Andrew Laudato always considered himself a technology person that worked in retail. His first technology job out of college was at The Limited. “It was just the job. It could have been health care,” the EVP and COO of The Vitamin Shoppe says on this episode of Retail Gets Real. “It could have been insurance, right? I never thought of myself as a retailer. I was a nerd.”
His second technology job ignited his passion for retail. “The Limited had this little startup company … called Bath and Body Works. I was part of the very small team that was incubating that company inside of this large corporation. Every day I got to work with the CEO and the CFO and the merchants,” he says.
“I really flipped from being a technology person that worked at a retailer to being a retailer that was an expert in technology. That was a huge defining moment for me.”
From there, Laudato went on to work at more retail companies, including Express and Joann Fabric and Craft Stores, and became CIO at Pier One Imports before leaving the industry for a time. “I left retail, went into health care, didn’t love it. Came running back into retail,” he says. “I was a CIO for 20 years and now I’m a COO, with obviously a background in tech, but I’m a retailer first.”
In his role at The Vitamin Shoppe, Laudato focuses on creating a supportive environment for innovation, and fostering innovative teams, something he talked about at NRF PROTECT in June.
“You have to start with your customer, your internal customer, your external customer. I think of innovation as solving a problem or a need. Now, sometimes it’s a problem the customer doesn’t know they have. But you start with a customer, you start with a problem and then go from there,” he says.
Innovation is about more than technology, he says. In fact, “It’s not about technology ever. Technology is a tool. Someone asked me once, ‘What’s your cloud strategy?’ I said, ‘I don’t have a cloud strategy. I have a drive-our-omni-business strategy that does use the cloud. But there’s not a strategy,’” he says.
“It’s just like when you hire a contractor to work on your house, you don’t ask them what’s his hammer strategy or screwdriver strategy, right? These are tools.”
Instead, Laudato says, innovation is really understanding what the customer wants. And increasingly, the customer wants to shop where, when and how they prefer. “The very best customers shop multiple channels in multiple ways, depending on their need,” he says.
Check out our event recap and read the coverage on NRF Nexus where technology, marketing and digital innovators intersected.
What retailers are striving for is a seamless experience – whether that’s called omnichannel or, as Laudato says, “unified commerce.”
“To get there, we have to have unified, integrated systems and processes. That’s how we’ll truly deliver that seamless experience to our customers,” he says.
Listen to the full podcast to hear how Laudato’s very brief stint in high school football led to a career in retail technology, what his teams will be focusing on for the coming year, and his three goals for every conference he attends.
Episode transcript, edited for clarity.
BILL THORNE: Welcome to Retail Gets Real, where we hear from retail’s most fascinating leaders about the industry that impacts everyone, everywhere, every day. I’m Bill Thorne from the National Retail Federation, and on today’s episode, we’re going to be talking with Andrew Laudato. He is the Executive Vice President and Chief Operating Officer of The Vitamin Shoppe.
We’re going to talk to Andrew about his career journey, what it’s like to lead through times of accelerated innovation, his team’s focus for the coming year, and what the future of retail looks like. Now, my colleague Jen Overstreet chatted with Andrew in July at NRF Nexus. Jen, take it away.
JEN OVERSTREET: Andy Laudato, welcome to Retail Gets Real.
ANDREW LAUDATO: Thanks, Jen. It’s great to be here.
OVERSTREET: Let’s talk a little bit about you and your role to The Vitamin Shoppe. Why don’t you just kind of set the scene of what you do for The Vitamin Shoppe.
LAUDATO: Sure, so The Vitamin Shoppe is an omnichannel health and wellness retailer. We have around 700 stores in the U.S. and we have stores internationally through partners. I’m the COO at The Vitamin Shoppe and in my four years there I’ve worn many hats. My current responsibilities include the supply chain, technology, digital operations, customer care and franchise development.
One really exciting thing about us is we’re growing and we’re adding stores through franchising. We’re omni and that means stores and it means online.
OVERSTREET: Can you talk a little bit about that franchising? Why are you doing that now?
LAUDATO: As I mentioned, there’s about 700 stores and we’ve studied the markets extensively and demographics, and we feel very comfortably that there’s more room for — I’ll say hundreds of more stores in the U S. There are markets that we’re not in and our omni business is a creative. When we open stores, we actually do better online. It’s all about being where our customers are and continuing to grow the business.
OVERSTREET: I’m going to ask about COVID. I’m sorry. Everything always comes back to COVID and health and wellness and COVID. Some of that growth — do you think it’s driven by consumers being more interested in health and wellness and that market growing or what do you think is driving it?
LAUDATO: Yes, absolutely. The health and wellness market is growing, and we’re just a small percentage share of that. We’re looking to grow our share of a growing market. It’s really exciting to me to be in a retail business that is selling health and helping.
We all care about our health. Everyone you talk to is on a health journey. It’s really an exciting and fun and rewarding business to be in and that’s exactly what’s happening. It’s growing. COVID did help people maybe think about their health a little bit more and that’s continued and we believe in all the data shows that it will continue.
OVERSTREET: What about your career journey? How did you end up with The Vitamin Shoppe?
LAUDATO: All right. I’m going to go way back.
When I was going from 10th grade to 11th grade in high school, my family moved to a new city and I had this idea that to make friends, I would sign up to be on the football team. I’d never played organized football, but I’m a big football fan, and I played backyard football.
We drove up to the school — it was in the summer — and my mother said to me, ‘You’re kind of little. I think you’re going to get killed. All those boys look very big.’ I was like, ‘I’ll be fine.’ She was kind of right. I did not get killed, but I did get my leg broken, and end up in the hospital, in surgery.
So here I was 17 years old with nothing to do and really bored. My football career ended very quickly, and my father came home with a box, and in this box was a computer. This was in the 1980s, so this is very rare, and it was an Apple IIe. I went to the library, got books and taught myself how to program and it really changed my trajectory.
I was maybe the only person in my high school that went from the football team to my senior year, [when] I was the computer club president. I chased that dream in college and started working in technology.
From there, I got a job at The Limited. That’s how I got into retail. It was just the job. It could have been health care. It could have been insurance, right? I never thought of myself as a retailer. I was a nerd. I like to say I was a nerd before it was popular. Now it’s kind of cool to be a nerd.
Then a couple years later, The Limited had this little startup company you probably heard of called Bath and Body Works. I was part of the very small team that was incubating that company inside of this large corporation. Every day I got to work with the CEO and the CFO and the merchants. I got to try new products, which was sometimes scary. I really flipped from being a technology person that worked at a retailer to being a retailer that was an expert in technology. That was a huge defining moment for me.
I went from there to Express, which was another Limited company. Then did a little stint at Joanne and then I ended up becoming the CIO at Pier One Imports. I held that job for 16 years. I left retail, went into health care, didn’t love it. Came running back into retail and that’s my whole career journey. I was a CIO for 20 years and now I’m a COO, but really with obviously a background in tech, but I’m a retailer first.
OVERSTREET: So tell me about that. What is it about retail that draws you in? Why do you say you’re a retailer?
LAUDATO: Well, it was kind of like I had a little attitude when I got out, I said, ‘Oh, yeah, I’m getting free,’ but it’s the innovation, the change, it’s always something new and it’s competitive. In over 30 years of doing this, even here — we are at a conference and we’re learning new things and new ideas. It’s never stopped being interesting and challenging and fun. It’s never stopped being that and I don’t think it will.
OVERSTREET: I’ve heard you speak before. You spoke at NRF PROTECT earlier this year, and you were talking about creating this great environment for innovation, fostering innovative teams and how you do that. Can you talk a little bit about that and how you approach innovation and testing emerging technology at The Vitamin Shoppe?
LAUDATO: You have to start with your customer, your internal customer, your external customer. I think of innovation as solving a problem or a need. Now, sometimes it’s a problem the customer doesn’t know they have. But you start with a customer, you start with a problem and then go from there.
I think when we use the word innovation, everyone thinks of tech and iPhone. But sometimes innovation is a process, or it could be for us in product. Innovation is one of the core tenets of The Vitamin Shoppe so just really understanding what your customer wants. It’s not about technology ever.
Technology is a tool. Someone asked me once, ‘What’s your cloud strategy?’ I said, ‘I don’t have a cloud strategy. I have a drive-our-omni-business strategy that does use the cloud. But there’s not a strategy.’
It’s just like when you hire a contractor to work on your house, you don’t ask them what’s his hammer strategy or screwdriver strategy, right? These are tools.
People ask me what’s my mobile strategy. It’s the same question. I don’t have a mobile strategy, but I have a strategy to let the customer shop where and how they prefer. For so many customers, it’s on their mobile. We have a very successful mobile app. But that’s not a mobile strategy. That’s a customer strategy using mobile technology.
OVERSTREET: You said you were a CIO for a long time, and now you talk about innovation and tools and these strategies. How has your perspective changed over the years? How have you developed this perspective that you have?
LAUDATO: Innovation is tough because it’s spending time, talent and resources on something that might not work or honestly, probably won’t work, right?
What I’ve really learned is that you can’t innovate until you have two things present: You have to get your house in order. If your emails aren’t emailing and your website’s not running, and all those things, and your budgets aren’t good, and your projects aren’t on time, you don’t have the right or the permission to innovate. You have to start at that foundation.
I talk about pouring concrete — back to the construction — I always use those analogies because everyone gets it. Everyone’s had a missed, failed construction in their home project. So get your house in order, get everything working. Only then have you earned the right to innovate.
The next thing is that teams need psychological safety. People need to know it’s OK to make mistakes. It’s OK to take risks. There’s an old joke: I’m all for risk as long as nothing goes wrong, and things will go wrong. You have to make sure people feel safe and empowered and even rewarded for making some mistakes.
As far as perspective, I definitely started my career where I was really afraid to take risks because I was afraid of the consequences. But once I became aware that you could build an environment and a culture of psychological safety, then things just took off from there.
OVERSTREET: Can you give an example of what that means? Psychological safety that allows people ... What exactly does that look like?
LAUDATO: It looks like when someone does something really wrong, you have a chat with them about what they learned and how we benefited from that mistake, instead of punishing them, taking away rights, yelling, screaming.
We all pay a lot of money for our educations and even more money for our children’s educations and it’s so important to get education. A project that fails is an education if and only if you’re willing to talk about it and learn from it. Then it’s not a waste of time or money or energy because education is valuable.
Now, if you have something that failed and you sweep it under the rug, or that’s the thing that shall never be mentioned, then you did make a big mistake. The safety is the, that word we use in Agile is retrospective, where you talk about things, learn from them, know what you learned and then don’t repeat that mistake again.
OVERSTREET: So we are here. I mentioned PROTECT earlier, that you were at PROTECT, but right now we’re actually here at NRF Nexus at the beautiful Terranea Resort, outside of L.A., and we have a great cross-section of retailers here. We have CIOs, CMOs, digital officers. And you are speaking today and you’re attending today, so can you tell me a little bit about what you’re hoping to share and learn as you attend Nexus this year.
LAUDATO: I’m on a panel to talk about omnichannel retailing. Even before we start, we can debate the phrase, right? A lot of people think omnichannel is passé because omni means “many.” So “many channel,” but what it means now, and I think to everybody, it’s about seamless. Unified. There’s a lot of words we’re using, but that’s what we’re going to talk about.
I always define it — at The Vitamin Shoppe we talk about, and I said it already — let the customer shop where, when and how they prefer. And the very best customers shop multiple channels in multiple ways, depending on their need.
At The Vitamin Shoppe, ‘health enthusiasts’ is what we call our employees and they’re experts on product. It’s a great experience to go to the store and talk about your needs, your goals. But once you find a regimen, then you could put that on a subscription and have it come to you every month, right? It’s the same customer with a different need.
So we’re going to talk about that and what it means and the big, big message I have is that — if your goal is to be seamless to your customer, you need to be seamless on the back end. If you’ve hobbled together at order management and all these different web tools, and they’re all just kind of glued together, it’s going to show up in your experience. If your processes are not the same, if your web team is releasing every two weeks, and your warehouse team’s releasing every quarter, that’s going to show up.
There’s a woman that wrote a book called, “Corporate Underpants,” and the idea is that your underpants are showing if your customers can see right through your web and your technology and your experiences. I think that not just talking about — should we call it unified commerce — but to get there, we have to have unified, integrated systems and processes. That’s how we’ll truly deliver that seamless experience to our customers.
OVERSTREET: That’s great. That’s definitely a good message. What about, you know, we have so many smart people gathered here today. What’s something you want to learn more about?
LAUDATO: It’s a time and financial commitment to come to a show, so I always attend with specific goals. I would say they’re modest goals, but I keep track and make sure. One of the things is to validate the path that we’re on at our company, so hearing where others are going and does it make sense or are we aligned. It’s a little bit of a way to keep score and see where you are.
Another goal I have is to meet at least three new people. I’m a little bit of an introvert, but I think I met eight new people already, so I’m ahead on that goal. And to get at least one new idea.
Meet three people and get one idea. That doesn’t sound like a lot, but one good idea that we weren’t thinking of, take that back home, and implement it? It’s a huge victory for a huge accomplishment. So those are my goals — validate what we’re doing, meet some new people and get one great idea.
OVERSTREET: You had said earlier before we started that you brought your team with you. Could you talk a little bit about what your team’s focus is as you look ahead to the next year or two?
LAUDATO: We’re all in on composable commerce and API enabling all of our tech stack. I use the analogy of LEGOs — instead of buying one big brick, we’re buying all these little LEGOs. We’re buying them and building them, and that way we can, when a new idea for a feature comes up, we’ll be able to snap together and deliver those.
Between vitaminshoppe.com, our point of sale, our backend, all of our marketing, it’s all about breaking these up into small composable pieces, then assembling them to provide really experiences we don’t know yet that we’re going to need, but we’ll be ready when we do discover those. So that’s on tech.
On supply chain, it’s about being better, faster, cheaper. It’s about more transparency. There’s a lot of debate about speed to the consumer, like when I order this, will I get it tomorrow? But what we’ve learned is it’s not necessarily about getting it tomorrow, but it’s about having clarity about when I’ll get it. When you’re shopping, everybody loves that ‘You’ll get this next Wednesday. You’ll get it on Tuesday. You’ll get it on Friday.’ So a big, big thing: transparency to the consumers.
Continuous innovation in our supply chain, which — what’s really impressive to see is how lots of little changes that add up to be big. I know this is big in manufacturing where you take 10 seconds out of a process, but if you’re running that process thousands or tens of thousands of times, that adds up and those costs add up. So we’re always doing that and it never ends. You never reach the end on those goals.
And franchising — we’re welcoming people that are passionate about health and wellness into our family. Small business opportunity. Someone can open up their own Vitamin Shoppe store. There’s all this talk about the Big Mac was invented by a franchisee or the $5 foot long, and we’re pretty excited about what innovation these new franchisees are gonna bring into our organization. We’re super excited about that.
OVERSTREET: When we were talking about the conference, you had mentioned getting new ideas, and I was wondering for someone in your position who — it’s kind of your job to figure out the best way, the best new ideas to go after — how do you stay current when there’s so much going on in retail, and there’s so much going on in technology, and there’s just stuff flying at you all the time. What do you do to not just get new ideas, but stay focused on the right things?
LAUDATO: What I like to do, and I think it’s the best way to learn things, is to sign up to teach them. One example, like a month ago, when ChatGPT first hit (maybe it was two months ago), our head of HR, our Chief People Officer, said to me, ‘Hey, will you come and talk about this generative AI to the HR team?’
But I wasn’t an expert, right? We’re all learning this as it came. So because now I’m signed up — I said yes, because that’s what I do — now I had to learn kind of just in time to teach the class. And boy, when you’re standing in front of a group, in person or virtually, and teaching something? If you’re a fraud, they’re going to look right through you.
I had to really immerse myself and learn it — just-in-time learning. I created an online class in project management and I wrote a book. I’m always trying to teach things, and that’s how I stay current or how I drive things I know to the next level is by teaching. I’ll tell you in project management, I’ve done hundreds and hundreds of projects. I got certified in PMI. I’m certified in Agile. I’ve been doing it for my whole career. But when I sat down to create a course on it? Like, ‘Ooh, I don’t really feel like I know this content.’ It’s such a different level of understanding. So that’s my advice on being current and being as much of an expert as you can be is to volunteer to teach.
OVERSTREET: What about the future of retail? So you have such a great perspective on this from where you sit. What excites you most about the future of retail?
LAUDATO: Well, look, we’ve talked about innovation a lot and retail has been and always remains on the vanguard of innovation. The vanguard, right? Because the consumers demand it, competition pushes it and so that’s what excites me. The pace of change is accelerating. That means the pace of innovation is accelerating. That means in retail, we’re going to have to just keep moving faster and faster to stay out in front of these things. That’s what I love about the future.
OVERSTREET: What is your best piece of career advice? Either something that someone shared with you or something you might share with someone who’s just starting their career.
LAUDATO: I would say live your business. Maybe in retail, we talk about visiting stores, but work in the store. Run the register, unload the truck, load the truck, work in the distribution centers. I spent a week in our distribution center doing every job, and there was like one small thing that no one would know to ask. We were asking our health enthusiasts in our warehouse or in place to do math every time they put something away because they had to multiply by the case pack. Well, computers can do math really well, right, so let’s just have it do the math for them so they don’t have to have that extra moment. It’s small, but it’s one of those small things.
I’ve been to our manufacturing plants. We put on the suit and see how things are made. I’m shopping our own website. Like I said, we have a subscription business, but you need to have a subscription. You know how that works. Take the products, wear the clothes. You have a loyalty program, then you better be a member of it. So just whatever business you’re in, live your business.
It also gives you credibility. If you’re sitting around in a corporate meeting and someone’s talking about things at the store or things at the warehouse, and you’ve been there and you’ve done the job, you’re now the expert in the room. You have credibility. That’s my big advice is live your business.
OVERSTREET: It’s such great advice and it’s such a good perspective. A lot of times we hear people say like, ‘Oh, it’s not, it’s not really a retail company. It’s a tech company that’s in retail.’ Yeah. I’ve heard that before, especially with new startups, but it sounds like what you’re saying is you need to be a retailer. You need to learn retail. You need to know your customer and the tech is the tools that gets you there.
LAUDATO: That’s right. It all works great in the lab.
OVERSTREET: Exactly.
LAUDATO: It hits the real life, a reality of a store and someone maybe that’s new? That’s when you really see how these things work for the internal and external customers.
OVERSTREET: Andrew Laudato. Thank you so much for being our guest today on Retail Gets Real.
LAUDATO: Thanks for having me.
THORNE: Thanks Jen. And thank you all for listening to another episode of Retail Gets Real. You can find more information about this episode at retailgetsreal.com. I’m Bill Thorne. This is Retail Gets Real. Thanks for listening.
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