This week we welcome Forrester's Brendan Witcher for a wide-ranging, thought provoking and no holds barred discussion of what's most important right now in retail. Among the topics we explore are what strategies are working best, why it takes a crisis for retailers to innovate, the often critical role of physical stores, and the distinction between "disruption" and "destruction" (and why many retailers should be embracing the latter).
Then we move on to our fast-paced weekly segment “Remarkable or Forgettable?” where we give our hot takes on retail headlines, and deem them wow-worthy, best ignored or somewhere in between. This week's big stories include Chewy's earnings, Bed, Bath & Beyond's digital and private label dreams, Kroger's fading tailwind, Nike bids adieu to more wholesale partners, and JC Penney's alleged "green shoots."
As Vice President & Principal Analyst with Forrester Research, Brendan Witcher serves business strategy professionals and is globally recognized as a leading authority on consumer behavior, market developments, technology trends, & solution providers in the digital engagement space.
With 25 years of experience in leading B2C businesses, and having written more than 150 industry-leading research reports for Forrester, Brendan is a trusted strategic adviser to well over half of U.S. Fortune 100 companies — including 8 of the top 10 — that sit at the forefront of driving innovation and digital transformation.
In addition to regularly speaking at industry events, Brendan is sought after frequently for commentary and insights by top media outlets including Bloomberg, CNBC, CNN, NPR, The Economist, Time Magazine, and The Wall Street Journal.
Recent Reports
Building The Business Case For Omnichannel Commerce
It's Time For Retail Stores To Open Their Doors To The Digital Org
Align Strategy And Technology To Deliver Next-Gen Personalization
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Join us to celebrate the release of Steve's new book.
Monday, April 12 at 5pm EST. We'll be joining Trevor Sumner and other retail luminaries for a Remarkable Retail takeover of "This Week in Retail" on Clubhouse.
Tuesday, April 13th at 5pm EST. Join us on Zoom for our Virtual Book Launch Celebration with special guests Seth Godin, Sucharita Kodali and many more. Space is limited, so please register here ASAP.
To order Remarkable Retail click below.
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption will be released April 13th and is now available for preorder at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks and The Food Professor with Dr. Sylvain Charlebois. You can learn more about Michael here or on LinkedIn.
Michael LeBlanc
Welcome to the Remarkable Retail podcast, season 2, episode 10. I'm Michael LeBlanc.
Steve Dennis
And I'm Steve Dennis.
Michael LeBlanc
In today's episode, we're speaking with one of the top retail analysts in the business, Brendan Witcher from Forrester. A wide-ranging conversation, never shy about sharing his thoughts and insights around retail technology, retailers. We talk culture, and how change does, and does not happen with retailers.
Steve Dennis
Yeah, well, as I think we've dipped into a number of times, culture is the thing that gets in the way of a lot of innovation. And you know, in my experience, it's an incredibly hard thing to change unless you're really forced to. And I think COVID certainly has jumpstarted a lot of innovation basically, because, in many cases, retailers didn't have any choice to engage in multiple change. But, that longer term change to respond to digital disruption, changing consumer preferences and all that kind of stuff, it certainly looks if history is any indication that it's, it's pretty hard for most retailers to change as profoundly and as quickly as they need to.
Michael LeBlanc
Well, and as we've often hit upon as almost a theme running like a highway up the center of our discussions is this idea of why it takes a crisis to make change happen. And how do you institutionalize change without having, you know, COVID element scale crisis is that, you know, how do you make that move happen? Right. And you know, it'll be interesting to get Brendan's perspective, because he's, he's been looking at this from all kinds of different angles as well as you writing in the book about it many, many times, right.
Steve Dennis
Yeah, it's certainly been an area of, of interest for, for me for a long time. Unfortunately, it's, it's not so easy to give simple, easy implementable advice.
Michael LeBlanc
Right, right. All right, just before we bring Brendan on, you've got the revised and expanded second edition of your book, 'Remarkable Retail' coming out very soon. You're doing a couple of special events to celebrate. Let's tell the listeners all about it.
Steve Dennis
Yeah, so in most markets, the book is out on Tuesday, April 13th. The night before, I'm going to hijack Trevor Sumner's week, This Week in Retail event on Clubhouse. So, we'll be talking about the book and having some special friends join us. And then the next day on Tuesday, April 13th. Also, at 5pm Eastern, I'll be doing a virtual book launch event on Zoom. We'll have a bunch of special guests, Sucharita Kodali, Seth Godin, and others will join us. You're nice enough to be hosting it. So, we'll have those, those dates to refresh your memory as well as the details on how to participate in the show notes and on social media.
All right, and with that, let's bring on Brendan Witcher and talk about disruption and destruction in retail.
Michael LeBlanc
Brendan, welcome to Remarkable Retail podcast. How are you doing this afternoon?
Brendan Witcher
I'm doing great. Thanks for having me. Really appreciate the time.
Michael LeBlanc
Well, fantastic to hear your voice if not to see you in person. The last, I was thinking when's the last time I saw you? It was sitting in one of those unusual work cubes at the NRF show on the, on the basement, outside the media room. And, I looked over and there you were, you had commandeered one, I think you got there at four o'clock in the morning to commandeer yourself a workspace. But it is great to hear your voice. And again, thanks for, for joining us on the podcast.
Brendan Witcher
Oh, it's great to be here. And yeah, it's an art form navigating the NRF show, right. Once you do it a few years, you start to learn the secrets or the tricks and being able to find someplace to park yourself.
Michael LeBlanc
That's right, navigating the endless aisles so to speak.
Brendan Witcher
That's right, that's right.
Michael LeBlanc
That's right. Brendan, tell us about yourself. Give us a background, about, about you what you do, how you came to, to be a Forrester and what your beat is it Forrester.
Brendan Witcher
Sure, absolutely. So, so I've been at Forrester for about seven years. I cover digital business strategy. And, I lean in on that word strategy a lot, because I'm not a tech analyst. I don't care what an API is, I don't even know what an API is to be quite frank with you. I don't really look at technology. I'm more looking at what's going on with consumers, and how they're behaving and why they're behaving the way they're behaving. And then I look at what organizations can do to better serve those consumers based on what the consumers are expecting and what their needs are. And, then as a third step, I look at technology. And, I look at the capabilities that today's new innovative tech can, can provide to ultimately enable those retailers and brands and other organizations to provide those experiences for consumers.
So, I kind of come at it from the reverse way of the way you'd work a maze, right. If you work from the center and the way out, it's a lot easier than working from the, you know, the openings on the outside and trying to find your way in. So, that's kind of my approach as an analyst.
And, I just very quickly, I was Head of Strategy for Guitar Center before this job. Which was an interesting job out there in California. And then before that, I was Head of Marketing for a company called Harry & David out in beautiful Medford Oregon, now owned by 1-800 Flowers. And then I have a history outside of retail after, before that I was in the restaurant business in Chicago. And so, yeah, that's kind of my background.
Michael LeBlanc
Steve, I think, I think you were, you've got so many great ideas about, you know, so many different directions, we could take the conversation.
Steve Dennis
Well, that's, that's, I think, the hard thing with someone like Brendan. So, maybe we just start off really, really big picture and then start to drill down. I mean, as you look at what's going on in retail, today, what's on your shortlist of strategies that you think are really helping retailers right now?
Brendan Witcher
Yeah, there's, it's a good question. There's, there's a few of them that I would point out are very important. One is an ongoing one, and something that I've seen for years now, which is organizations and brands need to realize that, yes, they cannot be behind consumers expectations. That's absolutely true. And that's, that, if I said that, you'd be like, 'Yeah, yeah, yeah that's not very analysty of you', right. That's, that's pretty well known fact. But the reality is, is that you also can't be too far ahead of the consumer, right. And that's, why is that? It's because, if you try to work on something that consumers don't really expect yet, or they don't really want, it probably means you didn't work on something that they did expect, or that they did want.
I have yet to meet a retailer or brand that has unlimited time and unlimited resources to work on anything they want. And so, they're usually sacrificing something that's probably at their core in order to chase some kind of shiny object that consumers just aren't going to want yet. You know, I always joke, you know, I always bet, when I, when I'm talking to people, I bet people at Starbucks, that I won't find a single customer this year that will walk into a store, look around and go, 'Oh, there's no virtual reality, I'm out of here'. It's not gonna happen, right. And so, maybe you don't need that quite yet, right. But, there are plenty of customers are gonna go 'Wow, you sent me 136 emails this year, and none of them are relevant to me'. So that will happen. So that's, that's the kind of things that I help with strategy. That's number one.
Number two, is the idea that organizations today, because of what's happened with the pandemic, because of what we've just gone through, they're starting to rethink retail, like they never have before. And that's a good thing. If I can quote Michelle Gass here, I'd say that, you know, she, she, I'm gonna paraphrase her. But, you know, she basically said that the apple carts been upset, right, like we've tipped over the applecart, apples are everywhere anyway. So, we might as well build retail the way it should be built. And that, that, to me is an important point, because retail is not designed to meet the needs of what consumers are expecting today. The consumers evolve much faster than the retail space.
And then the third one that I would say is most important, is understanding the non-technical problems that, that companies have in order to change. Again, something I'd often say from stage and when I'm in front of audiences, as I say, you know, the reality is, 'You can buy all the technology you want. You can buy $2 million worth of tech, 20 million, 200 million. If you don't change culture, in your organization, your organizational silos. You don't fix the right metrics in order to measure success. Then I guarantee you', It was a guarantee, I say, "That they'd be the same company next year that they are this year'. It isn't just a tech problem. And so, really, transformation means all parts and pieces, technical and non-technical. So, those are the three things I think heading into the rest of 2021 and into the next year that organizations need to be thinking about and understanding how their vision works in all three of those areas.
Steve Dennis
So, on that last one in particular, one of the things that Michael and I have talked about a bunch of times on the podcast, and I touch on a little bit in my book is, you know, why, why does it take a crisis for retailers to innovate? And, what is it about changing culture, because I do think it largely comes back to culture and fear of failure and those sorts of things. Why is that fundamentally so hard? Because I do feel like okay, yes, this has obviously been a very transformative, disruptive time. But it's not like retail has been without disruption for many, many years. So, what's special about this time, and what would you say companies have to do to really attack that cultural issue?
Brendan Witcher
Yeah, well, a couple of points, I'm going to lean on there. A couple of your frames, Steve, I'm going to address. One is, I wouldn't call this disruption as much as I'd call it destruction. Disruption is when someone comes along and does things better than you and suddenly you have to chase that.
My friend and colleague, James McQuivey, who wrote the book, 'Digital Disruption', you know, he talks about this at length about how you know, what digital disruption really is, is more players coming into the market at a cheaper cost, and being able to innovate faster, and that forces everyone to try to keep up quicker. Versus the old days when you had just a few companies that really could afford to innovate. And so, innovation just didn't happen that quickly.
This, what we've gone through here is more of a destruction where we've really, and I don't mean to be dramatic about it, that's not what I mean, I'm just, it's just matches what the word, you know, disruption very nicely. But, the word destruction in this way is we've kind of destroyed the way people are shopping by making them and forcing them to shop in ways that they haven't before. You know, you've got about one out of five consumers in the US buying groceries online for the first time in their lives. That is a, that is not something that's called disruption, that's called destruction, right. They're destroying their old ways of shopping and their behaviors and rethinking even who they do business with. You know, there's plenty of individuals, and I'm sure that all three of us are them, who have looked at new retailers, we've never really looked at in the past and said, 'Well, maybe I can get that here', right. 'Or maybe I can get that there, where you would normally have gotten it from somebody local or a different retailer. And so that's what's really happened.
And so, the difference between disruption and the destruction that's happened is that disruption is something that people say, 'Well, we're still doing okay' right, 'we're still hanging on. And, and it's a big investment'. And a lot of it has to do with retailers don't want to be, I'm going to say this in a very controversial way, but retailers don't want to be leaders. And I don't think they should be leaders. It's a very dangerous position to get really far ahead and do very innovative things just to find out that they don't work, right. You see all these, these companies that come and go. These startups that everyone gets all jazzed about, right. That, take Brandless, for example, right. I really liked Brandless. I liked their ideas, and I liked the concepts. But, they were really out there, right. About the way they were approaching retail. And of course, now they're, they're no longer in business. And so, retailers don't, can't really risk that. They want to be fast followers. That's the, that's the sweet spot for retailers is to let other people test to learn and then chase them. The problem is that will most, what most retailers determine is fast followers are actually laggards. So, you know, they, they end up saying we're going to be fast followers, but then they never actually do it, which turns them into laggards. And that's one of the problems that we have.
Where the destruction phase, everything's broken anyway, nobody's going into stores, so you might as well redesign your store. It's like you're, you've got this whole world where consumers have reset their expectations. And retailers are looking for opportunity to reset their own ways they're making investments in retail.
Steve Dennis
One thing I just want to ask you about real quickly, which I think is related to this, and maybe you've updated your, your thoughts, but I remember we were at a conference together and your presentation you said that when it comes to applying relevant experience, only the last I don't know if he said few years count or three years count, I don't remember exactly how you, how you said it.
Brendan Witcher
It was three. Yeah, three.
Steve Dennis
And I think your, your point was largely that, you know, so much has happened, that you want to kind of unlearn what the things that made you successful. Any, any update to that statement or clarification around it?
Brendan Witcher
Yeah, no, I'm happy to address that. Because I think it's important to note that what I was trying to say was, when I said that, again, you're taking that out of context of a long speech, right. But what I was pointing out at the time that I said that was that you know, in the past, we used to be able to win customers with assortment. You know, when I was at Guitar Center, before this, we carried out, I think at the time, we carried somewhere between 160 and 180,000 skus. We owned 66% of the music industry market, right. Like, we were a huge company, but we leaned in on that assortment as a way of winning, right. Because we had done it since the 70s. That's how we had won business. And what, and even when I was there, I was trying to convince the executive team to realize that, that the truth of the matter is, is that we're no longer competing against one, you know, like daddy's music or, you know, a Sam, good or any of those companies. We were competing against the entire internet now, right. The assortment was the internet. Which is why, I wasn't saying that assortment was something that we didn't need to have. What I was saying was it's not the competitive advantage it used to be. In fact, part of that speech that I give is me saying, 'Your products don't matter anymore'. Now, that's a lot of hyperbole in some ways, right. But what I'm trying to say is that when I asked consumers, how many places can you buy a coffeemaker? Or diapers, bananas, batteries, or whatever it is. They don't say five, they don't say 10, they say hundreds. They say 1000s. And I'm not making this up. This is actually the way that they respond. When I asked the question, I can almost guarantee it. When I, when I'm on stage, when I asked the question, they think they can get these things anywhere. The question becomes, who will provide me the experience that I want, in order for me to choose that company to get it from.
Steve Dennis
Yep.
Brendan Witcher
Right. And that's what I meant by the last three years. Is what I'm saying is that today's consumers expect more than what they had before. And the, their use of mobile, their use of websites, they become more digitally savvy. They expect you know, channel less commerce. They expect more personalized experiences. They expect more on time delivery, better in stock positions. They expect the whole experience to just be simpler and easier, because that's who they're shopping with today. And if you're going to win them, you got to provide those experiences. And you couldn't get away with what you got away with four or five years ago, which was having a consumer come in store and see that the item is out of stock and go, well they'll just buy another item. No, they'll just open their phone, go to Amazon and buy it there and ship it to their home, right. Like that's what I mean by 'What happened beyond three years doesn't matter anymore'. What I'm saying is that that's not the important points, those things just don't happen anymore. And you need to look at the way consumers are behaving today, in order to serve them today.
Michael LeBlanc
Let me follow up on this, I call this jump ball moment. In other words, you know, consumer behavior, we've pulled the circuit breaker on consumer behavior in ways that we probably haven't done since the Second World War. And we're all trying to encapsulate that way, in some ways that we can all understand it. Sometimes that leads to buzzwords like 'omni channel' or 'retail apocalypse' or 'the great acceleration'. Are you buying into some of these, these notions? Is it too early to understand the COVID era? Or you starting to think that some of these things matter? That, that there's some net new behaviors, maybe it's work from home that's going to transform, as you said, culture. Maybe it's this acceleration that's going to stick. What are you thinking about when you like to, you know, that's a myth, just get past that, that's just, that's just a flash, that's an adaptation of the COVID era, versus this is a structural change, and we need to really pay attention to it.
Brendan Witcher
Yeah, I mean, the three, the three words that you outline there as buzzwords are very interesting, because they each have their own characteristics and make them either worthy of listening to or not worthy of listening to. The very first one, omni channel, that was happening long ago. I mean, I started as an analyst in 2014. And we were just starting to do cross channel shopping, right, and it was accelerating long before the pandemic, long before the pandemic. So, this is not a pandemic thing, this is a thing that was happening, it accelerated during the pandemic, and it will probably continue to do it. And there's very good reasons, the length of this podcast doesn't allow me to go into all the reasons why the channels meets the needs of consumers. But what it comes down to is it meets a lot of the needs for the online shopper, and the offline shopper in one single transaction. And so this was a popular way of shopping even beforehand. So that buzz word itself isn't, isn't much of a buzzword is a change in customer behavior.
Brendan Witcher
The great retail apocalypse, which is kind of nonsense, because what, what when people would say the apocalypse, I'd say, okay, maybe there is but the way that it was being defined was a mistake. People were saying that it was a store problem. It was never a store problem. It was brands that are becoming relevant were going out of business, right. And that,
Steve Dennis
Preaching to the choir my man.
Brendan Witcher
That is where, yes, and that is where, that is where the, the media takes a story and ties two things together and says, 'Well, I see store, companies with stores closing, so the apocalypses is those companies with stores are, you know, stores are irrelevant. It's a, it's a, it's a false leap to make, right. Because, you know, there's plenty of companies with stores that were opening stores. Tractor Supply, and Dick's Sporting Goods and other people. And that's why, they're all opening stores, right, in many cases. So, why, why is that if it was truly a store problem, then that would be the problem. But it wasn't.
If you look at the brands that were going under, you had the Sears and JC Penney's. These were not brands that people were jazzed about anymore, right. Like, when you're, when your primary products are tools, and you start out with a marketing message that says like 'The softer side of Sears' or The lighter side of Sears', you clearly don't understand your customers at that point, right. Like this is a, this is like a core retail mistake, or, you know, Ron Johnson coming into JC Penney, trying to turn it into Apple, right. Like, these were mistakes that were clearly made. Toys R Us didn't have a store problem. They had a debt problem, right. Everybody knows that, right. And they went out of business because they had too much debt. But, but that's not an easily digestible thing outside of the retail space. If you're not in the business, you don't understand that. And so, what ends up happening is the media translates it in a way that people can easily digest and easily understand.
Michael LeBlanc
It does feel like the, the great acceleration, our friend, Carl Boutet, amongst others came up with, that is more accurate than the other one, not the other two, but certainly the retail apocalypse, which is more of a media narrative, false narrative, but this acceleration seems to have happened. Would you agree?
Brendan Witcher
Yeah, well, I know Carl, and I, and I've heard him say it, and I've heard him talk about that. I don't disagree with it, I might put a little asterisk next to what he writes though. Because, while I agree that we accelerated, we certainly didn't push on the gas and lay a brick down on top of it.
So, what, what's going to happen is we're going to decelerate, which is an odd thing to say. But, the truth of the matter is, is that for 20 years, we've been talking about how consumers find a better way to shop and then they adopt that in their lives. And it's been absolutely true. And I'm a big believer in that, 100%, so does Forrester.
But this isn't, this isn't our choice. This is forced behavior. And so, we're in a state where we really can't go into stores. I know I can't go into my local hardware store right now. They only have buy online pick up in store. And, there's a couple of things causing what Carl calls, 'The acceleration' that are attributing this. One is we're forced to shop online with some companies. So that's just the way that it's. Number two, and this is critically important, is that most companies out there, although it breaks most accounting rules, are counting things like buy online, pick up in store, as an eCommerce sale.
Steve Dennis
Yes.
Brendan Witcher
It is not an eCommerce sale. It is a store sale. Why is that? Because from accounting principles, you would normally attribute sales to the place where the inventory and the costs and the labor live, right. And so, if you're end up doing, the danger, you may say, 'So what's the danger?' The danger is that if you count it as eCommerce and everyone thinks everyone's going to eCommerce, there might be an indication people saying, 'Well, since everyone's going eCommerce, we should close stores'. Well, guess what happens when you close stores, you can't do that by online pickup at the store. You can't do that curbside, right. And so, it's a misstatement to say that eCommerce is accelerating. That's not true. It's, it's gone forward by about seven years.
There's two contributing factors to that. But those contributing factors will go away after the pandemic, meaning the one will be more less restrictive on our in-store shopping. And the other one will be maybe omni channel will start to get its due and be its own category of shopping, rather than just attributing it to eCommerce and forgetting the fact that without the store that eCommerce wouldn't have happened. Just in closing on that statement, I would say while we've pulled forward about seven years, maybe nine on grocery, we're gonna pull back to probably about, the great acceleration will be kind of a, okay, acceleration. We'll probably pull forward about three years, maybe four, when this pans out. We'll probably be somewhere in the low 20s, as a percent of retail will be eCommerce. Not at the, not at the 40% we're sitting at today. That is just not going to happen. It's going to, it's going to pull back groceries, same thing.
Steve Dennis
Yeah, I totally agree. And I guess, I want to go back a little bit to, and I don't want to get like too into the semantics of this. But, I do think the classification of eCommerce is worth talking about not only because, to your point, that, that there is kind of the conclusion that 'Oh, with all this stuff moving online, I therefore don't need stores, or I don't need as many stores'. And I think that's clearly not right in a lot of cases.
I also think it starts to affect how stores operate, right. Like, if you how I was saying to somebody this morning, that if I go over to the Nordstrom near me, they've now got like 3000, 4000 square feet devoted to online pickup in store. You know, I'm not sure how many orders they're fulfilling from store stock. But you know, the, this idea that stores were mostly places to go see stuff and buy it and take it home. And we therefore want to maximize selling space, is really I think starting to shift. Now again, to your point of remains to be seen how much of this persists at this hyper level.
But, but aside from just the store closing false narrative, there's also this well, stores are becoming much more hybrids in their roles. And, and maybe you know, the deployment of, of different formats is going to change to you know, dark stores and Nordstrom Local type formats. What your, what's your take on all that?
Brendan Witcher
I agree with that. I think you know, you said, it's funny that you use the word 'Stores are mostly designed for people to walk in and buy things.' Actually, they were entirely designed. Let's, let's be super clear, when stores were created, here's what they were designed to do. You walk into a store, you pull something off the shelf, you go through point of sale and you leave the store. That is literally the only thing a store was designed to do. And so, in today's era, in other words, when there's any other form of shopping, the stores not designed to support it, because it's still the same, right. Like, that is literally the only way the store is truly optimized is for that style of shopping. Every other way it's less than optimized for. So that could be curbside. That could be pickup. That could be you know, things like dark stores, as you talked about. That could be pickup only locations. And not only that, things like ship from store or endless aisle, where I'm in the store and I buy something that's available online. Or, associates having, you know, tools to be able to talk to me about things that are available in different channels, or at different stores, right. There's just, there's so much to the new, the new path to purchase. And stores, quite frankly, were not designed for it. And so, of course you need to redesign it. Of course, you need to rethink it. And I think you're right that it's a hybrid model, but it's not really the hybrid, it's more of the, the new retail environment needs to be okay, this is since so many people are doing buy online and return to store, our returns area can't be the service area, because now we're getting 10 times the number of products back in our store, right. Like, that just doesn't suit that anymore. And, when 40% of our orders online are now buy online, pick up in store, we can't have the Service Desk be the buy online pick up in store area, right. There's nothing more frustrating than me buying like shut a shutter fastener for 87 cents, going to pick up a store and I'm standing behind some guy who wants to return 200 pounds of concrete at Home Depot, in under 30 minutes, right. Like these weren't designed for this, right.
Steve Dennis
Sounds like a random, a random example.
Michael LeBlanc
One of the things,
Brendan Witcher
Right, I'm looking like a schmuck standing there and I'm watching everybody else walk through point of sale going 'What's wrong with me, I'm and idiot? What am I doing? Why did I do this?
Michael LeBlanc
You know, one of the things that stores were designed for, is to be clear and convenient access to people. If you were, you know, if you were an executive and you would saying, 'Listen, I think this is a strategic advantage because versus a pure play because I, I offer the ability for same-day and convenience'. And, it seems, particularly in the return space, I think returns it's very powerful. Like, there seems to be a competing philosophy amongst retailers. I wonder what side you're on. One is stores, BOPIS and curbside are a very expensive way to do retail. The other is, it's a wonderful way to be strategically sound and inexpensive way to do online fulfillment, or is it both?
Brendan Witcher
Well, I think it's a march multi-part value proposition that you need to use stores for. So, the three big ones you've mentioned, too, and I'm going to mention a third. The ability to buy online from my favorite store it is, you know, I get no shortage of inquiries from the retail and brand space. And, there is no shortage of them that asked me, just as much as people want to know how to beat Guitar Center back in the day, people now asked me 'Well, how do we beat Amazon?' I'm like, 'We'll use your stores'. Like, 'Yeah, yeah, but how do we really beat Amazon?' Listen, you have the thing to beat them with. They can't do buy online, pickup in store, they can't do that sort of stuff, right. And, people always wonder like, 'Well, why is Amazon trying to get faster and faster delivery?' Because it's one of the reasons we shop in stores, is because we can get it today. And, Amazon knows that. And that's why they're trying to get faster and faster and faster. They still can't do the touch and feel a product before I buy it. But with things like wardrobe, they're trying to make things like that happen.
But, I think that the second one is the other one is buying line return to store, right. Consumers, all you have to do is look at why people don't choose to shop online, it's because they feel like the returns process would be a pain. So again, that store creates an advantage there.
But the third one, and any retailer out there can go look at their numbers and see that this is true. Your stores are a giant billboard, for your company in the region, right. I got a lot of slack a couple years ago, in the Wall Street Journal, I said something about a certain CEO, who was quite respected, but I said this person need to get out of the business. Because this person had mentioned, the CEO had said, we're going to close store so we can focus on eCommerce. And, I said this is a person that clearly doesn't understand how the business works anymore. I said your, your eCommerce sales are up because you have stores in those locations. And, I made the quip, I said, Listen, I go, 'Why would you close stores where you can create a competitive advantage to go online where you have no competitive advantage?' This is what people forget about eCommerce. eCommerce is a flattening of the curve. Everyone has a homepage. Everyone has product assortment. Everyone has a checkout page. And, everyone ships the product. Tell me how you get a competitive advantage online. It doesn't, it is, it is like you're going to place it literally is harder to compete in, than the ability to do it in a physical location where you can create those unique experiences.
And so, I just don't think people understand that those elements, when you go to move to eCommerce, you're making a mistake and not understanding that each consumer has their own situation in which they want to buy things. You know, when I wake up in the morning, I don't know, if I wake up in the morning need something that day, my first thought isn't, 'I better go to the internet'. No, my first thought is 'Where can I get it locally? Right. But that's situational. There are some things that I need to get that I don't need right now. And I say, 'I'll just get it online'. No big deal.
But none of us are all eCommerce buyers. There's I haven't met a human being yet. Someone will probably email me later say 'I'm that person'. I haven't met a human being yet that hasn't been a store in the past year. Whether it be grocery a 7-11, a Starbucks, a physical whatever. We go into physical locations when it suits us. And so, if you're truly a customer obsessed, customer centric company, you're not saying we're going to limit the way people can shop with us. You say it out loud it's almost stupid, isn't it.
Michael LeBlanc
Yeah, right, right.
Brendan Witcher
Hey, you know what, here's these opportunities to sell, we're going to close those. And, we're gonna, we're not going to make opportunities over here. And we're going to hope, a great business plan, we're going to hope people come to our website in a world where everybody basically, you know, Jack's Shirts looks just as good as Macy's as an eCommerce website. You know, great idea. And, by the way, Amazon's sitting there waiting for you to.
Steve Dennis
Yeah.
Brendan Witcher
So, I don't see the point in that. I think it's a bad strategy.
Steve Dennis
Well, it's interesting, because I did get some pushback. I said, you know, you show me, show me a brand that's closing a lot of stores and you show me a brand that doesn't have a too many stores problem, they have a brand relevance problem. Which I think is you know, another way of saying what you said. And, and closing stores does not do anything to improve a retailer's competitive position. It may get them out of a liability, right.
But, but why, you know, I go back, and I don't know if you had any particular insight on this, but I do feel like, you know, some of these points, whether they've been made by you know, Forrester, or Deloitte, or you know, all sorts of Industry analysts are various pundits and whatnot. And, they're certainly ample, I mean, going way back to my days at Neiman Marcus, and we had plenty of data on what was going on with the interaction between store and digital, and this is certainly before we got to the levels that we're at today. So, what is it that causes retailers to fundamentally miss what's going on? I used to chalk it up to the siloed organizations. You know that there was really the, the eCommerce division and the store division. And that was the big barrier. But I'm not so sure that that's so true anymore. What's your perspective on how people miss this and what they need to do to get out of the wrong way, I guess?
Brendan Witcher
Yeah. Well, first, I would, I would not discount the power of groupthink, right. When you when you read in, in, you know, CNBC, that stores are closing, more stores are closing than opening. And the truth of the matter is more stores are opening than closing. You know that, that's a problem. And, you start to hear that in the media and you start to think, 'Oh, yeah, everybody's moving online, I better too', right. Remember, retailers have a tendency to want to do what everyone else is doing. And, if they think everyone else is doing that, then that's what they should do, right That kind of an idea.
The number two thing is, quite frankly, while organizations, I'm gonna lean on that buzzword for minutes, while organizations want to create these seamless omni channel, whatever you want to call it, unified commerce experiences for consumers, they very much still operate as multi-channel retailers within the organization. For example, I know plenty of CFOs, who still give credit for online sales to the online channel, and credit for in-store sales to just the store sale. And, they, they budget their spend to each group based on those sales.
Steve Dennis
Yep,
Brendan Witcher
Rather than understanding the influence that those channels have on each other sales, right. You know, finance, people tend to be very cut dry, very binary, right. And so, this is your sale, this is your, we're gonna give you this budget, right. And so, in some ways, the internal, internally, the organizations have those problems. 53% of organizations say culture is limiting their ability to digitally transform properly. In fact, 83% say organizational silos create those problems. So, there is a huge gap that's going on internally, in lots of organizations, in not understanding how that's happening.
And the other thing is, is that, and I don't mean to disparage anybody when I say this, but the reality is, if you want to get short term gains, close your stores, sure. That's a good way of cutting costs. It's a great way at cutting costs. It's gonna make your, your P&L look great. And if you're an executive that only plans on being there for the next year or two, you're gonna look like a hero, right. Problem is the long-term effect of that on your brand is to the negative. And, if you're someone who's going to be there for the next 10 or 15 years, that's going to be a different decision you probably make, because you're thinking about the long-term effect on the brand. But let me just say point blank, if you close your doors, you might as well just, you know, close it all. Like, if you close those stores, let me say it a different way, if you close your stores, you might as well close your doors. There you go. That's tweetable, right? You close your stores.
Michael LeBlanc
Now you're a meme.
Steve Dennis
We got an episode title.
Brendan Witcher
I'm a meme machine, right. Like that's, that's the thing. Like, it's, it's so true. And I've never, you know, I've never seen anyone close their stores to get to growth, ever. I've never seen that case study.
Steve Dennis
Well, I, I make that statement in my book. And you've got more data than I do. So, now I feel like I've said the right thing. So, thanks for validating my, my data, data-light opinions.
But well, I know we're coming up on time. I don't know whether there's anything you really felt like we didn't get to that, that you really wanted to talk about. Or Michael, whether you had any closing questions. I'm just mindful of our time.
Michael LeBlanc
Yeah, I mean, it, my last question, I guess would be to bring it home, and Brendan, we got to get you back on the show, cuz I think we could have we could have another couple episodes like this is. As a retail industry, we've gone through what you described as a destruction the COVID era. What should the retail industry just leave behind? Like fresh start out of the blocks, it's a unique opportunity in our lives to start something fresh. What should that be?
Brendan Witcher
Yeah, I think, I think what they need to do, what organizations need to do, to be quite honest, and this is like one of those Dr. Phil sort of moments for them, I think, where they really need to like exam themselves and understand, where are you being truly company obsessed? Where you believe you're being customer obsessed? And I think there's too many companies out there that think, you know, we want to do this, we want to do that. We want to do this for the customer, so they can buy more things from us. Like that is a company obsess statement, that it's not a customer obsessed statement, right. A customer obsessed company focuses more on, we want the customer to have the best experience possible, because we believe in the long term impact of that, of that experience.
When I, when I owned, I used to own the Elbo Room in Chicago, the Elbo Room Nightclub. And when I bought it, there were 2,600 liquor licenses in Chicago. And I asked the staff that I inherited I said, 'What do we sell?' And, of course they said, 'Alcohol', right. Like that's the first thing they said. Some of them said live music because we were a live music club. And I said, 'Actually, you can go get a vodka. cranberry at 2,600 other locations, with the exact same ingredients anywhere in the city, if that's what we sell, we're gonna go out of busines', right. What we sell is the Elbo Room experience, you know. It's the Elbo room experience. It has to be that experience. It has to be unique for us. And, we have to deliver whenever people come in and show us that they want from us. What is it they're expecting? What is it they need from us that we can provide for them beyond the drink, right?
And retailers need to go beyond the product. They need to stop saying, 'We want to this, because it makes people buy more from us'. That's, that's a mistake. Because normally you just measure things in tiny windows, like over the weekend, or this year versus last year, right. You need to look at the long-term effect of how your customers are leaving you and you don't even know it. And they're leaving you because you're not customer obsessed, your company obsessed. And as my friend Mary Ransom, who was over Bloomingdale's at the time we talked about this, said, 'You know what happens is you end up creating the short-term wins by doing what you want. And then you create long term losses, by creating a burn of your customer file' Your customer file starts getting unhealthier and unhealthier, and it gets harder and harder to get those conversions. And that's what we need to leave behind, we need to leave behind this idea that it's all about this weekend versus last weekend, or this, or this Tuesday versus last year, last year's Tuesday.
We need to start looking at, do customers show us that they want us in their lives? That we're at their top of their consideration set when they're ready to buy. And, when we can get to that it's those companies that can serve consumers at that level that are going to that are going to win going forward. I guarantee it.
Steve Dennis
Well, that's a great place to leave off. I think there's been so many great points in here. And hopefully, people will take heed and, and figure some of this stuff out. Well, thanks so much, Brendan, for joining us really appreciate it. And yeah, we'll try to get you back on and dig into many other things we started. And, we'll put various links in the show notes so people can see some of the other great things that you Forrester are up to. But, thanks again for joining us.
Brendan Witcher
Thank you very much. It's really a pleasure.
Michael LeBlanc
Well Steve, it's great to hear from Brandon. And you know, it's interesting how, you know, can COVID be that point of clarity around change, Brendan calls it destruction, which I thought was interesting, not disruption. I mean, as again, you and I've talked about the massive changes in consumer behaviors, you have employees working from home. Retailers seeing the productivity benefits. Is there risk in all this, that we just regress back to the mean? As you say, we regress back to the boring mill for too many retailers?
Steve Dennis
I think there is risk. I mean, if you look at the history of retail, and Brendan's certainly got into some of the, there are a lot of these shifts that are shifts in consumer behavior or technology disruption or destruction, that have been pretty obvious for a long time, and yet many retailers were slow to respond to them. So, as we talked about at the top of the episode, why does it take a crisis for retailers to innovate? And I think, you know, when you get up against the wall, and perhaps you're facing imminent doom, it's a lot easier to change, right. It's not so easy to change when the, either you're not understanding how profound some of the changes are, or you just look at risk in a different way. So, I definitely think is, we get back to some semblance of normalcy, there is a real risk that, that retailers don't realize how much more has to be done to deal with this hybrid world to deal with the blending of digital and physical channels and just some of the, you know, persistent trends that will stick with us post COVID.
Michael LeBlanc
Well, in some ways, you know, the old saying, 'Volume solves some sins in retail', I mean, for anyone who is reluctant, whether it's curbside or BOPIS or BORIS, or even eCommerce and the scale and scope. The consumer adoption has no doubt advanced many years. So, hope, perhaps that also advances their thinking and provides that impetus that is not crisis related, but just, you know, this big step forward in terms of consumer behavior that is like okay, now it's, it's immutable. We can't, it's not going back. And now the volumes are there that make it make more sense?
Steve Dennis
Yeah, I agree with that. But, I also think the thing to pay attention to is a lot of what retailers have done, and are doing, or likely to do, is going to get them to a place of parity. You know, dealing with what had become the new table stakes, right. So, I think the question is, if you're still fundamentally irrelevant, and you're fundamentally unremarkable, you still have a lot of work to do, right. So, it's just not a matter of doing curbside pickup, or appointment shopping, or live streaming, or what have you, right. It's much more, making sure that you're really doing those things to stay, to be remarkable and stay remarkable, as the industry evolves.
Michael LeBlanc
Alright, we're back with 'Remarkable or Forgettable?' Let's talk about Chewy. Let's talk about pandemic puppies. Let's talk about big results.
Steve Dennis
Well, Chewy's blockbuster sales, blockbuster earnings, or I should say at least profitability that they have not seen so far. And, I think this is another example of some brands that have benefited enormously from some of the shifts we've seen. But, I would say this is, this is pretty remarkable. Chewy has built a huge business in a fairly short amount of time. They've certainly been helped by some of the COVID forces. But I think as we've talked about a few times, one of the things that's great about Chewy, is an online business is, there mostly in a convenience and selection sort of business. Which the internet is good at, right. You don't really need to go to the store to get a big, you know, container of dog food or some of the other stuff that's at the heart of their business. So, you know, remains to be seen if they'll be able to keep up this pace as we get back to a little bit more comfort in going to stores. But overall, it's pretty remarkable.
Michael LeBlanc
Well, and it's also the case that it's like an annuity, you've got all these new paths, net new pets, thanks to the COVID era. Now, it's like an annuity. They're, they're going to be around for years. So, at least the, the demand, so to speak will be out there. We're not talking about the tail wagging the dog. I couldn't refuse.
Steve Dennis
Ugh,
Michael LeBlanc
All right.
Steve Dennis
It's been a week ladies and gentlemen.
Michael LeBlanc
Enjoy your chicken dinner. All right, Bed Bath & Beyond, digital and private label Dreams. What do you think about that?
Steve Dennis
Well, this is an ongoing story with Mark Tritton, who's the relatively new CEO, came from, from Target. And I think, I don't know I'm a little mixed on all this. I think Bed Bath & Beyond is one of these brands that certainly is well known, has a good size, well established customer base, good retail footprint, etc. They've now been working at a lot of things that I think were pretty known problems, or shortcomings at Bed, Bath & Beyond. So, he's bringing in some really top eCommerce digital talent. And, they're definitely running the Target playbook in terms of building out private brands. I mean, it was pretty shocking to me to learn, I guess I really hadn't focused on it, how poorly developed they were in the private brand business, and certainly they were, their stores were kind of a mess. So, I think this is jury is still out. I mean, I think these are really sensible things to d. They are long standing problems. Mark and, seems to be, you know, he's, he's got a great track record, he's putting together a great team. So, I think it's more one to watch as opposed to, you know, remarkable or forgettable?
Michael LeBlanc
Well, I guess it to your point, does it just get them to parity in which that, in which case they'll still be in trouble? Or does it, does it get them ahead?
And yeah, speaking of getting ahead, Kroger had some great results. They are talking about doubling digital sales, and they're talking about a fading tailwind, which is kind of like, is that foreshadowing of things to come?
Steve Dennis
Well, managing expectations. I mean, the grocery business, I think is going to be definitely a remarkable from the standpoint of, we're going to be talking about it a lot, because there's just so much going on, right. There's been this massive shift to eCommerce. But, I think as people go back to restaurants, right, there's going to be this this tailwind that I think they were alluding to. We've got Amazon upping their game. So, I think, yeah, a lot, a lot of conversation here, I think we're gonna see a number of retailers be telling Wall Street like, 'Calm down, we're not going to run the really tough comps coming up', and it's just going to be hard to sustain those. That doesn't mean though, that the businesses is in trouble. It just, you know, kind of an expectation, compared to really unusual times.
Michael LeBlanc
And talking about running the business Nike, is run itself out of some pretty big retailers, right. They dropped seven retailers, including Macy's, what do you think of all that? Well, I
Steve Dennis
Well, I taught, well, first of all, full disclosure, Nike's been a client of mine in the past. I talk about them a lot in the book about the particularly their consumer direct offense, which is the strategy they've been running at for several years now and is behind their decision to drop a lot of wholesale partners. You know, I think a lot of brands, not just Nike, we talked about Adidas, I think last week, that are realizing that there's a lot of advantages to try to go as direct to consumers, they can. You know, ability to control the brand experience. Ability to capture more margin. More customer data, you know, end consumer data. So, I think this is just another step. So, I think it's pretty remarkable in terms of the evolution of the business and some of the broader changes we're seeing with manufacturer brands in the wholesale relationship.
You know, the only thing that I would mention is I think there's some concern that they could overshoot the runway by, by trying to go too far.
Michael LeBlanc
A step too far, so to speak.
Steve Dennis
Direct to consumer. Yeah, and you know, I think that's, that's worth watching. The retailers that they pulled out of, for the most part, are not retailers that are growing. And they're not retailers where they really get the showcase kind of position they want. So, I think they'll still have, you know, between, obviously, s strong and rapidly growing eCommerce business and their own points of distribution and some remaining major wholesale relationships. They'll still have a good, good presence.
Michael LeBlanc
Let's talk about Green Shoots at JC Penney. New, new leadership talks about this Green Shoots, that's optimistic. But I guess you gotta say something, right.
Steve Dennis
I mean, it's, it's a difficult position, I think maybe they might be picking mushrooms more than green, green shoots. I mean, I think this is completely forgettable, or you know, will be remarkable in that it will come back to haunt them. I mean, Penny's, first of all, I mean, I think every apparel player on the planet is probably going to have increases in the second half of the year. You know, it's not really a matter of
Michael LeBlanc
It a comp, its the comp story, it's the opposite of grocery, right. It's the comp store in the other direction, right.
Steve Dennis
Well, and years ago, remember, somebody I worked with saying to me, 'Well, you know, the best way to run a comp increase is to run a horrible decrease the year before', right. So, now, that obviously wasn't intentional on the part of Penny. But I mean, they're pretty easy comparison. So, I think you knew not only do we need to really baseline this more to 2019. But, I also think, well, I know Penney's has leaked so much market share over the last 10 years, or so, that they are way underwater. So, not to mix the metaphor but you know, you got to pull out of a dive right before you can ascend. But, I think this is this is much ado about nothing.
Michael LeBlanc
All right. Well, that's this episode of 'Remarkable or Forgettable?' We'll be back next week.
Another great episode. Steve, take us home.
Steve Dennis
Well, if you liked what you heard, please follow us on your favorite podcast platform so you can catch up with all our great interviews and insights and new episodes will show up every week. And, please take a minute to drop us that elusive five star rating. I'm Steve Dennis, for my latest insights follow me on Twitter and LinkedIn. And, be sure to order your copy of the second edition of 'Remarkable Retail' from just about anywhere books are sold.
Michael LeBlanc
And I'm Michael LeBlanc, Producer and Host of The Voice of Retail podcast. You can learn more about me on www.meleblanc.co Steve, have a great week.
SUMMARY KEYWORDS
stores, retailers, retail, consumers, ecommerce, business, people, brands, brendan, remarkable, shopping, companies, buy, problem, organizations, understand, book, online, customer, forrester