Scaling Up [S1.E3]: ‘The Making of a Category Killer’ with Matt Spencer, CEO Baby Bunting

In this episode, you'll learn how a small, state-based, family-owned business transformed into Australia's largest baby goods omni-channel retailer. From $40m revenue to over $350m and publicly listed (ASX:BBN).



Ed (00:53)
I have the pleasure of chatting today to Matt Spencer, the CEO of Baby Bunting, Australia’s largest baby goods retailer. This is just a great story tracking the strategy and execution of a small Victorian based, family owned and operated business that emerges into the leading national retailer in the category. Matt gives amazing insight into the playbook of how this all unfolded. In the last 10 years, Baby Bunting has grown from 40 million in sales to over 350 million and it’s growing earnings at over 30% annually. Baby Bunting is now 20 times bigger than its nearest competitor, and this just didn’t happen by mistake. I personally loved hearing about the importance Matt placed on taking an incremental approach to executing this strategy, understanding how each building block could add to the next and the prioritization of these. Above all else though, there is a continual theme that shines right throughout this interview, and it’s the importance of a great team in supporting a CEO or founder in all aspects of his role.

Matt is one of the most humble CEOs you’ll ever meet, and I shouldn’t be surprised. There are great stories of him flying across continents on red eye flights just to save a night’s accommodation. But to hear the baby bunting story firsthand, it was a privilege and it was incredibly inspiring. The last 20 minutes, Matt dives into his experience not only in transitioning baby bunting from a private to a public company, but also the life of a CEO and the lessons he is learned along the way for any ambitious entrepreneur. I think this episode is a must listen. Matt Spencer, welcome to Scaling Up.

Matt (02:33)
Thanks very much, ed. It’s great to be here.

Ed (02:35)
I think before we get deep into the Baby Bunting story, it might be worth giving some history and some context as to how the business evolved even before you got there. So maybe I’ll give a little bit of history and you can fill in some blanks as to where I go wrong because you know this much better than I do. But you just celebrated your 40th anniversary. So 1979 Baby Bunting opens family business all the way up to 2008. At that point in time, five stores Victorian based, quite a big family business, 40 million in revenue making about 5 million bucks a year. Very little infrastructure, no centralized warehouse. And at that point, a big figure in the story, and I know we’ll touch on this probably a bit later, Barry Saunder’s, absolute veteran of the retail scene in Australia, comes into the business and he’s a guy that had run Target. He’d run Big W, he’d run Repco and the Reject Shop, as I said, a veteran of the industry and he saw this opportunity for Baby Bunting to be a category killer. He thought babies and pets, there are two categories in the Australian landscape that hadn’t been dominated and he saw the baby industry highly fragmented in 2008 and he thought, what an opportunity, he’s in the business for three or four years growing the business I think up to roughly a hundred million dollars, 12, 13 stores

Matt (04:15)
Yeah, a little bit more than that, but yeah, certainly he was in the business at that critical time and I guess from my point of view, he was the architect of how to take Baby Bunting from a family based organization to a national changed or retailing business. And as you’ve alluded to a CV that’s pretty illustrious and I think probably over one of the very few privileged people who have been able to work for Barry. But actually to learn from Barry, I mean this was my first job as a CEO. he just taught so many lessons in retail strategy looking globally at what has occurred in other retailers who had become category killers. And we certainly look towards Bed Bath and beyond overseas as one of those businesses. And I think our journey is sort of paralleled quite closely with what Bed Bath and Beyond has done. But I think Barry very early on in the piece, apart from recognizing the opportunity and pets and baby are right and those are emotional categories for families, what he did was he laid out some very clear principles that we would stick to in forging the history or forging the story of Babe Bunning to where we are today. 53 stores over 360 million in sales and a great bunch of people with a great leadership team.

Ed (05:38)
And I’m sure we’ll come back to Barry because he’s so central to this, but just zooming in on 2011 when they need, Barry decides to step away from the business he, he’s getting perhaps too old to be in the hustle and bustle and the search goes out for a new CEO and there’s Matt Spencer, CEO of Kathmandu, phenomenal brand. I think you needed a bit of convincing from what I hear as to take the job and I’m interested as to why.

Matt (06:12)
Yeah, look it’s an interesting piece and we are sitting here today in our Maribyrnong store and this is where all my interviews happened, but actually on the shop floor, not necessarily in this back office where we’re sitting today, but I was with Kathmandu and I ran the retail side of the business and that included store development. I had an office in Christchurch and I had an office in Melbourne and I love the brand, I really did. And what did I love about the brand is because it was something that was so familiar to me. I love the outdoors. I love just getting out there doing things, love retail and I’ve been in retail for most of my career, but checking in and out, doing different things at times. One of the things about the business here is we’re a family business. What I mean by that is we are about supporting parents and navigating their way through early parenthood.

And at the time I had a young family and I was getting on a plane sort of virtually every second week to go to New Zealand. And also I was looking at store development. We were doing much like Baby Bunting, we were rolling out stores. And so when you head up the store development and property section, you had to go and visit for every store you put on the ground, you probably visited maybe 12 or 13 opportunities and that meant national travel in Australia and travel throughout New Zealand. And really it wasn’t sustainable to run a career like that with a young family. And I’ve always will maintain that family is your number one priority. It’s not about dollars, it’s not about business, it’s actually about your family. And I’ve worked in banking, I’ve worked in petrol I’ve worked in supermarkets and I learned that you weren’t the most popular guy at a barbecue on a Sunday afternoon when you said you worked for a petrol coming, they hate petrol pricing or you worked at a bank and there’s bloody bank fees or you work in supermarkets and the queues are too long.

And what I learned about Kathmandu was the joy of the customer. It really brought that piece back. And so coming to Baby Bunting, the business was very immature at the time, at a very clear strategy. I didn’t have that emotional connection that I originally had with Kathmandu, but the thing that actually got me over the line was TDM was a very important part of that and I could see, how would I put it, the excitement, the opportunity that Tom at the time was sort of articulating by where this business needed to go and Barry was there saying, actually this is the strategy and the retail credentials. And I could actually see the opportunity from a learning and development point of view, but I could also see the opportunity from a category point of view. What really turned it over me was I actually took time out on a Sunday before excepting the role and I went into a store and it was busy and the customers were there and they were excited to be there and they wanted to be in our stores.

And that was the absolute trigger point that says, this is for me because like Kathmandu, it was a brand that was positive. It added value to people’s lives. People would walk into the store on a mission, there was a positive mission in their lives versus going to a petrol station where it’s a grudge purchase, I’ve got to put 140 bucks worth of fuel in my car, I don’t want to touch the nozzle because it’s a bit dirty and it’s in and out top type retailing. And whilst it’s exciting from a velocity point of view, it didn’t have that customer experience. And so if you go back to it, the simple thing was what a great business with great customers and great opportunity.

Ed (09:45)
I love how your own personal alignment of values was such a big part of that piece and I think there’s a great lesson for everyone because I think the longevity of what you’ve created and your own enthusiasm for the job now in 2019, 8, 9 years on, still plenty more to play. I think that’s almost that alignment piece has been so key it seems.

Matt (10:09)
Oh, absolutely. And that’s what wakes you up in the morning. And the funny thing is we’ve got an enormous amount of distance to cover still to be even a better support to parents. And we are so we are only scratching the surface at the moment in our business, but it’s easy to wake up in the morning and work for something that you believe a hundred percent in really so easy. It’s just enjoyment.

Ed (10:32)
And can you describe when you did decide to take the job, what you walked into, maybe just to provide a little bit of color and some context, what was the culture of the business? What did you see initially? So from the outside, it looked as though you walked in and you saw 50 things that needed to be done, but were very slow in your approach in knowing exactly the order of events that needed to be executed. And we can come back to that, but I am interested in your initial impressions.

Matt (11:03)
I walked into a business that financially had invested to grow and that had put its own stresses on the performance of the business. And it was a small business. And when I mean small is we’d invested in offices, they were too big for the business at the time, but we knew we needed it into the future. It was quite unsophisticated in terms of systems, but we had a roadmap to go on that I think you used the word slow about we had a whole lot of things to do. I took used, probably turned the word methodical. We had a very clear plan and we were what we needed to achieve. And the trick was actually trying to work out a bit like Tetris as to what part to do first and what competencies we needed in the business. And you’re right, the first I sat in an open plan office next to Barry for, I don’t know, eight months or so, and every day just your list grew of what were the opportunities and it’s actually how do you actually distill those down to what are your top two or three things that you had to achieve that year and what were the functional priorities?

And what really came right up front was having the right people, the right team around you to actually help you make those decisions. Because I’m one person out of a big business or big in some context small than others and I only know what, I know I can be a generalist in a whole lot of stuff in retail, but you need functional expertise and those functional experts, if you get the right person, they will help you navigate to what are the priorities and what are the decisions you need to make.

Ed (12:42)
Just touching on that, you clearly identified who you thought could help you scale this business, but there was some executive turnover, I think new CFO and new head of merchandise, new head of IT and new head of logistics. But at the same time you kept some really key people, people who have become really key to your business. People that come to mind like Michael Payne who was the CEO of a family business is now still in the business with you today. It says to me that you can identify talent but also that you must be a great coach as well because people have obviously been on this journey with you throughout. And so I am interested to know how did you see these qualities in people that you knew could help scale this business?

Matt (13:31)
People make the difference real and some of these people make a real difference and all of them do. I think, you know, sort of alluded to the fact that there has been some executive turnover. I don’t think we’ve ever had somebody who was not fit for purpose in our executive team there’s an and stage and there’s a skillset that you have there, but one of the most important things that an organization needs to have is the right culture and Michael is actually a manifestation and representation of that culture. He’s with been with the business since it was a family business and before that he ran the operations for Baby Co, which was 32 stores. I think at the time. When I roll out a store today, we’re going to be opening Doncaster soon. I can guarantee you that the culture for people in that store will be exactly the same as the culture that we have in Myaree in Western Australia.

And neither would’ve ever met each other, neither would’ve ever spoken to each other. But it’s that talent’s identification about what we need from our people in our store level that actually he brings and he puts that sort of magic dust over the operations and the coaching really is to take it from a family business of five, six stores up to 80 plus stores and operate in a chain store manner. And so the development Michael’s been successful being able to transition that which not many people can actually do. Absolutely because it’s a different mindset because you can’t be the person changing the light bulbs every day and also opening up new doors and coaching and developing regional managers across the country. So he’s been absolutely fantastic in our business. And there there’s been a lot of people like that. And we’ve got, our longest serving employee is a guy called Jimmy Zacharopoulos and Jimmy Zack’s been with us for 29 years. He’s gone from no warehouse to multiple warehouses to half a warehouse of 5,000 square meters to 10,000 square meters plus three BL’s and all us and forever growing and developing it. And it’s so good to see that people are able to adjust and change and it’s through the talent of the leadership team that you’re able to take good person on that journey and change them and give them a development and a direction over time that must

Ed (15:42)
Give you great satisfaction as well.

Matt (15:44)
Every day, every day it’s just privileged really to work with a group of great people.

Ed (15:52)
There’s no doubt in my mind that people and culture are the heartbeat of high performance. There are so many other, you can talk about killing the category and how you did it and we will get onto that playbook, but at the end of the day, it’s executed by the people and if the people are wrong or they don’t have the skillset or they don’t have the same values that the business does, it’s never going to be executed as well as it can be.

Matt (16:19)
And it’s interesting, you can tell performance if you have a look at our stores, if you can imagine a list of all our stores in a row with sales for the day and everybody’s tracking at one level and somebody tracks at a different level, by and large it’s a people issue.

Ed (16:37)
And can you track that down to who’s on duty?

Matt (16:39)
You can get down to that level. You obviously want to see some sort of trend occurring, but I have never worked in a business where the individual at the store level makes such an enormous difference to day-to-day performance. So we can tell if the management’s away on holiday or off on a training course, you can actually sense those things and it’s very, very clear and we are lucky, we’ve got a group of really good managers and a great team at store level and one of the first things that we put in place into our business is actually to have consistent store structures, consistent area management structures. Now we’ve had to break a straight up into two regions as we’ve grown and scaled because people just make such an enormous difference to the performance of your business.

Ed (17:26)
The theory says for businesses, retailers to kill the category, they’re creating enough scale so that they have enough power with their suppliers to reduce the price. They can then reduce the price on the floor, increases volume increases, sales creates more scale. And the virtuous cycle goes on to the point that there’s such margin advantage over the competitors. The competitors are squeezed, they can either match you on price and lose because the margin isn’t there or they lose the volume. And so the category killer exists because there’s then one dominant retailer and we’ve seen it in the Australian market with Bunnings is another great example and there are lots of ingredients that go into this playbook and I’d love to unravel a few of them.

Matt (18:13)
So the most important thing is there’s a very clear plan. You talk about a category killer, I mean we still price matched over 300 various different brands or retailers last year, so there’s still a lot of players out there, but it’s fragmented. So we’re the only national retailer of baby goods. So really what is so important is that you know, have a plan that you start off with and says, how do I go from where I am just a single maybe four or five stores in a single market to become a national retailer? And so how do you move through that phase and do it effectively? Many in our category have gone and done that via acquisition and they’ve failed dismally. You acquire different cultures, you acquire different formats, you acquire different inventory aged inventory, you acquire different debts, you acquire so many different things that are not yours.

So the very clear thing for us was we’re going to grow organically and we grew to our plan. So we had a very clear network plan. The other thing about it is that when you do start to become larger and more important to suppliers, I don’t like to use the term power, we just want to work with our suppliers to get the best outcome for our customers. And if we can do that in a partnership approach, it’s a win-win. And so that’s what we try and work through in our business to make sure that we know we can bring great value to our business, to our customers every day. And whether we are doing that through better supply chain, whether we’re doing it through better buying terms, whether we’re doing it by product differentiation, building our own private label, getting exclusive products, they’re all ingredients that make up a really important mix that brings the baby bunting as I guess the largest retailer of baby goods in Australia.

But I’ll go back to really at the start, there was a plan and that plan we look at every year and in incrementals over eight points every year we look at those eye points and say, well how do they actually change year on year and what is the next level of progression? So for instance, we will market our goods across channels. Well in 2009 we only started the internet retailing then in 2009. And the whole idea is how do we incrementally grow that? How do we grasp our network? How do we incrementally grow our product lines? The easiest thing to do for instance in our world is to go, let’s shrink the products now because then chop the tail. Well no that’s not what we need to do. We need to expand and blow out the product range to make sure that we’ve got the widest assortment for our customers and great value every day, every visit. So implementation of the Best Buy program EDLP, it actually sort of says that we’re not running a high low catalog model all the time and a customer can have confidence in that value statement. So there are a whole lot of different ingredients that come into making a what you would term a category killer. It’s not just one thing but you have to have the right people making the right decisions across a number of areas.

Ed (21:14)
Dig a bit deeper here, and you’ve taken the words out of my mouth. The incremental approach has been so consistently applied here. And one example that comes to mind is when you first arrive at the job you thought the brand needed a refresh. That was 2011, it’s 2019 and baby Bunting’s about to go through a full rebranding. The point being that that was identified, but there are whole heap of other really important factors that you identified. You came from Kathmandu a brand that the brand is important. You could have spent a lot of money at the point in time, but instead you decided to incrementally ensure that the customer was being looked after with as you say, everyday low prices, knowing that the customer proposition every day was going to be something that they could identify with. And so this incremental approach, I do want to dig into a as to how that was staged out.

Matt (22:19)
It’s funny, one of the things that was actually when I was first thinking about joining the business was actually I couldn’t identify with this baby clinging to aby and it was almost like a hand drawn baby wearing a baby wearing a nappy. And I used to drive past this, I lived close to the original Bwin store and that baby was 30 plus years old and looked every bit of it and it was sort of grated on me. But one of the first things that we put in place was we actually did brand health survey and we made a commitment to do a really in depth survey and we do it biannually and we’ve been doing that and then asks a lot of questions about the brand and nowhere were the customers saying to us that brand is dated old fashioned. It just wasn’t a feature of what was important to them at the time.

So it sort of gave me a sense that there were other things that we had to do before we had to actually really change the brand. Plus I think you got to look at where we are on the stage of our evolution and that is we are now in one of the largest shopping centers in the world. Our brand needs to stand up against the greatest international brands and the greatest domestic brands and it has to sit in that portfolio and therefore there’s now a real commercial requirement to build that plus the fact that the font doesn’t exist anymore and you can’t replicate that baby in a digital way. But those are just minor details. Anyway, there was that need to change. So then it was once you get over that part and you can deal with your friends and you can deal with people saying the baby’s a problem, then actually what actually will deliver great value to the customer.

Because once you’ve got the customer on the hook, it’s actually clear that you can start to grow the business. And traditionally in this category there’s been large domestic retailer. So in Queensland there was bubs, they were the most popular brand of specialty retailer for baby in Queensland there was Baby’s Galore in Sydney and they were taken out by bought mother care. There’s still a very good operator there being Sydney baby kingdom as they known every city had their own retailer but nobody was building out into a national footprint. So from my point of view really I always go back to what was our key themes that we were working to the property strategy, it had to be in convenient locations and the elements of the format. What has every store got to have for our customers? I mean we will not open a store that doesn’t have parcel pickup.

We will not open a store that does not have labor facilities. We will not open a store that doesn’t have parenting rooms. We won’t open a store where there’s not dedicated car parking and we won’t open a store where you can’t have car seat fitting at the store. So you know can get the most sought after location. But if it doesn’t offer those attributes, we are very clear our format needs to have that because that’s the customer value proposition we put forward. So as you go through and say well how do you organize, you’ve got to always invest to grow. So what are those underlying things? And for me there’s three very clear areas. One is building the best teams, having the right people around to support the growth story, having the right IT systems and business processes to actually make sure that we have the technology to support our business growth.

And the third one is getting control of the supply chain. So having the right logistics infrastructure, you need to invest in those three things to keep growth occurring. And so we’re going through this machinations at the moment about what we need to do with our next generation of our warehousing and logistics because we’ve just reached that point where it needs to occur. But we are constantly doing that ahead of the curve. So at times it’s quite difficult because you’re investing in infrastructure capability and systems when you haven’t got the revenue but that will drive the revenue.

Ed (26:28)
I think that’s great leadership isn’t it at its heart is having a vision and executing and this incrementality we keep talking about that 1% adds up and so you become whole pretty quickly.

Matt (26:38)
Yeah, I must say I think the guys around me get a bit bored of me saying to them it’s the one percenters, it is the one percentage because they do add up and it’s so critical. Excellent execution every time is just you’ve got to do it and it’s those one percenters that make all the difference in the business like ours.

Ed (27:20)
You’ve touched on the customer proposition, you’ve touched on the importance of the one store format and I know that you’ve just moved to shopping centers and that provides a new challenge in itself. Yeah,

Matt (27:31)
We did do a regional format. So when we went to the smaller market, so the Bendigo’s and Ballarat’s of the world, we had to bring a smaller, small format to market but all were the same. Whilst it’s a smaller store we increase the size of the fixturing. So the height just to get the range in because the range is a clear differentiator for us. And we still had all the attributes that I’ve talked about just before.

Ed (27:54)
We haven’t necessarily touched on customer service and I know that is also the customer is key to your proposition how baby bunting loves the customer and owns that experience for them. Maybe you could give some insight into your approach to recruiting and hiring staff for the floor

Matt (28:16)
In this business. Unlike when we look at our, what happened with babies ‘r’ us, toys ‘r’ us their model was not high-touch service. Whereas we’ve taken a clear position that says we won’t compromise on that part of our business. Investment in people and investment into the shop floor and to deliver service to our customers so important. That doesn’t mean we don’t have issues with customer service. I mean our stores are so busy, I mean they transact significant volumes and you can never service a one-to-one relationship all the time. So there’s elements of the customer services and the customer journey that you have to keep on focusing on and it’s an incremental approach. How do you make the processes more seamless? So moving the counter from the submittal, the store to the front of the store, they’re all things that actually are done not only for convenience point of view but it’s actually, it’s all about getting the service model better on floor.

Your question’s a very interesting one about where do you find the team and who do you recruit? And you talked a bit earlier on about employing mothers. I think we are actually employing parents and as I found I was aligned to the brand was because I was a parent myself. And that’s going to be a really competitive advantage for us going forward. And as I said alluded to earlier, we need to do better for our team who’s who our parents themselves than we do today. And that’s a really exciting thing for me. I think that’s the next journey. Cause at the end of the day, I’d love to be the best employer of parents in the country in the world, I don’t know, but it’s going to be something that the journey we need to embark on and do a lot more on. So I’ve got to work on that part.

But recruitment on shop floor it there’s a real combination of do you go for people with the skillset of being a parent and understand the journey that a mother or a father is going through or do you go with somebody who’s just got retailing experience and had they might have worked the shop floor at even the reject shop, rebel Woolworth, target Kmart, wherever. What’s the more important attribute to have or the confidence? And I think parents actually went out because it is such a daunting experience, especially for the first time parent, which is probably our biggest customer segment.

Ed (30:32)
Couldn’t agree anymore. And one last question around the playbook. In this day and age you can’t afford not to be an omnichannel retailer and by that I mean not just have these fantastic stores but have a great online experience as well and it’s something that you have worked very hard at.

Matt (30:53)
We have and we’ve evolved with our online offer. What we’ve done is we’ve mapped the customer journey and really what it’s saying to us is that people spending more and more time doing their research. So we’ve just invested in a new website platform whilst it’s got some issues at the moment, we’ve only just recently gone live in it. What it is seeing is a lot more traffic and what it is seeing is that engage, it’s based on an engagement models. Cause what’s happening is people come onto our website, look at product, but then to get informational content they’d go out of our ecosystem. So we’re trying to build that single ecosystem that you can look at the product but you can actually read the article about how best to feed your baby or what is the best nutritional aspect or do I want to see Sam Wood about some personal training or those sorts of things.

Ed (31:41)
The content piece now is so important.

Matt (31:43)
It is so important. You can’t underestimate and really invest in that piece. So to us is a massive journey. And then how do you actually bridge that online offline experience? So when you come into store that can you get the same information at the product level and then transact with some sort of mobile process. Now that’s the next journey for us is how do we actually do that and have it totally seamless. Whilst it’s a very high touch customer experience in terms of explaining products and all that sort of stuff, but once the decision’s been made, how do you actually might be a three hour journey in the store to find the right products to make it only a five minute journey to exit the store and you’ve got all the products that you need.

Ed (32:27)
I think it, it’d be remiss me not to ask, now that we’re talking about online retailers, you have kept Amazon at bay and lurking in the shadows for a long time and I know people are always thinking, oh no, they’ll get to Baby Bunting eventually. I know you believe that isn’t the case and I tend to agree with you, but I’d love to hear the thesis.

Matt (32:50)
So about over 70% of our products require Australian standards, so therefore there’s somewhat protection about people just randomly importing baby goods into Australia. People still do it, but there is a level of protection around that. The thing about Amazon and they are a fantastic retailer, yes, I don’t don’t ever want to say that they’re not. They’re a great logistics organization, but we very much put our own Amazon defensive strategy in play and we knew that we, we’ve been looking at Amazon as you would know for many, many years. I mean it was one of the biggest things that we learned when we worked with closely with TDM on the board is look internationally, look what they’re doing and learn. Yeah, top two 50 products, how do we stack up when I think the exchange rate was a dollar six at the time. So it was a very real prospect that people could absolutely import directly from overseas.

So we observed and monitored the model. Well what are the things that are going to differentiate us? First of all, you still got to keep value, you’ve still got to keep value and therefore the pricing equation, we can’t afford to let others beat us on price. So investing in our EDLP model, investing in Best Buy, we need to do that regardless whether that’s Amazon’s price or whether it’s actually the little mom and dad shop down the corner, we want to make sure. Second thing is that service element for a new parent touching and feeling the product, getting tangible experience and the tactile experience. When you buy a pram, are you going to have a second child? Is it going to fit inside your car?

Ed (34:36)
It’s intimidating as a first time parent

Matt (34:27)
Can you fold it?

Ed (34:38)
Yeah, absolutely.

Matt (34:38)
Is it heavy? All those sorts of things are questions that you got to actually experience. And our team members, it’s cut upon them to take that product out to the car and show people how it works and it doesn’t fit in your car. And it’s our job to win the sale and to win the customer because give them confidence about price, give them confidence about the service they’re going to get, give them the quality product. That’s two Australian standards. And then what we’ve wrapped around that now is a service model that says we’ll fit the car seats for you. We’ll have the right return mechanisms we’ll be conveniently located with our stores, we’ll put the car seats, you’ve got a car you roll up and we can actually put the car seat in your car and you can see the action. We’re not going to pressure sell either.

And that’s the other thing that’s most important is that in our business, whilst it’s easy to try and grow the sale by just add on selling, I’m very nervous when you start to add on sale for the sake of selling. Don’t give the customer a bad experience because it’ll come back to haunt you. So sell them what they need. The good thing about it is that if you say you need a high chair in six months time, they’ll come back and get the high chair from you. If we’ve given them a bad experience, they’ll go somewhere else. But by and large MPS is showing that they come back into store.

Ed (35:54)
That’s the joy of being able to stock wide and have such a phenomenal range is that if they need something, they’re coming back

Matt (36:02)
Yes, one stop shop. I mean that’s the brand Baby Bunting the one stop baby shop.

Ed (36:07)
I think the next thread like to explore is not necessarily about Baby Bunting specifically, but more your experiences as a CEO and you’ve seen what scaling a private business looks like. You’ve now been in the public markets almost five years. What are some of those pain points of being a public market CEO

Matt (36:31)
Time? It’s very different and it was a first time CEO, so it was really nice to sort of go through the journey in a private company. But the board was very clear from day one when I started is that we will run it if we are a public company. So all the disciplines, all the requirements for making sure all the committees were had, the minutes, all the things that we needed. So the disciplines and the rigor around our process was tight and I learned, I had the training wheels on for a couple years to really understand what that meant. And I had some great mentors and leadership in this space, whether it be through the likes of Barry or the likes of TDM and then the partners that we worked with and others on the board who had actually had that public life experience so we could work through that.

Ed (37:23)
Did you underestimate the amount of rigor required even in that transition piece from private to public?

Matt (37:32)
I had seen what had happened at Kathmandu. So we went from private to public. Whilst I was only on the periphery of that I think I had some pretty good educators in the lead ups. And a point that I want to make is going through an experience like we did the IPO. Whilst it was a lot of work and a lot of extra overhead into the business, the thing that really came out to me was having the right people around the table. And I’m not only from our own internal team because you know, just need to have that right, but to have the right lawyers, the right bankers, the right board, the right investors, all those partners, good selection early on,

Ed (38:26)

Matt (38:27)
Just made the process so much better

Ed (38:30)
Because it can get messy.

Matt (38:32)
It can get messy for a variety of reasons, but we deal with all those people today and we have good laughs. Just like during the process, whilst I was a pressure cooker, you never lost your sense of who you were, your sense of humor. You just had to work hard, get the volume, get the right team around you. And that to me that was critical. I mean if we’d got one of those wrong, whether it be the legal or the banking or the advisory or we would’ve made it a very tricky experience. But because everybody was harmonized, we had a great operating rhythm, we’d had people who’d been through IPOs from the CEO point of view. So Barry and others on the board. And then you’ve also had the experience of what TDM brought to the business, having gone through the process before, it just worked. Yeah, it was really, it was a pleasure to be a part of.

Ed (39:26)
It was a great listing and it continues to be a great public company,

Matt (39:30)
But it’s a team effort. I’m just one of a big team.

Ed (39:35)
A lot of public company CEOs are always frustrated with their roles as investor relations CEOs, you are the public facing person as to front up half yearly results, yearly results and have these analysts ask questions. At the end of the day, you’re a retailer, you love brands, you love selling to customers and owning that customer. It’s as though the skill set has to be completely almost flipped on its head.

Matt (40:05)
You need to be a good communicator, I’d suggest. I think that’s one aspect, two is I think you’ve got to keep your values very clear internally and externally. So not compromise on those, but also get the right team around you to help you in those scenarios. So your CFO is absolutely critical and I’m very, very lucky that with the CFO that we have in our business and we’ve got a company secretary and group legal council who provides absolute discipline and rigor around the process. And both of those individuals have actually then built teams around us to help us to manage this exact process. We don’t have an in investor relations company that we work with. We’ve obviously work with media agencies from time to time and they’ve been very, very good. But my point is really for me to face into the analysts, to face into the investors, I walk in with a high degree of confidence that we are prepared, we know our business. And so if you want to ask me a question about the retailing and the floor and what we’re doing with our customers, I’m very comfortable about that. If you want to ask me about all the numbers, I understand the numbers, but I’ve got a really good person on my right who can gets the detail, gets the numbers, and can answer those sort of questions.

Ed (41:31)
It’s a great case study for the CEO, CFO dynamic. And the CFO was not just the numbers man, but a right hand man and such a key figure to help run the business in the public markets.

Matt (41:45)
Absolutely in the public space you need that. And then the relationships that you build with the analysts, your shareholders and all that, I mean that’s so important and being made available. And one of the things we’ve actually been very clear about and we’ve done this from day one, is give information to provide transparency so that you can always talk to something slightly off or you can point to a number and you can point to a data point that says, because we’ve actually explained that data point over a series of years

Ed (42:18)
Consistency of it

Matt (42:19)
The consistency of it, and it provides an element of rigor in our business. And conversely, it gives the investor the opportunity to really understand what makes our business tick.

Ed (42:35)
I’d love just to wrap this up, some of your own reflections on the core lessons that you’ve learnt in your time as CEO and as that job has changed with the business scaling, as you say, over 350 million in sales now what are your own reflections on the lessons you’ve learned?

Matt (42:59)
Well, the number one lesson is people and recruiting the right people around you. As I said, I don’t think we’ve had any individual who hasn’t been right for the time, but at times it’s right that there’s a change as you grow, having the right people in the room to help you through whatever the situation is, the most rewarding lesson. And it’s also when I look back at how we go about recruiting people, when I recruit somebody, it’s very rare that I’ll just get an unknown person, it’ll be a referral. Somebody who’s actually I’ve worked with before, know people I’ve worked with and getting those people cause you actually get a good insight into them and the way they operate and therefore you’re not getting an unknown quantity. So everyone’s got to fit. There’s a need to do that. So the lesson for me, first of all, CEO, is make sure you got the right bench strength and make sure you got the right team.

Keeping yourself feet on the ground if I wanted to not visit stores and because there’s enough to keep you busy every single day. But the reality is in stores where the customers are, they’re the ones who pay the bills every day. The store teams are the people who actually are engaging with those consumers and we’ve got to give them the support and respect that the store teams deserve. So actually being out there, and when I say store team voting, I mean people like in the DC as well, where they’re the ones that supplying them the stock in an accurate way to the stores so that we can service the customer. So actually not losing touch with what the business is about is another big lesson. And then making sure that you’ve got a board that you can have a very open and transparent relationship with. And I’m blessed that our board is a retailing board. We’ve got some great retailers on the board, so I can get out there and if I’ve got any question I can tell you there’s somebody on our board who’s seen it, done it, conquered it, delivered it won it.

Ed (45:04)
The importance of that can’t be underestimate because people view boards often as just this governance box ticking exercise, but the value of a board with a growth mindset with this sort of entrepreneurial spirit where they’re thinking owners of the business and this mentor-mentee relationship can develop between the board and the executive team is so powerful.

Matt (45:29)
It is. And our executive team all go to all board meetings at every single meeting. They have to report to the board the thing that, you know, talked about investment. I mean all our board members are invested in our company,

Ed (45:40)
So they should be.

Matt (45:40)
Yeah. And all our leadership team have shares in the company. And then as you move through the organization, we do an employee gift offer. So we know we give a thousand dollars gift worth of shares. We know when the results are right. We give a thousand dollars worth of shares down to anybody, or part-time has been with our business for 12 months and also long-term casuals. So we have ownership from the chairman through to the person who’s serving the customer. And I mean that is so powerful and alignment because when we do get a result and you’re going to get a dividend, you, you’ve contributed, you own that little bit of Baby Bunting and that’s so that is powerful stuff.

Ed (46:23)

Matt (46:24)
And so it’s very easy to look at it if you are looking at it from a spreadsheet point of view or a financial metrics point of view. Geez, it’s just another accounting, just it’s actually ownership of the business. So important.

Ed (46:40)
Well said. Could not agree with you more. Is there any advice that you’d give yourself, looking back, if Matt Spencer came to Matt Spencer in 2011 and ask for some advice before taking the job, what would you give that advice to yourself? I know it’s kind of a cryptic question

Matt (47:02)
That’s a very, very good question.

Ed (47:05)
At the time, did you believe that you could execute what has been executed?

Matt (47:11)
Absolutely. It’s funny though, because I was just looking at, we reflected on, before we started this interview, just a bit about our strategy and I said, we’ve got this plan that we’ve been working to since 2009 and it’s got eight key elements. And I was looking at the network plan and was talking growth to 30 stores and I was thinking, wow. And I think there are things that I have learned that I didn’t know when I started. As I said earlier, there was a lot of things around, there’s 50 things to do and I just wanted to do a whole lot of stuff. The advice that I would give Matt Spencer today again would be you will have 50 things in your mind. Take your time, take a little bit more time to synthesize that because if you didn’t have the likes of the board we had, or the chairman that we had at the time, you could have made some pretty tactical errors in that space.

So taking the time, making sure the strategy is very, very clear. I think one of the things that I learned I would’ve done the values piece maybe a little bit earlier in our business. So we did an employee engagement survey a few years in and one of the things that came up was, what are our values now? I’ve always worked in the basis that the values are pretty clear. We live it every day, we feel it, but people really want to understand a little bit more about those values. And so I would’ve put that in there and sort of said, okay, as a values-based organization, whilst internally I felt that, but I should’ve actually walked out and actually really put my stamp on up front saying, these are the values and these are the behaviors and the expectations of our business. From day one. I just assumed that because they were there, people would just continue on with that.

Ed (48:51)
Did at that point in time, did you feel empowered to change them walking into a new job? It is hard to walk in and enact immediate change when it comes to values.

Matt (49:04)
Once again values aren’t about me. So what I would’ve done is it’s actually about the culture of the organization. So if we look at our values today, that’s not, now, I didn’t put those values on the table. So these are our values. I’ve had that before by the way, in one of my other jobs that I worked in, where we’ve from overseas came a list of nine things and said, these are your values, son. It’s not like that we actually build your values up from the shop floor, from the DC, from the office work, the managers. And that actually then came back with a group of things that we had to do as a business and what we believed in. Sure, we had to synthesize all the bits of feedback into what does it look like into a few ideas. But they were a representation of what everybody’s telling us. It wasn’t what I was telling the organization we should be.

Ed (49:53)
It’s a fantastic answer. And my last question is around Matt Spencer, the person. I’m always curious as to the routines or life hacks that super high performers have sort of gained over time. How do you unwind? How do you relax? How do you accumulate knowledge in short spaces of time considering that you are time poor? Well, what are some of your high performance routines?

Matt (50:25)
High performance routines, hunting, like my high performance body, which is a bit out of shape. I’m a keen water sports person, so I swim. I do squad swimming three times a week. And that sort of centers, it’s actually one of the most social sports there is. But I swim a lot. Love surfing, getting out there and just being in the waves and just being out with the kids, having fun riding or whatever it might be. Yeah, that’s the release of energy. It doesn’t mean the mind’s not working. You know, spending a lot of energy. I’m not a high performing sportsman by any stretch of the imagination, but just that time of quality thinking time is great. It’s really, really good. I’m lucky that the Internet’s come along because actually I can digest lots of information and recall it without actually having to, I don’t get the time to read books.

I’d like to, I just don’t get that. So I’m lucky that, I mean, living in this age where the information flow is fast. And then the one thing that I can say about myself is I believe in the glasses are full. And actually you can do anything. Yeah, I’ll never be a grade sportsman, but I can still hit a hockey ball around the field or I can still go for a surf. I can still go for a swim. I can run a company. Believe it or not, I’m not ambitious. It’s just my desire to be the best I can be what I do. And if I’m a bad swimmer who can only swim a 50 meter in X amount of seconds, that still could be the best I can do. But I still feel like I’ve achieved. So to me, I get my enjoyment from others I get the enjoyment from seeing others succeed. But I also get pretty stoked when I see good headlines and good things about the business that we’ve created as a team.

Ed (52:26)
And that is something you have created. You’ve created a phenomenal business, you’ve been at the center of that, and it’s something that you should be incredibly proud of and you’ve done it with the utmost of humility. So congratulations and thank you so much for spending an hour with me.

Matt (52:42)
Thanks, Ed. I’ve thoroughly enjoyed it. And look, as I say, it’s all about the team. Yeah, they’re the ones who’ve are delivering. I’m just helping them do it.


Scaling Up: Seasons


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast



Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Scaling Up: A TDM Podcast


Latest Insights

Stay informed, receive Insights first.