bjbj Bob: Hi, it's Bob Phibbs, the Retail Doctor with Paul Schottmiller from Cisco Systems.
Paul, so much of the activity here at the NRF Big Show in New York City is about technology
and how we're going to do all this stuff in the store and we value everyone. But as you
and I started talking, we realized where the pedal meets the metal - in the store- it's
a little different. And you had some thoughts on that. Paul: Yes, there are a lot of segments
in retail where it really appears they've sort of given up on the idea of staff in the
store to help their customer, and I think that's creating an opening for technology
to come in and potentially play a role. We did a recent survey of 1,000 US consumers
and asked them their top three influencers in the buying process, who helped them buy,
and only 13% said store associates were one of their top three influencers, whereas 68%
said online reviews. Bob: From anonymous people. Paul: From anonymous people. Bob: That could
have been bought, or from a competitor, but they trust them more. Paul: Yes, and there's
a real uptick in that trend. Bob: Wow, that's fascinating. Paul: Even friends and family
were down 20%, year over year, 60% the year before, 40% this year. Twenty percent said
store associates in 2010, down to 13% in the most recent survey we just finished in 2011.
Bob: So what were the top three? Paul: All online related. Online reviews. Bob: Online
reviews, Facebook, social media, that stuff? Paul: Yes, other types of online recommendations
and reviews as influencers. Bob: And is that different from geography or age? Paul: There
was some segmentation by age and the things that you would expect. Bob: The younger, the
more tuned it. Paul: Obviously, younger people, but, quite frankly, even in the middle age
and up categories, more and more interest and initiative around using the technology
channels. Bob: Astonishing. So from my side, of course, I would take that we can grow that
13% if you train your people better. Paul: Right. Bob: I mean, that's clear. But on the
technology side, you'd say, "Well, if that's the case, then why would we put any money
in our employees?" Paul: Well, the question is, "What's your value proposition to the
consumer?" If it is qualified labor in the store, then you really need to make that a
focus, and you need to spend the time, the energy, the money, and the talent to develop
that. If you don't, other people will and you'll be replaced by these technology sources.
I believe for a lot of retail, the reason we're seeing what we're seeing is that a lot
of retailers have given up, and they really don't have a strong effort towards making
that differentiation. It's different. It's different at Wal-Mart than it is at Neiman's
or Nordstrom, for sure. Bob: Yeah, but the Amazon feature changes everything I think
. . . Paul: Absolutely. Bob: . . . because maybe you were able to get an extra $50 for
your item, and now the tuned-in customer is going to say, I can get it here for that.
Now you've got this almost violence against your employee. He has to do decide, do we
do it or not? It becomes a policy or a service issue, but regardless, that $50 is gone from
the system. Paul: What we saw was that if they're absolutely price shopping, very focused
on an item, particularly commodity items and price focused, things like technology and
that s very difficult to overcome. You've got a level of price transparency as a function
of the smartphone and the mobile in the stores. Now if you can catch people earlier in the
decision process, in phases we call discovery and inspiration, then if you're providing
them that guided selling, either in person or through some of your online tools, it does
somewhat alleviate some of the pricing pressure that we'll see otherwise when people are simply
shopping. Bob: Luxury goods are now arriving onto flash sale sites like Gilt. So those
products may all look great on Madison Avenue, but when it really gets down to it, luxuries
could become commoditized too, right? Paul: Sure. Bob: So what would your advice be to
a luxury retailer, for example? To not become a commodity. Paul: First off, you have to
look at the digital component of the experience. Ignoring it is absolutely the wrong strategy.
You need to look at it and figure out how you're participating with your customer in
that journey, the digital, but also the human interaction pieces, because the human action
piece is important in some categories in some segments in some retailers for some customers.
And if that's part of your value proposition, you need to make sure that you're not kidding
yourself in terms of the investment in that area . . .training your employees and paying
your employees. If you do, just like if you've got a higher price, it's going to get exposed
by the technology very quickly. Bob: But even then, if I had an extra person on board for
three hours, let's say, and that cost me an extra $30, isn't the potential that if they
turn one sale around, they would more than pay for the person? Paul: Absolutely. hzl!
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