In this first of a new series of The Road to Online Retail podcasts, international retail sales and marketing guru and the Chairman of Toys R Us Aus/NZ/UK, Kevin Moore, reflects back on the impact covid has had on the online and physical retail environment and also what trends he's spotting for retail around the world.
Yes, it's been a very tough couple of years with a lot of the physical retail environment being "hollowed out", but that's rapidly advanced the adoption of online retail. However, it's also having a positive "reinvigorating" effect on some aspects of the physical retail world. There are lots of opportunities out there if you know where to look...
EPISODE 1, SERIES 2 TRANSCRIPTION
23rd February, 2022
Nigel Miller: Welcome to the second series of The Road to Online Retail.
In the first series, we focused on the second age of online retail and how, in this second age, it's even more important than ever before to stand out from the crowd. In this series, we're going to continue that deep dive with international retail marketing and sales expert, Kevin Moore. Welcome Kevin.
Kevin Moore: Thank you very much Nige.
Nigel Miller: Now, we started this podcast two years ago, pretty much, when COVID first kicked in and COVID was having a dramatic effect on retail at that point. What's changed over this two year period?
Kevin Moore: So importantly, it's having a dramatic effect when these are drama, negatives, and a dramatic positive effect on retail and a dramatic negative effect on retail, depending on how prepared you were as a leader and how open-minded you were as a leadership team or as a business owner to embrace the accelerated change the accelerated acceptance of all things online by shoppers.
So there are a lot of positives, a huge number of positives have come out of this. And some of the negatives, we talked about the fact that early in this, that a lot of stores wouldn't make it and a lot of stores haven't made it. They've gone. They're not here. And the stores that remain are smaller, more focused and have a much, much wider online offering to be successful.
So there were a lot of good things have come out of this. It wasn't just a, a bad thing.
Nigel Miller: And in the world of online for online retailers, what's changed for them in this period of time.
Kevin Moore: Let's sort of talk about retail. So I think the key thing about, you know, the, the beginning of, of 2020 and the beginning of 2022 is in that time, it's all retail.
Nigel Miller: Yeah. Yeah.
Kevin Moore: So we used to have this thing. I have physical retailers and bricks and mortars, and there's online. It's all retail. And we've seen this because the behaviours of physical retailers who have gone out and acquired online portals and businesses to accelerate, um, their position because they bought shoppers who are comfortable and trusting of those domains.
And we've seen it because online retailers have bought defunct brands, that have gone under that were retail brands that people trusted. They walked into their stores and they loved them. So it's now just become to this point where, when we're talking retail, it is retail. If I'm a shopper, I wish to shop with you, your brands, the products you offer and I wish to shop wherever I choose to be. I want to go to a store and I will tell you some great stories about just how powerful physical remains when done properly, but I want to go to physical stores when I choose to, when it suits me. I also want to shop online with you. When I choose to when it suits me and I want to be able to have it sent to my home, collected from you and in one of your stores.
I want to not even leave my car in some, some click and collects. So it's this whole shopper-centric in the true sense, the word, whatever the shopper wants to shop, I can have in the ether or in a physical store.
Nigel Miller: The old buzzword was omni-channel retail. That was sort of like the "holy grail"! Has this actually appeared now?
Kevin Moore: Yeah, I think it's the whole Omni channel is now it's just retail. Um, and I, I think that's, that's, what's brought it together. Some, some great writings. I always refer to Howard Saunders, and follow the guy. His views on what's happening with retail. He did a beautiful blog all around what physical retail owes to online retail and how it should be thanking online retail for what it's brought and injected into physical retail.
Paco Underhill has just wrote a beautiful book about consumption of food and how we eat and why we eat and why food is important and how we get that again, online and physical.
So physical, cause we're buying it for home or physical, cause we're consuming it out of home or online because we're having it delivered to our homes. So there's a lot of really good thought, being expressed and being shared, around the world, on where we find ourselves now.
Nigel Miller: And before we dive in too far into sort of general stuff, what's happened to you specifically over the last two years as far as businesses you've been working with, what have you seen in your own personal experiences?
Kevin Moore: When you ask that question, straight away I think about 10 companies. 10 companies that I'm involved in, in some shape or form. I'm either working alongside the CEO, a managing director, general manager , or I'm a shareholder in the business or, I'm a director of the company or all three in some cases.
And what I've seen is that those who are still standing today and still standing, so some of them went through a tough time. Those who are still standing today are in great shape because they have been able to understand, much overused words, we've heard pivot, they've been able to pivot their businesses.
Some of them haven't pivoted, they've just accelerated because shoppers are accepting of what they did and more shoppers have come to join them or their existing shoppers are buying more from them. There's a great story, I won't share the company, but was a great meeting that took place in the U.S. with a major physical retailer.
And they said, "you know, inside your business, in this particular category, your shoppers, who come to your stores, buy $32 billion worth of this category! Just not from you!" (Laughs)
And the CEO went, "What?!"
"Yeah, yeah, yeah. Just not from you. So how do we help you? They're buying it and they come into your stores and they shop on your online, but they're not buying it from you. So how do we help you do that?"
So these are the things where you can open your mind. To access a category back in the day, you had to stock and build extra space and whatever, well now we're shrinking the space. So all of the businesses have done well. They've improved.
Their cost base has changed significantly. It's got more expensive to employ people. It's got more expensive to freight things. No matter what part of the supply chain you're in prices have gone up and they're not going back. They're not going down. Somebody asked me the other day, Hey, do you think prices are going to go down?
They import from Indonesia and India and China. And I said, "No, no, no, no, nobody's giving back price. Whoa, it takes us so long to get price. We're not going to give it away, not give it back. One of my children in-law brought a Hyundai. They ordered it in early 2021 and they got delivery of this in late 21.
And the time they ordered it to the time the new one appeared on the lot, went up from $60 to $80,000. That's a 25% increase. Now, Hyundai aren't giving that money back. Nobody's giving that money back, not in airlines, not in hotels, cost of hotels have gone up, everything's gone up and that's why we'll see price inflation.
That's why we're seeing all of the central banks around the world saying clearly, "you know, we're no longer allowing money to flow as easy as it did and that's all coming back and that's a bigger picture, Nige, which kind of takes me on to the thing we talked about, about retail assets, physical assets, real estate. And we'd might touch on that a little bit later, but the some phenomenal, big picture, seismic changes taking place around the world because of this change in retail and online.
But I got excited my arms away. If you can't see me listeners, my arms are waving. I love this stuff.
Nigel Miller: Kevin's arms are waving so much. He's got a fan on his ceiling and I'm a bit worried he's going to actually touch it at some point.
Kevin Moore: I'm in a Queensland summer. It's beautiful. It's, it's a hundred degrees outside there in 92% humidity.
Nigel Miller: Yeah. I'm in a New South Wales summer, and today we've got rain, but it's lovely because it's cooled down at last.
Okay. So how well have some of your businesses done compared to what you would have been projecting pre-COVID?
Kevin Moore: I guess the key ones, if we start at the largest scale, in terms of reach and brand, the Toys R Us business in Australia, New Zealand has gone from strength to strength and the investment in robotics in our warehousing has changed everything. Our ability to market more widely to tap into a database of it's now 1.2, 1.3 million shoppers, and this is all public company. It's all...
Nigel Miller: Well, that's one of the big changes. It became a public company in the period.
Kevin Moore: Yes, to get access to capital, to do the things it needed to do and having done that and proven the model, proven the model that you can take a physical brand with phenomenal goodwill across every part of the stakeholder base. So when you take a brand that suppliers love, shoppers love, employees love, everybody loves it. It never did a bad thing to anybody and you bring it back again in a different form. The support you get is unbelievable. Support from suppliers has been amazing. Support from employees, four, five, six hundred people want to rejoin the company cause they had a great time, a great career. It's a beautiful brand. So we, we proved the model, um, access to capital you're able to do the things that you, you need to do. We've proved the model and the business continues to grow very fast and on the back of that, because we've been the test case for Toys R Us Kids in WHP in the U.S. We pitched for and won the UK license. So we're now Toys R Us Australia, New Zealand and UK.
The reaction in the UK has been just unbelievable. I mean, we knew it was going to be good. We did no PR, no media and the spontaneous reaction, it ran in media, every form of media, it ran in old fashioned print media, online media, it ran in in categories, it ran in everything, and it from the national newspapers, so, the Daily Mail, the Sun, the Independent, but then in regional press , The Nottingham Post,, just amazing the response. So it's, it's really resonating because people love the brand. I mean, spontaneously 25,000 people have signed up to be subscribers. So that's been a, a real win. How to understand and the belief, I mean, in all stakeholders for the brand owners to trust a management team to take a brand and to bring it back to life.
So the brand had been removed from both those markets. It didn't exist in the UK and it didn't exist in Australia/ New Zealand. To allow a management team, to share their vision, to buy into their vision and say, "Yeah, we believe you can do this" to bring it back as a digital first. So lead with online and then develop some of the most beautiful experiential stores, which again, we'll talk about more and more what's happening around the world with experiential, the investment in very, very high, fewer, but very, very high quality retail outlets, which are, you know, you just want to, would you just want to hang in them. You just want to be in them and your shop, your shop, but you want to be in.
Nigel Miller: I'm intrigued. So I'm looking forward to learning more about that.
Kevin Moore: The events business in Singapore. So again, when we talked about that, it looked like it was going under it didn't, again, it pivoted the CEO, Andrew MacArthur Edwards, and his team did an incredible job with that. It now runs some of the, I would humbly suggest, some of the best events software in Asia. Um, I don't think anybody close to the event software and how good it is. It's running events across 27 countries at a time. It's got some incredible clients. It used to win a client a month, it's winning, you know, eight clients a month, and they're big players, they understand that they need reach in Asia, you know, multiple languages, um, that business and that team have done an amazing job.
Nigel Miller: It was a physical event business that's now pivoted to offer events through online software?
Kevin Moore: Yeah, so it, it built its own software, but actually we bought the development company, they worked with us and then it was going so well we bought development company and they're now part of our team. So we now run hybrid events. Um, we've got some, uh, when people like Marriott who run, I think it's 4,500 hotels and venues across Asia.
And when they say I get what you're about, and then they want the software and they, they actually say to all their event companies, we'd like you to use this because what they can do is they can bring alive this whole hybrid thing. So, you know, physical events, online events, they're events! So I think that's the thing that we're seeing, no matter how you use that term, it isn't just, there's the old way of doing it and the online, it's now just what it was.
It's just that the online has allowed people to deliver it in ways that they never could. But when they turn around to all their suppliers and say, guys, please use this because what we want to do is we want 2000 people in an event at Marriott hotels across the whole of Asia. And what we want to do is to have a thousand of those people, physically in our events, eating in our venues, eating the same food, seeing the same event, the other thousand may be in their offices or at homes, but we can create an event with exactly the same feel across our venues across Asia.
So that again, people are opening their minds to do things in different ways. We're seeing the same thing with all the tech companies are doing a great job of harnessing it. Um, so that's a great one.
Online, Tulloch Wines, brilliant what they've done. They've just improved where they've been with their businesses, Digital Mavens is doing well. So there's a lot of good stuff going on.
Nigel Miller: Just going back to Tulloch for a second, I mean, that's a business that basically would have relied on Cellar Door for a vast percentage of their retail previously. How does a relatively small business push online into what's already a fairly crowded market and make a difference?
Kevin Moore: Well, Christina, first of all, Christina Tulloch who leads that business and had the team around her embraced the digital way before COVID way before the pandemic. They understood that it was important that they had a physical, single, physical location, and they had to reach people in their homes. So you worked with, with Christina, you saw that the quality of the work that was done and having the destination which won Cellar Door for I think three or four years in the Hunter Valley, which is a big deal. There's some incredible investment in those Cellar Doors in each of the valleys around the world, the wine valleys around the world. But what happens is you create this amazing place, you take it into people's homes, they can see how amazing the wineries. They can see you picking grapes at certain times of the year. You can see them budding and flowering. You can be inside the venue. So they were ideally prepared for people to say, you know, I want to continue my relationship with you, I'm going to buy more of my wine from you. I can't go physically to a store, so, whereas I'd buy six bottles from your 12, I'm not going to buy 18 or 24.
Nigel Miller: So, do you do that by just ramping up your digital marketing as in, send out more newsletters?
Kevin Moore: I think it's subtler than that, I think the same thing we've seen with Toys R Us and Babies R Us, what you do is you, you retain that relationship and you share more thoughtful content that people go, "Yeah, you've caught my attention", you know, awareness and engagement.
If it is that good, people just want to be interested. They want be there. We haven't touched on which we're going to touch on at some point, we're going to touch on the whole of the streaming in retail, which is just going off in China, is going off around the world but I'm running all over the place cause there's a lot's happened Nige since we last recorded the podcast.
Nigel Miller: Yeah. I've been doing some work with a fashion business here in Sydney called Carolina. She's a lovely lady who,
Kevin Moore: Yes, yes. Yes.
Nigel Miller: Basically Colombian, brings in a lot of products that are made in her factories in Colombia, et cetera, great quality, but she uses to amazing effect influencers. The difference that's made to her business is huge as well.
It is bizarre that people are obviously online more they're watching stuff everywhere, Instagram, Facebook, whatever. And then if they find something they're into, they go for it!
Kevin Moore: But also they find somebody they trust. If you trust the brand, - seeing that with Toys R Us and Babies R Us - you trust the brand or you trust the person. And if the person says, yeah, actually I, I rate this, it works, that's a key part of it. The other thing that we've seen, and we've talked about this before, it's all broadcast media now. There are 10 million television channels. 10 years ago, there were a few but 10 million. There aren't but anybody can broadcast. We're broadcasting.
Nigel Miller: Yeah. Yeah. And I have to say, as a producer, a video producer of many years, I'm quite intrigued by how successful some of these people are in growing businesses. I've, for my sins, during COVID got into golf. There's this guy in the UK, who's golf channel I absolutely love. A guy called Rick Shiels. And he's got just gone over 2 million subscribers and it's just a guy being authentic and genuine about clubs , about how he plays and helping you improve your shoots. And I look forward to watching the videos.
Kevin Moore: And we've seen that everywhere. The ability to, to reach out. I did a review, so Finding Cadence, when we first started, it released its first single, on one of our first podcasts. It's now done 15 and I was doing a review of the guys who are on Distro Kid and looking at all the distribution channels and we're up to 300 different streaming channels around the world and you look at people listening in Ireland and in Germany and in, you know, in Spain and it's crazy. And there's just three blokes on the Gold Coast with some instruments and an old mixing desk. So it has changed everything. To be able to distribute content and have a wide enough audience, a global audience, that is truly interested.
And when we say that, remember there are big chunks of the market that is still tough to get to because of the, you know, the great firewall of China and because of the markets that just, just block you out, but there's so much appetite for content. And I think in your role now, you never dreamed to be able to publish to the world.
And that's what we do now.
Nigel Miller: I'll give a quick example. So when I first started in production back in London, many years ago, to make a video, we'd have the producer, the director, the camera operator, the camera assistant and the sound person as a bare minimum onsite. And then the editing was a really laborious thing of linear editing so every change took days, basically. And then you go into the online edit and, you know, spend hundreds of pounds an hour, have an editor, an edit assistant, millions of pounds worth of gear.
And then a couple of years ago, I was called at about eight o'clock in the morning saying, "Hey, can you come into our head office? We need a video made and it's gotta be in Switzerland by tonight." And by the evening I'd sent a video with full effects, graphics, everything, which I'd shot in the morning, turned around and distributed to Switzerland, and I thought, "Well, A) that's why we're a lot cheaper now than we used to be. But B) crikey!"
Kevin Moore: Yeah. And, and that's the thing, it's the ability to be able to do it, the functionality of it and high quality. I mean, I sit in front of you we're on Zencaster. I've got a state of the art Rode microphone and headphones and YouTube, you've got a mixing desk in front of you and it's, you know, it's not crazy money, not crazy money.
Nigel Miller: No indeed. And that's the point. I think the barriers to entry of a lot of industries have just vanished.
Kevin Moore: But I would like to humbly suggest that as with online retail, right from the get go, and as with anything as we get into the streaming, retail streaming, quality matters. So you and I did our original Udemy courses now five years ago, six years ago, seven years ago, we shot the first one. 2014.
And we said from the get-go it would be shot in high quality video, high quality audio. It was all about quality, quality. And Udemy said to us, when we first ran it, they reached out to you and said, this is beautiful work. It's still stands the time, Udemy Business is selling this to VW and to event companies and to hundreds of companies in America, because the quality matters.
So, yes, you can buy the equipment to do things more cheaply, more cost-effectively and you can distribute unbelievably because of our distribution networks, but the quality still matters. And if you don't do the quality, you don't cut through.
Nigel Miller: Okay, so crystal ball time. Looking ahead. We've gone through a lot of change. What's coming up? How is the retail industry morphing with time?
Kevin Moore: So I think it's happened already. So, if we look at different parts of the world, we're seeing, the retailers that remain are investing in very, very high quality digital assets to be able to provide amazing online experiences and it's just getting better and better and better. It's now not something that was in the, oh, we've got to do this thing. It's in the back. It's now their lead guys and girls are doing phenomenal jobs of keeping their brands front and centre. They can show more products and sell more products than they ever possibly could physically, which they're doing. That brings with its own amazing benefits and huge curses.
Nigel Miller: Give me an example, what are we talking here?
Kevin Moore: So a department store would previous have held, you know, 30, 40,000 skews. They can have a hundred thousand skews. They can have 150,000 skews. Some of those skews, stock keeping units, some of those items that they sell will never even touch their warehouses. They will go direct from their suppliers to our homes or to the store for click and collect.
So it's given the retailers the ability to all be category killers. They've all got the ability to sell a much wider range of product than they ever did. And the marketplaces taught us that. The marketplaces taught us that we didn't actually have to have the product in our own warehouses. So physical retailers are doing that.
So they're going into the space that the marketplaces had and they're doing it quite cost-effectively.
Nigel Miller: Does that make brands more important than ever before?
Kevin Moore: I believe it does. I talked about goodwill and I talked about quality and when you do one thing really well for a long period of time, people trust your quality. How you harness that, how you deliver that cost effectively, that's a business issue. But if you have that brand, I think you're able to do things other people can't do.
If you've come in and your positioning has just been on price forever. Price is a tough thing to hold onto. You can't always be the lowest price. Somewhere along the way something's being crimped or something's being short-changed, it's hard to do just price.
You have to have experience and range. And I think any of the major retailers who are in a category are now much, much better to compete today, ironically, than they were at the beginning of COVID with the marketplaces, with the Amazons and with the eBays and with the Alibabas, they're much better equipped to do it because they can have a wider range of product shipped at as good a price as some of the marketplaces.
Remember marketplaces for individuals are not cheap places to operate. We talked about this 16, 20, 22% cost of doing business if you're an eBay or Amazon reseller. So if you're a physical retailer with your own setup and you harness your supplier base and say, "guys, look, um, 10% of your skews I don't want to touch. I want them on my site, but will you ship them please? And I'll ship you boxes so that we have a good shopper experience when it reaches people's homes. So it's all branded." So I think they're in a much better position, a much better position. And the brand is important. The brand is important.
COVID's taught us how important the brand is.
I think the second thing they've done is they're investing in truly beautiful retail. I mean, some of the numbers I'm hearing that Hermes and Louis Vuitton and Tiffany are putting into some of their stores. So they've gone from having 10 stores in a capital city down to three, but those three are just beautiful stores. I mean, they're breathtaking stores. And when you go in there, you don't have to have it there, it can be delivered to you. They are places that you want to go. We've seen the same thing with Toys R Us: the Al Futtaim store in Dubai, unbelievable. We've just seen the store open in New Jersey. Beautiful.
So, the stores are so good, people want to be there. So, Toys R Us just opened their first physical store in the U.S. for several years. It's in a mall called the American Dream mall in New Jersey.
The American Dream Mall is a beautiful mall. It's how retail is going and I'll come back to this. So about 55% of the retail space in there is experiential. There are things going on. There are ice skating rinks. There are water parks. There are entertainment venues and only 45%'s physical retail.
Anyway, the store was opened. The first opening took place, which is a media opening, and the media went, this is great. And people turned up.
They then said, "This is going so well, we'll have a second opening!" To the second opening and more local shoppers came, this, this goes so well, we'll do a third opening.
Third opening came and at the third opening, a lot more shoppers turned up and it's trading really well. So the shoppers turned up, and there's a lovely young girl in the lineup to get into the store and the guy who leads Toys R Us in the U.S., Yehuda Shmidman said, "Hey, look, can we just come and video you and talk to you while you're here?" Little girl came over and they interviewed her.
Anyway, mum came over and started to chat with Yud and went "Oh, oh, I hope we have nothing wrong". She says "oh, no, no, no, this is fantastic. Being able to come here is amazing." And Yehuda said, "Look, I live in New Jersey, New York, which part of the state you from?" And she said, "We're not from New Jersey, we're from Florida. We've flown the family from Florida to be at this store opening."
That's the power of really good experiential retail. And that's what we're going to be seeing more and more of. Now we can shop online for those brands, but being part of it, that's the key thing. And we're seeing that again around the world, these investments in beautiful stores that people say, "I want to go and see that I remember that" - it's not gone. It's great that retail has this, this chance to come again.
Nigel Miller: And I guess it's sort of almost obvious because if we've got the hang of just shopping with a couple of clicks to actually get us to get off our bums and go heading off somewhere, there's gotta be a really good motivation to do it now.
Kevin Moore: Absolutely. And it's got to be an experience. I'm wanting it to be a great experience. I want it to be something I remember.
We talked about Bass Pro, when the first those stores opened, I can go in, I can fish, I can shoot guns. I can use a boat. I can go onto a lake and use a ski boat.
That's that's super experiential. And that's what we're seeing more and more. People want to be involved in that.
Nigel Miller: Sorry, but that's big business, surely? There's a barrier to entry to be able to do that?
Kevin Moore: No, no. So during COVID people have gone outdoors to shop around the world. Organic markets have gone off. I was at a little, a place called Bellingen, which is in the middle of, it's not in the middle of it's in northern New South Wales. It's a little tiny town. It's funky. It's laid back. It's got beautiful alternative people and the organic market there is out in the open in the show grounds mixed among gumtrees and streams.
I'm serious. Mean what better experiential! You go there, there's a big football oval is part of it, but there's a stream running through it. You shop amongst the trees. I mean, we're not talking about it, you know, a car park somewhere. And anyway, they've continued to trade. So the small retailers have understood that they want to be there because people want to go there. It's outdoors. It feels safer and it feels good. People are doing that.
So I think as an independent retail, as you're looking to revamp your stores and look at your lease locations, if you can't make them something truly experiential, and if your mall owner is not doing something to make that a truly amazing place, then you need to look around and, and change.
If you can buy, which you can do at the moment, if you can buy freestanding retail, that you can own that you can make the destination buy it. Buy it, because right now everybody's selling retail, nobody's buying it. Everybody's buying logistics and warehousing. So if you can do that and you're a business owner, do it, do it now, do it well. And make it a destination. Allow people to come.
One other thing on the big end of town, cause this is another thing that we've seen, it's gonna happen more and more. I talked about when, as a young man living above a pharmacy - a drugstore - in an old town called Harrogate in the UK, and it was a truly beautiful place to live. Above the pharmacy, the chemist, the drugstore was a two storey, huge high ceilings, staircase up through the middle of it and that's where the pharmacist and his family used to live in those days. And so live-above-the-shop retail.
In Asia, specifically Japan, we saw it in Hong Kong, live above retail has always been necessary because that's the way you live.
In most of the places where we have lands, so certainly North America, nobody lived above retail. We built strip malls and big shopping malls out of town and people didn't live above them. What we're seeing now is those sites, the value of them is not the retail below - I talk about American Dream - when 45% of your stores are physical retail everything else has to be different.
What we're seeing is those malls being either knocked down completely or people are buying them back quite cheaply, and they're starting to put residential above them. So there's a big shopping mall in Queensland, in the Gold Coast, so destination is called Pacific Fair, it's it's a beautiful mall, one of the best in the country. And the owner, the part-owner has just bought back the rest of the equity in it. And I believe what they're going to do is they're going to put up towers above it and we'll have genuine beautiful live above the shop. And it is a world-class mall. It's got to Hermes, it's got Tiffany, it's got beautiful stores. We will have that more and more. So those sites that have been shopping malls with nothing above them, that space is going to have value again. And we're going to build above it and we'll see it all around the Western World.
Nigel Miller: And it's interesting because obviously if you're a food provider, then you've got a ready market right above you. Whereas if you're out of town somewhere and people got to come and find you, then that's not going to work so well, it changes the mix basically.
Kevin Moore: It completely does. Yeah. This concept of people driving to go shopping, it's got to be an experience has got to be amazing. And we haven't got people back on roads yet, so when you do have people back on roads, again, it's not a heap of fun.
So if you live above a world-class mall, what a great place to be.
Nigel Miller: So two years ago, it's fair to say that retail was looking like a industry that was going to be decimated by the changes.
Kevin Moore: Hollowed out!
Nigel Miller: So what you're saying it's basically having a facelift and looks pretty buoyant going forward, is that right?
Kevin Moore: No, it's been hollowed out! So in the 24 months, the amount of retail space has shrunk, department stores that are left standing have not opened new department stores. They've closed many. They've given up the lovely space they had, they've subleased it, or they've said the landlords I don't want it.
So when we go into a department store, now it's much smaller. The best of them now have fewer stores, less space in those stores and their sales revenue has grown by a percent or two. That's great. That's an amazing thing to have achieved. So it has been hollowed out. If you go to the high streets and you go to the second and third tier strip malls, they're sad.
There's nothing in them. They're just hollowed out. Those who've survived are in better malls, better locations, creating better footfall, but not to be confused. They have been hollowed out!
Nigel Miller: Right. And so if you're in a high street, that's now got 32 charity shops because...
Kevin Moore: There it is! 32 charity shops and not a lot else. When you don't pay taxes and you don't don't pay anything for your products.
Nigel Miller: Probably too big a question, but how would you revive a high street? Is anyone doing that well that you've seen.
Kevin Moore: When I think of the most vibrant spaces, town spaces in the world, they're all in very old places. They're in Matra Souq, in Muscat, Oman. They're within the walls of Luca in Italy. They're in Deira Souq in Dubai. They're the old places that people want to be. The laneways of Melbourne are still vibrant, but it's retelling of lots of things, but not things.
It's a lot of food. It's a lot of entertainment. I think that's very hard to replicate in high streets that have lots of cars flowing through them. I mean, you can't get a car... well you can get cars through the streets of Luca, but a mate of mine lives in Luca has a range Rover inside the walls of Luca. I'll tell you what, that's hard when you've got two inches, either side of the vehicle!
We see it in Las Vegas in some of the malls, the enclosed malls in Vegas, because they're enclosed spaces and they're vibrant, but it's hard to do in a high street of a town where there's cars and buses and trucks and things moving through.
It's really hard to do.
Nigel Miller: Yeah, it's funny because I grew up in a village in England called Cranleigh. It actually used to claim to be the biggest village in England, and I think that's all up for debate, but they had a beautiful department store, not huge, but David Manns and had been open for 175 years and it's shut this year and I'm on this school Facebook page and the sadness from everyone on there is amazing. It's still shut because obviously not enough people shopped in it. The other thing with the village, growing up there was this amazing, amazing baker called Hibbs and an amazing, amazing butcher called Collins. And they did these sausages that the queue would go down the high street. Saturday morning, at the baker, the queue would go down the high street. They're not there, but why can't a business like that survive?
Kevin Moore: Well, they can, and as, as you're talking now, I'm busy flicking through my photographs and I met a phenomenal young man in 110 year old department store out in regional Queensland. And I said to him, cause I was shopping there and saw all this stuff and I said, "Are you online?" He said, "I took the business online." he's an employee. "I took the business on line eight weeks ago." So, I said "Show me. Shopify?" He said "Yeah, Shopify".
So we jumped on my phone and we started shopping and I said, "how's it going?" He said, "we're blown away". So, it can be done. This is regional Queensland, 110 /120 year old store. And then I walked around, I said "Are you involved with the family?". He said, "No, that old lady over there, she's one of the third generation, she's an owner."
And I walked over and said, "Hello,, I've just been talking that nice young man." She goes, 'Yes?". "So he's taken you online?" She says "He has. I don't know what he's doing. Not a clue, but it's going well." So it can be done. He took it upon himself, in a small town, in regional Queensland, in Australia to do it.
Nigel Miller: Good on him.
Kevin Moore: It's it's doable. It's all doable.
Nigel Miller: Yeah. Okay. So basically it's going to take more imagination and more creativity and probably more artisan qualities?
Kevin Moore: Yeah, but it's reach. So one of the questions that we used to ask of a mall is, you know, what's its local market area? How many people and what's the spend and they'd say, oh, well we've got a million people and they spend, you know, 3 billion. I don't know what it is but it doesn't matter anymore, really? What matters is that you can, as we're doing, you can publish to the world and you can sell product to the world and have a physical location.
Nigel Miller: So, what we're seeing here is there's a lot of change going on, but surely it's not easy to make some of these changes? Does government come into this? Does zoning come into this? What has to change to make retail even more vibrant?
Kevin Moore: Again, we've learned that government has also understood that it's all online now. So when we talk about a service, we have service centres that the government owned that nobody wants to go to. Again, there's no desire to stand in a long queue when you don't need to.
So government services are being delivered in a way they haven't been ever delivered before and they're being delivered online.
But when it comes to the physical changes taking place, so we're seeing changes in how contractors are dealt with around the worlds. So government's role at the different levels it's involved in, it's got a federal national government who are defining labor rates and defining how people work. And then down at the state or a regional level, we've got people defining where we are going to put infrastructure, how are we gonna develop towns, and then down at local area, we've got local governments saying, "and this is what you can, and can't develop".
And each level of government, where you've got two or three levels of government, needs to be aligned to understand that these things have to change otherwise, as you described, what we have is we have empty spaces in old high streets that nobody wants, or we have these terrible derelict strip malls and derelict physical malls, enclosed malls, that nobody wants.
So for people to be able to redevelop those and make them vibrant places, which has a mix of entertainment and maybe logistics is in there and people living above them and they're creating this, they need the help of government. So government has to say, yeah, I'm good with this. I do understand that if I don't assist you, if I don't help you develop, if I don't allow you to go above and build above the airspace on shopping malls, my community, my local government area, my voting community will not get the best from this. And I think that's an important part of it.
Money gets it! I mean money's flowing into those places and they're looking at the returns and looking at how it's playing out and money gets it. Um, so we'll see that more.
Nigel Miller: One of the other big changes of course has been distribution.
Kevin Moore: So in physical retailers, the requirement to get product out of factories into, into one's own warehouses and then into one stores. And that's been fraught with difficulties.
If you're online, there's a requirement to get them out of factories, into your warehouses and then into people's homes. And that's been fraught with difficulties.
I think if you look at a global scale, there is no impetus, there's no desire by the largest parts of the logistics industry worldwide to put more capacity into logistics. If you're in the shipping industry, it takes a long time to commission a ship and currently nobody wants to do it.
We had massive overcapacity, we lost a few shipping lines. A whole load of ships were mothballed, and they're not coming back in a hurry. So that pricing isn't going to go away.
Ironically, there's this whole concept of the Silk Road. So China's Silk Road, the ability to ship from China, specifically to Europe, but also into north America has been visionary and it's something that people were unable to achieve on a government level because in the Western world, you tend not to get the alignment.
The Americans can put people on the moon and they can send people to space because everybody gets behind the president. But when it comes to commerce, you're on your own. And the Americans create a free playing field for the best and brightest and most innovative people to create amazing companies, which they do amazing industries, which they do, but they don't, they don't get involved in creating the infrastructure.
So when you can put items out of a factory, a train siding into your factory in China, and that then runs, that box goes all the way to Europe, to Madrid, to Germany, to wherever it's going on the Silk Road, on a train, a 13,000 mile long train line. That's a game changer!
So that doesn't just allow the big end of town to ship into markets, it allows individuals to be able to deliver to those markets. Cheaply. People don't care if it takes 21 days. They don't care if it takes 21 days. I know it's coming and the price is right. So I think these infrastructures, rail, intermodal transport, so where a truck meets a train or an airplane meets a truck or a, a ship meets a train or a truck, they're good things and we'll see that more and more.
Further down the line, you've seen the phenomenal boom in independent businesses running their own single Toyota Hiace or their own single VW Transporter or Mercedes Sprinter, so you've seen that a huge last mile, last kilometre booming and we've got everything happening in between.
So logistics will play a huge part. We will see driverless as we go forward, even if it's just the night runs that we see for trucks, if you go to any country in the world and you look at the major cities, if you ever drive a freeway late at night, if you're in a car, you're the only car and it's just red lights in front of you and white lights coming towards you, as trucks are hauling things between cities. A lot of those can be driverless. So there's a lot of things coming that we can see.
Nigel Miller: Let's take this back to the small business. So if I'm thinking of starting as a retailer, I've got a great idea, or if I have been a little bit slow in my transitioning from just a fairly simple physical retailer, where should I be putting my energy and what are the things I need to get absolutely right?
Kevin Moore: So it depends which way you're coming from. If you're coming, starting a new business, 90%, I throw these numbers around, I don't know if they're right, it's a truism, it's indicative. 90% are starting online because they're able to say I've curated it and I can get to more people this way. Even if that's more people in my community.
They're not on one high street. I can get to the whole of my community, my community might be a million people, half a million people in my town, rather than just the people who come to the part of town where I open the store. And once they've done that, then they can say, do I want to have a physical location?
I've got to have at some point. OB Five, I talked the guy who owns OB Five just before Christmas, bought another skateboard.
Nigel Miller: Broken any limbs this year?
Kevin Moore: Not yet Nigel!
managed to damage a knee on a standup paddleboard, on a lake about two weeks ago, but it's okay. And I said, how are you doing? He said, come out, come out, come out back.
And I remember his first warehouse, now in his second warehouse, I looked at and went "wow. You got 10 times more stock than I saw you with 24 months ago." He says, "yeah, I've got to move again". But we're seeing him saying, well, once I'm doing that, I also want a space for people to come and skateboarder. I do want to be experiential. I do want there to be somewhere that I can bring it alive, not just the boxes. So he's moving in into physical.
If you've got a physical location as the department store in central Queensland, you then say, Okay, my move is towards the online. So how can I get more online? How can I liaise with my suppliers and say, look, I do want to buy double the number of skews I've bought from you. And every supplier wants to hear that, "oh, a growth retailer. How good is that? Let me throw my arms around you". "I want to double the number of skews, But I only want to stock half of them. I want you to, to ship them to my shoppers. Are you good with that? And find a way.
So those are the things that small businesses, " How can I do that? How can I take my physical store far more online? If I'm online, how can I have some form of physical presence that's relevant?" Not just another shop, not just another shop. It's got to have relevance.
Nigel Miller: But again with online, still not a case of build it and they will come. You've got to promote, haven't you?
Kevin Moore: Yeah. So again, you talk about influences. I believe the greatest influencer you can ever have is yourself. Look at Christina Tulloch, I mean, it took us a while to get Christina in front of the camera, and now she is brilliant and she'll stand up at an event with 150/200 people and she just holds the stage beautifully.
It took her a while and once she got into it and she'd been coached and she was confident and she saw herself from behind the camera, as well as in front of the camera, it changed everything. I think that that the best thing you can be is that person who says, this is what I'm curating. So you love what I buy because you've seen it now understand me and my motivations and what brings me alive.
So that's what we've seen with a lot of the streaming. So I go back to the Silk Road and where we see Chinese government assisting small business owners, startups, with their streaming to allow them to stream and sell online in real time so that people can see it, I mean, we've had shop TV forever, you know, forever. I can buy online. And this is now, again, 10 million shop TV channels. So we can now do that. So I think if you do that, get on boards, you know, get comfortable with that little circle light in front of you, with the microphone and, accept the fact that you're going to be broadcasting, get coached, make sure it's the best you can be, but I think that's the, the best thing you can do.
There's a beautiful business here in Australia called Three Birds, and Three Birds set up teaching predominantly women how to renovate and how to renovate, not interior design because it went beyond that, and they now sell courses online. Beautifully done. And the guys who started that, is a very successful business, 30, 40 employees now, but their digital reach is amazing and the quality of what they do is amazing and they feature in all of that, they are the stars of the show and their knowledge in those courses, $600 a pop, are bought by a lot of women to be able to assist them in renovating properties. So they're at the front of it. They're comfortable that that's where they need.
Nigel Miller: I guess we should be doing a little bit of promotion of our own here, which is that if you want to tap into Kevin's expertise, we do have The Road to Online Retail website, where you can see all the courses we offer.
Kevin Moore: Absolutely you can, and I've got to say Nige, I've been blown away, cause we again did a review of the stats. The number of listeners in America and the UK, yeah, I guess Australia, New Zealand and Singapore, cause you know, that's, that's our hood, but the number, the percentage of our listeners in the U.S. and the UK really does surprise me, it blows me away. So if you're listening in the U.S. and you're listening in the UK, thank you, makes a big difference and we're glad that what we say in our part of the world resonates with you and your part of the.
Nigel Miller: Yeah. And if you could either subscribe or give us a like, that'd be appreciated too. And if you want to see the website go to theroadtoretail.com.
Thank you for listening, now, Kevin music. Have you still been playing any music in the, during...
Kevin Moore: Oh yeah, absolutely we have. We're going to go out with our latest single which is a song called "Speed Freak" and "Speed Freak" is a song that's reminiscent of the 1960s in London. So people who ride motorcycles, which I do, and you do Nigel, we'll know that in London, there's an amazing place called ACE cafe, and it's still around today and people used to go then the Sixties and then right after Brighton.
What they didn't know, there was also a place called the Cellar Cafe on the banks of the river Thames in Windsor, where the Queen lives. Who knew that the Queen allowed motorcyclist in her hometown? And my mate, who's the lead singer and the lyricist, who writes all the songs, Bob used to ride a Triumph from the Cellar Cafe down to Brighton. So this is a song that reminisces all about the days of riding fast on little green lanes and through towns in England in the 1960s. It's called "Speed Freak".
Nigel Miller: Okay, we're looking forward to it. Thank you for listening.