Why Our Belt, Tie and Wallet Company is Investing in Artificial Intelligence

Why Our Belt, Tie and Wallet Company is Investing in Artificial Intelligence

Today, it seems like every company is somehow in competition with Amazon, as the tech giant extends its reach into more and more industries (most recently health care). That expansion is powered by Amazon’s robust tech infrastructure, which gives it a platform to scale quickly in any sector it enters.

There’s a widespread perception that large legacy companies in those sectors won’t be able to keep up with the disruption. However, in this article we’ll draw on our company’s history to argue that for legacy companies, responding to change isn’t as hard as many people think.

We’ll talk about how Randa Accessories built their data capabilities and modernized their tech backend to achieve Amazon-like precision and efficiency, growing their core business in the process.

And, we’ll share our disovery of what motivates today’s men to wear ties — the answer is not what you think.

First, a little about Randa. You many not know our name, but you know and own our products. Our fashion and apparel accessories are available under 50 brands (including Ralph Lauren, Levi’s, Columbia Sportswear and Tommy Hilfiger), and are sold at over 20,000 points of sale, and millions of digital touch points.

We’re the world’s largest men’s accessories company. We sell ties, and belts, wallets, bags, hats, slippers and luggage.

Randa is completely vertical, business-to-business and direct-to-consumer, with 4,000 employees working from 23 global offices.

Our culture emphasized growth and efficiency and led us to success in revenue, margin, penetration, and market share.

For example, we’re the leading supplier of belts to Nordstrom… and to Walmart, to Macy’s and to Kohl’s, Amazon, Ross Stores, and The Hudson’s Bay, Liverpool, Printemps, El Cortes Ingles, David Jones, John Lewis and to Costco.

We spent over $50 million to assure that when a consumer walks into a retail store for pants, they immediately see our belts nearby. Dress shirts? There are our ties…

And then, we hit a wall.

Shifts in macroeconomic trends, changes to consumer path-to-purchase, price compression, disruption of the retail landscape…

Suddenly, fewer customers were walking into stores.

And online, when you shop for Levi’s jeans, you’re presented with other choices of jeans, not our Levi’s belts.

So, we turned to our powerful corporate culture. We threw resources, cash and talent at the challenge… and, we still hit that wall.

It turned out that our legacy culture was our most valuable asset, until the day it wasn’t.

We learned that we couldn’t navigate tomorrow’s landscape with yesterday’s maps. So, we drew a new map.

And with this roadmap our company has grown from $200 million to nearly $1 billion.

We call our roadmap, “Moats, Boats & Bridges.”

 


Moats protect the core and build barriers to competitive entry.

Bridges leverage adjacent opportunities — adjacent customer segments, channels of distribution, and adjacent products and services.

Boats are transformational.

 


“Moat” culture, that of successful legacy companies, is linear. One thing leads to another. Efficiency and optimization are highly valued. And innovation strategy is deliberate. Everyone knows where the company has been, where it is, where it is headed, and the plans to get there.

“Bridge” culture tends to align well with “Moat” culture… inclusive of new, but adjacent, businesses.

“Boat” culture, as is favored by start-ups, is nonlinear. It values novelty. Boat culture is often inefficient at its onset. And, strategies are emergent, they bubble up from all directions.

Reid Hoffman, the founder of LinkedIn, once said that ,

Start-up innovation requires that you to throw yourself off a cliff… and build the plane on the way down.

For incumbents, the larger you are the faster you fall.

It’s a common misconception that legacy “Moat” cultures fail to identify non-linear innovations, that they’re stuck in the “old” way of doing things.

In our experience, this is plain wrong.

The real problem is that most non-linear innovation does not serve current customers, it disrupts the legacy process — which drives the bulk of the sales and cash flow — and it is often a big distraction for little immediate gain.

Conversely, start-up cultures are inspired by disruption. And these teams are usually free from the encumbrance of comp sales and increased profits that the other cultures face.

Legacy and Start-up cultures, “Moats” and “Boats,” fiercely compete for limited resources — A-level talent, capital, and technology. They don’t play nicely in the sandbox together.

Our solution, create an environment where all three cultures will thrive… and separate the opposing forces.

Let’s take a look at how we accomplished this at Randa:

 


In our “Moats” world we leveraged and extended what we do best. We went vertical and we went deep.

We invested what is now the largest belt factory in the world: Tata in Guatemala.

We purpose-built over 1 million square feet of Randa-owned distribution centers.

We purchased what is now the largest in-store merchandising company in America, MCG, with 3,000 employees who assure our fixtures are filled and our consumers engaged and to provide consumer insights, in real-time.

We created an extraordinary Vendor Managed Inventory system, with enhanced machine learning, allowing us to place precisely the right inventory in each of 20,000 stores every week.

“Bridges;” We added adjacent categories: Luggage, Footwear, Headwear, Cold Weather Accessories.

And, leveraging our concept-to-consumer supply chain, we penetrated adjacent channels of distribution: Vertical Specialty (Old Navy, Lands’ End, Gap), Aldi supermarkets, drug stores and “Farm & Ranch” stores including Tractor Supply.

Equally important, as our market share in several categories grew from 25 to 50 to 75% and greater, we began to manage entire accessory departments. We remove risk from our retail partners, elevate department performance and increase customer satisfaction.

We could no longer grow via increased penetration, so we pivoted much of our marketing budget from business-to-business centricity to consumer insights, and to stimulating consumer behavior.

And, we built “Boats.”

We created Randa Digital Labs and moved them out of our headquarters to their own facility, we provide them with their own A-level talent, their own resources, and allow them to create their own performance indicators based-upon emergent business models.

Randa Digital Labs uses start-up strategies including rapid prototyping, and fail-fast, measure-fast, optimize-fast tactics.

And, Randa has an appetite for acquisitions, investments and collaborations.

In addition to major investments in owned-brands, infrastructure and supply-chain, we’ve recently invested in several early-stage business-to-consumer companies including The “Greats Brand” of fashion sneakers, a digital-first tailored clothing business and a luggage start-up (to be launched shortly). And, stay tuned, we have some large surprises in store.

Our “Boats” culture is consumer-obsessed, we conduct ongoing qualitative, quantitative and path-to-purchase studies. We have already collected over 4 billion points of consumer data.

Which brings us to why Randa, a belt, wallet and tie company, is now investing in data scientists and artificial intelligence.

Our growth can no longer be dependent on increases in market share, we’ve grown too large for this to be the primary source of continued growth. We need to increase total consumer spending in our categories, our share of customer “wallet.” To do so, we must control our own destiny. We need to understand and motivate our ever-evolving consumers, to delight them and satisfy their needs, their “jobs to be done.”

We are using artificial intelligence and machine learning to implement digital tools to identify customer lifestyle and preference and then deliver a curated, targeted, customized accessories experience. Data is our fuel and AI is essential in order for us to provide extraordinary value to our customer.

We have already discovered why men buy ties — it’s not because of dress codes, comfort, or matching a neckwear to their dress shirt (one hint, you can’t wear the same tie you wore to last month’s wedding — because that tie is too visible on Instagram.) And, we’re discovering surprising reasons why men buy belts (it’s not to hold their pants up… ).

This roadmap has served our company well, so far. It is my hope that it will do the same for yours.

© 2018, David J. Katz

Click more information regarding Randa Accessories.

— — — — — — — — —

As presented by the author on March 18, 2018 at ShopTalk: “The World’s Largest Conference on Retail and Ecommerce” 


     As presented at ShopTalk 2018: The World’s Largest Conference on Retail & Ecommerce

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  • Ellie Parsons

    Artificial intelligence and machine learning in fashion will go beyond the traditional areas of machine tasks into creative and customer interaction processes, blurring the line between technology and creativity.

  • Chris Burnham

    Randa will realise significant returns from these efforts and demonstrate the potential advantages for companies that successfully marry creativity and AI.

  • Billy Crawford

    This new strategy can deliver significant speed, cost and flexibility improvements across the fashion supply chain.

  • Jemma Reece

    Consumers will enjoy the benefits of such improvements

  • Morgan Williams

    We are likely to see more innovation in the fashion industry

  • Fred Reynolds

    Leading fashion companies should enhance their creative process, design and product development to get more satisfied customers

  • Karim Mohammadi

    Amazon is on the verge of creating the first AI designer, with the development of an algorithm that designs clothes by analysing images, copying popular styles and using them to build completely new designs.

  • Sadio Musa

    Customer relationship management is one of the next frontiers for the fashion industry

  • Conan Pitches

    Thanks to this technology, companies can evaluate sensor-collected data and improve in-store experiences for target customers.

  • Lee Bennett

    Innovation may further expand the income gap between high performing firms and their competitors.

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David J. Katz

Retail Guru

David J. Katz is a "LinkedIn Top Voice in Retail," a best-selling author, a frequent public speaker, an alchemist, and the chief marketing officer at Randa Accesories, a leading multi-national consumer products company, and the world's largest men's accessories businessHis specialty is applying insights, data, story-telling, technology and analytics to influence consumer behavior. He helps retailers, brands and suppliers create successful outcomes in evolving markets. David has "hands on" experience with P&L, M&A , Leadership Development and Digital Transformation. He has ongoing collaborations with global brands including Levi's, Polo Ralph Lauren, Dickies, Tommy Hilfiger, and Columbia Sportswear, And, he works closely with leading retailers including Macy's, Kohl's, JCPenney, Amazon, Nordstrom, Walmart, Target, Costco, Hudson's Bay, Liverpool, Debenhams, David Jones, Printemps, & El Cortes Ingles. Named a fashion industry "Change Agent" by Women's Wear Daily and a "Menswear Mover" by MR Magazine, he has been featured in The New York Times, The Wall Street Journal, New York Magazine, Business Insider, The Huffington Post, and other publications. A frequent public speaker, he is co-author of the best-selling book "Design for Response: Creative Direct Marketing That Works," and has written many articles on marketing and consumer behavior. David has been elected a "top writer on fashion and Innovation" by Medium. A graduate of Tufts University and the Harvard Business School, in neuroscience and marketing. He studies, and applies, stimulus and response. The name Pavlov rings a bell. Note: Alchemy is a science or philosophy that transforms something ordinary into something meaningful, often through mysterious means. David studies consumers, identifies "jobs to be done," adds products and brands, stirs the caldron with a bit of marketing catalyst, and via transmutation, creates... retail gold.

   

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