Welcome to Inside the Corner Office, a podcast where you will be taken behind the scenes of the daily life of a CEO. I'm Thomas Buber, CEO of AXA. In each episode of this podcast, we will delve into a specific aspect of this role. You will see that making decisions from an office is definitely not what this job is all about. For every topic, we'll be joined by a leader of a major organization. I hope you will enjoy these discussions. Tune in and take a seat at the table. We are inside the corner office. Today I've got the great pleasure to be with Enrique Martinez who is the CEO of a very iconic brand in France, Fnac Darty. And whoever in France or in many other countries wanted to buy books or wanted to buy electrical appliances will certainly have looked and visited Fnac Darty. You've been at Fnac Darty for a very long time. I think 25 years. You have lived through difficult moments because at the time it was not always a pleasure. You had difficult times but today you are leading one of the big companies I think across 14 countries who is really established not only as a traditional brick and mortar player but who has played all the registers from becoming digital very quickly from moving into a different business model around services. So you've really managed and succeeded in the transformation of your model and on top you are a bit like me also a foreigner as a CEO in France. So there's lots to talk about and welcome today. Let's start with a simple question. Do you remember the first time we met?
Yeah, first of all thank you for inviting me. Thank you for the presentation. Yes, I think it was in 2019 in your office here in Matin and at that time we just started having a kind of a relationship to the insurance in the stores and I remember I was in the office for two years in Paris and we had this lunch together in this magnificent dinner room here very classic palace and I remember we talked about how it is to be a CEO to a foreigner in a French company because both of us we were discovering what is entering the establishment in Paris. So I remember perfectly. I think we have met several times since then for sure after but yeah I remember 2019 it was the beginning of the partnership. I remember even afterwards so as you say we met more often.
Maybe let's start with that point. So at the time we were both new foreigners in France. Now fast forward five or six years. How do you feel today? What were the challenges and also how did you overcome these challenges?
I think that these five years count for ten years at least because of course in the business but in life and society things are accelerating every day in so many ways and for sure COVID has been a very stressful time for everybody in the business. So I think today I'm in my position for almost seven and a half years living in Paris for almost 13 years. So I think I can say I'm fully integrated not just in my position but in the country and I think today this is not my first challenge to be integrated to know the culture and the people and the networking. I think that's been a lot of work what is important to understand and to integrate. I think today I can use this treasure to help me with my challenge and my company into moving forward whereas in the first year as you we discover a new country and we were not established for our studies here so that was an extra job for us but I think it was a good investment in terms of time and energy because for different reasons it's very important to be connected; if you're not integrated you won't succeed.
For people listening to us, what's the one piece of advice, the one secret you want to give to somebody who comes to a foreign country and wants to succeed in establishing? What would you say? What should he or she do?
I think to try to fully understand the culture deeply and to invest not just for your work but also in terms of to understand the society, the culture, the people. Invest your time, personal time for sure to speak the language. I think this is for me the basic. It is very difficult to understand a country without speaking the language; have this barrier when you need to be translated or force your team to speak a different language is very tough for everybody. So speak the language, respect the culture, and try to understand at the maximum. And for the corporate level, I think in the first years invest and meet people that is really important to have the access to the things you need to develop your business not just for the personal interest but also for your company. And after invest a bit of time. Well, it's not easy because it takes a lot of time to invest your network but time enough to continue to be relevant in the discussions with the people all the time.
Do you remember your first time when you were in one of the boutiques, you were standing in front of mostly French employees. How did it feel?
Yeah, for me it was very impressive. I think my advantage is I was working in the company for 15 years before coming here. So I knew the company and some people knew me and I was very well welcomed when I arrived to France. But when you are here in front of the people, for me it's a lot of respect to look at what is the heritage of the company and the importance socially of Fnac, what it means a Fnac for the people here in France. Not just for the employees but for the cultural society, for the customers for sure. That's a lot of responsibility but on the same time very excited. I mean at that time and still today for me it's like a privilege. So I'm very excited every day to do different things. When I have the opportunity to meet new people and to go to the stores or the logistics, for me it's like a big moment in terms of joy and that's very important. The honor job we have different responsibilities, different things agenda, but I think one of the most important is to bring energy to the teams when you visit your business.
Which area do you like the most? Is it more the logistics, is it the stores? What do you like most?
For sure the stores, because it's my background in commerce. It is where you feel that things are more close to the customers in terms of commerce and there's a lot of feedback that comes back. But on the end, what is most important for me when I visit things is not the things, it's the people. Today it's more and more important to spend the time to understand and to talk with the people, with different people, no matter whether the management or the employees. And I understand that this is more relevant for me, what they bring back on the visits is not if the merchandising was perfect, it's what was the energy that the people had and the expectation and the discussion and sometimes the information I bring back to the head office after this visit for sure.
Do you remember something that marked you the most during these store visits that you have not forgotten?
Yeah, for sure. When you sometimes arrive, there is just some catastrophes or some bad events personally and you need to meet that, something you never forget. I remember when there was the attacks in Paris in Bataclan. Unfortunately, there were two employees in it. They died and I remember we were at the store and the day after to announce to the team that they were lost. That's probably one of the most strong moments in my career because it was for the people that were working together for the last 20 years, they discovered that their colleagues disappeared. They're not anymore like this. And there are other moments but probably this is the most powerful and intense moment on the communication for sure. There are other very shiny and very brilliant moments when you open the stores, you do things that are light and easy but the others are also important to be there. Yeah, it's a big moment of cohesion when something negative has happened, that you also commemorate together. And be there and understand and support the team in the difficult moments. I think is relevant. It's also relevant for us to be part of this because we are a family on the end. We spend so much time in the company all the days and we feel that everybody has different positions, jobs in the company but on the end we are working for the same objectives. So when something happens with some of us, I think we feel that something really affects us for the whole group.
I mean you say you're like a family. How do you balance being like a family i.e. friendly, respectful, but at the same time also making sure that stuff gets done? How do you find the right balance?
I think for me it's okay because as soon as you are honest and you say the things, you don't hide your intentions. In my view, I'm in the company and doing what you think is the best for the company, not just for me personally or for some individuals or for the shareholders. Everything should be coherent and in some harmony. But when you need to do some tough things, you need to explain them but in the end it's my responsibility to do it. So the question is, is it the best for the whole thing? And if it is, I'm able to communicate and to be transparent. As you mentioned in the introduction, our business has been very tough for the last year. We have been transformed for two different things: the change of your products. When I entered the company, plus that the 50% of the revenue were coming from the music. Today it's less than 5%. And when I entered the company, internet was just starting. We launched the first e-commerce platform in 99. Today it's 25%. So imagine in this 25 years we have changed almost the full mix of products and almost the full mix of channels. So that's been very challenging for the company but if we haven't managed to do that we should disappear. So on the same time you need to take care of the team and support and to move on but it's our responsibility to make this happening, makes this transformation happening to continue to be relevant for the customers.
This is quite a tricky task because I mean we have the same thing. You need to realize early enough that there is a trigger point when you have to start the change because if you realize too late you'll be dead.
Yes. So what do you do to understand and feel those trigger points? You never know if it's too early or too late. It's always too late. That's always I think our business is very fast. Our business is not a question of decades, question of months and we feel very quickly you know when you do something whether it's good or not. The reaction from the customer is immediately. So we feel that what they think they should move on as soon as you have the good data points to control and your perception is always okay. And when you think there are things that are going on in the bad direction, you know it, we know it and this is the advantage in our business that we don't need to wait too long to move on in our space to correct and to adjust the strategy, the commercial policy or there are things that are a bit more long to move but in general I think when we look at what happened in the COVID, we managed to move from zero stores open in one day. I can imagine it was impossible to manage the companies with zero stores and we did it. So that proves us that our ability to move quickly is probably bigger than we imagine.
Yes, but you also I mean you realized early enough that digital is not your enemy but your friend. And so you had both legs and when one leg didn't work anymore, you could fully switch. Had you not anticipated this, you would have probably have been in a different situation. If you look forward, what are the three things you pay attention to now when it comes to evolving your business model?
I think we have a situation that is not the best one in terms of microeconomic standpoint. The business growth is very low. So we know that we need to change our business model in the next years. I think online penetration, multichannel, I think we did it. We managed to integrate the both channels, we managed to do e-commerce in a profitable way. Our promise on the quality is okay. So we have not more to be afraid of the e-commerce platform that will kill us. I think we are in a good way. But even with this it's not enough because business is not growing for the moment in Europe. So we need to change our business model. We need to integrate all the different sources of revenues. That's why we decide to move strongly for services. For example in services, as you know probably we have one of the biggest after-sales platforms in the world. We repair more than two million products per year and we decided three years ago to put this on the center of my strategic plan and to say for sure we are e-commerce platform. We sell products but our business is not to sell, it's to serve the customer. Sometimes they need to buy a new product, sometimes they need to buy a recycled product, or sometimes they just need to repair. Exactly. So my view is we are not producing anything. We are distributing and we are serving the customer. So let's do it in a relevant way. Let's put this service program in the middle of your strategy, in the middle of your relationship with the customer, and let's try in the next 5 years to make that the biggest revenue source for the group.
It's a great retention tool because you don't sell an electronic device or washing machine or book every day. Whereas repair keeps the relationship going. But I mean this is a very different model. So somebody who sells a washing machine doesn't necessarily have the comfort to also then sell the after sales service in particular if it's maybe with a third party. So how did you make people shift that they do both and can feel comfortable with both?
I think we have the chance that we have very relevant brands and the teams have been working in this area in some way in the last years. So we don't start from zero. Probably starting from zero in this area should be impossible. So we take some assets and decide to move on scale them up in a very massive way and our conviction is on the end if you don't look at yourself what is your relevant role in the future compared with your customer, there will be someone else that will be cheaper and easier and faster than you. So the thing for me was what can I do that I'm the only one that can do in a relevant way? And my vision that we are developing is this is the only thing that we can for sure do it as a major asset for us. For sure we need to be good in the service level, we need to be good in the offer, we need still to be good in everything we do but just not big enough and we need to move in a different way. And I think we need to reinvent what is a retailer like us. What will be the next 15 years? What will be for the customers? What will be the relationship, the trust they think they will trust on us to do for them? And I think we need to learn and we need to also train the customers to be aware and to be able to pay for the services, to trust on us to make us relevant on a daily basis. And that's a whole journey but we are very happy because even in this moment that the growth the French economy is not very good, we have been able to start doing this process. So I think this is very promising.
And what's the right strategy: make or buy? Because we have that same debate. What's the right strategy?
I think as a traditional retail, we were more able to make all the time because we were more comfortable to control. I think today what is happening with the AI and with this competitive landscape, I think we need to review what was our vision in the last years and probably there will be other opportunities to do better in the future. I give you this example: in the AI for sure everybody is looking for how we can improve our operations and there will be part that probably we will invest directly because there are things that are very relevant for us, but I'm for sure that other parts that probably their specialists they will be faster than us to do this kind of transformation. So we can wait to be relevant but probably it's too late or we can probably look in a different way and probably share this part of the knowledge and the support for the companies.
What is like the most exciting AI opportunity for you in your business?
We are managing different ways. I say to my team we are testing 25 different things this year but I want to have at least two relevant ones: one for the customers, one for the internal productivity. For the customers, it's looking at what is for their search engine in the e-commerce platform to be sure that when the customer comes to us we will truly help them to find what's the best for them in a different way, conversational. And that's a lot of things that we are seeing that's very meaningful. The other thing is we face every two seconds a customer calling us for a problem in a product, an intervention, and it's critical how we can use this information to make relevant the way we take this call in a different way, not just to make a pre-evaluation but also to send this call to the people that will be most relevant and faster for the customer in the best way. And that's the things we see that this new AI platforms can help us a lot. So this is the two things we are moving really fast. And for sure the other things come for the content: we have 30 million offers in the platform, so these tools can help us to enrich in terms of content etc. There's a lot of different things but these two are the most exciting for me.
