Episode Transcript —Optimizing Your Brick & Mortar Customer Experience w/ Bridget Johns from RetailNext
00:08 Speaker 1: You're listening to the Spend $10K a Day Podcast, brought to you by the performance marketing experts at MuteSix. This is your source for cutting-edge insight into the world of online advertising, from the team with more Facebook case studies than any other agency on the planet. Here are your hosts, Steve Weiss and Stewart Anderson.
00:33 Speaker 2: Alright. Well, welcome to the Spend $10K a Day Podcast. Today we have an incredible guest, we have Bridget Johns from RetailNext. RetailNext is providing an amazing solution for offline brick and mortar retailers, or even digital native retailers, who wanna really explore the offline selling through pop-up shops and other mechanisms. Think of RetailNext as the Google Analytics for offline retail. So Bridget, thank you so much for joining our podcast. Tell us a little more about yourself, your background, and the RetailNext.
01:10 Speaker 3: Sure, thanks for having me. As you said, RetailNext is a analytics platform for physical retailers. We're set focused on solving the problems that physical retailers encounter in their day-to-day operations. And in doing so, we aim to optimize the shopper experience to make sure that your physical shopping journey is as exciting and as friction-free as a digital one may be. I came into the business as a retailer, so I'm certainly not a technology lifer, as they might say. I rent stores and was a retail operator for many many years before joining the company. And I currently oversee marketing and customer experience for the company.
02:01 S2: A lot of our audience runs e-commerce sites. Obviously, this might be new to a lot of people in our audience but I think it's incredibly valuable as trying to transition that e-commerce experience to pop-up shops and offline retail. Tell us a little bit when you were running e-commerce, when you were running, should I say brick and mortar stores before you got into RetailNext, what were some of the biggest pain points that you ran into when you were running these stores? Obviously, optimizing products for the right audience, getting people in the stores. I'd love to hear about those pain points. I think those are fascinating, before we go into the solution.
02:36 S3: Yeah. I think one of the things that's really interesting and that I've really been nerdy about along the way is, having layers of data and having contextualization to information that you may already have. A really simple example is, physical retailers have counted the number of people who walk into their stores since the very first retail stores were opened. It used to be with the pen and paper, and then it was with slightly more sophisticated like beam counters or other kinds of counter-technologies that eventually evolved into video-based solutions. And when I was still running stores, there were certainly some data about how many people came into your store and what that meant in terms of conversion. And the more sophisticated systems would allow you to understand if those analytics were different on weekends versus weekdays, or in the morning versus the afternoon, but there was very little context to the information.
03:39 S3: So, as e-commerce and digital platforms started coming into the economy, it became pretty clear that data was such a big driver of that, and it is incredibly frustrating to manage a store and not be able to understand the types of shoppers who are in your store on a particular time of day, where they're going, what categories or products they're interacting with, and how they best optimize the store to take advantage of that. And I think that that's been a big data divide between digital platforms and physical stores. And really for the first time, those data streams are starting to come together and work together in a way that I think is, of course, productive for the retailers themselves, but more importantly makes for a more friction-free experience for shoppers themselves.
04:36 S2: It's really interesting. As a consumer, a person who's brought thousands of products, I never realized the amount of data that's going on on me, like counting people as they walk into stores. I know it sounds rudimentary, but it's interesting to me 'cause coming from the online world, I'm always focusing on conversion rates on websites, conversion rates on e-commerce sites. Tell us a little more... How does RetailNext... What do they do a little differently? I understand helping people quantify which products, optimize that user experience offline, the store, but, If I'm in a brick-and-mortar retail, why am I looking for a solution like RetailNext? And how do I quantify if this is working or not? How do I see like, "Okay? Basically, I have all this data in front of me. Now, I'm making data-driven decisions offline." I'd love to hear more about how retailers quantify and make data-driven decisions from the data coming from RetailNext?
05:35 S3: Yeah, when I think of you... If you think about how you navigate digitally, and you go to a website and then you are taken down a path of some sort in your shopping experience, whether it's recommendations, or suggestions, or the next product that you may see. When you think about your physical shopping experience and many times when you walk into a physical store, sometimes you know exactly what you want to buy, and the friction can be in that the store doesn't have it, or that you can't find it there, so you wanna be able to optimize that journey for people who come to your store and they know exactly what they want. They want the black jacket that is in the window, and they want it in a size six, and their mission is to fulfill their desire as quickly as possible. But sometimes people come into your store and they just want to explore and navigate and have a different kind of shopping experience. And I think in both examples, being able to provide the ease of navigation and the magic of physical retail, is really really important. And without data, it's really like everything you do in your store, from what's on the mannequin in the front window to where you have handbags versus shoes versus denim, for example, as an apparel retailer, traditionally, it's all been based on gut feel and intuition.
07:17 S3: And I think that everything that we consume has evolved somehow based on data and the understanding of the preferences and the profiles of the people who are consuming. If you think about your music, or hotels, or any other kind of consumption, there's been an evolution of how data drives those decisions for you.
07:51 S2: What kind of data... I'm just trying to visualize this. Let's say I have a brick-and-mortar store, I have a suit shop, and I have 20 people that come in. Five of those people look at the first black suit. The other 10 are looking at shirts and pants. I'm just trying to picture what this looks like. What am I looking at on the RetailNext platform that's gonna show, "Okay, do I put the black suit up in front at the top like my best sell... " I guess it aggregates some of your best sellers, it aggregates the time of the year. I'm just trying to picture what that looks like.
08:27 S3: Yes, so the platform is primarily powered by video. RetailNext has developed a proprietary video sensor that does a couple of things that are unique to the market. The first thing it does is it collects the most precise measurement on a sensor, and through the video analytics, it takes videos, essentially in terms of into tracks, or measurement paths of shoppers and how they navigate. It would take the navigation of a person who enters the door and would measure that engagement from one sensor to the next, and throughout the full path of navigation. A couple of important points on that, first, is that the data and those tracks are aggregated anonymously. So I don't know exactly who is walking through your store, but I do know with great precision, where they're going. So if somebody walks into the store, they go right, they stop at the fixture that has red sweaters, and then they next go to a fixture that has black sweaters, for example. Maybe they pick up something at both of those areas of the store and they make their way to the fitting room. Being able to understand metrics such as traffic, dwell, and dwell time at various areas within the store allows a retailer to take that data, turn it into insights around shiftability, or engagement, or exposure within the store, and really drive a more efficient operation in the store.
10:14 S2: Wow. That's really cool. That's really cool. That's really interesting to me, 'cause I'm thinking numbers, I'm thinking about conversion rates, I'm thinking about times-of-day conversion rates, I'm thinking about sizes: How do I put the best size in front? How do I even... From a retailer, and I have brick and mortar, and I have e-commerce role, how do I know which products to put from a supply chain in my store, and which products to put on the website 'cause a lot of retailers now are obviously starting to open up their own stores. So the question is, from a supply chain, how do I make sure that the best products are always stacked in the stores? And with RetailNext, it seems like, through the arrogation of all this data using video and sensors, you could really see a lot of this real-time analytics, which is gonna drive a lot of purchasing decisions, correct?
11:02 S3: Yeah, and I think what's really cool is you think about these digital natives opening stores, is that the data really can flow two directions. So if you see items that are trending really well online, and as you say, and you're really trying to optimize your inventory management, say you have excess inventory of these products, put them in front and center in the store and see if that helps move the inventory. Or if you see a trend that is shifting in store to increase sales for a particular item, you can really understand, with your inventory levels and the data that you have around, both the in-store navigation and the online navigation. Do you promote those products online so that you can increase sell-through? Or if you have inventory gaps, do you dial that back? How do you work your inventory across both your physical and your digital properties to make sure that you are selling as many items at full price as you can and cycling through your inventory in the most efficient way?
12:15 S2: So I guess a lot of our readers, a lot of our listeners, they all have the same question. I get this question 20 times. And I don't know if you guys have a solution for this, but attribution, our partners and everyone who listen to this podcast is running a lot of Facebook ads. Is there any way to your platform, do you provide a solution to any way possibly attribute how someone actually came into the store, where they came from? Is there... I know it's really hard, and Facebook is obviously come out with their offline conversion attribution, but is that the problem that you guys are tackling, or are you more focused on just the optimization of the store?
12:56 S3: Yeah, up until now we've been really focused on the optimization of the store. I will say that with the introduction of our Aurora Sensor last year, it really opens the opportunities for retailers to start solving that attribution question. The sensor itself is an addition to the onboard video. It also has built-in WiFi, Bluetooth, and Beacon capabilities, so it has the ability to take that in-store measurement and tie it to what is happening digitally, either through I guess WiFi login, or a Beacon, or Bluetooth. So the technology is definitely evolving to the point that I think attribution will be more easily tackled on the digital to physical store piece of it. I think it's a little early to see it happening with a lot of robustness, but I think it is something that we're pretty close to.
14:09 S2: Yeah, I could just imagine, my store experiences, if I see a Yankees shirt, which I recently bought a Yankees jersey, 'cause I'm a big New York sports fan. And I went into a sporting goods store and I saw the Yankee jersey, and I was just very curious like, "Can I get this product cheaper on Amazon or another website?" And seeing that Yankees jersey, it induced what we call a "brand search." It obviously induced me to start looking on other websites while I'm on my phone. Well, the question is, through technology, can we attribute that whether that Yankees jersey was in the store was what motivated me to do a search online, and actually maybe attribute that conversion back to the brick and mortar? It's an attribution game. I get it, and I think everyone gets it. But that's huge. And if you guys could be a solution for that, that would be something I think what everyone would be really excited about.
15:06 S3: Yeah, we think so too.
15:09 S2: Cool. Beyond just the RetailNext, what do you think the future is of brick-and-mortar retails, as far as relating to e-commerce? I know that's a very open-ended question, but you guys are at the forefront of everything innovative in a brick-and-mortar retail. I went to the Camarillo outlets in Southern California this week, and Sunday afternoon literally, the whole place was dead. There was no one there. There were probably 20 cars at gigantic outlet mall. And I think like, how can we infuse, or how could we bring a solution to the market that can infuse people to go back to brick-and-mortar? What do you think that solution is, if I may? If I asked that correctly. [chuckle]
15:57 S3: Yeah. RetailNext, our perspective is that physical retail is certainly not dead, but it is radically transforming. I believe that in 10 years you will look back at this period of time and say that it was a period of massive disruption. And it's not just that physical retail. Some legacy physical retailers are challenged. But I think it's also just the way that physical retail has been brought to market, and the purpose of physical stores, I think all of that is changing. When we think about the retail landscape, there are five big trends that we are focused on, and I think that these play into both the technology as well as the mindset of bringing the digital to the physical life and back again. So the first, I would say, is that we believe that there has been this over-investment in e-commerce, and we believe that as most people know, it is very hard to have a profitable e-commerce only business. Unless you're Amazon, it is almost completely impossible. It's very expensive to acquire customers, it is very expensive to maintain, very hard to broaden your reach. So we think that there will continue to be some shift of investment from e-commerce into other kinds of experiences. Whether they are pop-up stores or a physical store network, or other kinds of physical partnerships, we think that's a pretty important one.
17:41 S2: So what you're saying...
17:41 S3: The second one is.
17:43 S2: Well, you're saying... Just so I'm clear, what you're saying is that to sustain in e-commerce site, you need to bring people from different areas into your funnel for both online and offline, correct? It's just a...
17:53 S3: Yes.
17:54 S2: "Yup, I agree with that."
17:56 S3: So the second is, we believe that we still are over-malled in the country, but we believe that there are really good malls and very very productive malls, and there are malls that probably won't survive this cycle, so we expect that there will be fewer locations for physical retail, but they'll be much much better. So if you live... If you're ever in Northern California in San Jose, we have a Westfield property here, Valley Fair, that is impossible to find a parking spot even on a Wednesday afternoon. That mall is definitely not suffering the same challenges as the one you just spoke about, and it's a great shopping experience. It has a fantastic assortment of retailers, it has entertainment, it has awesome restaurants, so it's a destination for sure. And we think that that is for sure the future of multi-tenant retail, having this kind of mixed experiential environment. And I think that being focused on creating that broader experience is an important strategy for the mall operators, for sure.
19:21 S2: Yup.
19:22 S3: The third kind of trend that we talk about, which may be a little biased because of our technology focus, but we still believe that in-store experience is your best marketing. I think if you can walk into a store and you can have a fantastic connection to a sales associate or an environment that is physical, it is going to beat out a digital experience every single time. But one of the challenges is, I think that not a lot of retailers are as focused on the in-store experience as they should be. But you get somebody in your store, you know they're there for a reason, and it's a missed opportunity if you don't make the most of it.
20:04 S2: I think that...
20:06 S3: Which leads to...
20:07 S2: Go on, sorry.
20:10 S3: I was just gonna say, it kinda leads to our fourth trend that is, all of that being said, we believe that retailers no longer have the luxury of waiting until Black Friday to turn a profit. So stores have to be set up to run profitably year-round, or mostly year-round. Because as we've seen the last two holiday seasons, you don't get that same huge spike in sales volume around the holidays in physical stores as you have in years past. Those numbers continue to come down, and that's the highest percentage of e-commerce growth happens around on the holiday season. And staying focused on creating a retail environment that turns a profit throughout the year, I think is really important, or else you will end up going the way that many retailers have this year.
21:10 S2: Cool, interesting.
21:12 S3: Yeah. And then I think just to round it out, our fifth big trend that we talk about is this notion that brands continue to go direct to consumer. And that direct-to-consumer model is really important. And I think it's one of the reasons that department stores are so challenged right now, is that brands really wanna find a way, and it's cheaper than ever to connect directly to your consumers and build that relationship one-to-one with them.
21:42 S2: Yeah. I think we're looking at it from a different stress here. We're always looking at from e-commerce conversion rate. Like, Facebook is our shopping mall, and we're always trying to put the right image, the right experience in front of this user on Facebook. Very similar to how a shopping mall or a department store would look. I look at Facebook as the biggest digital shopping store out there, carrying every brain you can imagine, carrying every product you could imagine, and it's basically, very similarly where it's... Facebook optimizes the user experience toward what most likely people gonna be interested in. I think that as these offline brands get a more success in e-commerce, I think what I'm seeing is that they're putting a lot less attention to detail into, obviously, what you just said, the in-store experience.
22:34 S2: And I think personally the evolution is connecting that in-store experience with the online experience. I think that having a mixture of the two and having a really centralized platform to provide analytics on both, and trying to see trends on both, and comparing the two is really interesting. You look at it very similarly the way we look at. We're always focused, return ads, spend and return on time, return on every piece of creative we do, and obviously, I think that leveraging the RetailNext platform, I assume that a lot of your retailers are also looking at people coming into stores. What is the convergence rate? How could we up the convergence rate by putting different products in different places? How could we make this a seamless shopping experience? Correct?
23:20 S3: Yeah. I think it's interesting because, for us, we have some legacy retailers and brands that are super-sophisticated on data around in-store. I don't want to take anything away from them but they are few and far between. What we're seeing is a lot of the digital natives that some have chosen the RetailNext platform to power their stores. People like Intrepid, or Lolli and Pops, or Alberts. Bees and Beta is another really good example. All of these digital natives, newcomers, kind-of retailers or brands, have such a voracious appetite for the data, and they know what to do with it in store. So they're really building this data-first platform that allows them to understand the physical shopping experience in ways that nobody has before. And I think that is really the future. To me, that is the future of retail. All of these emerging brands are totally turning the model on its head, and in my opinion, one of the reasons that a lot of the legacy retailers are struggling to survive and why you've seen so many bankruptcies this year is because quite frankly there's a better way to do it. And I think for a lot of retailers it's hard to get away from legacy investments, and technology stacks, and process, and all of these things. And when you have one or two or three stores as a starting point, it's more manageable to take small bite of the apple and then grow from there.
25:04 S2: Couldn't agree more with everything you said. I think taking it from a data-driven perspective, I think these companies are moving quicker, they understand... They understand customer acquisition, they understand providing a personalized experience. I 100% agree. The last question, which I've been holding off 'till the end, which I think is really interesting. We're seeing all these native brands, native commerce brands: The All Birds, the UNTUCKit of the World, moving over from digital-only to native. If I'm a brand, I'm doing very well digitally, I've built an amazing business, and I'm considering going from online to offline, whether it's a pop-up shop, or department store, or whatever. What advice would you give this brand? What do they need to know? What resources... This is a huge transition, a huge investment. I think back to when Apple first started the Apple Store, really interesting. What do the native digital brand needs to know before they make their transition to offline?
26:04 S3: I think there are few things that we talk about with our partners that are opening the first stores. I think the first thing is, it sounds a little counter-intuitive, but with that first little profit you should invest in the physical location. I think you can... There are... Every week we hear of a new concept that is like a pop-up store for digital native retailers or whatever it is, and I think there's a lot of opportunity to test different markets and different locations without having to sign long-term leases and invest in expensive build-out. I think the first thing is to just be really mindful of that investment for the first couple of stores, and prove it out before you start spending too much money. The second thing is, really use all the data that you have from your e-commerce business. Where are your loyal customers, and where do you think that people will be the most excited about you opening a physical location? And then test it in pop-up or brand, or in some way that doesn't break the bank. For example, Word store in San Francisco is in the back of their office. 27:29 S2: Interesting.
27:29 S3: It was super-inexpensive for them to open it. It is a fantastic shopping experience. It is not where a legacy retailer would have chosen to put a store, but I tell you what, on a Wednesday morning, the place is packed. So they have ability to connect to their consumers, to let their consumers know where they are, and drive traffic into the physical store. And they don't have to pay prime real estate rates.
27:58 S2: You could also see a lot of this. You bring up a great point, Bridget. A lot of this data that you could see, you can see inside of Facebook. You could see exactly where your best consumers are, and you could also even run ads directly in these specific areas when you have a pop-up store to really say, "Hey, we're opening a pop-up store here. For every person who walks in, you get $10 off," or something like that. Correct?
28:24 S3: Yeah, I think there's that opportunity to leverage a lot more information at a location level.
28:33 S2: Cool. So just a quick recap, understanding your data, obviously, very important where picking locations, using a pop-up store initially and then really testing out all the different locations. I guess, to summarize it, being very agile in your methodology.
28:53 S3: Yeah. I think being agile is super important because the landscape is very different than your digital one. And very few retailers get it a 100% perfect the first time. It's certainly something you wanna iterate on. And allowing yourself the flexibility before re-investing more heavily in a location, I think is really key.
29:20 S2: Very good stuff. I've learned a lot on this. I've learned a lot from talking to you, Bridget. I really appreciate you taking the time out of your day to really explain both what RetailNext is, as well as really just having a tabletop discussion on what the future of offline brick-and-mortar is. I think we're all curious as to what the future holds. I know I am, being an e-commerce marketer, I'm trying to figure out how does one live with the other cohesively, but this has been awesome.
29:54 S3: Yeah, no problem at all. It was a lot of fun.
29:56 S2: Cool. So thank you so much for your time, and we will be in touch soon. Thank you.
30:01 S3: Okay, Steve. Thank you. Bye-bye.