Leading Through Chaos

Andy Laudato, COOOctober 29, 2020

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• 720 stores in the US• E-commerce• BOPUS, Curbside• Wholesale• International licensing agreements

The Vitamin Shoppe

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An omni-channel approach putting the customer

at the center of all we do

We are Customer Obsessed

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Our brand pillars

Quality Innovation Expertise

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When COVID HIT

• Surge in business at initial onset • Channel shift to digital • Significant drop in store traffic• Deemed essential in most states, not all• 90 stores closed. Some forced, some by choice • No curbside capability • Challenge to get cleaning supplies, masks, etc.• Corporate office closed; moved to remote work• Mix shift to Vitamins/Immunity with a decline in sports nutrition• Disruptions in the supply chain (both inbound and outbound)

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• Put your own mask on first • Establish guiding principles: • 1) Our people 2) Our customers 3) Our business• Maintain your brand integrity while reacting to customer needs • Shorten the planning window, but don’t walk away from the

fundamentals:• Establish a goal, make a plan, execute the plan, review and adjust

• Be courageous enough to walk away from projects and processes that have suddenly become less relevant

• Double down on new ideas • Communicate with full transparency internally • Adapt external communication. From promotion to emotion

What should leaders do when the world turns upside down?

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• The COVID pandemic is an accelerator. That means what’s happening right now, was already happening, it’s just happening faster.

• Digital everything• Contactless payment• Same-day home delivery of anything (not just pizza and Chinese food)• Pre-shopping research • A focus on health and wellness • Quality and trust take center stage

“Luck is where preparation meets opportunity”

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• Strong leadership team with clear and consistent goals were in place • Building strong business relationships with vendors in advance (top to

tops) made us the go to partner for scarce inventory • Existing Virtual Friday program prepared us for full-time WFH• ‘Fix the foundation’ project started in late 2018 prepared us for

unplanned customer behaviors • Prior cloud migration prepared us for unplanned volume • Cyber security tools including MFA and MDM were already in place • Strong quality perception with our customer base with our private

branded products• A strong assortment of immunity and wellness products

Where we got “Lucky”

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Win the Recovery – Project

Objectives

A. Improve the customer experience throughout all touchpoints

B. Forecast, purchase and track inventory needs for immunity and other recovery-related products

C. Retool our supply chain for improved speed, flexibility and redundancy

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Moving forward Apple/ Google pay Instacart – home delivery Improved store delivery model Immune inventory investment

Recommended, need funding BOPUS/Curbside enhancements Robots in AZ DC Ship from store

Projects Evaluated

Further evaluation needed Micro-fulfillment in Brooklyn 4-payment installment plan (web)

Not recommended at this timeX Automated shuttle system in VAX Same Day delivery via courierX BOPUS Deluxe

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Changing Priorities in 2020

PersonalizationWholesale Mobile POS – pop ups Drop Ship – endless aisle Advanced analytics Store traffic counting / pattern analysis Real time BOPUS / Curbside In-store digital capabilities Space Planning Allocation & Replenishment – Next geno Advanced pricing and promotion tools Improved Forecasting - Advanced ship notices Ship from store – BOSSo IT Infrastructure migration to the cloud

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• Establishing and sticking to principles provides a clear lens through which to make all decisions

• Some tactics exceeded expectations; others not so much. Learn and move forward

• When you have to, you can remove bureaucracy and move quickly; why not all the time?

• Extra effort and attention is needed to stay close to the team. Casual meetings in the hallway and kitchen are gone. Skip and super-skip meetings have proven effective

• I get we all have problems, but empathy for essential workers is critical • Don’t underestimate how much people aren’t aware of

Lessons Learned – (so far)

Thank You