What do an outdoor apparel company and craft beer have in common? Dedication to brand values, quality and community impact, despite the ebbs and flows of the market, according to L.L. Bean president and CEO Stephen Smith.
Smith was the keynote speaker at the 8th annual New England Craft Brew Summit, hosted by the Maine Brewers Guild earlier this month in Portland. More than 450 industry members and 40 vendors attended the event, which has become the largest craft beer conference in the Northeast.
The theme of this year’s event was “From Startup to Steady,” with panels and informational sessions exploring how New England craft breweries can sustain their business in the volatile craft market, including succession planning, sustainability practices and leadership strategies.
More than 700 breweries operated in New England in 2022 – the most recent year for which data is available from the Brewers Association (BA) – producing nearly 1.71 million barrels of beer annually, and contributing more than $3.847 billion in economic impact, according to the BA.
“As the board discussed businesses and industries in Maine that we admired and hope to learn from as we fight to make craft beer as synonymous to Maine as blueberries or Bean Boots, we could not think of a better brand than L.L. Bean to help us kick off this day of learning and collaboration,” newly elected Maine Brewers’ Guild board president and Baxter Brewing president Jenn Lever said in her opening remarks. “Much of craft brewing success has been built on authentic experiences, and L.L. Bean has more than a century of experience sharing their authentic mean brand.”
Smith, a self-proclaimed craft beer enthusiast and the first L.L. Bean president and CEO hired from outside the company, shared five lessons for business longevity, acknowledging the ebbs and flows in consumer goods industries.
“Our industry and our consumer trends, just like yours, they’re shifting every day,” Smith said. “And as the company has learned over its 112-year history, the highs and lows definitely come and go. But making sure that you’ve got perseverance and a long view, it can help weather those storms.”
No. 1: Building Brand and Knowing Your Purpose
Smith encouraged brewery owners to think of their businesses as brands, and that “every action you take adds or detracts” from consumers’ perception of the brand.
“If you don’t take deliberate ownership of your brand, it’s going to be built around you based on your employees and your customer interactions,” Smith added, emphasizing the importance of knowing what the consumer experiences with brands, such as at taprooms.
L.L. Bean is a primarily e-commerce company, with two-thirds of its $1.7 billion in sales coming from e-commerce sales. But the company also operates 54 stores in 18 states, as well as 25 stores in Japan and 13 in Canada. The company is in the middle of updating its flagship store in Freeport, Maine, investing more than $50 million in the location that has become a major tourist attraction.
While “it’s really hard to justify that amount of an investment in a retail facility that we’re not going to get 50% more sales out of,” the investment is still vital to maintaining L.L. Bean’s connection with consumers, Smith said.
“We feel a real community responsibility to be a center for Freeport,” Smith added. “Freeport is a town that isn’t actually healthy, and so it is trying to convert itself from an outlet-oriented town into more of a food and beverage town, and they’re working on their plan really well.”
Smith also pressed the importance of knowing your brand’s purpose, and making sure that purpose is clearly articulated to consumers.
“You can’t plan for your business if you don’t know who you are,” Smith said. “If you don’t know why you exist, you don’t know what makes you different and what your brand stands for.”
No. 2: Business Cycles and Planning
Once a brand knows its purpose, the company then has to be mindful that it is doing “purpose-driven business planning,” Smith said.
He separated business planning into four columns:
- Evergreen, including a company’s purpose statement, mission statement, guiding principles and overall vision;
- Evolving, including multi-year strategic plans, and key business strategies, intentions, goals and objectives;
- Long-range financial plans, including sales, profitability and investments;
- And annual plans, including budget planning and annual goal setting.
“It allows every single employee to see visually what their annual goals are, how that ladders up into a budget,” Smith said. “And then they can see that come all the way across the budgets to part of a three-year plan, part of a five-year strategy plan, to uphold our vision, our mission or purpose, and how to do it through guiding principles and stakeholders.
“It’s so incredibly helpful to keep the business aligned, especially in change when you’re trying to keep your focus on your Northstar,” he continued.
No. 3: Staying Disciplined and Lean
Smith encouraged businesses to “consider an exercise in lean-ness,” evaluating where their biggest costs are and what cost-saving measures can be taken. The strategy is important not only when it’s vital for business survival, but also when businesses are having success.
“When you have growth, it covers all of your sins,” Smith said. “And wasteful habits can be developing that only get exposed when sales start to slow down.
“What that means really is just diligently examining your business processes, your expenses, your headcount, every line of your budget, all of your investments,” Smith continued. “It’s always easier to look for those opportunities when the times are good. People aren’t threatened, they’re much more open to change, that much more open to critically look at the business. And that in turn becomes a discipline that you can rely upon when you actually need it, when you face adversity.”
No. 4: Surrounding Yourself with the Best People
Smith views his position at L.L. Bean as a “coordinator of experts” and that his job is to make sure employees are doing work that “energizes them and empowers them” while also moving the business forward.
“For me, my big three leadership traits are integrity, empathy, and transparency, and I use those to set the tone for our culture, for our behaviors, for my behavior,” Smith said. “And I’d encourage all of you to spend some time to define your leadership traits, and align them with your team and align them with the culture that you want for your organization.
“And for me, integrity means nothing’s more important than staying true to your word, and keeping your commitments,” he continued. “Empathy is shown by inviting and understanding multiple perspectives that can only make you better, and is a key to a diverse and inclusive environment. And transparency is all about giving as much context as you possibly can, sharing as much information as possible, to empower your team to make informed decisions and take calculated risks.”
No. 5: Learning and Leveraging From Your Community (However You Define It)
Smith emphasized the importance of communicating with other members within the craft industry to learn from each other and become better businesses together.
“We all benefit when we seek out opportunities for collaboration and learning within and across our business in our industry and our local communities,” Smith said.
“There’s tremendous value in spending this time with peers – and yes, competitors – benchmarking, sharing best practices, and sometimes just simply appreciating that we’re not alone in wading through an extremely turbulent market environment.”
Bonus: Never Sacrifice Quality
During a Q&A session following the keynote address, Smith was asked how the company manages periods of growth.
L.L. Bean recorded three consecutive “best years in company history” in 2020, 2021 and 2022 as people spent the COVID-19 pandemic doing outdoor activities, or wanting comfortable clothing for working at home (the company sold 2.3 million pairs of slippers in one year during the pandemic).
Through that growth, the company made sure to “never sacrifice quality,” Smith said.
“There isn’t really a trade off that we make,” Smith said. “What does happen to us – and I assume lots of you are L.L. Bean customers – we run out of stuff all the time, which is incredibly frustrating as we’re wanting to grow sales.”
Smith emphasized the importance of keeping on top of forecasting to avoid out-of-stocks, as rushing to replenish inventory isn’t really an option.
“If we run out of something, in general, we will not rush it through our supply chain system, because that’s where corners get cut,” he said.