When Gina Drosos took over as CEO of Signet Jewelers, the company needed an overhaul on both the strategic and cultural fronts.
“What we found was that we had become a culture that was not innovative,” Drosos says. “We weren’t agile. We weren’t efficient enough in how we worked. And it really wasn’t a place that people were excited to be part of.”
How did she change things? She went out on a company-wide listening tour.
On this week’s episode of Fortune‘s Leadership Next podcast, co-hosts Alan Murray and Ellen McGirt talk to Drosos about Signet’s incredible growth during the pandemic, how Drosos turned Signet into a company people are excited to work for, accountability within the jewelry industry, and much more. Listen to the episode or read the full transcript below.
Alan Murray (00:11): Leadership Next is powered by the folks at Deloitte, who, like me, are super focused on how CEOs can lead in the context of disruption and evolving societal expectations.
Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray and I’m…you’re already laughing, Ellen, and I haven’t even introduced you yet.
Ellen McGirt (00:18): I know, I know.
Murray (00:19): I’m here with my fantastic co-host, Ellen McGirt. I want to tell our listeners, because they may not know this, they are probably not listening to this on Valentine’s Day, but today is Valentine’s Day.
McGirt (00:25): It is, it is. Yes, I love you, Alan.
Murray (00:27):I love you, too.
McGirt (00:29):We have the perfect CEO for Valentine’s Day, don’t we?
Murray (00:32): Oh, we do. We do. We do. It’s Gina Drosos, who runs every jewelry store you know of. It’s Signet Jewelers, it’s Kay, it’s…
McGirt (00:35): Jared. He went to Jared.
Murray (00:39): Yeah. And the business has a fantastic COVID story, just an amazing transformation that’s happened over the last three years. And we’re so lucky to have Gina here, on her big day, on Valentine’s Day. Gina Drosos. Thanks so much for joining us on Leadership Next.
Drosos (01:19): Well, thanks for having me. It’s lovely to be here.
Murray (01:24): So, tell us about today. I mean, how big is today, really?
Drosos (01:28): It is a big day. You know what’s so interesting? Valentine’s Day traditionally had been more of a holiday for people who were dating or for getting engaged. But one of the big changes that we’ve seen during COVID is that people are investing to celebrate those that are closest to them. You know, we’ve sort of culled our contact list and are spending more time with people that we really care about, and so it’s become a bigger holiday.
McGirt (01:55): Let’s start by just establishing the baseline. How big is the company? What are all the brands? I know I was trying to sing some of the jingles there. How many brands are actually associated with Signet? Sorry, Alan, I’ll stop singing.
Drosos (02:07): We have five in the U.S. market. Kay, Zales, Jared the Galleria of Jewelry, Banter by Piercing Pagoda, and JamesAllen.com, which is a fast-growing digitally native brand. We actually also just purchased two other businesses in the U.S., so they are now part of us as well, making it seven. And that is Rocksbox, which is the leader in rental and subscription jewelry in the U.S. And Diamonds Direct. We’re also the number-one jeweler in Canada, with Peoples Jewellers, and number-one in the U.K. with H. Samuel and Ernest Jones. So it’s a great jewelry family.
Murray (02:53): Yeah, it’s a massive global brand, and business, Gina, is booming, right? I mean, you’re seeing numbers like you’ve never seen before.
Drosos (03:03): We were undergoing a transformation as we came into COVID. Signet was a bit behind, especially in e-commerce. But we had started to transform our company. In fact, the holiday before COVID hit, we had an iPad in the hands of every one of our store personnel, so that they were helping people find jewelry in the store if we had it there in the cases, but also online. You know, we were in the beginning of being able to access inventory from across our entire fleet.
You know, jewelry is different from apparel, it’s not like a medium size white T-shirt. So much of what we sell is bespoke. A diamond is unique. It has its own fingerprint. And so being able to find just the right one for someone is an advantage for us, because now we can access our inventory from everywhere. But we had begun a digital journey thankfully, when on March 23 of 2020, we found that we needed to close our doors to keep our people safe. We, within 48 hours, stood up technology that allowed our store managers to help people from their living room, sitting on the sofa using the iPads that they had already learned how to use in store. And so, because we were on that digital journey, we were able to pivot quickly.
We just announced our holiday results a few weeks ago—Signet’s best holiday season in the history of the company. We guided at that time that we thought our revenues for our entire fiscal year, which ended just at the beginning of this month. So a couple weeks ago, we guided that we thought our business would be up to 42% in revenue, which is really, you know, a terrific result, of course, coming off of a slightly depressed base last year. But the category, the jewelry category, is also up. The jewelry category, we think, will grow about 30% this year, but Signet growing somewhere in the 40%-plus range is definitely gaining market share. So it’s been a, it’s been a big pivot.
Murray (05:07): It increases my guilt that I haven’t yet bought Ellen jewelry for Valentine’s Day.
Drosos (05:10): I’m sure there’s a Kay Jewelers near you.
McGirt (05:12): I know for a fact there is. But it’s the time that we spend together that is so precious to me. That’s the important takeaway.
Murray (05:18): But you’ll take the jewelry.
McGirt (05:21): We all love a bauble. We really do.
Gina, I want to talk more about the transformation. I know it sounded like you were already in a good place from the digital point of view when the pandemic hit. You also have been talking about the cultural transformation that you’ve been on. And just a little bit behind the scenes reporting that … it is profound. It has been a profound experience for people. Can you dig into how you assessed what needed to happen when you became CEO? And what were some of the things that had big impacts?
Drosos (05:55): I think, Ellen, you’re exactly right. Our transformation has been both strategic and cultural, with cultural being probably even the more important of the two aspects. What we found was that we had become a culture that was not innovative. We weren’t agile. We weren’t efficient enough in how we worked. And it really wasn’t a place that people were excited to be part of. We didn’t have the diversity that we needed to really broaden our thinking. And I learned this because when I became CEO, I went on a listening tour, where I basically did focus groups with our employees in all parts of the world and asked them what was great about the company and what wasn’t.
And what I found work was that there were terrific ideas throughout our organization of things that we could do differently and better. But those just weren’t making it to the top. So we changed that. And we really, you know, declared as one of our key strategies that we wanted to become a more agile and efficient culture. We embarked on cost savings and driving out costs that customers don’t see or care about, so that we could invest in our people and in other strategic priorities like the digitization of our company, becoming a more omnichannel and now even a connected e-commerce company, and our people really, really stepped up. I mean, we listened we encouraged them to bring their best selves to work, and it’s made a huge difference.
Murray (07:26): Gina, I always thought jewelry would be one of the last things to succumb to the e-commerce revolution. I mean, as a buyer, you know, when you spend that much money on something, you kind of want to hold it in your hand and look at it and not do it over a website. But you and I were on a CEO call a couple of weeks ago where you made an astounding comment which is that today, post COVID, 72% of purchases at your brands begin online.
Drosos (07:55): Yes, you’re not wrong about people liking to get advice, liking to see the piece of jewelry that they’re buying. It is often an expensive purchase, certainly one imbued with meaning, and everyone wants to get that right. So we actually have, we believe somewhere in the range of 85-plus percent of our customers have a connected journey, so they connect with us in the store and online. So, some combination of those two, sometimes through social media and influencers, things like that, but it is a connected journey.
But many of those, over 70%, are starting that journey online. They’re looking, they’re seeing where they might find pieces that they like, getting a sense for style. They’re educating themselves. And one of the things that we’ve done is, we really have uncovered is, that the most important aspects of the jewelry purchase decision are expertise, so getting some kind of consultation or education so that you you feel like you know what you’re doing, and then visualization is important.
And so, we have proprietary ways that we can show diamonds. We take pictures of them, you know, hundreds of photographs of a single diamond, and then can blow it up 40 times in HD and show it to you on a computer screen, and you can actually see a diamond better on the screen then you can in person trying to use a loop. So we’ve really tried to bring these two things, this consultation and visualization, to customers wherever and however they want to shop with us.
Murray (09:29): Two quick follow-ups, if you’ll let me, Ellen, that I think are relevant to that. One is that 72%, what was that prior to the pandemic? And second is, how many stores you currently have, and is that number going to go up or down?
Drosos (09:43): We don’t have the data to say exactly what we think that journey was before the pandemic. But if I had to guess, I would say orders of magnitude, probably half or less. What I can tell you is, our e-commerce as a percent of our sales has quadrupled since before the pandemic. So when we began our transformation, only about 5% of sales were e-commerce, and now we’re typically in the high teens, low 20s as a percent. Now, of course, this connected journey is what’s so important. So we still have, you know, the 80% of people who are finalizing their sale in the store. They might have done that through buy-online, pick-up in store. They might have done a curbside pickup, but they’re getting that last step typically at the store level.
And then in terms of stores, that’s been a big part of the financial progress, and I think consumer experience that we’ve brought during our transformation. We’ve closed about 22% of our stores since our transformation began. We’ve also opened stores in better locations. We did that based on data. We really took a white sheet of paper and mapped the country and said, if we were going to plant store number one, where should it be, and went from there.
We also differentiated our banners when we began our transformation. Kay and Zales were very similar. You almost couldn’t tell the difference. And we really did our homework on who the customer is for those different banners. We separated the assortment, the experience, so we’re speaking to different customers. The combination of those two things really has allowed us to optimize our store footprint.
So now we have a competitive advantage, because we have the best digital experience that you can get in jewelry, and we still have a broad but optimized store footprint with stores in the right places. So they’re convenient for people to be able to go in if they want to.
Murray (11:44): I’m here with Joe Ucuzoglu, CEO of Deloitte US, who had the good sense to sponsor this podcast. Joe, thanks for being with us. And thanks for your support.
Ucuzoglu (11:49): Thanks, Alan. Pleasure to be here.
Murray (11:52): So, Joe, one of the surprises we saw in 2020 in the midst of a lot of bad news was some good news about the acceleration in the adoption of digital technology. Do you think that’s going to continue?
Ucuzoglu (12:08): I do, Alan, and I would say that the cause for optimism is warranted, that there are going to be some pretty significant dividends that come from the massive acceleration in all things digital. We’re going to see significant benefits to the economy from the big digital transformation investments that companies are making. I think we’re going to see big benefits to people in terms of quality of life, as we see new models for working that allow greater flexibility, productivity.
Murray (12:39): So people were forced to innovate in 2020 because an extreme change of circumstance was forced upon them. Can they keep up that pace of innovation?
Ucuzoglu (12:48): Well, that’s the challenge for all of us as leaders. I saw a great quote in one of your interviews, Alan, that his period of time change was free, because the alternative to change was even worse. We all have to look back on the way in which we moved so quickly. We broke some glass. We didn’t let corporate bureaucracy get in the way. It actually benefited all of us significantly and leveraged that mindset going forward to act more quickly, to be less inhibited by risk, and to see the true benefit of embedding digital transformation and an agile mindset within the way that our organizations operate on a go-forward basis.
Murray (13:29): Joe, thank you.
Ucuzoglu (13:31): Alan, pleasure to be here.
McGirt (13:33): Gina, I want to circle back to your own leadership journey, because it’s a big part of what we talk about here. I love the fact that the first thing you did was a really in-depth listening tour to understand what wasn’t working and what kind of ideas were out there. Can you talk a little bit about what you were listening for, and the kinds of ideas that you were willing to take and invest in?
Drosos (13:53): I guess two important aspects of my leadership style are, number one, that I believe that we must be humble, and really listening is the right way to learn. I believe in diversity as a strategic imperative for a business. And these two connect, because the one thing that leaders can never see are our own blind spots. And when you surround yourself with people who think differently from you, or you ask for their point of view, you learn things that are very important, and that’s what happened to me on my listening tour.
We also had core values as a company, and many of them were very good ones, but they were very long. And you know, hundreds of words to describe our values. We went to our team members and we said, help us create core values that can become part of our language, that we can use every day. And we came up with nine words. Five core values described in nine words that people now use as part of their vernacular.
One of them that was very important to us, always is, but especially during COVID, is “people first.” We really put our people first. We put safety at the top of our list. We developed a cleaning protocol for our jewelry. For example, we worked with a leading medical institution to develop a bespoke cleaning protocol to keep our people safe. We called it our Love Takes Care program. So that’s very important.
Another of the core values that our people came up with is “straight talk,” you know, really telling it like it is. You know, it’s a very fast-paced environment that we’re in. Retail is always evolving. It moves very quickly, and you have to have straight talk with people to be able to be agile and to move as quickly as you need to. Those are just two, but our team really did a great job, I think, coming up with both the strategies and the core values.
Murray (15:44): Gina, where does your leadership style come from? Where did you learn it? Who were your mentors? I’m fascinated by what you described. I’m not sure 10 years ago that would have been the received wisdom of leadership.
Drosos (16:00): I definitely started with great mentors in my parents. They were both very strong, very equal in their relationship, which I think is great, always very fair. My father was an attorney and my mother a school teacher. Education was very important. So one of the aspects of my leadership that I definitely took from them is being a continual learner. I think the best leaders are always open to new ideas, always leading change. Because if you’re not leading change, then change will happen to you or your company in ways that you haven’t anticipated. So, being a continual learner and really trying to think about equity and justice are important aspects I took from them.
And then I had a long career, as you know, at Procter and Gamble, at the global beauty business there. It was a very entrepreneurial journey inside a big company. We created the number-one beauty company inside a soap and diaper company, through a lot of global expansion and acquisitions and things like that. And one of the things that I learned there is how important it is to be decisive. You listen, you get great ideas, you make sure you’ve surrounded yourself with diverse points of view. But then the leader needs to have a clear vision, a common set of values, and be decisive to help the organization move forward. And I had great mentors at Procter and Gamble as well.
McGirt (17:32): I want to switch gears a little bit and talk about diamonds, and some of the problematic ingredients that go into jewelry. I think I have this right that Signet has been filing conflict mineral reports beyond what was necessary for a little while. Can you talk a little bit about why that’s important and how you think about the broader footprint that Signet has in the world?
Drosos (17:48): Right. Well, one thing I can tell you with great confidence is that there are no problematic ingredients in our products. All of the jewelry that we sell is conflict free, and we are very, very thoughtful about human rights and making sure that sustainability is part of our equation.
We are founders of the Responsible Jewelry Council. This is a governing body of the jewelry industry that goes to suppliers and confirms that they are consistent with the values that we’ve put forward. We’re part of the World Diamond Council. We are part of many charities who are doing really great things in some of the markets where we source our diamonds. Botswana, for example. The educational system there, and the health care system, is significantly improved through the efforts of Signet and other companies. So we have been a leader in this area for a long time. We’ve declared U.N. sustainability goals and are proudly moving in the direction of achieving those.
Murray (19:05): But this supply chain, and Ellen, thanks for getting us into supply chain. This is a tough business. I mean, you know, you’re dealing in diamonds that may have changed hands several times, and pushing way back into the supply chain and making sure you’re comfortable with how they are mined, how they’ve been treated since then. You made a statement at the beginning that said you’re confident that there’s no problem with your supply chain. Can you really be that confident about such complicated supply chains in such complicated countries?
Drosos (19:22): Yes, yes, I can. It is very important to us. The way that we are confident is multifold. Number one, we are a direct sightholder. We buy diamonds directly from the companies that mined them, so we know that they haven’t changed hands. We cut and polish many of them ourselves at our own factory in Botswana, which is great. And we can actually document every step in that process for our customers who are interested in that. We also have a strategic group of suppliers that we work with and that we have worked with for a long time. And we require traceability in our supply chains for them to be a supplier of Signet. So it’s very important to us.
Murray (20:13): And you do that because it’s the right thing to do? Or do you do it because your customers demand it? Or you do it for both reasons?
Drosos (20:20): It’s a combination of both. Honestly everything that we do as a company is because it’s the right thing to do. As Ellen said, we were publishing, you know, our own sustainability reports and sourcing reports long before customers were asking these questions, because it’s the right thing to do. But more and more customers do care. Gen Z is, you know, they will change the world. There’s no question that this generation will make a profound difference because values matter to them. And they want to know that they are buying from companies that share their values.
McGirt (20:55): So speaking of Gen Z, one of the big issues facing all leaders at every level is talent, and nurturing the next talent. And so pathways to the top, pathways to the executive suite, are changing, and they should continue to change. So I’m curious, in addition to all the ideas that you saw, you met lots and lots of of people as you were getting to know the company. How did you begin to think about how people who may have been overlooked for promotions or for investment, make sure that they know they have a path forward? The way I like to say it is you know, how do you know that the Black mom who was a manager somewhere in America knows that she could possibly be the CEO of this company?
Drosos (21:31): Well, I’m going start with the end result on that one, and then I’ll tell you kind of how we got there. But I’m very proud of the diversity and inclusion that we have at Signet. We have a highly diverse board. Two-thirds of all of our directors are either people of color, or women, or both. And so, very diverse from the top of the organization. More than half of my leadership team has been women for a number of years now.
But what we found was that we did not have as many persons of color in leadership roles as we needed to have a truly diverse organization. As I mentioned, I believe in diversity as a strategic imperative. It’s how companies think in more agile and innovative ways. And so we went into our organization and found great leaders who were interested in accelerating their career, and then we put them in challenging roles to really help broaden their responsibility.
We founded a mentoring program. I myself, for example, am a mentor of one of our vice presidents, an African-American women who leads Zales for our entire western region. That’s a new role for her. She was promoted a little over a year ago. And I have a monthly mentoring call with her, where we spend an hour, and we talk about our leadership challenges, and it’s a very safe space for her to be able to share ideas or bounce things off of me or tell me about, you know, personnel issue she’s been dealing with or whatever it is. And it’s not the vice president talking to the CEO. It’s two leaders talking to each other in a safe space where, you know, we can grow and develop.
So that kind of thing is going on all across our company, and it’s a wonderful way to find talent, challenge them with responsibilities, but surround them with the kind of education and support they need.
Murray (23:48): Gina, we have a couple of questions we’ve been asking everybody on the podcast since the beginning of the year. I’m going to let Ellen ask them, because I have forgotten what they are.
McGirt (24:03): This is our lightning round. We are asking everybody just to give us a pulse of what they’re thinking about on three separate topics. The first question is, what’s top of mind for you about COVID?
Drosos (24:13): I think right now it’s what the workplace will be like, of the future. We’ve all done such a great job working in a hybrid kind of an environment, sometimes in the office when collaboration or innovation are important, but a lot of times on a Zoom call or, you know, a Teams call from home. I think people have really loved the flexibility that that’s given them.
Really, I’ve talked to a lot of moms and dads in our organization, who love the fact that they can be there when the children get home from school, or that they can have lunch with their teenager, you know, who’s doing Zoom school, that kind of thing. So I think it’s really, it’s given people a renewed commitment to wanting to be able to have some flexibility. And I think the companies that lean into that will have the best talent wanting to flock to them. So that’s how we’re thinking. We’re planning, as we come back into the office, to do that for very intentional reasons. Like I mentioned—building relationships, collaboration, innovation, but we’re not coming back in just because it’s the way it used to be.
McGirt (25:15): The next one is Alan’s favorite. Top of mind for you when it comes to the economy.
Drosos (25:20): You know, it’s a very interesting time. I mean, obviously, we’ve seen inflation at 40-year highs. That puts pressure on consumers, especially for discretionary spending. I mentioned the jewelry category grew 30% last year. I don’t expect it to grow that quickly in an inflationary environment. I think it will normalize back to, you know, 1% to 3% gross, like we’ve seen over the last decade, potentially. But what I do think is enduring is people wanting to celebrate those that they love the most. And that bodes well, I think, for our category going forward.
McGirt (25:55): And the last one, really quickly, what is top of mind for you as a leader on your own leadership journey?
Drosos (26:01): I mentioned one of the hallmarks of my career has been continually learning. I just, I love to grow. I’d love to be able to help people grow to achieve, you know, their important life aspirations. And I love that for myself, too. I always love challenge. I think transformational leadership is something I’ve always, you know, sought out, and retail is a great place for that, because there are so many new things that we can bring for customers. And we have those coming all the time. Our digital team is launching more than 100 new features every quarter.
Drosos (26:56): And I love, I just love going through it with them, and I’d love to see the creativity come to life. It’s great.
Murray (26:56): Great. Thank you for taking the time to be with us and congratulations on your success.
Drosos (27:02):Well, thank you so much. It’s really congratulations to the Signet team. They are awesome.
Murray (27:05): Leadership Next is edited by Nicole Vergalla, written by me, Alan Murray, along with my amazing colleagues, Ellen McGirt and Megan Arnold. Our theme is by Jason Snell. Executive producers are Mason Cohn and Megan Arnold. Leadership Next is a production of Fortune Media. Leadership Next episodes are produced by Fortune‘s editorial team.
The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.
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