PACSUN President Brie Olson & Co-CEO Alfred Chang

Deborah Weinswig (00:01): Hello everyone. And welcome back to another episode of the Rethink Retail podcast. My name is Debora Weinswig. I’m the founder and CEO of Coresight Research and your host for this week. I’m very honored. Today, I have the distinct pleasure of speaking with two retail executives who many of you know. They’re really leading this industry with creativity, innovation, and a real digital first mentality. Joining me today are Alfred Chang, Co-CEO of PacSun, and Brie Olson, President of PacSun. So we get two for one. Brie, Alfred, thank you so much for joining the show today. Alfred Chang (00:31): Thanks for having us Deborah. Deborah Weinswig (00:33): So let’s kick things off. We’re in a challenging macro environment. We have a consumer who seems to have endless appetite for new and innovative experiences and products because they want to use those products as they are enjoying those experiences. Can you talk a little bit about any surprises you’re seeing in terms of how consumers are behaving? And especially as we look outside of North America, if you can help us think about that as well. Alfred Chang (01:06): Sure. Well, thanks for having us. Yeah, it is a challenging macro environment, as you stated. And I think it’s driven by a lot of world events and different factors on the economy. And we know that has an impact to how the consumer spends in particular and that’s probably the largest impact, but underneath that, even as their wallets are being affected and their spending power’s being affected, we know that there’s also things that recently have impacted how the consumer shops. And with a generational pandemic that we haven’t seen in a while, that’s definitely impacted how the customers behaved the last few years. So if you look at the current environment, there’s absolutely different things that are impacting their current behavior, such as they haven’t been able to do certain things the last couple of years and that impacts then now what they tend to spend their money on, even with a tougher macro environment. Alfred Chang (02:09): But as you stated, there’s always newness. There’s always something that’s going to drive what they choose to purchase, especially in terms of how they want to express themselves in terms of their overall lifestyle and that really speaks to them. So today, based off of what fashion trends, what they’re planning to do today, maybe a year or two years ago, definitely a larger push within the casual lifestyle wear, as things were more situated at home, potentially more in the backyard in the pool that influences the consumer. But our customer though, besides some of these physical influences, also greatly influenced by how they can express themselves in the digital world, in particular in social media and other forms of plat other platforms. And this really, as we saw in the last couple of years, drove also some shopping behavior in terms of how they want to express themselves within the digital world. Fast forward to today, maybe their lifestyle changes a bit in terms of what they can do and socialize and participate in and travel, more nighttime activities. Alfred Chang (03:17): And we know those things have an influence in terms of what they choose to purchase from a category standpoint. But even as all of those things are happening that influence is a bit based off of what they’re actually physically doing, as well as what they’re doing in the virtual world, fashion’s always moving, newness is always a factor and those are things that are driven by trend, driven by cultural influences. And despite the macro environment, those kind of things are always, always evolving and moving forward and that’s something for us at PacSun that we spend an enormous amount of time. That’s what we’re really based off of in terms of understanding and being experts at this consumer. And we continue to move along with where they’re taking us. Deborah Weinswig (04:01): It’s interesting, we’re seeing, I would say your consumer is where we at Coresight are probably getting the most inbound questions because of how rapidly they’re changing, how they’re being influenced and just changes in overall behavior. Brie, as you look at this consumer and how they’re consuming and where they’re consuming, we spend a lot of our time thinking about new channels of distribution, whether it’s quick commerce or live streaming or metaverse. And then they’re buying online, picking up in store, what’s happening with returns. What are you seeing in terms of changes just in almost more of the operation side of how their purchasing journey is beginning and ending? And one other question I’m going to fold into that is in the US, the consumer, I think just because there are in some ways less sources of intelligence, it takes about four, if you will, interactions for them to convert. That compares to about 12 in China. What are you seeing in terms of what those areas of impact are to get them to convert? Brieane Olson (05:08): Thanks Deborah. As the pandemic has certainly influenced our acceleration into digital, we’ve recognized at PacSun that we are catering to a fully digital generation. And I think some of the large shifts we’re seeing with gen Z are that they value access, community, and sustainability more than any other generation before them. And so some of the things that have remained constant for us as a brand are our focus on innovation, creativity, and authenticity. And youth culture is really at the heart of our brand voice and so we are hyper-focused and have been over the last several years on that evolution of the consumer and staying relevant to them. And you’re absolutely correct in terms of there have been significant shifts in terms of our evolving marketing strategies and how that impacts conversion and engagement across the consumer. Brieane Olson (06:31): We are certainly catering to a fully digital generation and we’ve made important strides as we continue as a brand to explore alongside our consumer in this evolving digital landscape. As a part of this, we were one of the first brands to accept cryptocurrency, and we also have been one of the first brands to offer PacSun branded product over a year ago on Roblox and have since launched several larger gaming initiatives, including PACWORLD on Roblox, a virtual mall tycoon game, PacSun the game, and more recently 3D clothing and acquisition of land in the Sandbox. And so the types of tools that we’re using from a marketing perspective are certainly shifting. Within those shifts, we’ve also taken a much greater emphasis into TikTok, and we have seen tremendous strides in our consumer wanting new and exciting views into both virtual and in-store experiences. And so we’ve been catering to these digitally on social media via TikTok, Snapchat, and more recently with Discord. And examples of those would be unboxings, live streams, even a lot of focus from our creators who play such a critical role in our success on these channels and amplifying our brand voice on the platform. And it’s really our creators who help to create that diversification of storytelling capabilities. Deborah Weinswig (07:58): It’s interesting, I helped co-author an HBS case study on TikTok and to deliver it twice a year to some unbelievable students. And it’s been interesting starting there to just see how of this generation is thinking about engagement. And once again, going back to some of the distraction at the same time, we have all these, not only new products, NFTs, virtual clothing, access tokens and whatnot that are changing how we think about purchasing. And then there’s the gamified aspect of that, right? If you think about Gap where they had the four different drops and you put all the pieces together and you could have the opportunity to make a purchase of a Bored Apes Yacht Club sweatshirt. Deborah Weinswig (08:49): And so we’re seeing more complex, Alfred, ways to purchase. But I think this consumer is so sophisticated that they’re really gravitating towards that. As you think about web three, which I think is you think about Sandbox and Decentraland and AXI and whatnot, which I think are really more on the web three side, how do you think about the customer journey, customer lifetime value and the products that you sell and the community you build? Because I think we’re seeing some really interesting … And while it’s early, that customer does seem to be quite sticky. Alfred Chang (09:29): Yeah, for sure. Look, I think as you describe web three in totality and the different areas that it’s manifesting itself, for us, the first most important thing is to ensure that we continue to provide access points that our consumer and our community expects. And quite simply right now, it has been really where I think our overall community and our consumers absolutely understand and are participating or want to participate within what’s described as NFTs. I think in terms of the gamification world and what we would describe and that customer would describe as what they consider to be an evolution of gaming and going into metaverse in terms of the virtual world, end of the day, Roblox is a game, but it’s also creating a whole meta universe and really being that early form of what a metaverse is being described as. But I think in terms of web three and all the different technology that web three provides in this whole new world and how things are going to be built and how it’s going to engage against this consumer, I think we’re obviously still really early on. Alfred Chang (10:47): Right now, we’re seeing NFTs, we’re seeing gaming has been around for so long that technology just helping evolve how that customer participates within gaming. Beyond that though, in terms of where Sandbox is going and these different other forms of web three, it is really still sitting within these, what I would say, very specific communities. In these communities, you’re absolutely right Deborah, they’re so sticky and they are so, not just passionate, but there is a lot of innovation happening. There’s a lot of passion happening within there in terms of what they believe in. And these things are being built by these communities in terms of where web three is going to go and how they’re choosing to utilize and participate within what the blockchain technology affords. Alfred Chang (11:41): And for us as a brand and retailer on our end, obviously we want to authentically listen to this community. We want to understand what’s happening within there and find ways that where then to our broader community, we’re excited to see where web three is going to take us and we want to make sure we’re participating in it authentically. And I think that’s what we’re … All this excitement right now in terms of what web three and NFTs and all of this that you’re hearing out there and news and you hear both sides around people believing this is just a moment. It’s not really going to develop into something that’s going to be significant in terms of for our consumers in the world, but it absolutely will be. I think the question is going to be, we don’t have visibility to where all the different use cases are, but we absolutely know what’s happening in these various communities. It’s exciting. There’s going to be a lot more development. There’s going to be a lot of things that don’t manifest itself into something more significant and broad. But at the same time, there’s so much development and innovation that’s happening in that space right now. And we absolutely do think that that’s going to continue to evolve and going to be significant to our customer. Deborah Weinswig (12:59): It’s interesting because to me, there’s this endless opportunity for learning. And I think, whether it’s just … I look at Discord and Upstream in between those two. And Upstream does a lot of phenomenal education. That these consumers, their degree of sophistication, it’s exponential. It’s not really arithmetic or even geometric, right? Alfred Chang (13:24): Yep. Deborah Weinswig (13:25): And I think that’s what’s so interesting is that they’re increasingly sophisticated really day by day. And I personally, I’m very involved in a lot of philanthropic organizations, Brie, and so I really thought … Before the DAO was a decentralized autonomous organization, was really put together sitting on the boards of a few charities. How can we come together? Deborah Weinswig (13:48): Each put in an equal, if you will, amount of money and have an equal voice on decisions that were made, especially if these are … Hey, it could be, are we going to order pizza tonight or are we going to order sushi? But I really think that in this generation, going back to what you said earlier, Brie, which really resonated with me, this is a generation around access and sustainability. And I think that this authenticity, they really want to get behind what they care about. Have you looked at DAOs? And if not, is it on your roadmap? Along those lines, how are you helping your customer get behind what matters to them and have that be in conjunction with PacSun and I would say even further engaging them with the brand? Brieane Olson (14:37): Absolutely. A huge initiative for us is authenticity. And authenticity can mean a lot of different things, but brand engagement today, albeit amongst our audience is largely predicated on authenticity and really the conviction and the value of true authenticity and building a community. And as we develop this emotional resonance with our audience, as a lifestyle brand, really through our brand voice, it’s both the PacSun brand voice and all of the creators that we bring into our platform. And we’ve leveraged it in a lot of ways as a social platform, as a voice for good. And an example of that for TikTok is last year, Emma Chamberlain did a TikTok on our platform and on her own. And she is one of the most authentic and influential voices for her generation. We’ve worked with her in both 2021 and 2022, but her focus for PacSun was actually on mental health and it yielded 82 million views. Brieane Olson (15:39): And that really brings the PacSun brand and the discussions that we’re looking to engage our consumer with really beyond fashion, music, technology and into more social movements and encouraging discussion and into inclusion and diversity. And as a brand PacSun does choose to speak up in terms of what matters to our consumer, what we believe the future for our communities and the social responsibility of the organization. Those have been big pieces that as an organization, we have worked in terms of overall shift. That affects both our brand voice, but also affects how the consumer identifies with a brand because for a lot of consumers in gen Z, as we look, they value community over brand. And that is a significant shift from a decade ago. And so as a brand, how do you build that voice? Brieane Olson (16:40): What are the different types of conversations you want to have with your consumer? And so that really ranges at PacSun from the collaborations that we do, whether it be with ASAP Rocky, Ryan Destiny, Storm Reid, Emma Chamberlain, or the partnerships that we do, whether that was with Corey Populus in Circulate Marketplace, which really is about amplifying the opportunities for new emerging black owned brands. And as we evolve and we think about also the philanthropic partners that we’ve chosen to work with, whether that be from STEM to the Future or Fashion Scholarship Fund, these are all moments that the brand is taking the opportunity to connect with the consumer in a much deeper way and begin those important conversations. And so I think absolutely as a brand, we have evolved our brand voice and have the responsibility and opportunity to connect with the consumer in much deeper ways than before. Deborah Weinswig (17:47): It’s really impactful. And I have to say through having really known the brand well when I was a sales side analyst at Citi and just having watched it evolve, not only once again in North America, but globally, there is a meaning for your consumer. And I do feel like they’re engaging with the brand earlier and earlier. And so I assume, Alfred, you’ve got the gen alphas already. It’s not just the early gen Z and the late gen Z, but how are you finding that generation is engaging differently? How are they spending differently? And with this movement towards circularity and really in some ways it’s beyond sustainability. I think it’s if you can take better care of your clothing, not only does it get a second life, no pun intended, but you can also utilize it for longer. So there are many aspects around sustainability that I feel like the gen alpha generation is just starting to look at and you’re already seeing it in a completely different way and the very, let’s call them the earlier gen Z’s. Along those lines, how are they expressing their values through what they wear, through what they buy and then also how they buy it? Alfred Chang (19:13): Yeah, you’re absolutely right. I think our connection has really grown with what we call this NextGen consumer. We’ve really been focusing and putting a lot of effort into positioning the PacSun brand to be the lifestyle brand that that generation and each generation thereafter, this next gen consumer says this is a brand for me, that’s focused on me and represents myself the most and in the most authentic way. And as we look at that positioning and we talk about today, mainly it’s gen Z, but even on gen alpha, we know that younger teen, because of the information that’s available and how they’re engaging in the digital world, they’re absolutely looking at how the brands that really represent their voice and what they care about. Alfred Chang (20:04): And the things like sustainability and recycle clothing and what that means for them is drastically different even than young millennials and a bit of gen Z and which is for them today, as they are seeing what’s happening globally, it’s definitely not just something that’s important, but it’s moving from what was more of an important and an afterthought and a different driver to something that actually does start to not just be a consideration on the end, but something that impacts their purchase behavior right from the very beginning. And while I don’t think fashion is at an inflection point that the auto industry clearly has been, and we finally arrived at, in terms of the impact of how people feel about electric versus gasoline, the fashion piece is starting to move very quickly in terms of how they want to express the importance of, hey, what are companies doing from a sustainability standpoint? Alfred Chang (21:07): How can I complete my wardrobe and my lifestyle, and how can I express that and be able to have an impact in terms of understanding, hey, there’s only so much disposable clothing that I need and how else can I participate in expressing that overall lifestyle and pick up the things that I love and I want? And I think that’s still such a big driver, even for gen alpha and gen Z. End of the day, people want to express themselves. They care about fashion. They care about how they look, but the complexity of how they can express themselves now and bring that to life because of the different opportunities that technology has afforded them, that awareness level around the impact to the environment, how they wish to express that lifestyle, I think is so critical for brands, especially for us in terms of staying relevant with this consumer, that we’re able to allow them to engage with us across those expectations. And I think that if you’re not doing that, then you’re going to quickly see that you can’t claim that authenticity and you’re not a brand that represents them. So it’s impacting how they’re choosing to make those different purchases, but that’s really been where our focus has been. Deborah Weinswig (22:28): That’s incredibly interesting. I mean, as I think about how they’re expressing themselves, to date, we have not seen, and I really just find it fascinating, an unsuccessful retail NFT. We’ve seen some things in health and wellness and whatnot, but everything that’s been done in retail has been a smashing success. And when you talk to some of these younger customers, they’ll like take out their wallet, they’ll show you. And to me, what’s so interesting is when you talk to them, they’re like, “My clothes in my closet, when I leave my house, they’re still in my closet, but I get to take my NFTs with me. I can show you, I can talk to you about them and why I bought them and whatnot.” Deborah Weinswig (23:11): And it’s really interesting how they’re looking at the acquisition of virtual goods. And even if they’re clipping their avatars or whatnot, but even just having this ownership in a unique way, and especially if there’s any access token, you can get in line earlier or whatever it might be. And Brie, as you start to think about how you advertise, how you market some of these changes around where you’re spending and how you use data for that, can you just help us frame that? Because, once again, I think that PacSun has been so early in so many of these things, and especially from a data driven decision perspective, I think we really stood back in awe during the pandemic at just how decisions were made and the success that you had. Brieane Olson (24:08): Absolutely. I would say one other piece to add to the conversation and some of Alfred’s points is over the last 18 months, PacSun did make the strategic decision to engage a younger consumer. And so we launched our fully gender fluid PacSun kids camp capsule and collection that caters to kids starting as early as age four, stretching all the way to age 14. And really allowing the consumer that had such a large appetite to be able to get into the brand sooner, to have that access to the brand. And as I mentioned, our kids brand was designed with no gender barriers. So completely fluid, shot on both genders and really with no distinction. And that has really resonated in the market. And we’ve seen tremendous success, inclusive of participation from some key wholesale partners. And so engaging with the younger consumer and working with the sweet spot of age eight or age 10 is really where a lot of the metaverse work and our thoughts and strategies around why does it matter for PacSun to be in the metaverse really evolved. Brieane Olson (25:27): Just from the young children who don’t see a large differentiation between physical and virtual goods in terms of the value that they create for them. And so if they believe that value is equal, we really understood that as we were evolving as a brand, an important piece of community connectivity, but also virtual goods needed to come from this virtual evolving space. And so it was really exciting to host those focus groups and speak to these younger consumers. And we really view our audience as the cultural pioneers of the future, because they are moving at such a rapid rate and NFTs to them do carry significant value. And we’ve seen tremendous response from our initiatives in the digital space, starting with Roblox virtual clothing, the engagement on the Roblox games, and really how the consumer is starting to think about their identity and those blurred lines around your identity in the physical world as it evolves into your identity as you’re connecting with friends, socializing, going to school, engaging across all of those platforms in this decentralized space and how you interact and what your avatar and identity of your avatar means and the importance of those virtual goods. Brieane Olson (26:53): And that has really led us to some important unlocks, as we thought about our evolving NFT strategy, as we thought about our evolving footprint in the digital space and in the metaverse for sure. Deborah Weinswig (27:09): Yeah. It’s fascinating. One of my really good friends who is also the founder of a large and growing startup, we were talking last night, as one dreams at two or three of the morning as we’ve had a long day of work and she’s like, “I really want to start a brand when I retire.” And I’m like, “We should do it together.” And so it was fascinating as we talked about what was very important to us. And of course the first word out of her mouth was sustainability. And I said, “I’ve been thinking a lot about this. If we were to do …” Because of course now we’re already doing it, right? “If we were to do something around gender fluidity.” So if you just have one line of clothing and also I think it should be very size inclusive as well. And idea could be zero to 50, whatever it might be. And maybe everything’s not carried in the store. Some of it’s online at both ends of this size spectrum just to really maximize the in-store footprint. But if we do more in general fluidity, is there Alfred, an idea that we can utilize our inventory, let’s just say, in a more efficient way? And what else are you seeing in terms of this idea around how this consumer is shaping really the whole shopping journey of the future? Where are you starting to pick up efficiencies in process and then where are you also having to invest maybe where you hadn’t expected in order to maintain their intention and also drive conversion? Alfred Chang (28:48): Yeah. I think on the first part of your question in terms of gender fluidity, again, for us, really being able to not just develop product, but speak to what’s changed our shopping experience, it really, again, is driven from the consumer and what they’re not only expecting, but how they view themselves and view their generation and community, which is that in terms of identification and how that continues to evolve is there’s different expectations around it now. And it’s really driven by that in terms of the opportunity around gender fluidity, and that’s how we looked at it. And I think part of all of this is to be anything of this, whether it’s sustainability or whether sustainability has some more technology and there’s aspects to that. When talking about gender fluidity it’s really about expression and it’s so important to be authentic within that area. Alfred Chang (29:48): So for us, to be really honest, our gender fluidity strategy is really driven by the customer, it’s really driven by how they’re choosing to express, how they expect to shop and how they expect apparel or other accessories to come together on it. We haven’t looked at that as some sort of operational process or opportunity that then helps to necessarily impact and reduce assortment size, or how do we leverage that from an operational standpoint because one of the things is as much as we’ve seen the customer continue to evolve and we talk about sustainability, we talk about size inclusion and general fluidity is it’s still about self-expression. And this generation and gen alpha, absolutely still there’s so much to be excited about. Alfred Chang (30:44): In fact, we actually believe now in terms of looking at this time period and what’s coming within the next couple of years, is that we’re decades away from the idea of everybody wears this denim jacket. And in fact, what we’re seeing much more of is that there’s so many variety of communities, different ways of expressing themselves, different trends, passions, and some of those rise up to become ones that the whole world grabs onto, but there’s actually so much more going on on that. So, in fact, I think, to be really honest, continuing to stay authentic and relevant, we really actually see that there is more diversity within assortments and gender fluidity is absolutely one of those things that we have to represent authentically. Alfred Chang (31:42): From a process efficiencies and where we believe the opportunities are, it really still is driven by technology and where technology is going to help. And I think that’s one of the things about it is it doesn’t really change what the customer wants. Technology advances how that product can, one, manifest itself, but two, also technology helps with how they can engage with that product, how they can purchase that product. And then that continues to move forward. I think that’s where we have to find more and more efficiencies, really leveraging technology in terms of what it’s been able to do in terms of currently on our web platforms, in terms of how social media is evolving, but also looking for, as we talked about before, how web three is going to really help with some of those touchpoints. Deborah Weinswig (32:40): I mean, always having the analyst hat on and trying to think about dollars and cents and maybe we’re finding those pockets in different areas. I had done a big research project around gender fluidity because it was an area that we thought there was a lot of … This was … Geez, this was like five years ago already. We felt that there was a lot of opportunity and we started to meet with some resistance at that time, as you can imagine. And we dove into and actually came up with 26 different genders, which when we were presenting that to senior leadership teams, they really took a step back. And what we were able to do is start to … It was really interesting, in Minecraft, you identify yourself. Deborah Weinswig (33:23): Sometimes you’ll have a flag in your house. And so we started to show this to a lot of executives and they’re like, “Wow, we really didn’t understand just how consumers were identifying themselves, how important this was.” And I think sometimes some of this learning process, if you’re not living it every day, if you are … I would argue that’s everybody’s consumer now, but sometimes I think even at the C-suite level, you have an idea of who your consumer is, but I think that consumers are changing at a pace unlike anything we’ve seen. I mean, a lot of the research that we’ve been writing recently is that between the years 2022 and 2026, we’ll see as much change as we have in the past 100 years. Deborah Weinswig (34:04): And a lot of that, Alfred, is driven by things that you’ve just mentioned, especially around if we think about AI and where we are and where we can go. And I think that blockchain technology, this ability is … Because I spend a lot of time in supply chain, right? The question that … I’m sitting in a conference room, people would be like, “Where’s my stuff?” The consumer says it, the C-suite says that. And I think this ability, because if you know where your stuff is without … I never like to point fingers, but there have been some announcements recently from some very large retailers and I’ve been in some of those warehouses, where there’s a lot of stuff, because some of it was in factories, some of it was in containers. And it all came in at the same time and now it’s like, “Wow, we’ve got a lot of stuff. And we have to think about how to move through that.” Deborah Weinswig (34:56): There’s a sustainability aspect there because I do believe people buy things, not because they necessarily wanted to, it was more around price, that if you don’t love it, you won’t take care of it in a way that I think is really critical to the environment and extending the life of that garment. And so Brie, as we think about this consumer and this technology and just how much is coming at you and at the management team, how are you guys making decisions on what technology solution to focus on first? Because if we think about it, even today we’ve talked about live streaming, metaverse, NFTs, crypto, blockchain, supply chain, data, data intelligence, AI, deep learning, and whatnot. And how do you focus and how in a world where I think everyone’s so distracted, PacSun has done such a great job of staying focused. What’s the secret sauce, Brie? Brieane Olson (35:52): I think our teams and leadership move quickly, and we lead as a brand with innovation at our core, and we understand the importance of authenticity. And so in many ways we are consumer led and so we gravitate towards the channel that’s going to be most impactful to the consumer. And I think our teams’ innate understanding of the digital worlds, how it’s constantly evolving, an overall brand vision that accepts exploration, challenging making mistakes, learning from them because that’s part of moving quickly, but also being very strategic. But really an in depth understanding around gen Z. It has to come naturally to our teams. There has to be a constant desire, and there is a constant desire from our teams to disrupt the space and to move quickly and to think about things in a different way. And so even when we’re tasked with picking product or creators, we really have to think about our brand voice. Brieane Olson (37:01): What is going to break through? What’s really special to the consumer? How can we elevate the next generation of premium product and quality design and partner with creators? Whether it’s Emma Chamberlain, Storm Reid, ASAP Rocky with his Mercedes collection. Going beyond just the initial partnership and really figuring out how does it channel all the way through? What digital aspects are important? PacSun recently participated in complex land. And that’s a virtual festival of everything that we’re talking about. Showcasing NFTs, virtual shopping. And I think an overarching and led by Alfred and Mike, really an overarching brand vision around that creativity, innovation, and the ability to constantly try new things is critical to our success. I would also say that PacSun takes a very integrated approach to the metaverse and all new initiatives where it impacts all functions. So we have not created standalone functions in these areas to go after specific trends, because we try to really approach it from this is an overarching shift happening generationally and something that is going to impact our business long term. We make it a key strategic focus, and it becomes a part of everyone’s jobs. And so we really embrace these shifts in a more holistic way when it comes to everyone’s roles. Deborah Weinswig (38:35): That’s incredibly helpful. Alfred, I’m going to close with a last question to you and we’ll make it an impactful one. So as we think about, I sit on several boards and ESG … And I’m always on the audit committee since I was formally a CPA. And so at this point, somehow we’ve been tasked with ESG and depending where you reside ESHG with H being for health and mental health. As you think about your employees and so much of what they’ve been through and are growing through right now where still so many people are working from home. Retail, what’s so unique in my opinion, and wonderful about retail, and as we’ve seen this phenomenal surge back to the stores, which I think has exceeded … I sit on the board and it has exceeded all expectations, which has just been so great. Deborah Weinswig (39:28): Because from a sustainability perspective, we see many fewer returns when purchases are made in stores as you can see it, touch it, taste, it, feel it. As you think about your sales associate, how are you either changing your approach or community? That’s number one. Number two, as live streaming is very much front and center in terms of what’s critical in the future and right now for PacSun, how are professionalizing the role of the sales associate and maybe extending their career at PacSun? And then lastly, as you think about the H in ESHG, and just how much people have been through, can you talk about some of the resources that are available and what’s unique in terms of the approach that PacSun has taken to the employee? Alfred Chang (40:24): Yeah, absolutely. Look, I think we think about our sales associates and having gone through the ups and downs and just the dramatics of the last couple of years and going from entire store closures, everything to digital to then stores reopening and then also the safety aspect of things. Primarily the first thing that we really want to do is how do we operate in a safe environment for associates. And that really has been a lot of our efforts in the previous year and a half. But since then, I think one of the things that is incredibly important in this hybrid mode as well as things being more digital, people working from home, having an organization that not only has a corporate entity, but has thousands of associates out in the physical space every single day, as well as then a distribution center with a large amount of associates working in an operational environment, safety has been paramount, number one, but trying to find that in terms of how do we allow them to continue to perform in a safe matter and navigate through this timeframe. Alfred Chang (41:44): But also I think one of the things we learned different than before is how do we stay connected with each other? It’s a large operation. You throw on the complexity of now work from home. You throw on having to deal with some new things in terms of safety. And we learned early on and one of the things we wanted to do was to be able to, again, be able to connect with our associates, speak transparently with them, try to really put ourselves in totality in terms of what we’re all experiencing and be able to send physical things to them, be able to have more touchpoints, more communication. Because staying connected as you heard Brie, a great job in terms of describing what really drives our brand. Our associates, our family, the employees, they’re the heart of it. Alfred Chang (42:44): And with us so focused on what our brand’s about, that connection piece was so incredibly important. And that really has been a lot of our efforts internally in terms of how do we stay connected, how do we stay together, stay focused on the common goal and really look out for each other during a time where I do think we’ve all had to experience a lot more ups and downs, a variety of things we weren’t used to dealing with before, and probably a little bit more fragmented due to the whole work from home and remote work situation. I think then you fast forward to from an ESG standpoint, ESGH standpoint, look, we really treated mental health particularly, from the fact that if you look at our consumer and our target consumer, that is equally not just a topic, but something that I think the awareness level has greatly grown and it’s necessary that it has grown in terms of the issue of mental health and how prevalent it is, how impactful it is. Alfred Chang (43:59): Particularly amongst our target consumer in which our sales associates in our stores, we really look at them as, and we always talk to them as they are consumers. They are the best of our consumers. And who our sales associates are in the stores today are one and the same. And they themselves, the same messages that we put out there, as a lifestyle brand, we have to not just be about as we sell apparel and that’s and accessories and that’s such an important part of how that lifestyle is expressed. But the other part of it is the platform, the brand that we’ve created. That it makes it a lifestyle brand not just because of the product that we sell, but also what we stand for and the messaging, the resources that we put out there. Brie talks about the creators and influencers in terms of in the past couple of years, not just creators and influencers that look great in clothing, but creators and influencers that absolutely have expertise and care about mental health, care about the things that our consumers care about and our social associates care about. Alfred Chang (45:12): And one of the best things that came out of the last couple of years was really two parts around our sales associates. One, that there was tremendous amount of feedback in terms of how connected they felt and how relevant they felt the content was to what they were experiencing and therefore our consumers were experiencing. We really wanted to make sure that we continue to stay authentic and relevant. We started PAC Talks, which really wasn’t a live stream to simply say here’s a cute top and some great looking genes. PAC Talks is a live stream really about connecting with our customers and our sales associates around topics that matter to them. That we’re a part of their lives and how we could also be a platform and resource to bring some of that expertise and hear people talk about the issues that they’re facing, or provide new perspectives around diversity and representation. Alfred Chang (46:09): And that was a huge part of, again, how we … And the second piece, as we talk about our sales associates and how we’ve expanded their participation, is even more direct. One of the things in the last couple of years that Brie and her team have really worked on is if our sales associates are best of our customers, they’re consuming this content, they’re creating this content. There’s nothing more authentic than content that really comes out of thousands of sales associates that are living this lifestyle, expressing what they care about, not just in clothing, but in relevant social topics. And we’ve really been able to expand how they participate amongst our social channels and again, being able allow them to utilize our platform. So it’s not just people that are external that we bring in onto the platform to talk about these topics or present new ideas. Alfred Chang (47:05): It’s also our sales associates. Thousands across the country. Best of our customers. And those are things that absolutely then help to create even more of an authentic what we talk about community. And community involves our customers, it involves our associates. It’s all of us together really being able to express against this brand. So that’s a bit about how we’ve done some things to really incorporate sales associates, how we look at some of those things and we expect that to continue to evolve and continue to grow how we can engage our associates across the whole country. Deborah Weinswig (47:47): That’s fantastic. So first of all, Brie and Alfred, I can’t even tell you how … I probably could talk for another hour or two. I feel like we just scratched the surface. And really the organization, this rethinking, taking the time during the early days of the pandemic, take step back, think about who your customer is. I love this idea on the culture of pioneers of the future, number one. And then as you’re thinking about their identity in the physical and virtual world, and I have an avatar and for those of you who know me, I’m all of five feet tall, but one of my avatars is a six feet tall, blonde haired male. And there’s this strength that on those days when maybe I’m not that strong, that’s the avatar I’ll choose. Deborah Weinswig (48:31): Third, I think your point around recycled materials matter even more, I’ve heard that from very few retailers. I think that is really insightful. And I do once again, think that this younger customer is focused even more there. Fourth, the comments around gender fluidity and the reasoning behind that. I think it’s fantastic to have product for the age four to 14 or size four to 14. And as that customer certainly has been through a lot of the past few years and I think trying to figure things out and giving them that safe space to do that I think is really meaningful. On sustainability, I think we could spend an entire hour there, but really being first and foremost. And then this idea around diversity in the assortment, it was interesting, Alfred, your answer to my question around cost savings. Deborah Weinswig (49:23): It wasn’t what I would’ve thought, but this idea that being tech enabled and looking at tech first, which can … First of all, you can have fewer tech solutions. You can have them interoperable and having definitions that you share with the industry so that you’re giving back in a way that everyone is then utilizing the same tools for the same purpose. It really can do so much and I know that’s an area that you guys have spent some time on. The brand voice I think is resonating and through all channels. And then lastly, I do think I’ve always thought of PacSun for my entire analyst career as a lifestyle brand and I think that’s even more important now. With your focus on not only the consumer, but obviously your employees or consumers as well, and how you take care of them and how you can communicate to them, reducing turnover and once again, expense, but also really having these brand advocates and brand ambassadors, whether they’re in your stores, whether they’re online or wherever they might be, I do think that you’ve really laid the foundation for this new direction of retail. Deborah Weinswig (50:36): I can’t thank you enough for spending time with me today, but also I just want to say congratulations, because it really is a challenging environment and to try and find your own brand voice, and then to have your customer be able to have that resonate with them, it’s really quite heroic. So congratulations, and I wish you much success. Brieane Olson (50:56): Thank you so much, Deborah. Alfred Chang (50:58): Thanks Deborah. Really enjoyed our session today and I really appreciate the thoughtful questions.