University of Maryland’s Dr PK Kannan: The Future Of Retail In The Post Pandemic World
An Interview With Jilea Hemmings
The first thing that many retailers have done is to provide online options for shopping and fulfillment. Large retailers like Walmart and Target have been investing heavily in their online channels in the past years, specifically to counter Amazon’s threat, that when the pandemic came they were ready to take online orders and ship. They have done extremely well in the pandemic even as Amazon struggled to meet their orders and had to prioritize items.
As part of our series about the future of retail, I had the pleasure of interviewing P. K. Kannan, the Dean’s Chair in Marketing Science at the Robert H. Smith School of Business at the University of Maryland. Dr. Kannan has extensively researched how businesses can best harmonize physical and digital experiences, specifically examining the in-store and online experiences in the retail industry. His work includes consulting experience with Frito-Lay, PepsiCo, and Black & Decker. His current research stream focuses on digital marketing — mobile marketing, attribution modeling, media mix modeling, new product/service development and customer relationship management (CRM).
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 came to the US from India in the late 80’s to pursue a doctoral degree in engineering but could not get the financial aid I needed from the engineering program. So I joined the doctoral program in business instead, hoping to transfer later. But I liked the program in management science so much that I stayed on and got a Ph.D. degree in marketing and management science. I have loved every minute of it since then, researching how marketing and data break new grounds for retailers and consumers.
Can you share the most interesting story that happened to you since you started your career?
Given my degree in management science I started in my career in a decision sciences group teaching operations management, manufacturing and services. The group was dissolved, and I moved to the information sciences group within the same school and dabbled in information technology research and later moved to a marketing group teaching marketing courses — all in a spate of four years! It was a blessing in disguise because it got me thinking of how technology can impact marketing and operations and led to my early foray into e-commerce and digital marketing.
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?
I had my favorite model to analyze how different brands compete among themselves (which I thought of very highly, of course) and was presenting it to the marketing manager of a consumer packaged goods firm. I was so enthusiastic about the model and results as I presented that I failed to realize that he did not understand a word of what I was saying. Needless to say, it was not a very successful presentation to get that company to work with me on the research. I realized that you need to put yourself in clients’ shoes and understand their pain-points and make the research relevant for them. It is the same thing for marketers — understand customers’ pain-points first and develop your product design and marketing implementation accordingly. Success will follow.
Are you working on any new exciting projects now? How do you think that might help people?
One of my new exciting projects is understanding the structure in people’s social media engagement. People like and follow many brands and worthy causes on social media platforms like Facebook and Instagram. We analyze these “likes” and uncover the underlying structure in these networks. This project will help brands understand what social causes their followers and potential customers are passionate about and align themselves with these causes with donations and CSR projects. This all helps worthy causes and benefits society.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
I would advise them to work on impactful projects and research, rather than focus on the number of projects and publications. Also, teaching students is a noble profession and we should view it as something we are doing to raise future generations of responsible citizens, consumers, and managers. It gives back immensely which will prevent any “burn-out” concerns.
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 will never forget the help of my middle-school mate who took it upon himself to educate on the benefits of pursuing a doctoral degree when it was never in my radar. He planted the seed and helped me along to get into a good school for my doctoral education. Such mentoring is something everyone should be involved in and it is my mission in life too.
How have you used your success to bring goodness to the world?
I am a researcher and teacher. In addition to mentoring students and juniors in my profession, I, along with my colleagues in school, am currently designing and implementing a course in digital marketing in the MOOC format — which is basically a free online course anyone in the world can enroll and benefit from. I believe in free dissemination of knowledge that can benefit everyone if they have time to enroll and take these courses.
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 five examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?
The first thing that many retailers have done is to provide online options for shopping and fulfillment. Large retailers like Walmart and Target have been investing heavily in their online channels in the past years, specifically to counter Amazon’s threat, that when the pandemic came they were ready to take online orders and ship. They have done extremely well in the pandemic even as Amazon struggled to meet their orders and had to prioritize items.
Some retailers have used online orders and adopted a “click and collect” format where the orders are waiting at the store and picked up by consumers as they wait in their cars. This is especially the case with grocery stores in Europe where this format was already in existence and US retailers have also adopted it.
Some retailers (especially clothing retailers) are investing in technologies like Augmented Reality and Virtual Reality for virtual product viewing. Such investments are useful even after the pandemic as more customers migrate online.
Many retailers have adopted and are investing more on mobile apps to ensure that the customers are able to shop with them even when their stores are closed. The pandemic changed consumer habits because of the physical constraints it placed on retail. Loyalty to retailers is now becoming a thing of the past, but mobile apps may help those retailers maintain loyalties.
There is a great example of a Dutch luxury retailer in China that turned to the social channel — WeChat — and had employees act as influencers to pitch their products on it. Even though their stores were under lockdown, they were still operating successfully because of the social channel. In the US social commerce is still in nascent stages but I expect this to grow rather quickly post-pandemic.
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?
Physical stores will continue to exist, but at a much smaller scale. Retailers may not need as many stores, instead some of the existing stores may convert to showrooming where consumers touch and feel the product on display and order online through the retailer app or kiosk. For example, Bed, Bath and Beyond has been moving to this format even before the pandemic. There will always be consumers who like to experience the product before they buy, even with Amazon Prime and Instacart, and so retail stores may cater to that. Malls may become more entertainment and gaming focused in order to stay innovative and give consumers a reason to visit. Malls in the future may not be just about shopping.
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 common denominator for all these retailers you mention is “customer-centricity”. Lululemon has figured out that they are not for everyone in the market. They know their niche well, provide products they love, use technology to get to know the customer better, use social media influencers and are able to keep their customer loyal. It is the same with Kroger — they provide value (quality at a fair price), use technology and use analytics to understand their customers — personalized mobile coupons and such, are not afraid to innovate beyond their core grocery offering and run very efficient stores. Costco has always been a very efficiently run operation, centered around knowing their customers in the local areas they serve and customizing their offerings based on that. Their customer service is just great and this customer-focus has translated into overall success. Some lessons include: know your customer needs and pain-points, provide value, use technology and analytics to personalize, run a right ship and don’t be afraid to innovate.
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?
The DTC (direct-to-consumer) companies are becoming very common as consumers migrate more and more to online channels. Most of the DTC companies in the US could be using manufacturers elsewhere such as China for cheaper sources and they are likely to get significant venture capital backing to start up. Many of the successful ones have identified the customer need and provide direct value to them. However, the brands have trouble scaling up. When they want to expand their customer base, they are forced to look offline — through stores etc., — and overhead costs and expenses increase. Their acquisition costs also go up as copycat brands move in, increasing the customer acquisition cost. So, they could be getting 3- 5% market share but have trouble growing. My advice to large retailers is not to go on a price-war with them but rather ignore them if they are really small. If they grow larger and start hurting them, then retailers could go omnichannel themselves or buy up such companies. In addition, the current trade war between the US and China is leading to additional duties on imports that may hurt those DTC companies sourcing from China.
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. :-)
Teach math and programming to as many young students as you can — with the world becoming more technology focused in all walks of life, skills in this area are critical for tomorrow’s world. Go online, post YouTube videos, and impart your knowledge and wisdom to others!
How can our readers further follow your work?
https://www.rhsmith.umd.edu/directory/p-k-kannan
https://www.linkedin.com/in/p-k-kannan-9919245/
This was very inspiring. Thank you so much for joining us!
About the Interviewer: Jilea Hemmings is a staunch believer in the power of entrepreneurship. A successful career revamping Fortune 500 companies was not enough for her entrepreneurial spirit, so Jilea began focusing her passion in startups. She has successfully built 6 startups to date. Her passion for entrepreneurship continues to flourish with the development of Stretchy Hair Care, focusing on relieving the pain associated with detangling and styling natural black hair. For far too long, people with tender heads have suffered in pain. Until now.
