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Understanding what your customer needs today and tomorrow

How Best Buy Canada rose to the challenge to meet their customers where they are during the pandemic

Shift podcast

"The convenience factor, from a customer [perspective]...could mean something different depending on the day of the week. It could be that they want it direct to home, they want curbside, they want to pick it up in store, they want to shop in store. So we have to make sure that we’re investing in each one of those areas and channels and make it consistent [and] reliable for the customer. That’s why I think, for me, being in supply chain at this time is extremely exciting. Technology is going to play a big part, and making sure that we can deliver on that customer experience is a big challenge for us."

Stephen Gordon, Director of Multi Channel Logistics, Best Buy Canada

Understanding what your customer needs today and tomorrow

How Best Buy Canada rose to the challenge to meet their customers where they are during the pandemic

For retailers, the pandemic upended much of what they knew about doing business. With ever-changing customer needs and an unclear road map, the industry had to evolve and adapt on the fly.  

On the latest episode of the Shift podcast, we sit down with Stephen Gordon, Director of Multi Channel Logistics at Best Buy Canada, to discuss how he navigated the early days of the pandemic and remarks on what he sees as the enduring changes to supply chain logistics and retail. 

He talks about how strong communication combined with outside-of-the-box thinking paved the way for Best Buy Canada’s successful response to the pandemic’s challenges from a supply chain perspective and beyond.

Jon: Welcome  to another exciting episode of Shift, pandemic edition still. And today we have Stephen Gordon, Director of Multi Channel Logistics at Best Buy. For those of you who know me, you know I love tech, you know I love gizmos, and you know I love retail and supply chain, as it turns out. We're going to be talking about some really interesting stuff today with Stephen. Welcome to the show.

Stephen: Thank you, nice to be here.

Jon: So, Stephen, maybe you could do us a little favor here, and for those of you who don't know you, maybe you could just take a second and just tell us a little bit about what your role is at Best Buy, and a little bit about yourself.

Stephen: Sure. Currently, I oversee most of the supply chain functions at Best Buy, including transportation, distribution, and also eCommerce fulfillment and delivery. I've been with the company 27 years, so that through that time we've seen a lot of different shifts in the organization. We started off back in 1993 with Future Shop, and then as you know, Best Buy came in and purchased Future Shop, and we basically carried on with a dual brand strategy and then we consolidated the brands a few years back there. So, there's been a lot of different transformation within the organization, and I've obviously been a big part of that during the last 27 years.

Jon: Oh man, I have to imagine so much has changed in the last year. That's probably the understatement of the year, I get it. But to work in retail, to be someone who is responsible for logistics and supply chain, and last mile, and all this stuff. The playbook must be thrown out, no?

Stephen: Obviously, it was unprecedented, the shift that we went through last year, but I think as an organization we've always been focused on continuous improvement, we've always been focused on keeping everybody on their toes to change and transform, so I think that really helped us last year. But it was a challenging year, definitely, from a last mile perspective.

Jon: Unbelievable. Well, let's talk about that for a second. I'm really curious, we've had a few guests on now since, well it's been a year I guess since the pandemic started, and it's always really interesting to hear how large organizations handle it. We've talked to TELUS recently about how they were approaching networking and all this kind of stuff. So, the pandemic hit, Stephen, what did you guys do right away? How did you put employee and staff safety first? This must have been a real shockwave.

Stephen: Obviously, yeah, to your point, the safety of our associates, employees and customers was the top priority, and we used that in every decision that we made this past year. But right at the beginning, the environment was changing extremely fast.

Jon: Hey Stephen, I'm curious, when you guys were thinking about shifting the way you do business, your operating model, meeting customer expectations, etc. What was the reaction from the staff when all this went down, your employees? Because at PWC, we obviously talk and do a lot of work on the employee side as well, and I'm just wondering, and maybe this is just anecdotal, I don't know, but what was it like with all of your associates and the people working within your stores, as the rules changed, as safety became a greater priority, was there much dialogue back and forth between the stores, the staff and head office?

Stephen: Yeah. I think that was one of the critical things for us in how we managed to survive and prosper in this environment, is that it was open communication. We basically cascaded information on an hourly, daily basis to the associates, to let them know, "Here's the operating model," or, "Here's the things that we're trying to accomplish and here's what it means to you." Yeah, it was a daily occurrence. And I think that, as we got information, we had to interpret information, especially with the different provincial guidelines. We had to figure out, what does that mean for us, from a retail organization? How can we operate? How we can serve our customers? And then from there, we would communicate to the associates.

So, "Here's what that means from an operating model." And then also from a safety perspective, we had to get the PPE out to the stores, and each store focused on what does the store layout look like? How do we keep people socially distanced? How do we keep people socially distanced? How do we make sure everybody's safe? And that was one of the keys initially out the gate was, making sure that people were informed, making sure that people knew what the next step was, and also making sure people had the environment and the equipment to stay safe.

Jon: Yeah. My hats off go obviously to anybody who's working in that front line.

Jon: Going to switch gears here, as consumers, our expectations have completely changed. We often talk about as shorthand, that Amazon model, and Uber for that matter, how they've completely changed our expectations as shoppers, as consumers. It's like, I've been known to say, what is it? The slowest internet you'll put up with is the fastest internet you ever had. It's like, we're just trained to expect the best and that becomes the bar. So now, with the delivery culture and curbside, and eCommerce, and all the stuff that's changed, what do you think the best parts about this massive acceleration has been for you and for Best Buy?

Stephen: I think, obviously with customers, to your point, it's the convenience factor. So, time becomes extremely important to customers, and I think that what we've seen is a shift online, and it's not just people who have been shopping online, buying more frequently online, we've also got customers who are buying online for the first time. So, I think for us, the exciting part is that we get to invest in technology to try and make the online experience as frictionless as possible.

What we've done in the brick and mortar retail for many years is try and refine that process, standardize that process, so the customer has the same experience each time they come into a store, regardless of the store they come into. Online presents a 10X challenge in that sense, because there's a lot more moving parts, a lot more third party involvement, a lot more technology involved, and I think that's the exciting part, is that how do we deliver that experience, that same consistent, reliable experience in an online setting, as we've done in the retail setting over the years?

And I think that it's not just setting up and investing in the online pieces. The convenience factor, from a customer, convenience could mean something different depending on the day of the week. It could be that they want it direct to home, they want a curbside, they want to pick it up in store, they want to shop in store. So, we have to make sure that we're investing in each one of those areas and channels, and make sure that we can really refine that process and make it consistent, reliable for the customer. That's why I think for me, being in supply chain at this time, is extremely exciting, because technology is going to play a big part, and making sure that we can deliver on that customer experience is a big challenge for us.

Jon: what's your perspective on the notion of eCommerce and whether or not it's changed the game forever? There's all these different delivery and distribution channels happening now, and we'll get into a little bit of marketplace maybe a little bit later. But what do you think has stuck? Do you think people are going to go back to as much brick and mortar, or do you think this time has changed it for good?

Stephen: Well, I think the feeling was always that Canadian online was underserved, and we weren't growing as quickly as a lot of other countries, and I think this pandemic has really pushed that forward and accelerated online. Again, if it's delivered consistently and reliable, I think that's going to stick, people are used to that convenience. We'll continue to invest in brick and mortar, and again deliver the experience as customer demands evolve.

You want to go to the store for an experience that you can't get by interacting online. Whether it's a high touch purchase, like a connected home package, or sound system, or home theater, or an appliance, when you're spending thousands of dollars on an item. I think that in-store experience is still a viable experience and will still continue to be important to customers, but I think that convenience of online and the multichannel approach is still going to be a big part of shopper's experience going forward..

Jon: Yeah. I tend to agree and I think the role of the store, the physical store will probably change dramatically and I love what you said there about, every channel's going to have its own purpose and its own power, I suppose. And the physical store is really, I think, going to be about experience and about curation and about expert sales, because that's what you really can't get as well online, I suppose.

Stephen:  Yeah. No, I agree. And I think as well that it's going to continue to evolve and we just have to be ready to be able to invest in those interactions that the customers are looking for, or pivot to double down on areas that we've invested in before, but we just need to make that experience a bit better. I think the store is a focal point for the customer, when you think about services, going in and getting a diagnostic on your laptop, or even returning product. I think having retail to take your product back, if the product doesn't fit what you're looking for, is a real good convenient way to get that product back and find something that fits your needs better.

Jon: Totally, yeah. So, as a director of multichannel logistics, I'm curious, what was your biggest challenge when all this thing went down?

Stephen: I think the biggest thing initially was keeping operations running. The fluctuations in volume, as the stores started to close initially, a lot of the volume went online, which is a different dynamic, and then as the stores started to open up there was more of a balance there.

And then I think that one of the key things was the innovation, optimization, the pivot as we change business. I think from our logistics and distribution environment, we've always focused on continuous improvement, we've always focused on making sure that we're bridging the gaps, we're improving day to day processes, and we're getting the associates and the people on the front lines involved in those changes. The leadership had the faith in the associates, the associates had the trust in the leadership, and we were able to make those changes quickly, as things changed.

Jon: Mm-hmm (affirmative). Well, speaking of peak volume, this was the first COVID holiday. I can't even imagine the stress that was around that.

Stephen: Yeah. I think we probably realized a couple of months into the pandemic that the Canadian from a last mile perspective, and even from our perspective, fulfillment and delivery was going to be a challenge. With the type of growth we were seeing, and then you add peak volumes on top of that, we knew that we had to start planning early to be able to accomplish and get through that volume. So, again, we talked a bit before, one of the key things for us was to accelerate the technology roadmap. We had fulfillment stores, or we had stores, 131 or so stores, but we didn't really use them strategically for fulfillment to the customers.

So, what we had to do was look at technology and see, how do we engage these stores where these stores would be closer to the customer? So, rather than ship it from one of our fulfillment centers, if you're a customer in Victoria, how do we leverage that store to get that product to you quicker? And what that accomplishes, is it not only accomplishes a quicker, more efficient delivery, but it takes that volume away from the national and regional processing centers that the carriers were having the biggest challenge with. The other thing was, we had to try and come up with tools that allow customers to interact with us without necessarily going into the store, if it was an easy purchase for the customer to make.

So, quick and easy pick up for us was a prepaid model. Before we just had a reserve and pick up, where you could reserve it, but you still had to pay for that product in-store, which again was time in the store for the customer. So, we looked at this quick and easy pickup, which prepaid pickup in store, you've already paid for it, the transaction's easy, and then that allowed us to take a look at something like curbside. So, now that the customer's paid for it, can we deliver that product to the customer's car?

But we also had to look at how do we promote these services? So, promoting contactless convenient options, like curbside and prepaid pickup to the customers, planned early receipts coming into our distribution centers, so we could get the store stocked up early, and then obviously once that's all done, we're encouraging customers to come in and shop earlier, so that we can spread out that Black Friday, Boxing Day peak and try and have it more of a monthly promotion, as opposed to a weekly or a daily promotion. So, those were all the things that we thought about as the pandemic hit, and we worked and built towards those to try and get us through the peak periods.

Jon: I can't even imagine the mayhem that might have been with a lot of planning, because I just have to think it's so complicated sitting in your chair, So being able to rise to the challenge on the delivery window, the speed, the volume. I even read that some organizations were partnering with Uber and Uber Eats for delivery because they just didn't know how else to do it.

Stephen: Yeah. And when you think about it, you're totally right, that at the end of it all, especially in supply chain. Supply chain is one of those areas that if people don't hear that there's a problem, then they think that everything's okay. But if we didn't put these things in place, and a normal year with the growth that we experience would have been a challenge in itself, but the fact that we had to transform the network and all of this technology and capability to meet the volume at the peak period, was a testament to everybody that we worked with and also the people on our teams to make it happen. And I think overall, delivered a very similar experience than we did last year, as far as the number of days to deliver, riding all the delays and stuff we had in the network, but the growth was significant, and I think that was a big win for us.

One of the things as well I think is, as we talk about what did we learn from the pandemic, and we talked about continuous improvement and how that set us up in order to pivot quickly, from our own staffing perspective, but we leveraged some strategic partners that we had built up over the year. We worked with these partners, as far as carriers are concerned. We communicated with them, we innovated together, we shared information with them. I think that those partners are the partners that come and help when you need it most, and don't underestimate the value of working with these partners on a daily basis, in more of a win/win scenario. Not just, "Hey, I'm paying for a service, here's what I want for that service." But how do we work together to take costs out the network, and also deliver a better customer experience? And I think we leveraged those partners during the time of need, and they came to our assistance and helped us out in that sense.

Jon: That's amazing. I was reading somewhere else too about Gen Z and online versus boomers and that kind of stuff, and I was wondering what your take is on assortment versus availability? And I thought it was very interesting personally how people are more interested in the things that are in stock, versus the things that they may necessarily want. They would choose availability over choice. How do you respond to that, as someone who's into and runs supply chain and delivery, and all this kind of stuff?

Stephen: That's good, from a supply chain perspective. For us to sell the product that we have available We want the customer to get the product that's available as close to their home as possible. So, I think it's a good thing for us. I would also say that, you're saying with the Gen Z, I think there as an eco consciousness there as well, that when you take a look at these networks we're building and take a look at the growth in eCommerce, I think they're also looking for that environmentally friendly or eco sensitive company that can deliver that experience, and I think for us, that's where it's critical that we can reduce the kilometers that we're traveling to deliver that package to the customer, and have that local to local connection, because it makes a big difference for the environment, and I think they're also conscious of that as well.

Jon: Yeah. Well, that's why I love what you were saying about maybe potentially, I don't know if it's going to be a long term strategy, using some of your stores for fulfillment, because you have a lot of stores, a big network, and it would certainly make a lot more sense to start to reduce the distance traveled, the miles, and you're right, Gen Z is very interested in purpose driven organizations who take this seriously. So, I think it's great to hear.

Stephen: Yeah. And it's something that we've already ... We did launch it last year during the pandemic, and this year is going to be a refinement year for us, to really understand the Canadian network is extremely dense, and I think 90% of our customers live within 10 to 15 kilometers from our fulfillment centers or stores. So, we just need to make sure that we can get the inventory in the right location and have the network to service that customer. So, we're well on our way to delivering that, and this year's going to be a big year to continue that journey.

Jon: Is there anything that you would change?

Stephen: From what perspective?

Jon: Well, in terms of how you're setting up the future, because basically, and this is just my own ... I live in my own world or whatever, but as you start to plan these things and put different mechanisms in place for supply chain, for delivery, for fulfillment, for all those kind of stuff, is there anything that you would want to go back and redo, or have you been super happy with the changes and the direction of all the stuff that you've done so far?

Stephen: I'd like to do it faster.

Jon: How do you do that? How do you do it faster? How could you do it faster?

Stephen: I think it's technology. I think it all comes back to, again, we're a retailer. And now we're transitioning to a multichannel retailer that has to have all their systems interacting and talking to each other, and sometimes making a change to add a carrier, or add a level of service, or direct orders to a certain location is quite complicated. So, I think as we go through and we uncover the technology needs, some of it's quick and some of it's going to take a bit longer, and I think that we're moving at a pretty decent pace.

That's why it's exciting to be in supply chain at this time, because it's an extremely complex network to set up, and it's extremely complex to deliver that experience to the customer. One of the things that is going to be a game changer I think for retailers, as they use their retail stores for fulfillment, is demand planning and being able to have that inventory. To your point, customers are buying what's available instead of what they want, we have to anticipate that need for the customer and start to place inventory in locations where we know the demand for the product is going to be, not that it's already been.

And I think that's the big nut that we have to crack to make this efficient, and I think that artificial intelligence, machine learning, all of these tools are going to come into play because our human brains don't have the capacity to manage that much variation. So, I think that that's the exciting part, and we're not there yet. So, I think again, I think we're probably quite advanced as far as the network we've got set up, but again, we know where we need to get to, and it's how do we get there as quickly as possible?

Jon: So, Stephen, you've been through what I have to imagine is probably one of the most action packed, Topsy-Turvy years in your career. Would I be right in that?

Stephen: Yes.

Jon: Would you be willing to share your top three tips for our listeners, for any retail organization who's trying to manage their logistics and supply chain risks. You've been there, you've seen it, you've pivoted, you've invented. What do you say to them? What are your top three things to be thinking about? Top three tips?

Stephen: I think one of the things that was really big for us is having accurate and timely data. We've got, like any organization, tons of information flowing from multiple different systems. But how do we get that all in an area where we can consume it, asses it, and then make decisions?

So, I would say have accurate and timely data that allows you to make quick and fast decisions, but also when you make a decision, it allows you to measure the impact. The other thing I would say is, and I touched on it before, is on a daily basis, take a look at who your strategic partners are, and if you don't have them, then we should be investing in partnerships that make sense for us, because those are the people that are going to help us when we need the help the most

And I think that the last thing was just consistent, open and honest communication through the journey. A lot of the times, you don't know what's going to be next, what the next disruption's going to be, but I think you have to communicate to the people that you work with, to your partners.

Jon: Well, the notion of communication is so important, and we talk a lot about it at PWC. But I'm interested, before we get into our lightning round of random non sequitur questions, I'm curious about, as a leader, what's it been like leading in a remote world? You talk a lot about transparent open communications with both partners and employees, etc. What was it like for you?

Stephen: It was definitely a different environment from seeing people, from meeting people, from popping into people's offices. We had to ... Visiting the distribution centers, that I did frequently. We had to try and manage through this virtual world, and I think the key there was, we set up a daily communications meeting with my direct reports and again, it's an opportunity to keep each other up to date on what's going on, identify any challenges or concerns, ask for help, pivot if we needed to pivot. I think that was the key for us, is that it was almost that we had to increase the frequency of communication, just to make sure that we were all on the same page, the facts were on the table, and then we could make decisions based on that.

And I think that we had to constantly change our direction, our decisions, on what we wanted to do based on what we knew at that point in time. I think, again, it's set the expectations. "Here's my limitations. Here's what I can do through the communication." Communicate that to your leaders, communicate that to your coworkers, stay connected to people, especially your peers. we did more cross functional work because we had to get people, as we were solving complex problems that were multi divisional in an organization, we had to get the right people on frequent communication strings, in order to decide how we were going to best serve our customers.

Jon: Amazing. Just last random question of my own. what product type was the most popular selling item in the pandemic? Was it computers, or monitors or ...?

Stephen: Yeah. It was headphones.

Jon: Headphones?

Stephen: Yeah. iPod pros, we sold tens of thousands of those. The funny thing was, and I think this is what happened to individuals, and it definitely happened to me. You get home and you realize that that coffee pot you're using every morning is no good, so you buy a new coffee pot. And then your toaster doesn't toast fast enough, so you buy a new toaster. And then you realize, "Hey, this monitor isn't big enough." So, I think people went through different variations in a lot of home office stuff, but not just home office stuff. Small appliances were really big as well. Coffee makers, vacuums, toasters. Anything that would help them be more comfortable in the home.

Yeah. You know the interesting thing as well, is that fitness equipment we could not keep in stock.

Jon: Oh, I believe it.

Stephen: Whenever we got a shipment of treadmills, bang. They were out the door. So, people were ... I was saying to the buyer, I said, "We need a treadmill that turn into a closet right after the first three months where you don't use it anymore."

Jon: Classic. Yeah. I mean, home improvement, trying getting lumber? Impossible. Hot tubs and that kind of home recreation thing was ... I mean you're probably six to eight months out with some of the stuff, to actually ordering and getting it delivered, because there's no inventory. Everyone basically diverted their travel and vacation funds into home improvement and fitness stuff. It's amazing to see.

Stephen: Yeah. The other two things that we couldn't get in stock was basketball nets for kids, and trampolines. You couldn't get a trampoline in Canada I don't think.

Jon: Speaking of predictive demand planning, anyway, who knew?

Jon: Okay, we have just like a minute left, so I'm just going to ask you some random questions. Lightning round. Okay. These are questions that you have not been privy to, so let's see what happens. Okay. Stephen, vinyl, CD, or cassette?

Stephen: Vinyl.

Jon: Vinyl, nice. Do you have a favorite mode of transportation? And not necessarily one that you yourself control, but is there a type of transportation that you really like? Trains, planes, automobiles?

Stephen: I like ... I'm not a big train fan. I've been on trains, and in Scotland we use trains to commute. But a train's a train. I'd rather be on a fast airplane. Maybe a concord.

Jon: Nice. I was actually very disappointed when they shuttered concord, but are you going to do? Okay. Snack wise, cheese puffs or pork rinds?

Stephen: Cheese puffs.

Jon: Cheese puffs. Do you have a best working from home tip?

Stephen: Get out and go for a walk.

Jon: Yeah, it's scientifically proven to change your brain chemistry. Do you have a best technology hack?

Stephen: No. I'm a supply chain guy. I'm technology challenged.

Stephen: I was trying to print something the other day, and I said to my wife, "The printer's not working." And she said, "Why don't you restart your computer?" And lo and behold, the printer started working.

Jon: When in doubt ...

Stephen: So, the old IT hack, just shut it off and reboot.

Jon: And last question; did you pick up any hobbies during COVID?

Stephen: Walking. I actually was never a big fan of walking. I thought, "What's the point?" But I try and get out for a walk every day now, and I'm really enjoying it.

Jon: Thank you. Okay. All right, well, that wraps up another episode of Shift. It goes by so quickly, especially when we're talking about electronics, and supply chain, and fulfillment, and it's a very, very interesting space. So, Stephen, thank you so much for sharing your experience and what it was like at Best Buy this last year, and really gearing up for conquering the pandemic and serving customers.

Stephen: My pleasure. I really appreciated it.

Jon: And I just want to thank the listeners as well, because we know you have so many podcasts that you could be listening to instead, but we really appreciate you choosing ours and spending the time with us, PWC and Shift. So, until we meet again the next time, be well, and if you like the podcast, please share it with others. Thank you.

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