Transcript - Experiential Retail Post Covid

Joshua Williams: [00:00:00] Retail Revolution, a unique podcast that features in depth conversations with guest experts in omni-channel retailing with myriad perspectives, technology, consumer engagement, data analytics, merchandising, and more. We pay special attention to current sociopolitical issues and challenges and their implications on fashion retail as well as opportunities to innovate and rethink retail's future is at RetailRevolutionPodcast.com for more information, including full transcripts and follow us on Instagram and LinkedIn @RetailRevolutionPodcast. Retail Revolution is produced by Joshua Williams and hosted by Christopher Lacy. Both are Assistant Professors in the Fashion Management graduate program at Parsons School of Design. 

Naomi Kennedy: [00:00:46] Hello, and welcome to this bonus episode of Retail Revolution. My name is Naomi Kennedy and I'm interning for Retail Revolution podcast this spring. I'm a graduate student at Parsons School of Design majoring in Fashion Management.

In this episode, I want to explore brick and mortar retail and what it means to evolve with rapidly changing consumer behaviors, especially in light of COVID-19. Our host, Christopher Lacy once said "brick and mortar is not dead, but mediocre, brick and mortar is." With that said, I'm so excited to introduce our guest this week Kelcie Slaton. Kelcie's background includes a career with Neiman Marcus, where she held multiple roles, including assistant buyer. After this, she received her master of science and merchandising from the University of North Texas in 2017. After graduating, she started her PhD studies at Iowa State University.

She is currently a PhD candidate and will graduate this summer. In addition, she is a merchandising instructor at the University of North Texas, and a part-time professor for the fashion management program at Parsons School of Design. Her research interests include merchandising, consumer experience, luxury retailing, consumer behavior, and retail marketing.

So Kelcie, welcome. I'm so excited to have this conversation with you. And congratulations on almost receiving your PhD. 

Kelcie Slaton: [00:02:18] Thank you so much. Thank you so much for having me today. 

Naomi Kennedy: [00:02:21] Yeah, absolutely. So I'm really excited to talk with you because I've read one of your publications about consumer behavior and the rise of inventory-free brick and mortars.

Do you mind telling me a little bit more about your background and what interests you the most about this space? 

Kelcie Slaton: [00:02:35] Yes, definitely. So my background has been everything within fashion merchandising. So my undergrad, my master's, and now my PhD has all been within merchandising.  As you stated, I did do a stint in the industry with Neiman Marcus. And I was a buying office coordinator and then an assistant buyer. And I was looking at everything as far as online. And then I went into a store buying office and then we really kind of shifted to this multi-channel, omni-channel strategy. And so I definitely was able to see kind of in a larger traditional retailer, how it was a little bit difficult, especially when you were not built in the digital age. And so really that it has definitely shaped my research as I've moved into my graduate career and then obviously almost graduating with my PhD. So my, my area that I study in retail really focuses on this modern area of retailing and exploring how retailers can really innovate to have longterm business sustainability in a time of changing consumer preferences.

Naomi Kennedy: [00:03:45] Yeah, that's great. I think your point about omni-channel, especially with these larger retailers, we're seeing those difficulties now, especially with COVID-19 and this huge shift towards e-commerce. I mean, it was already there, but of course the pandemic totally accelerated that. So with that in mind, what type of store environment do you think fosters omni-channel the best and customer engagement, and how can retailers use that to their advantage and lead to profitability?

Kelcie Slaton: [00:04:14] Yeah, this is definitely an important question for all researchers and merchandising and retailers in general. And for me, I like to reference the Experience Economy, which was published by researchers, Pine and Gilmore. And so these two individuals were really the first to report that economic growth has shifted from commodities to goods, to services, and now to experiences.

So experiences in retail stores are really necessary as they play a key role in effecting the consumer's emotional response and consumption behaviors, such as engagement and purchase behavior, which of course can lead to profitability.  So what fosters consumer involvement best in a store environment is really one are actually a combination of what is called the four experience realms, or the four E's. And that is entertainment, education, escapist and aesthetic, which was also conceptualized by Pine and Gilmore. So really taking a look at these four realms, education is going to include any participation and absorption in an event, which is really driven by the consumer's desire to self-educate, or improve their knowledge and skills. So for example, a retail store can conduct a tutorial on how to properly apply contouring makeup. Or maybe have a brand representatives speak about a popular brand in the store. 

Entertainment is going to enable consumers to passively absorb activities and performances to excite or build some kind of desire over brands and products. So for example, maybe having a DJ present in the store or maybe incorporating elements that are going to engage the consumer senses.  

The next one is going to be escapist. And this really enables consumers to seek changes and novel experiences in order to escape from their everyday lives or their everyday environment. So for example, maybe offering beverages to consumers when they enter the store. 

And lastly aesthetic, which allows consumers full immersion into a retail space and overall atmosphere. So for example, an emphasis on the store layout or the use of transactions. 

And so I really believe if retailers can tailor to one or more of these elements in their store environment, they will see an increase in consumer engagement and overall profitability.

Naomi Kennedy: [00:06:33] I love that. I think myself as a consumer, like if I'm going to a brick and mortar store, which is kind of rare these days, you know, I want to have an experience. I don't want to walk in, maybe buy a shirt, whatever. Like, I would love to have like this all engulfing experience like you're talking about. Can you think of any retailers that you think are doing this exceptionally well? Like anything really innovative or experiential to your point? Do you have any examples? 

Kelcie Slaton: [00:07:01] Yes, definitely. So three different stores come to mind. So, the first one is Nordstrom Local. So this is a concept by Nordstrom and it is a small inventory free store that really focuses on the consumer experience and conveniences.

And so they have things such as a nail salon, a beverage bar, personal styling services, alterations, curbside pickup, I could go on. But again, it has no inventory. So I was actually fortunate enough to do my own research on this format and I was able to report two very interesting findings. So, first the Nordstrom local consumers find the brand personality of the format to be exciting as the store is really in tune with their wants and needs such as experiential and lifestyle factors that these consumers actually highly value.  And secondly, the consumers brand loyalty influences consumer purchase behavior, which in most research the opposite is the effect. So purchase behavior influences brand loyalty. So really the intention of Nordstrom Local is to build a sense of loyalty through the story's unique services and experiences, which will then lead to subsequent purchases completed through the other channels from Nordstrom Local. So really this has this implication that having no inventory in the store is actually viable because the consumer will ultimately purchase from the merchandise and their other channels. But they're really kind of brought in by this idea of the services and experiences they offer. 

Another great example that I can think of is a store called Neighborhood Goods, which is a retail destination that was created in the Dallas Fort Worth area. And it allows brands to test and explore their brick and mortar strategy while reigniting the sense of discovery with consumers through an elevated shopping experience. Again, we have experience here. So the store provides brands, a well-designed cohesive shopping environment that positions their products within this space in a very thoughtful and individualized manner.  So brands who are in this store received shopper data in the form of weekly reports and they have additional support services such as marketing and advertising, and also within the store, they have distinct food and beverage  offerings as well as regular planned events.

What's also really great about this store is that Neighborhood Goods also employs staff to support the business model and they are trained on all the brands that are focused on hospitality. 

And then the other store I'd like to bring up is a store called Reformation. And I really think the crowning achievement is their fitting rooms. So typically shoppers usually go into a store, grab the items they like in the sizes that they need, and then retreat to the fitting room. However at Reformation, there's only one of each item on display. So shoppers can add their items to the fitting room by requesting it on a model or an iPad or asking an employee to scan the barcode.

And so their clothes await them in what popular press actually calls a magic wardrobe.  So the fitting rooms are also outfitted with phone chargers, speakers, and a button that even lets the shoppers change the lighting, which I definitely think is a game changer for consumers in a fitting room environment.

Naomi Kennedy: [00:10:13] Yeah, thank you for that. I'm studying this subject as well for my own thesis at Parsons. And it's funny that you bring up Nordstrom Local and Neighborhood Goods, because those are the exact two case studies that I'm looking out for my own research. I also think that it's interesting, one of them is totally inventory free and then the other one is this kind of like hyper curated product assortment. So that, that duality is really interesting. And then your point about Reformation brings me to another question that I had. What other factors should brick and mortar stores consider in terms of consumer behavior. So I think that Reformation is a really great example of like introducing technology in to especially like the fitting room, but the, the retail space. And I think that we're seeing other types of technologies start to emerge you know, AR VR, these types of things. Do you think that these are trending technologies, something that's just really cool in the moment? Or do you think that there's longevity there?

Kelcie Slaton: [00:11:17] Oh, I definitely think there's longevity there. So retailers really have to ask themselves what does the consumer want. And it's really interesting because we are in a time now where consumers are really changing their shopping preferences and firms really need to have this idea of the customer orientation.

And so really to kind of look at your question and answer, in addition to transformative experiences that I just spoke about, brick and mortar stores really have the opportunity to do a lot of things that you talked about. So customized goods, fuse reality with technology and enhance their services such as personalization and convenience.

And so I truly believe this is what the consumer wants and really expect while shopping.  So the market is really saturated with competition and stores really need to think what can I do to stand out? So first I need to curate some sort of unique product offerings to differentiate themselves as consumers are really motivated by this need for you uniqueness.

And then second, technology, of course, is a part of our everyday lives. It's a part of the consumers' everyday lives. So stores really need to integrate technology within the shopping experience, such as using mobile POS or QR codes. And third time-saving and convenience elements are very attractive to consumers. And this can be seen with the increased usage of self-checkouts and buy online pickup in store. And then finally personalization is very important to consumers and retailers should really understand and be in tune with their consumer and focus on providing a customized experience based on their preferences.

And I truly believe that these factors will really and surely we get the consumer more engaged within the environment. 

Naomi Kennedy: [00:13:00] Yeah. Yeah, absolutely. So just to build on your point about personalization, I feel like this is a buzz word that we keep hearing in in recent times. So do you mind expanding on what you mean by personalization?

Because I think that, for me, what I think of there are, there are two ways here, like. One is like data tracking you know, understanding your customer's frequent purchases, where they're purchasing and how that can impact their future purchase behavior as well as store layouts, for example.

And then I also think of, again, to your point about uniqueness. You know, personalizing products. So I don't know monogramming or, or customizing a shoe or things like that. Do you mind just elaborating more on personalization? 

Kelcie Slaton: [00:13:42] Yeah, it definitely is. So I really think this is, I mean, yes, it is a trendy word. Right? And so I really think that online and really, I would say the omni channel strategy retailers have really been playing on this. So if they have a mobile app and they can track your spending and what you're buying. So for example, I hate to use a grocery store, but I think they do a really good job of this. The Kroger that I go to, they have an app and I usually will purchase my products on the app and then I'll do a curbside pickup. And when I go to rebuy, they always have my top products listed on the first page. And so that's a convenience aspect, right. They know me, they know what I am shopping for.

The same thing can be said with clothing retailers. They can track what I'm buying as far as my sizing. And so they can suggest sizing for me based on the brands are based on popular brands and how that can then shift to other brands that I may buy. So that could also be a really good example as well.

But really it's a retailer is looking at the consumers and just tracking how they're shopping. And so again, like you were saying, it's the layout, it's the type of products that they are offering to consumers. Maybe it's sales as well. Maybe they can see that maybe I'm not buying as much. And so, "Hey, here's a 20% off coupon. Why don't you come in and see." But again, they know me, they know my spending habits and I think that's really great. And, and you think about it. And you might've think, wow, that's, that's kind of a lot of information that a retailer may know about me. But I've done some interviews with consumers in the past and they love it.

You know, they were in a time now that, I mean, you can be tracked with just your cell phone. So they want, consumers want retailers to use this information and to know something about them, to then curate their store and their strategies completely to them. And they love it. 

Naomi Kennedy: [00:15:35] I think that's such a great point because this is something else that I've thought about, customer marketing insights and things like that. You know, you can ask a group of people. What do you think about this product? Or what do you think about this? And, and oftentimes what they say is a lot different from what they do. So I think it is so important to kind of guide your, your customer. Like "you've bought this in the past. I think that you'll like this." You know, kind of help out, especially with these like curated assortments.

I think those are really, really great points. Thank you. 

Kelcie Slaton: [00:16:07] No problem. Thank you. 

Naomi Kennedy: [00:16:09] Yeah. So all of this being said, just to circle back you know, we've seen brick and mortars evolved throughout the years. And again, the pandemic has just completely accelerated so many behaviors, but especially I think in the brick and mortar space, like even if we go to a brick and mortar store now, you know, there are stickers on the floor telling you where to stand. There's hand sanitizer everywhere. It's just a totally different way of interacting. So I'm curious, how do you think that brick and mortars are going to evolve? You know, when, and if we eventually ever come out of this pandemic. 

Kelcie Slaton: [00:16:42] Yes, I think that's definitely also another really great and important question that a lot of retail firms are probably asking themselves right now.

And so I think there's a few things that they need to consider post pandemic. So first, at this point, consumers, even non digitally native consumers have learned how to buy online and really experienced the convenience of that. And there may also be some consumers who are still hesitant to shop in stores after this is all over with. Therefore I think stores really need to focus on their omni channel strategy that we've been talking about. So for example, maybe have some investments in real time inventory tracking. And revamping the store to be used as more of a fulfillment center or a point for a buy online pickup in store or reserve online pickup in store.

 These are really conveniences that the consumer has become accustomed to in the current state of the world right now. And really playing on this idea of convenience, I also believe retailers need to continue to offer curbside pickup or maybe local same day delivery, as this has actually become the number one fulfillment preference for many consumers. I also would continue to offer a touchless technology in the store. And really capitalize on mobile payments and other convenient aspect. And again, the use of QR codes. And lastly, going back to the emphasis on omni-channel retailers now have access to more data than ever before. Right? We've also talked about that and this really does give them the opportunity to build these stronger relationship with consumers and create additional revenue streams for them. And these retailers can use the insight from this data to create the more personalized experiences and these offerings that the consumer truly does desire. 

Naomi Kennedy: [00:18:27] I am right there with you with all of these points. I think the most interesting one is the same day shipping. That's definitely something that I've been seeing more and more. And even when, you know, when I'm purchasing something online and I have to pay for shipping, like just regular, you know, ground shipping, I'm sh I'm like re in 2021? So I think shipping is huge. Returns are huge. QR codes are super cool. I'm, I'm right there with you. It'll definitely be interesting to see how all of this will shake out, you know, even in the next six months, it'll be interesting to see which retailers are really ahead of the curve and, and which ones are, you know, kind of struggling behind.

So Kelcie, thank you so much for your time. This was a really great conversation. I really appreciate all of your insights. If our listeners want to get in touch with you, what is the best way? 

Kelcie Slaton: [00:19:14] The best way is probably through email. And that is just kelcie.slaton@gmail.com. I usually look at that quite frequently through the day. And so it definitely encourage you to reach out if you do have any questions about anything that we talked about today or anything else as related to, to merchandising or retailing. 

Joshua Williams: [00:19:36] That's great. Awesome. Well, thank you so much, Kelcie. Thank you so much for having me.

Thank you for listening to this episode of Retail Revolution. A very special thank you to everyone who has helped make this podcast possible. If you'd like to support the work we're doing, please visit our show page at RetailRevolutionPodcast.com and click on the donate link. Our theme music was composed by Spencer Powell. Be well and stay tuned for our next episode.