Executive Smart Talk: The New Retail Reality

As lockdown restrictions ease in parts of the U.S., retailers are beginning to address what it  means to reopen stores in this new environment. Zappos.com, a pure-play e-commerce store with no brick-and-mortar presence, has been able to continue operations through the pandemic and has unique insight into changes in consumer behavior.

Jeff Espersen, general manager and chief merchandising officer at Zappos, shared some key takeaways in the latest installment of FN’s webinar series “Leading in a Crisis,” presented by FDRA. Espersen joined FN Editorial Director Michael Atmore yesterday to discuss “The New Retail Reality,” how Zappos is adapting and what it’s observing in the market.

Listen to the replay of the link here.

Returning To The Zappos Office

 “Our number one is the safety of our employees and our customers. We’re on week 10 of working from home, so we’ve gotten into a really good rhythm. We’re evaluating right now what [returning to the office] looks like. We have a survey out to all our folks to figure it out. It could look different for different teams, and we want to make sure folks are really comfortable coming back to the office. We have all our employees involved to make sure we do what’s best for them.”

Supporting Vendor Partners

“You read the headlines and it’s tough to see some of these retailer and our brand partnerships [declare bankruptcy]. It’s going to look different when we come out of this – there will be fewer places to buy product. But one thing we continue to focus on is our customers, which includes our vendors, and how can we stand up and do the right thing for them during this time frame. We just want to make sure that we are being great partners.”

Redistributing Work Across the Company

“We’ve been working really hard and are dedicated to not furlough anyone. What we have been doing is looking at our folks and figuring out where else can they help in the company. We’ve  started a program around that where they can plug in if they don’t have enough hours in their job today – maybe they can help in another area, like merchandising.”

Maintaining Company Culture While Remote

We have a very unique culture in our company and we do a lot of team building events in person that we can’t do right now. So we have virtual happy hours and book clubs, we even have weekly bingo games virtually. Some people do scavenger hunts, send birthday packages and do drive-by wishes, remote arts and crafts for kids. It’s fun stuff that can break up the monotony and the business of that day because, as you know, work and home has combined – there isn’t a break between them.”

Zappos Jeff Espersen
Jeff Espersen, GM and head of merchandising at Zappos.

Popular Products During the Pandemic 

“As we got into the pandemic, things got very specific. What people were buying was very narrowly focused around comfort and being around the house a lot: loungewear, comfortable clothes, yoga. Slippers – in the off season – have been doing really well for us. In performance footwear, there have been some categories that have been selling well like shower slides, but it’s all the comfort aspect.”

Selling to the New Consumer

“We’ve tried not to be promotional during this time frame and just focused on making sure our consumer is getting what they need. What we are looking at is how we can bring a selection to the consumer that they want. We’ve learned some things from this, and we will start pivoting in the near future in the things that we’re doing to offer a more nuanced collection.”

The Customer Service Anything Hotline

“The heart of our business is service and how we wow our customer. We’ve pivoted our traditional customer service team to a hotline that gives customers a place to reach out to, whether it’s to hear a kind voice, get a TV recommendation, or find a hot ticket item at a local grocery. They don’t even have to shop with us – they can call us and ask us anything, even delivering a pizza in the middle of the night. It’s true that we were able to help [a doctor from Mt. Sinai] and provided 300 oximeters for them. We also have people calling us to ask us how we’re doing – it’s pretty cool to have our customer call and check we are doing okay.”

Brand Challenges Right Now

“Our brands – and we totally understand this – are looking at how to make sure they have a good flow of product without overextending themselves from a factory base. There’s not a lot of newness; some product has been delayed by one quarter to another. One of the things we’re noticing is that it runs the gamut: some people are showing new product, others are playing it safe. We’re looking at ways we can bring in new product and we’re trying to give them good guidance on what we’re selling. It has been a good back and forth.”

Trending Products for Spring

“Let me look at my crystal ball here – it’s cloudy! I think there will still be a seasonal component but it won’t be as important. It’s starting to get warmer here on the west coast; we’re seeing sandals and flipflops starting to pick up as people start to get outside more. Running for us has  picked up, whether it’s hiking sandals, hiking shoes, trail shoes or pure running.”

Zappos Jeff Espersen Jeff Schaefer
Zappos execs Jeff Espersen (L) and Scott Schaefer hit the billiard table in the company’s lobby.
CREDIT: Patrick Gray

The Tight-Knit Footwear Community

“Every single day I talk to at least a couple folks in this industry, whether it’s to catch up with what’s going on or it’s to ask for advice or support. It’s amazing to us that this industry is so close knit and how we all come together and work as one. I believe that that really helps us. Personally for me, it really helps to sit down and talk to these vendors, see where they’re at and see how we can help each other. We’re here for them, whatever they need.”

Protecting Prices

“As brick-and-mortar retailers open up their stores, that might cause some promotional activity. We’ve tried to shy away from that. Into the back half of the year, particularly Q4, I think the product selection is going to be a little more conservative and more core, so I’m not sure that folks will want to promote that anyway. Plus we want to make sure that we protect our brands at the same time too.”

What to Invest In

“There has been a push for Made-in-America product and there continues to be. I’d love to see more. I think it really resonates for us as an industry, but also as a company too. We should try to figure out how to push for that. I think [sustainability] will still keep growing and escalating. It might pivot in what it looks like but it’s very important in what we’re doing now. A lot of brands are starting to get more sustainable, and I don’t think that should change.”

Staying Healthy At Home

“Starting to work from home full time was really tough. Going from the interaction side of the office, being able to walk the floor and have face to face meetings, to doing everything on video conference. Trying to separate work from home – you can take calls all day! One thing I’ve tried to learn is to block out time on the calendar for myself, whether that’s a half hour here or an hour here. That has helped from a sanity level. I’m blessed to have a healthy family and everyone is doing well, but that is the biggest thing. Today I feel like I’m in a pretty good groove of how things are.”

Advice to Fellow Leaders

“Lead by empathy: care about your people and make sure that they’re good. Always listen to your consumer because it’s amazing what they will tell you – usually our customer won’t steer us wrong. The center of this is to be the calming force. You’ve got to make sure that you continue the communication level. We communicate much better than we did when we were in the office. Communication and transparency is up; being nimble is up.”

Advice for Small Brands & Designers

“We need them in our industry, as we continue to evolve. If they need and want to talk to me or one of my merchandising folks, please reach out and we’ll figure out how we can help. We have a platform that is very successful and we can figure out if there’s something we can do together. But I would say don’t give up: Keep running the plays and moving forward, because that’s how most of us start out – they will fall on their face a few times before they get it right.”

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