for example. So, we try to bring just a new element to that.

The other part is, personalization and customization. One of the things [are] when you come into our store, you can walk in and find these amazing bulk bins, where you can choose, in bulk, up to 500 different types of candy. And then you can mix and match to your heart’s content in a giant gummy bear, or a pink can, or some other vessel. So, in our online environment at the beginning, we were doing five or six mixes of candy that were really popular, but we wanted to bring that experience of choosing all of your favorites. So, we launched this year what we call “Design Shop” that allows you to truly customize your candy with not just the candy that you want inside of it, but also, you can upload a picture, and you can put that on the label of the pink can, or the chocolate bar, everything’s on the chocolate bar, the perfect gift [laughter], right? So, we are doing lots of those more interactive things online.

Michael Krigsman: So, for you, this personalization is the key. So you take that personalization form the store, online, back again, so how does that work?

Erica Stevens: So, pretty amazing technology [laughter]. So, we have developed some proprietary software where we can develop this interactive experience with our customers. So that we are bringing Instagram and Facebook and those pictures that you’re taking with your friends as well as those things that are quintessential to Dylan’s Candy Bar,  and, for us the customer experience is the absolute most important. We had a lot of learnings as we were launching the program. A lot of our competitors in the personalization space, not only just candy, it can be a tedious process in choosing everything online. So we tried to make it fun and exciting, try to brand our brand, not have to click wherever you needed to go. Where we’re striving to go is to have the experience of buying personalized candy as easy and quick as it is to buy on Amazon, or our website where you’re just doing a stock item. And we want to, most importantly in my world, fill it just as quickly, and have something completely as personalized to that individual as a stock item that we sell.

Michael Krigsman: So, the user experience for the whole thing is foundational to the success of what you’re trying to do.

Erica Stevens: Absolutely! People walk by our store and they see this amazing environment, and come in. But for us online is about keeping that experience going. First impressions are amazing, but we want to make them leave just as excited as when they walked in the door, or finish the checkout process.

Michael Krigsman: So I want to talk about the technology, but before we get there, tell us about your business model and personalization, and how does this notion of customization and personalization feed into the way you think about the company as a business?

Erica Stevens: Yeah, so we are, in some ways you could say, have the business model of a traditional retail company. And, we are involved in retail, wholesale, and online channels. We also do some really exciting stuff like host parties in our stores, as well as at customer locations. And, in our larger flagship stores, we have candy cafes. You can get candy cocktails for both adults and children versions, so, within that, we are infusing this idea of personalization. Each component we’re doing a little bit differently, but each customer we want to be able to personalize their experience with us in the products that they’re getting.

Michael Krigsman: And you allow them to do things like print gummy bears, special types of gummy bears, photos of gummy bears, things like that.

Erica Stevens: Yeah! In our stores as well as online, you can make a truly personalized gummy, so that can be a picture that you upload from Instagram, from online, from a selfie, it can be words, it can be drawings, it can be anything from our 3-D printers.

So, you are using 3-D printers, as well as anything in the store, presumably in some type of fulfillment environment online.

Erica Stevens: Yes. Our warehouse and fulfillment process is amazing. Because we’re handling food, we’re and SQF-certified facility, SQF stands for “Safe Quality Foods”, and it’s a very important piece what we do for customer experience. We need to have the best quality products, and never have anything go wrong with that, so, as people are thinking about distribution centers and fulfillment centers, our facility, it is pristine, it is food-grade, but we also carry notebooks and apparel! So it’s an interesting take on traditional warehousing.

Michael Krigsman: We have a question from Twitter. Arsalan Khan asks a question that actually I was going to be asking you in a moment, so thank you Arsalan for that question. Great minds think alike I suppose. And he’s asking about the metrics that you use, customer experience metrics, and also metrics that you use for supply chain, so generally, the metrics question.

Erica Stevens: Yeah, that’s my world so I’m excited to talk about that. So, a number of different ways we’re doing metrics and data analysis. So one way is we have customer experience surveys that we ask all of our customers to take. We do secret shopping in our stores to ensure that everything is happening the way that we expect, and we’re meeting all of our priorities for a great experience. For our customer experience, we pay a lot of attention to Yelp, to Tripadvisor, to online forums to get the pulse of what our customers are experiencing. Along with that, we look at KPIs on all sorts of different levels. The speed at which we’re fulfilling orders, the number of returns that we have, the number of keeping the particulars of personalization, the number of particular points that have gone wrong to ensure the customer gets the product that they wanted, and quickly. So, those are the big metrics that I’m looking at on a pretty regular basis.

Michael Krigsman: Let’s talk about technology, and I’m really wondering how you organize all of this. It’s a complicated operation. From the outside it looks like, “Oh,  look at this nice store with all kinds of candy,” but there’s a lot of technology in place in the store, in the back office, in coordinating with your logistics or supply chain, and of course, your ecommerce. So let’s parse this. I think in the beginning you were talking about 3-D printing, and that’s kind of left-field for most of us to be thinking about in your candy environment. So, tell us about the 3-D printers, that is so interesting.

Erica Stevens: Yeah! So all proprietary software, 3-D printing along time ago, at the beginning of its inception, was about CAD drawings. And we don’t want to bring CAD drawings into the world of gummy candy. So, technology has improved tremendously. So our partners in 3-D printing developed this software, and the great gummy candy that we’re printing, developed software for those printers. So it makes is much easier that it will automate the upload of a selfie into determining where those lines go, when there’s so much in the background. For example, where I am now, earlier generations of software would not do well with all this background and all of the colors against my face. So we have the technology that knows, “Look at my face and take away all of this behind me,” cleaning it up that way.

Michael Krigsman: And how much of this, again we’ll come back to the technology, but how much of this was Dylan’s original vision. How does this fit within her original idea?

Erica Stevens: I think it fits very well. For her, it was making our customers feel as though they are being transported into a modern-day Willy Wonka’s Chocolate Factory. So, where in 2001, this was not part of the plan, but finding new ways to bring candy into people’s world is exactly the mission and the vision of the organization. So, we try very hard to wow people, to bring things that are unexpected, to wow people in their store experiences as well.

Michael Krigsman: So when you were designing software on printing candies, basically creating 3-dimensional candies, printing them, essentially customizing them and personalized, how did you go about doing that? Because there is very specialized expertise, and especially to do it on a production scale such as you have.

Erica Stevens: Yes. So, for me, the most important thing is the architecture, and having a solid plan in place with our technology. We don’t assume one system will give us everything, but we need to make sure that the data being transferred is as correct, as efficient, so there are no holes in that process. So that’s where a lot of my day comes in. So, we start, the hub is with Netsuite, it is our system of record, it is our system of truth, it is where we make all the decisions, and we have systems that feed into it and feed information out of Netsuite, in that regard. So, it’s very important to me that we don’t have two systems that are speaking to one another without Netsuite in the middle. Um, that’s where my sanity comes in. [laughter] So with this, we have developers that are experts in 3-D printing, that are working on that software. We are web developers where we decided, when we designed our website three years ago, we were looking for a flexible platform that, that we weren’t looking at personalization at that point, but we wanted to have something that we knew we could grow [with] all the crazy ideas that we have to wow our customers. We wanted to make sure that we had a platform that could do that and grow with us. So, that’s the strategy.

Michael Krigsman: How have you architected the flows of data? Because it sounds like even though you’re a very small company, your operations are very complex, you have a lot of moving parts going on here.

Erica Stevens: Yes. Yes, so again that’s where we have Netsuite come in, and for me, my biggest concern is reconciliation between systems. So the more we can ensure that we have everything coming into one space to be reconciled is important, and that we’re all gathering information from the same location. So, you don’t grab all of your analytics from that system and I could be grabbing it from this system and there could be variables that could be making those different. It’s an area where a lot of companies struggle, where “this is my Order Management System, this is my WMS, and they sort of talk to each other but not. And you could also put information into this third place and so I never know how much money I’m making.” So…[laughter]

Michael Krigsman: So, can you connect this back, then, to this unique customer experience. So how does all this technology and technology architecture come back to support the core mission of Dylan’s Candy Bar?

Erica Stevens: My goal is for my customers to never have to think about any of this. So, where we’re always striving to be is that someone who is customer-facing never says, “Well, my systems wouldn’t allow for that.” And to me, there’s a true omnichannel experience where you can go into a store and return something from the web that you can use gift cards, both online and in-store that the systems will allow for that, so that the customer experience is always a great one, because regardless of the medium in which they are interacting with us, they’re going to get the same information, they’re going to get the same level of excitement that they are engaging with us.

Michael Krigsman: So your goal is to be completely seamless between the retail store and the online environment.

Erica Stevens: That’s our goal. We’re continually figuring out, reassessing ways to do that better. Traditionally, technology doesn’t always allow for that. Your website doesn’t have the same features and compatibility with your POS. Therefore, we are working very hard in building up that hub of NetSuite, and we have a POS that is build directly upon NetSuite. We have a highly integrated e-commerce experience and the data is falling; if someone joins our loyalty program, gives us our information onto the website, it will come into the POS and the customer can bring up a customer record, get points for their dollars spent in both locations and it feels like we’re one, unified company.

Michael Krigsman: I want to remind everybody that you’re watching Episode 195 of CXOTalk. We are speaking with Erica Stevens, who is responsible for supply chain and IT at the famous Dylan’s Candy Bar. And I especially want to thank NetSuite for sponsoring this episode, so NetSuite, if you are out there, we are really grateful and we really do appreciate it.

So we’re talking about omnichannel and I just want to drill down into this further: Dylan’s Candy Bar is about the customer experience in the store, and the customer experience and the user experience on the web, and from the customer perspective, that seamless transition, go here, go to the store, go to the web, is pretty simple and pretty obvious, and yet, from a behind-the-scenes point of view, it is very difficult to do. So what are the challenges that a retailer like yourself, a fast-growing retailer faces, and how do you overcome those challenges so that the consumer never sees it?

Erica Stevens: So, it’s difficult, because we have people that are experts in retail and building that experience, we have people that are experts in the world of e-commerce and the traditional ways that you do e-commerce, and bringing all groups to the table and doing what makes sense is something that we strategically do, and I think that the technology needs to follow. So, a lot of retailers that are trying to get into both spaces, they are letting technology guide how they do things in those spaces, rather than saying, “Ok, we need to customize, we need to tell the technology what to do in this regard and think outside of the box as far as the mode in which we operate, to bring in this other channel that is working alongside it.

Michael Krigsman: And when you say, “not have the technology lead you,” can you be more [specific]? Give us some examples of how you can get caught up in the technology and how you’re trying to not do that.

Erica Stevens: So, gift cards is a great example. Gift cards are generally…the way that you do gift cards is generally very different in e-commerce with an e-gift card than a retail environment where you have those physical cards. And a lot of third parties that people use might not work well with the other space. So, that’s been a challenge. How do we use the requirements of two different systems of POS and a web platform and make them work nicely together? And, we’re working in cloud environments. I want to be able to do anything from anywhere, and that’s what NetSuite and our platform and POS allow us to do. We’re truly cloud based. But that means, where do you say I want real-time calls and have information be updated immediately without taking up bandwidth and making sure the transaction is very speedy, and that you don’t have multiple servers that might be weighing things down, and where do you say that we’re going to batch some information that maybe it’s speedier, and maybe they don’t have access to their gift card or their loyalty information immediately because the batching is happening in regular intervals.

Michael Krigsman: So all of your software is based on the cloud?

Erica Stevens: It is, yeah.

Michael Krigsman: And how does it work from a performance standpoint? Because, of course, one of the things that you monitor carefully is the performance standard of your site. So how does it play out?

Erica Stevens: It’s part of our vetting process. So, we have had technologies where they were built on platforms and using servers that would have a tendency to go down, to slow the process, and we have – and everything is highly interconnected. So something happens in one area, and then, let’s say, our POS is connected through a series of things there, and that slows down printing a receipt. It is looking at the big picture in every single detail, and for us, performance is part of the vetting process, making sure we design the program this way, what are the pros and cons, will this slow anything down? Because, when we’re talking about finishing a transaction or speed of fulfillment in our warehouse, customers have a lot of expectations of us, and as we’re in the business of providing an amazing experience, it is as speedy as possible.

Michael Krigsman: And we have another question from Twitter, and that is from Chris Peterson. And he is wondering, did you look at open source software at all as you were evaluating the systems to use?

Erica Stevens: No! [laughter]

Michael Krigsman: Ok that is a simple answer! Is there any reason why you didn’t? Or it just wasn’t on the radar at all?

Erica Stevens: Um, I mean I definitely see that value of open-source, absolutely. It’s just, being a small company and needing to rely on our partners tremendously. So, you know, with our web platform, I have people that I can kind of source that out. I did end up developing the architecture but I don’t have to worry as much about those details. So, I’m just not an open-source person.

Michael Krigsman: So with the cloud, essentially what you’re doing is outsourcing major components, all of the back-end of your systems, you’re essentially outsourcing so you don’t have to deal with it.

Erica Stevens: Yes. Or I would say I could focus more, the company could focus more on how all of this outsourcing is interacting with the other components. And so, it’s still very time-consuming absolutely, but it allows me to focus in different areas.

Michael Krigsman: When you are, I feel like I’m hitting you rapid-fire with all of these questions, but we’ve got about ten minutes, or a little bit left and there’s so much that I want to ask you. So, as you’re clearly technology is integral to what you’re doing with the company to create the goal of an entirely seamless omnichannel retail environment, the company is planning for its next steps, how do you think about technology in those conversations, where does technology start to enter into it? How do you think about technology from the ground up?

Erica Stevens: I strategically look at it as the second step. We have such as strong vision coming from Dylan in creating this amazing experience, these amazing products, our biggest challenge is we have too many ideas, and how do we accomplish them? How do we prioritize them? But, I don’t want to use a piece of technology because its available to me. I want to use it strategically to accomplish a goal. I think that technology is essential to what we do, but to me it’s a tool to make this grand vision happen. So it is Step #2, not that it’s second in importance, but it’s Step #2, and where we take that then is, how do we do this most efficiently? How do we have the fewest people touch this so that we can automate, make customers’ expectations…you know doing personalization and shipment within a couple days, that’s pretty amazing with personalization today. So, we want to keep getting better and better with that, and finding ways that technology can continue to wow. But, the technology is not what’s wowing the customers, it’s the lollipop tree in our stores.

Michael Krigsman: So the experience is the thing that creates that customer delight, and it’s the technology that enables you to present that experience both in the stores, like with 3-D printing of selfies on candy, for example. It’s the technology that lets you do it but it’s all in the service of that vision.

Erica Stevens: Absolutely. Very well-placed.

Michael Krigsman: So you mentioned Dylan a number of times, and as she’s thinking about the concepts, how does the tech enter into it? And very briefly, as we only have a few minutes left, tell us who is this mythical Dylan of which we have heard [while] talking about Dylan’s Candy Bar? And how does technology figure into her thinking as well?

Erica Stevens: So, Dylan is our candy queen. She is the face of the brand and she’s a creative force, she is involved in every single product we have in stores and online. She is the daughter of the legendary fashion icon Ralph Lauren and author Vicky Lauren. So, grew up in a very unique environment and being exposed to the world of art and fashion. She’s got a degree in Art History from Duke University, and this is a childhood dream for her to open up Dylan’s Candy Bar and it’s been a tremendous success, being in business for 15 years. And, we’re going strong and we’re growing like crazy. So she is Dylan’s Candy Bar.

Michael Krigsman: Ok. And very quickly, how does technology fit into her envisioning what can be? How does technology fit in that early stage?

Erica Stevens: She has a vision of what the outcome is, and then it’s my job and a lot of team members’ jobs to make it happen. So, she’s looking to make, without getting too much in the details, making sure that it’s happening in the way that it will delight our customers.

Michael Krigsman: So she has an idea for something that will delight your customers, enhance the experience and so on, and she is envisioning at the start, the kinds of technology that may enable it, essentially?

Erica Stevens: Yeah, the way in which we would make that happen. So, it’s not deciding on NetSuite, but it’s making sure that we have a method of delivering to our customers in every store and in every channel.

Michael Krigsman: Ok. And we have a question from Twitter, and again I’ll ask you to answer pretty quickly because we’re running out of time. So, Lauren 6031 on Twitter, and Lauren, I’m not sure if that’s your last name (it’s not!). So, Lauren 6031 on Twitter asks, as far as investment goes and growth, is it online or is it in the brick and mortar stores? That is a good question. Really good question.

Erica Stevens: Yeah, absolutely. It’s both. Dylan believes strongly in brick and mortar, and it’s the greatest translation to our vision. But, we also want to interact with customers throughout their lifetime, and when people don’t live near one of our stores, that’s where the e-commerce comes in.

Michael Krigsman: We’re hearing all kinds of sounds.

Erica Stevens: Sorry, it’s New York! [laughter]

Michael Krigsman: Oh it’s New York, OK. All kinds of horns. So gain, just as we move towards closing up here, again, unfortunately I wish we had lots of time, the technology you have mentioned a few times having a single system and using netwuite is critically important for this. Explain why a single system is so important for your operation.

Erica Stevens: It has to do with getting the data quickly and easily as possible to form a whole picture in order to make a decision. We are very data-driven, and we also move quickly. So, we also want to get the whole picture from one single source. So, rather than grabbing some e-commerce statistics from one place, and store statistics from others and having to merge them and reconcile them, having this architecture is the way that we can pivot quickly.

Michael Krigsman: So it’s a matter of having seamless data flows. And Netsuite is of course a suite, and which modules of NetSuite are you using right now?

Erica Stevens: As many as possible.

Michael Krigsman: As many as possible. You know, that sounds like, for a relatively small company, that’s a big statement, NetSuite covers a lot of ground.

Erica Stevens: Yeah. You know, we use order management, we actually run our warehouse from all of our fulfillment, all of our manufacturing is coming from NetSuite, or through NetSuite. POS is built directly on NetSuite, our e-commerce platform we just have an integration there. We’re just looking for data analytics, all of our reporting is done through NetSuite. You know, future goal, I want to make a more robust reporting system for us, but right now we’re doing pretty well on what we’ve got.

Michael Krigsman: Ok. And my last question is: So you’ve been doing this now for a while, and what advice do you have for other retailers who want to create this kind of customer experience that’s also highly differentiated so that they, as you do rise up above the crowd; stand above/rise above the competitive noise? What advice do you have for those folks who are trying to do that to succeed?

Erica Stevens: It think it is, first of all always stepping back and looking at what is our actual customer experience? Because I think that, you know, we all have so much to do and we all tend to get a little siloed in “this is how this works in theory”, or “this is how it works over there in that other department, that’s how that works”, but does it really? And is the customer seeing a seamless process, or do they get on the website and it could be a different company? So, for me, in my professional career, a lot of it has been, “Yeah I know you’re not completely on board with these changes that need to be made, this investment that needs to be made, but go and try to return something to the distribution center when you brought it in the store. What happens?” And to think through every step for the customer, there’s often a lot of lightbulbs to say “Oh, wait a minute, how would that work? And if we don’t know how that works, then the customer is definitely not going to have a good experience in making that work.” So it’s that, again, the technology, guiding the technology rather than letting it guide you in your decisionmaking. To some degree, we always have to make decisions based on some capabilities, however, looking for that flexibility and not having those brainstorming sessions outside of, “Well, it’s not going to work because the system won’t do that.” Let’s figure out a way to do that if we find out it’s most important to our business and our customers.

Michael Krigsman: So really, being very rigorous about looking at it all through the eyes and discipline, looking at it all through the eyes of the customer. Sounds like that’s the bottom line.

Erica Stevens: Yeah. Absolutely.

Michael Krigsman: Ok. Well, we have been talking today on Episode number 195 of CXOTalk with Erica Stevens, who is responsible for supply chain and technology IT for Dylan’s Candy Bar. And this episode has been sponsored by the wondrous NetSuite, because we really appreciate your sponsorship. And also I want to acknowledge our video partners at Livestream because you guys are also awesome. Erica, thank you very, very much for taking the time and speaking with us today!

Erica Stevens: Thank you!

Michael Krigsman: Everybody, I hope that you will come back next week where we’re going to have an incredibly good show, at least, I hope it’s incredibly good! We’re speaking with the Chief Information Officer for the World Health Organization, and so that’s going to be a lot of fun. Thanks everybody so much and have a great weekend. Bye-bye.