Physical retail is far from dead, but for many retailers traffic is increasingly harder to come by. In a fascinating panel recorded live on the floor at last month's NRF "Big Show," we welcome three founding CEO's to discuss how to create a more remarkable customer experience by leveraging innovative technology. Our guests are Daniel Black from Glass Media, Morgan Davis from MarketDial and Chris Todd from Theatro
Physical retail is far from dead, but for many retailers traffic is increasingly harder to come by. In a fascinating panel recorded live on the floor at last month's NRF "Big Show," we welcome three founding CEO's to discuss how to create a more remarkable customer experience by leveraging innovative technology.
Our guests are Daniel Black from Glass Media, Morgan Davis from MarketDial and Chris Todd from Theatro
But we kick-off the episode with a run-down of the headlines making waves in the world of retail including whether Bed, Bath & Beyond got a real life line or just a temporary reprieve, what to make of earnings reports from Capri, Under Armour, and Simon Property, and the possibility that expanding layoffs might have a cascading effect. We also discuss whether declining imports are a cause for concern, before wrapping up with Canada Goose's strategy to ramp up its growth plans.
We're headed to Las Vegas in March for another edition of Shoptalk. Retailers and brands can get a Shoptalk ticket for a reduced rate of just $1950 rate here using our special discount code RBREMARK1950.
Morgan is the co-founder add CEO of MarketDial. Prior to MarketDial, Morgan was an associate at Kickstart Seed Fund. He also previously worked at the Boston Consulting Group (BCG) and focused in its Consumer Practice Area. While at BCG his projects included several due diligences for top-tier PE funds, a data-driven brand redesign for a national
QSR chain, international marketing and sales benchmarking and training for a large consumer goods company, and a strategic overhaul and implementation of a consumer-facing education program for a specialty consumer goods manufacturer.
Daniel, a Silicon Valley native, is often referred to as an entrepreneurial rebel for choosing to launch his retail technology company “Glass-Media” in Dallas, Texas. Since moving to Dallas in 2013, Daniel has quickly become an integral part of the startup community/ecosystem. In February 2015, Daniel was co-featured on the cover of “D CEO Magazine" in an article entitled “The New Faces of Dallas Tech.” Later that year, he was named a finalist for the Tech Titans - Emerging Company CEO Award and was honored in the Tech Titans Gala. Daniel is a firm believer in giving back. He is a mentor at a local, leading venture accelerator and remains actively involved with the Dallas Entrepreneurial Center and various other entrepreneurial organizations throughout the Dallas-Fort Worth metroplex. Daniel attributes much of his success to the education he received at Claremont McKenna College. He graduated with a dual major in Economics/Government and completed the Leadership Studies Sequence. During his senior year, he was awarded “Claremont McKenna College Entrepreneur of the Year”. To date, Daniel remains involved with the College’s Center for Innovation and Entrepreneurship (CIE) and was honored to have been selected as a Kravis Leadership Fellow.
Chris is responsible for leading Theatro’s overall direction, strategy, and growth. Chris is a “roll up your sleeves” type leader who is passionate about the strategy of a business. Chris believes that most every idea can be a winner…it’s all about figuring out the strategy angles to drive success! As a co-founder, Chris has been instrumental in guiding Theatro from an early innovative concept into a fast-paced growth company.
Chris has 25+ years of experience in senior executive positions with small start-ups and large multinationals in a diverse array of industries, including software, networking and apps for leading hardware and software companies including Cisco Systems, AppTrigger, Metaswitch, Extreme Networks and Newbridge Networks.
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 is now available 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 eCommerce Leaders podcast, and The Food Professor with Dr. Sylvain Charlebois. You can learn more about Michael here or on LinkedIn.
Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue, his YouTube BBQ cooking channel!
Michael LeBlanc 00:05
Welcome to Remarkable Retail podcast, Season 6, Episode 5 presented by MarketDial. I'm Michael LeBlanc.
Steve Dennis 00:11
And I'm Steve Dennis.
Michael LeBlanc 00:13
Well, Steve, the content just keeps coming from the NRF Big Show in New York. We just released a bonus episode last Friday with Roshan Jhunja, General Manager of Retail at Square. And for this episode, we assembled an outstanding panel of thought leaders to talk about the latest in technology, innovation in retail stores. We have Chris Todd from Theatro, Daniel Black from Glass Media, both of which I think are from your backyard in Dallas and Morgan Davis from the other side of the nation with MarketDial.
Steve Dennis 00:42
Well, first of all, I really wanted to do an episode that is focused on leveraging technology in stores. It turns out physical retail is not dead.
Michael LeBlanc 00:50
Steve Dennis 00:51
People are shocked for me to say that, but we do know that in general, traffic is even harder to come by. And so that to me means one of the things you absolutely need to do, therefore is to maximize the traffic that you get. So, that means improving conversion rates, cross sell upsell, creating that really remarkable experience that customers will want to talk about and keeps them coming back. And there's a lot of activity going on. And so these are a few people from, from within our network in particular, as you mentioned, I know Chris and Daniel from the venture capital retail tech scene in Dallas. And I think they each bring a little bit different perspective in terms of the innovation, what it brings for customers and how they approach it. So, a good, good conversation.
Michael LeBlanc 01:42
Yeah, it's a great conversation. Now you lead this conversation. I'm the producer, we have four microphones, and we had four guests, not five. So, I was in the background, just making sure the sound was great. So, thanks for leading the conversation. You did an amazing job. So,
Steve Dennis 01:58
It's also a little bit of payback from longtime listeners who know that (crossover talk), I managed not to make it to one of our interviews and you went solo. So, now the universe is balanced.
Michael LeBlanc 02:08
Steve Dennis 02:09
And everything is in alignment going forward. And with any luck, it will be both of us. As we, as we move ahead.
Michael LeBlanc 02:14
And I also wanted to shout out to our listeners, we really appreciate you and thanks for listening and sharing. And if you have any suggestions on big themes or issues that you'd like us to tackle on the show, be sure to reach out to us on LinkedIn or whatever. We'd love to hear from you. All right, Steve, let's, let's jump into the news. I guess the first big story of the week that we should probably cover is Bed Bath & Beyond gets tossed a lifeline. So, what do you make of this Hudson's Bay Capital, which is, by the way, for the listeners that are curious it has nothing to do with Hudson's Bay, the retailer, it seems like a bunch of pretty sharp finance folks have thrown them a big lifeline. So, what do you make of that?
Steve Dennis 02:49
Well, of course, as I predicted on last week's episode, that they would file for Chapter 11, and this happens. So, I did not see this coming. I definitely was hearing that there were no traditional lenders, equity players that were going to step up. But,
Michael LeBlanc 03:04
Steve Dennis 03:05
These guys' hedge fund stepped up for a billion dollar-ish, in equity and debt. From what I can tell basically, I mean, the filing and perhaps the liquidation of the company was imminent. And this allows them to, to buy some time. It's kind of a crazy deal as far as I can tell, like I don't really understand how other than buying Bed Bath & Beyond some time, this is very likely to work out. The business is in serious trouble. They announced that they're closing another 150 stores. It's very unclear what the plan is that's really going to right this ship.
Michael LeBlanc 03:48
How do they get out of all these stores without going into protection, by the way like, (crossover talk).
Steve Dennis 03:50
Well, they don't.
Michael LeBlanc 03:52
They don't, right? I mean, there's no money there, they don't just walk away from this.
Steve Dennis 03:58
I mean, as far as I can tell, unless there just coincidentally happened to be a bunch of leases coming up. They're on the hook for these leases. Now, they may be able to work their way out of some of these over time. But they can close the stores but they're still going to pay, presumably they're going to pay rent on these for quite some time unless they eventually file.
Michael LeBlanc 04:11
There's a penalty no doubt. There could be a penalty there too, right.
Steve Dennis 04:14
Mostly, yeah. Many as you know, many have operating covenants and so yeah, from a cash flow standpoint I assume it improves it somewhat, but it is not the panacea that perhaps you know, getting out of liabilities that perhaps a bankruptcy filing could happen but it does buy them some time. One of the things that's also kind of crazy about the whole thing is that over the last few weeks Bed Bath & Beyond came one, became, became one of these so called meme stocks. And if folks aren't familiar with this it is basically a bunch of people that have no idea how stocks work, that get excited in certain, certain equities and they become really popular and this sent Bed Bath & Beyond stock up a lot, going back two, three weeks. And,
Michael LeBlanc 05:05
Is that the play here from Hudson's Bay Capital is to buy it for $1 and sell it for $1.05. And (crossover talk) get in and get it noted. Is that the play here?
Steve Dennis 05:13
In theory, if you could get the stock to go up a lot and stay there, you could raise additional equity, and close the debt out. AMC, which was another meme stock, went through kind of this roller coaster ride up and actually issued some new equity to take advantage of it. It turns out the stock has come down from there. So, it's a very volatile play, (crossover talk).
Michael LeBlanc 05:39
It kind of relies on the bigger fool theory of finance, right?
Steve Dennis 05:43
Exactly, right. So, could it work out for them in the relatively short, short term, perhaps. But in the meantime, it certainly seems like Bed Bath & Beyond is likely to blow through a lot of cash and is very likely to find themselves in crisis in the not too distant future. So, I was surprised for sure. I don't think this does anything strategically to change the outlook, it just kicks the can down the road a bit.
Michael LeBlanc 06:11
Let's talk about a few more earnings, Capri released earnings, which were kind of disappointing, and I never heard of the name Capri, but I certainly know the brands underneath the umbrella. Talk about that a bit.
Steve Dennis 06:20
Yeah, I think I renamed them, their holding company, it was originally the, basically Michael Kors Inc. So, Capri now consists of Kors, Jimmy Choo, and Versace. And we're kind of early in earnings season, we're getting the companies that end on the calendar year, most of the retail earnings are going to be coming in the first, first week of March, so brace yourself. But this was a big, big company, kind of accessible luxury focused, their sales were down 6%. They gave pretty weak guidance. And the stock has really gotten clobbered. And I expect anybody in the accessible luxury space is going to have some challenges because the customer is not necessarily that Uber wealthy person that you know, kind of can go through any cycle and is not particularly price sensitive. And they sell a lot of products that nobody really needs. So, I think this will be an interesting kind of sub-sector to look at.
Steve Dennis 07:18
And then we also got a couple other big companies' earnings this week, Under Armour actually beat Wall Street's expectations. It had a bit of an improvement in terms of what's been a few rough quarters for them. But they sounded kind of an optimistic tone, which was a little bit surprising, because of their inventory. You know, we've been talking about inventory glut’s for a while now, their inventory was still up 50% year-over-year on more or less flat sales, and their margins took a big hit. So, the fact that they were a little bit more optimistic, was good for the stock. They've got a new CEO, who comes from outside the industry who comes from Marriott. So, we'll see, we'll see what happens there. But that, but they were definitely sounding a more positive tone. And then the other one I wanted to mention quickly was Simon Property Group. So, they're one of the big mall operators,
Michael LeBlanc 07:43
Steve Dennis 07:44
And tend to have higher-end malls. The interesting thing and their performance in the mall part of the business was solid, not amazing. But they did call out that they were having some struggles in the part of their business, which includes some retail investments. So, they got into a partnership with Brookfield on JC Penney, they are also in the Spark Group, part of the Authentic Brands Group. And the real, (inaudible) Gilt Groupe, which is the Flash Sales Group and performance have fallen 33%, profits fell 33% for the year.
Michael LeBlanc 08:42
Forever 21, (crossover talk) weren't they also, had something to do with Forever 21, (crossover talk).
Steve Dennis 08:46
Yeah, Forever 21, I guess, I think is within the Authentic Brands Group. (Crossover talk) It's a little complicated because, (crossover talk).
Michael LeBlanc 08:52
Because I think that one is right. I think they (crossover talk).
Steve Dennis 08:54
Yeah, there's some overlapping ownership and joint ventures and it's kind of confusing, but you know, they really got into at least the JC Penney and the Forever 21 part mainly because both of those brands looked like they were in serious trouble. And they were big tenants, of course of the big mall operators and it seems like they bought into those investments to, you know, kind of talking about buying time here today on the podcast, but buying some, some time to get through COVID and kind of work their way forward. But in terms of operating performance, they're definitely weighing them down.
Michael LeBlanc 09:29
And well we'll actually get a good perspective on overall shopping malls and big real estate. We. We just got off mic with an interview with Tom McGee from ICSC and that'll be in a couple of weeks but it's a great interview with some great insights. All right, let's get to some quick hits. Layoffs, so you know, it's funny this common percentage number. Have you heard this great Sherlock Holmes book, "A Seven-Per-Cent Solution." It seems like the three or 6% solution because everybody seems to be finding the right number and more and more names outside of retail but around retailers are starting to do some layoffs as well. Yeah.
Steve Dennis 10:02
Yeah, I don't, I don't know if this is a little bit of a canary in the coal mine, as we know, and we've talked about a bunch, the job market still looks really strong, particularly in the US. And a lot of the press has been around tech layoffs. In fact some more got announced this past week. But now we're starting to see more layoffs outside of tech, some pretty big names. A bunch of retailers like Saks have announced layoffs, Disney just did a big, I think 7% I think that's the number you quoted, layoff, Affirm, Buy Now Pay Later just did a big layoff. And what I'm really wondering here is whether there's kind of a cascading effect. In other words, if everybody's doing it, does it either make you feel like you can get away with doing it and not take the heat? Or if you don't do it, you're going to look bad to your board? Or is everybody else seeing things that perhaps you aren't seeing yet. So, I can imagine there's a little bit of a domino effect that could start to happen across the next few weeks, and in the next few months. And then, of course, depending on the mix. You know, it's one thing to say that the job market is robust. But that's not necessarily true for everybody in their particular skill set.
Michael LeBlanc 10:37
Steve Dennis 10:38
So, it doesn't necessarily mean that folks are going to be able to find, you know most folks are going to be able to find a job in a matter of days or weeks or, or what have you. And then as more people get laid off, maybe it takes them longer to find a job, maybe the job that they can get doesn't pay as well, you know, a lot of the tech jobs are the, the wages were really inflated.
Michael LeBlanc 11:15
Steve Dennis 11:16
And so, the dampening effect this could have on consumer spending further down the road, I think might be more significant. But again, you know, as we've talked about, there's really kind of conflicting forces going on here.
Michael LeBlanc 11:52
So, during the COVID, here, we saw a great rise in the savings rate. So, we're starting to see some numbers here that that savings rate, you know, in one way, it's kind of worrisome. And in the other way, it's kind of getting back to historical patterns. How do you see, what are the numbers you're looking at and what's your perspective?
Steve Dennis 12:11
I think it's unclear other than the trend is that consumers are on average starting to eat into the significant savings that they've, that they've compiled. And a lot of folks are starting to comment on this. But yeah, we are getting back, or we're getting away from what was kind of crazily high savings rates, to things that are much more common. So, I think if it starts to flatten out here, that's not necessarily a cause for concern. But given interest rates going up, given spending slowing, you know, that could make it more, more problematic. I generally think as long as the job picture remains strong. It's not a big worry. But as we just talked about, you know, that picture could change.
Michael LeBlanc 13:02
Yeah. And there's a qualitative nature to that picture, right? Restaurants and food service hiring is picking up but you're not going to go from coding the Metaverse to working in the bus line in the restaurant, right. So, that's,
Steve Dennis 13:12
Michael LeBlanc 13:13
You've talked about the nature of those jobs.
Steve Dennis 13:15
Michael LeBlanc 13:17
Who was it? NRF put out an announcement about February imports expected to be lowest in three years. But is that again, it's kind of like perspective, is that meaning something important? Or is that just because they were so crazy high because of COVID buying forward patterns from consumers? What do you think about that?
Steve Dennis 13:35
I think if you look at the long-term trend, it's an objective layer or just you know, on its own it's a, it's a low number. What's hard to parse out is, on the one hand, we know as we talked about earlier, there's been an inventory glut. So, retailers looking to get their inventories back in line, one of the ways to do that is to buy less stuff, right? (Crossover talk) or you can buy less stuff and generally speaking, it's a combination of the two. So, I think this is to be expected to a certain degree, just in terms of the inventory rebalancing. Whether it's also a sign of pessimism on the part of retailers there's probably some of that as well.
Michael LeBlanc 14:17
Canada Goose has dialed up its growth plans now they, they, I know the company fairly well of course, because it's got the word Canada in it. And a couple of things I see them doing they're expanding their product lines, but then they say they want to grow their store network. Now they've been a bit soft with the challenges in the Chinese economy, which was growth but I think they're, they, they're thinking that growth will, growth and margin are behind their ideas. What do you think of their plans?
Steve Dennis 14:45
Well, Canada Goose to me, I mentioned them in my book there and sometimes in my keynotes, to me they're really a "Remarkable Retailer" they've got a very clear focus on who their customer is. They deliver something really remarkable and are very disciplined as far as I can tell, and yes, they've had some issues because of being very reliant on the Chinese market, which has obviously been an issue for many, many people. But that seems to be an improving situation for them. And I think they really feel like they can step on the gas, both in terms of, like you say, product expansion, expanding some distribution through wholesale, but I think the big, big move is the direct-to-consumer push in their own stores. And so they're looking to get to $3 billion Canadian, over the next I think, five years and to double their store footprint. So, I think that'll take them from 50 Something stores to about 110. So, once again, it turns out physical stores may not be dead.
Michael LeBlanc 15:44
I guess we should have said about Canada Goose and their Chinese plans that they're, they're floating a balloon up to see how that message goes. Should we have said that?
Steve Dennis 15:52
A trial balloon.
Michael LeBlanc 15:53
A trial balloon, (crossover talk) a spy balloon. Well, whatever is going on there.
Steve Dennis 15:57
Too soon. Too soon.
Michael LeBlanc 15:58
Too soon. Anyway, we wish, we wish, Canada Goose luck. All right. Without further ado, let's hear now from our store panel recorded live at the NRF Show in New York City.
Steve Dennis 16:09
So, we're here from the floor of NRF to talk about in-store innovation. And we've got three great CEOs and founders to help us do this. So, so welcome, guys, we'll, we'll go, go very quickly just to have each of you introduce who you are, maybe just a bit about your personal and professional journey and what you currently do. So, Chris, from Theatro, do you want to start out?
Chris Todd 16:30
I am glad to be here, and I appreciate the opportunity to chat with everybody and so forth. So, Chris Todd, I'm CEO and one of the co-founders of Theatro. Based out of Dallas, go Cowboys after a fifth win last night, so I got to put in a plug for the Cowboys.
Steve Dennis 16:42
By the time these airs, though, you will all be very disappointed. So, be careful (crossover talk.
Chris Todd 16:43
Yes, exactly. So no, we make, Theatro is an innovator in in-store technology for connecting the frontline workers to their company to allow them to communicate and bring their culture to life. Right.
Steve Dennis 17:01
All right. And how long has the company been around?
Chris Todd 17:03
We are entering our 11th year. Wow. Yeah.
Steve Dennis 17:06
Wow, (crossover talk). So, the OG on the, on the panel today. All right, thanks, thanks, Chris. Daniel Black another Dallas guy,
Daniel Black 17:10
Another Dallas guy,
Steve Dennis 17:13
Tell us about you and Glass Media.
Daniel Black 17:15
Yeah, I founded Glass Media, I guess I'm the founder and CEO. We're based in Dallas, like Theatro as well. We started in 2015. So, we're a little over eight years old. And we specialize in custom digital signage, bespoke visual solutions and interactive retail experiences.
Steve Dennis 17:31
That sounds very cool. But we're gonna have to figure out more about exactly what that means.
Daniel Black 17:32
We sure will.
Steve Dennis 17:33
Morgan Davis 17:35
Yeah, I'm happy to be here. I'm not from Dallas, I'm from Salt Lake City, co-founder, CEO of a company called MarketDial. We're here to show and there's 100s, 1000s, you know, vendors here all promising ROI on their different solutions, offerings and whatever. Our job is to help retailers sort through that and run experiments to figure out which ones actually drive value for their business and which ones aren't worth investing in.
Steve Dennis 18:01
Right. All right, excellent. So, we started kind of a big picture. Turns out the death of physical retail was a little bit exaggerated. And today, we're really focusing on what goes on in a physical store, how you help retailers increase conversion, or cross-sell up-sell, whatever, you can figure out what's working on those kinds of things. But I'll just be curious, from your perspective, as you guys have been, you know, you launched your business, you've been running your business. Daniel, what do you, what do you think people get wrong about physical stores or the potential of physical stores that kind of perpetuated this narrative of the retail apocalypse and other kinds of things?
Daniel Black 18:35
Yeah, sure. I think people tend to forget how intellectually curious a lot of consumers are. As we make advancements in technology. We make advancements in corporate sustainability. So, if sourcing materials, I think people forget how impactful storytelling is, and how much the consumers yearn for that knowledge,
Steve Dennis 18:47
Daniel Black 18:48
And I think there's no better place to get that than in a physical environment where you can either engage with a retail associate, or you can touch and feel the product on your own.
Steve Dennis 19:01
How about you, Chris, what's your perspective on that?
Chris Todd 19:03
Absolutely. I think that, you know, just, if you think about why is it that you go into a store, it's actually the human-to-human contact, right? What is it, what does the consumer want, good eye-to-eye contact and easy, fast, knowledgeable associates to answer their questions,
Steve Dennis 19:09
Chris Todd 19:10
They also want to touch and feel the product and that's something you really can't do in our online world. And there's an efficiency of online,
Steve Dennis 19:14
Chris Todd 19:15
But you lose that human touch. Yeah,
Steve Dennis 19:27
Yeah, they haven't. As much as things have advanced there's certain things that online has not been able to come close to replicating. So, Morgan you got a little, little bit you know, a different angle on this. What's your take on the importance of physical retail?
Morgan Davis 19:41
Very similar stuff I've heard from you is that retail is dying in a way but it's bad retail is dying in that those retailers who aren't innovating and offering new and interesting experiences to their consumers are dying and closing stores at an historic pace. Still, and will continue to do so. And a lot of what people get wrong is that some of these efficiencies are exciting online, and maybe I can ship some shoes to that consumer really quick and deliver that value. But all of the DTC brands recently are sort of finding that that's not enough. And we need to come offline and have a harmonious concept between the two. And it's not just replicating allbirds.com and a physical store, it's figuring out what that consumer wants at that moment, here. And that is a lot harder than people expect, I think. But figuring that out and innovating and pushing those bounds is really how the magic of retail and sort of that harmonized experience can happen.
Steve Dennis 20:39
Yeah, well, thanks for using my term (crossover talk) to get a,
Morgan Davis 20:41
I'm a big fan.
Steve Dennis 20:42
Small royalty take.
Daniel Black 20:43
What I was gonna say, Steve, another thing too, that's interesting is, you know, the challenge now is online chat bots, you can do your standard FAQ's, right? But we needed to train all these retail associates to be able to speak to kind of the complexity and the history of,
Steve Dennis 20:48
Daniel Black 20:49
Of the products in the merchandise. And that's going to be a big challenge, right? Because you can't get that online, you need to go to the store. But you need to ensure that that retail associate can, can talk the talk, right and walk the line.
Steve Dennis 21:08
Yeah, we talk a lot about and we've even done an episode on you know what I call the difference between buying and shopping. It's sort of like, you know, our errands versus experience. And you know, online is pretty good if you want the shortest distance to a particular task, getting a particular task off your to-do list or whatever. But as you start to get into those more complex, you know, questions or just wanting to, you know, see product in real life, try it on, does it fit, an outfit to get, you know, and all those kinds of things are, you know, really haven't figured out how to do that particularly well online. So, let's go a little bit deeper.
So, Morgan, when you, you know, what problem is it that MarketDial solves for retailers? Or what opportunities do they create? Give us a little bit more sense of your business model and how it works?
Morgan Davis 21:51
It's a great question. So, the problem in retail is a good problem to have, which is, there's lots of folks out here like all of us, with different unique offerings, every team (inaudible) retail in retail is designed to come up with new hypotheses, the pricing team, the merchandising team, the labor team, they're all trying to push the business forward in their sphere of influence and they have these ideas. The scientific method doesn't end at hypothesis, though, it ends when we can accept or reject the results of an experiment here. And so, our job in there is to help make that part of the scientific method, quick, easy replicable. So, that pricing analysts, the merchandising analysts, the labor analysts, can run experiments in their store in a cheap small-scale way to understand what's going to work and what's not,
Steve Dennis 22:19
Morgan Davis 22:20
Empirically from, you know, the 1000s of experiments that have been run, using our platform, about a third, not only don't work, but actually a road margin, and units and transaction, all of the bad sort of KPIs. And so, if you run 100 new initiatives, and you don't know which 30 are destroying your value, your toast, because you're going to put those into your fleet, and dilute the customer experience, dilute your margin and that experience that you're giving as well. So, our part in there is how do we make that experimentation process so easy, and, and low cost, and anybody can do it in the org that they do it every time and they have full visibility on ROI, before they commit to that new end cap for that new space move, when the pricing structure or whatever their whatever they're thinking about.
Steve Dennis 23:26
So, what's this, because when I first heard about MarketDial, I thought, Well, I've been involved as probably plenty people listening, have saying, you know, we're going to pilot or test and we pick, you know, X number of stores, for whatever reason, mix of north and south, we like to store manager, they do a good job, whatever. And then we'll just look at how those stores perform, versus everybody else testing, you know, a really simple test to control. And then, you know, if sales are up in these stores 10% and the others are sub-seven, it's successful, right?
Morgan Davis 23:49
Steve Dennis 23:50
That to me has been, I mean, it's not very sophisticated.
Morgan Davis 23:53
No, (crossover talk).
Steve Dennis 23:55
But you're doing obviously more than that. What is it?
Morgan Davis 24:01
You'd be surprised by how few people even get that far, honestly, especially brands that come from a strong founder that are very brand driven, that maybe have few SKUs and products, it just kind of works, right. So, for a long-time brands, like great customers (inaudible) Vineyard Vines, they put something out in the world. And it just works, right, like people buy it as much as they can, it sells out. And so, the thought of optimization and how to maximize that is really secondary, because it just kind of works regardless of what you do. And it's not until that's not the case that the comps aren't just as easily up and to the right, that you really have to start thinking about doing that. And so that is the base case.
Morgan Davis 24:30
These middle sort of cases where we're going to put our sort of finger in the wind are a form of experimentation. Inaccurate and not super scientific, but they are something, so it points you sort of in the right direction. But for me if I was making a 10s of 1000s, millions, hundreds of millions, sometimes dollar commitment to a big CapEx or OpEx, change, I don't want a good feeling about this, like, the data, (crossover talk).
Steve Dennis 24:44
Warm and fuzzy.
Morgan Davis 24:46
Reported, exac-. It's just not enough for this. And those are the scales that we're talking about here, right? Like you give 1000 stores and then you make a $100,000 change in each of those stores, that adds up and labor adds up. And pricing changes are risky. And so, getting to a more scientific level, is there, you can sort of leave the retail world and think, how excited would I be to ingest drugs that were tested the same way that we test these things? Not. Right. I don't know, we gave it to a couple people, and they seemed okay (Crossover talk) let's ship it.
Steve Dennis 25:02
Morgan Davis 25:04
And obviously, when they are, when you know, lives are at stake. And one of them is a good experience. But we're all committed to this and dedicated to the craft. So, let's do good. Let's do a good job.
Steve Dennis 25:52
Yeah. Excellent. Thank you. All right, Chris, how about, what do you, what you guys do? What problems do you solve? What opportunities do you create?
Chris Todd 25:59
You know, Steve, the way I would describe it is, how many times have you gone into a retail store to look for an associate to ask a simple question, and you search, and you search, until you find somebody? And you ask that question. And they say, Boy, I'd love to help you. But I'm not from that department.
Steve Dennis 26:10
Chris Todd 26:11
Have you ever had that problem?
Steve Dennis 26:14
Chris Todd 26:16
We solved that problem, right?
Steve Dennis 26:19
Chris Todd 26:20
But the reality is that the associate you're talking to, actually is not connected to anybody else. And your chances of finding the right person is a function of how many departments or how many products that they actually have, right? Because not everybody can answer every question. And so the idea of like, what Theatro does is we connect everybody together, everybody's reachable. And for the first time, everybody's accountable.
Steve Dennis 26:24
Chris Todd 26:25
Because too many associates and too many team members are actually just on the floor, they're in the store. They don't know what the plan of the day is. They don't know what their operation is. And if you can actually allow them to actually understand what their role is, understand what they're supposed to do on a day-to-day basis, ask questions and connect to their peer group, execution goes up. So when and in retail today, physical retail, a lot of it's about change management?
Steve Dennis 26:36
Chris Todd 26:37
Well, you know, if you think about it, when you go into a store, how do you find somebody you walk around, looking for him? How does management find somebody? They walk around and look for him?
Steve Dennis 26:42
Chris Todd 26:43
They know where they're assigned. They really don't know where they are. How do you even know where somebody is all the time? If you want, you have complex plans, you have different operations, you want to introduce curbside, you want to introduce these, you know, different experiences. How do you do that if you ca-, can't communicate together? And that's actually the basis, Theatro,
Steve Dennis 26:47
Chris Todd 26:88
People ask, where did you get the name?
Steve Dennis 27:07
Chris Todd 27:08
Think about it. Historic team members are cast members in a theatrical production. You could not do a theatrical production, if everybody doesn't play their role, and isn't in synchrony amongst everybody else.
Steve Dennis 27:19
Chris Todd 27:19
And at the end of the day, that's pretty simple what we saw. We build those workflows that pull off all the different complex experiences you're seeing in stores.
Steve Dennis 28:03
With respect when I first heard about Theatro at the beginning, I thought, well, they're just selling a bunch of walkie talkies or something like that, like, you know, like, what's, what's, what's innovative about that? Obviously, it's much more than that. But what's sort of the secret sauce on top of, because originally, I thought, I guess more of a kind of a hardware solution, not the intelligence that's been propelling it.
Chris Todd 28:21
It's a great point, because some people do think of us as a hardware because I built a little IoT device, and I provide it to our customers as part of our service. And the reason is because only 30% of retail workers actually have a computer, a mobile computer to use while they work. So,70% don't, but of that 70%, 50 over half of them have a two-way radio. Okay, two-way radios. So, we replaced the two-way radio with a very unintelligent IP device.
Steve Dennis 28:38
Chris Todd 28:39
A kind of analogy would be to think about Nest. Is Nest, Nest just a thermostat? It replaced the thermostat with an IP device that actually Google is building all kinds of cool stuff on top.
Steve Dennis 28:48
Right, right, right, right.
Chris Todd 28:52
We're the same thing. We replaced the radio. I'm not a ra-, it's one, I have 140 different apps. One of them is the radio app, right. But that was the entry point, get in there replace the radio, I could give the radio away for free, it doesn't matter.
Steve Dennis 29:01
Chris Todd 29:02
Steve Dennis 29:04
Chris Todd 29:05
But that's where people tend to think of as a starting point, most of the stuff we do is you can get much more complex interaction workflows and so forth.
Steve Dennis 29:26
Yeah. All right, Daniel, your turn and now you have such a visual aspect that you know, I'll have to get people to go check out your website so they can picture it a little bit better, but you know, what is it that you do for retailers and how has that evolved?
Daniel Black 29:40
Yeah, so Morgan, spoke a bit about experimentation, Digital Signage for quite a long time over a decade. It's just been a set it and forget it, right? People throw up TVs and build video walls. The big problem with that is we mainly work with visuals, visual merchandisers and store designers who really care about the store experience and the problem of Digital Signage is, they haven't been able to repurpose it right or make it their own. And so what we do is, you know, we have a huge production facility in Dallas, we actually make custom digital, and all of our solutions are modular. So, we give visual merchandisers the ability to test something in the window and bring it in store, and actually you know be able to better empower themselves to utilize technology, to draw customers, draw eyeballs, and ultimately sell more product. And I think that's what Digital Signage has been missing for the last decade is ,it's really been run through IT. It's just been a set it and forget it, and none of the people inside the store have had any impact on what it looks like and where it's placed.
Steve Dennis 30:41
Sure, sure. So, a bit of a jump ball question here. You know, if you're, when you think about the challenges retailers have, which are many, right, driving store traffic, converting, cross sell, upsell, you know, high net, trying to get a high net promoter score, so people come back and you know, the literal-, literally customers remark on the brand. When you go into and if any of you guys want to, want to start but when you go into a retailer, and you're and you're trying to talk about some of these higher order dynamics that you, that you help drive. Are there any commonalities? Are there any things that you feel retailers don't appreciate as opportunities?
Chris Todd 31:21
You know, I think from our perspective, when I go, especially, when I go into a store, a physical retail store, we look at, we look at things through the eyes of execution, because you can have amazing strategy, the headquarter does, it can have an amazing ROI. But when it gets down to di-, did it fail because it wasn't well executed?
Steve Dennis 31:32
Chris Todd 31:33
Or was it a bad strategy,
Steve Dennis 31:36
Chris Todd 31:37
Steve Dennis 31:38
Chris Todd 31:39
And execution is the, it is where it all falls, (inaudible) where the rubber meets the road.
Steve Dennis 31:42
Chris Todd 31:43
And so when we look at the store, I don't necessarily see the merchandising, the positioning, the branding, and all that we look at the team as a way to say, All right, if all that comes together, it's all got to come together. At the end of the day, that person who's interfacing with the customer, right? Deal with them the way they wanted to be dealt with.
Steve Dennis 32:08
Yeah. And when and when you are successful with retailers obviously you've been successful with quite a large number of them over the years. Is the thing that makes them expand with you or stick with you that you show higher conversion rates, you sh-, show higher average cross sell satisfac-, like what are the metrics? I guess that,
Chris Todd 32:19
Yeah, (crossover talk).
Steve Dennis 32:21
That we retailers are using to evaluate whether your stuff works or not?
Chris Todd 32:31
There are really four things that you can do, you, we can either increase sales by speed of service, like faster, reduce abandonment, which then drives Net Promoter Scores and (inaudible) scores, happier customers, employee engagement. So, we lower turnover because (crossover talk) or productivity, So, I can do any of those (inaudible) with (inaudible) which is the highest priority. And if you look at the difference between somebody like a Macy's versus somebody like a Costco, or a Walgreens, or a Wawa a C-Store, to a department store, you have different objectives you're trying to drive revenues, (inaudible) and that's really is a matter of how you orient and motivate and get their store team to execute. What is the goal? What are, what's the plan? What are you trying to hit?
Steve Dennis 33:16
That make sense?
Morgan Davis 33:18
Actually, we had a really interesting set of experiments around that, that one of our customers ran, where they coupled new technology in their stores explicitly for execution, sort of management, tracking, all that kind of stuff, with a little bit of a pay increase as well, because we were asking a little bit more. And so, they combine those things together. And they wanted to see what was the outcome. Did we get better execution? Well, they did, a few points higher in their tracking measurement. But the interesting thing is, they actually saw a big enough basket sized increase to pay for both of those things. They didn't believe it at first, because you pay more money, you add some technology, your basket size increases, and they're like, I don't know.
Morgan Davis 33:40
So, we actually ran it two more times. So, three times in total and different test cells and controls, and like they experimented the heck out of this thing, you know, execution and having that done well, and having that exper-, experience really adds to that feeling. Gretchen from The Container Store, just yesterday, here at the show was saying how when you walk into The Container Store, it's a feeling that's there. And that's, that's what you're going for and with, with shoddy execution, and with sort of haphazard things put together the feelings not there no matter what.
Steve Dennis 34:06
Sure, (crossover talk).
Morgan Davis 34:08
Really, I was shocked that it was, you know, valuable.
Chris Todd 34:11
I totally agree.
Steve Dennis 34:30
Yeah, do you have a perspective on that Daniel? And then I have a follow up question for you that's related to what Morgan just said.
Daniel Black 34:34
Yeah, I think just in terms of modularity, digital signage, just empowering the stores to look at tests, right AV test with digital signage to drive incremental footfall.
Steve Dennis 34:42
Daniel Black 34:43
Drive sales lift. Like I said, a video wall at the cash wrap. It's not something you can do a lot of AV testing with.
Steve Dennis 34:49
Daniel Black 34:50
We're even doing things like on the countertops for promoting loyalty programs or gift cards. That's all stuff we can track in the Point of Sale.
Steve Dennis 34:55
Daniel Black 34:56
Um, web online. And so, I think that's the future digital signages, rapid AV testing, and tying that with visual digital storytelling.
Steve Dennis 35:07
Sure. But my follow-on question because we're talking about feeling, you know, there's, there's the branding aspect of things that happens in stores, right, which are more intangible. It's one of the things I think is so impressive about what you guys do. It is just to me, it just elevates the environment, right? It's part of the visual package. But then there are those specific things where you're, there's a call to action, essentially, that you can measure. Is that something that your customers struggled to measure the impact of or not so much?
Daniel Black 35:35
A struggle measure and then you know, you look at trends, shop-in-shops, right? So, we're not just looking at a department store. Now it's a store within a store? And what's that emotional connection when you get to that aisle of whether it's a watch, or it's sunglasses?
Steve Dennis 35:47
Daniel Black 35:48
Everyone is trying to, kind of hone in on that emotional connection?
Steve Dennis 35:53
Daniel Black 35:54
And I think, honestly, we're seeing a lot of results. But like Morgan was saying, some of it's hard to measure, some of it's all qualitative,
Steve Dennis 35:58
Daniel Black 35:59
It looks pretty, but is it driving sales?
Steve Dennis 36:01
Daniel Black 36:02
We need to connect both, both those dots.
Steve Dennis 36:03
Yeah, we would, when I was at Neiman Marcus, every store would have several $100,000 in artwork, you know, what is, what is the ROI on that? And why couldn't it be half as much or, you know, whatever. And it's very hard to say, but it's part of the brand image in the sense that it works but, (crossover talk).
Chris Todd 36:18
There is a sense that there's a corollary that gets down to even the communications aspect. So, for instance, when we connect everybody together, if I send you a message and say, Steve, do you want to have lunch tomorrow, versus if I send a message to you and say we have a recall, please take this off the shelf.
Steve Dennis 36:29
Chris Todd 36:30
It's the same technology, it's the same everything,
Steve Dennis 36:32
Chris Todd 36:33
The value of one message is, you know, orders of magnitude greater than the other. How do you put an ROI?
Steve Dennis 36:36
Chris Todd 36:38
Okay, the first one,
Steve Dennis 36:40
Chris Todd 36:41
You know, we're doing 10,000 messages a month.
Steve Dennis 36:44
Chris Todd 36:45
Some of them are really high value, and some of them are Hey, thanks for helping me with that. How do you, how do you do that?
Steve Dennis 36:50
Chris Todd 36:51
It's like the artwork? It's,
Steve Dennis 36:55
Chris Todd 36:56
There's a lot of gray area.
Steve Dennis 37:01
Sure. And I think the balance, I mean, I think what's nice is, I mean, I guess I feel that retail has always been, you know, a balance of art and science. Now, there's a lot more technology and, you know, to be able to get bring more and more science to it, which you know, I guess I, I'd like to think that that narrows the areas where the intuition or that you know, magic happens, but you still need that clearly, there's lots of retailers that are not super, super analytically driven, that do quite well.
Morgan Davis 37:15
It narrows it, but makes it more important, because that's your way to sort of bring that feeling,
Steve Dennis 37:20
Morgan Davis 37:21
And life to it. Like, when I go into a DICK'S Sporting Goods, you can't see me on the podcast, I'm not known for my athletic prowess. I'm an athlete, again, when I go into DICK'S Sporting Goods, and there's, there's more there than you know, just pure raw science. Now, science helps get us to that right point,
Steve Dennis 37:24
Morgan Davis 37:25
But there's, there's this good combo that makes me feel like an athlete in DICK's Sporting Goods.
Steve Dennis 37:28
Yeah, absolutely. So, I'll try to bring this home. And you can kind of take this in any direction, we're going to give you a little bit of latitude. But what sort of last words for each of you? What's next for you? Or what are you most excited about in the industry or for, for your company in particular? So Daniel, do you want to start on that?
Daniel Black 38:13
I think for us, we're getting more into just the analytics, so we're doing a lot more and Lift and Learn. So, you're actually touching the products for measuring that engagement. So, I think for us connecting more sensors, doing things with gestures, where we can track people's hands, we can track their eyeballs. And that's really the future to real time or rapid AV testing. Yeah, kind of what we do in Digital Signage.
Steve Dennis 38:34
Interesting. I didn't realize you guys were doing that. That's cool. Morgan?
Morgan Davis 38:36
Yeah, one thing we're doing that I'm pretty excited about is a lot of our customers and buyers and kind of users of our platform and software are the retailers themselves. So, you know, DICK'S Sporting Goods, The Container Store, Woolworth, great, great folks doing this. They have a lot of partners that they actually work with the brands who supply their (crossover talk) goods in all these cases and they're driving innovation in those stores. They're asking for different space, they're trying for new sets, they're new, new products. So, we're working with them to try to build a sort of three-sided marketplace, if you will, to bring those brands closer to those. So, we can all have the same data and decisioning tools to say, did it work? Did it not work? How can we tweak it and retry this new, new initiative that this brand is pushing? So, how can we not just do retailers to MarketDial? How can we bring those brands partners in as well and have a more holistic view on the outcomes?
Chris Todd 38:48
What we're working on from an innovation standpoint, Steve, is that almost every one of our customers has their own roadmap of what they'd like to accomplish. At Theatro, I’m super proud of the fact that just this month, we were recognized by RAS as the number one technology innovation, number one software technology innovation company, (crossover talk) like tier one retailers for the third year in a row.
Steve Dennis 39:46
Chris Todd 39:47
Nobody's ever won it twice.
Steve Dennis 39:52
That might even be remarkable.
Chris Todd 39:53
Yeah, it is. But the reason that, that actually the tier ones keep voting. Theatro is obviously not a well-known brand compared to a Microsoft or an SAP or Salesforce is the fact that we innovate and do just about whatever they want to do to solve real problems. And so that's, that's kind of our next step is actually taking those. We have 420,000 customers; they just work at 40 different brands.
Steve Dennis 40:02
Chris Todd 40:04
Right. Those, that it's always been our tagline is innovation for the forgotten hourly worker. Not many people build stuff for hourly workers.
Steve Dennis 40:08
Chris Todd 40:09
Steve Dennis 40:10
Chris Todd 40:11
They just assume they're going to execute their strategy, their plan.
Steve Dennis 40:13
Chris Todd 40:14
We're all about that. And so, I'm super proud and super excited about what the next year is going to bring for physical retail.
Steve Dennis 40:37
Yeah, well, I think it's going to be I mean, this to me is a good example. I mean, aside from just you know, being a little bit flip about, it turns out physical retail isn't, isn't dead. But you know, you just think about, you know, whether it's how hard it is to get traffic in the first place and making the most of that from my branding and a conversion and a, you know, just dollars and cents standpoint, leveraging sales associates, you know, with the labor challenges is, you know, hugely important. So, I like to think that there's maybe this new appreciation for physical retail, and the various possibilities that technology and other things can provide. Well, thanks so much, guys, for joining us, and we wish you the best of luck for 2023. (Crossover talk), we will see you out in the world.
Morgan Davis 41:15
Likewise, thank you.
Michael LeBlanc 41:18
If you like what you heard, please follow us on Apple Spotify or your favorite podcast platform. So, you can catch up with all our great interviews, including, ‘Organized for Growth’, our interview with Satish Malhotra, CEO of The Container Store.
New episodes of Season 6 presented for another season by our friends at MarketDial will show up each and every Tuesday. And be sure to tell all your friends and colleagues in the retail industry, all about us.
Steve Dennis 41:40
And I'm Steve Dennis, author of the bestselling book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. You can learn more about me, my consulting and keynote speaking at stevenpdennis.com.
Michael LeBlanc 41:54
And I'm Michael LeBlanc, Consumer Retail Growth Consultant, keynote speaker and producer and host of a series of retail trade podcasts including this one. You can learn even more about me on LinkedIn and you can catch up with Steve and I in person at Shoptalk in Vegas March 26. And a month later in Barcelona at the World Retail Congress, April 25.
Until then, safe travels everyone.
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