Retail Rundown: Actionable Insights for the Agile Retailer

Julia Raymond Hare:
Hello everyone and welcome to the Retail Rundown. I’m your host as always Julia Raymond Hare. Today we are joined by two guests. Eric Nykamp and Jay Klauminzer. Eric is the Chief Executive Officer of Raange, a mobile marketing space helping brick and mortar turn visitors into digital customers. Jay is the Chief Executive Officer of Raise. It’s a website and an app where shoppers can purchase discounted gift cards from over 4,000 brands. Eric and Jay. Great to have both of you on the show today.

Julia Raymond Hare:
Before we hopped on to record this, I read online Jay, that prior to joining Raise, you were actually a vice president at a company a lot of us know and love DoorDash. I wanted to ask, did you see the news that they’re for the first time ever, advertising at the Super Bowl this year?

Jay Klauminzer:
I did see that and I can’t help, but smile. I started at DoorDash when they were only in a handful of cities. Just to see where it’s come over the last several years has been really inspiring. Historically, they’ve basically taken market share. That’s how they’ve won. I’m sure over time, people started eating more at home with COVID. I think this is a real good opportunity for them to really share their message of delivering good with as many eyeballs as possible. I’m really excited for them.

Julia Raymond Hare:
That’s great. Have you guys used DoorDash more, or Uber Eats you think, over the past year than you have before?

Jay Klauminzer:
I have. Well, I started, until I started gaining the COVID weight, so I pulled back on it and started eating healthy. I’m in Chicago. DoorDash is fantastic here. Every single restaurant I could possibly want is on that platform. I am exclusive with DoorDash.

Julia Raymond Hare:
That’s amazing. Yeah. I can’t even talk about the COVID weight because I’ve been out of the boxing gym. I usually do that and hit. It’s been hard staying at home. I’ve considered the Peloton. I haven’t bought it yet. It’s one of those things you’re, “Gosh, I’m just stuck in the house all the time.”

Jay Klauminzer:
Yep. We do what we can.

Julia Raymond Hare:
We do what we can.

Jay Klauminzer:
What I got recently was the Mirror, which is-

Julia Raymond Hare:
You did? How do you like it?

Jay Klauminzer:
I am absolutely a huge fan. I was a little nervous at first, but it really feels like you’re taking a group class and I love that the Mirror, you can actually see your form and focus on it. I just realized that doing exercises all this time, I was doing lots of them wrong. It’s been really fun and they have a family one. I have kids and, so you go to the family fun section and get the kids involved. It’s been a blast.

Julia Raymond Hare:
Oh my gosh. That’s amazing. I’ve seen a lot of ads for Mirror and some of the other connected… because Mirror’s the one that Lululemon purchased, I believe.

Jay Klauminzer:
Yeah, that’s right. Lululemon purchased it last year.

Julia Raymond Hare:
Super cool. Eric, you must be familiar since they’re a flagship Canadian brand.

Eric Nykamp:
Yes. Absolutely. DoorDash is also growing here exponentially. A lot of commercials are being always played. It’s really good. The COVID weight for sure, but I have a nine-year-old, and we have a lot of snow. Shoveling a lot of snow is always good exercise. That’s good.

Julia Raymond Hare:
I’m not familiar with that, being in Florida, but I’ll take your word for it.

Eric Nykamp:
I prefer yours. It’s fine.

Julia Raymond Hare:
The other brand we can expect ads from this year is Scotts Miracle-Gro. Scotts Miracle-Gro actually ended up spending 20 to 25% more on advertising last year than it originally expected. They announced plans to increase spending this year by another 15 to 20%.

Julia Raymond Hare:
What I find most interesting is how much these three brands we talked about reflect some of the shifts we’ve seen over the last year. As we talked about with the pandemic, number one, the gig economy, the freelance economy. Number two, the fact that people like us are staying home and investing more of their time into their house and into home improvement projects, gardening projects. I’d like to just take this opportunity to open the floor and see what you guys think about the gig economy and its relation, and maybe impact on the retail industry.

Jay Klauminzer:
I’ll jump in really quickly just because I’m very familiar with the strategy over at DoorDash. I think what we’re seeing is… and it’s been happening over the last decade with Amazon, originally offering free ground shipping. Then they moved to two day shipping and now they have one day shipping. In some cities they have a few hours shipping. You’ve got a consumer attitude that really wants things now. I think the gig economy will play into that as more and more retailers turn on last mile delivery using companies like DoorDash, Postmates, et cetera. There’s a Walgreens right across the street from me. When it’s too cold out, you bet that I pick delivery. Somebody from DoorDash goes and picks up what I need and brings it to my door.

Jay Klauminzer:
I do think, it’s great all around. It’s great for the gig economy workers, because it’s more time doing jobs, equals more money in their pockets. It’s great for the consumers because they can get things almost instantly. It’s great for the retailers who are able to combat the likes of Amazon, who can get anything to you in just a day, to be able to have it to somebody in 15 minutes or even an hour. I think we’re going to continue to see this trend this year as more and more retailers turn on Last mile delivery at checkout.

Julia Raymond Hare:
Mm-hmm (affirmative) Last Mile delivery is a huge one. Eric, what’s your take?

Eric Nykamp:
Well, because of COVID has come in. A lot of people have unfortunately lost their jobs yet they have really good skillsets, which they can employ still. This gig economy and the different platforms that are available for them. I mean, you can find experts, matter experts, skillsets within minutes to help you with your engagement. I know a lot of our customers and partners, they’re trying on all of these different channels. They want to do everything to engage with their customers. They’re trying to always find new customers. Now they can tap into additional people to help them get those numbers, which is really, really good. Also since we’re a software platform as well, sometimes you need to get some skill sets for the development side. The gig economy is really helping. I mean, it’s been there for a very long time, but it was not always on the up and up, but all of these different platforms, they have these really good reviews and tracking people and the work that they’re doing, it kind of speeds everything up extremely fast.

Julia Raymond Hare:
Mm-hmm (affirmative) Eric just real quick, I want to add to that because you’re focused on mobile marketing space and in brick and mortar. I see a lot about, just in passing, about text message marketing from making a comeback and things like that. Is that what you’re seeing? If you looked at China, they have WeChat communities and once you join the community, they can send you mobile marketing messages. It’s really growing in a weird way. It’s making a comeback I think.

Eric Nykamp:
I don’t think SMS was used properly in the early days. One, it was extremely cost prohibited. It was really expensive. Now it’s really going down in price. The one thing that we focus on and we always be mindful is, not one person is ever the same. You might live off of Instagram, another person might live off of Facebook. I know my parents live off of Facebook. There are so many different channels and platforms out there, but SMS cuts through every single one of them and it’s always on your lock screen. Whether you want to capture new customers or to get new contacts into your database, which is extremely important these days, to get that often in your database, and then you can do whatever you want. Or, the ongoing engagement, the ongoing marketing, SMS has always been a really good channel to… Not to be only on, not just to focus on SMS, but to have that in your toolkit, for sure.

Julia Raymond Hare:
Mm-hmm (affirmative) Definitely. Well, good stuff. There’s some comments on the gig economy and also mobile marketing. As we continue our conversation, I want to just bring up NRF. I spent two weeks with the RETHINK Retail team, covering their virtual Big Show this year. It was abundantly clear that 2020 served as one big example of why retailers must be agile. The true definition of agile. Starbucks, for example, made news recently, it’s data transparency efforts led to their current plan that they announced to grow today’s 33,000 stores to 55,000 by 2030. An additional 22,000 stores in the next decade, and their plan is to continue developing experiences, that address the evolving customer routines. That’s new store formats, smaller format. I wanted to ask both of you, if you have an example, and this is a bit of a buzz word in the business space, but, what are some actionable insights that retailers can gain from their consumer and sales data?

Eric Nykamp:
I’ll go first. I don’t even think that we are collecting enough data. There’s a lot of information that we’re capturing on the sale, at the POS terminals, but I really don’t think we’re capturing it enough. I do love all the analytics tools out there. I love all the predictive models that are out there. How to engage more customers and how to get that conversion to a sale. I still think that one piece that most retailers, regardless of who they are. I still don’t think that they’re literally asking their new prospect or their new customer. What do you prefer? What do you like? Tell me what you would like and I can customize content specifically for you. I can customize products specifically for you. I still think this is a big lack.

Eric Nykamp:
I mean, anyone that has signed up… I’m not going to name any retail brands that are out there, but if you sign up to any of their newsletters… No surprise. I’m a guy. I signed up to a retail brand. They obviously sell to both men and women, children. They sell to everybody yet the emails that I always get is ads for female clothing.

Eric Nykamp:
I mean, it’s great. I mean, it’s fine, but obviously they don’t know who I am. There is a lot of data that’s out there, but they still don’t know who I am. I still think there’s a lot of work to get into personalization. Can it be a contest that’s run? Can it be all these different marketing tools to get that data? I still think just a straight conversation or just while you’re getting that opt in to that person, continue asking some detailed questions. That’s just my take, I know there’s tons of different things you can do with the current data, but I think there’s a bigger issue that there’s still data that’s missing.

Julia Raymond Hare:
Okay. Eric, your take, you said, “I don’t think we’re collecting enough data.” You love the analytics tools and the predictive models, but you think they’re really focused on the sales conversions. It sounds like what you’re getting at is there’s not enough personalization, with your example.

Eric Nykamp:
Correct. Just because your name is on an email, it doesn’t mean that it’s been personalized.

Julia Raymond Hare:
Exactly. Jay, do you agree with Eric? Because, I think I could see an angle where one might disagree and say that retailers are swimming in data. They have enough, they’re just not using it right.

Jay Klauminzer:
I certainly agree in store. I want to challenge that notion of online. I think we actually do capture too much online. Let me talk in store for a second. It started back in the days where it was simple basket analysis, and it’s the reason why men who bought beer would get a coupon for diapers. They knew that that was a highly correlate channel and category. Retailers that understand these baskets can tailor their offers and return. They now have started, you see, most retailers having their own newsletters, loyalty programs. They’re doing that because they can start to tie your purchase data to your behavior and then customize offers more. The big trend now is actually multichannel, which is leveraging your in-store data to better target you online and vice versa. I just mentioned the Walgreens across the street. I’m going to go and probably buy some chips for the Super Bowl. I guarantee you, I get an email with a promo highlighting snack goods shortly after, because that’s who they think I am.

Jay Klauminzer:
These loyalty clubs are important because it gives retailers the ability to capture more of that data that Eric mentioned were missing, and do things to target you different, in both channels online and in store. I do want to push back. I think we’ve got too much data online. You know, I just think of our data. We capture everything you do, from how you move your mouse, to which pages you go on, where you drop off. All that’s really interesting, but the challenge is making sense of it. At the very basic form, we’re looking at clickstream data, so we can find the issues and, where are there issues on our site and our app and focus on those. More advanced, as Eric mentioned, the customization is really what matters, based off of your prior preferences, what they know about you from other sources.

Jay Klauminzer:
There are lots of companies out there that let you append your data so that they could know that, I’m a male between 39 and 49, and I’ve got children, et cetera. With that, you can actually build really sophisticated targeting models to predict what you want before you even know it. Amazon is the king of this, of course, but others are getting really good. I think we capture too much online, and really the challenge is making sense of it. There are retailers out there that are doing a really sophisticated and well tuned consumer job.

Julia Raymond Hare:
Jay, I like what you said, especially about the clickstream data, and then how you compared it to taking a step back from where we came and the days of basket analysis, and all the way to today where Amazon and other companies are good at predicting what you will buy next. I don’t want to dive too deep into the topic of privacy, but with GDPR in Europe and coming over to this side of the pond very soon. What do you guys think about that when it comes to consumers, having more control of their data, is there an element there where it will actually help personalization because then, they might opt in and give you more information, knowing that they’re in control?

Jay Klauminzer:
I struggle. As a consumer, I fully believe that we should own our data. Back in the eighties and nineties, Silicon Valley made products, right? They were making software, hardware. Now consumers are the products, and that data is being sold to advertisers to make money. I fundamentally, as a consumer, want control over my data. As a retailer however, I know that that data gives us much better access to targeting. I think what we’ll start to see is the delineation of capturing data for purposes of selling it, and capturing data for purposes of providing a better experience. GDPR, the California Data Privacy Act don’t do a really good job at delineating those two things. I think, for consumers, it will be better off once we do that. If I’m just capturing that data internally to target, of course, use that. If you’re capturing obviously to sell it, then give me control over that.

Julia Raymond Hare:
Mm-hmm (affirmative) Good points. Eric, do you have any thoughts on that?

Eric Nykamp:
Yeah. I agree on both points. Our platform was basically built here in Canada. We have the CASL law that came out. The platform was literally built on the law that was about to come out for the privacy. That’s why I mentioned earlier that if you, instead of kind of reaching out for this information everywhere, if your customer willingly gives you all of this information that you can do way more customization, including that opt-in. Then, you have all the tools that you need to do some really hyper amazing marketing campaigns with. I do believe also on a personal side, my data is mine. My son should be anonymous. All of these things are really important. I think that will always be a little bit of a struggle moving forward, but we’ll see how it goes.

Julia Raymond Hare:
Yeah. It’s definitely a push and pull. A lot of things have changed over the past year. People are more online. In fact, I know last year at the peak, I think we were up to 25%, at least in the U.S and then it varied near that in Europe. China’s been at 25% for a little bit longer in terms of percent of retail purchased through e-commerce. If you look to 2020 as something we can learn from, a year we can learn from, in what ways do you think that consumer engagement and loyalty have been impacted?

Jay Klauminzer:
I’ll jump in since this has been a huge focus of ours this year. Early, actually late last year. Oh my gosh, strike that. I just forgot it’s January. Okay. I’ll jump in because I’ve thought a lot about this question this year. In early 2020, we at Raise decided that we were going to take our technology and build it into a stand-alone payments app. Raise is a marketplace where you can buy and sell gift cards, but we also have processing capabilities where we can issue gift cards directly from retailers. We took that technology and put it into an app called Slide, which for up to 300,000 stores in the U.S, you basically get a bar code and pay, and earn 4% cash back for doing that. We did this because we thought what I think will be a big trend moving forward.

Jay Klauminzer:
We saw it last year. It’s going to continue this year, which is the convergence of mobile payments and loyalty, using your phone to pay and getting rewarded for doing that. Huge trend. That business, since we launched it in June has been growing like gangbusters because people love to save money and they love to pay with their phone. I think the second trend which we… I didn’t think it was going to happen this fast, certainly. I thought it was going to take five or 10 years… Is the notion of contactless payments. Obviously, with COVID we see all demographics and the surprising one is the baby boomers that actually had the highest growth in contactless payments because they’re most afraid of touching things. I think we saw 2020 give us a huge tipping point for that, where I thought it would take five to 10 years to be totally cashless.

Jay Klauminzer:
I think it will now happen sooner than that. Consumers, once they realize how easy it is, they don’t need to worry about taking their wallet or pulling out a credit card, or signing. They literally can hold up their phone and pay. The Apple card was a great example of that last year. Slide now is a great example of that. I think the two big trends we’re going to see this year that we’ve learned in 2020 is, the convergence of mobile payments and loyalty, and the notion of contactless. I think those are here to stay. Just if I double click a little bit more on the loyalty side, we talked a bit about it in the targeting section, but the loyalty. The idea of loyalty is quite simply to get customers to come in and get them to buy more.

Jay Klauminzer:
I think what we’re seeing is, now the personalization of loyalty. You used to get 20% sitewide offers and that went to the entire customer base. We’re seeing retailers get much more sophisticated, where they’re looking at usage cohorts, demographics cohorts. They do sophisticated cluster analysis to look to see how to get people to buy more. With that, they’re learning very customized tips and tricks of how to approach each demographic. Instead of 20% sitewide at retailer X, I might get 25% off on a certain category that they know is what will make me stick to that brand. They may send 10 to 20 different varieties of these when they do have a sale, because they know that different cohorts engage and interact with promotions differently. I think what we also saw this year was retailers didn’t have as much money to spend, but they needed customers. They got really smart with how they approached engagement in loyalty.

Julia Raymond Hare:
Jay those are two excellent trends, and I’ll let Eric jump in here. I want to reiterate. I love that you mentioned, not that long ago, if you think about it, it used to be a discount that was sitewide that was sent out to everyone. Now, we’re getting so advanced and I always love a good cluster analysis. Eric, I’ll let you jump in.

Eric Nykamp:
Sure. I agree with Jay, especially about the contactless. When we launched seven years ago, I think there was some other type of epidemic that was happening. It was a swine flu or something that was happening. At the time retailers, because at the time we were focusing a lot on physical retail. A lot of them were getting into that whole iPads, to get new subscribers in their database. Everyone had iPads and all of these different tools that they had. Our technology was basically directly on a signage. We could give you your text and number, even program a QR code at the time, even NFC stickers. So, people can just tap in and register in their database. That carried the trend. I think that just kind of compounded it for during these COVID days, for sure.

Eric Nykamp:
People that are still asking people to touch a key pad all the time, forget about it. Even though I still see, because I come from the payment space as well. I still see people putting covers over their POS terminals. They never clean them, but when someone says, are you going to clean it? And they’re like, “Well, no. I put a cover on it.” I go, “But I’m touching the other guy’s thing. Aren’t you going to wipe it down? So the contactless thing is absolutely important. Just text in, you get a message back you’ve registered and you’ve collected tons of data, a new opt-in for your merchant. Absolutely, absolutely key. Especially during these times. I mean, I think we just did for one of our brands, they registered a million people in less than six months.

Eric Nykamp:
That’s fantastic. The other thing is, where I think something that we’ve all learned from, or we should continue learning, and this is everyone within a retail organization is, even if you’re someone that’s just folding clothes within a store, everyone should kind of start thinking about what an LTV is. What a CAC is, the cost of acquisition. I mean, we all need to be ready for another pandemic or disaster proof our business. So many businesses I know in Canada went belly up because they weren’t ready for the next month. They’re only thinking of today, today, today, and they’re not thinking about the future. Then, getting these contacts into the database, loyalty programs are fantastic because I have you in the database now and I can continue talking with you, even though my store is closed, we still open the business for you. I know who you are. You’re always welcome. I’m here to serve you. A lot of people didn’t do that. I think this is one big learning class, that a lot of people learnt, to disaster proof your organization.

Julia Raymond Hare:
Mm-hmm (affirmative) It is hard, right? To be so strategic when you’re just trying to keep your head above water. I think you make a great point because that will make the difference between the winners and losers. I will wrap up today’s podcast with one question for you guys, and you don’t have to answer it. Some people don’t like to call out specific retailers, but who do you personally think was someone that really kicked it up a notch and was agile last year?

Jay Klauminzer:
I think I saw two that jumped out just from my email inbox. Obviously we’re going to start to see earnings reports come out in the next month or so we can validate this. I saw two specifically. The first is actually Costco, which is a big box retailer in the U.S. I mean, they were out in front. They were one of the first national retailers to require masks. Their cleaning protocols were just second to none. They really jumped in front of it and said, “We’re open for business. We support small businesses.” If you actually look at their email marketing too, it’s gotten much more customized this year, trying to take advantage of all the trends. Historically, it was just whatever promo dollars they had from partners. They would advertise those. Now they’re really getting to be a good experiential marketer. I think that’s one.

Jay Klauminzer:
I think the second who validated this, was Amazon. Amazon was just being Amazon and they execute everything so flawlessly, but between their category mix, how they changed their footprint of their warehouses to be able to supply PPE and paper goods, I think just, they were so agile. For two companies of that size to be able to move that quickly, was really impressive.

Julia Raymond Hare:
I love those picks Jay, especially on Costco, because I don’t think they get enough recognition. Obviously Amazon is known and loved in most circles that of retailers it’s a different story sometimes, but as a consumer known and loved. Eric, who are your picks?

Eric Nykamp:
I think Lowe’s did a fantastic job too, at least here in Canada. Obviously I can’t cross the border. The Lowe’s here, I think also did a fantastic job. Essential services. I mean, during the summer, everyone had to take care of their house. Like Jay was saying before, there’s so much stuff that needed to be done. From what we experienced, they did a fantastic job as well. Amazon too, not only because they know their customers. Their KYC is unbelievable. They know their customers, they know how to advertise to them, and they know when to advertise to them. I think the fact that they’re pretty much completely digital and there is no face-to-face, help them as well. They’re kind of really, really lucky on that as well.

Julia Raymond Hare:
Mm-hmm (affirmative) Great picks. You said Lowe’s and then also Amazon. Jay Klauminzer and Eric Nykamp. It was amazing to have you both on the show today and I hope to have you on it in the future.

Jay Klauminzer:
Thanks.

Eric Nykamp:
Thank you very much.