Episode 230: Behind Cutter & Buck’s Astounding Growth with Joel Freet, CEO

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew. Cutter and Buck is a brand many of us are familiar with, but like so many of our trusted partners, we know so much about their product and so little about their company, which is why I love talking with folks like our guest today, Joel Fried, the CEO at Seattle-based Cutter and Buck. Now get this, Joel's dream was always to work in the apparel industry. Both of his parents worked in the apparel industry. At the age of 8, he wrote an essay describing his dream of running a clothing company. He began as an intern for the tournament division with Cutter and Buck, but when it came time to apply for a full-time gig at the company, he was rejected not once but twice. Never one to back down, he applied a third time and he finally had the opportunity to work as an assistant to the tournament division in 1999. Now, over the next 15 years, he developed his leadership in several business channels for the brand, including golf, corporate, international brand development and licensing. And in 2014, Joel became CEO of Cutter and Buck. What a journey for that little essayist and rejected intern who today runs one of the most successful supplier businesses in both retail and corporate. Year to date, Cutter and Buck has achieved their highest sales compared to any time in their past decade. I chat with Joel about their retail versus wholesale and corporate business, the tremendous strides they've taken in sustainability, digitization, And Joel compares our industry's adoption of technology to retail. It's a fascinating perspective because he sits in a unique position to observe both sides. And you'll also be surprised at how corporate trends are now the influencer over retail. Hi friends, I'm Bobby LeHew, Chief Content Officer at CommsQ. Next week, we're hosting a webinar on the subject, Is the Promo Industry Headed for a Recession? And it's about the impact of inflation on our business and how to plan ahead in uncertain economic times. Our guests are two of the most strategic thinkers in the industry, Jonathan Isaacson, Chairman and CEO of Gemline, and Jeremy Lott, President and CEO of SanMar. The webinar will be held on Thursday, July 14th from 2 to 3 PM EST. Come join us prepared with your questions. You can register at commonscue.com/webinars. That's commonscue.com/webinars. And one more announcement on behalf of our friend Kirby Haaseman. Kirby, as some of you know, is the CEO of Haaseman Marketing and Communications. He's an author and the founder of Better Business University, where he is launching a new course about how to start a successful promotional products company. If you have new colleagues that have recently joined your company, or maybe you need to better understand how the industry works, go visit betterbusinessu.com. That's betterbusiness, the letter U,.com, and click on the New to Promo link at the top right of the page. Today's episode is brought to you by Commitscue, the work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more, visit commonscue.com. Now here's my chat with Joel Fried. Joel, many of us in the industry are mostly familiar with your wholesale work, but you're about 50/50, right? Retail, 50, 50% promo, wholesale. Give us a glimpse into what your retail, retail channel looks like because, because we're so familiar with the other side. I think it's a fascinating glimpse into your world. You sell into Target, Amazon, Nordstrom, other major retailers. Where are you seeing the most impact and growth on the retail side?

Yeah, retail has been super fun for us the last couple of years. I mean, really, um, even before the pandemic, we, we really started to go all in on what we call internally like the Amazonification of the consumer market, where, where people want what they want when they want it delivered right now. And so that same kind of a platform that really works well for us in the, in the promotional space works great in the retail space. So we we started to merge our business plans, uh, in both of these channels, and it's just worked awesome. And so we've had huge growth in retail over the last few years. Um, the pandemic and then, you know, all of those consumer demanding moments, all that stuff really kind of accelerated things as well. Um, and where we're seeing the most growth in, in retail is really in what we call, what we call direct fulfillment for retail, which is consumer ordering online, and then we do the fulfillment right from here. So usually that consumer is ordering online from like Nordstrom.com or Target Plus or, right, the Fanatics brands. That's huge for us. So we have a really big business going in those direct fulfillment programs for retail, a lot of which are single, you know, single units to consumers. A lot of units are decorated. So that's where we've just seen tremendous growth in retail. And then, and then, and then additionally, I'd say we've also seen a lot of great growth, particularly 2020, in the golf segment of retail. Golf— you know, um, however you want to put it, uh, windfall, right?

Well, had a lot of—

right, golf was like an approved sport for, you know, individuals and for families. And so, yeah, there's a lot of golf rounds being played, and really golf, the, the industry at large, got a huge boost. So our business in the golf segment really went up from there as well.

You mentioned to me that there is the trend in retail, this growing trend, where you are becoming their fulfillment partner, their fulfillment house, and there's less inventory on the shelves and it's direct to fulfillment, or you use— I'll use the wrong words because it's not my industry on the retail side, but, but you're seeing that as a big trend, right, in retail, that where you're becoming their fulfillment partner and you're putting much less inventory on the shelf for them?

Yeah, absolutely. Um, our biggest customers in retail are all direct fulfillment right now. Yeah. So, um, we, we would say dropship. I mean, we can use those terms kind of synonymously. It's totally fine. Dropship or direct fulfillment. We say, um, we say DF or direct fulfillment on the retail side and tend to say dropship in, in promotional. Um, but yeah, the growth the growth is massive. So it's not that we aren't still doing in-store business. It's there. It's just not growing. Um, in fact, it's, it's declining, but the growth in direct fulfillment is so fast that it's really powering, uh, powering our growth in retail overall.

Your retail outlook and your corporate wholesale business gives you such a unique position in the industry. On one hand, you're at the center of driving trend and innovation. How does this influence the corporate side? I would think that's a very unique position.

It's just been— it's super exciting because consumers now in corporate, they want the same great products that they see at— in whatever the consumer environment is, you know. And so if they're— whatever, wherever they're— wherever they're shopping, right, or on the streets, right, people see, see these great products from, you know, frankly, great brands, and then they want that for their promotional use or for their company store and make their employees feel great, all, all of those things. And so we're just frankly using the same products in both markets. And so don't tell anybody, I guess I'm on here to tell you a lot of things, but we're using the same products and it really is, is flying. It's working great for us. And that's helped us to reduce, um, to, to reduce our, our environmental impact, if you will, because we're developing fewer products. Uh, we're really concise about that, really clear. And then just also, yeah, the, the, you know, we can see it from both— we see it from both sides. The, the same demand, the same demand curves are happening. The only difference is that seasonality is a little bit different between the consumer market and the promo market, whereas in the promo market, um, you see a little bit flatter demand curve throughout the year. Like, we sell a ton of outerwear in the promo space in the summer, a ton. We sell tons and tons of outerwear in the summer, and it's kind of an old joke that we had reps in California who were like, oh, we can't sell any outerwear. And it's like, well, we sell outerwear across the country year round in promo. And in retail, you do see those more standard cyclical things. And maybe it's because we're not that big. So maybe we're not seeing that, that huge wave. But we, you know, we sell as many polos in December in the, in the promotional space as we do in May. And that's just not the case in retail. We sell far more polos in May in retail than we do in December.

But as far as being a distributor partner and knowing that I have a supplier partner like you, you and I have been around long enough to know there was this massive gap between trends and styles and then what was happening in corporate. And now we've seen that completely shrink or go away. And as a distributor now, knowing that I have a partner like you is huge, knowing that you're not taking this leap backwards to bring forth trends and styles to the corporate.

Oh, you know, you might even say it's the opposite. Because the core— yeah, I would say it's now internally how we discuss it. It's the opposite in that there's so much sample size within the corporate promo space, right? You get these, you get, you see these green shoots of new demand cropping up and you're like, okay, that's really hot. So that's a really hot consumer product category. Like, let's get into that. Let's get there. And so I would say that we're actually seeing the opposite. I worked entirely in corporate for a few years in my journey at Cutter and Buck. And there was definitely a time I noticed going into promo, I was like, whoa, this space is moving fast. It's adopting really fast. The cool thing in promo— I'm sorry, I'm jumping over.

No, go ahead.

It adopts really fast, but then it stays in it. It doesn't just throw it away. It adopts something big. It's kind of like what we call like a zeitgeist level, you know, category or something. And then it stays there. And that's super cool. Like, let's get into a big category. It's great for us as a supplier in that space because let's get into that category and you're not going to be done with it in 6 months. So the only category I would say that we really shied away from with that speed was PPE. We just, we were like, for our business model, it was just too short-term. And like understanding, you know, a lot of people that you've interviewed and stuff, we understand the capacity of the supply chain. It's like they can make so many masks, like you could make like a factory that makes— there's factories that make a million t-shirts a day. You know, whatever, a million t-shirts a week, right? Well, how many masks can they make if they can make a million t-shirts? It's like a tenth as much sewing, right? So you're like, well, so you turn these factories into PPE factories and they could just churn it out so fast. So that was really cool to watch how that got adopted really fast because we just had to stay cool and be like, we're not going to do that.

Wow, that had to be hard.

Yeah, that had to be hard.

You saw the saturation coming pretty quick.

Yeah, we just know what the production capacity is, right? You're just like, you could make a gajillion masks, like, The statistics are crazy, like how many pairs of jeans they make every year. They make, you know, 3 billion pairs of jeans or something every year. Yeah. Oh, well, how many masks do you make with that?

Right, right, right. It's interesting to hear that the corporate buyer influences the retail buyer in that way. How else are you seeing these influences affect your business? You mentioned something to me. You said how you service retail and how you service corporate is really the same. And this might get into inventory perhaps, but what did you mean by that?

Well, one, I want to qualify something that you said there. I want to be sure that I'm, I'm clear when I say like the retail or the corporate consumer influences that. And so you pick up that from the corporate consumer. I just want to be clear that the buyer— thank you for that. Just because we talk about— I'm sorry, we just talk about buyers separately. So I might— we can say them as generally like customers. That's, that's fine. But sometimes we're articulate about that and just like, hey, that's highly influential, but that same demand. So your employee, if you're running a company program, your employee is a consumer, right? That consumer, right, right. Everybody aware of this? Like, they also buy stuff. They're also, quote, you know, they're also Amazon Prime members or they're Walmart Plus members or they're, you know, whoever, Jet.com. That's, that's, you know, absorbed into Walmart now and such. But they're already very attuned consumers. And so they're expectation of click, cart, purchase, it's exactly identical. And so I heard this a few years ago, and I will credit— I want to credit this woman who did it. She was, she was at the cutting edge of IBM and the IBM team, and she had said, whatever your last best experience was is your new minimum expectation. Right? So we've, you know, so like that consumer, right? So if like your employee, you have a new start employee who like who's starting for you at your, you know, whatever, your seed, your seed plant and like, hey, go online and order, you know, go and order these products. Like they have an expectation. It's going to be the same click, click checkout, right? The same expectation. So I think that's a super exciting, you know, development in the promo space and we're already doing it and like we're, we're really doing it. That's our, you know, really our main growing business in retail. And so we're excited about, you know, web store items and, you know, these turnkey, you know, turnkey company stores. We don't build company stores ourselves, but we build the whole assortment of products. And I think that's just an amazingly exciting thing that's, that's happening in, in some areas of promo. And you can see how it's, it's going to help even more. And I think your question was about inventory, and that starts to be like, okay, so we're sitting on this large inventory, we're servicing all of our customers and all of these consumers with it. Why not just extend that inventory into, you know, the promotional space where it's servicing the same types of consumers? That's a big thing for us. So we're investing more heavily in inventory. It's kind of hard to get it in right now, but we're investing more heavily in inventory. And because those products are shared between our businesses, that's just going to help everybody. So there's more inventory to rely on. It's spread, it's spread wider. We can, you know, we can get deeper into those things and know that we're going to satisfy more and more consumers in retail and in promo.

I have a really dumb question, Joe. It has to do with inventory and your turn time on retail side where you said decorated and you're dealing with smaller quantities and smaller units now. Turnkey fulfillment for retail, is that— does that transcribe to corporate and promo as well? Like, what's that turn time for you?

I mean, it's a real basic question, but it's funny because it depends on what the integration is between the organizations. So, okay, all of our turnkey, you know, direct fulfillment programs in retail, for example, every single one of them, 100% of them are fully integrated with a technology platform. All of them. There's none of them that aren't because we're only, frankly, we're only dealing with those that are, that have some kind of EDI or some kind of, some kind of fulfillment platform or an aggregator that's like, now I'm, now I'm out of my depth here. Channel advisor, like these kind of aggregations of, of different platforms, right? So you can kind of tap into a platform, but all of them in retail are integrated. So everything is, is what we call production ready from the start. So as soon as that order hits us, it's ready to go on to, for example, primarily an embroidery machine. That integration is really, really powerful. I mean, really powerful. So it never sits in a, you know, those orders never sit in a queue anywhere, right? They're not sitting in a queue waiting for somebody to hand, you know, hand key them in. Um, they come in batches, and a lot of times those batches also live together on the embroidery operation. So you've got over a great NFL weekend, for example, and, you know, season, every team that wins, you know, every Monday, you know, Monday morning after the Sunday night wins, we get, you know, a bigger list from the 16 teams that won. We get orders from all of them versus the teams that lost. Right. You know, kind of in general, right? And then we always have good business with the big teams and the big, you know, nationally popular teams and stuff like that. So, but that fully integrated technology, utilizing fully integrated, you know, full integration technologies. That's what allows us to provide a fast service. I don't want to say a faster service because those programs that we do have in the promo space that are fully integrated, they get fast service too because it's easier for us to just do them all. We do them all the same. And so it's just, it's just so typical in our— it's more typical in our promo space that we're getting, you know, what we call like programs. They're getting faxed and emailed to us. And so they're sitting, sitting in a queue. So we're looking at opportunities to integrate both on these kind of like data, data scraping technologies that somebody emails us a PO, which I understand is, is, you know, maybe a necessity of their business. And we can, we can, we're learning how to scrape those and automate, you know, automate that entry in some way. It's still not it's still not as pure as the integration with, um, with those direct fulfillment platforms because those direct fulfillment platforms that we have, particularly for retail that are large scale, they're also taking an inventory feed. So that's the other cool thing in integrations is that they're not displaying products that we don't have. Yeah, maybe even in that size, right? So if we're out of size large of our black Virtue Polo, all of our platforms, you know, it's, it's literally we have hundreds of thousands of SKUs out there that are reliant on that polo. Shame on us, it's our loss completely, but I understand. But that's taken down, like, it's automatically not available to the consumer, right? So if the Raiders win over the weekend and they're counting on those black polos in that particular style and size large, we don't have them. And that consumer can make that choice very quickly to look over another product. So that's another way where You know, the scraping of the data kind of helps us some, like in the promo space, but really it's, it's important to have that fully integrated, that fully integrated platform, taking inventory feed, taking the product data, doing the, doing the order flow. All of that is just, is it's what makes it go really fast.

You've just clarified our whole passion around connected suppliers and eliminating all of those problems. But I love how you eloquently describe this, this whole process, right? And we just so passionate about this because that's the thing we want to free people from, is all the minutia that's involved. I mean, look at the leaps that you've made on the retail side and what we're doing with Connected Suppliers and Promo. It's that kind of leap forward. And can you speak to that a little bit? Like, what does our industry have to do, both suppliers and distributors, to embrace this? Because it's something we're obviously passionate about too.

Yeah, I, I think it comes down to your What you said there, embrace it. I would say that you gotta believe in this model because it's working. I mean, the, the, these, these companies that are dominating the e-commerce retail space, I mean, they're dominating it through like Fanatics. Fanatics is a dominant, incredibly great, they're really well run and they are a dominant force. They don't allow you to have products on their website that aren't in stock. It, it's just like the opt-in. Do you wanna be available for them? Now, on the promo side, there's often resistance to that. It's like, well, don't show me things that are not in, you know, guarantee everything in stock. It's like, well, we live in the world of you can't guarantee everything all the time, right? And so it's like, hey, those really big— they're not guaranteeing it, but they're giving a lot of these great options for a consumer to say, right? And that's, that's a big thing is that, is that in those, in those spaces, we get to to put up a lot of selection and say, hey, if you're out of the larges in, in black for, for a couple weeks, it's okay because they can— the consumer can choose a medium or large and they have 15 other black polos to choose from. Yeah. So I think it's belief in the model. I think that's really the, the thing, because it always feels like there's that little breakthrough is that somebody says like, oh, I want the, you know, I want to be sure that everything that you show on my website's in stock. And it's like, okay, cool. Well, let's integrate our systems. Your objective is to only show things that are in stock. Yeah. So let's just integrate our systems so you're only showing things in stock. And so that's, I think it's about a belief and, you know, your organization and others like you are, they're figuring out how to create aggregating platforms to connect suppliers and distributors and even their, you know, and even the consumers in the promo space to this. To these technology platforms. So it's all— it's already being done. Like, I think it's just poured over the, you know, kind of poured over the technology. And, and that the other thing to kind of believe in is, you know, believe in the— believe in the consumer. Like, they're okay to have a few different choices. And there's something that we've, we've struggled with getting kind of an understanding of. And I think it's not— it's not like sanctimonious, but like like, you don't have— like, if you have one logo, you know, if you have one logo for this customer, for this client, like, you can put that on a lot of products and have them all available, right? It's more important to have a lot of products available than it is to have a lot of logo variations. And that tends to like come with this interesting little debate that we continuously have is that a lot of people want to have a product and then show it with like a menu of logos. And a breakthrough thing is like, each time you put a different logo on that product, like a different piece of artwork— I'm sorry, to be specific, right? A different piece of artwork, right? You've created a different— you've created a different item. And like, that's cool. Just record that you've got 2 different items and sell them both. Like, or 10 different items. If you've got 10 different logos, you can put those all on one white polo shirt, but respect that you're not selling one white polo shirt with 10 different logos on it. You're selling 10 different items. That is a breakthrough. When, whenever we can get to that conversation, it really, it really kind of helps things go along of like we can have multiple items. And, you know, I think, I think even more so for us, that's probably not a great even selling point. You'd rather have more options of the products than more options of the logo. Right. So when you respect the consumer.

Let's talk about sales growth for a minute. You are ahead of 2019 year to date. You're ahead of, of 2019. That's astonishing. And have had one of the most successful years in your past decade. What do you attribute to this growth beyond demand post-COVID? Is there something that in your world and infrastructure that you've changed to prepare for this moment?

I think I've alluded to it here. It's just unifying our business model better and better. We just, you know, we did that deep SWOT analysis and really looked at the business and, you know, looked at how our products were selling, what types of products we're selling. And we've just really consolidated the business to a simpler model for ourselves. So we've been closing brands, for example. Like we had a really awesome 20-year run, a 20-plus year run with Annika Sorenstam. And creating the Annika collection, which was just a fabulous, fabulous experience for all of us. And as we looked at our business overall, we just discovered that it was, it was frankly not big enough, you know, to drive considerable growth, that, that collection and the clientele that it served just wasn't big enough to drive that kind of growth. So we've, we've done some consolidation in our company. That's one of, that's one of the brands that we consolidated. We're also looking at, you know, a lot of product consolidation and stuff. But that product consolidation saves, saves a lot of different dimensions of the business and operating expenses as well as, you know, improvements in gross margin and otherwise. So, so yeah, so we're just— I mean, we're thrilled the consumer has really responded to us as well. We've also extended our categories and in Cutter and Buck, we've really extended into lifestyle outerwear. That's been huge category gains for us. We have Some of our, some of our top products are outerwear and layering products now. And we've introduced a lot of sustainable products starting in 2021. We really— starting in 2021, all of our products moving forward will have sustainable materials built in, all of them. So we've already— I want to get, I want to get to that one in just a second.

I have one more question about your growth.

Sure. Oh, sure.

What's your big— I always love to ask CEOs this question. What is on your desk right now. But let me ask it in this way. What's your biggest challenge inside this growth moment that you're having this year right now?

It's the supply chain, but I don't want to talk about it. I mean, it's so like, it's so boring to talk about. It's like, yeah, it's, it's boring, but it's, but it's horrible. And, you know, we're super sensitive to it. Like, we're right. Yeah. I mean, we're just, we're just like, everybody hears it. I mean, it can, it just ends up, you know, sometimes it just sounds like excuses. It's like, hey, look, You know, we're a globalized company. We do production all around, you know, in amazing contract manufacturers all around the world. Several of them were closed for months on end. It's going to disrupt our supply chain. And yeah. And so, you know, one of our, one of our things, and we'll probably get to it around like sustainability, is that we do not do air freight in our supply chain. We made that commitment and we made that commitment and I believe it was 2018. We looked through everything. We said, we cannot— if we're going to— if we are going to, to, to move toward ever better, if we're going to be a sustainable— if we have the possibility of being a sustainable goods company, we got to eliminate air freight. And so, yeah, that has been both a, you know, incredible— it's been an incredible blessing for us in the last year and a half to have that discipline of our business model to not require air freight. Freight and then to not allow air freight in our disciplines. And like, the world is full of these stories this year where air freight took longer. It's like, right, it's crazy. These crazy things have happened, right? But we've really— like, the supply chain, it just— the whole, the whole thing of production has been really challenged. And so we're— we've been, you know, out of stock of top-selling items for months with, yeah, with You know, kind of waiting, you know, and that's right. That's been, that's been hard because, because our products are really, really in high demand.

Yeah. Yeah. Are you seeing improvements compared to, say, 3 months ago, 6 months ago? Are you seeing improvements? Are you still seeing—

it's kind of moved around like, like 6 months ago it was at the ports here and in the US, right? Like where, where you just— we used to— we've totally taken it for granted for 30 years. Like, hey, this stuff landed, you'd get it in 3 days. Like we're in Seattle, right? So we're like, half an hour from Tacoma Port, you know, 20 minutes from Port of Seattle. So we're like, you know, when it's landed, it's like, it's like it's here, you know, it's like, oh, it's here. That turned into who knows. And like, that was, that was, that was embarrassing. I mean, honest to God, in the promo space especially, it was really embarrassing because it was like, what day is your stuff available? It's available next Friday. And it's like, you know, next Friday comes, like, what day is your stuff available? Oh, it was today and we don't know where it is because there's actually no tracking mechanism for that, for that period of time. It's like, that was brutal. So like, that's all gotten better. Yeah, but you know, Shanghai was shut down for better part of 2 months and, um, you know, some other areas are, are really struggling. And you know, I think, you know, for everybody to know, like, you know, for everybody in your audience to know, like, man, freight costs went way up. It's I think they're, you know, for a period this year they were up 600% year over year. 600%. 600%. Not 60%. Wow. Like we used to asterisk like if freight went up 6%. 600%. And so we've continuously adjusted to that and worked to absorb that while not, you know, really trying to not take prices up wherever we can. So, yeah, so it's all— it's all— it has been really a supply chain learning experience. We've learned a ton. And yeah, and we can turn it into the positive because now we've started working with—

we've—

we now we're just frankly working deeper with our supply chain. We're working deeper and we're saying, let's have a more resilient supply chain. Let's own more fabrics. Let's get, you know, let's get deeper upstream. Let's help each other. And up to and including our product model where we're really, you know, helping work with our factory base to make more consistent products for longer periods of time. And it will really help our— we'll be so much better for this, this wild, wild ride that we've had in the last couple of years.

Let's, um, let's go back to sustainability for a minute because I know it's a big passion of yours and big passion of Cutter Box. You eliminated what, 99% of all air freight from, from your supply chain as shipping sea freight. You educated me, reduces CO2 emissions an average rate of 20 to 30 times. You made this decision 5 years ago, but this had to be a heavy lift. I mean, suppliers have been dependent on air freight, if I'm, if I'm not wrong about that. What did that transition and impact have on your infrastructure? That had to change a lot.

Uh, we had to redesign our entire product development process. Let's say that in order to have the, the objective was to eliminate air freight. That's kind of a lousy objective. It's more like get get more sustainable as a company. Key result: eliminate air freight. You know, cascade from there. We had to redesign our entire product development process. And that's, that's what we're so proud of. The people that, the people that work for us are so proud of, like, we redesigned this whole thing and we said that we're no longer going to have, you know, fabrics or trims or anything allowed to air. You know, nothing can air. Everything has to be built into a longer timeframe. We redesigned. So we redesigned that. And then we redesigned our go-to-market process to, to actually eliminate the sample process because the sampling process is also very heavily reliant on air freight. You're doing small runs of like salespeople samples, right? Salesman samples, as we call them. It's an old-fashioned term. I'm sorry, salespeople samples, right? We don't really do— we don't do them anymore. So we didn't have to change the terminology so much, but we, we eliminated the concept of samples. Of pre-production samples, and we only use top-of-production samples now. So I'm— these are like trade secrets now, but like, it's fun. Like, I encourage everyone to do it. Like, help, help the planet, you know? Let's, let's— we're all in this together. And so, so we redesigned our product development cycle, we redesigned our go-to-market cycle to not be reliant on sales samples ahead. We redesigned our calendar, so we, we, we launch, um, we actually launch faster than we used to. This is the crazy thing. We actually launch faster than we used to. So our development cycle without samples, we, we, we go faster from, from idea to on the shelf. We go faster. Wow. And, and that is another potent, potent, um, potent thing between promo and retail is that it's a, it's a challenge. It's a challenge to explain to a, you know, a retail buyer, like, We have the stuff right now. I'm trying to sell you things that we have right now because that's kind of a mind blower. They're like, wait, no, no, I'm trying to buy for spring 2023. And you're like, no, no, like you can buy it for spring 2023. I just want you to know that we have it right now, which in the promo space is totally natural, right?

And promo, right?

Oh yeah, of course you wouldn't show it to me if you were talking about, you know, 8 months in advance. But so that, that all had to change. So we really changed our, our retail our retail go-to-market changed considerably in order to, frankly, in order to eliminate air freight. Yeah. And so now—

Yeah. So to clarify for the promo audience, when you're talking samples, you're talking about samples for, for like retail samples that you're considering bringing in in very large quantities, but it's the samples from overseas to you.

Well, we used to go out and sell, right? We used to. Yeah. No, we still do some. We still have a handful of development samples like that still happens. Okay, designing them. That's part of the, part of the early product development process. But we don't do like a second run, or if you call it like a first run, that's like your sample run. And so then you would, in the retail, you know, the fashion business, you would go out. Gotcha, right. So again, this is like trade secret kind of stuff. Like, I, I think people should do it. Like, I, I, you know, it's cool, do this kind of a thing.

It was such a big transition for you. What, so that other suppliers can learn? This audience is about 70% distributors, 30% suppliers, so that other suppliers can learn from this. What was it about that experience going into it that you didn't know but would be helpful for someone considering? Can you— I'm sure there's tons of tips, but can you think of one or two that are top of mind?

Um, you just have to, you have to set your objective and let everybody know what it is, because there's going to be so many cascaded decisions about, about that. It's a fact, you know, the why, you know, everyone, you know, people are gonna— there's 50,000 flavors of why, why, why this, why that. It's like, well, this objective is to eliminate air freight, so Yeah, so we don't, you know, we don't have that stuff here in time for the holiday. So why don't I have samples? Well, it's because we want to eliminate air freight and samples require air freight. And these are the types of things. And so I think it's just really, you know, the big lesson I think is you have probably a ton of owners and like, I'm not— I don't think I'm teaching them something. You just own it, own the objective and be super disciplined to it because there's going to be, you know, and then, and then, and then 3 years later you're a visionary. So it's like, it's like you're a total jerk. You're a total jerk. You're a total jerk. They hate you. You're the worst. You don't know what you're, you don't know what you're doing. You don't understand. You don't listen. And then it works and you're, you know, it doesn't work. It just, it just, that's what's happening. And then you're a visionary. So who knows? Like, just stick with it. Stick with it. Good advice.

Good advice. It's something that we don't talk about enough, but this industry did for a while, and then, and of course, everybody made a lot of progress on it, is that under sustainability is also your digital commitment. Um, migrating, even just something as simple as migrating your sales tool to digital eliminated, get this, an astounding 37 million sheets of paper. What other digital transformations have you been through that have impacted your sustainability initiatives? I know we talked a little bit about your, in your infrastructure.

Yeah, infrastructure has been huge, but, you know, order, you know, the order once you've created a digital product, then you're, then you're selling it across all of these platforms. So it really helps your, your operation just work a lot more efficient— efficiently. And then when you've created those digital products, and then, you know, the, the direct fulfillment customer, the fully integrated digital customers are ordering from you, it reduces the order processing costs considerably. So that's, that's more sustainable. And frankly, you have happier employees. Like, if you don't have, if you don't have employees that want to be happy to work work for you. I mean, you gotta, you gotta try to get that. Like, and so it reduces, it reduces the pain a lot in the organization. So there's still a lot of ground to cover on that. I mean, we've still got a long way to go. Um, it's really working for us to have eliminated all of our print materials. We have no print. In fact, our warehouse manager, you know, contacted me a couple weeks ago about, about like, he's like, we still have like an aisle of catalogs though. Like, I'm like, well, call, call international. Let's get the recycling program going. Like, we're not using them. And he was like, oh, we're not using them. It's like, no. So, and I want to just be clear on something in your audience. This is something that's so, it's so critical was that the signal, again, people moving faster, right? The promo space moving very fast. We, we were another one of those suppliers who were getting the call from the, from the, you know, kind of distributed, I'm sorry, like the big distributors who have offices all over. Right. We were starting to get that call of like, You can't send 500 catalogs to each of our offices, you know? You know, like, hey, like, right, like, in one day there was this— this was like before we were really memeing all the time, but there was a shot of— I don't want to name any names because it was— I can't quite remember who it was, but they took a shot of a cubicle. It was literally just full of catalog boxes, just full of it. Right. And it wasn't from us. The catalogs that they were shot weren't from us. But we all knew, we all knew at the time, we were like, oh, okay, cool. It's— and they're like, beware, do not send your bulk of catalogs to us anymore. So that was like that first signal of like the administrative cost to the distributor of catalogs, purely the administrative cost, right? Of just like, where do we get rid of them? How do we store them? We had to hire people just to catalog the catalogs. And all this stuff. And, you know, through that experience, you know, we just looked at it harder and we're just discovering, you're like, well, what are people ordering? Because we allow people to order— we allowed people to order catalogs as well, right, for free. And they just order catalog and it's like, oh my gosh, it's gone down by like 70% in 2 years, right? In 2 years the demand had gone down 70%. So I was like, fast enough, let's get rid of catalogs. We do not— like, we do not need them. People like, oh no, no, it's like, no, no, It went down 70% in 2 years. Yeah. Yeah. And so, you know, we all have just, you know, we have just poured so much thinking and research into our web platform. Like, it's called CB Corporate. And for the promo space, we use it. And also for the retail space, we use— we use the same web platform for both businesses. So if you're a golf shop in Tuscaloosa— or I'm sorry, I should say Oklahoma— if you're a golf shop in Oklahoma City, you go on CB Corporate and place your reorders. You know, if you're, you know, if you're a distributor in Seattle, you go on CB Corporate, you place your order, you know, you buy your samples and things like that. So, so we use the same platform everywhere. So that's another huge, huge change, um, that comes along with the catalog elimination. Yeah, yeah.

I remember 7 or 8 years ago telling my, my warehouse manager not to recycle, to not accept any more catalogs and recycle all of them.

And And you wouldn't believe how many people were going behind my back to get all the catalogs still then. But I'm so glad to hear this.

I'm so glad to hear. Let me ask you another question because you follow the automotive industry as a bellwether for sustainability initiatives. For sure. What have you learned from the auto industry? I know that's a big question, but sort of what have you learned recently that you keep an eye on that really helps you in your business?

Well, for a long time, I just learned so much about platform, platform design of just having, of building. We use the term platform internally a little differently, but platform design of, you know, sharing platforms of just getting a lot of efficiency out of it. Expensive good, it's globalized, all those things. So that was, that was huge. But then watching this transition to, to the next generation of cars. So you got the internal combustion engine divisions, and now you get the electronics divisions and watching the big, the big guys. I mean, with all due respect, these are companies that are a million times bigger than ours, you know, making huge transitions, and they have calculated them very carefully. So we're looking at like their product lines of what's coming out on the, on the cutting edge, you can look at You know, who's, who's coming? You know, it's mostly, frankly, 5-passenger SUVs. Like, that's the next, that's the next category to win in the automotive space. And that gives you indications of the consumer base, the demographics. You can see how, you know, it's, it's kind of growing families, people of a certain age, you know, that, that's, it's not minivans are the fastest growing electronic, you know, the electric vehicle market. It's 5-passenger SUVs. That's different than sedans. And so those things are can start to give you clues and indications of how consumers are thinking. And then what are the core demographics that you need to be sure that you're hitting? So, you know, they're not, they're not, you know, they've kind of come out, you know, previous generation is kind of more like first adopter cars that are small and lightweight and don't have a lot of utility to them. But now this generation coming through is this 5-passenger SUV. And it's going to really change, you know, I have a 5-passenger SUV, my wife has a 7-passenger SUV, but We're generally the same. And it's like, that's the, you know, you can start to see how it's a, it's a category that you got to go and compete on. And in apparel, there's similar things or similar categories that you really need to go and compete on.

What impact are you seeing inflation have on our industry? Or let me put it this way, are you seeing indicators with Cutter and Buck that are really beginning to impact you now short term?

I think right, right now, um, well, the supply chain supply chain, enter supply chain reason here. But with our employees, with the CMB family, like it's impacting our people. And so, we're sensitive to that. And we're, you know, we're working to find ways to, you know, get more productive so that we can pay people more. We can't react instantaneously, like, but we're certainly aware of it. That's where we've seen it a lot. And so, We've taken, we've taken some price increases over the last couple years on like decoration and stuff like that. Like that's where we have to with the, with the wage demands that we have upon us and such. But we're really sensitive to it. Like, like we're, we're really all about productivity and just how we're going to get more productive as an organization. I don't want to, you know, slam a bunch of price increases into any market that we've got. I mean, you know, once you're integrated with, with a lot of companies, you really don't want to to deintegrate and start over again. You have that nice integration going and that nice flow. So yeah, we've been able to kind of— I don't want to say weather it, we're just, we're pretty nimble when it comes to, you know, what we're doing with, with our purchasing and stuff like that. And so we're able to— we're— because we're frankly, because we're so disciplined in those areas, we're, we're quite nimble. We know exactly where everything is and we can, we can make adjustments as necessary. So, but it's going to be, it's going to be a wild ride. I think it's just going it's going to slow down some. You know, there's going to be some areas of the economy that slow down. I mean, I think we're starting to see housing and those, those types of— and I shouldn't say housing, it's more like real estate is slowing down. That's right. That's one category that we watch.

Are you seeing any other indicators through your parent company, New Wave Group? Are there any other indicators you're seeing that are red flags or interesting?

Well, New Wave Group, oh, that groan.

The poor—

I mean, it's I mean, New Wave Group is in Sweden, right? And they have a lot of business in northern Central Europe, and they're very attuned to what's going on in the Ukraine with the Russian invasion. I mean, it's— I mean, the fuel prices and the energy prices changing really rapidly. I mean, that's going to be— that's going to be it. So I think— I think what we need to do is, you know, this is commentary now, but I think what we need to do overall is just double down for us on our— on our on our objectives, double down on sustainability, double down on efficiency and productivity. And, you know, you know, keep using it as a reason to be as lean a company as possible and not try to just spread that, you know, spread, spread those things around. So it's a, it's a fun, it's kind of an interesting challenge. So I won't call it fun because of the factors leading to it, but it's interesting. Sure.

Yeah. Last few questions I have are actually about Jill. I found it fascinating Oh, me? Yeah, you always wanted to work for an apparel company. So get this, writing an essay at the age of 8 about your dream of doing so. You started as an intern, but was turned down twice to work for the company, tried a third time. You became an assistant to the tournament division in 1999. You were manager of licensing divisions, then corporate business director from 2009 to 2014. You became CEO in 2014. Now talk to Joel, the intern, for a moment.

Oh geez.

What would you tell Joel the intern to do better, faster, or double down on? And what would you encourage him not to do? And of course, you know what I'm doing here. I'm speaking to those entrepreneurs who might be— see our industry as an incredible opportunity and they want to get advice from somebody who went through those kinds of leaps in their career.

Sure. Uh, the thing I would double down on is learn and then learn and then learn some more. Continuous, continuous learning. There is, there's so— and even now, between, between 1999 when I started my career in, you know, post, post-university and such, and, and now, I mean, the opportunities to learn are immense. Yeah. And low cost. And frankly, some of them are fun. Like, I did a, I did a, I did a Coursera course in the fall and winter, um, that's kind of brought— I think it's brought to you by Google, but it's about user experience design. I, I felt that I had a blind spot in user experience I felt that the company kind of had a blind spot in user experience. I found this course on Coursera. It's like $40 a month and it's like university-level education. And the program— that program is a program that when you, when you graduate from it, you wind up getting a call from— or probably not a call, probably an email from Google being like, hey, would you like to apply for a job? And so the opportunities to learn are just They're so, they're so huge now. So I would, I would have doubled down on, I would double down on learning. Joel, the intern, double down on learning, start sooner, take it, you know, take it more, take the learning very, very seriously. It probably took me 3 or 4 years until I was starting to interview for kind of management jobs that I really had to dive back into learning again. And that's 3 or 4 years I wish I had back to, to, to learn a little more. I was also in my early 20s. So like, like, right, which I lean into, you know. All right. But, um, but yeah, that's what I would definitely lean into, and I would, I would advise anybody getting their career going, yeah, to just learn as much as you can.

What would you encourage him not to do? Was there times where he held back too much? Was there like— what would you say to Joe the Intern about not doing?

No, I never held back. I got my hand slapped so many times. I got my hands—

by This is a true story about Joel. I remember running into you at a show in Canada once, and I couldn't even keep up with you. I couldn't even keep up with you physically.

You were on the move so fast. Oh, man. Yeah. If you ask 20 people that worked with me for that whole time, they'd be like, oh my gosh, you were a jerk when you were a kid or something. Like, I don't— I don't know. Like, I was— I wish I would have. I wish I probably would have been a better— Yeah, just, just, you know, be yourself, but mind your manners. And I don't think I ever was off base on those things. So I wasn't prepped for that question out of the top of my head. Right.

That's a hard one. I'm sorry to throw that at you. Let me ask you this last question. What concerns you about the— I got a two-part question. What concerns you about the corporate market industry promo and for the, for the near future?

And what excites you the most about it? Concerns, I think concerns, I would say digitalization seems to be taking longer than I think a lot of us think. So I don't want to like, I don't want to put, I don't want to like put us on blast, like, right? Because I think there's a lot of us who are like, oh, this is going really fast. And it just, it's just, it's just taking longer. And, you know, I think it, I think it does take, you know, kind of that outsider, you know, something you learn, you know, the concept of an outsider's perspective to be like, work in another industry and then come into it and be like, why are you doing it like this? On I remember somebody at a supplier conference once where, you know, the keynote speeches were at the front and it was like, oh, we're going to be modern, we're going to be modern, we're going to be modern. And this young, this young person was sitting next to me and she said, well, if we're going to be modern, why aren't we like live tweeting this? Like there's, there's no QR codes in here. Why are we handing out all these catalogs? And I was like, yeah, that's kind of how it is. So just digital, I think digitalization just kind of, there's such an opportunity. I, let me put it differently. The opportunity to run your operation more efficiently is right there with digitalization. Don't think that it's for, you know, the Silicon Valley set. It's right there. And it does, I will, I, the blast that I will say is like, I am concerned that this industry could be disrupted by somebody who really digitizes really, really fast. So I suggest that everybody in the industry work to, work to, you know, protect their turf and grow their business efficiently and more sustainably with, with a lot of digitalization. That, that, that concerns me. What excites me is that there's tons of creative people in the space. I mean, like tons and tons. It's like, you're an example. I mean, just every time you come in contact with somebody like these, these are great creative people who are who love customers, they love client relationships. The relationship building thing is so strong and the culture of positivity around that is so strong. So that has me really excited. Like, like there's the sky's the limit, you know? And, and I think we all know, like, I think every— I will say I will use it. I don't use it that much. Every distributor in the marketplace feels like they're underpenetrating the market that they're serving. Right. I feel every time I talk to somebody, I feel like Yeah, unless, you know, unless they're in a particular area that was very reliant on a single industry, for example. I know there's areas— I totally respect that, and I don't want to say that everybody—

but you're right, most do feel like they're underserving.

Most feel like they're underserving their market, right? They're right. And right, all the time you find out, you talk, you just talk to some other professional and you're like, hey, you know, who's, who's doing your, your like promotional apparel? Oh, it's a mess. Like we We don't really do anything. And you look at the company and you profile it and you're like, gosh, there's a ton of opportunity there for promotional. Like, what's your promotional? So we're still— I've only been doing— I've only been attached to it or had the privilege of working in it for maybe 15 years or so. I'm sure people are like, been doing this for 50 years. They were like, yep, it's the same as in 1962. It's underpenetrated. Like you're still explaining to people what it is. And right, like, how much potential is that? Like, it's huge. So it's super, it's super exciting. And so, yeah, so I think digitalization on the one side is like, oh, we better get moving. Like, we're all, you know, I think a lot of suppliers are really pretty far down this digitalization thing, and because they're servicing such a wide customer base, and, uh, you know, it's, it's, um, Yeah, but the excitement is, is, is definitely there. We're thrilled that we have a little tiny little sliver of a slice of the promotional products business. We love it. It's great for our retail business. It's great for our consumer mindset. It's great for our operation. We love it. We love it. And we can see that. Excited to see it grow.

I can see that. Joel, thank you so much, man. You are so— you and Cutter and Buck, and I need to say you and Cutter and Buck because I know you I know you would throw props to your team and everyone at Cutter and Buck, but what you are doing in terms of leading sustainability initiatives and what you're doing in terms of changing the business and the way we think, hats off to you, my friend.

Thank you for joining us today. Oh, it's my honor to be here. Thanks for thinking of me. Yeah, yeah. So let me know if I can ever do anything. Anybody out there, let me know. Thanks, Joe. Yeah, happy to help.

Thanks, Bobby. Thanks so much for tuning in to this episode of SkuCast. Be sure to keep up with our latest content by subscribing to SkuCast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for for listening.