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WAWGTDWATF - The Future of Retail
48 Plays10 months ago
Doug Stephens, bestselling author and retail futurist, joins WAWGTDWATF to discuss the future of retail and the major transformations shaping the industry. Drawing on decades of experience, Doug explores the interplay between physical and digital retail, emphasizing the shift from stores as distribution hubs to immersive brand experiences. He highlights the generational transition from baby boomers to younger consumers with different values, the rise of domestic Chinese brands, and the role of emerging technologies like AI and robotics. Doug also addresses challenges around education, workforce development, and consumer privacy, advocating for a reimagined retail landscape focused on societal well-being.
Keep up with Doug on LinkedIn
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Transcript
Intro
Introduction to Doug Stevens
00:00:25
Speaker
Today, our guest is Doug Stevens, a bestselling author and retail futurist. Doug, thanks so much for being here. How are you? i'm I'm well, thanks for having me. It's great to be one of your inaugural guests on on what I'm sure is gonna turn out to be a wonderful podcast series. Thanks so much, Doug.
Doug's Background and Retail Profit
00:00:46
Speaker
So just to get us kicked off, can you introduce yourself and tell us a little bit about your background and your current work?
00:00:53
Speaker
Yeah, absolutely. My name is Doug Stevens. I'm the founder of a company called Retail Profit. We're a Canadian company that works globally in the retail sector, and our focus is strictly on the future.
00:01:09
Speaker
of retail, ah the changing consumer, the changing technological landscape, changing economic circumstances, and of course, all sort of wrapped up in a very, very different media landscape. And I would argue that that's sort of how I came into this work that I'm doing now. I spent about 35 years in the retail industry.
00:01:33
Speaker
And started in the 90s, worked my way through a number of different retail organizations in Canada. And this is sort of in the days where you could do that. You could work your way up from the ground floor of a retail organization. There were enough rungs on the ladder. So I worked in operations, marketing, franchise sales, wholesale sales to large national and international customers, and eventually general management in both Canada and the U.S. I left corporate life like many others did, frankly, in 2008, 2009, just sort of on the cusp of the financial crisis. And it occurred to me at that time that we were seeing just
00:02:19
Speaker
ah To my mind anyway, unprecedented levels of change.
Recognizing Retail Changes in 2009
00:02:23
Speaker
you know In every corner of of life, the financial markets were roiling and the economic health of consumers was changing. There were massive demographic shifts.
00:02:36
Speaker
with the aging of baby boomers. There were certainly ah massive ah technology shifts. Of course, so Facebook and and social media ah became sort of an entrenched behavior on the part of consumers. And then, of course, we also had a very ah different and shifting media landscape with ah conventional advertising being overtaken by digital and So when you added it all up, it seemed to me that it was an appropriate time for someone to sort of climb into the crow's nest and and begin looking out further onto the horizon to understand what all this change meant ah from the standpoint of how the consumer would change, how the market ah globally would change, and then ultimately
00:03:23
Speaker
how retailers would have to go about crafting strategy to address all this change. And so that that was 2009. And we've been about 15 years now ah working globally with Fortune 100 and 500 companies ah and and really focusing on just that building strategy ah to make them resilient as they move into this a chaotic and dynamic future ahead.
00:03:51
Speaker
important work. And like you said, somebody had to crawl into the crow's nest and start to take a look at these things, right? Perhaps as a continuation of what you've just uncovered and and shared with us, what are some of the most significant trends that you're seeing in retail right now?
Future of Physical vs. Digital Retail
00:04:09
Speaker
I would argue that we're so we're really inundated with change right now. um But if I look at the things that I think are really ah causing a tremendous amount of of thought and and um creative work on the part of retailers. I would say that, number one, it's really this ongoing journey to understand the dynamics and the interplay between physical retail and digital retail.
00:04:44
Speaker
It's been quite an evolution. you know I think that um ah when I first began working with ah organizations and Laying out the story um that, to my mind, digital retail was going to actually overtake physical retail by what I felt was going to be as early as 2030, we would start to see the volume of sales online of goods ah globally begin to overtake that of physical retail.
00:05:19
Speaker
i was I was sort of labeled a lunatic, you know, back in the day. And shortly after that, I would say the industry began to understand, yeah, OK, we're definitely, um you know, companies that we were sort of blowing off as being profitless, um you know, wastes of time like Amazon. OK, they're for real. um They're here. They're here to stay. They're doing tremendous volume. So what does that mean for how we use physical stores. And we started to hear these terms omni-channel and cross-channel, multi-channel being used in the retail sector, this idea that
00:05:59
Speaker
that the experience for the consumer should be continuous, whether they're using digital, whether they're using a physical storage, should all be one sort of homogenous experience. And I would say that from there, we sort of evolved even further to the point of the way I saw it was essentially that what was really happening in the in the market was that we were seeing media in virtually every form, whether it was on a smart TV, a smart device, a laptop, tablet, a social media post, media was sort of becoming the store, quote unquote. You know, media increasingly was where we were going as consumers to get information about products, to thoroughly evaluate a purchase before making it. And then with increasing confidence, simply making that purchase online,
00:06:54
Speaker
And that if anything, physical stores were becoming less important as a distribution vehicle for products, but they were becoming more important from the standpoint of giving consumers tactile, immersive, ah involved brand experiences. So the way I saw it, media was becoming the store and stores were actually becoming a really critical form of media.
00:07:19
Speaker
And it was around that time that we started to see the advent of places like the Nike um the the the nike experience stores, these massive stores that were really like you know living advertisements for the brand. I think we've even evolved further now to understand that It's not that you you know you operate a normal retail chain and you have a few of these massive brand experience stores. I think that the market is is beginning to understand that really every single one of your stores needs to be.
00:07:54
Speaker
a brand experience store. That doesn't mean you can't sell products out of it, too. It doesn't mean that these two things have to be in conflict. But but certainly, um the the role of the physical store is very, very different today than it was. So that that would be one.
Shifting Consumer Focus
00:08:12
Speaker
I also think that it's fair to say that the vapor trail right now of Baby Boomers and their spending And the need for retailers to now turn their gaze to ah an entirely new segment or segments of consumers is also one of the most significant and biggest changes that the industry is dealing with. um
00:08:42
Speaker
You know, baby boomer spending was profound. it was It was literally historic. It had a tremendous impact on the retail industry. However, the entire generation now is over 60 years old. All baby boomers are over 60 years old. And statistically, by the time you're 50,
00:09:02
Speaker
you start to see a decrease in spending, especially on, you know, consumable items, consumer consumer goods. So we have an entire global industry now trying to reckon with the new behaviors of new generations of consumers ah who come with very different sensibilities.
00:09:22
Speaker
very different expectations of retailers and very, very different economic situations. That would be my number two. And then finally, I would just argue that we've seen also a tremendous change in terms of China's place in the world as it pertains to retail That's so interesting because I would think that China has been a significant player in the space for you know years, decades. But what has changed recently or what is changing now?
China's Transition in Global Markets
00:09:56
Speaker
Well, it's ah that's a great observation because you're absolutely right. I mean, we could go back easily 30 years and point to the point at which Western companies began to move production of goods over to China. And over the course of
00:10:13
Speaker
That 30-year period truly became the world's factory for virtually every product category. What we're seeing now, the transition now, is that China has recognized something important. It has recognized that, yes, it has enormous production capabilities. But it also has a massive domestic population of its own. It also now has a fully fledged and formed middle class of consumers who are open and willing and have an appetite for Chinese domestically produced brands.
00:10:52
Speaker
And so we're now seeing China go from being the world's factory to becoming a brand all on its own. And this is really having a massive impact on ah brands, for example, in the beauty sector, whereas Chinese consumers would you know, sort of default to European and North American beauty products ah in the past, a new generation of Chinese consumer is perfectly open and willing to try Chinese domestic brands. And so when we look at where the disproportionate growth in a category like beauty is coming from, it's no it's no longer coming from.
00:11:33
Speaker
the European brands or North American brands. It's coming from Chinese domestic brands. And we're going to see this across beauty, apparel, I'm sure um the automotive market at virtually every category of goods now is going to be impacted. And that's really going to cause some significant problems for North American and European brands because they have really been using China as a cash cow for the last 30 years in terms of you know their ability to sell their products into the Chinese market. Chinese now are turning to their own domestic brands. That's a big change. so i would you know i mean we could We could talk forever probably about just the things that are happening now, but I would say those those three things are the biggest on my radar.
New Frontiers in Competition
00:12:17
Speaker
Those are significant shifts and each are having a clear impact on the industry. Looking at some of these economic trends, some of these changing consumer behaviors that you've mentioned, what do you think will be one of the biggest challenges in the retail industry in the coming decade? And how would you suggest that retailers prepare for these challenges?
00:12:39
Speaker
So that you've sort of hit on what I spend about 80% of my time trying to figure out, you know trying to sort of read the wind and understand you know which direction the market is blowing in. I think that there's ah there's a really massive I'll call it sort of a subterranean shift happening as we speak. And it's something that I've just recently begun to sort of frame out and and try to provide a framework for retailers, consumer brands to understand. The one thing that every business today has in common, regardless of what they sell, even regardless of of who they sell it to or where they sell it, everybody has
00:13:24
Speaker
competition. every Every brand, every business has a competitor. For about the last, I'm going to say 70 years or so, competition and the kind of the the paradigms or the rules of competition in the retail and consumer goods market have been pretty understood and accepted. Basically that you competed on the basis of product quality, you competed on the basis of price or convenience or selection or service, you know, kind of these standard sort of pillars of competitive behavior. I believe we right now, however, stand on the cusp of a very, very different era.
00:14:09
Speaker
and And I'll just try and quickly explain what what I mean. If we go all the way back to the end of the Second World War, and I know as a futurist, I'm supposed to be talking about what's ahead, but I'm going to talk about i'm going to talk about what what's behind us for a moment, because it's really important. At the end of the Second World War, there was an unprecedented global bipartisan, so this was not about political affiliation, but bipartisan global investment. among democracies. So, you know, fascism had been defeated. The cool breeze of democracy sort of swept across the world and in places like Canada and certainly in the U.S. as soldiers came home from the war.
00:14:53
Speaker
ah There were incredible investments made in domestic industry, in domestic infrastructure, in education programs, in sort of kick-starting economic programs and housing programs for veterans. ah It was truly an investment made on the part of governments that had never been seen before in modern history.
00:15:15
Speaker
That kicked off an era of absolutely unbridled consumerism. By the 1960s, a few things had happened. Number one, the economic fortunes of the average Canadian ah had improved significantly. Basic things like owning a home,
00:15:34
Speaker
getting an education, ah having an automobile, having a good paying job with job security. These things became basic expectations where certainly pre-World War II, they had not been at all. But now you had the largest portion of the largest generation in history, the baby boom generation between the ages of five and 15. And anyone listening to this that has kids between the ages of five and 15 knows that that That's the age at which children need everything, right? More more toys, more clothing, more more games, more electronics, et cetera. So it was this incredible period of consumption. And what we need to understand as an industry is that we are now kind of living off of the vapor trail of that phenomenon. And it is coming to an end.
00:16:28
Speaker
Whereas education used to be a basic, call it almost an entitlement, that you felt that, you know, if I wanted to, I could go and go to college or go to university. I could afford to do that. That is no longer the case. Things that we take for granted, like democracy, the ability for us to wake up in the morning and know that we live in a politically stable environment. And whereas business people, we understand that we live in ah in a relatively stable political landscape, we don't have that guarantee anymore. We see what's going on in the US right now. The idea of domestic investment in infrastructure and in industry, again, is something that
00:17:13
Speaker
is no longer happening to the extent that it was. Jobs over the last 30 years have been offshored to cheaper economies. And even capitalism, you know capitalism that sort of leans into the middle class is no longer a guarantee.
00:17:29
Speaker
So as a consequence, we have now generations of new consumers who are struggling, struggling to pay for their educations, worried about the future of their political structures, you know bemoaning the loss of jobs to places like China, Mexico, the Philippines, et cetera. I mean, good Lord, we've been offshoring fast food jobs, you know customer service jobs in fast food. My point in saying all of this is that I believe these things, education, democracy, industrialism, and capitalism are the new competitive frontiers. I believe that just having a decent selection of products with a relatively good level of convenience, that is no longer a competitive advantage. It's a basic expectation. However, companies that can tap into this need for education, and I'll just use education as one quick example. So if if I was having this conversation with you 40 years ago, I would have said that, yeah, retailers enjoy pretty consistent, never ending stream of qualified, trainable graduates.
00:18:38
Speaker
ah coming out of colleges and universities, people that are willing to start on the bottom rung of the ladder and work their way up. No longer the case. We know that fewer and fewer ah people are enrolling today in college and university, that tuition fees are really shutting a lot of people out of education. And so as a consequence, that steady stream of bright trainable workers is is basically vaporizing now. And retailers that understand that and can actually work to create their own pipeline of educated workers are going to enjoy a significant competitive advantage. I'll give you one example of that. Walmart right now is beginning very slowly to wade into providing education to its employees. Target Corporation is now beginning to subsidize education programs for its employees. Google is actually creating education infrastructure so that you can, quote unquote, kind of go to school at Google, graduate and potentially get a job with Google in programming, in in AI. So we're coming into an era where the idea of a Walmart university that has a standing that is equal to or perhaps even greater than a Kellogg Business School or you know an MIT
00:20:06
Speaker
This is completely realistic now. Corporations are going to recognize that if we can actually create our own educated pool of talent, what an incredible advantage we will be able to have over our competition. And the only thing that they would look for from students is a guarantee on the part of the student that you will spend a to a term of duty, let's call it, with a Walmart or whoever builds this infrastructure. And if you do that, guess what? You get a free top-notch quality education and a start on a career. And I think that we're going to see more and more companies awakening to that. So that's just one example. But these new frontiers of competition I think are going to really be what companies need to be focusing on.
00:21:11
Speaker
To shift gears a little bit and to lean a bit into technology, what we've seen is a rise in emerging technologies and more specifically things like augmented reality and virtual try-ons. I'm wondering, one, how do you envision these technologies evolving? And two, how do they play into the impact on traditional brick and mortar?
Impact of AR and VR on Retail
00:21:36
Speaker
Yeah, great questions. I mean, again, it sort of plays to this this idea, this construct that increasingly in virtually every way, digital retail, it is becoming the store in our minds. It's the first place we go. When we're considering a product, we no longer jump in the car and you know head off to the the shopping mall. we We go to Amazon and about three quarters of all cases, we go directly to Amazon. If Amazon doesn't have it, we'll probably find someone else online that does.
00:22:07
Speaker
And the technologies that you're referring to, things like augmented reality, the ability to bring digital data into the physical environment or virtual reality to transport ourselves into the digital environment, these are only serving to further shape that reality, that the need to go to a store to do basic shopping things, basic shopping behaviors is simply not there anymore. You know, IKEA, for example, and others have been using augmented reality so that you can place furniture in your home, get a sense of what that new sofa would look like. Amazon is certainly using a lot of these technologies as well. So the confidence now that we have in buying things online compared to not even, forget about 30 years ago, let's talk about even 10 years ago, is dramatically different. and more reason why retailers really need to continue to so to ask themselves, if we are going to operate physical retail stores, what is it that the consumer is going to see, hear, feel, experience in those stores that they can't online? Because if if we're not giving them something that's actually worth getting in the car and traveling for,
00:23:26
Speaker
then then what is the point? you know We may as well just close those stores. So again, a lot of the work that that I'm doing with retailers is focused on exactly that. you know What is it that you can immerse the consumer in that does two things that really unfolds the brand story for them and makes them feel a part of that, but also really delivers on your brand promise and provides immediate value to that consumer so that they want to come back. You know, they want to do more business with your brand. That's where I spend a lot of my time actually working in workshops with ah various brands.
00:24:08
Speaker
That sounds interesting and exciting, kind of forming or imagining the future based on the information available to you now and the consumer trends and behaviors. So just to go down this road a little further in terms of technology and retail, I want to get your thoughts on robots. When I think about robots and retail, I'm thinking about the use of robots in factories like Amazon and that sort of thing.
00:24:35
Speaker
What are your thoughts about that? And where do you see that evolving in the next 10 to 15 years?
Robotics in Retail Operations
00:24:42
Speaker
ah Again, from the standpoint of context, important to understand that clearly robots aren' aren't new. um If you talk to anyone in the automotive industry, they'll point you back to the late 70s, early 80s, when we started to see robotics introduced on assembly lines. So nothing new. As it applies to retail though,
00:25:03
Speaker
I think there was an initial, um you know when we started to see the advent of robots in retail, there was ah there was tremendous amount of hype around the idea that it was going to be consumer facing, that you know robots would be roaming around the store and and pointing you in the right direction and offering product advice, et cetera. And there was one robot in particular that was really kind of making the rounds a little kind of humanoid robot called Pepper, the robot.
00:25:33
Speaker
I was showing up in you know malls and airports and that sort of thing. um I think what we've learned since though, is that ah robots up until this point, and it's an important caveat because AI is going to change this significantly. But to this point, robots have been reasonably good at handling relatively non-dynamic tasks.
00:26:02
Speaker
And customer service is anything but and a non-dynamic. Every customer has different needs. um you know People speak differently. They use different syntax. People ah have accents, and all of which is very difficult for robots to to process. um The point being that where we're actually starting to see the advent of of robots in numbers is on the back end of retail, not on the front end at all.
00:26:33
Speaker
ah And you pointed to Amazon's warehouses. In fact, our estimates are that by as early as 2030, and in fact, that might even be ah that that that might even be late,
00:26:49
Speaker
um we expect that Amazon is actually going to employ more robots than people. Yeah, and and it'll be um you know everything from ah monitoring warehouse activity through drones to the robots that are picking goods off the shelf, robots that are transporting those picked items ah over to human workers for packaging. and Eventually, eventually though the only humans in in an Amazon warehouse are going to be people there to maintain the robots.
00:27:21
Speaker
um um This raises some really interesting issues, um social, political, and economic. Number one, ah unions are terrified of this, um and they're pushing back on this really significantly because we're not we're no longer talking about a percentage of of a workforce being affected. We're talking about entire professions being wiped out.
00:27:47
Speaker
You know, that that we could see the the whole idea being a warehouse worker. people In 20 years, people might say, what do you mean? I don't even understand what that means anymore. yeah Because they're all robotic. um That also raises implications for taxation. If you have a thousand Amazon employees today that are being paid and paying income taxes on their wages, you replace those thousand people with robots, where does where does that income tax go?
00:28:16
Speaker
And so if you're if you're the US government, you're looking at this very closely and saying, well, what does this mean? Do we have to institute a robot tax? You know, how how else are we going to maintain roads and and maintain fire departments if if we're losing this enormous chunk of the tax base? It also raises ah really interesting questions around universal basic income. What do we do? Just kick a million people to the curb and say, sorry, robots got your job now, good luck. um Maybe you can scale up from being a warehouse worker to becoming an AI technician. I mean, come on.
00:28:54
Speaker
So we're going to have to really begin to seriously address the idea of universal basic income for people to at least prevent people from falling through the cracks in our society. And there are going to be a lot of people and a lot of cracks to fall through. So um it's it's an important topic, and it's certainly coming on real fast. And when when we start to commingle AI and robotics, now all of a sudden we're talking about, ah you know,
00:29:23
Speaker
piece of technology that begins to look and sound and act sentient, which obviously will accelerate the capacity and capabilities of these ah pieces of technology. And and ultimately, i they will make their way into the customer service world. um In what form, who knows? But it seems that the writing is definitely on the wall.
00:29:50
Speaker
Just with you bringing up AI and machine learning, before we merge it with humanoid robots, taking a moment to take a look at personalization. And I know that's a buzzword that has been around in retail for some time in other industries, but with the advancement of technologies like ML and AI.
00:30:08
Speaker
and having a really great use case for personalization with these technologies, I'm wondering what you think some of the potential implications are for consumers around privacy, their data, and how they interact with retailers.
Personalization vs. Privacy Debate
00:30:23
Speaker
It's a really contentious space right now. you know You have significant concerns, obviously, on the part of consumers. This delicate balance between wanting to enjoy conveniences. You want to enjoy conveniences. You want product recommendations to be tailored and personalized. You want a retailer to have some sense of context in terms of what are your likes, your dislikes, your preferences, your past purchases. um And yeah, sure, it'd be great if Amazon could become extremely predictive and be sending me things that I look at and I say, huh, wow, that's exactly what I'm looking for. The question is, what is the Faustian bargain that we have to make to come to that level of personalization? And I think that that's where it gets
00:31:20
Speaker
ah scary from a privacy standpoint and then also from ah from a legal standpoint as well. and Will we sort it out? Yeah, I think we will. Ultimately, the market is going to find sort of its equilibrium in terms of what businesses want and need and what consumers are prepared to tolerate and what governments are willing to legislate around. But I do think it's going to be a really litigious and awkward period of time ah before we get there, ah where there there certainly will be, and there we see it every day. There are all kinds of privacy infractions that are going on. ah The EU is penalizing businesses ah left and right for these kinds of infractions. Consumers may be up in arms about various data breaches and leaks. and So we're seeing the fallout now, and I suspect, as I say, we'll get through it. We'll find the equilibrium point, but it may take a while. Whether it's retail specific or not, what are you most optimistic about when it comes to the future?
Optimism in Retail Capitalism
00:32:23
Speaker
If I look at the last 30 years of of retail, I think it's been a relatively dark period, to be really frank. you know A lot of the things that we that we talked about, the idea that we' we've really just exported slavery. in North America. you know We went from the 1860s, the slavery associated with cotton industry, and we've really just sort of, we've redressed that. We've exported it to other countries where we could sort of institutionalize modern slavery. We've we've gutted the middle class in North America and Western Europe. We've you know exported many of the jobs that were associated with the retail industry. We have created an economy ah that is dependent on overconsumption. It doesn't just produce overconsumption, it's dependent on it. Costco's entire business model is based on you spending more than you should, buying more than you need. you know um And they're just one example. so
00:33:25
Speaker
I look at the last 30 years where some people might think it was sort of the apex of of retail. I look at it the other way. I think it's been a destructive period of time. And that makes me hopeful for the future because I think that once retailers really internalize the idea that the new competitive advantage of the future is going to be around rethinking capitalism that benefits most. It's going to be about rethinking industrialism that creates domestic opportunities industry and jobs. It's going to be about rethinking education and making sure that companies are investing in in creating educated workforces. when i When I think about those things, I actually feel that the next 30 years is going to be about healing the damage that we've done in the last 30, and that makes me incredibly happy.
00:34:18
Speaker
Yeah, that's a perspective that I don't think I hear very often. And so that also makes me optimistic. Where can people learn more about what you do or follow some of your work or stay connected to some of your ideas?
Doug's Contact Information
00:34:35
Speaker
Sure. Yeah. Well, the the mothership is retailprofit dot.com. Just about everything that I do and written three books on the future of retail dating back to 2013. The most recent book, Resurrecting Retail, was written in 2021 on the heels of the pandemic.
00:34:55
Speaker
So access to all the books, articles, blogs, podcasts, media work, everything is at retailprofit dot.com or you can find me on LinkedIn and it's just Doug Stevens with a pH.
00:35:09
Speaker
with a pH, amazing. Doug, thank you so much for your time today. It's been an eye-opening conversation, especially when we consider that retail touches you know every industry, right? it's not We're not just talking about fashion or wearables or consumables, right? It's kind of, it's widespread. So I just wanna, yeah, thank you so much for your time and and appreciate you joining our podcast today.
00:35:35
Speaker
It's been my pleasure, Rose, and I hope to maybe i'll I'll come back in a year or two when you have ah yeah millions of subscribers and we'll we'll do it again. Amazing. I love it.