We're all about accountability on the Remarkable Retail podcast, so as we get close to wrapping up Season 5, it's time to grade Steve on his annual predictions. Michael takes out his virtual chalkboard as we go through all ten predictions about the future of retail, including Amazon's brick-and-mortar dreams, the Metaverse, whether JC Penney has a future, the trials and tribulations of digital disruptors, and a whole lot more.
We're all about accountability on the Remarkable Retail podcast, so as we get close to wrapping up Season 5, it's time to grade Steve on his annual predictions.
Michael takes out his virtual chalkboard as we go through all ten predictions about the future of retail, including Amazon's brick-and-mortar dreams, the Metaverse, whether JC Penney has a future, the trials and tribulations of digital disruptors, and a whole lot more.
But we start with the retail news that caught our attention this week, including fresh figures on inflation and the job market before our quick takes on the somewhat vexing picture emerging from Black Friday and Cyber Week. With earnings season wrapping, it continues to be a tale of two cities with remarkable retailers like Ulta delivering strong numbers, while others (Lands' End, Farfetch), well, not so much. We do our by now familiar head scratching as Macy's fumbles around with brand partners that seem to do nothing to change its relevance and remarkability issues, before concluding with ideas on how Amazon can improve its retail profitability.
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Steve Recent Relevant Forbes Articles
10 No-Holds-Barred Predictions for Retail in 2022
The Stores Strike Back Again. Again.
Understanding Buying v. Shopping
Amazon and the Fault in Their Stores
Digitally Native Brands Hit the Wall
Blow It Up: It's Time For "The Great Reconfiguration"
About Us
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 00:06
Welcome to Remarkable Retail podcast, Season 5, Episode 22, presented by MarketDial. I'm Michael LeBlanc.
Steve Dennis 00:12
And I'm Steve Dennis.
Michael LeBlanc 00:14
Steve, do you remember the first time you went to New York City like Manhattan? I think you were born in that region. But do you remember the first time you crossed a bridge and went into the big city?
Steve Dennis 00:24
Not specifically but yes, I was. My family lived in Queens. And I was actually born in a hospital in Orange, New Jersey. Fun fact. My dad worked in Manhattan, and I probably went in to go visit him.
Michael LeBlanc 00:40
I tell you up here in Canada, I watched you know, I was born in Ottawa, moved to Toronto, I you know, you'd see New York, so much in media and television and movies, I was dying to go there. And eventually I went in my early 20s. And that was, you know, the taxi driver in New York, right? That was, you know, you didn't want to lean on anything, because it's probably just peed on kind of New York. What (crossover talk),
Steve Dennis 00:59
You gave me a vivid picture Michael.
Michael LeBlanc 01:02
What a different city. I mean, and of course, why are we talking about this, because we'll be together in the Big Apple coming up at the NRF Show on Monday, January 16th, presented by our friends at MarketDial with The Container Stores', Gretchen Ganc you and I, and I think you're doing a book signing as well. So, we just want to make sure that people connect and know we're going to be there.
Steve Dennis 01:23
Yeah, we're, we're doing a talk called Shift happens: Choose remarkable, or relevance. And we'll be, I'll be sharing some, some ideas from my book and some other stuff. And Gretchen will be talking about all the cool things they're doing at The Container Store. And then yeah, we'll have, we'll have some books to give away and to sign so make sure you plan for that.
Michael LeBlanc 01:45
All right. Well, we look forward to seeing everybody there and it'd be wonderful to be back at the show now about this episode, we got a solo episode. A really fun solo episode coming up for the people. It's an episode dedicated to grading yourself on your January 2022, 210. No holds barred predictions for retail in 2022. The rankings so we put you to task so to speak in this episode.
Steve Dennis 02:10
Yeah. You know, I don't generally consider myself a futurist. But one of the things I've noticed about people who call themselves futurists is they don't do short term predictions. I'm sure you can find an exception. But then they'll put things in, you know, books or speeches or whatever about things that are going to happen at an indeterminate time in the future. And honestly, for me, from an accountability standpoint, that might have been the smarter move. But anyway, you'll have to stay tuned to see the errors of my ways, as well as a few things that I think I got. I got it right.
Michael LeBlanc 02:41
All right. Well, let's, let's get to the news of the week. So, let's tap on a quick macro, we get some great new job numbers coming out. A continued strength, which is good news and bad news, I suppose off mic, we're talking about how hard it is to find people and people ghosting and interviews and just walking away from stores and not even telling you they don't work there anymore.
Steve Dennis 03:00
Well, we got a couple of things in the US anyway. I know that the situation in Europe and some other markets is not as strong, but the GDP numbers were surprisingly strong. People keep saying you know, we're in a recession, and yet we've had a couple quarters now of positive growth on the low side, for sure, but still positive. As you mentioned, while we have seen some of these high-profile tech layoffs, and some other, other companies announcing big layoffs, the overall job market is really still pretty strong, jobless claims, unemployment continues to be in pretty good shape. We did get some positive news, or at least a positive indication that perhaps inflation is tempering a bit. And then one of the things which I hadn't been focused on that much on other than I drive by and see what the gas prices have been. Gas prices this past week are actually lower than they were before the Ukrainian war.
Michael LeBlanc 03:58
I interviewed the Deputy Chief Economist for a big bank here at CIBC and he called the recession, a wannabe recession. I have never seen anything like it because you got full employment, yet you've got recessionary winds blowing. So, it's a real different time. So, I'm sure it'll be something we'll talk about now and in the future. Let's talk about any, any other comments about it's kind of in the rearview mirror now. We're in the, we're in the, you know, the after party, so to speak, Black Friday, Cyber Monday, any, any, there's some data coming out any comments on the data that you've been seeing and reading?
Steve Dennis 04:30
Well, you know, I think overall, it paints a picture of a pretty tepid cyber week, I guess you could say. I know our friends at Salesforce reported that global eCommerce sales are only up about 2%. You know, and I think we're generally. I mean, COVID kind of messed, messed up the
Michael LeBlanc 04:42
Yeah, yeah, yeah.
Steve Dennis 04:45
Extremes here in terms of percentage growth, but you know, kind of the long-term trend had been that eCommerce was growing, you know, 13-14% every year and so you know, I would always joke around when people say, Oh, it was a record year this year like, Well, yeah, it's been a record year since 1993. It's not really big news, (crossover talk). Yeah, other people were kind of focused on the fact or at least the estimates that store traffic was up quite a bit year-over-year. I don't know that that's terribly surprising, given that we are now comparing, if people even remember this, but we were starting to see the big Omicron,
Michael LeBlanc 05:20
Yes.
Steve Dennis 05:21
Spike and I think that definitely tempered traffic.
Michael LeBlanc 05:32
That was the big NRF story of all right, what were the numbers like, marked at a new record five-day period that exceeded 166 million projection.
Steve Dennis 05:39
Right.
Michael LeBlanc 05:40
They gave for cyber, so they really hung their hat on traffic this year, which is interesting.
Steve Dennis 05:49
Yeah, and of course, traffic doesn't necessarily result in sales. So, in another report and you know, the problem here is the data sources are mostly from surveys, or in the case of (inaudible) Mastercard’s stated it's from, you know, their cardholder data. So,
Michael LeBlanc 05:57
Yeah.
Steve Dennis 05:58
It's indicative, but you know, we don't really know how things sorted out until we kind of get the, you know, the individual retailers reporting their specifics. But the NPD data showed that on a $1 volume for cyber week, sales were down compared to last year. But the other thing they did that I thought was interesting was they were comparing it to 2019. So, the pre-COVID,
Michael LeBlanc 06:11
Well, that's interesting.
Steve Dennis 06:13
Period and they had sales down and compared to 2019 by 9%, on a $1 basis. And then even more interesting, I think, is when you look at it, because you know, we've been talking about how inflation is affecting, you know, it has a component of what that sales volume looks like. But if you do it on a unit volume basis, their data shows that transactions (inaudible) excuse me, units sold, were down by 19%, compared to 2019, and down 8% to 2021. So, to the extent you believe that that's reasonably an accurate picture, I would say Cyber Week is pretty disappointing.
Steve Dennis 06:40
Now, what we touched on last week, and I guess I'll just kind of wrap up with this. I do think number one, Cyber Week is not the whole holiday season, (crossover talk). Because of Thanksgiving occurring earlier, relatively speaking than it did last year, there are more shopping days ahead. So, here we are recording this on Friday. And at least if you celebrate the Christmas holidays, you still have, what 22 days?
Michael LeBlanc 07:01
Yeah.
Steve Dennis 07:02
To shop. So, there's still a lot left that can happen. Yeah, I guess one other thing, I lied there, I was going to wrap up. But the other thing that I thought was interesting to look at is the degree of discounts. And I mean, in most of the reports I saw, that discounting was heavier this year, by a pretty good amount than last year, which makes sense. If you think about last year, we're kind of in this position of inventory scarcity. And this year, we're into abundance or glut, depending upon where you sit.
Michael LeBlanc 08:01
Yeah, you were chasing, you were chasing inventory more than you were chasing sales this time last year. I think consumers are playing a game of discount chicken with retailers. They're like, Okay, we hear you, we hear you got lots of stuff. So, we're just going to wait it out until like the 24th. Again, if you're buying for Christmas. So, I think there's a lot of that going on.
Steve Dennis 08:18
I will say and this is very anecdotal information, but the sheer number of emails that I have gotten with promotional offers, is just staggering. And you know, I unsubscribe from stuff and whatever. So, I don't have the (inaudible), and I don't keep track of this year-over-year, but,
Michael LeBlanc 08:22
Yeah, yeah.
Steve Dennis 08:24
I just felt like desperation starting to creep into some of these emails. As we got into the latter part of Cyber Monday in particular.
Michael LeBlanc 08:41
Let's talk about earnings, Ulta raised their forecast on strong beauty sales. We've had, we had the CEO of Ulta on kicking off our season, what, what make you have the Ulta earnings?
Steve Dennis 08:52
Well, incredibly impressive. I mean, not only did they, they raise their, their guidance, we've talked about a bunch of retailers that have lowered their guidance, or basically said we have no clue what's going to happen. So, this is a bit of an outlier. But a, but a 14.6% comp, shown here that too often. And at 27.5% rise in net income on what has already been a pretty good string of performance. And I guess my comment, I mean, as you said, we had Dave Kimball on Ulta is a retailer that I show cat-, showcases a remarkable retailer in my books. So, I just think there, they seem to be firing on all cylinders is probably a bit of a lift from the kind of people going back out more and you know, (crossover talk) kind of left things.
Michael LeBlanc 09:31
Yeah.
Steve Dennis 09:32
So, there's that. But if you think about Ulta, as well, you know, they're in so many markets now. You know, this is a business, the beauty business, which is one of these businesses that, as you well know, used to be really kind of a cornerstone of the traditional department stores. (Crossover talk). So, you think about you know, with Alto with Sephora, Blue Mir-, Mercury you know, a few of the smaller players. There's been such a shift over the past decade away from those traditional players largely on the mall to, to these more convenience oriented, more focused competition. So, I think that's just a, something for people to think about more you know, whether in the beauty business or not just think about more, more holistically as to you know, what is that about that allows these companies have, have great success?
Michael LeBlanc 10:24
Now I saw a name from your, connected to your past, Lands' End put out some results that weren't, weren't stellar, what did, what did you make of those?
Steve Dennis 10:32
Yeah, so Lands' End, and I often use lan-, you know, we talk about all these digitally native vertical brands, and, you know, I often talk about Lands' End as an analogue native vertical brand, because, you know, historically they have been a pretty successful direct-to-consumer brand. And they were, they've had kind of a, a, a sorted history, perhaps, but they had been doing there better,
Michael LeBlanc 10:45
Terrible by the way, but okay.
Steve Dennis 10:50
They had been doing better, it seems, but Wall Street was surprised that they had swung to a loss, they took their outlook down, and I just decided to check because people here in just a few minutes, we talk about some other stock performances in the main part of this show segment. But their stocks are down 60% year-to-date, which is not exactly fantastic, but you know, a lot of retailer stocks, (crossover talk) quite a bit, but yeah, but they're, they're struggling. And then, you know, just to go back to our wobbly unicorn corner, Farfetch (sound effects), there we go.
Michael LeBlanc 11:13
Here we go. (Inaudible),
Steve Dennis 11:16
Steve, wait for the sound effects.
Michael LeBlanc 11:20
Yeah.
Steve Dennis 11:21
Once, once again our rehearsals.
Michael LeBlanc 11:25
We rehearse over and over and over,
Steve Dennis 11:29
Over and over again. And then I step on my line, or step on your line. Anyway, Farfetch, which is an online, mostly online fashion brand which, was, was flying pretty high for a number of years. They really, what's a nice expression? They had a bad week, (crossover talk).
Michael LeBlanc 11:57
There is no bed invol-, is there a bed involved?
Steve Dennis 11:59
There's no bed, (inaudible) it's an expression that perhaps involves a bed you could do your own research, (crossover talk).
Michael LeBlanc 12:04
Left better unsaid on our family oriented podcast.
Steve Dennis 12:06
Yes, yes. Well, you know, when you have a unicorn in your bed, things are going to happen. Yeah, they were, they were flying high and kind of crashed back down to earth based upon some guidance that they gave, and their earnings were. Yeah, not, not, not good. So, it's, I guess you know when I step back not just only on this set of earnings. But some of the ones we've been discussing over the last few weeks. It's really kind of a re-, continued reevaluation of some of these high flying, quote unquote disruptor business models. But on the other hand, brands like Tractor Supply Alta, some others that have this really powerful business model, even though they've been around for a while, like they're not nearing, (crossover talk).
Michael LeBlanc 12:43
Bringing in good numbers.
Steve Dennis 12:48
New, new brands continue to deliver. So, even in this shaky economy, or uncertain economy, it's possible to put up some pretty good numbers if you've got a remarkable business strategy and you execute it well.
Michael LeBlanc 13:04
Well, speaking of some remarkable numbers, I guess, Claire's is opening up 21 Macy stores. Is that remarkable or is this filling up space. What's, you know Claire's is a nice, young brand? I mean, I guess that it makes sense. It's a youth-oriented brand. I guess it's a JC Penney play that you g-, get to the youth. But what do you, what do you make of that?
Steve Dennis 13:24
Well, I just want to know, are they next to the Wetzel's Pretzels? Because I feel like we reported on that a while back, and I haven't heard anything about it. I don't know. I mean, I sometimes feel well, first of all, sometimes I feel like I'm just piling on with my complaints about Macy's. That's fair criticism.
Michael LeBlanc 13:44
What do kids call it dogpiling? We're not (crossover talk).
Steve Dennis 13:46
Dogpiling, yeah. But it does feel like they are just trying stuff because they have the space. And because they have a broad strategic desire to, you know just like with toys, you know Toys R Us, you know, just get that younger customer get a slightly different customer. And at one level, it's fine. But I'm still going back to like, what is this cohesive strategy to really go. So, it's great to try stuff. But I feel like too much of it is motivated by we've got these massive stores; we've got 1000s of square feet that are producing under $100 a square foot. What else can we put in it? So yeah, I just it, it, it feels a little bit desperate. And I should point out I'm pretty sure Claire's has already got a big presence at Walmart. So, it's not like they don't have kind of a shop in the shop wholesale kind of relationship already. So, I'm not sure how additive this could be.
Michael LeBlanc 14:44
Let's end today talking about our friends at Amazon. We haven't talked about them in a while so I'm sure they're feeling lonely.
Steve Dennis 14:51
Whatever, whatever happened with those guys?
Michael LeBlanc 14:52
So, we've seen some price data from prefer-, perf-, perfarato-, profiter, (inaudible).
Steve Dennis 15:00
That's a good question. I say profiteroles because those are delicious. But I don't think that's their name, Profitero I think?
Michael LeBlanc 15:06
Anyway, we're seeing some price information from a company which we can't pronounce. That's talking about Amazon prices. What do you, what have you learned?
Steve Dennis 15:13
Well, there I saw this. And I also saw some other data that points to how Amazon is very consistently, materially cheaper than some other large discounters like Walmart, like Target, like others. And one of the things that, that I just wondered about, particularly since it seems like Andy Jassy is focused on improving, while improving the profitability of Amazon more broadly, but in particular, given the underperformance in retail, it just seems to me like there's got to be an opportunity for Amazon to selectively raise some prices on a fair number of items, and I think it would be a layup to, to add, you know, 50 basis points, 75 basis points to their, to their gross margin, which is a huge amount of money on, on the scale of their business (crossover talk).
Michael LeBlanc 15:56
On their (inaudible), for sure,
Steve Dennis 16:00
Yeah, and it's something that presumably, they could test their way into as well. So, I've been aware, because I've seen other reports on this pricing difference, because, you know, some Wall Street firms and others do this bundle you know basket analysis. And, and I've just noticed how consistently, there's some really, really huge differences. And I guess it's not clear to me why you need to be 16% cheaper, for example, their study pointed out a target on some items, like couldn't it be 5% cheaper, and still, still be the price leader. And yeah, generally speaking, Target and Walmart are pretty short prices. So, it'll be interesting to see the strategy. I guess the reason I bring it up is it seems like there's a real opportunity for Amazon to improve their profitability. And it'll just be interesting to see, you know, this is kind of merchandise 101, right? And whenever you're always looking for opportunities, you know this.
Michael LeBlanc 16:53
Yeah, yeah.
Steve Dennis 16:55
To, to optimize your pricing and your inventory turnover. And your, as well, as you know, obviously, there's the strategic branding part of how you want to, you know, be forward in the market, but it seems like they've been leaving a lot of money on the table potentially for, for years.
Michael LeBlanc 17:03
Well, I think it's going to be an interesting, an interesting year ahead for many retailers, including Amazon. So, with that note, let's take a look back at your predictions. And let's get, let's get the chalkboard out and let's see how you did.
Michael LeBlanc 17:16
All right, Steve, let's get on to this fun segment where we're going to take a look at your 10, no holds barred predictions for retail in 2022. You are a no bullshit guy. So, let's take the opportunity to see how you did and we're going to give you a, we’re gonna give ourselves or you're gonna give yourselves a grade, like, we're taking you back to school here, A thruF, I guess A+ to F. So, I'm going to call out your 10 predictions that you made back in, in January, you even have an article in Forbes,
Steve Dennis 17:43
Yeah.
Michael LeBlanc 17:44
And we're going to see how you did, we're closing in on the end of the year. So,
Steve Dennis 17:55
We are, (crossover talk) to be fair, you should probably just put this out as a little bit of a disclaimer. It's possible things could radically change in the next like three weeks. So, I'm just going to put that out there. We are doing this a little bit early. But I think I'm going to be able to stick with these grades.
Michael LeBlanc 18:12
I think the lawyers call that a caveat. So, we just put a caveat in there. The stores strike back again, your number one prediction?
Steve Dennis 18:19
Yeah. So, I talked about this in my book. And I also wrote something about the store striking back I don't know, two or three years ago, because as we've talked about it a bunch of times, there was this whole retail Apocalypse narrative, which I thought was, was kind of nonsense. And, and people want to keep thinking that eCommerce is going to take over the world. And so, this prediction was basically about well, not so fast. Stores are going to continue to be important. And in some ways, not all ways, but in some ways. They're even more important when it comes to things like buy online, pick up in store or return to store and so that was what this was about.
Michael LeBlanc 18:04
Yeah.
Steve Dennis 18:05
So, I mean, this one, I think I would give myself a pretty solid A. I mean, when you look at number one, eCommerce growth has flattened physical store growth, from a sales perspective has been quite strong. Lots of stores are still opening I believe, according to our friends at Coresight twice as many stores opened as have closed so far this year, and many of the digitally native vertical brands so called digitally native vertical brands continue to open a lot of stores, Warby Parker talked about getting up to several 100 stores. So, that's a little bit of irony there and specific to what we talked about with Target the hybrid role of the stores, so the role of stores in, in fulfillment is becoming even more important because there's quite a lot of investment there not just from Target but Walmart and a bunch of others. So, I feel pretty good about this, this prediction you keep talking about the sky is falling for physical stores, but facts are stubborn things.
Michael LeBlanc 19:54
Facts are stubborn things and I think it reminds me of one of your best social media tweets. When Facebook announced they were opening a store to sell the Metaverse, irony is dead, (inaudible).
Steve Dennis 20:06
It officially died. Another proof point,
Michael LeBlanc 20:08
(Inaudible) another proof point. So, I'm going to put you up on the chalkboard. A, you got an A. So, there you go. Let's go on to number two.
Steve Dennis 20;14
It's pretty tough to maintain. But we'll see.
Michael LeBlanc 20:17
All right, do you like that chalkboard sound? It's a little, a little fun there for the, (crossover talk).
Steve Dennis 20:23
I love, I love, I love the sound effects.
Michael LeBlanc 20:27
A little fun for the (crossover talk).
Steve Dennis 20:30
Re-, re-, to retail AMS, what's that called ASMR?
Michael LeBlanc 20:32
Let me play that again. (Chalkboard sound) All right.
Steve Dennis 20:35
Too relaxed to go forward.
Michael LeBlanc 20:37
Yeah, either that or we've lost half the audience. Going to number two, moderate department stores will experience a dead cat bounce. Now, first of all, what is for those who may not know? What is a dead cat bounce?
Steve Dennis 20:52
Well, I mean, I don't like to use violent imagery. You can kind of picture you know, if you were to drop a dead cat it wouldn't (crossover talk) bounce very much, (crossover talk).
Michael LeBlanc 20:56
Yeah.
Steve Dennis 20:57
Yeah, yeah, yeah. So, it's, it's this idea that doesn't really stay up in the air.
Michael LeBlanc 21:06
Yeah, they don't, they don't bounce several times. They bounce once and then.
Steve Dennis 21:07
Right.
Michael LeBlanc 21:08
Not that I've had the experience.
Steve Dennis 21:11
I mean, your results may vary. But, but yeah, there was a lot of talk early in the year and we're not going to call anybody out. But if you were to Google, things like department stores are back or department store resurrection or these sorts of things, you will see quite a lot of people who frankly should know better. Who we're predicting that department stores are going to have this big resurgence. And I just never thought that that was likely mainly because the problems of the department store sector are two decades old. And I didn't see anything that was really fundamentally going to change that trajectory. So, here I think again, I would give myself an A.
Steve Dennis 21:36
Look at the performance of the four major department stores so Macy's, Kohl's, Dillard’s and Penney's Macy's sales basically flat year-to-date profits down, Kohl's sales, down seven or 8%, I think profits down 60%. Dillard’s is a little bit better, their sales are actually up, and their profits are okay, so Dillard’s is a bit of an outlier, though, you know, they have not radically changed their trajectory. Penney's is harder to understand because they're now owned by Brookfield and Simon so the only thing we know about Penney's, we'll come back to Penney's in a second. So, I won't spend too much time on it.
Michael LeBlanc 21:54
Yeah, yeah.
Steve Dennis 21:56
Is that Penney's traffic according to Placer ai is down about 30% year-over-year. So, it's hard to imagine they're having a great year. And Simon and their recent earnings report talked about the poor performance at Penney’s. So, I think it's pretty clear the top three are not performing very well. Dillard's is a little bit better. And then the last little statistic here is if you compare those four chains, traffic relative to 2019 is down in the vicinity of 20%.
Michael LeBlanc 23:05
And they weren't exactly lighting it up year-over-year.
Steve Dennis 23:06
They weren't. So, back to what, not even back to 2019, which to your point was not exactly a banner year, so yeah. Not, not very promising.
Michael LeBlanc 23:16
All right, so here we go. (Chalkboard sound) Another A. Now let's jump to and you've mentioned them, JCPenney, which again, was one of my favorite social media quotes that you had thoughts and prayers when Marc Rosen and took over from, from Levi's, (crossover talk).
Steve Dennis 23:32
I'm such an optimist.
Michael LeBlanc 23:34
You are, you are but your prediction of JCPenney takes over the mantle as the world's slowest liquidation sale. What. what say you, ahhh, maybe it's come a little slower or faster than you thought. What do you think?
Steve Dennis 23:47
And this is going to bring my average down quite a lot. Maybe if I can improve upon, I'm going to give it, myself a D. And the D stands for dumb. Because this was not a prediction. It's not a very good one for reasons I'll mention in a second, but the other problem is, we don't really know how Penney's is doing. So, it's hard to evaluate what I had in mind. Well, first of all, the world's slowest liquidation sale is Sears, which still isn't quite (inaudible) but we're just starting there. I think Sears is probably wrapping it up here after the holidays.
Michael LeBlanc 24:08
You've been saying that for three years.
Steve Dennis 24:11
I have been seeing that for three years. But I am really convinced that this is true. But my thought was that, that Penney's was going to really then start to decelerate and the biggest evidence of that would be store closings, and they have not closed any stores this year. I suspect they'll close some stores after the holidays, but they are not falling apart kind of in the way that I anticipated. And the reason it's particularly dumb is they have new, the new owners Simon and, and Brookfield, (crossover talk). And those guys and they, they bought the business for a song. They've got a new CEO, so it'd be very unlikely that they would really start to unwind that thing as quickly as I thought. So, in retrospect, even though I am very pessimistic on the long-term future of JCPenney, this was a dumb prediction to make and it's clearly not happening, at least not yet.
Michael LeBlanc 25:13
All right. Alright, so let's move on to number four, the profitless prosperity of disruptive brands becomes under increasing scrutiny. If this is true, there's a lot of people we talked to about this. You mentioned Dan McCarthy. There's a lot of brands, a lot of buzz, a lot of people pulled down and an overall downdraft and DTC stocks. I got to thinking you're pretty close to the mark here.
Steve Dennis 25:35
Well, I'm going to have to say, this was actually probably a bit of an underwhelming prediction because things really fell apart for most of these brands. I'm going to give myself an A+, because (chalkboard sound). Well, you know, we started using this term wobbly unicorns,
Michael LeBlanc 25:44
Yeah.
Steve Dennis 25:45
Because many of these once, once proud unicorns have fallen into the gutter or whatever visual you want to have.
Michael LeBlanc 25:57
(Inaudible), Some of them are a little more less wobbly than others. I like that, that term wobbly. Because you know, you know, some of them are gone and they're so proud.
Steve Dennis 26:05
Oh sure. You know th-, but things are, things are a little shaky. You know, that's the part I like, about the wobbly part. As hard as it is to say, I think, you know, in our outtakes, we'll have to, how many times we had to re-, (crossover talk). Wobble, wobble-libally. But um, here are four brands whose stocks are down more than 80% year-to-date, Allbirds, Rent the Runway, RealReal and Stitch Fix. We have Warby Parker, Peloton, On Running and Wayfair, which are down between 60 and 70%. So, you know, very high-profile brands, lots of venture capital money, that have gone public in the last year or so that have really, really taken care.
Michael LeBlanc 26:47
I mean, to be fair, for just looking at stock prices, a lot of stocks, like I could say Disney is down significantly so is Target. So, it's not the only indicator, I would say that's, that's pointing you in this direction, right?
Steve Dennis 26:57
It is not. But I think the thing, which I was really pointing to in the beginning. It was less about making predictions about the stock performance, because you know, that's what, speaking to your point. I mean, it's, you get caught up in other things, and, and you know, there are timing issues and things like that. But the profitless prosperity that I was alluding to, is this idea that while their sales continued to grow pretty strongly, their profits are getting worse. And you know, that's generally not a great indicator, and that phenomenon would get more attention. So, it's gotten more attention from the market. And that's driven their prices down a lot. But also, just more and more people are talking about that. And we're seeing layoffs at places like Warby Parker and Allbirds, as well. So, the balloon has really been deflated, here.
Michael LeBlanc 27:40
All right, number five, understanding buying versus shopping becomes more important. Well, if we rank this one simply and how popular this episode was, it was one of the most popular episodes of the year for us, our episode on buying versus shopping. But for, for the per-, folks who may not know what that means. unpack that for us, and then give yourself a grade.
Steve Dennis 28:00
Sure, well, the quick, quick description and it's and it is a little bit overly black and white. But it's this idea that we're you know kind of in two modes of shopping generally, or our consumer behavior. One is buying mode, or some people call it more task driven, or running errands where it's very much a functional thing. It's about speed, convenience, acceptable choice, which eCommerce is (crossover talk) actually good.
Michael LeBlanc 28:26
Efficiency, right?
Steve Dennis 28:28
And then shopping is more experiential, emotional solution oriented, you know there are a lot of, sort of adjectives that, that go along with, with that, and that's where certain kinds of physical stores are particularly important. And my point, which I made originally, in my book, Remarkable Retail, but also, we talked about on the podcast, as you mentioned, was that understanding this was going to drive more decisions than it, that this, was this difference would get more visibility. And I have to say, as much as my ego says, I would love for that to be true. I think it's, it's true in a fairly I mean, I still think it's an important distinction. And, I've had some experience with clients that really like it.
Michael LeBlanc 29:01
Yeah.
Steve Dennis 29:02
And I've heard some people get back to me and say, oh, you know, when we heard this and or read it, or whatever, we really liked it. But I wouldn't say that I can point to a ton of specific examples. So, I'd have to give myself maybe a B- on this, which might be a little bit charitable.
Michael LeBlanc 29:22
Well, I mean, I think, I think that you, you added, you certainly add to the conversation, right? I used to talk about, you know, this, and we talked about this together, this bifurcation between experience inefficiency, and that isn't always helpful when you're trying to put a strategy together as a retailer. What do you mean, and can't you be both and all these things? So, I thought it added to the conversation. So, I think you're a harsh marker on that one, I think. Well, I have a prediction, I guess, if you're looking at it from has everybody adopted this whole framework, and has it improved, I think we've moved the needle forward, you've moved the needle forward. So, I think you're, (crossover talk).
Steve Dennis 29:54
Well, you're being very kind. I think my biggest issue here is I should pick predictions that are actually not so confusing to grade if we're going to do this assessment.
Michael LeBlanc 30:03
Some demonstrably simple statements. Well, let's talk about the next one, Amazon double clicks on its physical dream. So, Amazon is kind of to and fro’d, a very busy year for Amazon in a whole bunch of ways, where do you, where do you settle out? You visited their Style store; you had that experience. But,
Steve Dennis 30:19
Yeah, this, this is a real mixed one in that. But I think I would have to give myself maybe a C+, I mean, it is true that they opened two Amazon Style stores, which are new concepts for them. And there are indications that they will be opening some more, they opened.
Michael LeBlanc 30:34
Fresh stores.
Steve Dennis 30:36
40, something Amazon Fresh stores, and they opened several more Amazon Go stores, but it's not exactly a breakneck pace. And so,
Michael LeBlanc 30:40
Right.
Steve Dennis 30:41
So, we know that we know they, they closed what, what I affectionately refer to as the land of misfit toys, their, their books, their book concept, and Amazon 4-star and, and things like that, which I actually think was a positive in terms of focusing on physical store concepts that can actually be scalable. So, I didn't look at that, (crossover talk).
Michael LeBlanc 31:11
And you've made the point several times in the podcast that you applaud that, in other words, don't keep it going on life support, if it doesn't work, or does work,
Steve Dennis 31:13
Right, yeah.
Michael LeBlanc 31:15
You know, make the call, close it down, it didn't work, move on to something else, right. I mean, you would applaud that basically.
Steve Dennis 31:24
Yeah, I think from a, you know, having a culture of experimentation, that's the way to go. If anything, I think they probably held on to, to a couple of things too long. So, getting that focus, I think, is great. But the reason why I would say I can't give myself a very high grade is they're clearly not stepping on the gas, at least not yet. In terms of Fresh, you know, Amazon Fresh in particular, went well, way more up in the air right now, than I thought going into the year.
Michael LeBlanc 31:50
Number seven, the great reconfiguration gains momentum. So, to your point about making more simpler projections, (inaudible).
Steve Dennis 32:00
So, we yeah, this is also something I talked about in my book. And we didn't do a podcast episode on this. But this is this idea that we would move, that retailers would move from more of a one size fits all format strategy to create both more hybrid formats, as well as a more hybrid go to market strategy. And I think, you know, I probably give myself a B+ on this because I do believe we're seeing quite a lot of activity from some number of retailers. So, we talked about Target, already not only creating these hybrid store formats to deal with the physical and digital world, but also pushing on smaller store formats, these sortation centers and so this mix of physical assets to improve their success, on a city-by-city basis.
Steve Dennis 32:33
Best Buy has started to invest in testing this in the North Carolina market. They just opened a virtual shopping store, a lot of moves around smaller stores to complement larger stores on the part of, of many retailers. So, I think this is definitely picking up speed. And I expect it will continue to. It's not as widespread as I thought might happen or frankly as I think needs to happen. So, that will tamp down my grade a little bit.
Michael LeBlanc 33:19
Well, the next one, number eight, Metaverse, Sch Metaverse' should actually be the mo-, bold and easy to understand, because it's the nonsense around the Metaverse.
Steve Dennis 33:24
Oh, my goodness.
Michael LeBlanc 33:26
When you look at the I mean, if you just ranked it in terms of how much pain it's giving to Facebook, in terms of write-downs, or sorry, I should say Meta, you know, right there. There's something but what do you, have you seen any light of day on this Metaverse stuff or what are you thinking?
Steve Dennis 33:43
Well, I still really feel more or less the way I did going into the year there was so much hype around this, and so much discussion, everybody with their Metaverse strategy. And I just thought, well, it you know, it's interesting. I believe the Metaverse will be important in the future.
Michael LeBlanc 33:55
Whenever that is.
Steve Dennis 33:58
But I didn't think anything of any real consequence was going to occur this year. And not only do I think that's almost exactly right. But yes, to your point, the biggest investor in this has, has really run into a wall though. Though I guess they're gonna keep trying to blast through that wall like the Kool Aid guy.
Michael LeBlanc 34:18
Make Jim Cramer cry? I think that was an accomplishment.
Steve Dennis 34:19
Yeah, yeah. I mean, if you can make James, Jim Cramer cry, then you know, you've had a pretty good day. So, yeah, I give myself an A on this. And again, it's not, it's not to say that this won't be important. This is very much a test and learning kind of thing right now. But in terms of it really moving the dial on, on anybody's P&L or being (inaudible). Most customers don't even know what we're talking about when we talk about the Metaverse and so that's not a ton of progress.
Michael LeBlanc 34:43
This is, the next one is number nine and we're almost there, is one you could kind of predict year-in year-out in one way shape or another. Hyperbole becomes the greatest thing ever. Because there is always hype in the market in one way shape or other but what, why did you think this was important to bring up, (crossover talk)?
Steve Dennis 35:03
Well, this is another poorly formed prediction. So, I think, you know, even though I've done these prediction things for a few years though I did skip 2021, because of COVID and I was just like, I don't know what the hell is going to go on? Yeah, so my, you know, so I just bailed. I was a coward when it came to 2021 in particular. But, um.
Michael LeBlanc 35:21
Who could predict the Spanish Inquisition, by the way?
Steve Dennis 35:25
Well, nobody expects it, that's for sure.
Michael LeBlanc 35:28
Nobody expects it.
Steve Dennis 35:30
But no, I guess I said this partially to be, to try to be funny. And it came nicely after, after the Metaverse prediction. But what is interesting, and I know, we've touched on this in a few episodes and have talked about this with other people is, you know, just the, you know, eCommerce is taking all over, you know, over the world. You know, nobody's going to shop in stores, again. I was reading which touches on the next, the final one a little bit in a second. You know, grow eCommerce through grocery stores is going to double in two years. And you know, it's not remotely close to what's happened. So, there's just a lot of hyperbole, bright shiny objects or whatever, that seemed to get a lot of traction among, you know, the punditry class or whatever, or the media. And I just think, you know, I'm, I'm a bullshit, dispelling enthusiast, I think, is the term that I used recently. And so I just think it's important that we try to let,
Michael LeBlanc 36:21
Yeah.
Steve Dennis 36:22
Let a little bit of rationality and,
Michael LeBlanc 36:25
Right.
Steve Dennis 36:26
And facts prevail every once in a while.
Michael LeBlanc 36:33
Give yourself a double A on that.
Steve Dennis 36:35
I'm sure, whatever, I think maybe it's incomplete.
Michael LeBlanc 36:38
All right, you know, incomplete and go to the back of the class. All right, this brings us to number 10. Convenience wars, jump the shark. And, and this one's interesting for me, because it, you know, I have long had debated or looked at, like over the course of my eCommerce career, which is similar to yours, like 20 years, how important is getting something really fast to someone is, but this is like, what do they call instant commerce? I think you were talking about here. But,
Steve Dennis 37:06
Yeah, (crossover talk) that was the main thrust. So, the quote I have, which I just love, and I've repeated many, many times is from my friend, Seth Godin, is "the problem with the race to the bottom is you might win, or worse finish second", and I always felt that well, first of all, how many things do people really need in half an hour, right? It's like, if you want to, if you really need something, they have stores, you know, you could go get it. To engage in a really expensive methodology of getting things to customers quickly, seems to have relatively limited utility, from a consumer standpoint. But what we know, at least in the current way of doing things until we can teleport things to you, or something is extremely expensive, you know, so we saw not only on the part of some pretty big companies like you know Instacart, DoorDash, etc., making big plays for fast delivery, but a lot of startups getting a lot of venture capital money and,
Michael LeBlanc 37:37
Yeah.
Steve Dennis 37:38
As well as big, big companies doing some of their own fast delivery. And you know, for the most part not only have some of these investors, venture capital funded companies either have gone away, they are cutting back their staff a lot from exciting markets, etc. DoorDash just announced a big layoff the morning we're recording this.
Michael LeBlanc 38:37
You know, I had a good conversation with Gopuff, SVP of Business and I, you know, I came away from it more impressed than I was looking at just the headlines. I mean they're in like, 500 cities now. They may be like, there may be enough room for one, like they built, they built this business, on their business on a foundation of, you know, university and college towns, right, get the kids something fast. And, you know, they're, they're delivering alcohol, and they got their own private label pizza, which is really popular. So,
Steve Dennis 38:57
Sure.
Michael LeBlanc 38:58
Maybe there's a, there there, but I guess.
Steve Dennis 39:03
Yeah, I don't, I believe there, and I don't know what you know, I can't put numbers to it. I mean, I believe there's always a customer segment that's willing to pay a premium price for convenience. And there are certain kinds of product types, you know, Chinese food or whatever for delivery. I mean, there's, you know, there's certain things that, that (crossover talk) have a, have a different dynamic. So, it's not that this, this segment won't be significant and, and won't be a growth segment, but so much money and, and hype have gone into this idea of ultra-fast delivery. And for the most part, we're seeing either prices go up for this, you know, Whole Foods, you can't even get something delivered for at least in Dallas or without paying $9.95 now. And a lot of, of the bigger companies are kind of pulling back on this and even you know things like curbside pickup, and BOPIS have pulled back quite a lot. So, I just think this is another one where or you know or even if we look at what's going on with Amazon, which has doubled their capacity for fulfillment on a local market basis, you know, now are pulling back on that. So, there's been a lot of investment in trying to shrink the time of delivery. And most of that is not looking like the most sensible investment. So, I'd give myself an A on this one as well.
Michael LeBlanc 40:29
All right there, Richie Cunningham, you give yourself an A, on that one, (crossover talk).
Steve Dennis 40:34
We should have the listeners grade me on that one.
Michael LeBlanc 40:37
Well, of course, and just, just in case, any of our listeners, maybe even the international listeners don't know, “jumped the shark” that's from Happy Days, the TV show. And is one of the long running shows when the Fonz was water skiing in his leather jacket, and a big shark came up (inaudible) showing the jaws and he jumped over the shark. And that was pretty much the end of the show. It was like the show was (inaudible), you know, I think you did very well, Mr. Dennis, in, in your,
Steve Dennis 41:03
It was better than I did in college. And that's all I can say.
Michael LeBlanc 41:07
Maybe you should stay in the prediction business? I don't know if it's pretty good, (inaudible).
Steve Dennis 41:09
Maybe? Well, I will, I will be making 2023 predictions next month. So, stay tuned for that.
Michael LeBlanc 41:16
Yeah. So, next month, let's, let's leave it there. But let's remind everybody, we've been renewed, and our great presenting sponsor is back, MarketDial. And we'll be in New York at the NRF Show. And we'll be on the stage. So, you're going to get a preview of some of the work and thinking you're thinking about and then very shortly thereafter, we'll be releasing new episodes, Season 6, including a prediction episode. I'm waiting, waiting for myself with bated breath to see what's cun-, going through that head of yours.
Steve Dennis 41:43
Well, we'll see if I learned anything from my poorly formed predictions this year. Maybe, maybe I'll just do like five and then that way I won't feel so compelled to stretch things out.
Michael LeBlanc 41:53
I like it anyway. All right, well, it's a great episode and let's leave it there. 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 Hal Lawton talking about Tractor Supply's, Remarkable “Life Out Here” Growth Story. New episodes of Season 5, presented by MarketDial will show up each and every Tuesday. And be sure to tell your friends and colleagues in the retail industry, all about us.
Steve Dennis 42:18
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 42:30
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 Steven and I in person at the NRF Big Show in New York January 16 on the stage talking about what it takes to be remarkable with The Container Store, SVP, Gretchen Ganc.
See you in New York, everyone.
SUMMARY KEYWORDS
prediction, Metaverse, stores, talk, brands, year, amazon, big, people, department stores, remarkable, bit, thought, retailers, eCommerce, store, Ulta, point