What's Next with Steve Dennis

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- [Steve] Well, hi, I'm Steve Dennis.

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I'm a consultant, author and speaker

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on retail strategy and innovation.

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I've been in the retail industry a really long time.

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I don't really like to talk about it.

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And I'm also the author of "Remarkable Retail,

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How to Win & Keep Customers

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in the Age of Digital Disruption."

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- [Karim] Thank you, Steve, for joining me today.

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- [Steve] Thanks for having me.

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- [Karim] So, the book, "Remarkable Retail"

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it's coming out at a...

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It's very timely,

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obviously not only over the past number of years,

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have we had a growth in e-commerce,

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but this pandemic has really changed people's buying habits.

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And I know one of them has been and I know many people

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have taken advantage of calling up or going online

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and ordering groceries or whatever the case may be.

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And then picking them up curbside, right?

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There's this curbside pickup phenomenon

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that we've been seeing this year.

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And you mentioned...

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You obviously mentioned that in your book,

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but you also mentioned in your book about the customer

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is the channel.

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And you do reference consumers picking up groceries

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or shopping curbside.

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And I'm wondering if you could explain more

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about this customer as the channel thing.

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- [Steve] Yeah, well, one of the biggest mistakes

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that a lot of retailers have made over the years

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not just during the pandemic is thinking of e-commerce

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and brick and mortar as largely distinct operations.

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And I think what the pandemic has done is number one,

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really reinforced the idea and accelerated the stats

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around how consumers start most shopping journeys

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in a digital channel even though the vast majority

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of those digital shopping journeys

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end up involving a store in some way.

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But in particular what happened with the pandemic

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is yes, we saw more kind of traditional e-commerce growth,

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but we saw a lot more of this behavior

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where stores are involved in what people call e-commerce.

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So that's the curbside pickup that's buy online

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or return to store.

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It's online orders that are fulfilled by stores.

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So if anything, it's actually

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kind of ironically turned out that stores are going to be

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even more important for a lot of retailers,

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even though we've obviously seen

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a growing shift to e-commerce.

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But you know that shift to e-commerce

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has been going on for 15 years.

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Like that in itself is not new.

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- [Karim] Yeah.

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- [Steve] So the idea of the customers as the channel

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is not to think about e-commerce versus brick and mortar,

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it's to say, well, it's the focus on the customer

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and our job is to figure it out how to reduce the friction

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between shopping across those channels

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but more particularly really elevate that experience

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and in away that is truly remarkable,

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which is really the thrust

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and underlying principle in my book.

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- [Karim] And previous to this pandemic,

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the discussion around e-commerce has always been

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e-commerce will grow at the detriment of bricks and mortar

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but I think we've seen that one sort of needs the other.

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E-commerce for grocery stores,

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at least here in in Canada and in Toronto

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needs the grocery stores in the neighborhoods

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to fulfill that.

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- [Steve] Yeah I...

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Right. Oh, I'm sorry.

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Go ahead.

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- [Karim] No, so I was wondering whether or not

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you had always thought in this way

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and whether this will continue even post-pandemic?

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- [Steve] So I think couple of things are going on there

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that's important.

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One is there's an aspect of online,

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which e-commerce and sort of,

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I hate to say traditional e-commerce

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'cause that sounds a little bit funny,

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but if you think about e-commerce,

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at least in its early days,

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it was sort of a better catalog,

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mail order catalog business.

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It basically use technology to automate ordering

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but the basic fulfillment was very similar

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to what catalog company has been doing forever

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which is to pick, pack and ship a product

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in the central distribution location and mail it to you.

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I think that was e-commerce

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that has been the bulk of Amazon's business for example

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other than digital downloading.

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So that sort of e-commerce is really great

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for certain kinds of products,

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largely around where it's just convenient to order it online

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and have it show up at your home or office.

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So, and that part of e-commerce for the most part,

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doesn't really involve a store.

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You may go to a store to check out the product

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and order online,

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but a lot of e-commerce and particularly

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what's happened in the last several years

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and really accelerated by the pandemic

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has involvement from the store

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because the customer is either going there

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to talk to a sales associate or get ideas

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or put an outfit together or whatever and or I guess,

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the store has a role in fulfilling that order.

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So it's been going on and I think just generally people

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have been a little bit too black and white

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about talking about e-commerce and the main thing

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is really blended altogether.

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The kind of pure e-commerce

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for the most part doesn't really exist.

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Even some of these newer brands that started online

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they're all opening stores

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because they realized that there's a big aspect

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of commerce that is a merger or a hybrid

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of physical and digital.

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- [Karim] I know e-marketer recently was talking

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in one of their episodes about the future of shopping malls.

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And so when you think of adjusting

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a black and white framework you think,

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"Okay, shopping malls are going to end,

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no need to go into store and walk around and stuff."

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But I'm curious whether there's a reinvention

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of shopping malls when to keep this in mind.

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- [Steve] Well, I hope so.

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I think, again, there's a little bit of the devil

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in the details.

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I mean- - [Karim] sure.

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- [Steve] Shopping malls have been losing...

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I mean, well, one in the US in particular,

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but I know in Canada in some other markets,

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there was a real boom in building shopping markets

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and shopping malls and shopping centers

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for the past 20 years.

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And so one of the things that happened in general

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was that the capacity that was developed

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in malls and shopping centers was much greater

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than the demand overall.

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So there was going to be a reckoning at some point.

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And the pandemic is really forcing that.

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But the other thing is that a lot of this shopping malls,

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not all but a lot of the shopping malls really

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were highly dependent on apparel and were highly dependent

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upon department store anchors.

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Most of which have really been struggling

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for many, many years.

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And in fact, a lot of people say,

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"Oh, well, e-commerce really is what has caused

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these department stores or malls to get in trouble."

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And actually, if you look and particularly

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until recent years, most of the market share that was lost

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by department stores actually went to off-price retailers

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and discount mass-merchants and fast fashion companies

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and other specialty retailers.

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It wasn't so much that it was captured by e-commerce

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plus all of those stores could have e-commerce themselves

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like a e-commerce didn't have to be the reason

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that some of these stores or some of these malls

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got into trouble.

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But it is absolutely the case that a lot of these malls

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were overly reliant on concepts

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that really didn't innovate enough

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and consumer preferences just switch

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to many more off-the-mall formats

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and then more so on an e-commerce.

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But I think what you generally see is

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that the very best malls,

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particularly the ones that are more,

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have a stronger tenant mixes

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and maybe a good mix of restaurants and entertainment,

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I think most of those will do pretty well

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without a tremendous amount of change.

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But the malls that didn't reinvent themselves

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and have just a ton of space devoted to retailers

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that are really dinosaurs in this era,

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I mean most of those are either going to get bulldozed

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or really need to reinvent themselves.

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So we'll see.

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I mean, it's hard to attract capital,

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I think to invest in some of these more mediocre malls,

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the malls that have a good customer base, a good tenant mix.

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I think, they need some reimagination

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but I suspect that the top 20% of malls will do pretty well

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once we get beyond the pandemic.

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- [Karim] That's really interesting.

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And I'm curious about this one.

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So small independent companies,

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they may or may not have a retail location.

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Maybe they are working with your traditional grocery stores

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to get their product on the shelves,

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but they've started to open up

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their own e-commerce capabilities, right.

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So yes, they might have some product on Amazon

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but they've got their own Shopify store.

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- [Steve] Yeah.

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- [Karim] I'm wondering if there's an opportunity

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in e-commerce outside of Amazon,

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outside of being reliant on shelving fees

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that these companies have with their own store.

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Can they compete even with free shipping

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and things like that that Amazon provides?

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- [Steve] Well, it's certainly it's certainly tough

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for the smaller guys to compete with the big guys.

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And what I generally say is that you need

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to really make the different or understand the difference

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between what I call and talk about a little bit in the book

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as table stakes and differentiators.

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And by that, I mean there are some things

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that you just have to do to be in the game.

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So it's pretty hard to imagine how a retailer of any size

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can have at least basic e-commerce capabilities.

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And so thankfully, there is Shopify and there is BigCommerce

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and there are ways to get those basic functions.

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But you have to be really careful not to chase your tail

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and gauge in a race to the bottom essentially,

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trying to out Amazon Amazon.

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- [Karim] Yeah.

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- [Steve] So generally, I think figure out

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those basic features that keep you in the game

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but then it's going to be more about leaning into those things

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that can really make you different.

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So how can you focus maybe more deeply

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on a particular set of customers

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or offer unique and different products or offer service?

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What's that thing that can be different enough

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that a set of customers care about

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that Amazon really for the most part or it could be Walmart

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it could be whole host of other big retailers.

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What are those things that customers will value

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that you can uniquely deliver on?

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Because if you start in a race to the bottom

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or start in a race with Amazon,

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I mean, you're basically going to get to this race

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to the bottom

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and Amazon's always going to have lower prices

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and be able to kind of out supply chain.

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So- - [Karim] Yeah.

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- [Steve] Pick your battles, pick those basic things

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to keep you in the game

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but pick those places where you can really win

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over the long-term.

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- [Karim] And wondering if this delves

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into to this next question.

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In the second part of your book,

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you outline and you go into detail about

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what you call the eight essentials.

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- [Steve] Right.

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- [Karim] And so I'm wondering Steve,

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if you could quickly go through these eight essentials

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and I'm wondering if there was one

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that might be the most underrated one.

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One that's most overlooked I would say

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by brands or companies.

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- [Steve] Sure. So I'll just quickly mention what they are.

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So the first six I do talk about as being table stakes.

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In other words, if you're not pretty good at them,

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you're probably at a disadvantage.

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So number one is digitally enabled.

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So this is the idea of really using digital technology

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to enhance the customer experience.

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Number two is human centered,

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which is just a little bit different spin

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on thinking about customers, I guess, in a broader way.

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Three is harmonized,

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which is some of what we were talking about earlier

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which is really understanding how to blend digital

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and physical in interesting ways.

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Fourth is I'm probably going to screw them up in the order,

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but fourth is mobile.

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This really is a recognition of that mobile is,

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when we talk about digitally-enabled shopping journeys

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more and more of that is because customers

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are shopping wherever they happen to be

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on sort of some smart device.

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Fifth is personal, which is idea of treating

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different customers differently

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and personalizing the experience.

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Six is connected which is really leaning

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into just how we're more connected to people,

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whether that's through social media or getting reviews

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and other things.

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And then the two differentiators I talk about are memorable

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which is how do you create an experience

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that is really so much better

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than what the competition can do

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that literally customers will talk about

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which is the key idea of remarkable.

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And then eighth is radical

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which is mostly about needing to constantly innovate

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and build a culture of experimentation.

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As your question about which one is the least appreciated.

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I think it's probably personal.

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I think particularly for smaller retailers,

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well, I guess really retailers of all sides,

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the really big guys sometimes tend to lean on

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a one-size-fits-all approach.

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And that often doesn't meet customers in a more...

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As a customer intense and relevant way

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as they would like to.

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I think for smaller retailers, the opportunity is

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if they've got that local knowledge

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that has some unique products,

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they have the ability to do more personal experience.

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They can really leverage that.

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But I think there just oftentimes tends to be this tendency

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to do the easier or more efficient thing

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which is to tend to treat customers a little bit

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like they're all the same.

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And that's where you can really get into trouble

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as a big guy by allowing interesting segments

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for competitors to go after.

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As a smaller guy, it's sometimes just chasing your tail

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trying to out Amazon Amazon, or out Walmart.

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- [Karim] Steve, thanks so much for this conversation.

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I've really enjoyed and appreciated it.

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If people want to get ahold of your book

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to read more about your thoughts as it pertains to retail,

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where can they go?

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- [Steve] Well, all of our social media generally,

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@ Stephen P. Dennis.

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My website is www.stevenpdennis.com.

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And my book is available on Amazon

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and just about anywhere else books are sold.

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So you should be able to find it anywhere again.

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- [Karim] Again, thank you so much, Steve.

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- [Steve] You bet. It was great talking to you.

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