Retail talk with Nicole Leinbach Reihe

November 1, 2019

Nicole Leinbach Reihe

Ranked amongst the top 10 retail influencers, Nicole is a very active thought leader working on a daily basis with small independent retailers and small businesses. In this podcast, Nicole brings to bear her rich practical experience in the world of retail, and how changes are perceived.

” If you are not an omnichannel retailer at this point, if every touchpoint that a customer might have along the journey to your business is not connected, you risk losing customers. “

BIO: Nicole Leinbach Reyhle is the Founder and Publisher of RetailMinded.com, a well-respected retail industry resource that has been recognized worldwide for its leading business insight since 2007. With a core concentration on independent retailers, small businesses, technology and how the various touchpoints of commerce influence modern merchants, Reyhle is a frequent guest and contributor to various media outlets that include The Today Show, Forbes, Entreprenuer.com and countless B2Bpublications. Additionally, Reyhle has been the Spokesperson for American Express’s Small BusinessSaturday since 2014 and is the author of the book “Retail 101: The Guide to Managing and Marketing Your Retail Business” from McGraw-Hill. Recognized within the top 10 out 100 worldwide retail thought leaders since 2015 – including having held the #1 spot – and a retail “futurist” for IBM, Reyhle is also the Co-Founder of the Independent Retailer Conference. Learn more about Reyhle at RetailMinded.com.

Transcript:

Mani : Hello everyone. Welcome to the series of podcasts that Retail Singularity, an offshoot of Litmus7 Systems Consulting is hosting on the future of the retail industry. We see retail changing very rapidly before our eyes, and we want to be a part of the forces that are driving these changes. I am Mani Subramaniam, President, Retail Singularity. In this series of podcasts addressing the future of retail, I’ll be talking to leading retail influencers who understand the direction retail is taking and to try and evaluate the impact of these changes.

Mani : Hello. Good morning, and welcome all to this series of recording on the future of Retail Singularity. This is Mani Subramaniam from Retail Singularity Hub. Today I have the privilege of talking to Nicole Leinbach Reyhle. She is the founder and publisher of retailminded.com, a well-respected retail industry resource that has been recognized worldwide for its leading business insight since 2000. It’s a core concentration on independent retailers, small businesses technology, and how the various touchpoints of commerce influence modern merchants. Reyhle is a frequent guest and contributor to various media outlets that include The Today Show, Forbes, entrepreneur.com and countless B2B publications. Additionally, Reyhle has been the spokesperson for American Express’ Small Business Saturday since 2014 and is the author of the book Retail 101: The Guide to Managing and Marketing Your Business from McGraw-Hill, recognized within the top 10 out of the hundred worldwide retail thought-leaders since 2015, including having held the number one spot and a futurist for IBM.

Mani : Nicole Reyhle is also the co-founder of the Independent Retailer Conference. Welcome to this podcast Nicole, and thank you very much for your time.

Nicole: Thank you. I’m excited to be here.

Mani : Nicole, I am as excited about the way retail is changing as most people are. I’m also a little bit confused. Am I right in sensing that the world of retail is changing much faster now than it has in the last a 50, 80, 100, 10, 20 years? And if you agree, what are some significant changes that you’re seeing?

Nicole: I absolutely think that technology undoubtedly has contributed to the pace of change that we’re seeing with retail, and it would be completely blinding of us to ignore that technology has changed how consumers are reacting to their spend decisions. So when they’re making purchase decisions, certainly that’s been influenced by technology. So the path to purchase is wildly different than it was even 10 years ago. Social media and online marketing and the connection with artificial intelligence has been able to attribute to the touchpoints of digital even. So whether I’m on my computer or on my smartphone, they’re are now synced. There’s so many dynamic details that are influencing how consumer behavior is being influenced and ultimately led to that final decision of purchase. And often this is not just happening online by the way. What’s happening is the path to purchase has so many variables.

Nicole: A study that came out about a year ago or so, it was a report that was completed through IBM, but it said 53% of consumers touch digital on their path to purchase. Now that doesn’t mean that they’re necessarily purchasing online. It just means that during their path to purchase something, they are influenced at a digital touch point. So maybe that means they’re in a physical store and they’re taking a picture of something, texting it to a friend and saying, “Do you like this?” Or maybe it means they’re on social media and they’re influenced by an advertisement that ultimately inspires them to make a purchase. So that’s what’s really made the most change is that the path to purchase is wildly different than what it used to be.

Mani : Oh really interesting. Okay. One of the confusion points is we hear a lot about retail stores that are shrinking. The predictions out that this year we’ll have around 7,000 retail stores shutting down, as again, it’s around 5,200 last year. But while retail stores are shutting down, retail continues to grow at a very steady 3.5% or 5%, 4% growth. How do we reconcile this?

Nicole: So I think that what’s happening is that because of this evolution and change, there’s ongoing shifts in behavior as well. Right? And where people have historically spent is changing to where they’re spending now. Even retailers, for example, that used to be bricks to clicks. That’s an expression we commonly heard. Now we hear a lot of clicks to bricks. There are retailers that are starting their brands online and then opening physical stores. If you look at Amazon as an example, by 2021, they have estimated, they have said in the media that there are plans to have over 3000 physical stores by 2021.

Mani : Wow.

Nicole: Obviously we all know who Amazon is. That is a click story emerging into the brick experience. So it’s wildly different in so many ways than what we’ve seen in the past. But I think what it tells us from a very optimistic level is that consumers are still really appreciating and demanding physical experiences. But again, that path to purchase is so very varied that there are going to be multiple touch points.

Mani : So how do retailers who want to survive, and indeed thrive, what do they need to do to change and thrive?

Nicole: Yeah, what a great question. Retailers really need to be more precise, more proactive in order to be more profitable, right? They need to allow for predictability, thanks to the analytics, and thanks to the data, and thanks to the technology that is available to them to allow for their businesses to be more proactive, right? Because using all this strong intelligence that’s available to us at every touch point of that customer experience, retailers can better react, and then better behave with their future spending decisions, their merchandising decisions. There’s technology now that allows for retailers to analyze how customers even navigate their physical stores through foot traffic monitoring, and that type of technology can actually deliver intelligence that doesn’t just tell you where a customer is or is not going, like what that capture rate of how customers behave in your stores, but it also can reveal data that might say, “Okay, this is going to be your peak staffing time for employee management.

Nicole: Or this is an area within your physical store that would be identified as, let’s say, a dead zone, so you know from a merchandising perspective you might want to put something there different for strategy. All of this intelligence can also be linked into other technologies such as your peer to peer review sites, such as Yelp, or your point of sale systems. Collectively, these details can allow retailers to be more proactive and make smarter decisions, and I think that that’s what retailers really need to embrace. Instead of shying away or maybe being intimidated, or quite frankly just scared, or even many retailers choose to ignore certain technologies. Instead, I think they should embrace it and say, “This is going to help bring me clarity to actual customer behavior, which will ultimately allow my business to be more proactive, spend better,” in terms of where their dollars are being spent, and ultimately go more profitable with their collective effort.

Mani : Oh great. Okay, thank you. Now with retail stores are shrinking in number but retail growing, the old metric of comp sales is no longer the sole metric of how retailers are doing. What are some new metrics that will come into place, and what should happen to the old metrics?

Nicole: Yeah, I mean it used to be that metrics were based on sales alone, right? Obviously that’s an important piece to this puzzle. I mean, no business stays in business if there’s no business to be had, but what’s happening is retailers are able to capture data from everywhere, and they’re able to see, well, we’re growing a brand and that brand growth is leading to sales. They’re able to see that experience retail is so important. You have a lot of stores that are opening as almost like a showroom.

Nicole: We saw that recently with Nordstrom in New York City. They opened their Nordstrom locale, their first Nordstrom locale location, which is basically a pick up destination. They have a physical store for people who are ordering online or wanting to physically go in there to pick something up. Buy online, pickup in store, or even going in there to shipping back to Nordstrom’s, or to gain this Nordstrom’s experience without the actual inventory. So retail is definitely changing, and they’re measuring success from a variety of angles. It’s really as an omni-centric experience now for retailers. It’s not just a one stop shop destination.

Mani : I’ve spent a long time in retail, and I actually worked very closely with merchandisers. We used to think that pushing merchandise into the world was the way that retail thrives. I’m noticing that the push retail is slowly transforming into pull retail where customers demand what they want, and they go looking for the merchandise that they are seeking. Is that a valid observation to say that push retail is now replaced by pull retail?

Nicole: I’d absolutely think that’s very valid. I think customers are in control. I think retailers need to listen to the customers. I think that customers are reshaping retail. Retailers, while they might think they’re making those changes based on their own actions, it’s really the customers who are putting those demands out there. And a lot of that come because of this very omni-centric role that we do live in. So retailers are having to be proactive in response to customer expectations. And also competition is fierce. Customers know that if one retailer doesn’t want to capture their dollars or isn’t meeting their expectations, they know they can go somewhere else. And retailers, the savvy ones at least, also know that. So every touch point within that customer journey needs to be one that keeps their attention, because it’s very easy for customers to switch gears. And that’s why that path to purchase is such an important conversation, because retailers, at any given time, risk losing customers because customers know there’s plenty of other places that might be more deserving of their money.

Mani : So what specifically do you advise your retail clients to do to get those customers into their retail stores, whether it’s online or brick and mortar?

Nicole: One of the things that I’m really passionate about when it comes to retail is the engagement and entertainment factor, because consumers really don’t just shop for products anymore. They shop for the experience, and that experience is intentional and sometimes it’s unintentional. But my buddies Kizer and Bender, Rich Kizer and Georganne Bender, they’re retail thought leaders and do quite a bit of work. They call it Shoppertainment. And I really think that’s just a good word, because it does define what customer expectations are nowadays. So Shoppertainment incorporated into not just digital, but physical in store, email marketing, all the places in which that consumer might touch along the way in terms of their path to purchase. So I think that from a customer perspective, retailers need to not just plan for them to enjoy their inventory, but plan for them to deliver memorable experiences. You want to create an experience that someone wants to repeat and not just themselves again, but the type of experience they want to tell their friends about. You know? And that old fashioned type of marketing still goes a very long way.

Mani : Again, of the several formats of retail in the US, different formats that seem to be going at different speeds. For example, grocery has been the slowest to take off, but many experts are predicting that grocery will be the fastest growing segment in online retail. What are your thoughts on which segment would grow and at what pace?

Nicole: So I think grocery is such a fascinating conversation, because there’s also a lot of conversation about sustainability, and there’s a lot of conversations about supporting your local grocers, right? And your local farmers for that matter. Even in earth marketplaces, we see the demand for instant delivery when it comes to grocery. And then you have something like Instacart, for example, which is a grocery delivery service. But you need to be able to meet the other demands that customers are putting out there as well. Not just quicker speeds for grocery, but also that sustainability and that local appeal. So collectively all of these things are influencing how grocers are reacting to customers. There’s also that freshly made appeal. So they want food that is fresh, and for many consumers they want it already made for them. Right?

Mani : Right.

Nicole: To take home and enjoy, versus cooking it themselves. So there’s so many dynamics. I do think grocery is a very exciting space within the retail category. I think the supply chain within the grocery category is very dynamic. We’re seeing a lot of great innovation in terms of how that is being tend to as well. And again, that comes back to technology so they can actually identify how long, let’s say, produce has been on the shelf and quickly get that turned around, and pull in from a local market to replenish that. So all those details are really impacting the success and failure rates, quite frankly, of grocers.

Mani : Right. Just this morning I was reading about how Instacart in collaboration with the retailers, especially in the Southeast part of the country is beating Amazon at its game and is having a faster rate of growth than Amazon itself in those geographies. It’s fascinating.

Nicole: It’s fascinating. As someone who travels quite a bit, while I personally don’t use Instacart, I have come across many conversations of other travelers who say, “When I get to my hotel, I use Instacart to deliver some of my favorite things so that I have them in my hotel room.” I find that fascinating, because no matter what city they’re in, they’re using it. It feels like home. It helps them to feel like they’ve created their own home no matter where they are thanks to that Instacart familiar delivery that they have.

Mani : That’s such an interesting perspective. Thank you. What role do you see technology playing in the retail of the future? Has it reached its peak down to the usage or do you see extending use of technology?

Nicole: I think it’s only growing. I think that the channels of technology are obviously being improved. I think payments is a very interesting category that often gets overlooked. For example, you have these installment payment companies such as QuadPay or Afterpay, and these technologies through payment are allowing consumers to pay more on terms that they’re more familiar with, particularly the younger generations, like millennials. Many millennials don’t want to use credit cards. They prefer to pay for things in like a PayPal transaction, or an installment payment transaction, or a cash transaction, debit card usage, for example. And so with that customers are turning to technologies through payment to say, for example, let’s use Afterpay as an example, those who go to the Afterpay website and say, “What retailers accept Afterpay?” And then at that moment deciding where they’re going to shop.

Mani : Wow.

Nicole: I think that’s very interesting, because if you really think about that, that entirely changes how a customer has historically shopped. Instead, a customer might say, “I need a new mattress. I need to find a mattress store.” Whereas this time a customer says, “I know I need to get some stuff for my home, or I need a mattress for the matter. Let me see what stores accept Afterpay, and then I’ll decide where to shop.” So those types of changes are continuing to influence how consumers behave and how retailers quite frankly, are marketing their businesses. Retailers have to be savvy enough to know they can’t just have their own website, and be in Google, and have social media pages to be at the forefront of consumer attention. They need to be at all the places that customers are including peer to peer review sites, including such as Afterpay’s own website, the technologies in which they accept for payments. These are all important places that customers are landing when it comes to their path to purchase.

Mani : Right. So in that sense would you agree that customers are more empowered than in the past and than possibly some retailers?

Nicole: Oh, I see. Are customers more empowered? Absolutely. Yes. Customers are in control. Retailers, as much as they want to think they’re in control, they’re not. What puts them in control is the technology that has a connectivity to help keep their customers on path to purchase to them. So there is what’s called multichannel, and then there’s omnichannel. Multichannel is a disconnection between the touchpoints of any retail operation. It’s a multichannel, separated channels of operations. Whereas omni is connected, and yes, I get it. Even omni is becoming dated. If you are not an omnichannel retailer at this point, if every touch point that a customer might have along the journey to your business is not connected, you risk losing customers. Right? So everything has to be omnichannel from a marketing perspective to a sales perspective.

Mani : The other interesting trend that I’m picking up is that there is more direct to consumer. More brands are reaching out directly to consumers rather than going through retailers, and in some cases retailers are seen as a hindrance rather than as a help. Is that a something that you are seeing as well?

Nicole: Yeah, direct to consumer, quite frankly, is just an opportunity that brands have recognized. They don’t have to have a retailer. What they risk though is if they are also a brand that sells with retailers, their retailer, which is essentially their client becomes their own competition, right? So they need to be mindful of that from an at large business strategy perspective. But many brands like, let’s say Casper, which is a mattress company. They do direct to consumer, and they do a good job at it. That’s actually another great example of who started online and now merges into physical. So direct to consumer presents a very valuable opportunity for brands to make more money, stronger profit and customers to have a stronger brand loyalty with them as well.

Mani : Right, okay. And yeah, that the other brands are also increasing their share of direct outreach to customers. Nike, PNG, are all some good examples where they traditionally stayed away from customers, but now they’re embracing customers.

Nicole: Right. Absolutely. That’s exactly right. And I think it comes back down to that customer demand and expectation. Customers like that brand partnership with you. They want to feel a connection. Having brand loyalty is important to them, but they’re not as loyal. Customers in general are not as loyal as they historically have been, because the competition is more fierce, right? You can see direct to consumer experience is also forcing brands to build strength in or to strengthen their loyalty experiences or opportunities. So it’s really a win win on both sides.

Mani : All right. So finally, this is our final question. All these changes are shaking out inefficiencies. The supply chain and retailers are becoming more efficient and therefore more conscious of their customers’ needs than before. I know we have discussed parts of this before, but is that the overall trend?

Nicole: Yes, I think that really is the goal, and so whether it’s a trend or not is hard to say, because I think that it hasn’t been optimized yet by enough retailers. The key for sure is to streamline efficiency, and I think that collectively all these efforts we’ve discussed today can help brands and retailers do that. They want to streamline their operations. They want to strengthen their customer connections. They want to ultimately increase their store profits. And I think that efficiency is key for that. You need to have clarity. You need to be able to see all the touch points of the business, all the touch points about customer connections, and bring everything together in order to ultimately find that success you’re looking for.

Mani : Okay. Thank you, Nicole. I know that I have a number of questions, and you have a number of very interesting insights, but we are running out of time. And thank you very much for your time.

Nicole: Yes.

Mani : I appreciate you spending time with us.