July 8, 2024 • 35 mins
Best-selling author of Why We Buy, entrepreneur, and marketing guru Paco Underhill drops by the show to answer our "Burning Questions". We do a deep dive into human behavior and how it impacts your business.
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(00:10):
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to burning questions.
And it's a podcast from our company, 500
degrees and 500 degrees is a content development
and fulfillment shop.
We have offices in Toronto, Miami, and Columbus,
Ohio, and we've got great clients, some of
the best of the QSR world.
(00:31):
We've got Burger King, Tim Hortons, Popeyes, firehouse
subs.
We've got clients in the convenience store industry,
which is morphing and changing to become what's
next in a few lists future.
And we have new clients in the automotive
industry, particularly automotive dealers for Honda.
And that shopping pattern from a retail point
(00:51):
of view has changed.
I've always been fascinated about retail, the path
to purchase, and I've been fascinated with you.
I'm a bit of a fan boy for
Paco.
I'm, I'm going to admit that right now.
You are known as the OG of retail
anthropology.
And if you go onto Amazon, your books
(01:12):
are on the top selling list.
You're a New York times bestseller.
This is the classic, this book, why we
buy this really lit my fire in terms
of how people shop from the collection of
product on store, well-stocked to the size
of aisles, what women want, um, call it
(01:33):
the mall obviously has changed and then how
we eat.
And I would encourage everybody to run, not
walk, engage with you.
If they have a corporate job that they
need behaviorists to work on, but also to
get these books or download them, Kindle, read,
watch your podcast.
They really will open up your eyes in
(01:54):
terms of what's happening in the world of
retail science.
So welcome Paco.
Tell us a little bit first about the
companies that you work with in terms of
offering consulting services and retail science, let me
answer that question a little differently.
(02:15):
Okay.
Matthew.
Okay.
I'm I'm into that.
Uh, 40 years ago, I was a poor
part-time adjunct instructor in a doctoral program
in environmental psychology or the effect that space
has on people's behavior.
And I was part of the research crew
(02:35):
that would go around to different cities across
the country and work on zoning laws based
on traffic patterns and topography.
I had my moment of epiphany on the
roof of the Seafirst bank building in Seattle,
60 stories up.
I was installing the cameras on the edges
(02:55):
of the roof and there was a stiff
wind blowing and I could feel the building
rocking in the breeze.
And while you can't see it, Matthew, I'm
six foot four inches tall.
And the joke that I often tell is
I'm one of the only tall people I
know that gets heights with two pairs of
socks on.
Okay.
And up on the roof of that building,
(03:17):
I promised myself I would reinvent my profession.
Yes.
And a week later, I was standing at
a bank in New York city, getting madder
by the moment and realized that the same
tools that I'd been using to look at
how a city worked, I could go inside
a bank, a store, a hospital, an airport,
(03:37):
a doctor's office, and be able to deconstruct
how they worked and how they might work
better.
I had never taken a business course.
I'd never worked in retail.
But one of my first clients was Citibank
looking at the first ATMs. One of the
second client was Burger King, looking at the
(03:59):
pad and the installation of the first salad
bars.
Part of what was astonishing for me then
as a environmental psychologist is that almost all
commercial research, and this is in the 1970s
into the 1980s, was based on media research,
(04:21):
meaning people ask questions and I knew that
what people say they do and what they
actually do are often very, very different and
what was really wonderful is that in doing
the work, whether it was for Citibank or
starting with Burger King, we were able to
(04:43):
come back and go, here are three things
we think you should try out tomorrow, and
they almost always worked.
And if you can go give people some
quick, easy, tactical victories, getting them to buy
in to the strategic issues are eminently easier,
(05:04):
so the company that I founded in Viracel
became the principal testing agency for prototype stores
and bank branches in the world.
I am the son of a diplomat.
I grew up offshore.
English is not my first language.
And over the course of the next 15
(05:27):
years, we opened 10 offices scattered across the
planet.
And I've spent maybe 120 to 150 nights
a year on the road.
It was really, really fun.
And part of what we were looking at
is what is global and what's local.
The fact that we were able to bring
(05:49):
both international experience, but often in the broader
world of retail, being able to look at
tactical issues was really important and the intersection
between design, visual merchandising, marketing, and operating issues.
So, and from that point on, we started
(06:11):
to build other tools.
And certainly for the past 10 years, some
of, in Viracel's largest clients have been technology
companies, because we've built similar tools to be
able to deconstruct, you know, websites, web presences,
(06:31):
and apps.
And I, again, look at the difference between
what is global versus what is local in
terms of, you know, somebody's market.
So, you know, if you'd asked me 35
years ago, whether I'd be seen as an
expert in retail, I would have asked you
what insane asylum you were escaped from.
(06:52):
But you know, part of what's true for
many of us, Matt, and I'm, I'm guessing
both for you is, is that we often
get, you know, taken places that we had
no idea we'd end up.
No, I, I, I agree completely.
I, I tell my kids and, and the,
the a hundred employees we have at 500
degrees that we're in the door opening business,
that not the door closing business and get
(07:14):
comfortable with engaging intellectually and, and problem solving
that the clients themselves don't even know how
to solve and they'll find somebody, it can
be us, we all have brains.
And, and our company and companies that I've
worked with previously at other ad agencies, you
know, we've been involved in retail design.
(07:35):
And what's interesting is there, there seems to
be two schools of thought.
One is what I would call the lipstick
and the makeup of creating a prototype store
that looks really good and is vibrant and
is an exciting and almost a entertainment function
(07:58):
associated with it and others who are really
dialed into the strategic function of the retail
environment.
And we've always started with, and this is,
this gets us business and sometimes it doesn't
get us business, but to be different, we
will say, look, we start at the back
of the store and work forward because there
(08:20):
are many things that create an environment for
a, an associate or a customer that really
takes away from the shopping experience, dock to
stock, bathrooms per se.
We've had, I was yelled at by a
CEO when I told him that the, the,
the bathrooms looked like you could film a
(08:41):
heroin PSA in it and they were actually
quite proud because, you know, we don't put
a lot of money into those things that
aren't producing cash, but it's all about that
touch point.
And I'll just add one more thing is
in today's environment where finding associates and hiring
them and keeping them long-term, you know,
reducing the churn in the retail environment is
(09:03):
really important.
When you take a look at the employee
break rooms and their check-in, it doesn't
look, it looks like a prison locker room.
And to me, there's an opportunity to start
at the back, but then there's also the
opportunity of what's the shopping pattern that's going
to cross sell the best, sell forward and
sell up.
And I'll, I'll drop it off at that
(09:24):
and see what kind of comments you can
deliver.
Well, I mean, first of all, I think
one of the things I'm very cognizant of
is that there are a series of biological
constants, okay?
The things that aren't changing.
90% of us are right-handed, okay?
We tend to push with our left hand
(09:47):
and pick up with our right hand.
I may be six foot four and my
lovely wife may be five foot three, but
the ratios of hand to mouth, hand to
floor have all stayed roughly the same.
We also know that the way our eyes
age, meaning that my eyes at 72 and
(10:09):
my stepdaughter's eyes at 25 are predictably different,
okay?
What we also know is that for all
of the things that stay the same, one
of the things that makes retail interesting is
the evolution of us and that what made
(10:30):
a good store in 2000 and what makes
a good store in 2024 is different.
And that evolution is a reflection of what's
going on and changing within us.
And part of what I think is very
important in the broader world of retail and
the broader world of cyber design too, is
(10:54):
just understanding what is a constant and why
it is changing and getting to a better
meeting of art and science.
Oh yeah.
And, you know, there are six issues here
that we've been tracking.
First is the recognition that the connection between
(11:15):
our eyes and our brains has been fundamentally
changed by our relationship to screens and that
the broader world of physical and cyber is
getting really fuzzy.
I can walk in to a QSR C
store and the number of people who are
there with their phone in their hand is
sometimes 40%.
(11:37):
Okay.
Second is the role of gender.
And this is a very interesting one because
Matthew, with each passing month, the number of
households in North America where the woman is
the dominant bread earner goes up, women are
60% of the graduates of institutions of
(11:59):
higher learning, and any mother will tell you
that she's much more likely to have trouble
with her learning challenged son than she is
with her daughter.
And, you know, this fundamental role of gender
within the context of our culture is, is
getting eminently more complicated.
(12:20):
Okay.
And I, I just, I had a run
in with a, with a discount store client,
similar to the one that you had, where
I, I led a, a group of guys
into the women's bathroom and said, men don't
talk about bathrooms, they don't report them.
(12:42):
They don't care.
There's very, there's often very little tension in
a men's room.
We walk in, we unzip our pants, we
do whatever we have to do.
Sometimes mostly we wash our hands and we
leave, but in the women's bathroom, there's often
tension.
There's tension about cleanliness.
There's tension about who's in there and what
(13:02):
they're doing in there.
Um, and therefore the premise that a women's
bathroom is either an asset or a liability,
but it is never nothing perfect.
And in terms of back to the store,
to the front, I'm, you know, for example,
do you know that there's a Mexican supermarket
(13:23):
chain, which has come up with a way
of using a forklift truck to restock end
caps and, uh, shelving units.
And part of what they're doing is making
it easier for somebody to restock shelves.
The forklift truck comes up, they bring it
back into the back room.
They set it down, the team re-merchandise,
(13:44):
they take it out on the floor and
they cut their restocking time and cost by
20%.
Less time people are, uh, tasking and more
time serving customers.
Really important.
One of our clients was Bed Bath &
Beyond, God rest their soul.
Uh, but during the time that we worked
with them, they were really focused in on
hyper-marche, which is stock it to the
(14:06):
roof.
And that was partly because they would just
buy, you know, incredible volumes.
They had no place to put it, but
they were very focused when they were in
their heyday of making sure the associates weren't
tasking and could direct people to the product
because people come into a retail environment to
buy, not necessarily to browse and walk out
(14:26):
the door and have lunch.
Well, I think this is part of what
also, I mean, one of the things, for
example, that's been an interesting issue for us
is going to the store management teams and
going, if you have a name tag, list
the language skills that somebody has.
Okay.
(14:46):
Just recognition here of that process.
The other thing which I thought was interesting
at Bed Bath & Beyond is that if
a, if an end cap is too perfect,
somebody is reluctant to, to touch it.
Sure.
Just that you can often just do a
little adjusting here and all of a sudden
(15:07):
the conversion rate of people picking stuff off
it is, is dramatically changed.
And this is part of what makes our
job fun.
That's fascinating.
I mean, is it, would it be an
issue of somebody puts together a perfect Keurig
K cup stack out pyramid, nothing out of
(15:28):
place.
Is it the behavior of the customer going,
I just don't want to touch it because
it looks so good.
Or do you have just one box, maybe
off kilter that creates that, that motion of.
Yeah.
Okay.
There I'm, I'm here to buy K cups.
Let's go.
Yeah, let's go.
I mean, I mean, this is, this is,
this is, this is what part of what
makes this job fun is, is you can,
(15:50):
you often can do a, just a little
something that makes a big difference.
The you know, in terms of, and you
talked about the screen, big believer in it.
We've seen it.
We've talked to our clients about it.
Um, incredible sea change, uh, post COVID.
I remember getting a call from the then
(16:10):
president of Burger King, right in the throes
of it.
And he said, Hey, look, in three weeks,
you guys have to create all of the
stickers, all of the decals, all the, you
know, sanitary communication for associates, as well as
for the guest experience from the door handle,
all the way in floor decals, you name
it.
And we did it.
(16:30):
It was a global exercise, but from that
point on, there was something in the back
of my head that said, we are really
going to change what's happening.
I got past the, um, pre-depression stage
of is the retail world ending or is
the world ending into, this is going to
be a fascinating short for people to pick
up on it.
(16:51):
Um, you, in our preamble up front, before
we started rolling tape, uh, you talked about
some of those changes to in post COVID
and wondering if you could sort of walk
along with us and, and see what you've
seen.
We, you know, started with screens.
The second was the role of gender.
The third is generational.
(17:12):
Okay.
And this is, uh, you know, recognizing that
once we reach age 40, 80% of
our weekly purchases are the same thing.
I mean, we have already decided we like
grape Poupon, not Goulden's mustard.
Okay.
Um, whereas, you know, the 22 year old
is still making decisions and still figuring things
(17:34):
out.
Um, and I think one of the things
I find interesting, Matthew is one of the
roles of retail in the future is better
matching retail to homes, meaning that if I'm
going in to buy the grape Poupon, why
do I need to buy it in something
that was designed to scream at me from
(17:56):
the shelf and not something that looks beautiful
within the context of my kitchen and goes
into a recyclable dishwashable container.
And that, that eco issue here in terms
of the future of consumption.
But I think this is a very important
one.
(18:16):
Second is that with better supply chain management,
we are able to shrink the size of
the store.
Meaning that I can have the same number
of SKUs in a store that's 25%
or 30% smaller.
Um, so again, we talked about screens.
We talked about, um, gender.
(18:37):
We talked about Jenner or Jenner generations.
Um, but fourth one is the, is the
role of time.
And I think this is one of the
things about the Gen Z issue here, which
is that all of us in a post
COVID world are desperately multitasking and I can
stand, whether it's the doorway to a store
(18:59):
or a shopping mall, or watch somebody as
they go online and make a fairly accurate
judgment as to how loud the clock is
ticking inside their head.
And I think that, that 1930s premise that,
you know, the longer I hold somebody, the
more money I get out of their pockets
just doesn't work anymore because there are so
(19:21):
many of us that are anxious.
My kids are coming home.
I got to get back to work.
You know, where is my husband in those
process to be able to, you know, say,
Oh, I'm here to, you know, have a
leisurely experience here.
And I don't care how long I spend
in stop and shop, you know, so long
as I can get everything that I want.
The retail attainment, the black hole perhaps.
(19:43):
And let me ladder on for a second
on that thought, because the interesting thing about
this generational comment that you're bridging is, you
know, we've designed path to transact or customer
journeys with sort of a style for a
boomer millennial that's either coming into a restaurant
(20:04):
or retail location or through drive-thru.
And when we've observed Gen Z, sometimes there
isn't too much communication difference, you know, when
you're at the bottom of the funnel, you're
limited in terms of the phrasing in the
headlines that you could do.
It's basically, you know, block and shop, but
they are big and have really introduced retailers
(20:28):
and QSRs into pickup or delivery.
And the brand experience at that time is
smaller and is shrinking.
And it's one of the things that we're
dealing with right now in terms of where
do you actually hit it?
You hit them on the screen prior to
coming in and they're going to pick it
(20:48):
up.
So why would you have a mediocre pickup
location or a pickup experience?
Just a thought.
No, I think that's very, very accurate.
You know, part of what we have to
acknowledge here is that the cutting edge of
retail design, Matt, left North America more than
35 years ago.
(21:08):
I agree.
And that I can point to examples of
pickup stations at a metro in Turkey that
make what happens at the top U.S.
merchants, grocery stores, mass merchandisers shameful here because
somebody's actually thought it through and there are
awnings, much less an ice cream vendor out
(21:32):
there who will sell you an ice cream
cone while you're waiting for the, for the
delivery to be made.
Yes.
You know, yes.
I think this is, this is an opportunity.
The other thing which we don't recognize, Matt,
is that often, why isn't there a hybrid
(21:54):
shopping trip where I go into the store
to pick out the things that I want
to pick out and that everything else that
I know, laundry, soap, whatever is ready for
me at checkout or at a, at a
drive-thru and the interrelationship between store design
(22:15):
and QSR design in terms of pickup is,
is something I'm going to be talking about
at the plant convention next week.
Wow.
That's great.
Well, good luck with that speech.
Cause I'll, I'll, I'm, I think I'm going
to be able to go out and, and
check it out.
So if I see you, I'm going to
high five you and thank you.
And then I'll, I'll be in the, be
in the audience.
The, you know, the, the shopping pattern conversation
(22:37):
is always fascinating.
The difference between now the, you know, Gen
Z is 11 to 26.
So we kind of concentrate on people that
can drive 16 plus and it's a micro
audience, but it's, it's really deserving lots more
attention as we migrate in.
Cause you have to take care of Gen
Pop and then you have to also take
(22:59):
a look at who's that new audience that's
coming in, you know, you travel the world.
What are, what are some of the things
that you're seeing now that are interesting to
you and you're seeing some other experts, some
other people that are morphing the retail experience
into something incredible, people that you're really impressed
(23:19):
with?
Um, well, first of all, I just got
back from, from, um, Dubai and, you know,
certainly Dubai is, is one of the epicenters
of modern shopping.
Um, it has taken over the role of
Paris and London as a, as a destination
(23:41):
for new money.
Okay.
Meaning that you go to the, to the
shopping malls of Dubai and you see more
variety of people than you will see virtually
anywhere on earth.
Um, and that's, um, the, the issues also
(24:01):
in terms of training there too, which are
very impressive, which is somebody looks at somebody
walking in the door and has figured out,
is that the wife of a Somali warlord?
Or is that the, you know, the uber
wealthy Indian from, from Mumbai here?
And how do I adjust my pitch or
(24:24):
my offering or my greeting in, in terms
of them?
So I think that's, that's, that's one.
Do you know what the, where the largest
market for my books has been over the
past five years?
Oh, tell me you're going to rock my
world.
Simplified character Chinese.
Wow.
Yeah, for sure.
And I think, uh, again, for all of
(24:45):
the, you know, recognizing that, that there are
places in the world where money is, is,
is younger, okay.
And while China is certainly going through some
middle-class challenges over the past, you know,
15 to 20 years, it was the fastest
growing economy in the world.
(25:05):
Okay.
And I think paying attention to places in
the world where money is young and where
the, the, the nature of management is more,
um, collaborative than, uh, combative, right?
(25:28):
So if I go to Mexico, for example,
often the holding company for a retailer is
also the holding company for a distributor.
And therefore people are often discussing issues on
the same side of the table, rather than
across the table.
Vertical.
Oh yeah.
(25:48):
And that often leads to, you know, for
example, I saw more women in grocery store
management in Latin countries than I have in
all of my work in grocery here in
the U S.
Back to your point, the idea of having
a retail environment and access to product where
(26:09):
you need them or along the path and
your journey from home to work or to
school or back.
Looking for opportunities.
For example, we have been working on some
airport retail issues where the premise is there
is no stock in the airport.
I go, I try something out.
I fall in love with it.
(26:29):
I order it and it's delivered to my
house.
And therefore, you know, getting people to try,
for example, a, a massage chair is something
that's easier to do in the context of
an airport than it is in the context
of a shopping mall.
Yeah.
The, uh, I I'm kind of like Jack
Reacher, not because I'm big and I'm vicious
(26:51):
in a fight, but I tend to travel
a lot and I buy on the road,
basically, you know, I'll pick it up or
to your point of just connecting the dots,
I'll order it, get the size, have it
delivered to my next destination, that's a fascinating
logistical supply chain.
(27:14):
And when you think, when you think about
the delivery experience, particularly in the food world,
and maybe it's a Gen Z thing, maybe
not, but every, you know, delivery has really,
you know, lit up the world.
The brand experience though, I think a 2
.0 conversation would be, how do you make
that brand experience rock?
(27:36):
Is it the delivery company like a Grubhub
or is it the brand that is being
delivered by Grubhub?
And what's the experience like?
And are people paying attention to it other
than, oh, it's another distribution channel and whatever
people like it.
Okay.
I think one of the things to be,
to be very cognizant of here, and this
gets to my next question of what is
(27:58):
global and what is local, that there are
so many, you know, Silicone Alley designers that
are designing for the convenience of Silicone Alley,
okay.
And we know for example, that D delivery
trucks don't work the same way in Brooklyn,
(28:19):
much less Harlem or in East St. Louis
than they do in Palo Alto or somewhere
else.
And that there are many of us that
don't work from home and therefore aren't there
to be able to accept the D delivery.
And is there a better, is there a
better way of doing it?
(28:39):
I saw in a very fancy Vegas apartment
building, they had little doors.
In the side of the wall next to
the front door where you could open up
and put your delivery in there, close it
up.
And the only thing I asked is, shouldn't
that be refrigerated?
(29:00):
And with two doors on either side, I
mean, just in any way, I think there
are some innovations here.
Do you know what a Kirana is?
I wish I did to be smarter.
A Kirana is the Indian convenience store, convenience
(29:20):
grocery store.
And there, if you go to any Indian
city, they're everywhere.
But do you know what is interesting?
Is that for many of them, some of
the majority of their sales are based on
D delivery.
Where somebody calls up on the phone and
goes, I'd like a stick of butter.
I mean, it isn't, you know.
(29:42):
And some little kid, you know, yeah, or
runs out to where it wants it to
go.
Yeah.
Well, I mean, and that's like a logistics,
stocking, fulfillment, upside down, um, sort of concept
that it can break through.
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to burning questions.
And it's a podcast from our company, 500
degrees and 500 degrees is a content development
and fulfillment shop.
We have offices in Toronto, Miami, and Columbus,
Ohio, and we've got great clients, some of
the best of the QSR world.
(00:31):
We've got Burger King, Tim Hortons, Popeyes, firehouse
subs.
We've got clients in the convenience store industry,
which is morphing and changing to become what's
next in a few lists future.
And we have new clients in the automotive
industry, particularly automotive dealers for Honda.
And that shopping pattern from a retail point
(00:51):
of view has changed.
I've always been fascinated about retail, the path
to purchase, and I've been fascinated with you.
I'm a bit of a fan boy for
Paco.
I'm, I'm going to admit that right now.
You are known as the OG of retail
anthropology.
And if you go onto Amazon, your books
(01:12):
are on the top selling list.
You're a New York times bestseller.
This is the classic, this book, why we
buy this really lit my fire in terms
of how people shop from the collection of
product on store, well-stocked to the size
of aisles, what women want, um, call it
(01:33):
the mall obviously has changed and then how
we eat.
And I would encourage everybody to run, not
walk, engage with you.
If they have a corporate job that they
need behaviorists to work on, but also to
get these books or download them, Kindle, read,
watch your podcast.
They really will open up your eyes in
(01:54):
terms of what's happening in the world of
retail science.
So welcome Paco.
Tell us a little bit first about the
companies that you work with in terms of
offering consulting services and retail science, let me
answer that question a little differently.
(02:15):
Okay.
Matthew.
Okay.
I'm I'm into that.
Uh, 40 years ago, I was a poor
part-time adjunct instructor in a doctoral program
in environmental psychology or the effect that space
has on people's behavior.
And I was part of the research crew
(02:35):
that would go around to different cities across
the country and work on zoning laws based
on traffic patterns and topography.
I had my moment of epiphany on the
roof of the Seafirst bank building in Seattle,
60 stories up.
I was installing the cameras on the edges
(02:55):
of the roof and there was a stiff
wind blowing and I could feel the building
rocking in the breeze.
And while you can't see it, Matthew, I'm
six foot four inches tall.
And the joke that I often tell is
I'm one of the only tall people I
know that gets heights with two pairs of
socks on.
Okay.
And up on the roof of that building,
(03:17):
I promised myself I would reinvent my profession.
Yes.
And a week later, I was standing at
a bank in New York city, getting madder
by the moment and realized that the same
tools that I'd been using to look at
how a city worked, I could go inside
a bank, a store, a hospital, an airport,
(03:37):
a doctor's office, and be able to deconstruct
how they worked and how they might work
better.
I had never taken a business course.
I'd never worked in retail.
But one of my first clients was Citibank
looking at the first ATMs. One of the
second client was Burger King, looking at the
(03:59):
pad and the installation of the first salad
bars.
Part of what was astonishing for me then
as a environmental psychologist is that almost all
commercial research, and this is in the 1970s
into the 1980s, was based on media research,
(04:21):
meaning people ask questions and I knew that
what people say they do and what they
actually do are often very, very different and
what was really wonderful is that in doing
the work, whether it was for Citibank or
starting with Burger King, we were able to
(04:43):
come back and go, here are three things
we think you should try out tomorrow, and
they almost always worked.
And if you can go give people some
quick, easy, tactical victories, getting them to buy
in to the strategic issues are eminently easier,
(05:04):
so the company that I founded in Viracel
became the principal testing agency for prototype stores
and bank branches in the world.
I am the son of a diplomat.
I grew up offshore.
English is not my first language.
And over the course of the next 15
(05:27):
years, we opened 10 offices scattered across the
planet.
And I've spent maybe 120 to 150 nights
a year on the road.
It was really, really fun.
And part of what we were looking at
is what is global and what's local.
The fact that we were able to bring
(05:49):
both international experience, but often in the broader
world of retail, being able to look at
tactical issues was really important and the intersection
between design, visual merchandising, marketing, and operating issues.
So, and from that point on, we started
(06:11):
to build other tools.
And certainly for the past 10 years, some
of, in Viracel's largest clients have been technology
companies, because we've built similar tools to be
able to deconstruct, you know, websites, web presences,
(06:31):
and apps.
And I, again, look at the difference between
what is global versus what is local in
terms of, you know, somebody's market.
So, you know, if you'd asked me 35
years ago, whether I'd be seen as an
expert in retail, I would have asked you
what insane asylum you were escaped from.
(06:52):
But you know, part of what's true for
many of us, Matt, and I'm, I'm guessing
both for you is, is that we often
get, you know, taken places that we had
no idea we'd end up.
No, I, I, I agree completely.
I, I tell my kids and, and the,
the a hundred employees we have at 500
degrees that we're in the door opening business,
that not the door closing business and get
(07:14):
comfortable with engaging intellectually and, and problem solving
that the clients themselves don't even know how
to solve and they'll find somebody, it can
be us, we all have brains.
And, and our company and companies that I've
worked with previously at other ad agencies, you
know, we've been involved in retail design.
(07:35):
And what's interesting is there, there seems to
be two schools of thought.
One is what I would call the lipstick
and the makeup of creating a prototype store
that looks really good and is vibrant and
is an exciting and almost a entertainment function
(07:58):
associated with it and others who are really
dialed into the strategic function of the retail
environment.
And we've always started with, and this is,
this gets us business and sometimes it doesn't
get us business, but to be different, we
will say, look, we start at the back
of the store and work forward because there
(08:20):
are many things that create an environment for
a, an associate or a customer that really
takes away from the shopping experience, dock to
stock, bathrooms per se.
We've had, I was yelled at by a
CEO when I told him that the, the,
the bathrooms looked like you could film a
(08:41):
heroin PSA in it and they were actually
quite proud because, you know, we don't put
a lot of money into those things that
aren't producing cash, but it's all about that
touch point.
And I'll just add one more thing is
in today's environment where finding associates and hiring
them and keeping them long-term, you know,
reducing the churn in the retail environment is
(09:03):
really important.
When you take a look at the employee
break rooms and their check-in, it doesn't
look, it looks like a prison locker room.
And to me, there's an opportunity to start
at the back, but then there's also the
opportunity of what's the shopping pattern that's going
to cross sell the best, sell forward and
sell up.
And I'll, I'll drop it off at that
(09:24):
and see what kind of comments you can
deliver.
Well, I mean, first of all, I think
one of the things I'm very cognizant of
is that there are a series of biological
constants, okay?
The things that aren't changing.
90% of us are right-handed, okay?
We tend to push with our left hand
(09:47):
and pick up with our right hand.
I may be six foot four and my
lovely wife may be five foot three, but
the ratios of hand to mouth, hand to
floor have all stayed roughly the same.
We also know that the way our eyes
age, meaning that my eyes at 72 and
(10:09):
my stepdaughter's eyes at 25 are predictably different,
okay?
What we also know is that for all
of the things that stay the same, one
of the things that makes retail interesting is
the evolution of us and that what made
(10:30):
a good store in 2000 and what makes
a good store in 2024 is different.
And that evolution is a reflection of what's
going on and changing within us.
And part of what I think is very
important in the broader world of retail and
the broader world of cyber design too, is
(10:54):
just understanding what is a constant and why
it is changing and getting to a better
meeting of art and science.
Oh yeah.
And, you know, there are six issues here
that we've been tracking.
First is the recognition that the connection between
(11:15):
our eyes and our brains has been fundamentally
changed by our relationship to screens and that
the broader world of physical and cyber is
getting really fuzzy.
I can walk in to a QSR C
store and the number of people who are
there with their phone in their hand is
sometimes 40%.
(11:37):
Okay.
Second is the role of gender.
And this is a very interesting one because
Matthew, with each passing month, the number of
households in North America where the woman is
the dominant bread earner goes up, women are
60% of the graduates of institutions of
(11:59):
higher learning, and any mother will tell you
that she's much more likely to have trouble
with her learning challenged son than she is
with her daughter.
And, you know, this fundamental role of gender
within the context of our culture is, is
getting eminently more complicated.
(12:20):
Okay.
And I, I just, I had a run
in with a, with a discount store client,
similar to the one that you had, where
I, I led a, a group of guys
into the women's bathroom and said, men don't
talk about bathrooms, they don't report them.
(12:42):
They don't care.
There's very, there's often very little tension in
a men's room.
We walk in, we unzip our pants, we
do whatever we have to do.
Sometimes mostly we wash our hands and we
leave, but in the women's bathroom, there's often
tension.
There's tension about cleanliness.
There's tension about who's in there and what
(13:02):
they're doing in there.
Um, and therefore the premise that a women's
bathroom is either an asset or a liability,
but it is never nothing perfect.
And in terms of back to the store,
to the front, I'm, you know, for example,
do you know that there's a Mexican supermarket
(13:23):
chain, which has come up with a way
of using a forklift truck to restock end
caps and, uh, shelving units.
And part of what they're doing is making
it easier for somebody to restock shelves.
The forklift truck comes up, they bring it
back into the back room.
They set it down, the team re-merchandise,
(13:44):
they take it out on the floor and
they cut their restocking time and cost by
20%.
Less time people are, uh, tasking and more
time serving customers.
Really important.
One of our clients was Bed Bath &
Beyond, God rest their soul.
Uh, but during the time that we worked
with them, they were really focused in on
hyper-marche, which is stock it to the
(14:06):
roof.
And that was partly because they would just
buy, you know, incredible volumes.
They had no place to put it, but
they were very focused when they were in
their heyday of making sure the associates weren't
tasking and could direct people to the product
because people come into a retail environment to
buy, not necessarily to browse and walk out
(14:26):
the door and have lunch.
Well, I think this is part of what
also, I mean, one of the things, for
example, that's been an interesting issue for us
is going to the store management teams and
going, if you have a name tag, list
the language skills that somebody has.
Okay.
(14:46):
Just recognition here of that process.
The other thing which I thought was interesting
at Bed Bath & Beyond is that if
a, if an end cap is too perfect,
somebody is reluctant to, to touch it.
Sure.
Just that you can often just do a
little adjusting here and all of a sudden
(15:07):
the conversion rate of people picking stuff off
it is, is dramatically changed.
And this is part of what makes our
job fun.
That's fascinating.
I mean, is it, would it be an
issue of somebody puts together a perfect Keurig
K cup stack out pyramid, nothing out of
(15:28):
place.
Is it the behavior of the customer going,
I just don't want to touch it because
it looks so good.
Or do you have just one box, maybe
off kilter that creates that, that motion of.
Yeah.
Okay.
There I'm, I'm here to buy K cups.
Let's go.
Yeah, let's go.
I mean, I mean, this is, this is,
this is, this is what part of what
makes this job fun is, is you can,
(15:50):
you often can do a, just a little
something that makes a big difference.
The you know, in terms of, and you
talked about the screen, big believer in it.
We've seen it.
We've talked to our clients about it.
Um, incredible sea change, uh, post COVID.
I remember getting a call from the then
(16:10):
president of Burger King, right in the throes
of it.
And he said, Hey, look, in three weeks,
you guys have to create all of the
stickers, all of the decals, all the, you
know, sanitary communication for associates, as well as
for the guest experience from the door handle,
all the way in floor decals, you name
it.
And we did it.
(16:30):
It was a global exercise, but from that
point on, there was something in the back
of my head that said, we are really
going to change what's happening.
I got past the, um, pre-depression stage
of is the retail world ending or is
the world ending into, this is going to
be a fascinating short for people to pick
up on it.
(16:51):
Um, you, in our preamble up front, before
we started rolling tape, uh, you talked about
some of those changes to in post COVID
and wondering if you could sort of walk
along with us and, and see what you've
seen.
We, you know, started with screens.
The second was the role of gender.
The third is generational.
(17:12):
Okay.
And this is, uh, you know, recognizing that
once we reach age 40, 80% of
our weekly purchases are the same thing.
I mean, we have already decided we like
grape Poupon, not Goulden's mustard.
Okay.
Um, whereas, you know, the 22 year old
is still making decisions and still figuring things
(17:34):
out.
Um, and I think one of the things
I find interesting, Matthew is one of the
roles of retail in the future is better
matching retail to homes, meaning that if I'm
going in to buy the grape Poupon, why
do I need to buy it in something
that was designed to scream at me from
(17:56):
the shelf and not something that looks beautiful
within the context of my kitchen and goes
into a recyclable dishwashable container.
And that, that eco issue here in terms
of the future of consumption.
But I think this is a very important
one.
(18:16):
Second is that with better supply chain management,
we are able to shrink the size of
the store.
Meaning that I can have the same number
of SKUs in a store that's 25%
or 30% smaller.
Um, so again, we talked about screens.
We talked about, um, gender.
(18:37):
We talked about Jenner or Jenner generations.
Um, but fourth one is the, is the
role of time.
And I think this is one of the
things about the Gen Z issue here, which
is that all of us in a post
COVID world are desperately multitasking and I can
stand, whether it's the doorway to a store
(18:59):
or a shopping mall, or watch somebody as
they go online and make a fairly accurate
judgment as to how loud the clock is
ticking inside their head.
And I think that, that 1930s premise that,
you know, the longer I hold somebody, the
more money I get out of their pockets
just doesn't work anymore because there are so
(19:21):
many of us that are anxious.
My kids are coming home.
I got to get back to work.
You know, where is my husband in those
process to be able to, you know, say,
Oh, I'm here to, you know, have a
leisurely experience here.
And I don't care how long I spend
in stop and shop, you know, so long
as I can get everything that I want.
The retail attainment, the black hole perhaps.
(19:43):
And let me ladder on for a second
on that thought, because the interesting thing about
this generational comment that you're bridging is, you
know, we've designed path to transact or customer
journeys with sort of a style for a
boomer millennial that's either coming into a restaurant
(20:04):
or retail location or through drive-thru.
And when we've observed Gen Z, sometimes there
isn't too much communication difference, you know, when
you're at the bottom of the funnel, you're
limited in terms of the phrasing in the
headlines that you could do.
It's basically, you know, block and shop, but
they are big and have really introduced retailers
(20:28):
and QSRs into pickup or delivery.
And the brand experience at that time is
smaller and is shrinking.
And it's one of the things that we're
dealing with right now in terms of where
do you actually hit it?
You hit them on the screen prior to
coming in and they're going to pick it
(20:48):
up.
So why would you have a mediocre pickup
location or a pickup experience?
Just a thought.
No, I think that's very, very accurate.
You know, part of what we have to
acknowledge here is that the cutting edge of
retail design, Matt, left North America more than
35 years ago.
(21:08):
I agree.
And that I can point to examples of
pickup stations at a metro in Turkey that
make what happens at the top U.S.
merchants, grocery stores, mass merchandisers shameful here because
somebody's actually thought it through and there are
awnings, much less an ice cream vendor out
(21:32):
there who will sell you an ice cream
cone while you're waiting for the, for the
delivery to be made.
Yes.
You know, yes.
I think this is, this is an opportunity.
The other thing which we don't recognize, Matt,
is that often, why isn't there a hybrid
(21:54):
shopping trip where I go into the store
to pick out the things that I want
to pick out and that everything else that
I know, laundry, soap, whatever is ready for
me at checkout or at a, at a
drive-thru and the interrelationship between store design
(22:15):
and QSR design in terms of pickup is,
is something I'm going to be talking about
at the plant convention next week.
Wow.
That's great.
Well, good luck with that speech.
Cause I'll, I'll, I'm, I think I'm going
to be able to go out and, and
check it out.
So if I see you, I'm going to
high five you and thank you.
And then I'll, I'll be in the, be
in the audience.
The, you know, the, the shopping pattern conversation
(22:37):
is always fascinating.
The difference between now the, you know, Gen
Z is 11 to 26.
So we kind of concentrate on people that
can drive 16 plus and it's a micro
audience, but it's, it's really deserving lots more
attention as we migrate in.
Cause you have to take care of Gen
Pop and then you have to also take
(22:59):
a look at who's that new audience that's
coming in, you know, you travel the world.
What are, what are some of the things
that you're seeing now that are interesting to
you and you're seeing some other experts, some
other people that are morphing the retail experience
into something incredible, people that you're really impressed
(23:19):
with?
Um, well, first of all, I just got
back from, from, um, Dubai and, you know,
certainly Dubai is, is one of the epicenters
of modern shopping.
Um, it has taken over the role of
Paris and London as a, as a destination
(23:41):
for new money.
Okay.
Meaning that you go to the, to the
shopping malls of Dubai and you see more
variety of people than you will see virtually
anywhere on earth.
Um, and that's, um, the, the issues also
(24:01):
in terms of training there too, which are
very impressive, which is somebody looks at somebody
walking in the door and has figured out,
is that the wife of a Somali warlord?
Or is that the, you know, the uber
wealthy Indian from, from Mumbai here?
And how do I adjust my pitch or
(24:24):
my offering or my greeting in, in terms
of them?
So I think that's, that's, that's one.
Do you know what the, where the largest
market for my books has been over the
past five years?
Oh, tell me you're going to rock my
world.
Simplified character Chinese.
Wow.
Yeah, for sure.
And I think, uh, again, for all of
(24:45):
the, you know, recognizing that, that there are
places in the world where money is, is,
is younger, okay.
And while China is certainly going through some
middle-class challenges over the past, you know,
15 to 20 years, it was the fastest
growing economy in the world.
(25:05):
Okay.
And I think paying attention to places in
the world where money is young and where
the, the, the nature of management is more,
um, collaborative than, uh, combative, right?
(25:28):
So if I go to Mexico, for example,
often the holding company for a retailer is
also the holding company for a distributor.
And therefore people are often discussing issues on
the same side of the table, rather than
across the table.
Vertical.
Oh yeah.
(25:48):
And that often leads to, you know, for
example, I saw more women in grocery store
management in Latin countries than I have in
all of my work in grocery here in
the U S.
Back to your point, the idea of having
a retail environment and access to product where
(26:09):
you need them or along the path and
your journey from home to work or to
school or back.
Looking for opportunities.
For example, we have been working on some
airport retail issues where the premise is there
is no stock in the airport.
I go, I try something out.
I fall in love with it.
(26:29):
I order it and it's delivered to my
house.
And therefore, you know, getting people to try,
for example, a, a massage chair is something
that's easier to do in the context of
an airport than it is in the context
of a shopping mall.
Yeah.
The, uh, I I'm kind of like Jack
Reacher, not because I'm big and I'm vicious
(26:51):
in a fight, but I tend to travel
a lot and I buy on the road,
basically, you know, I'll pick it up or
to your point of just connecting the dots,
I'll order it, get the size, have it
delivered to my next destination, that's a fascinating
logistical supply chain.
(27:14):
And when you think, when you think about
the delivery experience, particularly in the food world,
and maybe it's a Gen Z thing, maybe
not, but every, you know, delivery has really,
you know, lit up the world.
The brand experience though, I think a 2
.0 conversation would be, how do you make
that brand experience rock?
(27:36):
Is it the delivery company like a Grubhub
or is it the brand that is being
delivered by Grubhub?
And what's the experience like?
And are people paying attention to it other
than, oh, it's another distribution channel and whatever
people like it.
Okay.
I think one of the things to be,
to be very cognizant of here, and this
gets to my next question of what is
(27:58):
global and what is local, that there are
so many, you know, Silicone Alley designers that
are designing for the convenience of Silicone Alley,
okay.
And we know for example, that D delivery
trucks don't work the same way in Brooklyn,
(28:19):
much less Harlem or in East St. Louis
than they do in Palo Alto or somewhere
else.
And that there are many of us that
don't work from home and therefore aren't there
to be able to accept the D delivery.
And is there a better, is there a
better way of doing it?
(28:39):
I saw in a very fancy Vegas apartment
building, they had little doors.
In the side of the wall next to
the front door where you could open up
and put your delivery in there, close it
up.
And the only thing I asked is, shouldn't
that be refrigerated?
(29:00):
And with two doors on either side, I
mean, just in any way, I think there
are some innovations here.
Do you know what a Kirana is?
I wish I did to be smarter.
A Kirana is the Indian convenience store, convenience
(29:20):
grocery store.
And there, if you go to any Indian
city, they're everywhere.
But do you know what is interesting?
Is that for many of them, some of
the majority of their sales are based on
D delivery.
Where somebody calls up on the phone and
goes, I'd like a stick of butter.
I mean, it isn't, you know.
(29:42):
And some little kid, you know, yeah, or
runs out to where it wants it to
go.
Yeah.
Well, I mean, and that's like a logistics,
stocking, fulfillment, upside down, um, sort of concept
that it can break through.
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