At a State of the Industry Roundtable at SFIA’s “Back on Track: Insights and Strategies” virtual conference, top executives at Walmart, Molten, HanesBrands, and Technogym indicated that the industry continues to adjust on the fly to the continued uncertainties presented by COVID-19 but detailed how enhanced communications across stakeholders is helping manage amid the crisis.
For Melissa Dawson, president, Molten USA, the biggest surprise over the last few months has been the deep level of personal engagement that’s developed as she worked with others to address a wide array of challenges. The engagement was not only with her team but external partners, including youth organizations.
“Everybody was hit and many of these are family organizations,” said Dawson. “In doing the Microsoft Teams and the Zoom calls, you actually are invited into these people’s homes and people are telling you, ‘I’ve laid off my entire staff.’ This process actually strengthened relationships because you were actually human. You were at your home.”
She noted it was all too common to see her “toddlers running around in the background” as she was having a Zoom call and often those conversations would extend to stay-at-home hurdles, such as kids adapting to virtual schooling.
“This was bare-bones,” said Dawson. “Everybody was totally caught off guard, and you actually were consoling your partners and the clubs and the teams. And they were consoling you because everybody was pretty much one degree of separation from somebody who was sick. And then it’s also trying to handle a business where the walls have fallen down.”
Dawson said Molten has been forced to come up with “multiple” contingency plans over the last few months due to the uncertainties around school openings and sports play. Close communications have been critical to making quick decisions and adjustments. She said, “You had to rely on your folks to stay invested in not only your brand but also your customers to figure out where you could find the minor successes to build those into greater successes.”
HanesBrands Finds Stronger Retail Relationships
Jon Ram, group president, Global Activewear, HanesBrands, likewise said he’s heard many apologies for background noise during Zoom calls as his team has been showing product to retailers as well as time-outs during calls as one participant has to handle a misbehaving dog. But he likewise believes HanesBrands’ relationships with retail partners have strengthened.
“It really did humanize it, and I would say deepen the connection with our customers,” said Ram. “To me, that was amazing to see considering everybody was going through challenging times.”
He credited his team to committing to the necessary adjustments in the work-at-home environment. “I’ve been fortunate because I’m working with a talented team of individuals who have embraced agile working methods, and have figured out how to get it done in what is certainly a very, very challenging time,” said Ram. “I look forward to striking the word ‘unprecedented’ from my vocabulary as soon as humanly possible. But, like everything else, we’re all learning as we’re going through this. And I think the most important thing for us as a company is really trying to understand how all of what we’ve been experiencing is going to affect how our consumers think about our brands.”
Walmart Finds Benefits From Flat Organizational Structure
Jake Griffith, general manager Sports & Fitness, Walmart, said an initial priority for Walmart was “protecting our associates and being there for our communities.” The giant discounter wound up hiring 500,000 new associates in six months as the chain remained open as an “essential retailer” to spike demand and its online operations expanded rapidly. Said Griffith, “We did a great job, and our associates really stepped up for their communities.”
Walmart also faced challenges understanding how to operate with the “different locales, different rules, regulations” around COVID-19 and the “complexity” caused by the accelerated shift in consumer behavior toward online shopping and digital engagement.
But Griffith, who took over the Sports & Fitness category in January after joining Walmart’s e-commerce team with the 2016 Jet.com acquisition, said what he’s learned most in his new role is how to manage an organization flatter to speed decision-making as well as the importance of the flow of communication.
“If anyone’s ever worked with a tech team or an e-commerce product team, these folks would have daily stand-ups at their desks every single day,” said Griffith. “I’ve taken a similar approach in having a call with my team every day. And it’s something I’m going to bring back to the office with me when we go back to the office.”
Technogym Eyes Fitness Opportunity Addressing Health Benefits
Marco Zambianchi, president, Technogym North America, remarked on his team’s ability to reach out to a broad range of customers and prospects with Zoom calls and other virtual communication tools than before as well as his ability to connect with his team. Said Zambianchi, “I could be closer to people that I usually don’t interact with because we were doing almost daily meetings.”
Technogym was also able to launch products with virtual trade shows that helped his team “reach farther down organizations and get more people engaged.” With travel restricted, sales reps were able to step up coverage from visiting 5-to-6 customers a day to 8-to-10 through Zoom webinars. He believes physical trade shows will come back but some digital components will remain. Zambianchi said, “You definitely want to be close to people and meet them, but I think finding the right equilibrium will be critical.”
Finally, Zambianchi believes the bigger opportunity in fitness was revealed during the pandemic by not only surging interest in at-home fitness from households but also a wide range of fitness clubs requesting content from Technogym to virtually reach people who wanted to work out at home with gyms closed or restricted. While much of the online workout content is being offered for free, consumers are showing that they’re willing to pay for premium content, he noted.
Moreover, Zambianchi said that only about 18 percent of Americans have a gym membership, and the crisis is showing the fitness industry would benefit from a much stronger and broader message around health benefits.
“You’re not going to the gym to look good,” said Zambianchi. “You’re going to the gym to live well. It’s a much more powerful message for the industry and really is the message that says the penetration needs to be 80 percent, not 18 percent. So, if you’re looking at that, the pie is much bigger.”
Tom Cove, SFIA’s CEO and president, who moderated the session, noted how COVID-19 has raised risks around credit decisions and significantly disrupted order flow and forecasting.
Dawson admitted Molten is carrying an “excessive amount of inventory” because many team dealers continue to hold off on making orders until more clarity arrives from each high school association on whether sports seasons will proceed.
“You’re forecasting based on the best-case scenario and also doing it as cautiously as possible and being able to delay your product overseas, if necessary,” said Dawson. “So there’s no right answer. We have meetings every week and we give our best guess and we honestly call it a guess. But we are waiting. The state associations play a huge role in this. The recreation associations play a huge role in this. And what each state is allowed to do when coming back to sport is playing a huge role in this.”
She expects the closer partnerships being formed to manage the many unknowns will be a benefit coming out of COVID-19. Dawson stated, “Everybody has realized they need to rely on and work with each other in order to help the entire industry versus being very self-serving about your individual business.”
Ram said Hanesbrands has been forced to seek out greater efficiencies due to the crisis that he expects to continue to pack long-term benefit. He said, “You always have to ask yourself, ‘Why are you doing things a certain way?’ And most the time the first response is, ‘Because that’s the way we’ve always done it.’”
But he also believes working closely internally and externally seeking solutions to COVID-19 issues has driven up comfort and trust levels that will help drive the pursuit of more efficiencies going forward in go-to-market processes and customer partnerships. Rom said, “Once you build that trust, you have the ability to do things a lot differently and that’s both from an internal and external standpoint.”
Griffith believes the convenience factor around shopping will receive even higher value coming out of the pandemic as more consumers have become accustomed to online delivery and curbside pickup. He said while some see e-commerce making stores less important, he believes stores and online should complement and add value to each other. He said. “Brick and mortar retail can be an asset to e-commerce, not a liability.”
E-commerce, according to Griffith, also provides more of an opportunity to understand and engage customers than ever before. He said, “I think a lot of times we think of e-commerce as sort of spear-phishing where ‘I want this product and I’m going to search for it on Walmart.com.’ But it’s actually a chance for any brand or any company to get close to their customer, to learn about them, and keep a relationship post-purchase. And keeping that relationship post-purchase in a sporting goods business is extremely valuable and important.”