Nicolas HienDollarama’s journey into digital transformation showcases a balancing act of integrating advanced technologies in a traditionally cost-conscious business model. As the retail giant ventured into this new territory, it faced the challenge of enhancing customer experience and operational efficiency, all while staying true to its ethos of simplicity and affordability. The strategic implementation of CRM systems, data analytics, and inventory management technologies highlights the complex interplay between innovation and traditional business values. So, how did Dollarama manage to align its digital advancements with its budget-friendly promise? What innovative approaches were vital to maintaining its market position during this digital shift? And how can other retailers draw lessons from Dollarama’s experience to navigate their digital transformations?
Contributor
-
- Nicolas Hien, Chief Information Officer, Dollarama L.P.
Transcript (Balancing Act)
Sanjog Aul [00:00:05]:
Hello and welcome to CTN. To learn more about the show, please visit ciotalknetwork.com and today’s topic is Balancing Act Dollarama’s digital leap in the world of budget retail. So this is a case study that we are going to bring in front of you which is about dollarama which is trying to integrate advanced technologies in their retail business which is typically, you’d say, a cost conscious business model, which is what retail typically follows. So they wanted to introduce advanced technologies then they also wanted to do these advanced technology related implementation to essentially help customer experience enhancement and also to bring about operational efficiency. And they also have this ethos of making sure that they keep everything very simple and affordable. Now starting from customer relationship management to data analytics and inventory management, there are many other areas in which they actually went ahead and fundamentally tried to rethink so that they could drive innovation but at the same time make sure that they stick to their business values. Well, this is a lot of effort that must have gone into it and there may be trials and tribulations and bruises and successes, but we would like to learn all of that. And for that I have with me Nicholas Hein, who is the Chief Information officer with Dollarama.
Sanjog Aul [00:01:30]:
Hey Nick, how are you?
Nicholas Hein [00:01:32]:
Hi. I’m very good, thank you. Thanks for having me.
Sanjog Aul [00:01:35]:
All right, great to have you. So now let’s talk about Dollarama’s background. It’ll be good for us to understand your organization a little better. And as you are going about in this digital transformation journey, which is never over, to be very frank, what people would love to understand is that how did your organization identify and prioritize which technologies they should be most effectively implementing to make sure that the customer experience is enhanced. At the same time they’re also able to contribute to the bottom line.
Nicholas Hein [00:02:10]:
Yeah, sure. So first of all, Dollarama is the leading co operator in Canada. So with 1500 stores, so we’re coast to coast from maritime to the west coast of Canada. And regarding the digital transformation team, navigating this whole transformation, especially when you are about, and you mentioned it, about keeping things simple and making sure the customer experience is top notch is definitely not a walk in the park. So we really had to strategize our approach and I think one of the very important elements is we didn’t just dive head first into every shiny new technology and trend that pop up. So what we did is we really took a step back and we carefully look at old technology and thinking about which technology would actually make our customer lives better and, and boot Our bottom line. So that was really a balancing act between customer experience and what’s very important in retail, especially at the moment, the maximizing the loss prevention. So for example, if we talk about self checkout, it’s really a prime example of this balancing act.
Nicholas Hein [00:03:33]:
So on the one end you want to have a seamless, stress free customer experience to read the famous frictionless checkout that everyone talked about. But so for that you might set up the scale, the weighting scale, with just a little bit of leeway to avoid unnecessarily attendant intervention. But on the flip side, you have to keep an eye on potential tests. So that’s why we had to make sure that the weighting scale is sensitive enough, catch the discrepancy, but also giving enough leeway for the customer not to be bothered by all the attendance intervention over time. So it’s all about finding this sweet spot between the customer satisfaction and the financial responsibility that we have. So when we set out on our digital transformation journey, we really had to wait up each technology. So at the same time we had to keep thinking about the long game. And sure, technology might solve problem right now, but what about down the line were we always thinking about, okay, what’s going to be the best thing for the future? We keep a long term vision and we make sure that the solution we keep are helping us grow and evolve and are always aligned to our strategic priority.
Nicholas Hein [00:05:01]:
So the idea is navigating this digital transformation was really a challenge, but we really kept our mind to stay true to our commitment to simplicity. So and that’s how we can now deliver the best possible shopping experience for the customer.
Sanjog Aul [00:05:22]:
So one is that of course you looked at technology and you were trying to figure out what technology solutions that you can put but then now we also know that technology is also changing very fast. So and then no one has a crystal ball either. So if you were to look back and say, okay, the basis of you making a decision of one technology versus another, how would you make a decision on one hand that hey, this technology is going to be around or this approach to enhancing customer experience or operational efficiency would be the right way to go, especially you can’t have that crystal ball and secondly, how did you also make sure that in the race to use the latest and greatest technology, you’re not going to unnecessarily complicate the environment?
Nicholas Hein [00:06:08]:
Yeah, so I think it’s always this balancing act. Right. So what we do and what we have done very well in the past, when we are really focused on solving Business issues. So the thinking is, and it’s really easy to fall into the trap of we have AI technology or we have a blockchain and missing the point where you are not using a tool to use a tool. You are actually trying to solve a business issue. Right. So I think what we’ve done we were really focused on and we are super disciplined company. So the way we are doing things is this year we are really focusing on store operation and execution.
Nicholas Hein [00:06:59]:
Then we look at the business issue and then we look at all the technology available to solve this business issue. Then so and while we’re focused on this, we still tackling the other element that the business has and the other priority. But we stay focused and we try to find the only tool that solve our business issue. Then this year is loss prevention. For example, Shriek is going up. We’re trying to find a tool specifically to solve our business issue. So I think it has been always a matter of staying very disciplined and keeping because it’s really easy to get distracted and just I speak to a lot of my colleague and at the moment everyone is talking about AI.
Nicholas Hein [00:07:43]:
Right. So AI and you feel that people are, are trying to use the AI instead of trying to solve a business issue with AI. Right.
Sanjog Aul [00:07:54]:
So now I land a point. Well taken in terms of people trying to go overzealous with AI and trying to see if anything that can be done with AI we can, you know, we should do it. And there’s nothing wrong with that hope but it is still to fully be, to be fully cooked for it to be, you know, utilized in the mainstream, right.
Sanjog Aul [00:08:13]:
The jury is still out now coming back to your as an organization’s, let’s say when, you sat down with your business leadership, they would have said, okay, give me this business impact versus put this technology in place. Right. So that’s your job to translate what they want as a business. And they then came back and you then made a decision of what combinations of technologies and processes and people related improvements that need to happen along with working alongside with your business unit leaders, you will get to it. So take me through your journey of kicking this off. Keeping in mind that on one hand you have to deliver business results. You have to make sure that you are coming across as an organization which is going to be taking care of its customers.
Sanjog Aul [00:09:01]:
You have to within the company, keeping it simple and then you’re all along making sure that there are some, you know, ethos that you’re companies follow. So it helped me deconstruct it on how did you go about starting? Because technology, I’m not saying is the easiest part, but it is what decisions you make, how you implement all of that depends on how you thought this through.
Nicholas Hein [00:09:25]:
So I think if you, if you start at the beginning and the way we organize in Dollarama is there’s. There’s two things in the IT department, there’s the IT department, but there’s also what we call the project management office which belongs to the IT department and is only responsibility of the project management office is to collect the business needs from the different stakeholder in the organization and making sure those business needs and the way we will address them will be aligned with the overall strategy. So we have a group of people that their job is really to get to the function, speak to the businesses leaders and really understand their needs, right? That’s really a key component of the success within the digital transformation journey. Because what they do is when they go to see them, they already have the overall picture. They understand the IT architecture, they understand the other solution and then they not necessarily negotiate with them, right, but they are helping them define their needs. And what they do is they make sure that they don’t receive how right? They receive what? And they make sure that they receive a business lead instead of receiving a solution from them. Because when we discuss with the business leader internally, the challenge sometimes is they are just trying to push the how. They’ve seen this specific software, they’ve been pitched from a vendor or they’ve been, they have this idea of something they did in their other company.
Nicholas Hein [00:11:04]:
And so it’s really started with this discussion where okay, let me better understand what you need, let me propose you solution, let me come up discussing with the IT team, let me come up with proposed solution and this back and forth of understanding the need, coming up with a solution, being challenged by the function and so on and so forth. It also helps the change management internally because the leaders of the different functions, they feel they are part of the decision, they are part of the discussion. So I think that was one of the elements that we did well in the past where we really involved them in the initial discussion and we helped them understand the state of these projects. I take an example of a replenishment project within the overall supply chain initiative that we have. So they really feel that they are part of something bigger which is the overall roadmap of the organization that is managed by the PMO department under the IT. So I think one of the key factors here is the IT is not just it’s a service for the entire organization but it really is big role is to define this roadmap by leveraging the project management office.
Sanjog Aul [00:12:33]:
So if you were to give some lessons to the audience here, what would you say are the top challenges that you grappled with when you try to get the business to start thinking the digital way? And and second, which particular things you tried to do that and which of those worked and which one those did not work? Because I’m sure all of the leaders who are going to consume this content in some form or the other are trying to do the same thing.
Nicholas Hein [00:13:02]:
Launching the digital transformation journey, specifically in the retail sector is really complex and I think first one advice would be to understand your role as a CIO, right. And as a CIO the way I see the role is really the role is to change the status quo. Your role is to make sure that it’s not just implementing new technology. It’s about making sure you can help the company changing the way you do things. So once you understand it, then you see your role a little bit differently. The CIO is probably one of the only one people in the business that has a real holistic view of the entire system, right? So you’re not only responsible for the IT architecture, you’re responsible to make sure that you align technology with business goal and strategy. So I think you need to understand that it’s not the most popular job in the world, right? Because at the end of the day, you are making sure you keep the integrity of the entire system.
Nicholas Hein [00:14:16]:
You make sure that you keep things simple. So you have to make very often unpopular decision, right? So it’s not a popularity contest and you have to say no to some people, you have to negotiate. So I think it starts and one of the advice is to make sure that everyone in the organization understands that the CIO has this role. It’s kind of a gatekeeper of the complexity and making sure you keep things simple and you don’t want to end up with a very complex architecture with multiple interfaces that will be very hard to maintain in the future. So I think it starts with this and obviously to get that, you need to have a full support from your CEO, making sure that he is really supporting this journey and then after that, it’s really about collaboration.
Nicholas Hein [00:15:11]:
And once everyone understands the role of the CIO, then it’s a matter of making sure the collaboration between the department is done very well. So yeah, that would be the advice.
Sanjog Aul [00:15:27]:
So it’s very interesting that most of the digital transformation initiatives, they also in a way have the potential to fundamentally improve the workings of a company, not just lab technology. Right.
Sanjog Aul [00:15:39]:
So one of the biggest areas which could be an area of opportunity is I say using data analytics, for example, and the ability to even capture the customer insights. Now these two areas when like compare and give us a comparison on what it was like before you started your digital transformation initiative, the way you used to do your data analytics and the way you used to capture your customer insights compared to when you started this journey, or you’re now this farther along in this journey, how has that improved? How has that evolved as a result of you working on this?
Nicholas Hein [00:16:16]:
Yeah, that’s a very interesting question because that one probably of the most significant shift that occurred towards our digital transformation journey. The approach that we took to leverage the data analytics. We recognize very early the importance of leveraging the data and years ago we were the pioneer to deploy BW on ANA a few years ago and this decision really mark a transition from a centralized approach to data with a laser focus on exception management. So in the past and traditionally what we used to do was we had a traditional reporting system that provided the operation team with a static report and so every district manager, regional district manager people in the field operation had to fit through data to identify trend and anomaly. So you’re taking field operation people and you convert them into analysts, right.
Nicholas Hein [00:17:22]:
So you add them to read reports and to take the correct action from those reports. So when we started our transformational journey, we moved to a much more proactive model. So we moved away from presenting the data to providing actionable insight directly to the end user. So we move from a report to an exception management type of action and reporting and so that was the system that started analyzing the data, interpreting, finding exception and suggesting action. So instead of receiving a report, the people in the field started receiving action. So the report were digested by the system and then we were speeding action. One of the big benefits of doing that was to to have a kind of a standardization on the way reports are interpreted because the same report on sales or on inventory or what have you can be interpreted very different way from an individual to another.
Nicholas Hein [00:18:30]:
So that changed a lot the way the efficiency and the level of execution because suddenly everyone was looking at it the same, right? Because the system were analyzing it and speeding in action. And it was really well received in the field because it was much easier to train new people to make sure everyone is focusing on the same area of improvement, better allocation of resources, process were optimized. So we really felt that shift between traditional reporting to exception based reporting throughout the data insight.
Sanjog Aul [00:19:12]:
Now given any digital transformation initiative, while you will get them to start seeing data analytics and other changes and even the people in the business unit, leadership level or the executive management level, they see the value and their, you know, KRAs and KPIs almost makes them, you know, abide by whatever changes are required and they’re willing to work with you but then there are two other constituents. One are the business users as well as people in the IT team who would say I did not sign up for this extra work because I’m already very busy. What did you do to that end? How did you get them to all not only just start agreeing but actually become interested and excited about it? Because most of the ideas for improvement and or if some things are working out or not working, they will come from these two constituents which is the business user as well as the IT team which are supposed to make all of this happen and make it a success. So what did you do to that end?
Nicholas Hein [00:20:13]:
Yes, of course one of the things that we’ve done to make sure that journey were successful was to and to make sure that what you’re describing as I’m super busy, I’m overwhelmed with a lot of priority, I’m firefighting all the time, which is the day to day of the IT operation. We restructured the team really. So what we did is we divided the IT team in every department between operational support and transformation. So and you have different type of people in the IT department and some people prefer doing day to day support and they structure their thing and they work towards with their customer to improve or to fix bug, etc. And you have people that are more project people that want to do transformation and they accept the changing priorities and etc. So what we’ve done is we’ve created a section in every department where we have the project team and the support team and no one should be at the same time should do project and support and that way it’s avoid this issue where people are overwhelmed and every new request from the users or the business users, they are seen as okay, incremental work. I have already, I’m already a lot of stuff or a lot of priority, etc. So the people that were doing the transformation were really dedicated to certain departments.
Nicholas Hein [00:21:49]:
So I’m the one servicing the import department or the supply chain department etc. So that way and I also don’t have a day to day because my job is to transform. So it’s to connect the need understand it, propose a solution and prioritize with my customers. So if the customer that has a lot of needs and a lot of change in priorities, it’s in collaboration that they will reprioritize every week and within the transformation piece. And at the same time it’s a bug occur in production. It doesn’t delay the entire project because everyone has to fix the bug and to fix the prod. So that was the first element and that was one of the key elements why it actually worked because people were dedicated to the transformation journey and I think that was one of the elements that was really successful.
Sanjog Aul [00:22:49]:
Now given retail sector by design is competitive, there will I just hope there comes a time when you got healthy and a very high margins but typically retail function doesn’t work that way. So when it comes to the innovation in digital technologies which if were to come and they could perhaps get you to become a healthier, more profitable business, what is it that you feel is coming our way, which we should be ready to harness. And I’m saying this as if you were talking to fellow retail leaders and you would like to have them start gearing up for the next set of technology innovations and which they could utilize in their own environment and get the benefit and offer benefit to the business which it becomes the retail itself becomes more profitable. What would you say to that?
Nicholas Hein [00:23:40]:
Yeah, so I think and for sure and we are in the dollar store business, right. So obviously we are every penny counts and and it’s very important to make sure that we can really justify every move or every piece of technology we are implementing. And we are. So I think it comes up to always asking the question does it actually benefit our customer or our bottom line. Right. Because when in this environment of target margin you really have to justify every single investment you are doing so and as I mentioned earlier, it’s not just about blindly following the trend. It’s making sure that every dollar that you spend you brought a real tangible value. So I think it first starts with you need to take the time to crunch the number.
Nicholas Hein [00:24:45]:
We do a lot of pilots here. So we before embarking in any deployment of technology, we always start by okay, can we do it berit multi. Do we have a way to actually test our all of our assumptions, everything that is in the business case can we do it in one store, can we do it at the office? Can we take a really small subset of people and try to go and not necessarily to deploy at 100% but let’s go to deploy at 60% just to test, okay, do we have the right assumption and can we scale it? Because usually before convincing people to embark in a huge journey or a huge project, it’s always easier to convince them to embark in a very small pilot project to validate assumption. And then you’re not just guessing, you are, you are justifying an investment based on something tangible that has already been proven at most scale. Right? So I think that that’s how we’ve done things in the past and I think to make sure every dollar spent, every dollar that spent count, it’s the right way of doing it.
Sanjog Aul [00:26:06]:
So if you had to share some top tips for fellow retail leaders who may be already on this journey or maybe ready to embark on a newer phase of their digital transformation journey, given your experience, what would be your advice to them?
Nicholas Hein [00:26:24]:
I think I would be that would be stop calling it a digital transformation journey. It’s a good start because it can scare everyone out. It could be as easy as making sure you keep the thing simple and at the end of the day, what’s really the digital transformation journey is some of initiatives that are integrated, right? So I think just by presenting them as, okay, this is the set of initiatives we want to apply. This is where we are, this is where we want to go and I think people have been burned a lot with huge project and everyone is worried of never seen the end. So show them that, okay, you are actually different step towards a certain goal, but every step of the way we are making progress. Everyone can see the progress and celebrate all those small steps, right? So I think breaking this big journey into small digestible pieces are one of the key elements I would recommend.
Sanjog Aul [00:27:39]:
Once again, thank you so much, Nick, for sharing your insights about Dollarama’s journey of integrating advanced technologies to enhance customer feedback and operational efficiency while maintaining the simplicity and affordability. Thank you so much again. And for the audience who’s watching and listening to this show, my request is to please connect with us on social media and subscribe to our podcast. Once again, this is Sanjog Aul your host from CTN signing off. Please take care and God bless.
Download Podcast
Apple Podcast, Google Podcast, Spotify, iHeartRadio, TuneIn, and Pandora. Find other syndication channels here or search CIO Talk Network podcast on any other app.
