EPISODE 061 : 05/12/2022
Ian Scott has more than 20 years of experience within the retail and POP sectors. He has headed up business and marketing departments at several retail consulting agencies in the UK, including Tag and UA Unibox. In 2020, he started his own consulting agency, and in 2022, he was named a Rethink Retail Top 100 Retail Influencer.
Host: Ned Hayes and Ashley Coates
Guest: Ian Scott
Listen to every episode
Topics discussed in this episode
- How physical retail is coming back and why online native brands are opening storefronts
- Why Amazon is shuttering their physical stores
- How to view your store’s shopping experience from the perspective of your customer
- The future of artificial reality and virtual reality in retail
- What to keep in mind when creating a customer engagement and loyalty program
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Ned Hayes [00:00:01] 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.
Ashley Coates [00:00:13] Spark Plug is excited to welcome Ian Scott to the podcast today. Ian has more than 20 years of experience within the retail and pop sectors. He has headed up business and marketing departments at several retail consulting agencies in the UK, including Tag, Instinct Laboratory and UA Unibox. In 2020 he started his own consulting agency, Ian Scott Retail Consulting, and in 2022 Ian was named a Rethink Retail Top 100 retail influencer. Welcome Ian.
Ian Scott [00:00:43] Thank you very much. That almost makes me sound like I know what I’m talking about doesn’t it?
Ashley Coates [00:00:47] That was the intention. Well, we’re so happy to have you here today. Very excited to chat with you about all your knowledge and experience in the retail world. Let’s start off with you’ve said that you became hooked on retail when you started working at a pop agency about 20 years ago. Can you tell us what first got you hooked on the world of retail?
Ian Scott [00:01:08] I’ve been working in the B2B integrated marketing world before that, and I like working on the different aspects that combine for a campaign. But what intrigued me about retail is it’s that very final bit that persuades a customer to put their hand in their pocket. So I quite like that point where the business, the business world, you do a lot of work and then you never see what becomes of that because it’s then taken on in the business to consumer aspect. So I love that if you did something in retail, it goes in a shop and you immediately see whether it makes a difference or not. And I just found that absolutely fascinating. I mean, I was immediately hooked by the whole process then of how do customers engage? And I realized very quickly how science and it still is to this day. And that combination just intrigues me incredibly.
Ashley Coates [00:01:54] Absolutely. That moment of the purchase decision is magical moment. So many factors went together.
Ian Scott [00:02:00] Yeah, definitely. Definitely.
Ashley Coates [00:02:02] Will you share with us a little bit more about your career history and what are some of your career highlights up until now?
Ian Scott [00:02:09] Okay. I think it was 2000 when I started in retail and I was a business development manager. So I was out there hitting the phones and going out to visit people, talking about retail. And I loved that immediacy. See, the company I work for work with some really well established brands, particularly within the food and drink sector companies like Cadbury’s. So we were working on some really interesting projects going into the main grocers across the UK, implementing category solutions and product displays, enhancing on shelf and things like that. And I loved the immediacy of it and the excitement and I ran my own business for seven years, which was great fun. The creative director of that first, the company that I met, Alan Davis and I, we set upon our own, ran that for seven years, which was a fascinating experience answering the phones, sweeping the floor, trying to find the sales, developing the marketing strategy, worrying about cash flow, all these sort of things. And it’s a skill set that’s really useful. Now I’m a consultant, run my own business again, it’s the skill set that I can revisit with regard to projects. I think one of the projects that always stuck in my mind was one when I was freelancing crikey, I think nine years ago, and it was a company called Alexandra who a high end fashion store, and they wanted me to redevelop their Savile Row store. So Savile Row in London is very high end, bespoke tailoring. And if you’re familiar with the Kingsman films, I’m not sure you’ve seen any of these. Their store is in Savile Row, so it’s a very prestigious area, and I had to develop a little bit of a physical brand identity for the brand because they’ve never done anything in retail. And then I turned and literally painted the walls myself, painted all the railings on the stairs, and then physically carried all the display items in. And it was a fabulous experience and I loved being so hands on where I designed the concept, decorated the store, physically, carried things that when I walked down the street just a couple of weeks ago, and since the shame is gone now, it’s no longer than I hadn’t revisited for a number of years. But that was probably one of the most exciting projects because I was so hands on with all of it.
Ned Hayes [00:04:04] Well, do you think there’s something unique about being hands on and physically present in retail, especially in the modern age, when so much is online? Is there something important about actually walking into a shop?
Ian Scott [00:04:15] Yes. I mean, I’m a huge advocate of the physical retail space and I’ve got very vocal on LinkedIn when people are saying physical retail is dead. I found some research that said before the pandemic, 83% of global retail sales went through the store and it’s now 75%. Okay, so who’s dropped 8%? But it is still 75% of all retail sales and that’s a big channel for people to claim is dead. Now what I have seen, particularly in the last 12 months, is we had all of the lockdowns where we had to go online. So we’re getting lots of misleading statistics about the growth of online. And again, when of course, it’s great we weren’t allowed in the stores, so we were forced through legislation to adapt and change the way we shop. What we’re seeing now is people are able to come back to stores, is the growth of online is dropping back to the level of growth it was before the pandemic. So I’ve read several reports, you know, online drops. And again, when it’s no it’s reverting back to where it would have been still growing. If you plot the chart for pre 2020. So there’s a lot of misleading statistics out there. You could pick a statistic to back any argument you want from the last two years. But fundamentally, what we’ve seen is by being deprived not only physical retail, but social interaction. Bars, restaurants, cinemas, holidays. What we’re seeing is people have a greater appreciation of that, and it’s in our DNA, we are social creatures. Why go to a restaurant and pay a lot of money for a meal that you could buy from a supermarket and eat more cheaply yourself? The difference is the socializing aspect of that. And also when we look at retail as well, a number of people will choose to go to stores or a mall. The mission is to go to the mall for the day and have a look. It’s not I need a pair of jeans or I need a pair of shoes is I’m going to go to the mall because, you know, the mall will offer you a whole array of different stores, some you’ve never seen before. You can have a meal, you can have a drink, you can even go to a movie afterwards. So, you know, there’s plenty to keep you there. And the whole aspect is that social side of retail. I think we appreciate it a little more because we’ve been denied it so much over the last two years. And so what we’re also seeing is a combination with the fact that we see so many store closures because of the pandemic. Physical space is more accessible. It’s cheaper, it’s more flexible. Landlords are taking a battering just like retailers have. So we’re seeing things like turnover based rent. So as a percentage of sales, if you have a poor month, your rent drops and if you have a great month, your rent goes up. So we’re seeing this in a number of cases.
Ned Hayes [00:06:45] Where it seems much more fair to retailers to be able to pay for what they’re actually making rather than just being physically present.
Ian Scott [00:06:53] I agree. I mean, some of the interesting situations are how you actually negotiate that, because what we’re learning now is the physical store contributes to online sales as well. The beauty retailer Sephora has noted that when they open a new shop in a new area, their online browsing and sales increases in that geographical area driven by the engagement with the store. So some landlords are now trying to go, but I also want a percentage of your online sales. So this is new territory because this is like, well, how do you actually calculate that? How much of the online sales is related to the stores? So I was chatting with a consultant who works in this sort of space with landlords, and they were saying, There’s a blank canvas here. How do we actually work out what is fair? And it will settle in the next couple of years. But certainly brands and retailers can access physical space more easily and more cheaply now. So we’re seeing some interesting developments of DTC brands or growing brands, being able to utilize physical space in a new way.
Ned Hayes [00:07:49] Right. Well, speaking of utilizing physical space, some online brands like Warby Parker, for example, is a classic example. Online brands have begun opening physical stores. Do you see that trend continuing to accelerate?
Ian Scott [00:08:03] Yes, I do. It’s interesting you mentioned Warby Parker because their share price has been struggling recently and I think that’s highlighted the value of the wholesale channel in that going direct to consumer is great, but you appreciate what the wholesaler, the middleman retailer did in that they invested a lot of time in increasing awareness advertising, drawing footfall into stores. So we see brands like Nike developing DTC very well, but Nike’s a global monster in retail and brand recognition, so they were a key driver as a destination for the wholesalers that they stocked Nike more people will come. For brands like Warby Parker, and other startup DTCs they don’t have that universal awareness and presence, so they have to invest in that part, which is very expensive brand advertising. You have to have mass coverage, saturate, continue the exposure to embed your brand in people’s subconscious. But it is great to see that they are driving those things forward. And we’ve seen a number of DTC and startup DTC brands leveraging physical space very well. And I went to a Warby Parker store when I was in Boston a few years ago. It’s a great space and I really like what they’re doing because this is the challenge as well, because they’re not experts in physical retail. So they have to make sure that they recruit other great agencies or internal staff to make sure that the investment in the physical space is effective and focused as well.
Ashley Coates [00:09:24] Yeah, that’s a really interesting point. So then on the other hand, some brands are opening a physical store and then backing out, Amazon is an example of this. So what do you think Amazon got wrong and why are they shuttering all of their physical stores?
Ian Scott [00:09:40] Amazon’s interesting because virtually all of their stores are science labs. They’re data gathering experiences. So part of me wonders whether that was the plan all along well, let’s open them, we’ll try them, we’ll close them down. The four star stores, I was always intrigued because what’s your reason for going to a four star store? If you go to fresh stores to buy. Okay. They were opening a fashion as it style their new fashion range. That’s to go to buy clothes. Why do you go to a four star store? The premises stuff other people like. And how does that become a destination? So I was intrigued by Four Star. I went in the shop and it was that typical clinical Amazon space. But the category adjacencies were bizarre. There was the Garden Bay weed killer in the Bay next baby food, and I just don’t see weaker on baby food sitting naturally side by side. So and it was massive drive to sign up for prime. So I don’t know whether they got what they needed out of it or whether it failed. Amazon will always tight lipped about insights or their activities, so I was a bit intrigued with that. And in London we had a hair salon that opened as well as a trial. And the idea was you had augmented reality, so you could sit in front of a screen and see what your hair would like if you wanted to go blond. And then while you actually have a drink you could browse hair care products and buy them. But that was always going to be a test lab, that one. So I see them opening more retail stores afresh and that just will count technology’s growing. I just read yesterday they’re opening a 30,000 square foot fresh store in Washington and they opened a 25,000 square foot Whole Foods store a couple of months ago. So we’re seeing that growing and that is revolutionizing checkout. And I visited four different grocers that is deploying their technology in London a couple of months ago. And it was fascinating to see the sign up still a bit clunky. But that’s going to come along. And then that will have another massive impact, because the checkout area was a whole sales channel for impulse purchase and that could disappear. So the confectionery and the soft drinks and the gum companies and the brands selling insurance and things like that that were always there at the till, that’s that whole channel is going to be lost for them as well. So I think that’s going to develop in an interesting way.
Ned Hayes [00:11:48] A moment ago, you mentioned direct to consumer DTC, and that world has really emerged in the last 10 to 15 years, especially as technology allows brands to go direct. Do you see that really being the future of retail or do you think there’s always going to be the need for the middleman adding value?
Ian Scott [00:12:06] I think there will be a mix. I think we always, as humans, tend to exaggerate change. We think back to the back to future films. You know, we should be around on hoverboards these days or even Animal Farm. We’re looking at what 1984 is going to be like and things like that from George Orwell. I think that will be a mix. I think the challenge for the wholesalers is you need to give them a reason to buy from them, not direct from the brand. So you could go to using America now as Dick’s Sporting Goods, trying the latest case and then stand in front of the memory staff, go into the Nike app and buy them direct. And the challenge is Dick’s and all those other brands like that, need to create their own unique experience that makes them the best place to buy Nike’s, using that analogy. So the one that always springs to mind is Selfridges. Now, a lot of Selfridges people said the department store is dead. The Selfridge store in London is amazing. And I actually have a guided tour for 3 hours tomorrow to actually look around with what Whitman I’m really excited about that. With everything in combined Selfridges, you can buy elsewhere, probably cheaper, but they make their experience worth visiting and they have this iconic yellow shopping bag. And it’s a badge of honor to walk down Oxford Street in London with a yellow Selfridges back. But you go inside and they have a wedding license now so you can get married in the store. They have a cinema, so you can sit in plush seats and they will serve you food and drink. They have a skate bowl so you can go along with a skateboard, prove you can skate and for free skate in their skatebowl on the second floor. So they make it interesting and I know they’re at the higher end and it’s easy to say, well, they’re luxury and they have big budgets. But that mentality of making it interesting is how it works with Selfridges as well. What I do love is they changing rooms in the middle of the shop floor as a feature. Most clothing stores will hide the changing rooms behind the checkout, and you have to go looking for it. And they have these stunning designs for their changing rooms. And the kids one is like a little doll’s house made out of wood. And there’s amazing wood in the fashion area for the women’s clothing. And it’s sort of this organic shape, and it’s all made out of frosted acrylic rods end on the end of these circular tubes and the light bounces off. So they make it interesting. So I think this is the challenge that wholesalers have. There will be a growth area for DTC and it will settle into its own position particularly in physical. Wholesalers have an advantage because they’re already being out there, doing it, creating awareness. They’ve just got to make sure the experience validates you going there instead of direct to the brand.
Ashley Coates [00:14:29] Mhmm. Yeah, absolutely. Thank you for that perspective. Turning back to you quickly, Ian, this past January, you were named a rethink retailer top 100 at Retail Influencer.
Ian Scott [00:14:40] Yes.
Ashley Coates [00:14:40] How does that feel? What does that mean?
Ian Scott [00:14:43] It was. It was a shock. You have to be nominated for that. And a couple of people I know did say they were going to nominate me, which was really nice. But they said that six months before. So I didn’t expect anything. And I was suddenly on Linked in that day, there were loads of people I know and respect proudly announcing and I was like, okay, never mind. And then my email came through and I was like, Wow. And I didn’t really know how big a thing it was. But certainly looking at the list of the 100, there were a lot of people that I admire and respect there. So it certainly is a group of people that it’s an honor to be associated with. And I suppose the benefit I’ve had with my LinkedIn posts certainly had 50% of views. So there was an actual commercial benefit of having that and acknowledging it because people were then coming to find out whether it was stay at that elevated level, that’s down to me be like those wholesalers, I’ve got to give them a reason to keep returning to me so that it’s down to whether my content is valid for them or not. But yeah, it’s been nice. I mean, I’ve had a few people comment on it when they’ve engaged with me as well. So yeah, it’s a wonderful accolade.
Ned Hayes [00:15:44] Yeah, you’ve had a great run because you started your consulting company in 2020, right?
Ian Scott [00:15:50] Yes.
Ned Hayes [00:15:50] So what led you to start an agency at that time? Especially, we didn’t know the COVID was coming, but when 2020, you kicked off an agency. Tell us about the thinking behind starting that.
Ian Scott [00:16:01] It was very simple. I got made redundant. I was global head of retail innovation for Tag Heuer, our worldwide marketing services company. And it was a fabulous job and it was a new role created because a number of leading clients were saying, You’re the biggest in the such sourcing the supply of ten peoples sale. Therefore you must have something to say. So we would like innovation as part of your offer. So the new role was created and that’s a blessing and a curse because you have a blank page so there’s no precedent or no history of what clients want. So it was interesting and I spent probably the first year really just getting to understand the clients and meeting them, understanding the account teams and developing the idea. But when COVID hit, it was no surprise to me that redundancy was coming because it was a job that was easy to the wrong word. But on a balance sheet, I’m not one of the account directors managing £1,000,000,000 account was this proactive activity. So yeah, I was made redundant. Just I think it was July the first, 2020. So it was interesting to become a consultant on physical retail as the government closed all the stores. But the first year was hard. It was very, very hard. But I think what helped is as the stores started to reopen, people realized that they needed to get more value out of them. So I imagined then that someone with my offer may have something to provide to clients that may be relevant at that time. So the first year was awful timing. The second one was probably very good timing in that respect.
Ashley Coates [00:17:25] Wonderful. Can you tell us more about the services you offer in your client base?
Ian Scott [00:17:30] Yes, certainly. I offered a setup almost by chance. A friend recommended is a subscription service, so I write weekly or monthly reports which can be generic, or they can be on specific areas. So it’s almost like content I would post on LinkedIn. So I have this massive Excel spreadsheet and an interesting story comes in and I have to make the decision, do I post about it or do I put it into the report? Because obviously I can’t post what’s in the report. So I offer I create a monthly report on food and drink, one on export and fashion, one on retail technology, one to retail sustainability and I’m just starting one on health and beauty sector as well, where I curate stories about new store openings, technology, sustainability, industry reports. And I’ll one page couple of images, rights and commentary and then a link to other articles, downloads, reports or videos to support it. And I started doing that and that was really starting to gather momentum. So that’s taken off really nicely. And the great thing with subscription is it’s consistent repeat work, which is always welcome when you’re a consultant. And then when I started, I was doing a lot of work working with suppliers in the retail market. So they may be technology or bespoke services where they’re experts in what they do rather than experts in retail. So I did a lot of work working with companies to help them talk to retailers in the retailers tone of voice and terminology, and particularly in the last seven or eight months, working with a number of brands and retailers auditing stores. So I go in and assess stores, use some interesting technology from a company called Fix eight, which helps scan and predict engagement based on the view. So that’s quite nice. And also running a lot of retail trend presentations where people will ask me to come in and showcase to internal teams what’s going on in the world of retail. And I also run retail safaris, where I have a route around central London where I can take people and it’s what I call brand and product agnostic. It’s not about the products on the shelf, it’s about the amazing staff or the sustainability message or how they integrate their digital into the physical space, how they tell stories and things like that. So that’s really starting to pick up again, particularly now the stores are open. That was a bit of a closed channel for the last couple of years, but I did want a couple of weeks ago. I’ve got another one coming up next month as well, which is great.
Ned Hayes [00:19:42] So what you just added was a fresh perspective that you’ve brought to your clients and you’ve been able to give people a viewpoint from the perspective of a shopper, right?
Ian Scott [00:19:54] Yes.
Ned Hayes [00:19:54] So how do you actually enter into that persona and be able to look at it through the eyes of somebody shopping, especially after all your years of experience. I imagine it’s hard to be fresh.
Ian Scott [00:20:05] It is. And the interesting thing is we are all shoppers. So the target audience is everyone in the world. So that, again, is great because everyone is engaged in the sector. But the challenge, like you say, is how do we go into a shop and not think like a retail professional, but think around a customer? A wonderful guy called Richard Hammond, who runs a company called In-Crowd, is someone I respect highly. And he said to me once, he says, You need to package and sell the service of being the customer, offering that customer perspective. And I’d never thought of it like that. I just had an opinion. But I’m lucky, I suppose, in that I just tend to look at those environments and just think I wouldn’t do that. That’s too complicated. For example, there was a shoe retailer in Birmingham, which is the second biggest city in the UK in their biggest shopping center called The Bull Ring. And last year I was in there walking along and there was a floor graphic which was Keep your distance, keep six feet, keep two meters, and they’ve got a QR code on it. And I just looked at that and went, Really? Because everyone loves QR codes. Now they’ve had a resurgence. They stick a QR code and everything, but I’m like, This is a busy shopping mall, so you want me to stop, bend down with my phone and photograph the floor? Well, I worry about a mother with a pushchair or a stroller ramming into the back of me while I’m doing it. And then what I’m going to do is I’m going to learn this information about your brand and I’m going to go into your store. I’ll go, No, no one wants to bend down and scan the floor. I tried it and it didn’t actually download properly. And then it’s like make a good window and I’ll come into the store. Don’t ask me as a customer to do all the work, make your window exciting, and then I will come into the store. And there are so many interactions and there are so many bits of technology out there about making it easy for the brand. But unless you make it easy for the customer as well won’t do it. Why should the customer do more work? Because you want to learn more about them. And so I just start looking at that. And another one was Zara, who is a big Spanish fashion retailer, and they had Global Flagships a couple of summers ago. They had a plain white window and again that a QR code in the window and it was scan the QR code, download our app, open a point your camera at the window and you have a virtual catwalk. And I’m like that’s an awful lot of work for a shopper when only 3% of shoppers will even look at a window. And I understand you can imagine in the meeting people go, Oh yeah, we do these to these VR and we download the app, we’ll get all their data and then you’ve got a shopper walking past going, No, I’m not going to do that. And I posted about on LinkedIn going, This is asking too much. And then literally that day I went along Oxford Street and there were noticed youngsters crowding around the QR code and again they go grumpy middle aged man, what do I know about Gen Z and Millennials? And they were trying and again it didn’t download and they walked off shaking their head and that was a waste of time. And I was just like, You can’t add these frictions and barriers to what should be the simple parts of the process. The customers know too much. They have access to all the information in their hand, and unless there’s a fair trade off, they won’t do it. So I just tend to see things from that point of view. I suppose I still haven’t managed to productize and sell that service yet, but I suppose just offering opinions is a way of establishing my thinking at this.
Ned Hayes [00:23:12] Right? Well, you also bring a global understanding of retail to your practice. You worked for TAG, which I believe is based out of New York, and yet you’re based over in the UK. So why is it important to think globally as a retailer today?
Ian Scott [00:23:26] I was very lucky with Tag. I did get to travel the world and I would spend every spare minute walking around shops, taking a look, taking photographs. We are of global economies now. Most of these big brands are global and you can learn from different sectors. I’d read so much about how Asia was very advanced and there was a preconception that with all the technology comes from there. And I went out there and my conclusion was nothing to do with the technology because we all access that very quickly. They have curious shoppers in a way that we don’t in Europe and America. They love vending machines, particularly in Japan, there’s vending machines for everything. And there was a vending machine selling I think it was a Chanel lipstick outside a beauty store. And there’s a queue of 200 people waiting to press the button and get a lipstick. When you could walk into the shop, just buy it. So when something new is rolled out or that everyone flocks to try and they’re really curious, more willing to share data, they don’t have this hang up like we do in the West about Mark Zuckerberg owning our soul because he knows everything we’re doing. There’s a trade off. Their biggest app is WeChat, which is I say it’s like is WhatsApp, online banking, Facebook and everything all rolled into one. You can get divorced on WeChat is government run and brands then post little mini programs within WeChat. So instead of having 57 if you have one and it becomes accessible and easy to use, people understand that it’s government run and the government access all of this information, but it’s made very, very easy. So they’ll go, I understand you getting my data, but you’re making it an easy and engaging for me. Whereas here in the West we still have these reservations about data sharing, even though every app on our phone listens to our conversations and sends us tailored ads. You start talking about a green sofa, you get green sofa ads. A try free holiday in the Bahamas, that one is not work yet for me, sitting in that room is a good access to browse anything. I was talking in the pub the other day with a friend about this, so data mining is already there, but we resist it. In Asia they tend to accept and embrace it more and what that does is it drives change. And I have to say to Brand, you want to know you don’t need a crystal ball. Go to Asia. If you’re operating in Europe, go to Asia and you can see what’s going to be coming in the next 2 to 3 years. And if you’re in America and the big controversy, if you want in America, go to Europe and you see what’s coming in the next 12 to 18 months, because I feel that Asia is ahead, Europe’s in the middle. And I think America in very general terms are a bit behind. But having said that, you got with Apple and Nike and Amazon and Google, you’ve got some of the most advanced brands. But from a retailing experience, I think that’s the line at the moment. So I would say to anyone working Europe and Asia and America, what should we do in the next couple of years? Just get on a plane. If you can go to Shanghai, go to Tokyo, go to Seoul, walk around and you’ll see what’s coming.
Ned Hayes [00:26:10] So what is led to the US in particular being somewhat behind? Is that the regulatory environment or is it consumer preference? What’s made the US lag Asia in particular?
Ian Scott [00:26:22] I think there are a number of factors. I suppose the challenge you legislation is it’s state by state, so it’s difficult to to roll out. You’re a consulate that operates under a country flag as far as I can see, of different time zones, all the different states, you know, different legislation as well. So you’re more like a continent than a country. I mean, I’ve always found since I first went to New York in 2002 the point of sale and the way you communicate is less sophisticated in North America than it is in Europe and I’m setting myself up for all sorts of backlashes, but that’s just my perception is it’s slightly less sophisticated in the way they engage. The way of selling in America is different culturally and like the different countries in Europe are and same in Asia. So I just feel the embrace of change is not as quick in certain areas. I mean, that’s a personal view. I don’t feel like I have evidence to support it. But when I say in point of sale and communication in stores in America, it can be more in-your-face and loud, whereas it’s slightly less loud in Europe and in Asia that is all on an app. We’re going, Wow, QR codes about you go out to Asia, they never stop using QR codes. Everything’s done on the phone. I think China, the start of last year for the first time ever, 51% of their retail sales were digital. So it’s the first time it was more than a physical. And I don’t know whether it’s slipped back. I think it was a locked down influence, but do everything on the phone. The first time I went to Shanghai four years ago, the buskers you scan the QR code a week had to pay. You didn’t change into the open violin case with the time. Yeah. And then we’re just already doing it. I went to a store which was Alibaba, who are in very simplistic terms, the Chinese, Amazon, and it was a test store and it was a supermarket. And at the time they were doing 30 minute deliveries, which we laugh at now because there are idiots losing money doing ten and 15 minute deliveries now. But I watched a 70 year old man pay for his groceries with facial recognition. Right now I can’t see 70 year old people in and I posted about that and people got don’t want my face on a big screen in the store, which just demonstrates why it works in Asia. It doesn’t in the Western world because we find reasons not to embrace some of these changes, whereas they go, give me more, what’s next?
Ned Hayes [00:28:31] Right. And just to build on what you said, what’s fascinating about the QR code in particular is that it was invented in Oregon, where our parent company is based here near Portland, and various other technologies have been invented in the US, but actually fully productized and fully brought to a consumer market in Asia. So I’ve seen this time and time again that I’ll work on something in the lab at Microsoft or Adobe or Intel, and it rolls out here, but it’s met with a I don’t know if the public is ready for it, but then it goes over to Taiwan or it goes to Shanghai and suddenly everybody’s is using it. Boom. Yes. So we’ve seen the same thing with the hardware loyalty platform that we deliver. We’ve had gradual uplift in the US and yet Asia is fully embracing it. We have deployments across China where people are ordering thousands of these devices and just saying, let’s go, let’s go. Yeah. So maybe it’s a cultural difference, but I wonder also if it’s a consumer ability to absorb new technologies faster that people are comfortable doing that, like you said with the facial recognition.
Ian Scott [00:29:33] I think so. And I’d say, yeah, any global brand with technology to test it in Asia because you get better feedback and better engagement. So if you want to know whether it works or how it works or if it improves the process, that’s probably the best environment. I always feel you will have those cultural variances, you have regional variances and then, you know, category variances because people will shock certain products in different ways to other products and you need to understand all of them. And then you layer on top of the generic human behaviorial aspects of how humans think to make decisions or into common territory of thinking fast, thinking slow, and also some of those wonderful biases that we have that are embedded in our DNA as humans. And understanding all of those helps us differentiate and also get the insight as to why things work or don’t do that as well.
Ashley Coates [00:30:18] Well, I’d love to chat about how the pandemic affected technology and retail. It really sped up the adoption and integration of technology into many retail spaces. So what were some of the most exciting advances that you saw in retail technology?
Ian Scott [00:30:34] First of all, there was a lot of technology that had to be touchless because touching was one of the big issues. The biggest one that really swept through was live livestreaming, which again is bog standard in but english phrase are very sad in Asia, where livestreaming is one of the key channels for retail. We saw it coming through and there were companies like Hero I think are just being bought by Klarna that offered this idea of utilizing physical staff in-store even at the store shop. So you could have a member of staff in the store and you could connect through the app with a phone and you could have curated shops around the physical space with a member of staff. And the great thing with that, what I like about this technology, it’s still relevant post-pandemic as well because you can still sit at home and look around the physical store with a member of staff who could curate the tool, recommend products and assist with the purchase. So I love this sort of a livestreaming client telling type of tools because they just merge channels seamlessly. And it’s all about what I was saying earlier is it’s easier for the customer, the customer benefits. And I think particularly during lockdown, a lot of these companies, it was great because they could still utilize the store and they could utilize the staff to work. And you were dealing one on one with the customer. They just happened to be through a phone rather than face to face. So I love the idea of how this now becomes another part of the tool kit. Even though we can’t go into the store as well, it just gives the customer different choices.
Ned Hayes [00:31:58] Right. Well, speaking of a tool kit, one thing that we mentioned earlier was this AR VR type of experience. And I know Mark Zuckerberg, for example, is really hot on the metaverse, but I’m not sure myself. But I’m curious if you could speak a little bit about where you see AR being useful in the retail space today?
Ian Scott [00:32:18] Yeah, one of the obvious areas that really crossed it was health or beauty. I have some scary videos of me trying on pink and black lipsticks and things like that just to demonstrate that. And I was looking at, I say three or four years ago in Shanghai, most of the beauty brands have introduced various forms that they say you could do on an app at home. You can also do it on screens in-store, and it’s a great opportunity. My daughter tells me. It’s a really cool thing. I was being a bit concerned about color reproduction between the camera and the lens that you view, but she said, Well, it’s great. You get a sense and it narrows down your options. So health and beauty really adopted that very well. And I see that becoming a big thing, the metaverse itself. I’m quite intrigued by this. Everyone’s leaping on board the bandwagon. I think Mark Zuckerberg’s had an opportunity to deflect some of the issues. He’s had recently rebrand the company into a subject matter that is growing and new. But what I find quite intriguing is I think it was Walmart, I saw a little video and it simulated someone with a shopping trolley going through a mall and you can pick up products and put them in the basket. And my first instinct was you don’t have to do that. You can reinvent. There’s no limitations that this physical space in the metaverse, I don’t know what the answer is, but I’m like, Why do you want to go to the lengths to recreate the physical shop when you could do it floating in the air? You could do it in spaceships, you could do it walking through mirrors, what it means that none of those physical restraints in the metaverse. So why don’t you find a really interesting way of utilizing the resources in the metaverse that aren’t available in the physical store? And I can say I don’t know what the answer is, but I was like, don’t create the physical shop because what’s the point? I might as well just go to the physical shop and that may be useful is a bit of a transition as we adopt the idea of familiar I know where I am, but you could go into all sorts of weird and wonderful things with that.
Ned Hayes [00:34:02] Right. And it goes back to the advent of the Internet when people first created stores online like websites for stores, they tried to duplicate the actual physical store. They built whole counters, they built little like check in here for customer reservations, check in here. And over time, we saw all of those things fade away as people realized all they needed was that one click basket or Amazon even put a patent on the one click purchase because removing that friction was key. And so, as you just said, in AR and VR, we’re going to see that friction disappear. I’m personally very excited about AR. If I can walk into a store and have my glasses and not have some big helmet on, but just have my glasses show me the prices or show me how long something has been on the shelf so I can make a quick decision and it’s adding value rather than adding friction that yes.
Ian Scott [00:34:54] I agree. I’m seeing things like shopping lists coming to life where you can hold the phone will navigate around the store to take you to what you want or what I loved as well was, you know, imagine all the other brands going, well, how do I convince them to buy me instead of the one on their list, which is what shelf age point the sale is all about. And the great thing is you can then adding Challenger brands. Okay, Prescott, I know you’ve asked for this one, but we’re 10% off and things like that. It’s still a bit clunky in that using your phone is still shopping’s often a two handed activity to hold the phone to know where to go. But I love the thinking behind how can we then hold this up and you see arrows on the floor showing you where to go and then directing you to special offers that you weren’t aware about. So things like that is a nice way of utilizing the technology to engage people definitely.
Ned Hayes [00:35:40] So let’s shift gears a little bit to talk about loyalty and talk about how to keep customers loyal. So the company that sponsors this SnowShoe actually focuses into consumer loyalty, especially for independent retailers. So this is an area of interest to a lot of our audience. So what’s the status of customer loyalty and how has this changed over the last 2 to 5 years?
Ian Scott [00:36:03] I think, yeah, a lot of people are trying to hold onto that. I’ve seen various iterations of subscriptions to try and keep people going, and I appreciate it because I offer the subscription service myself, but I’m aware that you often get high fall off rates from subscription. Just look at what’s going on with Peloton at the moment. It’s no surprise to me that their subscription rates dropped because particularly with exercise, because in January we’re already we all sign up to the gym, burn off that Christmas fat and then by April we go, I’m not going this month, so why should I keep paying for it? So those sort of things are quite challenging and turn that into loyalty. You have to give people something more. I always resist subscription for supply of product because I always feel What if I don’t need it next month? But I still got to pay for it. And I’m sure there’s ways around it, but my perception is I’m going to be paying for something I don’t need. So I think that’s a challenge. But other loyalty schemes, again, you need to offer a value. I saw that just giving a discount because why throw your margin away if they’re going to be a regular customer anyway and is getting that balance. So I think there are a number of ways that you can see brands offering engagement. Companies like Nike do it really well. They have their sneakers app, which is for those crazy sneakerheads, the ones that buy all the limited edition releases. But they’ll do things like, Oh, the latest LeBron sneaker is available. You got to go to the Los Angeles basketball court for 12:00 tomorrow to get the release of these nutters getting on planes or flying across the country to be there and stuff. It’s crazy. But that sneakers, I think, generated $1,000,000,000 in revenue last year. But what they do is they tap into the excitement, they engage and they talk to them. You go in the Nike app, added some more detail to my version of the Nike out recently and they ask what you’re interested in. Then they’re pushing videos about subject matters you’re interested in. They’ll talk about new releases. So it’s not just this is cheap, but this is why, right? You want to engage, you want to have fun, do you want to go out and do more? Do you want to use the product you just bought in different ways? And to me that creates loyalty because it’s a community and building community is a great way that’s not about discounts, but it’s about a sense of belonging. And again, has been saying all the way through, you’ve got to make it relevant and exciting to keep it going. But you build that community. For example, there’s a wonderful store in London for Rapha, this high end cycle clothing company, and they build community brilliantly. They have a great coffee shop and there are so many retailers want to put coffee shops in as great people come in, stay longer and spend more, whereas most don’t. They come in and they buy a coffee and they leave. So they spend more time in your shop. And all you’re doing is sharing the revenue of that square footage with the coffee offer. Whereas with Rapha cycling and coffee shops, certainly in Europe, they’re intertwined. The classic Sunday morning bike ride. You go for a ride, you stop and you have a pint of tea, a big piece of cake, and then you carry on cycle, that’s the folklore of cycling for generations over here. So by adding a coffee shop to a cycling offer, it’s a natural symbiosis. And I went to visit the store when they extended it last year and I bought coffee. But you weren’t allowed to drink it inside because of the restrictions and they have benches outside. So I sat on the bench and a guy came in, sat next to me and he’s gone, Oh, you come down to the store as well? And I said, Well, I came to have a look at it. And he says, Oh, I love Rapha. He says, I’ve driven from Oxford. It’s like an hour and a half journey to come and have a coffee and talk to the staff, not to buy anything. It’s his focal point when he’s in London and he goes, I’ll do, I’ll come in here. And he sat there with his coffee and they’d been chatting to staff that he knew by name. It didn’t buy anything this time, but he buys it. So his mission to London was, come and have a coffee in the Rapha store. And it gave me a sense then that the loyalty they have created is about making this community fun. And I was in the shop just last week and as Muddy Bikes wheeled in this bike racks inside the store and most shops would be like a muddy bike outside. No, bring your bike in. One of their other stores, you see people cycling through the store. It’s a popular bike and they go to have a coffee. So they embrace the whole element of what goes on with the culture of their customers and how they use their product. They don’t push the product hard. They go come and have fun. And there were 30 people sat at the cafe with laptops and chatting and meeting up. So that’s a great way of building loyalty. You’ve got to work hard at it. The point is that resonate with the customers.
Ashley Coates [00:40:11] Yeah, that’s great and well. And so you’re talking about engagement as being a very successful model for creating loyalty. And you gave some examples of larger companies like Nike as well as Neighborhood Bike Shop, How to build that engagement. What can you just tell independent retailers about building a loyalty program? If they may not have the same resources as an international corporation, how can they build that engagement? What sort of program or practices do they need to implement to build that loyalty and engagement with their customers?
Ian Scott [00:40:44] Certainly, I often showcase Nike and I appreciate they’re a multi-billion pound company, but the principle is scalable and it starts from the fact that they know their customer, they understand their customer well, and everything they do is focused on that. And that can work for a one person business selling on Facebook or having a corner store. Because if you get to understand them and talk to them, you understand what’s going on. And by appreciating what goes on in your customers world, you have a greater chance of then valuing what you do. And a corner store that’s as much as knowing people by name, understanding their kids from then to what they bought last time. In Nike’s world, that would all be collected data and there’s a global app for it. But when you’re a one man business, you’re talking personally 1 to 1 with them. And I think that’s important. And you have to work hard again at sending that information out to customers or making it available for them based on the insight you get. And the great thing is the smaller company is you tend to know your customers better. You know one person at Nike will know a fraction of 1% of their customer base, whereas when you’re smaller, you know more of your customers or all of them, because it’s just you or two or three staff. So I think in that respect, it’s that engagement with them, making them feel welcome and valued, which is a very easy thing to say. The challenge there is, is capturing that information and remembering it and then being able to communicate to them at the right time about what’s of value to them. And I’m sure your sponsor and other companies like that have tools that help facilitate this, but you still need to input your information and your understanding of those customers to make that to work properly. The problem is a lot of businesses feel that they need to be stocking the shelves in the store or posting on Facebook, but you need to invest in that knowledge of your customer as well, because that’s the thing that gives you a real long term return. As we all know, it is cheaper to sell more to an existing customer than to find a new one. So if you look after them, they will then become advocates for you, especially if you’re a small business guys, wonderful company offered to do this and they looked after me and when I had a problem they fixed it. That ripple effect of this goodwill, especially with the power of social media, people normally post when they’re really happy or when they’re really annoyed. The silent majority in the middle was indifferent, which is why feedback forms can be misleading. Because again, you want to read from a feedback, focus your bad service or you want to give glowing reports. 80% of people in the middle like yeah it was all right. I don’t need to talk about all right. I’m busy doing other things. So we tend to get driven by the extreme emotions to give feedback. So you have to work hard because the 80% in the middle are the ones I mean, you’ve got the superfans that want to promote you, but you can convert that 30% that are near the superfans more easily and then you have to work harder to just appreciate what they’re interested in, why they bought from you, and then utilize the loyalty to give them reasons to come back, I think.
Ned Hayes [00:43:29] Right, right. Wise words. Well, if we could look at the future for a minute, we’d spend a little bit of time thinking about the last five years and where retail has gone. Where do you think retail is going in the next 5 to 10 years?
Ian Scott [00:43:42] It will not be as dramatic as we think. As they say, change is never as dramatic as we think. I think we will find a little more of that settling the digital and e-commerce side is not sound is natural and is still growing to its natural state, so online will keep growing. And different sectors, different regions, different categories, it will become 30, 40, 50, 60%. But what I think the biggest change, the biggest development will be how they merge. I call it symbiotic retail physical stores will start more journeys. It’s the natural end of a journey where you go to the shop and buy the product. But a lot of people will go into the store to learn, experience, talk to someone, and they will then buy at home on the sofa with the phone in the hand. So we’ll see more integration between those channels where stores will work seamlessly with online both ways, both of them will start then journeys. You just got to make sure that it is a seamless link. The customer will flip between channels without thinking they don’t even conscious of it. So you can’t have online only office because they’ll go into the store and they’ll just get really annoyed because it’s 10% more is not available. I see more of the integration of the different channels where a customer can pick up a phone, walk into the store, go to a show, go on social media, go on a website and it’s all the same. And I think that’s where we’re going to see the development in the next few years.
Ashley Coates [00:44:57] Well, thank you so much, Ian. We do have one last question for you, which is, what do you want your legacy to be? What would you like to be remembered for?
Ian Scott [00:45:05] Oh, my goodness. I’ve not thought about the legacy I’ll leave behind. It will be great if I help people look at retail in a different way. I suppose in very, very simplistic terms that could be thinking differently about the customer or just being more aware of what’s out there. I think anything more than that would be a little bit egotistical, I think.
Ashley Coates [00:45:24] Well, thank you so much for joining us today. It’s been a wonderful conversation.
Ian Scott [00:45:28] Thank you. I really enjoyed it. And thank you for inviting me to chat.
Ned Hayes [00:45:32] Spark Plug is a wholly owned property of SnowShoe. All content and copyright 2021 Spark Plug Media.