Transcript - Steve Dennis
Season 4, Episode 6
Conversation with Steve Dennis, Author, Remarkable Retail
Joshua Williams: 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.
Visit retail revolution, podcast.com for more information, including full transcripts and follow us on Instagram and LinkedIn at retail revolution podcast, 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.
Christopher Lacy: Steve Dennis has over 30 years’ experience as a strategic advisor, board member, general manager and C level executive at two Fortune 500 retailers. He has worked with dozens of retail, luxury, technology and social impacts brands to inspire catalyze and design more remarkable as well as profitable growth strategies.
Steve signature "tell it like it is style" and eight essentials of remarkable retail framework makes him one of the industry's most in demand thought leaders. As a senior contributor to Forbes Magazine and with his insights regularly featured in Bloomberg, Business Week, CNBC, CNN, Fortune, Harvard Business Review USA today, and The Wall Street Journal, amongst many others, this revolutionary is igniting a new wave of retail and brand engagement.
Today, Steve and I discussed the reissue of his best-selling book, Remarkable Retail, How to Win and Keep Customers in the Age of Disruption, and we will also explore how retail can break the cycle of mediocrity and create the change it so desperately needs.
I'm Christopher Lacy, and this is Retail Revolution podcast.
Hello, Steve. Welcome to the show.
Steve Dennis: Hey Christopher. Thanks for having me. And thanks for that very lovely introduction.
Christopher Lacy: Oh yeah. Well you are a remarkable leader. So, it is no doubt that you would have written a book called Remarkable Retail.
So, before we talk about the book, I actually want to ask; thinking about your career what moment did you think, "I need to get this information out there and do it in this book form?" And I know you've done Ted Talks before. And what kind of prompted you to say, "I want to change what we're doing and how we think about it."
Steve Dennis: Oh, I don't, I don't know that I have a super compelling answer to that question. I think I'm one of those guys, and I've heard other folks say this, that I felt for a while like I had a book in me, and I just wanted to write one. The challenge was really coming up with something that I thought was going to be good enough and going to be helpful enough.
And so, I played around with a bunch of ideas actually for a number of years, but when I started doing more keynote speaking, four or five years ago, I was basically forced to develop a presentation and to have some, some fresh ideas. So that, that allowed me to kind of keep working on some of the themes. And after, I don't know, a year or so doing that, I started to sense that I had enough of a narrative and a framework that might work as a book. And so, then I just had to sit down and write the damn thing basically.
Christopher Lacy: I mean, that's amazing. I, I love reading books, but I don't know that I could actually sit down and write one.
Steve Dennis: Well, it is, it is process. I remember, you may have heard this, that people say, "well, you know, if you just sit down and write 750 words every day, then two months later you'll have a book." And I think the math of that works, but the actual doing of it, it's not always so, so easy.
Christopher Lacy: So, what can we expect to see in this updated edition of Remarkable Retail?
Steve Dennis: Well, a few things. The main thing, I guess, and what really prompted me to do a second edition so quickly after the first, is really COVID. I finished the first book really maybe two or three months before the pandemic hit. And a lot of the things that I was worried were going to happen to retailers that didn't innovate and we're going to basically put them ever closer to the precipice or put them over the edge. A lot of those things I thought, wow, you know, there might be two, three, four years for them to mount their transformation, but COVID really accelerated just about everything and collapse those timelines.
So one is, I felt like, okay, I've got to have a new point of departure for the advice to make sense and just deal with obviously some of the things that transpired. But the core ideas I think are pretty similar, but I absolutely spend time on what the implications are of living in this COVID economy. There are a couple totally new pieces of the book and a good chunk of it is substantially revised. Sucharita Kodali from Forrester's written a lovely forward. And so so, you know, in some ways it's a lot of the same ideas, but at the same time, a lot of it has been updated and expanded
Christopher Lacy: I'm going to read a portion from your book that I like, and we can unpack it. You said: "but we shouldn't lose sight of the fact that many troubled retailers are suffering from wounds that were largely self-inflicted over a period of many, many years. Far too much of retail is still filled with tired, old ideas and an abject failure to pursue innovation. Many of the retailers filing for bankruptcy or closing large numbers of stores have barely changed in over a decade." So, my question for you is.
Steve Dennis: Yeah.
Christopher Lacy: What was it, and what is it that kept retailers from effectively innovating? And is it the same that it was before COVID, as it is after, I mean, innovation obviously had to happen because crisis causes that. But do you find that there was something that was core to that mistake with all of them?
Steve Dennis: Well, it's, you know, it's certainly hard to minimize the impact of COVID. But I think if you look at, I mean, pick your favorite retailer that's been struggling, JC Penney, Macy's, there's lots of them, right? And I worked at Sears in 2003; spent a lot of time looking at other department stores and the department store sector was not a particularly good sector back then. And the challenges that needed to be addressed were pretty obvious. And this wasn't so much about e-commerce though, that obviously started to become more important.
And so most of these companies really, certainly the big ones that have been around for awhile that have had these long-term issues, you know, they just haven't changed very much. And now really what we see even before COVID, but certainly made worse by COVID, are cost reductions and store closings is kind of the solution.
And I always say Macy's problem isn't that they have too many stores. Their problem is fundamentally that they're not customer relevant enough.
Christopher Lacy: And the thing about customer relevance is, is it hard for a retailer to understand it? Because there's often people that they're like, well, the younger customer isn't loyal, and the customer is always changing.
If that were the case, then I don't know that there would be retailers that are getting it right. So...
Steve Dennis: Right.
Christopher Lacy: You have these eight essentials that go along with that, but why is there this kind of idea that we can't figure it out because the customer is always changing? Where does that kind of come from, do you think?
Steve Dennis: Well, I mean, there's an, it's like a lot of things that people like to repeat or in these generalities. I mean, there's an element of truth to it, but to your point, plenty of other companies figure out how to stay current with the customer. I think, you know, going back to the question of why some of these retailers haven't changed. I think there's an element of they just weren't doing their homework. They weren't understanding consumers well enough. They weren't understanding the potential impacts of technology or new competitors. So, there's kind of an awareness component that they just weren't doing a good job.
But I also see, and I talk about this in the book a little bit, even if you do a pretty good job of understanding what's going on, you still have to fundamentally accept the degree to which these changes could impact your business. And I think that's where, particularly as the pace of change has accelerated, and I'm talking really pre COVID, a lot of retailers just didn't fundamentally understand the degree to which they were going to become disadvantaged by their failure to change more aggressively. But ultimately of course, even if you accept this reality, for lots of cultures, it's really difficult to change. In some cases, that's a cultural thing, right? They haven't built a culture of experimentation. People aren't rewarded for taking intelligent risks. In other cases, they haven't invested enough in the right areas. In other cases, which I think is certainly one of the big issues with the department stores in particular, is they've got this massive investment in real estate in locations that are for the most part, fundamentally disadvantaged.
Christopher Lacy: So, what it takes to move such a cliché, right? But to turn that battleship, is really a big deal. And it has to happen over multi years, not just suddenly when you realize your business is especially terrible. In your book, you bring up the fallacy that e-commerce is 15% of the business. And your statement about, you know, just the size of large format brick and mortar businesses. And it's often said, brick and mortar’s still drives retail business, and that's true. But why is there that fallacy of the e-commerce percentage and how is that hurting leaders being strategic about their retail path forward?
Steve Dennis: Well, I actually think that particular statement, it sort of evolved for me over the last few years. When I first started talking about that, it was largely a reaction to what I would say was kind of the dismissive quality on the part of some brands and some frankly retail organizations and associations that would say, "well, you know, it's only 5%, it's only 8%, it's only 11%." Right? And they were just making it sound like it wasn't that big a deal. And they didn't have to worry about it. And the point I make making the book is really twofold. One is, first of all, that percentage that gets quoted in the paper is the whole industry, right?
Christopher Lacy: Right.
Steve Dennis: Not experience of any given sector. So, off-price retail e-commerce is less than 1%, gross reads 3 or 4%. Books, music, games is, you know, 60% or something. So, it's not particularly relevant just to quote a general number, because no one retailer experiences the average. Right? And also, the impact of losing business to a competitor, whether they're online or not, is not the same as keeping it for yourself. There's different economics. So, there's a little bit of kind of inside baseball around the financial dynamics and the different situations.
Now, what I think is even more important is even talking about the percentage of e-commerce is I think increasingly not nearly as important, because the fact is most consumers shop in multiple channels and a lot of what we call e-commerce today, isn't the e-commerce of old, which was basically kind of a new catalog, mail order catalog, where now you go to a website, you order it, and that comes out of a central distribution facility, and we mail it to you. I mean, that's certainly still a big part of e-commerce, but today e-commerce is online, pickup in store, curbside pickup ship from store. So, there's an aspect in that percentage, which is actually very much not possible to do well if you didn't have stores. So, I really think you have to look at the whole thing and not obsess so much about the general e-commerce percentage or even the e-commerce growth rate.
Christopher Lacy: Yeah. I mean, what you're saying is kind of how I always talk about omni-channel, which when someone says, “we want to do an omni-channel strategy." And I'm like, really omni-channel is just doing business now.
Steve Dennis: Right.
Christopher Lacy: Right. Like it's, it's not a thing anymore. It's kind of like, you couldn't do business without it.
Steve Dennis: Well, that's, what's actually kind of funny, I think. And I don't know, some people think I'm too harsh about this, but all these brands talking about, "Oh, you know, we're really going to invest in e-commerce now." and I'm like, well, where were you? Like, this is not e-commerce didn't. And this idea of physical driving, digital and digital driving physical, and customers cross channel behavior, like all this stuff. I mean, I was working on that at Sears in 1999. I was working on that in Neiman Marcus in 2004. Like, this is not new.
Christopher Lacy: Right.
Steve Dennis: But it's just like, you know, some day you woke up and discovered it and you think, you're the first person ever to find it or something. I don't know. It's just, I just think it's funny like how much press it gets. To me, it's more like, why weren't you working on this 10 years ago?
Christopher Lacy: Oh, I know. I think about it and I will never forget. I was working for Armani Exchange in 1997 and they were launching e-commerce and it was such a big deal in '97, they actually made us all t-shirts that we all had to wear in the stores. And it was this, the website. And it was just a wild at the time. And now when I still talk to companies and they're still trying to figure out their e-commerce platforms, I'm like, "Whoa, I'm 40 now."
Steve Dennis: Wow. I tell them, I tell the story in the book can actually, I mentioned it in the first edition, but I moved it up to the front in this edition of, when I was working at Sears in 1999, we had our annual strategic retreat and our CEO at the time, Arthur Martinez, made this pronouncement in front of the whole group that the future of Sears' brand success was going to be on our ability to meet the customer's needs anytime, anywhere, anyway. 1999. And that actually led to my being named a vice president of multi-channel integration. And so there are plenty of other problems at Sears at that time. And obviously things haven't gone, so, so well.
Christopher Lacy: Right, right.
Steve Dennis: Over the years. But, but I say to people, you know, like as much as people, bad mouth Sears we we're working on this stuff a long time ago. So, you think of a forward, and actually a good company, how do they, how do they miss this? I don't know.
Christopher Lacy: Yeah.
It's it's interesting, especially when you're a part of the stories that are happening. I think the way you probably view it with Sears is how when people talk about Barney, sometimes. I'm like, I, I was there, and I actually know the things we were doing.
I just like, you know, it's kind of that moment where you, you go, there are other factors that are at play.
Steve Dennis: Yeah, I did have somebody want to say to me, "Hey Steve, if you're so smart, why didn't you fix Sears? I'm like, wow. Sorry.
Christopher Lacy: I know there's always that person.
Steve Dennis: I also, it wasn't, it wasn't the CEO, which, but I think even if I did, I would not have been able to fix it honestly, but that's another story.
Christopher Lacy: So, chapter four, I have to tell you is, a chapter I enjoy quite a bit. Chapter four is titled "The Collapse of the Middle." And in that chapter, it's definitely a chapter. I think you committed to redoing as a result of COVID-19. Because in it, you talk about bifurcation.
Steve Dennis: Right.
Christopher Lacy: And I'd love for us to get into that right now. Cause I love that you talk about this and what that means and the shift it's done in retail.
Steve Dennis: Well, I started to notice actually, probably going back at least a decade that we were seeing this real bifurcation in performance. What I noticed was the growth was occurring both in terms of top line revenue growth, comp store sales, et cetera, as well as store growth, at kind of either end of the spectrum. So, one of the spectrums being more value-based retailers, so Walmart, TJX Costco, those sorts of places. The other end of the spectrum, either luxury retail or more kind of high-end specialty, and that most of the troubles were in this middle group that were not particularly value oriented, nor did they have anything really special in terms of product service. And so, I that's just something I started to pay attention to, and it just really continued to grow. Deloitte wrote a study, or did a study, on this phenomenon a few years ago that brought a lot more data to it.
And that started me actually very much led to this idea of Remarkable Retail, because I started to basically see, well, there's nothing really special about these retailers in the middle. You know, they're not, they're not particularly good at anything. And so, if you want better value, you've got lots of choices, or you want more convenience. You've got lots of choices if you want. Unique product, better service. We're willing to pay a premium. You have lots of choices. But it was just getting harder and harder in a world where there's more and more choice, more and more information. Very few things are scarce anymore, and you really can't get away with being average or in many cases, even very good.
So, that was what started to get me to say, well, you know, you really have to be remarkable and I'm using remarkable in the way some people may be familiar that Seth Godin does in his book Purple Cow, which is remarkable in that its distinctive, but also that people will literally talk about it. And I think, you know what we've seen pre COVID, but certainly in COVID is when customers have better choices and it's so easy to access them, their money goes to those retailers. And it's really difficult to win back that business once you lose it. Because I think it's the case that consumers don't switch in droves for a slightly better version of mediocre, you know, you have to really do something to win their business back. So, I think this bifurcation retailer performance has just continued. It's certainly driven by a bifurcation in consumer circumstances, because we've seen the rich get richer, the poor, get poorer and struggle more. And so, there's an aspect where wealthy people can afford the more expensive options. And there, unfortunately, no large group of, I mean, obviously this has been a long-term trend, but made worse by COVID, where you have a large percent of the population that's really struggling and just can't afford, in many cases, to shop at certain kinds of retailers.
Christopher Lacy: Yeah. your term of mediocre, I felt like I used to use that a lot when I was a leader. And in my head, I always thought, even on myself, I was like, I'd rather, it's just better to be either hot or cold, but there's nothing worse than being lukewarm.
Steve Dennis: Right.
Christopher Lacy: I want to ask you about, you mentioned scarcity and there is chapter in your book. And now I feel terrible that I can't remember it, but you, you focus on mass consumption and scarcity. And it was quite interesting to read your viewpoint on this because it automatically made me think about sustainability movements and how, when you can consume so much, how do you really keep this idea of scarcity?
Steve Dennis: Yeah.
Christopher Lacy: And the luxury industry revolves around the idea of scarcity, right? I mean, that's really one of the pillars of it. Do you think we can get scarcity back?
Steve Dennis: Well, I think it's, it's harder and harder. I mean, the general advice I give is, and again, it's where I think a lot of retailers lose their way is, they don't... they end up being pretty lukewarm. They don't commit. Right. And I think in retail, you have to fundamentally commit to cheaper, better, faster, kind of the efficiency side of the equation. Or, you have to go more into the more effectiveness, remarkable side and it's, it's really definitely the middle.
So, what I think is very challenging for the vast majority of retailers is, and I say this a couple of times, I think in the book, you know, you're not going to out Amazon, Amazon, or out Walmart, but Walmart. So, this idea that you are going to create something really special or scarce in trying to go head to head in aspects of those sort of businesses is almost a certain to fail.
So, I think the way you find scarcity, in many cases today, is you try to really hone your focus on a particular set of customers and a particular set of needs and wants, and really go deeper as opposed to broader. And I think that's hard sometimes for a lot of brands because of the push for growth. Right? I mean, if you think about some of the most special, I don't know, take Restoration Hardware, for example, they have a very clear, as far as I can tell, they have a very clear customer focus, style point of view, fairly narrow and they stick to their price points. Now could Restoration Hardware try to be 10 times as big? Perhaps, but to do so would be to open up the aperture, so to speak on customer income and customer style and perhaps other products and so forth. And then you start to lose. What makes you special?
So, I think you have to be really, really careful to have that lens on who's this for? What problem are you solving? Or what story are you creating for them to tell about themselves? And not kind of regressed to the mean, which is, I think where a lot of retailers getting into trouble.
Christopher Lacy: I like that you use the, the example of Restoration Hardware. I am a Restoration Hardware guy. I love it. I love its aesthetic. And to your point, they do a very good job about being like, this is who we are. And, and I, I remember the evolution of Restoration Hardware. I mean, you used to go there to get doorknobs.
Steve Dennis: Oh yeah.
Christopher Lacy: But it evolved staying true to its DNA, I think, I think in a way.
Steve Dennis: Yeah. One of the most powerful things that I think brands can do, retail or otherwise is, is be able to competently say, "Hey, you know, it's okay, this is not for you."
Christopher Lacy: Right.
Steve Dennis: We know who we are, we're doing it well, and we don't want to dilute what we do. Now, I mean, if you're Walmart or your Costco, right, you have a very wide lens of purchase occasions and customers you're serving. So, I'm really talking about this more in the context of trying to create scarcity around a very particular point of view and business model. And you have to have the confidence in many cases, walk away from that business, which, you know, if you're a publicly traded company is not always the easiest thing to do, right? Because of the culture. Pressure for growth.
Christopher Lacy: And I think the idea really about that is always keeping it if you're a leader in an organization and you're thinking in that way is going, we know? That we're not going to be for everyone, but everyone is welcomed to try it out. Right? And so, there's kind of that feeling. And really playing with that the right way and committing to it really the right way.
I, and I said playing, but really committing to that the right way.
Steve Dennis: Yeah, I think that's, I think that's very true. I mean, there's certainly some businesses, I guess, that can get away with being, having like that snob appeal and, and keeping it secret. But yeah, it's hard to build much of a business with that as your premise.
I think the other thing too is going back a little bit to scarcity and why retailers have a hard time changing. I think the other thing is, this is not new to retail. Retail evolves considerably over the decades, right? It's just picked up pace. But I think, if you look at some of the retailers that did really well, five years ago, 10 years ago, 15 years ago, many of them, it's not necessarily that the customer changed that much, but it might be part of it, is that new business models emerged to steal / share. Right? So, if you're in the eyeglass business, you know, you weren't necessarily wearing about something like Warby Parker, right. That came out of kind of nowhere, but suddenly was a fairly big thing. And you can't let some of these disruptive business models take your best customers, right? Without some sort of response, whether that's acquiring them or doing your own version or changing your business. And I, and I think you can see, I make this joke; it's not really a joke, but I make this comment sometimes that there's so many of these retailers that like watch the last 20 years happened to them. And in some cases, it's what we talked about earlier, which is the advent of omni-channel and e-commerce and everything. But in other cases, there's just better business models that meet customer needs in new ways, or they tap into some sort of customer insight that perhaps they missed. So you really have to pay a lot of attention to these disruptive business models, particularly if you're really wed to a particular real estate strategy, because that's, you know, online is obviously a lot easier to shift, but if you're very rel brick and mortar and you know, it's not so easy to pivot from that quickly.
Christopher Lacy: As you were writing the book, first, I want to ask you, what was your favorite chapter to write and why?
Steve Dennis: I've never been asked that question. I, I would say the chapter on essential number seven: memorable.
Christopher Lacy: Okay.
Steve Dennis: Because, number one, that's the place where I get to talk more about particular retailer strategy. So, there's a little bit more storytelling case studies in it. And so that was kind of fun, but it also forced me to really think about, okay, what are the different ways that people put together memorable strategies? Because the problem, or the limitation, I think with a retail book is keeping everything at such a high level. Like, it's very hard to give good advice for a grocery store and a furniture store and a cosmetic shop. Right. You know, mom and pop big. So, so I try to keep the advice, hopefully, pretty useful for a wide audience. But that was the chapter where I got to did go down into more detail and think about different ways that people did it. And I hope that helps the reader look at it and say, okay, I see my, my challenge more in this particular approach, as opposed to something that might be right for a totally different kind of retail.
Christopher Lacy: My follow-up to that question is if you were to look at those eight essentials. And I'll, I'll say them for everyone right now. It's digitally enabled, human centered, harmonized, mobile, personal, connected, memorable, and number eight radical. Thinking of those eight rights now. And thinking about the landscape that we're in, what would you say to the majority of retail leaders that you would say, you probably need to look at this one right away at this point before doing anything else.
Steve Dennis: Well, I'll punt a little bit on the question in that I try to make the point that there is no one size fits all recommendation. And that really to be a remarkable retailer is about, these are the ingredients for a strategy, and so you've got to find the right mix.
Christopher Lacy: Right.
Steve Dennis: I'll also say that the first six, I think for most retailers that I can think of, are essentially table stakes. In other words, if you aren't pretty good at them, you're probably in trouble. So, if I had to answer your question a little bit more directly, I would say seven and eight, even though you asked me for one. Because I think those are really the differentiators.
So, memorable as we were talking about, or really what are those things that really distinguish you from the competition and create a really powerful story with the consumers you're trying to win, grow and keep. Radical is really building the culture of experimentation so that you can consistently, well, if you need to innovate, you can get started and make some things happen. But even if you are reasonably good at innovating, how do you keep that flow of innovation coming, so you can stay relevant and stay ahead of the competition.
Christopher Lacy: Thank you so much, Steve. It has been awesome speaking with you today. I have to tell you. I probably could talk to you for, for a lot longer, because there's so much I want to go into with you about your book. But I I'd love for you to share with our listeners how they can stay up to date with what you're doing and hear about the adventures of Steve Dennis.
Steve Dennis: Well, my adventures are pretty boring these days, but hopefully, hopefully that will change in the not too distant future. Probably the best way to get the more, most comprehensive view is check out my website, which is Steven with the V, P like Peter dennis.com.
But I also write for Forbes as a contributor. So, I've got articles going up there every once in a while. And then I'm just all-over social media, shamelessly promoting my book and other things. And I'm @Stephen P. Dennis on Twitter and Instagram. So...
Christopher Lacy: All right, Steve, actually, when can we expect, the new version of Remarkable Retail?
Steve Dennis: It will be out in the U S and Canada on April 13th and most other international markets, generally a couple of weeks after that. But you can pre-order it right now, just about anywhere books are sold.
Fantastic.
Christopher Lacy: Thank you so much, Steve.
Steve Dennis: You bet. Thanks for having me. It was just fun.
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