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Editor of STORES Media and NRF's Vice President of Education Strategy, Susan Reda

In this third episode of RETHINK Retail, we discuss retail, ecommerce and the consumer of the future.

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Mobile and Ecommerce

In this third episode of RETHINK Retail, you hear from Susan Reda, Vice President of Education Strategy for the National Retail Federation (NRF) and editor of STORES Media, the publishing division of the NRF. Susan is responsible for developing all content for the magazine and additional STORES properties. Susan has a long history of covering current trends in retail, including her previous role as editor at Apparel Merchandising Magazine. Join us as we explore retail, ecommerce and the consumer of the future.

Episode
3
of RETHINK Retail was recorded on
September 11, 2018
TRANSCRIPTION

Paul Lewis:

Hi, welcome to another edition of Rethink RETAIL. Today my guest is Susan Reda. She's the editor of STORES Media, the publishing division of the National Retail Federation. She is responsible for developing all content for the magazine and additional STORES properties. In addition to her busy role with STORES, she's also the NRF's Vice President of Education Strategy. Susan has a long history of covering current trends in retail. In fact, before joining the NRF she was the editor at Apparel Merchandising Magazine. So, Susan, let's start out with telling a bit more about yourself and what you do.

Susan Reda:

Sure. I have been involved in retail in some form or another for multiple decades, so that gives you an idea of how long I've been doing this. I actually landed my first job out of journalism school with a small publication called Hosiery and Underwear Magazine. But lucky for me, it was at a pivotal time in the hosiery industry when people started to wear lots of color and pattern on their legs and so it had shifted from nude being the predominant color and people buying their hosiery in an egg to finally a department store really showcasing the fashion in hosiery. So really, it was just a lucky time. I look back and wonder how in the world we filled, we came up with ten different story ideas about socks and hosiery, but we did, and it was probably great training for the years about writing about retail that have now followed that. So I have just been very fortunate to be in retail all these years.

Paul Lewis:

Yeah. And you have been with the NRF, as you mentioned, for a while now. You've probably seen a lot of changes in the retail industry. What are some of the ones that you felt were the most profound, or maybe it's the ones we're going through right now.

Susan Reda:

Yeah. I joined the NRF in, believe it or not, April 1991, and at that time I was just freelancing for them and I have just kind of stayed the course over all these years. But I have been so fortunate to witness the birth of so many things that today in retail we accept as commonplace. But one of my early [feats 00:03:09], as we call them in the journalism industry, was eCommerce. Nobody knew what it was about. I can remember being at the very earliest conferences covering eCommerce and it looked like a science presentation because there were just poster boards of people trying to describe how this is going to work. But there was such an energy about eCommerce. You could almost watch people sit in rooms, hear presentations, and then go straight to the phone, because we didn't have smartphones then. And they were calling their bosses and whatever and saying, we need to do this, we need to think about this, this is going to be the next phase. So I think that's probably the biggest thing because eCommerce and digital retail as we often call it today have just changed our business.

Susan Reda:

But some of the other things, I came into this industry when department stores were really powerhouses and we were really seeing the emergence of specialty retail and there were so many specialty retailers who really were catering to a young consumer, the baby boomer at that time, who just finally had their own money to spend and were spending it on all of these new great brands out there. I've seen the growth of mass merchandisers like Target and Walmart, both of whom really, those businesses were both born, so to speak, in the early 1960s, but have certainly come of age in the last two decades and have just become tremendous forces to be reckoned with. And our good friends in Seattle, Amazon, have been around for, I think it's 22 years now. So watching that little business and thinking about the first time you logged in to Amazon, we didn't even call it that, at AOL.com and watched the wheel turn and heard the connection and bought a book and think about how just amazing that was. And now we've got children who are ordering the Alexa and they're getting what they want.

Susan Reda:

Those are some of the big things and, of course, underpinning all of that is technology. The technological changes in our industry have been nothing short of radical. I can remember sitting with CEOs in the very early phase of conducting interviews and they would talk about punch cards, that was how they managed inventory. Today if you said "punch card" to most people in retail they would just scrunch up their forehead and look at you like you had ten eyes, what are you talking about? Well, I remember.

Paul Lewis:

Yeah, it is hard when you think back about that time. It was just completely different. Data was stored, like you said, on punch cards. You mentioned about you would call to get the information because there was no other way to quickly connect with other people. And I remember people coming back from those early 1999, 2000, 2001 times saying, “I don't know what a website is, but I think we need two of them because our competitor has one.” So it's been a huge evolution. The pace at which it's changed over the last 17 years has been extraordinary compared to what I think the change has been maybe in the 50 years previous to that. I think we've seen more changes in the last 17.

Susan Reda:

I would agree with you. Do you recall the craziness around Y2K?

Paul Lewis:

Yes.

Susan Reda:

We all thought that everything was going to fail. I can remember covering stories about how we would manage Y2K on the systems side of the business. And then lo and behold, nothing really exploded and we moved ahead, we got past it. But again, that's something that if you say to young people involved in retail today, they kind of look at you like, why did you think that? Well, because it was all so new to us.

Paul Lewis:

Yeah. And it was all over the news. I mean, I literally know someone who bought a place up in the hills and like a month before Y2K stocked it and was all set for the end of the world that he thought was coming because of all the hype about all the systems were going to fail and the world would turn to chaos. So it was an amazing time. And, like you said, now we don't even think about it. Of course our data has multiple backups. No one is programming in something that's going to end just because of the time of the year. But at that time it was a huge deal.

Susan Reda:

Absolutely.

Paul Lewis:

So I would say today there's a lot of talk about traditional retail dying. Obviously there have been some store closures and it is a time of change, but I wonder what your thoughts are on that?

Susan Reda:

I think that if you find yourself in the pack of people who think that retail is dying, that you're really missing the big picture. I would be remiss if I didn't acknowledge that stores have closed and brands have shuttered, but to separate brick and mortar from online is really an outdated way of thinking. I see shopping as very vibrant. I look around me and see retailers re-imagining the selling experience, selling to consumers through multiple channels and in multiple ways and I think eCommerce has not in any way contributed to problems in our industry, but has provided tremendous opportunities for retailers of all shapes and sizes. They're embracing technology and they're making their shopping experiences online and in-store better than ever.

Susan Reda:

I look at so many of the new players whose businesses are largely direct to consumer, and they would not exist if it were not for eCommerce. And yet, what we have seen over the last two years, maybe even a little beyond that, is that those direct-to-consumer brands are realizing the need to have a physical footprint and to connect with the shopper face to face. So, again, I see it as very vibrant.

Susan Reda:

I look back, since 2016, retail sales have actually grown faster than the GDP and NRF is now expecting 2018 retail sales to increase at a minimum of 4.5% over 2017. Those are big numbers. ECommerce has grown from 8% of total sales to 9.5% just in Q1 of 2018. So you have to look at the jobs picture. Retailers added more than 65,000 jobs in the last twelve months. Retail employment is higher today than it was before the recession and our industry remains the number one U.S. private sector employer. So I look at those pieces and I think, no, we're a business and an industry that is in the throes of change and challenge, but not by any means, dying.

Paul Lewis:

Yeah, I couldn't agree more. And I think that it is creating new opportunities. You talked about some of the direct-to-consumer and primarily online brands and that they are looking to find a physical footprint. And I happened to notice the news today about Nordstrom's partnership with Lively and a lot of other brands that are primarily direct to consumer that don't have that retail presence and trying to do exclusive contract deals with them to represent them. So I think you're finding some strange bedfellows, but the industry overall is moving forward.

Susan Reda:

Absolutely. Technology has just completely advanced our industry and opened doors for entrepreneurs, startups and all of the players who are entrenched in our industry to look beyond what was and envision what can be. It's made a tremendous difference.

Paul Lewis:

And as you look out across those technologies, are there any new technologies or technology players that you find interesting or are there some retail startups that are maybe approaching retail in an interesting way that you've seen?

Susan Reda:

On the tech side I think there are a number of transformative technologies that I would anticipate are going to continue to impact retail for years to come. I'm watching what's happening in machine learning and hearing about new ways of using artificial intelligence [inaudible 00:13:03] in the background and in consumer facing processes and I think that's enormously exciting. That machine learning process will enable us to get closer to the consumer, will enable personalization. It just keeps learning and because it has the ability to learn with so much data coming at it, something that the human being just cannot do, we're able to advance the industry much quicker.

Susan Reda:

I am also watching things like augmented reality and voice technology. Two things that I, again, I think it's going to be really interesting to see how retailers embrace these technologies and use them to enhance the customer journey and find ways to use those things to save money in sort of operational efficiencies. So on the augmented reality front I've been especially enamored with some of the furniture and home retailers who have given us the chance to key in, you know, the size of your room, put a few makeshift pieces around, and drop that couch in that you've been eyeing for two weeks or two months and find out if it's really going to fit, what's it going to look like. Have a great sense for that before I purchase it. And then probably make that purchase by clicking a button because we're so much more comfortable with that technology.

Susan Reda:

I've seen augmented reality change the way people purchase makeup. It can be thought of as very young people embracing this and playing with lipstick colors, but then you go and stand back and watch what goes on at Sephora and you recognize that it doesn't have age boundaries. People want to have a sense for how am I going to look in this. Will it really enhance my eyes. Will it give me cheekbones I didn't have. And when they see it and they see themselves transformed, that just fuels the purchase.

Susan Reda:

I'm really interested in voice technology. I think we saw the start of what it might mean for retail last holiday season and I think this year will be pivotal. Like so many things, so many ways that consumers interface with technology, there's that level of comfort. And initially you're kind of hesitant and you're not sure what's going to happen, but it happens the first time and you're delighted. It happens the second time, you're tickled pink. And the third time it better happen because if that doesn't get on my front doorstep in two days I'm going to be annoyed. And it's just sort of how we expect technology to serve us and how it's changing the way retailers interact with customers.

Susan Reda:

Now, on the tech side, I just see so much possibility going forward. You did ask me about retail startups and I look at that segment of our industry and again, it kind of breaks down into the startups on the technology side and the startups on the product side. On the tech side I find myself watching companies like Starship Technologies. They've created what looks like a cooler, picture a Coleman cooler you might take to the beach only it has wheels on it and it can be used for quick deliveries. So if you were to place an order with a local restaurant they could put your meal inside this cooler and they set it off, program it on their end, and you're on the other end with your cellphone watching the path of this device as it comes to you. And when it comes to you, you unlock it using the code from your cellphone and whatever technology is enabled in this device, and you take out your food. And it goes back in an autonomous fashion to the restaurant to make its next delivery. I look at things like that and I'm just like, wow, this is game changing.

Susan Reda:

There's another technology that I think is also going to really take root. A lot of startups are playing with the technology that drove Amazon Go. The idea of Amazon Go, as so many of us in this industry have watched, is that as you're going into the store it recognizes you, it knows what you pick up off the shelf, and it charges your account upon exiting the store. And I'm watching a lot of startups want to deploy that technology at other retail stores using tweaks, maybe they're using cameras, maybe they're using a different type of beacon, but they're all looking for ways to make that technology come to life.

Susan Reda:

And then on the startup side, on the product side of it, I think about how quickly retail startups have become entrenched in our lives. Companies that five years ago were names we hardly recognized if at all, names like Casper and Warby Parker and Birchbox and Allbirds are now part of our retail lexicon. We know who they are. We consider their brands desirable. And then there's relative newbies who are finding their way quickly into our hearts and minds. I came across a company recently called Burrow and if you think about Casper and what they did in the mattress category, Burrow hopes to do that with couches, and so they're selling a sustainable product. They sell it in such a way that it can be taken apart. It is sent to the consumer in multiple boxes. You un-box this. You put your couch together in record time, there is no allen wrench. And then you're ready to go. It's a cost effective solution. It's a solution for today's consumer, particularly the urban consumer who might move more frequently. I look at these things and I think, okay, this is just where our industry is headed.

Susan Reda:

In beauty we're seeing retail startups who are really tuned in to the customer's desire for natural products. Companies like Beautycounter and Thrive Causemetics are telling their story about producing products that have none of the ingredients in them that in any way compromise what today's consumer wants. They have no chemicals. They're made with natural ingredients. And they're connecting with consumers. So that's a whole other avenue of startup that we're seeing happen. Really interesting times.

Paul Lewis:

Yeah, absolutely. Just working backwards over some of the things that you just mentioned, I think the idea of the self-delivery vehicles is just going to be a game changer and also the Amazon Go environments, I'll just say without putting a brand name next to it, basically automated stores, are going to become much more commonplace. And, like you said, after the third time, expected. And probably the change that will happen is the same way that when people look back and then say, I don't know how you lived before you had a cellphone or when you didn't have permanent high bandwidth, you know, you had that dial-up bong sound. They can't fathom that it'll be the same thing. So you mean you went out and you talked to a person in order to pick up a product at a store? And it will confuse them actually hearing stories from the past.

Paul Lewis:

And you also mentioned, I think, voices is getting to be so large. I know many of our clients come to us specifically about developing effective voice websites. How can we respond to all the types of inquiries that can come over from these different voice devices either directly as an app or as input from these AIs of Alexa and Siri and Cortana and Google. So there's a lot that's happening with voice and we'll just get very comfortable talking to computers. Right now I think there's still a lot of us that are making that transition, but I think in the near future we'll be doing that without any compunction whatsoever.

Paul Lewis:

Finally, you talked a little bit about the AR/VR world and I agree with you for the right application. You have to be careful of which ones do make sense, but I think for the right applications. I know that we do the in-home experiences for clients, where people can place furniture or paintings or other things inside their augmented reality of their living room and it even scans to know where the walls are and things like that. So it's very amazing.

Paul Lewis:

We had a client, Decathlon, that has all these tents. You talked about how does it optimize like maybe an in-store experience they have all these tents for camping, for outdoor activities. They're very large, they're very hard to set up in stores. And yet, with an augmented reality experience people can try all 100 different SKUs of tents, climb inside them, see how much space they take up, how they pack down, and learn everything about them when it's very hard to do that in the store. So I think for the right applications it's an amazing frontier for new retail.

Susan Reda:

Yeah. I think you make a great point that for each retailer it's about understanding your consumer and what your consumer wants and expects from you and then using technology to lift that experience. In my case, I have attempted AR several times. It's just not working for me. I think it's an age thing. I can't really acclimate myself to it. So, I can't think of a retailer that caters to an older shopper, but if there was such a thing, I don't think it would work there. At the same time as I said, I'm just so energized by it. I watch people do it, I experienced it and thought, oh that is so remarkable. When you're wearing that headset, and you realize that just by looking at a product, you can see a broader description. You can see the price point, and then you actually can quickly make the purchase without moving, without taking the headset off. This is so just next generation, and yet, next generation could be two years from now, or less. When I looked at some of the things that are happening in Asia, my jaw dropped, but in an exciting way, because of what the future holds for retail.

Paul Lewis:

And Let's double click on that for a second. As we look at the future of retail, what are some things that you see coming down the pipe? And what are some things retailers need to do to stay competitive in the coming age?

Susan Reda:

If only I had a crystal ball. You know, it seems like a simple answer, but I think that, that concept of using technology to get closer to the consumer is really one of the most important missions that companies need to have right now. I would say that sharp focus on core consumers... the need to plow money into both physical stores and websites are critical as retailers look to the future, and look for ways to stay competitive. I have talked to so many retailers over the years, and those who think to fight their way out of the highs and lows of this industry are those who have a greater willingness to test, fail, and repeat. In our industry, we have to constantly toss everything against the wall, see what works, pick what does, and move that ahead, and just keep that constant testing at the forefront.

Susan Reda:

There also needs to be a certain willingness to let go of legacy, and that's a very very hard thing to do, but we all have that feeling inside. That it's been this way for so long. I'm reluctant to change, because I've always had a consumer who came back to x. But the truth is that the consumer is not the same person she was five years ago, two years ago, and some cases two weeks ago. You know retailers today, they have to be transparent, they have to be sustainable. These are things that are super important to today's consumer, and they just have to be willing to flex and stay in touch with that consumer however they need to do it, but constantly engaging your consumer to find out what's important to him or her, and how you can move on that, it's critical.

Paul Lewis:

I couldn't agree with that more, you know, in terms of the constant testing. I would say the last two guests that I had on the show, Daniel Burrus and Veronica Sonsev, both mentioned that need, that you've got to be testing because by the time that you've got it figured out, if you haven't been doing that, someone else does have it figured out. A lead in the marketplace these days is just so critical, so you have to put more into your research, your development, your testing, trying new things and to see where they will go. I also agree that you have to let go of the legacy. If you think about it in many ways, Sears was the pioneer of (at that time a new technology) magazines. Selling that way, so that I think their statement was "we're opening our stores to everyone's living room." If you think about it, that's exactly what Amazon has done, just in a much more effective way. So it's that thing of, yes it did work, it worked for a very long time, but that doesn't mean it's going to continue to work. You have to be willing to really talk about the sacred cows in your organization, and sometimes be willing to move away from it.

Susan Reda:

You've hit the nail on the head!

Paul Lewis:

Well, you know maybe just to close out. Are there some companies that you think are kind of setting the bar in the retail industry these days? Are they doing something where they're pushing the envelope? We talked a little bit about some startups earlier, and some technologies, but are there any main retail players whether that be brands going direct to consumer or traditional retailers that you see setting the bar in the industry these days?

Susan Reda:

There's always a handful, in fact there is way more than a handful. So I'll call out some companies, and then I'll be annoyed at myself later for forgetting others, but I would never take my eyes off Amazon. I think that there are a lot of people who are frustrated by... how quickly they embrace change, and they adopt new things, but that is what had made that company so tremendously successful in part. I watch Amazon like a hawk, because I just think their understanding of the consumer, and how they want to shop, is very interesting. They are not the only dog in the race. They play a very important role in chasing the retail story, and then I look at companies like Walmart who people wanted to write off of eight years ago, five years ago, Walmart can't compete. Well excuse me, but they are competing with a vengeance. I think looking at the acquisitions they've made, looking at the growth of their ecosystem, the development of the labs they have. The partnerships they're making with global companies. Walmart is a force to be reckoned with.

Susan Reda:

Some of the other big players that I keep an eye on are... I'm watching Macy's, another company that people will say “oh, well Macy's is a traditional department store”. Macy's is a department store, but there is nothing traditional about the way they approach their business, and the fact that they just keep moving. They're in that boxing ring, and they're ready to take on the competitors. With a litany of different things that makes them powerful. I watch Home Depot, and I watch how they have shifted their business to be more and think with today's consumer. They're using technology in so many ways to make their business more efficient on the back end, and in a costumer facing way. So, I think they're really interesting, and then I think we have companies that are shaping the customer view of interaction, and I think that retailers need to watch them.

Susan Reda:

The company that really stands out for me is Peloton, and Peloton is the home exercise bike. It's a luxury purchase, when you think that purchasing the bike and choose... the heart rate monitor, whatever else you need to really get started on that journey will set you back probably about $2,000. But they have such a unique connection with the community of people who have purchased that product. I have never seen anything like it. The social, and community that they have built is just mind blowing, and I think that watching companies like that is important because I think that they're shaping costumer expectations for the future. So if you're not finding ways to interact with your consumer, and share content, and build communities in the way that someone like Peloton is doing, then you're missing an opportunity to see the future for retail.

Paul Lewis:

That's a great summary. I think that uh... repeat that a little bit. You're saying obviously you have to watch the market leaders, the Amazon, what are they doing, they are innovating so fast. You have to know what kind of, where the industry is headed. You have to look down the road, not just what's happening right at this moment. But I agree with you that there are so many traditional players, the Walmart, the Macy's that are completely reinventing themselves, and they've got a lot of strengths that completely online businesses just don't have. Then you have new players that are coming to the market place, that are approaching in a new way, and they really are getting the stickiness, and the value of community, and of connecting with consumers, and if I really were to boil down the discussion, I would say that's probably the biggest piece of advice is you have to know your consumer, you have to know what will connect and interact with them most effectively, and what creates the best, hopefully lifetime relationship with them.

Susan Reda:

You said it so well.

Paul Lewis:

Thanks! Well Susan, it has been a real pleasure to have you on the show today. Thank you for making time.

Susan Reda:

Thank you for having me. I've enjoyed talking about retail, I guess you can tell. It comes easily funny, I'm pretty passionate about it. Don't ask me where I shop, unless you are prepared for an hour long discussion. Very hard to pin down.

Paul Lewis:

Well let me ask you where listeners in the show can learn more. Obviously, they can follow the NRF. Are there any URLs, or anything else, or social media you'd like to throw out?

Susan Reda:

You know that doesn't come easily for me. Yes, the NRF website is a powerful way to stay in touch with all things related to what we're doing. To support the industry, and to educate those who are closest to the retail banquet. Stores magazine has its own website, and it's www.Stores.org, and please feel free to follow me on Twitter, and it's Susan_Reda. So, happy to engage with anyone, and interact, however most convenient

Paul Lewis:

Awesome! Well again Susan, thanks for being on the show today, we really appreciate it.

Susan Reda:

Thank you! All the best.