The Crystal Balls of top retail execs on what to expect in 2020
Steve’s breakdown: Here’s our 2nd installment of the crystal balls of the industry leaders. Today’s balls: Retail
EVERYWHERE, USA: Every year, thousands of attendees, from CEOs and founders to analysts, gather at the National Retail Federation’s Big Show to provide an update on the industry and trends to watch. Whether it was placing the focus back on its physical stores or highlighting the growing importance of sustainability, retailers took the stage at the annual event to give insights into what to expect in 2020.
Here are some of the most notable quotes from industry leaders at this year’s show.
Erik Nordstrom, co-president, Nordstrom
“I grew up selling shoes. … We think a lot about shoes. I don’t know why it took us so long to put drinking and shoes together, but it’s a great combination.”
Nordstrom is talking about the cocktail bar in the retailer’s women’s shoe department in its newly minted New York City flagship. Shoppers can sit at the bar itself, or order drinks from the seating within the department as they try on shoes, as two women were doing on a recent Monday evening. Founded in 1901 as a shoe store by the Nordstroms’ great-grandfather, John W. Nordstrom, (whose initials still serve as its stock ticker), the company has always been an apparel retailer with an emphasis on footwear. Now it is also something of a restaurateur: In addition to the bar in shoes, there’s some sort of food or beverage concession on every floor in New York — seven in all — more than the company has in any other location.
Ron Johnson, CEO, Enjoy Technology
“The physical store has the upper hand again.”Those words may be surprising coming from someone who is leading a service company, where technicians go to customers’ homes to set up their tech and school them on how to use it. Then again, Johnson is also widely known as Apple’s stores guru, the guy who figured out how to create a physical retail environment that is as much about being part of a club, whose members are in the know, as it is about buying devices.
In fact, Johnson said the fundamental idea behind Enjoy came from Apple customers who would often say that they wished they could take the company’s “geniuses” home with them. And Enjoy has turned those homes into retail stores of a sort — half of Enjoy visits involve additional sales, according to Johnson.
Michelle Gass, CEO, Kohl’s
“It’s hard to even use the term [department stores]. What does that even mean anymore?”While Gass touted the retailer’s differences from its department store counterparts, namely in not being connected to malls, its recent holiday numbers suggest it may be facing similar struggles. Kohl’s reported November to December comparable sales fell 0.2% year over year, and subsequently pulled back expectations for its fiscal 2019 earnings to the lower end of its guidance. Meanwhile, Macy’s reported that its holiday store comps on an owned basis fell 0.7% over the nine-week period and its owned-plus-licensed comps fell some 0.6%.
Though, according to GlobalData Retail Managing Director Neil Saunders, the holiday sales from Kohl’s were “not a disaster,” there is still work to be done. “Initiatives like Amazon returns are good at driving footfall, but Kohl’s needs to convert that traffic into money in its own registers.”
However, Gass defended the partnership with the e-commerce giant, noting that it’s going to take longer for some of its initiatives to be recognized. She added that she believes the future for Kohl’s and retail in general is “very bright, but we’re all going to have to change.”
Helena Foulkes, CEO, Hudson’s Bay Co.
“Sometimes I think we’re looking for rocket science as the answer, but there are very basic things we can focus on, on the fundamentals.”Hudson’s Bay Co. may finally regain the chance to get back to such work now that an agreement on a take-private proposal has finally been hammered out, with the blessing of Catalyst Capital Group, HBC’s largest minority shareholder and an opponent to a previous offer. (Shareholders will vote on that at a special meeting in February.) Meanwhile, the company has been struggling mightily, with plummeting profits and shrinking margins. The company’s real estate sales (including the Lord & Taylor flagship to WeWork) and take-private drama have been distractions for months, and Foulkes has had little room to get back to fundamentals since taking over as CEO two years ago.
Tal Zvi Nathanel, co-founder and CEO, Showfields
“The biggest value we can give the founder of a brand is to interact with his customers. If we can stand for three hours on a Saturday in Showfields, you could interact with a thousand people.”Showfields is a four-story, 14,707-square-foot department store of sorts for online brands that opened last year in New York City’s NoHo neighborhood. The always changing tenants — brands tend to sign up for six- or three-month stints — keep people coming back, and provide digital pure-plays with the kind of connections that only brick and mortar can provide. Showfields measures activity like “dwell time” to help these emerging brands gain insights into those connections. Nathanel sees retail as thriving, but only if online and offline are seamless, and believes that people increasingly crave gathering in real spaces. “The importance of physical is going to grow as digital becomes more important to our lives,” he told Retail Dive in an interview in between sessions at the Big Show.
Neela Montgomery, CEO, Crate and Barrel
“Increasingly, a brand is what people say about you — not what you say about yourself.”Crate and Barrel has seen its share of turmoil in recent years, as longtime executives left and newer ones exited after alarmingly short stints, some amid lawsuits. Montgomery, who took over nearly three years ago, has helped right the ship, allowing the home goods retailer to focus on a comeback. At the NRF Big Show, she noted the importance of connections with customers made in physical stores, even when those stores don’t make the final sale. She said that its restaurant in Chicago has been key to that, and last year announced plans to bring in eateries to 15 stores.
John Furner, president and CEO, Walmart U.S. (formerly CEO of Sam’s Club)
“If you can find me a great group of team leaders in a Sam’s Club, I can show you a great Sam’s Club. … There’s no better investment you can make than in the team who are serving the people who pay you.”The retail industry has historically been plagued by high turnover rates and disengaged workers. Speaking on stage with Zeynep Ton, an operations management professor at the MIT Sloan School of Management, Furner spoke about Sam’s Club’s effort to create value for customers by investing in employees. It’s a stance reflective of the current moment in which consumers expect companies to create more than just economic value.
Using a combination of tech, training and respect for the expertise of the people closest to the work, Furner said Sam’s was able to better engage employees, and as a result better serve customers. As part of that effort, the company bet on those team leaders with the greatest depth of experience, creating a system in which, for example, a meat cutter with decades of experience could earn more than a back office employee. The fight for good talent was the focus of several NRF panels this year as retailers grapple with the realities of an industry moment in which having top notch, frontline brand ambassadors can be a critical differentiator and brand loyalty builder.
Mindy Grossman, president and CEO, WW International Inc. (formerly Weight Watchers)
“One of your greatest competitors is the last great experience somebody had.”
Grossman, who joined the company in 2017, said that in order to be successful and vigilant, retailers can’t view competition in a “single lane.” The experiences a brand provides to consumers must be personalized, seamless, intuitive and entertaining because those are the factors that will leave a lasting impression. “The next time they’re interfacing with your brand, that’s what they’re comparing you to.”