EPISODE 095 : 01/05/2023
Hitha Herzog is Head of Retail Research and a Chief Retail Analyst at DONEGER | TOBE, “a people-first insights agency delivering consumer, commercial, and creative strategies to keep brands relevant .” With a background in analysis, retail insights, business development, and more, Hitha is well-versed in creating business and creative strategies as well as predicting consumer trends. She is also an accomplished author, educator, on-air contributor, and keynote speaker.
Host: Ned Hayes and Ashley Coates
Guest: Hitha Herzog
Listen to every episode
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 [00:00:04] Sparkplug is excited to welcome Hitha Herzog to the podcast today. He is head of retail research and she’s a chief retail analyst at DONEGER | TOBE Peoples First Insights Agency that delivers consumer, commercial and creative strategies to keep brands relevant has a great background in analytics, retail insights, business development, and she is also an author and educator and a keynote speaker. So welcome to the podcast.
Hitha Herzog [00:00:37] Thanks for having me. I’m so excited to be here.
Ned Hayes [00:00:41] Well, you have such a robust career. What are some of the noticeable trends that you’ve seen, especially in retail?
Hitha Herzog [00:00:48] Gosh, I don’t even know where to begin. How long do we have for this? Yeah, you know, it’s interesting with retail because I think there are two sides to it. There’s one side where we see stalwart retailers that have been around forever. And I don’t want to name names. I mean, maybe that’s just another podcast we do. But I think people can assume who I’m talking about. These are retailers that have been around for many, many years. Maybe they’ve been around for over a century, and they do their business like they are still doing business from over a century ago. I always say they seem like they’re the like the the cruise ships floating down the Hudson River. I live in New York City. The Hudson is right behind me. I see these cruise ships that go negative five miles an hour. I feel like that’s what these stalwart retailers do. They are very slow to change. And I think now retail is changing so rapidly with the advent of technology and small business as well. Small businesses are very nimble. And my prediction is that small businesses will eventually eclipse these large, smaller retailers because they are so nimble, they have such reach, and they are able to make disproportionately more money online through their websites and third party sellers and and third party websites than they do via brick and mortar.
Ned Hayes [00:02:28] Right. So you’ve seen so many changes, but you’ve also seen some people just kind of stay in the current stay old school, right?
Hitha Herzog [00:02:36] Stay old school. And while it might be working for them, I think there is a vibe in retail because it’s been done the same for so many years and we’re talking decades and we have executives that learn from executives in the past. And what works. If something works by change it right? Why fix something that’s not broken? But in this case it is broken. And instead of really examining it, maybe dismantling the foundation and creating a foundation that’s sustainable for the next 50, 60, 70 years, they just stick with what they’ve done in the past. And we’re talking about everything from back chain or excuse me, back and inventory management to supply chain last mile and then the way that items and product are merchandised on the floor. I was looking at photos from a retailer that is pretty massive name during Black Friday. You know, again, I don’t want to name names, but you see their name all over Black Friday and during Thanksgiving and you walk through their floor, you would think with such fanfare around their name and Thanksgiving that they would have at least some some clarity or some direction when it came to merchandizing on their floor for these past days. And it looked like a mess. It literally the luggage department looked like it was your luggage. When you, you know, you lose your bags and everything’s kind of collected by some the luggage carrier carriers. You know, that’s exactly what this luggage department looked like of this of those retailers. So that’s problematic. That’s that’s a merchandizing problem in your 150 year old brand. So not sure what’s going on there.
Ned Hayes [00:04:26] Right. Right. Well, I’ll let you in on a little secret. We’re going to actually run this episode as one of our kind of end of year episodes that that wraps up the end of 2022 and looks into 2023. So I know that you’re seeing problems in supply chain and problems in execution and merchandizing, but if we. Switch gears. How would Taylor prepare for a successful Q three.
Hitha Herzog [00:05:00] A retailer, if they really want to be successful in Q1 two and three into 2023, I would take a notes from some of these small businesses. So I am also a fellow at the Data Catalyst Institute. This is a think tank out of Washington, DC, and they’re based out of South Carolina, actually. But we do obviously most of our work in Washington, D.C. and we really looked into what these small businesses were doing in terms of inventory management and the way they’re selling their product. And I think I mentioned this before, small businesses are very nimble. They have many ways of selling their product, whether it’s I mean, most of them a lot of especially the rural small businesses are really relying on platforms like the websites and Etsy and Amazon. And, you know, in some instances, if you’re selling food Goldbelly, which is I love the site if you want to get I I’m originally from New Mexico. So if you want to get food from New Mexico delivered for your holiday dinner in New York City, you go to Goldbelly, they’ll deliver the tamales. And it’s amazing.
Ned Hayes [00:06:08] But wow, I did not know that was a thing you can do.
Hitha Herzog [00:06:10] Yes. Oh, yes, my friend. It is one of the coolest, especially if you’re one of those people that like to give very individual, very special, specific gifts. I like to give the gift of of food a lot. And nothing is better than when you’re far away from home to get something that is from your favorite restaurant there. And this is what this does. It’s not super inexpensive. I mean, I would say it’s totally expensive, but I mean, you’re definitely paying the premium to have that delivered. But so these sites, these smaller businesses and rural businesses are able to utilize these sites. And I think also they’re able to use analytics really, really well. So I’m just going to throw out a number. I was talking about real small businesses. Real small businesses are making around $65,000 of gross revenue, gross sales revenue from online and third party sites. So that is disproportionately higher than what they’re making via wholesale and in brick and mortar. Now, could you imagine if these larger retailers even let’s just say you’re a mid-sized retailer, let’s say your mid-sized retailer, if you were able to utilize your analytics and understand when those numbers are coming in, exactly who your demographic is when they are shopping, where they’re buying a really specific picture of what your customer is life like and really understand it, and then use that information to specifically target that customer with ads that make sense for them. Not anything in general or blanketed just very specific ads. I think not only would you get a loyal customer, you would have a return customer, and that would inevitably mean increased sales and increased revenues and profits for you as a retailer. So to answer your question, how do you prepare to go into 2023 and with profitability in mind, really understanding the data as a CEO? Or if you’re in this suite, if you are hiring companies outside of your company, understand, sit with that person that’s giving you the data and have them explain it to you like you’re a four year old. Don’t be afraid to say I don’t understand this. A lot of people, I think that’s where the problem comes. They don’t want to feel like the dumb person in the room. And if you have internal people that are giving you the data, sit with them and say, you know what? Explain this to me. It is up to you. You’re the one that’s paying the bill. So you should be able to understand it and you should know how to utilize that.
Ned Hayes [00:08:54] Right. Right. And one thing that I find really interesting about doing this podcast is we get to talk to elephants, people who work at very big names, I’ll name some names, Walmart, Target, etc. But we also get to talk to NS. We get to talk to single store owners. Like there’s this guy named Dean Jones who owns Encore Chocolates. A single store, Chocolat Place in Olympia, Washington. You know, tiny little business. He’s proud of his business. It’s. Successful, but he doesn’t have the team of 400 people to look at the analytics, to look at the supply chain. He’s actually working with the suppliers themselves. So how does a retailer like that take advantage of some of those those changes in the market in order to be successful without that big team?
Hitha Herzog [00:09:42] This is going to be an answer that no one wants to hear, especially if you are a small business owner and you’re the CEO when you have so much on your plate. But there are very basic how to’s online. I know. Unlike what the answer is Google and the answer is YouTube.
Ned Hayes [00:10:01] I think it.
Hitha Herzog [00:10:01] Is because that will show you exactly how to if you’re buying ads on Google, if you’re buying ads on matter, which is, you know, prior name, Facebook, you, there are business tools that will allow you to see that data. It’s built in. And all you have to do is spend two or 3 hours understanding when you buy that ad and you get the data sent back to you from a Google or a medal or you’re getting. And, you know, obviously they own Instagram or if you’re utilizing Tik-Tok, you just you can you can. It’s kind of the onus is on you. But the good thing is that you don’t have to spend a month understanding it. It’s pretty easy. And then if you are also buying ad space on those platforms, there are people that are, you know, are taking your orders that can also walk you through it. It’s actually shocking. It seems like they would be a completely unhelpful you know, they take your money, here’s your ad and buy. Now they want to see small businesses like the chalk up place that you were talking about. And one of actually the small businesses that we were interviewing for the Data Cattle Institute was this woman who owned this company. Kind of sounds similar. They’re called chukka cherries. And she makes these cherries because she grows these cherries and and creates them and jars them and sells them online. And her business is thriving because of that reach. And, you know, one of the ways she’s getting information is obviously from the you know, that the ads that she’s running, she’s getting data dumps from that, but also leveraging the Small Business Administration and the Chamber of Commerce. The local Chamber of Commerce does have a lot of information. And again, I’m specifically talking about the very small business. And if we’re talking about businesses, that’s where you go. Now, if you’re a little bit bigger, that’s when you you know, if you’re if you have teams inside, you know, in house or if you have a company that you’re hiring outside, that that’s when you that’s when you really have to sit down to understand that data.
Ned Hayes [00:12:08] Right. But just just to summarize, you’re saying there is a lot of information online for free that can help small businesses. And there’s also information from the companies that actually support advertising that will give you a leg up, that will give you some of the same tools and insights into the analytics and how to do advertising in a successful way and how to reach your target customer. That’s what you’re saying.
Hitha Herzog [00:12:32] Absolutely. Don’t underestimate the free information that you can get as a small business owner. It just takes a little bit more research and a little bit more effort. But listen, you’ve started your small business. I’m not trying to put more play a more on the plate of small business owners, but you’ve already done most of the work. And I’ve seen there’s a company that I was also talking to called Carlitos, and I don’t know if you’ve had this candy before. It is unbelievable. They cover they cover gummy bears with tahini. It’s the spice from South America and love. And it is so good. It is so crazy good that I’m a I’ve become obsessed with it. And they told me that their business, because of the leveraging of online, has gone nuts as they’re based out of California, not just local California, but has gone massive worldwide. But they’re also very good with social media, too. So not only they’re leveraging the ads, but they’re also seeing the metrics from social media.
Ned Hayes [00:13:37] Mm hmm. Absolutely. Yeah. Well, so we talked about advertising. We’ve talked a little bit about merchandizing and. Supply chain. So let’s talk about labor a little bit. I mean, Forbes recently had had an article about A.I. and automation that can combat labor shortages. And I, I understand that would help in a warehouse situation, but. Well, I’m just curious, what do you think of that kind of trend towards A.I. and automation? Is that really a thing that can help retailers?
Hitha Herzog [00:14:12] I think it’s already happening and we’re not realizing this. So I’ll give you an example. I went to Whole Foods here in New York City, over in Hudson Yards, and I walked up. I was about to pay. And it wasn’t even self-pay. It was a hand swipe pay. So you basically swiped your hand and it read your handprint and it paid for your items.
Ned Hayes [00:14:39] Wow.
Hitha Herzog [00:14:40] The kind of automation. You know, when we say A.I., we think, okay, robots are going to be checking me out. No, no, no, no, no, no, no. It is. It is so it is so automated to artificial intelligence to the point where it’s going to be able to these machines. I mean, it’s certainly machines, but it’s not machines in the sense of like, you know, robots from The Jetsons. It’s I mean, that’s such an old reference. And to all your young I’m sorry, I realized I grew up in the eighties. And so but it’s going to be very much honed into A.I. So retina scans, face scans. This is the type of a either talking about when it comes to labor shortages. So if you can’t get people to man your cash register, well, what’s the next best way you implement a machine that is A.I. and reads A.I., selects A.I. that will get your your hand swipe and you pay that way or it swipes your, you know, your Amazon QR code. That’s another form of it. I think we have to change the way we think about a AI and how A.I. is collected, right? Artificial intelligence is collected. Cameras now are going to be able to be equipped. We’re getting very, very close to that. I know that technology exists, but it’s going to be much less expensive and available very soon where it’s just going to be able to read Retina Scan. So could you imagine just looking into a camera and it being able to pay for something, you know, or or maybe that that retina, that that scan is seeing where your eye is going, but then will feed you specific things based on what you were looking at the saw but maybe didn’t buy. So so yeah it’s going to be that’s what we’re talking about with A.I. It’s not robots. The robot, they use a lot of overhead and it very expensive. If we’re telling you a business perspective, this is this is smart technology that most retailers already have. Most retailers already have cameras that are are used for loss prevention. Those cameras are going to get a lot more sophisticated. So as a retailer, if you upgrade the cameras once, but then you’re also getting data from that.
Ned Hayes [00:17:02] Got it. Got it. So the eye is on the it’s in the background. It’s almost like the engine powering the system. It’s not something that that we would see in the foreground.
Hitha Herzog [00:17:14] Exactly. And think about how much. So I use two examples. Obviously, the cash register and then, you know, loss prevention when it comes to cameras, there is, you know, the loss prevention teams work so hard to make sure that there are retails retailers are and retail stores are staffed and and well protected. But could you imagine having maybe one or two loss prevention people in the stores and then having them utilize all the cameras around them to have an accurate picture of someone coming in often to the store and, you know, maybe acting a little suspicious around specific product or, you know, how funny would it be if they’re, you know, a product about to, you know, take it out of the store and instead they get an ad for 75% off. I don’t know. You know, just it’s there are other active ways that retailers can protect themselves, but maybe turn into, you know, turn a potential criminal into a loyal customer. I don’t know. I mean, that’s far fetched, but that’s weird, right? Right.
Ned Hayes [00:18:17] Right. But speaking of like loss loss prevention, I actually serve on the board or or on the the ad hoc committee for organ for the Organized Retail Crime Prevention Task Force. And so so we work with law enforcement. We work with with a number of companies all the way from Amazon to Walmart to close to Home Depot. All of these companies are trying to prevent loss and especially organized crime. So so I’m curious if you’ve seen any national impacts or even regional changes that can help help retailers to prevent theft, either on a small scale or a large scale? I know what we like. Talk about it in terms of, you know, there’s a. The Lost. Prevention and and shrinkage. At the end of the day, it’s people without really paying for it. Yeah. Do you have any thoughts? Yeah. Go on. I’m sorry.
Hitha Herzog [00:19:13] Oh, no. You know, it’s interesting. I wrote a book called Black Market Billions, and this came out about, my gosh, 12 years ago now, ten years ago. 12 years ago. I want to think it was ten years ago, but I think it’s more like 12 years ago, 11 years ago. It’s happy medium now. I just did the math in my head. But, you know, I was embedded with the LAPD and we were looking at these organized retail crime rings and, you know, what they were doing in Los Angeles and how the LAPD was busting them up. And it was a fascinating experience. You know, I saw I followed the money trail with that. And I was not only looking at what Los Angeles was doing, but I was looking at what Albuquerque was doing in New York. We went international. You know, like I said, I was following the money trail. I was in India, I was in Latin America. So I took it on a global, local to global. And one thing that I was noticing with local retailers is that 11 years ago, the conversation between local law enforcement and awe and loss prevention executives and and the security, the conversation was just like just beginning. There wasn’t a lot of work between law enforcement and these executives and these people that were working to protect the stores. Now it is way more prevalent. You know, that conversation is is almost fluid thanks to organizations like yours and law work. And, you know, all of the work is out there, but I think we still have more work to do. I think that conversation now needs to go to a more local political level. I think, you know, I was watching the mayor of Chicago say basically, I’m going to paraphrase, but it’s up to the retailers to protect their own stores, actually. Retailers and stores need the help of local politicians. There needs to be a law, or at least, you know, something that says grand theft isn’t is to be prosecuted for. Grand theft isn’t. You know, $1,000 threshold. It’s 500. Let’s go back to that. You know, things like that, because that is what is really happening. And that’s what’s really in some way is crushing these retailers. It’s been happening forever, as you know. I mean, crime has been prevalent. It’s just I feel like now because that conversation with local politicians and, you know, policymakers, it’s just that that that is the next threat of conversation and, you know, duality and fluid conversation that needs to happen in order to really help retailers.
Ned Hayes [00:22:03] Right. And and along with your book, Black Market Billions, you also created a companion app, right, to help people actually identify counterfeit merchandise. So could you tell us more about about that journey or what that app did to help people understand fake goods out there?
Hitha Herzog [00:22:21] Yeah, no, it was interesting. I think the app was a little bit before its time because I just saw Deloitte launch something similar and I wanted to look into it. I thought I was like, Oh, that’s really interesting. But you’re right, I launched this app about ten years ago, 11 years ago, I guess I should say. And what I wanted it to do was scan hardware on bags. You know, we started out with handbags. Easy. We had a map. And every time you took a picture of a handbag or or a hardware, it would tell you whether or not it was fake or real and then put it on the global map so law enforcement could go on the app and look at it and say, okay, here’s a handbag that we think that we have identified as real or fake. So they could not only use it as an organizational tool, but you could kind of, you know, kind of call out your friends. I don’t know. I for a while had a lot of friends were buying fake handbags. In fact, I was in a meeting with a friend and she was showing off her Birkin. And I said, Oh my gosh, that’s so great. So, yeah, tell me about your app that you’ve rolled out and I’m like, Here, I’ll demonstrate it. Look, I have the phone. I’m just going to pull up the app and take a picture of her because that will tell me whether or not your bag is real. And she goes, Oh, no, no, no, no, no. This is actually fake. I didn’t want to carry a real Birkin because they’re very expensive. I didn’t want it to get stolen. I’m, like, really interesting. So. So I was kind of using it for fun, but that was the that was the original premise of me watching that, that I wanted my book to kind of go further than just, Oh, here’s an interesting book about war or C I really wanted to do going to help the community.
Ned Hayes [00:24:04] Absolutely. Well, I mean, your advice has been so helpful in different regards. I mean, you’re a contributor on on consumer spending for NBC Nightly News. You’ve been on Fox Business Channel, Bloomberg TV, etc.. But I’m just curious if you find that particular things that you say are a surprise to people, do you ever come out with something people say, Oh, I’ve never known that before. That’s really new information because I know that you delve deep into kind of the knowledge base and you’re able to bring new insights.
Hitha Herzog [00:24:41] We you know, it’s it’s part of my job is to obviously, I’m a research analyst and we are constantly looking at information all the time. And my superpower as an analyst is to be able to analyze data and numbers very quickly to to form a story. So what I thought was really interesting, I just worked on another research report with Oracle. It was a holiday survey for 2022. And what I thought was really interesting is the way that we were looking at the way that the consumer was spending. And we also looked at the way that the consumer was spending in line with how happy they were. So they actually wrote another report on the happy unhappiness, consumer happiness. And that report said that 45% of consumers hadn’t felt happiness in two years. Okay, which makes sense. We are coming on the end of a really nasty pandemic now. It’s been around, you know, it’s still not going any anywhere anytime soon. But I think personal relationships have really changed. And, you know, because of that and if you look at spending from a psychological standpoint when you’re unhappy, I mean, there’s a reason why there’s you know, there’s a there’s a term called retail therapy, right? I’m sure there’s a podcast out there that’s called that. But, you know, people use retail to make themselves feel better. So when you’re looking at that kind of information. You you obviously as a retailer and as someone that maybe is a CEO of a company, I would look at that and say, oh, my gosh, people are unhappy. Well, let me make them happy. I think in the same study, it said that 88% of people wanted. They would they would revolve or gravitate towards a store that had some sort of funny copy that made them laugh, that had something that was a little bit entertaining in their marketing. So you have obviously that’s a fine line and you want to make sure that you are not employing someone that’s offensive. Obviously, that’s not you know, you want to just make sure you have a lot of conversations internally and externally before, you know, hire a comic to write stuff for you. I say that being married to a comic. But so but, you know, it’s that’s what I found so surprising from the psychological standpoint. And then from the I’ll go back to the holiday survey that we did. We then saw consumers at a rate of 70 to 71% using store payment methodologies to pay for their items and talking about buy now, pay later. I mean, that’s what we call it now. You know, 20, 30 years ago when I was growing up, it was layaway. But, you know, you have Klarna and Afterpay. These consumers, if they don’t have the money. Right. We are seeing headwinds of recession and, you know, economic instability. They are still utilizing methodologies to pay for things because they feel bad. People haven’t felt happy in a while. So when you marry those two statistics, it becomes shocking and then you’re like, oh, yes, this makes sense.
Ned Hayes [00:27:55] Right? Right. Well, another thing that was implied by what you just said is that the rate. To all experience matters beyond just the merchandise. So people want something funny. People want something engaging people. People want an experience. So we’ve seen this to be kind of the superpower of small retailers where they can create this kind of curated. Experience. How do you. How do you. You recommend that people think about? Creating a curator.
Hitha Herzog [00:28:32] Ned, I’m going to interrupt you for 1/2. Sorry.
Ned Hayes [00:28:35] Did my breath.
Hitha Herzog [00:28:36] Freezing a little. So you know what I’m gonna do? I’m going to start. I think we should stop her video. This is the producer and me. I think we should stop our video. And will you repeat that same question that we’re we get all the audio together? Because that’s a really good question. And I want to make sure that the audio is clean. That’s just me being a producer. Sorry.
Ned Hayes [00:28:55] Sorry about that.
Hitha Herzog [00:28:56] No, no, no. It’s okay. I just want to I’m going to stop my video because I think maybe the fetus. Yeah.
Ned Hayes [00:29:01] So. Right. Okay, wait. I can stop. Mine, too.
Hitha Herzog [00:29:05] And then I think that’s better that way. The bandwidth doesn’t get, you know.
Ned Hayes [00:29:09] Sure. Okay. So one thing that you said that you implied was that the experience matters beyond just the merchandise that people are actually coming to, to a retail store for an experience, whether that’s a comedic experience or whether that’s a curated set of information and smells and taste and and lighting. So how would you recommend that somebody thinks about creating a curated experience? What are the key things to keep in mind?
Hitha Herzog [00:29:39] Okay. So number one, for a curated specific experience that will not only create brand loyalty or retail loyalty that will have that will ensure that your customer is spending because they’re sticking around for longer and that you will have that customer for for many, many years to come. Again, we go back to this conversation with data. It is all in the data right now. Executives, people in charge need to look at their API analytics or data analytics and see exactly who is coming to the store and who isn’t coming to the store and how can you service that person better? So I’ll give you an example. Nordstrom All right. Now, Nordstrom, this is the flagship store in Columbus Circle here in New York. It’s beautiful and it’s merchandised well. There isn’t a lot of product there. So you go you want to go shopping, you want to have an experience, you know, shopping, but you end up going there because there’s you could get a facial, you could get a blowout, you could hang out in the beauty section. You can get at lunch, you can have your lunch delivered to you while you’re shopping. So maybe they don’t have your size in that dress that you were looking at. But you know what? You just had a four hour day with you and your mom and your family or your friends and you are hanging out and maybe you order that dress online so it becomes less about the product that exists in the store. Right. I don’t think we’re seeing the abundance of many, many, many sizes and that that that is too much overhead for retailers. I’m realizing this now as they keep doing the channel checks. However, Nordstrom understands that person is more than likely going to want to eat something and something that’s great, or maybe drink something and hang out. They want to hang out. So that is just an example. You go across the street to Nordstrom men and the game is happening. World Cup is going on, they’re serving whiskey, they’re having vendors come in that specific to dudes. You know, it just that is that showed me a very strong understanding of who their customer is. And small businesses have that ability because if you think about how much how many customers they have, that data is small and it needs to put your arms around and understand that very much. I think of my friend who owns a store in Brooklyn called Annie’s General Store out in Kabul Hill. I think it’s Cobble Hill. My geography of Brooklyn is a little off. But she you know, she was saying during the pandemic, they got very specific. They were able to really understand who their customer was, really cute, create a community around it. And then once everything kind of opened up again, that community went offline into this brick and mortar. So it’s really about looking at your data, understanding your who, your customer is, creating that community, whether it’s online, you know, through advertisements, this, you know, this, this, this call for interaction on social media and then having the space for people to come in.
Ned Hayes [00:33:00] Right. It seems like one important consideration, too, is that you’re actually creating an experience that’s entirely on brand, just showing up with a bunch of photos and saying, Hey, we have something to drink that may not be a brand. If you’re if your store is creating a a curated kind of high end experience, you want to have, you know, custom cocktails, even custom mocktails, something that really ties in to your your brand experience rather than just a random beverage. So, so thinking close. About the whole experience. Why would somebody come to the store? A good example of that, I think, is price. Which is a an interesting store that has a very curated set of merchandise, but they also have a very curated in-store experience.
Hitha Herzog [00:33:50] Yeah. And that is I mean, that were, you know, what I was researching the other day, someone had mentioned that the next evolution of in-store experiences are these collaborations with food and beverage and restaurants. So if you can imagine, there’s a again, I, I apologize to your listeners because I am so Tri-State area focused. I’m here, but I’m going to give another example out of Brooklyn. There’s a restaurant that is actually from a these these chefs from New Mexico, where I am originally from, created a restaurant in Brooklyn called Ursula Brooklyn. But it’s all New Mexican food and they are starting to do pop up stores all over. But if a store, let’s say it doesn’t have to be a cooking store, but maybe it’s something new and innovative. Maybe it’s rag and bone. This is a brand that I tend to wear a lot, you know, did Ursula Brooklyn in one of their stores and did maybe a, you know, apps and drinks one night? Not only are you getting people to come in and have some drinks, but suddenly you’re associating your brand with something that is very cool. I mean, this person just got featured in food and wine and is getting the chef is getting a lot of a lot of celebrity buzz. I think we are seeing a little bit of that. You know, ten years ago, they were getting celebrity deejays and their famous people to come in and and deejay. I remember John Varvatos had a has had a music space and literally a stage with music. You know, it’s our instruments on stage that you could go up and play. And, you know, I’m not really a music type. Well, I listen to a lot of music and I’m obsessed with I don’t play an instrument, but I got out there strumming the guitar and, you know, but he’s had famous people up there perform because this is the old Bowery. The the Bowery and NYC. Oh, my gosh. What is wrong with me? I can’t remember the name of What is wrong with me. Bowery Ballroom. It was CBGB’s.
Ned Hayes [00:35:57] What is wrong with oh yes, CBGB is that school?
Hitha Herzog [00:36:00] He moved into the old CBGB’s space and he wanted to kind of create keep that authenticity. I mean, I don’t know how authentic you can keep CBGB’s in a high end men’s store, but he tried and and, you know, he had that element of music in there. But that’s one way, I think now we’re starting to see food and experiences that way. So I think it’s fascinating and so smart. I know food and clothing don’t really mix, but even if you were doing something that had to do with product or if you were selling ingredients or you were selling, you know, maybe it’s a it’s a general store like my friend and his general, there are a lot of different out of the box collaborations I think retailers could do to to to advance their themselves advance really join us and in 2022 slash 2023.
Ned Hayes [00:36:54] Right? Right. Well, I want to switch gears a second to think about how online commerce and in-person commerce are kind of merging. And the trend I’m talking about is livestreaming. People doing livestream shopping. And you spoke about retail therapy earlier and I feel like the livestream movement or experience almost gives retail therapy to people sitting at home. What are your thoughts about Livestream shopping?
Hitha Herzog [00:37:28] Livestream shopping is the next iteration of where retail is going. So I was joking with my friends, especially those that would come and do channel checks on Thanksgiving night with me who wanted to come out. And I said, you know, I have to say we’re not even going out. And it was a collective gasp and oh, my gosh, why? And I said, I can’t disclose targets because everything is because no one is shopping in-store this time period, because everyone is doing it online. And that’s the reason why is because we really had a distinct change in the way that the consumer shopped during the pandemic. The pandemic, the lockdowns, I guess I should say, was the delineation of the consumers that shopped before the pandemic and then during and after. So we saw how easy it was. I mean, I really had to make it easy for the consumer to get their stuff because they couldn’t leave their homes. Right. They they just in again, I was here, New York City. It was we were ground zero. So there was no way I was going outside. I have small kids. No, no, no. So so we got a lot of our merchandise and product delivered and in some cases within an hour or two. So I was saying that, you know, now with the advent of live streaming, they just takes that experience online. People don’t want to move from their sofas. They’re shopping on the sofa as they’re shopping in their bedrooms. They don’t want to leave their homes. Their homes became people. Their homes became a whole new sanctuary for people. Before, somewhere we just sleep. And now it became really where we exist and maybe it needed that shift. But retail is now shifting that way. And I also say that if I cannot purchase something with one click, if I have to walk across the room and grab my wallet and input my credit card, it’s not getting bought. The cart is abandoned. It’s over for that. That that thing that I was just about to buy. No, it has to be one click off my phone or it’s just not going to happen. And I’m not the only person that thinks that I know. There are many, many, many people out there. And I think that live shopping livestreaming, because there are so many people now on just one and so many people on on on all of these livestreaming sites, it’s just one click and you go out and you actually see people interacting. Right. Like, QVC has been so popular for so long. People love it.
Ned Hayes [00:40:09] Right. It feels it feels very, very kind of visceral. Like you can see the camera turn and you catch sight of a bag that you like and you can get it. You know, it’s not as if you have to go through the catalog and find everything. You can actually see in real time what the retail experience is and actually feel like you’re experiencing it. So I totally agree. I think that’s the next stage of the retail experience is that livestream, somebody is at the store shopping for you almost.
Hitha Herzog [00:40:36] Exactly as I was just going to say, it feels like a personal shopping experience. The livestream viewers are doing 75 to 80% of the work for you. You don’t have to get in your car and drive somewhere and then go through the racks. You could even pick a livestream that you like maybe. You know, it’s a livestream of, you know, gothic as clothes that I sometimes were old concert T-shirts that I sometimes where I would totally go to that livestream and watch it and buy, you know, and that’s how specific we’re getting.
Ned Hayes [00:41:12] Right. Well, I know you talked about the pandemic making livestream shopping and making online shopping really go through the roof. But how does that affect consumer loyalty posts post-pandemic? How do we get people to be loyal to a particular store when they can just flip the channel online? And at any moment.
Hitha Herzog [00:41:38] I think there’s a misnomer with loyalty that if there is a lot of market saturation for a particular product and ways to purchase that product, that really shakes up loyalty and people can just suddenly abandon a retailer. I think we need to go back to the basics of loyalty. What creates a loyal customer? It’s number one customer service. Number two, community. Or maybe I would reverse that. Right. But those are hand-in-hand, right? Number three, a good shopping experience, which also comes with customer service. Right. And then, of course, returns if you’re able to return something in an efficient, effective way that will keep customers coming back over and over again. I think retailers get clouded with all of these extra bells and whistles, you know, big flappy signs that are saying 75% off. Come in, come in, come in. No, no, no. It’s very, very simple. Just focus on what makes your customer happy. Really figure out those basic tenets and nail them, like just stick the landing on that. And that is what will create customer loyalty. I think retailers and executives feel like the customer is more fickle than they are. And there’s just too much option. And. And to the point there is too much option. Hence the reason why customers just want one or two or three stores that they always go to. And if you really think about it and I think if the if executives really think about it for themselves, too, they probably just go to one or two or three stores. They probably hit one or two or three brands. It’s the same for every single customer. So if if they can the retailer can focus on those tenants, they’re going to be golden.
Ned Hayes [00:43:36] Right. Well, can you identify a. A kind of single a single factor that’s driving. Consumer loyalty in 2023 that will drive consumer loyalty may be one, one, two or three will actually drive consumer loyalty.
Hitha Herzog [00:43:58] I think what it does is start that over. Consumer loyalty is driven by three things. Number one, community. If there’s a community around your retailer or brand, that is key. People want to feel like they are invested in something. They’re invested in your story and your product, right. Number two, it’s customer service. It’s all about customer service. It’s about taking care of that customer. Once they find their people and they’re shopping with their people, speaking their language, using words that they use, using copy that they use, like really showing that you understand. And number three, making sure that your return process is. Is 100% on. Perfect lockdown. Just make sure that you have that thing automated and so good to go, because I think that also is what deters deters loyalty. And you know what? I’ll add one more thing. Number four, the ability to have a seamless shopping experience. So I know it’s very hard for some retailers to have Applepay Shop, PayPal, any of those sort of automated one click systems. But I do know a lot of small businesses that would put in there, put their money into making sure that happens versus anything else that is key. I can’t emphasize enough. No one wants to get off their sofa and cross the room to get their wallet, to implement their credit card. They want it already in there so they could just touch a button and it gets purchased. That will prevent a lot of abandoned carts and more loyalty.
Ned Hayes [00:45:49] Right. And I’ll ask kind of an obvious question, do you think that building loyalty actually matters? Should retailers invest in building loyal customers?
Hitha Herzog [00:46:00] I think loyalty 100% matters. And I’ll tell you why. Loyalty means that if I am loyal to a retailer, I know that that retailer or brand will have my sizes or know what I like, will give me things or suggest things that I like. Maybe they’ll show me something that I may not even know that I needed, that I now need. I trust that retailer. We’re entering a time where trust has been shaken up. We don’t know what’s coming around the corner. We’re all going to like what’s going on and we’re now just getting our footing. So I think having the ability to rely on something, whether it’s a retail or brand, I sound like it’s 1920 and I’m talking about Ford, but I’m not talking about retailers now. It is truly, truly important to to be to focus on that loyalty, to understand who your customers are. I think and this is such a random example, but I think companies like anywhere from from. Well, you know, I’ll give you another example. I was going to use the Tide detergent example. I’ll use that example. I’ll give you another example, Tide detergent. You know, this is so random and it’s obviously a brand and, you know, it’s been around forever. But why do we use the detergent that we use? Well, I use that detergent because my mom used that detergent and it smells like home. And my kids will use that detergent because it smells like home. Right. It is that brand loyalty that I will never deviate from. Why do I run with Nike shoes? Well, I’ve run with Nike shoes for eight since I was eight years old. And I’m way past 80 now because I can rely. I know those shoes will take me from marathon to marathon to half marathon to walking around the city. I rely I, I know I am I, I trust that brand to walk and run many, many miles without having any effect on my body. Negative effects on my body. I do want to give another example to Martha Stewart. So when I at one point worked in investment banking many earlier way early in my career, her company was going public and our investment bank was doing the roadshow. And I she had made this example of how she her brand, she wanted her brand to start at the beginning, from when you’re an infant all the way to when you have grandkids and beyond, that’s what you want as a brand. You want that generational loyalty. And whether you do that through scent, whether you do that from just being there during terrible times or making sure that your customer feels like they can get what they need from you in an efficient way and then return it if they have to and get something else. That is what builds that loyalty.
Ned Hayes [00:48:57] Right. And you’re actually touching on something that we’ve seen with with the product that my company, SnowShoe, actually develops, which is when you are when you show up for your customers. But in an authentic way in where they’re really at, they become more loyal. So just a small example. We have a product that’s out there that then helps retailers to understand customer behavior and to to reach out to customers and engage them. And during the recent hurricane in Florida, some of our retailers in Florida reached out to all of their consumers and told them, hey, we’ve changed our hours because of the hurricane. Here’s what’s happening. And we really supported our retailers, gave them best practices in how to reach their customers during this time. No greater upheaval. It wasn’t about, you know, engaging and becoming by something. It was about taking care of their customers and the fact that we were able to support them in that that built loyalty because they understood that we knew where they were at. We weren’t trying to shoehorn them into spending more money or buying more money. We were just trying to show up for them.
Hitha Herzog [00:50:02] Exactly. And that is, I guarantee you that your customers appreciated that so more and and their sincerity of it. I mean, you came from a very sincere place. It’s not like, hey, we’re going to change our hours, but we expect you to pay, you know, like by $150 money.
Ned Hayes [00:50:19] Yeah, right. Yes.
Hitha Herzog [00:50:23] Well, let me let me bring you for some more money, even though you just went through devastation. No, no, no. You weren’t doing that. It was you were genuine. And I think that is another thing. Retailers need to make sure that they’re very genuine in their efforts and that that will come across if they understand their customer and how that customer talks and acts and what’s important to that customer. As a professor at Parsons, you know, I teach in the grad school of Fashion Management. We talk a lot about, you know, when brands go out there and have advertising campaigns or, you know, want to take a social stand on a on a political, you know, cyclist moment. And I was telling my students in some ways, some fashion brands, it makes sense for them to do that. And others it does it. And that is okay. If it doesn’t make sense for your brand to go out there and take a stance, don’t do it. Your customers understand that that is insincere. So you want to make sure, again, go back to the basics. Who are your customers? How do they interact? Maybe if you’re an executive, listen to this. Pretend you’re one of the customers, do a undercover boss thing and go shopping in one of your stores and and see how your your employees interact and see how that experience makes you feel. And then take copious notes and apply that to whatever campaign that you’re about to launch or what you’re planning for 2023 and 2024. These are all very real and experience, experiential and important experiences that that will ultimately help you as a retailer and executive.
Ned Hayes [00:52:02] Mm hmm. I absolutely agree with you. Can’t agree with you more. Well, we’re kind of at the end of our time. So I did want to ask an important wrap up question that is based on life experience. And this is kind of our ringer of a question, but we find so many interesting answers. The question is, what do you want your legacy to be? What would you like to be remembered for in your work and your life?
Hitha Herzog [00:52:27] Wow. That is.
Ned Hayes [00:52:29] That is a.
Hitha Herzog [00:52:31] That’s a big question. You know, Ned, I in my family, I have. I have toddler twins. They’re four years old. And I am very much about giving back. I think I am very fortunate to come from a position of privilege. I know my daughters are from that same position of privilege. I’m I there’s not a day that goes by that I don’t you know, I’m so grateful for that. And I think if I wanted if I really wanted to if I could orchestrate my legacy now, I want people to remember me for in a way in a way that, you know, I gave back. It wasn’t just about me talking about consumption and mass consumption. I really want to I want people to feel like my information helped them in some way or help the community in some way better themselves. I love to see people take information and run with it and then become complete successes from it. So if my information or my research or, you know, even my teaching can help a couple people out there better themselves go from one position to another. And they look back and they said, you know what? I took that information that he gave me or, you know, any sort of pro bono work I’m doing or, you know, the girls and I went out and gave out meals during Thanksgiving. I want that. I want people to lead. With that in mind, we have to give back. We have to it is it is our privilege to do that and to help and teach people to better themselves if they want that help. But that’s that’s my legacy. That’s what I, I don’t want to be known for someone that just advocated for mass consumption. It’s certainly what we do, right? It’s retail. People go out and shop and buy. But I want there has to be some consciousness about it. You know, there’s there’s a lot of of mass production. And I want people to to to know that we can scale back maybe and give back more and maybe be more thoughtful about what we’re buying and and just or maybe even buy and give to people who need, you know, that that’s there is a solution. Maybe every every, you know, 90% of every every 10% of stuff that gets sold during that day. The retailer goes back and gives 10% of that product to people that that need it. The it’s just there shouldn’t be such a a bifurcation between people who can have and consume and have the means to consume and people who cannot. That’s what I think.
Ned Hayes [00:55:33] Great. Well, thank you. And thank you for sharing your time with us today. It’s been such a pleasure to talk with you. I really appreciate it.
Hitha Herzog [00:55:40] Thank you for having me. It was super fun. And look forward to meeting you in person very, very soon.
Ned Hayes [00:55:47] Next time I’m out of New York. We should definitely do this in person.
Hitha Herzog [00:55:50] I would love to. I would love to. Thanks again for having me.
Ned Hayes [00:55:54] Absolutely. Take care. Have a good one.
Hitha Herzog [00:55:56] You too. Bye.
Ned Hayes [00:55:58] And I think that’s a wrap. Thank you. Here to.
Hitha Herzog [00:56:01] Thank you so much, Ned. It was such a pleasure talking to you. I hope those answers were okay.
Ned Hayes [00:56:08] Yeah, absolutely. I’m sorry about the audio issues. I think we started them out, though, when we ditched the video.
Hitha Herzog [00:56:12] Okay. Yeah, yeah. That’s if that ever happens again. Just. Ah, you know what? You should just start. Sorry, I don’t mean to impart, like, that’s why I’m soliciting, you know, information, but, you know, if you. I would just start your podcast and just don’t even use the video because that’ll.
Ned Hayes [00:56:27] Just but yeah. Yeah. So, so the thing is at, at the office, I have a great video and audio connection. Oh yeah. And I had to work at home here unexpectedly today. So, you know, sometimes home, home, wi fi is not as strong as at the office.
Hitha Herzog [00:56:44] Yeah, I hear you.
Ned Hayes [00:56:45] Well, thank you so much. And have a great few weeks until the holidays.
Hitha Herzog [00:56:49] You’re too near us, by the way.
Ned Hayes [00:56:53] We we aren’t going this year. But, you know, I might go on my own. We just started doing a company appearance because we just had to look at our budgets. Given the economic climate, I’m sure you.
Hitha Herzog [00:57:04] Know, I.
Ned Hayes [00:57:05] Ah, you I assume you’re going to be there.
Hitha Herzog [00:57:06] Well, you know, I was part of the, the, the rethink retail cohort of like right. Right. I’m 22, you know, we’re having a big party. So I was going to say you should come to the party if you’re around.
Ned Hayes [00:57:16] But yeah, definitely. Well, I’ll keep it in mind if I get out there.
Hitha Herzog [00:57:20] Thank you. Do. Would love to see you.
Ned Hayes [00:57:22] Okay. Sure. Take care.
Hitha Herzog [00:57:24] Talk to you later. Bye.