The Hidden IT Challenges Retailers Face – Insights from Giant Tiger’s Former CEO Paul Wood

Bruce: Okay. Thanks everyone for joining. With me today is Paul Wood. All right Paul let’s dig right in then. So, listen, why don’t we just start with, give the audience just a quick background on who you are and what you’ve done in your career in a very short amount of time.

Paul: Sure. Bruce. Thanks for having me on today. Yeah, I’ve been privileged to spend almost 20 years with the same retailer here in Canada, Giant Tiger stores. My career began on the finance side. I was a public accountant before that, CPA by trade. And was able to progress through the finance arm of the business into progressively broader scope and accountabilities across a great deal of the operation as CFO. Including supply chain and HR and legal and merch planning and, strategy and marketing and IT and a number of pieces and then ultimately ended up in the CEO chair there through the COVID pandemic and beyond. So, had a wonderful time there, a lot of great opportunities and a lot of growth over that time frame. The business grew from just over 100 stores to over 250 and close to $2.5 billion of sales in that time frame.

Bruce: Nice. Well, it sounds like you’ve done a lot in your career. I heard a lot of finance, and no offense but in my opinion, finance is a little bit on the dry side. So, we’re going to skip the finance stuff. But let’s talk about IT. And I know you’re not considered … you don’t consider yourself an IT expert. But as CEO of a large retailer, you’ve had to deal with a lot of IT things. So, let’s just start with one question. You’ve had up to 250 stores. From an IT perspective, what kinds of things would worry you and keep you up at night about IT at the store level?

Paul: Yeah. Well for sure, the store is the lifeblood of the business. And making sure that they always were able to be open and serve the customers in the markets distributed across the country, from small to large, urban to rural, etc. That was always a key focus of the business because it was vital to be open every day and to be serving those customers. We had a lot of traffic in the stores, a lot of small basket, high volume business and from a discount department store selling food and apparel and general merchandise. And so, it was important always to have systems and focus on store level from an IT perspective that kept the lights on and kept the business running as simply and easily as possible for our franchise owners in the field.

Bruce: I won’t put you on the spot to ask for a war story about something that didn’t go well. I suspect you have a couple of those. So, let’s talk a little bit about … the buzzword is digital transformation. 20 years ago, they might not have called it that, but can you think of a good example of how your organization needed to do something different at the store level, maybe for customers or for operations and how did that impact the IT department?

Paul: Yeah, absolutely. The one constant in retail is change. You have to always be keeping pace with your customer and with the world around. And so, there were various times and efforts over my tenure there where we did have to modernize and improve the toolset at store level just to be able to keep pace with the business around. And whether that was implementing a new finance and HR tool, whether it was implementing something to support the stores around their inventory replenishment and ordering and fulfilment, or whether it was something as basic as just a budgeting tool for the stores. There were always improvements that needed to be made at store level. And so, from a transformation perspective, it absolutely was imperative that there was clarity of vision and purpose and direction around those objectives that we laid out. That there was clear alignment across the business from stores to office and beyond, around the accountabilities for parts of those projects. And then just to be able to really zero in and focus on what the priority was in each of those cases. So, always requiring buy in from all functional areas across the business.

Bruce: Nice. I just wonder, you probably never got down to the level of the hardware actually used in the stores, so I won’t put you on the spot to think about that level of detail, but I just wonder. I suspect that you’ve had quotes and POs come across your desk. The concept of refreshing hardware at the store level, how often, how long would you keep hardware? Was that something that you thought about as CEO or as VP of IT at the time?

Paul: Yeah, for sure. There was always the element of refreshing, renewing the technology that came up, whether it was in the budget cycle from the IT leaders rolling up through either myself as CFO or to ultimately as CEO in the business. And it was sometimes difficult in those roles to really understand or grasp some of those details, like you say, if you’re not deep in the tech weeds, to understand which size of server, which type of server, or which kind of connectivity, or what amount of storage, etc. was required. And so, there’s a fair degree of trust provided there into the “experts in the architecture side.” But at the same time, it was very clear always and an imperative to ensure that the right infrastructure was in place to accommodate not just what was already happening at store level, but to be able to connect the dots or have those conversations to connect the dots between the infrastructure folks and the business with where the business was needing to move towards. And so, when we talk about transformation and there being a roadmap and being several years of focus forward, in terms of the capability that needed to be provided or the capacity that needed to be present at store level to support the new applications or the new software, or the new venture, whatever it would be that needed to be supported at store level. We had to ensure that there was lockstep there with the architecture side, and that they were also thinking progressively, were aware of where the business was moving, what the priorities of the business were, the needs of the business, and staying current and prepared to be able to raise the flag and say, “OK if you want to do that in three years, we got to start now to be able to prepare the runway and prepare the foundation to be able to support those things in future, or we’re going to get hung up and be unable to carry forward.”

Bruce: That actually brings up another question. I know every company is different and every retail organization is different, but you ran a pretty big one. Did you have different teams responsible for back office, data center, cloud operations and then a different team for the stores? How did you manage that, or how do you think most retailers think about that today? Is it the same people, same decision process, or do the stores get some other type of scrutiny?

Paul: I think to some degree there is some specific scrutiny around the applications at store level. I think, again, depending on the size of the retailer and the size of the IT team and infrastructure supporting it. But you don’t want to lose sight of the importance of the store and the store environment and what it ultimately needs to be able to support to meet the needs of the business for the customer. At the end of the day, that’s what it is. Retail is a very simple business, but it is 100% focused on the customer and on delivering, putting your best foot forward for the customer every day. And so having that focus from an IT perspective, being supported in terms of the store applications and the store environment. Yeah, there was always a group or a sub group that was focused on the store pieces and the store applications as opposed to those focused perhaps on, maybe the data center operations or, supporting our distribution centers for example, that were other big consumers of IT power and know-how. But the stores certainly have their own unique place in that value chain and in the importance of the business.

Bruce: Would you say that you put your most experienced, most talented people on the data center side or the store side? I’m just kidding. You don’t have to answer that question. At StorMagic we have a lot of customers in the retail space and something that we hear a lot is the cost of downtime, particularly at the individual store level. Do you have any thoughts, any stories there, or any advice for other retailers out there around how to avoid it, how to deal with it, what to do about preventing downtime, or the cost of it?

Paul: Yeah, absolutely. I don’t remember the costs offhand at the top of my head today, but for sure, downtime at the store was, a massive red flag, “all hands on deck” kind of scenario if that ever occurred. And there’s so many variables or pieces of the puzzle that can contribute to that. And so, very, very costly for a retailer to lose, and out loud again, you could argue, “Oh well, on a Monday afternoon in January, it’s maybe not as bad as a Friday afternoon leading into a long weekend, etc.” but it’s still important. And there’s still business being done on every day of the week in every one of those opening hours at store level. And so, it’s absolutely critical to be up and running at store level, to have the technology and the infrastructure there to support being as highly available as possible in that environment. And like I said, lots of variables, whether it’s connectivity, whether it’s applications, whether it’s updates or refreshes there. There were any number of things that over the years of my tenure there that triggered unexpected consequences by times. And whether it was a simple upgrade to something, crossing paths with something else and something going down. But those were always high stress, high urgency environments when something like that would occur because you don’t want the stores to be unable to serve their customers, particularly at the point of sale. Something in the back office, you could navigate with a little bit more patience perhaps, but not really, because the store operation, it’s also dependent on all of their tools being available. And if you have a truck backing up to the door full of goods and ready to be offloaded and received, well, you can’t do that if the system in the back office isn’t working. So, critical really on all fronts, paramount at the point of sale. But something you didn’t want to see was the store being down for sure.

Bruce: One thing that we hear a lot from our customers, and one of the reasons StorMagic gets a seat at the table a lot of times is that we focus a lot on simplicity of tech and the elimination of the need for resources at the store level. Is there anything there? How did you do this in your career? Because, I assume you can’t afford to have human beings in every store dealing with things. How did you deal with the remote nature of stores and the OpEx associated with that?

Paul: Yeah, absolutely. Your payroll is your largest expense beyond your product that you’re requiring to resell. In worlds of extreme competition and in tight margins, particularly in the businesses that Giant Tiger played in, in my time there, you don’t have the luxury of having extra bodies or hours to spend on IT resources. So, you try to make decisions that are supportive of a very lean operation, all the way through. Supporting stores across the country from a central location, all of our IT folks were based in Ottawa and we had stores all across the country. So, you had issues with stores opening earlier than Ottawa, folks coming to work at one end of the country or staying open much later on the other. And it required a lot of creativity around, the helpdesk, responsiveness and so on. Just to be able to respond to it. But even then, without, the benefit of some of the modern software and tools that exists, like StorMagic today for example, you were dependent on hardware being shipped back to a helpdesk and a fresh server being dropped on the next truck, going out to a store. So perhaps one of the sales lanes, one of the POS lanes might be down for two days while you wait for that exchange of equipment and those sorts of things, just because you don’t have the resources there, or you couldn’t have necessarily someone local coming and mucking around in it, so to speak. So yeah, there were limitations for sure. And that the challenges just with the distributed retail network and, how to be able to support it in an environment where you just don’t have excess labor dollars to spend.

Bruce: Yeah. One thing that hit me when you were just talking, your experience has been in a large retailer. Your experiences. I’m just wondering what it’s like in terms of making decisions on purchasing large IT implementations. And I just wonder, was there the adage of, “well you won’t get fired for buying from IBM because you know it’s going to work”, kind of thing, but it’s very expensive. Or what about small vendors? Did you ever give smaller vendors a crack at your business because you can save a lot of money? What’s the big versus small vendor idea? Have you ever struggled with that or have you ever dealt with that?

Paul: Yeah, that’s a great question because it would come up, certainly from time to time, as we would have explored new opportunities and procurement opportunities really throughout the business with respect to IT over time. And there is that trade off discussion that happens for sure where you’re looking at a proven big name which carries with it really the assumption that it’s going to work or fit what you need. But often we found, the niche plays, the innovators, the smaller upstarts, if you will, that didn’t have the cachet of the big brand associated with them were much more responsive to us as a customer to be able to get something that actually met our needs as opposed to some big system that would do the most of everything, but maybe not exactly what we needed in our environment. Our environment had some uniqueness to it. And so there were certainly opportunities where we did explore those that were well respected in their industry, but maybe were a smaller player at the table and had strong ratings from those like Gartner and the like, where their technology was proven and they had references that could be provided but maybe weren’t as well known, because often the solution could be tailored a little bit better or was just more bang on to what we were looking for, and at the same time, more cost-effective. And as I said before, a discount retailer with very thin margins, cost was a very important factor. And so, yeah, it required perhaps a little additional diligence upfront in vetting someone that maybe didn’t have the cachet of someone else, better known perhaps in the industry, often that was perhaps selling it up the chain, so to speak, from the IT group to myself or from myself to the board if it was a very large purchase, for example. But well worth the effort ultimately. There were plenty of examples where you either, get in on the ground floor with something that is established and about to take off, or just exploring someone that maybe was a little bit off the beaten path from a brand recognition perspective, but for sure delivered quality product. And those were the wins that you hoped you found in the procurement side.

Bruce: Yeah, that’s something that we find all the time, is that I’ve worked at big companies, I’ve worked at Dell for a long time, and now I’m at a smaller company and, it’s just different. In that we can build more direct relationships where we’re able to move on a dime for our customers. We can develop something that’s specific for their needs. We give them the attention. And I’m not saying big companies are bad. They’re good too. It’s just sometimes there’s a good fit between a large vendor, I’m sorry, a large end user and a small vendor because we can deliver specific things for their needs. So, I definitely hear what you’re saying.

Paul: Yeah, there were some great partnerships that developed out of that, just from that nature of the smaller, agile, vendor working together and great success that way for us.

Bruce: All right. So, I don’t have any last questions for you. The only thing I’ll leave you with is, is there anything that we missed that you’d like to mention, or do you have any last bits of advice for any other retail execs out there that are listening?

Paul: Well thanks a lot for having me on today, Bruce. For sure I enjoyed the conversation. In terms of advice, I think as I said before, retail is a very basic business with a lot of detail associated with it. And so, it’s imperative to have clarity of vision, clarity of accountabilities, and to always remember to focus on your people. And at the same time, be on the lookout for opportunities to save money when you’re setting the course and charting the course on your transformation journeys forward or on your growth path forward. You got to have the foundation in place to be able to support the shiny objects that are undoubtedly coming from loyalty, or from marketing, or from operations that need to be layered on to the systems and to support the customer journey. Without a strong foundation underneath on the tech side, able to scale, able to be reliable and also to be very simple for users in the field at store level, you’re going to run into problems and delays and not be able to achieve on those customer facing pieces. So, it’s important to not put the end before the beginning. Begin with the end of mind really when you’re looking at how set yourself up. So, thanks a lot for having me.

Bruce: Awesome, Paul, thanks so much for joining. Really appreciate it. Thanks for on the insight. I’m sure everyone listening is happy that they did. And for those of you out there, thanks for joining and we’ll see you next time.