As the Retail Realm Partner & User Conference is just around the corner, we caught up with one of the event’s keynote speakers, Greg Buzek. President of IHL Group and Founder of the Retail Orphan Initiative, he is a nationally recognized industry expert with 25+ years of experience in retail market analysis, business planning, product development, and consulting with Fortune 500 companies. Noted by RIS News as one of the “25 Most Influential People in Retail” and included in the National Retail Federation’s 2015 list of “People Shaping Retail’s Future,” Greg will deliver the Day 3 Keynote at the 8th annual global retail technology conference at Caesars Palace in Las Vegas (Aug. 20-22).
We asked Greg to give us a sneak preview of his keynote’s topic, The Changing Landscape of the Customer Experience, and why he believes the retail industry’s radical transformation is leading to real possibilities for resellers and retailers.
Q: You’ve talked at previous events on the subject of ‘Debunking the Retail Apocalypse.’ What do you mean by that?
‘Retail Apocalypse’ makes for a great headline but is fake news. Last year, during the so-called ‘Retail Apocalypse,’ there was actually an increase of 4,080 stores in retailers with more than 50 locations. U.S. retail grew $232b in 2017 (which is equivalent of the annual retail sales of South Korea). And this year, in the first 6 months we are up $132b more. This is the equivalent of adding the annual revenues of Best Buy, Macy’s, Staples, T.J. Maxx and Bed Bath and Beyond to the economy…yet this is bad news.
Q: Why do you think so many people have such a negative view of retail—especially brick-and-mortar—right now?
Bad news sells better than good news. In fact, it gets 10x the clicks. Mainstream media is no longer subscription-based, but advertising-based. 10x the traffic means more money. Also, “retail apocalypse” is a catchy name. Finally, there have been a handful of very large retailers that are closing stores and going under. In nearly every case it was because of bad management, too much debt, or short-sighted private equity owners. Most people point to the deterioration of malls. We have 10x the per capita retail square footage of Germany. We have 24.5sq feet of retail space for every person in America. Because of private spending, we have built malls at a rate 4x the population growth since the 1970s. This has not been coordinated. So, you have a glut of locations, many funded by debt, and some big names caught up in it and a catchy headline.
Q: In your opinion, what needs to happen in order for people to look beyond the marketing hype of the retail industry and see it for what it really is?
Realize that even by 2020 85% of all retail will still have a store component to it. Stores are not only relevant, they are critical. Pure play e-commerce gets a lot of publicity because of Amazon but represents only 10.6% of all retail spend right now. We project that online will have as much as 25% of spend in the next few years, however, stores will be involved in much of the fulfillment, either through Buy Online and Pickup in Store (BOPIS), Click and Collect (like groceries), and ship from store for e-commerce orders. Next, retailers must invest in their IT infrastructures to properly compete. This means getting to a single version of the truth on the customer and their order/inventory information. Finally, they must get real about out-of-stocks. Our research has shown that almost 24% of Amazon’s North American retail revenue is for items people tried to buy in store first but found their local store didn’t carry the size, the quantity, or the specific items. Retailers must invest here and fix this.
Q: What is the biggest challenge for retailers today?
Changing their culture in two ways. First, compensating their merchants/buyers, not just on sales and gross margins, but on service levels as well. They don’t currently monitor or count the sales that walk out the door, just the profitability of the sales they have. So, they don’t know what they are missing. And second, committing to strategic levels of investment in IT to transform the business and get to a single view of their customer data across channels, a single view of inventory and order regardless of where that sits, updated POS technology to leverage the systems deployed in real-time, and finally an updated and optimized LAN/WAN architecture that can handle all of the data. These are the foundational systems. Retailers that refuse to make these investments are most at risk of getting beat.
Q: What current trend or technology in retail do you think will become even more important/ influential in the coming years?
RFID, Computer Vision, and AI. The biggest thing retailers can do is get to an accurate inventory view. Most retailers do physical inventory twice a year, and their actual inventory can be off as much as 25%. They must deploy technologies to improve their inventory accuracy or BOPIS, Click and Collect, and Ship from Store do not work.
Q: What are you excited about in particular for your keynote at the Retail Realm Partner & User Conference?
Specifically, to share the real data they know in their gut but that is not being reflected in the press. All the news is bad news in the press due to the click-throughs. But there is really good news in retail, and those retailers making investments are seeing huge returns and growth. And this audience is right in the middle of the sweet spot of opportunity.