Manage episode 181219453 series 98062
EP088 - PwC Partners Steven Barr and Byron Carlock
Steve Barr (@Steven_J_Barr) is a partner in the Consumer Markets practice at PwC, and sits on the NRF Board of Trustees. Byron Carlock is a partner who leads the Real Estate practice at PwC. We sat down with Steve and Byron to talk about the current state of the US retail market and what the future may look like.
In this interview, we discuss, Mallageddon, Omnichannel, Grocery, Mobile, and of course Amazon.
Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 88 of the Jason & Scot show was recorded on Thursday, June 15, 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
New beta feature - Google Automated Transcription of the show:Transcript
Jason: [0:25] Welcome to the Jason and Scott show this episode is being recorded on Thursday June 15th 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Cohoes Scot Wingo.
Scot, Steve, And Byron: [0:39] Hey Jason and welcome back Jason is got show listeners, Jason tonight we have two guests on the show that are going to help us better understand some of the retail and real estate dynamics that we've been talking about here in 2017 first we have Steve bar Steve is an over 20 year veteran of pricewaterhousecoopers which I'll call PWC from here on out, where he is focused on the consumer Market Steve is a frequent for contributor on topics around retail Brands and cpg he's also on the Board of Trustees for an RF, we also have Byron Carlock and he is the national partner and real estate practice leader with PWC and Works close to the Steve to understand physical retail Trends and how they impact commercial real estate industry he's been at PWC since 2012 welcome Steve and Byron.
[1:28] Thank you John long long time listener first-time caller.
Jason: [1:34] We are excited to have you guys on the show and we always like to get things started by giving a listeners a little bit of a perspective about your backgrounds and how you came into your rolls so maybe Steve we can start with you you want to tell us how you got here.
Scot, Steve, And Byron: [1:49] Yeah it's good it's really great to be with you so I leave the consumer markets practice at pricewaterhousecoopers which includes our retail practice are consumer packaged Goods practice. And our travel and tours and practice. The practice includes our advisory Consulting business and our traditional audit and tax practice I've spent my entire career focused primarily in the retail and consumer space and like I said I'm glad to be with you tonight.
Jason: [2:18] Traffic in Byron.
Scot, Steve, And Byron: [2:20] Sure and I'm on Byron Carlock I leave the national real estate practice I came to the firm from industry five years ago. And spent the first half of my career with the Trammell Crow family a prominent real estate family based in Texas with many companies in the various. Real estate categories of office retail multifamily. Hospitality industrial and then I ran three routes for a sponsor before coming to the farm. I also lead the practice across our lines of Services of. Assurance tax and advisory my jobs almost as fun as Steve's but I'm more the dirt guy and so I'm watching our industry go through an interesting metamorphosis especially in the retail category.
[3:10] Awesome well as the the dirt guy Byron let me kick it off to you and you know so 2017 is you've been an issue for a while and I've got a majun this is kind of, what is the most brutal years you seen us as relates to Store retail you seen over 5000 stores announced that are closing this year we've had folks on the podcast that say we can get to 10000, and you're in that Plies Mall closures in the 20 to 30% range over the next two years, watch County help us frame it giving your long exposure to the market and in the physical retail side how, what are you seeing out there is it the worst year you ever seen in and any other pontifications would love to hear.
[3:51] Sure I'm going to put it in more of an evolutionary disruption time frame because I think it's very interesting to sit back and realize. The 90% of retail sales still happen in brick-and-mortar. And so although e-commerce is the fastest-growing phenomena in retail it's still only 10%. Of the total spend and so what happens in brick and mortar is very important. And certainly worth watching and you're right the store closures are going to be big we can get 7700 somewhere around in there so you're right between 5 and 10000 and the square footage vacated you know in the tens of millions of square feet. But what's interesting for the real estate.
[4:36] For the Realtek perspective is on that which is vacated it's an offer it's an opportunity for landlords to rehab and reposition. Answer there's National articles you know this week in the Wall Street Journal talking about. The mall might not have any retailers in it and some of the different uses that that real estate is finding as landlords reposition the real estate. So I'm coming at it from a bit more bullish perspective from the brick-and-mortar perspective in that I think we'll see New Uses even though those vacancies will.
[5:16] Eradicate certain retail Concepts week we refer to sometimes as the mediocre in the middle.
[5:24] Got it 60 what's your take on kind of where we are from a 30000 foot kind of you. It's interesting one of the things Byron and I chat about frequently is the question of whether were over stored or under demolished in life what I, yeah and what I mean by that is there are some great properties and some great locations. I really just don't have the right retail for for today's consumer. Transformation there is no question and you guys wouldn't have any back on the show if we didn't acknowledge that. There is some significant headwinds for certain retailers but we have a number of our clients and I'll lean with Byron toward some level of optimism because the number of our clients. Or investing in some very unique properties focusing on. Experience and press partnering in ways that might be non-traditional from a historical standpoint but really connect with with today's consumer.
Jason: [6:34] Yes what's really interesting you know I feel like I am definitely on your guy side of the fence as a pro brick-and-mortar guy Scott is really the, the digital doom-and-gloom guy on the cough but I think even he concedes that the brick-and-mortar is going to continue to be a really important part of the mix I will say however that, I do start getting nervous cuz you mentioned that average, 10% of sales are online in a lot of segments that are important like particularly in the malls.
[7:06] That that percentage is more like 15 or 20% and 15 or 20% feels like an inflection point when it can really disrupt a category.
[7:16] Yeah do you think we're going to see some some actual category disruption or do you think it's just going to be the the weakest players in each of those categories that that we see go away.
Scot, Steve, And Byron: [7:27] Steve began alluding to it's all about the experience so it's that category. Can create an experience in a reason for someone to be on the showroom in the store and experiencing the product and learning about it then that disruption can be stalled if not why why take the time out of your busy schedule to get. And so the consumer needs a reason to be welcomed into the store and feel as though it's a worthwhile experience.
[7:54] Yeah and I guess I would have to serve two thoughts the first would be you know in addition to the numbers you shared we're actually seeing. Many of our clients have their. Or their their direct businesses grow. 20 to 30% in the end in fact as you both know well. Some have even grown in the in the 40 50% range and something that said we called the last two holidays. And you know those have come true so we're seeing there's no question we're seeing the massive shift. The other point I would make and having listened to your show for quite some time I know when I open up the topic of omni-channel. I think there's a lot of people that talk about on the channel and I don't think many retailers are are are doing that well. But I do feel as if the retailers are on a continuous journey of improvement. And some of the retailers are starting to do it well but I continue to be very disappointed with. With many of the store base retailers often my family gets tired of shopping with me because often what I do is I walk into the store. You know what I'm doing, my work thinks and I walk as if I'm just any consumer and trying to feel is it what's what's that experience for me if I've done things like buy online pickup in-store and I continue.
[9:30] Be amazed at how many stores make it very inconvenient for, the consumer to really have that buy online pickup in-store experience difficult to find a parking spot, if I have an impulse purchase or a different need there isn't a separate checkout Lanes sometimes it's very hard to find the the, the pickup spot within the store and so we really do need to see the Retailer's transform at the store level, and counterbalance, the convenience that comes with online shopping but like I said I think some are starting to do it well and others, if they don't do it you know I think they're going to add to that list of of dead banners bankruptcies and store closures.
Jason: [10:22] Yeah it it is shocking how much bad omni-channel there still is out there I know I have the luxury of living a few blocks from an Amazon bookstore and so I'm a horrible person, but my soda pass time when I have too much free time on my hands is just to try to go return Amazon purchases at the bookstore.
Scot, Steve, And Byron: [10:42] Yeah and what's your experience.
Jason: [10:44] That they don't accept returns from Amazon it's me just being mean but are there any retailers you think of that you would point to as a sort of shining beacons of really taking advantage of the wrecking water footprint and doing omni-channel well.
Scot, Steve, And Byron: [10:59] Yeah I can think of several I don't know if we're allowed to mention particular client names. Excuse me particular company names but yes there are some they're doing extremely well that make sure you feel like you are welcomed into the store almost as a treasured guests because they know your time starved they know you want special service. Play make you feel like your visit was worthwhile.
[11:22] No I mean I don't know I mean for example and I'll give you a couple cuz I think sometimes we can think we can speak in terms of examples but you know what Gucci is doing at the upper end this year. Is a game-changer and when you go in the store and you see something you like you better get it because if you don't get it it may not be there tomorrow. Limited production runs with the special embroidery while statements that become interesting accessories to any outfit.
[11:52] It's really a fun experience at the designer level.
[11:56] Even all the way down to HomeGoods in a perch who you go in and get to see demonstrations in the cooking kitchen or in the luxury bathroom. And you think wow I want to live like that. And so when you see those experiences that make the product come alive it makes your store visitation worthwhile.
[12:19] Now if it's a roll of toilet paper. Are bath soap or laundry detergent the commodity stuff is going to be sold on price and convenient.
[12:32] An empire in what would I would add to that is you know so often when we talked about how many Channel I think there's a focus of it being. The online transaction store but also we see some retailers doing an extraordinary job of if I'm in store and they don't have the style or size that I'm looking for, several of the leading retailers are able to access their inventory real-time often with a handheld device. Somewhere you know exactly where I'm shopping and in many cases you know make a commitment to me. How to get that old to The Shopper overnight or if you're in a large urban area in many cases on same day and. Bonobos is an example of that is extraordinary I often go into markets. And two tours in a recent Market visit. Explain that I was shopping or just doing the tour and what was staying at a hotel and didn't want to carry bags and they made a commitment to me that. By the time I was back at my hotel room in Times Square that they would have a package waiting for me so I think it's important to think of, omni-channel you know going going both ways but some some are doing it well. But that also means then that some aren't doing it well and what's especially challenging as same-store sales Decline and there's significant deferred maintenance from Information Systems.
[14:14] And investment in store associates in others it almost becomes self-fulfilling for those retailers that just don't have the resources to get it done and that's why I think this is going to be a balance of. The winners are going to continue to win and as Byron a said you'll being stuck in the middle or I would say you know being a struggling retailer. Really something transformational is going to happen or we are going to continue to see a decline but I I do believe those clear winners are there there's no question that they're very bullish on, specific real estate in specific markets at very strategic specifically.
Jason: [14:56] Yeah I would definitely agree Steve I think is you alluded to a lot of the.
[15:01] The most successful omni-channel experiences with Chompers really require excellent.
[15:09] In-store inventory accuracy in so if we see a lot of retailers investing right now in New processes and Technologies and systems to get that that inventory much more accurate so they can use it in a lot more customer experiences.
[15:24] Another Trend that I think is interesting an omni-channel I'm curious if either of you have any thoughts. We now seen a couple retailers kind of announced that they're redesigning stores around these omni-channel flows so target has a new store model I don't think they've open one yet but that literally has sort of a.
[15:44] A separate entrance for the fast visit you no pickup Goods type stuff.
[15:50] And that entrance is literally you know more convenient and separate from the the the full brows customer and I know.
[15:59] Starbucks already has a prototype store in their corporate headquarters that's a pure Order ahead pick up in in Branch experience where you literally can't order in in the store.
[16:11] Do you see those kinds of trans catching some some wind.
Scot, Steve, And Byron: [16:15] And I do know they're working at work harder at making it easier to return.
[16:31] Yeah and end, it's actually great example and the reference I made a little little more subtly earlier was it was actually you know to the Target Model by the way I would say is, I'm in a worse thing several of the mass Merchants so you know Walmart and Target really begin to execute. Very well in the store I think those companies would would say there's always an opportunity for continuous Improvement but I think they're realizing, the Strategic imperative, to improve that experience and I'm quite optimistic that the leading retailers are are going to be able to pull it off in fact I think you know I think we're going to start to see, even greater separation but I would expect those retailers, and a few others to to separate themselves and and and do it quite well what will what will be interesting. Will be you know at what page can they do that because. This isn't just about you know onesies and twosies there they're going to have any of these retailers no specific brand they're going to have to transform these stores. Very rapidly. Happened to listen to your most recent podcast and I think that you know the conversation around the period of time that some have forecasted that it might take to transform. You know the Sears locations as as they close United quite an extended time arises I don't think there's enough time to do it at that pace and.
[18:05] And he's going to have to make decisions that we're going to have to accelerate this and transform the in-store experience immediately. To continue to stay relevant to smash especially with Amazon. And look while I'm intrigued by how Amazon is is disrupting our world. I'm continuing to be curious at what point will Amazon be disruptive and end. Folk music may think you know I'm a bit crazy because we've seen them as the the disruptor.
[18:43] Will the time come when Alibaba and you know enter the US market or will the time come when some transformational player we've seen it in retail and sometimes it's a very long life cycle.
[18:55] I really can't stress enough the need for retailers. To accelerate that pace of change and even for the disruptors to continue to disrupt themselves, so thanks for bringing up the the a word it wouldn't be a Jason and Scott show that kind of talk a little bit about Amazon let's take the angle Steve will start with you and then I want you to chime in so, it sounds like your recommendation retailers this to innovate and stay in front and Amazon could be disrupted the what about Brands I know you guys talked to a lot of brands with what do you say to Brands when they're, you know when they're saying hey what what should we do about Amazon and we see people that have a spectrum of their evil adult partner up at all all the way to Univera deep Partnerships with. Curious how you advise folks on them yeah it's Steve I'll go first and Byron if you want to jump in. The age-old question here is that that question of Channel conflict right and not only. For for their own branded stores but in many cases for their Retail Partners from a wholesale perspective and. I'm not sure there's anyone right answer depending on the category I get much of my Amazon information from you two gentlemen. But we know well that as they've entered certain private label categories.
[20:26] Steve quickly gas is Amazon a quickly gained a significant market share in a number of categories and I think the the most recent Mary Meeker internet Trends presentation which was fascinating. Was one at one of the latest examples where they talked about Amazon share with batteries and I think the other category she mentioned it was. In the in the baby category so Brands I don't think there's anyone right answer but I think I can tell you this. Our clients are struggling with what to do and how to do it like they're all coming up with. Individual Solutions some are arguing that just like a regular wholesale partner and others are looking to. Come up with unique School offerings and product that not only for Amazon but for there are other wholesale partners and then for their own branded stores. And I think we're going to continue to see folks have that dilemma and as we know there are a number of luxury players or some. Unique players whether it be lvmh or Birkenstock or others that have made choices of not partnering with Amazon or. Disengaging from pretzel prior partnership with Amazon so an interesting Trends to watch but I don't think there is a single answer that it applies to any category Byron I welcome your thoughts. No I think the biggest. The big disruptor to watch there's Walmart I think their acquisition of jet.com and their rationalization of that business into their retail model is the game changer as a southerner you know going to Walmart as a spiritual experience.
[22:08] And to make that experience convenient. For those that want to do it over the Internet only broadens their ability to compete head-to-head with Amazon and so I think that's worth watching and when they make returns exchanges and pick up the. Everything like that convenient in the store think about all the distribution Outlets that they've already got on the ground in your neighborhood.
[22:34] That make that experience all the easier because I think that's the one who watches the disrupter for the big a in, one thing I've been mean nasty from a commercial real estate perspective here in our region the warehouse kind of segment is really heated up as as e-commerce has grown it is is that a national thing is they're kind of a Spider-Man in balance for that warehouse type space that, it's important for that that amazon-like experience.
[23:00] Yes I need for three years running in our emerging Trends publication industrial has been the leading product category and it's obviously, driven by the demand because of because of the importance of fulfillment in the new economy and so industrial is a darling I don't see it changing and the use of that industrial space is already changing to adapt to. The environment related to returns and so you see some industrial parks adding retail elements so, returns of e-commerce merchandiser actually sold out the back of the warehouse. And so it's interesting to see whether or not industrial buildings become. You know many outlet malls in the future as of adjunct service to the customer that is. Using the goods that are moving through those warehouses yeah we have a, but the ability to access for the Planes Trains and trucks during the holiday season has become, very challenging for for you know many of the retailers in MN online providers so it's it's not only a competition for the industrial space but a competition for, all of the components of that supply chain including the last mile. That's right that's very important to note I mean so you got your large you know million-square-foot distribution centers that can be remotely located.
[24:37] But you cannot deny the need for smaller spaces close in for last mile delivery and so the competition for four walls that are compatible for that last mile delivery is heating up but it's also using space that might otherwise be underused. And so you're seeing vacant Office Buildings. Turn into last-mile fulfillment centers for pickups and deliveries you're seeing self storage units. I'll be available for you no nighttime delivery. Of the goods from the remote distribution facility and then distributed out by The Last Mile deliver first thing in the morning. And so the use of four walls can be fungible and I think that's one of the things we're learning about this disruption is space can be used for multiple things and it doesn't always fall into the traditional categories that we thought it did.
[25:31] Cool and then Steve one last Amazon kind of nuance see if you've talked about how they're going to impact retail and brands, how about the cpg your grocery category you know they've they've got the ghost or we just kind of walk out with things they've got the pickup store that had fresh for a while that's in several cities they've got Prime now Pantry there's almost like eight platforms they're experimenting around so that it seems like they're pretty serious do you think they're going to, going to start to make some inroads there or do you feel like groceries too tough for Amazon.
[26:03] I think they're going to make significant inroads in it and it's interesting I'll give you something that I'm watching that may not be obvious to to everybody but you know in in in my day, I'm 52 years old all of the large cpg companies in my life professional Life Time opens, I'm office is and had a mandate to be located in Bentonville and there's no question that continue to be true given, the tremendous strength and capabilities of Walmart which I continue to believe is is is going to do continue to perform well but what we're seeing is the same consumer packaged Goods companies now. Placing folks in Seattle and so Seattle. Seattle the new Bentonville from a cpg standpoint for the additional Bentonville cuz it's not it's not an origin and so that's my signal to say. Cpg companies know it's imperative. Set the alarm with with Amazon and the other thing that we're seeing is our consumer packaged Goods companies are taking a hard look at containers and scuse sizes, wait so that they're optimized for. The Amazon delivery model in really far for everybody's delivery model but there's no question Amazon is is going there I saw a.
[27:36] Presentation very recently not not vouching for the numbers but the forecast there was that by, 2023 that Amazon would be the equivalent of 2000 grocery stores, in in in the US which if you compare that to you know that's the comprable size to something like I believe a great example would be like a Kroger so there's no question. That's there going to be a significant player it's also interesting though a little bit off of Amazon but, many listeners may know when you you know well Lidl is is has said they're coming into the u.s. and they're going to open 100 stores in the near-term primarily in the east coast and in a very targeted area, there's going to be continued transformation in the grocery retail space. Far beyond just the the Amazon facts I think they'll be a little effective and some others.
Jason: [28:39] Yeah it's I think the grocery space in fresh in particular is going to be super interesting to watch because that feels like a space that no one has really wrapped up yet like you know Amazon has.
[28:51] His head the pilots with fresh for a long time but you know isn't.
[28:54] In that many markets yet we just seen Walmart put a lot of weight behind digital fresh Kroger but your point like.
[29:04] All the I think it said there's they're going to spend four billion dollars incrementally in in the u.s. to grow their grocery business and I think those Weedle stores I think the first grand openings are today.
[29:16] Down in the east coast so that seems like a.
[29:20] An area where we can see a lot of new store openings and I guess what I'm curious I've heard some people say that.
[29:28] Grocery is already more like the the density per capita of grocery is even more over stored than retailing General in the US so does that mean.
[29:39] A ton of traditional grocery is going to close to make way for these guys you think that they're going to evolve you think we're the markets going to be able to tolerate.
[29:48] All these German Grocers coming in and in serving customers in new ways.
Scot, Steve, And Byron: [29:54] Yeah I think my answer would be I think it's going to get to, the in-store experience that in-store experience can be different depending on who the consumer is it could be on the value end. Or it will be on the premium experience and thinking of, the Wegmans of the world are the ages of the world and the Publix where you know when you're in the store is it it is it can often be you know an extraordinary pleasing experience so, look who it is no question their razor-thin margins in grocery retail and it takes, almost Perfection which which several of the leading players on do do quite well but that tells you though there's. There has to be some disruption to come there, Ellen with the growth of online whether it be Amazon or jet.com or now is the German grocer isn't and you know some of the existing players you're not done growing whether you know whether it be. Trader Joe's of the world or some of the regional and National Brands ghetto Kroger and others continue. To transform their stores and do exceptionally well.
Jason: [31:10] Yep I think for listeners it's going to be interesting you know traditionally the way we do retail is like the super premium in-store experiences, what for super premium products you know so Byron mention the Gucci example earlier right in the super you know value products tended to come with pretty.
[31:29] A value oriented experiences of wheedle is going to be an interesting blend because they're a super low price points which means, the store experience is No Frills you bag your own groceries you have to pay a deposit for the shopping cart cuz they want to make sure you return the shopping cart so they don't have to pay a guy to go get it, but then they're going to have very high quality organic.
[31:52] Produce in there and so it it if that's an interesting interesting trade-off to say hey get the high-quality products in the No-Frills environment so I'm going to be watching.
Scot, Steve, And Byron: [32:02] I think about yeah but think about what you just said in that which I think Mary's with what Steve was saying earlier their systems mirror their delivery. And so their price point is complemented by what they do versus what the consumer does in order to get that price and I'm going to guess that their systems and become extremely sophisticated on sku management. To know what's going to sell when and so they very cleverly marry a systems and process and experience.
[32:34] To the consumers expectation because the consumer pretty much knows what that bargain is when they walk in the store.
Jason: [32:41] No and I think you're exactly right Brian Byron there.
[32:44] Probably the most quantitative retailer out there in terms of measuring the efficiency of everything.
[32:54] Tut in and building the systems and processes to be highly optimized for the experience and value proposition they think customers want so I mean the only question is going to be whether American consumers, want with what with their offering because they're very good at delivering what they offer.
Scot, Steve, And Byron: [33:11] Sure it's with an contrast that with the grocery store as a spiritual or Community experience where you go do everything from your wine shopping to your Fresh Foods to that evenings Gourmet takeaway to flowers to a massage. I think I think what what we're seeing is. Experience offerings that fit the taste and budget of the buyer in different location.
Jason: [33:36] That makes perfect sense.
Scot, Steve, And Byron: [33:38] Steven know it's early yet but your your holiday forecast is widely read and can you give our listeners a little taste of what you're thinking about for holiday this year here here we are in June so I'm asking you about holiday well here we are in June and I will tell you we actually are about, to Launch. Are our first Global holiday survey so you're you're not asking too early here's what I can tell you about holiday in advance I it was interesting two years ago. For our press release when we lost our holiday survey which usually comes out in early October two years ago we we had a message that said, you know an overall same-store sales increase and I know it just simply was a measure, did not matter and it fell flat and I was very surprised that it fell flat so last year. We should have walked away from that but I'm going to go back to it this year because it's simply doesn't matter I'm, I am insanely bored with the holiday forecast to come out and and, you know it comes out from a wide range of constituencies it safe overall holiday sales are going to be up 3 or 4% because that's that's what they say every year when you deal go down earlier, and you take what happened last holiday wear overalls you know online was up 27% but like I said earlier we saw some key players Pro. In the 40 and 50% so I think the there there we should come up with new measures that matter and one of them will be another continued growth.
[35:17] Of online which I continue to believe will grow somewhere overall near 20% but even that is is a measure that, blind to the fact that a few folks will continue to grow at a 40 to 50% clip with, with their online offering the other thing is I think we're we continue to be in a mode where consumers are going to spend a portion of their holiday budget especially Millennials on, themselves and on experience friends and family I'm going to a show, or a concert or the like so when we think about holiday I don't think it's right anymore just to look at retail sales but we really need to look at experience and then I think we're going to, pull into our holiday Outlook the growth of post travel airplane travel and Automobiles and so holiday now is, far, a far bigger picture than just retail sales but no question we'll see significant online gross I'm a little bit concerned here in June and we'll see we'll see how right I am that retailers are seeing, there I left and desirable results for year-to-date and that they're going to be, very tight in there ordering for holiday ends over the years my clients you know you never know what the weather's going to be like and you never know what, geopolitical or other events may occur but if we end up having a strong holiday but they were extremely conservative on their ordering they actually may miss on opportunities that the flip side of that is when we seen bad weather and other things.
[37:00] When there's too much than they go Promotional and they go promotional early. It really wipes wipes out their holiday self retailers have it have a dilemma because of they look in their crystal ball you know is the glass half-full or half-empty. And we'll see but I do feel good about digital and online continuing to lead the way.
[37:25] And I will save some of that contextual I just returned this week from the real estate Round Table in DC which is the Gathering of. 250 of the nation's real-estate CEOs and we had one presentation by a former fed governor and he said the bridge between where we are and holiday is it relates to that ending level is going to be confident. And so when we digest what it's going to take to inspire additional confidence we have to really analyze everything in the. Geopolitical jobs and and mood of the buyer to determine how bullish they will be come November December.
Jason: [38:04] Yeah you know what I think there's going to be another one of these interesting ones to watch I think traditionally that's always been true and the consumer spending has index very closely to consumer confidence but it it seems like we're seeing a lot more standard deviation in that that correlation the last couple of years, and I'll be on some other things I'm really nervous about for this holiday season Steve I think you're exactly right, nervous retailers are going to go in with tight inventory but I think one of the other impacts is.
[38:35] If 7700 stores truly close before holiday this year that means our friends at Gordon brothers are going to liquidate 7700 stores worth of inventory and, you know that that's going to have an impact on on prices and consumer demand as we as we hit holiday.
Scot, Steve, And Byron: [39:00] Is you know not only the Gordon Brothers on the liquidation but for some of the, banners and brands that are continuing but perhaps having to go to the off-price channel to sort of the, today action Ross stores we may see some some really really tremendous deals from a consumer perspective in in the value Channel.
Jason: [39:25] And I'm sorry Byron you were going to say something as well.
Scot, Steve, And Byron: [39:28] Everyone loves a bargain I'll give her just reminds me of of Stanley Tangers quote years ago and good times people still want to bargain and bad times they need a bargain. And So It Goes liquidations May draw people out to spend in a way that inspires additional confidence so if that is going to be one worth watching because I think there will be a lot of closings and liquidations that. Put some Bargains in the market to get people out to experience those.
Jason: [39:54] Yep and I think there was one quarter Larry on that that quote though everyone loves a bargain except for the manufacturers.
[40:03] So I didn't want to change topics another topic we have on the show a lot is mobile and.
[40:13] In particular you know if.
[40:15] If e-commerce is a you know small sliver of total retail sales but it's the fastest growing then you know mobile is a small sliver of digital sales but you know the fastest-growing and you know we've been talking loud about brick and mortar stores.
[40:30] What are the things that's really interesting to me about mobile and brick-and-mortar is we've got all these consumers they may be our only spending 10% of their stuff online but.
[40:39] 50% of their purchases are being influenced by digital so they're getting used to having all this digital information when they make purchases in the the obvious way to give him that digital information when they make purchases in brick-and-mortar stores is on mobile phone so I guess I'm curious, Evite.
[40:56] You guys are seeing anything interesting happening in Mobile and you know if there any experiences that you've that you've seen or that you're optimistic about in terms of Mobile use in stores.
Scot, Steve, And Byron: [41:08] It's Steve and there's there's no question that the phrase we often uses is a mobile matters and, Siena resting to Think Through the story I told her earlier in the podcast around how the stores need to transform to keep up with. Digital the same thing is true with respect to mobile and what I mean by that is it's only, a year or two ago and it's unfortunately true for a few retailers today where if I'm in store and I want to use my mobile device. I really get, small version of their website and it's not a mobile design website but the leading retailers have now taken it to one click capabilities, and so those folks that are transforming the mobile experience I had my own personal experience where I will I won't name the retailer but I was at an outdoor retailer and the particular, shoe was on sale I wanted to have that shoe they didn't have it in stock the sale ended that day, they didn't have the in-store capabilities to take care of me so I wanted to buy a my mobile and I was typing on this small keyboard and it was incredibly painful I was able to complete the transaction but there was nothing user-friendly about it, that same retailer is now transformed their mobile site and with one click and using.
[42:38] In one of and Apple pay Samsung pay type options truly I think in, two or three very quick clicks, I'm able now to complete the same transaction if all retailers can get to that stage we're going to see explosive growth in Mobile, especially as Millennials and gen Z years continue to take up a larger portion of of the demographic of of the act of shoppers.
[43:08] Byron any thoughts on mobile I know I just think alongside that comes the ability to fulfill the order as promised and then make the returns easy if it doesn't work. I think a lot of folks are still working on their systems not only in the handheld convenience that Steve was just referring to but on fulfillment and returns as well.
[43:29] Call Ann on the film inside, there's some data out there that indicates UPS and FedEx or not able to keep up with with the demand is that something easier view of thought about and kind of corollary to that is is I've kind of been a long time believer that the Amazons eventually going to, directly compete with those guys would love to hear your thoughts on that too.
[43:50] I think it's overwhelming I had to do a return last week and it was a rather large item and I had to get the house and I asked for the time band which is usually 2 hours and it was eight hours and I inquired with the customer service. Representative why is the band eight hours and she started laughing mr. we've got a lot of stuff to pick up today. And we just don't know when we're going to be in your neighborhood and I thought that was you know it was honest but it was also I think indicative of what you were saying.
[44:22] Yeah and I don't have any specific use not a specific area of expertise for me but I you know I do believe extraordinary companies find ways to transform themselves in. And I certainly believe all of the companies in the category especially the leading players. They're going to come well prepared for in the context of holiday but overall they're actively transforming their businesses and. Absolutely no question. I think we're in for front floor for quite a battle, quitbit it back to mobile Steve the last year you know we saw for, so two years ago we saw Africa Millennial kind of oriented folks traffic going over 50% last year we saw transactions get there for the millennial kind of audience and, other folks are kind of the past half traffic and getting towards 50% transactions sounds like you follow Alibaba I think there are like north of 80% transactional volume coming from mobile do you think this is another holiday where we kind of Step function up, midnighter is the US going to look different I do think we like to think we stepped up and, I'll put a Shameless plug in for our holiday survey how about we.
[45:55] Think about getting back to you in October when we went when we haven't released but it's an area of specific Focus for our upcoming, holiday survey which which I said it being launched and why like I do expect that Trend will be exactly as as you said we'll look forward to sharing our holiday Outlook late September early October.
Jason: [46:19] We will certainly take you up on that.
Scot, Steve, And Byron: [46:22] Similarly will be releasing emerging Trends in real estate for 2018 and it will have a significant dedication to what's happening in retail that maybe we should maybe we should do a rematch of this in October.
Jason: [46:36] That would be terrific let's do this until we get to October where is we're coming up to the end of the show, if you had a you know 30 seconds in the elevator with the CEO of your favorite retailer what's the number one piece of a go to advice you have for retailers this year.
Scot, Steve, And Byron: [46:56] Mine would be make the visit special yeah and NN mine would be.
[47:06] Focus on the consumer which clearly many of them are doing but in the end if you're taking care of the consumer I think the rest of it will find a way to take care of itself.
Jason: [47:20] Yep and then flipping it around what about to the the CEOs of the brands.
Scot, Steve, And Byron: [47:29] Yeah and I'll I'll take this one first plan I would say innovate and personalize. And I think if if they're able to if you think of the leading brand whether it be on the electronic side in the Footwear & Apparel side there's no question the leading brands that are. Constantly innovating and focusing on personalization are the clear winners.
[47:59] I have to agree 100% with that comment so let's take it out further so we were kind of looking six months for, what's kind of you guys have been in the industry for a while so let's project out to 3 or 5 years what is retail look like you know do we have are we all sitting in our dark basements with VR goggles on like but Jason's doing or are we know what does that experience like are drones to like dropping things we have to catch him, I would love to hear your thoughts Byron let's start with you.
[48:31] I think there's some of that that's all I was I was at a luncheon in Dallas couple of weeks ago where Ross Perot Jr shared with us that he has agreed with Uber, to be a pilot for their new Uber Elevate drone system which will be people people delivery and package delivery in and they'll be parking there drones in. In in Dallas and so he feels a little bit like The Jetsons but I think it's a promise just like driverless cars are upon us, and they'll change the way we live the way we do our errands the way we receive our Goods I don't think it'll be overnight but I think it's gradual and will be here before we know it and the groundwork is already being laid for that.
[49:16] Yeah and what and what I might add I would show you I just did a market tour to New York and visited the World Trade Center and made a trip up to Columbus Circle so that included, the Apple Store. It at the World Trade Center the Amazon store Columbus Circle and I live in San Francisco and in the Embarcadero Center offices. They've opened a new Sephora store and there was one thing in common from all three of those examples stores were completely full. And the reason the stores were completely false is because they have extraordinary offerings they have exceptional Associates. Innovative products so I believe in three to five years the retailers that continue to do those things are going to continue to have those full stores that we saw and we're going to continue to see them being extremely relevant.
Jason: [50:16] Well guys that is a perfect place to leave off I, couldn't agree more and it is happen again we've wasted a perfectly good hour of our listeners time, don't forget listeners you're always welcome to continue the dialogue on her Facebook page and if you like today show feel free to leave us a review on iTunes Steve Byron very grateful for you taking the time to share your insights with us in the listeners.
Scot, Steve, And Byron: [50:43] Thank you very much for having us it was a pleasure to join you and I look forward to listening to your next podcast, awesome and just briefly how can people find out more about your your thoughts so you know we talked about the holiday preview that you guys do so would love to if you direct folks there, and any other writing that you guys do that you think would be interesting if you if you have a place people can find that where do they look for you online.
[51:12] Www.twc.com. Yeah you can do that and then I occasionally contribute to Forbes probably not as often as I should but I do and I find and I do try to release retail trends, on Twitter and you can find me on my name and then like Byron said that Peter bc.com and we have landing pages both for our real estate practice and also for, our consumer Market practice which includes the retail practice and we'd love to hear from you directly or, folks want to follow us in any one of those medium we'd be thrilled to the follow along with you Ausable position it's.
Jason: [51:57] We sure will until next time happy commercing.
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