Retail technology is all about frictionless experience: interview with Ryan M. Craver

Hello all! Wojtek Borowicz from Estimote here and I’m happy to open our Medium channel. We’ll be publishing interviews with smart people doing things related to all sorts of topics: contextual computing, Internet of Things, retail tech, next generation of user interfaces, location marketing, and growing developer communities.

For the first talk I interviewed Ryan M Craver. These days he is responsible for licenses with the Lamour Group and runs their children’s wear brand Trimfit. He’s also an advisor and mentor for several retail startups. Previously he’s been SVP of Strategy at Hudson’s Bay. No one knows more than Ryan about digital transformation in retail, so we sat down to discuss what technology has in store (pun intended) for brick and mortar. Enjoy!

WB: Let’s get it out of the way quickly, because you probably get asked this all the time. Is brick and mortar dying?

RC: Absolutely not. I think it is completely incorrect, but there is a couple of things happening that are leading to the issues we have in brick and mortar. Overall, we haven’t responded quickly enough to the wave of change we’ve seen.

The first thing is there’s globalization of trends. Trends move much faster from country to country because of conglomerates like H&M, Uniqlo, Zara, and others. The timeline has shrunk.

Secondly you have brands that are frequently going direct to consumer. They are opening their own stores, they have their own websites, there is no real need for department stores for the most loyal brand customers.

And finally, there is ecommerce. It’s a big, big driver of a lot of positive sales comps yet negative driver for store sales for many retailers.

When you have those three big pieces all happening in one shot, brick and mortar struggles. It’s time to take a step back and think how to make it relevant again. You need to pull back on the number or size of stores and realize these stores should be more like a guide to the customer. Less shopping and more fulfillment. The high costs of yesterday to operate a store can’t be maintained today on lower sales.

Brick and mortar is definitely not dead and there are still a number of consumers who love shopping in the physical world as a leisure activity but there will continue to be more pain.

So what would be the cautionary tale behind stories like American Apparel, Radioshack, and Blockbuster?

Those guys grew too big, too fast and didn’t adapt to the changing market conditions. The Blockbusters of the world started responding to Netflix way too late. Radioshack just had way too many stores and they didn’t couple their brick and mortar offering with solid ecommerce. And American Apparel fell victim to increasing their sales comps as opposed to focusing on profitability.

Another one on the tipping point is Gamestop. Gamestop has some tremendous difficulties ahead because PlayStation, Xbox and publishers are selling much more through direct downloads. That eliminates a physical new purchase and the used game market. And then there’s streaming and mobile gaming, too.

They have way too many stores and they’re living and dying off the heroin of the net sales comps as opposed to profitability. They still have a very compelling offer in allowing customers to come into their stores, try out games, play with Oculus Rift. That is fantastic, but it has to be done on a much smaller store base.

Source: Mike Mozart

What strikes me as interesting, is the parallel between startups and retail stores. You mentioned that stores like Radioshack scaled too far, outgrown their sustainability. We’re seeing similar narrative in tech right now, with all the talk about dying unicorns.

I am the biggest advisor of startups to cast a wide net but take small bets. Something you don’t necessarily expect may do really, really well, but there’s also gonna be a lot of failures. One of the great examples is Amazon with AWS. Jeff Bezos never ever expected to be a cloud computing giant, and now they’re the largest cloud service in the world.

Talking about startups, you’re advising a couple of them in retail tech space. Any bets on who’s going to make the biggest impact?

I’m very bullish on location marketing. The greatest contextual layer available to us as marketers and retailers is location, when you combine it with something like interest or past purchase behavior. So I do believe there are going to be some startups within this space that will do very well.

There’s a couple of interesting ones that have started to pivot. One example is Foursquare who relaunched through Swarm. Most recently they jumped on the back of the Chipotle issue with e coli and their severe decline in traffic. Foursquare predicted they will see a 20–30% decline. And everyone knew that bet was true, but what makes it very powerful is that they could project earnings from location data in a public manner.

You touched upon what I call two legs on which location tech is standing. One is the contextual layer, understanding where a user is to deliver relevant content. On the other hand, we have the ability to analyze traffic on an extremely granular level. Which is going to be more important in retail?

Analytics should be the big driver of value for retailers. But right now they are focusing elsewhere. They put the contextual layer of driving better engagement and marketing first.

That’s because we’re struggling with the ways we’re going after consumers right now. Look at retargeting. It used be the hottest thing since sliced bread, but now the returns are starting to degrade. Look at display ads in text, they’re doing terribly: we see that through Google’s earnings. If you look at Facebook, yes it’s targeted to whatever level we want, but it’s still not the best performing. So you start saying: none of this stuff is working, maybe I should go back to email? But Googles of the world are moved email to promo tabs and no one reads them because everyone is sending way too many emails.

And now you bring a push notification that’s got the context of interest or previous purchase and it has location, and it’s in the moment. Whether it’s a coupon or it’s just further engagement with the brand, it’s going to perform much better than what the current tools offer marketers.

This brings us to what many people call omnichannel, one of the biggest buzzwords in retail these days. In one of the previous interviews, you’ve stated that you hate the term. Why is that?

I believe omnichannel is a buzzword that has been manufactured to scare people into making the decisions they don’t necessarily need to make. If you think about the digital world, there’s two parties right now. One party thinks they’re ahead of the space and they believe they know what they’re doing. The other party is completely terrified by the term digital.

I do a lot of speaking and it often starts with talking about some of the disruptors, like Zuckerberg, Bezos or Jack Ma of Alibaba. When you start to throw those charts up and you show people what’s happening in the world and how much disruption there really is, as much as the term itself is overused as well, they become incredibly scared. And when you layer that on with words like omnichannel, it diverts the focus away from people.

Source: Joe Wolf

In fact, we’ve been working in an omnichannel world for a long, long time. If you go back to the early days of Sears, when they first started the catalogue, or when they opened the customer service line to take orders, those were two new channels. When you go back to time when we had depots, little stores that just delivered products you ordered through catalogue, that was another channel.

So we’ve been operating in an omnichannel world for so long I don’t think it’s any different. Ecommerce is just bigger and because of its’ reliance on tech, people are either terrified or emboldened.

We’ve dealt with omnichannel, so let’s move on with buzzwords. Everyone and their mom is talking about Internet of Things now. What role IoT will play in the future of retail?

Yeah, IoT is also overused. Whether we call it beacons, sensors, or Internet of Things, it doesn’t really matter. What they’re gonna bring to retail is a much more frictionless customer experience. If we’re focused on the customer and driving the easiest possible purchase, we’re doing our jobs.

If you look at Amazon’s Dash program, that’s an amazing way to drive purchases without a lot of push from the retailer. The fact that I can take a Gillette Dash button, throw it in my bathroom, press it, and have the product shipped to me in two days, that is an amazing experience. It’s what I call thoughtless commerce. At the time of need without thought. It’s a small example of one ecosystem developing around Internet of Things, but broaden that into the connected home and there’s endless possibilities. Samsung is working hard with their appliances, so keep an eye on how they’re going to run their Internet of Things.

So it doesn’t matter how you call it, it’s just about making sure there’s as little friction as possible in making the purchase?

Absolutely! Keep it simple, stupid. At the time of need without thought.

Two years ago, back at Lord & Taylor, you spearheaded one of the first large-scale retail deployments of iBeacon. And you seemed a big fan of this technology, which used to be the general sentiment in the market. Now the hype is wearing off, so what are your thoughts on beacons in 2016?

I’m a huge fan of beacons. The hype declined but it evolved into a massive world of beacons. The initial worries over customers not willing to share their location is a total joke. We’ve been completely desensitized and everyone is willing to share their location. And it’s not just about beacons, but anything related to any type of search. Customers are willing to share their location if it provides them with better information or experience. Asking about things that “things near you” is a top search in Google right now.

As beacons and sensors develop, they’ll be the silent brain behind many organizations, like retailers, airports, museums and and so on.

What advice would you give to retailers thinking about beacons, but not quite convinced yet?

Get out there! What are you waiting for? Look at the number of press releases on beacons today, there’s one every week. If they’re deployed at airports, how are you as a retailer not having beacons or other sensors deployed to better understand traffic patterns or drive more traffic?

And do you employ location marketing at Trimfit, after moving from a big box retailer to a brand?

Absolutely! Trimfit is one of the brands I currently run, but we also have license from a bunch of different brands like New Balance and Victoria’s Secret. What I love about location marketing is that with apps like Ibotta, SnipSnap or RetailMeNot we’re able to go to and say: all right, we want to run a promotion within this many stores over the next week to give a dollar off. We’re currently running four campaign across roughly a thousand stores in North America, so I am still practicing what I preach.

Last question. Imagine it’s 2025, you walk into a large retail store in the US. What’s different from today?

For the customer, the store of 2025 is not going to look much different. If anything, you’re gonna see a smaller footprint and a bit less inventory, because the world is awash in the inventory and we need to get much leaner.

What’s going to change is a lot of piping that drives what’s being pitched to you is going to be dynamic and fast-moving. The information that retailers have about you, anonymous or not, is going to be a lot more thorough. Pricing and promotions are going to be dynamic.

So not many changes to the naked eye, but a lot of new stuff under the hood?

Exactly.

Make sure to recommend this post if you liked it! And follow Estimote channel for more interviews in the coming weeks.