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The Jason & Scot Show - E-Commerce And Retail News

Join hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder & Executive Chairman at Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: January, 2018
Jan 26, 2018

EP114 - Great Retail Bifurcation, Kasey Lobaugh of Deloitte

http://jasonandscot.com

Kasey Lobaugh is a Principal and Chief Retail Innovation Officer at Deloitte Consulting LLP, he first appeared on episode 68.  You can follow him on twitter at @klobaugh.  Kasey and his team publish some of the most useful research in the industry including The New Digital Divide which helps quantify the effect of digital on in-store purchases, and the Deloitte Retail Volatility Index which measures disruption in the retail industry.  Kasey sat down for an interview live from the NRF Big Show, to discuss some new research he'll be publishing in March at ShopTalk.  Kasey is giving our listeners an exclusive first preview.

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 114 of the Jason & Scot show was recorded on Monday, January 15th, 2018.

New beta feature – Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Monday January 15th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Tahoe Scott Wingo.

Scot:
[0:38] Good morning Jason and welcome back Jason Scott.

[0:42] Well Jason one of our most popular shows of 2017 much to our surprise was when we had our mutual friend Casey lobaugh on from Deloitte to share what they're singing retail Casey is Chief retail Innovation officer and a principal.
For the retail practice at Deloitte Casey welcome back to the show.

Kasey:
[1:00] Thanks I'm I'm happy to be back.

Scot:
[1:02] Don't worry we're excited to have you on we're all here live together so that's exciting too we rarely get to see our guest so I just want to say your hair looks amazing today good you're having a really good hair day.

Kasey:
[1:12] I was up all morning.

Scot:
[1:13] Yeah okay good good spot a product in there.

Jason:
[1:17] Having the best hair amongst the three of us is not is a very well bar.

[1:21] Welcome to the super rarefied air of the multi time guests honored to have you last time on the show you give us your.

[1:30] Your full background but like obviously the the shows expanding exponentially so there's a lot of listeners that may not have heard your first episode so can you remind us just a little bit about how you came to your role at delay.

Kasey:
[1:41] Sure thing and worse all thank you guys for having me back thrilled to be here long time listener how about that.
Set my background I've been with the lawyer a long time in the fact is I think about the number of years it's a bit scary I've been I'm approaching 22 years with the lawyer in our retail practice.

Jason:
[1:58] And you were the first teenage party.

Kasey:
[1:59] That's right that's right I do.

Scot:
[2:00] Doogie Howser ability.

Kasey:
[2:02] Early on you know early on with with the letter i really focused on e-commerce so we're talkin your 99 2000 2001 time frame you're helping retailers,
Enrique's launch e-commerce figure out what it meant to to operate.
The other operations in place and then we went through a period of time where we were helping retailer scale and it was really all about maturing business processes you had a new technologies that they gave more sophistication around e-commerce.
After that I did a bit of a pivot and started working on this thing that it's time we were calling multi-channel,
omni-channel helping retailers figure out how the channels work together and did a lot of work around on the channel strategy and then more recently I spent a lot of time on the future of retail like where is it going next how should we think about it,
what are the implications how do we create in a winning strategies against a very fast evolving retail environment.

Scot:
[2:57] Cool awesome let's start with, taxable? Sitting here it's January 15th the dust is still setting settling on holiday 17 what what do you think about what are some of the insights that you drew from holiday 17 come in early look of of what you got song.

Kasey:
[3:11] Great question you know so an interesting enough we do we do a report for our clients we don't publish it,
Alba we do share with her with our clients about what we saw us we just put the wraps on that last night at the highest level I'd say it was a good holiday obviously we believe it's the best holiday you and many many years now.
For retailers on upper upper around 5% 4.95% so clearly a good holiday and then,
no surprise e-commerce in a put up about 50% of the holiday growth but that also means that there's some gross that's coming from brick-and-mortar when you look at it and pure.
Dollar amounts it's about a 60/40 split 60% of the gross you know coming from an e-commerce standpoint 40% of the growth dollars coming from brick and mortar and maybe that's a surprise because we sort of look at it.
Brick and mortars growing up 1.71 .9% somewhere through there but when you do the math it's actually a big amount of dollars.

Scot:
[4:09] Yeah that was the 1% against 85 to 90% so so the number that squirts out speaker.

Kasey:
[4:14] We lose track of the number of dollars that come along and that's one of the things we try and highlight the second thing I'd point out is so you know meaning of are the retailers in the marketplace I I like to stay there.
They're celebrating but in many cases that you sort of have to look at that someone skeptically the markets at 5% so if you're up.
2% if you're up 1% that means you may have had positive results but you're losing market share relative to the market so we sort of always have to think about these things.
Yeah from a relative standpoint so if you are as strong as the market.
But if you're stronger than the market great if you're not as strong as the market that actually shows that you still have weakness relative to you know what's going on with the consumer and so I wouldn't take too many Victory laps too soon and that's part of what are our findings or reveal here.

Jason:
[5:02] Obviously we're doing this show from the internet Big Show in New York City I know you guys haven't had a chance to get to the show yet any like expectations going in what it what do you think the big topics are going to be this year at the shop.

Kasey:
[5:17] Yeah so that that's a good questions I think about the show one of the things I've heard a grown,
and I even tweeted about this earlier in the week was I'm always anxious to see what the new buzzword is the vendor seem like they're in this this arms race to figure out who's going to coin the.
The next bus word whether it's.
Cognitive Commerce I saw you know seamless we know from years past multi-channel on Beach and I threw out those buzzwords lot around personalization a lot around blockchain and so there's a lot of vendors who really trying to coin the buzzwords,
the interesting part is Buick historically the buzz words have never been the answer.
The right there if you think about it did you go back to we've done the study where you go okay back let's go back 5 7 years wear on me Channel.
Was Devo's new safe who were the ones that retailers that were winning around on me Channel and when you look at it you go they were winning because they had capability.
At the end of the day they're actually we're not the winners,
and so you still have to tear that apart and look at it and and be skeptical and I encourage everybody be skeptical of the buzz words and Sarah challenge whether or not those are are are really winning strategy so that's why I go to the floor I'm really looking at,
what are the new Buzz words and what's being said by the industry and how should we think about it.

Scot:
[6:34] So I guess you're not all in on cryptocurrencies not going to do at KCI Co.

Kasey:
[6:39] I don't know though if we just added Bitcoin to the show here you're at your Stockwood Skyrock.

Scot:
[6:46] Yeah we we are going to do a Jason Scott Coyne so just to let you know later in the year we'll talk about that.

Jason:
[6:52] I don't want to disclose too much too early.

[6:55] But I actually what I was at CES last week and like turn-up Kota to like literally launched us a cyber currency and got got some ridiculous kissing their evaluation.

Kasey:
[7:08] That's awesome by the way I believe in the power of blockchain and I think it's going to be revolutionary but that's different than the hype around cryptocurrencies this currently going on.

Scot:
[7:18] But then the show doesn't want to talk about future stuff but,
what are the reasons you're here on the show is you guys have a new report coming out in March and I think it debuted at shop talk so we'll be excited to watch that and we're really excited cuz you have offered to give our listeners an exclusive early look at the report here on the Jason Scott show.
The report is called the Great retail bifurcation this is a topic near and dear to my heart my full-time gig right now is on demand Car Wash what's 50.
And I talked about this all the time because people say and I talked to some folks and they say why would someone pay for a service like this why don't they just go to a $3 Car Wash so I,
bring up the bifurcation so you guys have been a great resource in there,
old report and I'm excited to see this new report coming out so let's dig in the report let's start out with you know you guys have,
come up you can write about a lot of different topics why the bifurcation and what's the Genesis of the report.

Kasey:
[8:15] So one of the things we try and do as we try and look at what's going on in the industry what's conventional wisdom.
And you know honestly one of the things I always try and do it take on conventional wisdom about,
what's going on and if you look historically you know we had done a big report that we called the digital divide that looked at how mobile devices were being used,
and we thought the industry wasn't thinking about it correctly,
because they were thinking the industry largely at the time was thinking about Mobile in in into the degree it was generating transactions and we said,
we actually think we have to look at it differently and let's look at how it's influencing in store sales if you work all that reports,
that was sort of conventional wisdom first that we took on and then subsequently we wrote a report called the retail volatility index when you know a lot of retailers at the time were you thinking about,
and instill today about you know the big online retailer and to the degree that they're affecting,
retail and so we took that on this a while there's something else going on here and if you guys are call it was really the fragmentation of share that was happening that was happening at nearly the same Pace as we were seeing consolidation.
And so from that you know we started scratching her head about it.
The conventional wisdom today and we hear words like digital transfer retailers need to do a digital transformation or.
Yeah that the idea that there's this retail apocalypse going on right now.

Scot:
[9:47] Call Ed Mulligan.

Kasey:
[9:48] You have Molly getting nervous you know that somehow the industry is being young traumatically just dropped in and by the way that's usually put in the context of people shopping online and not shopping in stores anymore we also heard that is a narrative that,
so it's the millennial the Millennials ruining but he got to see the list of all the things the Millennials are ruining right.

Scot:
[10:07] If they're killing everything.

Kasey:
[10:08] Everything including retail.

Scot:
[10:10] Fabric softener.

Kasey:
[10:10] So we decided this or that start big and clearly what are those.

Scot:
[10:16] But not avocado toast their they're putting all their money and avocado toast.

Kasey:
[10:20] The new things that the tide.

Scot:
[10:22] Tide Pods yeah they're it while they're eating those.

Kasey:
[10:24] They're eating that's right.
So so we started to take on this conventional wisdom so we said so let's figure out is any of this true and which parts are true and which parts might not be true.
So that was that was really impetus this her to take on the research at the time we didn't know what we were looking for we just knew this was the conventional wisdom and we wanted to start tearing it apart.
So we started looking at by the way this this research has been going on for about 16 months now so we started looking at the economy first now.
At the time we were started as we started to dig into the economy we started the recognized actually strong,
now you know even if you clearly a lot of people to recognize today the strengthen the economy go back 16 months and all the signs were there that the economy was strong you know the unemployment rate is at near historic low,
you know already,
and that the home price indexes have Rick of the index has rebounded and it's actually now got your the highest home prices we've ever had so record-breaking home prices consumer sentiments gone through the rough we know that and the median income.
You know for the for the consumer has now exceeded where it was in 2007 so by all.
Citations you going to go wait a minute we have we have a strong economy so how can we be having the retail apocalypse if if the economy stats.

Scot:
[11:44] The good news is unlike the Great Recession of 08 it's not on the back of it so people actually saving during this kind of unit boom cycle so so it feels like it's Cena doesn't mean it won't go down but it's definitely better set up then we had kind of liking o 6:07.

Kasey:
[11:59] That's right I mean really if you think about that in the last year this idea about the retail apocalypse is really taking on a ton of momentum at the same time the economy and you know the consumer.
You know it's strong right now only that but then you look see.
Markets gone through the roof right so we've got more you know more value on the balance sheet of our consumer and then even when you go over and you look at.
Retail industry the retail industry is actually showing strength and it's been showing strength for some time.
You know one of the things we've looked at is the correlation between GDP and retail sales and there's always been a strong correlation and in fact if you look back over the last 18 months retail has been outperforming the GP,
it you know at a pretty significant clip right so in 2017 we saw three and a half percent retail sales growth.
And at the same time we saw GDP about 1.7%.
If you look at the projections for this year gtp's supposed to be strong last couple of quarters has been 3% or so and and of course the holiday we've seen good results there as well.
In our own survey we did a bit of a survey around the great retail bifurcation and ask people hey did you spend more in the last 12 months and what we found was 44% of people we surveyed said I spent more 41% said I spent about the same so,
is 80% spent the same or more okay that all lines up as well even when we look at.
Retail by categories we find strength now it may not be in all of the categories you know from time to time the categories are different but we saw that we've seen Home Improvement.

[13:37] 5.2% of beauty cosmetics and fragrance at 5% Home Furnishings 3.3 apparel seem softness,
about 1% by the way we've done a deep dive into apparel and one of the interesting thing was we found there is is a real deflationary pressure around prices that we've seen units of apparel growing faster,
but then with a deflationary pressure on prices and we'll get a little bit into.

Scot:
[14:03] You think that's private label cousin on her.

Kasey:
[14:04] It yeah so as we think about the great retail bifurcations you hear me as we tear this apart one of the things we see you know has to do with with the consumer and their.
Available dollars to spend so if you did a couple that idea with our previous your report the talked about fragmentation of Cher let's Bears entry we've seen.
Competitive forces really driving deflationary pressure so you're off price you know fast fashion and a lot of these pressures for the build-up and they're causing for deflationary pressure.

[14:39] So you know what's that paint I just painted the picture that says.
The economy's strong right relatively speaking and retails actually doing well write 3.5% who can complain about that so then that you know cause you to think further about okay.
Well then what's going on what what what are we missing especially if you look at the headlines and headlines across the board you know from.
From the Press repeat this really you know they have painted this really bad picture about retail that means to me that.
There's something missing so what we did is we said well let's let's keep digging deeper.
And there's a there's a quote I was love Sarah finding the right quotes to think about situations and Albert Einstein said you don't have to know everything you just have to know where to look.
Okay so we took that we thought about that and in retail what where do you look like you look at the consumer right but consumer tells us.
You know what's really going on so he said okay let's take all of that and let's dig deeper you know into the consumer so can we don't know what we're looking for.
So we looked at generational differences we looked at Regional differences with hypothesis hypotheses around Urban vs rural,
gender we really started trying to rip this apart and we did our own survey to support this we looked at publicly available data through all these dimensions and.
One of the things that started to reveal to us was when we looked at it through the consumers economic lens right.

[16:13] That's where we started to see differences I'm going to talk to a little bit later about the idea about millennials,
the reality is we did not see dramatic changes generationally right we didn't see dramatic difference is urban versus rural cuz I had some hypotheses around that it was really when we looked at it through this consumer economics lens.
That we you know we're able to start to see some things so what we did we took.
We took the consumer and sort of broke them out into three cohorts and we use.
That the government's classification around this around low-income middle-income in high-income starting to try and figure out how they behaving different how are they shopping different you know are they.
Your do they have the available money where they pressured right now those are the kinds of questions we looked at so the low income consumer you know has income below 50,000.
The middle-income 50 to a hundred thousand high-income is a hundred thousand or more and you know sweetheart to look at that interesting part it's like a 40 40.
20% split so 40% of population low 40% mental 20% high and of course if you look at something simple like home ownership clearly you see that's cute with 49% of low-income only homes + 83 + percent,
High income owning homes as we ever is reporting that we looked at income while how they performing from an income standpoint we looked at.
Non-discretionary expenses right cuz we no income minus non-discretionary leaves discretionary or disposable and really that's the amount that.

[17:46] Really drives retail so we thought let's rip that Apartments understand net worth difference is xcetera and here's where we saw.

[17:55] A profound.
Difference here's where this was the aha moment this is when we dug into this this is for us what what the find that the research report when we started to see how drastic the difference is worth and for me personally I would tell you you know Apollo retail.
I listen to that Jason Scott show I do everything I possibly can to understand what's going on and for me this would really wasn't haha MoMA.
So I know when we probably all know we've heard about the bifurcation of income between the income and low income we probably heard that for a long time but the degree to which it has happened you know in the last 10 years for me was shocking.
The degree to which event is happening last 10 years.
And so when we start to look at that the fascinating part about this like if you look from 2007 to 2015.
What we find is that over 100% of all income gains went to the top 20%.
Over 100% that means the other 80% of the population.
Didn't do so well you know -2 flat fast for 80% of the population right so think about that in some ways I called this the last decade.
And for meeting of our consumers by the way it was I talk to my own colleagues I talk to the executives across retail like to remind everybody where where we fit where you fit as an individual within that because you have to keep in mind.

[19:23] You know you know that that you're you're doing favorably in this income it are in this environment if you're an executive if you're you know technology vendors many of the listeners of your shows and unlikely the owner of a car wash.

[19:39] That's right the owner of a spiffy car wash.

Jason:
[19:42] Regular listeners that the show will know that Scott travels with his own gold Throne that he's actually sitting on right now is he's doing the.

Scot:
[19:49] Yes and I wear my unlike snoke I wear my gold robe.

Kasey:
[19:52] I'd say over over 20% of all income gains went the sky apparently right.

[19:57] Show me where this this was really profound I would say in 2016 continue to be in some income games and some of those games actually were spread out more than they've been in the past to where at least at this point.
In a SS 2007 low income has actually gone positive slightly but they're you know that you see some some gain here.
The problem is income isn't the only component here that matters right so I've heard this like why the stock market stock markets up right well the problem is is that.
The top 20% own 93% of the stocks so any depreciation in stock.
Is all almost flowing to the same top 20% who have gotten the income games,
and by the way I don't have the facts behind this but it was my own personal belief that when we talk about digital disruption we talk about technology technology is fueling.
This is bifurcation of the income where you know if you think about the available jobs today read some of the other day that said there are now more.
Open positions that are going unfilled than ever in the history of our economy.
And you think okay why is that will unemployment rate slow while there's a lot of people though that.
Positions that have gone off of the unemployment rosters there no longer speaking and it's I believe it's a mismatch between the available jobs which you know are more technology-oriented and available skill sets.

Scot:
[21:28] Olympics Girl Scout on the 80/20 so so that's a population so if there's 300 million people in the US 80% are in that haven't kept up in 20% or a head.
Does the wallet split preview it seems like the wallet because the 20% or so affluent it seems like they would almost be like.

[21:45] 90% the wallet 5% or 10 on the wallet sideways backflip.

Kasey:
[21:49] That you're absolutely right right right so there's a small percentage of population that's really can controlling it a big part of that that you cannot expend.
So the interesting part though is you dig deeper as I dig deeper this only gets more pronounced because all we've talked about so far as we talked a little bit about balance sheet,
stocks we talking about income when we then look at non-discretionary spending this gets more pronounced in that non-discretionary expenses of skyrocketing.
And as they've skyrocketed the effect of the lowest income has been the most traumatic I mean think about Healthcare is during that same time. 2007-2016 up 66%.
Education up 41% food housing Transportation 1810 + 3.
Do you put all that together and you put that against a flat to decreasing income and what that does is it puts pressure on to disposable income or discretionary spending.
In fact when we look at when we look at that proportional impact it really becomes pronounced it that the non-discretionary expenditures for the lowest income of a 22%.
So again zero to negative and an 22% increase in non-discretionary spending.

Scot:
[23:04] The only relief is gas prices are down from that time frame.

Kasey:
[23:08] That's right that's right so there's some there's some there's some.

Scot:
[23:09] It's not offsetting what the increases.

Jason:
[23:11] Hello it is funny I mean we're talking about how these macroeconomic things affect consumers gas prices to me is always one that I think of is a little bit of a red herring.

[23:24] Close attention to it and follow it super closely but it's it's not a big chunk of that.

[23:30] Non discretionary budget for for the average household so it's it almost seems like people sort of overweight at like we're at their Healthcare is taking 30% of your not discretionary money in gas is taking 2%.

[23:45] Doesn't matter the gas is cheaper.

Kasey:
[23:47] Right right you have to sort of look at it in aggregate that's what we tried to do is look at 9 discretionary and aggregate knowing that there's no shifts occurring and what was it was fascinating as I talk to her about deflationary prices.
And apparel and slice of a Factory CD player Sherry prices in certain areas we see inflationary prices,
I haven't been able to tear this apart to figure out know what tribes that deflationary pressures what drives inflationary pressures.
I have my own hypothesis again this is not a proven fact yet at least that I've been able to prove out but I believe that those areas where technology has been able to make more inroads and more impact,
drives the deflationary pressures those areas where it's slower to adopt.
Alesso so freezing by talks about Healthcare you know being an industry that I personally believe is still tons of opportunity and technology is not made as many in Road maybe it has an inner in other areas.

[24:48] So okay well let's dig deeper okay this gracious let's talk about the scratch the discretionary share of wallet then,
what's the consumer left with the fascinating part here is low income has had a negative 16%.
Change in discretionary wallet in fact they've gone negative.
I ain't 2015 their discretionary well it went went negative a dramatic change from 2007.
And if you go up the only the only cohort that had any increase in discretionary is the high income.
4% increase in a 4% may not seem like a dramatic increase but when you put it against the the amount of dollars that are you know coming in.

Scot:
[25:34] $100,000 plus you.

Kasey:
[25:35] It's a significant amount of additional money so when I start to think about that in fact you what we show is going to low-income.
Now has a net change in discretionary income of nearly $3,000 negative.
While the the highest income is up around $32,000 net change in their discretionary income so we got one consumer that has money.
Money to spend in one consumer who is more pressure than ever around.
Therefore you got to think about price sensitivity of the bottom 80% versus available dollars of the of the top 20%.

Scot:
[26:17] You talk about low medium high at the very beginning now your time got two buckets what happened to the medium guys.

Kasey:
[26:23] Why I start a group those together I'm sorry so I start a group together when I talk about the 80 right who are doing not as well.

Scot:
[26:31] Exact more like the low then.

Kasey:
[26:33] That's right so I started just divide it like the top 20% doing well the other 80% is pressure.

[26:41] Okay so then I started thinking further about this idea about what retailers are really competing for discretionary income there two competing for disposable but we also know over the last 10 years something else has changed and that's,
new categories of disposable and specifically we look just at 1 devices devices and data plans so if you went back to 2007 you know who was spending money on devices and data plans,
due 2016 of spinning at Force what we now know is all income.
Cohorts are spending on devices and data plans and if you looked at digital spin.
As a percentage of income digital meaning on the device for the low-income category except 3.6% just in the last year.
And high incomes only at .71% as a as a percentage of their dollars going towards this category okay so what was to say that.
For that low and middle-income categories that used to spend on certain retail you know items and spin.
There their discretionary disposable is squeezed and another portion of that is going to new categories or spend that maybe they weren't too in 2007 just shows more and more pressure building up and for us we sort of you that is,
increasing the price sensitivity that those categories have right so that for us was sort of really interesting about.
Tearing apart the consumer because at the macro level the economy is doing well let's not doing well for everybody okay at the at the macro-level you think retails doing well.

[28:20] Let's dig deeper and figure out what what's going on so what we started to do is to say okay well if that's occurring how might that be manifesting itself on the retail industry itself.
And you know there's another quote that I like to quote often is follow the customers they change.
We change and that was from the Tesco former CEO we talked about like evolving the value proposition of the retailer in accordance with what the customer actually wants crazy philosophy right.

Jason:
[28:48] That seems super and Kim.

Kasey:
[28:49] That's right it does so how can we look at retailers in the context of what I just discovered here.
And so we took retailers you guys know me I was like to think about Frameworks to measure performance of the industry in the aggregate we put together a framework to look at the value proposition.
Every Taylor's simple-framework on one end of the spectrum we looked at price.
On the other end of the spectrum let's think about it in terms of Premium premium products or services.
So if you're a top price retailer you're getting plotted in a to the left if you're a Premier Service or product exclusive product your plotted farther to the right now.
How about called is a subjective plotting right because we're just sort of making an assessment of where.
Retailers are relative to each other but we thought it was a helpful and by the way there's a ton of debate.
Kind of debate myself my colleagues working through fighting and there was a lot of really in arguments about these relative placement.
A single dimension on a value proposition probably isn't fair it's more complex than that.
We use the framework to look at the foreman so as we planted everybody out we came up with three categories right if you're on the far left let's call that price based retailers if you're on the far right.
Lascala's Premier retailers and in the middle that's calling balanced right so if there's a retailer that doesn't necessarily offer exclusive.
Really exclusive products or extremely exclusive experiences but they're not cheapest either they a nice mix of Prada.

[30:24] And promotion in a Serta falls in the middle so those are sort of the three categories so we said okay we got three categories now let's look at the performance of those categories.
And this again was another huge aha moment for us is when you look at the five-year Revenue growth of of those retailers for a price-based you actually find they've been incredibly well.
Insight over a five-year. The growth is north of 30%.
If you're up earlier base retailer we also find their growth has been incredibly good in fact we find that north of 60% that we see.
His last drink there now the problem is and I gave you you may have noticed that I overlooked in that it is those Balance retailers over the same five-year. We're seeing about 2%.
Growth of those okay so it's really,
bifurcation of where the strength is in the industry and again if you were late that back to a consumer one consumer who is incredibly price-sensitive because of a constrained discretionary spending and another consumer actually has.
More money to make more decisions the questions are they buying more stuff.
Where they buy more premier stuff are they buying more Premiere plus Services you know oriented by the way you'll hear a lot you know in the industry by all people want experiences not stuffing,
yeah I challenge you to look through the same lens is that all consumers want experiences not stuff,
I think there's a lot of consumers who are just trying to get by you know with with squeeze dollars.
To figure out how to buy the stuff I need just to get by there is a consumer though who has more than enough money to spend on more experiential things than maybe they think they might.

Scot:
[32:01] An inconvenience is a huge factor form to that's what the whole car wash things about like yeah they're they're so busy because to make over that under K you can't just you know you're working 60 80 hour weeks the convenience factor for those premium retailers is a big.
Big part of it as well white why they're choosing that retailer.

Kasey:
[32:19] I think that absolutely makes sense is that there's an element here that says at some point you're willing to change it trade dollars for time.
Hey has to do it while I have extra dollars I don't have extra time right I'm willing to do that so anyway as you dig deeper by the way if you look just in the last year that same exact framework what we find is in last year except if your price based your up north of 6%.
If your Premier based your up 8% or so and if your balanced if you're the balance retail your negative so weak that that cohort for us is negative 2% or so.
So by the way I would call out that not everybody in the cohort.

[32:58] Forms like the cohort rights and every cohort there's an Amelie's where there's a price-based that's negative and there's a premier that's negative in there someone balance is doing a little bit better than others so that that's absolutely there.
In aggregate but we find a strength and weakness and that's really what we were trying to identify.

Scot:
[33:14] Yeah I need this is what hurts the mall base retailer because I'm all is neither you don't go to the mall saying.
Oh my God I'm going to save so much money right you go to the dollar store the club and does usually Arnot Mall.
Y'all so don't go to the mall saying oh my gosh this can be so convenient because you know if the park over here it's busy hike over here and so some malls I think kind of end up being in that Wasteland in the middle right now.

Kasey:
[33:36] Yeah I met many of the companies that are warm all based absolutely fall they're not although but many of them apps.

Scot:
[33:42] But the Apple Stores obviously bucking that Trend but.

Kasey:
[33:44] By the way one of the things I did point out his this is a lens to look at the industry there are other lenses that also have a credibility you know the idea about are you off mall are you off you know re Mall based might be another lens to look at this.

Jason:
[33:58] I would also just point out.

[33:59] All of these definitions shift overtime which is funny because there was a gyro in which you would have Define the mall as convenient.

[34:08] Like we put all the stores together in one place and surrounding them with a bunch of parking that was much more convenient than having to drive 15 miles to the store and today that same structure feels like.

[34:20] The inconvenient shopping experience because what are our expectations have just.

Kasey:
[34:26] That's right that's right.
I'm right by the way we looked at this then performance along a lot of Dimensions we looked at return on assets return on Equity we looked at PE ratio we're looking at everything we can look at that they would help us understand,
performance of these cohorts in an across-the-board on every one of those Dimensions you'll see the exact same.
You know if you looked at yet when you look at the graph in the report visually looks the same with strength on in the off price strength in the Premier and weakness you know in those that are in the middle.

[34:59] Even if you looked at here's there there's my other favorite conventional wisdom store closings.
This is closing stores the whole industry were closing stores closing brick and mortar stores that are being closed there's actually if you if you need it out there's more stores opening than there are closing.
Further if you then look at it via the same categories that I put forth you see the exact same thing occur you know price face retailers they're opening up stores in fact they're opening up stores like crazy.
Premier bass retailers also opening up stores and it's that the balance retailers were the vast majority of the store closing you know is occurring.

Scot:
[35:35] So there's like 7000 closures last year I think is like the number that a lot of people put out there so you're you're saying that there was more than enough more than 7,000 openings around the the value side and the other side took character.

Kasey:
[35:50] What we did we went out and we studied at 10 Case press releases we tried to collect the everywhere we could and we use theirs there's varying reports that include and don't include some.
Certain companies but we were able to get everything we could see and what are what what are study found is that there were more opening in the work clothes.

[36:09] We also looked at net promoter scores,
long the same three dimensions and we find the exact same thing where you know consumers are 22% more likely to recommend price-based retailers than they are these balance based retailers their hundred 10% more likely to recommend Premier retailers than their balance.
Retail so we find the exact same thing that really has to do with what's the consumer want.
This is the simple idea about how is the consumer changing how are the pressures on the consumer changing and then how are you as a retailer you know evolving and meeting those those changing to man.
By the way the interesting part here is if you look at digital through this lens right what we find is the vast majority of price-based retailers are physical with very little,
digital presence very little digital offering of course it once you get to the premier side you find digital matters a lot more as it pertains to Premiere but I was like to look at this through that lens of life.
Yahweh.
If you looked at ticket take a price-based retailer who's had signs of success over last 10 years and you look at them in and tell them they need to do a digital transformation or,
or go back 10 years time and tell them the way of the world is e-commerce,
they would have missed if they done either one of those things that she was opportunity they've had in the last 10 years the amount of value that they've generated,
you know my entire career has been about digital in retail and I certainly believe that the future of retail is predicated on digit.

[37:40] However I don't think being digital is the only strategy I don't think being digital is a sufficient strategy right.

Jason:
[37:49] It's not much of a differentiated.

Kasey:
[37:50] How much are the temperature like retailers need to have digital and Technology fundamentally sort of ingrained in what they do but how that manifests itself and how they create value propositions around that needs to be that's the Strategic question.
So anyway that that's sort of the Highlight you know you think about this great retail bifurcation says look on one side we've got income that's really changing their for the consumers changing and therefore,
if we look at retailers in success or weakness it actually corresponds and I'm fairly well with what's happening at the consumer at the wallet love.

Scot:
[38:24] So if I made from value and Premier I kind of know what I need to do I'm in good shape but I'm balanced what do I do.

Kasey:
[38:32] Actually.
I'm not sure that anybody knows what they need to do I think that's the that's the hardest question because the world is evolving and Retail environment consumers evolving so quickly.
That how you think about that consumer and how you think about creating value propositions one of the things we believe is it is increasingly granular.
You know Aunt in the value proposition actually is also increasingly modular so instead of having the big you know.
Monolithic value proposition that you're going to offer up to the consumer what we see is.
Fragmentation fragmentation not only of the market but fragmentation about how I approach the market if somebody call this personalization.
Right beside you that I talk to you different than I talk to you the next Consumer what we actually take that idea further.
And this idea that says no not just how I talk to you that's a marketing thing but how I approach you how I serve you my value proposition 1 assortment I bring to you we got to take all those things and safe.
That has to come become increasingly granular granular and modular how I take that out the market that's what's happening to the competitive base and frankly that's happened that's what's happening to the consumer as well.

Scot:
[39:44] So so some of the.
So like Nordstrom and tax and I don't talk about the Retailer's but when I look at Nordstrom's and Saks the kind of have two phases of the consumers they have the the luxury side and then.
You know then they also have the price side so that you know that Nordstrom Rack and Off Saks so that's it seems to be an example, like what you're talking about.

Kasey:
[40:03] Yeah what was that without a doubt that's an example and in fact if you if you if You Pull A Part the vast majority of big strategic moves that any retailers have made recently they really do line up with this idea about some cases there.
They're different brands some cases their Acquisitions of brands that you'd go while that doesn't make sense with.
You with your customer base and if you looked at it through the Senate lens you got all that makes absolute sense less that's a choir a brand that actually lets me approach you know and and capitalize on a different customer in my customer base.

Scot:
[40:37] Well there's tons of talk about Millennials word where do they fall into this mix.

Kasey:
[40:41] Yeah you know that's that's a great question cuz I was another thing we took head on this conventional wisdom that says this is all the money all the Millennials destroying all of this.
And what we found was.
Well I'm some ways that's true but the reality is it's more intricate than that so at the highest level when you average all Millennials together we actually find in our study we find.
They behave differently they behave in many ways that you might expect a shop online more often they go to the store last off,
you know those things but here's what really is fastening when we when we separated the Millennials by the same income cohorts here's where the big aha was as it pertains to millennials.
It's only the high in Cumberland you that actually really skews the entire collection towards the behaviors that you would expect.
The low-income Millennial actually behaves very much in line with the low-income consumer so we looked at propensity the shop online and what we found is a low-income Millennial shops online roughly the same way a low-income person does.
Meeting Tom middle-income Millennial does the same way also looked at whether or not they shop at discount stores and we found the same thing very much in line with the high in Cumberland Hill though.
Is is skewed dramatically towards behaviors and therefore they as a subset,
of the Millennials actually skew the entire collection of Millennials that way so when you pull it apart and then it becomes really obvious now the issue that you have is when you look at the high income Millennial you find out that's about 6%.

[42:13] The population or so it's a small portion of the population that really behaves differently one of the things we counseling and caution is to sort of think that the millennial is a group.
Now is that consumer we actually have to play the part we also looked at an interesting question is fragmentation of spin when you do shopping stores how many Shores at stores do you shop at when you do stop and shop online how many.
How many different places to shop online and what we found was high-income across-the-board skews hired a fragment or spend across more retailers.
The millennial online shopper skews.
Almost off the charts in terms of the number of different retailers that they're willing to shop shop with online that's very interesting insight.

Scot:
[42:58] The shop at a lot of very few.

Jason:
[43:01] The highway promiscuous in the.

Kasey:
[43:03] That's right that's right that's right.

Jason:
[43:04] Does a user than play this but just to save it stated explicitly like so all Court cohorts.

[43:10] Gain wealth as they get older right so the older the color is the more wealthy 10 aggregate but one of the things that's been unique about Millennials is they've gained wealth much more slowly.

[43:22] Then previous cohort So when you say hey there's a a high-income group in a low-income group.

[43:28] That hiding from group is actually much smaller as a percentage of their total population then was true for Gen xers.

Kasey:
[43:36] Yeah that that's a great point cuz we all like to imagine when we said around as retail experts that we are and we imagine you know a millennial and how they shot,
you know what there their they're probably wearing yoga pants they've got 3 smartphones they probably avocado toast I think you mentioned that,
you know we got the idea of a millennial that the problem is that idea is a very small portion of the millennial one in five Millennials live in poverty.
2/3 of Millennials didn't go to college don't have a degree and the older Millennials 26 and 34 are the cohort with the highest rate.
Of uninsured medical incidents are the incidents that most frequent lead people into poverty so there's many people who are millennials today who are not doing so well they really fall into categories that we don't often think about when we talk about money.

Jason:
[44:25] Yeah it's fascinating and I run into some retail all the time is just.

[44:29] Our industry was born based on these kind of urban legends in the you know this kind of word of mouth like oh this is who our customer is this is what their economic situation is in in you know you're you're bringing us another example of.
When you really look at the data the urban legend off and doesn't hold up but I used always chuckle.

[44:50] Personas are big thing for retailers he's going to need to return to have this Persona who their customer is and I have this premise that on average every retailers Persona is 10 years younger than their average.

[45:03] Because I want imagine that they have this like young hip Shopper and yet that that usually isn't who shopping in their stores.

Kasey:
[45:10] Something about this cuz I just I just shared data that most of it is you're looking in the rear right we're looking for looking back think about you know here we are interesting about the,
the buzzwords I'm in route back to this idea of the buzz words that were the big buzz words here at dinner after last 10 years.
In what I just showed was that there was something going on in the marketplace that none of the buzz words were.
Where anywhere clear to close to write were talking omni-channel retails the future in Mobile link.
Important in that they weren't good and that if you did them right they wouldn't be productive but there's a whole collection of retailers that that went a Direction.
Around the cut off price you know that was incredibly lucrative over the last 10 years that none of the buzz words.

[46:00] That opportunity and when was thinking about business with him. RetailMeNot retail strategy we got to keep in mind that this is about finding opportunity.
Finding where those pockets are of of demand or pressure or needs that we we can figure out how to capitalize on those in and serve those and provide to those right,
and if we look into the future we have to figure out,
where are those evolving opportunities where they coming from next and how do we think about those too often and Retail we think about capability we think of mobile.
The capability when we don't think about is is this idea of need right and the changing competitive environment and how our competitors are thinking about unlocking those opportunities so you know I got passion about this idea about.
You know Zig when everybody else zags write the passion about this idea about thinking in more granular ways about where there's opportunity and being skeptical.
I'm a bender let me be clear I'm a vendor but be skeptical of us off of us vendors who who you know show up with the buzz words and show up with these simple ideas that are conventional wisdom about what success looks like.

Jason:
[47:12] With the very rare exception of Jason and Casey be very skeptical of the vendors.

Kasey:
[47:16] That's right you want to be skeptical of Scott.

Jason:
[47:20] Scot used to be a vendor now he just helps make our life better by having our.

Scot:
[47:25] Agnostic vendor so what channel does being somewhere so choose your own strategy.

Kasey:
[47:30] You guys now that that's those are the highlights of the great retail bifurcation in the report you will be launching in.
The March will be sharing with few of our clients between now and then but in March we're going to be in a launching it and you will see it will make sure we push it out to the market.

Scot:
[47:46] Did you guys projected Ford like as it's only going to get worse or so like some of the tax cuts and we're seeing some people raise minimum wages for retail employees was trying to see some movement at that lower level I don't know if it's me and you don't fit.
WD projector for door.

Kasey:
[48:01] There's no projection on it but we certainly have had,
plenty of conversations of course this is it gets wrapped up it gets wrapped up very quickly and threw a political positions and thinking and and how you believe these things that are happening now policy changes made manifest themselves.
You know I would share my own personal view point would be that.
In a meeting of the changes that have occurred recently including the continued growth in the stock market skews towards one end of the Continuum you look at the tax cuts and you have to decide whether or not you believe.
The trick is trickle-down effect will.
You know ultimately find its way to the lower lower ends of the income Spectrum I'll refrain from providing will have to have more conversations over a beer about whether or not we believe one way or another.

Scot:
[48:51] We don't get into Kenzie in economics here at the end of the show.

Kasey:
[48:53] That's right it is it's a great question about whether or not you know the things that are occurring from a policy standpoint or only going to accelerate this or whether or not they're going to solve this.

Scot:
[49:02] Cool Whip between now and when the reports out what should should listeners they're interested in this topic where would you point them like maybe your Twitter feed or.

Kasey:
[49:11] Yeah so it will certainly in the Twitter feed will continue to offer more things out but I thought I would share this look we're sharing with our clients you know that the initial findings I'd be happy to share you knowing conversation with anybody in a prior to our official,
no more States and reach out to me via email or Twitter LinkedIn any of those ways I'll be happy to know begin sharing some of this there's nothing super secret here,
let me thrilled to share this with anybody that thinks this would be helpful.

Scot:
[49:40] Awesome and then what's your Twitter handle.

Kasey:
[49:42] Caleb.

Scot:
[49:43] Caliber.

Jason:
[49:44] And we'll put that in the show notes so you just have to click the link.

Scot:
[49:47] Go to last topic so you spend a lot of time thinking about the future you you're heavily involved The Singularity University and and you know we always have this fun topics around Ray Kurzweil and stuff what anything would we think about the next 10 years what does it hold for.

Kasey:
[50:01] And I always like to say you know if you think that you've seen disruption you know you ain't seen nothing yet.
Cuz the reality is if you don't we study this in the retail volatility index when you when you really think about okay is the industry being disrupted today I think pretty much people would say yes being disrupted but if you say.
Artificial intelligence isn't disrupting and I can't come up with an example this is all this is Ben and blockchain isn't disrupting and driverless cars aren't disrupting and you know advances and in human health.
So the vast majority of the the Technologies even that will see over it at interrupt.
Disrupting today the destruction that were talking about today is really after 20 years of first and maybe second year second generation internet Technologies.
Web IP protocol mobile devices you know so and we start celebrating him.
Of those and you know I look at it and go boy this next Generation that are just now coming online,
are going to make that pale in comparison but I finally I comes back to the exponential curve of advancing Technologies in the impact of those Technologies where we're now starting to feel the acceleration of that.
And I think things like I think things like blockchain and its ability to.
Open up the marketplace are really going to have a profound effect once once we figure out what and how do you use blockchain to open up Trading.

[51:34] Inventory providers and customers and you know there are retailers today that play The Ledger.
In between suppliers and customers today what happens when you don't need a company.
The place at Rolex that do I think I'm pretty bullish on that it'll take awhile for that to you know evolve and unlock the advances in artificial intelligence there's a great presentation of singularity,
on the advancements in what what like why now why are we talking about it now when you see that presentation about well here's how far it's coming The Last 5 Years it's mind-blowing,
about how far it's gotten so I'm confident that in the next five to seven years that will have a profound effect though you know I guess I tell people you ain't seen nothing yet that's my view.

Jason:
[52:21] It's funny one of the things I've learned from from Singularity is the human brain just isn't wired to sort of.

[52:29] Project these exponential changes and so we have this tendency to think linearly and you go home and there's been a bunch of change we're probably.

[52:36] Most of the way through that change when in reality I wholeheartedly agree that like the overwhelming majority of disruption were likely to see his still.

[52:45] Still in front of us which is great news for the three of us at this table because there's going to be a great role for our businesses and more importantly the Jason and Scott Show podcast.

Kasey:
[52:54] The interesting part I'll add one more common is that it's not usually the technology itself the technology gets all the attention it's the changing.
Competitive Dynamics it's the changing barriers-to-entry it's the changing idea about what it means to compete.
That we lose sight upright weight we want to think about our competitive model as it stands and will attack on whatever technology is and in largely will be the same but the disruption comes from the changing.
Competitive environment that's what changes not just that a you know my competitor now has a mobile app I need a mobile app to know.
That's not it it's like I talked to her earlier about deflationary pressures on prices and apparel it's those sort of changes that come from the technology that we miss when we don't double click and triple click into what are the implications.

Scot:
[53:43] And the consumer changing more rapidly than we can react to him to your point about the the quote they have.

Kasey:
[53:48] One of the things we're saying this is back to buzzword right this are buzzword we're saying this isn't the retail apocalypse it's more like the retail Renaissance,
brightest idea that there's a spirit of change that's occurring we sort of put it into the to the Renaissance. Where technology became important in science became important and the question is whether or not you can evolve.
You know during the Renaissance.
And that's really what we're at because the industry isn't week the industry has strength there are winners and losers it's happening at a faster Pace than ever but it's not the apocalypse.
You know and it in its demise it's actually in its you know when someone gets in at a day here as we as we figure out how do we compete in a new environment.

Jason:
[54:34] Well that is great news and that is a great place to leave it today because it is happen again,
we've used up all our a lot of time so we certainly appreciate your time Casey is a reminder if you enjoyed the Today Show we certainly appreciate a 5-star review on iTunes if you like to continue the conversation you're welcome to.

[54:52] Click on over to our Facebook page and leave us a comma.

Scot:
[54:56] Yep and a kind of a fun thing is you get to play you are in a rock band so you have in your your your night gig are night gig is podcasting in yours is playing a bass guitar so there's a big a jam session at the Retailer's get together at the soap look forward to seeing you rock out tonight.

Kasey:
[55:12] And I look forward to it.

Jason:
[55:13] Until next time happy commercing.

Jan 15, 2018

EP113 - NRF Preview http://jasonandscot.com

Episode 113 is preview of the NRF Big Show 2018.

  • Recap of CES 2018
  • Preview of NRF Big Show 2018
  • Retail News

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Episode 113 of the Jason & Scot show was recorded on Sunday, January 15th, 2018.

New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 113 being recorded on Sunday January 14th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your host Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners Jason this is one of those are very rare times over the course of the Year where we are actually not only in the same town but in the same room at the same time.

Jason:
[0:53] I know it's awesome we make eye contact while we're talking this is very weird for me.

Scot:
[0:58] Yeah it's very weird I'm usually just staring deeply into the the computer.

Jason:
[1:02] I'm staring deeply into a photo of you I have over my computer.

Scot:
[1:05] Are there candles.

Jason:
[1:07] We don't need to get in any more specific.

Scot:
[1:08] Call Sue.

Jason:
[1:12] Why are we here Together Scott.

Scot:
[1:13] We are here at Big Beautiful New York City for NRS Big Show.
It's that time of year again where were you here making the Trek down to the Javits Center no snow on the ground this year I think that's the thing the last three in RFC I've been trudging through snow but this one's pretty dry.

Jason:
[1:30] There's no snow yet but the mean in RF weather tradition is the blizzard that comes in during the show and makes it impossible to go home after the show and if I'm if I'm remembering correctly there is it forecast for snow during the show so we'll have to see.

Scot:
[1:45] We may be doing a lot of podcast from the the podcast you here in New York.

Jason:
[1:49] Exactly are our misery could be our listeners benefit.

Scot:
[1:53] And what's up we definitely want to do a little preview of some of the things that were already hearing about it in RF but you are fresh out of Vegas where you were at CES I want to hear all about your CS6 transfer.
Exciting things I saw the Tweet about but I'm sure there's more color you can share.

Jason:
[2:10] Yeah so there's an annual tradition for me is you know you celebrate New Years and then you'll get on a plane and fly to Las Vegas with,
180000 of your closest friends to see the latest,
new Innovations in electronics and then you go straight from there to New York for the blizzard and the big interrupt retail shop and I go to CES,
almost every year I think this is my 32nd 2-year CES largely to see,
new trends that might affect our our clients on our Industries.

Scot:
[2:48] Now that he's become Dex and CS remember and you probably go if we're talking 32 years they used to be separate shows then it kind of merged and now you can hardly see a computer anywhere at at CVS.

Jason:
[3:01] Yeah so they were competing shows context was in November CES is in January they both briefly also tried to have second shows in Chicago at another time of year was that that wasn't very successful,
condex went out of business some of those exhibitors then moved over to CES and over history at various times they've been industries that.
UCS is an important part of their business and then moved on so I can the video games used to all exhibit at CES they outgrew it and launch their own show which is he three computers are not a,
super robust part of the Consumer Electronics ecosystem at the moment they're pretty flat.
Although there is a big push people are feeling like the Esports and the high-end gaming is.
Starting to drive a meaningful niche of these high-performance laptop sales.

Scot:
[3:53] One category that is CS now is Auto City Autos used to be kind of at their show which is called a Syma and then another part of SEMA Ace.

Jason:
[4:03] Cosima is the auto parts show that's in Las Vegas there there's a course of the Detroit Auto Show is going on right now in Detroit which is where all the.
Karma you typically see car manufacturers in Detroit launching their new Mustangs and those are two things and you'd get the like.
Tire guys in the the oil filter guys and all that at SEMA and for many years one of the big pieces of the consumer electronic show was the aftermarket.
Car audio industry which is of course almost completely dead.

Scot:
[4:34] Yeah and then we had GPS is for a while they were big now actually Autumn acres are there in a pretty big way right.

Jason:
[4:40] Exactly so they have taken over the hall that used to have the car stereo equipment in it and they're largely showing car tech in so you know they're they're typically not launching their new vehicles.
It in Las Vegas they're typically showing the new in-dash platform their new automation things the new wireless Services they're offering and what's what's a little funny is you you go to all the car boots and you.
You might say you'll see some cars but you see a lot more like.
Check components from the cars and then you go to all the other Halls where you see the the major ingredient tech companies like Bosch and Intel and Qualcomm that make alot of the parts in the car.
And they are of course have fancy complete cars and they're both so you go to the tech show to see the cars in the car show to see the tech.

Scot:
[5:31] So what's new in cars is it is there still a big battle for the Smart Car platform already moved on to self driving cuz I know Intel's bigger than that what were some of the big things and Auto.

Jason:
[5:41] Dazzled by far the big Trend in the the car boots this year is Automation and particular the self-driving Vehicles they have this system.
This ranking system from.
Animated level 1 through 5 so I go level 1 car has tools that help you drive better like a flashing light that tells you that the car in front of you stops and two can kind of assist you and certain things.
Like like a break for you when there's a car in front of you three can let you have your hands off the wheel for tonight you have your eyes off the wheel in five doesn't have a wheel,
inside there a lot of now level 3 cars being shown at the at the show and a lot of the,
the tech Innovation was around like these these autonomous vehicles and then to a lesser extent.
Electric vehicles in new charging Technologies and things like that Qualcomm has a thing called Halo which is wireless charging for your car so you have a plate in your garage and you.
You just parked the car over the plate and it charges it overnight free.

Scot:
[6:51] This may seem Irrelevant for retail but I saw on CNBC Ford,
you announced they're very excited about driverless cars but they really kind of they don't believe that they'll be kind of a fleet kind of a thing like an Uber there really more into package delivery so I think that it's going to last mile.
Absolution. That was kind of interesting that the others there's a major auto manufacturer that really thinks it's going to be really more for delivery and he specifically talked about new from stores to do consumers.
Actually competing with FedEx Amazon ups and all those kind of folks.

Jason:
[7:26] Yeah yeah I mean there's another time we can talk about from that the show is Robotics and so it's kind of a combination of Robotics and automation there's a lot of interesting potential,
new helping that last mile but the Ford booth at CES is kind of interesting they really focused on.
Their vision for what a city looks like in a world in which most of the vehicles are autonomous and so one of the big questions that they they were trying to answer in their Booth is.
How do pedestrians interact with autonomous vehicles right like to,
often when you're crossing a busy street and there's a crosswalk you may go out of your way to make eye contact with a driver before you just make a leap of faith in Jump front of the vehicle so what do passengers expect to do.
When an autonomous car is coming up to a crosswalk or those kinds of things,
in one of the things that they did to study this is they really did this big research study on future cities but they actually invented a costume that looks like a car seat.
And so they say they dress the guy up to make him look like the empty seat of the car and sat him down in the car so it was a fake autonomous vehicle.
I'm just thinking that that's a funny job to go home and tell your parents you just got is your portraying a car seat.

Scot:
[8:41] Or when you have time to go to Starbucks I must look really weird it's like here comes a Walkin car seat.

Jason:
[8:45] Exactly so they videotaped all these consumer reactions and they have this notion around like we'll probably have to have some Universal standards for like a lighting system in the car that you know as pedestrians know that they're being seen or those kinds of things.

Scot:
[8:59] When ironic when is the new there's a Netflix series that started in the BBC and then got picked up but it's called Black Mirror and in this they just released season 4 I don't know if you watch it or not I think you're behind on everything.

Jason:
[9:12] I am kind of on most of the stuff you give me Groupon so that's that's next on my list.

Scot:
[9:17] No spoilers but one of the episodes it has this kind of plot device where there is a driverless vehicle that delivers pizzas and it kind of.
Knock some of this guy and it's not really part of the whole thing but the looking shape of it was really interesting like you just wanted to know a lot of time thinking about how this look and then I saw that CS.
Pizza Hut or.

Jason:
[9:37] Toyota and Pizza Hut add a had a partnership for an autonomous pizza deliver.

Scot:
[9:40] And it was just like it was exactly like the thing on dark mirror so I was really really very strange and then I saw an article about it and there was no coordination or anything it was just.

Jason:
[9:51] I wonder who inspired who think they're cleaning independent invention and then.

Scot:
[9:57] It's kind of has to be because well if the show had known about pizza thing it could have been but the shows literally been out for like that came out December.
Like 30th or something so there's no way they could have designed a prototype that fast but it's kind of really Tales from the future kind of a thing to happen there.
Okay so that's Autos then as I was sitting watching remotely and not fighting for calves with a hundred and eighty thousand other people I saw,
a lot of Twitter traffic in stories were around the the home automation and then also kind of the battle of the smart speakers and intelligent thing so so last year report from cs1,
this year it looks like Google is really stepping it up don't give us an update on what you saw there.

Jason:
[10:41] Jump to that last year we didn't necessarily expect partsmart,
speakers to be a big part of CES but you went to the show and Amazon with embedded in like over 400 devices at the show and you know I seem to be ubiquitous in Amazon didn't have a,
their own presents at the show yet they were getting on the bus,
a big part of why I say yes existed to generate PR to drive future sales and so most people declare the Amazon the winter that show they didn't take a booth and yet they had this great,
present so this year we are all curious to see if they would.
Double down on that or if any of their competitors would make up any ground and it really clearly has emerged a two-horse race with Amazon and Google so this was probably the death knell for Cortana Cortana was the first born,
on the PC is part of the Windows operating system and even all the Windows laptop manufacturers are now shipping laptops that are Alexa enabled,
not Cortana enabled.

Scot:
[11:40] No it's a Samsung when I can't remember its name.

Jason:
[11:42] Bixby in Samsung is definitely has an interesting strategy overall theme of the show is.
The traditional product you expect to see the show we're not very improved from last year it was a very irritable year and what the exhibitors were more focused on was.
The platform of how all these products work together rather than their individual features so.
LG and Samsung and I'll have Smart refrigerator smart washer smart kitchen is all these different tools and instead of showing you how much better the refrigerator is this year than last year there were more focused on how much better to the house works when all these,
devices talk together so that.

Scot:
[12:21] That's a lot of mocked-up houses in this kind of thing.

Jason:
[12:24] Yeah I like vignettes and in these use cases like a you just bake lasagna in your Smart Oven your dishwasher knows you just.
Bake the pan and so it's setting the dishwasher to the the pan scrubbing mode rather than the echo mode because it's got to get the the big done she's off the pan.

Scot:
[12:43] Does anyone have a nest camera for looking in my refrigerator so when I'm at work and I can't remember if I have milk or not.

Jason:
[12:48] Yeah it that's one of the most popular features in a smart refrigerators are these these webcam.

Scot:
[12:53] The ones on the outside where I can see inside isn't it I need like seeing.

Jason:
[12:56] Inside so that when you're at work you can at the store you can see if you need eggs or milk or those kinds of things.

Scot:
[13:02] The fair when I saw her was at sokoler came out with a pretty much any any kind of Plumbing fixture in your house can now be Alexa enabled so.
They had the suitcase for the guys holding a baby with both hands.
And he says Alexa turn on the sink and then he like takes a hand and he liked holds bottle and put it under and it's kind of like why can't you just take his hand in like turn on the sink and then they have a toilet did you did you get to check out the toy.

Jason:
[13:27] I did I did not actually test the toilet but I did observe the the Alexa enabled toilet and yeah that was in bed and everything it's not clear.
That you want or would benefit from voice embedded in all these products and the what was interesting about the whole voice battle.
This year was you know the Google had a much bigger presence than last year they both took a very big boost themselves which will come back to you in a second Amazon actually stepped out the size of their boots so they actually had.
Immodest Alexa Echo System booth.
Last year they had the treasure truck so they should have had the treasure truck and these examples of all the third-party products that work on the Alexa Echo System Google built this big Booth with they want some new hardware at the show so they have.
Through Partners they're making what I would call Echo work type product to a Google home product with the screen.
In a very familiar form factor that people that.
I have that the echo look and today he wants to Booth to demonstrate all those things unfortunately that the booth is super extravagant and was designed for big parts of it to be outdoors.
And for the first time in a hundred 15 days it rained in Las Vegas and so literally the the Google Booth was rained out on the first day which I imagine is a multimillion-dollar mistake.

Scot:
[14:48] I saw I had a slide did you get a chance to sit down the side.

Jason:
[14:51] It it did I did not get a chance to sit down inside their Booth was so crowded that they literally had like wait time management for all the various things so you are.
It's 15 minutes to go to the roof and go down the slide and I just didn't have the time.

Scot:
[15:08] Yeah I did back on the color thing I heard that the deluxe integration with the toilet was kind of crappy.

Jason:
[15:15] I'll add the drum roll and post no no I won't listen.
It's ok Google like did everything presents they were embedded in in more products but what they really did as they spent a fortune on Advertising so,
so Google bought all the outdoor ads they had as on a ton of the taxis they wrap the Las Vegas Metro in in Google sign in.

Scot:
[15:38] Stairs I was under the stairs.

Jason:
[15:40] Yeah they I don't specifically remember some.

Scot:
[15:42] Escalators are like an escalator.

Jason:
[15:43] Yeah so they they spent a lot of money on outdoor advertising which is ironic I guess given that they're primarily an advertising platform.

Scot:
[15:50] Should ask him how they measured the ethics.

Jason:
[15:52] Yeah I don't think there is one.
They definitely got more mindshare as a result of spending all that money and it certainly shows that there Devin Ernest interest in winning the space it feels like.
They're still pretty far behind from an integration standpoint there certainly far behind from a skills perspective as well as we've talked about.
But it's really emerging as a two-horse race and lots of retailers have a vested interest in Amazon not owning.
The the home automation voice space and so you know there's a lot of people that that you know I'm rooting for Google because they're the.
Potential foil to Amazon.

Scot:
[16:34] The Google Talk anything about the business model and how ads are in a work and they're just kind of like charging in and we'll figure it out later.

Jason:
[16:42] Yeah they really didn't like obviously wasn't they didn't talk a lot about it but there was a big announcement to me last quarter when both Target and Walmart and some other retailers started sharing first-party data with Google so that.
If you if you're in the Google echo system in your shop at Walmart and you say order more peanut butter Google has access to your peanut butter purchase history from Walmart's to fulfill their.
The the most likely peanut butter better you'd want right in that was historically abused competitive Advantage for Amazon is there artificial intelligence system had all this historical data on consumer purchases and since Google doesn't sell anything.
They're pretty disadvantaged in.

Scot:
[17:21] Just Walmart and Target both share their data with Google and you say or did you just say order more peanut butter will Google know a Jason buys the most.
Jeff from Walmart and allergic from Walmart like what use that to discern between retailers.

Jason:
[17:37] Yeah although it's it's the last that it's deciding like you opt-in so in the Google home Echo System you say I want my fulfillment partner to be Walmart and then that.
That Ops you into Walmart sharing your data with Google.
And then you're likely to get Jeff if you primarily order Jeff there that is an advertising opportunity so when you're a freaking purchaser of Jeff.
They're likely going to sell you the Jeff you frequently purchased but if you say order peanut butter and your not a frequent purchaser of Jeff they need to.
Suggest something to you and they typically pick one brand historically that's been this Amazon Choice program on the Amazon platform so they Amazon Choice products,
usually ends up being the recommended product in in the Alexa Echo System but we're seeing some strong indications that Amazon is actually selling.
The that.
First recommended spot for new purchasers to a lot of Brands and so that it's sort of ironic like we've always talked about Google is primarily in a driven business,
doesn't have a way to monetize voice Amazon obviously makes money selling stuff and so if voice makes you buy more stuff Amazon food,
monetize much better than Google and then irony of ironies it appears that.
Amazon is ahead of Google in terms of figuring out good advertising models for voice or at least acceptable ones.

Scot:
[19:03] Yeah okay a couple more serious than what was the worst or the wackiest thing you saw.

Jason:
[19:09] Yeah every year there's some goofy products there's that you know the.
Bluetooth for car something like that something that jumped out of me is completely wacky there's a ton of new smart Health Tech and particularly a ton of sleep Tech in some of that seems.
Somewhat silly right so,
aromatherapy and video systems you know help you get 4 hours of sleep in a 20-minute power nap for example so there's a lot of that and then one product we thought there was kind of interesting I think you could both be the wackiest product or the biggest commercial hit.
Is this the 3D printing for presumably young girls finger nails so you can.

Scot:
[19:50] Does chocolate last year too in my room.

Jason:
[19:52] There their they're definitely in some 3D chocolate printer.

Scot:
[19:55] I thought you're going to say chocolate.

Jason:
[19:56] For a while yeah but to me that would not be silly at all.

Scot:
[19:58] You need to light a printer.

Jason:
[20:05] Well it's.

Scot:
[20:07] Did you see that Samsung wall around what there's a lot of Buzz around the Samsung.

Jason:
[20:10] Yeah so every year there's a big competition around what's the newest most amazing television that could be invented and a lot of these two televisions are ones that never get commercial adoption there there.
You know concept televisions that they they build very similar to a concept car.
And so they keep getting bigger and bigger or thinner and thinner LG at a television that you would like an 88 inch 8K television that you would literally roll up.

Scot:
[20:38] I saw that it comes in like a little tube and it kind of rolls up so it could be a very small footprint.

Jason:
[20:42] Exactly and there is this actual practical problem that a lot of people struggle to self install TVs on the wall so there's a lot of TVs that are damaged shortly after their bought when they fall off the wall and these these you know.
LG TVs that are now like 6mm thin like they're literally mounted to the wall with tape so that that is kind of cool and interesting the Samsung.
Wall TV is just impressive for its high resolution and enormousness they didn't give us a spec for exactly how many inches it is but it's well over 200 in I'm so that was just a.
A very cool piece of glass.
There you know there are a couple of the new car manufacturers can't afford to go to Detroit Auto Show that they watched new cars from.
Companies that don't have a history in the outer space tender launch at CES and so there's this new electric autonomous vehicle called the Bryant which is science.
Which you know it may or may not ever see the light of day but the concept car looked very cool and it had a what they call a pillar to pillar.
Digital screen so the the entire Dash it a 4-foot wide Ash is all one big big Monitor and if I own this vehicle I would spend most of my time just sitting in the garage gaming because it's so it would be the best green I own.

Scot:
[22:00] Okay let's what let's bring it back to retail what was the the most interesting Commerce stuff for our kind of give us a tour of who who was talking Commerce.

Jason:
[22:14] Yeah so it really isn't a retail show I'm a bunch of retail people go to the show because all the manufacturers are building displays to introduce their products to.
Two people at the show very similar to have a retail would merchandise the products in the store so out of the merchandising team for retailers go to look and see how LG and Samsung and Sony are presenting their new products,
addition of the show Ali Baba had a big boost that a booth last year,
they went even bigger this year but what's interesting it really didn't focus on e-commerce or their Marketplace at all it really focused on.
Actual Alibaba branded products that Ali Baba's inventing so they have a smart speaker for example and it was really promoting a lot of there.
Services many of which will feel very Amazon alike.
To westerners so they have a equivalent to AWS into a big part of the booth was committed to their services they have a meeting chat.
Telepresence so I can go to meeting or Zoom or a blue jean depending on what region of the country you're in and those.
You know they're there demonstrating those things in the booth they did have a baba has an interest that used to own ant Financial which is all the payment stuff.
I'm so they had.
Ali pay and pay with a smile so that this voice recognition that pay face recognition that pays when you smile that lockers Dropbox Whoppers that you unlock with your face and things like that.

Scot:
[23:47] I saw you were in a cabin you can actually pay with Ally pay in your.

Jason:
[23:49] Most of the Las Vegas cabs take Ali pay and you correctly guessed wise cuz there's a huge amount of Chinese tourism in Las Vegas.
I lied to you and said I paid with all you pay like you have to have a Chinese bank account to get a wepay account so it turns out to be non-trivial to get one I tried.

Scot:
[24:05] I figured figured if you don't have Apple pay there's no you have.

Jason:
[24:08] I do have Apple pay and if anyone doesn't believe me you like send some cash to Jason Goldberg on Apple pay right now and see if it goes through.
The battle is the Chinese search engine that's sort of the Chinese equivalent of Google and they had a big boost they had never been there before they also are getting in there.
The Consumer Electronics space with some smart speakers and some some other products they have their own device operating system that they're pushing.
I'm there was a retail Tech Pavilion at CES but it was.
Yeah I think that retail Tech vendors were all getting ready for this weekend in a rest of the the vendors at CES were you know probably not the Marquee.
Vendors there's a kind of typical digital signage vendors that we see everywhere like perched that was in the retail Tech Pavilion.
And then in the emerging technology section there are a lot of vendors using computer vision for retail applications so a bunch of these Tech guys that don't know retail really well.
Are envisioning that every retailer is going to want to face recognition to track every customer and recognize every customer when they go in so that's a super comment.
Use case that these Israeli security companies set up set up boosted to pichai unless convinced that retailers want that.
But then what what makes perfect sense that there's a lot of is.
Companies with expertise in computer vision using that computer vision to create a Amazon go experience for self checkout or for inventory management so they were a bunch of.
Companies talking about that one in particular that got some good Buzz is called a ipoly and they they were demonstrating some.

[25:47] Some pretty sophisticated use cases of just using cameras of there being Shoppers to the kid very clearly differentiate which product of Chopper and picked up off a shelf.

Scot:
[25:56] So they were like sad mock-ups of stores with ever showing this technology.

Jason:
[26:01] Yeah they would claim that we have a complete amazongo equivalent solution and really like.
They have sophisticated computer vision technology that identify what the Shoppers doing but you know there's a bunch of other pieces that are required for go I.

[26:20] That I'm not sure of the startup companies have invested in solving for a retailer.

Scot:
[26:26] So while ago it may even last year there's that there's a really big company in China xiaomi that they were going to launch phones here and I think they've got a whole family of gadgets now that seems to disappear were they there.

Jason:
[26:39] I didn't see them now this CS is not a huge phone show because in February is a huge is the worldwide phone show in Barcelona the Mobile World Congress,
you're right there are some Chinese manufacturers that tried to penetrate the US market and maybe the interesting one and I,
I never know how to pronounce their name properly is a Chinese company so I'm not going to try on the podcast,
is there a big Chinese consumer electronics manufacturer that makes a lot of Premium smartphones in China and they were making a big splash that they were going to,
enter the US market and they actually cut a deal with AT&T to sell their phones,
in all the AT&T stores until right before CES that was the big announcement and they had a huge booth at CES well.
The US government claims that there you know owned by the Chinese government and that their technology isn't secure,
and that apparently they the government rattle their saber enough to AT&T backed out on this.
The steel in Ogden not to sell this Chinese Hardware.
You know if you if you go super nefarious that the Chinese government could somehow have access to these these camera phones and speakers and all these.
A consumer stands in the US.

Scot:
[27:59] Alright last CS topic anything exciting on the in the world of drones and then they are VR.

Jason:
[28:06] So there is a ton of drones I would say it was a slow year and evolution DJI really dominates the consumer drone space they wants one last year around Siesta became super popular the mavic pro,
they've since launched a smaller one in so what you mostly sides he has his everyone else knocking off the.
The mavic pro this year so there was a lot of that what was new at CES this year was it was definitely the first year when the robots were very ubiquitous there robots in.
All the big boots and then he really range the Spectrum from some that are like practical and have achieved some consumer 6s like like tomorrow vacuum cleaner.
Rumah type stuff to some very absurd robot so there are a lot of LG was showing shopping robots that.
Drive to shopping cart to follow you around the store so you don't have to push the cart there a bunch of robots that drag your suitcase through the airport for you so you don't have to do that it was like a $35,000 robot that folds your clothes when they come out of the.

Scot:
[29:06] Oh I saw that was exciting.

Jason:
[29:08] So maybe that is an application in a retailer folding clothes at the Gap or something like that but I'm not sure a lot of consumers are just like folding up to.

Scot:
[29:17] To draw a crowd to come see the the folding robot I saw a CS but a Boeing a released a prototype type of a drone that can carry 500 lb.
I'm it was interesting it's not a military application I think they've taken the military stuff in Skillet down but the article suitably talked about it being an interesting way you could like load balance between fulfillment centers with that kind of weight load that's kind of interesting you know.
Here's a corner of stuff I don't need in Ohio have the Drone carry it to I don't know how far this thing can go but to to another fulfillment center.

Jason:
[29:49] They're definitely scaling up the Drone technology so they were at least two passenger drones are three passenger jet drones at the at the show so these are like autonomous vehicles that take,
passengers in that notion is that that could be a sky taxi in some cases there's an all electric one that Intel is partnering in we were kind of joking about.
Yeah probably not perfect timing to have.
Autonomous drone with no pilot in it that carries passenger that's being powered by this Intel chip the now is vulnerable to the Meltdown,
I'm back I'm not sure I'd want to be directly under that that that drone but they definitely had some big capacities I think even the Bell the big helicopter manufacturer was there with.
With some ground so definitely possible and then a lot of the robots are good at moving that stuff around in the last mile to so Hyundai had a bunch of industrial robots obviously the Kiva is.
A robot that than Amazon now owns and you joked about the military uses but I will say just superficially a bunch of these drones did look like they.
We're just disarmed right before.

Scot:
[30:56] Yeah it kind of freaks me out the speaking of Black Mirror episode recommend for listeners.
All the episodes are independent so you can just like skip around watch the one called heavy metal that when they gave me some good night nurses pretty,
okay that's a cool thanks for that CS review that's awesome let's do it quick in RF preview so,
I think the thing we're really excited about it is there's a Apple event that we got invited to and that's me tomorrow and.
It's we don't know anything about it we just know your typical Apple format limitation has we have something that says we have something in store for you there's a picture of a bag,
so seems like apple is doing something around retail technology what you have any speculation what's going on.

Jason:
[31:43] Yeah I don't have any real insight I am in the dark as much as you it it definitely seems like apple is poised to launch some retail product or service.
They never have a booth at CES they want to see us this year but they have a big meeting space it's heavily apple-branded at interrupt this year which I found interesting and so you can buy in that with,
ass getting invited to this secret event that they they wouldn't tell us the nature of.
I might like the most likely thing is that they're watching some new thing in the payments ecosystem so maybe like the next version of Apple pay or a POS or a you know everything the Apple OS 4.
You know commercial retail tack like you know tablet enable meant that kind of stuff.

Scot:
[32:31] A lot of retailers use the tablet as a retailing thing so maybe it's just more around that or maybe it's just a set of back that's practices doesn't feel like they would do an event and a meeting room for just like hey here's how people are using our technology seems like there must be more.

Jason:
[32:44] No eyes I think they're going to want something that's apple-branded that that is targeted at the retail industry so I could be super fun we don't don't that many surprises from Apple these days.

Scot:
[32:54] I know it's over here and if it's if it's Earth shattering we will put out a quick podcast just to kind of lay down our thoughts after we see whatever the amazing thing is I just hope Tim Cook there I've been dying for attempt.
I need a good Tim Cook an emoji selfie and be good to do unicorn or I don't know.

Jason:
[33:15] You said one of the products I bought at CES this year is a 360 camera and so I feel like.

Scot:
[33:22] 360 song.

Jason:
[33:23] 360 selfie.

Scot:
[33:24] Nice.
Nothing that we're excited about is we have Casey from Deloitte on the show so we will be putting out.
I left some new research that we're going to be talking to Casey for the first time here on the show we have our digital council meeting so that's good.
I saw they have a speaker I did not read the details did you.

Jason:
[33:47] Yeah I think it is a friend of yours we from Alibaba.

Scot:
[33:51] Oh yeah I do remember now awesome so we'll get to hear all about singles day so that'll be good and how much better it is then Cyber Monday let's see anything else around interested we want to talk about.

Jason:
[34:04] So there are a number of,
interesting private events that are great networking opportunities and you know hopefully we'll we'll get some people inebriated and get them to inappropriately share with us on the podcast for those of you that don't know Scott and I super well,
we are not the guys that get invited to all the private,
parties in our in our youth so this is this this weird once-in-a-lifetime opportunity where we get the invites to the the cool parties.

Scot:
[34:33] Yeah yeah the Geeks shall inherit the earth.
Well we have so that's it on shows let's bang out a little bit of Commerce retail news from this last week so it wouldn't be a Jason Scott showed without.

[34:58] Not a ton of Amazon news this week despite the lightest Amazon news for a while.
And I'm ending this cuz the company is in a quiet. So I will your public company there's this kind of. Of time where you know how your results were and you can't really say much about them and,
I'm excited cuz they did announce when they are going to release.
The fourth quarter earnings and that will be on February 1st so we will do a special version of the show where we will cover those will cover will put it down the night of the first and then we'll hopefully get it out on the 2nd if her audio team can,
jump on that we've been talking a while about all the rumors around Amazon going into the drug business drug stores,
I am now there's a loud drum beat about beauty so I don't know exactly what is King it run off of that but,
you know it's pretty clear in the retail World Alton's for doing really well so I think Amazon is kind of turning their guns that way so it'll be interesting to see how that's going.
And when I've been dying to ask you about Jason is Kohl's there is this kind of news item that Kohl's is really wanting to work closely with grocers that didn't make a lot of sense to me cuz I'm thinking all right,
blue jeans and broccoli what's what's the connection film.

Jason:
[36:15] That one of you eat a lot of broccoli you can buy small are better-looking bridging.

Scot:
[36:19] Duncan's are in celery when you tell her you you actually.

Jason:
[36:22] Net positive or negative calorie intake I guess I think that's not true and.

Scot:
[36:29] Dang it.

Jason:
[36:31] Yeah sorry to be the one to.

Scot:
[36:32] All that celery.

Jason:
[36:33] Exactly so I think what's Happening Here.
Is no retailers have a particular footprint and they buy all the real estate around that footprint so you know what Kohl's store I don't know the exact size but I think they're probably like 60 or 70 thousand square foot store.
The something in that range and you don't that's based on a certain merchandising assortment in that's in that store,
so overtime categories that you were storkland carry become less successful and you move out of categories or you add new categories and there are times when retailers find that they have more square footage than they can.
Profitably manage and so a common play particularly when you're not performing as well as you'd like is how can I downsize by handing some of the the rent responsibility to us too.
Subway Surf right so,
that the example as you like uses Best Buy like you know they used to sell CDs and video games and music and then of the store that's that's all digital delivered but they can't just shrink their leases in their store,
I'm so that they rent space to a lot of their manufacturers Samsung Microsoft.
I'm we'll all have shopping shops and so I think Kohl's is in a situation where they had excess base for what they think is their Optimum inventory and so you go looking and say.
Who can I profitably Reese this pace to and ideally it should be someone that's going to bring extra traffic to my store that might buy stuff.
So in the old days that was always the coffee shop you went looking into to add a Starbucks.

[38:09] Because of Cole's real estate proximity there in strip malls that could be convenient places to grocery shop and so it sounds like they've just come up with this notion that.
Man is if there is someone only wants to expand in our footprint Subway some of our space people shopping grocery much more frequent so it could be a great traffic driver to the stores and they could benefit from that so well.
To see if that idea plays out and if they're able to get some some folks to take them up on that but I think that's what's going on.

Scot:
[38:40] Yeah and that was Ron Johnson's vision of retail right it would be this kind of we had Omar Asad the analyst on and I forget what he called it but it's kind of like you know a bizarre.

Jason:
[38:51] Yeah we often called a retail bizarre and it's actually the common,
merchandising way in a lot of places in the world sew-in in the USA department store owns all the space and they decide what brands are in it and they they merchandise the brands in Europe most of the department stores are.
Simply landlords that rent individual shelves in the store to individual brands.

Scot:
[39:13] Boots.

Jason:
[39:16] Just another other news that there's a e-commerce your player that focuses on the club.
Experiences in those large format box that we've had on the show.
The there are rumors that they are a potential acquisition Target and I think a Consortium of grocery stores was mentioned as a potential buyer like Kroger.

Scot:
[39:39] Yeah the number that stuck out to me was 500 million so fingers crossed for a friend's at box on that one.

Jason:
[39:44] And that is that that's close to their last round right so that would mean the the early folks will do really well and the the last investors probably won't do so well that if that ends up being the number and it happens.

Scot:
[39:57] Sometimes it works tops for that cuz the last investors get these really nice preference tax.

Jason:
[40:03] Gotcha cool see you that's why I have you here to make sure that my.
My Angel Investing is fruitful one near and dear to my heart Circuit City is relaunching.
So folks some of you young ones on the shelf that is that was a specialty retailer that that kind of grew up and competed with Best Buy they went bankrupt,
a number of years ago I want to say formally like 2008,
the the brand changed hands in bankruptcy court a few times so they're actually was this company in Florida TigerDirect that bought the the brand and they launched relaunch the Circuit City website for a few years.

Scot:
[40:49] And at CompUSA.

Jason:
[40:50] Yeah they wait about CompUSA they.
If I'm remembering there's some drama there too I think they're there was some like weird finances and the owner and some.
There could be some some interesting backstory their bets of the brand changed hands again and you know frankly when I heard that someone bought the the brand out of bankruptcy unlike someone else's like.
Trying to Leverage The Nostalgia and they're going to watch another.
Another you know reskinned website and it's actually more than that like that they have a new ownership that there intending to open retail stores.
And so this would both be a website and some number of new stores it's it's interesting cuz I'm not sure you would look at the Consumer Electronics base and say what we really need in consumer electronics is.
Is more stores and another brand to buy that place but you know we'll have to see what their unique value proposition is they bring to the table.

Scot:
[41:47] That one you talked about called.
Yeah yeah, some Vision like a cool like a smaller footprint showroom thing cuz I use gadgets you want to touch him and feel him and you know her shoes for four people to care about shoes.
Best Buy refills at 4 meal at times I'll go look at stuff and then order it on to another retailer.

Jason:
[42:14] And I I would say you like one of the weather problems with all the trees retail consolidation there used to be this phone to see you could be a geek,
and walk into the store and you discover something new every single time you walked in that store that you didn't know exist that you wanted and one of the things that all the digital transparency is created and like all the consolidation of the stores is created you know really,
you working on Apple Store and you never see something.
You didn't know was available before you walked in the store and you know how I feel like that's going to happen to be the case it at even Best Buy now is well and so it would be interesting to see if there.
You know that they're going to provide that sort of fun jolt of discovery.

Scot:
[42:53] Yeah kind of on the opposite side of the spectrum my wife was shocked she showed me this the other day,
she likes this designer named Ella moss and they have some kind of annual sale and she went to the website to check out the annual sale,
and announced they're closing their website and it said say goodbye to lmr.com but say hello to us in our stores and they just pointing people to Nordstrom in a variety of other stores where their items are found so I thought that was.
Certainly opposite trend of what we've seen out there but they must have.
Musta Had A Good Reason baby was too expensive to run the website maybe maybe they get pressure from their Channel partners that kind of said we don't like you offering this track. I don't know what it is just have a really interesting use kids haven't seen.
Happen.

Jason:
[43:38] It's bugging the trend I suspect there is some serious distressed underlines for that but I applaud them putting Silver Lining trying to put it out there favorably.

Scot:
[43:51] Last topic one hit on we're about 14 days into January so we have about half of the Retailer's the brick and mortar guys,
I report monthly same for sale so we're getting up kind of a,
early read on holiday and then once we have that Amazon report in early February and then kind of by mid February we should have a pretty good read on how how they came in but did you notice any of the or some interesting holiday things you saw that have come out so far.

Jason:
[44:18] That's what's interesting like obviously overall it was a very good holiday like probably the best one since,
2010 2011 the most most,
retailers like you know either announced that they performed at that sort of average growth or even outperform the industry and there are a few outliers that we saw.
Be significantly down and so you know it's about a rising tide raises all boats when you're the boat that sinking in that Rising tide,
that's a particularly you know owner assign so we seventies Sears did not benefit from the,
renewed spending they were down significantly I think like 16% and I think it announced another round of store closures I mentioned on the I did mention but in the store predictions bet,
certainly feels like a year of major retailer.
Go away and I think Sears would be unfortunately a good candidate for that.

Scot:
[45:15] Yeah when it's surprise out of folks this is kind of one of those bury the lede so Walmart had a positive news that they are,
because of the the tax act that was passed the raising the minimum wage for employees to $11 an hour I think it was and several other people did this there was only one that's on retail the same time that kind of tucked in they are the closing $0.60 stores,
I'm really bummed because the Sam's near my office where we actually got our office enough snacks and stuff is going to close so that's going to be inconvenient and then.
I saw a Wall Street analyst kind of did this analysis and the 60 Sam's stores that are closing they are some number of miles from a Costco store so ones are keeping open don't seem to have much competition but the ones,
they're closing you know the list the target clickbait title of this was like Costco's crushing Sam's so they went to an analysis so I thought that was.
Pretty interesting that you know Walmart's not used to losing so if they are losing to Costco that that's pretty fascinating.

Jason:
[46:21] Yeah for sure and it I mean.
I think Sam's Club stores can do very well but but Costco is almost a unicorn in their retail performance I mean Walmart the largest retailer in the US they have like over 4,000 stores in the US,
Costco to the second largest retailer in the US they have like 200 stores.
Did that yesterday they really have that model down like and I'm not sure that the average Costco I mean it has ever underperform the average Sam's Club store which doesn't mean Sam's doesn't do well but.
But your point like they're probably not doing well in the the head-to-head battles.

Scot:
[46:59] I don't know enough about the cause for maybe we can have a an analyst on. Kind of Enlighten us on that cuz I wonder how cuz there's BJ's as well right.
I think I've seen the same for sales for BJ's are doing pretty well so.
I believe in this report said Sam's same-store sales are doing well but it must be kind of A Tale of Two Cities the ones that could be with Costco or doing poorly in the ones that aren't are doing well for them to close these it would close them if they're doing awesome.

Jason:
[47:23] Yeah but I do think it's part of this way speaker thing we're over stored in the u.s. populations are moving so you open the store.
And you know it to cater to a Suburban population and then those folks move in the suburbs back to the city centers and where your store should be should be different so it's it,
clothing stores is not on is often a sign of a healthy retailer and I think Walmart's the perfect example like,
diprimas clicking on all cylinders checking all the boxes and so it's you know it's it's unpleasant for those employees but it's probably a good time for investors to see someone having a good financial performance and still.
Being willing Nicole that hurt and kind of move away from some of the most profitable pieces of the Enterprise,
I think another one that.
We it was interesting that she was Target in one of the stats we saw their this is been progressively bigger stat.
We seen every year but Target is not saying it's 70% of all their online orders are being the film in some way from the store so we talked about this for a long time it's when the best ways are brick-and-mortar retailers can compete with Amazon is,
you should from that store you get to ship USPS and get it there in one day for much cheaper rate than you pay UPS or FedEx from.

Scot:
[48:39] Yeah I think target actually exceeded expectations and raised so that's good at the stocks been doing well.
I'm in that same vein we mentioned earlier around that grocery store topic but Kohl's they came out with 7% same-store sales for holiday and is reminder to listeners we had Kevin Manziel on the show year ago now is it wasn't so it must be.

Jason:
[48:59] What was the shop talk.

Scot:
[49:00] Shop talk so about 8 months ago and he was talking about their strategy and it looks like it played out pretty well and he's announced his resigning and handing over the reins to a new CEO and.
She will start I think in July August time frame so always good to have a really nice hand over there when things are going well.

Jason:
[49:19] Absolutely I think another one that sort of was not rising in a,
in a rising tide is unfortunately Macy so I think they were down in the like two and a half percent and they've announced another big round of store closures so I think they're closing like another hundred stores.

Scot:
[49:38] In the last one I saw it is Lululemon they were up 13% this interesting cuz everyone is is gunning for these guys to everyone has come out with their own athleisure line,
babe copied everything Lululemon's doing and they cannot seem to slow these guys down there they're so.
The brand has an affinity with folks especially Millennial females they have that experience with yoga classes in the store and none of the other athletes are guys are really able to keep up with them,
and I think this is I'm not an expert on Nike and Under Armour but they're both under pressure,
things that Turtle Dave Dave kind of gone all in on some of this athleisure stuff specifically around yoga thinking they could take okasa market share from Lululemon but Lululemon's hanging in there.
Interesting example of a david-and-goliath where where David is winning.

Jason:
[50:30] Exactly and in some ways maybe starting to look more like glass.
Yeah so it's going to be an interesting one to watch people have been kind of predicting the end of this athleisure trend for a long time.
Never seems to come so it'll be interesting to see whether.
Whether you know it is a cycle that gets broken and and is athleisure Trend ever doesn't it'll be super interesting and see if Lululemon can leverage all that.
Great customer intimacy they have to pick up on the next train or whether they're there at least you're only,
it's got one of my New Year's resolution was to do a little shorter shows and so it is happen again we've used up all our a lot of time we certainly are grateful for her listeners taking the time to listen to the show,
if you enjoyed it we really appreciate a 5-star review on iTunes I mention that we're going to be visiting Apple this weekend they could they could be very angry with us so we need to get lots of review so they,
saying they're good racist and if you want to have any conversation about any of the topics on today shows we'd love to hear from you on Facebook.

Scot:
[51:35] Yep thanks I wanted to join us.

Jason:
[51:37] Until next time happy commercing.

Jan 13, 2018

EP112 - Annual Predictions for 2018

 

2017 Recap – Predictions made on episode 64

Jason

  1. Retailers truly embrace Omni-channel  (Attribution/Inventory/promotion/pricing – YES
  2. A/I – Bots for Customer Service but probably not for transactions, lots of buzz on big data AI but no game changing new experience – No
  3. Personalization – to eliminate friction, not drive new demand.  Data integration not some new product or touchpoint –No
  4. Laggard categories will discover digital (Grocery, Luxury, QSR) – Yes
  5. Microservices – 50% of new platform implementations will be cloud, and Micro-service based solutions will start to emerge – Partial

Jason 2017 Score 2.5/5

Scot

  1. The IPO market is going to be open, but the e-commerce companies will get crowded out by the big tech unicorns like Uber, Snap, pinterest, airbnb, spotify and the like – Partial
  2. Amazon will start to chip away at the Fedex and UPS’s of the world with a service like this in the US.  – No
  3. Machine learning is the new ‘network effect’ – everyone has caught onto the power and competitive moats available from ML and that’s going to be a big theme.  Every vendor you work with from carts to images to upsells to recommendations to search engine results to whatever is going to HAVE to have a ML capability to stay current and keep YOU competitive. – Yes
  4. We’re going to see e-commerce growth accelerate pretty materially in 2017.  We’ve been in this 15% band and I think we will see there was a move up in 2H16 to high teens and we could see 20’s in 2017 – Yes
  5. eBay – it’s a do or die year for ebay, they could potential partner with Alibaba. – No

Scot 2017 Score 2.5/5

2018 Predictions

Scot

  1. Mallageddon 2.0 – We saw 7000 stores close in 2017, I think this accelerates in 2018 as the 30-40% of weak malls fail and we end up with 9000 closures.
  2. Amazon will NOT buy another offline retailer, triples down on private label.
  3. I’m going to re-up on my Amazon logistics prediction, I think I was just a bit too early on that one, but I’ll make it bolder, that Amazon will squarely get in the last mile business in 2018 and compete with FedEx and UPS.Amazon’s ad group will get so large that they have to break out details about it and everyone will be shocked at how large it has gotten so quickly
  4. Walmart will make a big M+A – top candidates would be Instacart, postmates and eBay.
  5. Somebody acquires magento, or they go public.

Bonus – Amazon comes out with alexa powered wireless earbuds – because I want them.

Jason

  1. Grocery gets disrupted by digital (led by curbside pickup).  Digital grocery doubles in US, at least one delivery firm peters out.
  2. Drug gets disrupted by digital.
  3. AI Gap – biggest trend of 2018
  4. Voice – Huge but not for commerce.
  5. Payments – Retail digital wallets die (except Starbucks/Walmart/Amazon).  Bitcoin tanks.

Bonus – Amazon launches a wearable.

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 112 of the Jason & Scot show was recorded on Wednesday, January 3rd, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature – Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 112 being recorded on Wednesday January 3rd 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your Tahoe Scott Wingo.

Scot:
[0:40] Happy New Year Jason and happy New Year to Jason and Scott show listeners Welcome to our first show recorded in 2018.

Jason:
[0:50] It’s very cool I’m excited to start the new year I feel like it’s going to be another action packed one in our in our jonra.

Scot:
[0:59] Yeah that’s the fun thing about retail I feel like we could do a daily podcast weekly is even hard to catch all the news that’s going on.

Jason:
[1:07] That is true but then I feel like there’s a lot of fans begging that me not to do any more than I already do but that was might just be me and not.

Scot:
[1:17] Cool.
What’s up long-time listeners will know that it is a regular feature of our show that the first episode of January is our annual prediction show so this is our third shot at this Jason.
So pretty exciting so let’s take it off by looking at last year’s predictions and seeing how we did Jason was start with you.

Jason:
[1:45] This is the part of the show I hate.

Scot:
[1:47] So if listeners are really really want to learn more about these things you can go back to episode 64 that was the last year’s preview show and I and you can listen to that and see how we did and 16 compared to 17 in here the 17 predictions you don’t have to do that there were going to summarize them for you here but if you really are curious about anything we bring up and want more color,
you can go back to episode 64.
Okay Jason last year you and the way we did this as we had 5 predictions and a bonus so effectively 6 predictions so let’s go through them last year your.
Top prediction was that retailers will truly Embrace omni-channel and you talked about attribution inventory promotions and pricing.
How do you feel that prediction did through 2017.

Jason:
[2:33] Yep. So I generally feel good about that prediction I’m calling that went to win there a bunch of things that happened last year that were,
probably hard for people to observe,
but but most retailers did get more sophisticated about their omni-channel attribution models we saw a ton of retailers move to Universal inventory we saw a lot more Universal pricing and then some of the the highly visible things we saw were like Target made two major Acquisitions in shipped and,
Grand Junction to improve their omni-channel Wal-Mart rolled out of town of omni-channel initiatives with the pickup towers and express returns and discounted ship-to-store,
Kroger and Costco both rolled out curbside pickup so I think across-the-board I’m giving that one true.

Scot:
[3:26] Yeah but when I go to Best Buy they still can’t look up my rewards number and if I do an online order they have no idea what happened to the cash register traffic crazy but I’ll still give you this one.

Jason:
[3:37] I think there are still a lot lots of gaps but I would argue in your specific example that’s Alessa not embracing on me channel cuz I would argue,
Best Buy does embrace quite a bit about me channel it’s a date I’ll retailer still have a ton of data silos regardless of Channel and sew-in your point like,
rewards just aren’t willing a greater to the store and that’s a shame.

Scot:
[3:59] 4 meter Omni channel is breaking out of this data silos.

Jason:
[4:03] I only want to live in your happy world I do.

Scot:
[4:06] Cool alright so so far that’s one win and 0 losses.

Jason:
[4:12] Feel free to stop here if we want.

Scot:
[4:14] And that’s it well unfortunately we’ve wasted another 5 minutes of your time.
But seriously your second prediction was calling for Bots for customer service but not transactions lots of buzz on big data and AI but no game-changing new experiences.

Jason:
[4:35] Yep so even though I kind of Madhuri to the prediction by saying more buzzed than game-changing experiences I’m still giving myself a false on this one because I think it was,
even more hype and the last tangible stuff then I was predicting so I think you don’t right out of the gate,
there’s a new chat services and there was a lot of hype about new customer service,
offerings on those chat services but they were universally stupid and none of them got embraced by customers and you know after that initial hype I just don’t think we saw a lot of a lot of traction so I’m giving the whole the whole box thing in 2017 did not happen.

Scot:
[5:19] Even Facebook seems to not be talking about it as much and didn’t one of their big Partners kind of shut down the bar that was it 800-Flowers or everlane or one of those like one of the launch Partners kind of said yeah we’re not doing this anymore.

Jason:
[5:33] Yeah I think that was everlane 800-Flowers is famous or notorious for being one of the first adopters of everything and so it’s almost.
It’s not predictive of something being successful the fact that 800-Flowers is one Embraces it cuz they they like to be the first mover.

Scot:
[5:51] Shut it off though.

Jason:
[5:53] Yeah no absolute.

Scot:
[5:54] Tahlequah this is like it’s either hard to maintain or actually bad customer experience or something I don’t know.
Third is one of your favorite topics personalization,
so you said to eliminate friction but not really Drive new to me and data integration not some new product or touch point I don’t know what any of that means so maybe recap what you were thinking there.

Jason:
[6:17] Yeah so I hate talking about personalization because it’s a amorphous sort of thing,
and so what would I said what would I try to say in the prediction was that I think we’re going to see a lot of better personalization but that doesn’t equal like some magic new widget on the web website that just automatically more personalized than the old widget,
what I was really expecting to see is retailers merge a lot of their Silo data to provide,
more seamless experiences and eliminate friction across the board and you unfortunately already alluded to a perfect example of that not happening,
that you you went into Best Buy and they couldn’t couldn’t figure out your year membership Rewards.
Status with Best Buy and that’s because all those their systems are siloed at Best Buy,
and so in my mind. My prediction was that a lot of those eyelids would get eliminated in 2017 and while I could point to a couple of retailers that had made some progress in eliminating those silos,
I still think there’s a ton of silos and I think we all at Shoppers put up with a lot of ridiculous friction that we don’t even realize,
because of how at retailers of organize their their systems in their data and I I just don’t think we made near as much,
progresses I optimistically hope for 2017 so I’m I’m giving myself a fail on this one as well.

Scot:
[7:48] Wright’s that’s one win to faience your 4th prediction this was a good one ladder categories will discover digital and you mentioned to grocery luxury and Quick Serve restaurants.

Jason:
[8:01] Yep and I feel like this was going to get me back to even I I gave this prediction a true,
for those of you that follow the grocery category you may have heard of the Amazon made an acquisition in the space in the whole food so that was certainly.
A grocery retailer discovering digital we also saw a huge investment from Kroger and Walmart and grocery,
that US are as a Quick Serve restaurants and they all Embrace digital in a big way in 2017 so both McDonald’s and Taco Bell rolled out,
Order ahead of course the the Weider a farm before last year and in this was Starbucks but most of the traditional to SRS,
Nina played significant catch up in 2017 and then also a lot of the luxury Brands got more serious about digital for a long time then they over it we said that,
digital was eroding to their their brands and that they they wanted the experience to be in the dressing room and not online and you know all of those old luxury houses that used to say that launched,
direct-to-consumer e-commerce sites in 2017 some of them even started started,
toe dipping on some of the the marketplaces and and so again you know I think across-the-board grocery Luxury Inn Key West are where three categories that made big strides forward in digital in 2017 so I call that trip.

Scot:
[9:30] I agree that even better than the order had at McDonald’s have you had one of the touchscreen kind of order things those are pretty cool.

Jason:
[9:37] Yep absolutely.

Scot:
[9:39] Less errors on your order.

Jason:
[9:41] To management that you and I are a couple dialogues on,
I know twittering about some of the bad G Management in traditional retail seems like you got a lot of bad physical retail experience is rightly and those those kiosks are all part of the wait time management system at at McDonald’s which is very clever.

Scot:
[10:00] Alright so let’s see we are at 2 and 2 now and so your V addiction,
was extremely retailgeek e microservices 50% of new platform implementations will be cloud and microservice based Solutions will start to emerge.

Jason:
[10:18] Yep and so for those of you that that aren’t Super retailgeek E like this is the notion that most people that run the e-commerce site,
own the software and run it on a server that they own like either on their their services are in a Datacenter that they rent in so this this prediction was really that like half of all the new platforms,
would instead be in the cloud so you know Amazon web services or Google Cloud platform or Microsoft azure,
and that most of them instead of being this big monolithic piece of software would be these newer platforms that are kind of a collection of little api’s or little services,
that you got most think of his Legos that you snap together to create your experiences and.

[11:05] I think these are both super important Trends if you talk to the CIO at any retailer like they’re their the trends that they’re falling and it’s what they hope to add a brace in the future.
But in 2017 at all amounted to more talk than action so.
We we actually didn’t see a lot of rhe platforming in 2017 impact in many ways I’d say it was one of the slowest years in The Last 5 Years in RI platforming.
So it’s hard to call this trend a complete win when there just weren’t that many new platforms.
It is true that of the new platforms the overwhelming majority were on the cloud so I kind of get myself credit for that.
Never retailers like Nordstrom that was on this podcast last year and they talked about migrating everything from an on-premise solution to a cloud-based solution.
We we’ve had a billy May on that on the show who now run is the CEO at Sur La Table and they’re in the process of moving to a cloud-based solution but,
they just weren’t a ton of replat for Mains and the micro service-based architectures while everyone loves talking about.
They had fewer wins in 2017 than I anticipated so I kind of gave myself a half credit on this one Cloud yes microservices know.

Scot:
[12:26] Yeah I think I learned from last year to be less for Bose in my my predictions gives you more chances to be,
so then your bonus was around payments to another one your favorite topics and you said kind of on the topic of digital wallets that something other than PayPal Amazon will achieve 10% of us e-commerce transactions excluding Amazon such as Chase Walmart Apple pay,
Apple sound Safari or the w3c web payment standards could gain traction so give us an update on how you did on that one.

Jason:
[13:06] Yeah so that one would be a mixed one that’s another example of not writing very smart predictions,
it turns out I don’t have a way to measure whether or not specifically say that we did I will say like that Walmart pay actually got more traction and Buzz than I certainly was expecting,
but of course nowhere near 10% of all non Amazon transactions,
and in the one that that I haven’t seen any data about consumer adoption on,
but has gotten a lot of adoption with e-commerce platform supporting it is is the thing I reference there the w3c,
web payment standard and so this is a a super quick recap for listeners this is he,
a new standard for typing your credit card into a web browser it’s an open standard that’s embraced by the 8th the the standards community that publish HTML,
it’s now been implemented by Google so it’s in all the Chrome browsers,
it is in the Microsoft browser it’s it’s not an apple browser yet,
but it makes it dramatically easier to store your credit card on your local machine and safely.
Automatically enter it in in websites when you make payments and so.

[14:39] Again like all the Shopify site supported all the demandware site supported a lot of the big e-commerce sites have added support for it,
so on the one hand.
More than 10% of the top 500 websites probably support it but we don’t know yet whether whether consumers are leveraging it or not so.
It was a bonus so maybe the score doesn’t matter but it definitely felt like a poorly worded prediction and you don’t mix results.

Scot:
[15:08] Yeah I don’t know I wonder if do you think that stripe in Braintree have gotten over 10% cuz they’re doing the majority of Mobile payment.

Jason:
[15:17] They are but I am not sure I consider stripe or Braintree a wallet,
so as a payment processor like they’re they’re like stripe in particular is killing it on the long tail,
Braintree is a little more focused on the mid-market or Enterprise,
companies that let you know there’s some Visa owns a company called cybersource which does great on the on the Enterprise side they all have big market share but they what they don’t let you do is store your credit card once,
and then leverage it across multiple sites that you shop and so they don’t like,
remove a ton of friction from the e-commerce experience because they let you reuse your payment information over and over again.

Scot:
[16:02] When when a side I know you know this but Apple pay rolled out their cash peace and they have been pushing it super hard I can’t,
you know I buy phone alerts me every 5 seconds I need to set up Apple pay now and I’ve actually it’s kind of sad story I’ve given up on Apple pay because I’ve had to set it up so many times between my watch and Os installation like I finally give up on the the the juice wasn’t worth the squeeze on that one but it’s interesting that now that I’m out of it that it really suddenly aggressively wants me to set it up so they must Apple kind of is woken up,
Bond Apple pay stub.

Jason:
[16:37] Yeah that like my my like brief editorial on that like that they have a very good experience,
under certain circumstances,
and they’re they’re doing a good job of expanding those circumstances so this year they want to the ability to to use Apple pay in a browser which was a huge deal and it in late in the year they watch ability to do peer to peer payments with Apple pay in that potentially huge deal,
but the problem the fundamental problem with the Apple pay is,
you know at best and only works for the subset of the world that are that are in the Apple echo system,
and some of these painted things require even a much narrower subset like only on the latest Hardware that has a particular chip in it or only on the very latest version of the operating system in the latest version of the Safari browser,
and so it just,
it it’s not apples goal to be a world dominant ubiquitous payment system right I get it really is just a utility for for Apple users.
And I think that that limits its its broad appeal.

Scot:
[17:43] So I just kind of keeping score there I think you got a solid 2 to 3 out of your 6 predictions so it will give you a kind of 50%.

Jason:
[17:51] Yeah that was basically my performance in college so I’m okay with it.

Scot:
[17:55] I think it’s a baseball baseball you be here.

Jason:
[17:58] Yeah that would be much better hitter than I was a student hi Scott you I think of is much more cerebral than me so let’s see how you did.

[18:09] I like setting the table. You’re super smart and you’re always like really really prescient about your prediction so,
I’m sure you nailed it I think your first prediction was about the IPO markets and that there was going to be a lot more,
action in the IPO Market in 2017 but the e-commerce companies might get crowded out of the space as of these big Uber snap Pinterest Airbnb spotify’s in the like all do their IPOs side note did I hear a rumor that Spotify,
maybe Miss 2017 and just just filed this year.

Scot:
[18:44] I know why why could they not do it earlier but I don’t know where is an Uber would have filed if they didn’t have to go to there.
Poop show that they’re Lawton right now that with the name cian all snap made it out and.
Actually did pretty poorly and effectively close the idea window for the big guys and then they all have their own issues so I mentioned Uber kind of imploded on some things there I don’t airbnb’s is prior.
Great candidate for next year Pinterest I don’t know.
Were there on the revenue they change their Chief Revenue people a lot which makes me nervous. And then as you mentioned spotify’s filed the.
You’re kind of the thing I got wrong here is Stitch fix made it out we talked about a lot of the show and I’m super happy for them,
another one that was frequently mentioned as a possible IPO can it was chewy and they got Acquired and then Casper is always been kind of out there as as Dollar Shave Club Dollar Shave Club good acquired to also I’m so.
You know I think the IPOs to watch for next year and e-commerce world are going to be.
Casper and then some watches his big guys and how they perform so.
It’s worded the wording on the sun makes it hard to know so the window did open so I get credit for that but I was kind of wrong on the mix of companies that got out so I gave my car myself half credit on that.

Jason:
[20:07] That seems fair so your second prediction I was when we talked about a lot on the show,
Amazon will start to chip away at FedEx and UPS,
are logistic services in the US and you convoluted we made it a 2018 prediction you said hey and 2818 Amazon could even expand into peer-to-peer in River suggest X.

Scot:
[20:32] Yeah they I’m going to get myself a fail on this one when we talk about new predictions I want to talk about it again but when things.
The trend that we talked about on the show but I think it’s good to summarize it here the amount of consumers that want.
Things over to them is outpacing the investment that FedEx and UPS are making and also USPS so there something has to give and it some point.
Amazon being the largest I’d I’m fully.
Going to committed that they’re going to build their own capability was flexing what would happen in 2017 is flex was started influxes an Uber light delivery system eating 1099 drivers they have an app.
Amazon signals to them and then they come and make deliveries they started this for Prime now and increasingly through 2017 we saw Amazon using Flex the driver system for just normal deliveries as well.
And even in the holiday ever heard a lot of reports of a mixture so flex and then actually fulfillment center employees doing deliveries and all kinds of things so I think.
I think some of this happened behind the scenes but it wasn’t kind of to the degree I was thinking in this year so it’s something’s going to give so we’ll see.
Thought I’ll get myself a fail this year.

Jason:
[21:48] Tough grader but I like it,
your third prediction was about machine learning and you you said that was going to be the new network effect that everyone’s trying to recognize the power and competitive mode that are available for machine learning and it’s going to be a dick theme,
every vendor you work with some Cars 2 images recommendations engines you know search engines are all going to have to have machine one and capability.
Test a current then and keep keep their customers competitive.

Scot:
[22:18] Yeah again I should have been less wordy on that one but.
I’m going to say when you when you look at kind of the cloud vendors out there so I’ll I’ll say Amazon for sure is all in on machine learning.
As part of their Cloud conference which is called AWS reinvent.
It was all machine learning all the time pretty much most of the new Innovations they talked about over there is multiple tracks but the biggest track was machine learning Google this year at their annual conference the kind of said we went from.
You know search first it’s a mobile first to machine learning first and they they’re putting.
You all their resources into Ai and machine learning and then if we if we can look at the the.
E-commerce endures you can’t throw a stick it in these trade shows without hitting a machine learning or AI vendors to everyone that I run into every vendor is now fully is probably even.
Little bit bubbly you know so it seems hard that all this can live up to the hype at this point.
But you know what I look at the platform guys you certainly know more about this than I do but but Salesforce is done a lot of really interesting things we had Rob on the show.
I kind of talked about this a little bit so they have Einstein is there a machine learning platform and weeding Dad into the platform previously known as demand where is pretty interesting and I think very indicative of what we’re going to be here I’m as as goes even deeper.
So I’m giving myself a yes on this one.

Jason:
[23:48] .. I think that’s fair I think you nailed it that the the vendors were all embracing it and I and I think there’s a rain everyone did embrace it exactly you said the big vendors I think we’re all in with like,
a huge amount of effort and then I think the long tail vendors,
certainly added machine learning to their marketing and nothing else so I certainly think you nailed it there I’m not sure if there was,
ubiquitous progress in terms of the actual retailers and customers embracing all those vendors Solutions in in 2017 Infiniti that’s what you predicted.

Scot:
[24:22] Yeah at least separate data silos you talk about to be a problem you know so if you don’t have the single view of the customer machine learning can’t really get it.
How’s it going because it’s going to see little pieces what’s happening there so so that this can be an impediment to so he’s Advanced Technologies with the traditional omni-channel multi-data Silo retailer.

Jason:
[24:42] Yep so then you’re 4th prediction,
was what I think we’re all rooting for we’re going to see e-commerce growth accelerate material in 2017 and so you were saying hey it’s been at 15% the last couple years,
will see you move up in the second half of 2016 in the high teens and we we could even see the 20% sin 2017.

Scot:
[25:08] Yeah what I learned about this one was I should have thought something that I would know by the time the next show world around so we the jury is out on this one cuz we just don’t know how the year ended up.
Receive data out of MasterCard comscore a couple those folks that are pointing to iTunes and I’m seeing 1819 % the one Dana Point I want to see is Amazon.
I think it’s pretty sure that Amazon is going to come in north of 20% but I think there’s a shot and released just talking about.
The strength of prime and your 5 billion Prime things and I don’t know.
Nursing Amazon kind of leaning into it like there right now so it makes me feel like.

[25:53] Maybe their Q4 came in more towards 30% and that would make me feel a lot better that that Savannah’s on comes in kind of north of 25 then I think the whole holiday for everyone came in.
20% something myself yes based on the data available and kind of the body language coming out of Amazon right now.

Jason:
[26:10] I think that’s fair,
incident in your V prediction was about eBay in you you basically said it was a big infection year for eBay assorted do or die and then they could even potentially do a partnership with someone like Alibaba.

Scot:
[26:29] Yeah yeah that didn’t happen so I guess it wasn’t a do-or-die you’re so you know on the negative side they lost how Lawton who it was so great leader there.
Friend of both of ours is over at Macy’s now so it’s a win for Macy’s but you don’t know company is one person so you may is doing a lot of great things are getting more structured data from sellers their category tent is.
Things to do while they are improving their relationships with sellers they’re improving buyer.
Programs that are implementing a prime like program so they’re doing a lot of good stuff it just seems like when you when you look at this kind of Battle of Titans that goes on there and you’ve got.
You know the the Google’s the Amazons the Walmart this guy’s just have so many resources compared to eBay now eBay’s kind of.
Small in that world it just feels like they have more leverage is part of something else but I called it wrong so I’m going to get myself a big fat zero on that.

Jason:
[27:26] Fair enough and then your bonus prediction was awesomely bold Amazon will release another phone.

Scot:
[27:34] Yeah this is Phil I kind of thought it would be interesting to have internet to have Alexa to swing back and visit the phone and make it a kind of an Alexa oriented phone didn’t do it so I was wrong.

Jason:
[27:48] I like the prediction nevertheless and if I’m doing my math right that put you also at,
about two and a half out of 5 so we sort of sort of both finish the same I don’t want to say tide because it wasn’t a contest.

Scot:
[28:04] Yeah but together we had a hundred percent that’s why piece of people listen to the show.

Jason:
[28:11] But enough about the past let’s talk about what’s going to happen in 2018.

Scot:
[28:18] Yep so so I had some predictions to walk us through here so first of all I am reading a lot of articles that say.
Retail is on the upswing and everything’s great.
You have that happens every Q4 and I think it’s going to be short-lived I think we’re going to see Mama getting to oh this year last year we saw 7,000 stores close.
And I think you sent me more than that they close this year so I’m saying you know,
I still think there’s 30 to 40% malls out there that are very weak and failing and I’m going to say the store closure goes up and I just kind of picked a number because I learn to be more specific I sent from last year’s predictions,
I meant to say we have 9,000 or higher closures by the end of 2018 so it will be an even worse year than 2017.
I get a lot of tweets from these kinds of predictions.
I want stores be open but I just think it’s the reality that things are going a little bit worse in the the physical.
Store World especially malls before they get better I do think this is not an official prediction but I think you know 2018 oh probably be the low point then we’ll we’ll come back out of it.

Jason:
[29:30] Yeah I’m going to pile on your prediction in just say that,
both are true like retail could do better in 2018 we have so many stores in us that 9000 Source could close and retail sales could still go up,
so so that the two aren’t necessarily completely related but for sure seems like there’s still a bunch of vulnerable malls and vulnerable department stores in it,
frankly it wouldn’t surprise me if this is the year we see Sears close its doors.

Scot:
[30:00] The second one in this was kind of.
I was going to make this anyway but today in the press a friend of ours Gene Munster was out saying hey I think Amazon is going to buy Target and and he had kind of some interesting reasons behind that.
Scott Galloway is been kind of pounding his chest that they’re going to buy either Macy’s or Nordstrom’s or something like that I’m going to go out and say I think Amazon’s plate is full with Whole Foods they did that very specifically for grocery,
and they’re not going to buy another on.
Online retailer of size I think they’ll still open their own book stores will Pisces some more of that as grocery go kind of things and that kind of thing but I just don’t see them buying another brick and mortar retailer,
Chicago long with that I think that they had huge success with private label and they’re going to Triple down on that so kind of a double Amazon prediction there.

Jason:
[30:56] Nice I like it I like you being contrarian.

Scot:
[31:01] Write number three for me is I’m going to go back to my Amazon Logistics prediction because I think this is inevitable because of the you know what he charged this out the lines have to cross at some point at some point the number of packages,
to be delivered even by Amazon alone exceed the capacity to be delivered out there Amazon I’m sure he’s aware of that and you know if I’m down my I’m kind of.

[31:24] Planning for that eventuality so so again I think that in 2018 that.
You know that they are going to essentially do a lot more with Last Mile and effectively compete with FedEx and UPS certainly for their own packages and maybe for others.

[31:41] Number for TSO on this one we haven’t talked about Walmart in the prediction so I wanted to throw something in there for them I think I think Mark Lori is not done and I think they’ve done a lot there and I think she is just.
Starting to get swinging and you know I think the Walmart Wall Street likes this kind of really aggressive posture that they’ve adopted and I think that gives them a lot of flexibility so as I think will win what’s next on is.
Play I think they do a big m&a and you know part of me you would know better than that.
Groceries in wrestling I don’t think they buy another grocery store though so I can’t think what would it look like like Trader Joe’s or something.
Yeah so.
You know now that Target is bought shipped I could see Walmart taken out instacart or Postmates and then eBay is still kind of out there and I think.
Would be very powerful as a Marketplace partner for Walmart so I kind of put them in that bucket as well.

Jason:
[32:51] Cool cool.

Scot:
[32:52] Then any comments on them.

Jason:
[32:56] No I mean I feel like they’ve been rewarded for all the Acquisitions that they made in the last 18 months are there probably in Bolton so I would certainly be surprised,
Ted not see some acquisition activity in in.
2018 your your prediction seem to be around capability and infrastructure which could totally be a lot of their Acquisitions that’s far have been.
Actual Brands and so it’ll,
it just that out that’ll be interesting to see how that you know where where the focus is in 2018 and I suspect it could be opportunistic as much as strategic in terms of who’s available at the right price.

Scot:
[33:36] Yeah it kind of ties back to last year’s Casper thing.
You know that’s a nice scaled-up brand that once it starts down diepio path you have kind of this one time shot to go buy them I think that’s probably why she got taken out I think they were kind of,
Abdul pathan when you start filing for an IPO and having m&a talks so that could not throw that one in there to Casper could be a candidate.
My V prediction here is and I’m kind of getting into your world a little bit just cuz I wanted to see your reaction or anything.
Platform guy but you know the one platform that seems kind of out there alone is Magento so they were part of eBay they spun out that private Equity that means the Tock the clock is ticking,
it’s a great platform I think that they kind of do this tool path that they start down the going public and then they probably get acquired,
I’m not sure who acquires them seems like maybe a lot of the.
Cloud guide a lot of big guys have their Cloud solution nailed at this point.
Maybe Oracle maybe sap maybe IBM.
And so now you have more insight into the to the possible choir is it still learn to be less specific I’m not going to be specific on a choir so I think so kind of gets added into a larger Cloud offering.

Jason:
[35:01] Interesting yeah so it’s it was a weird year in platforms as far as I’m concerned like for a long time,
you got a lot of retailers that had no platform and said you know every year a bunch of retailers were buying a platform to start selling direct to sell digital am so you had to want a platform sales every year or you had a bunch of retailers it invested early and we’re in some outdated platform and so there you know every every like 3 to 5 years retailers were rhe platforming as the technology got dramatically better,
and so you ended up with these three huge Enterprises sap IBM in Oracle.
That were you know making a fortune on all these reply for meetings you had demandware now I’m by Salesforce to the big cloud one.
For long-time Magento dominated the long tail and then you know more recently Shopify sort of a cloud SAS version of.
Avalon tail has his emerged in course there’s a lot of other platforms but was weird that 2017 is.
No the Enterprise ones did particularly well I feel like the pace of RI platforming dramatically slowed down.
You’re hard-pressed to find someone that doesn’t already have a platform so there’s less new customers entering the market so it’s more replat forming and it feels like people.
Sort of the come to the realization that you don’t dramatically get better customer experiences just by replat for me and so it seems like a lot more people just invested in.
New tools are new plugins or new customer experiences for their existing platforms rather than reply for me.

[36:35] And I feel like that was an economic challenge for all these big companies that were used to.
A lot of expense every platforming happening every year and then you add insult to injury.
They’re able to charge a lot more or are certainly recognize a lot more revenue for selling a big expensive on Primm.
Perpetual software license then they are for selling s a service and so I think,
all the big guys had this double whammy of the economic model shifted that wasn’t favorable in terms of a gaap reporting in the customer slow down and so that you might find in a way that puts those,
does kind of Legacy guys that might have snapped at Magento for their customer base in the less of a acquisition posture so,
I would personally be a little surprised if one of those big 3 Snapchat Magento Magento still is an interesting asset and that they have tons of users,
in some ways there are more modern platform and something a lot of the other ones we talked about because they have kind of free architected more recently.

[37:39] There,
there may be a step closer to cloud and some of these other guys but they’re not pure Cloud their step closer to microservices but they’re not pure microservices so,
there I don’t know if they’re there an interesting I said they’ve got a bunch of users there maybe a half-step more modern and then so you know could could someone want to accelerate their own plan by by acquiring what Magento has,
you you could totally see it but it definitely isn’t a slam dunk.

Scot:
[38:11] And then assess my main 5 and then my bonus at this is really because I want it to be true,
and I know Jeff Bezos listen to the show so I have airpods which I really like but the Siri on them really stinks so what I want is Amazon to come out with Alexa powered wireless earbuds kind of an airpod competitor but with Alexa because I just want to sit there and have a conversation with Alexa what while I have little white things in my ears or whatever color the potty black or something so so my prediction is that Amazon will come out with that in 2018 and I have my fingers and toes crossed.

Jason:
[38:51] I like it the other way that can happen is Amazon and apple could just merge I don’t think either could acquire each other.
So so they could just merge and then they could put they could replace Siri with Alexa and then the airpods what’s your point of great Hardware could just have Alexa in the world would be a happy place.

Scot:
[39:10] My prediction is more likely than yours but I encourage you to make your prediction in your section.

Jason:
[39:16] No no no no I’m leaving that one firmly in your section alright,
well let’s run down my 5 so we we talk a little bit about grocery it was a prediction that they would wake up to digital last year I think this is the year that they totally get disrupted by digital and I think the thing that’s going to,
mainly drive that is curbside pickup,
so I actually think the digital grocery revenue is going to double in 2018 / 2017 we’re going to see a bunch of retards,
roll out a lot more capability to take digital orders for grocery.
And I think some of these delivery services could be the odd man out a lot of people have invested in building is delivery services like instacart.
And I actually think if if we see huge momentum for curbside pickup that we could see you know at least one of those delivery services get too stressed and have to do some kind of.
Disadvantaged transaction and that that that could include instacart as far as I’m concerned.

[40:22] So that’s my first prediction is a lot more of us will be shopping for groceries digitally in 2018.

Scot:
[40:30] You think curbside not not full on delivery.

Jason:
[40:33] Yeah I mean I think there’s some rich rich neighborhoods that are highly dense that the delivery will make a lot of sense.
And you know that might disproportionately be people that listen to the show but I think for the average American it’s going to be picking up your groceries on your way home from soccer practice.
I think that’s a.
Winning experience it’s 1% of sales in the US at 6% of sales in the UK it’s like 12% of sales in South Korea.
I think the early Pilots of all been so successful in the US that we’re just going to see sea rabbit adoption which by the way is going to mean that the retailers like Kroger and Walmart are going to report.
Much higher than industry average e-commerce sales in 28 growth in 2018 because they’re there the guys that are going to most benefit from.
From this grocery disruption I think an Amazon’s case it means we’re going to see Amazon roll out some kind of national capability for curbside pickup whether that means leveraging Whole Foods are building more of the.
Amazonfresh pickup locations or acquiring some other other business.
Opportunistic Lee that’s you know distressed in that the Amazon can get a really good deal on to give them more of these pick up Depot location.

Scot:
[41:55] Cool what’s number two.

Jason:
[41:56] Number 2 is a after grocery gets disrupted Pharmacy / prescription drugs are going to get disrupted by digital in in 2018.
So we we’ve seen some some early moves from Amazon that they might be getting into medical equipment.
And it wouldn’t surprise me of Amazon is the big drug disrupter in 2018 I know you predicted that they wouldn’t do a retail acquisition in 2018.
Well I kind of agree that they’re probably not strategically looking to acquire another big retailer I think I prefer Amazon has a lot of cash in there totally opportunistic so if the right deal fell into their laps I think they would do it.
And I actually think digital could so distressed the drug business that the drug retailers become.
A very economical acquisition or we can see some of the drug guys move out of the retail business and into the the insurance business more and then just want to spin off the retail and sell it cheap.
Here’s the thing to know about drug 60% of all their sales are traffic that came in to fill a prescription so if consumers start for filling their prescriptions VIA mail at home.
Or ordering stuff online and having it delivered to home then those retail stores don’t work if there’s not enough traffic in there to dry them.
They’re they’re not price competitive they tend to sell stuff at full pop retail and there’s too many of them so you add all that up and it would not take a huge amount of digital success to totally disrupt the drug business.

[43:37] And then you got the fact that the scariest business retailer in the world Amazon is is looking pretty carefully at the space.
And I think one way or another it’s a safe bet that drug gets heavily disrupted in 28.

Scot:
[43:48] Go to could help me with my 9000 stores I need.

Jason:
[43:51] Yeah absolutely and I I mean I also think just the changes in the insurance.
Industries in the US in the government Healthcare and all those other things are are potentially favorable consumers are learning that you have to shop for prices on your prescription meds just like you do.
You know any any other consumer expense and I think that that’s going to further open the door for that stuff so I hopefully it does help you out.

[44:16] So my third prediction is that the.
What I’m calling the the machine winning Gap is going to be the biggest trend for 2018 so you already said in a pretty last year that all the vendors would Embrace machine learning in a big way I think that totally happened.
I mentioned I didn’t think a lot of retailers that necessarily.
Fully Embrace machine learning and in 2017 I think they’re only a few examples.
In 2018 I think we’re going to see some retailers dramatically Embrace machine learning.
And we’re going to see a bunch of other retailers not embrace it does not have the resources or just you know be superficial and you know pay lip service or buy some.
Some small product that leverages it and so I think we’re going to see a big gap I think we’re going to see some retailers that are really good at machine learning and have.
Have them built it into their culture and a breaking down all those data silos and they’re just looking for every opportunity to train a logarithm is with all this customer data and use it to.
Deliver way better customer experiences and we’re going to see a bunch of other retailers that either don’t do anything or a very superficial and I think we’re going to see a big gap and customer experiences between those two camps.
I think you know obviously the the folks in Embrace machine learning we are going to be well positioned for the future in the sweater or doctors are going to get left behind.

[45:39] I don’t know how will measure that exactly so number for,
is voice I get asked that voice all the time that speak about natural language processing in boys Commerce I’m actually think 2018 is going to be a huge year for voice,
I go to CES this weekend I’m expecting we’re going to see you way more,
voice interfaces than ever before and I do think there’s going to be a lot more adoption of them in 2018 then there has been so far which I think 2017 was a big year but I actually don’t think.
A very big use case for all of these voice interfaces is going to be Commerce so my my prediction is,
voice continues to be a big deal for for interfaces for home automation for stuff like that but that it’s not going to be a big.
Use case for ordering products and the one exception to that is going to be the sort of Auto replenishment and using.
Using voice to add things to your auto replenishment list and kind of pause your list and modified and do those kind of think so I think with the exception of that one category where your.
You’re adjusting your consumable orders I think voices overhyped for Commerce is that a Debbie Downer for you.

Scot:
[46:59] You’re such a voice guy I’m so processing it I’m in shock.

Jason:
[47:03] I do like the sound of my own voice that is true.

[47:07] My fist it wouldn’t be a Jason and Scott prediction show if I didn’t talk about payments.

[47:17] So there’s a big Trend towards every retailer launching their own digital wallets Target is launching a digital while at right now in my big prediction is none of these retail brand of digital wallets are going to work.
I think there’s only room in the world the North American market for three digital wallets I think that’s going to be Starbucks Walmart Amazon so I don’t think other retailers are are going down the right path by,
by trying to implement that,
and I would heavily advised folks to 2 or I wouldn’t advise anyone now that I think about it but I think big point is going to take this year so I know there’s been a lot of Buzz and hide about Bitcoin,
super optimistic about blockchain and cyber cyber currencies in general but I just I don’t think Bitcoins going to be.
The viable currency to to emerge out of all this.

Scot:
[48:09] The okay so does that include blockchain and other coins or are just pick one.

Jason:
[48:17] So I don’t think we’re going to see a legal currency.
That the Cyber currency in 2018 I think we’re going to see blockchain becoming a super important technology for,
storing value for for Franklin sharing a lot of data and doing interesting things and a lot of Industry so I I certainly think blockchain is a super important and valuable,
technology but I don’t think we’re going to see you,
a branded currency emerge as a meaningful competitor to $2 and in 2018,
and I think the coin is going to be considerably less valuable on December 31st then it was December 31st of this year.

Scot:
[49:00] It’s too bad you didn’t make that prediction last year.

Jason:
[49:03] Yep.

Scot:
[49:04] That’s a good on Jack tonight we had many listeners ask for a deep dive on crypto and blockchain,
that is on our list for 2018 so we plan on doing a deep dive on that just so I do think and do some Sherby agree I think it’s important for folks in retail and e-commerce to have a pretty,
be a basic understanding of this technology and especially the blockchain cuz I think it’s going to be one of those things that there is reality there and it survives the hype and is pretty interesting,
track.

Jason:
[49:38] Totally I’m looking forward to that jump,
and then I did also do a bonus and I arguably we have the same bonus prediction so I tried not to overlap with you on any of the,
irregular predictions but I’m I feel like I’m comfortable space on the bonus I wisely decided to make my version slightly broader than yours so I have a better chance of being right,
I think we see Amazon watch some kind of wearable in 2018 and so the earbuds is a,
total good guess but some other kind of wearable speaker like I think some way to take the the,
Alexa technology with you is is something that Amazon’s going to figure out how to offer in 2018.

Scot:
[50:28] Cool I hope you’re right and I hope it’s your butts.

Jason:
[50:31] Yeah we should have to see that is the beauty TuneIn the episode 211.

[50:40] Scot that is all the time we allotted for tonight show or trying to get the shows a little shorter in 2018 so I predict were only moderately successful.
But I super appreciate everyone listening we will put all these predictions in the show notes so that they’re there memorialized and you can make fun of acid their dramatically wrong at the end of 2018.
If you have any thoughts about any of these predictions well for you to jump on Facebook and share your thoughts and if you enjoy their our show and enjoy this episode we certainly appreciate that five star review.
On iTunes.

Scot:
[51:18] Thanks everyone for joining us have a great 2018.

Jason:
[51:22] And until next time happy commercing.

Jan 3, 2018

EP111- End of year news.

Holiday Recap

  • E-Commerce up approx 18%, total retail up 4.8%
  • UPS Woes

Amazon News

Other News

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 111 of the Jason & Scot show was recorded on Friday, December 29th 2017.  Last show of 2017, happy new year everyone!  Tune in next week for our much anticipated annual predictions episode.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing

New beta feature – Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 111 being recorded on Friday December 29th 2017 I’m your host Jason retailgeek Goldberg and as usual I’m here with your hoes Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott shirtless after a long Jason Scott holiday decided to have you back.

[0:52] Yeah yeah we had to kind of this perfect storm where you had a bunch of travel ahead travel that offset from your travel and it has been 30 days since we laid down a Jason Scott show.

[1:06] Yes the first of all the most important question have you seen Star Wars yet.

Jason:
[1:09] I have I have made good use of our time off and I feel I got caught up on all the media that you’ve been frustrated that you haven’t been able to talk to me about so I got to see the Star Wars probably a week after you but.
Totally enjoyed it and I’ll see what I can do any spoilers but I feel like I was I was pleased and enjoyed it.

Scot:
[1:32] Yep yeah I loved it there there’s a pretty good second a fan of that hates it though so it’s been I know Chris.
Over at he was previously at Puma now at Izod is very upset about Star Wars we have to get him on the shoulder after more people have seen it took to hear his thoughts on it.

Jason:
[1:50] Yeah although we might have to reserve that for the e-commerce Star Wars fan spin off podcast.

Scot:
[1:56] Yeah yeah.

Jason:
[1:58] Slightly more nutrients.

Scot:
[2:01] But for hours.

Jason:
[2:03] But I feel like this is useful information only to you and not to any of our listeners that I have done some hard work in this month I’ve totally caught up on mr. robot and I was like over a season behind you on that.
And I feel like I’m almost completely caught up on all the The Avengers Netflix series so I’m I’m excited.
Chat in the in our pre-show prep sometime.

Scot:
[2:28] The content is really coming out rapidly though so have you seen you got to watch Discovery so Star Trek Discovery is good and then the new Will Smith movie on Netflix is really good I think you’d like it.

Jason:
[2:38] Not so I am cut up on Discovery and I agree I’ve been telling joining it other than the irritation of having to subscribe to.

[2:47] The yet another service for one show that’s the CBS Show Network.

[2:54] So I’m also watching the good fight just because we used to watch The Good Wife and we weren’t interested in striving just to watch the spin-off series but since we bought it for Star Wars we’ve been watching that as well.
Yeah lots of lots of good content and it is sort of merging with the Commerce world as many of our our friends than that, space it become the major content Publishers in the New World.

Scot:
[3:17] Yeah I guess pretty wild.
So weed since it’s been a month since we had a show we have a lot to cover and let’s jump into it so first we’re going to do some trip reports and then we’ll cover some news,
and the Scooby the last show 2017 so,
in next week’s episode what should be the first show of 2018 we that would be our annual prediction show where will review those predictions we made was it Jason episode 64 I think.

[3:45] Summer back then we made some bold predictions and we’re going to ask ourselves on those and then lay down our 2018 bold predictions for what’s going to happen in all things Commerce,
so that why don’t you could have told me you tell me about some of the nursing retail you saw as you were traveling around in December.

Jason:
[4:04] Yeah so I did do a bunch of trips in December I think ironically you may have gone to visit more new stores then I had but I did.
Mention and I hope a lot of people see it now I would I got to visit one of the very first Amazon pop ups in Whole Foods so there’s now a bunch of Whole Food stores that have these dedicated Amazon pop ups and they.
Have all the the Amazon branded gadgets and a few third-party Gadgets in the store so my local Whole Foods has one.
Nothing super surprising their inventory is really good though so like they had the the security cameras when they first came out I was able to get some of the.
The echo buttons for my Ferrari Alexis here at the house so we can play Jeopardy and do that sort of stuff.
And you course heard heard my device in the background responding to to our podcast cuz I forgot to hit mute.

[5:08] What interesting thing about the Amazon pop-up store it was interesting to me the point-of-sale that they’re running in the pop-up store is clover which is a super popular.
Small-business POS system I find it humorous because.
If you go into an actual Amazon bookstore it’s kind of painted check out because they make you use the Amazon app and they don’t accept cash.
And so somewhat ironic that these Amazon owned pop-ups inside of Whole Foods which is owned by Amazon.
Take credit cards through the clover but won’t let you pay with your Amazon account.

[5:44] So very very different retail philosophy than the Apple the Amazon book stores where they don’t show prices and.
Make use the Amazon app and all that sort of stuff but I have a feeling that has more to do with a expedience than any particular strategy.

Scot:
[6:01] Yeah I’m sure someone in the bowels of Amazon is working on it PLS for a Kindle what kind of a tablet I’m sure that’s in the works.

Jason:
[6:09] Yeah absolutely.
I also got to visit the Google pop-up store so this is an annual pop-up they do in New York it was in.
Tribeca last year and I think it’s in the Flatiron District which is just a little further north.

[6:25] This year and I would say was a little disappointing last year it was a net new retail concept that used it to give live demos of all the new Amazon Google Hardware.
And you know last year the home had just launched that is your first can see that the pixel it just launched they were showing the first VR headset since there’s a lot of like.
New hardware and it was kind of a cool experience in retail environment in this year.
Everything’s very incremental like it’s it’s basically the same retail environment as last year but with the newer Hardware in it and.
You know Google doesn’t have a lot of net new hardware this year it’s mostly.
Evolutions of the hardware they showed last year so you know Google home is better than a couple permeations now that the pixel 2 which is course better to have more apps on the Google VR but like there really wasn’t any.

[7:16] Marquee thing to see your experience in the the store this year that you would have done last year so I guess.

[7:26] If you looked at it on its own it was probably a good showroom by the way you can’t buy anything that’s inside of their showroom but if you compared it to last year it was it was pretty darn incremental.
And then I did last month have a trip to Amsterdam.
There’s not a ton of super interesting retail that would be relevant to this audience.
But one of the Novelties they have a very large Apple Store it was one of the European Flagship stores.
It’s now about 5 years old but it still has the distinction of being the the world’s largest Genius bar so it has this huge Genius Bar and the only reason I bring it up is its.
It’s kind of shocking to walk in the store to huge two-story store in addition to the Super One Genius Bar.
They have tons of project tables for various services that they provide and it’s it’s really a stark contrast to the fact that like.

[8:26] 75% of the of the floor space of this Apple Store is really dedicated to Services verses.

[8:34] Selling Apple retail products and I do feel this is a large evolution of the Apple stores that you know they have.
They’ve done produced that their party products that they carry you know they’re there more focus on Apple products than ever before but that the real role of the store has shifted from.
Introducing Apple products and selling Apple product to providing service for Apple products.

Scot:
[9:01] Yara are local Apple Store upgraded to that new kind of what are they call it Town Hall.

[9:07] Jars the growth and yeah I was surprised the number of skews they carry went way down on the third-party side like the whole speaker display went away in a bunch of that stuff and it is very much more of a service kind of an orientation which is which is very interesting.

Jason:
[9:21] Yeah and of course is Apple’s bottom or third-party unit products and made them first party products it makes it less appealing for them to carry the competitors.
Products of that that’s the only part of it but it it you know there is it gyro when you would have gone,
anytime you went by the Apple Store you pop in because you be likely to see something new if it wasn’t a new Apple product it would be some new accessories and you know now like,
you know if you’re very techy it’s not very likely you’re going to walk into an Apple store and and you know.
Have the excitement of discovering something new thing you haven’t heard of.

Scot:
[9:55] Yeah,
cool so I was in New York for a personal trip and we went up to see the tree in a couple shows and whatnot and hit a lot of retail and as we were kind of wandering around the city I had a list of things to check off for SUP was the Amazon store down by Empire State Building I had not been in that one yet so I wanted to see that and were the first people I see there is Jason Del Rey one of our friends the Jason Scott shows that was kind of a,
funny coincidence in the city of what is an 8 to 10 million people I run into Jason at the Amazon store.

Jason:
[10:27] No way was he working there is that his night job or was he.

Scot:
[10:30] No he was actually he in a fellow colleague had actually done at or behind that store is the prime now hub for I guess South Manhattan and they have done a tour of that as kind of precedent and your this was.
December 19th or 20th now that’s.
Yeah yeah somewhere in there so it’s going to peak season I guess they did got a tour during peak season is of President and he was exiting through the store just kind of have a look and ran into.

Jason:
[11:00] Yeah and I knew that wasn’t his side hustle I just want to make fun of them.

Scot:
[11:06] And then.
The it’s been about 18 months since I’ve been an Amazon store and I felt like the adenta lot of cool new stuff about having to act better integrated and the checkout was you could chuck check out anywhere which is kind of neat you didn’t have to go to check out a lot of cool things they’ve done there.

Jason:
[11:22] Yep and is there a coffee shop in that one that’s a little bit on the smaller side right ok Google.

Scot:
[11:26] It has a coffee shop yeah yeah I couldn’t tell we didn’t have time to stop by I could tell if they actually operate or if it’s a third-party it wasn’t Brandon Starbucks or any other brand or anything so it’s kind of Nursing.

Jason:
[11:39] And that is,
that’s on 34th Street in New York which is one of the more stories retail streets in the world that’s the largest Macy’s and a ton of retail flagships open up on that store so it’s pretty important retail real estate.

Scot:
[11:56] Yeah that’s what yeah we literally walk from there to Macy’s in like dinner a box or something wasn’t bad at all.
That was cool and it’s good to see Jason and then I stopped a lot of brand stores know we talk a lot on the the show about digitally native vertical Brands opening the store so I wanted to see some of them went to everlane which was in her everything’s kind of,
unisex Basics and the store was jam-packed that was does interesting he can actually buy stuff out of that stores there’s a lot going on there.
My favorite when I stumbled on it hadn’t planned to go is I read a lot about these sneakers called All Birds and,
there’s always described his slippers plus sneakers equals all birds and look at this really kind of wool soft kind of thing in the upper and then have a soft Rubber Sole.
I answered went there try those on those really fast and because that place was humming I mean it was like.
6 people deep try on shoes or when was walking out with boxes so you could tell there was a lot of energy around that store.
The most crowded one is a Skate brand called Supreme I’ve never had all these articles about this place where people wait overnight and.
Part of the whole thing is they only let like 15 people in this world of time cuz it’s really small so so went there sure enough there was a line literally around a New York City Block and it’s kind of funny the line breaks because.
Passes of all these other stores they get angry when that line go so you see the light you know she’s breaks in the line so.
People that don’t know how the line works all these International people trying to get in line they’ll just kind of hop in the line.

[13:26] They have all these bouncers to the line and they’re very Surly in this part of the whole experience for there, like you know this is not the end of the line go over here that’s in the line of their kind of mean to you so it’s funny to watch that.
Repeating the Supreme store and it’s literally like 60 skews in there and people were buying as much as they can get their hands on it also read that it’s.
Demand-supply so tightly most people that shop in there take all that stuff and sell it on eBay and Amazon so it’s really kind of a become a.

[13:54] People just got to camp out and get the stuff and sell it online to firstfield with looks so that was interesting.

[14:01] Yep then if you’re in the retail world you getting your gift run by story so I went by there they were quite busy and then there’s a couple new down in SoHo Adidas and Nike have some cool new stuff so I got to experience that.
All very good and then the one that was kind of thing is a e American Eagle I guess it is they have the say eStudio where is this whole concept that’s in Union Square.
Say it’s a denim shop in a laundromat and it’s kind of funny the laundromat was really more of a prop like no one was there using it,
looks like there are six machines that it almost never been choose there like these giant dustrial stainless steel machines this is I read several articles this is going to be kind of,
how to get Millennials back into the store with this this.

[14:47] Going to come get your laundry they’re going to shop while they do it the Millennials I was with can I give it a thumbs down they didn’t like that store the other things that you would have appreciated is every.
Every pair of denim had a tablet there they were too high and iPads.
But they were just sitting there plant looping a video there is no kind of integration with reviews and it’s got to start having been to the Amazon store where they pull everything from online into the store and then this one which is just like this.
Kind of looping video and spend all this money on these tablets for they were interactive at all I thought was kind of a big mess for those guys so good to experience a lot of retail on my truck which was fun.

Jason:
[15:23] Yeah it’s perfect that you were you got a chance to do that I was you went pretty fast.
Is the everlane store did you see anything digital in that store because unlike a lot of those other brands everlane really is the one that like,
started off as a digital Brandon and added retail and of course online they’re really well known for having Rich product information on there,
on their website and are super transparent like they showed up building materials for all the the products you know the real pricing for everything today have any of that in the store.

Scot:
[15:56] Not that I saw it felt like.

[15:59] It felt like a small Gap you know kind of the same kind of just Basics or like yours a sweater in four colors here is pants and five colors on a table there weren’t any I didn’t see any digital displays or any of that kind of stuff in the store.

Jason:
[16:13] Yeah that was my impression from earlier as well so it it’s interesting and disappointing a little bit that even when it’s an important part of your brand online that that.
A lot of these guys that are opening it just a few stores aren’t figuring out how to carry that through to their physical presence as well.

Scot:
[16:30] Yeah yeah, you need to walk over to the Amazon store and see how it’s done.

Jason:
[16:35] Exactly although Apple Amazon probably has some room to improve there too so hopefully next year will be talking about some of them cooler retailers that that are getting it right maybe that that should be a prediction for next year.

Scot:
[16:49] Yep yep you can always aren’t you so that’s the truth before it’s let’s start it, mac review of news how do you.
How do you feel the the holiday it’s too early to call it but we we should have a pretty good read here since we’re doing this after Christmas how do you think holiday went for 2017.

Jason:
[17:09] Yeah I am pleasantly surprised I’ll even go so far as to say that my slightly pessimistic Outlook going into holiday.
It has not proven to be the case so you know there were lots of Rosy predictions going in the holiday ever are almost every year by the way.
And I had mentioned on the earlier show that often times when you have a better than average year in sales it’s because you got.
Super Promotional and you know very marginal rosian so you.
You see all these great articles in December about have a good holiday sales were and then you’d see all these badass quarterly reports in January from all these companies that talked about how they didn’t make any money.
And so that still could happen but the.
Early indications are that we had pretty rough but better than usual growth in e-commerce we definitely had better than usual growth in brick-and-mortar Commerce and that it wasn’t.
A hyper promotional holiday where where you know we just got there by by dramatically cutting costs and starting some crazy.
Arms race so so that all looks pretty encourage.

Scot:
[18:22] Yeah yeah I’m seeing the same things I’m really interested in hearing how Amazon did so I’m on pins and needles until their fourth quarter of you because.
If if e-commerce accelerated kind of the 18 maybe 20% level and I think we could see a.
Amazon 30% Q4 which day did Jeremy slow down in the 4th quarter state.
Because it’s just such a big order for them it’s it’s hard comp to do well on so if they did High twenties R30 that that just means he just soaked up an amazing amount of of share so I’m curious to see what they were.

Jason:
[18:58] And that I mean we’ve already seen some predictions I think there’s a Barron’s article that that.
Said they like 50% of all holiday sale sales work was Amazon so that that would certainly boutwell of that proves to be true.
You know what one of the data sources we follow pretty close to use the MasterCard data and they’re they’re calling it a 18% growth in December for e-commerce and 4.8% for retail which is.
A big jump that would be the biggest growth since 2011 for a brick-and-mortar retail so that super exciting and then one cautionary Tale.
Maybe with a slight astrix there’s a couple firms that track.
UPS and FedEx on time shipping and it does appear that we ran into some capacity problems particularly with UPS.
So they’re reporting that UPS had a 89% on-time shipping over cyber 5 that’s obviously like.
You know one of the the biggest Peaks.
UPS is of course trying to be ready for that Peak but you know 89% on time is is pretty low that’s that’s what is lower than historic.
And then even in the first week in December they were 91% on time and that you know computers pretty unfavorably was like last year where they were at 97%.
On time for that same week FedEx which is used a lot less in the overall scheme of things for e-commerce is it like 99% on time.

[20:33] But these numbers are accurate which UPS dispute you might imagine the.

[20:42] It is a signal you know that that’s totally in line with this trend we’ve been talking about about these carriers just aren’t growing as fast as e-commerce and so we were perpetually having a bigger capacity problem every year.
For these Peaks and so you know UPS grew about.
8% capacity this year but we just said that the e-commerce might have been around 18 or 20% and that the result is that they’re having to put all kinds of extra strength and construction zone retailers about,
what does ship Win 4 for retailers in it you know you could predict project this trend out a couple years and it certainly seems that whatever retailer Zone,
their own last-mile capacity.
There’s only one are going to have a pretty big advantage over over the the rest of the industry as,
you know the industry continues to grow faster than then the UPS can can fulfill.

Scot:
[21:43] Yeah yeah the good news though is we didn’t have a debacle like was a 2015 and a 2015 is that one year we’re like 3 million packages gutensohn the system and it couldn’t keep up so.

Jason:
[21:55] And a lot of it just miss Christmas shipment which is the course the worst.

Scot:
[21:58] Yeah yes a lot of stress on the system but it did kind of held up it looks like you know what kind of mentioned Amazon in there but let’s make it official it wouldn’t be a Jason Scott show without talking about.

[22:27] So first let’s talk about Amazon does it come in manual pressure release the week after Christmas and I will put a link to it in the show notes but.
This is about me massive it’s like.
Literally 120 bullets of of highlights I pulled out a couple that I thought listeners would find interesting the most specific one is they actually said 4 million people.
Child Prime during the holidays which decimal specific number they’ve ever used about Prime,
and it’s a big number so you know most people kind of Peg Prime at maybe 60 million,
but if you have 4 million people just come in trial for the holiday that’s pretty amazing.

[23:13] You know if if if half of those stick that’s like a 5% bump right there and just Prime books they said the top selling item was the Echo. And then.
Add Amazon Alexa has been the top.
Download in the IOS app store which I’m sure Apple loves to see which is kind of nursing they also said tens of millions of Alexa enabled devices were sold.

[23:35] So I guess is range of 10 to 99 million devices what do you use to lower that range 10 in a lot of people have talked about.
These things aren’t that saturated there’s not many people using these devices you know that’s that’s it with 300 million consumers 10 million is.
Pretty much cereal I think that’s probably Global number too so interesting to see they’re pushing a lot of Alexa enabled devices out there.
There’s some tidbits around the marketplace they said a billion items were sold over the holiday season didn’t know Define the holiday season I’m going to guess they probably call it November one forward and I think they’re talking about.

[24:14] Thanksgiving for it at cuz they take a coffee run promotions earlier,
three-way abdulian items were sold in the Dover the Cyber 5 which is Thanksgiving the Cyber Monday they said third-party sold 140 million items on the Fulfillment side they highlighted the 10 performance centers had a million item days,
that’s a lot of items shipping out of the film It Center in this is kind of an interesting kind of flexing of their data science muscles I thought,
I thought you would appreciate they said these Coast has more holiday spirit than the West Coast because Alexa was asked play holiday music 2 and 1/2 times as frequently on the East Coast vs West Coast,
I really weird tidbit for them to pull out and it just kind of showed you know how these trends that are able to see through all the devices and machine learning capability that they have.

Jason:
[25:03] Yeah it’s it’s almost scary to think about like some of the insights they can get in human behavior was from all of that data.

Scot:
[25:11] Yeah they said like the most requested recipe was chocolate chip cookies the most requested song was Jingle Bells today I got a couple interesting things there.
When Amazon article I wanted to ask you about it said that these ad agencies and image of wpp Omnicom and pupusas.
Did they are spending 800 million in 2018 for ads on Amazon which is a 40 to 50% increase year-over-year I thought that was.
Interesting that the ad agencies are really waking up to Amazon as a an advertising video but then also I’m curious like we’re who’s losing the,
you know the the 400 million or whatever that Delta is in there is a coming from TVs coming from Google what what do you think about that.

Jason:
[26:04] Yeah it is super interesting that I mean Amazon is a great advertising platform for a variety of reasons and so I think we’re going to.
Continue to see them get more relevant at the moment you know what these are,
wildly rough estimates of third parties so I can’t get into talking exactly about what what pupusas suspend is with Amazon for example.
Directionally what I think you’re seeing at the moment is a ton of spending,
from brands on Amazon but it’s pending it’s coming out of the Brand’s trade budgets versus their marketing budget so when you you think about a.
A Big Brand a cpg like Procter & Gamble or an apparel brand or whatever like they’re likely is a CMO that has a marketing budget to build brand Affinity in his his KP eyes are things like unassisted brand recall.
He’s the one buying the Super Bowl ads and those guys I don’t think are spending a big trance are not shifting a lot of spin to Amazon yet.
But in addition to those guys there’s the sales person that owns.
All the sales that happened with Walmart or Target or Costco and those guys that have a budget,
to buy ads or promotional opportunities with those retailers to help sell products for that particular retail so traditionally.

[27:35] That could be coupons that they they co-published with that retailer order could be in-store advertising it could be an incap to make the product more visible order or these kinds of things and so now.
Amazon has become a major retailer for all these Brands and so it has an account team just like all these other brands,
and it has a trade budget just like all those other brands but instead of buying in store point-of-purchase displays or coupons,
they’re they’re spending that those dollars with a am at G and and you know most often AMS,
on Amazon platform and so if anything that those dollars are really shifting,
from other retailers that are getting smaller as Amazon’s getting bigger and the trade budget goes along with the sales,
on Amazon so you know that those dollars are probably coming out of Target more than they are coming out of network television advertising at this point.

Scot:
[28:36] Yeah I haven’t seen a circular in a long time but I’ve stopped getting the paper long time ago too so I imagine there’s there’s not a lot of opportunities to spend money on the circulars in those kinds of things.

Jason:
[28:46] OSHA disappointingly most retailers still have those programs and you absolutely can spend money on them and you know there’s a lot of sacred cows there so shifting dollars off of those things,
probably harder than it logically should be but but it’s certainly starting to happen and once those dogs get shifted to Amazon they become.
Way more measurable and.
Frankly most cases more effective in so you know once once that Ship Happens that becomes a great case study and I suspect a lot of seeing those are looking at those things.
You know I won’t be surprised if we see the the Big Marketing budget start to follow some of those trade budgets onto Amazon.

[29:28] Another Super interesting thing to me in this last month that we didn’t get a chance to talk about.
Is there have been a number of interesting signs about Amazon entering the.
The prescription drug market so that they actually got Pharmacy licenses in about 13 states.
And there are various kinds of Pharmacy licenses and this is not a license to dispense medications it’s a license to.
Dispense medical equipment so that could be the stuff you use for getting oxygen in your home or Walkers are all this this various medical equipment that Amazon that has a license to sell in like 12 or 13 states.
But when those licenses were disclosed you know that it became news Amazon’s looking at the the pharmacy business and you know whether it was coincidental or not.
We we saw CVS make a big announcement about a potential merger acquisition with Aetna,
that would sort of be emphasized CVS’s retail business,
of course Walgreens in the middle of a merger we’re seeing the big Pharmacy companies kind of,
try to diversify themselves and not be as as focused on retail at the same time that we’re seeing a number of interesting indications that Amazon might be getting into the the pharmacy business.

Scot:
[30:58] Yeah yeah the CVS setting the stuff was quite popular on CNBC is a way to kind of have an Integrated Health platform and should be interesting to see you.

[31:10] What stops Amazon from doing the same thing you know they could open up their own health insurance armor something there’s there’s no business I don’t think he was on would get into so to be a nurse in the seat.

Jason:
[31:20] Yeah I normally.

Scot:
[31:21] How that how it plays out.

Jason:
[31:22] When when you know Amazon gets in any new business like their quickly are people that run up and go well here’s why that business is different than other ones Amazon’s been successful and here’s why Amazon won’t be able to be successful here right like in in general,
all those barriers proved to not be very big barriers in Pharmacy one of those big barriers is that,
you know you really have to have a partnership in agreement with the insurance companies,
to enable the the folks that are insured by those companies to get their prescription meds from you and since that the traditional pharmacies of locked up a lot of those deals,
you know people have speculated it would be hard for Amazon to answer without a a insurance partnership.
And what’s what’s interesting is there’s a huge chunk of people that are now buying,
their prescription meds out of pocket and not using Insurance either because they’re underinsured or don’t have insurance or because they’re they’re finding that you can in many cases,
get better rates on the prescriptions than the negotiated race that the insurance company has locked them into in so you know one one piece of speculation is the Amazon could really be focusing on,
Pharmacy products for people that are paying out-of-pocket versus,
you know being a big part of the the insurance industry and of course it’s not outside the realm of possibility Amazon could buy a big insurance company pretty easily in the same way they bought Whole Foods.

Scot:
[32:54] Yeah yeah absolutely another kind of kind of.

[32:59] It’s going a little bit outside of Amazon but are our friends at recode. Jason had a interesting scoop where,
hi he had heard this kind of the cowboy rumors that Home Depot was looking at acquiring there are Logistics partner which is XPO XPO Logistics is.
A company that focuses on The Last Mile logistics for heavy items so if you’ve ever gotten something delivered from a Home Depot like Appliance or a set of cabinets or,
I furniture and that kind of thing XTO is well known for that and you know what what he was reporting is that.
Amazon’s looked at the company and if amp it as part of their Furniture efforts to Amazon’s doing a pretty big push into Furniture I’m sure Wayfair use XPO also but that I haven’t seen anything specific to that,
but if you have a pretty good lock on this kind of heavy stuff being delivered so you know what.
What’s interesting is Amazon sniff somewhere and other retailers really wake up and are starting to make pretty big news this would be like a 9 billion dollar acquisition so this isn’t just kind of a small,
defensive plays on these things that are happening here based on what Amazon’s doing so it’ll be interesting to keep an eye on that one to see what happens.

Jason:
[34:10] Yeah but you can you can easy to imagine you know you’re in one of these businesses that predominately deliver big heavy stuff like Home Depot or Furniture Company in Hugo hey what would happen to us if Amazon bought our fulfillment.

Scot:
[34:23] Yeah yeah seems like the best antidote for that is to start building up that kind of capability like like Amazon is doing so interested to see if,
retailers do that and what it would cost him,
Cheryl or she will be on board with that when I could dine ask you about that was announced during our break there was Target acquired shipt s h i p t there’s all these companies name,
Chris plays on the word ship this is D grocery delivery company I think they’re out of Alabama are some somewhere unusual they’re not a Bay Area delivery company,
Target acquired before between 500 and 600 million depending on how they’re not works and stuff so kind of furthering this kind of grocery delivery battle with what do you think about that.

Jason:
[35:05] Yeah it was so for clarification this is not the company that Kmart uses to ship your pants right so that’s an old e-commerce.

[35:17] For those of you that used to watch that the Kmart original e-commerce ads that were pretty funny will put a link to those in the show but yeah that was a big acquisition and and actually,
Target 2nd and condition this year in the Fulfillment Channel.

[35:35] And it’s interesting to for folks that aren’t familiar with shipped you can kind of think of them as like an instacart they they have a big network of.
1099 employees.
That they send to the store to pick up goods and deliver them same day to Consumers and so they they do some fresh grocery deliveries and they do a lot of General Merchant deliveries.
I need the have been doing some work for Target but they also do Kroger and Costco I think and so if you’re Target.
You’re buying this company that that a bunch of your competitors are using right now for same-day delivery and that’s a little bit dicey like target has said in the short run we’re not going to change them at all we’re going to.
Continue to use them and.
It’s a little tricky you you pay shipping $99 membership fee to be able to get deliveries from them and then you get deliveries from any of the retailers in their Network,
and obviously the more retailers they have in their Network the more valuable they are in the more likely they are to be able to get people to pay.
These $99 membership fees so if Target was investing in shipped hoping shipped would just grow as a separate entity.
It’s a scary investment because if your Costco.
You might not want to use shift anymore now that they’re owned by one of your competitors Target right and so.

[37:08] Potentially the company becomes West valuable when one of their customers buys it you know especially when they’re banking on this networking effective.
Of having more retailers in getting more customers.
The the other side of this would be to say hey Target just needs more capacity for doing same day delivery themselves and they’re buying ship for that that capability in there eventually going to,
ship them away from the separate business model towards just being a resource for Target.
And you know that would make a lot more sense but then they probably overpaid for it right because they probably paid a valuation based on.
On this growth projection that ship has it as a separate entity so it’s a little bit of a catch-22 how how Target will use them.
But it certainly makes sense that that retailers need to be thinking and investing in,
their own last-mile capabilities like particular you’re going to be in the fresh category you want to think about how you’re going to do home fulfillment on Fresh which is point to point.
So I think there’s some interesting things I’m glad to see Target making investments in here like this is potentially a risky investment.
Given that that you know Target’s claiming that they’re going to let them run as a standalone company in there there you know now potentially tainted as a standalone company given the throne by Target.

Scot:
[38:37] Yes they have to think the value is if we roll out same delivery to ask Target stores we generate y sales and it’s worth $500 to get why sales so I sales must be like in the billions of dollars which makes sense to me.

Jason:
[38:51] Yeah and Target you know which is doing well at e-commerce over 50% of all Targets e-commerce is fulfill from spores in so this is really,
Expediting that that’s for fulfillment and since target has a store close to someone that many consumers,
same day can be you know potentially cheaper than shipping and in many cases so you know it it is leveraging Target strength which is this this big network of stores that are close to Consumer so big picture I like it you know I hard to say whether they pay the right price for it or not.

Scot:
[39:29] We’ll save it for the prediction show but I’m curious if you think this causes Postmates an instacart to kind of if those pens fall as well from this acquisition so we’ll save it for next year.

[39:42] I want to report on is Stitch fix we talked about when they’re S1 was filed we spent a fair amount of time going through that and explain that model will since that show they went public and,
that is kind of a lukewarm reception so when you go public you put this range out there.
There ain’t nothing was 16 to $18 the price a little bit below that range at 15 which is an indicator that you know if people were concerned a bad the.
Have a negative backdrop blue apron had missed a quarterly number as.
Stitch fix was out on the road which is terrible timing these things happen so so they could do it you know that.
Google subscription models even though once food and wants apparel and we know on the show that’s vastly different problems to solve it but I think investors kind of said.
This is this is a challenging segment let’s punish but let’s let’s.
Not punishment put on more risk around the stitches thing get 15 but then was really interesting is,
there’s I want to go public there’s a about a six-month of three to six-month window before you announce your earnings,
so they didn’t have any news or anything.
People as they got familiar with the model I don’t know exactly what happened but it got up as high as 28-29 then they announced their quarter in December 19th and,
you know there there’s kind of Tale of Two Cities there I think they did really well on the quarterly results compared.

[41:13] Going forward they did talk about there should be some pressure on margins and having to spend a fair amount on sales and marketing to acquire customers some folks reacted negatively and then it came back from them so I would say it’s been a successful IPO there,
last I looked there in a market cap of about two and a half billion which is,
pretty good and you know so I think there are there out there doing really well and you know I think this investment is going to be with people watch to see can they really turn that into active.
Subscriber system.

Jason:
[41:44] Yeah and it’s not automatically a bit I know the higher price you get in that IPO you know the more money that is for the company in the short run but in the long run,
it’s not necessarily a horrible thing that you you have some room post-ipo for that kind of bump right in that bike,
certainly you know create some advantages in terms of equity for employees and and all that sort of thing right.

Scot:
[42:12] Yeah yeah there’s.

[42:15] Target also depends on who’s selling IPO so do you have primary source and secondary shares so if your investors are selling in diepio and they get a low price that’s going too bad because they are looking for a high return,
what is the company selling shares you know there is an argument to be made kind of Goldilocks it be somewhat conservative other people tell you no.
Did Equity you’re selling you should maximize the value of that and do what you can so I think it’s a.
Nothing and I was just one mile marker on this very long road and it’s really kind of start of a New Journey so so I think it’s good that they’ve done well and and people are following them and there’s been some turning there still there.
Base of shareholders but it seems to have gotten sticky and people that are believing it or are there now know there are a lot of naysayers that kind of talk about it.

[43:07] They don’t believe that it’s kind of an algorithm company and it is it is hard when they also say they have something like 3,000 stylus them company with 3000 stylish set up so people are still trying to figure that out.

Jason:
[43:22] Yeah and that you know they truly are an interesting company that they’re certainly claiming a lot of interesting successes or an artificial intelligence and you know both,
gopher merchandising for for you know deciding what goes in that that fix that box and,
you know how sticky those products are two customers how many they keep but also they’re starting to use that artificial intelligence to Define new products and and sticks Stitch fix his kind of shifted from,
predominantly being a reseller of other people’s apparel tub to producing their own products based on this artificial intelligence data now that they have.
This big critical mass I think it’s we’ve talked about on the show before the chief data scientist there is that Chief data scientist from Netflix so,
pretty credible team on the artificial intelligence stuff and in many ways these guys are the poster child for artificial intelligence research retail so if.
It’s cool that they’re public in there.
You know disclosing more information and we’re getting a c under the under the covers a little bit more so certainly someone to to follow closely.
For that also interesting that you know it’s a female run company and I say that because the the next piece of news we have is about another new weed female run company which is Colts.

Scot:
[44:41] Yes yes a Kohl’s promoted their Chief digital officer to CEO so we actually had Kevin on the show Kevin Manziel and,
this is this is really not official yet I mean they’ve announced it but it doesn’t happen until I think May of next year but there’s been a lot of Articles kind of talking about how she’s going to save the company.

Jason:
[45:01] Yeah I’m always excited about this because Michelle is the latest in a sort of class of the.
Digital Executives becoming the chief executive of the company and you know that we’re really just starting to see the first wave of those so am I mean like one of the very first ones.
Was Art Peck who’s now who is the VP of e-commerce at Gap and is not running Gap.
Billy Mays been on the show Huey Ren e-commerce for Abercrombie & Fitch she’s now the CEO at surlatable.
How often is is a guy we know well in the industry that ran digital it at Home Depot and then became a senior executive at eBay and he’s not the president at Macy’s.
And so you know Michelle is is the latest in in this class and I’ll be really interesting to see what she does at Kohl’s which is.
Particularly interesting Lee position so it’ll be another in some ways there like the department stores that are.
Really struggling right now and are looking for some reinvention and in some ways they have some.
Unique advantages around pricing and treasure hunting and you know things that have traditionally been hard to do digitally so it’s certainly going to be interesting to follow.

Scot:
[46:20] Did you see that article about so Walmart has this incubator called store number 8 and they’re working on some pretty cool stuff I figured you’d be work to speed on it than I am.

Jason:
[46:29] Yeah they they’ve name this incubator store 8 which is a based off of a Walmart store 8 which was the Prototype store and they are.
Like both have a bunch of internal projects and are investing another projects.
The they’ve announced a couple projects recently one that that is potentially a competitor to the Amazon go which.
Will probably be talking soon as I have done a deep dive in the past will probably be talking about again the future because I I strongly suspect pretty soon that Amazon go stores going to open to the public.

[47:05] Walmart store 8 his has announced a bunch a bunch of initiatives around VR so this one Katie Flanagan who runs that the incubator for Walmart.
And she’s very bullish on the future of VR Commerce and so they they recently had a big guy with the Huffington Post and they should a bunch of.
Of tech startups that are doing.
You know there is interesting things with VR increasing when you with Walmart brand so they showed I got a mod clown cloth be our concept in.
A bona bus VR concept and I have to say there’s a ton of interesting stuff coming out of the incubator I have great respect for the.
The team at Walmart but I am not personally as a bullish on VR Commerce in the next couple years as it feels like they are I think it’s.
You know it’s an interesting technology but like in many ways it’s it’s it’s to sort of awkward and intrusive.
To really be a convenient shopping experience and you know most cases you know the shopping experiences that are winning are the ones that are lower friction than anything before.
And you know throwing on all this awkward VR equipment to go shopping.
Doesn’t feel super super exciting to me like if anything I’m I’m more optimistic on the sort of a our experiences than the VR experiences.

[48:34] Why does minor people than me at Walmart so it’ll be interesting to see how that all plays out.

[48:39] But you know predicting the future is exactly what we’re going to do on our next show so assertively TuneIn.
2 2 episode 1 12 or we’ll recap the Bold predictions we made from last year,
Anna Scott and I will both share what we think are some of the surprising things that are going to happen in 2018.
And with that I’m happy to report that it’s happening again we’ve used all our a lot of time.
So we certainly appreciate all of our listeners sticking with us if you enjoy the show we’d love to get that 5 star review on iTunes weed encourage you to leave feedback on our Facebook page and continue the dialogue.

Scot:
[49:20] Thanks everyone for joining us and have a Happy New Year.

Jason:
[49:23] Until next time happy commercing!

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