The Future of Retail Over the Next Five Years, with Carlos Castelan, Managing Director of The Navio Group

I had the pleasure of interviewing Carlos Castelán. Carlos is the Managing Director of The Navio Group — www.thenaviogroup.com — in Minneapolis, a retail business consulting firm that works with clients like Kraft Heinz, CVS, and Fidelity,

Thank you so much for joining us! Can you tell us a story about what brought you to this specific career path?

During my second year of business school, I started picking up consulting projects via a platform called HourlyNerd which today is named Catalant. The consulting work accelerated to the point where it became my primary focus outside of attending classes and I was running a small business out of the guest room in our two-bedroom apartment. As graduation neared, I was cajoled by a friend and colleague of mine at Hourly Nerd, Ben Zlotoff, to pursue independent consulting full-time. The logic went: what did I have to lose? Perhaps naively, I decided to take a shot rather than go work for other consulting firms. It’s been a winding path pursuing independent and then boutique consulting, but I have been doing what I love. Today, I lead a small firm focused on serving retailers who need help driving high-impact projects.

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

In pursuing this path, I have been most surprised by the generosity that others have shown me over the years and how putting yourself out there is well-received. As a friend and mentor of mine, Daniel Duty, always says, “You don’t get what you don’t ask for.” I believe this to be true and, as an example, I reached out to a person I admire — Ron Johnson — to get his advice on some career questions. As someone who has been bold in his career, and grew up in the same area as me, I admire Ron and figured I would reach to see if he would have time to answer a few questions. I was surprised to hear back from him and was even more amazed when he made the time to speak with me. It has been a privilege to connect with someone as inspirational as Ron.

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

One of the funniest mistakes I made early on was sending a client a proposal and on one slide I had accidentally left the name of the prior client on the proposal. I was mortified when I was walking through the proposal with the client and, fortunately, he laughed and didn’t think it was a big deal. That said, to this day, I double and triple check proposals or anything of the sort to ensure that doesn’t happen!

What do you think makes your company stand out? Can you share a story?

One of the things that makes our team and company unique is our ability to function as both strategists and operators. Often, consulting gets a bad rap because teams don’t actually “do” and the output is a deck that’s been assembled by associates 2–3 years out of college. We take pride in being able to present to C-level executives as well as work alongside operations teams to get work done. There’s not really a great term today to describe both operational and advisory consulting, but we are a small team that helps bridge the chasm between strategy and execution.

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

I find it helpful to take weekends off from email and my laptop. I do my best not to open my computer until Sunday night. The time away from work and unwinding helps me come back refreshed the following week.

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

My wife has been an incredible source of support for me for which I am grateful. I would not have had the courage to pursue the path I have without her. For instance, when I was applying to business schools I had never considered leaving my job to pursue an MBA full-time. She was the one that encouraged me to go after it and that she would support us while I was in school. Because of her encouragement, I applied to several schools and was fortunate to be admitted to Harvard Business School which became a life-changing two year experience for me.

Are you working on any exciting projects now?

We are currently working with a large client on an exciting new offering at the intersection of retail and healthcare. This is a very popular space as people see an opportunity for improvement in healthcare and to bring the “customer first” mentality of retail. It’s an exciting time to be involved in an initiative that’s needed and creating good in the world.

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

One of the most impactful statements I heard from one of my professors, Rakesh Khurana, was the description of management as a “higher calling.” While it sounded dramatic at first, he went on to talk about how people spend most of their days at work and so leaders and managers can shape whether someone has a good or bad day or week. Managers have such an outsized influence on the lives of their teams so, for now, I am working on building a workplace that inspires others to enjoy their work and helps them achieve the goals that they have for themselves.

Can you share 5 examples of how retail companies will be adjusting over the next five years to the new ways that consumers like to shop?

1. A focus on hyper convenience…

One of the biggest focuses for retailers today is identifying new ways to provide added convenience to customers. No longer is convenience for customers just defined as proximity to the retailers’ store as it once was. Beyond many of the initiatives related to faster home delivery, one of the biggest game changers today is Amazon Go — a model designed to have no checkout lanes and where customers can simply walk out of the store with their products. The concept has been deemed successful by Amazon in Seattle and is now slated to expand to Chicago and San Francisco. Technology providers, such as Microsoft, are working to build similar technology that enables frictionless customer experiences in-store to offer Amazon’s retail competitors. In-store convenience will become a focus for retailers and has the potential to start eating away at legacy convenience stores or drug stores designed for quick trips.

2. …or high experience

On the flip side of convenience, many retailers are also focusing on a high-touch/high experience model for customers. In a world where most everything can be purchased online why should customers come into a retailer’s store? Retailers that provide a strong customer experience via personable staff or find a way to create a shopping experience that doubles as a medium of entertainment will win on this end of the spectrum. Story is one company doing this today by revamping its space every few weeks and showcasing new products. This concept gives people a reason to come through its doors and keep coming back.

3. Using data to improve offerings

Data is critical to rapid iteration of a retailer’s offerings and to build long-term customer loyalty. In our work with clients, all are in some stage of trying to identify the different pieces of data they have and how to best act on them to better serve their customers. This is where new, retail upstarts have a clear advantage in being able to use data because of not having to deal with legacy systems. For example, Stitch Fix is a great example of a growing company that employs dozens of data scientists to better serve customers and predict what clothing they will like best. Data is at the core of how Stitch Fix serves it customers. It’s not too hard to imagine a scenario, where customers will be able to shop in inventory-less physical stores and have the assortments tailored to their preferences all based on data. The customer picks what they want based on the images they see and the products are waiting for them at the door as they exit.

4. The connected home

One of the great frontiers in retail is the home. Everyone from Amazon to Google to Apple is trying to be the center of a connected home and while the Amazon Echo is ubiquitous recent reports suggest that not many customers are shopping via their connected devices. That said, the connected home and devices within it present opportunities for companies to digitize previously analog devices from thermostats to lightbulbs to irrigation systems. Among the most popular devices are the Philips Hue lightbulbs which can be controlled from an app via cell phone and allow users to control the brightness of a bulb or put it on a timer. Beyond the devices themselves, the data from these devices, even at a macro level, presents a treasure trove of information for companies to better serve their customers at home.

5. Transparency & sustainability

A great trend of late that affects the retail world is consumer demand for sustainability and transparency. Look no further than the recent plastic straw ban in San Francisco or the plastic bag ban across many cities in the United States. Regardless of how one might feel about the bans, it’s clear that there’s increased consumer focus on sustainability which goes hand-in-hand with the desire to see more transparency in a retailer’s supply chain. So, how should retailers adjust to these trends going forward? They should lead efforts within their stores to be more sustainable and find ways to develop products that highlight that feature at the same price as existing options which is critical. An example of a company that leads with sustainability is Sweetgreen, a fast-casual restaurant, that offers compostable bowls, cups, and napkins. These may seem like small measures but add to the overall company’s brand appeal, particularly with younger customers.

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.

I am a big believer in the power of education and its ability to transform and change lives. With economic disparity in this country continuing to increase, I think re-thinking the education system would go a long way to providing kids the tools and opportunities they need to succeed. I would love to see a combined effort between the public and private sector to re-think our education system and come up with innovative programs that encourage kids to think big and show them what opportunities might exist. This is something that we’re thinking about at The Navio Group in particular as we think about internships for next summer.

How can our readers follow you on social media?

Personal: @cdcastelan on Twitter

Company: @thenaviogroup on Twitter or Facebook page

Carlos, this was very inspiring. Thank you so much for joining us!