Ned Hayes [00:00:06] Welcome to SparkPlug, where we talk to smart people working at the intersection of business and technology. Brought to you by SnowShoe making mobile locations smarter, SparkPlug is happy to welcome Rachel Michelin, president and CEO of the California Retailers Association. Welcome, Rachel.

Rachel Michelin [00:00:26] Great. Great to be here. Thanks for including me. 

Ashley Coates [00:00:28] I was so happy to have you here, Rachel. Will you start off by telling us about California Retailers Association? What does your organization do? 

Rachel Michelin [00:00:37] Gosh, it’s kind of  like what we don’t do. So we represent all retail in California, large and small. So we have members who are the national brands. We have regional retailers. We have small retailers, specialty retail and we really focus on the regulatory and business environment in California. So we work at the state level with the governor, with the state legislature, we work with the different counties, all 58 and then local governments across the state really just trying to represent the millions of folks that work in and are influenced by the retail industry in California. 

Ashley Coates [00:01:12] Well, you’re wearing a lot of hats for a very large state. 

Rachel Michelin [00:01:17] Yes, the fifth largest economy. So yes, it is crazy. 

Ashley Coates [00:01:21] Wow. And then, Rachel, you also give us a little background on yourself. How did you come to head up the California Retailers Association? 

Rachel Michelin [00:01:29] Well, you know, I’ve worked in the Capitol, I worked on political campaigns. I’ve always been engaged in politics in California. Prior to this, I ran actually a women’s leadership association. It was bipartisan and I focused a lot on recruiting women and training them to run for political office or apply for political appointments. So worked with a lot of local governments in the state legislature and various administrations on that issue. And then had this opportunity. They asked if I would be willing to come over to the retailers. It was a little bit out of my comfort zone, so I thought good time to do it. So I did, and we’ve rebranded it. We’ve grown it. We brought in new members, new leadership team. So it’s been a really great experience. And little did I know that on my first anniversary of the start, we would be hit with COVID. So it was almost like, you know, just jumping in there full force and just suddenly being on a national stage because California is the largest retail market in the nation. 

Ned Hayes [00:02:30] Mm-Hmm. Well, tell us more about why retail matters in California. 

Rachel Michelin [00:02:35] Well, first of all, you know, retail represents one in four jobs. So, you know, a lot of times, right, when you talk about retail, we think about going into a store or shopping online, and that’s all you think about. You don’t think about everything that’s behind it. So think about how do those items get onto the shelf? That’s all part of retail distribution centers, warehousing the ports, trucking. All of that is impacted by retail. When you think about going online and shopping, think about it. Those are people that are putting those websites together, people putting the coding together in order for you to order your items. So when you think about the scale of California retail impacts, every issue, every piece of what goes on in the state, every piece of what goes on and touches this industry. And so on one hand, it can be very. And there’s a lot to your point. You wear a lot of hats at various times, but it’s also very exciting because you deal with so many different issues in any given day that you really realize retail large and small is the backbone of California’s economy. 

Ashley Coates [00:03:42] Well, and we’ve heard so much about how COVID has impacted so many retailers around the world. The world really, based on what you just said, can you tell us how COVID impacted the association, given all the aspects of retail that you just mentioned? 

Rachel Michelin [00:03:58] I think that coming in as the new CEO, President, CEO a year in, I made a lot of changes that first year structurally to kind of move the organization. But then when you’re hit with a global pandemic, suddenly you become an expert on everything. And I would say that the first couple of months I never left my dining room table. I would usually be, and this is prior to Zoom right. So everything was still conference calls. So I would sometimes I’d get out of my pajamas all day, right, because I was dealing with the East Coast, so I would start at 6:00 a.m. fielding calls. Because and then and you’re realizing and I think that it really made other folks understand the impact of California. Because once we started getting all, I mean, we were the first state under the regional under the state stay home orders for a state to do the mask mandate. You know, when people started realizing the impact California was going to have on their business nationally, it really made them pay attention. So I would say that it helped our association grow. We. We brought in new members because people have realized that they need to have a voice in California and they do that through the retailers association. But it also is. It was challenging. I mean, you’re dealing with not only the governor’s office and the administration, but at that way, back when I had a spreadsheet, over 700 different local ordinances pertaining to COVID that you’re paying. And so you’re dealing with the governor. Fifty eight counties doing their own thing and then cities within those counties doing their own thing. And it was just it was crazy. And so I’m proud of the work that we did. And I think that we did a lot of good things. But yeah, it was it was nuts when that was going on. It’s still it’s just recently with the new mask stuff coming out from the CDC. That’s my new thing that I’m dealing with now. 

Ned Hayes [00:05:53] Right. Well, it sounds like your constituency is elephants and ants, so everyone from very large companies to very small retailers. Can you tell us how you saw those, those different parties? 

Rachel Michelin [00:06:07] So, you know, one of the things that was really important to me, I I’m a huge believer in small business. I think that to me, you know, people who go into business and open that small retail shop in your community, kudos to them because that’s a dream, right? That’s something people dream. That’s blood, sweat and tears they put into that. And so we spent a lot of time. And when we were growing and going through this whole COVID situation and working with local chambers of commerce, I did a number of webinars and conversations with local retailers. We talked about how you could pivot to getting that online presence. We talked a lot about curbside pickup and curbside. And how do we really help the small businesses stay relevant and spend a lot of time focusing on continuing to build that relationship between your consumers and really also encouraged particular, our small retailers that the investments you’re making now on that online presence, whether it’s using social media. I was amazed at how folks used Instagram or Facebook to start selling their items that you’ve got to continue that right because you never know what can happen. And I think going forward, everyone needs to have that online presence. So that was really, really important to me. But then when you look at kind of the big box stores, so remember some of them, which is also grocery were deemed essential from the beginning. And so working with them, they were kind of, I say, the guinea pigs to how this whole thing was going to work. So we were looking at social distancing and working with CalOSHA regulations and figuring out how this was going to work. Looking at the mask mandate, how do we interact with our employees, how do we protect our employees and protect our consumers? So it was a very weird experience where half of your members were open and you’re dealing with that and the other half were closed. So at the same token, I’m dealing with the ones that were open, but then advocating so hard to local and state governments to as quickly as safely as possible. Get those other retailers, get their doors open as well. 

Ned Hayes [00:08:13] Right? How how did retailers deal with COVID this year if you were grading the state on retail and COVID? How did you do? 

Rachel Michelin [00:08:23] I probably would give us a B-. I think that we did a lot of really good things. I think that the challenge is for retail and I wouldn’t so much put it on retail. I would say that we were the most consumer facing industry. When you think about it, we were the ones that people still needed to go to a grocery store and get their groceries. People still needed to go to a retail pharmacy and get the prescriptions. And I think that we really handled that well. I think the challenge was California being so big and so diverse that that was that was tough, right? When you’re dealing with all these local ordinances in retrospect, I wish that this state coming from the governor frankly had more of a cohesive approach to dealing with this than necessarily all about local government. Don’t get me wrong, but when you’re dealing with this kind of issue, I think had we had a more cohesive approach to it, it probably would have gone a little bit smoother. 

Ashley Coates [00:09:25] You just highlighted many things having to do with retailers pivoting during the pandemic. Now we’re actually looking at reopening in 2021. I have a quote here from you saying in terms of California reopening, you said you’re going to see people looking and finding the opportunity within the chaos. Can you share any insights you have in terms of how California will reopen? 

Rachel Michelin [00:09:51] So, you know, I think they’re going to be some things that stay with us. I think curbside pickup is here to stay. Right. I think people enjoy that. They like it. I think even small retailers like it. I think you’re going to see online shopping. People liked doing the online shopping. I think the delivery system is going to continue. In fact, when you talk about opportunities and chaos, I would say that there are a number of companies who have startups who have reached out because they’re getting into the delivery service, right? They’re looking at buying brick and mortar stores in California, start using them as kind of mini distribution centers and doing more kind of neighborhood delivery so that it comes a lot faster. So within 30 minutes, you can have snacks on your door or within 30 minutes, you can have diapers delivered from more of a local retailer. So I think those things are going to stay. I think the industry, it’s going to be fascinating to see where it goes. I think that folks, you know, I was asked earlier where I see this happening. I think once we hit June 15th in the reopening, where what we’re hearing is that there won’t be social distancing, the mask mandate should go away. You know, we’ll see the devil’s always in the details. But I do think you’re going to see folks going into summer, going back into the mix, going into that retail experience, right? You don’t realize how much you miss something until you don’t have it. And so I think they want to look at and see and go into the malls, go into the stores, go into their local retailers, really focusing where we’re really promoting, go to your local retailers, go to your local businesses. That’s important in the recovery, but it’s also important, I think, just for the health of us mentally coming out of this kind of pandemic and it’s going to take a while. And I think that the issues with the masks is going to take a while to get out of. I think that, you know, I think you’re going to see that continue, though. I think you’re still going to see people walking into a retail establishment. And that’s fine. They feel more comfortable wearing a mask. They absolutely should do that. And I think that you’re going to see people going in. They don’t have a mask. And that’s OK, too, that I think that we really are going to see some innovative things coming out of in terms of the supply chain, delivery, curbside. And really, I think focusing on local and small retailers and how they continue to develop those relationships with their consumers. 

Ashley Coates [00:12:20] Absolutely. You mentioned a couple of new practices, such as curbside pick up home delivery. Are there any other best practices that you saw retailers using last year, especially local smaller retailers that you see continuing post-pandemic? 

Rachel Michelin [00:12:35] I think utilizing social media, I think Instagram, you know, one of the things I thought was fascinating, and you saw that small retailers, more retail boutiques, but then also like large retailers, some of the department stores did it to where because you couldn’t go in and try on clothes, you saw people trying on the clothes, right? And you saw different body types. And this is what this pair of shorts is going to look like. If you’re 5’10 or if you’re 5’4, this is what if your skin tone is this color, this is how this I mean. So I think you need to see more of that coming down the pipeline where people can start to see, you know, and using kind of those live models. I loved watching some of the smaller retailers really selling their items online, right? And having that personal interaction. I was amazed at how they really utilize. Like I said, Instagram and really said, This is why I love this bag, because, you know, and those types of things, I think you’ll continue to see, you see how retailers are very competitive rates, hugely competitive. And so I think you’re going to see different aspects coming out of COVID that people will continue because they became really good business practices and they’re really going to help them even in the future going forward to be able to market not only their business, but the products that they sell. 

Ned Hayes [00:14:01] Along with that innovation. Do you see some of the kind of advanced technology that we’ve seen out there, like augmented reality or being able to add more technology to a retail space? Do you see that as as surging forward? 

Rachel Michelin [00:14:16] I do I think it was happening before COVID hit. I think that that a lot of retailers and, you know, retailers moving more towards the experience of shopping as opposed to just going in and shopping, right. So people want that experience. So I think you’re going to see more of that advanced technology coming into the retail world. I think you’re going to see traditional stores selling different things. I’ll tell you one of the biggest and you know, this does kind of go back to COVID. Pet supplies and pet stuff is becoming a huge market. And so before you would have, you know, specialty stores really focused on pet stuff. But I think you’re going to see some more of the more traditional department stores and shopping getting into that pet supply because that’s a huge thing. Right? I mean, look at what happened the last year. So I think you’re going to see the what you see in store is evolving. I also think that you’re going to see some of these bigger department stores, national brands becoming more of a one stop type of shopping experience. You may not have the groceries in there. But I think what happened with some of them learned with this essential non-essential is that you have to diversify what you sell in your stores. And so I think you’re going to see that as well. 

Ashley Coates [00:15:31] That’s really fascinating. Actually, can you tell us more about any other segments of retail that you’re that you foresee growing and also changing going forward? 

Rachel Michelin [00:15:41] I think you’re going to see like I said, pet, pets going to be huge. Pet stuff will be tremendous, I think you’ll see more pet friendly policies in terms of, you know, in the shopping experience, I think that, you know, pets became such an integral part of what we’ve gone through. And from a mental health perspective, I think you’re going to see that stores are going to embrace that and bring your pets in in that type of thing. I think that we were starting down this road before COVID. It got a little sidetracked, but we’re coming back to it is really focused on the environmental sustainability aspect of retail. And I think that’s absolutely important and something that is important to all retailers. And we’re having a lot of conversations about that. Looking at packaging, one of the things we learned a lot because of this last year and a lot of deliveries and boxes and all of that, how do we look at packaging and how do we take the lead on that? So I think you’re going to see retail leading around environmental sustainability issues. And just in general, I think the supply chain in California, that’s a huge issue. We’re having supply chain issues in our state and we’re really trying to work with all of our partners in terms of leading. And I think you’ll see different ways of things being delivered in some parts of the country, not in California. But you have drones making deliveries, right? I mean, I think that’s a little freaky right now to me, but you never know. I mean, you could have a drone in the future delivering something. So I think part of what we’re looking at, too, is how do we protect the environment? What’s the cleanest way to get items to store shelves and into consumers homes? And I think that we’re going to continue to have those conversations. A lot of that was happening before COVID, but we learned a lot because of COVID that will take those best practices going forward. 

Ned Hayes [00:17:30] Can you tell us about one or two retailers that you see really innovating? 

Rachel Michelin [00:17:35] You know, I think there’s a number of them that are leading the way because they’re changing their business models. As an example, I would use CVS right, retail pharmacy. They’re really evolving more into a health care entity where they’re really looking into their doing and investing in technology around seniors. I think I think another thing we learned, unfortunately, because of COVID was that there is some vulnerability when some of our seniors were in group homes or assisted living. And I think you see you’re seeing a movement of people feeling safer trying to keep their loved ones who are older in their homes as long as possible. So CVS is investing in that. They’re investing in technology where you can kind of monitor your parents or your loved ones or your grandparents, whatever, because it make sure that they’re being safe. So I think CVS is one that’s really innovative on that health care side. I think you look at other companies, you know, you talk about the pet friendly stuff. Macy’s is one. They just announced that they’re really going to be focusing on pet products. They’re focusing on home goods, they’re focusing on some other issues that you really wouldn’t think them traditionally to do that, they’re looking to diversify what they sell because really the key is to keep people in your store as long as possible, right? The longer you can keep someone in the store, the more likely they’re going to purchase more before they leave. And so I think that’s what we need. So I think those are a couple of examples. I think stores like the Gap was already looking at some of the advanced technology when it comes to I’m on the website being able to see how clothes fit and those type of things. I think you’re going to see that coming out in the future. So I think there’s a lot of different they’re all looking at different aspects of how they can advance their business models, and it’s going to be interesting and exciting to see what happens. 

Ashley Coates [00:19:33] And building on all of those changes by retailers, how do you see retail touching the economy in the future? It sounds like retailers are becoming more than just a store for casual shopping. 

Rachel Michelin [00:19:47] They are, you know, you’ve got places like a lot of them have credit cards. A lot of them are becoming, you know, you go into a Wal-Mart as an example, and you may have other businesses within a Walmart right, within a Walmart, you know, they’ll rent out space to a nail salon or to a hair place, right? And so you see that that expanding so retail does touch everything and they are evolving in terms of what they’re doing. Health care is a big piece of it. I think you see more and more of them in in a Target in Southern California. As an example, they partner with Kaiser Permanente, where they have a clinic in a Kaiser or in a Target. You look at even look at what’s going on with COVID and with vaccinations, right? CVS are inside of Targets in Northern California. So, you know, on Friday, I’m taking my girls get their COVID shot. We’re going to Target, we’re going to the CVS so they can get their shot. Well, guess what? I’m sure I believe they’re spending some money because I’m with my daughters and they love shopping at Target. So, you know, I think those are the things that you’re going to continue to see in the industry that touches every aspect of the consumer because again, it goes back to the experience and it goes back to the ease of shopping and it goes back to really what is it that consumers are going to demand, right? Retail is all based on consumer demand, so they will change depending on what the consumers are asking for. So I think you’re going to see a lot of changes going forward. 

Ned Hayes [00:21:17] I was just in California last week and I was struck by the size of the state. There must be lots of differences within the state in terms of policies and municipalities. What kind of differences do you see? 

Rachel Michelin [00:21:30] A lot. Just today, I dealt with a number of them just before I did this call. You know you. That’s the fun, I think of running the retailers association, I say that now because it is so diverse, right? And when you think about it, not only is it about the different municipalities, whether you’re dealing with. We’ve got over 470 cities in the state. We’ve got 58 counties. Then you have the state government fifth largest economy in the world. But then look at geography wise, right? So when you’re looking at San Diego, the market is very different than in San Diego. That has a much milder climate. It’s usually sunny people are outdoors. Then when you’re looking at Northern California that borders Oregon, where it’s snowing and those types of things, so. And the politics are different. I mean, let’s just be honest. California is a very progressive state, but we still have pockets that are not. And so particularly, we saw this a lot with COVID, which became a frustration. And that’s where I had my list. I mean, seven different ordinances and because every county and city was doing their own thing. And it becomes very challenging and it becomes hard. And the problem is, from a retail perspective, is that retail is that very forward facing industry, right? And people are very loyal to their retailer. Whether it’s your grocery store or your local small retailer, you go to get your your birthday gifts or whatever. And so we became the ones that had to enforce all of these ordinances, and even now, as we’re coming out of COVID, we’re seeing more and more and I kind of call it Whack-A-Mole, where we’re seeing local governments coming up with all of these ordinances and it’s really challenging. And from an industry perspective, to deal with them because what happens to them is that we want to be good partners. We’re in the communities, right? Retailers are the ones that are giving to the Little League. They’re supporting the nonprofits. They’re employing community members. We think about it. Retailers really employ the community members of which they’re in. And so we want to work with local governments. But it becomes hard sometimes because some of them don’t take the initiative to reach out to us and say, How can we work together on some of these initiatives? An example environmental sustainability. Right? We want to work with local and state government on that. But Belk has ordinances that, quite frankly, because they don’t understand the entire supply chain. And you put one little kink in the supply chain where from your perspective, as a local elected, you think, Oh, this will be great, everyone’s going to love it. You don’t understand the unintended consequences that ends up being that you don’t have enough toilet paper on your shelves and then people get upset. Right? And so those are some of the issues that we have to deal with so that a local standpoint, a state standpoint, and then California is the most regulated state. So we also have appointed regulatory boards that we deal with as well. So it can get very complicated when you’re dealing with all of these moving parts. And really, our emphasis is we want to be good corporate citizens in California. We want to be good employers and one in four jobs are related to retail. We’re a huge economic driver in the state and what we don’t want to see is these jobs leaving the state because it becomes too, too burdensome here. They’ll they’ll go somewhere else, especially now because of the internet and online shopping. 

Ned Hayes [00:25:12] Right. So speaking of online shopping and unintended consequences during COVID, people went online. So how do brick and mortar stores catch up today? 

Rachel Michelin [00:25:23] And I think you’re going to see. Well, I think there’s two ways. One is I think that you naturally and I’ve seen it is that you have people are good people, especially in your communities. They’re going back to their small businesses, whether it’s a retail restaurant, whatever. I’m also amazed and just incredibly impressed by local chambers of commerce throughout the state, who are really partnering with different groups, and they’re doing all kinds of unique things and blocking off streets, creating these environments and these experiences for people to come and enjoy a restaurant and retail kind always go hand in hand, kind of at the same time. So I think you’re going to see those types of things, especially in California, as we enter the summer. Now, let’s just be honest, we’ve got great weather most of the time during the summer and so people can enjoy being outside. Plus, it’s safer. I think people feel more comfortable being outside. So I think you’ll continue to see that in terms of the larger retailers. It comes down to experience. I mean, I think you’re going to see them offering different experiences. I think you can see malls reinventing themselves where you’re seeing things like the bowling alleys or coming back in in a mall or it’s not so much the movie theaters, but maybe it’s a gym or people can go workout, shower, enjoy the mall, go to dinner or do some shopping. I think that whole experience level is really starting to come back. But there’s other things like before COVID, we were already working with a couple of our members on liquor licenses where you can walk around and enjoy a chardonnay while you’re shopping right or meet your girlfriends. And we’re going to do happy hour at this retailer and we’re going to we’re going to get a fashion show and we’re going to learn about different ways to put your outfits together. So I think that those are the things you’re going to start seeing more of, particularly in California. Once we get past the June 15th date and we’re kind of more fully reopened. 

Ashley Coates [00:27:16] Absolutely. And you were mentioning earlier that retail is really driven by what consumers want, and it sounds like you’re saying consumers want experience right now. It’s been more than a year that all of our experiences have been in our homes online. Do you think this is experience really going to be what drives consumers and retailers this summer, especially? 

Rachel Michelin [00:27:39] I do. I think a couple of things. I think it’s that I think there is that personal interaction people have missed, right? And they want that to have that. You get that when you go into a brick and mortar store. But you know, the other thing that I watch is right now, the tourism industry is booming, right? Everyone wants to travel. So guess what people want to do? Oh, I’m going to go buy new outfits. I’m going to go try things on. I need a new bathing suit. So I think you’re going to see a lot of that coming out as well, where retailers are saying, come on in, it’s time to, you know, get rid of your Zoom clothes and focus on your fun clip, right? I mean, we I think it’s going to be funny that it’s almost from a work perspective. In addition to a school perspective, we’re going to have like back to work sales because people are going to have to go back to the office and they’re going to have. So I think you’re going to see a lot. There’s a lot of creative ways to the marketing coming. 

Ashley Coates [00:28:31] It’s a whole new retail holiday.

Rachel Michelin [00:28:34] Exactly, exactly. 

Ned Hayes [00:28:37] Right. Well, the California Retailers Association, I know, works on policy to help retailers be successful because so can you tell us about a few of the policy initiatives that you’re pushing through legislation? 

Rachel Michelin [00:28:50] Sure. So, you know, I think one really is around environmental sustainability, we’re really looking at how we can be good corporate citizens on environmental sustainability packaging. Like I said before, is a big one. One that we’re really focused on, too, is broadband. You wouldn’t necessarily think that, but one of the things we really are working with our collaborative collaborative partners around broadband and expanding that in California because what we learned to is particularly for our small retailers, how important access to reliable broadband is in order to run your business. So we’re really taking a leadership role in that. And I think other issues pertain around just in general. How do we help our businesses recover, particularly small businesses from COVID? And how do we make the path to that recovery as easy as possible? You know, as I mentioned before, it is a little murky right now in California because while the CDC has lifted the mask mandate is not been lifted in California. So we’re really trying to figure out how we navigate that between now and June 15. But then we also work on a lot of issues around consumer protection, job creation and education is a big one. We really want to see, you know, there’s some incredible opportunities in the retail industry for folks, and we want to be able to highlight the career paths in retail. And like I mentioned before, it’s not just working in a store. There’s a lot of really good jobs that contribute to the retail industry, and we want to promote that. We want to promote that with our education establishments, both at the high school level and at the community college level because we want to see young people getting into the industry. And so I think those are some of the things that we’re really focused on. Transportation is a big one for us to, you know, making sure we have a smooth logistics system and then really anything related to the supply chain is important to us as well. 

Ashley Coates [00:30:51] Rachel, just fascinating hearing you talk about all of the aspects of the retail industry and how it plays into the larger economy and everything you do at the association. We do have one last question for you. Can you tell us what is your personal mission and how do you want to be remembered? 

Rachel Michelin [00:31:10] My personal mission, particularly in engaging on the policy side and advocacy side, is that every person has a right and responsibility, in my opinion, to be an advocate for the things that they believe in. And I still am, and it goes back to my work even in California, when they lead, even as it as a staffer working in the Legislature is that I want people, whether it is governmental affairs person, a CEO for a retailer, as an employee at a retail establishment in California to know that their voice matters and their voice matters in the public policy discussion, we have to be respectful. And I think you have to respect all viewpoints. But I believe there’s more opportunities for us to be working collectively together and find really good solutions to some of these issues facing the state, particularly coming out of the global pandemic. Then there is for us to be fighting over, and so I would like to be known as someone who was someone who brought people together. You had those those conversations and sometimes can be difficult to have. That really resulted in change that benefited so consumers in California and the employees who work in the retail industry. 

Ned Hayes [00:32:23] Fantastic, thank you so much for your time today, Rachel. 

Rachel Michelin [00:32:26] Thank you for having me. Appreciate it. 

Ned Hayes [00:32:37] Thanks for listening today to the SparkPlug podcast hosted by me, Ned Hayes, and brought to you by SnowShoes Snow.sh for smarter mobile location, Smart Plug is a wholly owned property of SnowShoe all content. Copyright 2021 SparkPlug Media.