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

JANET HAYES:

Thank you for having me. I’ve been a longtime fan, user, reader and I’m honored to be here this morning. Thank you.

ADI IGNATIUS:

Great. Long time, first time. I love that. Let’s start by getting to know a little bit about you and the path that has brought you to this CEO role. Can you talk about the journey that has led you to work for some of these very interesting retail brands?

JANET HAYES:

I’ve been in retail my whole life. 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?” 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. 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.” 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. I found myself, looking back, really joining multi-brand retailers and learned wholesale. I’ve learned retail. I’ve learned vertical, B2B. As I’ve gone through the retailers and brands that I’ve worked for, one thing that’s remained constant in all of them and in common is that they really were focused on the customer, and I’m passionate about that.

ADI IGNATIUS:

Let’s fast forward. Roughly two and a half years ago you became CEO of Crate & Barrel. This is in the middle of the pandemic. You’re certainly getting ready, learning the job during the pandemic. To what extent was that a challenge, to what extent was that an opportunity?

JANET HAYES:

I joined Crate & Barrel Holdings in August of 2020, and I’ll say maybe the only thing harder than being a new CEO in the middle of the pandemic is getting a new CEO in the middle of the pandemic. I walked into an empty building in August of 2020 and there was a board meeting on my second day. 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 in front of me was a great first step to there.

In the 90 days that followed, I look back at my notes and they are so clear, written with so much purpose, and I often reference those notes to go back and say, “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. It’s what you want to see coming into a brand and coming into a company like that.

ADI IGNATIUS:

So 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 in the first 30 days? What do you need to do to earn respect, to figure out what the company does? What’s your advice for that first month?

JANET HAYES:

I think you said the word right there, respect. I walked in with a tremendous amount of respect for Crate & Barrel Holdings and a tremendous amount of respect for the customer that they held. In the first 30 days, listen. Listen with respect, listen with curiosity, ego down and just ask questions, really listen. 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. You have to figure out how to get through the screen and you have to figure out how to connect.

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, 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 recentering on what was important to us during that time. So 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 I’ll carry with me.

ADI IGNATIUS:

We’ve talked about becoming CEO in the middle of a pandemic. The supply chain problems were bad, then probably got worse for a while. I can’t imagine how you coped with, but I’d love to hear what was your experience with the supply chain challenges of 2020, 2021, 2022?

JANET HAYES:

We are still not out of the woods. For us, we chose on 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 equation was changing very, very fast for the customer. 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 used them as decisions and how we were looking at the supply chain.

I 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 just how fragile, really, the supply chain was, 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 to this, but we’re not out of the woods yet. 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.

ADI IGNATIUS:

I’m interested in whether you’ve had to adapt, whether you’re trying to source materials closer to the sale point, 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?

JANET HAYES:

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 long-standing vendors really helped us through a lot of the crisis, being able to trust each other and understand, and again, give empathy. They were having a hard time sourcing materials, getting materials, getting their workers in. We understood that. We were able to communicate that through to our customers. I think we strengthened our care team here and the communication to our customers. We felt the effects of it 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 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 home and redefining what was important to them. We were able to take that data very quickly and say, 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 assortments. Pretty quickly, we were able to pivot and readjust our assortments. We did, again, focus on quality and value. What 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.

ADI IGNATIUS:

You’re sort of a leading indicator in terms of how people are living, and how they’re changing how they live and work. That’s interesting that you saw you were selling different products as people were adapting their lifestyle to life under pandemic. Are we coming out of that? Are you seeing whatever spiked is coming back down, or something else is spiking as we evolve to the next stage?

JANET HAYES:

We’re seeing some changes happen. It was so fun during that time to see all the data come in, it was almost voyeuristic what was happening in the homes, and we can see where people were moving, state by state and where was the fast growth coming from on the states.

But we are seeing a change now. I think 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, they want quality, and they’re doing their shopping, they’re doing their decisions, and a lot of what we’re seeing is based on quality, and they want less, but for it to last longer.

We are seeing some changes in sizes. Again, sectionals versus sofas, sizes of dining tables. Really, it’s 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.

ADI IGNATIUS:

We’re starting to get some good questions coming in from the viewers, and I want to go to one right now, which this is from Shane, who’s in San Francisco, who imagines that you’re facing cost increases from your suppliers during this inflationary period. “How have you handled the changes in your cost and how are you passing them on to the consumer?”

JANET HAYES:

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 it, 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. So we knew that those prices, 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 I think it would’ve been shortsighted if we only dealt with it on a price and said, “This is exactly what we did.” We needed to look at the whole journey and the whole value that we were offering to the customer.

ADI IGNATIUS:

Sustainability concerns are probably very important in your business. How do you think about sustainability, and what do your customers want in terms of sustainability?

JANET HAYES:

Passionate subject for me. This is one of the things I was most excited about when I became CEO of Crate & Barrel Holdings. This is a passionate subject for me, and certainly one for our customers. And our customers are telling this every day. This is a big decision point in who they purchased from and what they purchased. 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, 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 that customer make the right decision all the way through the product lifecycle.

We’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 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.

ADI IGNATIUS:

How would you define your customer? Who is the Crate & Barrel customer?

JANET HAYES:

If we take it from the very top, Crate & Barrel Holdings has four brands inside of the company. There’s the Crate & Barrel brand, there’s Crate and 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 & Barrel customer has been with us for 60 years almost now. We 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. Crate and Kids, we have new customers in Crate and 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. But they never come off of saying, we want quality with that design.

And Hudson Grace, that’s a whole other customer, one that’s very in tune with entertaining and gift giving. But again, common denominator across all the brands is quality, value, design, beauty, purpose.

ADI IGNATIUS:

Congratulations on 60 years. Harvard Business Review has just turned 100.

JANET HAYES:

Congratulations.

ADI IGNATIUS:

Thank you. Most of the companies we have written about have not survived, so 60 is a big milestone. I want to ask one more question about supply chain. This is from Gurvir, from Barnala, India. And the question is, as you look at the global economy, are there trends or warning signs you see that might suggest something about future supply chain bottlenecks?

JANET HAYES:

I think, if anything, what we’ve learned over the last couple years is, again, it’s fragile. We have to take care of our relationships out there and invest deeper in them. We have to be agile, much more agile. We certainly learned that as a company here, we need to be able to move our product or our sourcing quickly. And 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. And 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 product lifecycle.

ADI IGNATIUS:

I want to talk to you about retail more broadly. Here’s a question from Nicole from Charleston. You’ve been in the retail business for all these years, working for a lot of great brands. What has surprised you the most about how retail has evolved over that period?

JANET HAYES:

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. And 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, 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 in our customer’s 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 exciting. I would tell you I think what’s changed the most is, we are now being driven by experience. 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.

ADI IGNATIUS:

You’ve been in the top job now for two and a half years. 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? What does it take?

JANET HAYES:

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 that is going to stop you is yourself, and that’s why I say put your ego down and pull respect through all levels.

ADI IGNATIUS:

When you talk about keeping the culture thriving, almost every week on the show at some point we talk about the challenges of hybrid. Many leaders are quite flexible and that’s the keyword, flexibility. But then there’s this culture question, and some of us are very comfortable with the flexibility, work-life balance that hybrid allows, but we worry that maybe over strong culture may be sapped by the lack of physical presence. How do you think about that and have you worked out what the best approach is to handle all these things properly?

JANET HAYES:

We’re still evolving. I want to give credit to the teams here. We’ve declared ourselves a flexible workplace, and I think that word is key, which says we will change when we need to change, but right now we value talent and results and collaboration over location. That’s working for us here, and it is working, the results are coming in and I’m very, very happy and proud of where that’s heading. But what’s working for us is I’ve empowered my leaders to make the decision about how their area should run. We spend years asking our teams to be resilient, to be adaptable, to be flexible, and that’s what they showed us during the pandemic. And then to say, now we’re going back, that’s not the right move. We’ve got to respect what they went through and they showed the change.

For us in this sector and in this company, that won. We had great results. I want to learn from what we went through. We still change probably every couple weeks. I’m asking my leaders to say, is it still working for you? Do you need to change? Each area has really been able to work to where they are keeping their culture connected. So technology is more remote than they’ve ever been. IT is more remote than they’ve ever been. The brand teams are in a few days a week. It might be different for finance.

I’m really empowering my leaders to make sure that they’re staying connected, their areas are staying connected, cross-functional communication stays connected. We have meetings once a quarter to say, how are we doing? What do we need to change? The communication is still open, it’s still alive. I love that this team is flexible in how we’re evolving, and I think we have to stay there. We’re not done learning what this looks like, but what’s happening is a different kind of collaboration, a different kind of effort is happening, and we’re innovating as we go. And I want to stay present and give credit for where the results are happening and fix it where it’s not.

ADI IGNATIUS:

I think that’s really helpful. A few questions have come in where people are looking to people like you for insight or trends around the recession question. We all fear it’s around the corner, but we’re looking for signs. You’re in a particular position and you probably have signs that you’re reading. Where do you come down, or what are you seeing that could be an indicator of a looming recession or not?

JANET HAYES:

As a leader, I have to pull my resources from a lot of different places. I’ve gone to some professional organizations that we’re in and spoken with CEOs there, and I’m using some peer-to-peer information, certainly doing a lot of reading. But most importantly, I’m watching all the economic factors, but I’m also watching how the customer is changing in this.

I do think we’re going to see a slowdown here. We are planning for that. I think the most responsible thing to do is plan for it, and if we beat it, that’s great. We’ve worked very hard over the last two and a half years to reposition the brands, to strengthen the strategies, to look at the product assortment, to make sure that we have a supply chain that is ready to handle what will come. I think in the last two years, we’ve certainly been through a change in the retail model from chasing inventory to reading all the public acknowledgements, too much inventory. We’ve got to get that down.

To me now, it’s about quality. It’s about the quality of what we’re going to deliver. If we’re going to deliver less, we need to stay strong and we need to deliver it with quality and we need to deliver it with purpose. We’re bracing for it. We’re planning for it. But I think one of the things about being a privately held company is we’re in it for a long view. Much different than the pressure that some of the public companies face day over day or hour over hour or quarter over quarter, we are planning for the long view and that lets us focus on the customer and it lets us focus on quality, and it lets us focus on value and put the investments in the right place and prioritize our resources in the right place to be able to successfully make it through what we see could be a recession.

ADI IGNATIUS:

I appreciate that. Janet, I know you have a hard stop and have to rush off, so I want to thank you for being on the show. It’s fascinating. I wish we had more time. There were a lot more questions that had come in from our viewers, but thanks very much for being on The New World of Work.

JANET HAYES:

Thank you so much for having me. Really appreciate it.