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.

November 9, 2020: Primark remains firm on brick-and-mortar, Walmart ditches the robots, Amazon enters the Nordic market.

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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 my guest, Jesse Wragg and Melodie van der Baan. Jesse is the co-founder and managing director at eCommeleon, a software company designed to help retailers take advantage of global marketplaces without becoming overly reliant on Amazon. Melodie is the founder and CEO of Swap Retail, a B2B platform for retailer to retailer inventory exchanges. Previously, Melodie developed extensive experience in both the wholesale and retail sectors of the fashion industry. Jesse, Melodie, great to have you guys on the show.

Melodie van der Baan:
Thank you.

Jesse Wragg:
Thanks.

Julia Raymond:
Well, the first bit of news we’ll, cover because of the timely nature is the US election. The body politic remained on edge during the US 2020 general election and retailers around the nation preemptively prepared for potential unrest. Retailers in popular shopping districts, such as New York Times Square and Michigan Ave boarded up their windows, while the city of Los Angeles shut down traffic to Rodeo Drive from Monday to Wednesday of last week. CVS Pharmacy boarded up stores and areas damaged by unrest in the past, while Walmart boarded up windows in Birmingham, Alabama, only to take them down 24 hours before the election.

Julia Raymond:
Walmart also announced it would be temporarily removing guns and ammunition from sales floors only to reverse course and say it would return items to some locations. Melodie, I’ll pass this question to you first, it’s a tough question. Following the death of George Floyd, we saw countless brands express support for protestors. Could preemptively boarding up windows now reflect negatively on brands that have made past social stands?

Melodie van der Baan:
I don’t believe so. And the reason why I think that it’s acceptable to board up is because if you are boarded up, then you’re also taking a step to prevent a future issue. And I feel like if they’re already boarded up, then nobody’s going to try to do anything. And if nobody has any need to go and break something, then they won’t. And that’s just my personal perspective is an ounce of prevention is worth a pound of cure. And I think as a business owner, it’s really something you have to do is to take your precautions to protect your inventory, to protect your store in general. So, no, I don’t think so. But then again, that’s also me coming from the perspective as a business owner and understanding how important it is to have a store to be able to reopen.

Julia Raymond:
And I liked the phrase you use there.

Melodie van der Baan:
Prevention is worth a pound of cure.

Julia Raymond:
Yep. That makes a lot of sense. And I’ll pass this to Jesse, do you feel the same? And do you predict that we’ll see an impact in consumer spending because of the election?

Jesse Wragg:
Yeah. I actually really agree with Melodie’s points, but there is a big difference between a political statement such as standing behind a movement like the Black Lives Matter versus effectively protecting their assets. Brick and mortar stores across the country have already had a big hit this year and we’re going to continue to have a big hit for as long as there’s lockdowns happening, or people are afraid to go out and buy things in high street stores. So really trying to protect themselves from damaged windows or damage to any goods in stores, I think is just a smart move.

Jesse Wragg:
Especially if these are brands who maybe have a global presence, and might’ve already experienced this with the London riots in 2011. There was a police shooting, which in the UK is very uncommon, but there was a guy called Mark Duggan who was shot by the police and it sparked riots all over London. And there was looting and arson everywhere. To be honest, whether or not boarding up is the way to go. I’m not sure. If anything they’re just providing a lot of kindling for any would be arson, but I think the bigger concern is really the message that’s being sent. And why is it that that’s the norm? Why are we expecting that? That’s I think my main concern with this.

Julia Raymond:
And it’s just been a tough year for retailers, not only with the pandemic, but then at least in the US with the riots and having to board up in the big cities where a lot of the flagship stores exist. And then now again, boarding up for the election. So something has to give for our retailers out there.

Melodie van der Baan:
And you know what? I really think that it’s kind of like if you want to go and make a statement, but there’s nowhere to make that same statement that you made before, then you’re going to have to choose a different outlet. And so if a statement needs to be made, there will have to be a different way to make it. And it won’t be through vandalizing the same places that were. Now that said, I do believe that the vandalizing that happened, I do think that it made a statement.

Melodie van der Baan:
And I think there were a lot of people who did ask why is this happening? Who maybe would not have asked, had it not. And I saw that within my own retail store. One of the girls who works here said that to another girl. And it really showed me, even though as a business owner, as a retailer, in one aspect of my life to say, “Oh my gosh, I would hate for anything like that to ever happen to my store, to my merchandise.” And to be put back so much on a year, that’s already hard enough. And yet when I heard her ask that question and I knew how it came about, I said, “The exact reason that happened is so that you would ask.” And I think that was really powerful to feel the pain of the retailer.

Melodie van der Baan:
And also I don’t know, the movement of Black Lives Matter and how the terrible act of vandalization did get people to ask why. So it was very interesting.

Julia Raymond:
That is, that’s an interesting story. And for our listeners, Melodie referenced, being in her store and you are actually calling in from your retail store in Miami. So I think that’s just interesting to note.

Melodie van der Baan:
Yes. Aside from being a co-founder of SwapRetail and trying to help retailers and brands transfer inventory to mitigate sale racks. I really speak in first person on so many different matters of this year, 2020, and just being affected by the pandemic, by everything that’s been happening and feeling it first, first, firsthand. So yeah, everything comes to me, not as a co-founder of a tech company, but as a real human experience as a business owner as well.

Julia Raymond:
Great points. Let’s move on to the second topic today. We’re going to focus on a large retailer Primark. As the UK considers a second wave of lockdowns, British clothing retailer Primark says it has a no plans of launching an e-commerce site. And despite the growing shift to digital shopping, Primark’s parent company, AB Foods says the company does not sell online because it does not consider digital to be economically viable given the selling price of its products.

Julia Raymond:
Primark saw a 63% slump and full year profit due to COVID-19 and has reportedly stated that a second wave of lockdowns would dent sales by nearly 375 million pounds. That’s huge. Still Primark says it expects full year sales and profit through 2021 to be higher than the previous fiscal year. And they’re currently operating by the way, 11 stores in the US and opening a 12th location in Chicago in the coming months. Jesse, I’ll pass this to you first in the US we’ve seen competitive brands like H&M and Forever 21 trimming their physical stores as consumers are moving more online. With this growing shift, do you think fashion brands can afford to forgo e-commerce?

Jesse Wragg:
It’s funny Primark are a really good example of this type of business, where they simply put their foot down and say, “No, this is how we run our business.” And throughout history, there’s been real successes and real failures with that attitude. And it’s quite funny to look at Primark, but I think it’s also important to see that they’re not on their own. They’re part of a bigger group who are the general group of AB Foods, maybe they’re losing money on Primark, but they also sell tea and sugar. Which in England, they’re probably two of the most purchased products at the moment with everybody’s sitting at home. So I think that they’re benefiting certainly from all the AB Foods group will be benefiting in general, even where they may be losing on Primark. But as far as e-commerce goes, I think Primark, they’ve definitely not ruled it out for the medium term.

Jesse Wragg:
In fact, they explicitly said, “We’re not going to rule it out.” So perhaps in a few years time, we could see them online. I think their general attitude towards online itself is quite questionable, and their priorities are quite questionable. When you look at some of their other attitudes, such as climate change, they’re talking about being that zero by 2050. That’s 30 years away. There’s entire nations promising to be net zero before then. And I think Primark’s simply playing catch up on too many different fields to even consider online as a real strategy. However, on the other side of it, I think, you could also look at Primark as potentially being quite intelligent. Maybe they’re looking at big stores like the Gap pulling away from shopping malls, as it was announced last week.

Jesse Wragg:
And as you said, H&M and Forever 21 are definitely bolstering their online presence as well. It could well be that Primark are working towards a future where they’re the only high street store. Certainly in the UK, they’re lobbying to have 24 hour shopping in some areas where, they expect that in a lot of high streets, a lot of city centers that they know they’d have the demand, and they’re just pushing to try and get a license to be allowed to open 24 hours a day. So I think that’s an another type of commerce, which certainly in the UK and a lot of Europe at least is far-flung from the norm.

Julia Raymond:
So Jesse, you mentioned a few things. You said in some regards to their general attitude towards online is questionable. They’ve also put a really far goal date of 2050 for being net zero. And so they’re playing catch up, but you said on the other hand, this could be a serious strategy that is working towards a future for them, where they could be one of the only retailers left on the high street and being open 24/7 if that gets approved. Melodie, what are your thoughts to what Jesse said?

Melodie van der Baan:
I think if Primark considers their competition to be H&M and Forever 21, that they would need to evolve. Because if you look at who the customer of these two brands are, then you would say that this is a person who is shopping online and they are shopping online all the time.

Melodie van der Baan:
So yes, casually, you might stroll into an H&M or Forever 21, but if you’re looking at a 20 something-year-old, they are always on their phone, they are always shopping. And if you have a good will brand name like Primark, then you already have that awareness. And you already have customers who might be wondering, “Gee, I wonder what’s in Primark this week?” And during a time of a pandemic, why not give them a way to buy online? If you already have a customer, why not give them every sales channel available to be your customer?

Julia Raymond:
That’s a great question.

Jesse Wragg:
It’s a very good point. And I think one thing that you can’t forget with Primark as with every brand, whether or not they want it, their products are already available online. If you look on Amazon and type in Primark, there are products being sold, licensed Primark products being sold on most countries, Amazon certainly on eBay. Whether or not this is authorized, I don’t know. Maybe it’s a ploy from a subdivision of Primark that’s just testing the waters, or maybe it’s just black market sellers trying to make a quick buck, but those products are there anyway. So it’s also possible the Primark is saying, “Well, hey, you know what? We don’t want to use it as a sales channel, but buyers are going there and looking for our products, they’re searching for the products. Let’s at least use it as a marketing channel.”

Julia Raymond:
I would say, if you have the advantage of knowing who your customer is and what they buy, I say, get in front of them as often as you can in any way that you can accommodate them. That’s my belief as a retailer. And if you have the means to do it, like Primark does. But it was very interesting though, I see the parent company being perishable goods. They might just think that they can’t turn it fast enough online, or maybe it’ll move too quickly in one channel and not have the ATS to sell online as well. Whatever their case may be, I would say figure it out and get online and sell Primark directly to their customer. That would be my-

Jesse Wragg:
Such a good point. I think the thing, as well is thought that Primark, it’s easy enough to say let’s just only sell products above a certain price range, or we sell bundles of items and they can come up with outfits or they can sell … there’s enough options out there for innovation. And as you say, they’ve got the clout, they’ve got the resources where they could definitely put a team together and figure out, “Okay, well, how can we actually make this economically viable to do this marketplace thing? To do this online thing?” There’s got to be a way. I don’t believe for a moment that Primark don’t have the access to the resources to make that work. And yeah, I completely agree, they really should be. But also, I don’t know, part of me is definitely happy that they’re not, because I’m not a massive fan of how they operate.

Melodie van der Baan:
Yeah. It definitely seems like they just have some really deep-rooted beliefs that are causing them to stay on the track that they’re on. Because obviously the means is not the reason why they are not evolving or pivoting. So clearly, it’s a deep-rooted belief that is keeping them on track.

Julia Raymond:
Yep. And to Melodie’s point, if you have the data and you know who your customer is and what they buy, that is a huge advantage versus going and relying on Amazon, which we know is notorious for not sharing all the data that they maybe could with their retail partners. And by the way, Jesse, you mentioned Amazon before we started recording. And you said, we should probably mention for our listeners, amazon.com did launch in Sweden, October 28th. And this is marking its first local presence in the Nordics. What are your thoughts on that, Jesse? Are you excited about this, given your focus on marketplaces or are you nervous?

Jesse Wragg:
I’m definitely excited. I think it’s a good opportunity for non-Swedish retailers to enter the Nordics. It’s interesting though, because we saw the same thing happen with Amazon when they opened in the Netherlands a few months ago, back in March. The first days were just filled with translation blunders, where they had not bothered to translate the website properly. And there was a lot of uproar locally from people saying, “Hey, you’re trying to enter a market and you can’t even be bothered to get the listings or the website translated properly.” I think that there were definitely arguments about whether or not this was a marketing push because I saw more people complaining about bad translations than I did actual information about Amazon’s launch. So maybe that was a clever marketing tactic from Amazon.

Jesse Wragg:
It’s a good way to ride the wave. I think Amazon go into countries and they just kind of throw their weight around until local consumers realize that they can buy locally. Just like Dutch buyers were always buying from Amazon in Germany or in some cases, Amazon France, and getting their items delivered to where they are in Holland.

Jesse Wragg:
Swedish buyers have been doing the same thing for a number of years. And now, you’ve obviously got Ikea in Sweden as well, who again, have a fantastic online presence and they’re really sort of reinventing e-commerce in their own unique ways. It’s going to be interesting to see how a Swedish consumer sort of reacts to this. There are a few local marketplaces in the Nordic region, but certainly Amazon going there is going to bring with it a lot of British, German, French, American retailers who are already selling on all of the other Amazons. And I think a lot of Swedish or Nordic retailers in general are going to be scrambling to try and compete and make sure that they’re on there as well, perhaps on a marketplace that they’re not yet familiar with.

Julia Raymond:
So, great opportunity for other new sellers to enter that market. Melody, did you have any thoughts on that before we hop to our last topic of the day?

Melodie van der Baan:
I would say that in a time where there’s a pandemic and sales are down, every opportunity to open up a new door, to open up a new customer relationship is critical. And so, if launching into a new market, like Jesse said, allows new sellers to broaden their reach, I think that’s fantastic. And there’s a lot of people who love Amazon hate Amazon, but truthfully, I do believe there are a of retailers who are benefiting from an online presence, especially while local sales may be down.

Jesse Wragg:
You’re absolutely right about that. I think where people just need to become be careful is to just not become too reliant on Amazon. This is something that I see so often is you’ll have a business that maybe starts off with a handful of products and they realize that Amazon is a great way to sell them. And then suddenly they’re selling hundreds or thousands or tens of thousands of products all on Amazon. And maybe they’ve got a Shopify site or they’re maybe on a couple of other marketplaces alongside it, but still 80 or 90% of their revenue is coming from this one channel. And it might be amazon.com or it might be all of the Amazons around the world that they’re on, but 80% of their revenue is coming from that one conglomerate. The problem is that when you make one mistake-

Melodie van der Baan:
That’s a terrifying place to be.

Jesse Wragg:
Well, that’s it, you mess up once and suddenly your account suspended for three weeks. And you’re not getting any sales in, Amazon’s holding onto all your cash. You can’t pay your employees. Your entire business goes under in a few weeks just because of maybe you forgot to mark an item is dispatched or you forgot to put it on holiday mode and you went away for a couple of days. People make those mistakes and Amazon don’t care. They won’t accept that as an excuse. And so that’s why, I’m a really big proponent of like, yes, marketplaces are great and Amazon is obviously worth being on, but you need to be on as many marketplaces as possible and you need to be doing them all just as well and investing just as much in all of them.

Melodie van der Baan:
And you know what? It’s interesting you say that Jesse, because this has been advice given for as long as time has ever been. If you look all the way in Proverbs written by King Solomon, he says the same thing he says, “Make sure you diversify your portfolio, do not put everything in one basket.” So it’s interesting if you go all the way, way, way, way, way back. That is how it’s always supposed to be, when it comes to running a business or even just your personal finance portfolio.

Julia Raymond:
So funny, it’s a tale as old as time. And yet we still have human error and we get tunnel vision sometimes. It’s funny because we’re talking about one of the big hitters, Amazon and we’re switching to its competitor, even bigger, Walmart. They just made a really interesting announcement. So there’s been a turn of events and Walmart ended its contract with Bossa Nova Robotics.

Julia Raymond:
They have worked with Bossa Nova Robotics over the last five years and deployed over 500 of their inventory scanning robots across Walmart stores. But last week, Walmart said its come up with other simple and cost-effective ways to manage the products on its shelves with human workers, rather than the robots as reported by the Wall Street Journal. The CEO of Walmart, US, John Furner reportedly had concerns over how consumers are viewing the robots and that contributed to this decision. Melody, what are your thoughts on Walmart ditching its shelf scanning robots for human workers? And do you think that’s the real story?

Melodie van der Baan:
The real story I’m not sure about, but I would say the margin for error that they are now about to play with is what concerns me more than anything. So I have a retail store and I see my staff and how they count inventory.

Melodie van der Baan:
And I see things go wrong and it doesn’t matter how hard you try, there’s still going to be a margin for error. So I’m wondering how you’re going to go from robots, who I would imagine have a pretty low margin of error to human beings. And that would be, really, my bigger concern is how much will they potentially lose by switching back to a more human touch in this particular aspect? I question it and I don’t know if it really, you can say people were paying attention to robots in aisles was really an issue. I don’t know, I’ve never been particularly bothered by a robot any more than I’ve been bothered by somebody who gives poor customer service. So, I don’t know if that’s a particularly valid reason to forego the robots. And I don’t know if that’s a wise move to believe that humans can do a better job than a robot at inventory.

Julia Raymond:
So you’re a little hesitant on that. It’s questionable because of the margin of error that is inherent with human workers, of course. Jesse, what is your thought?

Jesse Wragg:
I think it’s a very good point that there’s obviously, humans by their very nature are going to make mistakes. But Walmart haven’t necessarily come out and said that they’re going to be relying on human nature. They’re getting rid of robots, but the obvious middle ground is artificial intelligence. And there are a few solutions out there and Walmart haven’t said anything about this, I don’t know anything really about it, but there are a few solutions out there. I know there’s one company, I think they’re called AKI Logics, which they’re basically operating in exactly this space. They’re trying to basically get the best of both. And it’s AI, which is sort of taking over exactly this area where you can then get that human element of it. And whether it’s humans, because people want to see humans, and you mentioned what is the real story?

Jesse Wragg:
I think Walmart have realized that a very easy way to compete against Amazon is to do right by the people on their workforce. How much bad press does Amazon gap because of the way that their employees are treated? How many people leave an Amazon warehouse after a 14 hour shift on minimum wage with bad back, bad feet, they’ve been running around on concrete and then they go to the press because they can make a quick buck and the press love it because people love to hate Amazon? Maybe Walmart are going, “Well, hey, you know what, let’s actually do the reverse of what the industry has been doing for the last 100 years. Let’s not replace people with robots, let’s do the opposite. And also let’s make their job easy by implementing some artificial intelligence so that they don’t make mistakes.”

Melodie van der Baan:
That would be a wonderful balance if that’s the trajectory.

Julia Raymond:
Well, I think you have a good point. Not only are they maybe involving AI as a replacement, a mix of AI plus humans to replace the shelf scanning robots, but also you said, it’s an easy win at least from a PR perspective to compete against Amazon since they receive so much backlash for how they treat their employees and the low pay. My question would just be, is it really at all about getting rid of the robots to hire humans or are they canceling contracts because there’s a new technology that’s on the horizon? Similar to what you said, Jesse around AI, but maybe it has to do with artificial intelligence through the camera systems that they could deploy in store to help with some of that. So I don’t know, maybe there’s something out there that’s coming that we don’t know about just yet.

Jesse Wragg:
Yeah. It’s definitely interesting. I mentioned that company AKI Logics, I really don’t know too much about that space. Obviously my focus is definitely more on marketplaces. So most technologies that I’m dealing with are sort of order management or fulfillment for that sort of things. But definitely there are quite a few innovating companies in that area. So it’s definitely a space worth watching.

Julia Raymond :
And as we wrap today, Melodie, because you are a retailer yourself and also CEO and co-founder, I don’t know how you fit everything into your day, but what is one thing that you would say is a takeaway from you this year in 2020s, since we’re heading towards the final months?

Melodie van der Baan:
I would say, evolve or die. So, that’s one thing that I would say. So looking at launching SwapRetail this past January, we didn’t see a pandemic coming when we launched in January, we’ve just always been focused on the greatest inventory pain of sale inventory and how that affects the turns of a retailer, their top and bottom lines, and really the brand retailer relationship as a whole for specialty stores. And when the pandemic hit, we kind of went top of mind, because retailers now, maybe if somebody had a little tiny inventory pain before, they have a big inventory pain now.

Melodie van der Baan:
And so it’s been really interesting to see not only myself as a retailer, but all the other retailers saying, “What can I do to progress my business, to mitigate my losses and to advance for the coming year?” And so I would say as a retailer, I enlisted the help of a planning office and buying office because I said, I don’t want to do next year alone. I want to be set up for success because if wave two comes in this pandemic, I need to be ready for it on the SwapRetail front saying, “Which brands do I need to be partnering with that are no longer going to have stock in case reorders are amiss and retailers are in need of them, they’ll be able to work with the other retailers.”

Melodie van der Baan:
And so this has been a major planning year for me. And I have taken all of the times where sales are down or things seem to be dreary or disconcerting and saying, “What can I put in place to really be on the offense and not the defense?” And so I would say evolve or die so that you can choose to run your business in an offensive manner, not a defensive manner.

Julia Raymond :
Good points, evolve or die. That’s so true. And Jesse, what would you add? What has been your learnings? I know you work with retailers at eCommeleon.

Jesse Wragg:
It’s funny. Not to sound like a broken record, but marketplaces. They’re a fantastic resource, whether it’s for retailers or a brand. From a retail perspective, I think most retailers these days are at least on Amazon, or one or two marketplaces, but certainly diversifying into different marketplaces. But then from a brand perspective, a lot of brands shy away from marketplaces because they look at the way that their products are sold on, for example, Amazon by what they may be considered a cowboy retailer.

Jesse Wragg:
They look at it and say, “Oh, it cheapens the brand.” I think what a lot of brands don’t realize is that marketplaces want to make it easy for brands to represent themselves. And obviously with Amazon, you’ve got the brand registry and certainly, with a lot of other marketplaces, you have different features if you are a brand. And brands don’t tend to realize that they can use a marketplace as a marketing channel, rather than a sales channel. Their retail partners probably spend a good percentage of their time every week or every month tearing their hair out, trying to figure out how to sell a product on a marketplace.

Jesse Wragg:
Whereas the brand could actually do a lot of that work for them and everyone benefits. The brands then don’t need to add infantry and the retailers benefit as well. And what it means is that where consumers now going to, e-commerce like crazy, and you’ve got brands and retailers all kind of chasing after themselves, trying to figure out how this online thing works. Marketplaces are a very, very good way to do that. A lot of the work’s been taken out of the process. You don’t have to figure out how to get traffic to this new channel. You don’t have to figure out how to make it all work for you, it’s all done. There are the resources are out there, the marketplaces are focusing on probably 80% of the work. You’ve just got to get your products on there and start selling them.

Julia Raymond :
Absolutely. Meet your customer where they are and evolve or die, and part of that is getting on marketplaces and getting on any channel you possibly can. I would like to take a second to thank you, Jesse Wragg, co-founder and managing director at eCommeleon, and Melodie van der Baan, founder and CEO of SwapRetail. Thank you guys so much for joining today.

Jesse Wragg:
Thank you.

Melodie van der Baan:
Thank you. It was great. To be on.