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On Episode 9 of Techie and the Biz with hosts Erika Silber and Max Silber of MetTel, guest Ken Feyder, CIO, Hermès Americas, discusses the evolution of retail IT and how omnichannel shopping is keeping the store relevant. Watch more episodes from the series below or subscribe to the audio podcast.
This is Techie and the Biz, a podcast to explain and simplify how business technology is changing and why it can benefit your organization.
Americans are projected to spend over $110 billion this year on luxury brands, but have we ever stopped to think about the anatomy of retail IT, and how the technology behind the scenes plays into the luxury buying experience?
To help us unpack this, we’re excited to be joined by one of my good friends, Ken Fader. Ken has spent his career leading and innovating at some of the most well-known retail brands, and currently serves as head of IT in the Americas for the global luxury brand, Hermes. Welcome Ken.
Hi. Thank you. I’m so excited to be here. Thanks for having me.
Awesome. To start us off, we would like to learn a little bit about your current position as well as your professional journey in tech.
Sure. Um, so I’ve been in the retail IT industry for nearly 25 years in different kinds of retailers and brands. So today, yeah, so today I lead the America’s IT team here at Hermes. Um, that means we support not just the US but also Canada, Mexico, Brazil, and Argentina. Um, I’ve been here for a little over four years. Um, I’ve seen the company grow in size and complexity. Um, it’s been an absolutely wonderful journey. I’m very privileged to work with some of the nicest and smartest people you’ll ever meet. Um, before Hermes, I spent nearly decade of my, uh, life with Coach, um, various, uh, roles and capacities from project management to international expansion. At one point, um, one point I was leading the team, that managed Coach Europe technology. So that, that was interesting time because I was based in New York. My team was in London, and my boss was in Shanghai. So, um, Um, a lot of travel or a lot of, uh, zoom calls, I guess.
Oh, yeah, both. Exactly. Yeah. Uh, let’s see. Before Coach I was with Abercrombie and Fitch. That’s my memoir material, ’cause that was Abercrombie and its heyday. So, um, and another retailer called Value Set Furniture before then. So you see pattern here. What I’ve been doing.
Interesting was, was it always your goal to end up in technology?
Uh, actually, no. Um, I don’t know if this was a fate or happy accident, I guess. So if I were to go back to prehistoric times here, um, my undergraduate Degrees, economics and pre-law. Okay. Um, and I got an internship at IBM. Um, back in the day, IBM had this, um, branch just north of the city here called Advanced Business Institute, right? So talk about big blue bubble of technology. Everyone was tech savvy. Everything was working perfectly. Um, it was phenomenal. So sort of got hooked on technology there. Um, and I made an assumption that the rest of the world operates like this. Everyone’s tech savvy. Um, and then one day I wake up, I live in Columbus, Ohio, and I work for a company called Value Set Furniture, discount Furniture Retailer. Um, and I realized, you know what? No, not the entire world is tech savvy. Uh, and we’re talking about, you know, again, I’m gonna start aging myself here, you know, mid nineties, late nineties. So some of these store locations, the extent of technology innovation, there was the newer fax machine as opposed to the older one. Um, but I had a wonderful team and I had an opportunity to really see an action very quickly how technology can make dramatic change in retail. Uh, and so I, I got hooked, um, because that was in a way shocking, but in a way, uh, eye-opening experience. And, um, I’ve been at it ever since.
Wow. So, I, so I think on the heels of that, most people are probably unaware of what it even means to run technology for a retail company or a brand. Can you explain what is it that your team does and what are the key components of retail it?
What is it that you do? Um, you know, I ask that I get asked that a lot. Ask, ask in a, in a different way. Yes.
What is it that you actually do?
No, I do get asked that a lot, from people outside the industry. Because look, we’re not a tech company. And, and I get that. I think as, as customers, when we, you know, walk in a store, um, our focus is really on the product or on the in-store experience, not really on technology. I think most people can probably relate to, you know, the obvious stuff. Okay, well, you are in the store. There is the point of sale register. Well, that’s technology. Okay, I get that. Um, e-commerce, when you’re shopping online, the website, again, technology, those things are pretty evident and pretty obvious. Um, but that’s just the tip of the iceberg. So, so if I were to look at my current team, um, we have, uh, an IT operations team. Okay? So, uh, among other things that’s help desk that operates seven days a week to support our stores and corporate departments, um, and infrastructure teams. So we run hundreds of servers, storage, redundancy of our data centers, firewalls, networks, telephony, all, all of that. Um, there’s a dedicated cybersecurity team. Okay. Um, there is another group that’s laser focused on logistics technology. So lots and lots of systems that manage the inventory flow through the distribution center and into the store. As well as, like I said, e-commerce fulfillment. We have a group that’s focused on business intelligence and analytics, for example. Um, and I’m not talking about financial reports, okay? We’re talking about, um, interactive dashboards on, on mobile devices that, uh, present the data to our field personnel, somewhere corporate, um, functions that allow business to make educated decisions based on the data trends. Um, and then ultimately better service our clients. Um, of course, we have an engineering team, right? So developers, um, that work on new applications, existing applications, integrations between systems, um, and that’s everything from ERP to sales, reporting to inventory management. I think the difference between our, our industry, um, and let’s say pure tech companies is the sort of intimate relationship between technology and the business objectives, right? So you have to remember we’re retail company first. We’re not a tech company. So that means everything we do is to support the business. Um, so it’s not just about, you know, new shiny objects. It’s about the return on investment, uh, and the impact that technology has on, on the operation.
So maybe for this particular order, we’re gonna go ahead and use UPS automatically without human involvement. Again, there are so many facets to this. And, and, and OMSA properly configured, OMS, uh, can make these decisions in split second, which will ultimately improve customer experience and improve profitability for the company. It’s very invisible to, to, uh, most people shopping online, but it can get pretty sophisticated. It’s really interesting.
Wow, that is really interesting. Yeah. That’s, that’s a lot of factors going in there. I didn’t even realize. I would never think that they would base it on loyalty, per se, but that makes sense. It could be, right?
So again, not every retailer is going to choose, um, how to build their algorithms, but if you think of a system that has access to all of those data elements and philosophy of different brands will dictate what does and does come into play, you could build the algorithm based on all of those factors to different degrees and configure it just the way you want it.
Hmm. I think I’m gonna have to focus now on where I, we’re gonna make you VIT loyalty. Yeah. VICI like that. But I do appreciate we know a guy. Yes. Yeah. I do appreciate the visibility of a company’s OMS. Like, I, like when I placed an order, I could see that it was shipped. I could track it, you know, just the other day, my son was fascinated that we placed an order on something that he needed at maybe one o’clock, and by eight o’clock it was at our house, which was a little surprising. And yeah, kind of like, I was honestly surprised that it was that fast. But I suppose that this, it all depends on the algorithms, and I was explaining that years ago. I don’t, you know, we used to have to wait 10 to 12 days for a shipment to arrive, and that was normal. There’s such instant gratification these days.
Yeah. Yeah. It’s interesting because some predictive analytics comes into play, um, especially for some of these kind of commodity retailers that can anticipate that this particular zip code on average orders so many, whatever it is. So we might as well prepare it and get it closer to that location so we can fill those things quicker.
Wow, that’s so, that’s so smart. I wonder, is smart tech like QR codes, RFIDs for asset tagging, are they one of the most common technologies used in conjunction with an OMS, among others?
Yes. I, I think, um, RFID specifically has really matured over the last few years. By the way, if anyone’s not familiar, RFID stands for Radio Frequency id. Um, there are tags, uh, that work together with the readers. And essentially the idea is to provide you real-time inventory visibility. Um, and the technology has progressed, um, so much recently that that inventory visibility, uh, can be done now with like military precision accuracy at this point. Um, there are these fixed RFID readers now that can read these tags to as far as 30 feet away. Um, so one of the things, for example, so many use cases, but we no longer have to do what’s called physical inventory or cycle counts. Okay? When you have to close the store and whatever. So again, not every retailer uses this, and, and it’s not for every product, and it’s not for every brand. Um, but as far as technology is concerned, there’s so many use cases, like I said, there is that there is theft prevention, okay? You can also use these tags to confirm product authenticity. Um, in a larger stores where you have a large selling floor and you have, uh, inventory on the selling floor, it also helps to locate the product on the floor if it’s misplaced, right?
I’m sure you’ve experienced this. You walk in, you say, Hey, do you guys have this in my size? They look it up and go, oh yeah, we have one. Where is it? It’s not here, right? I don’t know. Someone misplaced it. We have it. That’s great. That’s super frustrating. So if that, uh, item has an RFID tag, the sales associate can immediately say, oh, it’s actually over here, here ago. Someone placed it with the jeans. I dunno. Um, so again, it’s maturing and it’s progressing fairly quickly, or a couple of interesting players in the marketplace today that, uh, push that technology forward. Um, QR codes, QR codes, you mentioned, they can be powerful too. So whether it’s product info or some storytelling, um, sometimes it’s how to videos. Okay. Um, again, really depends on the product. Um, but it’d be so much easier to scan the QR code. And there you go. YouTube university, right? You get to, uh, learn how this thing works and what it does. Um, lots of different, um, technologies in retail that collectively are all aimed at improving your experience in the store online. It’s interesting, when I think of information technology, it sounds like something on completely the opposite end of the spectrum compared to this magical world of fashion and luxury retail. How do you operate in an environment that has to bridge team members from both the technical and the creative world? Um, yeah.
So when I was working for a coach at the time, the CEO of the company, Lou Frankfort, um, he used to say that we’re trying to blend magic and logic, right? It’s well said, right? Very good. Um, well, yeah. So fashion retail is not like grocery retail, okay? It’s the want versus need. Um, and the product has to have an emotional appeal, and the brand has to resonate if you’re going to come and shop at a luxury brand. Um, and so what that means is it’s on me to lead the team to operate under the same philosophy as the brand we’re working for. And so if you take the luxury sector, obviously you can imagine that, um, customer service is important, okay? As a client walking into a store, you have certain expectations of customer service. So then people working in the store are attracted to that environment. And those people, our customers appreciate a degree of customer experience as well. They, they, uh, value that very highly. So as we build technology, let’s say for store personnel, we have to take an angle of how does that fit into their world. Um, so point is when we select particular technology, it’s much more nuanced than your call ROI kind of a calculation. Uh, when we make those decisions and make those selections, um, that true sense of the environment, whether it’s a store or a particular corporate department or distribution center, or whatever the case may be, the systems really need to complicate, uh, compliment, compliment, uh, that, uh, environment that if it doesn’t fit very well, it’s gonna get rejected. Um, and so I I, I guess one example that I can think of is, you know, how Microsoft is, is pushing the whole copilot thing. Um, well, shouldn’t a store system be a co sales associate or merchandise planning system, be a co merch planner? Um, so this is the uniqueness of retail IT versus other industries sort of blending art and science here to some degree. That’s what, to me, makes it interesting and special, um, right brain people and the right left brain people working together in the same building. Um, so it’s, it’s really fun. Maybe that’s, maybe that’s why I’ve been doing this for so long.
That’s fascinating to me that you have to go beyond the technology and actually talk about, uh, talk about the culture. You’ve worked for many, well-known, known brands as, as we said earlier, what is it like to work with all these different brand cultures? And did that really impact the, or how you worked and led in it? Again, that alignment to corporate culture, uh, company culture, brand culture is very important. Um, one of the things that comes into play if you work to do this properly is enterprise architecture, ea. Um, so the process in a sense, sort of break it down, starts with, okay, well, the first things, uh, first as an IT department, we really need to get a deep understanding of everything that the business does. So we’re gonna start with building a business capability map, okay? And we’re going to layer all the technologies that support all of those business processes, um, and then we are going to sit down with the business leadership and understand what are the business goals for this year, for the next five years, and so on and so forth. And we’re going to take that, layer that on top of our map and say, okay, well, in order to enable this business goal, this technology is going to be a big enabler. This technology needs to be invested into this technology becomes a focus. Um, so to kind of give you an example, um, if a company is looking to acquire more brands, okay, so sort of reflecting back on when coach was acquiring Kate Pate and Stuart, we, when it became that new tapestry, um, if your brand’s going to acquire other brands, are your systems prepared to be scalable and to be able to operate in this multi-brand environment? If, um, you are expanding internationally and now you’re looking to operate in different cultures and languages and time zones, is your technology enabled to do that? All of a sudden in terms of payments and currencies? And some countries like Brazil and Italy have some called fiscal at the point of sale. Um, then you have to sort of look at the nature of the business of the company. Um, so furniture company versus fast fashion, uh, retail company, the inventory, uh, movement or the velocity of the inventory movement is different. So the replenishment systems need to reflect the needs of the business there.
Um, product line, let’s say, um, you’ve been selling scarves, and then now you decide to sell shoes, well, that’s sizing, okay? Now, your merch team has managed the size curve, and so that you don’t end up in a store that’s got too many of size A and too few of size B. Okay, well, that’s analytics, maybe predictive analytics even. Okay? Um, uh, perfume. Okay, well, that’s flammable. Okay? So now you have to make sure your transportation systems and logistics are prepared to handle, um, that kind of material. Um, so on and so forth. There’s traceability of, uh, what product is made of. Some countries have restrictions on products based on their country of origin, um, even some states within the us. Um, so there’s a lot of nuances from that angle.
Then there is kind of a softer side to it, so you gotta consider your audience, okay? So, so you could close your eyes and imagine, um, sales associate at a Hollister store and at a car Kia store in different demographic, okay? So the systems and technology you put in their hands really needs to resonate with, with that audience. Um, so again, kind of goes back to, to be a successful IT leader in this space, you really need to have a really deep understanding of the philosophy of your brand and what is, what is it the company does, otherwise, the relevance gets lost. I’m getting all philosophical on you. I’m sorry.
That’s interesting. It’s, it’s really complicated. Yeah, I mean, there’s so many facets. What would you say is the number one challenge regarding IT in the luxury retail sector? In other words, do you think luxury brands would prioritize cutting edge tech focused on the customer experience, as you mentioned, or over software longevity or TCO, the total cost of ownership? Um, I mean, ultimate, it’s gonna depend on the brand. Uh, I think in the luxury sector, the TCO is a little too simplistic. Um, you know, again, customer experience is the key. Um, and if you think of a luxury industry, it’s really not transactional. Okay. Um, so there is a lot more to it.
That being said, though, before you get to these cutting edge, what I call shiny objects, um, there are some foundational components that really need to be in place and, and, uh, for a fair amount of brands they’re missing. Um, so I can think of a few things. First of all, there is what I call technical debt. Okay? Um, some of the core systems, like, like your ERP, enterprise resource planning, things like SAP, um, and lots of places are outdated, not capable of operating in that new environment. And so those are big, intrusive projects. ERP implementations typically take years. A lot of focus and sometimes come into play, uh, very differently in terms of the technology implementation where technology will dictate the business model, okay? Or at least that core model in some respects. So the change management of the organization, um, when, when you’re doing something like that becomes very, uh, very impactful.
Um, another thing I think that’s missing specifically in the luxury sector is some of the analytics, cutting edge analytics. Um, for example, what I, I mean, there’s an industry term called hyper-personalization, okay? Really getting to know who you are as a client and present things to you that way. Um, so free, let, let me give an example. Um, you, you are looking to buy something online, and there is filtering, okay? And a lot of it is, you know, not nuanced enough, okay. By size, by color. Okay, great. Well, we know who you are. How about, I don’t know, filter of belts that match the shoes I bought last month? Okay. We know your purchase history, we can probably determine your style patterns. Why is that not available? Oh, that would be nice. Um, yeah.
Uh, what’s interesting about it is that, um, I’ve seen a statistic that customers who use filters, and given that those filters present the right product are twice as likely to convert to a sale. So there’s commercial aspect to it too. This isn’t just about presenting with the right product. Um, so things like that. Uh, another opportunity, uh, huge opportunity. We talking about, you know, fulfillment experience, you know, talked about the OMS, um, but it’s not just about speed and quality of delivery. Um, it’s profitability too. Um, how do we manage returns? Okay. Some of the brands are looking at 20 plus percent returns. Um, and I’m sure you can imagine that, um, especially when it comes to ready to wear or shoes, people will go and, and buy three different sizes online, get all three shipped to them, try ’em on. Okay, that one fits great return. The other two, okay. Obviously not great for the retailer to have to manage what’s called the reverse logistics of managing those returns. Um, there’s, there’s plenty of opportunities around these foundational systems that really need to be solved before our sector of the industry can, uh, progress into something that’s, uh, a little bit more advanced. Um, different brands are focusing on different areas, and there is definitely some innovation that I’ve seen. Um, but we’ve got, we’ve got a lot of work to do.
Sounds like there’s definitely an opportunity for, uh, enhancements with all the data available now. So I like that. I think that’s to, to me, that seems really logical. We’ve heard over the, over many years now, murmurings of the brick and mortar retail store is dead, and how we’re gonna be buying everything online. Drones are gonna be, you know, dropping packages at our doorsteps. How do you feel about that? Yeah, I heard that one too. It’s such a, such a misconception. Uh, there’s all these articles being written about it and completely wrong. Um, I think the basis for some of that thinking is that whole notion of people want experience is not things, but what’s lost is that shopping is an experience, okay? Being at a store is an experience. Um, and I think there is kind of an narrow view of shouldn’t, like, the store should not be competing with e-commerce, they should be complimenting each other. Um, people wanna start, uh, shop online. People wanna shop in the store, people wanna shop on their mobile. People wanna shop on social media. People wanna shop using call centers and shoppable videos and all these things. It’s not one or the other. It’s all of the above combined, uh, with a single thread of a brand, DNA, um, making its way through all of those channels. Um, now of course, if you need to get some paper towels of from Amazon, you don’t need a store, Right? But in the luxury industry store is absolutely the key. It’s those interpersonal relationships, um, between the sales associate and the client. I, I think without it, you don’t have enough opportunity to come into a store and touch the products, oh, this is heavy, this feels good. And touch the silk, look how, how, uh, how great it is, uh, let alone smell the perfume. You know, try doing that online. Um, so again, these two things, uh, compliment each other. But also I would say some of the in-store shopping could be a lot like e-commerce. Um, one interesting example, if you’re, if you ever go to Hudson Yards, um, one of the stores there, a small store, um, it’s a brand called stands. They, they sell socks and things like that. As you walk into a store, you grab your own phone, you scan the QR code, turns your phone into the point of sale system, okay?