Adena Friedman, Chair and CEO, Nasdaq
C.S. Venkatakrishnan, Group Chief Executive, Barclays
In conversation with: Lee Clifford, Executive Editor, Enterprise, Fortune
C.S. Venkatakrishnan, Group Chief Executive, Barclays
In conversation with: Lee Clifford, Executive Editor, Enterprise, Fortune
Category
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TechTranscript
00:00Good morning. Thank you so much for joining us. And Alex, thanks for the introduction.
00:06So Alex mentioned this sort of idea of creating brand love, and I'm kind of fascinated by
00:10that. Talking about brand loyalty or brand love points to sort of the truth of what's
00:16a very emotional and maybe arguably irrational connection, you know, between customers and
00:21the products that they're most loyal to. And at the same time, you each have at your command,
00:27you know, endlessly growing amounts of data that really kind of quantify this irrationality
00:32and give you ideas about, you know, how to use it, how to shape those emotional reactions.
00:35So I'd love to hear a little bit about how that's playing out for you. What are you,
00:40how are you, what are the kinds of data you're getting? What are they telling you and how
00:43are you reacting them to shape the brands? Chris, we were just talking about this earlier
00:47if you want to kind of jump into. Oh, yeah, sure. Well, first off, thank you
00:50for having me. Yeah. So at Hasbro, we use data quite extensively, I think is probably
00:56everyone in this audience does inside of their firms. I started off at Wizards of
01:00the Coast, which is subsidiary of Hasbro. And in my six years there, I think we octupled
01:07our data and insights budgets. I've been CEO now for about two and a half years, and I
01:12think we're on our way to tripling our data and insights budget. So it's foundational
01:16for us to fundamentally understand our consumers and where they want to go. And we'll use that
01:21on everything from, you know, what do parents want to buy for their kids and what are the
01:25hot new trends that little boys and little girls are looking for the holidays, to large-scale
01:32digital games where we understand what classes of characters players are choosing, what formats
01:39they're choosing, and how we should be affecting design.
01:43And in a digital format, in some cases, you can tweak those products fairly quickly based
01:47on the way the players are using them, for example, with the digital games in the portfolio.
01:51Oh, yeah, sure. So Magic the Gathering is our biggest brand. It's a billion-dollar card
01:56game, and it's a rather complex card game. There's over 20,000 unique cards inside of
02:02the domain of the game. Every quarter or so, we release another 250 to 300 cards, which
02:08really shape the quote-unquote meta of the game. And digital allows us to understand
02:13how those cards are being used in real time. And if we have some power creep inside of
02:17one card, we can either nerf it and make it a little less powerful or help to edge
02:23up some other cards to help offset it, which helps drive satisfaction for the game.
02:28That's great. Joanne, you're in a very different sector, obviously. You know, Tapestry is the
02:32parent company of Coach and Kate Spade and Stuart Weitzman. But at the same time, getting
02:38a big flood of data in, how is that shaping marketing decisions, design decisions?
02:43It's great to be here, and I'm learning new terminology, so I'm going to use nerf it.
02:47Nerf, yes.
02:48Going forward, we don't use that in our business, but we do use data. So just to build on that
02:56idea, as a retailer, we have a lot of data. And our focus has been to really harness that
03:02data and embed it in our organization. It's not enough to have the data and even to pull
03:08an insight out of that data. It has to be in the hands of the people who are really
03:12making the decisions every day in our business to have an action that has an effect on the
03:18consumer, ultimately. And what we talk about at Tapestry is it's a balance of what we call
03:24a balance of magic and logic. Our business is a lot about bringing creativity and innovation
03:29to consumers, but doing that with an understanding of what consumers value. And, you know, in
03:36the world today, the consumer is moving pretty fast. There are lots of things that are impacting
03:42how the consumer feels from day to day, from region to region. And I'll give you an example.
03:47Our tabby bag, which is now a new icon for the business, and it's been doubling in volume
03:55pretty much every quarter for the last few quarters. Back in 2020, we had seen the tabby
04:02start to fall off. And we were going through the pandemic, and our normal cycle would have
04:08said let's mark it down and bring in the next new thing. And our data said that actually
04:14this is a bag that young consumers are gravitating to. In fact, we're acquiring new young customers
04:21with this bag. So rather than so that insight informed our creative teams, and that insight
04:27led to innovation behind the tabby bag, which was the creativity. This is the magic that
04:32came in. And we developed a pillow tabby, which was, you know, we're in the middle of
04:37a pandemic. Everybody wanted, was staying at home. A soft, brightly colored, puffy version
04:44of the tabby went viral. And since then, we've launched a quilted tabby, a Times Square tabby,
04:52a square tabby. Tabby is taking on a life of its own. So it's that, it's the intersection
04:59of the data that informs the creativity. And when you bring those two together, that's
05:04when the real magic happens.
05:06Sure, sure. Again, soft and pillowy, the nerf word comes to mind again. It's a slightly
05:11different context. One of the big narratives around the election that we just had last
05:16week was a sense that a lot of consumers felt cash-strapped. You know, they didn't feel
05:20like they could splurge on things that weren't essentials. They felt like they were having
05:25to ramp back on treating themselves well. You know, you're each running companies where
05:29your brands are not essentials. They're not the last thing you're going to throw out the
05:34window. How did you see that coming through in the data? How, or did you see it coming
05:38through in the data, I should say? And how have you responded to that perceived price
05:42pressure among your customers?
05:45So maybe I'll kick it off. So when we think about, first of all, as I mentioned, the customer
05:51is moving very fast and they're reacting to things that are impacting them, including
05:56inflation. But as we think about brand building, we think about the value equation with consumers
06:02and the value equation is more than just price. As a brand builder, we're focused on creating
06:09emotional connections with our consumer and delivering product and experiences that that
06:14consumer values. So the value equation for a consumer is, yes, what does it cost? But
06:20what is the function? What is the style? What is the quality of the product? And all of
06:24those things go into that evaluation of this is worth it. And so as we do a lot of work
06:32understanding consumers, and it's not just reading data, it's also going into their homes
06:37and talking to consumers and understanding the meaning behind the meaning that they might
06:43fill out a survey or you might see in the transaction data. It's really understanding
06:47what's on their mind and delivering that value equation that works for them. And when we
06:54build in the quality that they recognize, when we build in styling and innovation like
07:00the tabby bag I just mentioned, we understand what the value equation is for the consumer.
07:07Our job is to deliver product that they'll value and they'll buy at the price that we
07:13can sustain. And so that's, I think, the essence of brand building and the essence of staying
07:19close to the consumer.
07:20I guess there's an advantage in the sense of durability. It's easier to pay a premium
07:25if you think you're going to have this for 10 years or 12 years, whatever the product
07:29might be, a great game or a great bag. Chris, you've got a much wider assortment of things
07:35that you're selling, obviously, but have you seen price pressures in your customer base
07:40and how's that been playing out?
07:42Oh, absolutely. The toy aisle, the dominant price point is $10 or less. I think it actually
07:47is the median price point inside of the aisle. Obviously, we have to deliver a lot of play
07:52value for the money. But I go back to something that Joanne mentioned that I think is a commonality
07:58between tapestry and Hasbro and how we think about things. At the end of the day, we're
08:02about delivering magical experiences to the consumer. There is a very real and palpable
08:10sense of emotion in any purchase, whether it's a high-end collectible for a 55-year-old
08:15man or a birthday gift for a 5-year-old neighbor. We need to bring magic and we need to bring
08:22it at every price point. At Hasbro, we deal with price points ranging from free for our
08:27digital portfolio of games all the way up to $500 to $1,000 for a super high-end collectible.
08:34I'm liking that there's the magic overlap between what you're doing, even in very different
08:38fields. Just a reminder, speaking of magic, if you want to make some magic by asking a
08:43question to either Joanne or Chris, put your hand up and we'll get a microphone over to
08:46you. Don't be shy. Flipping back to brands and data for a second,
08:54big portfolios for both of you. Joanne, Tapestry's been pursuing an acquisition of Capri, which
09:01if it works out, which is admittedly a question, but if it works out, you've got more brands
09:05and presumably more data. When you're bringing data in from across many different products,
09:13are there ways that it can cross-pollinate each other? Can Team Mr. Potato Head learn
09:18something from Team Transformers or can Team Coach learn from Team Stuart Weitzman? Does
09:24the data move across the organization that way, I guess?
09:29We definitely see that. I suppose inside of our toy aisle, we share a lot of our designers
09:34across different brands. There's a lot of commonality between consumers in the ages
09:40of four to eight. The same aesthetic that helps you create a great My Little Pony experience
09:48often can be used to create a great Candy Land board game experience or a super high-end
09:54action figure experience. The data, parents usually have more than one kid. There's two
10:01parts to our equation. It's what does the kid want and what does the parent want. Understanding
10:06parent trends, understanding their price pressures, understanding what kids are asking for, watching
10:12and consuming, yeah, that has a lot of relevance for us.
10:15Makes sense. How about for you, Joanne?
10:17I think similar in some ways, but as I think about how we build a portfolio of brands and
10:23the value that tapestry adds, we have a purpose at tapestry that's to stretch what's possible.
10:30That means that we help our brands stretch further than they could stretch on our own
10:34with capabilities that we're bringing to bear across the portfolio. You mentioned one,
10:39that's data. There are some data and insights that are relevant across the portfolio. We
10:46learned that one in three consumers this holiday will do most of their holiday shopping online.
10:51That's an interesting insight that all of our brands can use.
10:56As we think about the platform, we have a platform where we allow our brands to have
11:01their own unique DNA, so their own designers. We do not cross-pollinate design and merchandising
11:07and marketing teams. The place where we find the opportunity to share across our portfolio,
11:13it starts with the consumer insights and the data that I just talked about. It includes
11:19technology. Reaching consumers today in places where they are increasingly requires a technology
11:25infrastructure that allows you to show up in the right way.
11:29All of our brands leverage the same technology infrastructure. They benefit from the ability
11:35to harness all the data that we have in similar ways, but they apply it very uniquely to their
11:41brand and their brand DNA. We have a supply chain. We haven't talked about the supply
11:45chain yet, but I'm sure we'll get to that. We have a globally diversified supply chain
11:51that all of our brands can leverage. That has been incredibly critical, particularly
11:57for the last five years with all the disruptions in supply and demand.
12:01I would say last is talent. We do cross-pollinate talent across brands, across regions, around
12:09the globe. That provides opportunities for our team members to really grow their careers
12:14in new and interesting ways, in ways that would be hard to do if we were one singular
12:19brand. It provides an unbelievable trove of ready-now talent for our brands in different
12:27areas. A lot of positives that the Tapestry platform brings to each of our brands.
12:32Sure. Glad you brought up global supply chains. The incoming president-elect has said that the
12:40most beautiful word in the English language is tariffs. I was going to go with elbow,
12:46but he went with tariffs. That's fine. In all seriousness, there's been a tariff regime in
12:51place for a while. Trump started one, Biden added to it. Trump has said he wants to expand it.
12:58Your supply chains truly are global, and yet a lot of your customers are here in North America.
13:03What have you learned from the past few years about how to manage that? What are some of the
13:07challenges you're looking at going forward? If there's one thing maybe that I disagree
13:11with that you said earlier, that some of what we make is nice to have. Hasbro is in the business
13:18of creating joy and community through the power of play. I think that's a staple for most households.
13:23What we've generally found is what's good for the American household is good for Hasbro.
13:28Generally speaking, I think our government representatives, going back to Hasbro has been
13:32around since Milton Bradley in the 1860s. Going back to the Lincoln administration,
13:38we've tended to have a pretty good cohesion between government policy.
13:42The Lincoln Logs probably weren't made in Malaysia. You raise an interesting point,
13:48which is if the price doubles, I think I might still pay for it, but some households won't.
13:58We have quite a bit of elasticity inside of our supply chain. We're making things
14:05in North Carolina. We're making things in Massachusetts. We're making things in Belgium.
14:10We're making things in Kyoto, Japan, and we're making things in Southeast Asia.
14:15We tend to have a great deal of flexibility about where we can make things and how we can react to
14:21different policies. To move production from one place to another if you need to.
14:25I would say, but generally speaking, what's good for Americans tends to be what's good for
14:31Hasbro when you're dealing with things like play and things like toys and things that bring
14:37wellness to your household.
14:38Makes sense. Joanne, how about you?
14:41I would just say in the topic of supply chains and tariffs, over the last five years,
14:46as I alluded to, I think the theme is agility is the new black in fashion. That's something
14:54we like to say. It is so critical with all the disruption in demand around the world.
15:01We saw really, really big swings. I think unprecedented swings in demand as countries
15:07shut down. We saw unprecedented swings in supply with also disruptions to supply lanes and ports
15:15and container availability. We have a supply chain that is globally diversified to allow us
15:22to navigate all of those challenges. We have really focused on being able to navigate those
15:29challenges and deliver for our consumers. Our supply chain is not reliant on China.
15:35From that perspective, we feel well positioned. Less than 10% of our finished goods
15:41are produced in China. We're not beholden to one country or at risk of having one
15:50tariff regime really impact our business. Again, our focus is to make sure that we
15:56can deliver for our consumers and that we have the agility not only to make sure the product
16:01gets here, but it gets here with the quality and the value. That shift in our supply chain
16:07has been one that has taken several decades to build. We have to build the capability.
16:13The handbag business is one that's really craftsmanship at scale. It requires craftsmen.
16:21We're focused on bringing that incredible value, durable, beautiful product to our consumers.
16:30That's the focus of our supply chain. I think you've each pointed to something at different
16:34points in the conversation, which is if the customer loyalty is there, the challenges can
16:38be overcome by that momentum. Unfortunately, our time flew. That's the note I'm going to end on.
16:44Joanne Kravoiserat and Chris Cox, thank you so much for joining us.
16:47Matt, thank you so much.