Driving Operational Efficiency at Kohl's, with SVP Rajiv Malik

I mean, when I joined the industry, we were just retiring the Telex machine.

Really?

And then we got the fax machine.

I don't even know what a Telex machine is. Yeah.

I mean, my deepest expertise is on the sourcing side.

Yeah.

You know, that's what I've done for, you know, 20+ years.

Yeah.

So that's probably my, you know, strong suit, that's what gives me the ability to influence in the organization. You know, I'm not a technical designer by trade, but, you know, the ability to manage vendors, the ability to manage strategy, of course, then helps the tech design team. They're working with more resources, they have more leverage, you know, similarly with quality and PI, product integrity.

Yes.

So, you know, part of it is managing process, managing system, managing organizational interfaces. But my, you know, deep expertise is vendor management, you know, country of origin management. So it's a, you know, big ecosystem.

Yeah.

You know, there's a lot of units flowing through it, you know, very short amount of time, lots of SKUs. So it's an exciting world.

Yeah. Have you seen much change since 2016?

Since 2016, well, you know, we are more and more dabbling now with 3D product creation, with digitization as a buzzword. And some of this is being forced as our business moves online. There's more customer data available. There's more cues available from the customer to react, and the ability then to build processes and systems to react to that customer cue is where the digitization, the AI, the product creation, digital product creation all comes in.

Yeah.

That's certainly, you know, a new horizon. And people are in different levels of evolution in that.

It's a huge part of the industry at the moment. The value of getting it right is so great that it's almost a no-brainer that you have to do it.

Yeah, yeah, yeah.

It certainly feels like the right thing to do. It should drive efficiency, it should drive speed. It should drive sustainability, you know, fewer things flying around the world. And ultimately, it should impact, you know, cost in a positive way, cost of doing business in a positive way.

Yeah. From your perspective, as you say, you've got quite a large remit. I mean, what do you think has been the most exciting change over the last few years?

Yeah, I would say the, the recognization within retail in general that, you know, you have to be operationally efficient. And drive operational efficiency has been very interesting. I'm an operator by makeup and trade, and that's exciting for me. Efficiency in terms of building product and bringing it to market as quickly as possible in the most efficient manner at the right value. Those things have become much more important. As, you know, the customer has become much more perhaps educated and has more choices. So that's been exciting for me, you know, it's been a very interesting last few years.

Yeah, it's interesting, you know, the customers being more clued up, as you say, educated. I guess we're all more aware of— when I think of the customer being more educated, I think of sustainability, that's the first thing that comes to my mind.

I think in the US, I think it's the customer and the employees who are driving it. Yeah. You know, our own associates actually are the biggest, probably, constituency who want to see, you know, retailers operate in a sustainable fashion. Customers certainly, you know, will always have always voted for a more sustainable option if they can get it. At the right value.

So yeah, I think you're right, it is customers and people, as you said, your associates, are keen to drive that change. At the moment, obviously you've been at Coles for 3 years, give or take, and you must be working on some exciting things at the moment. I mean, what's the most exciting thing that you guys are doing over there?

Yeah, so I think the digitization aspect, you know, we're beginning to get much more seriously involved in digital product creation. So building product in 3D, fit evaluation in 3D, that's probably the most interesting new initiative we have within my world.

Yeah.

You know, very game-changing both in terms of how we operate and how we will, you know, move forward. And ticks off a lot of boxes, you know, efficiency, sustainability, profitability, you know, all of these are pillars.

Yeah, absolutely. From a business standpoint, those are obviously hugely important. You talk about product integrity as well, and I'm trying to think of the right word, maybe product popularity. Do you feel like it helps drive that? You're making products that your consumers Bonds?

Yeah, yeah.

Well, so as more and more online data becomes available, customer reviews, 5-star ratings, 4-star ratings, those are elements that are influencing behavior within businesses. So we clearly see products that have 5-star reviews have better sell-throughs and better margins. So being able to collect that information and then translate that information into new product or product that can achieve similar benchmarks is definitely something within, you know, anyone should be looking at how to unlock that.

Yes, absolutely.

I mean, you won't stay at a hotel that's 2-star or take an Uber that's 3-star, right?

Yeah, absolutely, absolutely. With data, you always want more as well, I find.

Yeah.

Because you get that 5-star review And then you look at it and you think, okay, but what was 5-star? Was it the fit? Was it the color? Was it the pattern? Was it just the—

And that's the detail of digitization, right? Can you measure the successful attributes and can you separate the unsuccessful attributes? Because then you want to emphasize on the successful attributes and de-emphasize on the unsuccessful attributes as you move forward.

For sure.

As opposed to— there is a place for intuition and invention, obviously, but intuition and invention informed by data is probably much more efficient.

Yeah, there's only so many questions you can ask someone to put on their review.

Yeah, yeah.

But you can extrapolate multiple reviews to hone in on aspects that are common among good reviews, for example.

That must be quite exciting.

Yeah, so those are the new frontiers of data analytics and where AI will come into play. You know, you don't necessarily need a person reading reviews to mine those attributes. It'll be artificial intelligence which will tell you across 400 successful reviews, the number one attribute for this hotel was comfortable beds.

Yes.

Right? Yeah. How many times does that attribute pop up in a successful review versus an unsuccessful review?

Yeah, and then giving that information back to the consumer as well is also quite a rewarding process because they know that, okay, well, this is actually— I'm not just giving this company a review and it's not going to help me. If they know that there's a give and take here, you know, an exchange of value, then people are more likely to do it.

More likely to do it, yeah.

There's exponential growth in people doing it. Doing it as well. Yeah, hopefully it just goes.

Yeah, yeah, more data is better, becomes the outputs become more accurate.

Yeah, big changes will happen that haven't happened yet that may happen in the next, let's say, 3 to 5 years. Um, whether it's a process or a technology, you know.

Yeah, well, I mean, 3D technology, you know, it's still in its infancy, so to speak. I mean, there's several different players out there who are providing or selling this technology. It's hard to integrate, no one's end-to-end. But I think as these players get more mature, as they become more end-to-end, it will change how we bring product to market. There will be an element of, you know, like we will walk away from perhaps paper or physical samples, you know, the way we walked away from a fax machine, right? So that is the, you know, the exciting perhaps road ahead of us. It's still early days, you know, it's still in early development.

Yeah.

It's still experimentation, you know, but quickly maturing. Exponentially maturing faster.

It's, um, for a company like Coles, it must be hard to know when to bite the bullet, per se, you know, when to jump on board with these new technologies, because there's a fine line between going too early and being one of the guinea pigs. Yeah. Potentially affecting, yeah, cost and quality. Yeah, because you want to try and, yeah, the way and implement, yeah, technologies. But also on the flip side, you could, yeah, miss the boat a little bit. Yeah, fall behind competitors. So yeah, I guess as someone in your position, you have to kind of keep your eye on these things.

Yeah, well, we, so we try to stay educated. Yeah, right. We try to stay in interaction with, you know, providers and players in forums like PI. You know, it's a partly a learning experience, partly, uh, you know, influencing experience. And hopefully, you know, with enough information and enough, you know, learning, we, we get the timing right and, and we align with the right people as well.

You know, it is— yeah, it's a good forum for that.

Yeah.

Yeah, as you say, both influence and learn at the same time.

Yeah, yeah.

Kind of see where you are.

Yeah.

Because it's quite a collaborative industry, I find.

Yeah, I mean, people do share, you know, to the extent that is appropriate. And we see it as, you know, if the partners we're working with are strong and healthy and can influence industry, it's certainly going to benefit them, but it will benefit us as well. Because they will bring that to us, right? So, so, so we want, you know, our partners to be, you know, strong, healthy, influential, in the front edge of whatever new is happening.

Absolutely. Yeah, absolutely. It's kind of like when your neighbors, when they do up their house as well, you know, it's going to increase the value around you, but you don't—

Yeah.

We touched on this earlier on, but I'd like to expand on it a little bit in terms of the part that technology is playing in the industry becoming more sustainable. There are people that suggest that the apparel industry is the most pollutant industry in the world, but it's certainly up there with one of, one of the most. Perhaps that's just due to its nature and its size, clothes being ubiquitous, you know. Yeah, something that everyone wear. Yeah. So by its very nature, it's going to be huge as an industry. But technology certainly will play a large part in it becoming more sustainable. Do you think that 3D technology is the main player in that? Is there anything else that you feel?

Yeah, well, 3D technology is certainly an element, you know, of driving sustainability in the sense that If you can create virtually and if you can eliminate the use of physical assets, you have fewer things flying around, fewer things being produced which are not necessarily adding end value in the sense they're not being sold or worn by someone. But there are other elements. I mean, obviously there's a lot of good work going on, you know, with the Better Cotton Initiative in terms of sustainable cotton, you know, growing yield at the farm using less water, using less pesticide. There's a lot of work going on with recycled polyester. We see that more and more, you know, coming into the supply chain. With the use of water, you know, if you're aligned with the right manufacturers, you know, many of our factories essentially have, you know, almost 100% recycle of the water they use in processing product and are essentially zero affluent. So there is technology out there. The question is, you know, are you willing to align with the right people?

I see a lot of companies coming out now and putting these things in place. A lot of people want to let people know what their goals are. That's the transparency side of things, which which I think is, is very, very good. Yeah, 90% good. But I think 10% of it feels sometimes like a marketing story, which is hard to get away from that kind of— this is, uh, yeah, greenwashing.

Yeah, quite like that.

But it's got a little tinge. Yeah, sometimes.

I mean, we've been very conscious that, you know, let's, let's do work before we talk about it.

That's right.

Right. And that's, that's the probably right approach.

Yeah, I would I would agree.

Yeah.

I appreciate you've been in retail for over 25 years. Do you think that there are things that other industries can learn from fashion?

Yeah, I mean, you know, we are an industry that turns around new product, new SKUs, you know, on a monthly basis. Probably the largest number of SKUs, you know, and ever-changing, you know. We're not selling the same carrot every 6 months. It's a new vegetable, so to speak. So yeah, the variety of product, the turnover of product, the complexity of the supply chain, and essentially the complexity of competition. All of that makes this probably one of the most intense and interesting industries to be in. And to survive, you have to be, you know, agile, you have to be open-minded, you have to leverage technology, you know, all of these things, which is fairly unique to this industry.

Yeah, it feels very dynamic.

Yeah.

Especially now with the technology introduction and people's adoption of technology, whether it's digital or not. Yeah. It feels very dynamic. Yeah.

Yeah.

Which is very interesting because it's come from quite an archaic manufacturing process, which didn't change for a long time.

Yeah.

Certainly, we were talking earlier on about, you know, pre-2005.

Yeah.

About the way that the fashion industry worked on a global scale was very different to how it is.

Yeah.

And so even in the last 15 years, you've seen an incredible amount of changes, not just one change that's taken place, but quite a number, quite a bit.

Yeah, yeah.

So some—

yeah, yeah, yeah.

Um, would you appreciate—

yeah, no, absolutely. Yeah.

Um, I, I don't know if there's anything else that, um, been saying this time. I mean, yeah, I was wondering if you had any sort of interesting facts or things about, about the industry. But, um, I mean, you're telling me earlier on about, yeah, this seismic change that happened in 2005.

Yeah, so we went you know, from a quota era in the United States to a quota-free era, which changed the dynamics of how and where we sourced from. And then we went through, you know, the cotton crisis a few years ago. Somewhere in between that was the big change in people adopting product life cycles and then people shortening product life cycles. And today we're at a place where we're trying to change that even further with digitization of how we build product, how we bring it to market. And of course, within that, we have the challenging world of tariffs.

Yes, that's to put it lightly. Yeah, very challenging. But do you feel like the industry is at a point where really it can take anything that's thrown at it now?

Well, I mean, it's a flexible industry. There's a lot of places to make goods, you know, we're always looking at these things, making sure the business is de-risked for things like this. You know, good sourcing strategy should be able to overcome some of these temporary changes.

Yeah, well, let's hope they are temporary. Yeah. And it keeps developing the way that it's going. Rajit, thank you very much.

Thank you, appreciate it. Everybody get up!