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Retail Innovation|July 29, 2022

Analog Retail & The Future of Physical Stores with Kate Ancketill | EP38

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In this episode:

Wendy Liebmann talks with Kate Ancketill, founder and CEO of GDR UK, about the future of the physical store in a digital, and Meta-age. They agree there will always be a significant role for good physical retail, however, it must be fully omni-channel and logistically optimized to support ecommerce.

They discuss:

  • How stores must move away from the transactional, and towards enhanced services
  • How mass retail should hybridize space, build smart partnerships, deliver what’s trending on social media, create “tribal hangouts”, and empower retail employees
  • That it is essential to create many different options for shoppers in their different mindset modes
  • How the key to successful retail is to use data to get the right product at the right time for the customer walking in the door
  • Examples of innovative physical retail around the world – from Spain to China to England to the US
Don’t miss upcoming episodes, stay up-to-date by visiting the WSL Shopper Insights Library, or our Podcast page.

Podcast Transcript

Wendy  00:09

Hello, everyone. I'm Wendy Liebmann, the CEO and chief shopper at WSL Strategic Retail, and this is Future Shop. This is where I talk to innovators disruptors and curiosity seekers about the future of retail. My guest today is all three of those things. She is Kate Ancketill. She's the CEO and founder of GDR, the UK based company that advises global businesses from Procter and Gamble, Tesco target Sephora and Google Lego on trends in innovation, consumer behavior, retail and technology. Today, Kate and I are going to talk about analog retail, and how the future of retail is still grounded in physical experiences. Yes, it is. Kate's joining us from London. So good afternoon, Kate. Welcome.

Kate  01:02

Thank you, Wendy. I'm delighted to be here.

Wendy  01:04

Yeah, it's great to see you. Let's jump right in you. And one of your team recently published a blog that caught my attention called unapologetically analog. And it really supported our latest shopper research about the continuing importance of physical stores in a digital age. In it, what is it about physical shopping experiences that make them still relevant today?

Kate  01:27

Well, Wendy, I have to say, I've never been asked the question, Will physical retail exist into the future by a woman. But I've been asked hundreds of times by men. And I just always think it's so obvious, it's so not rocket science, that there will always be a place a very significant place for physical retail that is good retail that is appropriate to the current and future customer needs. Now we know we've lost a lot. But that was because it wasn't very good. It wasn't meeting the customer needs. And so I think it's almost a sort of not necessary question, isn't it? Because it's like saying, oh, will human beings continue to meet each other in real life in the future? Or do you think we'll entirely live in the metaverse? Now, you know, anyone sensible, of course, knows that. We will always want to meet each other in the physical world, we will always want exchange and marketplaces in all their forms, which include everything from obviously supermarkets to actual markets. And so there's obviously no question that physical retail will remain absolutely at the core and hub, as it always has been of our cities, towns and villages. But then we do have the overlay of course of the COVID lock in the lockdown, which meant that everybody was desperate to get out. And so but that's a temporary, you know, blip in human history, isn't it? I think we've always and always will want to be out and about engaging in commercial exchange, and meeting each other and learning things. And just the format through which we do that in retail is of course changing.

Wendy  03:13

You talked about in that piece. Five really interesting specialty type retailers from Aesop, the fragrance company in footlocker to a paint company in Helsinki to a DTC sneaker brand and luxury retailers. How do you see the sort of every day retail, the grocery, the mass merchants the hypermarkets? What are they need now to be delivering? I mean, because clearly, we've learned to shop online that was happening before we were all shut away. There's all that sort of efficient trip, we see that in all our work, you know, when it gets stuff off the list, that's not important to me, fine. Click deliver it, please. Or let me pick it up, please. But people still want to come into the store. We saw that in in some recent work where one in four people told us, you know, I actually order online every week and go drive to the store and pick up what I've ordered two thirds of those parked the car and go into the store. Sometimes it's because they forgot something, or sometimes it's because now they have time to buy and browse what they want. So when you think about you see a huge number of, of new innovative concepts around the world. What is the sort of everyday store need to be What does boots need to be for example, as an English example?

Kate  04:31

Yeah, I mean, boots, like CVS, or many of its equivalents in the US is becoming a health and wellness center. So you would expect to have consultation booths, which we've had for years, obviously, that's not new. But you might have kind of more high tech sophisticated video conferencing with proper doctors with, you know, self diagnostics, we can measure your own blood pressure and all that sort of thing. So enhanced services is better Basically what we're moving towards so away from, you know, traditional transaction because as you say anything relatively humdrum, you can click and have it sent to you home or have it cleaned collected. So it's the more engaging things that people are finding, in even sort of regular mass market retail. So that would be you know, repurposing space for a start. So not only, you know, would your boots become your health provider, so it might have nutritionists on staff and it would have, you know, the doctor surgery type, additional services that are one below going to an actual doctor, if you've got a large hypermarket, they've probably got spare space. You know, with the Endless Aisle these days, you simply don't need as much inventory under one roof as you used to. So in many cases, we're seeing partnering with experiential services like gyms and yoga and culinary schools and, and of course, upgrading of cafes into co working spaces, which are then monetized for the brand. Or, you know, as you've got in the US with Kroger, they've partnered with kitchen united, haven't they to, you know, bring four or five or six different regional or national or local restaurant menus to the click and collect offer. So you actually have to go to the Kroger to pick up those restaurant meals for takeaway. So there are many ways that I think mass market retail can make better use of its space hybridize partner, sometimes shimmy up and partner with sexier brands, which might mean you know, food plus fashion, or it might mean fashion plus beauty, or it might mean kids plus education, or, you know, all of those kinds of partnerships that we're seeing more of, and then of course, the obvious ones bringing in what's trending on social media. So updating the inventory to fit what's trending on, say, tick tock, you know, selling meal combos in supermarkets, that are reflective of what's going on in the main culinary TV shows at the time. Or last year when baked feta. Pasteur was the most searched thing on Google, having that available with all its appropriate ingredients in one place in the supermarket aisle and drawing attention to that being reflective in terms of your curated inventory of you know, what's trending in the local population online. So all of that basically the good omni channel stuff, and it's basic retail these days, with the best will in the world. It's very complicated to be a retailer these days and getting those basics right, even at that level is very difficult. So getting the inventory right for what's going on in the general world and the local population.

Wendy  07:51

Yeah, that is an interesting piece because in our one of our latest how America shops reports, we talk to shoppers a lot about their expectation of the store, the physical store today, what we called retail five point out and this conversation about I want to happy store and happy store, at first glance could be all the bells and whistles, shiny, bright, but part of happy was easy. It was efficient. It was save time, let me if I want to come in one moment and get something quickly and get out again on the other if I want to park and wander down the pastor aisle or the beauty aisle. So that notion of happy is yes in the minds of the shopper and the minds of the beholder. But it is the different kind of emotional way than what we sometimes talk about when we think about physical shopping spaces. Is there something that you've seen lately that captured what I would call this balance between efficiency and joy?

Kate  08:55

Yes, as you say, it's a very fragmented picture, because the consumer is so fragmented, and you have to create so many different options for different consumers in their different mindset modes. And therefore, what you would have in a busy airport, makes the traveler happy. So that might be something like the Carrefour Flash 10/10 store, which was obviously opened recently in Paris. It's a tiny little convenience store. And it's called Carrefour Flash 10/10 store because it's 10 seconds to shop, and 10 seconds to check out. And it's like the Amazon Fresh or Amazon 'Just Walk Out' store but with no barrier at the entrance at all. You don't need an app, you need nothing, you just walk in. As a any human being walking in gets monitored as an avatar according to the differences in distance between their joints. So they become an anonymized avatar. And the cameras pick up what you've picked up from the shelf or what you've put back and therefore what you have upon your person. And in your own shopping bag or in the shopping bag that you've taken from them. And then all you do is walk to a kiosk, put your debit or credit card against the tapper for contactless, it knows what you've got on, you know, scanning, nothing, and then you paid and you walk out. That is your happy place, isn't it if you're in a rush in an airport, or train station, but obviously, if you're an architect or designer working with a luxury brand, for a chichi part of town, then obviously the happy place is going to be very different for that. And it may include things like, again, hybridized, use of space, modularity, something that changes seasonally that on a Saturday evening becomes a lecture theater, or on a Sunday afternoon becomes a kid's play space, and potentially has space for rotational pop up elements because you want continuous refresh and renewal. And also, I think building in factors like click and collect windows being much more prominent, much easier to get to concierge services built into the front of the store or easier, more prominent, live streaming studios. If it's something like WOW Madrid, I don't know if you've come across in obviously insane.

Wendy  11:25

Yeah, amazing, right?

Kate  11:27

Yeah. I mean, it's what is that? They say themselves, we are not a store, what are they, they are a leisure destination. And that includes everything from being an Instagram studio to a live music venue, to a tech forward exercise and gym space to a restaurant served by robots, only selling tech forward Department Store of the Future direct consumer brands, which constantly change that really is a cultural center, isn't it? It's a tribal hangout space for a certain demographic. It's obviously Gen Zeds, its possibly millennials, the CEO who used to be the CEO of El Corte Inglese, I think has fully understood with Real Madrid that department stores failed to adapt. And he's brought all of those modern ideas now into this new concept. So it'd be super interesting to see if it actually makes money because nobody really knows yet. It's too new.

Wendy  12:30

It is interesting, because, you know, as you're describing that, I know, I keep moving back to the very pedestrian. But you know, that's when I've always thought that if I'm in a pharmacy or drug store, the lead player in that experience is the pharmacist. And that pharmacist is buried in the back of the store, I want them in the window. I want them sort of Tom Cruise style, making amazing health care cocktails. But even just thinking about that notion, whether it's the great supermarket where you see the fishmonger, I remember the Metro store in Germany, their future of retail store at the time, and you'd go to the fish market. And it was a traditional fish counter, but you could actually smell and you heard the sea. And it was incredibly immersive. It was sort of the Nike, the original Nike store right where you have the tap tap tap of the dribble basketball. So I do think we've lost so much even in everyday spaces of the sight, the sound, the smell, that capture that experience of what you talked about in the very beginning that ability to think about physical retail as a as an emotional connection with others.

Wendy  13:46

So hold that thought before I continue my chat with Kate about amazing physical retail. You can see many examples of the latest innovation in retail on our website wslstrategicretail.com. Take a look at our latest Retail Safari®s from around the US and the world. You can also access our How America Shops® study on Retail 5.0 and the role shoppers expect of the happy physical store in 2022 and beyond. Now let's get back to my chat with Kate.

Kate  14:22

I think women on the whole like to do a bit of foraging and hunting and gathering and just looking around to see what's what to be inspired. And you know, just to learn stuff and see what other people are thinking and take it all on board. It's part of a sort of social or just entertaining activity even to walk down a supermarket are you think oh yeah, I hadn't thought of that. I'll do that for dinner tonight. But what I rather Love is in the UK, we have obviously Aldi and Lidl, and in Lidl supermarket which is obviously a major discounter, one of the least expensive supermarkets here. They have the middle of Lidl, It's such an entertaining place to be. I can't tell you how much fun that is. Every time you go you get I'm gonna get beans. I'm gonna get fizzy water. So you get all the boring stuff but you know the highlights always trawling up and down the middle of little.

Kate  15:19

Do you think oh, full body waders 20 quid.

Wendy  15:25

I may need those anytime soon I need full body weight to fashion statement, Kate. It's a fashion statement.

Kate  15:35

Oh fly zappers, ultraviolet fly zappers, I could do is over those. So you just never know what you're going to find. And you know, it's unbelievably low prices. So it's also about that surprising and delighting with unexpected, whether it's bargains or just inspiration or education or learning something having a bit of a session with a Somalia or culinary expert or observing more and more, as we see with the likes of SITU Live in Westfield, London, which is mostly electronics, but it's sort of connected internet of things type lifestyle goods, you can't buy anything in the store at all, you can only scan a QR code and then buy it later from the actual brands site itself. It's basically a studio space in which you can be immersed with experts associates, who are often performing, as I say, for the camera, for YouTube, as well as for the people in the little theater spaces that they have. And it's all live. And obviously you're in the VR studio trying the Oculus headsets, or you're on the kind of ebike or you're sitting in the super car, doing the driving. That is seriously interesting and fun retail, they're also feeding you free coffee, and they've got the Samsung fridges and the home sets. And that is truly experiential and fun. And I think successful, you know, example of future retail where there's continuous renewal, essentially, it's a permanent store. But everything every brand that's in there is a pop up. So it's obviously all kind of data gathering and improving its performance for any other further rollout. All good retail these days does have some elements of data gathering to it, unless it's really a mom and pop type situation.

Wendy  17:32

But even there it is the understanding of your individual customer, right, your individual shopper and a mom and pop, whether it's the local news agency, which of course we don't have here. But you know, it's the local convenience store. It's the local cheese shop. And that ability to walk in and be recognized in that space is hugely valuable. And weather data helps you do that, or your personal one on one connection through the staff in the store or owners in the store that feels to me like it's the other unlock the ability that we now have to know through technology through big data, small data, who the people are, who are coming, what they like what they don't and respond, particularly here when we have the luxury of size and scale, this notion of 10,000 stores, or 5000 stores and the efficiency of the milks got to be here and all the shoes and socks are going to be there. That's where I think people get lost in what was retail versus what is in candy retail in that experience. Is that what you're seeing around the world beyond the fabulous WOW store in Madrid?

Kate  18:44

Yes, I certainly think that localizing to your immediate population, but also your your non immediate population, potentially through the use of social media and live streaming and concierge services and all those kinds of things, the Klarna-hero app collaboration, there are ways of doing it, whether through technology, or whether through just regular human interface. The key to successful retail is to get the right product at the right time for the customer that is walking in the door. And also, of course to attract those customers to walk in the door, which is to do with your location. And the times you're open. You know how attractive your store looks from the windows, whether what you're selling is actually what that local population typically needs. And essentially the the appropriateness of that offer. I think as more and more of the younger generations do spend more and more time in the metaverse for retail as well as things like gaming and hanging out in other worlds and work of course, because it is an enterprise solution as well. I think there will be a further backlash again. You know, now we're in the COVID backlash to get out in the real world. And in the future, we will be in the metaverse backlash, where people actually do want to smell the coffee and touch and feel and meet people in the real world. So I think that whatever happens to cause a decline in footfall, which has happened over many years, there's always counter trends that drive people back again, we have to be honest, there is that fundamental deleveraging of the physical retail space in favor of E commerce. And therefore, I think what will survive successfully in physical retail will be fully omni channel, it will obviously deploy the Endless Aisle, it will have optimized logistics so all the click and collect the home delivery, the multifaceted options for seeing something in the store and it isn't there in your size or whatever. But you can still have it at home within a couple of hours. All of those things that will I think settle to be regular high street Main Street future retail, fully omni channel and logistically optimized to be an interactive support to ecommerce.

Wendy  21:12

I find the discussion around the metaverse so fascinating because you know, you think about the number of people that game today of all ages, yes, certainly kids, but all ages, I think about some of the brands that are doing a really good job of creating that experience connecting it to retail, whether it's Nike or PacSun or anything in that sort of Roblox world or remember some years ago, one of the smartest Walmart people I know, they always talked about the right product, the right price right now, all the information we have to guide that today. That's the thing that's so exciting. Whether I'm leveraging from a gaming to a real Metaverse experience to I want to smell the coffee please. How does that shopper create their own path? That's the thing I find hugely exciting about physical and digital retail.

Kate  22:00

I mean, there's a reason why Lululemon seems to be taking over the world isn't there. I mean, they're extremely ambitious with their expansion. And their stores are very experiential, they you get free yoga lessons, you get very nice chats with knowledgeable Yogi type people that share a sense of the whole ethos of what they believe in, and also very good product. So it's absolutely possible to create a successful growing, profitable physical retail chain these days. Do you remember a few years ago, people might have slightly sniggered at the idea that in Lululemon, you would have named people on the staff notice board in the main store saying, Tiffany plans in the next five years to become a nutritionist? Do I need to know that? That's a slightly more information that I think I need. But actually, that was the kind of core that they cared about you the customer, and they equally care about their own store associates. And those store associates are the peer group and the friendship group of all those young women coming in. And when I go to my local Lululemon, sometimes, I feel it's one of those shops I could say to them. Do you mind just looking after my puppy while I nip next door in Waitrose?

Wendy  23:29

but that is the value of the people,

Kate  23:32

you would trust them. Nice people. They are people that say, yes, the management empower them to say, yes, all it always.

Wendy  23:42

That's right. It's really interesting, because I also think what sparked my thinking, as you said, that was I think about the stores you go to and on the outside, it says, here's the name of the manager, here's the name of the pharmacist, I got pharmacist in my head today, sorry, here's the name of the bank manager, whatever, right. But it's kind of cursory, no real connection to it. And or they may have a badge, you know, Hello, my name is whatever. But they're not seeing the value both ways of the person who works there as an advocate, as an ambassador as the heart and soul of the brand. And they're not seeing the way the customer shopper walks in and sees that level of engagement. I mean, for me, the best retail I go to is usually because I can think of there's a person there who's touched me who's made me feel like there's some as you said, emotional connection. Would you mind holding my baby? While I run off just down the back and try and a fabulous pair of shoes. You have that emotional connection that is so powerful when we think about the role of the store of the experience, whether it's physical or digital. Is there something in your world that you say why are people bothering anymore.

Kate  25:01

What's dispensable would differ in every location, place time, and is entirely got to be dependent on your customer hasn't it? So Nikes got this right with their Nike kind of localized stores in China, one store might be very oriented towards yoga, another one towards football and another one towards basketball because of the just dominant preferences for the customers in those different cities. So for them, you check out the yoga in the football city. So I think it's got to be led by the consumer. But I think there are certain basic issues that everybody has to get right these days. And that is temperature, lighting, cleanliness. The whole view of the omni channel kind of Endless Aisle, inventory management, never saying no, when somebody wants a particular thing that you should have, or be able to get to them. Being sustainable in your operations. That's an essential these days being inclusive, that's another essential. You can't be not welcoming of everyone. I think the best store I've seen on that front is the Rihanna, Savage Fenty store that's in Las Vegas, if you choose to, you can be scanned in fairly scantily clad underwear in the changing room by the store associate with a light up camera, which essentially its just an iPhone 12 and up. And then they create a digital twin of your three dimensional body and extract using artificial intelligence from their database, another human being a real person, that's almost exactly the same as you. And then they only recommend lingerie, which would fit that person and therefore would fit you. That is the only and best example I've seen of truly open arms. No matter what size you are, not only are you welcome not only do we have product, they will fit you. There's someone else on the planet within all dimensions and you're not alone. And I just think that is to be applauded.

Wendy  27:09

You know, in our world, we always say is the shopper in the room. Are you focused on always what your shopper what your consumer as shopper wants? That's really powerful. And I think you're absolutely right. That is a wonderful example that in that store, not only are you welcome, but there's a community that you can feel comfortable with anytime, anywhere. And I think that's a wonderful use of technology as well to make people feel or help people feel included and served. And again, the right product, the right place. And that emotional connection, which is really very powerful. Well my last question for you favorite happy store could be Metaverse,

Kate  27:48

my current favorite is actually a vintage store in Somerset. And it is a delightful magical vintage clothing and furniture store where of course they know me well. chat to them by going often enough to know the entire inventory.

Wendy  28:10

They offer you the coffee when you walk in the door.

Kate  28:12

They do look after my dog when I lived next door to the farm shop. So that's actually better.

Wendy  28:17

You're making me lust after that. It's that experience. I said once about a fashion store in Chicago called the crown you walked in, and you can smell the fashion and somebody said to me, Oh, what did that mean? Oh, that sounds nasty. I said no, no, no, it just, it was just the whole sensation was about passion. And why should we apologize? We should not. And yours is sustainable. So it's a good thing. But I can't thank you enough, Kate. It's wonderful to see you. It's been way too long and great admirer of all the work you do. And hopefully I will see you in a happy place in person soon.

Kate  28:52

 In My pleasure. Thanks, Wendy.

Wendy  28:57

So here's the thing, Kate made it quite clear that physical retail is not going away. But there's much that physical retail needs to do in the immediate future. To ensure it is relevant. It has to be fully omni channel it has to deploy the Endless Aisle. It needs to be optimized logistically with click and collect and home delivery services. We need to think of the store as the interactive support for e-commerce and not the reverse. It also needs to be a place that uses data to support what different and local communities want and need not one size fits all. And finally, we need to think differently about how the people in the store can provide the emotional bond the connection that is best delivered in a physical space. This is a very clear vision of retail for the future. Main Street or the Metaverse. The future of retail is surely exciting, but only if you can see it. See you there.

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