This week we are joined by esteemed author and retail consultant Ian Shepherd.

Ian is the former Chief Operating Officer of Odeon, Europe’s largest cinema business. He also served as the Chief Executive Officer for Game Group, a pan-European retailer with over 1300 stores.

Now writing, consulting and advising retailers, investors and innovative start-ups, Ian has penned many of his insights in his book “Reinventing Retail.”

Join us as we explore the purpose of stores in the new economy, why knowing your customer is key, and why retailers should never rest when it comes to innovation.

Episode 60 of RETHINK Retail was recorded on Jan. 24, 2020.

 


Hosted by Julia Raymond
Researched, written and produced by Gabriella Bock
Edited by Trenton Waller

TRANSCRIPTION

Julia Raymond:
Hi everyone. Today’s episode of RETHINK Retail, we’re joined by my guest, esteemed author and retail consultant, Ian Shepherd. Ian is a former Chief Operating Officer of Odeon, Europe’s largest cinema business and game group, a pan European retailer with over 1300 stores, where he served as the CEO, now writing. Let me say that one more time where he served as the Chief Executive Officer now writing, consulting, and advising retailers, investors, innovative startups, and has penned many of his insights in his book, “Reinventing Retail.” Ian, welcome to the show.

Ian Shepherd:
Julia. Thank you. Thanks for having me.

Julia Raymond:
It’s great to have you. I wanted to kick off by just hearing a bit about your professional journey. You’ve held a lot of C-level positions with huge companies, and also what inspired you to write your latest book?

Ian Shepherd:
Okay, well great. That’s a great opening question, and I think that I would probably draw out two things from my background that probably to a certain extent, define the perspective that I’m trying to bring to the work that I now do with retail and hospitality businesses. Which really are the driving engines behind Reinventing Retail, the book. The first of those is that strangely enough, I didn’t grow up professionally in the retail sector. I came to retail relatively late in my career. I started my career as a consumer marketeer in subscription businesses, in pay television and in the mobile sector. That gives me, I think, a slightly different perspective on the levers that really matter in a business. If I give you an example of that, in the pay TV company I used to work for, we sort of joked in a way that there were only three KPIs in our business that mattered.

Ian Shepherd:
They were, how many customers do you have? How much do they spend with you every month? And how long are they going to stay with you? Because crudely speaking, if you multiply those numbers together, you get some sense of the value of your business. What was interesting to me arriving in the retail sector was realizing that a retailer typically won’t know any of those three numbers. They’ll know footfall of course, but that’s not a customer metric. They’ll know things like basket size and transaction value, but those aren’t customer metrics either, because too many transactions are anonymous, and they’re not tied together into a customer record. It’s a fascinating observation, which leads me then to spend quite a lot of time with retailers just helping them wonder, “How would you run your business differently if you did know that detail about your customer base?” That’s obviously a route to loyalty schemes, and data and analytics, and some other topics that we may talk about, and that you talk about on this podcast with other people a lot.

Ian Shepherd:
But it all starts from actually, do you know who your most valuable customers are? Those subscription businesses that I talked about, typically if you look at how they’re spending their marketing budget, are spending half of it on retention, so they’re spending as much money trying to keep and nurture their relationship with their most valuable customers, as they are on acquiring new ones. Yet if you in a retail environment don’t know which of your customers is the most valuable customer, then you can’t in some senses, half of your marketing budget is not available to you. That perspective coming from a subscription sector, if you like, is definitely one of the things that I carry with me as I talk to retailers today.

Ian Shepherd:
The second thing I try to bring to what I do is that as you mentioned in your introduction, I have quite a lot of real boardroom experience in this. I’ve been the CEO of a publicly listed company. I’ve sat on private equity boards as well, and I’ve seen to a certain extent the good and the bad of that. I have the scar tissue as well as everything else that goes with that. Game, which was the retailer that I led is a good example of that. I led that business some years ago now during a real down swing in the video games market. What we saw was that despite lots of terrific people in the business doing lots of terrific things, and working really hard, in the end we had no choice but to put it through, what in the UK is called administration. I suppose the analogy would be Chapter 11 in the US, and we saw it emerge the other side of that a fraction of the business that it had once been, and that’s a truly horrible experience for everybody concerned.

Ian Shepherd:
I think you wouldn’t be entirely human if that didn’t make you reflect a bit on what you might’ve done differently, what the business might have done differently over the years, and how it could have avoided ending up in that situation. That experience was definitely, that began the thought process that led to the book. I talk in the introduction to the book about a moment where I sort of late one night after a very long meeting negotiating the future of the business, came out and my overwhelming thought was just, “This should never happen to any business.” And yet actually as we know on both sides of the Atlantic, it’s happening to retailers with increasing regularity, and that drivers having seen if you like, the bad side of what happens to retail, hospitality businesses when things don’t go well, was probably only accelerated by my more recent experience in the cinema business at Odeon, which was a pan European cinema operation.

Ian Shepherd:
There we were operating in a more stable market, and actually many of the same actions that we took at Game, investing in digital, investing in data, and analytics capability, investing in our colleagues, and our experiences and employer. Many of those, in some senses, that we had the room and the time to make those things work, and had a terrific run, doubling the profit of the business, but most importantly for the future of that business, transforming it as an employer from being sort of fairly lackluster third-quarter employer, to being one of the most noted employers in the UK.

Ian Shepherd:
Again, the book contains many of those lessons too. The yin and the yang, if you like, of the thought process that went into Reinventing Retail. And indeed the thing that entered my passion point, the thing that energizes me in the work that I do today, is trying to make sure that we learn as many lessons from other businesses, businesses like the subscription ones I mentioned, as we possibly can. That we put big retail and hospitality businesses into a position where they can reinvent themselves, and thrive rather than fading, and being driven out of existence by new entrance into their marketplace.

Julia Raymond:
Absolutely. It sounds like consumer marketing, is that your core? Since it was part of the beginning of your career, and you kept that with you when you went to work at these big retail companies, and with them and realized how much they might not know their customer when they really should. Is that still a problem? A lot of retailers claim today that they really know their customers, but do you think that’s still a huge issue?

Ian Shepherd:
I think what we’ve got to do is dissect a little bit what we mean by knowing your customer. The retailers that I see and work with, and I think that if I think about the people you’ve had on this show talking about their retail business, over time, at one level of course they absolutely know their customers because any good retailer spends a lot of time in store. If you’re in store, and you’re talking to your customers, and you’re working behind the checkout and seeing the issues that they have, and the things that they buy, and the things that they say, then of course at that level you’re going to know your business and know your customer. It would be unnecessarily insulting for me to suggest that retailers at that level didn’t know their customers.

Ian Shepherd:
But that sort of instinctive, and human, and person to person knowledge of the customer base is one thing. It’s quite another thing for a big multi-site, potentially multinational chain of retailers, to know their customers at the level that allows them to do with that customer base, what the subscription businesses that we were just talking about would do with theirs. I often say that in a way, all the investment that big retail chains make in loyalty programs, in building big databases, and hiring an expensive chief digital officer to come in, and do sexy digital things. All of those things really are, they’re trying to make themselves more like the local mom and pop store down the road, where it’s the owner of the store who’s working behind the till. That person instinctively knows their customers. They instinctively recognize their regulars, the people who affect their most valuable customers.

Ian Shepherd:
They’re able to do something about that. We lose that when we become a large chain of retailers, things become more impersonal, and customers in some senses become a longer distance from the heart of the business. That’s the sense in which I think many retailers don’t know their customers. I’ll often challenge a retail board by saying, “Who’s your most valuable customer?” And they’ll say, “Well, okay, let me draw you a diagram. It’s somebody in this demographic, with this kind of interest set, who lives,” and I say, “No, no, no. I don’t want a presentation. I want to know the name and address of your most valuable customer,” because if you don’t know that, then if that customer stops buying from you tomorrow, you’re not going to be able to do anything about it.

Ian Shepherd:
It’s at that level where I think retailers have both a big challenge ahead of them, but also a huge opportunity. The payback in becoming a business that thinks about itself as, “How many customers do we have? How much do they spend? How long will they stay?”, can be profound.

Julia Raymond:
Mm-hmm (affirmative). It sounds like the larger the business, the bigger your scale, the harder it is to innovate, and to get to that level of insight, who are the customers that matter most to the business? Because if they left and you didn’t know who they were, you potentially wouldn’t even know where the problem is coming from, if they started to lose big segments of the highest value customers.

Ian Shepherd:
Exactly.

Julia Raymond:
When you are consulting, and talking to retailers that have huge global reach, is there a process when it comes to innovation that you typically recommend? How do you go about this? Is it small steps? Is it pop up shops? What’s the key?

Ian Shepherd:
It’s a really perceptive question, because I think this is something that people wrestle with a lot, and I generally speaking, if there’s a flavor, I mean every retailer is different and every market’s different. But if there’s a flavor to the approach that I try to encourage retail leaders to take when they’re thinking about change and innovation, it’s about taking small, easy steps. The beauty of digital technology is that it needn’t be that expensive. We’ve all made the mistakes, certainly I would raise my hand. We’ve all made the mistake if we’ve been in retail leadership roles of signing off the enormously expensive investment, in some big new digital platform that’s going to take five years to build. Of course what happens is you spend millions of dollars building it, and five years later you end up with something that looked like it was state of the art five years ago, but it’s since been made completely redundant.

Ian Shepherd:
The litanies of businesses have made that mistake. The reality is that I think the better approach with not just digital innovation, but with the idea of change, generally is to experiment. A phrase that we’ve all used a million times in meetings is the phrase, test and learn. “Let’s just try something, and see if it works. If it works, we can make it the new standard operating procedure right across the business. If it doesn’t, we’ll just forget it and move on.” But it’s a very interesting phrase to conjure with when you’re working with the retail leadership team, because it’s actually quite scary. It has all sorts of cultural implications. It means that you’re going to need to be a business that celebrates somebody trying something new, even if it doesn’t work, even if it doesn’t work.

Ian Shepherd:
Because if you want to be a test and learn company, you have to be ready to do lots of tests. The whole nature of that is that some of those things will work, and some of them won’t. Yet there are many businesses where, I was with a retail team a week or two ago and I got a good laugh when I said, “Doesn’t it sound…” When you’re a business where people would say, “I’m really glad I wasn’t working on that project because it didn’t work.” That’s a cultural, so that’s not a symptom of a business which is going to innovate a lot.

Julia Raymond:
Right, the big F word, failure.

Ian Shepherd:
It’s a symptom of a business that instead is going to take a very cautious approach, and people are only going to want to pile on to things when they know that they’re going to work.

Ian Shepherd:
Test and learn has all sorts of cultural implications, all sorts of implications. For example, for your financial management processes, because if I’m bringing the CFO an experiment, and the financial process they want me to go through is, “Can you guarantee Ian, that this is going to work?” The answers, of course, I can’t guarantee it’s going work, that’s the wrong question. The right question is the question a venture capitalist would ask which is, “How much is it going to cost me to find out whether this works or not?” It’s a risk capital way of thinking about your financial processes, which is quite a different way of doing it than most big companies are used to.

Ian Shepherd:
I think that for companies to get really good at trying new things and experimenting on new things, there are implications for their technology of course, and that’s where a lot of innovation discussion is focused. But there are actually all sorts of implications for the culture, for the processes, for the kind of people that you have in the business, for the attitude to risk that that business takes. That’s why in a way, one of the observations that is right at the heart of a lot of retail discussion today, and it’s right at the heart of Reinventing Retail, is the observation that big retail businesses, they’re not just being driven bankrupt by other big businesses. People are not just being driven bankrupt by Amazon coming in and entering their sector. They’re being driven bankrupt by tiny internet startups who start with nothing, who have no capital, who have no customer base, who have no credibility, but who do something that really connects with customers.

Ian Shepherd:
The big company that was the incumbent in that sector, in some way fails to recognize that early enough, ends up having that revenue eroded, and then they get into trouble and they put out a quarterly update that the city doesn’t like. Then everything goes negative from there. But often it starts with the fact that the reason that the startup was able to do the thing that the big company wasn’t able to do, was simply because they had nothing to lose. They had no fear, they had no entrenched revenue to cannibalize, and so it was easier for them to innovate.

Ian Shepherd:
I think for retailers who are looking to really build a position that allows them to thrive for the long term, they’re going to have to address this issue of, “How do we become an innovation-oriented business, other than just writing the word innovation in the set of values that we’ve put on the boardroom wall, how do we actually make that real?”

Julia Raymond:
Mm-hmm (affirmative), and your take mirrors Harvard Business Review article I read just yesterday, where it was talking about innovation. It said a lot of companies, once they become successful, and even in the case maybe of the DTC that blows up, that’s when it’s most important to innovate. Because if you’re not always innovating, the next guy will come in and take your market share, basically.

Ian Shepherd:
I think that’s right. Actually, I gave a talk to the leadership team of a retailer who best remain nameless, but a European retailer who, and it was an interesting gig because they’re doing very well, and they’re perceived as a winner. They’re growing, their like for like revenues growing, their profits are growing, the city likes them, the share price is doing really well. The message I gave them was, “That’s brilliant. You should totally congratulate yourselves, and most important that you should congratulate your colleagues in store for all of the effort that’s got you into this position. The bad news is you’ve just made yourself the number one target for every startup, and venture capitalist in the world, because they’re all looking at your sector and they’re all looking at your brand, and thinking, ‘Well, crikey, there’s money to be made there,'” which means every startup that’s out there, that’s trying to raise money, is now pivoting to look like they’re in the sector that this particular retailer is in, because it feels like it’s a good place to be.

Ian Shepherd:
As a result, there’s a wave of innovation coming down the pipe. The business that I was talking to is going to have to be either, it’s going to have to be one of two things or both, which is it’s either going to have to be doing that innovation itself, and staying ahead of the game, or it’s going to have to become the number one partner for all those startups, so that it gets to cherry pick all the winning ideas before anybody else does. If they only carry on doing what’s made them so successful over the last two or three years, their story will not last very long.

Julia Raymond:
You talked a lot about the role of the physical store in your book, Reinventing Retail, and a lot of innovation we’re seeing happen in the physical store with smaller formats, with DTCs opening physical stores. What should retailers be thinking about when it comes to their store, in the new economy?

Ian Shepherd:
It’s faster. Somebody asked me the other day, “Is there even a role for stores for retailers now?” And of course the answer is absolutely there is, and if you want a piece of evidence for that, you just have to look at all the internet giants who are trying to open stores as fast as they possibly can. People talk a lot about Amazon and their experiments with stores, but actually even at the startup end I was reading something about all these mattress in a box startups that are in the…

Julia Raymond:
Yeah, Casper and…

Ian Shepherd:
Exactly, in the sleep sector now. Some of those are beginning to look for, they’re not opening stores themselves, but they are beginning to look for space in established retail businesses, and there’s a very good reason for that. Which is that if there’s one single universal truth about eCommerce, it’s the customer acquisition costs are really, really high. Cutting through and connecting with customers is really difficult, and the store represents a great way of potentially doing that. I think the key thing for anybody thinking about stores, including existing retail businesses trying to reinvent themselves, is to understand that whilst stores are important, the role of the store has changed completely over the last 20 years. 20 years ago, stores were essentially about products distribution.

Ian Shepherd:
I use the analogy in my book of, or the example in the book, of trying to buy a fridge. I’m old so I remember when buying a fridge meant you’d go to the local electrical retailer, and you’d look at all the fridges that they had for sale, and you’d write down some specs and measure them. Then if you wanted to do price comparison, you had to go to another store and write down some more prices. In the end you would buy one of the fridges that was in one of the stores, because that was essentially the only option that you had. Whereas today, I have the specifications of every fridge ever made available to me on the device in my pocket. I have all of the prices and offerings, from every retailer for all of those fridges also on my mobile phone in my pocket. In that sense, I don’t need a store anymore simply as a place to actually consume the act of purchasing a fridge.

Ian Shepherd:
If the role of stores used to be what I’d call distributive, they were about distribution, they were about getting products in front of people. That’s not true anymore. Therefore what a retailer needs to do is think quite boldly, and quite fundamentally about what their stores actually are for. There are great reasons to have a store in the market we’re in today, but they’re just different than they used to be. So a couple of examples, I’ve got six great reasons to have a store in the book, but if I was to give you a couple of examples here, one of them is convenience. Sometimes I’m buying a product that I actually want right now. I want the chocolate bar, the newspaper, the coffee, and of course those are, if you’re in a market where convenience and immediacy are important to your customer base, then stores are a great way of solving that problem.

Ian Shepherd:
The type of store that you’re going to build to serve that need has very particular characteristics. It’s going to be low friction, it’s going to be fast, it’s going to be well organized, because that’s essentially what that kind of customer wants. In a different market segment, the role of the store might be about discovery and curation. If you think about, I don’t know, soft furnishings and interior design, you might fall in love with that throw cushion that I have in my store, but you might not have thought to Google it, or look at it on a website. Some market segments, people need to stumble over and fall in love with product. Of course the store that you designed to deliver that, again, it has very particular characteristics. It’s going to have to be beautiful, stuff’s going to have to be laid out really well, it’s going to have to be kind of homely, and showcase product in the way that you want your customers to be seeing it.

Ian Shepherd:
There’s a set of design challenges around that, and then again, in other retail sectors, there are stores where there are set product sectors where the fundamental role of the store is really about active selling. A product might be complicated, it might be financial services, it might be selling a car, it might be something that people want to use credit to finance. You might need to have an extended conversation with a customer, you might want to encourage them to bundle products together, or to upsale, or to take particular tiers of service. There of course, you need to store that’s got brilliant salespeople in it, but that’s also designed in a way that allows those conversations to happen.

Ian Shepherd:
Each of those examples, and there are more I think, each of those examples of why you need a store drives a different store design, drives a different retail estate, you want different stores in different places, have different sizes depending on which of those kinds of journeys you’re on. I encourage retail leadership teams, finance people sometimes talk about zero-based budgeting, which is, “Let’s forget all the current stuff, and just start from zero, and build it up line by line.” You can almost imagine a zero-based store design process where you say, “Well if we didn’t have any stores, and we were a pure play eCommerce company ourselves right now, would we want any stores? If the answer is yes, what kind of stores would we want? What would we want them to look like? Where would we want them to be? Let’s start with that thought process.”

Ian Shepherd:
It may be that the answer that comes out of that process is very uncomfortable, because it may be that the answer that comes out of that process bears very little resemblance to the store estate that we actually have. Then we’ve got a tricky transitional thing to manage both in terms of which stores you have, and also that the physical layer, and the design of the store that you end up operating. But not starting from that process, just trying to justify the store estate that you currently have is a road to nowhere. I think that there’s quite a fundamental customer-centric view of, “Why have we got any stores? And therefore what would a great store look like?” Is a profoundly important discussion for retail boards to have.

Julia Raymond:
It certainly is, and I love the formats you gave. So you said convenience, where it’s low friction, it’s organized, there’s discovery and curation where people are stumbling upon, falling in love with products and then act of selling, like cars which now is moving somewhat online, and then financial products. It’s interesting because we see disruption. I just saw on the news that Bose is closing the majority of its retail locations across the globe, and there is a change because it used to be more about active selling when those products were very technical 20 years ago, and now it’s not the case. They can go through other big retail chains and partners. Is there some of this happening, when we take a step back, and look just at the UK market, are there trends you’re seeing that are impacting some of the changes with physical stores?

Ian Shepherd:
Well, I think what people are, the UK I suspect very like the US, is in the throws of demonstrating very clearly that if you have a purpose for your store, and you’re single minded about delivering that purpose, you will do well. If you don’t, bad things will happen to you. If you look in the grocery sector’s a really interesting example, if you look at the Christmas trading results that have come out from this, just this last few weeks, I think I’m right in remembering that the two fastest growing stores that sell any kind of food and drink product, were sort of little. On the one hand, very much in the budgets, economy kind of grocery sector. Fortnum and Mason, the department store on the other end who are traditional high-end business, but very well run with a lovely store and a lovely website.

Ian Shepherd:
The people who are finding it tougher I think, with the people who were kind of in-between. That’s partly, that’s about, it’s easier to stand out if you’re at one end or another of a polarization. But it’s also about what we’ve just been talking about in terms of the role of the store. More generally, if I look around the UK high streets, there are niche specialists with on the face of it quite a narrow product proposition, where you think, “Well, could you justify a store estate just selling chocolate or just selling soap?” There are niche specialists who are executing in both of those sectors, for example, so well that they are seen as runaway successes on the high street. At the same time there are retailers with a slightly more general, “We do a bit of everything,” kind of position.

Ian Shepherd:
Here I’m thinking particularly of department stores who are having a massively tough time justifying why they exist. When in some senses you’ve got, as a department store, if I want to buy a camera in a department store, you’ve got a narrower range than the specialist, at a higher price point than the internet warehouses. You’re sort of stuck in the middle, and they’re really struggling with that. I think yes, you can completely clearly see. I bet the same is true with the retailers that you and your guests are talking about from a North American point of view so regularly, that you can see that single-mindedness and clarity of purpose, and that translating into great retail execution.

Ian Shepherd:
On the other hand, those retailers who are a little bit more in the middle, who have slightly less clarity about what their stores are for, they’re finding it very tough.

Julia Raymond:
Absolutely. We had a guest who coined it the boring middle, and I think there’s a lot of truth to that, and it reflects on the struggles that big department stores are facing. They’re trying different strategies, like more private labels, and things like that too, and different partnerships, and store in stores. One of the things that we’ve debated, especially on this side of the pond, but also probably in the UK and the European markets, is the role of flagships, and the traditional notion of flagships is being questioned. We actually played a game at our recent dinner in New York for the National Retail Federation, a big show and it was fad, hype, or real, and one topic debated was flagship. I wanted to hear your take as a retail veteran on is this role changing? Is it fad, is it hype, is it real?

Ian Shepherd:
Gosh, what a great question. I wish I’d been there to play the game, and hear what everybody else said, but I think for me, I always have an instinctive note of caution when people start talking about flagship stores. It’s a very, very thin line between, “This store will represent our brand, and really establish us on the UK map on the one hand,” and then on the other hand, “Actually can I just have an excuse for signing a really expensive lease, and opening a store on Oxford Street or Regent Street in London for almost vanity purposes.”  I wouldn’t want to condemn all flagship stores because some of them are really lovely, but I think I would challenge a retailer who wanted to open in one of these kind of really AAA, very expensive shopping areas in London, or in a European capital of some kind.

Ian Shepherd:
I’d really challenge them with, “Why are you doing that?” I think that there’s an argument to be made, you could see your flagship store as a place to experiment, as a home of innovation, a place where you’re going to be brave and try new things, and I might be persuaded that that was a good reason to do it in some sectors. I guess in very high-end fashion, you can argue that there’s a PR benefit around having your brand associated with being in those places. But if I walk the two principal high-end shopping streets in London, Oxford Street and Regent Street, and I look at the stores that are there, I’m willing to bet that every one of those is described internally in that retailers head office, as a flagship. I would say a very small proportion of them actually are.

Julia Raymond:
Would you say maybe it’s the PR play, it’s the idea that for vanity purposes they could have a store there, but sometimes they don’t put the investment that maybe that kind of location should be getting?

Ian Shepherd:
Well, I think you’re walking very narrow tight rope if you’re going to open a flagship store, because if you put a load of investment in, and do things in that store that you haven’t done anywhere else, then you’re vulnerable to somebody saying, “Well what’s the point of that? If none of that stuff is transferrable into your store estate, and this store represents half a percent of your sales, what was the point in putting all the money in?”

Ian Shepherd:
The flip side is if you open a store in a very expensive location, and it’s exactly the same as all your other stores, it is by definition just going to be less profitable. I think you have to have a fairly cynical eye on this and say, “Well let’s just be really, really clear about what we’re doing with this, and why we’re doing it.” As I say in some sectors, and I think for some retailers in terms of the way they execute in their flagship stores, I can in a sense grudgingly see the benefit for them of doing that. But more often than not, I think it was just, “We really want to have a store on Oxford street. Fifth Avenue.”

Julia Raymond:
Exactly. Yep. Exactly, same concept. Ian, I wanted to ask you, because of all of your years of experience, there’s a lot of new technology, there’s a lot of talk on machine learning, AI. What technology are you most excited about personally when it comes to retail, as we have entered this new decade?

Ian Shepherd:
Yeah, well crikey. I get most excited about the stuff that’s most basic, to be honest with you. What do retailers need to do to really thrive, in the environment we’re in now it’s integrating new channels together. If I want to buy a product from you online, but then collect it in store, you should obviously enable me to do that. If you’re going to enable me to do that really well, you need to take an important step in terms of your logistics platform, which is you need to be exposing store-level stock numbers back to the website, so that I can tell whether my local store actually has the product in stock already or not. If you’re operating a store, and you don’t have the size of shirt that I’m trying to buy in stock, it should be utterly obvious, and utterly seamless that you would place a web order for me, and have the product delivered to my office, or to my house as quickly as you possibly could.

Ian Shepherd:
Yet I think, and look, we may be behind you over here on this side of the Atlantic, but I see a lot of retailers where those apparently very basic things, are still really not happening. Actually worse sometimes I see retailers where the technology is in place that would allow those things to happen, but the business processes, and the training, and the incentivization, and the motivation to make those things happen are not in place. I was with one retailer before Christmas looking at stores, and it became apparent as we went round that in this particular business stores are penalized. They have their revenue target deducted for returns that they take, but that would include returns that were being taken for sales that were made online. A small store could work really hard, and then see its ability to deliver its targets absolutely wiped out by a wave of returns coming in from web sales of products that that store didn’t even range.

Ian Shepherd:
You can imagine, I don’t need to tell you what that does to the attitude of people in the store to returns. Are they delivering a great service when you walk in with a big bag full of stuff to hand back? Well I’m sure they’re doing the job, but I bet they’re not that enthusiastic about seeing their KPIs hit in that way. There’s an example of the technology exists, the process is not that difficult, but somehow the end to end bit of the business has not been glued together. It is absolutely the case that one of the defining characteristics of retailers who are being successful in these very difficult times, is that they are delivering that seamless omni-channel, integrated offering to their customers.

Ian Shepherd:
The converse is true that the people out there who are not able to do that, are struggling. One retailer in the UK who again at best remain nameless, put out a profit warning recently. The trading is tough, and profits are down, but I read the small print, and in the small print of the profit warning, they proudly announced that the systems upgrade, which is going to allow them to do click and collect for the first time is going to happen sometime this year. Well, what have you been doing for the last decade? That speaks to where we started, which was talking about that culture, the attitude towards innovation, the attitude towards technology change, the attitude towards experimentation. It also speaks to the customer closeness piece that we were talking about as well.

Ian Shepherd:
I get really excited about people just doing really basic things well, that for me is the place that you would start. I would cheerfully throw fruits at any retail leader that wants to stand up and talk about blockchain, but hasn’t integrated their web and their retail channels in the way that we’ve talked about. Here’s a classic example, if you walk down a major shopping street a Fifth Avenue, or an Oxford Street, and you start buying products, maybe you’re on a day out with your family or your friends, and you start buying products in stores, you probably after a while don’t want to carry all their shopping bags around with you.

Julia Raymond:
I can attest to that because I just got back from New York.

Ian Shepherd:
Yeah, exactly. Name one of the stores that you shopped in on Fifth Avenue that would offer to deliver that product to your house, rather than making you carry it in a bag.

Julia Raymond:
Yep. I can’t think of any.

Ian Shepherd:
I bet somebody does, you’ll get letters about this, somebody will email you and say, “Well we do that.” In some senses, the basic aspect of omnichannel retailing that is, and yet here we are saying, “Well, can’t think of anybody.” I think that some of this basic stuff I think warrants a look, before people get too excited about new things. The other thing I then get very exercised about, here this is a purely, comes back to my origins in subscription businesses, is the whole piece about data. You talked about machine learning and these are tools. I think artificial intelligence and machine learning are cursed with names that are too sexy, so people talk about them too much.

Ian Shepherd:
Conferences happen, filled with people who don’t really know what they’re talking about. The reality is the discipline of understanding the data in your business. Where are your products? How quickly are they selling? Where is your stock? Who are your customers? Who are your most valuable customers, as we were talking about before, and what is their behavior? Those disciplines, there’s enormous value in there. I think there’s great grounds to be made, I think for many retailers in both understanding the data they already have, and putting themselves in a position where they get more, and then getting good at using some of that tool set to really understand it.

Ian Shepherd:
It’s second in the priority order after getting click and collect finally installed. I think those are some really, really important things there. There’s a danger for those of us who kind of observe and comment, and write about retail that you’re constantly chasing the next thing, and the next thing, and the next thing. And actually the industry at large hasn’t caught up with the thing from 10 years ago yet. I think that for retailers in a practical sense, there’s just a huge amount to go for.

Julia Raymond:
Mm-hmm (affirmative). There’s a lot of work to be done indeed. Ian shepherd, it was great to hear from you today, author of “Reinventing Retail.” For anyone listening, where could they go to get your book?

Ian Shepherd:
Well, I think it’s available on your side of the Atlantic, sadly, mostly from online retailers, which is an irony that I will leave uncommented.

Julia Raymond:
Well, that’s great to hear. I know you’re on Amazon.

Ian Shepherd:
That’s it.

Julia Raymond:
Yes, absolutely. Great.

Ian Shepherd:
Thanks for having me. I really appreciate your time.