The Convergence of The Sex and Science of Retailing

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\"RR_FGI_Robin_Blog_rd3\"Now that the dust has settled on one of the greatest, most entertaining and knowledge-filled seminars in recent memory (the annual Robin Report and Fashion Group International seminar, held a couple of weeks ago), we can get down to understanding perhaps one of the most important strategic issues of our time. It came from the always-surprising mind of Nadia Shouraboura. She has a PhD in mathematics and was the former head of Amazon\’s supply chain and fulfillment technologies for eight years before she launched Hointer. Her denim for men store is intended to create a new retail model by converging the best of physical and digital shopping experiences.

At the seminar, we learned that the now overused phrase, \”the convergence of the art and science of retailing,\” could be better understood as \”the convergence of the sex and science of retailing. I kid you not.  Of course you had to be there to get the context and spontaneous, irrepressible humor filtered through Nadia’s charming Russian accent. Given the explosive laughter among the 200+ attendees, Nadia could easily have provided a Seinfeld-esque hour of stand-up comedy all by herself.

Moderator, former Liz Claiborne CEO, Paul Charron, and the two other panelists, RB Harrison, chief omnichannel officer for Macy\’s, and Dr. Matt Wood, Amazon\’s general manager of product strategy, heightened the level of comedy, three unflappable George Burnses to Nadia‘s Gracie Allen.

Actually the gentlemen were exceptional in their own right. Paul, as a career-long industry visionary and brilliant strategist; RB, who is Macy\’s omnichannel genius and the bridge between traditional and digital retailing; and Matt, who has a PhD in machine learning and bioinformatics and is general manager of product strategy for Amazon Web Services and Bezos\’ \”go to guy\” for all the new features and services for Amazon customers.

By the way, stay tuned for my blog next week, which was my opening introduction to the seminar.  It puts our Internet obsessed culture into a back to the future moment.

Sex as the New Art

So what\’s this whole sexual reference that turned out to be a real aha insight for everyone and made Nadia so memorable?

First Paul Charron asked about the importance of the emotional, human touch and social experience of shopping advantages that physical stores have over E-commerce. The panel agreed that old-world traditional retailers intuitively understand this art element of consumer shopping behavior. However with the full on emergence of the Internet, smartphones, data analytics and contiguous retail technologies, including AR, the traditionalists are challenged to understand how to converge the science with art for the great synergy it represents — the ability to create a new, holistic and personalized shopping experience.

So what about the new world technocrats, the geniuses in everything digital and beyond, especially those breaking into the e-commerce retail space, like Jeff Bezos?  Do they understand the art of retailing — all of those human and sensate aspects of the shopping experience?

Nadia is one of those technocrats. She was honest about the limitations of being an unemotional mathematician and technologist. She asked, “A feeling? What’s that?” Her algorithms may have directed customers to potential new purchases and facilitated an easy checkout at Amazon, but building a brand with an emotional connection was not Amazon’s or Nadia\’s sweet spot.

She had an epiphany at Hointer when the customer experience took on a whole new dimension in her life. At the seminar, we all went on a wild steam of consciousness ride with Nadia as she revealed how she finally understood the importance of a customer experience. In Nadia’s words, \”For me, everything has been about technology. So when I went to the world of physical stores, I viewed them as a technologist.  I made the stores very technical.  One night a gentleman came into my store who was very well dressed, which was not normal in Seattle. I recognized him as a very famous European designer.  He shopped and tried on many pairs of jeans over several hours and seemed to be very engaged. I thought he was having a wonderful experience with my technology.  After his experience he told me that he didn’t feel anything when he was shopping. I’m a scientist, so when someone tells me they don’t feel something, it means nothing to me. You need an emotional connection when you try on jeans?  What does that mean?

“But I started to think about it and went to Europe and he tried to teach me about the emotional connection.  And I failed miserably. And then he finally told me I needed to try to find something in my life that I felt personal and emotional about that I could extrapolate to the world of shopping. The only thing I could come up with was making love, because when I make love, I feel emotionally connected. And I’m not distracted, I’m paying attention and I’m engaged. So after that every time he talked to me about the emotional connection with feelings about shopping, I would substitute the word for shopping with sex and making love and we started to connect very, very quickly! So then he told me when you combine your experiences in the physical store with technology, you don’t want a customer to come in and out in two minutes. No, he’s right, I do not!  So then he’d say what about eight-hour shopping? I thought that’s sounding like too much!”

At the end of her double entendre narrative, the entire audience was in uncontrollable laughter – even hysterics!

She wrapped it up with a more serious reflection, \”So what I learned is that I started to understand the whole emotional connection. Technology will catch on fire but you also need to understand that emotional connection.  And if I think what managerial skills are required for the future, both skills are very important. It’s how to use technology to create a great store design and experience without distraction.\”

Other Great Moments

Paul Charron aptly noted the increased potential for disintermediation a traditional retailer faces daily by any one of hundreds of tech companies that has superior knowledge of data and consumer behavior. This risk is embedded in the marketplace today, making the job of a retail executive that much more difficult. Gone are the days when logistics, supply chain and organizational dynamics could create and maintain competitive advantage and there was a sense that one controlled one’s corporate destiny. Today, retail leaders need to be as well versed in tech as merchandising. Good-bye to the merchant prince.

RB Harrison stated Macy\’s position in addressing the challenge of converging the physical and digital worlds. He reviewed how Macy’s is embracing technology, continuing omnichannel integration efforts, the enormous importance placed on consumer data analytics to ultimately personalize the marketing, product and shopping experience for each customer, and strengthening (not eliminating), the gut instincts of merchants with analytics.  All of this is to define Macy\’s efforts and accomplishments in converging the science with their very strong handle on the art of retailing.

Matt Wood spoke about the virtuous cycle of the data flywheel. The more data, the more segmentation. Therefore better the experience, which attracts more customers. And this cycle generates more data and the flywheel spins faster with even more data amplifying the virtuous cycle. You can inject energy into the flywheel with different purchase platforms, such as mobile, which represents over 50 percent of Amazon’s orders today. Or there are more textured ways of interacting with shoppers, such as Echo, which enables voice activated shopping lists that go directly to one’s Amazon account, or bar code readers that recognize when you need a refill.

Amazon opened a brick-and-mortar retail bookstore at University Mall in Seattle as an experiment. The 500 titles are curated based on regional Amazon data and the store is designed for consumers who are browsing and expect to interact with Amazon in a new way. Matt said the store plays with the concept of time.  Orders placed in the store are delivered later. RB added, people shop for a myriad of reasons and smart retailers adapt to the shopper at each moment and try to meet her needs as well as create a few new ones. He said sometimes we shop to discover, sometimes for entertainment, sometimes for camaraderie, sometimes to lose ourselves and sometimes vicariously to experience something new and different.

The panelists agreed the physical world has vastly superior conversion rates and personalization, while providing a better read of the customer. Digital retail is a great place to test and iterate cheaply with a continuous feed of data/information. We need to merge the benefits of data intelligence with personal service to stem the eroding profitability of the retail industry

Those Millennials, Again

The panel was asked to weigh in on millennials: are they game changers or a lot of hype? Matt reminded everyone that they are not a monolithic demographic, rather a nuanced generation with many segments. Moreover, millennial is a frame of mind shared by many 70 year-olds. What is the millennial fashion opportunity at Amazon? Millennials are segmented into groups and machine learning supports better recommendations for each niche.

Personalization, Personalization, Personalization

How many times have I said it?  Personalization is the next biggest thing. Nadia, the inveterate storyteller, kept us laughing with another tale about personalization, “I’ll tell you a personal story. I was sitting on my deck enjoying a drink and my husband was cooking dinner for us in the kitchen. So I was relaxing and suddenly I heard him talking to another woman. And he’s talking in this really soft voice and having an intimate conversation with someone. I travel a lot so I’m a little bit worried. So I go in to check out what is happening, because she is talking back and they are having this whole conversation — and he and I don’t talk that way. So it turns out he is talking to Alexa! This Amazon device, she looks really ugly and she’s in the middle of my kitchen. But my husband is tender with her and they are cooking together.

So it hit me really hard that this is the future. I started to think what this means for the physical store. So I picked up a few inexpensive devices and chips, I wired them together and within in a day I had a little device, that I shaped it into a magic wand, all for under $4.00. I gave it to my customers to use because in my store they shop with mobile phones. So instead of staring at their phones all the time, they walked around with their magic wands. And I when asked them how they felt with the wands, and they told me they felt like princesses! So I think that’s what next – to make our customers feel like princesses!

So if you understand how to create a visceral personal experience, it\’s a win, win! Take a page out of Nadia’s book. Her personal story is one of the best ways I have ever heard how to make those experiences rich and memorable.

The Takeaways

  1. We are at the dawn of the eclipse of the merchant prince
  2. There are no demographic groups anymore, just groups of shared preferences.
  3. The challenge of scientists is to capture and deliver an emotional experience
  4. The tech future is Echo and Alexa. Machine learning and AI are going to be everyday tools, soon.

Don\’t miss next year\’s The Robin Report + FGI annual seminar.  You\’re bound to have some unpredictable fun – and plenty of aha moments.

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