Shiftonomics Webinar: How Personalization & In-Store Experience Impact the Future of Retail
* Taylor Pipes, Content, Branch Messenger (https://twitter.com/thelocalist, https://twitter.com/branchmessenger)
* Ryan Broshar, Managing Director, Techstars (https://twitter.com/rbroshar, @techstars)
Taylor Pipes: Hello, I'd like to welcome everyone to Shiftonomics' first webinar powered by Branch Messenger. In the past few years retail has experienced profound transformation, rapid advances in technology, and mobile development have changed consumer shopping habits at speeds measured in instant delivery, next day shipping, and gotta have it now.
So, we're excited that you're joining us for our webinar that will explore:
the retail crossroads and how the in store experience will impact the future of retail.
We'll cover topics, and answer questions that you have about experiential retail, and personalization that will assuredly be major talking points that shape the future of retail in 2018.
Going over our agenda for today, we're gonna break down the in store experience. First I want to kick off some introductions, tell you a little bit about what Shiftonomics is. I'm gonna introduce my co-host from Techstars is Ryan Broshar. We're gonna go over the crossroads in retail, the in store experience, and the art of consumer personalization, the impact on the supply chain, and the digital tools that can help retailers today.
So, giving some background. My name is Taylor, I work for Branch Messenger as a content marketing manager, and everyday it seemed we were getting inundated with content about the changes in retail technology. So, we created Shiftonomics as a way to curate some of the news and the highlights, and create a newsletter that was able to digest that, curate that, and send that out to people who cared about the industry. We package up those stories, include exclusive interviews, tips, tricks, and tactics about retail call centers, distribution, fitness, healthcare, and managing verticals and we send those out to our users.
And this webinar is kind of a way for us to explore and deeper dive into some of the topics that we see in our newsletter, and that's kind of why the webinar is happening today.
I would like to introduce my co-host Ryan Broshar, he's a Managing Director at Techstars Retail, and Ryan I would love to give you an opportunity to give some background on what it is that you do, and go from there.
Ryan Broshar: Sure thing. Thanks Taylor, appreciate it, and excited to be on the webinar today.
So, as Taylor mentioned, I'm the Managing Director of the Techstars Retail Accelerator in partnership with Target, and so my background you know, multi-time entrepreneur, more recently got into the investment side of tech startups, run a venture capital fund called Matchstick Ventures that I'm the founder, and Managing Director for. And then more recently joined Techstars as the Managing Director of our retail program.
So, if you're not familiar with Techstars, it is a worldwide network that helps entrepreneurs succeed. We run accelerator programs, in literally every continent outside of Antarctica around the world, and so we see a lot of innovation, a lot of startups, and you know, we select 10 of those companies for each accelerator. They all move to one location for a three month period, and then we inundate them with 150 plus mentors. You know, in our program in particular we have Target as our main backer, so we work with Target executives, and other mentors who provide guidance and assistance to startups.
And then over the course of three months they get the mentorship, you know, workshops, speakers, et cetera that accelerates the companies for them and it culminates at the demo day at the end. So, yeah, we've literally seen thousands of retail tech startups that you know, we're reviewing for the program. We've had 20 companies run through the program and you know, we're gearing up for year three, which will start this summer in July in Minneapolis.
Taylor Pipes: What do you say is the most interesting, or fun thing you've seen in the last year working in this venture?
Ryan Broshar: You know, not to get like, a specific company. But it's been the timing of us starting this program. And you know, with the disruption going on in the retail industry to be kind of sitting at the nexus between the startups in the corporations, you know, in the large retailers we literally position ourselves directly in between of it. So, we're trying to help startups you know, up their game so that they can work with the large retailers, but we're also helping large retailers understand the needs of the startups so they can actually work together because I think there's been you know, a giant chasm between the two of them for a long time.
So, we're starting to see that chasm close and we're starting to see a lot of interesting partnerships, pilots, et cetera. And I think that's been a big shift in the market just over the last couple of years.
Taylor Pipes: That's a very interesting point. I think it's a great segue into today's topic because a lot of our viewers may be joining us from large enterprise companies, and wondering how they could kickstart some of these initiatives, and I think the market for retail tech has never been more interesting and exciting than it has been in the last year. And Minneapolis has been honestly, where we're located, is a huge hub of that happening, so I think that's an interesting point to kind of carry on through the conversation.
Ryan Broshar: Yeah, definitely.
A Crossroads in Retail
Taylor Pipes: So, with that being said, we're really at a crossroads in retail. Legacy retailers are closing, or facing questions about their survival, stores are shuddering. Right now, Macy's, Sears, and J. Crew are all facing sort of murky futures. In 2017, Radio Shack had some of the most closures of any retailer with 1,000 stores that closed. Payless had 512, so right now we're really at a shift in terms of what the retail climate looks like.
And unfortunately, a lot of the headlines have been pretty negative around this because you know, things are changing so fast that I think a lot of that's been led by images like this you know, the fall of the mall. Losing anchor tenants that have been leading to mall closings, these are the images that you see on nightly news, and local news.
I think the projections I'm seeing are 25% of malls will be closing in the next few years. Losing anchor tenants like, a JC Penny equals like, a deathblow to the mall. But I think again, this has been painting a really overly negative picture for retail. But I think the mall is an interesting place to start this conversation, Ryan, because the malls have kind of brought up a lot of questions about retail goes from here.
So, what are your thoughts on what you're seeing with you know, malls as leading towards change in technology in retail?
Ryan Broshar: Yeah. You're leaving up this dystopian future photo on there. It's a pretty bleak picture. No, I mean, I think there has been a lot of ... I mean, clearly the data shows of the change over where it is.
But you know, I think the main takeaway is that there's a lot of hype around that, and everyone's saying that the sky is falling. While there is change occurring, I think the fundamentals of the market very much are holding. And to me, that screams opportunity to the people who actually embrace this innovation. It's a chance for people to really change the positioning of their company and kind of how they see and operate their company as a whole like, there's been no better time to you know, re-evaluate the status quo of your company than right now because you know, I think if you don't, and you're not taking a hard look at what your company's going to be in the next five, 10, or even if you're gonna be a company in the next five or 10 years.
Then you know, you either go one route, or the other, and it's really a crossroads of where it is. And it's actually a great opportunity to evaluate what your business model is, where the opportunities for improvement are, opportunity to cut some fat where needed because the market is demanding it in that regard.
So, yeah while there has been a lot of store closures, and you know, clearly there's been the rise of Amazon, and online, and just kind of this whole new wave of consumer driven demand for products and where they want them. I also think that screams opportunity, right? It screams opportunity for people to jump on this disruption and kind of the new normal in the industry.
The Fall of the Mall?
Taylor Pipes: I think the interesting thing is, malls are an interesting part of this narrative because I think it's ... A lot is happening behind just a picture like, that you see here. A lot of these closures are telling us a lot about the demographics shifting in America. There's a return to urban centers. Young workers want to be closer to their jobs, so they're leaving their suburban locations where these malls you know, with a generation ago were thriving because families were located there, and now they're moving.
And there's also a lot of mall operators, lots happening with the assignment, and these different groups who are reshuffling their portfolios, and they are closing, and refocusing on closing some of their less, you know, mid-tier malls and focusing on their top tier, they call them A or B malls. So, actually I think there are some malls that are actually thriving. The King of Prussia mall in Pennsylvania, The Mall of America in Minneapolis, Irvine Spectrum. These are all locations that are actually beefing up their store portfolios, and I think they're doing really well, and I think that that's something we don't really hear, that I think is a positive note for retailers.
Ryan Broshar: Well, and I think there's a point to be made here of the difference between the mall and the retailer, right? Like, ultimately, malls are real estate plays on there, and the change in demand from consumers is not necessarily that they don't want to buy things from a retailer, is more so that they may not want to buy things at a mall, right? And that may be a change of preference from that, and the ones that are ... The malls that are doing well have very much ... And I can speak for Mall of America, it's just down the road from us. You know, they very much change it from not just a retail destination but you know, really an experience destination.
So, you see a lot of the new stuff going in is actually much more experiential. They've got you know, rollercoasters, and aquariums, all these things that are kind of wrapped around a retail experience from there, and I think they've made huge investments in there to continue to have it be ... I think it's the top tourist destination all of Minnesota is actually the Mall of America, and so kind of rebranding the mall as a tourist destination versus just a retail destination probably speaks volumes to the entire industry, but particularly to I think malls, which ultimately are a real estate play, and retailers benefit from that.
Taylor Pipes: Hey, we're gonna touch on that a little bit as we dive into the experiential part of this presentation, but I think that's a great point. And a very local point that we at Branch, and you at Techstars can focus on because it's right in our backyard, Bloomington.
Ryan Broshar: Yeah.
Taylor Pipes: So, I think that leads to a positive note that's gonna kind of kickstart this conversation about experience, and personalization. We like to take the high road in thinking that this isn't gonna be an apocalypse, and we're gonna fight through that noise.
And look at the data suggests that there's actually some really great things coming for retail in 2018. The United States alone has over one million retail locations with annual sales increasing four percent year over year since 2010. Online sales really only represent less than 10% of retail, and stores like, Dollar General, Walmart, GAP, Target, Tractor Supply Company, Nordstrom's are all seeing success, and positive growth heading into 2018.
Some other retailers like, Kohls have seen some really great numbers from one of the best holiday seasons that we've seen in over a decade. So, what do you make of these positive numbers that you're seeing here.
Ryan Broshar: Yeah, I mean, I think that goes to the narrative of the sky isn't falling, right? Like, I think the weather patterns are changing overall. So, you gotta you know, see through that noise of the apocalypse. I mean, even in the tech industry, which you know, I sit more so on than the retail industry. You hear the doomsday scenarios of like, "Everyone's dead." And you know, it's just a matter of the walking dead, and I don't believe that. I think it's much more of a straddling of the two like, there's gonna be changes, but I also don't think there's gonna be you know, the strong will survive. People will still make purchases in stores. But there's gonna be a different component to why they do that, right? And what draws them into your store versus a different store, and it's gonna be the whole experience from that, not just the loyalty side of it, right? Like, there's gonna be like a, "Why should I do that versus go online versus go to a different store?"
And that conversation wasn't being had 10 years ago, right? And now it has to be had because it should be really the forefront of strategy for major retailers is, where do we meet the customer, and why? And I think brick and mortar retail can solve a huge piece of that, you just gotta really think through the strategy of where they meet their customers.
The In-Store Experience
Taylor Pipes: And I think that's a great segue into our next topic here. I was reading a book, The Four, by Scott Galloway, a clinical marketing professor at NYU. And obviously we're not talking about Amazon a whole lot even though it is obviously a huge part of this conversation, but he mentions when Amazon zigs, retailers should zag. And I think that speaks to diving into this next thing is like, Amazon does certain things really, really, really well.
But retailers, whether you're a enterprise retailer, or a small brick and mortar local store in a small town, or a large sized city in the United States, there are things that you can do, and I think that experience is something that's happening that's reshaping a lot of how consumers are shopping, and it's something that Amazon really probably can't hone in as well right now because these are things that stores already been focusing on from a consumers perspective, so I want to kind of get your opinion on, what does the in store experience mean to you today, Ryan? And how does it impact shopping for you? Or for people in general?
Ryan Broshar: Yeah. So, I mean, it's such a loosely held term like, in store experience like, it is emotional experience? Is it a convenience experience? Is it a sensual experience? Emotional experience like, I think it's kind of like, overused to some extent. I think the experience is unique to every person who walks in the door, and I think it's more so ... I think a lot of the retailers originally were thinking about, "How do we maximize the you know, dollars spent in a store every single time they come in?" And now it's more about just getting them to come in, right?
Before it was a given that they were gonna walk in the door because they had to, now they don't have to, so how do we get them to do that? Well, you draw them in by you know, experience. And I think there's some really interesting case studies of why people come in, and you know, what draws them back in I think is another thing, too.
But you know, if you look at the assortment of goods, and like, why people go into retailers. I think the convenient play like, if you're just buying the toilet paper, and you know, the everyday essentials. Like, that's gonna be a hard play ultimately because that's something that you can get delivered to your house in less than two hours. It's not a sexy shopping experience to go through, and so if that's the case, then like, why wouldn't you just kind of order that online and have it delivered to your door when you need it?
However, if it's going into more like, decision making shopping you know, where it might be a style, it might be choosing this one or the other one, stuff you want to touch and feel. Then I think that's where the competition in store can really heat up. You know, and or if you have kind of your own unique brand that can only be found within your store, and not in other stores, and not at other online experiences to be kind of shopped against other stuff. I think you've got a real advantage in that point.
But ultimately you're trying to create something that a customer can identify with, that they enjoy, that they're willing to you know, get off their computer, go to work, go to a store, spend their time, you know, people have different reasons for wanting to do that.
So, you gotta figure out specifically who your customer is, and then meet them on their terms of that.
Taylor Pipes: And I think the interesting thing again, here is differentiating a bit from what Amazon does really well, is they've made ... They've streamlined the process of chore shopping so well that it almost ... It makes what was once a really tiresome, sometimes daily habit of going to the store to get items that we need to restock our shelves at home into something that can happen and streamline it so well, that a lot of people now are fearing like, they don't want to miss out on these local, authentic experiences that involve entertainment, food, and drink. And I think that that you know, Airbnb is actually one that comes to mind, it's not a retailer perse, but their model right now, their whole branding is shifting very quietly to become a very experience driven play.
And I think that speaks a lot to how younger shoppers think about things when they're buying things in retail.
Ryan Broshar: Yeah. And I like the FOMO point on that last slide there is that you're starting to see a lot of retail be based around the drop, right? Like, only the insiders know, or some celebrity makes an announcement an hour before you know, and you feel special by going there. And you're seeing a lot of pop up shops, and kind of these like, limited time only drops, which I think is fairly fascinating when you think about it of almost flips the script on everything that you would think a retailer would do in that they're planning 12 months out, they're announcing something a long time before, so then people can get ready for it, so they can get to the store when it opens, and all this stuff.
And this is almost like the opposite like, we're not gonna tell anyone what we're gonna do, right? And then we're gonna announce it and then do it you know, an hour later, or the next day, or whatever it is and trying to like, flip the curve if you will on customer demand.
While that may be more of a flash in the pan, if you do it right like, that could be a pretty big flash. Right? It can be well worth it, so you're seeing a trend in the market kind of towards these like, kind of drops beforehand and hopefully there's like, a sustained revenue that comes off of the initial hype.
Taylor Pipes: And there's actually a brand called, Outlier Outdoor. I don't know if you've heard of them.
Ryan Broshar: Yeah.
Taylor Pipes: They're like, a clothing company that's doing exactly that. They have what they call drops, in their parlance is called experiments, and they only unleash those on Instagram using like, high style, high fidelity photography that then pushes people to a place where they can purchase it. And by the time you've looked at it, an hour later they've already sold out because they've drawn the appeal to that sort of virtual social drop, which I think is fascinating.
The stores that I think are doing it best. I mean, we only picked three here, but MartinPatrick3 is a Minneapolis retailer, I don't know if you've been over there, Ryan.
Ryan Broshar: Yeah.
Taylor Pipes: But I think they exemplify this whole movement the best. They have a 15,000 square foot boutique store. It's really hard to describe it. It's like, everything, but it's-
Ryan Broshar: Pretty much.
Taylor Pipes: It focuses on exceptional customer service, they don't push sales, they almost kind of harken back to this older day of sales where they try to build relationships with their consumers instead of pushing product on them. So, they're doing a lot of things differently. I don't know if you can speak to that, but I think MartinPatrick3 exemplifies this whole experiential movement the best.
Ryan Broshar: Yeah, no, I think it's spot on, right? Like, they really ... I feel like they really know their customer really well, and they're just trying to put them in a situation that they feel comfortable to purchase without the you know, sales associate coming up and saying, "You should buy this. You know, buy that." I think that I mean, that really speaks to the millennial generation. I'm not gonna speak on behalf of all my fellow millennials here, but you can ... You know that that is a trend with them is like, they don't want to be sold, they want to experience, and they want to have a relationship, and I think you know, MartinPatrick3 hits that on the head for sure.
Taylor Pipes: And of course we've got Bonobos, and Warby Parker. I think Warby Parker kind of was the first to really look at a vertical that hadn't been changed in ophthalmology and eyeglasses I guess, you know, and say you know, "How can we fundamentally change and rewrite the entire focus of this industry?" And I think they've done it the best, and they've done it really the earliest. I think they've been around for, coming up on maybe eight years, but what were the price points for sunglasses are $500, and their store it's around $95, and they're very you know, up front with customer service, and their stores have essentially become ... I believe they're modeled after libraries, and bookstores, but they've become such a great spot to just kind of hang out. And I think that's another interesting thing, is we like to hang out at these places, you know?
Consumers before didn't used to ... Used to go in, get it, get the stuff, and get out, and that's not really the way it is anymore, right?
Ryan Broshar: No. And I think both of like, Bonobos and Warby Parker, one thing to note is it wasn't a bunch of technology being thrown at the experience, right? It was just like, literally changing the experience from their like, putting the consumer in the driver's seat. It's not like they have a fancy checkout system, or you know, stuff, RFID tags, or you know, like, it was just literally like a flip of the script of like, we're gonna go deep into one vertical. We're gonna own it, we're gonna know everything about it, and you know, that's entrepreneurship in general like, at Techstars we don't say go ... If you're gonna start a retail company, don't say like, "We're gonna take on all the retailers in the world." Like, go after a vertical that you feel like you can eventually own, and then there's opportunities to expand off of that. So, find your beach head, and win, and expand from there.
And I think you know, Warby Parker, Bonobos did that, you know, pretty amazing.
The Art of Consumer Personlization
Taylor Pipes: The next part of this conversation dovetails a little bit on the experiential side, but it's more the art of consumer personalization, which I think kind of goes hand to hand a little bit. But again, it's delivering products that can't be found anywhere else. Name branding, focusing on attention to detail, you know, the exceptional customer care, the ability if younger shoppers and millennials like to experience things, they also like to touch the products, see the product, understand its story. I think storytelling is a massive opportunity for brands to hone in on on this as well, but what are you seeing in terms of the personalization changes in retail? Whether it's a startup you've been working with, or experience you've had in real life?
Ryan Broshar: You know, I think there's like, the personalization of the experience, right? Like, in the store they know their markets, they personalize it to that. But yeah, you see like, a lot of these kind of niche brands coming through that are really trying to own their ... Find their beach head, right? Like, it might be YETI's, its coolers, right? Like, who would have thought there was a market for high end coolers, and now they sell way more than just coolers. It's like, a lifestyle brand of you know, outdoors, and fishing, and all that stuff. It's pretty sweet.
So, you're seeing the niche stuff really play itself out, and starting to make a much ... Cumulatively, and collectively having a really large piece in the market. I think the other side of the personalization of this is not just an association with you know, a directed consumer brand, but also the actual personalization of the clothing, you know, you see it in the footwear industry right now like, where as mass customization becomes the norm for in the footwear industry like, there's gonna be technologies and stuff that power that and that allows me to have a foot ... Not only a shoe that is designed by me, but also fits my specific foot on there.
And that's pretty interesting, right? The ability to say like, "This shoe is super unique to me, and it fits great." I think that is like, the level of personalization that ultimately the supply chain's gonna allow us to do and that's just footwear, right? Like, I think it can get to that in other verticals as well.
Taylor Pipes: That's such an interesting point because footwear used to be such a mass commodity that you could create like, a million shoes and roll them out to every store in the country, and we would be happy, but now you're seeing this complete change where a shoe manufacturer, or a shoe brand can partner with an artist that's no longer alive, or a game that you played as a kid, and now you can get that same stuff printed on your shoes.
I actually think like, that may solve some really interesting frustrations on the supply side and the manufacturing side. Because if you can partner with somebody to create that, why couldn't you partner at a local level near the buyer, and actually be able to bring that merchandise to them in an hour versus you know, two days from a shipment center you know, in Van Nuys, California?
Ryan Broshar: Yeah, I think you see it in footwear. I mean, you can see it with like, thread lists, and society six on clothing, right? Like, get the people to basically say, "I like this enough." Or pre buy it, and then produce it, right? So, you're kind of flipping the script on the, "I think you're gonna like this and I'm just gonna put enough of them out there and then hopefully it sticks to the ..." "I would buy this if you produced it," you know? Type of scenario, and that totally flips the supply chain on its head. It's just the technology needs to be there to do that.
Taylor Pipes: Yeah, I think another fascinating point about YETI is that when you go into that flagship store in Austin, it's sandwiched between two hotels, so they've deliberately tried to create this ... Not only as a place that would reel in people that are into fishing. I mean, I don't know-
Ryan Broshar: Nice pun there.
Taylor Pipes: Yeah. I actually didn't know YETI until I moved to North Carolina and I see YETI all over. I was like, "YETI, it's such an interesting name. What do they do?" And they make coolers, but now kind of studying what they've done, they've deliberately created this brand flagship store, but they don't want to be exclusive to just people that are in those you know, interests, they wanted to be an open, inviting spot for people to come in, and it could be an activation point. So, I'm sure they've seen so many new users and so many new consumers come in there.
Ryan Broshar: Yeah.
Taylor Pipes: That's such an interesting play, too.
Ryan Broshar: Yeah, and I think a lot of these brands in the retail industry, beyond experiential is they need to be inspirational, right? Like, I think if you see it in the athleisure market, right? Like, a lot of people wearing athleisure wear aren't athletes, right? They aspire to be, or they want to associate with that.
And same goes with YETI like, how many people have YETI's, but live you know, in a studio apartment in Manhattan, right? And have never gone fishing in their life like, but they kind of like, associate with that, and are inspired by that. Want to be a part of that. So, I think it's not only experiential like, when you're in the store, or like, why you want to get there, it's also inspirational like, why you want to be associated with that.
Taylor Pipes: And the quick mention of two other companies that are doing personalization really well, Sephora, and the French luxury retailer, SMCP. I think this touched on another aspect of personalization that you started this session with is that, it's not just the experience, or the in store side, it's a lot of the machinations that's happening on the developer's side, you know, these are the opportunities for startups, and retail tech to help power, and design, and develop the experiences that consumers have not only in store, but outside the store.
Sephora's doing that really well by being able to point people to a catalog of products that right there in the store an associate can walk them through. I mean, I think these are really interesting changes as well.
Ryan Broshar: Yeah. And I think there's natural ways for technology to plug in to retailers. I'll take the counterpoint of that, is I've seen so many applications out there of just adding technology for technology's sake, and it's almost like death by technology. So I think you know, as a retailer, I would be really open to trying new things, and figuring out ways to pilot them so you can learn, and grow, and potentially find opportunities that gives you a differentiation. Ultimately you gotta make sure that that technology is increasing the customer experience, right? Or improving it? And it's not impeding it you know, or impeding it towards transactions.
So, you know, I think for people listening there, it's like, there's ways to try out new technology, and pilot it the right way. And Techstars we've been really pioneering this, of trying to get stuff in the hands of customers, and retailers so they can really learn and understand this better, but not doing it for the sake of, it's cool, right? There has to be like, a real ROI to that. How do you calculate that? And then how do you scale it if it actually works?
Impact of Experiential Retail on Supply Chain
Taylor Pipes: And let's talk a little bit about the impact of the experiential retail on the supply chain. A lot of headlines last year, Amazon's partnership with Coles to help drive and power returns. I think there's been some interesting things that are happening in one of the most challenging sides for the consumer is figuring out that they don't like a product, and they need to return it. It's such a time consuming aspect, but I think some of these changes are highlighting the importance of you know, reintroducing consumers to the supply chain in a new way. And I think this is an area that you've definitely seen some changes in.
I'm curious if you could kind of talk about like, what does this mean, and why is it happening now? And why is it so fundamentally important to the retail experience?
Ryan Broshar: Yeah, I mean, just taking a step back on the supply chain is ... I think Amazon really I mean, obviously exploited the problems in the supply chain for the existing retailers that a lot of it had been put together by duct tape, and built upon systems that shouldn't have been built upon that were then built upon you know, on there and you're starting to see the crumbling of that and you know, people investing billions and billions and billions of dollars into that to try and keep up, and Amazon actually had the major advantage that they were a new retailer, and they were able to build something using new technology off the base of something that gives them a huge competitive advantage in the marketplace that now you know, ultimately you don't see Amazon as a retailer. They're more of like, a supply chain, you know, master if you will.
They've really upped the game on that and is using that to their advantage. But you know, when I look at the opportunities within the supply chain, and what that means for retailers to provide a better experience with customers. Honestly, I think the final frontier in that is returns, and trying to figure out, I know this is a problem for retailers like, especially if they're brick and mortar like, it's coming in maybe one customer will order something online, but then they have you know, a thousand plus entry points back into the supply chain.
And as a retailer like, how do you manage that? How do you create value out of that? How do you track that? It's a big pain for the retailers, but I mean, on the customer side too, like, I feel like that is underestimated pain for a customer to ... Especially for online returns of trying to put it back in the box, and then going to the post office. Or even if you go back to the retailer you're still basically creating an errand for yourself, and so you're a little less inclined to purchase more. That knowing you have an errand I think impedes the progress, so there's kind of this like, recipe for opportunity here that I think has been overlooked.
And we actually had a customer here in the last class called Shop Turn that is addressing this market opportunity, and you know, the more they got to know the retailers, the more they realized that it was an equal pain point for the retailers as much as it was for the customers. And this ultimately comes into you know, reverse supply chain logistics, I don't know how to get this stuff back into it, and so you're starting to see some movement on here, but man, I think this is a huge opportunity for some disruption, and really to solve this problem because I don't think anyone's really cracked the nut here.
Taylor Pipes: And on a similar note, Lowe's in a quarterly earnings call I believe last year said, they kind of touched on flexible fulfillment, which is you know, a similar pain point that you know, with the growth of online pickups, you know, they said that from an execution standpoint, 60% of their dot com sales were picked up in store. 40% of those customers came in and actually bought incremental product.
My wife and I had something we picked up at Lowe's the other day. We went in and picked it up, and because we were there we started purchasing other stuff. And I think that's another obviously very tangential part of this as well.
**Ryan Broshar: **Totally. You know who really likes this idea? Is CFO's within retailers because you know, there's typically a line item around basically product loss, that you know, they end up having to sell at pennies on the dollar to get rid of inventory that maybe was returned and they weren't able to put it back on the shelf quick enough. You know, I think there's an opportunity for revenue growth within this instead of you know, basically an expense that they have to end up writing off.
Speed of Delivery
Taylor Pipes: So, speaking of Amazon and the power of delivery. Let's talk a little bit about that. What is the right speed for customers, and let's kind of dive into the delivery market a little bit. What do you think is the right answer? I mean, we're quickly approaching the gotta have it tomorrow, or yesterday mindset. But it seems like there's a lot happening in this space.
**Ryan Broshar: **It is, and you know, I think Amazon has pushed the market forward, which I think is great, and they continue to do that around leveraging the advantages of their you know, advanced supply chain that they have. But what's interesting is like, I don't know if I necessarily believe that the answer is, is it two days? Is it two hours? Is it two seconds, right? Like, I feel like at that point we're just building a better horse for you know, like when they were doing the automobile it's like, if you ask the customer what they want they would've said, "Just a faster horse," not necessarily a car.
I think we've been going down this path of like, just continuing to assume that it's like, the gotta have it mentality. Well, I do think you know, having it in two hours is better than two weeks, I think there's a middle ground here, and a lot of retailers, especially brick and mortar retailers potentially could leverage this. Is not just getting it quickly, but getting it where I want it, right? I think you're starting to see a big pain point in the market, especially if you're in a dense urban area, or you're a working professional, stuff's being left on doorsteps. It's like, is there a way to actually schedule where I pick it up? You know, and it could be in the store if that's accessible and could be an advantage. But on the flip side it could be you know, almost like, "Meet me where I am so I can pick it up, and I can get it where I want it." And that doesn't necessarily have to be you know, within two hours of me ordering it, it could be at 6 p.m. when I know I'm gonna be home. That's when I want it, you know? Not just sort of sitting on my step.
I don't know the answer to that, but you're seeing trends in the market in demands from the customer of not just faster, faster, faster, but also, you know, meet me on my terms. Like, I want it where I want it, and when I want it, and that doesn't necessarily mean in two hours.
Taylor Pipes: To that point where you're saying, where you mentioned Amazon as being a major player in the supply chain, you know, their purchase of Whole Foods was primarily obviously because of the subset of customers they're gonna get out of that acquisition, but not at my local Whole Foods I see Amazon lockers. So, to your point, you suddenly are creating a ripple in the supply chain that's actually helping address some of those questions, that's kind of, yeah.
Ryan Broshar: Yeah, and I think that's it for sure.
Taylor Pipes: So, one of our last sections here. We've got two more to go. We touched on this a little bit earlier with the Mall of America, and I think that'll kind of come into this conversation as well, but there are a lot of alternative channels for commerce. Anything from pop up stores, to events. It's very timely right now that we can talk about this, but the Mall of America has literally been transformed into what I consider to be one of the world's largest pop ups because the Superbowl's location this year is in Minneapolis, so you're seeing like, a confab of media row there, and stores, and all over the city you know, pop ups are ... They could potentially host up to one million people.
Whether that's an example you want to use, what are you seeing in trends in pop up stores, and events that kind of touch on personalization and experience?
Ryan Broshar: Yeah, I think pop up stores and events go hand in hand, right? Like, you have a big event, how do you enable people to set up shop nearby and go to where the people are going, and have an association with an event, right? Because events typically drive out specific demographics, and you can associate yourself if you happen to want to go to that demographic, or you happen to sell to that demographic, and allows you to set up shop really nearby.
And there's a lot of money to be made right there because people are in a different mindset when they're heading to an event versus when they're going shopping, right? Or looking for a deal. So, there's kind of a different tolerance for pricing from there. And there again, it gets to the experience ... I'm going for the experience like, there might as well be a retail component to it, and like, how do you capture that?
I think you know, another ... Maybe we're gonna talk on this here in a minute, but you know, another kind of alternative channel to think through or like, what are existing channels that don't have commerce associate with them right now? But could flip it on? And you see this a lot in tech, right? So, this gets to beyond the events, but you know, Pinterest all of a sudden having buyable pins, right? Like, that's all of sudden now they go from an interesting place to store ideas to another place to store ideas to purchase them.
You see Facebook starting to get more into the almost Craigslist domain by people being able to post things and selling them, and having the marketplace online, you know, but if Facebook decided to go bigger with that, decided to actually trade retail channels for retailers, or for themselves, they would instantly be one of the largest retailers in the world like, overnight because they have a captured audience that pales ... Everything else pales in comparison to it.
So, you start to think through like, what are those kind of alternative channels beyond just like, pop up events and stuff, but also just existing user bases that could be monetized. And ultimately I think some of the largest tech companies in the world may have their eye on a certain product, or something, but ultimately they're gonna pivot into two different things, media, or retail. And you're seeing that you know, Amazon got into retail, now they're into media.
You know, Google is you know, a search thing, and now they've got a whole retail division of like, trying to work with that, and you know, they've got a YouTube channel that's all media.
So, you start to see like, how everything kind of circles back to the mean of retail, which is you know, the largest industry in the world, so the people are gonna want to try and get a piece of that.
Taylor Pipes: And Facebook is a super interesting one because a lot of the political changes that have happened in Facebook's feed that they're addressing right now have pushed their play into media on the back burner for a moment.
Ryan Broshar: Yeah.
Taylor Pipes: But quietly I think they've been doing a lot with their marketplace. They pushed marketplace to mobile, and to desktop I should say. So, it's not only a pure mobile experience anymore. But I was just going through there looking at stuff that's sold locally around my neighborhood, and now they're starting to push in local store's content that they're selling into that feed as well. So, it represents a massive opportunity for local retailers that are looking to get their product in front of people that it's essentially a completely new channel.
Ryan Broshar: Yeah. You can see the writing on the wall of like, where they want to go with that, and I think retailers should be trying to get ahead of it, and/or work with them to do something there.
Taylor Pipes: And groups that I think for brands as well, the place that groups have for closed, or semi public communities are the people that are selling things in really super niche verticals, or you know, rummage sales for ... I challenge anyone to go to their Facebook page and look for a rummage sale community in their area and they're gonna find one with 13,000 or 20,000 people on there selling their stuff. It's really interesting.
Ryan Broshar: Yeah, I agree.
Taylor Pipes: So, that leaves us ... I'm sure people have a lot of questions about what exactly they can do to kind of take some of these ideas to the next step. And Ryan, I think you're really best position to kind of talk about this with your work at Techstars, and the startups that you've worked with, and there's a lot of digital tools that can help retailers. So, I'm curious if you could kind of touch on what you're seeing. Maybe somebody who works at a large enterprise company, what can they do? Or how can they leverage the emerging tech to take some of these initiatives on that plays for personalization and experience?
Ryan Broshar: Yeah, and I think there's just so many areas of improvement here. You know, when you think about tech plus retail, a lot of people think like, "Oh, we're gonna have new stuff on the shelves. Or we're gonna have this new experience," or whatever, but I honestly think where technology can help retailers most is more on the back end, right? Like, in the employee management, in communication, and supply chain, and even kind of logistics, and delivery ... Like, there's all this stuff on the back end that the customers never see. And A, it's a safer place to be able to try new technology because it isn't customer facing. I know retailers are always hesitant to try new technology that actually faces the customer, and rightfully so, but this is an opportunity to really implement kind of new technologies out there.
So, we've talked to the pop up kiosks like, that's more customer facing, but that is ultimately a logistics problems from there being able to find the place, or the players who can help, find the space and get the product to wherever you need to go like, there's a lot of interesting stuff on there that hits on I think a real vein in the market here.
And then yeah, just like, the whole workforce thing. Like, you forget the scale of the workforce, and not only just of the immediate workforce within a retailer, but also all the suppliers of that workforce, of all the vendors out there, and you start to get into hundreds, and hundreds of thousands of people that are in charge of getting a product to the shelf to get it sold. So you know, what are the tools, the communication, the tools that allow that to interact from there?
And then you know, allowing them to interact with each other, and across organizationally is just incredible. And that you know, that lends itself to really just enterprise platforms that power the retail machine, if you will. And that's a lot of back end stuff overall.
I think an area of interest as well specifically for us actually is a bit more customer facing, but is you know, tools, platforms, procedures, et cetera that help on the ROI of kind of new platforms, so think you know, online, that could be voice, that could be AR, VR, like, while those areas most major retailers aren't touching yet, there's a lot to be learned there, and I think you know, that when those switches flip you don't want to be caught without the ability to execute on it. And I think we're seeing that in voice right now, right?
Like, so one of the largest things over Christmas this year was Amazon Echoes, and Google Plays, and you know, if you don't have a strategy for that, or if you thought that was not a real thing like, now you look stupid, right? And you're missing out on big market opportunities from there. So, get ahead of like, the next wave of things that are going to enable commerce, and don't say, "Yeah, that's a pipe dream down the future." Engage with that, right? Like, start to engage with startups who are doing that stuff, and you can learn a lot from them and then actually position your company to either be a fast follower, and/or a market leader on this stuff.
So, you'll see that in the market there's definitely people who want to be the fast follower, but really in a lot of this stuff you see the people who are actually the first movers ultimately can gobble up the most real estate in the market, and really be a leader ahead of he other people there.
So, anyways, that's a bit of my rant around the stuff that is getting us excited for this coming year, and you know, happy to hear any other insights from people you know, on the call, or follow up period as well.
Questions from the Participants
Taylor Pipes: Excellent, yeah. If anybody has any questions, feel free to submit a question. We're reaching the end of our webinar here today. So, if you have questions we'd love to hear them. These are the points where you can reach all of us. We can follow Shiftonomics and Branch Messenger at the Twitter handles there, and you can also follow Ryan Broshar @rbroshar, and again that'll give you access to a lot of the initiatives that he's working with at Techstars.
I don't see any questions right now, so apparently we've answered everybody's questions about this mysterious world. But if anybody has any questions, we'll hang here for another few seconds and I'll see if anyone comes in.
Alternatively, you can send your questions to at Shiftonomics and we'll address those as well. And we'll be following up this webinar with a blog post as well as insights that we've kind of talked about that go you know, deeper dive into some of these topics as well.
We've got a question for Ryan, how are organizations restructuring to innovate inside stores?
Ryan Broshar: I think you're seeing it a lot in the makeup of the teams, right? That have to service it. So, there's a lot more around kind of in store fulfillments and making sure that the stuff is on the shelf, and when needed. But if it's more of an actual experiential store, then there's a lot more around the relationship building from that. So, organizationally you're seeing probably a shift towards more hand holding, if you will, to have that experiential stuff. But I think more so, a lot of it's coming on the back end you probably don't even see it. Of the people who are in charge of putting the product in the right place at the right time, and assuming that that product is something that they want as well.
So, there's a lot more I think investigation into what consumers are actually wanting.
Taylor Pipes: Another question has come in, and I know you recently had taken a trip to Vietnam. I'm really curious though, a lot of what we're talking about has ramifications here, you know, in the United States, retail tech scene. What are your inclinations in what's happening on the global retail scene right now?
Ryan Broshar: Yeah, I mean, I just got back from Vietnam. I was there all last week visiting with some startups in the retail space. And it was actually pretty mind blowing to see that the scale of A, development in that region, but B, how a lot of the changes that you're seeing in the supply chain and the quality of the goods, you know, a lot of the stuff that is very topical when it comes to anything on the back end is actually all being implemented, and created there, right? Even though it's gonna have a direct impact on everything that is happening on the shelves here, and so yeah, I really walked away from that thinking that a lot of the innovation in retail is actually gonna take place ... The ability to go right to the factory and see what's going on. You're able to implement that.
And then also the employees who work for you actually understand that industry a lot better because they're more closely connected to it. So yeah, it was kind of an eye opening experience for me to understand really the new world order of I think how startups and retail are gonna evolve from there, and you know, it makes sense. It actually makes a lot more sense especially when you have a global supply chain that these startups who are coming in to help with that are closer to the actual supply chain than they are to the retailers, and the people behind the computers.
Taylor Pipes: Do you have any great book suggestions related to any of these topics that you might recommend?
Ryan Broshar: You know, a lot of my reading on the topics of this are more for you know, pure startups on there because we look at ... At Techstars we've clearly got a whole you know, retail focus with this program, but Techstars as a whole is a you know, startup community, and I think a lot of those principles apply throughout there.
And I'm also a big proponent of the local startup community, and propping that up. So, I'll give a shout out to anyone who's interested in doing a startup, you know, if they're in that level there's a book called Venture Deals, it really lays out how companies are started, and funded. And then another one called Startup Communities, which helps prop up local startup communities, and how to really build up using corporations, startups, investors, et cetera to prop up your community.
Taylor Pipes: And I'll add again, I mentioned this earlier, but The Four, the Hidden DNA of Amazon, Apple, and Facebook by Scott Galloway is real great read.
Ryan Broshar: Mm-hmm.
Taylor Pipes: It breaks down all four of those companies and their direct relationships and the changes that are fundamentally happening with retail, and the implications they have. It's a fantastic read. It's a great read, it's not like a pretty dense book, but it's very understandable and it makes it very clear the changes that are happening.
Ryan Broshar: One other shameless plug is Unleashing the Innovators. I'm actually quoted in this book from Jim Single, and it actually talks a lot about not just retailers in general, but how large corporations have implemented innovative techniques. I mean, there's a whole section towards how startups can help with that.
Taylor Pipes: Excellent. Well, we've got one more question. This might be a meaty one, so we'll see how quickly you can answer it.
Ryan Broshar: Yeah.
Taylor Pipes: Do you feel that stores must be fully omnichannel enabled this day and age in order to meet customer demand?
Ryan Broshar: Wow, that is meaty.
Taylor Pipes: Yeah.
Ryan Broshar: Well, I guess I'll preface that, I don't think they need to like, right now today, right? Like, I think it's an evolution for the customer as well, not just for the retailer. I don't know if the customers are fully ready for fully omnichannel everything. But you see the trends in that direction. So yeah, I think if it's not in your near term roadmap as ways to get better at that. If not, you know, fully embrace it, then yeah, I think you need to be doing that.
Taylor Pipes: Excellent. And with that, we would like to conclude the inaugural Shiftonomics by Branch Messenger webinar. Ryan Broshar, thank you very much for your time spending with us. I think we dived into some really great topics. And again, we'll follow up this with a blog post, and some further content that kind of dives into the topics talked about today. And again, thank you very much, Ryan, for your time.
And thank you all for attending, and listening in on this webinar.
Ryan Broshar: Sounds good, thank you.
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