Last week, Tom Nolan, who became CEO of the Kendra Scott brand in February, talked with JCK about the future of the brand. Here, Nolan—a veteran of Ralph Lauren and Condé Nast—discusses coping with COVID-19, what’s made the brand successful, and if it will ever go public (or upscale).
JCK: How did your company navigate the COVID-19 pandemic?
Tom Nolan: We had some pretty significant international expansion plans leading into 2020 that were derailed because of COVID. In hindsight, that was a good thing as it allowed us to really focus on our core [business] and expansion here in the U.S. and North America.
We have spent a lot of time building and firming up our team. We have an amazing organization, top to bottom, really talented and terrific people, that we’ve worked on developing and training.
We know that the customer is our boss. She’s the person that ultimately signs our paychecks. We want to make sure that, wherever she or he is, we are there for them and can cater to whatever their needs are.
The retail landscape shifted pretty materially last year. Consumer habits changed. We are a very nimble organization and were able to move really fast. We’re not afraid to take risks. We accelerated a lot of technology applications like buy online, pick up in store.
We have a new clienteling platform, Yellow Book, that we’re launching in the next couple of weeks. That lets customers interact one-on-one with one of our stylists. It’s reacting to the new world we live in, and making sure that we deliver the same level of experience with someone that may be in their living room, that we do in our retail stores.
Those kinds of things we pulled far forward and launched. We were able to meet the customer where she was and I think it served us really well. At the same time, our business got healthier. We just had to get smarter about operating expenses and how we run the business.
Our business landscape shifted, as many did, to a higher propensity online, which we were planning for anyway. But at the same time, our retail business and wholesale landscape also got galvanized and grew and is stronger than it’s ever been before.
How involved is your founder, Kendra, in the company now?
In her new role—it’s not even really a new role, it’s the same role that she always had—she has more opportunity to focus on design, philanthropy, and the consumer experience, the three areas that she’s most passionate about, and the three areas that she’s always spent a lot of time on.
With those three things, she is still incredibly active, even more so now than she was before. But now people on the outside can get a glimpse of what she’s like on things like Shark Tank, and that’s only the beginning.
Her name’s on the building and she’s always going to be the face of the brand. She always has been, she always will be. That’s only going to grow, now that she has more time to be able to do more of those things. We could not be luckier to have someone with her talent to be the face of our brand.
We hear a lot about companies going public, especially through special purpose acquisition companies (SPACs). Could that be of interest to you?
I’m certainly well aware of what’s going on in the marketplace because it is prevalent nowadays. We’re really just focused on the business that we’ve got ahead of us, really focused on reimagining retail, whatever that looks like in the future, and continuing to accelerate the momentum that we’ve had.
If we look to the future, we’re going to see how better to scale our business. If we keep doing great things we’re going to have a lot of great opportunities, and those things will be among those opportunities. Right now, we’ve got our head down, focused on running the business and making sure our customer’s happy.
Could you ever move the brand upscale?
I’ve got a lot of women in my life. I’ve got two daughters, a mother, sisters, and my kids range from 4 to 17. My mother is almost 80. All of them love our brand.
What’s amazing about Kendra Scott—and this is really where we have unlimited blue-sky opportunity ahead of us—is our product really speaks to every woman.
We already have upscale product, we sell fine jewelry, we sell demi-fine jewelry, so our price points go up to a couple thousand dollars. Kendra is a Midwesterner. She started this business with $500 and a dream. She saw white space in the marketplace, because she likes nice things but couldn’t afford them.
We want to be accessible. We know who our customer is. Sometimes where brands get a little out of sorts is, they forget who their customer is and think their customer is somebody else.
Our brand is able to scale to a very affluent customer who appreciates what we do, as well as somebody less affluent that has to stretch for our average price point, and we’re happy to accommodate all of them. I’m very happy with where we’re positioned, and where we are right now.
You are primarily a direct-to-consumer brand. Are you having some of the same issues others are having with digital advertising, as far as consumer acquisition costs?
When everybody moves to one area, and there’s not a lot of supply, and there’s a lot of demand—[which is what’s happening] with social media and digital advertising—things are just going to get less efficient as more people are putting stuff in the same pipe.
We knew that was going to happen. We built a plan to get ready for it. We have seen a little bit of it. The beauty of our business is, with the 120 retail stores that we have, we’ve always been a very local brand. We want to engage with and really dive into our communities, whether that community is SoHo in New York City, or here in Austin, Texas, we want to feel we’re part of that local community.
We’ve always been able to be more efficient and effective because of that connection that we have with our customer—it’s allowed us to navigate this little bit. We have an amazing marketing team and we’ve had to alter our course as it relates to some of these things. But we knew it was going to come. We knew we would have to be more efficient. We’ve built a business around that. It’s par for the course.
Do you see yourself opening more than 120 stores?
Retail is always going to be a very important part of our brand, because it allows us to interact with our customer in a way you can’t do on a website or through a wholesale partner.
It’s created some pretty significant efficiencies and inventory in the marketplace in cities that we want to be in. We know that we’re going to be expanding our retail footprint this year. To what capacity will really depend on the market.
The beauty of our business, which is different than other businesses I’ve been in, is we don’t need large footprints. Our average store is in the neighborhood of 1,500 square feet. We made a very conscientious decision early on to focus on outdoor centers, which have navigated things well.
Is there any kind of special insight or trait that you think Kendra had that made her successful?
There’s a commonality among very successful founders, which is an inability to quit, and a doggedness, and a desire to solve a problem. Kendra has all of those things and then some.
A lot of companies have nice product and philanthropy, but I’d argue that not a lot do it the way that we do it, because it’s who we are. A lot have reacted to the marketplace and realize those things are important and moved toward them. We’ve done it from the very beginning. Kendra always had a very strong point of view that she would always have something to give.
She embedded herself in her local community, which was Austin. She was a single mom, literally selling jewelry out of a box door-to-door. In spite of not having the inventory, she always gave it to people because her heart is so big and she cares so much.
By the time we opened our first store in 2011, there was a line around the building, because that community wanted to support the person that supported them for so long. That tenet has stayed with us for the last 20 years, and it’s never going to go away. We do it in the most authentic way I’ve ever seen a company do it, and I’ve worked for some neat companies.
Our customers know they’re not just a transaction for us. They know we genuinely care about them. Customers are smart. You can’t fake it. We don’t have to try, because it is just who we are.
Kendra has always been a bit of a risk-taker. She’s zigging when everyone else is just zagging.
To your point before, are we going to be more affluent? Not really. We know who our customer is, we love her, there’s a lot of them out there.
We don’t try to be something we’re not. The same things that made us successful in the beginning are making us successful now.
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