Nike has always been an innovative and intelligent brand. Already Steve Jobs highlighted how Nike celebrates great athletes in their advertising as opposed to highlighting features or benefits of their products. And Jobs ended up copying the concept for Apple’s ‘Think Different’ campaign. During the pandemic, Nike waved fees for its NTC premium, the subscription that includes Nike+ and provided access to online fitness classes free of charge. This adaptation and demonstration of empathy during difficult times helped it boost e-commerce.
As part of our series about the future of retail, I had the pleasure of interviewing Andrei Kaliev is the CEO and founder of DesignScan. Currently based in Riga, he is a serial entrepreneur with designs on changing the way the 609 billion dollars global furniture market is run.
Born in Latvia, Andrei comes from a family of entrepreneurs. At 17, spurred on by a budding interest in interior design and huge market growth, he opened his first fashion shop. From fashion, he then moved exclusively into the luxury furniture market, opening his first store in 2005. For Andrei, people are the most important asset in any business, as they are the ones that help companies grow with their knowledge and expertise. Andrei is driven to find people with talents stronger than his own in certain fields that he can delegate to confidently.
Andrei lives and breathes his work. Besides DesignScan, the rest of his time and passion goes into his family and finally being able to work on designing his own house.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
At the age of 17, I won my first interior design project — it was a clothing store in a shopping center. Already during this project I realized that I enjoyed the human aspect of interacting with clients, as well as planning and overseeing projects way more than having to fully carry them out on my own. So, I hired a friend of mine to do this work for me. From then on, I kept on growing within the interior design and furniture retail industries. I have worked in this sector for 18 years and have been in different roles and led different types of projects. I have sold furniture, led architecture and carpentry projects, represented different brands, dabbled in real estate development and construction. In each of those projects, I was ultimately the person responsible for the project’s success.
As those familiar with the industry will know, there is little that depends on you alone. With dozens of companies and hundreds of people involved in these processes, a great deal of emphasis needs to be placed on making sure all the links in the chain work in harmony. But this never happened and we were constantly forced to correct errors, catch up on delays and other issues to fulfill our obligations. I came to the realization that we were solving the same problems over and over again. It felt like reinventing the wheel each time we started a new project. What’s more, colleagues from other countries would complain about the same problems with their clients, builders and partners. In other industries, digital platforms and marketplaces eliminated inefficiencies and helped systematically tackle recurring pain points, but the industry I was in was way behind on that front.
DesignScan is the logical conclusion I came to after 18 years in design and retail. The underdeveloped state of digitization of the furniture retail industry, and clear examples of how technology changed other industries for the better, motivated me to solve those common pain points in a productized, automated and scalable way.
Technology allows us to remove friction that we previously thought of not as problems, but as necessities, and the internet allows us to bring together showrooms not only from different parts of the same city, but from multiple countries, all in one platform. I am convinced furniture retail could be in for important change, progress. After all, we’re looking at a market that has not changed much in dozens of years. And we’ll be in a great position to address new challenges that arise.
Can you share the most interesting story that happened to you since you started your career?
Our company represented the interior department of KOHLER. It is one of the largest private family-owned companies in America which has been owned by the Kohler family for three generations. At that moment we were just starting, I was 25 and the Kohler company was run by Herbert Kohler himself. We heard about him: he was a billionaire, a legend, a very charismatic person. And so we arrived at the Kohler conference in Munich, where all representatives from Europe gathered every year. Mr. Kohler was also present during the event to give a speech and thank everyone. And somehow we were introduced to him, only as a formality and with no expectations, something along the lines of, “these guys are our representatives from the Baltics, they make good sales”. Somehow, together with my business partner Dmitry, we ended up talking to Mr. Kohler for 2 hours. Nobody there understood what he was discussing with these young reps from the Baltics. But somehow he was so imbued with us that he called their Chief Officer for Europe and said: “bring these two with me, I will show them around our town”. I don’t know for sure, but I think that in America there is only one family that has its own town — Kohler, “then we’ll take my plane and fly to the High Point Furniture Fair, spend a few days together and part our ways”.
It came as a complete shock to us! At the time, we did not understand at all how this could happen,.. On the plane with Herbert Kohler, I asked him “Why would you do this?” He replied that he considered it would be important for us. After our trip, we agreed he would fly to Riga and visit us. We had already planned his stay, including a number of business plan ideas, but unfortunately Herbert had health issues and the trip didn’t work out.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson or takeaway you learned from that?
There haven’t been many ‘funny’ mistakes, but not one in particular that would make for an interesting, educational story. However, we all make mistakes, and it’s important we don’t beat ourselves up because of it. In fact, identifying a mistake is the best way to prevent it in the future.
Perhaps what’s funny in hindsight is that it took me so many years to realize I could start a technology company. In the world of design and retail, so many processes are outdated. When working with a new client, the same obstacles appear and what’s actually hard is helping clients themselves avoid the same mistakes previous clients have made. My key takeaway is that wherever we find these recurring pain points at scale, that’s when we can and should apply technology, the internet, digital platforms and marketplaces to solve them in a structural way.
Are you working on any new exciting projects now? How do you think that might help people?
I am currently working on DesignScan, a platform that unites all the different parties involved in the process of selling and buying furniture — manufacturers, vendors, designers, buyers, and others. This project arose out of some of the problems and pains I experienced myself and witnessed from others while working in the interior design and furniture industry.
I have carried out different roles: I’ve been a seller, an intermediary and a buyer. No matter which role I took, forming an order for furniture was always the most painful part of the process. The seller wants to sell more expensive products, but at the same time it is difficult for him to clearly explain why his product is better and why the client should buy it. The sofas are all alike and the prices are completely different. Sellers operate with subjective criteria (beautiful, high quality, “you will be satisfied”, etc.) and at the same time are in a very competitive environment.
The buyer is also not always an expert in furniture. He or she rarely buys it and needs to be guided when choosing. Buyers will not always understand how all the factors, such as budget, space and shape of property will limit their ability to purchase the furniture they like the most., And even when it seems to be ideal both in design and in price — it might not fit with other, possibly already purchased, furniture.
Here, of course, is where the intermediary — an interior designer, decorator, a professional architect — can be of substantial help. But designers tend to consider mostly the criteria of beauty, practicality and possibly personal preferences, but you have to deal with tenders and convince the client that this particular estimate is OK.
This is the kind of triangle we want to fold on our platform in a new way. We aggregate thousands of offline retailers on one single platform, digitize the stock, and set up a convenient process for searching and forming a price request. All this will be flavored with neural networks that we are developing as part of a separate Design Spy product. It will make it possible to select and compare suitable objects and simplify the process for all three parties. We do not want to replace offline retailers. Our goal is to digitize their business and provide them with advanced tools.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
In technology startups, at first, there is a lot of enthusiasm that helps you move forward and lead your team, but at a certain moment you realize that it is not so easy to change the world and that initial enthusiasm fades away. The only thing left is then the same old routine and work, day after day. We need to develop techniques for getting through such periods to once again reach a state where we find a source of new positive emotions and energy.
Three things help me. The first is to focus on one working day — where is my goal and what can I do today to reach it. You can always do a lot of valuable things in one day, much easier than planning for the entire year.
The second is to adjust your attitude towards work as if you were in a movie. The interesting part of a movie is not the happy ending, but the part where the hero is figuring out a way out of a difficult situation. . In real life, many people are forgetting that hurdles are normal, and that times exist when we need to overcome them. To succeed, we need to figure out how to position them as interesting challenges to solve.
And third — as my partner, mentor and investor Alexey Savchuk tells me, from the outside it always seems that everything is clear to others and everything is easy. But in fact, things may also be difficult for them, they just cope differently. Nothing is ever as easy as it seems, but that doesn’t mean we shouldn’t keep trying to do our best.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?
In general, I try to look at all the people I meet in my life as a source of some kind of knowledge. I must say I was lucky in life. I had and still have a lot of people around me who, without realizing it, have taught me a lot.
Different people helped me move forward at different stages of my life. Today, I am especially grateful to my friend, mentor and partner Alexey Savchuk. He has a unique vision of the world, completely different from that of many. Over time, it is more and more difficult to find a person whose opinion on some issue makes you rethink your own position, but Alexey never stops challenging you. It might seem that you have it all figured out, but after talking to him, you have more questions you seek answers to.
How have you used your success to bring goodness to the world?
I just try not to bring negativity. It seems to me that if everyone was just watching not to spoil the energy around them, then the world would be more beautiful. I try to do my best in every interaction with a human being, and that’s my way of spreading goodness. Sometimes it’s as easy as that.
Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share five examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?
1 — Farfetch deserves a special mention in my opinion, it is one of the best examples of offline retail digitalization. José Neves, who founded Farfetch more than 10 years ago, was himself going through experiences I consider similar to mine. He was a designer and had his own boutique, but for him it all started in the fashion world, with shoes. Farfetch brings together fashion boutiques much like DesignScan does furniture showrooms. High-end luxury fashion is something that traditionally didn’t work that well online, similar to furniture. So Farfetch is at the forefront of changing this, and saw the opportunity in the pandemic, which is not being used as an excuse for bad results, but as a reason to take the steps needed to build further.
2 — Zara has done a great job of continuing to sell online. The Inditex brand is a giant, but it’s run in a surprisingly lean way. It managed to react very quickly during the pandemic and reduced its inventory and operating expenses, while leveraging its online capabilities. As a result, online sales almost doubled. The idea here is that, no matter how large you are, you need to be ready to adapt.
3 — Rimi Baltic is a subsidiary of the Swedish group ICA. Rimi operates more than 275 stores across the three Baltic states. This is a supermarket chain that has been preparing for digitalization for the past 6 or 7 years. But now they have shifted to improving their online commerce on a monthly basis, with a focus on achieving the digitization of the entire grocery purchasing process. Online grocery retailing had only very slowly taken market share from the big, undigitized, Baltic retailers, but with the pandemic this competition accelerated. Rimi was able to react relatively fast and leverage the power of its brand to quickly grow its online business from zero to a significant portion of the online shopping market.
4 — Amazon GO — I think that this is one of the most advanced ‘Just Walk Out’ solutions out there, but it will be interesting to see how they will enter the market. At the moment it is not widespread, however, we know that this technology is already being implemented in China, for example. This was already in the pipeline but the new palm-scanning technology shows how Amazon wants to find ways to begin implementing the tech in ways that will find more acceptance in the West. If we look at London, a front-runner when it comes to technology adoption, we already know that contactless payment solutions and self-checkouts at supermarkets can be a huge success. The Amazon Go concept is a natural continuation of this trend, and it’s no surprise efforts have accelerated during the pandemic.
5 — Nike has always been an innovative and intelligent brand. Already Steve Jobs highlighted how Nike celebrates great athletes in their advertising as opposed to highlighting features or benefits of their products. And Jobs ended up copying the concept for Apple’s ‘Think Different’ campaign. During the pandemic, Nike waved fees for its NTC premium, the subscription that includes Nike+ and provided access to online fitness classes free of charge. This adaptation and demonstration of empathy during difficult times helped it boost e-commerce.
In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?
I think that in the next twenty to thirty years they will undergo a very strong transformation, moving from a utilitarian to a more emotional space, where shopping is seen, first of all, as an experience
New generations are learning to buy and getting used to buying online, brands are learning how to sell online. The youngest of these generations are mobile- and online-first. In fact, more traditional purchasing processes seem harder to them. So why do retailers need a physical location? Products and shops are being created purely for online sales and trust in all kinds of online marketplaces is growing. The tools for marketing and trading brands and products online are becoming easier to use and access. If we talk twenty to thirty years from now, I’m not sure if in the future there will be a place for shopping centers.
Already 20 years ago, it was said that shopping centers sell time rather than goods. People do not go to shopping centers to buy — they go there to waste time. But today digital is taking up more and more of our time. You only need to look at screen usage statistics to realize that the real shopping center of the future is on a screen and that there is no need to spend time walking around a shopping center.
The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?
There is no single answer. Lululemon, for example, has a product that is a cut above all other sports brands in quality. Yet, despite that, its products cost the same as those of many of their peers. What Lululemon has achieved is and worked on for a long time is creating a community of people that empathize with the brand — for years. The key may lie in how the brand that Lululemon managed to build is one that perfectly fits our times.
It’s all about the visionary behind the brand. There is always a person behind a success story that manages to create the perfect marriage of vision and execution. Digital marketing or the right business model alone are not enough. In today’s world dominated by Amazon and Alibaba, where Zara and H&M have gone global, brands need to stand out. They need to not only provide something special, but they also need to represent something special. Amazon will be better than you at price and at convenience almost every time. But there’s also Whole Foods to attract consumers looking for healthy, premium options. What is it about your brand that is worthy of consumers’ attention? Look at Patagonia and their engagement for the planet. Look at TOM’S and their fight against poverty. Or Adidas and their shoes made fully out of recycled material. Often it’s a company’s culture and DNA that attracts customers, not just the product.
Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?
We find ourselves in an era of unprecedented rapid change. At the same time, technology to navigate has never been as accessible. I think that anyone involved in any area of retail should remain aware of the trends and changes in the industry, and always be ready to adapt. We need to accept that our business models may not be able to survive the trends by remaining the same, but our businesses can survive by adapting. As leaders, we need to build teams capable of making quick and bold decisions without the fear of making mistakes. No one knows exactly how retail will develop. We need to learn to better analyze the moment and the long-term, re-calibrate, improve.
The planning horizon is very short. Leaders in retail SMEs but also large companies would do well in becoming acquainted with the lean startup methodology outlined by Eric Ries.
Interesting times are also coming for technology giants like Amazon and the Alibaba Group. As their size and influence begin to be seen as a threat to fair, free markets, and even as a threat to the governments themselves, governments will try to split them into several companies limiting their monopoly and there will be opportunities for smaller companies.
Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I think the world often focuses on grownups and how they can make money. I believe we need to focus more on being better parents, teachers, educators to children — especially in their formative years when they are 8–10 years old. The importance of this has been proven by economists, psychologists and others. The more time as parents we give them, the more self-confidence we give them, the more of those important values we will instill in them. This will help them become a better generation than ours and the best way to a better future. We need to get interested, learn how to raise our children better and spend as much time as possible with them.
How can our readers further follow your work?
- LinkedIn: https://www.linkedin.com/in/andrei-kaliev-174006156/
- Twitter: https://twitter.com/andreikaliev
And you can follow the latest from DesignScan on:
- Instagram: https://www.instagram.com/designscan_eu/
- Facebook: https://www.facebook.com/designscan.eu/
- LinkedIn: https://www.linkedin.com/company/design-scan/
- Twitter: https://twitter.com/DesignScan_eu
This was very inspiring. Thank you so much for joining us!