Retail Rundown: The Formula For a Successful Retail Turnaround – With Marc Babin and Ricardo Belmar

Julia Raymond Hare:
Hello, Retail Rundown listeners. I’m your host, Julia Raymond Hare. I hope all of you in the United States had a wonderful 4th of July weekend. Today, we’re joined by my guests, Marc Babin and Ricardo Belmar. Marc is the senior director marketing manager, Anyline, a leading provider for mobile data capture solutions based in the lovely Vienna, Austria. Marc also hosts the Anyline Anytime podcast, a series that discusses how their technology enables workers in all types of industries, including retail among others. Ricardo is a RETHINK Retail top 100 influencer and advisory council member. He is the founder of Retail Razor, which advises retail tech providers on their go-to-market strategy. And he hosts regular retail discussions on Clubhouse. And last but not least, he is the senior partner marketing advisor for retail at Microsoft. And recently joined the advisory council at George Mason University Center for Retail Transformation. If you’re in the industry, I highly recommend that you check those guys out, very cool. Marc and Ricardo, thank you for joining the show today.

Marc Babin:
Guten Tag! Happy to be here. Thanks for the welcome Julia. And yeah, we’re very much looking forward to the chat today.

Julia Raymond Hare:
Guten Tag! Absolutely. So we had NRF week, last month and we heard from many thought leaders and as brick and mortar becomes increasingly more visited, several retailers from PepsiCo’s Jeff Swearingen, to Bed Bath & Beyond’s president and CEO, Mark Tritton. They stressed how important it will be for retailers to create experiences that consumers will resonate with. And during a session, Tritton revealed efforts, the retailers seeking to improve its customer experience. They are launching new brands and remodeling hundreds of its stores. So Bed Bath & Beyond, huge remodeling project going on right now. And that is very exciting. These initiatives are already paying off, at least in the short term, their fiscal first quarter sales climb nearly 50%. And that was according to a statement released by the retailer last week. So I’ll pass this to you, Marc first. What are your thoughts on Bed Bath & Beyond’s turnaround?

Marc Babin:
Yeah, absolutely. I think it’s pretty clear that brands like Bed Bath & Beyond and of course, other household names, they’re going through a substantial shifts with what was certainly encouraged by the pandemic, at least from what we see over here. And unfortunately, most of these brands, they’re reacting to the global shift, the transition period that’ll be stretched throughout 2021. Like we’re seeing with Bed Bath & Beyond the cost of the late reaction, it’s eating into their profits that they’re seeing now when you look at their statements from Q1. So while revenue is up, of course from the last too, of course, all the things you mentioned, the expanded products, the new stores and so on. I think that their focus on the new customer focused channels like BOPUS and all the things they’re doing. I know when I was looking at their numbers, digital sales accounted for 38% from the Q1 sales, which is substantial but it shows that the efforts that they’re making in that area are having an impact from what the last 18 months did.

Marc Babin:
But the profits are still going to take some time to recover due to the late reaction that they had moving into this. But having said that, and I think that they are making it very clear that they’re making the right changes in order to survive and future-proof themselves. Again, despite that late reaction, just in May of this year, we all know that they had shared some news that they were partnering with a well-known 3PL, DoorDash in both US and Canada for deliveries, enabling the digital channels and enabling their customers to get the products a bit more reliably, which we know how important those 3PLs are for them. But more importantly, and from my perspective, in February of this year, we know that they partnered with Oracle to ramp up the digital consumer engagement, which is of course the future. Something that they’re calling a digital first omni-always, and customer-inspired approach, which from the tech sector where we are, we certainly love to see retailers going in that way.

Marc Babin:
But again, it’s a bit reactive from what I’ve seen anyway, but at least they’re pulling the trigger on this now. It’s going to eat into their profits in the short term, at least from my perspective, but significantly it’ll help them in the longterm. And that’s because the size of their business, the position in the market, they can afford to eat into their profits now to make these changes because they know in the longterm that it’ll pay off. But what I really think is important to stress here for the other retailers and the operators in the industry. With all the new technologies and innovations available, making that digital transformation, we all know how important it is, but it doesn’t have to be such a big expense and eat into profits for a long time. The more proactive you are, the less recovery is going to be needed later on much like we’re seeing with a lot of these large retailers now that are having to be reactive.

Marc Babin:
So yeah, I think traditionally when we look at the weaknesses of brands, like what Bed Bath & Beyond was, they simply were taking things for granted. But if we look at what they’re doing now, they really spun that around into a strength with eating what they have to eat now and taking the expenses now to make sure themselves are future-proofed in the future from what we see.

Julia Raymond Hare:
So Marc, you hit on a few things and one was that you like to see Bed Bath & Beyond being proactive. And you named a few partnerships with Oracle recently to be digital first and some 3PLs like DoorDash. My question is, is that enough? There’s a lot of things that might be going on behind the scenes that we don’t know about, but traditionally, Bed Bath & Beyond has had some weaknesses. Ricardo, what do you think their biggest weaknesses, and from your point of view and what we know, are they doing enough?

Ricardo Belmar:
I have to agree they’re on a good path. And I think they’re starting to show signs that there is potential in this turnaround plan. I think if you look at the data, that we’re still in the early days, even as their CEO admitted, it’s Q1, it’s first quarter in that three-year plan. But it’s starting to trend in the right direction. When I look at the data, I think it’s always interesting with every retail that’s been reporting data now that comparisons to 2020 are a little bit… I look at them with a skeptical eye because 2020 for most of these retailers, have the wonderful issues with stores being forced closed or capacity constraints. It’s a bit of an unfair comparison I think when you looked at performance from those years. When you compare Bed Bath’s performance in 2019, it looks a little bit more modest.

Ricardo Belmar:
I think it was somewhere around a 3% sales increase, but where they are showing really nice gains is on the digital side of things. I think they reported digital sales growth even compared to 2019 was up 84%. I think that’s saying something for their turnaround approach because Bed Bath I would not claim was, prior to these changes, a retailer that most consumers thought of as a go-to place online. I think Bed Bath’s challenges used to be what were they known for. They were known as the store you went to when you needed some appliances, home goods, small kitchen accessories, and you had a coupon. And you knew that you could go to that store and get 20% off, which is not the kind of brand relationship or brand experience that they really want to have with their customers.

Ricardo Belmar:
I think some of the things that they’re doing that telling me that they’re thinking about this the right way, we mentioned the tech partnerships and others that they engaged with to try to improve both the convenience factors for customers, as well as how they engage. I know I’ve seen some reports of some new AI based solutions they leveraged to improve their inventory positions. So for example, I think they’re now achieving about a 95% in stock count in the store, which I think is a pretty good achievement. If I think of a traditional Bed Bath Beyond store, what do I picture in my mind historically, it’s very stacked shelves with product piled up high, all over the place, very little merchandising going on. It almost felt like a warehouse-

Ricardo Belmar:
It’s very little merchandising going on. It was just, it almost felt like a warehouse approach, even though it wasn’t meant to be a warehouse approach. So what that told me over time is that, what they needed was a better approach to curation. And what I’ve seen them doing now with this AI approach, is they’re understanding now from their customer data, what products in a given category are selling and which ones are not, and they’re just starting to eliminate the ones that are not selling. Why stock them in the store? Why use shelf space, just to make it look like the store is stocked, when in fact no one is buying that product. So they’re focusing in on a better curated approach, they’re focusing more on having products that customers really want to buy.

Ricardo Belmar:
And then, I think, the other interesting factor for me that they’ve started introducing new private label products, that are a little bit more meaningful than anything they’ve had in the past. They’re taking a good, better, best approach to price categories for those private lines. I think they’re recognizing that they have to grow, not just on the backs of other brands, but they need to develop their own branded products that they can use to increase sales that way. So, I think that’s another area that a good improvement for them to build on.

Ricardo Belmar:
When I think of a lot of the categories that Bed & Bath carries, I always want to make a comparison to a brand like Williams-Sonoma and two things to me stand out with Williams-Sonoma. When you think about their brand experience for customers, customers see a Williams-Sonoma as a place that if I want to buy a small kitchen appliance, I know that if I go to Williams-Sonoma, I’m not going to be overwhelmed with a hundred choices. It’s not like I’m going to do a search on Amazon, for example, and find a thousand choices for that item. I’m going to go to Williams-Sonoma, because I know there’ll be 10 choices or less. They’ve basically preselected the ones they think are going to be the best ones and the most likely ones that I want and that’s where I expect to find in that brand relationship.

Ricardo Belmar:
And then secondly, they’ve really become a digital-first retailer. I think it’s somewhere on the order of 65% or more in fact, other sales are coming from digital channels. So I think that’s a really good aspirational target for Bed & Bath. They have a much larger store footprint, than obviously a Williams-Sonoma, so they have the ability to carry more. And I wouldn’t suggest that they take those categories down to five to 10 products in a category, but the fact is, in most bed/bath stores, when you go in and you might find a hundred different versions of the same product category, and it becomes overwhelming to a customer to have to choose between that. And I think that hurts the brand experience because you’re overwhelmed a bit too much that way. So, they’re bringing that under control and I think that’s a good improvement that they’re doing and making progress on.

Julia Raymond Hare:
Ricardo, when you talked a little bit about how their curation is subpar and that’s where they need to invest a little bit of time and money into which they are doing. I think that you’re spot on because I just remembered the towel walls. Do you remember the towel walls?

Ricardo Belmar:
That’s right. Yeah.

Julia Raymond Hare:
Absolutely ridiculous. And it just-

Ricardo Belmar:
That’s exactly right. How many different-

Julia Raymond Hare:
Huge.

Ricardo Belmar:
Options do you need?

Julia Raymond Hare:
That’s what it made me think of. And it also reminded me, so I was doing a recording with One Door the other day, and they are all about AI for visual merchandising. And we were saying that at its core, retail is about visual merchandising, that’s what drives a lot of the experience that customers have, so I think that’s spot on. And you mentioned private label as well. We’ve seen a lot of private label growth with Target, and in my opinion, Target is probably going toe-to-toe if you’re Bed, Bath & Beyond, just in terms of where do people think of when they’re buying stuff for their house now. The tables have turned a little there, so they have a lot of work to do. And Lauren Thomas from CNBC reported just last week, that by 2023, they are claiming their private label sales will grow to represent 30% of their business and it was only about 10% at the end of last year.

Julia Raymond Hare:
So that’s a big jump and I hope that they can get there, because I would love for it to be flipped back around towards Bed Bath & Beyond. That used to be the place people would think of when they’re going to furnish their first home, when they’re going away to college, all of these things. But now I think, Target offers a lot of those same things plus other conveniences. So, it’s going to be really tough for them to find a space there.

Julia Raymond Hare:
Mark, I was wondering if you could talk about meaningful brand interactions and from your experience with your retail clients, what are consumers looking for?

Marc Babin:
Yeah, so I think more than ever before, consumers are engaging with retail brands on more channels than ever before. I mean, we’re in a time when everywhere you can reach the consumer platform, whether we’re looking at social media or internet and TV or browser-based applications, or of course in store. Now, we saw this trend coming pre-2020, but obviously that was accelerated due to the last 18 months and what happened in the industry. So, between these classic brick-and-mortar shops, the mobile applications, the browsers, like I mentioned, there’s an endless number of ways for consumers to get in touch with them. And frankly, they’re expecting brand interaction on all these channels.

Marc Babin:
So while this perhaps complicates the way in which that brands communicate with consumers, because there’s more options now, perhaps there’s more work associated with that. I actually think it opens a lot of new doors and it’s kind of an exciting time. The opportunity to customize the experience for users based on the platforms they engage with, really allows retailers to significantly increase the likelihood and loyalty and engagement that they’re going to have, because they can touch them at more points during the day than just maybe a single interaction during a shopping experience.

Marc Babin:
So, a short example, we work with a couple of retailers and brands that are incentivizing consumers to engage with them on their mobile devices. We’ve worked with Red Bull and Pepsi, we have some ongoing campaigns. And they’re actually building engagement opportunities with their products, through the applications. So, it encourages them to of course, download the application, opening a new channel, which is great, and we like to see that, but it also forces them to engage in the platform, bringing the product to them in a brand new way. It’s kind of opening a new door and a new opportunity, based on the technology that’s available by capturing data from a [can 00:14:18] to an app or something like that. And I think retailers can do the very same thing, by enhancing the experiences and the engagement opportunities with the channels that they have available, which of course are unique to each retailer.

Marc Babin:
For me, this really comes down to the ability to capture that first party data, which I know we’ll talk about in a little bit. But it’s worth mentioning here that the ability to capture data within a platform, further enables that retailer to customize the communications and build more meaningful interactions, which is of course, a key factor now that we’re looking at this new age of retail. So additionally, we’re seeing a shift from brands to embrace a more human voice. I’m a really big believer in this human voice aspect from brands, no matter when they can do it. At every opportunity, the more human a brand can act and communicate, of course, the more approachable they will appear to consumers. And again, that’s just one less barrier, when we look at that relationship between consumers and the brand, really facilitating more engagement.

Marc Babin:
And the last point I’ll make here is, really about retailers giving consumers the power to have a choice. This is something that has come up recently, and it seems to be a trend among many industries, but particularly when we look when there’s a B to C experience is giving the consumer choice. We no longer live in that world where the retailer tells us how we can shop, where to go to buy something, how it has to be purchased. The more choice that retailers can give a consumer, obviously, the more likely they’re going to be to take the reins and explore what you have to offer. Now, that’s online or by a mobile app, or even in store, just by opening that up and giving them the choice, it just creates much more opportunity for that experience and that engagement to happen. So, the easier-

Marc Babin:
Affinity for that experience and that engagement to happen. So the easier and more transparent you are with the entire shopping experience, the more success you’ll see, and trust you’ll build. I think it’s really as simple as that.

Julia Raymond Hare:
Yep. And you mentioned a little bit about that first party data, which is the golden standard. Ricardo, do you have any additional points to add on the customer experience that everyone is expecting as we come back to stores?

Ricardo Belmar:
Yeah, I think maybe the key thing I’ll add to that is that it’s absolutely consumer driven. So we used to always have the conversation where retailers are trying to define what kind of interaction can I introduce or established that consumers would connect to? And I think that those tables have turned to the point where now it really is consumer led. The analogy I would draw is that retailers are opening doors, but the consumers are choosing when and how they’re going to walk through those doors. And when it comes to in-store experiences, now I think is a really great opportunity for retailers to rethink how they look at that store experience.

Ricardo Belmar:
One area, for example, that I really like to focus on a lot is how retailers are helping those frontline workers in stores. I mean, I saw a recent study that showed that people who prefer shopping in store, if you ask them, “What is the number one thing you like or expect most about that in-store experience?” And I saw numbers around 74% saying it’s knowledgeable staff. That’s what they want. They want good advice from staff at the store about what they’re shopping for. So what does that mean for retailers? That means that that store experience is such a critical interaction. Even if those customers have come to the store because their journey started in a digital channel, whether it was on their website or a mobile app, or they connected with the brand on social. Regardless of where that initial set of interactions were, if it’s ending up in a store, then now it’s up to those frontline workers to really bring it home and complete the experience for those shoppers.

Ricardo Belmar:
So yes, part of it is having product. We talked about that earlier, and even Bed and Bath having an improvement in their inventory management. That’s a key factor, no doubt. But I think to really close this out and to really have quality experiences, retailers need to start thinking much more than they have before about how they’re empowering those frontline workers at the store to deliver a brand experience that’s going to be memorable to the consumer, it’s going to deliver what they want, and it’s going to be something that they’re going to want to repeat and come back for more later. Because if you think about what are the types of brand interactions that the retailer wants, they want interactions that consumers are going to talk to their friends about, that they’re going to tell other people about, and encourage them to also go and engage with that retail brand.

Ricardo Belmar:
And when we talk about it at the store level, I think that is completely driven by the experience the customer has with those store associates. And it’s not just about training them to be knowledgeable about products. It’s also about making sure they are trained in how to sell and how to interact with customers in the most helpful way, especially when you have customers coming to… Using Bed Bath again as an example, chances are customers coming there are going to be looking at those choices of products, and they’re going to have questions. They’re going to want to find an expert. One example I always like to hold up for that is Best Buy. Right? Best Buy blue shirt employees. Right? They become an expert in the product knowledge, and that helps improve that experience. They can actually guide the customer along that shopping journey while they’re in the store to get to a completed transaction at a purchase. And retailers like Bed Bath need to be thinking the same thing. How are they going to further enable those store employees to deliver on that kind of brand promise?

Julia Raymond Hare:
Absolutely. And specially trained on interactions as we’re all crawling out of our COVID caves. So it’ll be good-

Ricardo Belmar:
Right. Because you can assume those customers coming through the door, they’re there because they want that human interaction. And they want this personal experience, so the store staff needs to be ready to deliver that.

Julia Raymond Hare:
Undoubtedly. And we do have time very quickly for a trivia question. Bed Bath & Beyond was not originally named Bed Bath & Beyond. I have three choices for you, Ricardo and Marc. We have A, and this was in 1971. So that’s when they opened. Was it opened as a Room Outfitters? B, Home Plus, or C, Bed & Bath?

Ricardo Belmar:
I’m going to guess Home Plus.

Marc Babin:
I’ll go Home Bath because the beyond feels like an addition, like an upgrade.

Julia Raymond Hare:
The Bed and Bath?

Marc Babin:
Bed and Bath. Yeah. Apologies.

Julia Raymond Hare:
All right, Marc is correct. See, that one was a trick question because it seems too easy.

Marc Babin:
It seems like something a corporate would do. They sat at a table and they decided. Let’s add Beyond. Done.

Julia Raymond Hare:
Yeah. That’s the mystical part of Bed Bath & Beyond.

Marc Babin:
Some agency got paid for that. Just remember that.

Julia Raymond Hare:
Lots of money.

Ricardo Belmar:
Right. That’s right.

Julia Raymond Hare:
Absolutely. Well, I wanted to wrap up our conversation today. We talk a lot about experience, and that is always in today’s world driven by data. What are some strategies, guys, that retailers can best leverage their data around interactions with their brand?

Marc Babin:
Yeah. So from my end, I strongly believe in agreement with what you said earlier, that first party data is the new gold standard. It’s, the lifeline in this new normal post-pandemic. I mean, it was important before, but I think retailers have really gotten on to the fact that they need it now. For the work we do, looking at first party and owned data, it gives retailers essentially a cheat code when they’re controlling all of their different operational variables. No more guessing, no more having to rely on industry averages or third party data. It really enables them to collect from their consumers in the real time, no matter the channel, retailers, they can accurately predict the trends that are coming in their unique store, the situations in their unique store, the shopping habits of their consumers just gives them a lot more confidence when they’re making their strategic decisions.

Marc Babin:
They can go into each year with a better idea based on what’s happening at their location. As an example, if we imagine a situation where we have a retail worker doing inventory management and the shopper in the warehouse, say, and they’re using a mobile device that’s equipped with a barcode scanner or a serial number scanner to scan product and boxes and so on. If then they’re able to scan that data in real time and have that data uploaded into an inventory management system, which of course a phone can do no problem. You have a consumer on the other end of the line, they’re online and they’re shopping at the same time. They can essentially have a live look at the items in stock versus what’s not in stock. And that improves the shopping experience and it gets rid of that complicated mess of putting something in your basket and suddenly it’s not available anymore, or it was never available to begin with. So that delay is essentially removed thanks to the technology we have because of this first party data being so accessible.

Marc Babin:
Another quick example I’ll mention here is just because it’s such a hot topic right now, but this whole concept around scan and go. The whole concept that consumers are able to scan items while they’re shopping, filling up their baskets can literally pay via their phone and simply walk out the door without the hassle, no queues, no hassle, and just kind of be out like that. Now while this experience is amazing and if you’ve ever experienced it, it’s absolutely fantastic.

Julia Raymond Hare:
So much better.

Marc Babin:
It makes checkout counters seem like an archaic dinosaur system. Even the self checkout, which I haven’t been to a self checkout that didn’t have a problem in the past. So this just makes it so much easier. But of course, while it’s fantastic, just think about all that data that was just collected from a single shopper, from the habits in their store, which aisles they were walking down to the items they purchased, what was purchased together, the quantity of the items, the date and time of that shopping experience, on and on and on. And the data is…

Marc Babin:
The date and time of that shopping experience on and on and on. And the data is endless, for a data geek this is gold. So the retailer can finally leverage this first party data to enhance the interaction they have with the consumer. And of course, that’s going to naturally create a more personalized and custom experience. Which again, leads back to that brand loyalty and encouraging a higher overall spend, which is what we want to do for retailers with their shoppers. So the key here, no matter what the example is, and of course you could go on and on with this kind of thing, but it’s increasing that value of first party data for the retail operation, for their specific shopping experience, not an industry average, not a trend, for them. And the cool part about this is the tools, obviously, they already exist. They’re in everyone’s pockets and it’s pretty fantastic when you think about just how accessible this is to retailers of all sizes these days.

Julia Raymond Hare:
And how open people are now as compared to the past, they’ll download that extra app if it helps them and they’ll allow you to track data while they’re using the app if it helps them find things in store. Things like that, Ricardo. It’s crazy. It’s crazy how consumers have become so much more responsive to this type of thing, if the value is there. Keyword, if.

Marc Babin:
That’s key. Yeah if the value is there. Because we had done a couple of surveys just to kind of see if that interest is there, because we know people how protective they are over data. But if there’s a key value there and something that they can take advantage of whether it’s a loyalty system or some advantage or some incentive, which for me not having to wait in line to shop, that’s incentive enough for me to download an app. And I can personally say every shop I go to is in my phone and I would never have done that a year ago. So that’s just showing that transition is happening and the consumer mindset is changing. That suddenly they’re open to giving you this data, if it is a better experience for them. And I think that that’s absolutely key moving into the future here.

Ricardo Belmar:
Yeah. I think for me, the one thing I would add that I think a lot of retailers tend to overlook or perhaps even not think all the way through is just the volume of first party data, they likely already have access to and have buried in their data systems that they’re not fully leveraging yet. Whether it’s fundamental things like purchase history, retailers with a loyalty program have even more data that they know about those customers and how they engage and interact. As we’ve been talking here, anyone implementing a scan and go technology, that’s another data source that can be used. There’s just so many different sources that retailers have already.

Ricardo Belmar:
When I hear so many concerns now being raised right, as these cookies are going to come to an end and all these other mechanisms that retail marketers have used to rely on to augment that first party data, I think what we’re going to see now is a boom in tools, again particularly AI and machine learning base, that are going to really look at drawing correlations and insights out of that existing first party data that retailers have access to. And the winners are going to be the ones who best use those systems and figure out how they’re going to act on it. Whether the action is to change something in the loyalty program, or maybe the action is to create a new loyalty program if they didn’t have one before, or maybe the result is going to be converted into a change in layout in the store that’s going to produce different buying habits now from customers that come to that store. I think that those are going to be the clear winners that come out of this because they’re going to know not just what data they have and what kinds of things it can derive from it but they’re going to develop clever ways to take action on the insights derive from that data.

Ricardo Belmar:
And that’s why one of the things that I see as a trend is just more and more positions of retailers centered around data analysis and analytics and getting more prescriptive data science type of positions, because those are going to be the other roles that drive the overall intelligence factor, let’s call it, of how retailers act on customer data. And that’s something that I think perhaps has been a little taken for granted in a previous years because you had other tools and other mechanisms available to make those connections with customers. As we’ve been saying here, customers are more willing to provide information if that value is there. And sometimes the value can’t be well-defined upfront. If it’s just an issue of check this opt in box when you just downloaded my loyalty app, well, consumer might not know yet. Do I want to do that? So they might not opt in up front, but maybe later as the relationship builds they’re more willing to let some of that information flow to the retailer and then give them access to it because now they’ve established the value. And I think that’s a new way that retailers will need to think about it. You can’t expect all of your opt-ins and all of these free access to personal information to happen upfront before you’ve been able to demonstrate the value.

Ricardo Belmar:
Again, the winners are the ones who figure that out quickly and start creating experiences that cause those customers to recognize, you know what this is valuable. I do want to give this retailer more of my data.

Julia Raymond Hare:
It reminds me of Ricardo because when I first downloaded the Target app, I mean, they had many apps and then it finally became just the one app. But now sometimes when I’m bored or I’m just looking for something to keep my mind busy, I’ll just open the Target app and see if they have any new offers for me.

Ricardo Belmar:
You’ve found the value, right? They’ve demonstrated the value in that app so now it’s become a go-to.

Julia Raymond Hare:
And they’re doing an amazing job at giving you those personalized offers based on what you bought before, based on what season it is. It’s really incredible. So I hope all retailers will be able to follow suit eventually. And it was great having you Ricardo, as always on the show and Marc, it was lovely to have you, and I hope that you’ll both join me again in the future.

Ricardo Belmar:
Thanks Julia. It was great being here.

Marc Babin:
Yeah. Thanks very much, pleasure to be here.