Explore innovative sourcing strategies, sustainability, and how running logistical sourcing operations is like playing in orchestra.

Our guest is Liz Alessi, Vice President of Sourcing at Coach. A leader with a passion for raw materials, Liz oversees leather, fabric, and hardware development for handbags and accessories.

We explore innovative sourcing strategies, sustainability, and how running logistical sourcing operations is like playing in orchestra.

Episode 30 of RETHINK Retail was recorded on August 29, 2019

TRANSCRIPTION

Julia Raymond:
Our guest today is Liz Alessi, the vice president of sourcing at Tapestry, specifically focusing on accessories at Coach. Liz, welcome to the show.

Liz Alessi:
Thank you so much. Thanks for having me.

Julia Raymond:
Yeah, I’m really happy to have you on. Just in general, I see that you’ve had pretty long history in retail and specifically the sourcing business. Were you born with like a passion for raw materials or was it other pursuits or circumstances that kind of led you to your role here at Coach?

Liz Alessi:
Well, I have an interesting story for you. I actually studied the bassoon. I went to college for classical bassoon playing. I’m positive that I’m the first person who’s been on one of your podcasts who has a degree in bassoon playing.

Julia Raymond:
You are. Wow.

Liz Alessi:
Doesn’t get cooler than that. Let me tell you. I studied at a conservatory called Eastman School of Music and then I moved to New York to get my masters at Manhattan school.I promptly quit, realizing that I did not want to be a full time as soon as for the rest of my life. I could cook a little bit, so I started to work in pastry. Those were the days where you could look in the New York time, the paper version, and find a job, which is what I did. I worked in two beautiful restaurants in Manhattan. Then I promptly quit that, because frankly I did not want to wear those plaid pants every single day.

Liz Alessi:
Then at that point I had exhausted all of my talents thoroughly, so I went to a temp agency who sent me on my first job at the Victoria’s Secret’s Design Studio. I filed for the first six months until somebody resigned in the sourcing department and they asked me to join the team. I temped in the sourcing department for a little while and then I became permanent. Next thing I knew, it was six years later and I was the raw material designer for all of their trim and componentry for the Victoria’s Secret stores. Wow. Which I thoroughly enjoy it and it was a wonderful place to kind of cut my corporate piece in such a large group of brands, and really learn how to work with suppliers, how to work with designers, how to manage a large organization just politically, frankly speaking.

Liz Alessi:
Then I left and I went to Coach in the leather department where I was for six years. Then two years at Marc by Marc Jacob. Then back to Coach. I’ve been here now for six years and we have blossomed into Tapestry Group, first purchasing Stuart Weitzman, and second Kate Spade.

Julia Raymond:
Wow. You don’t hear that a lot, you know, going from bassoonist, to pastry chef, to now VP of sourcing at a company like Coach. That is quite the journey. You said that it kind of just happened, right? You were working as a pastry chef and then you sort of were like, “I’m done with that.” You went to a temp agency and then they placed you in a role with Victoria’s Secret, and it just kind naturally float into that role, right?

Liz Alessi:
Yeah, exactly. It was very, very organic and very right place at the right time. This is what I always tell young people when they come and visit me and they say, “How can I get into this? I want to be a VP of sourcing.” I say, “The way I did it will never happen again. I guarantee you. You’ll have to find your own path.

Liz Alessi:
But I actually found so many similarities to my musical education and what’s required to be a good musician or a great musician if you’re lucky, and working in fashion, specifically in sourcing. It’s really interesting the similarities that I have found in how my training in music has matched up to the requirements I need to be VP of sourcing here.

Julia Raymond:
Yeah. Where are the parallels? Because when I first heard this I was like, wow, music is usually really a creative field, and so you went from super creative to sourcing, which to me sounds really involved in the business side of things, logistics and operations. Like you said, working with suppliers and designers. Where are the parallels that you’ve been able to draw?

Liz Alessi:
Well, I actually have a particularly fun job. I’m one of the few people I know who really enjoys coming to work. One of the reasons I love working here in this particular role is I almost have two bosses. Yes, I’m in sourcing and I’m under operations, but I have one foot firmly supporting the design team, so I’m really crossing over between very logistical sourcing operations activities and translating design speak. When they say they want a squishy or leather, I can translate that into a technical term that a tannery might understand. My role is always interesting because I’m having to walk that line between delivering on time, at the right price, at a mass volume, and making sure that aesthetically the team is pleased with everything we’re putting forward.

Liz Alessi:
But in terms of music relating to this role specifically, I would say that if you know anything about an orchestra, you might know that a bassoon is the bass section of the woodwinds section. We are meant to be felt but not heard. You probably don’t know what a bassoon sounds like, most people don’t, and that’s the point. Interestingly, I think that being in sourcing is somewhat like that. We’re not the head designer, we’re never going to get the accolades or be in the spotlight, our job is to be there, be felt, but not heard. If you’re expecting some pomp and circumstance as a sourcing person, you’re probably in the wrong place.

Liz Alessi:
The other thing you learn in playing music, especially in a section like the woodwinds section, is you have to know your place. Know your role. Know when it’s your time to support the flute player, or it’s your time to play softly, or play more loudly. Having that intuition around your surroundings and the people you work with is incredibly important to navigate a political landscape of a four-plus billion dollar company. Really knowing who your partners are, who you need to depend on at different times and who’s depending on you and those relationships is key to being successful in this role.

Julia Raymond:
Yeah. I could see that, navigating the landscape. I really love how you compared being the bass section of the woodwind section to sourcing and being in retail. It sounds like you’re sort of the liaison between the design teams and then the delivery side.

Liz Alessi:
That’s exactly right. I have one foot in one, one foot in the other.

Julia Raymond:
Wow. I love that. What are you seeing? Because you kind of have this bird’s eye view of both sides, obviously there’s a ton going on when it comes to sourcing and especially with all the conversations around tariffs, and so a lot of worry there. But when it comes to design, are you seeing any new trends that are particularly interesting, especially in accessories or pertaining to your category, which I might call it like the more affordable luxury?

Liz Alessi:
Yeah, it’s definitely affordable luxury. That’s how we describe as well, or accessible luxury. The biggest trend that I see certainly I would say in both world is sustainability: designing with more consciousness of your materials, the traceability of those materials, even social responsibility in your service providers who are doing your manufacturing. That is really what everyone is talking about on a daily basis. It’s definitely out there firmly. I’m sure you saw on the news that a Caring Group has formed the fashion tax last week and we signed up to be a part of that. We are really trying to educate ourselves in this extremely sticky area called sustainability right now.

Liz Alessi:
Whether it’s on the design side, when I’m speaking with Stewart about which materials he would like to use in our bags for next season, or I’m talking to our production manager about whether or not we should be air shipping finished goods to make a certain intro and what the CO2 impacts may be, that is the primary topic that I think is in everybody’s minds today.

Julia Raymond:
Right. It sounds like it adds definitely another layer of complexity, especially with with your role. I mean, is this something that’s been close to Coach for a while now or is it something that is just more important because of the trends and the changing generations and consumer behavior?

Liz Alessi:
Well, a little bit of both, I would say. Coach is a legacy company. It was owner operated for years. It’s about quality. It’s about lasting product. It’s not never really been about quantity. You know, we still have a repairs department who will take back your well-loved goods and try to fix them the best they can so you can continue to wear them.

Liz Alessi:
In one sense, we’ve always focused on that, because if you know anything about sustainability, it’s really about consuming less. The irony of that is that we’re a publicly traded company whose job is to sell stuff, right? We also want to sell things that last, because it’s the right thing to do for our planet. So, we have a lot of conversations around that kind of push pull where we know that our customers have needs and obviously the trend is around there are aesthetic trends, but then their big social trends. We have a lot of conversations around those two worlds and how we can best walk the line. But to answer your question, there are much more urgent conversations today than they ever have been before, and we’re spending a lot of time focusing on our own internal education around what sustainability means to Coach and to Tapestry brand.

Liz Alessi:
There’s quite a bit of debate out there in the marketplace around what that means even, from a leather standpoint, cotton sourcing, whether or not to be organic, or traditional, or recycled, or BCI. PU and PVC is a big conversation. The future of the way we source and produce our hardware pieces is a big conversation. We’re really trying to tap in to the latest news and LCAs and updates and working with NGOs to make sure that when we take a stand, which we will take in a big way, we’re doing absolutely the right thing.

Julia Raymond:
Absolutely. You said a big part of that was educating your own teams. It sounds like it’s just really involved. I mean, does this impact the supply chain? Are there big decisions that have been made or is this more of like a slow building momentum type of longterm strategy?

Liz Alessi:
I would say both. If anyone’s interested, you could go onto the Tapestry website and check out our 2025 goals, which are around our people, our planet, and our communities. Those are somewhat more longterm and we believe quite achievable goals, which will not necessarily have a direct impact on our current sourcing strategy, especially for raw materials.

Liz Alessi:
However, there are a lot of other activities going on to ensure that our materials are coming from the right place, our manufacturers are treating chemicals properly, that we are not putting toxic water waste into the environment, where we wouldn’t want more traceability around where our raw materials are coming from, down to packaging. Are there ways that we can work to have more sustainable packaging in our finished goods and in our stores?

Liz Alessi:
We’re having all kinds of internal debates around resources, and it really feels like the more we learn, the more we learn we need to learn. There’s so much going on constantly that if you just read the news every day, you’re seeing different people making different decisions. For example, VF Corp announced just recently that they were not going to be using any Brazilian raw material because of the wildfires. That’s a perfect example of a situation that is happening currently outside of VF Corp’s control that they now have to mitigate by finding a different sourcing strategy urgently to continue to make their goods.

Julia Raymond:
Yeah, that was definitely probably more reactive, but a smart move on their end.

Liz Alessi:
To really answer your question, I would say longterm we’re trying to get ahead of it as best as we can so we don’t have many of these urgent situations on our hands. But we are learning a lot about what is out there, the information that is out there, and again, relying very strongly on NGOs who have spent many, many years working in these areas and really trying to do this best we can to support these global initiatives.

Julia Raymond:
It definitely sounds like it. You said it’s on your website. You guys already have everything laid out for the goals to 2025, which is amazing and a step ahead probably of a lot of companies. On on that note, do you think there’s an aspect where it’s about educating your buyers and consumers about what you’re doing and making that really visible? Is there something that gets involved with the products that you’re sending out to really make consumers know that, “Hey, we care and we’re making changes?”

Liz Alessi:
I do to a certain extent. I think this is where companies do need to be a bit careful in terms of what they disclose to the public and what they don’t in full transparency. The worst thing I think a company can do would be, first of all, do nothing, but beyond that to be seen as greenwashing. For example, if a company put out a small sustainable capsule to answer some customer need that they may have heard about, it’s not really going to be moving the dial for their sourcing strategies and any major sustainability initiatives that they may have. What we are trying to do is make real substantive changes that move the needle in the most dramatic way that we can and then choose whether or not we’re going to share that with the general public or not. Does that make sense?

Julia Raymond:
That makes total sense. I think there’s a lot of risks sometimes, as well, especially from a marketing standpoint when you make these moves too to be greener and people might perceive it as just being for the wrong reasons or to generate more revenue versus I guess actually making it part of a longer term strategy to to help change the world in a sense.

Liz Alessi:
Yes, exactly. One of the things that I would like to make sure that our customers understand and even some people inside this building don’t quite understand is the source of leather. I don’t know how many people are aware that leather is a byproduct of the meat industry. I think recently in the news, the leather industry has been, I believe, a little bit unfairly bashed by some more sustainable types of article, sorry, more sustainable types of writers, because they don’t understand the meat consumption globally is what’s driving the slaughter, which the tanners or the leather manufacturers are taking the byproduct and making hopefully a very long-lasting product that will be used, and worn, and loved for many, many years.

Julia Raymond:
Okay, so you’re saying there’s maybe a misconception because number one, there’s the consumer demand for meat and then there’s the slaughterhouses that actually get the meat, and then there’s the tanners who are using the byproducts, so it’s actually not something. It’s basically they’re using product that would already be there because of the meat industry?

Liz Alessi:
That’s exactly right. Exactly right. The global slaughter has actually remained about the same. I know a lot of people are vegan now they’ve moved away from eating beef, but as emerging economies are now able to afford the high protein food, they’re actually eating more of it maybe as others are eating less. As long as people keep eating beef, we should be making leather out of the hides or making something out of the hides. But today, we know how to make leather out of the hides.

Liz Alessi:
I was very encouraged to have a conversation with one of the largest meat packers a few weeks ago who told me that they have a zero landfill facilities. They are using every part of the animal. If just do a quick Google search on what are bovine byproducts used in and I think you might be amazed how helpful all of these byproducts are. Not to say that raising cattle in high feed lot situations is good for the environment, but at least from the part we can control, I feel good about where we’re sourcing our hides and that those people are being responsible, and our leather manufacturers are being responsible in the way they treat the materials and chemicals and their waste.

Julia Raymond:
Yeah, that makes total sense. I love how you brought up the reason behind the meat industry, that demand not really going down because of these other economies and people having more expendable income and being able to afford meat, so there’s not a whole lot of change there. I’m sure a lot of people just don’t think about it like that.

Liz Alessi:
Yeah, that’s right. I think the hide is really a very small percentage of the value of the animal. I believe it’s around 3% now. The non-meat byproducts are used in fertilizer, in feed and gelatin, cosmetics, pharmaceuticals. They’re definitely doing the best they can to be responsible.

Julia Raymond:
Yeah, and to leave nothing behind, basically.

Liz Alessi:
That’s right.

Julia Raymond:
Totally. Well, moving back just a little bit to the category that you’re in, because I had Doug Stevens from the retail profit on a podcast the other day and he also wrote an article about luxury. His stance is basically luxury is evolving again, because mostly millennial consumers, they’re driving the change, they’re spending more on experiences versus product and services. I think he used the example luxury has always been related to status in society. It went from more goods-based to service-based. You know, you have a made or you have a gardener or whatever, and now it’s more about where are you going, who are you with, what are you doing, and social media is driving a lot of that. From your perspective being in this category, is this resonate with you? Do you agree with him?

Liz Alessi:
I completely agree with him. We are not in the luxury category, we’re in more of the accessible luxury category. But I think it was a pretty bold move for LVMH Group to buy a hotel, which I believe they did last year.

Julia Raymond:
Right.

Liz Alessi:
We’re not going to buy a hotel. I can tell you that. But certainly, the the millennials are driving much of this change in my opinion. A lot of articles have been written about this recently. Not only changing the way they purchase products, but reducing consumption just in general. They don’t want to work for companies who are not involved in some socially responsible ways in the world. They don’t want to purchase from companies that aren’t taking part in those things. Overall, they’re just consuming less. I think it’s probably the most interesting point in time for retailers, for people who sell things, in my history at least, to out what any company can offer to the customer that resonates with them emotionally that may not be their traditional product. Certainly experience is one of them.

Liz Alessi:
A lot of companies are doing quite well like Rent the Runway and thredUP. They are working with many brands now to rent product or resell product. Upcycling is something that every company will have to take very seriously. Then it’ll be up to each brands, I think, to figure out what fits in their own DNA, what their customers really want, and try to forge a future together. So in my view, this is a point in time where we have to be listening to our customers so intently to understand what they would like from us now. It may or may not be a handbag. I know that’s blasphemous for me to say. It’s something we should be thinking about now and partnering really with our customers to help each other find a future.

Julia Raymond:
Right, to have that a larger conversation and see where things are going, especially in the accessories division that you are so involved in. Like you mentioned Macy’s, so they obviously partnered with thredUP, and then thredUP also partnered with JC Penny. Definitely a different type of retailer, being a big box department store, but do you think that luxury retailers are going to have to reconsider the resell market over the coming years and get involved in that as well?

Liz Alessi:
I can’t really say yes or no to that. I think it’s something that should be thought about and considered. But the flip side of that is product integrity and brand integrity, right?

Julia Raymond:
Totally.

Liz Alessi:
You need to pay attention to what’s out there. You don’t want to be in a position like Burberry was in where you’re caught incinerating your goods because you want to protect your brand integrity, because that’s also not a good situation. But the fact of the matter is when you’re in a manufacturing environment, you can never 100% guess what the customer is going to want. You’re always taking a stab. That’s the job of the buyer and the merchandiser to place buys sometimes many months in advance of when that product hits the store.

Liz Alessi:
So until we have some maybe more intelligence around predicting what the customer is going to want, we will have this issue of what to do with our A, leftover, obsolete product. And B, what do we do when the customer no longer wants the thing that they bought? Do we want them to take it to a secondhand store? Do we want them to bring it back to us? I think I don’t have any of these answers, but these are the types of conversations I think brands are having and will continue to have over the next few years.

Julia Raymond:
I agree. There’s probably other ways maybe to do something that’s less visible than partnering with thredUP and having resale items in store is what I would suspect would happen. But really good points. Thanks for joining the show today, Liz. I mean, we could probably talk for hours. It sounds like you have a wealth of knowledge and probably just way deeper than I would ever know how to approach when it comes to sourcing, so I really enjoyed hearing kind of your thoughts on the market right now.

Liz Alessi:
Thank you so much. I enjoyed our conversation, as well.

Julia Raymond:
Great to have you on the show.

Liz Alessi:
Thanks.