Transcript

The Store Is Media

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Andrew Gaffney:

Hello everyone and welcome to the next session of the Connected Consumer series. My name is Andrew Gaffney. I’m the editorial director with Retail TouchPoints. I’m really glad you could join us for this next session.

I’m really excited for this next session, not only because we have a great speak in Doug Stephens from Retail Profit, but I think it’s also a real pivotal topic. As long as we’ve publishing Retail TouchPoints over the past decade, there’s been a lot of discussion around the changing role of the store. The beginning it was changing on how the store played a more critical role in omnichannel and how the store needed to become more digital and a lot of context and conversations and it’s viewed as almost the store is just sort of an expense model. I’ve had the opportunity to hear from Doug Stephens before. I think you’ll get a lot out of today in looking at the store as really an optimal place to tell your brand story.

The other really pivotal point of today is that your frontline associates are also really key in relating that brand story and I think I’ve got a lot of interesting ways to relate that to your business today.

I want to thank Axonify. They’re helping us bring this content to you today. Axonify is a communication and training platform designed specifically for the frontline of retail.

So to cover some background, we’re going to try and make this session as interactive as possible. We’d love for you to share any comments on social media. We’ll be monitoring LinkedIn and Twitter. We’re going to ask that you use the hashtag #CCS19 so we can help identify and re-share some of those posts. You’ll also see the handles for our speaker if you want to include those in any of your social posts.

A quick background and reminder, all the series sessions are being hosted by Retail TouchPoints. A quick reminder, if you’re not already a subscriber, we encourage you to join more than 45,000 of your peers in the retail space. It’s a complimentary publication. We provide a lot of great content including some proprietary research on trends in the retail space. We cover a lot on omnichannel and a lot of related topics that you’re hearing throughout the series, including a lot of what Doug is going to cover today. Also check us out on social media. We’ve got a pretty big presence on Twitter and LinkedIn and a lot of great relevant groups and conversations that you can take advantage of over there as well.

A quick reminder also, as part of the series, as a registrant of the series, you’ll have the opportunity to win some cool prizes. The more sessions that you register for and attend, you’ll increase your odds of winning those prizes including Airpods and Starbucks gift cards and also opportunities to win free tickets to our Retail Innovation Conference which is coming up next month in Manhattan. So be active and I hope you’ll get a chance to win.

Some quick housekeeping points. On the ON24 platform that we’re using here. We’d really love you to type in any questions that you have. We’ll get to the questions at the conclusion of Doug’s presentation. You can also monitor social media right within the ON24 platform. There’s also interesting resource that’s related to the topic. I encourage you to check that out as well. Also, just a quick reminder, at the end of the presentation, you’ll get a quick survey. We’d appreciate it if you’d take a minute to fill it out and offer your feedback. That’s helpful for us and makes sure that our content is strong and on-point in the future.

So without further adieu, I’ve mentioned Doug Stephens. I’ve had the opportunity to hear Doug speak and I think he’s really one of the leaders in the retail space. Doug is the founder and president of Retail Profit. He’s one of the world’s foremost retail industry futurists. His work and thinking have influenced many of the best known international retailers and brands including Walmart, Google, L’Oreal, BMW and many others. Prior to founding Retail Profit, Doug spent over 20 years in the retail industry holding senior international leadership roles. Doug is also the author of two bestselling books. One is The Retail Revival: Re-imagining Business for the New Age of Consumerism, and another called Re-engineering Retail. I would encourage you, if you haven’t had an opportunity to check those out, to definitely do so.

Doug is also the nationally syndicated retail columnist for CBC Radio and sits on multiple corporate and academic advisory boards. His unique perspectives on retail and business and consumer behavior have been featured in many of the world’s leading publications: The New York Times, TechCrunch, Financial Times, the Wall Street Journal, Fast Company, and many others.

So without further adieu, let me welcome Doug. We’re excited to have you here today and thanks for joining us.

 

Doug Stephens:

Andrew, thanks so much, and thanks to everyone that’s joining us on the line today. I know what a precious commodity your time is and so I really hope that we are going to make it worth that time. What I hope to do today is give you a different perspective, a different lens perhaps, to look through as you’re trying to navigate this retail future that we’re moving in.

The number of stores that closed in the United States just between 2017 and 2018, 13,614. I’m not going to go into who the victims were and why the stores closed. You all read the headlines just like I do, so you know some of the usual suspects here, but really the key thing about this number is that those stores simply do not exist anymore. The turbulence is not over. We have this year, we are currently tracking at about 4,800 stores that are bound to close. We believe that that number could balloon by as much as 50% by the end of the year. So clearly there is something very, very powerful happening in the marketplace and I think we need to understand what that is.

So a good starting point is here. In 2018, we know that about $2.9 trillion dollars was transacted in the retail market in terms of E-commerce. Now the $2.9 trillion dollars may not mean very much to you because you don’t have much to compare it to, but what should really kind of blow your mind about that number is that it’s a 22% year on year increase. It wasn’t that long ago in the grand scheme of things that if we saw 22% increase in anything in the retail, bearing in mind that all retail grows at about an average of six percent annually, so if we saw a figure of 22%, it would blow our minds. But now, this is just becoming the status quo. Every year we’re seeing these quantum leaps forward in terms of E-commerce growth.

But every now and then something happens that sort of blows my mind once again. Last November 11th, it was this. I don’t know how many people on the line are aware of a thing called Singles Day in China. It happens every November 11th of every year and it’s essentially a shopping holiday analogous to something like Cyber Monday, a day that Asian consumers and increasingly now, global consumers are encouraged to go online and buy all kinds of things from brands like Alibaba.com. So last November 11, 2018, in the wee hours of the morning while we here in the West slept, Alibaba.com alone sold $10 billion dollars worth of merchandise in the first hour of Singles Day. That’s the first 60 minutes of Singles Day.

I had to wrap my head around that. I got out a calculator and figured out that that’s about $167,000,000 dollars a minute for every minute of the first hour of Singles Day. Just to put that in perspective for you, that is essentially what four Home Depot stores sell in a full fiscal year. Alibaba was clocking that in every minute of that first hour of Singles Day. They finished off the day at about $31 billion dollars in sales and just to give you some perspective on that, that’s essentially twice the market capitalization of Tiffany & Co, in one day.

That is the magnitude now that we are dealing with in terms of online sales. We know also that companies like Google are also victims in this transition. 66% now of product searches no longer begin on Google. They begin on Amazon. Amazon has essentially become the cognitive default for product search in the marketplace. Just to show you even a more profound figure perhaps, is that when consumers know exactly what they’re looking for, in 76% of cases they go directly to Amazon. They bypass every other search engine. They bypass every other retail website and go directly to the big orange smile.

We talk a lot about Amazon. I know Amazon takes a lot of oxygen out of the conversation in retail today, but frankly I look at Amazon as really just being the end of the beginning of E-commerce. I think that when we look back 20 or 30 years from now, we’re going to recognize that within the history of E-commerce, Amazon was really just chapter one. I say that largely because E-commerce as we know it today is still a relatively rudimentary practice. It’s a relatively simple format. We point and click at pictures. It’s not very social, it’s not very immersive. Certainly Amazon is not a great engine for the discovery of products. It’s very efficient when you know what you want.

Going forward, when we look at how much of the opportunity is currently being tapped, you recall I said about $2.9 trillion dollars is being transacted online, but here’s the global opportunity. It’s about $27 trillion dollars worth of retail market out there for the taking. So I think that we are going to see E-commerce companies over the next decade or so now beginning to turn their attention to the more difficult things to sell online, the things that require more consideration, higher touch, higher value items.

What we’ve seen over the last 20, 25 years is really the easy stuff: books, electronics, some apparel items, things that are easy to index, easy to ship and easy to order online. Going forward though, we’re going to see the convergence of a number of different technologies that once they begin to conspire and mature, I believe we’re going to see E-commerce levels rocket to a level that we’ve never imagined.

Right now we know that about 80% of all retail transactions are being influenced somehow by digital. Now that may be something benign like looking up an address or a phone number. It may be something complex, like ordering an automobile from Alibaba.com on Singles Day, of which they sold 100,000 automobiles. It gives you some sense of the facility that people are looking at mobile with. We’re going to see that facility increase as we go forward. Already Levis, for example, is using chat bots through mobile as the frontline of their customer service efforts. A chat bot actually guides you to the basic product categories that you’re looking for. Other brands like L’Oreal are investing in startups like ModiFace that allow you try their products on using augmented reality.

According to Google, about 50% now of shoppers are actually inspired to purchase just simply from an image and brands like Instagram for example, are capitalizing on that now by building checkout right into the app so that you no longer have to leave Instagram in order to make your purchase.

We’re also moving forward, I think, into what I call, the replenishment economy. About 50% of the things that we buy in our lives, we buy repetitively and routinely. We’re not making judgments about brand or quantity. These are just things that we buy all the time. So right now we know that there are about 25 billion connected devices on the planet and going forward we expect that that number is going to absolutely explode to about 500 billion connected devices, at least according to the chairman of Cisco.

We’re already starting to see the advent of some of these things in our lives. IoT connected appliances for example, that are monitoring our consumption. They’re monitoring what products we have on hand and in some cases actually constructing orders. We’re going to also see the advent of smart packaging, packaging that actually understands how much contents it has in it and will actually trigger a reorder for your approval when it falls below a certain level.

Just to show you how crazy this is becoming, this is an illustration from a patent application that was submitted by Walmart. Now we’re talking about Walmart here, the folksy little company from Arkansas. They applied for a patent for this device, which according to the patent, is an automated store. This store, according to the patent, would actually go directly into the consumer’s home. It’s a step-in structure. It is sensor driven in terms of its sales and replenishment, so think about a minibar on steroids. You take something and you immediately get charged for it. It becomes predictive in terms of inventory selection and starts making recommendations and then it is simply serviced on a regular basis by Walmart. Walmart brings you exactly what you need.

So this whole notion of going to the store to buy 25 pound bags of dog food and detergent and light bulbs, those kinds of things, I believe, are simply going to come to us over the next 10 years. We will no longer shop for them.

We will see the entire complexion of online shopping change over the next 10 years or so. As I said, Amazon is a very efficient tool, sort of like a chainsaw: it’s not very pretty to look at and it’s not much fun to use, but it’s very effective if you know what you need to do with it. But going forward, we’re going to start to see more and more technologies coming to the retail market that offer a more immersive, more social and more interactive experience.

One company, of course that I’m watching, and I know that a lot of people are, is Magic Leap. This is a startup based out of Florida and one of the highest funded startups of all time if not the highest. They have about $2.3 billion dollars in seed funding right now. Brands like Alibaba and Google are investing in them. What they create is a technology called mixed reality, somewhat like augmented reality and kind of like virtual reality, but instead of the technologies that those use, this actually projects images into your eyes and lets your brain become the processor to figure out what is real and what is digital.

They recently launched a demo program with Wayfair where they allowed Wayfair to create a platform whereby by using the device, the consumer can look at these small room sets right within their own home and then they can pull objects out of the room sets and place them around their home at scale and get ordering information, get product details, read reviews, again, all in the comfort of their own home.

So when you start to put all of this together, the increased usage of mobile and all of the various apps and platforms that that involves, the replenishment economy, this notion that more and more things in our lives are simply going to come to us and the devices around us are going to monitor and measure our consumption and then coupling that with this new frontier of immersive online shopping, it’s my belief that by as early as 2033, what we could actually see is that the online retail economy becomes larger than the offline retail economy.

This is really I think a point in time that we as a retail industry have to start getting our heads around the purpose of the store going forward because when you think about it, really from the mid-1800s and the grand department stores of Europe and Le Bon Marche, etcetera, all the way through the big box and to the outlet malls of Ft. Lauderdale, Florida, not much has really changed in retail. Fundamentally we still plan and build and manage and even measure retail stores the same way we did in the midst of the Industrial Revolution. I simply do not think that that can be the case going forward.

I know that there’s a lot of talk in the industry around omnichannel almost kind of ad nauseum. I think we’re all getting tired of the word, but what really bothers me about omnichannel is I think it’s almost sort of a shrugging of the shoulders by the retail industry and saying, “Look, we really don’t know exactly what’s going on, so let’s just call it all one big channel. Let’s just say it’s all one big experience for the consumer.” I don’t really buy into that mostly because I feel that it kind of dumbs down what’s actually happening.

So I don’t like to use the term omnichannel or seamless or frictionless or harmonized. I think that there’s actually something a lot more complex happening in the market but it’s also something that is way more exciting, way more optimistic in terms of the future of not only stores, but the future of retail.

So here’s my theory and take it for what you will, but my belief is that what we are actually witnessing happening in the market today is that media, in all of its various forms, is becoming the store. Let me just explain that. Let’s go back 30 years.

Thirty years ago, you opened a physical store really for three reasons: to merchandise products, to offer product information and facilitate purchase. Apart from mail order or catalog sales, that was your only option if you wanted to present yourself in a given market. But now if we think about it, media, in every form, does all of that, whether it’s a connected magazine ad, a branded YouTube video, my smart TV an internet thinks connected device in my home, brands can now merchandise more products, they can convey more product information and they can transact in a heartbeat through media. Media is actually becoming a more robust and a much, much more efficient means of doing these three things.

So if we look at Amazon for example, in terms of selection, if I want to buy shoes, Amazon has 1,300,000 pairs of shoes. If I need product information, well there’s 67,000 reviews on this one sneaker. So we come back to this nagging question, right? Why would any brand decide to have stores? Why would any brand be out there building stores? Clearly most brands are closing them. So what’s the new purpose of a store?

My belief is that the exact opposite is happening with physical space. Stores, physical stores are now becoming an important media channel for brands. They are turning from being a distribution channel to becoming a media channel. Let me explain that.

If you accept that media is fundamentally effective wherever people have gathered in numbers … Let’s look at that from a historical perspective. So if we go back 1000 years, the gathering place was the Plaka or the agora or the Roman market bazaar. This was the place that people gathered in numbers, they got their news, they got information. It was the hub of commerce.

We flash forward to the printing press and now we have newspapers and this becomes the gathering point. Every day millions upon millions of people are reading newspapers and they now become the hub of information and commerce.

Over time, newsprint becomes somewhat displaced by radio. Radio becomes the campfire that people are gathering around. Then of course, the advent of the television.

Most recently, it’s become digital spaces. Digital space is where we are now gathering in numbers but the problem is with that is that this is a very, very crowded space. Even though companies are now investing more and more money in digital, the returns are significantly less. In fact, I saw one recent study that said that just in the last year there was about a 45% increase in digital spending, however, the return on that was only about an 11% increase in traffic. So we’re getting to a point of very, very marginal returns.

However, my belief is that these spaces now, these physical retail stores are the new gathering point. We see this happening all over the world. This is from Melbourne, Australia, a new opening of a brand new sneaker store called Sneaker Boy. It was absolutely unbelievable. They had thousands of people there and they had to literally direct traffic with bullhorns. If you go through the streets of New York now, you don’t have to ask anybody what the cool stores. You simply walk around the city and you’ll see the lineups waiting outside to get in.

Starbucks is a great example. I looked up some stats recently and I was kind of blown away by this. I figured that based on the numbers, Starbucks is getting about 98 million people a week going to their stores. When you compare that to the New York Times Sunday distribution, that’s about 2.5 million people a week. Now we all know what it would cost to take out a full page ad in the New York Times. We recognize the impossibility of scaling that, yet Starbucks has 98 million people a week in their stores. I ask you, which is the more powerful media channel?

I was recently talking to the head of marketing for a major cosmetics brand and I asked them, “How many people a week do you figure you get through your own brand assets?” And he said as a guess he’d say about 80 million people a week going through. My question to him was, “So, if you were to go to a Madison Avenue agency and you were to say, ‘Look, we want to try and reach 80 million people a week with a very, very targeted message that isn’t just a 30 second pre-roll ad or a banner ad, we want something that’s immersive and actually captures people’s attention for say, upwards of 15 to 20 minutes,’ how much do you think that Madison Avenue would charge you?” This executive’s response was, “It would incalculable the kind of price that they would attach to that,” and I agree. But the fact of the matter is that if we accept that physical stores are indeed a media channel, then you’re already reaching that many people a week. The question is, what message are you delivering and who are the people who you are pinning your hopes to, to bring that experience to life?

So we have to accept that the nature of the role of the people that are working in these stores is also changing. We know from research that nearly half of shoppers now, when they walk into a store believe they know more than the people that are working in the stores. 67% of the time, they don’t even believe that they’re being told the truth. So we have a real problem here.

In terms of the computerization of these jobs, there’s also a lot of movement on that front as well. In 2015, Oxford University put together a study where they looked at the computerizability, if you will, of a number of different professions and they found that there was actually a 92% probability that retail jobs as we know them today, will be significantly impacted by technology over the next decade. We’re already seeing the bleeding edge of that. We’ve seen the advent of robotics being used in chains like Lowe’s Home Improvement. Walmart is using some robots in test circumstances. AI is being used by brands like the North Face and others.

Yet, while one might conclude that, okay, well all retail work is just going to move the way of technology, we also see consumers saying that a knowledgeable sales associate in a store can make a dramatic difference in terms of their likelihood to buy. 72% of people that dealt with a sales associate who is actually using a mobile device or using some sort of in-hand technology said that it resulted in a better shopping experience. 73% would be interested in having a store associate text or email them to actually reach out and make contact with them. So while we see that yes, of course the retail industry is vulnerable to technology in terms of replacing some sales associates, we also know that an upskilled, fully equipped sales associate with the right technology can make a significant difference.

From our research, we sort of determined that there were basically four places where technology can be very, very effective in terms of impacting the customer experience. One is customer identification. Customers are now being trained by online to expect a degree of personalization when they arrive at a website and that expectation is now carrying over to the physical space. So technologies that allow us to identify customers very quickly, understand their purchase histories and be able to sell to them in a more personalized way.

Customer engagement technologies, the ability to have all of the right answers at my fingertips: to be able to check inventory in a single view kind of way, to be able to provide the right product information to that consumer who has already done copious amounts of research.

Associate training and task management, a vital, vital aspect. Understanding that now we’re dealing with a new generation of learners, of adult learners in the workforce for whom technology has always been a part of their lives, so leveraging technology for training purposes is vital.

Then of course, mobile POF. It is simply becoming table stakes in a hurry that you don’t line people up at cash registers. What is really even more striking here is that when we look at the people who are working without data technology or no technology they are about 450% more likely to want to quit, so I don’t need to tell you the inordinate pressure that that puts on cost.

Now, there’s one company in the marketplace I think we can look at and we can say, “Here’s an exemplar of what other companies should be looking to do.” Nordstrom is a very, very traditional business with family roots. They’ve been around for an awful long time, but there’s also extremely progressive and they’re very good at identifying the aspects of their business that they want to enhance with technology. So they’ve been making some significant investments in startups that allow their sales people to connect with consumers in a meaningful way. One of those is called BevyUp and the other is an app called Message Yes. It allows Nordstrom associates to reach out to their customers, to make contact, to make plans to put items into fitting rooms for them and make appointments with them. So it’s taking a fundamental aspect of Nordstrom’s value proposition and accentuating it and underpinning it with technology.

So as we look at this role of sales people going forward, right now a lot of people in retail are engaged as inventory managers, they process people through checkouts, they gather data as necessary for consumers, process returns, etcetera, etcetera, but going forward, I believe that the future role of people in the retail landscape is really going to be that of brand storytellers. It won’t be good enough to just have a little bit or product knowledge. You really have to have solid expertise. These need to be people who are capable of lateral thinking, problem solving, an expert at demonstrating the things they sell and really goodwill ambassadors for the brand.

In terms of mobile training, this has a lot to do with how these people become those brand ambassadors so you really need to think about things like onboarding. How do we onboard people into the company so they really understand the culture and values of our brand. We also have to adapt to new learning styles. I spent an awful lot of time at the very beginning of my career as an educator in the retail industry and I know firsthand that adults don’t learn the way children do. Adults need variety, they need small chunks of information at a time and they need to assimilate skills into their repertoire.

So things like gamification can absolutely help in terms of getting people bought into training and getting them excited about it. Making that training reward based and tying it directly back to compensation and making them in essence, want to be trained. Using a mixed media format is extremely important in terms of offering variety.

We have to accept that we’re dealing with a generation or two now, in the retail workforce, that has never not known the internet. It is the most stimulated generation in history, so to expect them to be staring at a product manual for four hours out of the day is just completely unreasonable so we have to leverage technology to do a better job.

To make it personalized and adaptive. People have different learning capacities. They have different learning styles. So if we can use technology that’s actually personalizing the method of teaching to that individual’s personal learning style, it’s much, much more effective.

It’s also really important that we understand exactly where people are in their training, in their development, in their onboarding process and be able to actually tie that back in a meaningful way to sales using a dashboard of some kind that gives us the ability to make those connections.

Beyond technology, it’s also really important to think about things like agency, giving people the empowerment to make decisions about how to salvage a customer service situation. I know that we talk about Ritz-Carlton a lot. Of course they are a great example of a brand that has given that latitude to their employees to solve problems, even if it costs money. But even brands like Zappos are a great example and Home Depot even gives people the agency to solve a consumers problem up to a certain dollar amount.

Career growth opportunities are vitally important now. In a world where we’ve seen a lot of the rungs in the ladder of development and mobility removed from the retail world, we as brands have to give people opportunities to feel that they’re growing and moving ahead.

Then ultimately perks, benefits, and by benefits, I’m talking most specifically here about pay. We have to make sure that people are paid properly and that they’re paid a living wage. Part of the reason that there’s a lot of urgency around this right now is that this marks the first year, 2019 is the first year that millennials now outnumber baby boomers in the United States. They are now the primary consumer that we’re going after and when we look at the sensibilities of millennials, when we talk to them about which brands would you be less or more likely to shop, we find that brands that have poor service, that is the number one beef among millennials that about 74% of millennials would be much less likely to shop if your service is poor.

But notice what’s just under that. If you’re not paying employees well and millennials find out about that, well about 60 plus percent of them would no longer be as inclined to shop at your brand.

So these are really important decisions now that we have to make about who we’re hiring, how we’re treating them, how we’re onboarding training them and incentivizing them to do their jobs well.

In essence, I guess what I’m saying is in a world where stores now are facing to be an efficient distribution channel for products but are becoming a very efficient and powerful channel for experiences and in essence becoming a media channel, we can no longer have clerks. We can no longer have people on the frontlines that kind of act like computers. We need people that are dynamic brand ambassadors, people that are super users of our products. They have been brought into the company in a very conducive and formal way and they’ve been trained to the utmost of their potential.

I just want to finish off before we go to Q&A with this one image. This is basically the last 100 years of marketing in one slide. What we’ve been trained as marketers over time is that if you put enough media in the top of the funnel, it will result in repeat business at the bottom of the funnel. As I said, it simply does not work. I’ve talked to marketers from New Zealand to Iceland and the Middle East back to New Jersey. It simply doesn’t work anymore. There’s no relationship between how much you spend on media and how much that actually pops your top line, but it doesn’t mean this funnel doesn’t work.

What it means is we have to look at the funnel and use it in a totally different way. What we need to do now is put all of our time, attention, resources and inspiration at the bottom of the funnel, as close to the consumer as we possibly can. In most cases, that first interaction with a human being that they have in your retail space is what will ultimately create this effect. The consumer, if they have a remarkable experience, becomes the most powerful media engine in the entire marketplace.

With that, thank you very much, and let’s go to Q&A.

 

Andrew Gaffney:

Awesome. Thanks, Doug. I’ve heard parts of that in the past but it’s always refreshing for me and always enlightening for me and I’m sure it was for the audience as well, so thank you very much. I want to remind everyone out there, go ahead and type in your questions for Doug. We’re going to spend about 10 minutes going through some questions. I’ve already had some good ones come in, but make sure that you go ahead and type those in and take advantage of this opportunity to get some further insights from Doug.

So Doug, let me jump in. The first question, you mentioned in the past the way we measure retail needs to change from the primarily invest inventory focus to more customer focused metrics. What are some of those metrics that you’re seeing prioritized by retailers to drive this transformation more to the store’s media?

 

Doug Stephens:

That’s a good question, Andrew. So I’ve talked to retailers that are now looking more at metrics like Dwell Time as being as far more indicative of a consumer’s willingness to buy from your brand than necessarily looking at something strict like a conversion rate, how many people crossed the threshold and how many transactions did it result in? So they’re really looking at softer metrics, but they’re now able to measure through technology things like how long did people stay in the store? What was their level of engagement? So how many different products did they engage with or how many human interactions did they have in the store? These now are becoming, I think, primary metrics in some cases for some of the retailers that I’m talking to.

But I think there’s another piece kind of missing here too. If you look at the behavior of some retailers, I won’t name names, but we kind of see some retailers every year going through their stable of stores and just simply lopping off the lowest performing 10%. I think that’s a huge mistake. I think it’s nearsighted because if you appreciate that a store has a media value, and I’ll give you an example: we also know from research that just by opening a physical store in a market, all other things being equal, there’s a 27% lift in a brand’s online sales just by having that physical asset in the market.

So I think we also need to, internally, get together with our executive teams and sort of say, “Look, what is it worth, from a media standpoint to have a consumer in our store? Assuming that we give them a great experience, what is the media value of that? We know we pay cost per click rates online, so let’s try and get at what’s the cost per interaction at a retail level.” That way, at the end of a year, if a business is looking at their list of stores, they’re not just looking at the top line sales or profit that that store generated but they can also add back in a media value. So what is the actual media value of that store in addition to the sales that it generates. Unless we’re taking that into account, I think we’re only looking at half the equation.

 

Andrew Gaffney:

Those are great points. We have another question. You talked about some cool things, mixed reality, etcetera. A lot of retailers are having to upgrade some of the old systems in their store. Training is really critical as you talked about and gave some great insights. How do you prioritize all of the tech investments if you’re a retailer today? What’s the most important? How do you make some of those decisions and have it align with the strategy?

 

Doug Stephens:

Yeah, another great question. The fact of the matter is, it’s the kind of thing that many, many businesses are struggling with. We know, and you certainly know being at Retail TouchPoints, that technology is like a revolving carousel, right? This year we’re talking a lot about AI. Who knows what that will be three years from now. There may be something else that catches our attention.

But the fact of the matter is I think that what most of the businesses that I talk to have not done is the heavy lifting of really dissecting their customers journey. Some have done it in a very general way. They’ve kind of broken that journey out into big blocks, but what we usually prescribe is that a business actually go through kind of an agonizing process of breaking the consumer journey down into the smallest moments and micro moments that they can possibly break it down to.

Then, once you get all of that mapping work done, then the objective is to step back and say, “Okay, where are the moments of truth that really define us and define our relationship with that customer? Where can we simply not fail?” Once you define those moments, then you can analyze each moment and say, “Ah, okay. So in this particular moment when the consumer first makes contact with a sales associate, what needs to happen there? What do we want that consumer to feel? Do we want them to feel it’s a personalized experience? Do we want to be able to understand what their past purchases have been, etcetera, etcetera?”

Once we define what the moment needs to be, then we can make a decision around technology. Then it’s easier to go out to the market to a provider and say, “Look, here’s what we’re attempting to do. Does you technology enable that?” But as long as we’re nebulous around what the net effect is that we’re trying to have and the experience that we’re trying to create, technology just becomes a black box.

 

Andrew Gaffney:

Yeah. That’s interesting. We have another question from Caroline. She said they’re planning to roll out digital initiatives in the future, client telling, and she said what change management services have you seen work for associate adoption?

 

Doug Stephens:

Yeah. So this sort of goes back to the equilateral triangle of benefits. Anywhere where we see that there’s a lopsided value equation between consumers, the brand itself and their employees, we see breakdown in any sort of initiative, not just technology but I would say any corporate initiative. So I think that the key thing is have we balanced the rewards to stakeholders here? I’m assuming that Caroline’s program is very good for customers. The question is, is it also very good for staff? We know that staff like to be empowered. We know that they like to have the right tools at their disposal. Certainly nobody likes going to work and feeling that they’re not doing the best job they can. It’s simply a matter of asking as an organization, “Are we really giving them great tools to do that with or is there a likelihood that things will become problematic for the staff in our stores?” If that’s the case, we tend to see a breakdown.

The other piece of it of course that’s really important is early communication out about the transition. We know that people are fundamentally reticent to change. I would argue that the younger generation now of employees in the retail is probably more open to change. They’re more flexible in their thinking, but nonetheless I think we have to bring them into the conversation very early on and get that buy-in that this is good for the business, it’s great for customers, but it’s also really for you guys and we value you and that’s why we’re doing this. The more buy-in we can get, the more successful it will be.

 

Andrew Gaffney:

Great. A question from Matthew. He’s asking, “Are there any retailers that are starting to upgrade their employees to be more of those brand ambassadors that you talked about?” He pointed out that there would clearly be an investment in that. So any examples that you’ve seen of retailers that have really started to adopt that?

 

Doug Stephens:

Yeah, there are. Some of these were featured in my last book. Sephora is an example, in my opinion, of a brand that has done a tremendous job of really getting brand ambassadors to be part of their team. Just to show you the different plane that these guys operate on, what I learned from them in the course of the research was that it can take up to five interviews to become a sales associate at interviews: five interviews. That’s as many interviews as some people go through to become a vice president in a company. So they have very, very rigorous standards.

They look for people who are not necessarily experienced in retail, but they look for people who are absolutely ecstatic about the products that they sell, they’re very, very immersed in the world of aesthetics and cosmetics and they’re just extremely outgoing people. From there the training programs are very rigorous. Do you remember I said that rewards for training are important? They reward people with product. They assume that these are people that like cosmetics products and they reward them with tons of it for going through training. They really celebrate the human aspect of the store as well by having people that are outgoing and willing to do demonstrations and bring the store to life.

There’s another UK retailer called Mulberry which is a high end fashion retailer. They have done a very good job too of using technology to enable the skills of their employees. So they offer their employee the ability to see an extended catalog of products, a single view of inventory so that if they run into a customer that doesn’t have exactly what they want, they can search through inventory very easily and find it. They have assisted selling tools. They have mobile checkout. So again, a retailer that’s really recognized the equity in their people and have spent what they needed to spend to equip them properly.

So there are some examples out there but I will also say this: according to Forbes, about 80% of retail executives believe in empowering their staff with technological tools and they believe that that will improve their sales and customer satisfaction, however 50%, 50% say that they’ve made no progress in getting there. So the desire is there, but one has to question whether or not companies are actually making the financial commitment to do so.

 

Andrew Gaffney:

Great. A kind of related question building on that from Rebecca: she said, “Can you expand on thoughts of frontline teams building not just on experience but a community? Any good examples of that concept?” Like more community based retail?

 

Doug Stephens:

In community? I’m wondering if that’s community in terms of community amongst the employees themselves or building community-

 

Andrew Gaffney:

Yeah. I guess I’m reading it among the consumer base too.

 

Doug Stephens:

Yeah. Well, it’s a great question. I’ll take it from both sides. I guess in terms of building community amongst employees, there are some companies that I’ve heard of and forgive me, I can’t think of one off the top of my head, but I have heard of situations where companies actually have access to other experts within the organization. So giving that frontline sales association a small number of employees who are widely regarded as being product gurus that they can call on in the minute to get the information that they need, so building community’s product experts can be very important.

I think in terms of building that sense of community among customers, I would look at a brand like REI for example. I think they do an excellent job of really deploying their brand ambassadors within categories to really build that sense of community among customers. I know from experience in talking to them, that they too, take a very rigorous to training, to onboarding and they really look at their people as being not just sales people but really category captains and brand ambassadors. For Rebecca, looking at REI might be a good example of somebody that’s doing a good job out there.

 

Andrew Gaffney:

All right, great. Thanks, Doug. We’re going to take one more question and then we’ll wrap up. A question from Nick and it goes back to tech investments: how do your convince your C-suite that new training and customer tools and initiatives are necessary?

 

Doug Stephens:

Yeah, a good question. This is something that comes up regardless of the kind of change we’re talking about. There’s always usually a question around, “Look, I get it, but I’m trying to convince my superiors and they don’t seem to get it.” I guess there are two ways to look at it: one is to build a cogent financial case for the upside. This is typically what we do, right? We come in and we talk about the cost of the technology versus the return on investment and what that looks like from a customer satisfaction and sales and profit standpoint and that can work.

But I would say to Nick that if that’s not working, if that message is falling on deaf ears, then the opposite can be done too. You can build a scenario based on what will happen if you do nothing. So imagine going in and saying, “Look, if we are not going to make this spend, if we are not going to equip our frontline people with the tools they need, what I’m doing now is I’m painting a picture for you of what our organization will look over the next decade as other retailers, as our competitors begin to upscale and upskill their employees as they begin to deploy more sophisticated technologies. Here’s what will happen to our sales and profit and share of market.” So if the positive message isn’t getting through then maybe we give them a doomsday clock and maybe that will get their attention.

 

Andrew Gaffney:

Yeah, that were great suggestions. Doug, I want to thank you very much. I always appreciate our perspective and I thought today’s presentation was outstanding, so thank you again.

 

Doug Stephens:

Thank you, Andrew. It’s always a pleasure to be with you.

 

Andrew Gaffney:

I want to thank again the folks at Axonify helping us to bring Doug’s content to you today. I hope you all enjoyed it. A quick reminder, you’ll have the opportunity to win one of the prizes from our prize box is to win tickets to our Retail Innovation Conference. I encourage you to check out the agenda there. That will be May six through eight in New York, and you can check that out at retailinnovationconference.com.

Finally thanks for attending. A reminder, this session was recorded so as our registrant, you’ll get a link to go back and check it out. Also, if you haven’t checked out the full menu of sessions, please do so and share with your colleagues. So thanks again everybody for attending and have a great day.

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