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Jun 29, 2018

Podcast Summary:

Physical storefronts are evolving. Our notions of the traditional brick and mortar store are fading into antiquity. It seems like every day we’re hearing about retail giants like J.C. Penny’s, Sears, Kmart, Toys R. Us, and others either are either shuttering their stores or going out of business altogether.

For those consumers who enjoy heavy doses of nostalgia, it can be a bit depressing to see these retail stores sitting vacant. Most of us can remember when malls were the go-to hangout spot, when we ran rampant with friends, window-shopping and spending hours loitering in food courts. Others can remember lazy Sundays travelling from store to store with our parents to get all of the household necessities. Now, we can get everything delivered through the click of a mouse, a tap on a screen, or even by simply saying it aloud to our smart devices.

So what does this evolution mean for consumers? What does it mean for retailers and brands? How can shops keep up with the ever-shifting digital market, especially when they’re competing with juggernauts like Amazon?

In this episode, we will discuss some of these questions and more.


Personalization and the "Store for One" Future of Retail:

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Amy Lombardo:                00:00                    

Physical storefronts are evolving. Our notions of the traditional, Brick and Mortar branch is fading away. It seems like every day we're hearing about Retail Giants, like Walgreens, Sears, and even recently Toys R Us, are either downsizing their stores or going out of business altogether. For those consumers who enjoy heavy doses of nostalgia, like myself, it can be a bit depressing seeing these retail stores sitting vacant. Most of us can remember when malls were the go-to hangout spot where we ran into friends, window shopped, and spent hours loitering in the food courts. Others can remember lazy Sundays traveling from store to store to get all the household necessities. Now we can get everything delivered through the click of a mouse, a tap on a screen, or even by simply saying it aloud to our smart devices. What does this evolution mean for consumer? What does it mean for retailers and brands? How can shops keep open with the ever shifting digital market, especially when they're competing with Juggernauts like Amazon?


Today, I'll be speaking with Dave Kuchenski, Diebold Nixdorf's Director of Retail Strategy, about the life, stagnation, and evolution of the physical store and how retailers can move with the ebbs and flows of the digital tide. Through all this, one thing remains certain, Brick and Mortar isn't dead, it's just changing. I'm Amy Lombardo, and this is COMMERCE NOW.


Welcome to COMMERCE NOW, your source for Fintech conversations, along with emerging trends in the banking and retail industries. Hey, Dave. Thanks for joining me.

Dave Kuchenski:               00:00                    

Hey, Amy. How are you? Thanks for having me.

Amy Lombardo:                01:54                    

Okay, let's get started here in the conversation. In today's ideal consumer experience, it seems like many businesses, whether you're B2B or B2C, are emulating Amazon. I almost think Amazon is that cool kid in high school that everyone wants to be like. They always have the cool trends right away, and they're always on the cutting edge. Talk to me a little bit about that. Can you explain opportunities retailers are looking at via the Amazon model, and how they could inject themselves into the digital ecosystem?

Dave Kuchenski:               02:28                    

Yeah, sure, Amy. A lot of things have changed today. I think we're seeing really four major impacts to retailers. And I think the first thing is that technology is changing very, very rapidly. We just did an analysis of the Gartner Hype Cycle, and we looked at technology as it was in 2003, and technology as it was predicted in 2017. And the interesting thing is back in 2003, there were a lot less technologies back then and those technologies, a lot of them were backend type of technologies. As you look at today, you got things like machine learning, AI, things that are directly affecting the consumer. It's a bit of a change. Technology is evolving much faster today. It's not like it used to be, where pace of change was slower, it was all about product placement and price, and inventory management. The landscape is changing today, very, very quickly.

Amy Lombardo:                03:33                    

Okay. Tell me a little bit about these technologies, and how they are influencing consumer behaviors?

Dave Kuchenski:               03:42                    

Yep. For the last, I'd say 10 years, it's been about the mobile device. It's not only the mobile device today. The mobile device is still the primary point of interaction for the consumer. It's the key driver to almost everything we do today. We're all attached to it. It's not only that anymore. It's voice controlled speakers, it's connected appliances, Smart TVs, digital watches. Even our cars are connected now and interacting with our phones. All of this creates new opportunities for the retailer to be connected. And its new opportunities to engage consumers. This gives brands and retailers more opportunities to inject themselves into the digital ecosystem, and earlier in the purchase journey. No longer is the predominant purchase journey started in the store. Being greeted by a staff member, because of this digital disruption, we're speaking to Alexa, or to Google, our TVs, our watches, as we browse, research, engage, purchase. The journey starts well before we ever set foot across the line of the physical storefront.

Amy Lombardo:                04:55                    

Okay. With these different types of technologies and where the consumer is starting this journey, how easy then, is it to deploy this type of technology today? Does it exist on a mass market scale?

Dave Kuchenski:               05:11                    

Yeah. Obviously, Amazon has resources that the average retailer doesn't. They run a massive, one of the largest, if not the largest, cloud business out there. They have processing resources that most retailers don't. What I think is important for retailers to do, is to focus on their consumer journey's and then apply technology to that consumer journey. A lot of people, they look at technology and they focus on the technology first. I'm going to go deploy a CRM, or I'm going to deploy a mobile application. Without ever thinking about the impact to the entire journey. I think it's important for retailers to sit down, look at their consumer journeys, and then figure out what technology should I use to enable that consumer journey and deliver the best experience possible to my consumer.

Amy Lombardo:                06:03                    

I was having a discussion with one of my colleagues yesterday and we were talking about the balance between what the consumer demands and then how the technology keeps up with it. You were talking about the fact that it's not just, let me introduce them technology, but find out about the consumer behavior first. On the flip side, we talk to so many organizations that are all about the consumer experience, but they can’t possibly execute it because their technology is still so many years behind, or it's not set in a way that it can be easily refreshed. Can you talk to me about that a little bit? Are you finding that here in your work with retailers?

Dave Kuchenski:               06:49                    

Yeah. Legacy technology is always a hard thing to overcome. What I think is most important is to start with, what are the biggest pain points in my customer journey. Start with that mapping. Start with what is the experience that I'm delivering to my customer. Find that pain point and then figure out, what is the technology that you may need to implement to alleviate that pain point, or at least make it better. I think taking a step back, and looking at that customer journey, I think is the most important thing.

Amy Lombardo:                07:24                    


Dave Kuchenski:               07:26                    

Shopping behaviors are changing rapidly today. No longer is the day where consumers are coming into the stores completely uneducated. There's a lot of independent product research that's happening. Consumers come into the store and they're more educated than they ever were. You have access to things like Amazon reviews, or Google reviews, mounds of product research done by independent companies. That behavior is changing. A lot of manual tasks are becoming digital. Take the traditional shopping list, for example. Why wouldn't I save myself time capturing a hand written version into an electronic format? Or better yet, reusing portions of that list that I buy regularly? Or capturing these list via voice assistant? Or even uploading these to my personal self-scanning system when I enter the grocery store? There's a lot of things that consumers used to do, that they aren't doing anymore.


Social interaction with brands. This is another dynamic that's really changing the way that retailers behave. The social interaction through Instagram or Snapchat, or pick your favorite social media, is creating this new ecosystem or platform for retailers and brands to interact with their consumers. It's almost, the way I used to find out about a product was through a commercial on TV or an ad in a magazine. Today, I can interact directly with the brand and then brands also have these Ambassadors of the brand that are thought leaders out in social media that represent different products and brands. The dynamic between the brand and the retailer, and the consumer, is evolving significantly. And then the final thing, technologies influencing expectations as we talked about a little bit. No longer is the two day delivery cycle short enough. Consumers want products that day. They want it, even though I've ordered it offline, I expect it to be there by eight o'clock the next evening. And this is really impacting retailers and how they think about delivering experiences to consumers.

Amy Lombardo:                09:40                    

Right. You gave a great example about the grocery store. I think about the fact that I buy milk and bread, and those lame sugar infused yogurt tubes for my kids every week. Why am I not just automatically having that in some sort of checklist?

Dave Kuchenski:               10:00                    

Yeah, yeah.

Amy Lombardo:                10:01                    


Dave Kuchenski:               10:01                    

Yeah, definitely. You can definitely utilize technology as a consumer to be more efficient. That's for sure.

Amy Lombardo:                10:06                    

Yeah, okay. I want to go now to the online versus the in store shopping experience and just how those two types of shopping engagements, are looking like in today's day and age.

Dave Kuchenski:               10:27                    

Yeah. Yeah. We talk about Amazon Go and how big of an effect that that's had on retailers, but I think obviously the online shopping journey has impacted in store shopping more than we can even realize. Expectations are different, journeys are different. When I visit a website or even the social media that we talked about, online retailers are aware of that. They know what I'm looking at. They know how often I visited their site. They're capturing data through things like my IP address, or whatever that data is that helps identify who I am and why I'm visiting their site. They're using that, and it's a major advantage for them to be able to deliver ads and offers, make product recommendations based on my shopping history. All the way through me reviewing the purchases that I just bought, and them being able to come back and say, “Hey. Since you purchased this and you really enjoyed it, you might like this as well.” That's a huge benefit to online shopping.


The in store shopping, traditionally there's been this blind spot. We call it a blind spot. From product discovery, through research, through browsing the store trying to find what I want, retailers don't know who I am, physical retailers don't know who I am, why I'm there, what I'm there to buy, what I've picked up and put in my cart, or maybe put back. They find out what I purchased after I go and complete that purchase and they get data about that visit. They have no opportunity to capture me in the store. Those in store advertisements are just general to consumers. They're not targeted to me and my specific needs. I think that's the big difference between online shopping and in store shopping. It's something we've thought about a lot and how we can potentially overcome that.

Amy Lombardo:                12:32                    

This blind spot concept, it's interesting to think about because you're right. You walk into any type of retail establishment, and to your point, it doesn't matter what demographic you are, they're just assuming that you want to buy that milk, that bread, or that lame yogurt infused tube. Okay. Are there recommendations of how to remove this “blind spot??”

Dave Kuchenski:               13:01                    

Yeah, I think so. It starts with how do you begin to identify consumers. Things like utilizing the mobile device in store, coordination with mobile applications, and things like beacons and try to identify who a consumer is, what they're relationship is with you. It's really about creating a deeper, more dynamic relationship with that consumer as they shop. And then the better you get at those customer journeys the better you get at applying the technology, the more efficient the retailers going to become at being able to potentially remove that blind spot.

Amy Lombardo:                13:41                    

Could you see that these physical establishments, the in store shopping experience, could actually have the reverse effect of what it has right now, and actually grow and return back to popularity?

Dave Kuchenski:               13:55                    

Absolutely. I think there's a ton of examples out there. We're going to get into this in the next podcast. But, there's a ton of examples of retailers that are using their Brick and Mortar footprint as an advantage in different ways. There's always going to be this need of consumer wanting to go in and touch and feel an item before they purchase it. Retailers are leveraging that. The more dynamic you can make that shopping experience, as I'm touching and feeling things, providing me with information about products, that's a really interesting concept. Used to be retailers would base their product selections on good, better, best. And then they would price them as such. I think that is changing. Retailers are having to think about what are the best products that I can put in my stores because consumers are more educated. They know that products have a material defect to them. And putting out a cheap product and expecting that consumers are going to buy it nowadays, doesn't always fly.


Retailers are thinking about their stores as fulfillment centers. This network of mini warehouses that could potentially enable them to do same day delivery within a few miles. There's a lot of examples of that out there. I think it's getting creative with how you think about your Brick and Mortar footprint, because there's examples out there in the market of both. Retailers that think about their Brick and Mortar footprint as traditional stores, and they remain that way. And I think if you look out in the market, those retailers are really struggling. And then you look at retailers who are thinking about their stores as more dynamic, the role of the store is changing and those retailers are really starting to thrive. Ulta is a great example. They just released earnings a few weeks back, and they've shown significant growth. They're looking at things like picking up products in store that were ordered online, or buying something in store and having it delivered to the house. Fulfillment through the store itself. That's a great example of a company that is truly rethinking their consumer journey and is thriving in their earnings because of it.

Amy Lombardo:                16:30                    

Right. Okay. I think this is a good place to stop in the conversation today, and Dave, you made my plug already for our next podcast, and how we'll jump into more of these examples of these retail giants and how they're finding different ways within their channels to compete. Thanks to the listeners for joining us for COMMERCE NOW, and subscribe to our podcast or find more information at Thanks for listening.