Reimagining Department Stores: Nostalgia Meets Innovation

[00:00:00] You're listening to The Retail Razor Show, where your expert hosts and their guests cut through

[00:00:12] the clutter in retail and retail tech to shape the future of retail.

[00:00:19] Hello and welcome to Season 4, Episode 9 of The Retail Razor Show. I'm your host, Ricardo Belmar.

[00:00:25] And I'm your co-host, Kasey Golden. Welcome to Retail's favorite podcast, where we cut through the clutter to give you sharp insights on the retail industry,

[00:00:34] commerce technology, and the human connection. It's the show for customer experience leaders, marketing executives, store operation leaders, and everyone else in retail and retail tech alike.

[00:00:45] And this is an episode fans have been waiting for since, oh, I think Season 2, Episode 2. So really over two years in the making.

[00:00:54] Wow. Has it really been that long? I can't even...it's like the end of the year.

[00:00:58] Of course, we are talking about a very special part of our show. The original Retail Avengers team from...

[00:01:05] back in our...

[00:01:07] Clubhouse days. Like we were...

[00:01:10] Does anyone even remember Clubhouse these days? It feels so 2020, doesn't it?

[00:01:15] Absolutely.

[00:01:17] Oh, the social media dramas of our generation.

[00:01:20] Yeah.

[00:01:21] Well, we have finally done it. We have brought the team back together for a reunion episode. And actually, we've got quite the special topic for this one.

[00:01:30] We do. We do. This is actually a topic I think we touched on more than once in our weekly Clubhouse sessions back in the day. But we never managed to make this one one of the recorded sessions that found their way into the podcast.

[00:01:43] It's very true. So for our special reunion episode, we're talking about the future of department stores. Specifically, we're asking the question, what is wrong with department stores and how can they be fixed? Strong opinion. Then again, we're also asking, why can't department store leaders get this right?

[00:02:07] Right. Yeah, we are that we are. It's definitely part of it. And in this age of AI and retail media, reemphasizing the human connection in stores, which of course are our three themes for the show. How is it that department stores keep getting it wrong?

[00:02:23] Not just wrong. I mean, so very wrong as if we're completely out of touch with why we got into retail in the first place, what it's supposed to be. Let's face it. How did these stores go from being the shopping destination for fashion to being OK, I guess I'll have to go there dealing with like most customers?

[00:02:45] Yeah, I can't wait to get into this discussion with the group on this one. I'm sure this will go down as one of our best episodes yet. I know I don't often say that.

[00:02:53] Oh, Ricardo, really? You always say that for every episode. I mean, sometimes I think the only reason you don't say it is because you might forget to say it.

[00:03:06] Well, maybe it's just that some episodes are really more than meets the eye.

[00:03:10] No, like you have been banned. You're not allowed to use that phrase anymore, Ricardo.

[00:03:17] I can't get a break, can I?

[00:03:18] Not around me.

[00:03:21] Oh, let's just get to the conversation already.

[00:03:24] Yes, but before we do that, I want to give a quick reminder to all our listeners to please give us a five star rating and review on Apple Podcasts, Spotify or GoodPods if you like our show and this episode.

[00:03:36] In fact, you might not know this, but it turns out that there is no limit to the number of five star ratings a podcast can have.

[00:03:45] Is that so? Somehow I suspected that that would be true.

[00:03:49] Yes, yes. And even more shocking, you might find this hard to believe, there's no limit to the number of reviews your podcast can have either.

[00:03:57] This is even less surprising to me. However, it is one of the hardest things for anyone to do.

[00:04:03] So, please leave us a review.

[00:04:07] All the more reason. That's right. For listeners to rush out and send in those ratings and reviews, it really helps us out.

[00:04:13] And don't forget YouTube viewers.

[00:04:15] I could never forget our fabulous YouTube viewers. Please remember to like this video and subscribe to our channel.

[00:04:22] All right. So, now we can just get to the conversation with our retail Avengers.

[00:04:26] I thought you'd never ask.

[00:04:34] This is such a special treat that our audience has been waiting for, what, about two years now, I think?

[00:04:40] Yes, it is. Welcome to our fellow Retail Avengers family. So good to have you all back with us again.

[00:04:46] And since it's been a while, I think it's a good idea for us to do a quick round of introductions.

[00:04:52] Brandon, let's start with you.

[00:04:53] I'm Brandon Rael. Been around retail my entire career. Passionate about all things retail, consumer, customer experience.

[00:05:01] Been in the industry. I know everything from merchandise and supply chain.

[00:05:05] And I think the last two-thirds of my career, I've been on the consulting strategy and transformation space.

[00:05:10] And did love talking about all things retail and digital and just the evolution of the shopping experience.

[00:05:16] So, great to reconnect with my fellow Clubhouse Warriors and Avengers. So, back to you.

[00:05:22] All right. Thanks for having us.

[00:05:24] It's great to be back. Thank you for putting this together. And I'm Shish.

[00:05:29] I work in the intersection of startups and retailers.

[00:05:32] So, I work with plenty of innovative startups that are doing amazing things in retail.

[00:05:37] I get to spend time with retailers really understanding what they're looking for in terms of innovation and emerging tech and all of that.

[00:05:45] So, I'm part of Microsoft with startups. I've been in Microsoft for 27 years and working with retail for over 20s.

[00:05:52] All right. And of course, the legend himself, Jeff.

[00:05:55] Hey, everybody. Jeff Roster. Spent about 20 years at Gartner covering retail.

[00:05:59] Spending the last part of my career now at Third Eye Advisory doing work in the retail world and the startup community.

[00:06:05] And now transitioning and doing a lot more work with philanthropy.

[00:06:08] So, doing homeless stuff, which hence the beard.

[00:06:11] And a lot of stuff now with adoption and foster care in the Bay Area.

[00:06:17] Amazing.

[00:06:17] All right. Awesome.

[00:06:18] I see.

[00:06:20] Well, it is always a treat when we have the whole team together.

[00:06:24] I do recommend tracking every single one of these guys down and following them.

[00:06:29] They have so much to contribute.

[00:06:30] So, now that we've got some of these intros out of the way, let's dive into our topic for today.

[00:06:36] Department stores.

[00:06:37] What's the deal?

[00:06:39] Why can't they just get it right?

[00:06:41] Yeah, exactly.

[00:06:42] We can look at this from so many perspectives, I think.

[00:06:44] I particularly love to get everyone's thoughts, not just on what's going wrong with department stores today, but let's focus on what they could be doing maybe to fix the problems, to get customers back to enjoying the department store experience.

[00:06:57] And honestly, why even when they do try new things, and we all often talk about those new experimental things they're doing, it doesn't seem to work out.

[00:07:06] So, for example, on the show this season, we've been focusing on three topics around AI, retail media, and the human connection in retail.

[00:07:14] And I think all three of these could have such key, key factors in department stores to make them better.

[00:07:20] So, I would love to get everyone's take to kick us off on where do you think department stores stand in each of these three areas and what's going wrong?

[00:07:30] I can kick you off.

[00:07:31] I think for historical purposes, department stores were once the center of our shopping universe.

[00:07:36] You know, if you think, and the generation we grew up in, it was the destination to go to for all, everything we needed for our lives, lifetimes.

[00:07:44] And whether it was back to school or it was shopping, holiday shopping season or whatever it was, there was a reason to go to department store and have access to all the products and all the experiences.

[00:07:53] And back in the day there was better assortments and merchandising strategies, execution store level.

[00:07:59] And it's, you know, it was the place to go.

[00:08:02] And I think clearly the digital revolution and the emergency of e-commerce and Amazon and Target and all the countless other factors that have happened.

[00:08:11] have really changed just consumer behaviors, I think irreversibly.

[00:08:16] And I think department stores were going through this expansion and consolidation strategy at the same time.

[00:08:21] And what we see in the inner cities like New York City, that kind of experience has never translated out across the scale of the U.S., for example,

[00:08:30] where there were so many missteps with merchandising, with pricing, with products, with servants, with just customer service experience.

[00:08:37] is that people would eventually realize, I don't need to go here anymore.

[00:08:40] I'd rather go to a Target or Walmart or Amazon as my default place to shop.

[00:08:45] And then quickly deciding not to go back.

[00:08:47] And there hasn't been a compelling reason to go back.

[00:08:49] And we're seeing Nordstrom take steps to try to make department stores more experiential.

[00:08:55] They only had a cafe there, a martini bar, more first-line services.

[00:08:59] I think that, like, the style version model from back in the day,

[00:09:02] they try to attract consumers and try to layer in luxury.

[00:09:05] And I think all the stores that were there in the store that make the department store magical have their own stores in the malls, too.

[00:09:13] Why would you go to Louis Vuitton section in New Markets or Nordstrom's when they have a Louis Vuitton in the mall?

[00:09:18] You can talk about AI and retail media and customer experience.

[00:09:21] I think that's fundamentally the issue.

[00:09:23] How do you retract and retain your consumers?

[00:09:26] But also Gen Z and Gen Alpha, they haven't grown in a world where department stores are relevant.

[00:09:32] And I think how do you retract them would be the biggest challenge.

[00:09:34] I think it's a really good point just to kind of note that for the last, what, 50 years, we've called them bottom doors.

[00:09:41] And maybe they've gotten the attention of a bottom door rather than maybe we should be thinking about them as, like, opportunity doors.

[00:09:49] Yeah.

[00:09:50] Well, I will say that.

[00:09:52] We'll get all the resources.

[00:09:53] Yeah.

[00:09:53] And I think to that point, some of the things that I picked up on what Brandon said, I must be in the wrong geography because my Nordstrom doesn't have that martini bar.

[00:10:01] And I'd really look out for that one and check that out.

[00:10:03] I must be in the wrong geography or the wrong state.

[00:10:06] It's a new mall by me.

[00:10:07] Exactly.

[00:10:08] Just be very careful with martinis.

[00:10:11] Very careful.

[00:10:13] That's one way to increase your conversion.

[00:10:15] I just moved to one of the newest Salesforce account executives in San Francisco to a new apartment, a yay daughter.

[00:10:22] And, of course, because she basically, when she moved, when she got laid off and gave all her stuff away, had to basically repurpose an entire apartment, which meant almost everything.

[00:10:33] So guess where we went?

[00:10:35] IKEA.

[00:10:36] Yeah, well, close.

[00:10:37] That was my nightmare.

[00:10:38] That would have been my nightmare.

[00:10:40] Creating viral?

[00:10:41] No, no.

[00:10:42] It was in San Francisco, so we went to Target.

[00:10:44] We passed.

[00:10:45] We drove.

[00:10:45] Actually, drove right by Macy's, which is, in theory, a department store, which would have a lot of the things, in theory, that she might have wanted.

[00:10:52] But, no, we actually went further to get to.

[00:10:54] And same amount of parking, as far as ease or whatever, went to Target.

[00:10:58] So there's a 27-year-old, top of the game, doing well financially.

[00:11:01] And she's choosing to go to Target to basically get almost everything in her apartment.

[00:11:07] That answers everything you need.

[00:11:08] And the other thing, and Casey, this is better probably for you, but I don't know that professional women need to go to high-end clothing stores the way they used to.

[00:11:18] I think they can do a lot of different things with a lot better price point.

[00:11:23] And that's a problem, I would say.

[00:11:25] When it comes to clothing, I have different opinions.

[00:11:28] When it comes to home goods, I could all get the best.

[00:11:30] Casey might not be the best example for that question.

[00:11:33] Gen Z?

[00:11:34] Yeah.

[00:11:34] Gen Z.

[00:11:35] Gen Z.

[00:11:36] Not millennials.

[00:11:37] I'm not convinced Gen Z has any taste to start with.

[00:11:42] Then you did answer the question.

[00:11:44] Then you did answer the question.

[00:11:46] So that's the challenge they have.

[00:11:48] And I don't believe that 80% of people should be doing their shopping themselves anyway.

[00:11:53] So I'm over here where there are professionals for this.

[00:12:00] We shouldn't have everybody dressed for themselves.

[00:12:03] Okay, so I'm glad you mentioned that one point, Casey.

[00:12:07] I think that there is something to be said about what does seem to remain true is shopping is the act of gathering.

[00:12:18] We like to gather and go get things and put them in our cart and fill our virtual carts.

[00:12:26] We like the aspect that shopping is gathering.

[00:12:30] Yes.

[00:12:31] And when you get rid of a lot of that friction, as you may, as a lot of people say, that's the part we like.

[00:12:39] Yes.

[00:12:39] Some of that friction is like our fun moment.

[00:12:43] And so when a physical store offers an opportunity to gather, like a Target, you get lots of different opportunities of like different products.

[00:12:53] You can get this, different rooms, things like that.

[00:12:56] Home goods in general and everything that has to do with a home is so much fun to gather for regardless of price.

[00:13:05] Yes.

[00:13:06] Gathering for a cashmere sweater that actually fits and is not going to pill, that's not as fun.

[00:13:12] I'm going to go to a brand that is not going to sell me junk and I'm going to look at maybe four brands and I'm going to pick one next.

[00:13:20] So you just highlighted, I think, a number of things I'm going to summarize a little differently.

[00:13:24] One is the keyword there was shopping versus buying, right?

[00:13:28] It was a shopping experience that you described, but it also implied that you were the destination.

[00:13:34] You're talking about shopping that has known or the potential for known brands that you have some inclination of liking already or you wouldn't go to the shop, right?

[00:13:43] So that says that the curation is key of what's available.

[00:13:47] Tarp has taste.

[00:13:48] Yeah, right.

[00:13:49] I do have to say.

[00:13:51] Yeah.

[00:13:51] So then again, it comes back to, okay, so why can't a lot of the department stores get that equation that you just spelled out right?

[00:13:58] Because if they were getting it right, more people would be shopping there, right?

[00:14:02] So probably what I see there is really the, well, I'm usually looking at it from a technology perspective and looking at all the startups, trying to figure out what is it that we need to solve.

[00:14:13] And some of the things that it really bubbled up for me was how do you make it more experiential?

[00:14:19] How do you make it more personal and curated?

[00:14:22] How do you make it more personal and curated?

[00:14:22] And technology can play a part there.

[00:14:25] And I think that's one element where, you know, when you're looking at what is it, can we go into a department store and not really find anything?

[00:14:34] And that's because the curation, the inventory, the assortment is just not set up right.

[00:14:39] Mm-hmm .

[00:14:40] But if it was, if there was an element of data being used to know who the customers are.

[00:14:46] And I think knowing the customer is an important element and that's where the data and the AI element comes in.

[00:14:52] Uh, and I think that's one element that he's to how can we reignite that experience.

[00:14:59] Yeah.

[00:15:00] Yeah.

[00:15:00] I'll double down with what she's just saying.

[00:15:02] I mean, what can we do with Kendra?

[00:15:03] We'll talk about monetizing, optimizing the value of data.

[00:15:07] And there's millions and billions of lines of data that, that retailers, especially department stores are not capitalizing on and not optimizing their supply chains and not.

[00:15:16] Enhancing their assortments.

[00:15:18] They're not being proactive and being very reactive.

[00:15:20] And it's really led to just a poor execution at the store level and just challenges with assortments and, and our quality of products.

[00:15:27] And the right amount, the right friction is always good.

[00:15:29] I totally agree with you, Casey.

[00:15:31] You want friction.

[00:15:32] You want that part of the experience.

[00:15:33] Everything seems to be so seamless.

[00:15:35] Like buy my hip in store, walk out the store, don't actually engage or go have an adventure in store.

[00:15:41] But, uh, department stores more for the not, or just felt a little falling flat in terms of in store experiences, having the right products, the right price points, the right collections.

[00:15:50] And they're not monetizing the value of the data, but not integrating technology in the way they should.

[00:15:54] We're leveraging AI to be far more proactive and prescriptive with their, with their strategies.

[00:15:59] We're in living a world today where you take talk to Italy is their main source of information for Gen Z or Gen Alpha.

[00:16:06] And they're looking for trends and looking for immediacy, immediate satisfaction.

[00:16:10] And the team who was in all those others, the world had that model.

[00:16:13] They can react so quickly and, uh, change their trends and styles.

[00:16:17] We department stores are still on that 12 month product development cycle, merchandising cycle.

[00:16:22] And, and the trends changed so much quickly today.

[00:16:25] Yeah.

[00:16:25] I mean, we used to be, we used to be focused on edits and a very distinct brands point of view, much more focused on UPTs.

[00:16:36] And with the rise of e-commerce being so digital ad driven, it's all about selling one piece.

[00:16:45] You know, that's primarily been the main focus is let me get you in through this and get you out the door quick rather than operating a little bit more like the casino.

[00:16:55] I'm going to keep you here going in circles, picking up stuff like next 30 minutes.

[00:16:59] And you're going to leave the higher cart that takes planning, takes merchandise, assortment planning, really knowing who your customer is, why they're shopping with you.

[00:17:09] And I think we have the most information, especially for department stores.

[00:17:13] They're sitting on so much customer data on their tastes, their shopping behavior across brands, across assortments.

[00:17:24] Are they buying perfume and skincare at the same time?

[00:17:28] Are they buying clothes?

[00:17:30] Is it a treat or is it fall season changes to whether or not your daughter walking into that target, buying things for a living room, kitchen, spoons, picture frames, lamps.

[00:17:42] If you look at her data, boom, new person just moved here, new customer to cultivate.

[00:17:48] They obviously live nearby because you're not going to be carrying all that stuff or driving too far, right?

[00:17:54] Or when he'll dad comes up visiting.

[00:17:57] Right?

[00:17:58] But your point is valid.

[00:18:00] It would be interesting.

[00:18:01] I would love to know if Target figured that out from her basket.

[00:18:05] And I don't say good frictions though.

[00:18:07] The word that comes from me is gamification and engagement.

[00:18:10] So gamification is a big element of that as well.

[00:18:13] How do we keep them engaged?

[00:18:15] And the casino experience is another one.

[00:18:17] How do you keep them in there engaged?

[00:18:19] Yeah.

[00:18:20] Yeah.

[00:18:21] So let's look at it.

[00:18:22] It's also a different way.

[00:18:23] So when we say, we've been saying department stores, but the fact is right there are different, let's say, levels or tiers of department stores, right?

[00:18:29] We've got high end luxury department stores like a Neiman's or a Saks, right?

[00:18:34] Where Casey likes to live.

[00:18:35] Then we've got on the low end, what has become the low end discounted side, which I'm going to say is like JC Penny, Kohl's.

[00:18:43] Cool.

[00:18:43] And then there's a middle ground, which is I think squarely where Macy's is.

[00:18:47] And it might mean in some ways there's a little bit of an outlier like Nordstrom that I think is not quite in the luxury tier as a Neiman's or Saks, but is a notch above Macy's.

[00:18:56] And they're probably more of that, I don't know, let's call it an aspirational luxury side because they have plenty of high end merchandise.

[00:19:02] But I wouldn't say they're at the same luxury level as a Neiman.

[00:19:05] So maybe I'm adding a fourth category.

[00:19:07] And then there's lots of other regional department stores I'm not naming that sort of fit within those levels.

[00:19:11] So if we think about those tiers, there's obvious reasons, I think, to say the middle is in trouble for those, right?

[00:19:18] Because they can't find an identity.

[00:19:20] Like every other retailer, you have to have a why reason for why people should come to your store.

[00:19:27] The low end ones in theory, their why is it's cheaper, right?

[00:19:30] It's discounted.

[00:19:31] It's value.

[00:19:32] Although I would argue that they're also, again, kind of shooting themselves in the foot and maybe in other places too, but with that model because they're just a race to the bottom and everybody sort of sees them that way.

[00:19:42] The luxury ones, they're looking for a different kind of consumer.

[00:19:46] So maybe you can set them aside.

[00:19:48] The reason I distinguish here is because one of the things that many people, I think some of us have said in the past too, as a differentiator is what kind of service do you give to your customer?

[00:19:58] Are you just a place where there's a bunch of products or is there more than the product to the experience?

[00:20:04] And I think it's in many ways easier for those luxury stores to offer that kind of service level.

[00:20:10] A little harder in that middle tier and almost non-existent unless you, but you could lean on technology to compensate on that discount side.

[00:20:18] So if we look at it through that lens, where, where do we think any of these stores are?

[00:20:23] Because we could, I mean, we could make this argument about, all right, let's look at everybody's last quarterly results and see where they're all are landing.

[00:20:28] And that would tell us a lot in each of these categories.

[00:20:30] Yeah.

[00:20:31] I think we started the luxury and they, they had their own distinct operating model, but I also think that luxury powerhouses like LEMH and Richemaldon, they, they've opened their own store to double down their physical stores.

[00:20:43] And their stores are far better than a store within a store concept that name and what offers the sex that he offers.

[00:20:48] The breadth and depth of the store business is better.

[00:20:52] I don't know, Louis Vuitton or Chanel, et cetera.

[00:20:54] They, they have the sales flow sheets who are well compensated and knowledgeable and can provide great experiences.

[00:21:00] They're online, that presence has improved.

[00:21:03] So we argue that what, what's that distinguishing?

[00:21:06] What distinguishes a upper end department store versus these luxury powerhouses that are double down on physical stores and offering far more?

[00:21:13] Far more products.

[00:21:14] So they, they have their own set of challenges because they're kind of in this stratosphere.

[00:21:18] The middle is countless challenges and I think they're balancing a gap between aspiration luxury to also affordability, which is a hard place to play because it's a completely different customer segment.

[00:21:29] And they're also on the fringes of competing with Kohl's and Macy's competing with TGMX and Marshall's and, and, and, and target for that matter for a core customer.

[00:21:39] So I think there's so many different factors at play there.

[00:21:43] I think the operational challenges we talked about earlier, but the lack of leverage technology and AI capabilities and data has also been challenging, but also Macy's problems sent back to 15, 20 years ago with that mass consolidation through federated to renaming all these reachable powerhouses to Macy's and try to really commoditize themselves as a brand.

[00:22:03] And they never really recovered from that time point.

[00:22:05] I mean, they, they speak about all the things they're looking to do in terms of layering technology and being customer centric and driving lowly programs and leveraging AI.

[00:22:15] I mean, they're not, but we just not seeing that feeling that they have the top 50 stores that they're, for the team, they're doing relatively well, but the rest of the chain is still underperforming pretty significantly.

[00:22:24] They're probably the, I was the poster child of what's wrong with department stores and what they're trying to do aspirationally to get better.

[00:22:30] I mean, in some ways, Tony's springing team are doing the right things, but it's taking some time to get there.

[00:22:34] Yeah, I think that design is the biggest competitive advantage anybody has right now, whether or not it's your department store's private label, your assortment, the brands that you carry.

[00:22:46] And I think that using AI and leveraging this technology and data to be able to find how much you can differentiate your product to create something that doesn't look the same.

[00:23:00] Because I feel like that we have this monoculture of all of these products where it's the same product across 50 vendors and it's the exact same product at different prices.

[00:23:13] I think it's right now departments, it's pretty much Timo and Sheen against the world while Luxury is over here doing its thing and staying out of it.

[00:23:22] But all the products look the same.

[00:23:23] And I think we could really figure out using that data and using AI on how can we bring design aesthetics to differentiate lines of products that are not this monoculture to be able to afford to make them at a decent price.

[00:23:42] Because usually design aesthetics up means price goes up.

[00:23:45] But I think we have the technology and tools to figure that out.

[00:23:48] One thing I'll say about the middle tier specifically is the lower tier is clearly on pricing.

[00:23:56] So there is the focus on pricing and luxury is a completely different audience.

[00:24:01] But the middle, I think, has got a real advantage there where they can focus on very specific things like customer experience.

[00:24:09] They can focus on very specific things like targeted audiences where they can identify.

[00:24:15] But I think what the middle sometimes misses is that targeted marketing and finding the segments that's right for them and then only going for that.

[00:24:25] And then there's other elements like, for example, being more sustainable, which the lower tier can't quite handle.

[00:24:32] And I think that's where there's certain advantages the middle can zero in once.

[00:24:37] That's a great place for the middle to be at.

[00:24:40] Yeah.

[00:24:40] Yeah.

[00:24:41] I think the way you're in fact right from the middle is driving loyalty and a sense of community, sense of gathering.

[00:24:46] Why we don't want to engage with the Macy's.

[00:24:48] Why we want to go to their stores.

[00:24:49] Why we want to engage them online.

[00:24:51] And Macy's have determined ways to attract this audience.

[00:24:54] So loyalty programs shouldn't need to be transactional based, but there should be gamification.

[00:24:59] There should be sense of community.

[00:25:00] There should be some sense of exclusivity.

[00:25:02] Events that you can't get anywhere else.

[00:25:04] Come to a pop-up shop within the Macy's, even in the suburbs.

[00:25:07] Limited time offers.

[00:25:09] Exclusive events.

[00:25:10] These are things that would definitely attract people to the mall.

[00:25:13] The mall culture is not dead.

[00:25:14] And the mall, you see teenagers, especially going to Sephora and Brindy Melville.

[00:25:20] I mean, there's plenty of stores that are thriving.

[00:25:23] You have to figure out a way to get the next generation to a Macy's, for example.

[00:25:27] And to make them a hot, trendy brand that people want to go hang out and spend time with and maybe buy some products.

[00:25:32] How do you guys feel about prices potentially going up?

[00:25:36] And things that the mid and lower tier price points that have been so attractive.

[00:25:44] Are we getting as much bang for our buck if there's a 25% or a 30% increase in price?

[00:25:49] I wonder how the consumers are going to react to maybe spending a little bit more money for to go up to mid-market, mid-brands.

[00:25:58] Because maybe their perceived value might be higher.

[00:26:01] Or at the same time, do they have to do something else to entice you to shop there that adds to the value other than the product itself, right?

[00:26:09] Other than the product.

[00:26:10] That helps justify whatever the price is.

[00:26:12] What's funny about that, Casey, is I just think about gas.

[00:26:15] So when gas is $1.20 a gallon or $1.30, which it once was, 20 cents different to go to a, quote, a little fancier gas station was you couldn't do it.

[00:26:25] When it's $4.50, which it is now in California, the difference, that 20 or 30 or 40 cents difference is not, you don't even think about it.

[00:26:32] So there is something to be said as everything goes up, that perceived delta becomes maybe less perceived.

[00:26:39] It is less.

[00:26:40] I mean, just, and so, yeah, that's actually kind of interesting.

[00:26:43] I wonder if that's a phenomenon we'll see.

[00:26:45] Yeah, I think if you associate price increases, I mean, there will be always price increases, whether it's inflation or economic factor with tariffs.

[00:26:54] The cost is usually extended to the customer.

[00:26:57] But there is a perception built around, okay, you're getting better quality, better brands, better assortments.

[00:27:02] And that value is there for the customer.

[00:27:04] They'll be willing to spend the money, willing to engage your brand.

[00:27:07] So it's, you know, Sephora is doing real well with that.

[00:27:10] Little Lemon two years ago was skyrocketing with teenage girls because they were the hottest brand on the planet back then.

[00:27:16] They still are.

[00:27:17] But, you know, their typical yoga pants as well, price well above what you get in other places.

[00:27:22] I think, yeah, they just had magic in the bottle.

[00:27:24] So if you have the right experience, the right product, the right service, the right brand equity, people pay for your products.

[00:27:30] It will show up.

[00:27:31] Or the right ransom.

[00:27:32] I just made a ridiculous purchase at Sephora because it's birthday month.

[00:27:38] So I need to buy something to get my birthday present.

[00:27:41] Yeah.

[00:27:42] And I have to maintain my key level for 2025 by hitting my spend this year.

[00:27:49] Yeah.

[00:27:50] Yeah.

[00:27:51] There you go.

[00:27:51] So you had to do it.

[00:27:52] You had to.

[00:27:53] You did it.

[00:27:53] I need to read Fred.

[00:27:54] But you did it.

[00:27:55] So what's interesting is so every, the last like half dozen branded examples, everyone is just given.

[00:28:00] Not one of them was a department store.

[00:28:03] No.

[00:28:04] No.

[00:28:04] It's true.

[00:28:05] It is what it is.

[00:28:06] It is what it is.

[00:28:07] But you've listed the differences in loyalty programs, ways that you were incentivized to buy more.

[00:28:13] Right.

[00:28:14] And why don't, but not at a department store where you could have bought all these same things.

[00:28:19] Granted.

[00:28:20] I mean, I think though, what is a department store versus what is a multi-brand retailer?

[00:28:27] I consider a multi-brand retailer and a department store to essentially be the same.

[00:28:31] They are by definition the same.

[00:28:34] Yeah.

[00:28:34] I don't have access to a true department store really anymore.

[00:28:38] You know.

[00:28:38] Which is categorized.

[00:28:39] Target's essentially a department store.

[00:28:41] Yeah.

[00:28:41] Of course it is.

[00:28:42] Right.

[00:28:43] Well, in New York, like I'm not going all the way out there to like a Target.

[00:28:47] Target.

[00:28:48] Wow.

[00:28:48] I won't even go to Costco.

[00:28:50] I'm not taking three trains or like an $130 Uber.

[00:28:54] Let's go.

[00:28:55] Guys.

[00:28:58] This is why everyone should live in suburbia because we don't have that.

[00:29:03] I can't even go to HomeGoods because like, how am I going to get all this stuff?

[00:29:08] Whoa.

[00:29:10] I need to borrow a friend with a car or like ride with a stranger.

[00:29:13] Right.

[00:29:13] But like a lot of these are Sephora.

[00:29:17] I can say it's kind of a department store.

[00:29:20] I just for beauty.

[00:29:22] I get lots of stuff other than just makeup.

[00:29:26] But the marketplaces kind of, I feel have blurred the line.

[00:29:31] Yeah.

[00:29:32] Marketplaces online have kind of started to blur that line where when am I walking into a true

[00:29:37] department store?

[00:29:39] Who are they?

[00:29:40] Yeah.

[00:29:41] What would we say are best purely traditional department store model?

[00:29:46] Who is that today?

[00:29:47] I tend to go to Nordstrom's right.

[00:29:49] Anyway, I'm a department store versus the Macy's.

[00:29:52] If you ask Nordstrom, they'd say they're not a department store, right?

[00:29:55] They don't like being labeled a department store.

[00:29:57] Well, I mean, I don't like being labeled a 60 plus year old man.

[00:30:02] I am.

[00:30:02] So I don't care what you want to be labeled.

[00:30:05] You are.

[00:30:05] You're sure.

[00:30:06] Exactly.

[00:30:06] Well, I mean, I want to call myself a 30 year old person in peak physical condition.

[00:30:12] I'm not.

[00:30:13] You are what you are by definition.

[00:30:15] So maybe that's some of the problem too, dude, to a great degree.

[00:30:18] Part of that argument, I think, is that what's a department in a department store is right?

[00:30:22] To be a department store, you have to have departments.

[00:30:24] And you can make the argument, which I do often, that most department stores now have very few departments left that aren't apparel.

[00:30:31] Right.

[00:30:31] With the exception of you'll still see a home store, right?

[00:30:34] You'll still see housewares.

[00:30:36] Every department store as long ago gave up on anything electronics related or appliance related.

[00:30:40] Oh, yeah.

[00:30:40] Other than small appliances in the housewares department.

[00:30:44] So there are very few departments.

[00:30:45] Right.

[00:30:45] And so Nordstrom, what does Nordstrom sell that's not apparel?

[00:30:48] Perfume, makeup.

[00:30:49] Cosmetics is probably the only other department, right?

[00:30:51] Yeah.

[00:30:52] Handbags, shoes.

[00:30:53] Do they do furniture anymore?

[00:30:55] I don't think they do.

[00:30:56] I don't think so, no.

[00:30:57] Macy's is still doing some furniture.

[00:30:58] Yeah, Macy's still does furniture.

[00:31:00] Yeah.

[00:31:00] They're bedding.

[00:31:01] Yeah.

[00:31:01] Mattresses.

[00:31:02] I got my mattress when I moved to New York from Macy's.

[00:31:05] There you go.

[00:31:06] There you go.

[00:31:06] The only place I did to not get bed bugs, because I heard that was like a thing in New York.

[00:31:12] Well, Macy's wouldn't do that to me, right?

[00:31:15] Well, yeah.

[00:31:16] Or you.

[00:31:16] One.

[00:31:17] One.

[00:31:17] One.

[00:31:17] One.

[00:31:17] One.

[00:31:17] One.

[00:31:24] One.

[00:31:25] One.

[00:31:25] We don't have those problems in suburbia.

[00:31:27] Also, another advantage is suburbia.

[00:31:28] We don't have those problems.

[00:31:30] Well, so Jeff, you bring up a good point, though, on suburbia.

[00:31:33] So I would say department stores have a different problem in cities versus the suburbs.

[00:31:38] Right.

[00:31:38] In terms of both how you get customers in the door and then what the expectation is from that customer once they're in the door.

[00:31:44] And I think fundamentally, a lot of that is the mall, because in the suburbs, as soon as you walk into the department store, every customer knows that the majority of things you're going to see there, you could find in the mall.

[00:31:53] Yes.

[00:31:54] I think there's the association with malls.

[00:31:56] There's a category called dead malls, which has had that peak in the 80s and 90s.

[00:32:01] And then these malls are semi-functional.

[00:32:04] It was so dependent on the anchor department store to keep them all alive.

[00:32:08] And then you see the thriving new malls that are more experiential, have new brands.

[00:32:13] They have like Nordstroms or Bloomingdale's and maybe Macy's that are more interesting.

[00:32:18] So they get through the categories of malls.

[00:32:20] I mean, those dead, quote unquote, dead malls, the department stores get bundled in that mess in terms of why would I go to the department store or malls that matter?

[00:32:29] The mall, my local mall is pretty much a dead place and I won't have to go there anymore.

[00:32:32] People would rather go to downtown for main streets and go to boutiques and local merchants or do everything online.

[00:32:37] We'll go through a Target, get everything I need.

[00:32:39] So that just continues to whittle away at the purpose of a department store and people's lives.

[00:32:44] I think that one of the big opportunities for department stores is to truly partner with the brands that they work with.

[00:32:52] I find that it's very expensive for the brands to have a presence in a department store.

[00:32:57] It is extraordinarily expensive.

[00:32:59] You have to pay for a lease now.

[00:33:03] You have to pay a portion of the software, use their software.

[00:33:07] You don't give them a customer debt.

[00:33:10] You have to give them very heavy margin agreements, a marketing budget, and you have to pay a portion of the staff.

[00:33:23] So it makes sense whether brands are opening up their own or I think we'll even see probably more brands go into more of a co-op model.

[00:33:32] I said this probably before, but I'm actually starting to see it now where six brands coming together instead of a pop-up or opening up a store.

[00:33:40] They're just coming together, six of them and sharing the resources and sharing the traffic.

[00:33:47] There's, I kind of.

[00:33:48] And obtain their customer data and use their own technology.

[00:33:51] Right, right.

[00:33:52] In a sense, the department store should look at themselves as a marketplace.

[00:33:57] In the true sense of what we think of as a modern marketplace in the digital space, right?

[00:34:02] And the department store really needs to translate that into their physical space, which is not the same model that they're used to, right?

[00:34:07] That's not the way they interact with brands.

[00:34:09] Like to your point, Casey, brands want data.

[00:34:11] They want customer data.

[00:34:13] So why aren't they, why aren't the department stores working?

[00:34:16] I mean, the department store, if they're doing well, then they would be getting a great source of customer data because not only do they know who's buying Ralph Lauren, but they also know who's buying Nike and they know if it's the same customer.

[00:34:27] Which if you just have, if you're just Ralph Lauren, you don't know what your customer buys outside of your brand ever.

[00:34:32] It is the best customer data there is.

[00:34:34] But if you work at the department store, the department store knows this in theory, right?

[00:34:37] Well, yes.

[00:34:39] There's so much that can capitalize on the power of data, whether it's, I mean, why wouldn't they share collaboratively with their, with their vendors?

[00:34:45] But they're, the brands.

[00:34:47] It's a wing-wing proposition.

[00:34:48] And I think there's a price for brands to be in the store.

[00:34:51] They're, the purpose of a department store back in the day was access, was scalability.

[00:34:56] Yeah.

[00:34:56] It's not having to open your, your physical brick and mortar stores.

[00:34:58] You can, you can have a position in a Macy's, a CEO, a J.C.

[00:35:01] Lord & Taylor, et cetera.

[00:35:03] And that, that was your way to get to the marketplace or across the states, across the suburbs and the cities.

[00:35:08] Yeah.

[00:35:08] Now that this digital marketplace is, they offer scale, scalability, access, data, insight, personalization.

[00:35:15] That's a definitely missed opportunity or growth, growth opportunity for department stores as they work with them.

[00:35:20] I think in some ways, department stores are still treating all these things as silos.

[00:35:24] So one of the things I said at the start is I mentioned retail media, which Jeff will laugh at me because I always bring that up.

[00:35:30] But I bring it up for department stores because let's face, I mean, in my mind, department stores should be all of the top retail media networks, maybe for Walmart and Amazon.

[00:35:39] They have the biggest opportunity.

[00:35:40] I think Macy's may be the only one that has in any way capitalized on that, but only in the sense that they're doing it better than everybody else.

[00:35:47] And everybody else is just so bad at it.

[00:35:49] But if they saw themselves as a marketplace, if they were the physical store version of an Amazon marketplace, they would do all the things Casey listed.

[00:35:56] They would use their retail media network and that would be marketing investment with the brand.

[00:36:00] It would allow them to generate customer data they would share with the brand on purchase across brands.

[00:36:06] They would have the equivalent of ad placements.

[00:36:08] They could merchandise things, having all the products across brands rather than always building a what is every department store do.

[00:36:14] They build a brand island.

[00:36:15] You go into the Ralph Lauren section.

[00:36:17] You go into the Nike store and everything is a store in a store.

[00:36:20] But that's not how people shop.

[00:36:23] Right?

[00:36:23] Right?

[00:36:24] And that to me sets themselves up to fail.

[00:36:26] Because if I go into the department store and I know I'm going to walk into a Nike shop in a shop, but I know there's a Nike store inside the mall.

[00:36:34] So how is that any different?

[00:36:36] Yeah.

[00:36:36] Let's take a closer look at data co-ops, too.

[00:36:39] That is a whole ecosystem that really benefits the brands and the department store.

[00:36:43] I've had this conversation about data co-ops in the past.

[00:36:46] And I think the biggest challenge has been the competitive aspect of it and the reason for not sharing data, all of that.

[00:36:55] But I think when you kind of look at the big picture on how do you now survive where the brands and the department stores benefit together?

[00:37:05] I think there is huge benefits in that data co-op.

[00:37:09] Yeah.

[00:37:09] If there's a commitment to just not email customers with the data, we could move mountains.

[00:37:17] Yeah.

[00:37:17] The huge opportunity for personalization, right?

[00:37:19] Cross-brand.

[00:37:21] A hundred percent.

[00:37:21] And if the department store would just see themselves less as the end purchase destination and more of that middleman, right?

[00:37:28] Which is what a marketplace is, right?

[00:37:29] Their marketplace is really a middleman.

[00:37:32] It's a platform for others to sell and others to buy.

[00:37:34] And they're facilitating that.

[00:37:36] I think that that's the mindset change that would be because...

[00:37:39] And then you can apply all these technology things that we're talking about, whether it's for personalization.

[00:37:43] And then the advantage to a brand is it's personalization across multiple brands, which is going to get a customer into the store.

[00:37:50] Right.

[00:37:50] Right.

[00:37:51] Right.

[00:37:51] I also see a compelling reason, but, you know, price increases.

[00:37:54] I think retailers and brands have now another challenge to deal with it, which is how do you drive value?

[00:38:01] How do you justify the price?

[00:38:03] And they have to come up with a value proposition.

[00:38:05] And I think data does give them something as well.

[00:38:09] Yeah.

[00:38:09] Yeah.

[00:38:10] I think one example I want to point to is how challenging it is to go direct into where, you know, these brands, even as powerful a force like Nike, a couple of two or so years ago, decided

[00:38:20] to retract from Foot Locker.

[00:38:22] I know we're talking about department stores, but just the model in general.

[00:38:24] Foot Locker and JD Sports and others.

[00:38:27] Yeah.

[00:38:28] And open up more physical stores and go brick and mortar and drive the customer experience, own the brand, own the identity.

[00:38:34] And they had an experience about two or three of the worst quarters ever as CEO chain recently and got recommitted to their wholesale retail model with Foot Locker and others again.

[00:38:44] Because it's hard to scale.

[00:38:46] It's challenging to have an integrated supply chain.

[00:38:49] Retail is not an easy operation.

[00:38:51] Department stores have their platform.

[00:38:53] They make it worthwhile for these brands and these companies to collaborate and partner and have revenue sharing and data sharing.

[00:39:00] So you all can win.

[00:39:01] Retail is very challenging.

[00:39:02] It's hard for these brands without their own stores.

[00:39:05] And so it's not an easy proposition.

[00:39:06] I mean, I'm seeing when we kind of go back to like when I would think of like a department store or Walmart.

[00:39:12] When I think of Walmart, I think pallet in, pallet out.

[00:39:15] Right?

[00:39:16] That's like my immediate go-to for Walmart.

[00:39:19] But I think we're seeing a lot more collaborations and more drops, which are very hard to manage on the supply chain side.

[00:39:27] But it's creating that excitement to go.

[00:39:31] And I think Love Shack Fancy just had so many customers upset that they didn't get a Stanley Tumblr from the collab.

[00:39:40] Right?

[00:39:41] Which I think is a huge opportunity to be happening in like Target did those a lot of collaborations with designers where there are these exclusive drops.

[00:39:51] But it requires everybody to be able to turn on a dime.

[00:39:54] And it requires that technology to be stacked and ready to go to be able to deliver and to fulfill.

[00:40:01] And how much is too much?

[00:40:04] And be able to plan that demand to where it wasn't so little that everybody's upset that nobody got anything.

[00:40:11] But just that right amount of most people got something and it plays in their benefit for months after a drop.

[00:40:23] And I think we can, department stores have a great opportunity to be very close with the brands that they carry and do more meaningful collaborations that are wrapped around like activation moments.

[00:40:34] Target's been really successful with that in the past, right?

[00:40:36] Totally.

[00:40:37] What are the emerging force of social selling, live streaming, and how can department stores collaborate with the brands to do these live events?

[00:40:45] But it also requires data insight back-end systems that are integrated supply chains that are optimized to be able to get ready for that demand.

[00:40:53] If you have to do a live streaming with an exclusive product from Little Women or wherever it may be, you better be ready for your back-end systems to meet that surge demand.

[00:41:00] Yeah, and I think that comes from moving it from a marketing and a PR, like a marketing moment or a PR stunt to a sales strategy that is like throughout the year, season over season, this is how we're going to drive revenue.

[00:41:14] And we're running an ROI.

[00:41:16] We're running a P&L on every single one of these initiatives as a whole to invest in it.

[00:41:22] Because a lot of times when they're just led by marketing, there's no tech and there's no ROI requirement.

[00:41:29] There's a conversion rate requirement, but it's not something that anybody's matching or comping next year.

[00:41:35] Yeah.

[00:41:35] And that's why the marketplace model is so brilliant.

[00:41:37] Yeah.

[00:41:38] And it's integrated with Walmart, Marketplace, or Amazon, or Target.

[00:41:42] They just have it so optimized and well, it's well-oiled machine and they're ready for this demand.

[00:41:47] Mm-hmm.

[00:41:48] Yeah.

[00:41:48] I mean, I would look at it as building on this marketplace idea, right?

[00:41:52] The department store should be the physical store version of an Amazon marketplace, plus adding on the potential of being the same kind of cross-brand, multi-brand, video-centric TikTok shop physical equivalent.

[00:42:05] I mean, a department store has the opportunity to combine all of these things.

[00:42:08] They could lead retail and video commerce because one of the ways I think that you really make video commerce and live streaming successful in a way that's different than how it is in China and the rest of Asia and in the West is that you need multiple brands.

[00:42:22] Or if you just do this based on one brand, I think it's much more difficult and a department store has access.

[00:42:27] And because they also do a lot of private label, they can mix that in as well.

[00:42:31] And that gives them some uniqueness to it.

[00:42:34] So, and this is in a way is building audience for them, right?

[00:42:37] Why is TikTok successful?

[00:42:38] Because it builds an audience, right?

[00:42:40] It engages people.

[00:42:41] It entertains while you also, oh, by the way, can buy something.

[00:42:45] And again, why can't a department store leverage that model as well?

[00:42:48] They're the one place, I believe, in retail that could combine all of these different things that are uniquely successful in their silo, but they can bring them all together into one platform.

[00:42:59] And in a lot of ways, I think it's that mindset of viewing yourself as a platform rather than as just a destination.

[00:43:05] And I think there's been too much focus on them thinking about the destination more so than what's the value of the platform for why people should buy from me.

[00:43:13] The internet has become more exciting than real life.

[00:43:20] I, it's been, it's providing more relevant human connection.

[00:43:26] Even though you're still alone, you feel alone with friends.

[00:43:30] You're, we're getting consumers, I feel are just getting more from the digital world to fill their cup, maybe fill their soul, be a part of something bigger, sharing stories.

[00:43:44] And when we walk into the real life and outside of our house, it's boring.

[00:43:51] And you're by yourself, like for real.

[00:43:54] Yeah.

[00:43:55] Less is the experience.

[00:43:57] Less is the experience.

[00:43:59] Yeah.

[00:43:59] And so, I mean, there has to be a little bit of a bridge that we've got to make real life more fun than online to, to be able to inspire those types of things.

[00:44:10] And I think that comes into leveraging into that human connection and what can even mid-tier or even discount stores do to provide that human connection because sometimes it's your only outing.

[00:44:25] I know that I am in this silo in New York City and little miss fancy pants that likes all the bougie things.

[00:44:32] But, you know, my mom lives in the middle of nowhere.

[00:44:35] I grew up with a mile and a half driveway that I had to walk in the snow to get to the school.

[00:44:40] That's, I'm not completely unreal.

[00:44:42] That sounds amazing.

[00:44:43] I want a mile and a half driveway.

[00:44:45] It's not amazing.

[00:44:47] I just shoved my snowsuit into a plastic bag at the bottom of the mailbox.

[00:44:51] But my mom, she lives in the middle of nowhere and she has to drive an hour to get into the city, a town.

[00:45:00] Well, forgive me.

[00:45:02] A town to purchase anything.

[00:45:05] And that might be the only, she might go out like once a week, hit the Walmart, the vet, whatever it is.

[00:45:11] Because that's her only out time, time away from the house.

[00:45:15] And so that is her human connection, in my opinion, where she's left.

[00:45:23] And these are, these are bottom doors.

[00:45:26] This is mid-tier.

[00:45:29] This is low, right?

[00:45:30] Like these are the stores where that is the only maybe event or outing or human connection that some of these people are getting for the week.

[00:45:39] Why aren't we providing them more?

[00:45:41] It's a huge opportunity to provide them more.

[00:45:43] They want to talk to people.

[00:45:44] They want to shoot the shit.

[00:45:46] Like give them that.

[00:45:49] So when your mom goes to those retail experiences, I'm guessing the way you described that they probably, those retailers probably know exactly who she is by name.

[00:46:01] Some of them, what is it called?

[00:46:03] It's not the feed store for sure.

[00:46:06] Everybody knows her.

[00:46:08] But I'm not.

[00:46:09] Right.

[00:46:10] I can't think of what it's called.

[00:46:11] Is it called the feed store?

[00:46:12] I think it is called the feed store.

[00:46:13] But they sell lots of different stuff, right?

[00:46:15] The feed store is like a department store.

[00:46:17] Every town has a feed store.

[00:46:18] For sure.

[00:46:19] I know exactly what you're talking about.

[00:46:20] Right.

[00:46:21] Yeah.

[00:46:21] I'm over shopping for candles and crap, right?

[00:46:24] But when I go for Christmas or holiday or whatever, she wants to go into town and run errands.

[00:46:29] And it's like a whole event.

[00:46:30] I'm like, no, I don't want to go.

[00:46:32] I'm going to be in a car for an hour and then we're going to go to the feed store in Walmart.

[00:46:37] See, see.

[00:46:38] Oh, and what you're speaking to is like the American experience of 30, 40 years ago,

[00:46:44] even 20 years ago, where there was an outing to go to the mall.

[00:46:47] But it takes forever because she has a chatty catty.

[00:46:53] She's having a human experience.

[00:46:56] By the way.

[00:46:57] That's the thing.

[00:46:57] It matters.

[00:46:58] It matters a lot.

[00:47:01] Those sales associates, those people that work in those stores matter.

[00:47:05] Yep.

[00:47:06] And it is the experience and it is that part of the experience.

[00:47:11] And so as much as I come from this whole other world, I am drug along for the other experience

[00:47:19] on a regular basis for that comparison where I want to be able to say, go out and do that

[00:47:24] and get a massage.

[00:47:26] And like, I don't have time for that.

[00:47:28] I'm like, well, if you didn't spend an hour and a half chatting with the person in the

[00:47:31] feed store, we could go get a 30 minute massage.

[00:47:34] So that's fine.

[00:47:35] You know, being able to cross collaborate, create more of those experiences.

[00:47:42] Maybe more of these brands should be doing.

[00:47:45] If you come here, you get this over here because it's complimentary.

[00:47:49] And then they don't have to build a restaurant in their store.

[00:47:51] They don't have to build a coffee shop in their store.

[00:47:54] Maybe if I come in, I'm going to date myself here, which might surprise a lot of people.

[00:48:00] But Bymart, lucky number was like a very exciting moment in my childhood.

[00:48:07] I don't know if you've ever, you had to go swing by Bymart to find out what the lucky

[00:48:11] number was every week.

[00:48:13] I missed that actually.

[00:48:17] Bymart?

[00:48:18] It was my favorite thing as a child.

[00:48:20] Every single time I was with my grandmother, it was just like, it's lucky number Tuesday

[00:48:23] or what?

[00:48:24] I think it was our two.

[00:48:25] Every Tuesday was lucky number.

[00:48:26] You had to swing by the store and there was a lucky number.

[00:48:29] And if it matched a number on your card, you got something.

[00:48:34] You got this thing for free.

[00:48:35] Gamification.

[00:48:36] Gamification.

[00:48:37] There you go.

[00:48:40] It's lucky.

[00:48:41] It's lucky number day.

[00:48:43] We have to go to Bymart.

[00:48:45] So it's funny the way Shish just mentioned that.

[00:48:47] And when you're talking about the fee store experience, that's literally exactly my dad's

[00:48:52] meat shop in Lodi, California.

[00:48:54] He knew his customers by name.

[00:48:57] I mean, by name.

[00:48:58] He knew that Mrs.

[00:49:00] Smith always burned.

[00:49:01] I mean, this is how I grew up.

[00:49:04] He knew she always burned a rose.

[00:49:05] So he would give her unique cooking instructions because he'd back it down.

[00:49:12] We're trying to build.

[00:49:14] Shish and all his amazing startups are trying to build my dad.

[00:49:17] Yeah.

[00:49:18] Yeah.

[00:49:19] Through technology.

[00:49:20] And your feed store.

[00:49:21] And I keep thinking of all the MBAs at all these various department stores and maybe just

[00:49:27] go back and look at history or maybe go back to that feed store and just sit there and

[00:49:30] kind of look at how do people want.

[00:49:33] Now, most people and busy people aren't going to want to spend the kind of time your mom

[00:49:37] does.

[00:49:37] By the way, your mom and I are like 100% in sync.

[00:49:40] The greatest experience on the planet is going to the feed stores for sure.

[00:49:44] That's it.

[00:49:46] But it's like, what is the unique retail experience?

[00:49:49] And it's a human experience.

[00:49:50] And even as we become more and more e-commerce centric, I mean, I hate to tell you, but I

[00:49:56] loathe when my wife logs into Amazon because she knows exactly what I've been looking at.

[00:50:01] It's pocket knives.

[00:50:03] It's really high.

[00:50:05] Flashlights are really great when I'm out in crazy places at night.

[00:50:08] She's like, what the hell?

[00:50:10] I mean, what's $100 for a flash?

[00:50:13] I go, yeah, but the thing goes at 90 degrees and it's like, anyway.

[00:50:17] So our e-commerce experience has gotten amazingly sophisticated and is mirroring the experience

[00:50:26] that my dad and the feed store provided.

[00:50:28] So I guess as an analyst, so I sit here and listen to all you practitioners who are in the

[00:50:34] battle.

[00:50:35] I just get to sit back and go, why don't these department stores do exactly what we're all

[00:50:39] talking about?

[00:50:41] And, you know, I mean, that's why it's always much more fun to write about how to do things

[00:50:45] than it is to actually have to do things.

[00:50:47] I think one of the biggest opportunities we have right now, especially with the amount of

[00:50:52] hybrid workforce, women are in charge of what?

[00:50:57] 85% of spending in the United States.

[00:51:00] In my case, it's 100%, but.

[00:51:03] I mean, I really am not.

[00:51:06] 95.

[00:51:06] 95.

[00:51:07] You slip a few in there every now and then.

[00:51:11] But it is a, they don't get a break.

[00:51:15] It's a struggle to go shopping with kids in tow.

[00:51:18] And I think looking into our past can create more of those future moments because going

[00:51:25] to buy more on lucky number Tuesday is a memory, a repeated memory for decades with my grandmother,

[00:51:34] as is walking into Albertsons and going up and watching them decorate cakes in the window

[00:51:40] while she does grocery shopping.

[00:51:43] And I would often, which I don't think they are allowed to do anymore, but I would often get

[00:51:48] dropped off at the library for story time while they went and did stuff for like two or three

[00:51:54] hours.

[00:51:54] But maybe department stores really taking in.

[00:51:58] If Nordstrom had a story time that was like an hour on the hour was like story time where you could go drop

[00:52:06] your kids for story time and go actually go shop.

[00:52:09] Yeah.

[00:52:10] What fun would that be?

[00:52:11] Well, I'll give you another example.

[00:52:13] You might, I, kids are teenagers, right?

[00:52:15] So they're on the youngest side of Gen Z or on the side of Gen Alpha.

[00:52:18] They don't know how you want to define it, but their most feared thing on a weekend is if we dare say

[00:52:24] we need to go to the mall and shop.

[00:52:28] And you know why that is?

[00:52:30] It's because they are so ingrained in their belief that they always want to be prepared

[00:52:34] and ready to go to the next thing they want to do in the day.

[00:52:38] And if we say we're going to go shopping, they don't hear those words.

[00:52:42] They hear, oh my God, we're going to go to 10 different places and it's going to take all day

[00:52:47] and I'm never going to get to the next thing I want to do.

[00:52:49] Exactly.

[00:52:50] Exactly.

[00:52:51] So if there was ever a source or a demographic that would love to invent the ideal department

[00:52:58] store where it's just one place to go, when you say you're going to go shopping, they would

[00:53:02] love it because it means you're in, you do what you do, everything is there and available

[00:53:06] and you will be done in a 10th of the time it takes to go to 10 different stores in the

[00:53:10] mall because that's what they don't like.

[00:53:13] That was the success story of Sears.

[00:53:15] That was why Sears was successful.

[00:53:17] That's why Kmart was successful.

[00:53:19] They had this model where you can go one destination and get everything accomplished.

[00:53:24] And they just-

[00:53:24] Oh my God, to tell all we needed Kmart.

[00:53:26] That was it.

[00:53:27] We need Sears, a gas station, and post office.

[00:53:29] That was all we needed.

[00:53:31] Yeah.

[00:53:31] And Walmart's essentially taken that place though as that one destination.

[00:53:34] If you're like my daughter, the answer to any question about needing to go buy something

[00:53:39] is, let me show you my Amazon cart.

[00:53:44] Because everything imaginable she could ever want to buy has been saved in an Amazon cart.

[00:53:49] Yeah.

[00:53:49] My two are relatively the same age in that Jim V category with Jalf and my son.

[00:53:54] They will provide what they want in the cart and what they're discovering and just send

[00:53:59] me a list.

[00:53:59] Well, I want you all of you then to appreciate the fact that your children have wishlists on

[00:54:04] Amazon.

[00:54:05] And just thank your blessings because my wishlist is on a whole bunch of sites.

[00:54:11] Yes.

[00:54:12] Quenelle.

[00:54:13] Just send money.

[00:54:13] Something tells me your wishlist is a lot more expensive than my kids' wishlist.

[00:54:17] Prada, Louis Vuitton.

[00:54:20] My Amazon wishlist looks like a wedding registry.

[00:54:25] I mean, it's like cupcake pans and like spatulas and like...

[00:54:31] Expressions makers.

[00:54:32] It like literally looks like a wedding registry.

[00:54:35] I'm like, never going to buy any of this stuff until it comes to the point where I need it

[00:54:39] because I haven't had a wedding registry executed yet.

[00:54:45] Yeah.

[00:54:46] Ricardo, you know when your kids are going to change in one shop with you?

[00:54:50] When that day is going to come?

[00:54:52] When's that?

[00:54:52] When you drop them off at college and you go to Target, you know, and all of a sudden

[00:54:58] they're going to watch you there because you know what?

[00:55:00] They want that credit card there.

[00:55:02] And that is not going to be a cheap one, man.

[00:55:04] That's the rugs and all that stuff.

[00:55:07] Holy smokes.

[00:55:08] Yeah.

[00:55:09] Yeah.

[00:55:10] Absolutely.

[00:55:10] And by the way, when they come back, when they move and successfully launch and they

[00:55:13] come back, they still want you to go shopping with them.

[00:55:16] And by the way, you know, that credit card is still supposed to come out.

[00:55:18] So, so you have that to look forward to.

[00:55:21] Oh, good.

[00:55:22] And by the way, when they come back, when they come back, you love doing that.

[00:55:26] So that's the only thing I'd say is a lot of them.

[00:55:28] You love doing that.

[00:55:29] If only there was a department store to go to then.

[00:55:34] Target.

[00:55:35] Yeah.

[00:55:35] I know.

[00:55:36] It'll be Target.

[00:55:37] It'll be Target.

[00:55:37] We're going to be able, we're going to have a huge opportunity here, or there's going

[00:55:41] to be a lot of fallout over the next 2025.

[00:55:44] We've done a lot of predictions over what the future of retail 2025.

[00:55:50] 2025 has been a major milestone.

[00:55:52] Whether or not it's been a five year, a 10 year, a 20 year, a 30 year look into the future.

[00:55:59] We're still not even close to what we thought we would be at.

[00:56:03] By 2025, this is a major milestone year for retail in general.

[00:56:09] Regardless of how long you've been in the industry, I feel like we've been working towards

[00:56:13] this year.

[00:56:14] Yeah.

[00:56:14] And there could be a lot of fallout, but I think that there's some great opportunities

[00:56:19] to really bring in these winners.

[00:56:21] I've seen right now we're in holiday and I have been enamored by a couple of brands

[00:56:30] that have just nailed it.

[00:56:32] And I want to see them.

[00:56:33] It's got enough legs to keep going.

[00:56:36] Don't let it just be holiday.

[00:56:39] Keeps the polo bear alive.

[00:56:41] I'm loving it.

[00:56:43] We're eating it up.

[00:56:44] I'm excited to get my picture taken with the polo bear randomly when I bumped into him

[00:56:48] last year.

[00:56:49] Now he's interacted in a window.

[00:56:52] There's a gift wrapping shopping concierge with the bear.

[00:56:57] Bergdorf Goodman is doing lavender taxi.

[00:57:00] That's doing same name deliveries and contests.

[00:57:02] If you tag it, if you see it, you can get lunch.

[00:57:07] Bloomingdale's launched their holiday windows with Wicked.

[00:57:10] Anybody do anything with Barbie in retail rather than just brands creating cross collabs?

[00:57:16] I think that should just keep going.

[00:57:18] All these types of interactive moments in New York, we get the best of the best and we

[00:57:25] get the best of the worst.

[00:57:27] I went to Macy's.

[00:57:28] I started my career at Macy's and they were the destination in Herald Square.

[00:57:32] They had the flower show.

[00:57:33] They had the Thanksgiving Day Parade.

[00:57:34] July 4th, they had the holiday shopping season.

[00:57:37] It was a really magical place.

[00:57:39] I think the challenge for Macy's is how do you translate that Herald Square in the middle

[00:57:44] of Manhattan experience everywhere else at scale and execute it to perfection.

[00:57:49] And that's been the biggest challenge for them, especially as they expanded their across

[00:57:53] the entire U.S.

[00:57:54] acquiring all those little department stores.

[00:57:55] They didn't.

[00:57:56] Struggling to repeat that model over and over again.

[00:57:59] But I think we're getting, I think we're really close.

[00:58:01] I think we have the technology.

[00:58:04] We have the data.

[00:58:05] It's just really about putting it together to make something meaningful that has enough

[00:58:12] time to work and to create that prediction or the longstanding every single time I go

[00:58:19] in, I'm getting this.

[00:58:21] It's an expectation.

[00:58:22] It's why now I'm choosing one over another.

[00:58:26] I hated going to Safeway.

[00:58:28] There was nobody decorating cakes.

[00:58:30] I pushed towards Albertsons because I had a cake.

[00:58:33] I want to go to those repetition things rather than it being PR.

[00:58:38] Sure, we get to test something, but we've got to get it out to all doors and really be a

[00:58:46] sales strategy and a technology initiative rather than a marketing budget.

[00:58:50] It's going to cost 100 times more.

[00:58:52] Yeah.

[00:58:53] But it should actually produce longstanding sales and get us some comp metrics that we

[00:58:59] can continue to build off of, in my opinion.

[00:59:02] I'm all for everything Katie's saying.

[00:59:03] If you look at it from a technology perspective or infrastructure perspective, these Amastes

[00:59:07] or Nordstrom's or Nade Marcus, et cetera, they're saddled with so much technology that's been

[00:59:12] so outdated.

[00:59:13] It's called 30, 40-year-old systems go for another age, go for the pre-digital age, go for

[00:59:20] the pre-AI age.

[00:59:22] They're not equipped with a technology stack.

[00:59:24] It's not cloud-enabled or ready to go with this immediate satisfaction or just many

[00:59:30] seed of experiences they need to be.

[00:59:32] And I think that how do you eliminate that technical debt, hundreds of millions of dollars, but free

[00:59:37] of the capital they need to drive these innovative customer-first experience with Katie's talking

[00:59:41] about us?

[00:59:41] That's the double-edged sword that these department stores deal with.

[00:59:45] You know, the technical debt and the cost of all that.

[00:59:49] And it's also...

[00:59:50] It doesn't have to be all expensive.

[00:59:51] I just think it needs to be consistent.

[00:59:54] Like, take a choice and let it actually give the time to permeate with customers and get

[01:00:01] real feedback and believe in it.

[01:00:03] I think the challenge there with that too that a lot of these brands run into is that when

[01:00:09] they're publicly traded, they are under the pressure of not taking that time that Casey

[01:00:14] just talked about with customers, knowing that it's an investment for a long-term output,

[01:00:18] which may say that someone would...

[01:00:21] The department store that ends up being private is the one that might be, I'm going to qualify

[01:00:26] that with a might and I'll explain it in a minute, might be the one that can do this

[01:00:30] because they don't have to worry about that.

[01:00:32] Except that what ends up happening, of course, is that the department stores that are private

[01:00:36] end up being bought out by a private equity who has no interest in actually any longevity

[01:00:41] in retail.

[01:00:41] They just want to take it apart and extract all the existing value and get their payback

[01:00:46] from that rather than trying to invest in it to make it a long-term.

[01:00:48] Success.

[01:00:49] That's a polite way of saying it.

[01:00:49] So I think those are the opposing forces.

[01:00:51] Yeah.

[01:00:51] It's a very polite way of saying it.

[01:00:53] Yeah.

[01:00:54] I tried.

[01:00:54] I could say it a very different way.

[01:00:56] It's a polite one.

[01:00:57] Yeah.

[01:00:57] I could say it a very different way, but I'll just sum up these.

[01:00:59] I think I will start collecting like cease and desist letters at some point.

[01:01:03] Yeah.

[01:01:03] I think all I have to do is say the alternative explanation I can sum up with one word and

[01:01:08] that's Sears.

[01:01:09] Yeah.

[01:01:10] As the textbook case of how it doesn't go well.

[01:01:13] A lab style strategy.

[01:01:15] Yeah.

[01:01:15] Exactly.

[01:01:16] So I would like to, before we wrap this up, if everybody could just give a super quick,

[01:01:22] because I know we're, we're pushing time here.

[01:01:25] What's the most excited thing that, that you have seen that you would like to see more of?

[01:01:31] In retail, I assume?

[01:01:33] Really like, yeah.

[01:01:34] To really think on while everybody's checking out for the next six weeks.

[01:01:42] And so for me, one of the, I think the conversation was very interesting.

[01:01:46] And one of the things that I've seen and that kind of surfaced from the conversation is one,

[01:01:52] I think Ricardo pointed out about the experience online, the marketplace experience that you

[01:01:57] want to recreate in store or in department stores.

[01:02:00] But at the same time, I think the conversation also went into an element that I've been seeing,

[01:02:05] which is we do not want to create the digital experience in store.

[01:02:10] We want to create a human experience in store.

[01:02:13] So how do we now bring in all the elements of online, but not the digital?

[01:02:19] How do we empower people with AI and, and improve that experience, the personalization and all

[01:02:26] of that?

[01:02:26] And to me, I think going forward, it's not about changing the in-store experience to

[01:02:31] digital, but really empowering people to, to better engage.

[01:02:35] And, and Jeff pointed out as well, do the store people know you by name and bring that

[01:02:41] experience into the store as well.

[01:02:43] And I think that combination of technology enables that.

[01:02:46] And to me, 20, 25 is really about that or should be about that.

[01:02:50] Yeah.

[01:02:51] I go, Trevin.

[01:02:52] I think that the most promising thing is Gen Z, Gen Alpha.

[01:02:55] I think the misconception is they're digital first and they only want to be online on tablets,

[01:02:59] but they grew up in this world.

[01:03:01] They all know a pre-digital world.

[01:03:03] And they actually, my kids in that generation would want to go to the store, want to experience

[01:03:08] things.

[01:03:08] Give me those wow moments.

[01:03:09] Take me to the wicked movie and buy all the merchandise afterwards, daddy, you know,

[01:03:13] that kind of thing.

[01:03:14] So it's, they want, they, and they went all in.

[01:03:17] And that's the magic formula is how do you get out of this digital ecosystem?

[01:03:21] And how do you track people's stores when the magic wow moments happen?

[01:03:24] Whether it's merchandising, products, experiences, limited time offers.

[01:03:29] These are the areas of opportunity that Casey called out.

[01:03:32] Department stores have to capitalize on this and want them to be successful.

[01:03:35] Otherwise we'll see just a mass store closures and continued disruption in the sector.

[01:03:40] That's really the other risk is to attract and to browse wow moments and be at the center

[01:03:45] of why you're going to the department store or, or a mall for that matter any longer.

[01:03:50] So all the technology is, is extremely critical in the backend, but don't replicate it in the

[01:03:56] front end.

[01:03:56] She's called out entire your store.

[01:03:58] So she, and just fit the customer needs and try to provide a good experience as best

[01:04:02] as you can.

[01:04:02] So a lot of excitement to come.

[01:04:04] So for me, the most exciting thing is my favorite grocery store, um, Rayleigh slash

[01:04:10] knob Hill.

[01:04:11] And it's just basically a shopping.

[01:04:13] It's a mobile app.

[01:04:14] There's, it's not that super sophisticated, but it shish on when I go in, I have a choice

[01:04:20] between self checkout, which I use last night with, with my wife.

[01:04:24] Cause the line was long or also go to the checkers.

[01:04:26] All of them, every one of them knows my name.

[01:04:28] Cause they're about a half a mile from my house.

[01:04:30] It's a phenomenal experience.

[01:04:31] I wear my 49er hat and we either have a little celebration or lately we're having a depression.

[01:04:38] So what they finally figured out is they they're building an app that allows me to be functional

[01:04:44] inside the store.

[01:04:45] And it's amazing.

[01:04:46] It's, it's got, it's everything.

[01:04:47] They still do the circular, the paper circular and that's there, but why?

[01:04:51] I mean, I have it right here.

[01:04:52] And so the fact that they have tier one grocer has figured out, man, let's really bring the

[01:04:58] tools.

[01:04:58] Let's let people use them and let's build a, a human experience in these, this amazing

[01:05:04] grocery store.

[01:05:05] But yet also have digital capabilities.

[01:05:07] So there is hope.

[01:05:08] There is hope for good, for very good retailers to make it well into the 21st century and beyond.

[01:05:13] Well, I think that that's a wonderful summary.

[01:05:17] Yeah, I, I agree.

[01:05:19] I agree.

[01:05:19] I think that that is the key right there is the, the winner here and the successful,

[01:05:24] but bringing it back to department stores is the one that's going to find the right

[01:05:28] combination of technology to layer on in the customer's hands, but not in the way that lets

[01:05:33] them be totally self-sufficient, but in a way that connects them to the store associates

[01:05:38] that are there to help them in the first place.

[01:05:40] And I think the piece that sometimes is missing from that is it's not an either or.

[01:05:45] I think a lot of these retailers say, I'm building a tool for my store team, or I'm building

[01:05:50] a tool for my customer, but they don't spell it out as I'm building a tool that brings

[01:05:54] the two together.

[01:05:54] Maybe it's the same tool that just has two interfaces to it and two sides to it.

[01:05:59] Right.

[01:05:59] But that helps make that connection because I think what Jeff said is exactly right.

[01:06:04] It says that's what makes it memorable.

[01:06:06] And that memorableness makes it positive.

[01:06:10] And it's too easy for retailers to inadvertently create negative experiences, I think right

[01:06:14] now.

[01:06:15] And that keeps people away.

[01:06:16] And what they need really is to create those positive experiences.

[01:06:19] And again, I think a department store that thinks this through has the best opportunity

[01:06:25] to execute that versus anyone else because they have the potential for the biggest variety

[01:06:30] of experiences in their store versus other types of retailers and other specialty retailers.

[01:06:36] So I think that's where the thoughtfulness has to come through.

[01:06:40] And that's where the right mindset change has to come through to do that.

[01:06:44] And they don't have to do it alone.

[01:06:45] Yeah.

[01:06:46] They have great partners.

[01:06:47] They have great resources together.

[01:06:49] That's where they need to leverage their technology partners to help them.

[01:06:52] Yeah.

[01:06:53] Well, Ricardo, I'd say that this episode is a wrap.

[01:06:56] Yes, it is.

[01:06:57] And thanks to our Retail Avengers group for joining us.

[01:07:06] If you enjoyed our show, please consider giving us a five-star rating and review on Apple Podcasts,

[01:07:12] Spotify, or GoodPods.

[01:07:14] Remember to smash that subscribe button in your favorite podcast player or like and subscribe

[01:07:19] to our channel on YouTube so you don't miss a minute.

[01:07:21] A big thank you to our amazing GoodPods listeners for helping us consistently stay in the top

[01:07:26] three spots for indie management and indie marketing charts.

[01:07:30] I'm your co-host, Casey Golden.

[01:07:32] Please connect with us and share your feedback on LinkedIn at Retail Razor or find us on Blue

[01:07:36] Sky, Threads, Instagram, and Facebook.

[01:07:39] And if you want to preview the best highlights from each episode right in your email inbox,

[01:07:43] subscribe to our Substack newsletter for full episode transcripts and bonus content.

[01:07:48] I'm your host, Ricardo Belmar.

[01:07:50] Thanks for joining us.

[01:07:52] Until next time, keep cutting through the clutter and stay sharp.

[01:07:55] This is the Retail Razor Show.