This episode we welcome our fellow "Rethink Retail Top Influencers" Cate Trotter, Hitha Herzog, and Rob Garf. Julia Raymond Hare and Gabriella Bock also join us to explain what the Rethink Retail's list is all about.
This episode we welcome our fellow "Rethink Retail Top Influencers" Cate Trotter, Hitha Herzog, and Rob Garf. Julia Raymond Hare and Gabriella Bock also join us to explain what the Rethink Retail's list is all about.
But first we take on the news of the week, including what to make of Nike's earnings announcement, their plans to open "Jordan" concept stores and the progress of their Consumer Direct Offense. Then we shift to the somewhat shocking news that Amazon looks to be by far the biggest retailer of apparel in the US, while finishing up with a quick take on retailer's continuing curbside enthusiasm and BOPIS.
Then we welcome our panel of experts and delve into what they as see the key drivers of what it will take to "comp the comp" after an incredibly strong 2021. We go deep on the evolving stores, how digital and physical need to work together, and what the playbook looks like to fight through supply chain issues and growing inflation. We also try to sort out which pandemic shopping behaviors are likely to persist and which might "revert to the mean.' Lastly our panelists share their "hot takes" on retailers to watch the balance of the year.
Rethink Retail's Top Influencers List.
Insider Trends delivers omnichannel strategy and innovation that actually makes clients money. We separate the hype from what actually matters, and provide no-nonsense guidance, data-driven insights and advice. Taking the lead and boosting profits is simpler than you might think!
I've helped some of the world's best brands with their retail strategies and have been named one of the world's top retail influencers for the past 5 years.
If you’d like to chat through your plans or use me as a sounding board, I’d be delighted! Feel free to call on +44 (0) 207 183 3785 or email contact [at] insider-trends [dot] com to book an introductory chat.
Feel free to enquire about retail keynotes and trend presentations, webinars and workshops here, too.
Are you a senior professional at a well-known retailer looking to:
• Navigate an accelerating and increasingly complex retail landscape
• Optimise your retail strategies, plans and spend
• Innovate and upgrade with confidence, knowing it will be an investment rather than a cost
• Separate the hype from the initiatives that will actually make you money
I can help. I've been helping brands like Nike, Levi's, Metro AG, Marks and Spencer, Chanel, Carrefour, Unilever, L'Oreal, Absolut Vodka, Galeries Lafayette, Samsung, Clarks, Credit Agricole, DeLonghi, Philips, BNP Paribas and Lego innovate and upgrade their retail strategies since 2008.
As the go-to authority for retail & consumer spending information, I leverage my journalism and financial services background—and combine it with a passion for all things retail—to help consumers, investors, and businesses make better decisions.
📌 RETAIL ANALYST:
As Chief Research Officer at H Squared Research, LLC., I specialize in providing retail and consumer information and reports (including ghost writing) for registered investment advisors. Span includes all market caps in the following consumer sectors (manufacturing and retail):
✔Apparel ✔Children/Teen ✔Consumer Electronics and Video Games ✔Cosmetics ✔Crafts ✔Department Stores ✔Discounters ✔Farm Supply ✔Footwear ✔Gaming and Gaming Equipment ✔Lodging ✔Home Furnishings ✔Home Improvement ✔Luxury Goods ✔Office Supply ✔Off-Price ✔Online Trip Advisors ✔Party Supply ✔Restaurants (fast-casual, quick service, casual dining) ✔Specialty Apparel ✔Sporting Goods / Athletic ✔Supermarkets
📌KEYNOTE SPEAKER | SPEAKING ENGAGEMENTS:
Rakuten Marketing Experience | Fashion Culture Design (FCD) | M&A Advisor Summit | Women’s Jewelry Association (WJA) | Internet Week | Pandora | Council on Foreign Relations (CFR) | NY InfraGard Alliance | IACC | LAPD’s LAORCCA | Mid-Atlantic Anti-Money Laundering Conference | many others
📌 ON AIR CONTRIBUTOR | HOST:
Dr. Oz (regular guest as investigative retail expert) | “Divided States of Women” podcast & video series | BloombergTV | CNBC | Fox Business Network
📌 FINANCIAL WRITER & STYLE WRITER:
US News and World Report | CNBC.com | MSNBC.com | People | Time | TodayShow.com | Elle India | Forbes | Forbes.com | Gotham | Ink'd Magazine | Mashable | Metro Newspapers | New York Magazine | Parade
Associate Professor at Parsons, teaching Social Commerce
Visit WWW.HITHAHERZOG.COM if you are interested in discussing my services.
I've sat on all sides of the retail table -- as practitioner (Lids, Marshalls, Hit or Miss), industry analyst (AMR Research), strategy consultant (IBM), and software leader (Demandware | Salesforce).
I'm currently VP and GM of Retail at Salesforce where I lead Industry Strategy, Product, and Insights. I work with execs at leading brands and upstarts from around the world to accelerate digital transformation.
Love writing, speaking, and participating on retail boards.
About Julia Raymond Hare
I ask a lot of questions - it's one of the most exciting parts of my career! I’m a podcast host, marketing professional and data nerd all in one.
After spending 4 years in global marketing roles for the digital agency Valtech, I co-founded its media brand RETHINK Retail. By interviewing retail executives, academics and thought leaders, I deliver retail insights for leaders, from leaders.
My "formal" 3rd-person description:
Julia Raymond is passionate about marketing management, building connections with others, analytics and research, with a core focus on the retail industry. She earned her BSBA with honors from the University of Florida while she was a teenager. Her post-graduate degree is a Master of Science in Predictive Analytics from Northwestern University.
Julia is knowledgeable about international markets from her experience in global roles reporting directly to the Chief Marketing Officer at Valtech where she led creative and marketing teams; she is the Editor in Chief and co-founder of its media brand RETHINK Retail, curating the latest content around the evolution of retail in today’s connected world through mediums such as podcasts, research and periodicals.
About Gabriella Bock
RETHINK Retail's Managing Editor + Writer/Producer of the Retail Rundown, an award-winning retail podcast featuring news, insights and interviews with the world's most influential retail thinkers. What does the future of retail look like to you? Pitch me at email@example.com.
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 E-Commerce Tech Talks , The Food Professor with Dr. Sylvain Charlebois and now in its second season, Conversations with CommerceNext! 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 the Remarkable Retail podcast, season 4, episode 11. This one goes to 11, Steve, it's part 2. It's Part 2 of our very popular RETHINK Retail Guest Episode series, Part 1. Thank you everyone, it is very popular. And this is, part 2 with Cate Trotter from Insider Trends. We've got Hitha Herzog, retail expert and author, and then Rob Garf, our friend Rob from Salesforce.
Steve Dennis 00:31
Yeah, it's really been fun to, you know, we often have guests, but usually one at a time. And so, it's been fun to mix it up a little bit and talk to some old friends as well as some new ones.
Michael LeBlanc 00:43
We don't have a lot of time with each of them. So, like, they're like a sampler episode. So, you know, each brings such great insights and such a treat to speak to them. And we also kick it off again with Julia Raymond Hare and Gabriella Bock, who join us and, and talk a little bit more about the RETHINK Retail list, and what they're all about, and where they're going with it. So, we have them on as well at the beginning of the session.
Michael LeBlanc 01:05
Reminder to everyone to be sure and subscribe because you can, if you're new to the podcast, and perhaps just hearing some of this great content, be sure and subscribe and you can go back and listen to some of our great episodes, you know, with everyone from Scott Galloway, and Simeon Siegel, which is our most popular episode of our fourth season, and in fact, the second most popular episode of the entire series. So, do check that out.
But, for now, let's get into news of the week. Let's talk about Nike. We've talked about them before. Everybody talks about Nike, their earnings erode, and they made a few announcements. What's your observation about what's going on with Nike?
Steve Dennis 01:43
Well, my first observation is that some people say, ‘Nike’ and some people say, ‘Nike’.
Michael LeBlanc 01:46
I just got that, I just got that.
Steve Dennis 01:48
That's like the most insightful thing to say. But anyway, well, we're getting to the tail end of earnings season here and Nike's earnings came out this week, they beat expectations. But on an absolute basis, they, they seem kind of lukewarm their, their overall sales increase was just about 5%, although North America was, was the star there, and their net income actually dipped a little bit, but their, their margins are still pretty high, eCommerce grew 19%, which is kind of in line with the industry. But nothing spectacular there. They, they definitely called out that supply chain was an issue and that they would have done considerably better had they actually been able to get product, which turns out to be pretty important to sales, you know, I know it's and a big insight that I'm dropping right there.
Steve Dennis 02:36
But, you know, Nike, I think is just continues to be one of my favorite brands. You were talking about the Simeon Siegel episode about the debate between DTC and, and wholesale and Nike is really a brand that has been leaning into what they call their consumer direct offense now for, -
Michael LeBlanc 02:54
Steve Dennis 02:55
just about, you know, well, they've been working on it for six or seven years, but sort of public with it, I guess, for, for four or five. And you could see it a little bit in the results that they've been pulling back on their wholesale partners. So, they reported that wholesale sales were actually down a bit. And that sales in their own various stores were up 14% so that's pretty strong. Their Nike live format, which is their smaller kind of membership-based format, which I think they're planning to grow to a couple 100 stores over the next few years, they called out that is performing well. And, they announced as part of this hybrid strategy, standalone Michael Jordan stores. So, obviously Michael Jordan brand has been a huge part of Nike for, I don't know what, three decades now, probably. And they are now going to be experimenting with a Jordan focused store. So, that should be interesting.
Michael LeBlanc 03:44
Let's talk about it, let's talk about Amazon. We've never talked about them. So, it's good to kind of get out it's good to finally
Steve Dennis 03:48
I know it's good to finally get them in here.
Michael LeBlanc 03:50
Get them in here. But, you know, I guess the news here is Wells Fargo and then Wells Fargo talking about their apparel dominance, which is, pretty massive, like, you know, almost double that of, of Walmart. What do you, what do you make of all this?
Steve Dennis 04:05
Yeah, well, I think Wells Fargo was perhaps the first investment firm to say, and you know, we don't have exact data on this, but they called out what they believed was a new fact, last, last spring that Amazon had overtaken Walmart to become the largest US apparel retailer. And yes, now they're projecting that their sales will, are or will get to double Walmart's which is a pretty impressive feat. They also say that our or estimate that Amazon makes up about a third of all online apparel. So, that's a, you know, as most people probably know, that's lower than their average online penetration.
But it, it's you know, I, I think, think we certainly don't think of Amazon as a major fashion player, and their strength is certainly much more on the basics side. But, yeah, it's just really amazing how that business has gone from, you know, pretty much, not much at all six or seven years ago to be such a large, a large piece.
You know, the real challenge, which I think is very much part of their physical store strategy, is going to be how do they get into the higher end parts of apparel, you know, the more fashion driven part, and you know, they don't really have the brands, for the most part, available to them. So, it's, it's a bit of an assortment issue, but they've been working hard on that for a long time.
Michael LeBlanc 05:38
I guess in one way, it makes sense because as we know from the cataloger’s history, apparel was a big piece, certainly basics and, and swim and fashion and all these things, as you say, you know, they're, what do, what do they also say? They're seven times more than Macy's, which is, you know, they're just selling different stuff. I guess their selling a lot of basics, but it's not where I think of, of my, to go buy my apparel on. And I guess they deal well with the bracketing, right, the different sizing, I'm going to order three and hope I get the, you know, the one in the middle. That's the, the Goldilocks fit. So, I guess that's part of it. I mean, it's a tough business to be in, there's margins, but there's a lot of returns, man, there's a lot of returns in that business, as you know.
Steve Dennis 06:16
Yeah, I don't think it's, I certainly don't think t's an easy business. I think we've, we've touched on this a little bit, when you think about Amazon, getting into it, to grocery, getting into apparel, some of this, I think is very much to just be a resource for just about anything you know, the American, the Canadian the, the English, whatever shopper wants, wants to buy, that leverages their supply chain, keeps the flywheel spinning.
And as we've touched on a few times, Amazon, at this point, you know, retail is about advertising. And so, the more data you can get, the more frequency you can get, the more traffic to the site you can get, the more you can leverage that to where the money is, which is, was, as we've learned recently, advertising. So, I think they're going to keep pushing, and they are in a position to deal with some of the margin challenges and absolutely the returns piece of it.
Michael LeBlanc 07:07
Steve Dennis 07:07
Because they make up for that on the ad side, I think.
Michael LeBlanc 07:11
Well, let's talk about Curb Your Enthusiasm, great TV show. Sorry, I'm just reading our notes here, at Curb Enthusiasm, I thought was Curb Your Enthusiasm. Are you a fan of Curb Your Enthusiasm the show, by the way?
Steve Dennis 07:20
I, I am. It's pretty, pretty, pretty good.
Michael LeBlanc 07:24
Pretty, pretty good. I actually have a cook on my barbecue show that is extracted from one of my favorite episodes, the Palestinian Chicken, which was one of my favorites. And I actually make, make that recipe. So, check that out.
Anyway, what are we talking about? We're talking about some numbers that came out. Talked about the consumers are loving, whether it's BOPIS or curbside or whatever, that we get some big numbers. So, talk about that.
Steve Dennis 07:48
Yeah, I know, we touched on this in the, the past, you know this, this curbside enthusiasm, which is a sub-chapter in my book, a shameless plug. But, you know, buy online, pick up in store has been a growing phenomenon in retail for over a decade. But, like many things, during the pandemic, it was greatly accelerated. So, we saw some stats that buy online pick up in sale, buy online pick up in store, more than doubled from 2019 to 2020. So, that's, that's pretty impressive. And the prediction is that it's going to grow another 21% or so this year. So, when you, when you just think about that on a couple years stack, I mean, that, that is amazing, amazing changes.
Steve Dennis 08:33
I think what will be interesting, and we've kind of anecdotally heard, heard some of this, whereas Target is really kind of doubling down on the curbside pickup part of it. I think a lot of other retailers are reporting that the curbside piece is waning, but the willingness of customers to go into the store to pick it up is, is growing.
Steve Dennis 08:55
So, to a certain degree, it doesn't, I mean, it, it matters operationally, certainly from a retailer perspective how to, how to devote the space to it and, and work out the processes. But, it's a very, very big shift in consumer behavior, and again, it brings, you know, I'm like a broken record on this, but when you, when you think about the growth in eCommerce, it's really the growth in eCommerce ordering, because so much of that growth, you know, outside of Amazon, which just doesn't have the physical store presence yet is, is really being, is really involving the store in some way, whether it is BOPIS or it's shipped from store.
Michael LeBlanc 09:33
Yeah, and Target’s the poster child, so to speak, for that point, right? What did I read 95% of their eCommerce sales were, were store related in one way shape or the other? And by the way, we should tell the folks we, we're going to have a great guest from Target on shortly after the, after we get back from Shoptalk, which we're off to this weekend. So, a little bit of a hint. Let's, let's get to our fun interviews. We're going to kick it off with Julie and Gabriella. Then we'll get into our RETHINK Retail, Part 2 interview session.
Steve Dennis 10:01
Julia Raymond Hare and Gabriella Bock are here with us to talk a bit about the Top Retail Influencer program.
Michael LeBlanc 10:08
Yeah, welcome Julia, welcome Gabriella. Can you first tell us a little bit about yourselves and RETHINK Retail? Gabriella, why don't you kick us off?
Gabriella Bock 10:15
Sure, and thanks so much for having us. I'm Gabriella Bock, RETHINK Retail's Managing Editor, and I also produce our weekly podcast called, ‘The Retail Rundown’. For your listeners who might not know us yet, RETHINK Retail is a multimedia destination for executive-led insights into the trends and innovations that are transforming the global retail landscape. We were founded in 2018 by our Managing Director, Paul Lewis, and our other co-founder and our Editor in Chief, Julia Hare. She's here with us today. So, I will pass it over to her and let her tell you a little bit more about us.
Julia Raymond Hare 10:51
Hey, thanks, Gabriella. Howdy to all the listeners, happy to be here. Again, I'm the Editor in Chief of RETHINK Retail. We also have an amazing podcast produced by Gabriella. I often host it, but not always. And I'm happy to be here today with some of our top influencers, Steve and Michael.
Steve Dennis 11:09
Well, thanks, we're, we're glad to have you. So, Julia maybe could just tell us briefly about how this Top Retail Influencer list came into existence.
Julia Raymond Hare 11:18
I would love to. It was very much an organic pursuit, we wanted to create quality content covering retail news and trends. And, as a host of a brand-new podcast, this was back when, actually we got laughed at, by other people. They're like, ‘Oh that’s just a podcast’, you know? But now, podcasts are, are going swimmingly and we started out, we needed to get experts on the podcast to help give us a little bit of credibility and to share their viewpoints on what was going on in the industry and that was pre-pandemic, so it wasn't as crazy. And then we were growing. So, we brought more journalists onto the team. And we were seeking more and more credible forces, sources to become an authority in the retail news and trends space. And over time, things started going really well. So, we started making the charts for the Top Retail podcasts, our editorial team was growing, and then boom, the pandemic hit.
Julia Raymond Hare 12:18
So, while there were a lot of challenges during that time, from a media perspective, advertising dollars, and such, we did see an uptick in people's interest in us. Our traffic online was growing. And the experts we were connected with really started to take on an even more important role as industry experience and massive rapid change was going on, people were looking to them for Hey, what do we do? How do we tackle this? How do we, how do we roll out curbside in three days, or whatever it was. So, we realized, hey, we have something here, we, we've built an audience of retailers, but we've also built something bigger, an entire community of thought leaders who were helping us share the pulse of commerce and where things were going. So, this roster of incredibly intelligent individuals became our Top Retail Influencers list. And we look to them to help share all of the craziness and distill the information for the retailers in our audience. And we're just really happy to be connected with so many influential and intelligent people. And we're happy to have this community.
Michael LeBlanc 13:28
Yeah, look, look, it's a really well-structured program. And you've taken it to a whole other level in 2022 with, with more initiatives. So, it's really exciting. I love the fact, the idea, the, the genocide, the idea that the tapping into the wisdom of the crowd, so to speak, but, you know, it's really, it's really a nice program. Gabriella, tell us about how you get on the list. And hopefully, what you would hope the, the impact, not just the contribution, but the actual impact for the retail industry.
Gabriella Bock 13:57
Yeah, sure. So, we've identified and organized our TRI into five main categories. And those are academia, analysts, associations, experts, and the media. And the qualifications in each category, they can vary, but overall, we're looking for a variety of factors, right? So, number one, of course, is industry experience. So, we're looking at how long they've been in the game. Have they established themselves as a voice of authority in the retail space? And then we also look at contributions of insights. So, how much and how often are they really driving discussion retail, and this could be through books, it could be through podcasts, or just really any published work, and then finally, reach? So, to be an influencer, you have to influence, right. So, we look at how many followers they have, how much awareness is around their content overall, and then just select our TRI, and it's not always easy. I mean, we've received hundreds of submissions.
Gabriella Bock 14:57
So, our team uses a variety of sources, including third party listings, primary research with their own network of influencers. And then we're also looking at recent award winners as well. So, it's, it's a, a lot to sort through, but to nominate yourself or someone you know, for next year's Top Retail Influencer list, you can visit our website at rethink.industries. Or you can also use the following short URL. And that is a bitly link. So, it is B-I-T dot L-Y slash T-R-I apply. And that is bitly/triapply. And then I guess my vision for the TRI is really that we can just continue to cultivate this real sense of community within retail thought leadership, and then hopefully schedule our own TRI events and meetups in the near future.
Steve Dennis 15:51
Well, that's great. Thanks so much for that, that background and that context, we'll be sure to put some of those links in the show notes but appreciate you coming on to tell us more about what you guys are up to. And with that we will bring on our panelists. All right. Well, welcome to our three great guests. We're really lucky to have three folks from the RETHINK Retail Top Influencer list and so why don't we just jump in and ask everyone to give us a brief sense of their personal history, and what your current role is within your organization. So, Cate, would you start us off?
Cate Trotter 16:26
Sure. So, hi everyone. Yeah, my name is Cate Trotter. I'm the Head of Trends at Insider Trends. I think my personal journey today, this started 14 years ago when I decided I wanted to start a trend spotting company. But we focus on best practice and innovation in retail, we do that for clients such as Chanel, Galeries Lafayette, TikTok, Facebook. We're very proud of our client list. But yeah, essentially, we help clients understand what's coming next, and how to make more money out of what's coming next.
Steve Dennis 16:58
Making money, sometimes elusive these days. That's awesome. (crossover talk). How, how about you Hitha?
Hitha Herzog 17:04
Thanks so much for having me. And yeah, my personal journey started almost, more than I think 20 years ago. I was actually in investment banking, and I saw this retail analyst who worked at my bank called Dana Telsey, and I wanted to work with her. And she was actually leaving to start her own company. And I think she really was the influence that made me think I could do this myself. And, you know, through a lot of turns, some in journalism, you know, most recently, I was a contributor over at Fox Business cover, covering retail and consumer spending. But I think I've really married my journalist background with my retail analyst side. So, I was at one point by side, by side analyst, and now, my company does white label research for registered investment advisors focusing on retail and consumer spending. So, I'm helping them with their clients, make money as well and I'm also an author of a book called Black Market Billions.
Steve Dennis 18:09
Ooh we love authors here. And how about you, Rob?
Rob Garf 18:12
Yeah, how you doing? Rob Garf here, calling in from just outside Boston, Massachusetts, in the states. I'm the GM for retail at Salesforce. So, I oversee our product solution and insights teams. And I came to Salesforce by way of the Demandware acquisition, which is now Commerce Cloud. But I've been in and around the industry for quite some time, sat on really all sides of the table, industry analyst, practitioner, strategy consultant and, here I am now at Salesforce, leading strategy for retail.
Steve Dennis 18:43
Very good. Well, we couldn't be better served, I think, for this topic today, which is the outlook for retail in 2022. Obviously, we all know it's quite a volatile and uncertain time. There's lots to talk about and time is short. But why don't we just jump in, Hitha maybe you could just give us your sense of what your general outlook for retail growth is this year, and what you think are some of the key drivers.
Hitha Herzog 19:06
This idea that retail is somehow dying, I think it's just a, a misconception and I think we all know that being in retail. You know, we're a society here in the United States, and obviously, globally, I mean, buying things, consuming things as part of our human nature. So, you know, while there are headwinds like inflation, like supply chain, I think the consumer is as strong as it ever was. Sure, there is going to be some stumbling blocks of uncertainty. But I think what is really driving it, is this small businesses push to small business and I was looking at some research from Data Catalyst Institute. It was saying that around 79% of small businesses use, you know, different ways of selling, and it's true. The last time I bought something, I was marketed to on Instagram. So, I think things are going to get a little bit smaller. You know, I'm going to date myself a little bit, but, you know, I'm a kid of the 80s, malls are our thing. And I'm not saying the mall is dead, but I think things are just going to get smaller. And I think that's what's going to be driving the consumer to purchase more.
Steve Dennis 20:20
That's interesting. Now Rob, you, I would assume in general, Salesforce is working more with larger clients. So, so what's your perspective, and is there any, I guess, counterpoint to what Hitha was saying?
Rob Garf 20:33
Yeah, absolutely. You know, and one of those common questions I'm getting these days is how do I comp COVID? How do I think about coming out of the pandemic, where we saw 57%, year over year digital growth in 2020, followed by 16%, digital growth in 2021. And CBOs, CEOs, are going to their board and trying to explain what this year is going to look like, if the first couple months are any indication, we are going to see digital growth last month, February, we saw based on our shopping index here at Salesforce, a 6% growth in digital sales. Much of that or all of that was driven, actually by inflation, because we saw pretty much flat order volume and units per order, as well flat.
Rob Garf 21:16
So, you know, the question becomes, how do you use the value of both, and Steve, I know you're bullish on this, the store in digital to lift all ships? And that's really where we see the theme this year. The stores coming and roaring back, but how do stores actually continue to lift digital? Our research actually shows that 60%, six-zero, 60% of digital sales will be driven by the store, whether that's demand being generated or demand being fulfilled. So, we see a healthy, similar to as Hitha said, year ahead, but it's really the combination of both digital and physical that are going to lift all ships.
Michael LeBlanc 21:57
You know, I'm thinking about inflation. And boy, it's gone from being a non-factor to probably the most, one of the most important factors in retail. And Hitha, you were mentioning that and, you know, it's probably the, the biggest lift we've seen in a generation. So, what, what's the playbook here? I mean, we've got inflationary pressures coming from everything from supply chain, and from labor that was happening even before the spring, now we've got a war in, we've got a war in Europe, that's going to drive up food inflation prices. So, the consumer is getting battled from all elements. What, what's the playbook here, Hitha?
Hitha Herzog 22:33
I think in specific categories, there is a, prices become, it, it's almost, prices are agnostic. You know, I think the best example of this is when you look at products from Apple, for example. The price of the iPhone, or any sort of, any product that they are offering, can continue to rise and the demand will always be there. And I think from the retailer side, that's what they have to examine. You have to look at what products can, I mean, the fact of the matter is prices are going to rise. But the question is what, what product is going to, you know, at what point is the, is the tipping point, right? So, I think when it comes to the retail side, I think, trying to make sure that they don't have any sort of customer attrition, obviously, but really examining what products are our consumers going to continue to buy? Because they have to, or just because they want to, the demand is there. You know, like I said, I think the consumer is probably going to, you know, maybe think twice about purchasing a luxury item, that may or may not have been, you know, a second thought a couple months ago even. But, but yeah, I think the retailers really have to examine what their product mix is.
Michael LeBlanc 23:54
Rob, I guess what we're talking about is price elasticity here on a range of goods. You've got such a wide range of clients, what do you, what are you seeing them doing so far to, to account for inflation and, and to counterbalance or to, you know, to incorporate it into their playbook?
Rob Garf 24:11
Yeah, you know, the equation is pretty simple. There's the top line and there's the bottom line, right? So, you know, at the top line, when I'm talking to customers about what they're looking into, is how do you optimize the relationship with existing customers? Certainly, there's the attraction piece of it as well. But you know, our research shows that after three bad experiences, most every ret-, consumer is going to leave a retailer. And so, you know, three strikes, you're out, if you will. And so, we're finding that retailers are honing their customer data strategies. They're looking at personalization, figuring out ways to really repeat purchases, particularly those that have high turn and high frequency, you know? On the bottom-line piece supply chain, as we all know, is going to be, and continue to be, extremely challenging.
Rob Garf 25:01
The variable cost where a lot of our customers are looking at are the associates and the home office personnel. We're in a whole new world of work. And I think those that are leading are looking at how to optimize their associates, particularly in the store as well. Those that have always looked at, which is most of retailer really scan and bagging and throughput at the till, are now thinking about how do we really empower the associate to do much more than just checking out? Focusing on checking in, helping the consumer find their right item through the moment of truth in the floor, not just at the checkout. But also, becoming fulfillment experts, becoming social media managers, becoming service agents, really allowing those associates to look beyond just scanning and batting.
Rob Garf 25:53
Which by the way, is not only good for the retailer, it's also good for the associates, because it's giving them a career, taking on all these new skills that weren't available to them before. So, again, it's really, again, a simple equation, but it's, when it comes down to it, the execution, both on the variable costs and how you look at consumers in a new way.
Michael LeBlanc 26:13
It's really interesting, (crossover talk), -
Hitha Herzog 26:14
I want to add to, really quickly, on the supply chain, I think we're underestimating how important the last mile is. And I think the retailers that can somehow figure out that speed to market or getting that, that, that, you know. I use furniture as an example, because I'm obviously trying to redecorate this apartment, and it's taken six to eight months to try to get a couch in here. But, but that, that is what is also going to add to the stickiness of that con-, consumer and that customer that keeps coming back. We've seen so many delays in the last two years. I mean, even in the last nine months, that I think that retailer that can really figure out how to do it as efficiently as possible, are going to be the ones that win out on, at the end of the day.
Michael LeBlanc 27:02
Hitha, you talked about the smaller independent business or smaller business. Are you worried that they can't compete on, on last mile when it gets to that same day, next day? I mean, there's a real handicap there, right? They don't have scale, and they're not everywhere? Is it, does it, is it a, is it a drag on their performance? Are you concerned about it?
Hitha Herzog 27:19
You know, it's interesting, you would think that it would be a drag, but I think a lot of these smaller businesses, to Rob's point, they're getting very, they're, they're manufacturing in smaller batches, and then becoming very keen and very good at identifying who that customer is, and exactly what that customer needs. So, your orders are smaller, their manufacturing is smaller. And while we saw them lose out at the beginning of the supply chain crisis, you know, we saw these horror stories of the product being, sitting there on the shores of, you know, not even the shores, you know, out in the middle, you know, right by Long Beach in Los Angeles, and here in New Jersey,
Michael LeBlanc 28:01
Stuck in Baltimore right now, apparently.
Hitha Herzog 28:03
Baltimore, exactly. You know, I was flying into LA, and I saw all these ships and you know I took pictures; it was crazy. But, but I think because smaller, smaller stores and smaller businesses, as products that are, you know, they're manufacturing in smaller batches. That, that ability to be nimble is one way that they're going to be able to sidestep the supply chain crisis.
Michael LeBlanc 28:26
Right on. All right, let's shift away from macro-economics and, and some of the supply chain issues. Cate, let's talk about the, the trends that they're, your clients are seeing and, and what you're advising and anything that would surprise the listeners? Something that maybe is underappreciated in, in terms of what you're talking to your clients about that make them go? Hmm..., -
Cate Trotter 28:47
Hmm, well, maybe your listeners will have to tell me what they find surprising. But what I've found interesting recently is, we've noticed a lot of our clients want to talk to us about clienteling. Or they're already embedding clienteling solutions into their stores. So, this plays on Rob's point that stores want to make more out of their associates and turn them into advisors who both connect on a human level with customers in the store, but also maintain that relationship away from the store.
Michael LeBlanc 29:22
Rob, quick comment on the democratization of, of what Cate describes here. I mean Salesforce is a powerhouse in doing exactly what she describes. Is it, is it through the course of your career you've seen the democratization of this capability, right through to retailers, not just the big multinationals, but, you know, best programs for everyone?
Rob Garf 29:42
Yeah, you know, absolutely. The mobile devices totally democratize this access. And it's also necessary, right? Because let's face it, consumers have also been democratizing the way they can access brands. They can get information, they can influence their friends, and family and so, you know, the trick here is, and as Cate was just talking about, it's untethering, the associate from the cash wrap, and really allowing them to engage with consumers throughout the shopping experience. Obviously, that's going to be different by category, it might not be the same in grocery as it is for high end specialty.
Rob Garf 30:16
But, in any case, there certainly is a democratization. And it's really allowing the associate to access that information. And it's at the end of the day, pretty straightforward information. It's about the customer and their profile, their preferences, what they bought in the past, the inventory, the price, the promotion, the village to order. And so, being able to expose that for a mobile device. I think a key point, though, is because we were having this discussion with our Customer Advisory Board on the chair for our Retail Customer Advisory Board a couple of weeks ago, and one of the Heads of Retail, in talking about this phenomenon reminded all of us that we still need to make retail, human. And so, he really encouraged us, and I'll just relay it to this audience here is, throughout all this digitization, let's not forget to humanize the experience.
Steve Dennis 31:06
Yeah, I agree. It's actually something I spent a fair amount of time in my book on and I'd, I agree with you, I think it's often overlooked. One of the things I want to spend just a couple minutes on is talking about, or getting your perspectives on, where we're going to see some differences in category performance, where we might see some differences in terms of particular retailers that, that win and lose this coming year. And, you know, there's been all this talk about the great acceleration that we experienced, because of COVID. I'm starting to feel, and of course, you know, I always like making up terms that, you know, maybe we're getting kind of this great rebalancing. In other words, you know, eCommerce is slowing down, certain categories that were incredibly distorted during the heights of COVID are now kind of going back to maybe more of their historical performance. You know, services were really hit hard during COVID, maybe consumers are going to start to shift a bit away from products to services. Ju-, just in general, I guess, do you agree anybody wants to take that on? And, you know, what does that mean, for categories you'd expect to perform perhaps unusually well, and maybe even calling out particular retailers? So, that's a big question, big setup, but anybody want to jump in on that?
Hitha Herzog 32:21
I have a controversial take on this, it may not be very popular. But I think we're never going to go back to what we were before. As much as we want to think that everything is going to go back and there is going to be some sort of rebalancing. I think we will never, ever see the retail landscape like we did. On March, you know, here in New York, it was March 13, when everything kind of started shutting down. Right before, you know, March 12, 2020, it will never look like that again. And I think that these categories, for example, athletic wear, you know, athleisure, I think it's just going to continue. I think we're going to have that hyper-focus on that, because we don't know what the next three months is going to look like.
Hitha Herzog 33:08
And yes, you know, a lot of these, these restrictions are coming down. However, I think that there's going to be something else that's going to hit us. So, I think we're going to see this hyper-focus on these categories that were really distorted during the last two years, continue. And I think, especially I'm picking out athleisure, is it's so, you know specific and so broad, but, and, and one thing that people really looked at. But, I mean, you look at the numbers, nothing is slowing down. In fact, there's, you know, just looking at brick and mortar and what's coming down on my street, you know, I live right off of Columbus, you know, there's a Lululemon right on the corner being built. And so, it's a high traffic area, I think this is not, it's not going to slow down.
Steve Dennis 33:54
Anybody else want to jump in?
Rob Garf 33:55
Yeah, you know, I'll jump in and I'm just using, and I really appreciate what Hitha, just mentioned, it's extraordinary times. And, I think, you know, what we've seen over the last two year has set a whole new baseline. We saw over the course of pandemic, particularly in 2020, at 40% increase in net new digital shoppers, and so, those are people that hadn't necessarily clicked the buy button before and they have, and that just doesn't snap back. And a lot of loyalty has been driven by health safety, convenience and trust, which to me is, let's remove the friction from the shopping process, and again, that doesn't snap back. So, some new behaviors that have really popped up, don't go away. In terms of categories, to your question, Steve, you know, what we saw from our shopping index over the course of the last couple months is handbags and luggage have come back.
Rob Garf 34:47
So, you talked about experiences and service so, people are wanting to travel again and they're realizing they need some new luggage. Home still remains very strong. We have seen a shift from the last couple of years have been largely around out of home because people are hanging out in their patios outside and needing outdoor heaters and furniture, to indoors now that they're looking forward to entertaining again. They're looking at kitchen goods, and they're looking at their living rooms as well. We're also seeing footwear and part of that was because footwear was so down over the last couple years. And now people might actually see my feet again. So, people like me are looking to, to make some investments there as well. So, there is somewhat of a, a rebalancing of categories. But to Hitha's point, in terms of the influx and the adoption of digital, whether that is a customer using their phone or an associate using a mobile device in a physical store, that will remain at high levels.
Steve Dennis 35:47
So, Cate, I know, we're coming up on our, our time and I just wanted to see if there any, from a consumer innovation standpoint, as you look at what you're talking to your clients about, are there, are there particular innovations that you think are very important, maybe some others that are righ-, not quite ready for their close up?
Cate Trotter 36:09
I've been following experiential eCommerce with extreme interest over the past year or so. So, and, and I think this is really accelerated, again, because of the pandemic. So, these are all these non-traditional ways to engage customers through digital, where we can ed-, educate them, give them an experience, but then we can add selling into the back of this. So, I don't know if you saw but, I think it was L’Oréal and Mac, they ran a hu-, an, an experience on YouTube where they had an influencer talking about different lipsticks. And as you watch that video, you could try on the lipstick in augmented reality. You could then go on to buy the lipstick that you were trying on.
Cate Trotter 36:58
I, that really caught my eye because that offers a higher level of experience, and also engagement than we might get in a store, actually, and also the numbers behind that perfor-, like, they, it performed really well. I think they saw engagement time go up by three times compared to a normal digital experience. And I think they engaged millions of people for like a fraction of a cent per person. I'll have to double check that, but the numbers were really impressive behind it. And so, I'm collecting examples like this of brands who are en-, engaging in a digital first way, but in my opinion, offering a better experience at scale, for less, and actually surpassing the store experience. So, my one to watch is experiential eCommerce.
Rob Garf 37:52
Yeah, and I'd double down on that. I mean, retail from the beginning of time was all about pulling the consumer to the retailer's property. And that was really safe, it was really comfortable, they had control. And now it's as much about pushing the brand to wherever the consumers are, and that's what I'm hearing from Cate, in terms of whether it's messaging platforms or social media voice, certainly, of course, the big buzz is the Metaverse because all the big tech platforms are investing in it. But the idea that these become the shopping mall of this generation, in terms of where inspiration is happening, where discovery is happening, and because of that these platforms they're able to monetize it by putting a shopping button there, which then will really, hopefully, because it hasn't happened yet, break down the friction between the inspiration and purchase. So, we call it shopping at the edge. Cate, I, I hear you and I second in terms of the experiential retail, and not just standing up a website and hoping people come.
Cate Trotter 38:45
Exactly, yeah. And we, we talk about shopping being embedded into everything. So, shopping, almost becoming invisible, brands leading with the engagement and the experience first. And yeah, Rob, as you say, just making the shopping part frictionless off the back of that. There's lots for retailers to think about with that. They possibly should think more like a magazine or a TV channel that just so happens to operate stores and digital channels. There's, yeah, lots to think through there.
Hitha Herzog 39:18
Yeah, I, I think I'm, I'm doubling down as well on, on the Metaverse. I wrote a research piece on Metaverse and was on a project dealing with a gaming, game five Metaverse company. And, I don't know if it's quite ready for its close up, but I think it's getting close. Very interesting to see what these land sales are doing, and which brands are coming to the table to participate in these million dollar virtual land sales in the Metaverse. And then one product I am very pro on is 3D printing. I was just reading a report from Toby (inaudible), and they were, you know, they had the Cana in-home beverage printer that looks so sleek and looks so great. (crossover talk), I think that is really, I mean, if you want to talk about futuristic, and like, welcome to 2022, I think 3D printing where, you know, maybe eight years ago or even five years ago, you know, people kind of threw up their hands and said, what, what is this, we don't get it. We're there now.
Michael LeBlanc 40:21
Wow, wow, that eh-, okay, that wasn't on my bingo card for anyone to talk about today so congratulations Hitha. Well, let's, let's, let's wrap this up with some hot takes, some quick takes. And I'm going to ask each of you for, if you had to pick a, a legac-, let's call them a legacy retailer, to keep an eye on for the balance of the year, and an up-and-coming disruptor. Hitha, kick us off.
Hitha Herzog 40:42
I'm going to say GameStop. I know, again, here I am with my controversial views. But I, I don't even know if you want to call it a legacy retailer. But I think, you know, given all of the attention, and given that there was a lot of pressure on the executives now, to really make it a viable company. I mean, let's remember that this is a brick and mortar, they have a brick-and-mortar component, you walk down to the store on 14th Street here on, in, in New York, and there's still no one in there. So, you know, apart from the apes being very pro about the stock, you know, and the short sellers, I think the, the executives are under a lot of pressure to actually make it a viable, or a more viable retailer, I guess I should say, so, I'm watching GameStop.
Michael LeBlanc 41:23
Alright, anyone, anyone who we don't know that you're keeping an eye on?
Hitha Herzog 41:28
I'm going to say Fernish. I don't know if you know this company. It's a direct-to-consumer furniture rental company. I just actually interviewed the CEO a couple weeks ago at a conference. And they're very interesting. It's not like your 80s rent to center type thing. There's really, you know, I think there was a lot of, I don't want to say, taboo, but controversy, you know, you think that someone's getting their furniture from Rent-A-Center, Fernish is a completely different thing and I think when you're seeing the way younger people are working and traveling and living, this is going to be a trend to keep your eye on.
Michael LeBlanc 42:06
So interesting. All right, Rob, you're up next to the plate.
Rob Garf 42:08
Oh, boy. All right. So, I'm going to go with Target. I mean, I guess it's probably not a big surprise, you hear their earnings from a couple of weeks ago. But what I really like about them moving forward is you know, with most retailers getting really scrappy over the last two years, and now trying to scale and become efficient, Target was already scaled, they made some of the smartest investments to get them to a point where they're using their stores as distribution centers and really optimizing the footprint. I'll also though, throw up PetSmart. And why I like PetSmart is, of course, you can get dog food and pet supplies most anywhere on the internet. But what you can't get virtually is all of the services that PetSmart offers in their stores in terms of grooming, and so forth.
Rob Garf 42:54
So those are two, as you say, legacy or traditional retailers, I guess if I could jump to the second one is I'd go with Shein. And it's one of these that, we all probably know about but, many people may not. If fast fashion wasn't fast enough, now you have ultra-fashion, but they're doing it in a new way in terms of being able to really react quickly to consumer demand through smaller bias, as was mentioned earlier in the podcast and move really quickly. But you know what, the point of entry and the barriers are low. And so, you got like (inaudible) as an example, a Chinese copycat who's quickly coming after them with $130 million investment, just recently. But I find it super interesting, of course, as one of our values here at Salesforce, sustainability, I question how they're able to do it ethically and sustainability, in a sustainable way, but I, I definitely have my eye on both of them.
Michael LeBlanc 43:45
So, interesting. All right, Cate, bring us home. Someone we might, a legacy retailer and then someone we might not know of, perhaps across the pond.
Cate Trotter 43:52
I, okay. So, again, I'm not quite sure if they're a legacy retailer, but I'm a massive fan of Nike's retailing, I don't think they can do any wrong. They think digital first, they're focusing on DTC. It's all brilliant. I could talk for hours about them. But actually, can I say two new ones that I'm really excited about at the moment? A more traditional, but forward-thinking retailer from the UK, is Situ Live. So, they're setting up a new type of department store, they charge brands to be stocked. The staff are mainly there to educate consumers, and also live stream from the store. So, every part of the store is designed to support live streams. It's, it's brilliant, what they're doing. So, look them up, they're awesome.
Cate Trotter 44:44
But I also discovered Plunk recently. Now, Plunk isn't really a retailer at all. It's actually a prop-tech solution. So, it uses AI to understand what's going on in a customer's home and then it recommends home improvement projects for them. It puts a dollar value on the cost of each of those home improvement projects, but also shows how much that customer's home is likely to increase in value as a result. It then connects the user of the customer with financing for that project, and also professionals, if they need them, to complete the project. It's a fantastic idea from a prop-tech perspective. But I'm wondering which hardware or home improvement retailer could adopt this idea and build shopping into the back of it. So, I think why I find this so exciting, is again, this is retail. Without retail, or, or retail thinking experience first, rather than selling first, it should be relatively easy to build selling into the back of a solution like that. But yeah, it sends home improvement projects from a consideration into a no brainer.
Michael LeBlanc 45:58
Now, last really super quick question. I'm assuming you're all on LinkedIn. Cate, is that the best way to get in touch with you? And then Hitha and then Rob.
Cate Trotter 46:08
That is definitely the best way to get in touch with me. My name is Cate Trotter, Cate with a "C".
Hitha Herzog 46:15
Yeah, LinkedIn is always great. You can find me also on Twitter @HithaHerzog, and I'm on Instagram at hithaherzog. And, of course, you can check out my book on Audible called Black Market Billions. The link is on my Twitter handle.
Michael LeBlanc 46:31
Fantastic. Rob, are you, are you, have you, have you departed from the physical and you just live in the meta-universe? Is that the best way to get in touch with you, or? How do you (crossover talk)
Rob Garf 46:40
I don't know about that, we'll see.
Michael LeBlanc 46:43
(crossover talk) He's just an avatar now, I guess.
Rob Garf 46:45
Exactly. Yeah, no. So, certainly, of course, as the others mentioned, LinkedIn is a good place to find me, also on Twitter at @RetailRobGarf.
Michael LeBlanc 46:53
Well, thank you to all the panelists, on behalf of Steve and I, for joining us on the Remarkable Retail podcast, and the, the folks at RETHINK Retail for bringing us together. We could probably have a many, many hours discussion and, and we'll, we'll be circling back with everyone. Thank you each and every one of you for your contribution. And it was wonderful to speak with you this morning. So, thanks a lot.
Cate Trotter 47:14
Thank you so much. It's been really fun.
Hitha Herzog 47:16
Thanks for having us.
Michael LeBlanc 47:17
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 and insights, and new episodes will show up each and every week. Be sure to check out our YouTube channel. And last but not least, tell your friends and colleagues in the retail industry, all about us.
Steve Dennis 47:33
And I'm Steve Dennis, author of the bestselling book, ‘Remarkable Retail: How to Win and Keep Customers in the Age of Disruption’. You can learn more about me, my consulting, and keynote speaking at stevenpdennis.com.
Michael LeBlanc 47:46
And I'm Michael LeBlanc, producer and co-host of the Conversations with CommerceNext podcast, The Voice of Retail podcast, keynote speaker, and host of the all-new Last Request Barbecue cooking show on YouTube.
You can learn even more about me on LinkedIn or meleblanc.co.
Have a safe week everyone.
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