Tecsys VP Guy Courtin On The Future Of Retail In The Post Pandemic World

An Interview With Orlando Zayas

Experiences matter. Retail simply isn’t about the inventory; it is about how you can impart an experience that complements the inventory purchase. Ikea, for example, has turned its physical stores into destinations. Who would have ever imagined going to a furniture store would be regarded as a destination? Or Sephora’s in-store experience that allows the shopper to be guided through their purchases, connecting the physical world experience to its digital reward system. Consider digitally-native firms like Indochino or Suit Supply that have created bespoke tailoring experiences within their guide shops. Of course, you can still order suits via their website, but the reason to go to the physical stores is to bask in the entirety of the tailored experience. It might not be Savile Row, but it seeks to replicate that experience.

As part of our series about the future of retail, I had the pleasure of interviewing Guy Courtin, a seasoned retail supply chain expert with decades of experience in the technology and supply chain space. Currently serving as Tecsys’ vice president and industry principal for Retail, Courtin held leadership roles at 6 River Systems (a Shopify company), Infor Retail and i2 Technologies (now Blue Yonder). Having served as industry analyst at Constellation Research, SCM World (Now Gartner) and Forrester Research, he understands the effects of digital disruption and the urgent need to transform for converging supply chain markets.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

I started out on this journey at the dawn of time — and by that, I mean the creation of the internet. When I joined Forrester Research in the late 1990s, the internet was just becoming ubiquitous. I was fortunate to be at a firm leading the charge in covering this new “technology”. I had a front row seat to seeing how companies such as Amazon and eBay became internet giants, while others like Enron imploded. I would point back to those early days as my launchpad into the world of e-commerce, supply chain and technology.

Can you share the most interesting story that happened to you since you started your career?

Like many of us, I have collected stories along the way, but one with real staying power is from back in my Forrester days. My client was large water distributor. I met with their e-commerce team in 1999 and they were in the midst of spending tremendous capital to create an e-commerce division. Their endgame was to sell bottled water directly to consumers; everything from large containers for your water cooler to individual bottles of water. I always remember a lunch I had with them where I asked, “The internet is a very powerful tool you can use for your business, but why e-commerce?” Their response was simple: “Our CEO read an article about Amazon and that is what he wants to do.” There was not much else we could say after that. We tried to steer them towards leveraging the internet for CRM or their supply chain needs, but the CEO wanted an e-commerce channel. If Amazon was doing it, so could we. Needless to say, the venture didn’t work. The story, though, is a valuable reminder about needing to keep executives and companies grounded in what their core business is, and not to be swayed by every shiny new object — and emerging technology is a series of shiny and often misunderstood new objects.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson or takeaway you learned from that?

One time I scheduled a meeting for my boss without getting all the details — who was in the meeting, the agenda, the expected outcomes. While he was good-humored about it, I knew he wasn’t too pleased about it when it was clearly a meeting he did not need to be in. It was a good lesson to always make sure you understand the details of an engagement and clearly communicate goals; and of course, the importance of owning and learning from your mistakes.

Are you working on any new exciting projects now? How do you think that might help people?

I have been really interested in the world of returns and the circular aspect of inventory. I believe that there is a great challenge ahead of us as the consumer becomes more comfortable with returning items purchased online, and begins to expect to be able return whenever and however is most convenient to them. By some estimations, Americans generate close to 80lbs of textile waste per year, per citizen. That is not sustainable. There has to be a better way, and I am confident that software and supply chains hold the answer. I believe that this will not only help people and the environment, but it will be a boon to businesses that are savvy enough to take advantage of this opportunity to find new revenue streams and a novel way to delight their customers.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

I think burn-out has become a real factor in the world of pandemics, with sheltering in place and not travelling taking a toll on all of us. Some industries are experiencing the brunt of this global disruption, and front-line workers are stretched to their limits, but each of us has a different threshold, and this last year or so has stress-tested each of us in unique and challenging ways. Through it, I try to encourage my peers to put things in perspective. Appreciate and focus on what matters — family, friends, pets etc. Give yourself permission to disconnect. It’s okay if you don’t answer that email right away or ignore that text message. I completely unplugged over the Christmas holidays and it was a great way to recharge the batteries. I highly recommend it!

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?

I have been fortunate to have a number of mentors throughout my life and career. Notwithstanding my parents as the constant, one person who certainly helped in my growth was my Cost Accounting professor in business school. Professor Shank was one of those old school professors — tough but fair. His business cases for class were always short in length but dense with numbers. What he really pushed on us was to think, and to tap into everything we have learned, not just what is being taught to you at that moment. That guiding principle has helped me in both my personal and professional life to think large, prepare rigorously, and be confident in my findings.

How have you used your success to bring goodness to the world?

First and foremost, I work every day to be a better dad for my son; while I love my work, being present for him is a privilege and a priority.

Professionally, I am fortunate to have had a rich tapestry of experiences in the retail supply chain space; I love using this background to teach my peers and the next generation of leaders alike. I believe that in order to advance and modernize the industry as a whole, teaching and mentoring others is powerful. To that end, I try to make myself available for those seeking assistance, education or advice, and to share the lessons I have learned along my journey.

Ok super. Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

The biggest change I have seen with retailers is the rate of transformation in moving from concept to reality. For example, there was a great interview with Marvin Ellison, the CEO of Lowe’s, who discussed BOPAC (buy online pick up at curb) being on their 2020 roadmap at the end of 2019. Once the pandemic hit, it was no longer on the list, but it was the list. It became top priority; they could not afford to wait or to deal with the red tape that was typically associated with new initiatives. Lowe’s made it a reality with impressive expediency. We have seen this across the board — Walmart, Best Buy, Target — these large retailers had to pivot quickly when it came to how they got inventory to their end customers.

I have also seen remarkable expansion of contactless payment, whether with tap-enabled credit card readers or payment via mobile device through Venmo or Paypal. Prior to Covid, we certainly saw rise of these technologies, but the pandemic has fast-forwarded their adoption.

Going further up the supply chain, I am seeing the growing usage of automation, primarily in the warehouse, where the pandemic forced many distribution centers to not only meet growing customer expectations (therefore the need for automation to help with efficiency and speed) but also faced with a responsibility to keep their own teams safe and socially distant.

Across the board, we have seen retailers accelerating their adoption of emerging best practices that streamline the consumer’s ability to transact and have their orders fulfilled in a safe and efficient manner.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

Yes! A resounding yes! Stores are not going away. While e-commerce has grown and Covid was a turbo-booster for that growth, most projections have e-commerce stabilizing around 20% of overall retail. That means 80% will still take place in a physical store. But it’s critical to recognize that stores are undergoing a transformation, and this transformation was already underway prior to Covid. When we look at stores, we cannot simply look at them through the prism of “one size fits all”. Stores will have to evolve based on what sub-vertical of retail we are discussing. Companies like Dollar General are seeing great success with their store format: Low prices in almost a treasure hunt type atmosphere. They recently announced plans to open over 1000 stores nationally. TJX is planning to double the number of Home Goods they have nationally with 700 net new stores. In parallel, look at digitally-native brands like Bonobos, Warby Parker, Allbirds and of course Amazon; they are opening their own physical stores. Why? Because they realize to truly create a full customer experience, you have to be active and present across all the channels where your customer shops.

Your customer might shop predominately online, but at some point, to lock in that loyalty, or satisfy a showrooming demand, you may need to offer a physical location. It doesn’t mean that location is the same as “old-fashioned” stores. Bonobos offers its stores as guide shops where you can look at clothing, try some on, but your order will be fulfilled from a distribution center. Amazon only carries a very small number of goods on hand, but using the mountains of data at their disposal, they can curate what is offered in that store to match the high demand items in that zip code. And those Amazon stores are a great showcase for their own electronic devices as well as serving as a lower cost return hub.

The store will not go away, but both stores and malls are being redefined within the customer experience. Will it still be a location to purchase products? Yes. But stores that thrive will focus on the non-transactional needs of the consumer.

• Value-added services. The Apple Store offers lessons and a counter to troubleshoot Apple products… and while I’m at it, maybe buy a new Apple watch.
• Secondary services. Kohl’s lets us shop but also return my Amazon purchases. Retailers like CVS and Walgreens are adding medical care services within their physical locations.
• Consumer experiences. At a Louis Vuitton store, I get champagne and white glove treatment while browsing for a new speedy bag.
• Like-minded shopping. At Guitar City or Zumiez, I am going to interact with folks who are passionate about music or skateboarding.
• Fulfillment. Target, Whole Foods and a host of other retailers are looking to their stores as forward-positioned inventory, allowing them to leverage that store inventory to fulfill customer orders faster, more cost-effectively and conveniently.

Physical stores need to be part of a retailer’s overall go-to-market strategy when it comes to building and nurturing their relationship with the end consumer. These stores must be seen as assets that have to evolve and address the changing demands and needs of that consumer. Savvy retailers will embrace this asset rather than view it as a relic of the “old days”.

The so-called “Retail Apocalypse” has been going on for about a decade. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?

The term “Retail Apocalypse” really drives me nuts. It usually amounts to clickbait headlines or sensationalism. Retailers have absolutely struggled, but this is not a new phenomenon. Retail, like all business, is in constant evolution.

Certainly, the way we interact with retailers and brands has changed. The web and mobile have created a new dynamic our everyday lives, including retail. No longer do brands and retailers have the power, but we as consumers do. We are literally a click away from anything we desire. This has created the apocalypse for the ‘old way’ we did retail, back when our choices were dictated by large brands and retailers and our range of choice was limited by the tank of gas in our car or what paper catalog I received. Companies like Sears, Radio Shack and Toys R Us, for example, failed to grasp this changing landscape; they kept trying to impose their old behavior on a digitally savvy consumer. Meanwhile, retailers like Tractor Supply, Bass Pro Shops and Target were able to pivot and grow during this time of “retail apocalypse”.

What have today’s success stories done to be successful? First, they clearly understand what their identity is and will be. You cannot survive by simply being a retailer carrying the same inventory as the next store. When consumers can vote with their clicks, you have to give them a reason to come to your store.

Second, retailers that curate experiences to build on that identity understand that they need to give their customers on-brand reasons to seek them out. While I can purchase a fishing rod online, I cannot replicate the giant fish tank at Bass Pro Shop — or try the climbing equipment on the climbing wall at REI. This added value creates opportunities for parallel experiences that cater to your target audience.

Third, successful retailers are all digital and data nerds, in a good way. We all know there is way too much data, but we don’t always know what that data can tell us and what questions to ask of it. Shrewd retailers find ways to harness and maximize the information they have access to. Just look at the growth of private label; using data allows retailers like Costco to leverage their Kirkland brand in the most profitable segments. Of course, this can create tension with suppliers, but that is the price of doing business. Finally, these retailers are also world-class ‘supply chainers’. Walmart is famous for having efficient and agile supply chains. With digitally-empowered consumers, the pace and strain placed on those supply chains is ever-growing. Retailers that hope to survive and thrive in this environment know their supply chains are what afford them the ability to succeed.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

Retail has always faced the threat of low-cost manufacturing and product alternatives. The challenge goes back to how a retailer or direct-to-consumer brand differentiates itself in the market. Is your product easily substituted by a generic, cheaper version? If so, then get ready for a race to the bottom. Or, does your product have a defendable position? I realize this is easier said than done. If we could all find and replicate the magic formula from the likes of Coca Cola, Adidas, Nike, Apple, Walmart and others, we would. But there is a reason why these names and brands command such a place in the market.

One trend that is in favor of local brands and retailers is the growing consciousness expressed by the consumer around sustainability and more localized products. Consumers are becoming much savvier and more conscious about where and how their products come to them; we have seen this when it comes to locally sourced food at farm-to table-restaurants. I expect to see more of this trend in retail.

Companies competing against commoditized goods need to look to their capacity to provide customers with more bespoke products or experiences as differentiator. Consumers are starting to want, if not expect, greater levels of personalization. All one has to do is look at the car industry; BMW could run their Spartanburg plant for 6 months, two shifts a day, and never build the same vehicle twice. Or head to In-N-Out Burger and learn to order off the “secret menu”. Consumers are looking to have greater control over the product, the packaging and the delivery, and retailers that view the consumer with this lens are in a favorable position.

Whether competing against commoditized goods, generics or faceless megabrands, retailers and e-commerce players have to focus on how they can get closer to the end consumer in heart and mind; take a page out of the political playbook and think globally but act locally.

Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.

1. Focus on your customer. This is Retail 101. Regardless of what you are selling, you have a target audience and personas you need to appeal to; too often, retailers lose focus on their consumer. What does she value? What kind of inventory mix is key? What price threshold? What type of assortment? The retailer Madewell understands its customer as a fashion-conscious consumer who is also socially aware. Their denim exchange program encourages their patrons to exchange jeans for money back, allowing Madewell to then recycle that denim for housing insulation. The brand respects and empowers that customer to engage with it authentically.
2. Experiences matter. Retail simply isn’t about the inventory; it is about how you can impart an experience that complements the inventory purchase. Ikea, for example, has turned its physical stores into destinations. Who would have ever imagined going to a furniture store would be regarded as a destination? Or Sephora’s in-store experience that allows the shopper to be guided through their purchases, connecting the physical world experience to its digital reward system. Consider digitally-native firms like Indochino or Suit Supply that have created bespoke tailoring experiences within their guide shops. Of course, you can still order suits via their website, but the reason to go to the physical stores is to bask in the entirety of the tailored experience. It might not be Savile Row, but it seeks to replicate that experience.
3. It’s the fulfillment, stupid. It is not ‘e-commerce’ and ‘brick and mortar commerce’; it is simply ‘commerce’. But in order to deliver on the promise of that unified concept, you must have the right fulfillment strategy in place to meet customers’ demands and expectations. Retailers have to think about a cohesive channel: One set of inventories, one unified experience and one seamless manner to fulfill, even if that fulfillment takes many forms. Grocers have demonstrated a keen awareness to this. Kroger was experimenting, prior to the pandemic, with last mile autonomous delivery. The company recently signed on with Ocado to create a fully-automated distribution center for faster home delivery. It has ramped up its BOPAC for those who seek curbside delivery. None of this would be possible without an ironclad fulfillment capability.
4. Leverage data. Yours and third-party. We all know that data is the fuel that drives our modern business, regardless of what industry. Retailers need to leverage the available consumer data, as well as other forms of structured and unstructured data, to perform a host of value-added services. This may range from better product allocation to pricing, or in the case of Costco, being able to alert customers who were at risk of being impacted by a food recall. Retailers need to also absorb and analyze other sources of data, like social media. Stitch Fix looks to harvest their subscribers Instagram, Pinterest and Facebook posts to better curate their subscription boxes. The challenge is not getting the data, but making sense of it. Data is the new oil, but that oil is useless until it is refined and turned into a usable product.
5. You will only be as successful as your network. Companies don’t compete — their supply chains do. This has never been truer than with retail. Brands and retailers have to take a networked view of their business, from suppliers to distributors to fulfillment nodes. It is the strength of the network that leads to success. This does not necessarily mean the relationship will be one of equals. Brands like Dell and retailers like Walmart have legendary supply chain networks and they rule those networks with an iron fist. Other retailers like Apple or McDonald’s also boast world-class supply chains and networks that ensure the product and experience remains consistent and top-notch across the board.

Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

We need to focus on the circular aspect of inventory within the retail lifecycle. Retailers and brands need to think about how their products and inventory are “end of lifed”. Recently, we heard of stories from the likes of Amazon and Walmart telling consumers who were looking to return online purchases to keep them instead and still get their refund. A pleasant surprise for the consumer, but not sustainable for businesses’ bottom lines, let alone the environment. When most of these discarded products end up back in a landfill, we can quickly grasp the potential severity of this issue. Retailers and brands, not to mention their consumers, must become savvier and more aware of the circularity of those returns. How can brands and retailers factor in reverse logistics within their overall business strategy? We can turn returns into an opportunity to delight our customer again and repurpose that working capital somewhere along our supply chains. Madewell is a case in point. Consumer electronics retailer Best Buy is another one through their initiative to offer consumers a place to dispose of their old electronics.

I would challenge retailers and brands to weave into their strategies how to leverage the returns channel; to repurpose inventory; to make that customer touchpoint an opportunity to delight them rather than something that is dreaded. We have not shown any signs of diminishing consumption, and returns are on an upwards trend; we must work towards a smarter way to deal with this profitability sieve.

How can our readers further follow your work?

Twitter: @gcourtin

LinkedIn: https://www.linkedin.com/in/guycourtin/

Web: www.tecsys.com

This was very inspiring. Thank you so much for joining us!

About The Interviewer: Orlando Zayas is the CEO of Katapult, an award-winning omnichannel payment platform. Zayas is known for his revenue growth strategies and visionary leadership in the eCommerce and retail space. His future-forward expertise has led companies such as GE Capital, Safe-Guard Products International, and DRB Capital. Zayas is also highly committed to providing educational opportunities to underprivileged communities through his philanthropic endeavors. Zayas’ business insights are regularly featured in publications such as Forbes, Entrepreneur Magazine, Retail Insights, and more.