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.

July 27, 2020: State of the global retail market, Google launches Shoploop, Walmart announces plans to close on Thanksgiving.

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Hosted by Julia Raymond

Written and produced by Gabriella Bock

Edited by Trenton Waller

 

TRANSCRIPTION

Julia Raymond:
Today, we’re joined by guests, Bobby Marhamat and Greg Sterling. Bobby is the CEO of Raydiant, a digital signage provider that helps businesses drive sales, improve the in-store experience, and reinforce brand messaging. Prior to Raydiant, Bobby served as the COO of Revel Systems where he worked on the front lines with over 25,000 brick and mortar retailers. Greg is the VP of insights at Uberall, a marketing company that supports more than 1500 brick-and-mortar retailers globally. Greg has also studied consumer behavior for the last 20 years. Bobby, Greg, thank you for coming on the show.

Greg Sterling:
My pleasure.

Bobby Marhamat:
Thanks for having me.

Greg Sterling:
Yeah, thanks for having me.

Julia Raymond:
It’s great to have you guys. The first bit of news, it’s not our most positive. We’re going to go over the current retail sales a little bit. So retail sales in the US and around the globe saw a big increase during the month of June. In the United States, retail sales climb to 7.5% last month, following an 18.2% increase in May. Economists warn, however, that the momentum may not last long. Since mid-June, the number of daily new coronavirus cases in the US has only continued to grow, reaching a record 71,000 on July 16th. Across the pond, governments in the European union kept daily new coronavirus cases below 10,000 since May 7th. And that’s according to data from the European Center for Disease Prevention and Control. In July, 2020, total European retail sales regained at 93% of trade volume that it had reached in February prior to the COVID-19 crisis in the region. Greg, I want to turn this question to you first. What do you think is on the horizon for retailers in the US and abroad?

Greg Sterling:
I think the US market and Europe may be in different situations for some of the reasons you alluded to, because coronavirus is much more under control there. People are free to go out to brick-and-mortar stores in a way that they aren’t here, or in many places in the country aren’t here. And I think the jobs picture is better in Europe than it is here. We’re on the cusp of unemployment, the supplement running out, there’s discussion about a new stimulus, but that’s not entirely clear. It looks like it’ll happen, but if they pass some more money and give people more stimulus, then we’ll see that show up in the retail numbers. If not, we’re going to see a decline further from what we saw in June.

Bobby Marhamat:
Yeah, and I think just to kind of piggyback on that, I think a little bit of that, but what we will probably naturally see is it will take a little bit longer here than in Europe in my perspective. But we will see some of that V-shaped kind of cycle come back over a certain period of time. I think it’s going to be slower than what it is and in Europe. But overall, I think we’re going to see that come back because part of the reason that I think the cases I’ve kind of gone up here and all that is people want to get out and get back in the groove of things. And I think that’ll happen indefinitely. We have to control it again, be safe, but that’ll happen indefinitely. And we’ll get back up to more of a, kind of a V-shaped cycle if you will.

Greg Sterling:
I disagree with that a little bit. I mean, I think we’re going to have a longer recovery than a V. I think the fortunes of different retailers are going to be quite different from one another. There are going to be some retailers that are pretty successful, that are doing a lot of things right, that are delivering convenience to consumers, a lot of different options. And other retailers that are really struggling. A belief that’s widely held is that the coronavirus has really accelerated existing retail trends or exacerbated them, as the case may be. So we’re seeing a lot of bankruptcies, there’s the belief that many malls will fail, and that there’s a shakeout that has been building for some time that’s really accelerated now.

Julia Raymond:
And Greg mentioning bankruptcy is the parent company of Ann Taylor as seen as the most recent one to file. And that was last Thursday, July 23rd.

Greg Sterling:
Yes. And with more to come. So I think there’s going to definitely be winners and losers and not a lot of those in the middle. You’re either going to survive and be successful and make it through or you’re not. There aren’t going to be too many people limping along, I think.

Bobby Marhamat:
Yeah. I think it’s going to be a little bit of a shift. I agree there, but I think the shift is as we’re talking to a bunch of retailers, part of… And actually even eCommerce players, part of it is I think we’re going to see smaller footprint stores come out of this. I think we’re going to see kind of malls look different, if you will. But we’ve even been talking to eCommerce players that are envisioning and talking about opening up smaller footprint stores and taking advantage of post pandemic, taking advantage of people wanting you back into store locations. So at least that’s the perspective that we’re hearing.

Greg Sterling:
I think people do definitely want to get back into stores. It’s interesting, the buy online pickup in store phenomenon. I think according to Adobe in April, there was more than 200% growth. And then as in May, as stores started to reopen, that leveled off a bit, as people went into stores and weren’t ordering things online as much. But I do think that there’s a kind of a new hybrid model that’s emerging where it’s almost as though the relationship between the store and online has flipped a bit. And I’m a big advocate of traditional retail shopping and traditional stores having worked in the local space for a long time. But I think in the past, people would go out, they’d go shopping. Online was an important part of their experience, but it was not necessarily the first thing that they would do.

Greg Sterling:
There were a lot of people who would just go out and shopping was a form of entertainment. You’d go from store to store if you didn’t find what you were looking for. Now, I think people are being much more focused. The internet is the first point of contact. And very often, they want to understand if something is in the store or they want to buy something online and get it curbside. And I think that that’s a shift that will persist, maybe not to the degree that it does when people are locked down. But I think we’re going to see this sort of hybrid online, offline model take hold in a more profound way than it has.

Julia Raymond:
Mm-hmm (affirmative). And Greg, you mentioned the middle is the place where retailers might not last. And that reminds me of our friend, Steve Dennis, author of Remarkable Retail. And he always alludes to the boring middle and how there’s a lot of tension there. Just throwing this out there, do you guys think that department stores will live on post-pandemic?

Bobby Marhamat:
I think we’re going to see them look a lot different. I think the ones that innovate… Actually just kind of talking about this with a group that we’re speaking to right now, but what it’s going to look like, it’s going to be smaller footprint stores. And I think there’s going to be some store-within-store elements that come out of this, where people can go and kind of experience maybe buy online, that convergence of online, offline, I think is going to be key. But I think some are going to live on and the ones that live on are going to have to adapt pretty rapidly. They’re going to look different.

Greg Sterling:
Yeah. I think it’s pretty tough because you’ll either have to be a discounter and people will shop you for price or you’ll have to provide some really enhanced experience that makes the store a fun, engaging, interesting place to be. And the Kohl’s of the world, the JC Penney’s of the world, are really going to struggle. Macy’s also, I think, even though Macy’s will probably survive. And I think one of the other things that happens is that because of the instability of retail and every brand now a direct to consumer brand in a different way than they have in the past. Where some brands, their primary channel was a store and their secondary channel might’ve been online, I think now online has to become front and center. And they’re selling equally online as they are in the store.

Julia Raymond:
Mm-hmm (affirmative). And DTC is a big trend as well. Do you think that’s one of the most important models that we see today because of all the changes with the pandemic?

Bobby Marhamat:
I think a direct to consumer is going to be something that does naturally become kind of more front and center, if you will. But I do think it’s especially apparent in the brands that have adopted curbside technologies and all that. I think curbside and other technology, direct to consumer will go up percentage wise as what they were before. I think people are still going to want to go back in store, and people are still going to want to have those experiences. I think that Greg’s point is there’s either going to be the brands that sell on price, or there’s going to be brands that create those great experiences.

Bobby Marhamat:
I think, as we were talking about that middle layer kind of goes away. If you can’t figure out where you fit and you can’t figure out how to interact with your customers, you’re going to be in a bad place. But I think if you can figure out those two things, I think although technologies that are used right now, online, eCommerce, curbside, all that good stuff that’s being utilized more so than ever is going to have a higher percentage point, but it’s not going to overtake in my mind.

Greg Sterling:
I’m the guy here who’s who seemingly defending eCommerce, and that’s not exactly my perspective. I mean, I’m a big advocate of stores. And I think people want the experience of touching, feeling, seeing products before they buy them. They want the immediacy that the store provides in terms of getting the product the same day. And so I think the stores that can do it right, that can offer convenience, that offer online curbside pickup, real time inventory, things like this, are going to win. Stores become fulfillment centers for online transactions. They become return centers, but I think the store combined with a great online experience is the winning combination. I think it’s challenging to pull it off. And a lot of people won’t be able to do it.

Julia Raymond:
Great points, Greg. And I think that you guys are a little bit aligned in that the in-store experience is not going away. And Bobby, with your company, Raydiant, being a digital signage provider, are you guys in talks about, or do you already do this maybe, where voices is becoming a hot topic once again? Because people don’t want to touch things as much, or the screens are interactive, using AI with the cameras, or what are you guys talking about when it comes to that?

Bobby Marhamat:
We see a couple of different things. A lot more screens are going to be used for education as people come through. A lot more screens are going to be used for pushing out kind of safety information. There’s definitely voice and basically being able to interact with a screen to get more information , that’s definitely here in the future. And we’ve also recently come out with kind of a virtual cashier, virtual expert, the type of technology where you can interact with someone. Let’s say, for example, you’re walking down the aisles of a Lowe’s and there’s maybe no nail expert there. You can interact on screen with a nail expert sitting in corporate or wherever else, and be able to have that interaction.

Bobby Marhamat:
To Greg’s point, I think the footprint is going to be a little bit smaller. I think there are going to be return centers and fulfillment centers, but I do think there’s going to be the interactive education piece that happens also in the touchless environment. And I think a lot of that technology is here to stay.

Greg Sterling:
If I can make one final comment on this, I think what we’re seeing, and Bobby pointed this out about the store experience. I think what we’re seeing is digital coming into the store more and more, this has been talked about for a decade or more, but it’s really happening. And that’s what consumers are going to be engaged by and what they’ll come to expect. They’ve used mobile phones in the store for a long time. And trying to also bring more of the store experience online, like with augmented reality, 3D views of products like you get on the Macy’s website or the eBags website. And those are much more engaging, trying to bring much more visual information, much more kind of concrete, tangible, sense of products into the digital environment. So it’s sort of a cross pollination effect.

Julia Raymond:
Mm-hmm (affirmative). And this is a great segue, Greg, you said “bringing the store experience online.” That’s huge right now.

Julia Raymond:
As mobile increasingly becomes a major component of the purchasing journey, there are two tech giants looking to bring video shopping more into the mainstream. Announced last week, Google’s R&D division Area 21 is launching Shoploop, a video shopping app that helps consumers discover new products, in, get this, 90 seconds or less. Shoploop users can swipe through short-form video clips that are detailing products. And if an item piques their interest users can then either save the item or be linked directly to the product’s webpage.

Julia Raymond:
Also entering the video shopping ring is Amazon, which on July 16th, added live streaming to their existing influencer program. Facebook also quietly entered the space last year when it acquired video shopping startup Packagd, and the team is reportedly now working on a project for Marketplace. Although new to the scene. Well, newer to the scene in North America, video shopping has played a major role in the Chinese eCommerce marketplace over the last few years. We had David Adelman on the show. He’s a retail strategist and president of T.A.G., And he told rethink retail that video shopping accomplishes, “Personalization, coupled with brand trust, which will be crucial elements to success moving forward in all channels.” Bobby, what is the potential appeal of Google ShopLoop model over others in this space? It sort of reminds me of TikTok or Instagram shopping.

Bobby Marhamat:
Yeah, I think it’s great. I think we’re going to see, of course, as we’ve seen, human attention spans were the lowest ever. And as we see a fun element together with really video, I think that’s going to be what it takes to be able to interact with more consumers and be able to sell more product here. So I think it’s the right product at the right time in the industry.

Greg Sterling:
I think that the concept is right. The problem with the Google Area 120 projects is that they often don’t do much to promote them and they wind up being shuttered a year later. So I think that it’s conceptually right. And I think that the younger audiences definitely will respond to it. So there’s no issue there. It’s just, I think the question is it feels a little bit like a “me too” product and will it be able to rise above some of the noise? That’s the only question in my mind, will it, will it be sustainable for Google? Because they just came out with this thing Keen, which is sort of a Pinterest-like product from the same group. And it’s not for retail per se, although you could use it to save products. And I just think it’s interesting, it has promise, but it’s kind of “me too,” and it’s going to disappear. And I think that often happens with a lot of these so-called Google experiments.

Julia Raymond:
Mm-hmm (affirmative). So Bobby, you said right product, right time, Greg, you said conceptually right, but we’ll see about the execution. Sometimes they don’t promote products as heavily. There’s a big competitive landscape. Google is a huge player, but so is Facebook and Amazon, some of the other ones. So it’ll be interesting.

Bobby Marhamat:
Absolutely. And I think even not particularly just ShopLoop, but I think video in the next few years is going to be bigger than it was and perspective there is even in-store. We’re seeing kind of a lot of brands go in-store and put if it’s a QR code that ties into a video that tells people more about that product, tying that in to be able to create more, A, the experience, but also the education factor. So that’s the in-store environment. But I think out of store also it helps you discover a new product. So I agree with Greg in the sense that they have the right vision, but are they going to execute on that? That’s to be known, but I think video in general is going to be something that takes off in the next few years.

Greg Sterling:
Yeah. I encountered a company. A company called Cooler Screens. And they have a deployment in Walgreens, the cold case where you have ice cream, and snacks, and carbonated beverages, and alcohol, have these had these see-through doors. And they replaced them with digital screens that actually mirror the inventory in those cases, but they can also run ads or any kind of dynamic images and video on those screens that can be seen from across the store or up close. It’s a pretty interesting digital interactive experience in the store. And I thought of it because of the sort of broader topic of video and so it’s pretty intriguing as a customer experience that incorporates video.

Julia Raymond:
Totally. I love that example, Greg. And do you think this might become mainstream? Because I believe they do have a lot of this technology implemented in China and some of the APAC region, but do you think this will become commonplace and our gas stations and grocery stores, even?

Greg Sterling:
I would say if the engagement numbers are consistent with what I’ve seen from the company, then yes. People seem to be more engaged. They’re selling more. One of the executives from the company was telling me… I have no relationship to this company. I just had an interesting conversation. One of the executives was telling me that they even saw a lift in sales on branded products from these companies that were represented on the screens elsewhere in the store. So it’s pretty interesting. So yes, I think where the ROI case is proven, we’re going to see more deployments like that.

Bobby Marhamat:
I think that some brands are even thinking about ways to do this kind of in their storefronts. Like “How do I put up screens where even when I’m closed, people can see new product? Maybe they see it in my storefront, they can scan something, they can go interact on their own phone, learn more about a product and all that queso.” So I do think it’s, again, using video in this fashion, using digital technology in this fashion also, we’re going to see more of that even happen in the storefronts as we try to interact more consumers.

Greg Sterling:
When QR codes were kind of more of a novelty, they sort of were hyped and then they sort of died down. And now they’re kind of coming back. But I can remember seeing out of home ads, giant billboards that had QR codes on them. And you could interact with that billboard through your phone with the QR code, if you could capture it, which you could in most cases. And I thought that was pretty cool. It’s not video, but it’s an interactive element in a traditional ad context. And so I totally agree with Bobby that more of these digital elements, and video in particular, will be coming to traditional retail settings.

Julia Raymond:
Mm-hmm (affirmative). And potentially grocers who run already on thin margins and even more so with the rapid adoption of grocery delivery services and things like that. So it might be also a way for them to monetize some of their existing space and make up for some of the loss margin, but we’ll see. So great. I will move on to the third topic today. I feel like we bring them up a lot recently. It’s Walmart.

Julia Raymond:
So they’re back in the news cycle. The retailer announced it would be issuing another round of bonuses to its employees and they revealed last week, it would provide between $150 and $300 to Walmart employees. So they also announced, this is pretty big. They are keeping their stores closed this Thanksgiving 2020, and ending it’s Black Friday head start for the first time in over three decades. John Furner, president and CEO of Walmart US, said the decision to close its retail stores on Thanksgiving serves as a thank you to Walmart’s employees for “stepping up during the trying year.” Greg, what do you think about Walmart’s decision to keep the lights off this Thanksgiving? Do you think other retailers will follow suit?

Greg Sterling:
I do think so. I mean, we don’t know exactly what the world will look like at the end of November, but it’s a safe bet in coronavirus hotspots that we’re still going to have some version of what we’ve got now. I don’t want to be cynical about the decision. I think it is a nice thing for the employees. Employees generally didn’t like working on Thanksgiving. And I think it was of limited value to the retailer. So I think Walmart scores a bunch of points with its employees and presents itself as a compassionate and thoughtful business. So I think it’s positive and others will probably embrace this.

Bobby Marhamat:
And I think naturally with some of the sales game being pushed online eCommerce, mobile, XYZ, there’s a level of that where they’re probably assuming that a lot of shopping will still happen on those formats. And the store environment is probably not going to have that much traffic to begin with. So I think it’s nice to have for employees, but it’s also in my mind, it’s a strategic move as well.

Julia Raymond:
So you said it’s a strategic move, and Greg, you said it positions them as a compassionate and thoughtful business. Perhaps there is a little bit of a play there, because I think if they were making tons of profit the day of Thanksgiving, they would probably keep it open, but who’s to say, right?

Bobby Marhamat:
Yeah. And I think a bunch of [inaudible 00:24:35], a bunch of sales will happen regardless. Well, it depends. It depends on how people interact, but they can interact online, mobile, even during Thanksgiving. I think it’s one of those messages that’s a feel-good effect to the consumers. It’s definitely feel-good for employees and they’re probably betting that they will be able to either make more or make the same amount by closing down stores.

Greg Sterling:
Yeah. And eCommerce has been growing dramatically during that whole Black Friday weekend period. So I think that they’re going to see a healthy online sales. So it’s almost a no brainer for them at this moment.

Julia Raymond:
Well, do you guys think that this season will be different because just last season, 2019, there were rumors that Black Friday could potentially be dying in a sense? And the doorbusters are no longer better in-store. It’s the same price online, so why go? Do you guys think that we’ll see a decline or it will just be extended and almost cyber Monday will be the big hitter here?

Greg Sterling:
I think that the sales are distributed across the weekend and many people seek to avoid the mania and craziness of the Black Friday crowds. I mean, again, this year is a very different year, but yes, it had been losing momentum and it had been leaking to other days. And you’re very correct about the benefits of going into the store are greatly reduced. I mean, I think what’s important here to point out though, is that the store plays a critical role with eCommerce. This is something that I think is, is not well understood and not often talked about, is that stores enable eCommerce. So if you have a store in an area eCommerce sales are going to be really healthy and people have the confidence to buy online because they know they can bring it back to the store.

Greg Sterling:
They might take risks buying things, “Is this going to fit? Will I like the color?” They might take certain kinds of risks recognizing that if it doesn’t work out, they’ll bring it back to the store. No problem. If you don’t have that store there, people are going to be more cautious. And so even though the store is closed, its presence facilitates eCommerce because it gives people the confidence to buy online. And I think that that’s something that has not been talked about a lot, or is not well understood, but I think… Well, maybe it’s well understood by some, but I think among analysts, it’s not well understood. But it’s very important that the store supports and helps eCommerce.

Bobby Marhamat:
And I agree with that. And I think there are certain industries that will take a little bit more of a hit than they would if we were completely open. I think the apparel industry is one. You can definitely buy online and it’s getting easier, it’s getting better, and you can create those experiences. But I think that’s one of the industries that people still want to go in, they still want to look, touch, and feel, and be able to interact in that store environment. So I think depending on, again, where we are in November, I think different industries could see a shift in buying behavior. I could see shifts in that regard, but I think lots to be seen until we get to that point.

Greg Sterling:
I totally agree with you about apparel. I mean, I, as a personal anecdote, I have this peacoat that I’ve had for years and I really like it, but it’s kind of worn out now and I’ve been trying to replace it and I’ve made maybe four or five online purchases of coats that look good, sort of resembling the one that I had from different brands. And they come in the mail or UPS, I try them on, they don’t fit. And it’s just so frustrating. And so I’ve stopped doing that because I only now will buy clothes online that I know fit because I’ve bought them before, I’m familiar with the brand. But I think Bobby’s right, is that, is that, eCommerce cannot totally replace the store. It’s a compliment to the store, but it’s not a replacement in many cases.

Bobby Marhamat:
Yeah. I agree. Totally agree. Totally agree. And I think, Judy, to answer your initial question of Black Friday, and just that Thanksgiving weekend, Cyber Monday, all that good stuff. I think, again, because consumers have had to shift even more so than they have, brands have had to shift, I think we’ll see things be different. But do I think sales are going to be down across the board? I mean, a lot is also dependent on the economy and where we are. So there are lots to be seen, but I think if everything kind of is status quo as it is today, I think overall, we’re going to see an okay Black Friday weekend. Again, certain industries are probably going to get kind of harder than others that you can’t go touch and feel. But overall, I think most brands are going to be okay.

Julia Raymond:
Mm-hmm (affirmative). And we will wait to find out. And just saw our listeners, a little reminder last year, US digital sales on Thanksgiving and through Black Friday grew 17%. So that was over $4 billion. That’s according to Salesforce. And then RetailNext report also found that brick and mortar traffic was slightly down by 2.1%. So maybe a slight shift last year to digital, we might see more this year, but to both Bobby and Greg’s points, it’s still important to have stores as sort of an anchor because customers have more confidence as you guys were saying. Bobby, Greg, thank you so much for joining The Rundown today. It was great to have you on and loved hearing your expertise.

Bobby Marhamat:
Thank you much.

Greg Sterling:
Thank you.