TUCSON, Ariz. — There wasn’t the identity crisis or doom-and-gloom hand wringing of a few years ago filling presentations as retail executives gathered for an annual think tank last week.
The industry instead focused on the theme of customer centricity, studying from the examples of past and present chief executives of companies such as Macy’s, Walmart, National Retail Federation, Lowe’s, McCann Worldgroup, PetSmart, Mattel and Kathy Ireland Worldwide among others during the University of Arizona’s Terry J. Lundgren Center for Retailing’s Global Retailing Conference, which ended Friday.
While the roomful of executives in more recent years focused on what they were doing to address the disruption, the shakeout has concluded with business now looking to best practices to win over the consumer with the National Retail Federation forecasting retail sales growth between 3.8 percent to 4.4 percent this year, according to president and ceo Matt Shay.
“If we can avoid some self-inflicted wounds, we think we can get there,” Shay said of the projection.
Lundgren, the retired Macy’s ceo and chairman, anchored the conference with an opening keynote reminding the audience of the various industry headwinds faced across decades, from the leveraged buyouts of the late Eighties to the tech bubble he called the “dot.gone era” of the early Aughts to the era of mistrust born from the financial crisis started in late 2008 and now the most recent shift in a changing demographics. The point with those examples? It’s all cyclical.
“If you noticed these disruptions happen every six to eight years, so the only thing I want to caution us all about is that that slide I just described we’re going to get through this and have relatively good positions,” Lundgren said. “As soon as that happens we’ll think, ‘Wow, I think I can add more stores. I’m doing really well.’”
Rather than anyone fearing or focusing on another slide, executives dug into what they’re doing at their respective companies to continue remaining relevant to customers.
Walmart’s been studied particularly closely for its piloting of various programs, bucking the overly cautious postures of some businesses with Walmart president and ceo Doug McMillon acknowledging not all ideas are going to stick but it’s about figuring out what does and then putting the technology to work.
“I think what’s happening is the aspects of data and technology that are now available to us as tools as business leaders are going to determine whether you adopt those effectively or not for survival and whether or not you can survive,” McMillon said.
In one instance, the company tried its hand at an autonomous floor cleaner that roams the sales floor with a camera attached to provide on-the-ground data, training academies that use virtual reality to help associates learn new skills such as what to do if there was an active shooter in the building to how to stock the vegetable wall in the produce department. The company continues to test its in-home grocery delivery service and following the success of pick-up towers in store, it’s now looking to test their placement outside the store for drive-ups with consideration of eventually planting those towers off property. Technology has also helped shorten the time for customers to sign up for a Sam’s Club membership in store from eight minutes to now 46 seconds.
“Digital is about the entire organization changing how it works,” McMillon said.
Lowe’s president and ceo Marvin Ellison, now about nine months into his new position at the home improvement store, served as a reminder that each organization is different and sometimes best practices are about going back to basics.
“It’s important to do the research, but it’s important to take the learnings from the research and implement them effectively,” he said.
Lowe’s recently signed an agreement to be the home improvement sponsor for the National Football League, has undergone executive shuffling and focused on localizing the assortment to win back customers that may have drifted away to the competition in more recent years.
Many ideas were presented at this year’s conference with a number of recurring things ranging from consumer privacy and security to the importance of corporate transparency and sustainability to simply the reality of disruption and change being cyclical with the idea that retail’s demise has been nothing more than fake news.
WWD sat down with a few executives during the conference to pick their brains on some of the key topics chatted about across the two days. What follows are edited versions of those conversations.
Terry J. Lundgren, retired Macy’s Inc. chairman and ceo
On customer centricity: “It’s a term that I’ve used throughout a good part of my career. I’ve always tried to put the customer at the center of my decisions and my former organization would use that idea to make decisions when thinking about building a store. When we were thinking about moving everything to mobile. That’s what the customer would want. It’s more expensive for us to take that leading edge but that investment is the right decision because we know our customers are going to want to move there, if not with us, then someone else. And so, to me, this conference is all about that subject: putting the customer at the center of your decisions but also personalization. I was passionate about My Macy’s when we took this giant organization and centralized the buying into New York, but I was passionate about having it be a personal experience in Tucson, Ariz., versus Los Angeles versus Minneapolis because I didn’t want to consolidate just to save money. Today with technology, which we didn’t have back in 2008 to the degree that we do today when I made those changes, is that we have technology that helped me learn about you based on your buying habits, your spending habits with all the cards that you would use, if you would allow us with the privacy rules if you opt in. We could learn more about you and then feed you information that’s relevant to you.”
Name an innovative retailer — emerging or heritage: “I would never have said this three or four years ago, but today I would say that one of the biggest positive surprises is Walmart. I think Walmart, this big giant company, is doing amazing things in trying new ideas, very innovative thinking, testing a bunch of ideas. And as [president and ceo] Doug [McMillon] has said, not all of them are going to work but I give them credit for having the courage to try. With a company like that there’s lots of organizations that will take shots at them for trying. They’ll criticize them, ‘Oh, you can’t have your employees delivering merchandise to consumers’ homes. That’s a risk. They might drive over the lawn. They might knock down the mailbox. They might insult somebody.’ That’s what all of the lawyers would say and you know Walmart’s got to have a lot of lawyers. But Doug said ‘Yeah, well let’s just figure it out. Let’s just try it and see what the consumer says.’ I give them, Doug in particular, but his team a lot of credit for becoming much more flexible and absorbing all these different changes and ideas.”
Retailer you wish could stage a comeback: “The biggest disappointment has been Sears I think. And while they’re still here, it’s almost barely. If you saw on the [conference presentation] screen today, they talked about the largest companies in the last several decades and Sears was right up there. Sears was one of the largest, if not the largest, retailer in America for decades. And the demise could have been prevented I think had there been an understanding of the need to focus on the consumer. I think there was a focus on financial engineering and a complete lack of focus on the consumer. So there was no investment in the stores. There was no investment in the employees. There was no investment in trying to attract the best and brightest talent. All of these things were missed and I look back and I think that’s a disappointment.”
Most interesting aspect of how the Millennial shops today: “I think it’s all very interesting. I think when the Baby Boomers were at the age of Millennials today in their 20s to mid-30s they were shopping in department stores regularly. They were shopping for brands. They were buying their first home or buying an apartment, but they were acting very different because what I’ve just described is almost the opposite of how Millennials are behaving today. And instead of buying homes and instead of shopping in department stores they’re shopping in a much more broad array of shopping options including online, which didn’t exist in the Baby Boomer era when they were 20 or 30. Additionally, just in terms of buying products, you think about how money is spent today by young consumers and they’re spending $150 to $300 a month on their phone or paying for services, the apps, that they’re using or video streaming. And that didn’t exist. That is taking money out of the pockets of these young consumers that otherwise could have been spent on apparel, accessories or home products and the like.”
Privacy and convenience. Are they mutually exclusive?: “I don’t think so and we talked [during the conference] about the difference between how the Chinese consumer is actually more willing to give up their privacy if you can create the personalization and convenience for them. I think the American consumer demands both and when I say privacy what that means is it’s in the control of the individuals. So you may choose to give up more information about yourself than I would because we’re in different age groups. You may choose to say I’m going to give my information to this company because I trust them and because I think they’re going to provide me better service as a result of that and, by the way, I might, too. It comes back to knowing the individual and knowing what they’re prepared to give up and what they’re going to get in return. If you’re totally private, it’s probably going to limit marketers’ and retailers’ ability to communicate with you on a personal level. But you don’t want to give up all of your information because of the dangers associated with that lack of privacy so the ability to customize privacy and create convenience for individuals is clearly there and getting better.”
Bob Eckert, ceo, retired Mattel
On customer centricity: “Well, it’s really important. I went to school here at the University of Arizona decades ago and my very first marketing class was with a professor named John Wieland. He defined marketing as find out what a public wants and get it to them profitably. I mean, this was 40 years ago [when] we really started talking about the consumer, and in my career, I’ve seen that evolution to where more and more companies are putting the consumer first. When they do, business is good. When they don’t, somebody else comes in and displaces them.”
Name an innovative retailer — emerging or heritage: “Certainly a lot of the people in e-commerce and those going to omnichannel are doing well. I just admire, for example, Walmart. What Walmart has done in my lifetime is go from a start-up to the largest brick-and-mortar retailer to now among the very fastest e-commerce companies. And they’re building that omnichannel presence that is required today to be successful.
“I also serve on the board of directors of Levi Strauss & Co. and they’re also pursuing omnichannel. They’ve got their own retail outlets, wholesalers with whom they work and they’re doing more and more with e-commerce and important partners like Amazon.”
Retailer you wish could stage a comeback: “Because I spent a lot of my career in Mattel working in the toy industry, I wish Toys ‘R’ Us could come back in a bigger, better way. I’m still long on Mattel. I love the company. I had a wonderful career there and Mattel and Toys ‘R’ Us had a pretty good partnership. I’d like to see the Toys ‘R’ Us name come back for consumers.”
Most interesting aspect of how the Millennial shops today: “It’s all about omnichannel. The Millennial today doesn’t recognize the difference between the type of channel or outlet at which they shop and he or she is shopping all the time and somewhat subconsciously because they’re always pursuing new things. They’re on their phones. They’re on their devices searching for new things and looking for new things and that’s why omnichannel is so important.”
Privacy and convenience. Are they mutually exclusive?: “No, but it’s incumbent upon retailers and those of us in business to protect consumers’ privacy and we need to do a better job of it. Broadly speaking, we do pretty well, but it seems like every month or so somebody comes along with a mistake. We need to make sure that we are surrounding that data in the very best possible way that we can because consumers are willing to share. I, as a consumer, am willing to share my data with someone, but I expect in return that they’re going to protect me from the bad folks out there.”
Kathy Ireland, chairman, ceo and chief designer, Kathy Ireland Worldwide
On customer centricity: “Customer centricity means listening more than we talk. It means serving our customers on an individualized scale rather than an industrial-sized one. It means being an anthropologist and really understanding where people are and what their needs are and serving them accordingly.”
Name an innovative retailer — emerging or heritage: “Oh my goodness I mean I’m always looking and learning how people are moving in this exciting time of retail. So much change. Terry [Lundgren] is a great example. My Macy’s was discussed [during the conference] today by Terry and Marvin [Ellison]. Just innovative new ways serving customers.”
Retailer you wish could stage a comeback: “It always breaks my heart when a retailer closes its doors. Not to name any specific names, but being in the industry this is our 26th year and we’ve seen a lot of doors close, particularly in 2008 when we had the economic crisis. For every door that closed, I wish they had stayed open. What I’ve seen is the retailers who remain relevant are the ones who anticipate change and initiate change, rather than are just forced to react to it. A lot of businesses they’ve been around for generations and they’ve always done things a certain way, but just because things have worked in the past a certain way doesn’t mean it’s going to work today or tomorrow. So really being anticipatory is critical to success.”
Most interesting aspect of how the Millennial shops today: “Millennials. Love Millennials. I think they are entitled for sure. They expect a lot. They demand a lot. They want to know the hows and for us we love that because, for us, that’s how we built our brand 26 years ago. It was the how. It’s what’s going on in the factories behind the scenes? How were people treated who are making this pair of socks? What are the ingredients going into this product? How is it impacting the environment? Millennials they’re wonderful because they give us that accountability. I’m even more excited about Gen Z because this generation they’re smart. These kids are really, really smart. They’re born with technology and the insight that they’re exposed to is so much. So many competing voices and I find this generation to be more discerning. I find them not to be so emotional as far as what they react to. They want to see evidence and that’s good. I see them as less vulnerable.”
Privacy and convenience. Are they mutually exclusive?: “It goes back to serving customers. Being an anthropologist, listening to them. It’s really individual so for some people they’re just not going to want to give up their privacy. It’s difficult, but to serve both those areas we have to be really nimble. Brands need to be elastic enough to serve and really listen and it’s doable.”