January 6, 2020 – New Year’s Special: We hear from retail thought leaders about the future of commerce and the impact technology, data and automation will have on connected shopping experiences.
No time for news? We’ve got you covered. Welcome to the Retail Rundown, your go-to weekly podcast where RETHINK Retail teams up with industry experts to deliver the top trending news stories in retail.
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Hosted by Julia Raymond
Researched, written and produced by Gabriella Bock
Edited by Trenton Waller
Hello, and Happy New Year to our listeners!
Today is the first Monday of a NEW decade, so guess what? We’re doing something new. I’ll spare you any corny 2020 vision jokes and jump right in.
This episode you’ll hear some of the most forward-thinking retail predictions from guests past.
As we enter into a new era of transformation, retail leaders from around the globe are thinking big and betting bigger about what’s in store for the future of commerce. From augmented stores to a home pantry that stocks itself, those who’ve been paying attention already know retail is on the apex of a digital revolution. There is no rest for retail.
To kick-off, you’ll first hear what the Retail Prophet himself has to say about the disruptive technologies we can expect to witness in this brand new decade.
I think that we will look back 20 years from now, maybe even in a shorter period than that, and we’ll look at companies like Amazon and Alibaba and I think it’s going to occur to us at that time that these companies and the way we shop online today was really just chapter one in what I think is going to be an extremely long runway for the online experience. Part of that, of course, is the Internet of Things. When you think about the way we shop online today, it’s very conscious, it’s very deliberate and intentional. We are still to some extent going online to shop, but I believe going forward, we are going to see the intervention of more and more technology in serving our routine replenishment needs. A surprising statistic is that about 45 to 50% of our consumption is just routine. It’s repetitive.
These are not products that require tremendous consideration on our part. Most of what we’re buying, we’re buying routinely, we’re buying the same brand and the same quantity. When you look at that portion of our spending, it would make perfect sense for more of that kind of consumption to just go over to a very replenishment based model. So yeah, I see the advent of connected appliances, even connected packaging that’s sort of monitoring the consumption of products and the level of contents within a package and triggering a reorder for approval. These things are going to become real. Just to put a point on it, recently, Walmart applied for a patent for an automated… fully automated store. But the surprising thing about the pattern is that they want to install that store in your home, directly in your house.
So imagine a walk-in pantry. This is as described in the patent. Imagine a walk-in pantry in your home that is fully stocked with products, food products, packaged products, and you literally walk in, take what you want, walk out, and that immediately gets charged to your Walmart account. Not only that, but according to the patent, it’s AI infused as well. So it actually becomes a bit smarter. Every time you select a product, it starts to know your needs, your preferences, your consumption levels better and it starts making recommendations. I mean, this is Walmart we’re talking about.
The little company from Arkansas. So yeah. I mean, this is no longer just fanciful stuff that sits somewhere in the future. We’re on the verge of it.
Yeah. Like you said, this is the end of the beginning of e-commerce and today is chapter one. I mean, that’s definitely a futuristic view and I imagine it’s something that could be possible. It could save on the last mile for Walmart by having regularly scheduled deliveries. Is that the thought behind it, this ties into your repetitive consumption?
That’s exactly the model. They’re suggesting that they would just stop by your home on a regular basis and replenish the items that you’ve taken and add some additional items that they think might be of interest. But in essence, yeah, you’re… this significant chunk of your consumption would simply be managed for you. Yeah, this notion that technology begins to take a greater role in our lives, in managing these routine purchases, arguably freeing us up to do other things and hopefully be able to invest more time in the considered purchases that we need to make, the big things in our lives
You just heard from leading retail futurist Doug Stephens on how he thinks technology will automate everyday shopping.
Next, we’ll hear from Dan Goldman, Global Head of Strategy at The North Face, on how he believes technology will empower retailers to make more personalized connections with their customers.
What I’m most excited about, again, going back to my passion area, is the notion about the ability to be more consumer obsessed, the technology that will enable more personalization and one on one interactions. Because obviously that circles back to our conversation on emotional connection earlier. And the notion of really being able to understand consumers’ behaviors in the past with their psychographic reasons why they’re doing those behaviors, and really enable that and empower that as an engine for brands will allow consumers to really connect with brands in new and different ways that will really drive that emotional connection in the long term.
That was Dan Goldman, Global Head of Strategy at The North Face.
Building on the topic of personalization we have Charlie Cole, Samsonite’s Global Chief eCommerce Officer & CDO of Tumi.
I’m still really bullish on, and I’m going to use a term that I think is overused, so to say, I’m excited for the future might sound a little weird, but I still think we’re just scratching the surface in personalization. I’ll say it really idealistically, Julia, I think every single person’s landing experience on our websites should be slightly different. I truly believe that. I think the products you see, I think the color schemes, I think everything besides the brand logos and brand DNA stuff, there is no reason why your navigation couldn’t be different than mine or your homepage or your product description page couldn’t be different than mine. And that doesn’t go beyond just an individual. I’m talking about device, I’m talking about some country, there are so many variables in this concept of personalization where you talk about this quid pro quo that consumers and companies have today.
Consumers have volunteered their data in a way and what they’re asking for companies is, make my life easier, make my life better. And I think that we’re just scratching the surface on that. For me, when I knew about personalization, it goes back to all the way to after sales service because it’s so easy to be like, oh yeah, I use personalization. I do look alike campaigns on Facebook. No, no, no, we are just scratching the surface. I really think we need to do a better job of continuing to make every customer journey and treat them like individuals. Because right now it’s still a little bit of batch and blast. And so that’s the area that I’m hopeful that we can kind of set the tone over the next five years.
While Dan and Charlie had a lot to say on personalization, the Retail Doctor Bob Phibbs also weighed in on the notion of a customer of one, take a listen:
Retailers are in trouble and we’re still talking about it’s a customer of one and we need to know our customers. That’s crap. You need to do your job, which is have compelling product presented so well that when I walk in I’m like I could see that in my home and have somebody add a little humanity into it so it’s not a technology play. It’s a human play and get that merch out the door at a profit.
And there you have it. And while on the topic of physical stores, some guests are betting big on the notion of retail spaces as media channels with the rise of connected experiences.
Here’s what b8ta’s Co-founder and President Phillip Raub had to say about the future of physical retail:
If you go back historically, the eighties and nineties you saw this migration towards more big box retail. It was about a place of mass consumption. Where could you go and you could find everything in one place. Then all of a sudden the internet actually created the idea of this endless shelf where you could actually find the same thing that … A hundred thousand square feet of retail wasn’t big enough. Now all of a sudden you had at your fingertips this endless aisle and the ability to find anything you wanted.
And while I think that’s not going anywhere anytime soon, the same time people were, what they were missing was the ability to touch and feel product, to experience things firsthand. And so now you’re starting to see this a little bit of this migration back to physical retail because people … But it’s different. And I think, one of our early takes on it was that retail was going to become more of a media and advertising model where people can learn about products, discover products, talk to people. But at the same time, we recognize that you couldn’t use the same business model. Because you had to figure out where and how you were attributing the sales.
So somebody came in in the same way that you would track media impressions into a store. You want to be able to do that same type of thing in physical retail that you were doing online. And I think that’s the, I think, the important difference that we meld together this notion of retail as a service, is that it’s about having these great experiences, but at the same time being able to understand what’s happening from both a marketing as well as from a sales perspective.
Certainly. So you’re basically saying historically speaking, we went from the mass consumption in the eighties, nineties to the nineties and the internet with endless aisle. And then to the 2010s and to today where it’s kind of reversing a bit to people want the tactile interactions. But that’s going to require new business models to measure the stores of the future, the stores of today even which are becoming, you said media channels.
Yeah. I mean, there was the buzzword omni-channel that was being used a few years back, which drives me nuts. Because at the end of the day it’s commerce. I mean people are buying things. Whether they buy them in store, whether they buy them online or what have you, people are transacting. I mean if you look obviously at economic data at a macro level, it’s not that people stopped transacting. And in certain categories they’re still doing a lot of that, in physical retail and other categories it’s a lot of what’s happening online.
And so I think brands had started thinking about it differently, like, “What’s my commerce strategy?” Not what’s my E-commerce strategy or what’s my physical strategy, it’s that the two of them literally go hand-in-hand. And they have to be very symbiotic in that sense. And I think, as we recognize that it’s like, we said, “What’s the physical manifestation look like?” But then also, “What are we doing in the physical space that traditionally was only being done in the digital space?” And through technology now, if that’s possible to be able to understand and measure what’s happening. And I think that’s really where our business is focused on, in it’s creating great experiences for the consumer. But then ultimately at the end of the day, it’s really understanding what are our partners trying to get out of it? And how are they learning and growing their business at the end of the day.
When it comes to newer and connected retail spaces, technology plays a huge role. And for a variety of reasons, retailers often select flagships as playgrounds for piloting new innovations. But is that approach best? Hear from Paula Rosenblum, top retail industry analyst and managing partner and co-founder at Retail Systems Research.
Well, the challenge with technology in stores is always an issue. The first thing you do is you run some pilot test to see if it changes anything. If it does, you start with a small project that pays for itself, and then you roll it out to more and more stores. The object of the game is to continue getting return on investment. If you don’t get a return on the investment, there’s no point in doing it. If you can change, listen, an A store is never going to really become an A plus store. So the name of the game in retail, particularly when you’re dealing with stores is to turn the D stores into C stores and the C stores into B stores and the B stores into A store, because you’re not going to move an A store to an A plus store. Your best bet is actually probably ironically, to put it in a B store and turn the B into an A.
That was RETHINK advisor Paula Rosenblum on “Betting on B.” But for the Retail Prophet, “he’s all in,” take a listen:
I believe every store is a flagship store. I think if you’re a chain and you’re rolling out stores that you don’t regard as being the true unfiltered expression of your brand, if you’re rolling out stores that you feel are less than that or stores that you have to apologize for and say this is a B or a C store, I think that’s your first problem. To have a really incredible experience somewhere in SoHo, New York is great but then to say… but in other markets like Kansas City, Kansas or some place outside of Chicago, we’re just going to give people a relatively ordinary, mediocre banal experience. I think that’s crazy. Every store needs to be the… in my opinion, the full expression of the brand story. Every store needs to hire brand ambassadors that you can be proud of representing your story to the public. If all you’re doing is giving a bunch of tourists in SoHo a great experience around your brand, but everyone else in the country is getting something less than that, then that’s completely defeatist in my opinion.
Rounding out our show today is Carl Boutet, the founder of Studio Rx and Executive in Residence at Highline Beta. Here’s what Carl has to say about the connected retail experience and what’s to come as consumers become more dependent on digital devices.
When we get into these debates around, well when you know, where do you think e-commerce is going to be 10 years from now in terms of percentage of market or are hearing some people saying 2033 it’ll be a parody or be like 50/50. I hope by 2033 we’re not even going to care about the difference. The only person that’s going to care is the person in the logistic side, that’s having to ship out, you know, the product and understanding where it needs to go. And when, you know, for everything else, it needs to be just all part of the same. And, and as we live in this augmented environment more and more, we’re digital and there’s just going to be a digital layer.
Pretty much everywhere we go that’s going to add information or context or opportunity on everything we see and do, that’s when we’re gonna really not, we’re going to have a lot of trouble seeing the difference between the two worlds. And, and that’s going to be as much in the physical, commercial spaces as they’ll be in our homes and be in places where we work. It’s, it’s all, it’s, that’s one of the things I say is, you know, as, as for the past 50 years now, we would be much more, surprised by the lack of light in a room. Like we walk into a room and there’s no electricity we’re like, ‘well, that’s odd’. Like, there should be electricity in this room because every room had electricity. I think, you know, we’re going to be going more and more towards that, where we’re going.
If we walk into a space that doesn’t have a digital layer on top of it and we’re going to be like, ‘oh, that’s weird. Why isn’t there a digital layer here? Why isn’t there more information popping up at me about this thing? Or why am I not seeing more context around that? Or where am I not seeing another way to engage with this?’ And that’s where I won’t get a little scientific science fictiony here, but that’s, I think, really where we’re going and we’re already seeing some of that, you know, with some applications that are, you know, we’re using on a day to day basis.
Well, there you have it folks — today we heard from top thought leaders about the future of commerce and the impact technology, data and automation will have on connected shopping experiences.
And a bit of housekeeping before you go – if you’re a retailer attending NRF this year, join us in dining on the top of NYC’s first-ever Neiman Marcus for a RETHINK Retail dinner sponsored by Valtech, commercetools and FRCH Nelson. Per our sponsor agreement, please note attendance for this dinner is limited to retailers and brands only. RSVP at rethinkretaildinner.com.
We’ll be back next week in our normal format to explore what’s new in the world of retail — until then, thank you for joining and welcome to 2020.