#RetailProphetAMA: The Future of Retail In A Post-Pandemic World

hello everyone and thank you so much for joining us today for the future of retail in a birth pandemic world ask me anything live my name is Riley Stevens I'm the director of insights here at retail profit and I'm going to be your moderator for today's discussion first of all I'd like to say we were absolutely blown away by how many of you have chosen to join us today from your home offices or from your beds wherever you're tuning in from this is a judgment-free zone so feel free to just sit back and relax and enjoy the next hour that we spend together because there are so many of us here today I just wanted to go through a few housekeeping items before we jump into the discussion just to keep us on track for the next hour so as I mentioned we've allocated an hour for this child and in an effort to be respectful of everyone's time we're going to be strictly adhering to that today so we'll be moving things along and as a result we're not gonna get to everyone's questions so you'll notice today that for the chat the chat box has actually been disabled we're gonna be accepting all of your questions your the Q&A box which is located at the bottom of your screen there you can submit a question through the Q&A box but just note that if you submit a second time we're gonna be actually removing those questions from the queue in an effort to get everyone's questions or as many questions as we can throughout the next hour we're gonna be doing a live stream on YouTube live as well so if you're joining us when YouTube welcome just note that you won't be able to submit a question through the YouTube live stream we're not gonna be checking that chat we'll only be accepting questions through zoom but with that being said if you do have a question and you're joining us with a different platform you can use the hashtag hashtag retail profit ama and we're gonna be following up this chat on Twitter and social media to answer as many questions as we can through those platforms as well we encourage you of course to post and share your thoughts your feelings your comments on today's discussion as much as you'd like now that's enough for me I'm going to quickly throw this over to Doug Doug Stevens is the founder of retail profit and I'm assuming that most people that are joining us for today's discussion are at least slightly familiar with Doug but if you're not I encourage you to check out the retail profit website where you can get more information about Doug myself and the company Doug is currently in the midst of writing his third and highly anticipated book resurrecting retail the future of business in a post pandemic world coming early spring 2021 now the insights that Doug is going to be sharing with us today are based on the extensive research that he has done to date for the book pass it over to you Doug take it away hey thanks for Ali and thanks everyone for joining it's nice to be together with 460 of our closest friends this morning so thank you very much from wherever you're joining in yeah as Rolly said I was planning to write a book that was going to be released early spring 2021 and I was working on that book and it was really sort of a philosophical look at the intersection of art and retail and trying to sort of take some of the concepts that we had been discussing for years to the next level to help retailers get to that next level and I guess it was around March 3rd that I was watching the news one day and it was just sort of this confluence of things that I saw there was I think a really significant spike in cases in Italy there was a rumbling in the stock market taking place there were implications on the ground in China for another flare-up just a tremendous amount of uncertainty and I remember distinctly thinking that I'm writing the wrong book here and so the fourth the following morning I got on the phone to my publisher and I just said you know I really feel that this is going to be probably the biggest event in our lifetime certainly the biggest event in the retail industry and so to my mind this is the only story that we should be writing about that you know we're in a time now where there's this tremendous sumer uncertainty there's fear there's panic around the health concern we're seeing potential bankruptcies among legacy retailers closings of small independent retailers and so I'm fortunate in the sense that I have a really understanding publisher no questions asked they just said go write that story so that's what I've been sort of embroiled in for the last couple of months is really digging into this and trying to understand not just the present but the future where does this lead us and so along the way we've been getting all kinds of questions from followers from clients and so we thought it would be a good idea to just reach out to all of you and to just share whatever we can today you know this is um this is sort of a changing animal it changes everyday and we're learning new things about it but but we're just here to really share what we know so far and and hopefully give you a little bit of a sense of direction so so that's sort of it so enough of that let's let's get on with it let's get to our first question right sure so before we jump into the questions which we are already getting questions to the Q&A so thank you keep them coming I have a couple questions myself just to set the stage for today's conversation um you know we mentioned or I've heard a lot of other people talking about what can we compare this to what other events have happened that we can draw from to understand what the best course of action is moving forward so my question is is there anything in recent history that we can compare this crisis to in terms of scale and scope or really anything that we can use to understand the short-term future and what that might look like yeah that's it's a great question that sort of level setting of the environment the fact of the matter it is our problem right now is not that we don't have anything to compare this to the problem is we have too many things to compare this to there were qualities of this crisis that we find ourselves in that share qualities with other crises so you know there's the the sort of the traumatic effect that we saw during 9/11 because let's face it although this wasn't quite as as a a short-term catastrophic event we're dealing with massive losses of life in fact we're suffering in the US alone and 9/11 so to speak every day so there's that aspect to it there's also certainly the economic fallout from this which we could we could point to the Great Recession of 2008 2009 we believe that at this point it might even be more protracted so we can go back and we can look at elements of the depression in this as well we've seen sort of the commandeering of of manufacturing resources by governments around the world and that shares qualities with world war ii you know something that we haven't seen the government do since that time and then of course we can go all the way back to 1918 and look at the 1918 pandemic and how that worked out but the problem with all of those comparisons is there's one thing missing from really all of them including the financial crisis and that is that we live today with a very very robust online ability and and an internet that that now has the capacity to bridge some of those gaps so it's a it's a difficult sort of Rubik's Cube to try and put together but but there's lots of reference points and we have to sort of distill the learnings from each of those in order to put together a picture what we do know at this time let's let's be honest about this this is probably the largest health crisis of our lives and it has the potential to be one of the deepest and longest financial crises of our times as well so there are those who maintain that retail will bounce back sharply once this is all over what are your thoughts on that so look if this were just a matter of kovat 19 if it was just if this were a short-term health crisis that that had a clear sort of end date where we could know for certain that we'll be out of the woods by a certain time I would I would suggest that yeah perhaps there will be that sort of return to the way things were the problem is that this is a there's a dual sort of threat here we have the health crisis which right now we know could potentially last as long as 12 to 18 months and that's being optimistic you know I mean the vaccine for HIV is still being sought 26 years later so there's no guarantee around when a vaccine will come and until we have a vaccine there really cannot be any full return to supply in the retail industry they just won't get to a level where we're kind of at pre-pandemic levels of supply in the retail industry but then the other complex problem here is that the longer this crisis drags on from a health standpoint the the greater the toll it takes on the economy the greater the losses will be in jobs job insecurity will be significant the markets are taking a beating so that's going to sort of put high net worth consumers on the sidelines you know so there are all of these various implications not to mention just sheer consumer reluctance to get back to retail that I don't think we're gonna see a full bounce-back now that's just my opinion but let's look at what's happening on the ground so let's look at China and we understand that you know understand that China locked down in a way that really no other country has or frankly could because of the level of authority that the government has in China but they lock down completely and they're still seeing flare-ups they're still seeing consumers not just worried about the health concerns but but also worried about the economy 50% of Chinese consumers say they're their sideline they're gonna be saving their money and not going out to retail in a big way now let's look at Germany to try and get sort of the Western economy point of view when German stores opened up and this is anecdotal I was talking to people who are on the ground in Germany and sort of seeing this with their own eyes they said volumes look like they're about 30 or 40 percent of what they were that's not a bounce-back and and as we know many retailers even if they have a decent online game they're not able to bridge the deficit in sails with with their online sales so we're gonna see I think a really slow incremental protracted return but until there's a vaccine here there's no bounce-back so on that I want to throw this to our participants here I've got a quick poll that I'd love if everyone could contribute and I'm gonna watch the pool I'll give you about 30 seconds to answer the question here is when stores reopen in your city will you be reluctant to visit them and while you answer that Doug I have a quick follow-up question which is you're saying here that retailers will have to maintain for up to 18 months on a fraction of normal revenue only to emerge in a potential recession is that correct yeah that's that's the thinking you know and it all really revolves around job insecurity I mean the fact of the matter is we've seen more more people laid off in a single week in the US for example than we saw through you know the entire duration of the financial crisis so I mean that's the level of job loss and job insecurity that we're dealing with and I think that that's going to be pervasive and even when retailers are able to go through a reopening and and begin the process of opening how many of us really believe that retailers are going to go out and they're gonna hire back exactly the same number of people that they let go I think retailers are certainly going to be hedging against the future by really trying to manage those payrolls so if we're dealing with a situation where we have persistently high unemployment and and I'm talking here potentially double-digit unemployment that's going to be a massive drag on the retail economy and no we're not going to see a full bounce back to normal until those conditions alleviate themselves okay so I'll share the results from that pool um you know 41% here said that they would be somewhat reluctant which sort of echoes the sentiment that you were describing earlier in terms of the feelings towards returning to stores once they reopen so that's very interesting now I've got a question that's actually come up several times now through the chats this question comes to us from Erin Todd and a few anonymous attendees as well this question is centered around the the the online retail changing and and then in turn and physical retail changing some of the questions are is this the end of brick-and-mortar as we know it and you've spoken a lot about this and passed books that you've written so take us through the shift between online and physical retail and what that looks like in the short term and long term yeah sure so you know a lot of what we have talked about in the past and certainly I talked about at length in in my last book re-engineering retail was this idea that there is a bit of a trading of places going on between online and brick and mortar that you know we've sort of looked at these these two forces and and sort of said no they're not competing it's it's just omni-channel it's all one big channel and the consumer can bounce back and forth between channels will serve them wherever they are my position was that there was something a little bit more complex a little deeper undercurrent going on and that was that there was really a trading of roles that online in many ways now is the store I mean let's face it when we think about buying something our first instinct is not to jump in the car and go to a shopping center or to a department store much less our first instinct is to go online and see where that product is and now in an increasing percentage of cases we're we're not just going online then going to the store we're just buying what we need online so that that my belief was that online is becoming the store so the question was well what's the point of having a physical store and my belief is that physical stores were actually becoming a really powerful media channel that physical stores were a means of customer acquisition we could bring consumers into the ecosystem through physical stores and then we could enjoy a lifetime customer value through all of the various online channels that we offer them I still believe that that's the case and in fact I think that what we've what we've seen over the last three months is that indeed online is the store and for many of us it's the only store that that we are are using right now so I think going forward we're gonna see two streams of investment we're gonna see a whole shitload of retailers now trying to get up to speed because they've realized that they've been caught here you know kovat 19 goes after pre-existing conditions and the retail industry has a lot of pre-existing conditions namely too much of a reliance on physical stores so we're gonna see in the aftermath of this and it's already starting to happen we're gonna see retailers really trying to build up their online capabilities the problem with that though is they're gonna be using companies like Amazon Alibaba JD comm as the benchmark they're gonna be looking at that as the high-water mark if we can just get to that point we'll be good the problem is that's not going to be the case because I believe that Amazon is already gonna be making investments in the next level of the online experience and I'll tell you why I say that about two years ago young lady named Nia Singh from New York got in touch with me and Nia said she was working on a building out a platform that would change the online shopping experience entirely she what she did was she built CGI stores virtual stores she was working with brands on test projects like Gucci and that sort of thing so anyway we began talking and she said you know I'd love it if you could make some introductions just let people know about what we're doing give us any advice so I looked at her demos I thought they were really good I totally agreed that we need to take the online experience to the next level make online stores more like physical stores all that was good I just felt that her demos might need a little bit more refinement a little bit more work so I said you know what work on it call me in six months and let's do this well in the meantime Amazon invested many millions of dollars in Nia's business they became a major backer of her business called obsess you can look it up online it's a great great concept so Amazon became a major backer so clearly Bezos and team understand that the online experience we have today sucks for being honest about it it's not really great it's not social it's not interactive there's nothing sort of entertaining about it and obsess is a business that can take that to the next level so I think we're gonna see one part of the market going in one direction to be as good as Amazon but I think Amazon's going to change the terms of reference entirely over the next five years in terms of what an online experience is in terms of physical stores I believe more profoundly than I ever have now that the physical store as a means of distribution of products is an outmoded notion I think it's inefficient it ties up enormous amounts of capital the cost on the ground of selling a product to a consumer is extremely high but with that said the physical store as a means of reaching out to consumers forming a relationship becoming an experiential point is really important now that physical stores are going to be taken out of the equation obviously for the most part for the next 12 to 18 months or until we have a vaccine but when we get back to a point where we start to see full reopening where consumer confidence is is back and the health pandemic is over I think we're gonna see a completely different looking physical retail landscape that is much much more geared towards experiential retail fantastic we have so many follow-up questions to that comes from Shannon Ryan who is our friend from he says can you give some category examples of retail that will suffer more than others for example grocery is going gangbusters but luxury is struggling so talk us through the common threads of you know who's gonna succeed in this world who's gonna do potentially more poorly given the circumstances yeah great question and thanks for joining Shannon it's great to have you so I mean obviously I mean the obvious stuff is right in front of our nose right I mean who would not want to own a pharmacy chain today who would not want to own a grocery chain so certainly essential services are benefiting online players like Alibaba and and others are just basically clearing the clearing the table right now in terms of their growth going forward once we sort of get through the the meaningful part if you will of the pandemic once we start to see the light at the end of that tunnel then I think we're going to start to see some austerity in terms of consumer spending so I think we're gonna see a real retraction on discretionary spending will we'll see increases in in non-discretionary consumers are really going to hunker down again we're dealing with I mean if we look at sort of the constituents that are involved in this you know you've got baby boomers who are we know that seventy-five percent of American baby boomers for example are underfunded in terms of their retirement well good luck with that because their retirement funds just got nailed by about thirty percent so they're gonna be hunkered down trying to save money trying to trying to plan for retirement we've got Millennials now who have taken to count them to financial crises right in the chops and so the first one impeded their incomes by fourteen percent on average over a protect protracted period the next one could take them even a couple of steps further back you've got Gen X who's been just waiting in the wings waiting patiently for baby boomers to finally retire and they're now looking at potentially a workforce where baby boomers are going to stay and longer and then of course there's Gen Z and Gen Z will just be entering the workforce at a time when we could be plunged into recession or god forbid depression so I think we're gonna see a very sober consumer on the other side of this I don't necessarily see a a wild sort of return to you know crazy spending anytime soon and that sort of is reflected in the 1918 pandemic as well when we look back in fact by 1920 the GDP in the US was still increasing but it was really by 21 when the damage really started to set in 1921-22 and it actually took until 19:25 to get back to a pre-pandemic level of gross domestic product so a good question I mean essential stuff the the stuff we need to survive the the safety and security stuff we're gonna see spending in that regard durables we may see some spending but it's really going to be the discretionary and luxury spending that's going to take the hit so on I love this question that comes to us from France and they asked I listened to your podcast about freedom becoming luxury freedom might be even more essential nowadays for consumers after this crisis how do you think this trend will influence retailers so if you could just take us and give us a brief overview of what that podcast about freedom and luxury was and then maybe just give us some more information about how you believe this trend will evolve post kovat yeah sure sure yeah it's a great question so my my thinking at the time and this goes back to an article that I wrote for the business of fashion where I was sort of positing the idea that you know luxury as a concept has always sort of been associated with material possessions that we as consumers as we achieved certain milestones in our lives we very often mark them with the purchase of a luxury good whether it was a a Rolex watch or a Mercedes Benz or what have you but I felt that that fundamentally Millennials could be a different generation partly because of the circumstances in which they grew up I mean they witnessed their parents claw their way up the the social and professional ladder to acquire you know big homes and cars only to have a lot of that ripped away from them in the financial crisis we've seen them have very very you know turbulent time in the job market they've also dealt with a lot of divorce and their families so so is a very sort of different climate that that Millennials grew up in when you couple that with the fact that social currency today the the ability to tell your friends that you've achieved a certain status is related less through material possessions today and more through experiences that it's not about what you own necessarily or what's parked in your garage so much it's more about where you are who you are you're with and what you're doing so I felt that you know fundamentally we're going to be dealing with a consumer who may view luxury as the ability to do what they want the ability to work where they want the ability to live debt-free the ability to enjoy the work that they do and and certainly the ability to travel and to have these experiences I believe that that could become even a more profound trend because I think that this has given us if nothing else this crisis has given us an opportunity to really reflect in to in two senses the ability to reflect on the degree to which we really do need people that we really do need a social structure around us for our own mental well-being but also to you know to reflect on what what really are our minimum needs what is it that we need to survive you know are all these material trappings really necessary and so yeah I think that we could see a little bit of a sobering that takes place after this but again these things run in cycles will we get back to a point where it's all about you know the Gucci handbag or yeah probably but we could have a very much more sober consumer in the aftermath of this fantastic now our next question comes from Chris Wood which also ties nicely into a question that I've been thinking a lot about recently which is what do you see the role of the retail associate being in the future both inside the store and outside and early I think if we can make this a little bit more macro what do you see as the role of people changing in retail because I really believe that this affects sort of every level of the supply chain and I'd be curious to hear your thoughts on that yeah people have really been front and center you know I wrote an article another article for a business of fashion magazine and it was around the idea that we're calling people on the front lines of retail heroes which is great the only problem is we're not paying them like their heroes and we're not treating them like their heroes the other 300 days of the year so will the will the role of humans in the retail world change I think it will I think that we could in fact be on a little bit of a path toward a breakthrough prior to the pandemic we were we were watching brands playing around with robotics you anyone who travels was seeing robots working in airports there were robot bars and restaurants there were investments being made on the supply chain side logistics warehousing delivery etc but a lot of it was experimental and part of the reason that robotics was an experimental track for a lot of companies was that consumer sentiment around the use of robots was kind of iffy consumers felt a little weird around robots and certainly they felt like if robots were displacing people and taking away jobs that that was that was something that they were not in favor of and so you saw this sort of very trepidatious investments going on in robotics I think that's going to change and it's going to change because we're gonna see consumer permission for robots now I think consumers have been appalled in some cases to see human beings on the front lines of retail making minimum wage in many cases and putting their lives on the line to be serving customers or working in warehouses and so I think consumers are going to open up to the idea that where it is safer to use a robot or where it's more efficient or effective or where the job would be so low-paying that it would that it would be almost detrimental to a human being to do then I think we're going to see more and more robotics being moved into the retail sector on both the back end and the front end my hope and this is really a hope is that we're we may wind up with fewer people working fewer human people working in the retail industry my hope is that that those jobs will pay better that the true value of a human the the dynamism that a human being brings to the relationship between a consumer and themselves that that can be rewarded with higher wages so perhaps fewer people better paid more responsibility higher skill levels and a lot of the frontline dangerous in some cases grunt work going to robotics so to follow up with that this is a question that we've received a lot and it's a little bit more tactical but maybe you can talk us through perhaps the site called like psychological a spectrum consumer standpoint there's obviously going to be a shift in our comfort levels with returning to stories and then on top of that there's also going to be a shift in our comfort levels using things like touch screens and stories which really have been the focus for a lot of retailers over the last five years ten years to implement some of this technology into their stores to allow people to to touching to get more information do you see that having a long-term effect on on consumer behavior or what's your what's your feeling one touch screens and digital screens and things like that at retail yeah it's a good question who would have made a great poll question actually but I mean you know I would just throw this out to a I'll to throw this out to anyone out there listening who has parents that grew up during the recession and I'm willing to bet because mine did too I am willing to bet that there were noticeable and persistent attitudes and behaviors on the part of your parents that were formed during the Great Depression in my case my parents would never throw anything away I mean they literally never threw anything away everything in our house was like 30 or 40 years old my father fixed everything clothing got mended money got saved coupons got clipped and it was all because of this incredibly traumatic and prolonged impact of the Great Depression I would challenge that you know this audience at the same question how many of us go having lived through this will ever look at a payment terminal a touch screen a bank machine the same way I mean we maybe we may get to a point where we say okay I'm inoculated I'm vaccinated but will we ever look at those buttons the same way and so yeah I think that we're gonna have to mitigate that we're gonna have retailers would be smart to be investing right now in alternate forms of payment alternate forms of consumers receiving information whether it's through gesture recognition facial recognition voice recognition but this this notion of touching things in a crowded retail environment I think that that is going to be a persistent underlying sort of subconscious thought with that I'm gonna pivot slightly I'm gonna take us to our second poll so we encourage everyone again to share your thoughts with us and this pool is going to ask the question to what degree do you or your organization feel it necessary to rethink your supply chain in light of the events and this you know the impact of kovat 19 in your business and again while everyone takes 30 seconds 45 seconds to answer this I have a bit of a follow-up question for you Doug which is can you tell us about the consumer mindset during crises like this this has been a question that's continuously come up in our feed today what should retailers expect about where consumers are at during and after the pandemic yeah good question and and you know and I mean a lot of the stuff that we that we see in front of us today is is fairly obvious right that consumers are worried they're concerned they're concerned for their health their concern for their finances and and so you know a lot of the conversation right now in the retail industry is around how how are we going to reopen and if we reopen successfully consumers will come and they'll likely spend I mean III even here you know really important players in the retail industry and really senior economists in some cases saying hey as soon as we you know as soon as we get through this everything will bounce back to normal what I've discovered through my research is that it's not that simple which will probably come as no surprise to anyone but consumer psychology just simply isn't that simple and then when you add sort of the the the accelerator of a crisis it becomes even more complex but I came across one theory that I found fascinating because I was really interested to know like what is going through the minds of consumers during periods of crisis and I came across a theory that was developed by three social scientists one of them a psychologist named Sheldon Solomon who is a professor in the United States he and three colleagues came up with a theory called terror management theory and what what the the the underlying thesis of terror management theory is this we as human beings are unique we are unique in the sense that we evolved to a point where we became cognizant of the notion of mortality we became cognizant of the fact that when we die were dead and and and that we we could die at any time now the problem with that is that if you lived every minute of your life feeling like you know any minute I'm going to get wiped out or I could die it would really be a horrible condition you would live in a constant state of terror so what what Solomon and his colleagues determined through research was that what we do to insulate ourselves against that terror is we create a world view because the other unique capability of human beings is our ability to rationalize so we create a worldview that protects us against the idea of death and what is that worldview consist of well it's about you know school and work and church and community and family right all of these concepts that I build around myself to sort of give me a distraction from my own impending mortality and the other side of that is within those within it within that worldview we also try and imbue ourselves with value so it's not just that we're a member of our family we're a valued member of our family it's not just that we work for a company where our work is appreciated by the people that we work or we're a pillar of the community in our you know in our church isn't that sort of thing so we create this worldview and we create our own value within it now that's all great and that works about 99% of the time to distract us from death but every now and then something comes along and pokes a hole in that worldview you know then the 9/11 terrorist attacks did that all of a sudden everyone felt for a moment like we were all vulnerable that we could all die at any moment and so what what what Sheldon Solomon calls that his mortality salience is this idea that every now and then our mortality hits us right in the face so what do we try to do in the face of that well first of all when we're when we're attacked by a threat there are three responses it's either fight flight or immobility and we see a lot of immobility so in the in the immediate aftermath of kovat 19 really starting to spread around the world what did we see we saw consumers hunkering down really not spending much money at all just sort of watching the news we go into the state of immobility then what we do is once we emerge from immobility we start to try and build back that worldview so how do we do that well in some cases it's through panic buying it's that we figure if we've got a more full cart filled with groceries than the person next to us that we're somehow safer that we've insulated ourselves against the threat over time what we start to do is build back that worldview we try to re-establish our roots with the community re-establish our place in the workforce reestablish our role in the family and to try and create that sense of value again that we have our own self-esteem within that worldview and how do we build back self esteem well in some cases it's through purchasing things right it's by treating the family to a vacation or buying that new car or getting that thing you want it gives you that sense of self esteem for other consumers it's negative behaviors it may be drug use it may be alcohol use but whatever it is we are doing that in order to bring back a sense of self esteem after we've had this episode of mortality salience so this isn't a it's not like a tap that you turn on and off consumer behavior is awfully complex but it's interesting to me that once you start to sort of predicate your whole notion around consumer psychology around this idea that we spend most of our lives trying to pretend that we're not going to die and that we have value in the world it tells you a lot about what's going on inside consumers heads exceptionally profound really ok scary actually makes you think I'm gonna share the results of poll to now before we move on to some more live questions so it's evident you know 42% say that they are going to have to completely rethink their supply chain and 38% say somewhat so very few people are looking at this as an opportunity to continue on business as usual which i think is likely a very very good thing because you know there's no real going back from what I've gathered from today's chat so far to to the old way of doing things now we've got a couple tactical questions this question showed up a couple of times from Shannon David and Liz thank you for asking this who is doing this well so can you think of any brands in particular that have either pivoted to really address the concerns they're consumers during this time or had an impact on on the way that you know brand sentiment or or the way that people are discussing a brand any anyone that's doing it well really yeah I think so and I mean in the interest of trying to provide an example that that everyone can relate to who's joining us today I think you only have to look at really the stark contrast between a brand like Nike for example and Adidas and and I wrote another piece about this just sort of is very early on in the crisis when companies were starting to sort of roll out their positions on this pandemic and roll out their positions to consumers about how they were going to do business and that sort of thing and and sort of I saw this sort of stark contrast develop so adidas for example sent a memo to all their employees all their store employees and this came directly from their CEO and it essentially said we it would be easy for us to close but we're not going to do that we think that in order to keep your salaries coming to you it's better that we stay open this was an internal memo and so that's what we're gonna do we're gonna maintain open stores the memo leaked out to the media the media ran with it the following day adidas reversed course and they then spent money on advertising to sort of try and clean up the mess they said oh you know we're gonna close our stores in the interest of the health and safety of our customers and our employees etc sever but the toothpaste was out of the tube by that point right the message had already gotten out to the market when you contrast that with what Nike was doing so and I'm gonna go back a couple years Nike going back as first three years ago was already really testing the boundaries of online they were really pushing their online direct-to-consumer game making huge investments on the brick-and-mortar side they were experimenting with novel concepts so you know Nike by Melrose in Los Angeles small store concept very local a Nike House of innovation kind of the big flagship store concept but but all really trying to trust test the boundaries of experiential retail as it turns out not only did Nike go to the consumer with a consistent message that said no we're not gonna open our stores just go home be safe play inside you know what we'll we'll look after you some other way they had the ability they had made the investment to accommodate a customer online and they you know had had made these investments in brick-and-mortar so that when we do get back to a position where brick-and-mortar is relevant once again they're they're in a great position to lead so to my mind you have everything there you have great communication in crisis you have great leadership and vision of the future you have investments being made in the right end of the market and as a consequence you have a retailer that has posted relatively strong results even in the face of this crisis I think they're a great test example fantastic now many this is a question I hear from Cassandra Kelly and she asks many are saying commercial mortgages are on the brink of collapse thoughts on this and how it will affect digital digital natives with a few stores of peloton worthy Parker bonobos all of those direct digital native brands yeah it's a good question so I guess I'll take that in in two pieces the first piece is you know we talked a lot in 2019 about the move of digitally native brands direct to consumer brands making investments in physical retail and what was motivating them to do that and part of what was motivating them to do that was the cost of customer acquisition through online channels through digital channels the in one case I think it was outdoor voices for example was spending so much on incremental customer acquisition through online media that the the the actual revenue and profit from each of those incremental customers wasn't even covering the cost of acquisition so weirdly physical retail became a more efficient and cheaper proposition for these brands from a cast of customer acquisition point of view and it also allowed them to maybe widen sort of the the the lens of who they were attracting to their their brand obviously that that no is a problem because physical retail for at least the the short-term is is going to be experiencing disruptions the good news for many of those brands is that we're likely also to see a decrease in digital media costs so we may get back to a point where it starts to make sense again for these brands to be reaching out spending money online in order to acquire new customers but but we'll see it's going to be a rough road for many of them because we're also going to see VC money now wondering if there's a better place to be than retail if I'm a venture capitalist I'm looking at the health sector I may be looking at essential services grocery etc I may not be thinking about how people can buy more you know eyeglasses or running shoes online having said all of that I think it's also important that there be a coordinated effort in the retail industry among landlords property developers property managers the government coming together to talk about this issue of rent forbearance of more of mortgage interest forgiveness something has to happen in a coordinated way to put a safety net under the retail industry because it's not an exaggeration to say that the job losses alone in the retail industry bearing in mind it's the bigger biggest employer in a lot of economies the the job loss alone could could tilt the entire economy to a bad direction unless we take a coordinated effort and action to save the retail industry during this time great we've got a question that I think is probably top of mind for a lot of people right now especially as it pertains to the long term approach for brands and retailers to take and that comes from Andrea George and she asks what's your view on sustainability playing through and via retail on to the high street post pandemic and really I think this affects all all retail really so what role will sustainability play yeah that's a great question Andrea and you know what our experience with sustainability I suppose until very recently has been that it's it's it's sort of like number three on the list of consumer priorities that consumers sort of say well I want I want great value I want convenience I want quality and oh and by the way I'd be great if it's sustainable I there is a possibility that that will change again it goes into will we go through this big rethink will Wilco vat19 sort of be the thing that that proves to us once and for all that you know literally if someone sneezes in China someone in North America gets the virus that we are that closely knit as a global community that the actions of one party impact the actions of another and and I mean if nothing else my god look at what's happened just during kovat 19 in terms of the environment that we're seeing clear skies in Los Angeles you know that we're seeing animals returning to the landscape that that we haven't seen you know in in urban population so in some weird way maybe this is bringing us closer to to nature to the natural world and maybe we will have more you know a higher priority level put on sustainability as a leading preference in terms of who we're doing business with that that would be my hope my hope is that we don't just sort of carry on like nothing happened there's a great teachable moment here about our consumption patterns about humanity and about the natural world and we should really take all of that into consideration I hope retailers lead the way in that regard too and don't just leave it up to consumers I agree and I think we're a first watch or say to everyone submitting questions we have a ton of questions coming through and thank you all again so much for submitting I'm going to have to ask a couple of questions that are more sort of overall I'm interested to hear from you Doug in terms of the long-term effects of kovat 19 and what do you see as being the longer-term changes that coke at 19 could bring we've touched on a few today but do you have any other thoughts on that um yeah I mean you know I think that they're the the trap that we can fall into with this with this crisis is to look at the the superficial aspects of it you know and and to be fair I mean you know we're we're eating through the news headlines and industry headlines we see a lot of the same stuff you know our consumer is now more open to online shopping we'll the online landscape look different is this the end of the shopping center as we knew it I mean there's a lot of that stuff but for me and and this is really where we I want the positioning of this book to sit is that there's a you know they often say that if you look out at the ocean the current that you see on the surface is much weaker than that then the current that that is deeper down and so I think we really have to start plumbing the depths of this crisis and asking questions like what are the deeper changes that are going to take place in society you know will this will kovat 19 finally be the point at which companies say you know what maybe we don't have to have 3,000 people come to an office every day maybe our people were productive and happier working out of their houses maybe they can come in every so often and if people aren't as reliant on traveling into offices what does that do to cities how does that change the the complexion both demographically and economically of cities and if the nature of cities changes well how does what does that mean for the retail in those cities and if education changes what does that mean for a city like Boston when all of a sudden 30 or 40 percent of students aren't living on campus they're not even living in the city anymore education becomes remote you know how do we communicate just the fact that we're sitting here today talking with over 400 of you having a you know a personal dialogue is remarkable we couldn't have even have done that 10 years ago so I that retail is a reflection of how we live I don't believe how we live is a reflection of retail I think it's a you know retail comes from how we live and if our lives how we work how we educate where we live how we live if that's fundamentally changed then we can expect that retail will change in a big way too and so my my work right now is really aimed at trying to understand those super deep tectonic shifts that are taking place and what that's ultimately going to mean for a different looking retail landscape so with that you know we've I've been doing some research too and I've sort of a lot of people have their theories on this being they call sort of the dress rehearsal for what's to come in terms of more pandemics and and more issues at moments in time like this how can or should retailers begin planning in the future for you know other crises like this yeah you know the we heard that a lot right we've heard it from from business leaders from analysts heads of state even saying nobody could have predicted this nobody could have seen this coming but in fact that's not true you know I mean people like Bill Gates and others have been out there for you know decades talking about the fact that there will be another pandemic that is probably just around the corner and when it hits us it could be significant and severe so we have known about these things the problem is we don't allocate a tremendous amount of intellect or effort to understanding these things until they are a clear and present danger and they're right in our face but I'll give you an example you know Intel I was talking with with an expert in crisis management I was asking him like who does crisis management really well and he mentioned Intel and he said you know Intel has had a standing committee on pandemics for years you know they just have this committee that gets together periodically checks in on the whole idea of could there be a pandemic what is what are we gonna do if there is one what's our response how are we gonna do business so a company like Intel has been prepared for this for years there's no reason why business leaders shouldn't be doing the same sort of thing putting together groups of executives whose job it is is to focus on one point on the horizon and see if that if that object on the horizon is coming closer to them and be prepared when it happens the other thing is you know one of the questions Riley and you you of course notice one of the questions we ask all the time in workshops when we're doing strategic workshops with companies is what would you sell if you couldn't sell what you sell you know what would you do as an alternative if if your core product or your core distribution method was taken out of how could you how could you pivot example being Airbnb obviously Airbnb for all intents and purposes is out of commission but they have pivoted now very quickly to delivering online experiences it may not fill the gap that may not become a long-term permanent business model but it's something right it's a pivot and it was probably something in their back pocket so planning those contingencies going through scenario planning asking those really terrifying questions what if our core product were you know null and void what would we do and and some of that is sort of exploring the big idea around your brand you know that Nike is not just about a running shoe louis vuitton is not just about a handbag these are bigger ideas encapsulated within brand and within that you've got a lot of different things that you can deliver to consumers that will have value and it gives you these contingency plans so I think it's a matter of leadership it's a matter of vision and it's a matter of confronting the the horrible ugly things that you know are sort of under the bed at night and dealing with them so we've got about five minutes till the end and before we conclude that sounds that sounds oddly ominous you mean the end of the livestream right at this rate twenty twenty I'm not sure done so before we conclude I want to just conduct one more poll for everyone who's still with us now the question here which you will see on your screens shortly is during or after the pandemic do you and/or your organization plan on investing more in digital so I'll give you a couple seconds here there's a lot of options for your responses here so we can get nice and granular in terms of what your feelings on this are and while everyone does that Paul Doug are there any words of encouragement that you can share I know that often times with these you know speaking of ominous it can be overwhelming it can feel ominous you know we're still very much in this and the at the end of the tunnel seems like it's starting to we're starting to see it but I know for a lot of companies and brands big and small they're really still feeling the pressure of this and questioning a lot so are there any words of encouragement that you can give the industry in these times so you know I look guys I as we've said there's no way to candy-coat this I think that you know getting through this health crisis is going to be emotionally difficult you know we're going to be dealing with a lot of mortality a lot of loss of life eventually that will probably be a few degrees away from each of us so there's that and then there is the economic turmoil that's going to come but I want to I want to share a story with you just a really quick little story that I came across as I was sort of researching the 1918 pandemic and just to sort of set the stage understand that the 1918 pandemic from a mortality standpoint was was far and away more lethal than what we're dealing with today were literally millions of people just in the US alone that perished in the 1918 pandemic and and the impact on the economy was very dramatic too because of course there were you know there was no alternate there was no internet there was nothing else to do except physical retail and physical services one of the one of the most one of the categories that got brutalized the worst through that pandemic was the movie theaters about 97% of movie theaters in the u.s. closed down just shut down and they were largely owned by independent film houses owners of these film houses would show whatever movies they wanted to show their audiences and so you had this situation where you had a lot of independents running these film houses movies basically out of commission even the ones that were open nobody was going to I mean and that's something that we've even seen in China more recently but the movie theater industry was in ruins let's just put it that way enter a guy named Adolph Zukor and adult hooker was a Hungarian immigrant to the United States he immigrated to New York City he worked as a laborer for a while eventually he got involved in the fur business he became a designer of fur garments he started his own chain of first doors and eventually he made an investment in the movie business now this is pre-pandemic around 1906 I think made an investment in the movie business and sort of got involved in the entertainment and and movie production business around 1912 he actually created famous players which a lot of you will be familiar with and then he went on to create Paramount Pictures so famous players was the movie production house paramount was the distribution arm that would sell those movies into theaters and around the time of the pandemic zuker realized something with all of these theaters going out of business he realized that if he acquired them he would develop a completely vertically integrated industry where he would then own everything from the production of the movie itself through the distribution and then ultimately the exhibition of the movie he controlled the point of distribution which he did he bought about a hundred and thirty-five chains of movie stores around the u.s. and and basically created what we have today the modern movie industry was created in the heart of the worst pandemic in history no the moral of the story is you have a choice you can either be the one that is saying the movies are going out of business the world is falling apart we need to stop doing everything and just go into our shell or you can be the adult sucker you can be the one who's scanning the landscape to find those opportunities to move further ahead to create a new business model entirely by capitalizing on the chaos and that's really what this is a matter of so my advice to you is be the adult zuker in your category and the other thing just finally I'd like to say is you know people have said well Kovac 19 is like an accelerator it's like a time machine into the future it's it's going to propel us you know forward with all kinds of progress I don't necessarily look at it that way because I think that there will be some negative things too and then we're going to see more people falling back into poverty we've spent the last several decades lifting people out of poverty I think we'll see more people going back into poverty I think that this is going to be very difficult socially and economically so I don't think it's it's all going to be positive but what I do think it is is it's code 19 is sort of a wormhole in space that I think once and for all may propel us out of the industrial world because let's face it the retail we see around us today most of it is a product of the industrial world it is not a product of the digital world so Kovach 19 could be the wormhole that allows us once and for all to cross over into the digital age and there's going to be vast amounts of opportunity once we make that leap absolutely so like that only two minutes behind schedule it's pretty impressive if you ask me I'll share the results of our last poll which show that obviously significantly people are planning on investing significantly more into digital given the pandemic and and the implications of the pandemic and with that we've concluded today's livestream I just wanted to say thank you so much to everyone for joining us today if you've enjoyed today's livestream I wanted to call attention to the fact that we do have six new talks on the retail profit website delivered by Doug and those are available for private live presentations they're available for organizations to book so if you're interested in that there's information on that on our website so you can visit us at retail profit comm I will also include the link in a follow-up email and as I mentioned many times throughout this this hour that we spent together I know we couldn't get through nearly all of the questions that that were given a lot of them were exceptional questions so thank you all so much for your contributions we will be following up with more information on webinars that are to come so we're going to be doing more of these so we'll be taking some of those questions that were left unanswered and bringing them to the next webinar in hopes to answer all of your questions and thank you so much again have an amazing rest of your day wherever you are and we will see you next time thanks everyone take care of yourselves

Channel: Retail Prophet

Views: 3,956

Rating: 4.8571429 out of 5

Keywords: Doug Stephens, Retail Prophet, Reilly Stephens, retail, pandemic

Id: a_FRD_zib5A

Length: 62min 43sec (3763 seconds)

Published: Thu May 07 2020