So, what is the “second age” of online retail?
Well, it’s what’s starting around the world right now.
It is the accelerated migration of shoppers to digital retailing of all goods and services.
Are you ready to be part of it? Listen to this episode to decide.
EPISODE 1 TRANSCRIPTION
11th May, 2020
Nigel Miller: [00:00:00] Are you ready for the second age of online retail?
[00:00:08] And what is the second age of online retail?
[00:00:11] Well, according to international retail and sales marketing expert, Kevin Moore, it’s the accelerated migration of shoppers to digital retailing of all goods and services. Kevin, welcome. What on earth do you mean by that?
[00:00:25] Kevin Moore: [00:00:25] Well, the first stage was back in 1998 when a young couple drove from New York across to West coast of the States and set up Amazon. And that was about somebody selling just books online. That’s what Amazon was. It was a single product, a single proposition. You could buy books cheaply. And over the course of the last probably 15 years, we’re 21 years into this, 22 years into this, over the last 15 years, what we’ve seen is that focus on specialist online retailers doing more and more with products.
[00:00:53] Now that’s not to be confused. There were some very good physical retailers who’ve actually done a good job, and I’ll come onto those later on, but sadly, the vast majority of physical retailers have not been able to get their vision and their business truly aligned with the needs of online shoppers.
[00:01:11] They’re very much focused on their stores. They’re very much focused on the cycle of things they’ve done for many, many years. So they haven’t moved.
[00:01:19] As we say over the course of the last 24 months and we’re going to talk about COVID-19 and what it’s done to accelerate the process. What we’ve seen over the last 15-18 months is all goods and services are now shifting online.
[00:01:30] We’ve seen the boom in Shopify, and we’ll talk a lot about Shopify and the Shopify sites, people being able to set up sites quickly. We’ve seen the growth in the marketplaces with Amazon and eBay, Alibaba and numerous other local marketplaces around the world in different countries.
[00:01:44] And more and more people are able to sell, not to the world, but people are thinking about selling to the next post code, the next zip code, and again, we’ll touch on that in in greater detail, but it’s all goods and services. This is no longer the domain of somebody wanting to sell a product online to the world.
[00:02:00] Nigel Miller: [00:02:00] Okay. Just going to go back a tiny bit on something you said earlier. You keep referring to “the shopper”. Now, for years, I’ve been hearing you emphasize that it’s about “the shopper” not “the customer”! What’s the difference and why is the distinction important?
[00:02:13] Kevin Moore: [00:02:13] Yeah, it’s interesting. We’re finally starting to see the majority of media refer to people who buy things as shoppers, not customers.
[00:02:20] The term customer is all about being customary, that we do something and we set and forget and we do it over and over again. If we lived in a zip code, a post code, we went to shops where we had good service and we went back to them. We’d have a lot of choice. We couldn’t go to the cities and towns.
[00:02:34] When we did, when we travelled, we tried new brands. Shoppers are promiscuous people. We are able to buy from one place one day and somewhere else the next day. We can walk into a store, physical store, with the idea of buying one item and come out with another item. So shoppers are very promiscuous. They want choice, they want service, they want range. They want pretty good pricing but they will move from place to place. They need to be entertained every moment of the journey. You can’t just expect them to be customary and come back to you!
[00:03:03] Nigel Miller: [00:03:03] You’re actually a retail marketer and your key focus is on “the shopper experience”. Tell us about that and why it’s important to focus on, in both the physical and online retailing worlds.
[00:03:15] Kevin Moore: [00:03:15] Yeah, that goes back to the best things that people have done with shoppers. So if we take the best physical retailing experience we can remember. It’s great. You walk in a, it’s entertaining. It smells good. It sounds good. You’re engaging with people, you’re touching, tasting, smelling. It’s a great experience and you just naturally shop. You don’t think about the process, but you leave the store with the great memories and products that you’ve purchased.
[00:03:37]Online, it was always difficult to be able to achieve that, to have that, personal connection, to have that physical experience in a digital or a virtual environment. Over time, we’ve seen people try and get beyond that to provide as much of the physical retailing environment as they can online. They built communities.
[00:03:53] So when we think about the best of the online retailers now, they are part of communities. People will shop them, but people will also join them on YouTube. They’ll join them in discussions. They’ll turn up for virtual events. But they’re looking for that connection all the time, looking for something that gets them as close as you possibly can to a physical relationship. You can never get there. There’s no doubt that the best physical relationship you have with a brand is better than any digital that you will ever have, but it’s getting closer and closer. But you must think about both of them.
[00:04:25] The important thing about that is so many physical retailers never got their head around that. They never got their head around the fact that I have to be able to take the best of my retailing and put it online. What they tended to do is say, “Oh, I’ve got to go online. Therefore I’ll have someone build a website for me and I’ll have one of my guys manage it and it’ll just be this peripheral thing, but I don’t really believe in it.”
[00:04:47] And you could see that in the way the online stores were laid out. You could see it in the amount of space and the amount of money that the online teams had to build that business. They were second-rate all the time. They were never given the chance to do it. You can see in some retailers around the world that went into receivership, that went under that over the last two years, their digital teams were just about to turn the corner. They were just getting it right. But they couldn’t get through.
[00:05:10] I’ll share one story, which for me is a story of just how genuinely ingrained physical retailers have been in this first stage of retail and why we’re now, in the next six to 12 months, going to see those businesses go under.
[00:05:24] One of the best physical retailers and omni-channel retailers in the world was a guy called Ron Johnson, and he basically built the Apple stores.
[00:05:32] He built Apple retail for Apple. He came in with nothing, a blank piece of paper, and he created the most successful retail operation. How so have you defined success? So shopper experience, revenue per square metre, gross margin per square metre, average basket size, the single transaction, how much each transaction that store was.
[00:05:51] He built a brilliant business over probably 20 years. He left that business and became the CEO of a large American, physical retailer called JC Penny and the board of JC Penny brought him in, and I walk JC Penny stores regularly, I’d like to see what he was doing. So at that time I walked the stores and saw what he was doing.
[00:06:08] You started to see the store formats change. You started to see the people in the store get younger. They’re recruiting people with different experience.
[00:06:16] Ron Johnson lasted, I think, 18 months before that business spat him out. They didn’t like him. The most senior people in the business, the directors could not get their head round what the guy was trying to achieve, so let him go.
[00:06:28] I don’t think JC Penny is going to make it. I don’t think a lot of physical retailers in that space, that discount department store, mass merchant store, are going to make it.
[00:06:35] There’s an example of where one of the best omnichannel retailers in the world was given responsibility for a major retailer, and the retail organization, at the most senior levels, couldn’t get their head round what he was trying to do because they were deeply dyed and deeply embedded in the way they’ve always done it.
[00:06:53] Nigel Miller: [00:06:53] And I guess that is interesting because there’s so many other retailers that you’re seeing in the news currently. I saw Debenhams in the UK are now in administration. A lot of the big names that have been around for generations are just struggling, a) because their doors are shut and b) because they’ve got no other channels…
[00:07:08] Kevin Moore: [00:07:08] And c) because they had a very high cost base in the year 2020.
[00:07:12] So there’s no way that you can sign a 20 year lease with retail landlord with 3% rental increases every year when your top-line sales are dropping. And they’re dropping up because you’ve become a bad physical retailer. They’re dropping because shoppers, who are promiscuous, have changed their behaviours and they’re shopping online, and every time they shop online, they shop a bit more online.
[00:07:32] And what I mean by that, one of my closest mates was talking to me about buying clothes and footwear, and he said, “I never do it” because he likes to try them on and make sure they fit. In COVID-19 and that was taken away from him. So what he’s doing is he’s going to his wardrobe, he’s taking out the brands and the sizes of those brands that he knows. He’s going to their sites and he’s shopping online for the first time ever.
[00:07:52] So that’s part of the “second age of retail”. We’ve taken away his ability to do that. So he’s changed his behaviour. COVID-19 is less about a pandemic in the future and more about significance and systemic shopper behavioural change. And once we change our behaviour, it’s tough to get us to go backwards.
[00:08:09] Physical retailers haven’t understood that, and that’s why the online retailers are doing so well.
[00:08:14] Nigel Miller: [00:08:14] And this is why you’re saying it’s the “second age of online retail”, because behaviours are changing through necessity as much as through, you know, willingness.
[00:08:23] Kevin Moore: [00:08:23] Yes. But there are a number of levels to this “second age of retail”.
[00:08:26] So the first thing is now all goods and services, so government and are doing things they haven’t done ever, “Oh we can’t possibly do that!” And they’re finding ways to provide government services, things where we had to go to a government office, they’re finding ways to serve those things up to us so we can stay at home and do that.
[00:08:43]It’s also the range of products that are being offered. Far wider products than we ever expected. Things that can be custom-made and brought to us are being offered. We also have to remember that back in the day, generally speaking, people went online to be able to reach the whole of the country at once, or the whole world at once.
[00:09:00] So people set up websites, they said, “I’m going to shop to the world and take my little artisan business in some small town in a Midwestern state, and I’m going to take it the world”. Now, today with Shopify, so Shopify are the fastest and quickest and probably most stable of the shopper website tools you can use, you can set up a Shopify website, selling your product in hours. It’s very cheap and it’s very fast. What’s happening now is people are selling to their own postcode, so literally setting up sites for those stores now and delivering bread, because of COVID-19, to people within their postcode.
[00:09:36] So it’s changed the whole of this thing about saying, “Oh, it’s an international thing.” No, no, no. It’s about being able to reach people who can’t get to you physically anymore. As we go through this change, also, we’ll see that the shift we’ve had in people commuting to work will remain. There’s no doubt that we’ve talked about homeworking for many, many years, and we’ll now see it as a far greater proportion of people’s time.
[00:09:56] Not necessarily a greater proportion of people’s roles just of their time. We’re not all going to start the telecommute. We’ll just spend more time telecommuting and that will allow us to be able to shop from our homes and we’ll look after our time in a different way. We don’t want to invest our time in getting into a car. Other layers of this are such that people go to a store for an experience, a physical store experience, they might go on public transport in the future, when we can do public transport again. They’ll go on public transport to the cities to see these amazing stores, but they don’t want to drive their car and they don’t want to take all their shopping back with them. They won’t need to. The things we’ve talked about where people can go into a store will have a great experience and say, that’s what I want, cashless payment, no touch payments, and it arrives at your home over the coming days. The excitement is continued on in your home.
[00:10:42] These are all the things are on the second age of online. It is everything coming together and it’s being forced together because of what we’re going through as a, as a planet.
[00:10:50] Give me some examples of who is doing this well.
[00:10:54] It’s a funny thing, we tend to point at the biggest and the oldest as being the most difficult, and it’s nothing to do with size. It’s nothing to the age of businesses. I was blown away by Walmart. Now, Walmart are the largest retailer on the planet. On a casual day in the US, when all the stores are open, 1.5 million people go to work in those stores. Forget visiting them, 1.5 million people go to work in their stores. Walmart through the whole of the first age of online retail, tried to do it themselves and had the humility to be able to say “We’re not good at it”. So they started to buy businesses.
[00:11:25] When they first got into the online home entertainment business, they were shipping DVDs and CDs and games back in the day before we had Netflix, they tried and weren’t very successful. So the team had the humility to go and buy a company called Voodoo.
[00:11:38] Now, Voodoo gave them a real ability to understand and learn about that sector. That was the point where they understood the key things that shoppers are looking for from online. Number one is they want massive selection. Walmart were one of the first guys to have something called the endless aisle, but they went from having about forty thousand, thirty thousand skews in store to a million online.
[00:11:58] They learned it at that point. They know that shoppers, once they’ve got that huge range, they want service, really good service. They want things to be delivered quickly to them. And Walmart had the distribution networks to be able to do that. And the third thing is they just want the right price. Not the best price.
[00:12:13] So back in the day, we had to give people confidence to go onto an online site cause it was all a bit scary, they might steal my money, they might not send me the goods. We had to give them a reason. And Amazon started with cheap. Everything was cheap, cheap, cheap. Cheap is not in the top three reasons why people shop online anymore.
[00:12:29]They want great range. They want really good service and they want to be supported and be able to be part of the community. Okay.
[00:12:37] Nigel Miller: [00:12:37] So the other factor here though is this just in some countries or do you see this as a global phenomenon and does it depend on the local markets? Like in Australia for instance, you know, vast distances between cities compared to places like China, obviously with huge population and during the COVID-19 over there, obviously ginormous growth in their local distribution with virtually everything being delivered to the door, because it’s quite easy to do that there.
[00:13:05]Kevin Moore: [00:13:05] Yeah, it doesn’t matter anymore. So again, it’s the shopper. We tend to think about things in an operational way. We put up barriers. “I want to do that. Ah, but it’ll take me these four steps and I can’t do those four steps.”
[00:13:14] The shopper doesn’t think that way, and in different markets, the shopper is far more open-minded. The US market is one of the most open-minded markets in the world. They are absolutely optimistic. If you say this blue box is going to cost you $1,000 and it’ll do A, B, and C, they just assume that blue box is going to do A, B and C and I’ll give you $1,000.
[00:13:31] Now it does, or it doesn’t. Markets like Australia or about Europe where tend to be more cynical, we have to watch these things happen. So sometimes we’re very slow adopters. It might take us three or four years, but it’s the shopper driving it. It’s not the fact that somebody says the distance is a far, if the shopper wants it, people find a way to solve the distance issues or the density issues.
[00:13:51] I mean, delivering to the centre of Beijing isn’t easy. Delivering to the centre of Jakarta isn’t easy. Hong Kong isn’t easy. So, people find ways to do it. So it’s more about the shopper. It’s about the shopper saying, “That’s what I do. I change my behaviour. I start to shop online, and then I never go back”.
[00:14:05] Nigel Miller: [00:14:05] Okay. That’s fascinating. Just before we go too far, at this point, I would imagine there’s a few people wondering who on earth we are? So, I think we should very quickly just touch on that. So, my name’s Nigel Miller and I’m a video producer/director. And quite a few years ago, I used to produce a TV programme on one of the free-to-air channels here in Australia.
[00:14:25] And the programme focused on helping small business owners overcome commonly experienced challenges. Now, for one of those episodes, I was looking for an expert in retail marketing to help out a small fashion retailer. And after doing a bit of research, I turned up you, Mr. Moore. And at that time you were the chairman of a retail marketing business with over 2,000 employees…
[00:14:44] … pick up from there.
[00:14:46] Kevin Moore: [00:14:46] Yeah. I bounced around the world. I’d worked for retailers, businesses that were mixed retail and wholesale. I’d worked in brands , lived in 10 different countries, but done about 50 different countries in terms of responsibility for business. And I’d ended up in the middle between retailers and manufacturers in shopper marketing, building an agency.
[00:15:02] And I basically built this shopper marketing agency from 80 people to 2,000 and were able to service retailers and manufacturers in Australia and New Zealand and up into Asia. we picked up some amazing clients, even people like Apple so we were doing something right, understanding what the shopper needed and being able to support those brands.
[00:15:21] I went onto a number of other things in terms of trying to pass on that knowledge. So you and I, Nigel and did some work on putting together retail training programs online. They’ve now been running for several years and over two and a half thousand people who’ve done those courses across a hundred countries.
[00:15:36] And one of the key things about that, interestingly, as we feed into this program is over a third of those people have requested online retailing courses. A lot of guys who work in retail and sell into retail are now realising, and are now being employed in online retailers. They want to understand what are the key parts that are relevant to online retail?
[00:15:57]I think actually what they’re saying is, there isn’t a map yet to help us be the best online retailer we can. How can we do that? And that’s the reason we’re doing this.
[00:16:05]Nigel Miller: [00:16:05] Indeed. And just to clarify, my role here is as a non-retailer with very little experience in that, basically I’m the technical grunt and I operate as the lowest common denominator when assessing the content we’re covering.
[00:16:17] And, basically, if I don’t understand what you’re saying, I’ll ask. Is that about right?
[00:16:21] Kevin Moore: [00:16:21] That’s about right. That’s about four years of about right! Yeah, you’ve always done that!
[00:16:27] Nigel Miller: [00:16:27] Now the other thing is that since I’ve known you, you’ve done a fairly large personal transformation from being the man that walked a thousand plus stores, physical stores, a year as the physical retail thought-leader, to the man who’s now all things online. Tell us about that journey.
[00:16:45]Kevin Moore: [00:16:45] Yeah, I’d suggest it isn’t a journey to continuum. I sit in both camps because one of the most important things is that all the good things that are online retail have come from physical retail, all the best things that we see in the best of the online retailers have their basis in physical retailing. Remember, we’re dealing with emotions. Shopper marketing is getting people to be able to engage with you. I walked eight States in the US only four months ago, five months ago, all the way from New York down to Dallas, Texas, LA, looking at different stores and shopping online too. So I used to do, actually 2,000 stores a year around the world, but I now do about a thousand stores a year still looking at stores, but then also doing probably about 2,000 online sites, just checking, looking, seeing what they’re doing, including the major marketplaces.
[00:17:31] And so I got to an age and decide I don’t want to be full time executive anymore. I want to go into being a non-executive, I want to help companies as a director. But I actually was quite dismissive as a professional marketer of the social media environment. And the best way to solve that was to immerse myself in something that I wasn’t quite sure about.
[00:17:49] So for about a year, I immersed myself three hours every week inside a digital agency with 20 somethings in open-plan. And I listened to what they were doing, saw what they were doing, and it took me about three months of that to take a huge cup of, “Oh my God, I got a lot to learn”. A huge slice of humble pie and realise this was phenomenally important.
[00:18:11] The connectivity… Things that we now take for granted, I didn’t see, and that was four or five years ago. Because then actually end up buying into that agency becoming its chairman. I’ve since bought into two other digital agencies because they are at the forefront of being able to engage and connect and retain connection with shoppers online. So I’m now immersing myself in that. I’ve then got on to work with a number of companies to assist them in their online offerings, to move into online retail. I worked with the Toys R Us bid to bring the Toys R Us brand back to life as a pure digital brand in Australia when that business went into receivership worldwide and that’s been a fascinating journey and a huge amount of the learnings that we have from that I’ll share as well.
[00:18:53] And that’s an interesting one because I think obviously Toys R Us is a brand that’s known around the world. And I know some friends of mine in the U S were amazed to see that the Toys R Us brand is still alive and well in Australia.
[00:19:04] Nigel Miller: [00:19:04] But, not appreciating it’s an online only play at this point in time. Tell us about that. Why you saw opportunities.
[00:19:09] Kevin Moore: [00:19:09] Yeah. I’ve been working with a very bright guy called Dr. Louis Mittoni. Dr. Louis Mittoni did a PhD in AI and machine learning, so he’s not a dumb boy.
[00:19:18] He was physical distributor of technology product. He’d set up a business called Hobby Warehouse. He loved online retailing, wanted to do it better and better and better and we got together, oh, four years ago. And we built that business together into being the largest online seller of Lego in the country.
[00:19:34] Now, that’s not a small thing to say. I mean, Lego is the dominant toy brand in any market in the world. And they ended up with Hobby Warehouse being the pre-eminent Lego reseller in the country, plus its digital partner. So, being able to sell into marketplaces so we did a lot of it with eBay in the early days of eBay coming into Australia, still do with Amazon to understand how the product and how the brands can move.
[00:19:58] When the Toys R Us brand went into receivership and all the stores were closed, the brands still existed. The digital assets still existed. So we bid on those assets and we said to the guys, this is what we want to do. We want to open a pure digital online shopping Toys R Us, and rightfully the global CEO said, you’ve got to tell us why you want to do that, because we’ve got other people here bidding for this and that major retailers, and they’re saying they’re going to put them through their store networks and do some online. And we said, if you look at all the research that’s been done by the industry, they believe, remember, this is probably a year and a half ago, they believe that by 2023, 43% of all toy sales will be online.
[00:20:35] In fact, some of the guys, some of the manufacturers in that sector, believe that 60%, six zero percent of the toy sales for their brand will be online.
[00:20:43]So why on earth would we start a business that’s just gone out of business with physical stores, by investing in new physical stores?!
[00:20:50] We believe we should be focusing absolutely on building digital communities, which is what we did. But we did it from a position of whereby we created very, very, very high quality digital communications. So from the get go, we said every single thing we do will be broadcast quality. Won’t be like a, you know, a YouTube video shot on a phone and in a backyard.
[00:21:08] This will be proper 4k, it’ll be properly done, beautifully done, to make sure that we start to put together these stories of people who are shoppers for hobbies and then shoppers for toys, which is exactly what we’ve done.
[00:21:18] We believe it’s the first genuine Phoenixing, in a good way, Phoenixing of a physical retail brand into a pure digital brand, and it is going very, very, very well.
[00:21:30] Nigel Miller: [00:21:30] Wow.
[00:21:31] Lessons to be learned. How big a change do you see occurring in physical retail as a consequence of COVID-19 pandemic? And will these changes happen globally?
[00:21:41] Kevin Moore: [00:21:41] Yeah, they are profound changes. This has forced an accelerated change of our behaviour that has been coming for 22 years.
[00:21:50] But it’s done it in a way that has shifted the way we behave on a global basis within days, not months. So, what do I mean? Generally speaking our form factor interface, the things that we connect with online, is our smartphone. And simplistically, it’s about 75% of our engagements, pre COVID-19.
[00:22:08] 75% of our engagements with all things online with our phone , about 20% was through a large screen, so a PC, and about 5% was in tablet format.
[00:22:20] Each time COVID-19 has resulted in lockdowns in each country, within 36 hours, it’s that short, so one day and half a day, within 36 hours, that shift has gone from effectively 75:25 to 50:50.
[00:22:35] So we now have large screens at home, because we’re all at home, and by large screen, I mean, we’re looking at our PC, an extended screen from our PC, or we’re looking at a smart TV. Now remember we now have seven foot screens.
[00:22:48] Nigel Miller: [00:22:48] Hmm.
[00:22:49] Kevin Moore: [00:22:49] We’ve got 86 inch screens in our home that are smart, so we can engage in a way we’ve never done before.
[00:22:55] That’s changed the whole of our relationship. We’re not engaging with a three inch by three inch or three inch by, by two inch screen. We’re dealing with full surround sound, incredible colors , and we can get those messages and we absorb those messages as a human far better. That’s why our trust with online has boomed.
[00:23:14] If you look at the four days after, it’s depends, it’s four to seven days after each lock-down, you look at the search criteria when a news bulletin runs from one of our leaders. So the president will make a statement to do with face masks, the search engines go ballistic on face masks within, oh, four to six minutes. Bang, gone!
[00:23:40] And we’ve seen prime ministers talk about staying at home and actually you’ll need to buy some jigsaws. The search engines go ballistic on jigsaws in, you know, three to six minutes. It’s so instant. It is an unbelievable change. So this has changed everything.
[00:23:53] If we then add to that, this is the saddest reality, it makes me very sad when I look at the number of physical retail stores that are going to close and will never open again, and it’s genuine. This is just a fact.
[00:24:04] There are brands that we’ve known for many years are not going to make this. They will be gone by the middle of 2020 or the end of 2020 calendar year. They just won’t be there, all around the world, and that’s sad because there are good people that have worked in those stores who are good retailers and they will not be able to work in physical retail again.
[00:24:20] And that’s reality. So if you start to extract that, I think in the US you and I were talking, Nige, with some of the discount department stores and the major brands, 60% physical retail closed up. Yeah, six zero.
[00:24:32] Nigel Miller: [00:24:32] Yeah. Well, I was just reading an article from the Associated Press that basically was saying that 60% of US retail square footage, and that’s people like Macy’s, Nordstrom, Nike, that sell non-essential merchandise have temporarily shuttered since mid-March. This is from Neil Saunders, who is managing director of Global Data Retail.
[00:24:53] Kevin Moore: [00:24:53] Yeah, I know Neil well, yeah…
[00:24:54] Nigel Miller: [00:24:54] So he’s saying this is the most catastrophic crisis that retail has faced, worse than the financial crisis in 2008, worse than 911, almost overnight, the retail economy shifted from being about things people want, to things that they need.
[00:25:08] Kevin Moore: [00:25:08] Right now, there’s a need basis, but we got through the need basis very quickly. You get locked-down for 14 days, as we’re experiencing at the moment, you get through the need bit, you do the toilet paper thing, you know, you do all the canned tomatoes, you do all that stuff, that’s all great, but then you actually need to be mentally stimulated.
[00:25:22] We see games start to go up. We see people start to stream services. So Zumba classes in your postcode, your zip code, are now being done online. They’re thrown up onto the YouTube…
[00:25:32] Nigel Miller: [00:25:32] For me, my local yoga place that I go to, they’re now online. My daughter’s karate classes are online, things that you’d never think are just very quickly appearing online by people who aren’t necessarily very technically competent either.
[00:25:45] Kevin Moore: [00:25:45] Exactly.
[00:25:45] Nigel Miller: [00:25:45] But they’re finding ways to get there.
[00:25:47] Kevin Moore: [00:25:47] Exactly. So what they’re doing at the moment is they’re throwing that up now as a service for free to remain engaged and connected. And that was my “durh” moment four years ago in the whole of immersing myself in social media in the early days of Facebook and Insta and YouTube.
[00:25:59] That was the “durh/wow”. But what they then do is they will then start to monetize that. They’ll monetize that relationship. So expect to see Shopify sites that allow you to be able to go and do that YouTube class or a class in, even higher quality than YouTube, and you’ll be able to click and pay for it online.
[00:26:16] That’s the real shift where somebody can do a Zumba class, do a yoga class, do karate class at home, and pay for it through a website. Well, almost certainly Shopify.
[00:26:26] Nigel Miller: [00:26:26] So what you’re saying, Mr Moore, is that we need to put our education online on Shopify?
[00:26:31] Kevin Moore: [00:26:31] Nigel, that would be a very good thing. Hold that thought!
[00:26:34] Nigel Miller: [00:26:34] I’ll look into that.
[00:26:35]Now, another thing that comes out of this article, which I found really interesting is how that some retailers have responded to the challenge by coming up with creative ways to stay relevant. And they quote again about Nike, for instance, introduced workout apps in China when the Corona virus first surface there.
[00:26:49] And that resulted in an 80% increase in users within the quarter and a 30% increase in online sales.
[00:26:56] I mean, that’s huge!
[00:26:57] Kevin Moore: [00:26:57] But go back to that guy , that mate of mine, it was specifically Nike. He was talking about, he has Nike trainers, they’re running out, he’s at home now. He can’t go and buy them.
[00:27:05] So he went towards his wardrobe. He took them out and look them went. Okay. I know the size, and I’ll order. And he did that. So, but they facilitated that by saying, ‘Guys, we’re still here and you can go to our site”. There’s some guys who got through by the skin of their teeth. BOSE, make beautiful sound equipment.
[00:27:19]I often wear BOSE headphones for calls. BOSE have done a beautiful job, within, within weeks of the world changing, to be able to sell direct online. They didn’t know this was coming. Within weeks of COVID breaking, they’re able to go online and people can now shop them online. Up until then they went through a reseller network.
[00:27:36] They closed their stores. So there’s an example of somebody who’s seen the writing on the wall, and that’s tough to do. Shut your stores, having been a physical retailer for, you know, a couple of decades and you say, now I’m going to go online.
[00:27:48] So, they’re guys who have the humility to do it.
[00:27:50] Nigel Miller: [00:27:50] Funny, because I’ve actually been doing some videos for another headphone manufacturer, Jabera, and they provide to the corporate market and they are seeing demand like you would not believe, because obviously a lot of corporates that maybe wouldn’t think about doing working from home for their people now have no choice, and consequently they’re equipping them to be able to do it well.
[00:28:10] Kevin Moore: [00:28:10] I have this phrase that frustrates you because you can’t get your tongue around it, but it’s “phygital”.
[00:28:14]Nigel Miller: [00:28:14] Yeah. (laughter)
[00:28:16]Kevin Moore: [00:28:16] So physical and digital. So how do you blend those things together to have the best experience of physical, great knowledge , one of the things in the online course that we’re doing in our online retailing is the detail, the good details. So there’s a great phrase, people talk about “the devil’s in the detail”. That wasn’t the quote. The quote was it by a guy called Vladimir Nabokov, and he wrote that “God is in the detail”, the good things are in the detail.
[00:28:38] If you get the detail right in online, everything just hums.
[00:28:41] I’m going to go through in huge detail about how we get the right number of images on a website, how we get who or what are in those images on your website. The role of video in products in website. The role of navigation and communication. Those are things we’ve learned so much of and to have it inside my head and other people’s heads is crazy.
[00:29:00] Globally, millions of people are going to lose their jobs in retail! It makes me weep.
[00:29:06] I’ve walked so many stores around the world and met amazing people in stores and they’re not going to have that choice. I truly believe that if an awful lot of them set up their own online businesses and they are assisted with all the great knowledge they’ve had of being able to procure and merchandise product, display product, and they can set up their own stores, not to sell to the world, to sell to their postcode.
[00:29:28] And I just want to share as much of that as we possibly can to give people the best chance.
[00:29:31] You know, people are going to have to have their own jobs. They are going to have to make their own jobs over the next three, four years. You know, they’re going to have to make their own jobs and we need to equip them to be able to be successful as they possibly can to make their own jobs.
[00:29:44] We mustn’t kid ourselves. There are tens of thousands of very, very large format retail stores around the world, which are not going to open again as shops as we know them. They just aren’t.
[00:29:55] So, I’ll put those in one category, the big end of town, you know, the major investors going to lose a lot of money, people are going to lose a lot of jobs.
[00:30:02] In the middle of the sector, if you’re light enough on your feet, there is still time today to set up a, a shopper, and I keep saying Shopify because they lead the markets. It’s almost eponymous. It’s like saying back in the first smartphone, it was the Apple iPhone, well at the moment it’s Shopify. There’s really daylight between them and everybody else.
[00:30:19] And you can get yourself a Shopify site really quickly and then learn the things that you need to do to be able to make that as effective as it possibly can, to build your online shopper base, to communicate with them, to be able to run entertaining and connecting communications with them.
[00:30:33] So there is a chance to do it. You’re gonna probably reformat a number of your stores, by the way, and they’re going to become warehouses.
[00:30:39] So we’re seeing a massive decline in the value of retail store real estate around the world, we’re seeing a huge increase in the value of industrial warehousing, warehousing that’s close to freeways so that people can get product away quickly or small format, in metreage terms, 150 – 200 square metre warehouses. They’re becoming the new retail shops because that’s where an online retailer can base themselves.
[00:31:03] You can sell skateboards from, you know, a small industrial site with Shopify to all your postcodes and all your country. That’s just enough if you want to feed your family and drive a nice car and go on holiday.
[00:31:14] Nigel Miller: [00:31:14] But that does sound a bit depressing.
[00:31:15] What happens to our high streets? What happens to our shopping centres?
[00:31:18] Kevin Moore: [00:31:18] When I was walking parts of Europe over the course of the last 24 months and I saw the high streets falling apart just naturally without COVID-19 I don’t know. I don’t know why that space is going to be used, what it’s going to turn into, but you can’t solve for everything. So let’s, let’s put… I keep saying I’m not a doctor. I can’t help in COVID, I can’t help at all. I want to help in every way I can to help small businesses and medium sized businesses, because the big ones aren’t listening or they’ve got there, small businesses or medium sized businesses get online and be the best they can be, have the greatest chance of success online. That’s all I’m trying to do. I can’t do anything else!
[00:31:52] Nigel Miller: [00:31:52] So going back to where we started with all this. So if this is the “second age”. And if this second age is the accelerated migration of shoppers to digital retailing of all goods and services, who are the standout examples of retailers embracing this opportunity?
[00:32:06] Kevin Moore: [00:32:06] I think it is all the pure online players. I’m going to say Toys R Us in Australia, but it’s so soon. I mean, we haven’t had that Phoenixing. So I look at some good online retailers who’ve, who’ve got their shares to, you know, 20%. So the total sales of online versus their total physical is 20. 20% still isn’t enough to keep your business in business.
[00:32:30] So you actually have to look at the guys who are pure online. The obvious ones are the guys who’ve been it for a long time. The marketplaces, Amazon, in terms of the algorithms and the connection with their shoppers and how they serve up deals and how they serve up huge range and service, it’s an eponymous brand.
[00:32:45] It blew me away in America, four months ago, five months ago, the most prevalent brand I saw in any part of my day, so transiting through Fortworth or JFK airports, on a sidewalk in LA, on a freeway between Vegas and LA. In a lobby of a hotel. Amazon boxes, Amazon trucks, Amazon aircraft, Amazon billboards, Amazon on television, Amazon stores being set up in some of the shopping malls in Texas.
[00:33:12] It’s just the most eponymous brand. You can add eBay to that. You can add Alibaba to that. You can add a lot of the marketplaces.
[00:33:18] You then go into each market, each country, and you look at who’s doing a very, very, very good job, of the pure online retailers. And each market’s got its own specialists who are doing a good job around technology retailing or they’re doing a good job around clothing, retailing, but they tend to be in categories as opposed to across everything. There’s only really the marketplaces that are across everything.
[00:33:37] Nigel Miller: [00:33:37] And then the obvious next question, who hasn’t done it well?
[00:33:39] Kevin Moore: [00:33:39] Well, they’re going out of business every day, Nige, you don’t need to, you just…
[00:33:43] Nigel Miller: [00:33:43] Look at the news…
[00:33:45] Kevin Moore: [00:33:45] the brands who aren’t here!
[00:33:45] Nigel Miller: [00:33:45] So, going back to the migration that’s now going on, by way of example, what percentage from your experience toys, for instance, would be online in the next three years?
[00:33:54] Kevin Moore: [00:33:54] Oh, there are studies all around the, I mean it doesn’t matter what the category is, Nige, so 80% of the things that we buy, normally, forget the 20s, now, 80% of the things that we buy on a normal basis, you can say half of that will be online by 2023. Actually, you know what, with what we’re going through with COVID, you can probably move that forward.
[00:34:11]Half of the 80% that we buy, the volume will be online by the end of 2022 you know, that’s 18 months away.
[00:34:18] Being positive, obviously there’s a lot of negativity around, why should retailers be excited by this second age of digital retailing?
[00:34:26] Let’s just focus on the absolutely huge opportunities that we have for mums, dads, 20-somethings, people being forced to go into retail back in the day, go in to online retailing.
[00:34:36] You don’t have to do a lot. Your cost base is low. You don’t have to shift as much product as a store would have to shift to make the same amount of money, and you can do it across a nation or just around the postcode. So let’s focus on the opportunity there because that’s where the greatest benefit to society is going to be over the next three to five years.
[00:34:53] Nigel Miller: [00:34:53] And I think that’s a very good place for us to probably finish our conversation today. But what are we going to discuss in our coming podcast episodes, Mr. Moore?
[00:35:00]Kevin Moore: [00:35:00] I guess the key thing we’re going to do next time is get into this whole shopper thing. So focus absolutely on the shopper’s needs.
[00:35:07] If we can understand what the shopper wants, it allows everything else to fall in line. We overcome, I talked about this, we overcome the freight issues. We overcome that “where am I going to be based?” We overcome all the issues about funding. What does the shopper need? What do they want? What do they need?
[00:35:21] If I can understand that, then I can provide a structure to them.
[00:35:25] We do that, bearing in mind that there are now an awful lot of plug and play for want of a description, plug and play parts of the process that we can do: from freight to sourcing, to packaging, to the sites themselves, to payment methodologies to the part payment and search functions.
[00:35:43] It’s all there to do as long as you understand it. We don’t have to reinvent the wheel. We just have to take each of those parts and link them all together to be able to reach our shoppers with a message to allow us to send them the product or the service. The next thing we do Nige, I know you’re going to love episode three, we’re going to look at the retailer’s “phygital offering” and you’ve got…
[00:36:00] Nigel Miller: [00:36:00] Phygital offering…?
[00:36:02] Kevin Moore: [00:36:02] You’ve got three weeks to learn that phrase.
[00:36:04] Nigel Miller: [00:36:04] Okay, alright!
[00:36:05] Kevin Moore: [00:36:05] So the retailer’s “phygital offering” – how we get that blend where somebody is in, in retail, physical retail at the moment and actually wants to accelerate that process.
[00:36:13] And then from then on, we really do want to get underneath the case by case studies of things that are going well, real detail. Remember, God is in the detail. If we can pick out things that make a real difference to somebody, I’m going to talk about skateboard, guys who’ve been in the skateboard industry who have no jobs, so they set up a skateboard firm.
[00:36:28] I’m going to talk girls who’ve been in the dairy industry and all of a sudden they are now delivering fresh dairy products to people’s homes. So there’s a whole lot of things we can do, but it’s going to be the detail of each one, and hopefully, the plan is that people are listening and say, “that’s got relevance to me”, or my son, dad, sister, brother, who’s got an online business, or they’re being forced into it, or they’re considering it. “Hey, listen to this. I think this might work for you”.
[00:36:49] Nigel Miller: [00:36:49] Okay, great. Well, I think that’s a good place for us to wrap up.
[00:36:52] So that’s all from us for this episode. Please give us a review and a rating on your podcast app. As you just heard, in the next episode we’ll be talking about the shopper needs. And let’s say that more than just toilet roll and pasta will be talked about by that time. And if you’d like to find out more about Kevin’s thoughts on ways to improve the retail customer experience in both the physical and online worlds, please go to our website; theroadtoretail.com; that’s the-road-to-retail-dot-com.
[00:37:19] On the site, you can send in any questions you might have about the topics we’re covering in these podcasts. And you’ll also find links to our various retail marketing and sales courses and our social media channels where we can keep the discussion going.
[00:37:31] And finally, if you want to learn how to improve the shopper experience for your online retail business, then you’ll be pleased to hear that we’re about to launch our first course dedicated to the online shopper experience. There’s a link on the site where you can register your interest and, by registering, you’ll be entitled to a 50% early bird discount.
[00:37:50] Until next time. That’s “thank you” for me and…
[00:37:53]Kevin Moore: [00:37:53] Thanks a lot.
[00:37:54] Nigel Miller: [00:37:54] Bye.