Retail Rundown: Signs of Life for Physical Retail – with David Wilkinson and Britt Mills

Julia Raymond Hare:
Hi and welcome to the RETHINK Retail Rundown. Today we are joined by my guests, David Wilkinson and Britt Mills. David is the president and GM of NCR Retail Solutions. You may have heard of them, they’ve been around over 120 years. They’re a leader in enterprise retail technology and the number one global POS software provider for retail and hospitality.

Julia Raymond Hare:
Britt is the Senior Director of Customer Experience at Mobiquity, a global digital consultancy that helps the world’s leading brands understand, apply, and engage with technology in meaningful ways. David and Britt, thank you so much for joining today.

David Wilkinson:
Thanks for having, Julia.

Britt Mills:
Likewise, excited to be here.

David Wilkinson:
Thanks for having us.

Julia Raymond Hare:
Perfect. All right

Julia Raymond Hare:
Let’s kick this episode off with a bit of good news. We are now nearly four months into 2021, and retailers in at least the U.S. are on track to open more stores than they closed this year. That was a bit surprising.

Julia Raymond Hare:
Year to date, they’ve announced 3,199 store openings. So about 3,200 store openings and 2,548 closures. So about 2,600 closures, 3,200 openings. And that is according to our friends at Coresight Research.

Julia Raymond Hare:
And if we dive a little bit more into that, we see that TJX, which is the parent company to the discount retailers, TJ Maxx, Marshall’s, HomeGoods, and HomeSense, the place we love to go smell candles, and they are planning to open 122 net new stores this year, bringing its total to nearly 4,700 locations.

Julia Raymond Hare:
If we look over to Five Below, they are planning to open between 170 and 180 new stores this year. And Gap Inc. has announced plans to open 30 to 40 new Old Navy stores, and 20 to 30 Athleta locations.

Julia Raymond Hare:
The other few retailers we’ll look at are American Eagle and Fabletics. American Eagle said that plans to open 60 area locations, including 25 to 30 offline shops. And then Fabletics, that’s the D2C athletic wear brand started by Kate Hudson, they will open 24 new stores and they have plans to open two international locations in London and Berlin. And finally, I know that was near full Burlington, formerly known as Burlington Coat Factory will net 75 new stores in 2021.

Julia Raymond Hare:
So this is amazing, Coresight is tracking all of these openings. I think it’s a good sign for retail. And David, before we dive into some of these brands, what do you make of all these store announcements? Do you think this is a signal that things are coming back, shoppers are willing to return to stores soon?

David Wilkinson:
Yeah, it is exciting news, and we’re definitely glad to hear that. And what’s exciting about it is the mix of retailers that you talked about, and the brands themselves. You saw, clothing stores, D2C, discounters.

David Wilkinson:
And so I’ll hesitate to say normalcy, because I’m not even sure how to define that today, but it is I think a return to consumer confidence. And it’s an acknowledgment that the world will continue to spend, and that retail is going to play a very important part of that.

David Wilkinson:
And while online and digital shopping is important, it shows the importance of the tactile nature of a lot of retail, especially when it relates to soft goods, clothing, and other items that you’re seeing in your announcements.

David Wilkinson:
We serve grocery, convenience, and fuel, and department and specialty retail, all aspects of retail, and while grocery and convenience have been booming through the pandemic, given everything that’s going on, it is super exciting to see that some of these specialty retail brands are coming back, and coming back really strong.

Julia Raymond Hare:
And you mentioned it’s exciting to see the mix of players that are coming back with new store openings. Britt, what is your take when you hear about all these big numbers being put up?

Britt Mills:
Yeah, I agree 100%. What we’re seeing at Mobiquity is that consumers aren’t necessarily slowing down their shopping behavior, they’re just changing the ways that they shop. And brick and mortar stores still provide a great value in various ways throughout the customer journey. So it’s great to see that brands still recognize that need.

Julia Raymond Hare:
Mm-hmm (affirmative). It is great.

Julia Raymond Hare:
I don’t know if you guys heard about this news, but pOpshelf is an expansion of the Dollar General, and they’re targeting higher-end shoppers with this home decor, beauty items, cleaning supplies, party goods. And then when I talked about this a while back, I think it was in Q4 of 2020, the reaction I got from a lot of the retail influencers was, “Oh my gosh, we don’t need this. We don’t need more stuff. We don’t need cheaper stuff. We can already go to Target. We can go to Walmart. And this seems unnecessary.”

Julia Raymond Hare:
But recently I guess people have been seeing some of the stores that did open and it is getting good response. And the Dollar General is expanding how many stores it will open with pOpshelf. Do you guys have an immediate reaction to that?

David Wilkinson:
Yeah, I think it’s interesting because we do a lot of business with the discounters, Dollar General, Dollar Tree, Family Dollar, like you said, and then the discounters around the world; I think they’re trying to fill a niche that exists between going into some of the very large stores and then having very specific types of discount items to fill in gaps that exists.

David Wilkinson:
I mean, you think about a lot of the discount stuff you buy, and if you buy it online, I think it’s hard to judge quality. And while you know you’re not getting the highest quality possible based on the price points, you still have some expectation of quality. And I think the discount items are really key to that in terms of being able to touch and feel something that you want to get a good deal on, that may be more of a disposable or consumable item, but you want to be able to touch and feel it. So I think there’s room for that in the marketplace today. And I think we’ll continue to see those discounters expand.

Julia Raymond Hare:
That’s an interesting take. I didn’t necessarily think about the idea that it would be hard to judge the quality online, so people do tend to shop in-store for those. And they’re filling that gap that may be a Target or a Big Boxer would not otherwise have because of either location or convenience.

Julia Raymond Hare:
Well, I’d like us to spend the rest of this episode talking about D2C and partnerships. If we take a look at Fabletics, as I mentioned earlier, the Kate Hudson co-founder of the Athleisure brand announced they would open two dozen new stores in the U.S this year. And the new locations, and this is pretty big news, are going to include fitness boutiques. And that is thanks to a collaboration with the at home rowing machine, Hydrow. I don’t know about you guys, but I see tons of ads all over my Facebook and Instagram for the Hydrow machines. They’re definitely targeting me. And some locations will feature video and touch screen technology that lets people who are visiting the shoppers to view it’s products on different body types. David, what are your thoughts on Fabletics and the new in-store experience it’s attempting to cultivate?

David Wilkinson:
Yeah. I think one, they’re doing a fantastic job as you just described and is evidenced by their expansion. I think this notion of mixing retail into lifestyle into experience, is going to be one of the keys to really brick and mortar. You’re seeing somebody like Fabletics who starts out as more an online and moves into more of a brick and mortar. But as brick and mortar tries to compete, we’re going to have to continue to see those kinds of trends continue. I think outside of the store, so you’re a consumer and you start something outside of the store, you want to go then seamlessly into the store, and then go into the store and remove friction.

David Wilkinson:
But when you’re in the store, you want to have a personalized experience that’s immersive and really helps you understand the product and allows you to bridge different aspects of your life. Whether that’s, you said, Hydrow. What are my fitness goals, or what is my fitness routine? And how does that map to the clothes that I need to wear for any specific event or any specific activity that I undertake? It could be recipes in my grocery shopping, it could be other eating habits as I go and do online dining or online ordering for dining. So all of those things that the blending of that complete experience and me as a consumer being in control of who has access to what my preferences are, is going to be critical to everything we do, I think, in retail moving forward.

Julia Raymond Hare:
Yeah. I think it was interesting when you said the notion of mixing retail into lifestyle into experience and how that kind of progressed coming from a D2C player that started out with, I think, a subscription service for the clothes, to what it’s becoming now, which is a full brand experience, is kind of amazing to think about. Brit, what would your take be on this trend in general?

Britt Mills:
I think Fabletics is unique in that their stores offer a major value add to the experience they deliver to their VIP membership base. We’ve learned that consumers don’t just join loyalty programs for discounts and points anymore. They’re expecting a level of access, transparency, and control. And I think Fabletics VIP members can not only redeem their monthly credits online, but they can also go in store and browse, touch, compare, see the quality of the product, and see what’s new before they redeem those credits. It’s definitely a value add for their program and lets customers control and tailor that membership experience based on their preference. Last I looked, Fabletics has over 2 million VIP members within their database. And I’m sure their customers in London and Berlin are asking for that in-store shopping experiences as well to enhance that overall brand experience.

Julia Raymond Hare:
I heard recently I was interviewing Ashley Dudarenok, who’s the China marketing expert. And she was saying that we are all members of the entertainment industry in retail. And I know that idea isn’t necessarily a new idea, but some influencers and people in the industry are saying it’s coming back bigger than before because people are ready to get out and spend. Do you think that’s true necessarily or category specific? What are your thoughts on that?

Britt Mills:
I think that consumers are entering the market with a new appreciation of visiting a retail store. And brands that are figuring out ways to enhance that experience and take it to the next level, I think they’re getting positive reactions from customers and other brands are seeing that. And so this immersive retail experience where you’re engaging with new technologies in-store, or they’re combining that lifestyle and retail notion, or just offering a more personalized experience for VIP and loyalty members in new ways. I think it’s definitely a differentiator in what customers are going to expect now when they start to enter these brick and mortars in retail experiences.

David Wilkinson:
Yeah. I’ll add that the experience itself will become the key differentiator for any specific retail brand. So it’s interesting that you link that back to the entertainment industry. I think in the short term, we’re all going to be so antsy from being cooped up from COVID, that I think getting out and experiencing the world of retail will be like an amusement park for all of us when we can just go do the things. And you’re seeing that from the new store opening. So we’re excited to see what that means. But I think Brit’s spot on in the fact that understanding your consumer loyalty has changed, we’ll say forever. COVID helped, social media drives, a ton of that, and then just the new habits of the next generation of shopper.

David Wilkinson:
As the buying power starts to shift to a younger and younger demographic, the notion of giving people access to their information, expectations of you knowing who I am and what’s going on, and me announcing publicly what I’m doing, where I’m doing it, and the things that I like, are all going to need to come together into the store to create something that feels very personalized at scale. And so I think that becomes the challenge. And you see Fabletics doing a good job of that in terms of understanding who’s coming into their store, linking it back to social media and other VIP loyalty programs. So that whole kind of closed-loop of creating that end-to-end experience is going to be critical. And you’re going to see that across all types of retail.

Julia Raymond Hare:
Yes. And it’s interesting, I saw a graph that was released probably yesterday on LinkedIn from Statista. And they were showing that if you look at something like Instagram, 79% of personal data is being shared with third parties through that app. And then it drops down to 57% for Facebook. So there’s a lot of good data out there, used for better or for worse. And I think that as we get more hyper-personalized, it will become an expectation. I think there’s a really interesting conversation … this is probably a whole other podcast, but about the use of your personal data from your fitness trackers. I think more and more people are using Fitbit, Apple Watch, things like that. And I’m curious to see how it will all feed in together to make the experience even more personalized, because as we talk about Fabletics and what they’re doing with the Rower Company, you can also look at the other exciting news that has taken place with the Tonal displays.

Julia Raymond Hare:
Have you seen any of the ads for the Tonal? I feel like they’re everywhere. It’s about the at-home pulley system basically that hangs on your wall.

Britt Mills:
Yes.

Julia Raymond Hare:
Yeah. So they have a huge display that is in at least some Nordstroms So you can go there to test it out before you buy, since it is more expensive.

Britt Mills:
Wow, very interesting.

Julia Raymond Hare:
It is. And I think we’ll see more of that, as at-home fitness becomes more of an acceptable trend. I don’t know that people will continue to stay at home once the vaccinations have been distributed more completely, but Lululemon, they have the partnership with the at-home Mirror fitness. And then the recent news, I think a few weeks ago, was the Adidas partnership with Peloton, which is more of a clothing line, but that’s an interesting brand union.

Britt Mills:
Yeah. I definitely think it’s interesting. When you look at the possibilities that a brand like Fabletics has when getting data and understanding and insights from your customers’ buying behaviors and shopping patterns, and you merge that with an additional data set of their lifestyle and workout routine, that level of personalization. You can now recommend products that you know would enhance their workout based on the types of rowing exercises that they’re doing. Peloton is a great example. I have a Peloton. Anything they recommend to me, I purchase, because I love the experience and they have more data on me on my workouts and what I do, and tailor what additional equipment, resistance bands would enhance my workout, what leggings or specific clothing I should wear based on … I do hit rides, I do … it’s amazing when you merge those two data sets together, the type of understanding you get from your customer and how these retail brands are going to react to that.

Julia Raymond Hare:
And David, do you have a Peloton as well?

David Wilkinson:
You know, I think I’m the only one on the planet that does not have a Peloton. I don’t. I stay off the grid a little bit with my fitness. I am in the gym … I don’t know if I can admit this. I’m a CrossFitter.

Julia Raymond Hare:
Oh, gosh. That’s intense.

David Wilkinson:
I’m physically in the gym every day, every morning, six days a week. So I go old school.

Julia Raymond Hare:
Old-school. Well, there’s nothing like it. I definitely miss my boxing gym. Waiting to get vaccinated to go back, just because it’s pretty sweaty in there. So I wanted to ask you guys just as a little fun one off, because it is so new, what would you guess … and you can’t Google it ahead of time. What would you guys that the gender-neutral Adidas and Peloton hoodie is retailing for on adidas.com?

Britt Mills:
I would say $149.

David Wilkinson:
I would guess $110.

Julia Raymond Hare:
Okay. Well, David, you were closer. It’s $80.

Britt Mills:
Wow.

David Wilkinson:
That’s not bad.

Julia Raymond Hare:
Not bad, not bad.

David Wilkinson:
Under-priced.

Julia Raymond Hare:
Raise your price.

Britt Mills:
Missed opportunity.

David Wilkinson:
Because now Brit’s going to buy two.

Britt Mills:
Exactly.

David Wilkinson:
Because she buys everything that they sell, and it’s half as much as she thought it would be.

Julia Raymond Hare:
Exactly. Exactly. Well, I wanted to ask if you guys had anything you are keeping an eye on, being in the retail tech side of things, that you’re most excited about or something that you just find personally very interesting going on in this space. I’ll give you a moment to jump in with anything you want to chat about there.

David Wilkinson:
Yeah. I think from an NCR standpoint, we have served physical retail for a long time, so the notion of how we create the experience. So we talked about DSE, you talk about online buying, and then you see growth trends like what’s happening in new store openings for shopping. So that experience. I think what we’re starting to watch and see closely is how you blend those, to what you’re seeing a little bit in the Fabletics case study that we keep referencing, but how you blend those two things together. And then we are very focused on the data rights, access to data, how you use that for personalization. And then really things like online ordering and creating a more integrated experience, and then bridging that to an in-store store experience.

David Wilkinson:
You described when you buy online, all of your data is known by Peloton, by Fabletics, by somebody else. When you walk into a store, a traditional retailer, you don’t give them permission to know who you are. That’s why we all love buying online is because they know who we are, they know what we’ve bought in the past, they know what are our behaviors are, they have our stored payment, and it creates a very seamless transaction. So for us, we’re spending a lot of time, how do we bridge that through data, some computer vision technologies, the ability to identify yourself, looking at mobile payments, starting a transaction online. So bringing that all together to drive the convenience factor of what we’ve all learned to love through COVID, holding onto those things that are very convenient and pushing them into a little bit more of the old world where we love to go into the store. So how do we create that seamless experience? So we’re spending a lot of time on AI, computer vision, and how we’re thinking about mobile and online with retail.

Julia Raymond Hare:
And I have one question on that, just because can be computer vision is intriguing to me. I see a lot about not only inventory management through computer vision, but also technology for check out free solutions where you just walk out, like the Amazon tech, and things like that. Where do you think that it’s most close to being a widespread adoption? Because there’s so many applications, but some seem a little bit more cumbersome to implement than others.

David Wilkinson:
Yeah. I think like you described, the just walk out technology is pretty cumbersome to deploy, in terms of retrofitting an existing store. Right now we’re finding practical application in things like fraud and shrink prevention, just known customers, watching customer behavior in an anonymized way, just to identify where there might be opportunities, and then improving guest experience. If you think about … I’ll use a grocery example, but if you think about going into the grocery store and using a self checkout device for produce. The scanner now on one of our self checkout devices is really just a camera. It’s an optical scanner. So you set an apple on there. You don’t know the code and you go to the pick list and you have this whole list. It’s usually alphabetized. What we’re doing is if you set a green apple on there, it knows it’s round, it knows it’s green –

David Wilkinson:
What we’re doing is if you set a green apple on there, it knows it’s round. It knows it’s green, and it can get through and it learns every time somebody puts a green apple and chooses green apple. So now it starts to build that imagery of what a green apple looks like. So as a guest, you can walk up, set an item on the scanner, and it knows exactly what it is, or at least within two or three so you don’t have to page through. It also would know that you’re trying to weigh a bottle of wine and, say, you’re buying bananas and you’re trying to steal.

David Wilkinson:
So there are some very practical applications that we’re using today that we see it in the short term. And then longer term it’s more about guest identity, loyalty, and then some of the frictionless… As it evolves, some of that’s really hard to do, and it gets prohibitively expensive for what the gain is. It’s fun to watch and we’re working with a lot of different companies in that space as they start to build out what that technology could look like.

Julia Raymond Hare:
Sure. That’s super exciting. I’ll be keen to watch that progress. And I like your examples specifically around the produce that helped visualize what you’re speaking about. Britt, what would you say is something, we just chatted a lot about computer vision, what are the technologies you guys are most excited about?

Britt Mills:
I look at the customer experience and technology agnostic, kind of understand what are the behaviors that we’re seeing today. And I think that getting back to, again, some sort of normalcy. And previously, I would define customers as they fell into a segment where they prefer to buy online or through an app, or they fell into a segment where they made it more of an experience and they went and browsed Target, got a coffee, and made a trip out of it.

Britt Mills:
And I think that now what we’re seeing is the synergy between brick and mortar and digital is even more important because a customer’s sort of forced to bounce between the two for various use cases. And they might not be as familiar with one as they are with the other. And so making sure that seamless transition that was mentioned is there. And then once you understand what the behavior is, figuring out what technology would support that and remove those seams so that it truly is seamless.

Britt Mills:
I do agree. I think the scan-and-go technology is interesting, especially within the convenience space. Convenience stores have the right, if anyone else, to be convenient and deliver that experience. And I think that’s one that Amazon is leading the way and its customers are adopting it and talking about it. And it might become more of an expected experience than it is a novelty. And so I think that one’s interesting for me.

Julia Raymond Hare:
And you mentioned that just frictionless technologies are top of mind. And I was watching or listening to a, I think, by Scott Galloway the other day. And he was saying that the two places he thinks are the most inconvenient and not frictionless are gas stations and the doctor’s office. So it’s interesting that you said they deserve to be convenient, because in a lot of ways they’re a little bit behind these stores.

Britt Mills:
Yeah, I do see that C stores and convenience stores are finding new ways and may be forced to find new ways to adopt technology through COVID. That contactless, touchless curbside was in high demand, and those that were not adopting it were left behind. So they were forced to figure out what that meant for their business, for their operations, for their associates.

Britt Mills:
And so I think they’re getting there. I think now that they understand that this expectation of convenience has changed and customers expect it and technology is a great way to deliver that, they’re getting more innovative in how they bring that to the customer. So I’m excited to see how that industry continues to evolve with that technology.

Julia Raymond Hare:
Absolutely. Well, it was wonderful having you both on the show. David Wilkinson, President and GM of NCR Retail Solutions, and Britt Mills, Senior Director of Customer Experience at Mobiquity. And I hope to have you on again in the future.

David Wilkinson:
Thank you. Enjoyed the discussion.

Britt Mills:
Yeah, likewise. Would love to chat again.