Reinvention Insights, Ted Moroz

Reinvention Insights

Reinvention Insights Discussions with leaders who arereinventing their businesses and their industries.

Ted Moroz President, The Beer Store and Brewers Distributor Ltd.

Facing increasing competition and declining beer consumption, Ted Moroz and his team embarked on a reinvention.


| TED MOROZ

7,000Employees

450 Stores

1

2

3


| TED MOROZ

In August 2014, David Saffer, Chief Learning Officer of Jackman Reinvents, sat down with beer aficionado and true gentleman Ted Moroz for an update on the reinvention at The Beer Store and to share leadership insights. The Beer Store and Brewers Distributor employ more than 7,000 people across 450 stores and eight distribution centres and cross-docks. Jackman Reinvents collaborated with Ted, his leadership team, and ownership in 20122013.

TED MOROZPresident, The Beer Store and Brewers Distributor Ltd.


| TED MOROZ

How is the reinvention going?

We started down the reinvention path with Jackman about two years ago. And so far so good by the end of this year well have a little over 100 stores that have the new look, the new feel.

Customer reaction is fabulous. Satisfaction surveys are remarkable. Its doing what we wanted to do, which is winning market share, and we are seeing that happen in droves.

The new stores, the reinvented stores, are carrying the day, frankly, for our business. We are very, very pleased with the work that has taken place so far.

How have the store teams been responding?

Well, brilliantly. I have always said that it is not just about bricks and mortar. The bricks and mortar are wonderful, the new look, the new feel. But it has also come true what you folks shared with us when we first met cultural change will accelerate as we change the environment.

Weve enhanced our employee college train-ing program, and we ensured that absolutely no one gets to wear the new uniform without having been through this spectacular training. And the training results are above expectations. Our training folks recently won an important achievement award for talent development through the Retail Council of Canada.

We are very proud of the work the training team has been doing, and so we have put all of the employees through this robust training and its enhanced customer service skills program. Its about how they are interacting with custom-ers. Its about peer knowledge, so a lot of it has

to do with how people want to be served by better hosts.

When customers come to our stores they want to have intelligent conversations with our people about what goes well with some-

thing they are serving. And weve been putting all of our folks through this very robust training program and now they are getting really good at it. We have experts from within that have been highly trained and they are going and training our people throughout the province.

It seems the investment in people is delivering returns to the company.

The reinvention path will probably take longer than I want, because it is not easy to just go out and renovate 450 stores. It is actually easier and faster to go out and train 5,000 retail employ-ees. In fact, well probably have all 5,000 retail employees fully trained before we finish all of the brick and mortar changes. The behavioural and cultural changes are exceptional.

Cultural change is accelerating as we change the environment.


| TED MOROZ

The reinvented interior of the Hopedale Beer Store in Oakville, Ontario. photo: arash moallemi4

It is absolutely wonderful being in those stores with those folks. I remember something you said at our first meeting together. When you reinvented Duane Reade, you said that cus-tomers would go in and think Duane Reade had new staff. It wasnt new staff, it was a new envi-ronment and new training!

We have actually had people say this same thing. Its been a great experience, and all of the things that you folks said would happen, happened so very good, kudos to Jackman.

Kudos to you for making it a reality. There is an expression Joe Jackman uses: Real estate is marketing in slow motion. As you said, its going to take a few years to get all of the stores reinvented physically. And while Labatt and Molson and others can help with changing and innovating products more, I think what youre saying is that your people and the training can move fastest of all, driving mo-

mentum as they are motivated and engaged its faster. It is also very productive. Every-one wins. Customers win, the organization wins, and employees win.

Its funny that you have just said that. I think what makes me come to work every day is the staff here. I know it sounds clich, but it is true, and I am all about engagement. I spend a lot of time with our team in the field.

This year alone I have ridden along in trucks with some drivers, and Ive worked probably in four stores. I would go and work for three to four days with each. I also take all the staff for dinner. It is very educational.

I can see the work that weve done having a good impact on whats happening out there. I see the customers eyes lighting up when our people are getting out from behind the coun-ters. Going out and spending some time with the customers and explaining what products are available and providing [pairing tips such


| TED MOROZ

If you look after your people, your people are going to look after your business... and you are going to sell more.

Reinvented uniforms.

as] what goes great with this sort of cheese and stuff like that. That just jazzes me. And it jazzes them.

For me its also important to know whether this is working or not. You need to be out there you cant sit in your office. You can manage by your emails, but its not extremely effective, obviously. I learn more working in a retail store for one day than I do sitting in 10 meetings in the office. Go out and work with people. But work, dont just stand there and watch them. Get your hands dirty and work so Ill go and work in a store. Ill be running in the back and getting beer for folks or walking around. Going out in the parking lot and helping people carry out or load their cars.

You learn so much about the wants and needs of your people, your customers you get to see

if your core values are working or not. You get to see what youve been doing with your training, with your reinvention.

I think this goes for retailing in general: if you look after your people, your people are going

to look after your business, and you are going to sell more of whatever you are selling. It just keeps growing, and that means you eventually have more customers. Its a great circle that I have always believed in. You guys at Jackman made that pretty much happen.

I wanted to ask about your career. You spoke last year at the Toronto Board of Trade and shared that your dad worked for Brewers Retail and you started in the warehouse. I wonder if you could tell me about some of the influences in your life?


| TED MOROZ

REINVENTION EFFECT

SOURCE: The Beer Store and Canadian Retailer, September 2014

3.6% 4.01%

Market Share Increase

VolumeIncrease

THE BUSINESS CASE FOR REINVENTIONFacing increasing competition from a rival alcohol retailer and a trend of declining beer consump-tion, The Beer Store enlisted Jackmans support to reinvent and grow market share.

The insight that drove the reinvention had to do with worrying less about the competition. The reinvention was more about what we were doing to demonstrate the versatility of beer, the range of flavours and occasions, the love of master brewing, and championing beer. It was about con-necting people in different ways with beer.

Jackman team members collaborated with the iconic retailer to assess the market, segment it, and choose which customers to focus on. Cre-ating a clear purpose for the brand, we brought it to life through a new brand identity, store design, digitally interactive store environment and a repo-sitioning communications campaign.

The four pilot stores saw an increase in sales and market share, as well as increased customer satisfaction, said Andrea Randolph, VP Retail of The Beer Store.

In fact, as The Beer Store rounds its 100th store reinvention, market share has increased by 3.6% and volume is up 4.01% far surpassing ex-pectations, according to Canadian Retailer (Store 2014 Edition).

Indeed, the training team leveraged the re-invention mantra developed with Jackman that focused on creating champions of beer love every day. As Suzanne Makins, Manager of Training and Development at The Beer Store, told Canadian Retailer, We have seen an increase in our employ-ee morale which has cascaded to the service that is now being provided to customers. Well raise a glass to that!

I had the opportunity of working with a lot of great bosses. My dad worked at The Beer Store, so I sort of heard about the store every day growing up. I knew a lot of the ins and outs when I started at The Beer Store. I was just really fortunate to have a lot of great bosses, very different bosses.

I had the opportunity to learn from them and I took what I hope were all of their best points, to be honest with you, all of their best features, and try to just roll them up into my behaviour and the way I do things, and that was the main thing.

But I think even more simple than that is being respectful of people. I spent many years in our warehouses. And I learned first-hand that good management is not magic. Its just being respect-ful and polite to people. Treat people the way you want to be treated. Its that simple. Some of my mentors have been retired for 10 or 15 years, and I still see them occasionally and thank them for what they did for me back then, because they were great people.


| TED MOROZ

The Beer Store before reinvention.

LINK MISSING

Leaders of other large organizations have shared with me similar recollections of their bosses. Perhaps each of you really had exceptional mentors, or perhaps you and others have a disposition that allows you to learn from and adapt what you feel is important from them. And you may have the ability to not just bring out the best in your teams but to bring out the best in those you have followed.

Thanks. I think it is important to share what I really believe. That is, a good company should be guided by its core values. I have been saying that since I was a vice-president of logistics more than 12 years ago. I like our core values. Our core values are pretty strong. Environ-mental leadership who doesnt want to be the recycling kings and queens of the world? Responsible sales and responsible citizenship is linking business, community citizenship, and

giving back. The things that we do for Rogers House and Leukemia Lymphoma Society, Terry Fox, local charities, local food drives, local food banks, or toy drives for Christmas. My wish and

my expectation is that we support large initia-tives and local ones.

We do things togeth-er as a very large team, but we are also more than 460 small business-es when you think of our community stores, distribution centres and cross-docks spread

out all over Ontario. And we also ask them to do something for their local community, whether it is a local township or their neighbourhood, so that is another very cool core value that we have. We also value operational excellence. That is a critical value and a story for another time, but certainly an important component of operation-al excellence has to be related to how our people feel about working here and why others feel we are a great employer brand.

A good company should be guided by its core values.


| TED MOROZ

Reinvented Beer Store.

5

The Beer Store Reinvented.

Before. After reinvention.


| TED MOROZ

For the past three years in a row we have won a Randstad Award. They surveyed thousands of Canadians asking them who are the most attractive employers. The first year we won an award we came in 10th, but we only operate in Ontario, so how can we be one of the most at-tractive employers nationally, when we are only located in one province? And the second year we came in 10th, and this year we came in 8th.

But the cool point is, this year Bruce Croxon was the host and keynote speaker at the award show. Hes the guy from Dragons Den and founder of the dating site Lavalife. And he comes out on stage, a really cool guy, and he starts talking about how he became successful in business.

He said, The one thing that I always say everywhere I go is that the good companies will be guided by their core values. He almost said word-for-word what I have been saying for a decade. I looked up and I go, %#@! I must be doing something right!

Ted, yours is a story worth repeating. A side note is, at the same Retail Council event where The Beer Store won its training excellence award, another Dragons Den member, Kevin OLeary, gave an interesting talk. His point was related to yours and it was delivered in the context of how private equity firms invest in retailers they have recently purchased.

He said that the secret to turning around a retail organization and achieving greater profits is to invest heavily in training and customer service. His experience shows that people and customers are willing to do whatever it takes to stay loyal to firms that make their lives easier, and respect and listen to them.


| TED MOROZ

And the benefit to private equity is that these customers are then willing to pay more for the goods and services they buy, raising profits and returns to ownership when they exit. He also said that many retailers are too afraid to invest in people because labour is such a huge cost, and the reflex is to cut rather than invest.

But more than being influenced by dragons, and in addition to learning from your team and customers in the field, I think that your team sees you getting out there, carrying the boxes, talking to customers, and speaking about values. You walk the talk. Set the example. Demonstrate the Golden (lager)-Rule!

Absolutely. There is a saying. I stole this one from Theodore Roosevelt: They dont care how much you know until they know how much you care. Something like that, that is absolutely important.

Look for more Jackman stories at bit.ly/jckmn360

| TED MOROZ 12

INSIGHTS:Front-line associates are critical

to retail reinvention.Leadership must demonstrate

desired brand behaviours.Staying true to core values

helps organizations become their most powerful.

Except where noted, the content of this article is based on a recorded interview with Ted Moroz in August 2014.

photography credits (1-4) Arash Moallemidesigners Helen Stead, Angela Wong

writer/editor David Saffer

A Jackman University Publication. 2014 jackman reinvention inc.

Documents

Reinvention Insights, Ted Moroz