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The Innovation Table | Karthicka Krishnasamy on Simplifying Complexity Pt. 1

By June 29, 2023February 8th, 2024No Comments
The Innovation Table | Karthicka Krishnasamy on Simplifying Complexity Pt. 1
The Innovation Table | Karthicka Krishnasamy  on Simplifying Complexity Pt. 1

Continued in Part Two
Karthicka Krishnasamy serves as SVP, Merchandising Operations for Michael’s. She is responsible for leading merchandising planning, inventory, pricing, space planning, category management strategy & data analytics areas within the company.
Prior to this she spent last 7 years at Walmart Inc., in various leadership roles. Most recently Karthicka was VP, DMM leading the OMNI channel merchandising strategy and execution for categories such as bed, bath, housewares, small kitchen appliances, mattresses, furniture, outdoor power, tools, automotive oil, home improvement, luggage, tires and battery. Prior to this she served as VP Pricing, Exit & Auctions for Sam’s Club and had the responsibility of transforming Sam’s Club value positioning in the market through disruptive prices and driving member loyalty. Her responsibilities also included overseeing the company’s merchandise exit functions such as liquidations, RTVs, auctions etc., Karthicka started in Sam’s Club 7 years ago as a Senior Planner for ladies and kids apparel businesses. She quickly climbed the ladder from a Merchandise planner to a highly transformational, strategic leader as the Director of Planning and Inventory for apparel, accessories and jewelry. She has been instrumental not only in improving business efficiencies but also focused her time and attention training, developing and promoting diverse talent. She is best known for constantly challenging her associates to change the way they think and work beyond their comfort zones in order to reach their fullest potential. She believes no matter who you are or where you are from, all you need is a will to make change, and a determination to succeed.

Prior to Walmart Inc., she worked at Sears Holding Corp leading various merchandise strategy and planning initiatives to maximize topline growth and reduce SG&A. Telecom and Retail leading major enterprise initiatives, developing and executing strategies to achieve strong financial results for fortune 500 clients across the globe.

A philanthropist at heart, she also represented Walmart Inc., in a non-profit immersion program at the Regional Food Bank of Oklahoma City where she helped them craft their future strategy.
Karthicka holds a Bachelor of Engineering in Electronics and Communication from PSG College of Technology in India and a Master of Science in Information and Communication Sciences from Ball State University in Indiana

Edris Bemanian: Thanks for joining me, Karthicka. How has your engineering background informed how you go about your job?

Karthicka Krishnasamy: I’ve thought about this quite a bit, because a lot of people say, “You’re an engineer…what are you doing?!” [laughs] I think the first thing is problem-solving. As an engineer, that’s your foundational task. You’re building stuff and you’re making things better and more efficient, and you’re finding the fastest way to do it. That’s the same kind of approach I take in every single job.

So, it might not seem like it, but the engineering mindset translates beautifully. I’ll give you a classic example. I remember at one of my previous companies, a colleague was presenting to me and said, “Here are like 80 different templates, and here’s how everything works.”

And I was immediately like, “Why is it so complicated?” Put it all up on the whiteboard and we’re going to make it simple. We’re gonna take these 80 templates and we’re going to get four. I think it’s possible.”

And he said, “Woah, we’ve never done that here. And this is a 40-year-old company.”

Engineers are all about optimization. Getting to the answer fast, quick, in the least amount of work, and for the best ROI. That is my approach to everything. And we did get into four templates and he was very surprised! When I came on board, he gave me a 70-page deck to bring me up to speed. Now if somebody asks about signage he hands them a single page.

EB: That’s a pretty amazing transformation. Is it fair to say that in some ways you see yourself as a process engineer first, then as Merchandising & Analytics executive?

KK: I would say I see myself as someone who can learn how things are done today and rearrange them in a more creative way.  Whether it is merchandising, whether it is pricing, or space planning, or whatever functional area it is. It’s about looking at something and using creativity to rearrange it in a way that simplifies complexity.

Simplifying complexity, by the way, is my favorite model. It’s the hardest thing to do, but if you can do that, you will stand out. There are so many people who are knee-deep in data and can talk so much about it, but they cannot pull themselves out and say, okay, so what? Tell me the two things I need to know. 

EB: Given that you have led merchandising operations, analytics, and pricing, what drew you to Michael’s company?

KK: Art and crafts is estimated to be a $40B industry in the US and over $120B globally. That’s the first thing I looked at. I previously worked for retailers in the food, consumables, hardlines and general merchandise categories. I’ve never worked in a category killer, which is what I’m going to call arts and crafts. So, I thought, it’s a very niche product category and it has so much assortment complexity. You have a long-tail assortment at Michael’s. We have about 45,000 SKUs just in our core business.

So, it’s an interesting niche category and Michael’s is a market leader. Anytime I’ve ever mentioned Michael’s, even before I worked for Michael’s or had even been inside a store, people always say “Oh we love Michael’s!” I can’t think of another brand where everyone instantly says, “Oh my God, I love it!”

The second reason was the CEO’s vision for the future. I knew the CEO from my Walmart days and he had a great vision for Michaels. And I know he’s not someone who just has a vision, but he would also execute that vision flawlessly What better than to follow a leader who is talented and has a great vision and be a part of that vision and execution?

The third thing when I was considering Michael’s was that I got a broader role. Other than buying, I have all merchandising support functions, and the ability to lead planning, analytics, pricing strategy, space planning, and inventory. It broadened my scope and I now have a team of over 180 people in my organization. Breadth always excites me because you can start connecting the dots between all these different functions to problem-solve for the overarching P&L.

EB: Let’s go back and talk a little bit more about the positive affinity of Michael’s. What do you think drives that? Because I’d never thought about this before, but you’re right; everyone seems to unanimously love Michael’s.

KK: People love creative stuff, right? That’s part of it. It’s making something, it’s creation, and that’s something people inherently love. And Michael’s differentiates itself with a broad assortment and amazing quality.  

You can buy from our assortment based on your needs. Artist Loft, for example, you have level one, level two, level three. So, if you are a pro artist, you go and buy your level three assortment, or if you are just trying to dabble in art, you go for level one. So, I think customers really appreciate the choices.

EB: Interesting. So, it’s a niche, as you said, a big niche. And within that, you have the assortment segmentation that appeals to different levels of interest expertise within the niche. And it sounds like you’re also saying you have accessibility to different price points and different demographics in that sense.

KK: Correct. It’s a good mix. And people just really love coming to Michael’s. It’s a favorite pastime! [laughs] People are like, “It’s Wednesday, I’m going to take my kid and I’m just going to stroll around Michael’s and see what I want to buy.”

And I’m like, “Really? Okay!” I had to learn quite a lot about this category when I joined Michaels because I was pleasantly surprised by such brand affinity and love from our customers. In all my travels I’ve never heard even one person say, “I don’t like Michael’s.” I have worked for companies in the past where you encounter opposite views, and we all love or hate. But here’s it all love. I’m just fascinated by it.

EB: That’s amazing, and that’s something I’m sure doesn’t happen by accident. How would you describe the culture that the leadership team is building and how does it contribute to the overwhelming positivity associated with Michael’s?

KK: The executive team is focused on transparency and that has built a lot of trust. There’s trust between the operators and the field associates and the Home Office associates and a good flow of information.

I’d say a big part of the culture is transformation. We recently launched a private-label credit card. We launched a third-party marketplace to add more items to the assortment. And now we’re rolling out self-checkouts. We are reimagining arts and crafts and how to set ourselves up for success in this niche product category.

So, I would the culture is transparent, trustworthy, and transformational. We’re anchored on these three things. We’re focused on driving results while making sure that we are taking care of our customers and team members That’s the kind of leadership that is getting built here at Michaels and it’s why I love being a part of such a great executive team.

EB: That sounds like a great test-and-learn culture with marketplaces, private label cards, and all of that. Are there any interesting insights that have come out of launching a marketplace?  Like, “Oh, wow, people who buy our products also like to buy electronics? We never thought about that,” or anything along those lines? 

KK: It’s very early because we just launched it in February and we’re certainly playing catch up. I am pleased with the traffic, interest, and reviews so far on our marketplace products., I can’t yet pinpoint ‘if people bought this product, then they bought this one’. One thing I am sure of is: “We have increased the choices for our customers and will be a one-stop shop for all things arts and crafts in North America”.

EB: That makes sense. Just the fact that you get engagement on the marketplace is step one. And to see people doing that in a niche category is a big signal. What’s your favorite Michael’s product? 

KK: Oh…pretty much anything that sells.

EB: [laughs] I love it! You said transparency is one of your core values and that was pretty transparent.

KK: [laughs] Yeah, pretty much anything that sells. However, personally, as a customer, I love our Halloween merchandise. Halloween is my favorite holiday and I think we do a fantastic job. We have some amazing products.

EB: That holiday layer with arts and crafts is interesting. What are the biggest differences between apparel, club, and arts and crafts? And I understand that’s a big question.

KK: Yeah, it’s a big one…I’m just sort of thinking it through. There are three things that stand out for me: “Traffic, Choice, and Value”. If you really think about the club model, it’s much easier to drive traffic. Traffic is the most important thing, just getting the customer into any store. In club, you go there because you need milk, you need eggs, you need essentials. It’s a need-to-have business. Arts and crafts is very much a nice-to-have business, so you have to give more thought to getting customers into the store and it’s much harder to drive traffic.

The second thing is, we have such a long tail of assortment and it’s a lot of work to balance those choices. Even with such a large assortment, people always want more choices. And that’s the reason why we went after a marketplace, to see how we can add more choices for the customer. And I have never worked in a category where I have this long of a tail.

Customers could completely walk away from doing a project because I did not have a specific kind of thread or screw for jewelry making. This might happen .00001 percent of the time, but people will completely walk away.

Which is totally not the case at other retailers I have worked for, which is like “Oh, they don’t have that cereal, let me buy another one,” or “Oh, they’re out of tomato soup, I’ll get this instead.”

The level of customer choice is just so different. I had to learn and I was like, “5 billion, 45,000 SKUs…how complex can it possibly be?” Boy, I was wrong! It is complex. And you can’t just randomly cut SKUs or add SKUs. You must be very thoughtful.

And the third thing is the value proposition. We already talked about brand and loyalty and whatnot. It’s a very HI-LO which is very different from the businesses that I walked away from. You compete on price in a different way. You know, how is your portfolio mix across fast-turning and slow-turning items with a long-tail assortment? It’s very different from running a traditional retailer who has more categories to play with. So: traffic, choice, value.

EB: You engender a ton of loyalty because you’re Michael’s and you’re the place to go, but if you miss one particular item and that customer has to go elsewhere, you’re risking them doing more of their basket elsewhere. So, there’s the constant pressure of SKU rationalization and decision-making and loyalty-building. Sounds tough!

KK: It is. And on top of that, it’s nice-to-have. I’m coming in for yarn, or a craft brush, or craft paint, so I can do a project. It’s not the same as, “Oh, I definitely need milk, I need eggs, I need to survive!” [laughs]

EB: Right, it’s not substitutable, and you don’t have the same shopping purchase frequency.

KK: Yes. Transference is so hard to measure. Substitution is so hard to measure. And when you try to optimize your assortment, these are the things you’re thinking about.

EB: You must have an incredibly interesting customer segmentation, right? Like the different personas and profiles that you build out?

KK: Yes, because you have your craft customer, you have your art customer and you have someone with kids, and then you have someone who comes in just during key seasonal time frames. And then you have the decor piece to it, and technology, which is also part of crafting and whatnot. So, it’s a wide variety of different customers in one box.

EB: One of the most interesting trends to me personally was when I first saw retailers like ACE Hardware bring in candy and soda at the check stand. It boggled my mind, and every time I went into my local ACE store, I’d ask the manager, “How many people bought candy and soda today?” And every time I asked, the number kept going up. So, it’s increasing purchase frequency and trips with contractors coming in regularly for snacks. It sounds intuitive and like a no-brainer now that it’s done but I recall it feeling very forced many years ago when it first came about.

KK: We do that too. We have candy and snacks at the front end.

EB: Do you think that’s a bigger kind of contributor to trips and revenue than people might think?

KK: Yeah, I think the lines are blurring between different verticals, right? You might wonder, “Why is an arts and crafts company carrying soda and snacks?” But what if you have your kid with you and the kid starts crying and you need a distraction? Or maybe you’re thirsty and you don’t want to go to another grocery store and then get back and continue shopping. It’s about catering to your customers’ needs, and behaviors, and evolving with them.

I very recently heard that restaurants are now selling T-shirts and merchandise and they’re making money out of that. Who would have thought that restaurants are going to have mugs and t-shirts?

So, the lines are blurring. And it’s also getting harder and harder for big companies to make money, so they’re trying to diversify their portfolio.

EB: Yeah, that’s a great strategy. Speaking of diversifying, I’m curious to see down the road what Michael’s version of GeekSquad will be. There’s got to be an arts and crafts version of that, right? Where you can go in and have arts & crafts experts curate things for you. 

KK: Yeah maybe so!

EB: Your background and skill set seem very transferable across different industries, and I’m sure you’ve been approached by a lot of different people for different jobs. What’s motivated you to stay in the retail space?

KK: The pace of change. I love it. The moment you think you know what the customer wants or expects, it changes. The constant change in retail is not for everybody, but I really like change a lot, both personally and professionally. I think that’s what has motivated me.

I used to work in the software industry, I consulted in insurance, defense, telecom, and for lack of a better word, it’s kind of boring. Here you are very close to the customer. In fact, you are the customer, so you can empathize with the problems that a customer would face. Whether you’re working at Walmart or Sam’s or Michael’s or any retailer.

The pace of change is so fast. So that’s the reason why I have stayed in retail and I wouldn’t have it any other way. It’s so much fun.

EB: How has omnichannel evolved over the course of your career?

KK: That’s a tough one. This is the subject of a whitepaper that I still regret not writing a decade ago when I was still in consulting. Think about going into a grocery store a decade ago. They never used to have products like gluten-free or organic all in one aisle. You used to have to hunt everywhere and finally get to the product that you need

I remember as a consultant asking one of these retailers, “Why can’t you put everything in an organic aisle, or a gluten-free aisle, or an ethnic aisle?” And they said, “Oh, no, no, no, no, we want them to take the cart and buy things along the way or we’ll lose the basket. If I put everything together, they’ll just walk in and they’ll just walk out.”

But that was convenience!  And guess what? Right now, if you go into any retailer, everyone has an organic aisle, everyone has a gluten-free aisle, and they’re trying to put all the ethnic stuff together.

What happened? Because that time for them, it was all about price and adding more to the basket, putting the milk at the end of the store, and retailers were not open to the change.

And I’m saying that because it’s the same thought process with eCommerce.  Retail executives were skeptical 10 or 15 years ago when I brought up eCommerce in the retail space because they thought people would never stop coming to the store.

And there is some truth to that. Remember, five, seven, eight years ago we all thought, “Oh, the stores are going to be dead! Everything is going to be on e-commerce and everything’s going to be only online.” And then suddenly everything changed, and we were all talking about multichannel.

And then Covid came and disrupted the heck out of everything…and now everyone is behind Omni. No matter how or where they shop, it’s all about how you can remove friction for the customer, provide the best value, and get it to them as fast as you can. 

Those three things have become extremely important. And to further complicate those three value propositions, now people are worried about personalization. Like, “How much do you know me? Why are you sending me all this data and information and ads? You should know me so well because I’ve been shopping with you.” So, the expectation has changed again. Everything has evolved so much in the last 15 years and it’s just fascinating to watch. It’s amazing how things have changed, and things are going to continue to change.

EB: So, you’ve got the customers, as you were saying Karthicka, who want the treasure hunt experience and are going to come into the stores. And then you’ve got the customers that just want the convenience. Do you see those blending together, where you’re going to be introducing the treasure hunt into the online journey?

KK: You have to it’s almost like table stakes to think about the experience.

I think of all these drone deliveries that have recently popped up a lot. Imagine you’re hiking somewhere in Oregon. I’m just going to take Oregon, for example. You’re hiking and suddenly you need a snack. Who is the retailer who’s going to show up and get you that snack or the water or a drink? When you are sitting on a mountain hiking and you ran out of food. That’s the retailer who’s going to win in the next decade.

Continued in Part Two