Also: Bad January, Boris Johnson, and Sony buys Bungie.
Good morning.
Many things were transformed by the pandemic, but chief among them was consumer behavior. People not only altered how and where they shopped, but what they bought, why they bought it, who advised them on the purchase, and how it made them feel. I spent an hour yesterday with a dozen CEOs of consumer businesses, and the stories they traded were a testament to the rise of an omni-channel, social-media-driven, conscious consumer—worlds away from two years ago. Some excerpts from the conversation below.
On the changing relationship with the consumer:
“Crises are like wars. The put history on fast forward…That’s what happened with digital shopping.”
—Judith McKenna, CEO, Walmart International
“Ninety percent of our sales, our research shows, now starts on the phone. Where they choose to finish that sale is clearly across so many, many opportunities.”
—Fran Horowitz, CEO, Abercrombie & Fitch
“We find 72% of our customers now start with us online, looking at jewelry.”
—Gina Drosos, CEO, Signet Jewelers
“What we saw happening was customers reaching out to our associates, then our associates innovating and connecting with consumers in new ways. They were connecting over social media platforms. They were doing livestreaming from their closets in some cases… They became social media influencers in their own right.”
—Joanne Crevoiserat, CEO, Tapestry
“Consumers are engaging in so many channels, physical and digital… The tricky part is how you stay authentic across all of these channels and how do you drive personalization across channels. When you serve a customer well in one channel, you’re driving loyalty in another.”
—Lidiane Jones, executive V.P., Salesforce (sponsor of yesterday’s discussion)
“We wanted to enable our consumers to move seamlessly between channels… Our omni-channel cart has been a real game changer for us.”
—Bill Barton, CEO, Bob’s Discount Furniture
“In the last 20 years of online commerce, we’ve really lived in a world that’s been dominated by search-driven purchases. Now…it’s the rise of social commerce, of expert-driven commerce. The ways she is receiving information is fundamentally different.”
—Nadia Boujarwah, CEO, Dia&Co
“People are really caring, more than ever, about sustainability. That say-do gap is beginning to change. People really do care about it.”
—Elizabeth Spaulding, CEO, Stitch Fix
“We learned three really big, very important things… We discovered the experience of building a bear was actually transferrable online… We found we had graduated into a multigenerational brand, with 40% of our sales coming from ‘tweens and adults…and we launched an entirely new platform for gifting.”
—Sharon Price John, CEO, Build-A-Bear
“Everything that was really innovative is now table stakes. And everything that is table stakes gets copied pretty rapidly. Things that would have taken you a year and a half or two years to do, people are now doing in 60 to 90 days.”
—Ashley Buchanan, CEO, Michaels
On supply chain problems and labor shortages:
“Ocean freight transportation problems…we see that continuing for a couple of years. Labor shortages are here for quite some time. This is the new normal, and you have to change how you run your business.”
—Ravi Saligram, CEO Newell Brands
“I think that the labor shortage is here to continue for a short while… It’s here for this year.”
—Robert Warshauer, CEO, Bluestem Brands
“The labor shortage has been just phenomenal. Like everybody, we’ve raised wages and given referral bonuses. Those are just table stakes at this stage. But one of the things we’ve really done…is decided we’re really going to take care of our people.”
—Erik Frederick, CEO, UNO Restaurants
“We are actually quite lucky, because the foundations of Blue Apron…started with this concept of really changing the food supply chain. So we have primarily a direct sourcing model: 70% of what goes into the box comes directly from the farm or the producer.”
—Linda Findley, CEO, Blue Apron
On the new generation of consumers:
“We changed out about 75% of our merchandise over the last two years…really orienting ourselves toward Gen Z and the younger millennial.”
—Heyward Donigan, CEO, Rite Aid
“The big generational shift that we’re seeing across all of our clients is these young employees who’ve had just the entire social aspect of work ripped out from under them, and it’s massively affecting them emotionally, mentally, even physically.”
—Sarah Robb O’Hagan, CEO, EXOS
“What we’ve been been focusing on is how to use chocolate for ritual—for self-love, prosperity, creativity, joy and peace… The idea of using one piece of chocolate to set your intention.”
—Katrina Markoff, CEO, Vosges Haut-Chocolat
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
These stock picks are a must for 2022 Beat the market with Fortune’s new Investment Guide Read more.
Bad January
This January was the worst for U.S. markets since the financial crisis, with the S&P 500 ending 5.3% down—its worst monthly decline since the pandemic began. Investors expect more volatility is coming. However, European stocks enjoyed a good start to February this morning. Fortune
Boris Johnson
The London Metropolitan Police are investigating a dozen parties at 10 Downing Street, Prime Minister Boris Johnson's home and office, during lockdown. That's one lesson from an "update"—not a full report, because of the Met probe—from Sue Gray, the civil servant tasked with investigating the gatherings. Gray: "At least some of the gatherings in question represent a serious failure to observe not just the high standards expected of those working at the heart of Government but also of the standards expected of the entire British population at the time." Johnson still won't resign. BBC
Sony buys Bungie
Sony has bought the game studio Bungie, which is behind the hit Halo franchise. The PlayStation-maker's $3.6 billion purchase comes shortly after Xbox-maker Microsoft announced its $69 billion takeover of Activision Blizzard. Ironically, Bungie used to be a Microsoft division before it spun out in 2007. Fortune
NYT buys Wordle
The New York Times has bought the phenomenon that is Wordle, for "an undisclosed price in the low seven figures." The paper promises the game "will be free to play for new and existing players, and no changes will be made to its gameplay." Fortune
Climate change and the C-suite In a recent Deloitte Global survey of more than 2,000 CxOs across 21 countries, 89% of executives agreed there is a global climate emergency. Deloitte’s 2022 CxO Sustainability Report explores some of the disconnects between ambition, action, and impact, as well as steps CxOs can take to start to bridge the gaps. Read the report
A million dead
Judging by excess mortality figures, close to a million people in the U.S. have now died from COVID. Around 700,000 of them were aged 65 or over. Wall Street Journal
Female founders
Fortune's Emma Hinchliffe has an interesting piece on Nykaa CEO Falguni Nayar, the first Indian woman to take a unicorn public. Nayar on breakthrough times for women-led businesses: "It’s like a wave. When the waves form first in the sea, you don’t see a big impact. And by the time they reach the shore, you see a big impact." Fortune
NFT lobbyists
NFT businesses know regulation is coming and want it to protect their bottom lines. So, unsurprisingly, there's a lobbying war brewing. Fortune's Nicole Goodkind: "Critics say that direct lobbying by major NFT and cryptocurrency companies betrays the promise of Web3 as truly democratizing the Internet. It’s supposed to be shared and borderless, operating with full transparency and no centralized leader pulling the strings—not a big business that curries favor with lawmakers behind closed doors and seeks legal loopholes." Fortune
Expat exodus
Is Hong Kong really experiencing an "expat exodus" due to its zero-COVID curbs, as some media reports have suggested? As Fortune's Grady McGregor, Clay Chandler, and Eamon Barrett explain: "At least four structural advantages—mainland China’s deep talent pool that’s increasingly capable of filling the finance jobs expats vacate, the likely persistence of Chinese capital controls, the continued growth of the mainland economy, and a dearth of viable regional alternatives—all but guarantee Hong Kong’s future as Asia’s financial capital." Fortune
This edition of CEO Daily was edited by David Meyer.
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