Envista CEO Opines On Traditional Retailers vs. Amazon

Jim Barnes started Envista with his partner, John Stitz, back in 2002—and at the time, it was the two of them and a few subcontractors. Today, the supply chain consulting and e-commerce services company has more than 600 associates and $100 million in revenue.

“We [received] no equity. No venture capital. we’ve done it through, quite frankly, with a lot of grit, a lot of passion, a lot of effort for the business, and we have continued just to reinvest in ourselves and expand the business beyond just our core supply chain services and systems integration business,” says Barnes.

Barnes spoke with Chief Executive about challenges companies in the retail sector are facing with supply chain, how to compete against Amazon, and more. Below are excerpts from that interview.

What are the big challenges your clients are facing in the supply chain today?

What’s happening is that for many, many years, brands and manufacturers controlled the experience of that the consumer had, right? So they influenced the consumer and they drove the consumer behavior. What’s happening now is obviously mobile devices, the speed of information, the speed of data, the information overload that we have, is [control has] moved from the brand to the consumer.

The consumer’s much smarter today about how they buy and how they acquire products. There are a number of searches you could do in terms of educating yourself to become a smart, educated buyer, both on price, product, performance, [and various feedback]. We’re going to this personalization model where most supply chains have been, right or wrong, developed in a linear fashion of one to many. So it’s a one-to-many, so I pick one and I push it out. Well now what’s happening, from a supply chain perspective, is that we’re moving more to one-to-one.

Back in my days at Johnson and Johnson, we were trying to move to a just-in-time approach, where I could actually make one product… I’d have the demand signal for one and I made one. Now did we ever get there? No. But the mindset was, “How do you go to a one-to-one relationship?” And so that’s what retailers and distributors need to be thinking, “How do I create a one-to-one relationship with the consumer, but my supply chain also has to be optimized and has to be effective to also support that one-to-one relationship?”

We’re going to see, regardless of what Trump does from a tariff perspective, you’re starting to see people trying to compress time. And so by compressing time, it allows you to move to more that one-to-one relationship. Now if I’ve got lead times of 90 to 180 days, it’s very, very difficult. The reality is that we need to compress time. And so retailers are sort of starting to wake up saying, “Wow, how do I compress time?”

It seems like a Herculean task to compete against Amazon because it’s like everything, anywhere anytime, and you can get it in about two days. What do you say to your clients who are trying to win that battle?

I gave a speech on “How to Compete Against Amazon,” at a conference in Nashville. Look, you’re not going to beat Amazon. You’re not going to go pop up 50 distribution centers, you’re not going to go bring up AWS. But the reality is that Amazon today, their e-commerce business, it’s a loss. They’re not making money on retail, they’re making money on AWS versus really making money on e-commerce fulfillment. But what they’re doing is, their AWS, they’re creating brand adapters. I mean, the reality is that Amazon today has… look, let’s just call it rough-and-tough, a $6 billion Prime business. And for what? They haven’t sold you anything yet. They’ve just set an expectation that they’re going to deliver to you in two days, and they’ve got your money. Think about it. That’s a $6 billion business. That ranks Amazon in the top 100 retailer in the world, and they haven’t yet done anything. They just managed an expectation, or they created an expectation for you.

But you’re not going to compete against Amazon, because that ship has sailed. But there are things that you can do where [you have an advantage]. Everybody thinks that the store is the Achilles’ heel of retail. Let’s take Spencer’s Gifts. Those stores, and that experience that you have at a store, is impactful on the digital side. Because again, you’re in the store, you’re going to purchase something. Your conversion rate in-store is much higher than your 1% conversion rate on your digital website. But it’s how to merge digital and physical together. And the reality is Amazon, frankly, are not going to put up 650 stores, right? The way that retailers can compete against Amazon is leveraging that personal relationship of store associate to you, right? There’s nothing personal at all about Amazon. I mean, I buy commodities off of Amazon, but I’m not going to go buy something that really requires me to touch and feel a product, right?

Leveraging stores to build relationships with the consumer, and to create brand loyalty is important beyond just having the items, the inventory, the systems, right? And I think that’s where people can identify, right? I mean, there’s a certain type of buyer for Spencer’s. There’s a certain type of buyer for Nordstrom’s. There’s a certain type of buyer, right, that goes into a Dick’s Sporting Goods. I mean, there’s a certain type of buyer that goes into REI. Amazon can’t compete with that personal relationships.

How have you evolved as a leader?

At the end of the day, I’m very passionate about what we do. I also know that it’s not about me, it’s about others. And so how do I enable others to be successful? Because their success creates, quite frankly, our success.

And so I think there’s a couple of key principles that I follow…it’s not about excuses, it’s about how we can be proactive, focusing on a common purpose and outcome, because I think when you have outcomes that have been designed by my leadership team and we have a common purpose, the purpose is definitely the motivating factor because [people] motivate themselves.

So a lot of this, quite frankly, has been done over time. A lot of coaching and a lot of mentorship with executive coaches I had, reading a lot of books. And quite frankly, I hate to say this, a lot of trial and error, right? I mean, so the reality is, and people say, “Well Jim, you can go to West Point, or go to the Naval Academy, that they will teach you leadership. You go to an MBA program; they will teach leadership.” They don’t really teach you leadership. People who come out of those programs quite frankly aren’t [necessarily] very good leaders. You know what I’m saying?

I think it comes down to having a core value and a moral compass, an integrity about doing the right thing all the time for our customers and associates, which doesn’t necessarily mean that it’s the right thing for you. You know what I’m saying?

So again, I don’t make decisions that are always about me, it’s about we. And as a leader, that has to always be in the forefront, right? Because the organization is much bigger than any CEO, and it’s this entity that exists that will survive without me, period. You know what I’m saying? And you as a CEO have to know that. But my goal is to set the vision and to ensure we have a common purpose and we know what our purpose is and what the outcomes are, both financially…but everybody else’s goals, really execute that, right? So that’s, yeah. I wish I had a playbook about leadership but I don’t. A lot of it is through trial and error.

I think people are respectful of who I am and what I do because I’m in the arena. I don’t mind getting my hands dirty, right? I enjoy getting my hands dirty. As a matter of fact, I want to get my hands dirty. And that’s the way I lead. I don’t lead from a glass box looking down at people. I’m actually in the arena making sure that our team’s successful.

Read more: Leading and Inspiring Executive Teams In Times Of Change