EPISODE 086 : 11/03/2022
Cathy Hotka is a Principal at her own company, Cathy Hotka & Associates, working as a high-value networking contact in the retail community. After starting her career at the White House and on Capitol Hill, Cathy began to focus on association work. While working for 7 years at the National Retail Federation, she created the NRF CIO Council and NRFtech. This ultimately led to the creation of Cathy Hotka & Associates as not only a networking company but also as a connection in the retail industry that offered better knowledge-sharing, collective brainstorming, and innovative solutions. Cathy now manages the Store Operations Council, hosting numerous events around the country, and is a RETHINK Retail Top 100 Influencer (2022).
Host: Ned Hayes
Guest: Cathy Hotka
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Topics discussed in this episode
- Detailed small business insights from Olympia, Washington
- Small business resiliency and adaptation during COVID
- Doubling community outreach during the pandemic
- Opportunities for small business loyalty programs
Watch Spark Loyalty’s Small Business Success Channel
Ned Hayes [00:00:00] Welcome to Spark Plug, where we talk to smart people working at the intersection of business and technology brought to you by Snowshoe. Your smarter loyalty leader Sparkplug is happy to welcome Cathy Hotka to the podcast. She’s the principal in her own company, Cathy Hotka Associates, working as a networking nexus in the retail community. She started her career at the White House and then Capitol Hill, and then she began to focus on association work like seven years at the National Retail Federation and work with the NRA’s CIO Council and RF Act. And now with her own company, Cathy Hotka Associates. She provides connections in the retail industry with sharing, brainstorming and lots of innovative solutions. She has a rethink. Retail Top 100 influencer. So welcome, Cathy.
Cathy Hotka [00:00:49] Thanks so much. It’s great to be here. Yeah, we’re thrilled to have you diving into it. Tell us about your career beginning at the White House and on Capitol Hill on. The key for all of that for me was working with very senior leaders, which is something I’ve done throughout my career. I’m used to hanging around with people with C-level titles, and that’s been a good thing in the world of business when there are technology companies who want to get to know those people. And in retail, it’s particularly important to be personal and to know people really know them. Retailers like to work with technology companies whose people they get and they have trusted.
Ned Hayes [00:01:27] Could you tell us more about how you moved into kind of retail i.t as a focus area?
Cathy Hotka [00:01:33] Yes. So I had been managing the American Petroleum Institute, CIO Council, so, you know, ceos of big oil. You can imagine what that was like. That was a ton of fun because they had more money than they knew what to do with. I got hired by the National Retail Federation to put together a CIO council for them. And just to give you an idea of how quickly retail changes this was in 1996, so not that terribly long ago, I approached the CIO of the biggest and most powerful retail company in the world, Sears Roebuck and Company. So it gives you an idea of how quickly things move. But working with retail, it has been fascinating and it’s been transformative for these retail companies. Look at what they can do now that they couldn’t do before, and they’re constantly under pressure to do yet more. So there’s always something to talk about. Absolutely. How does Cathy Hotka and Associates connect retail leaders so that they can compare notes and move the industry ahead? Why is it important that retail leaders stay connected? So luckily for me, I have an unusual last name, which I am grateful for every day. That’s been a big help. I’m the only Cathy Hotka they’ll meet. So that’s a plus. Retail leaders want to talk to each other because they want to know what their colleagues are doing, maybe at a company that is not their competitor. So a big hardware chain wants to talk to a big beauty chain to find out how they’re handling digital transformation or data analysis or all different things like that. And technology companies want to get to know retailers because retailers really prefer to work with people they know. So if I could figure out a way to, in a tasteful, non salesy way, to get some salespeople in front of some technology leaders, that always has a good outcome. And I’ve been doing that for many years.
Ned Hayes [00:03:24] So you do have a background in I.T and I was just curious how you are able to use that knowledge in retail leadership. If you could speak more specifically to how I.T has kind of taken a pole position in retail?
Cathy Hotka [00:03:39] It’s been interesting to see how the technology has affected the way retail companies have grown and what it is that they are able to do. A lot of us remember the early days when we were taking pieces out of boxes and setting them up on people’s desks and trying to train them and how to use this thing. And what do you mean? There’s an escape. It was all new enterprise software. It was all new. Then we had consumer eyes to technologies. So all of a sudden, the CEO of your retail company has a computer that he or she knows how to use, which was a whole different set of demands on the I.T. folks. But basically, I think it’s been fundamentally important to the growth of retail companies that they have been able to leverage these technologies. And one of the things that we’ve seen is that the winners, the companies that keep moving ahead and inventing new markets, are particularly aggressive about how they deploy technologies. And the companies that lag behind are not so sure they need to spend right now. They think they’re probably in a better position than they are, and that’s how they fall behind. Look at the pandemic. All of a sudden, nobody can go out. It’s March of 2020. Everybody’s at home, but you still need to eat. So how’s that going to work? And companies were forced to do amazing things. To keep their doors open and to keep the company going. Home Depot, for instance, stood up curbside delivery in seven days. Consider that Home Depot has stores in many countries, right? It’s not just that they figured out how to do it in suburbs of Atlanta. It’s that they did it across the world. And technologies like Zoom help them communicate with one another. They were working in Matrixed teams at home, talking to strangers in the real estate department or in the legal department that they probably didn’t know. The technology got them through. It, held their audiences. And now they’re deploying new technologies to say, relevant to the new customer. I think one thing that’s going to be interesting is the rise of the Gen Z consumer. Gen Z is graduating from school. They’re going to be setting up their homes. They are true digital natives and the way that they interact with stores is different from the way that we geezers do. They’re much more willing to think about NF, TS and Web three. They want to interact with technology that’s in the store. I mean, you may recall a couple of years ago Taco Bell, whose customer is a 17 year old boy, put touch screens in their stores because the kids who were coming in didn’t necessarily want to talk to the grandma behind the counter, but they were happy to interact with the machine. So as you have newer consumers who work in different ways, you need to have new technologies. So I think you’re going to see a rise in digital wallets. I think you’re going to see a rise in cryptocurrency. I don’t need cryptocurrency, but I think that there are some younger consumers who think that that would be pretty cool.
Ned Hayes [00:06:43] So I’m curious, you comment in publications such as Forbes on retailers like Apple and Amazon, and you just gave us a great example of a store that really responded to their customer base by becoming more technical. So what should innovative technology companies like Apple and Amazon be doing to accelerate the customer lifecycle to make it work better?
Cathy Hotka [00:07:07] It’s interesting that you mentioned those companies because Amazon, for instance, has been on a hiring tear hiring retail industry influencers to manage their various divisions. These people are very well known, very well respected, and it makes Amazon as a company more approachable. People feel like they can make a call to that guy instead of trying to attempt to contact the whole company. And in response, those innovative technology companies are spending valuable face time with retailers. They go to their office, they hang out there. They want to see what it’s like in there for a couple of days. They go to stores and see how people respond to technology. And so, you know, just as, for instance, phones in stores, 15 years ago, retail companies started putting phones in stores like, hey, why don’t we give them to our associates and see what happens? Well, the answer is nothing. They put them in a drawer now, now that everybody’s got their own phone. When you give associates a phone and tell them what to do with it, take pictures of displays, email them to our best customer. Talk to other stores in the division and give them suggestions. Now it’s taken off like mad. Everybody’s using the device. You know, some of it is having the right technology. Some of it is having the training and orientation so that people understand what it is they can do with the technology and how they can contribute to the company. I love that comment there and just how you’ve seen that shift in technology and usage and people’s understanding of it and kind of building off of that. Where have you seen the strongest advances in technology in retail over the past two years? I think the one that comes to mind most is self-checkout. Right. So you had store associates who were afraid to come into the store or they worked like dogs for two years. And then they thought, okay, I’m taking a break. There’s been a shift in customer behavior. And so out of necessity, retail companies have been installing new self-checkout. That’s a little easier to understand. It doesn’t yell at you like the old ones do or did. In fact, at the Nashville airport, there is a Hudson group that sells the water and the magazine. Yes, $7 water at the airport. They have an Amazon just walk out store in the airport. It’s basically a Hudson News without walls. It’s fenced. You swipe your credit card, you go in, pick up anything you want and just hit your credit card. In a way, no humans. None. Okay. Well, okay, so this is perfect. Talking about kind of these trends of less humans. No humans. What do you think is the future for A.I. in retail? A.I. is going to be in everything. We’re going to see all kinds of things. There’s a new consumer application where you can plug in your grocery list into your device. And as you’re walking the aisles, it’ll ping when you’re near that. That you wanted to buy. Oh, nice. We’re going to see a lot of this. You’re going to see it in everything from the technologies that they use to hire associates to planet grams, predictive selling, assistants selling. You’ll see it in all kinds of ways.
Ned Hayes [00:10:13] Well, you said we’re going to see. I’m curious about today. What brands do you think are getting it right today in terms of omnichannel and retail experiences?
Cathy Hotka [00:10:23] The two that come to mind right away are Walmart and Target. And I almost hate to bring them up because that’s so simple. But Walmart, for instance, has just gobs of money. And Target is an extremely well-run company. Brian Cornell has done a fabulous job as CEO, and they’ve invested all kinds of money. And those companies that didn’t resist change but went along with it and put in buy online, pick up store, ship from store, all those processes, their less technologies, the processes. But making that available is changing the way the customers can interact with the store. And, you know, now it’s not just young people having their groceries delivered. Now it’s older people having their groceries delivered because they hate shopping as much as the other people do. But but this is no time for companies to take their foot off the gas with tech purchases. Yeah. No, I think that’s a really great point. Kind of going into that retail in that shopping space, we see a lot of retail stores using loyalty systems in all sorts of ways. You know, you have Starbucks and gas points and blockchain based rewards systems, right. Why do you think so many companies are engaged with loyalty solutions? Why does loyalty matter in retail? Well, you know, the real truth is that they haven’t gotten it right yet. Oh, interesting. Right. So I have a loyalty program at my food store, you know, shop at a big grocery chain, and I get rewards from plugging in my phone number. It’s not really what they want to get out of that. Basically, I’m spending less money because of the reward program. They sell that information to third parties. So that’s why it’s valuable to the grocery store. The real promise of this, though, is to better understand consumer behavior and be able to act on it. You know, if I have bought cat food over and over, don’t send me a dog food coupon. There’s a lot more to be done here. And, you know, I have a feeling that a lot of people would like to have a closer relationship with their retailers, one that’s more personal, less transactional. What if your I’m wearing a black shirt? What if a retailer were to put two and two together and say, Cathy, you’re constantly buying black. We have some black things for sale. It can’t be right, but it would be great if they could. And they understand the potential for it. And that’s why they stay tied up with it.
Ned Hayes [00:12:40] Well, tell us more about that potential. Why does it matter? It keeps customers engaged with their store.
Cathy Hotka [00:12:46] Because customers are mobile. I’m old enough to remember when we went to the store in our neighborhood because my mother didn’t drive. We had a store and that was the store. Well, these days, think of your possibilities. We’ve got people who are buying junior clothing from Korea or from China directly, and it comes in a little flabby envelope. The customer has more choices now than they ever, ever, ever had. And customer acquisition costs are high. So it’s important for retail companies to stay relevant to those customers to present the kind of store that the customer expects. I want that store to be clean. I don’t want the clothes to be on the floor and act like they want my business, because if they don’t, I can go elsewhere. Absolutely. Because your mobile, like you said. Well, okay. So along those lines, you know what? Technology does actually help build retail loyalty. What technical programs have you seen work to build loyalty. Clearly, discount programs work. I would suggest, though, that there are other technologies that can amp up the loyalty. One would be fitting room technologies. How much do you hate it when you buy? You have three things. You take the back in the fitting room. They don’t fit. And you’re thinking, you know, I wish I could have picked that up in a different size. Now you have to put all your clothes back on and go back there with this armful of things that you have picked up which are now not right, and try to retrace your steps and see where did I get this thing in the store anyway? Anything that can reduce friction for the customer increases loyalty. So I’m convinced that those fitting room technologies where you can use air to show it an item, maybe have it scan the barcode and say, does this come in green and do you have it in this size?
Ned Hayes [00:14:32] Well, just switching gears back to the communities that you built. I’m curious if you can tell us more about the store operations council or maybe retail Brainstorm or some of the other groups that you’ve been involved with because you’ve been really instrumental in forming those groups.
Cathy Hotka [00:14:47] It’s been a lot of fun, I’ll tell you that. I started the Store Operations Council because there wasn’t one, and it seemed ridiculous to me that in the retail industry there was not a committee on the store. We go to fun cities. We have dozens of different kinds of people who can interact with each other just because their various formats are great. It’s wonderful to see how a beauty company can interact with a furniture company and talk about enhancing the experience of associates, training and development plan exams, all the various things that we talk about in the store. The retail brainstorm was a project that’s going to rear its ugly head next year, big time. The idea is to get a lot of retailers and retail influencers talking about those intractable problems that we haven’t fixed yet and the brilliant opportunities that we have to improve the industry. Because if we can get these dialogs going and get more people to weigh in, we can fix some of these things. Absolutely. And I love that clarity and that optimism and the interactions. Amazing. That sounds like a great thing that you’ve really been dedicating yourself to. Can you give us an example of what retail brainstorming looks like as a process? Yes. So I had a meeting not too long ago at Intel in Arizona, and I brought along about a dozen thinkers, very smart people, D levels, former C levels of venture capitalist. We had somebody there from 7-Eleven and somebody there from Saks. So it was all different formats. And I set up seven or eight different discussions. So one was around associate engagement. How do you do that? And I’d throw the topic out, say a few things, and then they would then take it and run. And the whole time that they are comparing notes, I’m writing down notes and we came up with a list of the most important things that we’re going to go after. So now that I have that, we are going back to the community, we’re getting all the influencers, the analysts, the reporters, the hangers on like me. We’re going to get together and ask a different community these same questions about what kinds of things we can be fixing. If you could fix two things in retail, what would it be? Is shrink something that you’d want to go after? What are the things that drive you crazy? What are the things that keep you up at night? And one of the things that should keep them up at night is that consumers think that they see 15% out of stocks. They think it’s not there. It could be that it’s not there. It could be that it’s there and it’s locked up. It could be that it’s there and it’s in the back. And it hasn’t been brought out yet. And that’s why that shelf is empty. And in a lot of retail stores, there’s no way for you to say, hey, does this exist? Do you have any more of these? A lot of times that’s just not the case. If you’re in a drug store, they’re just going to lose the sales. I think if we got some very smart retail practitioners together with the best technology companies, we can make some progress on these things. And that’s why The Brainstorm.
Ned Hayes [00:17:46] Well, speaking of very smart people. You’ve been a longtime judge of the CIO magazine, CIO 100 awards, right? I have, yeah. So what’s that process like? How do people get nominated and how do they stand out?
Cathy Hotka [00:18:00] They nominate themselves and they’ll come forward and say, this is what I did. This is my project and this is what I did. What the judges are looking for is ingenuity, creativity, perhaps a different twist on how to do it. So generally what doesn’t win is if somebody says, I installed this big retail company that everybody has, that’s not the idea. The idea is we had a business problem with this and then we put together a consortium of five different vendors to address it. We got the thing done in nine months and we came in 30% under budget. That’s the kind of thing that interests judges. Could you tell us about your company’s partnership with Retail Wire and in particular your work as a brain trust panelist? Retail wire has been a great experience. What a wonderful company. They reach tens of thousands of people a day and they do it by publishing three stories and having a bunch of us comment on the stories before they go out to the reading public. So we get to weigh in on the story. And what’s fun about that is that sometimes I’ll say this is a great idea and then nine people behind me will go, No, it’s stupid. Why would you? It’s never going to work and it’s dumb. It’s a lot of fun to be part of that. And then obviously they turn around and publish that in Forbes. It’s good exposure for all of us, and consequently, the retail wire panelists all know each other and we back each other up.
Ned Hayes [00:19:32] Well, you’ve served a lot of different communities, including the Retail Orphan Initiative. So could you tell us more about this retail orphan initiative?
Cathy Hotka [00:19:40] Yes, I think it was 13 years ago. There were a bunch of us who lost our friend, Paul Singer, who had been the CEO at Target. And Paul had adopted three little girls from Russia and had been advocating for adoption on Capitol Hill. And Paul had an untimely death. And there were. Five of us who looked at each other and said, we can do this. We can raise money for orphan charity. So we put together the Retail Orphan Initiative, Super Saturday, which will be January 14 this year in New York City before NRF. And it’s a learning event. It’s pretty much a long morning. We’ll start at eight. We’ll go until one. And we have retailers speak, analyst speak, charity speak. And we charge technology companies a fee to come. So retailers attend for nothing and technology companies provide the money, which is then used to rescue sex trafficking victims and provide learning labs for orphans. And I’ll give you an example, the best end to a presentation I ever heard. This kid was 15. He had raised hundreds of thousands of dollars for people in need. And it actually opened a hospital in Africa. And his mom was advancing his slides as he’s going through his presentation. And when he’s done, he comes up to the front of the stage and says, I know what you’re thinking. He’s just a kid. Well, I have a challenge for you. Everyone can do something. What can you do? And he turned. Walked off the stage, and people burst into tears. Wow. It was great. So it’s exciting to raise some money and see some good being done.
Ned Hayes [00:21:19] That’s really powerful. What a story. And it’s true. I mean, all of us can do something, right? Great. So as your work in retail continues and as you continue to make a difference in the world, where do you see the world going with retail over the next 5 to 10 years?
Cathy Hotka [00:21:34] Oh, it’s exciting. Think of all the things we’re going to have. No, it’s going to be really exciting. You’re going to have access to more merchandise, better merchandise, better priced merchandise. You know, look at where we were even 20 years ago in terms of what your TV looked like and what your life looked like. Things just continue to get better and better. And it’s my personal belief that if senior leaders network with one another share those good ideas and back each other up, we can have a really exciting time. Well, that’s fabulous. And along those lines, we have a question we love to end our sessions with and we’d love to ask and hear from you about what do you think your legacy is like? What do you hope to be remembered for? My goodness, I hope that it is in providing a warm, welcoming atmosphere for everyone. I hope that’s it. I like to think that by introducing people to each other that I made a difference. And I hope that’s the way I’m remembered and definitely hear that commitment in your work.
Ned Hayes [00:22:37] Fantastic to have you here with us. Thanks for taking the time to chat.
Cathy Hotka [00:22:41] Thanks, Ned and Kira. Appreciate it.
Ned Hayes [00:22:43] Spark Plug is a wholly owned property of Snowshoe. Copyright 2022 2023. Spark Plug Media.