Oracle’s Netsuite division recently put out the Future of Retail report (free with registration) in partnership with Wakefield Research and The Retail Doctor. The global study of 1,200 consumers and 400 retail executives across the U.S., U.K. and Australia found a huge disconnect between what retailers think shoppers want, and what shoppers actually want. Major differences are found in areas spanning the overall retail environment, social media, personalization and the use of advanced technologies such as chatbots, artificial intelligence (AI), and virtual reality (VR).
Bob Phibbs, better known as The Retail Doctor, shared with me some of his more interesting takeaways from the study, and why the gap is so wide between retailers’ perceptions of what customers want, and customer expectations for experiences they want retailers to provide them. Below is an edited transcript of our conversation. To see the full convo, watch the video, or click on the embedded SoundCloud player below.
Small Business Trends: Give us a little of your personal background.
Bob Phibbs: I work with brands, big brands typically, like Lego and Yamaha and a bunch of other people, to how do I maximize the customer engagement level at a brick and mortar store? I’ve been doing this in my 25th year. I started off in the trenches with working retail. I’ve also been an entrepreneur and I’ve been a franchisor.
Small Business Trends: One of the things that jumped out to me when I first saw an email was the headline, ‘Alexa, 95% of consumers don’t want to talk to a robot when shopping’.
Bob Phibbs: 95% of retailers think VR and robots and all this stuff, when planning for the future, that that will make people feel more comfortable. Shockingly, what is it? 13% [of consumers] actually said that would make a difference for me going in a store. I think that really was an interesting point.
Yes, one can say, “We need to go to the cutting edge,” but it’s not like an iPhone. It’s not like people are saying, “Yeah. Give us this.” It’s more like, “This seems like a good idea, right? This seems like a good idea. Will customers come after it?”
There’s another recent survey not that long ago, Brent, that was talking about yes, voice is really important. However, they’re not shopping by voice. In fact, what most people use an Alexa and that stuff for is play music and what’s the weather? People don’t feel comfortable and confident in shopping on a voice-enabled device.
Small Business Trends: What were some of the other main takeaways from the study that you find would be of interest to a lot of folks?
Bob Phibbs: 97% of people said that there remains to be a need for a brick and mortar retail store. I think that points to obviously the health of brick and mortar. We have left behind the 2017 retail apocalypse. “Stores are crappy, no one will ever go there again. We’re all just flying cars and eating avocado toast”.
The other disconnect I took out of the survey is that, in general, when you polled retailers, I think it was like 53% felt that they were providing an experience that made consumers feel more confident and less stressed and less alone. That’s what it is. But less than 13% of consumers said that.
They actually said the opposite, “I feel more stressed, more alone and more anxiety when I go into a brick and mortar store.” How does somebody feel anxious and alone? You’re not talking to anybody and you’re left in these, essentially, warehouses of products that all look the same. In fact, I was just at the new Nike store in Soho the other night. It’s fascinating seeing the way they have remerchandised the store.
If you think of certain brands, which I won’t say, where it’s just walls of shoes, of tennis shoes, and it’s like, “You know, pick one out. Let me know if you need any help.” It’s like, “What’s on sale?” You feel stupid. You don’t know if you got the right one. Nike doesn’t do that. In fact, they have customized their location so much that you might just see this kind of a product over one specific sport.
Here’s the other thing that’s kind of interesting. Brick and mortar, and this speaks to what we learned at NRF, retailers are learning by their micro communities, by what people order online and buy in a store. In that Soho store, in the women’s section only, they started by color. All the black shoes are here. All of the, I think it’s the, not pink, but white are on somewhere else. Then, they look for use. They don’t do that in all their stores. It just happens to be this one area.
You’re like, “Dude. That would make me feel what? Oh more confident, less anxious and you’re going to be there to help me figure it out, less alone.” Brick and mortar retailers that are understanding this are actually remerchandising stores in the right way.
Small Business Trends: How are retailers, the ones that are more successful than the average, how are they implementing or integrating these technologies into the store?
Bob Phibbs: That’s an interesting question. At one seminar I attended, this one guy said, “We approached consumers and we said, ‘Okay. Here’s all the things we could personalize.’” They were like, “Yes. I want all that.” Then, they said, “And here’s all the data we need to collect to get that.” He said, “We thought they would all be like, ‘No.’ They were like, ‘I’m all right with that.’” But when it came to facial recognition, nobody wanted their face scanned. Yet, we’re hearing from Asia and China is like way ahead on all this stuff. In the States, that’s like you’ve crossed a line.
Voice is lateral, which means there’s no context. If I say, “Get me toilet paper Alexa,” it’s going to go up to its database. It’s going to see whatever was put in there for toilet paper, either it’s Four Star or it’s their own brand or it’s cheaper, but it’s not contextual like visual is, right? When I go onto a site and I say, “Oh I’m looking at that fleece you’ve got, that greenish, I hope that’s greenish, I hope my eyes are right, that greenish fleece you got on.” You see it and then it’s kind of like, “Oh, but here’s some other options you might like.” It takes you down a little different path. That’s the limit with voice.
Voice will never be the same as visual. This idea that we’re all going to be shopping on that, maybe we’re shopping on lists that are already put together. Maybe we’re doing that for subscriptions. Maybe we’re looking at for a pantry we built in Amazon. You’re probably not going to say, “Buy me the latest Nike tennis shoes.” That’s just not going to happen. There’s going to be room for everything.
I think all the smart retailers are trying to figure out, “Look. We have all these data points online. We have all these data points in-store. Instead of just saying, ‘We’re going to bring a kiosk into a store …’” Although several people did talk about that. Millennials and Gen X in particular like that idea of having that option. The smart ones are saying, “No. Let’s take all those data points and put them together.”
One of the guys who I was able to speak to at mystore-e.com out of Israel, what they do is they take that data. They take a retailer’s data and then they have a little app that comes out. The store manager, let’s say, he goes through and he opens it up one week. It’ll say, “Hey. These two products are selling well.” It’s like, “Okay.” It says, “Make sure they’re merchandised together, because that’s going online in here.” Then, it would be like, “All right. Take a picture that you remerchandised them in the store. Oh, and make sure that you tell the employees that if you sell this, you can sell that.” Now, what does that do?
We confidently know customers who buy this are going to buy this, that it’s not going to be a big deal. Customers are probably going to like that, because you know a lot of people are doing that. All of the smart ones have actually reinforced everything we’re saying on the Oracle survey has found. They’re working to make those customers feel more confident. It’s not through, oh, we have great signage. Or we have a buy online, pick up in-store. That’s not it. It’s that store experience. I’m a little passionate about this, Brent, so if I get a little on, you can just like, “Dude. Tone it down a little.” All right?
Small Business Trends: Hey. What, on the survey, what were the most surprising findings to you?
Bob Phibbs: From my vantage point that only 11% of retailers could answer, I definitely have the tools for my staff to give customers a personalized experience.
Small Business Trends: Wow. Only 11%?
Bob Phibbs: I mean that’s their confidence level. Again, don’t go to it like … Say, some people take personalization like you can drop my algorithm. As I walk in, it says, “Hi Bob.” I can now have Brent when he walks up to me like, “Hi Bob.” That’s not what we’re talking about here. A personal experience to me is one-on-one.
One-on-one would be, “Hey Brent. It’s great to see you back.” You say, “Yeah. That lawnmower you sold me, I need to get a new blade.” Oh hey, we connect the thing. I see your bought model eight. I’ve got the perfect one.” Now, it really is selling one-to-one.
Here’s the other thing, Brent. All right. In a mass store, in a big store, we have got the opportunity to buy a container of product or a line. Because it’s a store, we can move a lot of it. You can sell a lot easier. Online, this idea that online is so much more profitable… you’re really trying to sell one-to-one. It’s almost like you have to physically go out and find each of these people and say, “Please give me money. Hey, please give me money. Please give me money.”
Wayfair is spending $197 per new person they bring in the door. That’s not sustainable. I don’t know [inaudible 00:13:44] VC money you can burn through. Stores don’t have to worry about that. They have to worry about profitability, but that idea that if we can bring a lot of people into a store and we can do a better job of selling one-on-one, because of the dynamics of it … Let’s say I’m working with you in the lawnmower. Your wife says, “I like that green dress over there. I’m going to go try it on.” You’re like, “Okay, cool.” That can only happen in a store. Do you follow?
Small Business Trends: That makes total sense. What kinds of retail companies are in the best position to succeed leveraging some of the things that we just talked about? Is it the big box stores, or is it the more boutique kind of stores? Or even the little mom-and-pop stores?
Bob Phibbs: Dude, you’re not going to pin me down on that. They’re all different, right?
Small Business Trends: Yeah.
Bob Phibbs: Walmart and Amazon are kind of like King Kong and whatever the dinosaur was, Godzilla, like, “Argh.” They’re trying to outdo each other and they both have really some interesting good strengths about it. Right? The biggest danger with Amazon is, let’s be honest here, if they didn’t have AWS, they wouldn’t have access to cheap capital to be able to do all the stuff they’re doing. I think at some point, someone is going to have to say, “This has got to be regulated. It’s got to be broken up.” I don’t see how that continues. We broke up AT&T and the oil companies over far less individual stuff in our individual lives.
Then, you’ve got the boutiques. I got to tell you, Ted Baker is a frigging amazing brand with no tech that you can see. It’s a unique vision. It’s designer brand. They tell their story uniquely in every location, plus he has a limited group of skews, but here’s the thing that they do is every location is different.
I was in their store by Columbus Circle. It has all these rulers and yardsticks and you’re looking down on these little models on the wall. You’re looking down on New York. It’s because Columbus Circle is the center of New York City. Did you know that? That is the center that they measure out for, so that’s all the measuring stuff.”
You can’t cookie cutter that.
Small Business Trends: No.
Bob Phibbs: Most mom-and-pops feel like, “I don’t need a website. My customers are all loyal. If they don’t buy from me today, they’ll buy in the future.” They’re still trying to use that lever of 20, 30% off, and then screaming at people to buy local. I had a woman on my Facebook page this morning say, “Should I tell people that … Should I be honest with them and tell them they need to shop from me or I’ll be gone? Or should I just play it like everything’s fine and be nice?” I said, “Nobody’s attracted to struggling retailers. Otherwise, we would all be flocking to Sears right now, J. C. Penney.”
If I was a small retailer and were to read this I would be going like, “Wow. More than two in five, 43%, of Gen Z and millennial consumers plan on doing more shopping in physical stores in 2019.” I’d be like, “That is great news for brick and mortar stores. I guess I should go out and paint it and put a new awning on. I should pave the parking lot. I should do this to be ready for them.”
The problem is in that moment when they walk into your store and it feels old and it’s 10 minutes before someone talks to you and you ask that they have something, and they’re like, “No, but buy from us because we’re local,” they’re not coming back. Here’s the problem, Brent. They don’t come back and tell you that. They just don’t come back.
This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.