Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age. Hey, everyone. Peter Crosby here from The Digital Shelf institute. Hinkley is a family-owned, premium decorative lighting company being run by its fourth generation. To win in their category, they've invested not only invest in class product and lifestyle photography, but also in a super thoughtful and ambitious digital shelf presence, paired with sterling consumer care. These investments help earn their premium, and Hinkley's longer-term North Star is to build brand awareness in a category that often feels brandless. Mike Friedberg, Director Of Ecommerce at Hinkley, joins Lauren Livak and me to outline their overall omnichannel and digital strategies on the way to transforming the consumer's relationship with Hinkley as they find statement pieces that transform their home.
So, Mike, thank you so much for coming on the podcast today. We are so looking forward to chatting with you about your work at Hinkley. Thank you so much for being part of it.
Mike Friedberg:
Of course.
Peter Crosby:
So Hinkley is in the premium decorative lighting industry. It's been a family-owned company for almost 100 years, which is mind-boggling and amazing, but the sort of the new generation of leadership of that family is really leaning into e-commerce and digital in a really focused and thoughtful way. I mean, tell me if you agree, your industry is kind of tricky, and that has a large number of SKUs, it's a lot of quickly changing trends, and right now, you expressed to us earlier that brand is often the fourth in the list of decision-making criteria for why consumers make their buying decisions. So something about your experiences for the shopper and the buyer is what needs to make you earn your premium. Do I capture that right? Is that-
Mike Friedberg:
You're correct. We're trying to make sure that the consumers or the customers in market are understanding the value behind decorative lighting in the online digital space.
Peter Crosby:
Well, tell us a bit more about how you approach e-commerce and digital, and how you really built your team from scratch.
Mike Friedberg:
Yeah. We've had the fortunate situation to invest in the digital side of the business early. We've taken advantage of trying to understand the market dynamics for buying decorative lighting online. Being 100-year-old company and well-respected in the brick and mortar space doesn't necessarily translate over to the digital space on day one, and we want to make sure we get recognized in that space. As you mentioned, brand is often fourth, so when you think about these big, beautiful fixtures in your home, how often can you remember what brand they are, unless you're completely vested in the category?
So often, it's style and design, and then the price point and, "Where can I buy this from?" Again, that leaves brand to be fourth, maybe even fifth if there's another reason why it shouldn't be fourth, but we want to make sure that we get recognized as the number one brand when the consumers in that kind of fourth filter, if you will, for picking their products, so e-commerce is very important to our brand to succeed. We always like to think about the next 100 years, and we feel the digital space is going to be that lever to propel us forward.
Peter Crosby:
Yeah. So tell us a bit about ... You've talked about your space at as sort of affordable luxury, and so you want people to feel that sense of luxury and so much of that, as you said in digital can just be such a different experience from in-store, and so when you sort of were tasked to build this out and create your brand online, what was the team structure that you put together to be able to do that over the time that you've been doing this?
Mike Friedberg:
Yeah. So when I was hired, I had a team of ... There were two kind of jack-of-all-trades that were on the team. They were from the customer care side of the business and they mostly dealt with the day-to-day, low-hanging fruit. We had an opportunity to come in and basically start the team and build upon, so we quickly looked at the opportunities in our market and where weren't kind of making an impact, and I think it's worth noting too, that when we pushed our products in the online space, we're often letting our retailers, merchandise, and enhance those SKUs on our behalf, and that's not what we wanted.
We didn't want our customers to control our destiny, if you will, so we had an opportunity to look at, more or less, the flywheel to see, "Where can we bring in dedicated resources to help propel our brand forward?" A lot of that had to do with content and merchandising, and at the same time, I was hired to be kind of the face of the sales role, engaging with our accounts, which is great in the beginning, and you're in the weeds, but at some point, you need someone with a strategic vision to be on the business instead of in the business, and that has really allowed us to expand the team from those original two folks. We're actually up to eight people on our team, really dedicated around sales, content merchandising, operations, and then, at least in our world of decorative lighting, we deal a lot with kind of customer care in the sense of we dropship the majority of our orders, which is a little bit different than a lot of manufacturers, so we have to kind of keep our fingers on the pulse of backorders, inventory management, all of those fun activities to keep the boxes flowing to the front doorstep in 24 to 48 hours, so that takes some resources as well.
Peter Crosby:
When you think of the scale at which you're doing this, how many SKUs are you talking about, at what pace, and sort of what is the scope of what it is you're doing?
Mike Friedberg:
Yeah. So that is what I would add as part of a fun curve ball, if you will. So a decorative lighting, there are thousands and thousands of SKUs. I think our active SKU catalog is anywhere from 35 to 100 to 4,000 SKUs at any one time.
Peter Crosby:
Yeah.
Mike Friedberg:
And that is just based on the sheer style and design. They go into these products. Not everybody wants the same product. Not everybody's home looks the same, so you don't have those generic kind of styled products, if you will, the builder-grade products that you get when you're your home. They want to upgrade from that.
So we're always changing our styles every couple months. We release a couple 100 new products every six months, depending on what the industry demands, so how do we update the content and merchandising for those SKUs is a challenge, right? So how do we wrap our arms around and create a value proposition for hundreds of new SKUs every six months? It becomes a challenge, not only from a resource standpoint, but prioritization of which SKUs to focus on.
Lauren Livak:
Mike, after this podcast, I think I'm going to look at every light and try and figure out the brand so I can see where they come from.
Mike Friedberg:
Yeah. A lot will start to look the same, fortunately or unfortunately.
Lauren Livak:
Then, you talked about resourcing, right? So when we think about ... You said your role kind of moved from more of the details to the strategy because you had to shift as things got larger, and you had to kind of work within the organization. Can you talk about how you pivoted from the details into the strategy, and also, how you're thinking about your organization for the future because you went from two to eight people, but it's not like you can go from eight to 80 people, so how are you thinking about that structure moving forward?
Mike Friedberg:
Yeah. We try to be good stewards of the P&L and discipline of our resource asks, and of course, not every time we ask for more resources, they get approved, but we try to attribute some kind of ROI to the headcount that we bring in. So to your point, we were able to make a pitch to the business that said, "We feel like these resources are necessary based on the customers we engage with, their expectations, their playbooks, their strategies for winning," so to speak, and if the overarching strategy is to be best in class in the decorative lighting industry, in the categories that we play in, these are the minimum requirements that we need internally to succeed. Now, as that playbook changes, and of course, it does, Wayfair's playbook changes, Amazon's playbook changes, Overstock's playbook changes, we have to keep up with that, and resources change to, so we're always trying to create efficiencies internally to say, "All right, if so-and-so was doing this activity or this project, does that still make sense going forward? How many SKUs are they touching? Who does it impact on that type of activity?," and so on.
So the resources aren't always going to be the same, but we're always balancing what we're asking for to make sure that we can get a return on that effort. As far as what the future holds, the strategy, at large, is still to win based on our partner's playbooks. They are essentially driving demand, and we're there to support that and stand out amongst a crowd. Really, we're starting to get more and more surgical, and that's where kinds of our strategy is leading into the back half of '23 and the '24 is, "How do you create surgical execution to win?" So instead of maybe ready, shoot, then aim, we're trying to aim before we shoot, and it becomes a very partner-specific aiming tactic.
It becomes a very SKU category aiming tactic to stick onto that pun, if you will. So we're really going to start slicing and dicing our strategy by account, by category, kind of in a matrix format, to say, "Here's how you win one level deep, two level deep, and what are the resources necessary to continue to excel within that kind of smaller focus?"
Peter Crosby:
So Mike, we've talked about the sort of the scale of the options that you are producing, the 100 plus SKU, the complexity of it, at the same time, and you own the relationship with the consumer once they have bought, and you're creating tremendous value through customer support, et cetera, but the sort of relationship that they have in the beginning, and correct me if I'm wrong, is really with your customers, your partners, and that's sort of like you said, where demand comes from and all that, but at the same time, you would like to make, if I understand you correctly, brand start to really matter in your category. Tell us a bit about sort of, "How do you think about how to pull that off in the sort of matrixed kind of relationships that you're talking about to the consumer?" Walk me through that, 'cause I think it's super cool.
Mike Friedberg:
Yeah, you're exactly right. Our customers are the face of our products at the time of purchase, so how do we make inroads with that consumer that made that decision to bring our products into their home, or maybe the interior designer who is buying on the behalf of the consumer, maybe they're redesigning their home and whatnot? That's one of the strategic challenges that we're working through as a broader company, and obviously, e-commerce and our department is a huge piece of that. Through the merchandising side, we continue to invest in a lot of lifestyle photography. So we've been known in the industry in the past for having some of the best lifestyle photography.
It's a big, big investment. We're not really using CGI. In fact, we're not using AR or CGI I in any capacity. We hire photography companies, we source homes in certain areas of the country, we spec what they look like, and what are the right fixtures for those homes, and we basically rent those places out for the day and go through the whole photography shoot, sometimes even with models. A lot of that was done in the past for print reasons, print advertising.
We have these big, beautiful print catalogs or the size of phone books from back in the day. A lot of that gets translated into digital assets, and the reason we continue to invest in that is because we want to make sure that these beautiful fixtures that we design, oftentimes in-house, that our customers and our designers that choose our products can see and feel what that would look like in their environment, whether it's their home or their setting, maybe it's a hospitality setting, maybe they're opening their first restaurant or coffee shop, and they need the right fixture to make sure that their situation or their setting is, all of it is right to that, but the reason we continue to invest, especially in photography, where I'm going here, is that resonates, more often than not, the feedback we've received from customers over time is, "We've seen your photos. We've seen your pictures. We know what your product looks like or your brand. We know of your brand because of your photography."
So obviously, that is a lever we are building upon or continue to build upon based on the feedback of our buying base. That's one of the more legacy levers, if you will. In the digital side, and kind of going back to the structure of the team is, "So how do we support that brand growth going forward?" So review generation's a big one. So we have invested heavily in both partner review generation, as well as internal review generation on our own website, so that that's also the challenge too, is we don't sell direct to customers.
If you were to buy our product from one of our customers, how do we start growing our reviews on our own website? We're almost asking customer to leave a review twice. So that's been part of the challenge as well, but we've been very pleased with the number of reviews and the SKU, the breadth of the SKUs we've been able to generate reviews on, and then we try to syndicate that out to our channel partners as well, so that's been going well. That's huge, especially in today's world where it feels like a lot of people can't make a decision for themselves, but they're willing to listen to a bunch of folks they've never met before, so-
Peter Crosby:
I may be one of those people. Just one.
Mike Friedberg:
Yes. Same. Same. I don't listen to my wife, but I'll take the advice of 1,000 random people.
Peter Crosby:
Well, to tell you, I mean, over the last few years, I've been known to buy some lighting, and it's so important to me, one, as you talked about, to see it in place, to get a sense for how it will feel in my home, and then other people, to confirm that, it's as good quality and as beautiful as I hope it is 'cause it's a big deal. It's very hard to do that digitally, and frankly, even in store, can be very overwhelming, to stand in one of those rooms and just see all these lights around, and digital somehow lets you really focus, 'cause you're looking at this thing, and then you see this array of presentations, and it can create that kind of comfort, whether you're shopping in store or online, that lets you press the buy button on something that is a premium value.
Mike Friedberg:
For sure. I think it's worth adding too, and there's added cost often, right? How many people have ... Maybe yourself, maybe you do your own installation, but when you buy a fixture, oftentimes, there's an electrician involved in their time, and if the fixture doesn't look right or you're not happy with it, or in the rare instance, that maybe a piece of glass broke in transportation, now, there's added costs 'cause the electrician has to come back or take it down. So we want to make sure that that conversion and that purchase is right the first time around, so we make sure that, again, we try to best-in-class merchandise our SKUs to make sure the customer gets all of the information upfront, and not just the technical specifications, the length, the width, the height, but the look and the feel.
So we continue to invest in more photography, angles, lights on, lights off, different bulb types, and then again, the lifestyle photography that I mentioned before, we want to make sure that that fixture can be conveyed in a setting that may resonate with you, the consumer, who's in market for that product.
Peter Crosby:
Yeah. Do you think, 'cause if I think of other, sort of categories within the home improvement category or however you define it, can you think of other examples that you look to of where a brand has become important, where it no longer was before, and do you feel like that's transferrable to what you're doing, the path that you're on?
Mike Friedberg:
Yeah. I mean, we keep our fingers close on the pulse, if you will, especially on the faucet category, home improvement category, anything that deals with homes, multi-family, apartments, that type of nature, and we want to make sure that we are in line with kind of their activities in the market. So obviously, in plumbing, there are many, many brands, but three stand out amongst a crowd. It's the Kohler, or the Delta's, or the Moan's, and regardless of the one that's in your home, you probably think you have one of those three. Again, going back to where we started, lighting doesn't necessarily have that, but how can we become one of those kind of three brands that people can say, "Oh, yeah, I have Hinkley in my home. Definitely, I have Hinkley in my home," regardless of what they had, but the brand recognition that they tie back to the SKU and the design and the style that they purchased to kind of make that fixture the talking point of the room.
It's something we continue to work on. Gone are the days of a first come, first served. There are too many brands in the market with too many retailers, and at the same time, in lighting, at least, we deal with a lot of white label, which is often a strategy you find in furniture, or rugs, or decor, where brand really, really doesn't mean a whole lot in the retailers can kind of tie all of those random brands together cohesively to create a marketing strategy. Wayfair does it really well. We're trying, as a brand, not to fall into that bucket. We want to stand out.
We feel like there's a value to be had. We want consumers to recognize Hinkley, and it's a full experience. If you have a reason to contact Hinkley, whether digitally or call one our 1-800 customer care line, you're going to get a best-in-class experience with that call, and you don't necessarily get that in a white label manner. You're just kind of trying to figure out, "Well, I don't even know what product I have because I bought ..." It was X, Y, Z brand and X, Y, Z name, but that's actually not the product that you received.
You received a Hinkley product in a Hinkley box, and you have Hinkley contact information in that box. We want those customers to reach out and engage the brand so we can latch onto them and continue to work with them in the future for future room redesigns and projects.
Lauren Livak:
I can imagine it's even more important for you as a category to have good data too, because if you don't know what brand you're searching for, but let's say I know I want silver or rose gold, or I don't know the term shiny finish versus a matte finish, right? Taxonomy and data must be so much more important because people might have a vision around those elements, but not necessarily know the design of the product, right?
Mike Friedberg:
You're exactly right. So you can look at a photo and kind of try to grab as much information out of that picture as you can or you want, and of course, pictures are worth a thousand words, and even more so today than ever before, we actually try to stuff as many infographics into a PDP as we can just because people, unfortunately read less and less and they just look at the pictures and the reviews, and they make their decision. But that being said, the technical specification information is of the utmost accuracy, their legalities, especially in the lighting industry. We want to make sure that your product is right for your room, but it's also safe for your room, and we're fortunately at the mercy of a lot of our partners in their taxonomies, and that kind of drives a lot of the requirements with the industry, right, wrong, or indifferent. More and more, we're working together as one to make sure that we're conveying the right information, but great example, no longer can you ...
You can't buy an incandescent bulb, you can't buy a halogen bulbs. Everything's gone to LED. Now, you can, of course, go and source those things on your own, but legally speaking, you can't walk into a big-box store and buy those things anymore, but we want to make sure that we have to go back and retouch all our SKUs because SKUs that may have once shipped with an incandescent bulb or once shipped with a halogen bulb, well, that's no longer the case, but those PDPs have to get updated. So we're always refreshing, and chasing, and revising, and to your point, information's everything. We want to make sure those customers know exactly what they're getting.
Even in the case of a professional or an installer, they have to know maybe how big the backplate is because they have a specification in a hospitality setting that we have to meet, and if we don't meet that specification, it's the wrong product for the job, and if we don't have accurate information, it could be very costly on both sides.
Lauren Livak:
Yeah, I think it's interesting 'cause when you think about things like over-the-counter drugs, you think about ingredients, and you think about you're ingesting it, so there's so many regulations, but also, from, in a lighting standpoint, there's danger that could happen from starting a fire or not having the right electrical specification, so it's even more critical to have.
Mike Friedberg:
There are a lot of codes, especially in the hospitality sector as it relates to senior living centers, how high a fixture can be off the ceiling. You sell ceiling fans. If the ceiling, God forbid, is very low and the blades are spinning, you want to make sure that they're not too close to the person in the room, and vice versa.
Lauren Livak:
Oh, geez. Oh my.
Mike Friedberg:
You got to make sure that if someone's trying to reach up and pull the string down, if you will, or the chain, that they can reach that, and it doesn't become a safety hazard. Last thing you want is someone having to stand on something else to reach the fixture to change it, so there are all kinds of codes that go especially into more of the hospitality and builder market that we meet and strive, strive to convey all that information to everyone.
Peter Crosby:
I have to. I remember once, when on vacation, and I was so excited about being on vacation, I actually did get on the bed and jump up and down because I was on vacation, not remembering that there was a ceiling fan.
Lauren Livak:
Oh, Peter.
Mike Friedberg:
The good news is, as fast as those fans move, they are built to stop.
Peter Crosby:
I can attest to that.
Mike Friedberg:
If your hand or, God forbid, your head gets in the way.
Lauren Livak:
Peter is still living, breathing with all limbs, so we're-
Peter Crosby:
Exactly, and I do love vacation.
Lauren Livak:
So Mike, when we think about ... Omnichannel, right? So you've been talking a lot about how you have expertise in brick and mortar, and you're now an expertise in digital, so how have you used digital to influence in-store shopping and vice versa? Are there any interesting ways that you've done that with different experiences?
Mike Friedberg:
Great question. Part of the strategy is to latch onto more of the macro kind of reporting that says where shoppers are starting their buying, their shopper journey, if you will. So we know that many of our shoppers or our consumer base is looking online, comparing and going into a store and making a purchase. It's just, it happens in our category and it's proven by where our sales breakdowns occur, so being that we're 100-year-old company, we have big, long-lasting relationships with many brick and mortar retail shops, and many of those are mom-and-pops as well. That being said, we want to make sure that our products, that we talked about earlier, are well-merchandised.
So we know what's best for the business, is that anyone who's starting their shopping journey, regardless of where they're going to convert, we want to make sure that our brand is well-represented. So we do our best to merchandise our SKUs, not only on just the key e-commerce kind of demand drivers, but also our brick and mortar, omnichannel, brick and click type accounts. We have a number of large accounts. A good example on the West Coast is Lamps Plus. We want to make sure that our products are well-merchandised.
Not every one of our SKUs is in every one of their showrooms. That's just not physically possible. These showrooms can handle dozens of, a couple 100 fixtures across many brands, but what they've all done very well is create this endless aisle. So, for example, on Lamps Plus, when you walk in there, they have these kind of big screen TV terminals with keyboards that you can log into their website and continue your shopper journey in their store, and they can help you. Their associates can help you find what you're looking for, but it's no different than shopping online from your home, so you need to have best-in-class merchandising.
Your titles need to be correct. Your data needs to be correct. Your photography needs to capture their attention, and obviously, you want to generate reviews. It's always nice to have the products in stock as well. So we make sure that we pay keen attention to our accounts, our customers that have these omnichannel opportunities because we feel like we're winning on both sides, and that creates a good partnership.
So if we can walk into a strategic meeting with our partners and speak to the efforts that we're putting forth proactively on their behalf and winning over their brick and mortar business, we come out looking very favorable compared to our competition, and it's done wonders over the last few years for us.
Peter Crosby:
Just to close out here, Mike, I just want to say I feel like we're entering into an era ... There will always be room for challenger brands and upstarts coming in. We've seen that in the last several years, but it does feel like we're getting to a place, in this new environment, where the focus is on omnichannel profitability and driving success that way. The focus is on creating this kind of complete experience and balancing that with your retailer ad investments. Then, the way that you are thinking about, the overall effort, is really the strategy for the next 10 years of the digital shelf, I think, of omnichannel commerce in general, and for a fourth generation company to be leaning into that just speaks super well to your founders, to your leaders, and to your diligence, and creativity, and creating a path with a North Star of the brand in your category that I think it's just really inspiring, and steady, and smart, and I just want to thank you so much for sharing that with our audience.
Mike Friedberg:
My pleasure, and completely agree. I think there's a lot to be said about this industry. There are a lot of brands, as you mentioned, and obviously, we have a lot of incoming brands, if you will, direct import brands that may or may not be putting forth the investment that some of the key brands, domestic brands are putting forth. I think what we're trying to establish is long-term relationships, long-term partnerships, mutually profitable partnerships with our key accounts. If they don't exist, we don't exist in, quite frankly, vice versa, so we're looking for long-term wins. Everything, as you kind of mentioned, advertising, media spend, operational side, they're all profit centers on a P&L, and we want to make sure that we're kind of checking all those boxes, not just for us, but for our partners as well.
For the next 10 years, 50 years, 100 years, it's hard to predict what's going to happen, especially in decorative lighting, but we're going to continue setting forth on this path forward to make sure that we continue to build our brand, we continue to invest in on-trend styles and designs, and affordable price points to make sure that when someone is remodeling their home, whether it's their first home, their second home, or their 10th home, that they have the statement piece that they can speak to and hopefully say, "This is my Hinkley fixture that I chose, and this was why." So future is bright.
Peter Crosby:
Yes.
Lauren Livak:
Mike, maybe one day the walls themselves will be lamps. You never know what the future holds, or what is the next generation of lighting, right?
Mike Friedberg:
LED has been an amazing, amazing invention trend. I'm trying to think of the word, but to your point, who knows what will exist in the next 10 or 15 years, what it will look like, and how it will emit light in your home. It'd be interesting to say the least. We look forward to it.
Peter Crosby:
Well, don't think that your future's bright pun didn't get past me. I heard it. I heard it. I'm with you.
Mike Friedberg:
Good. I'm glad you're picking up what I'm putting down.
Lauren Livak:
We had some good puns today.
Peter Crosby:
I am, Mike. Thanks again so much for joining us.
Mike Friedberg:
My pleasure. Thank you both.
Peter Crosby:
Thanks again to Mike for sharing his journey to category leadership and brand building. Become a member of digitalshelfinstitute.org to keep hearing from people like Mike. Thanks to him and you for being part of our community.
