WEBVTT - Barbara Kahn Discusses the Retail Revolution (Podcast) 0:00:02.240 --> 0:00:06.800 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:09.760 --> 0:00:12.240 This week on the podcast, I have a special guest. 0:00:12.360 --> 0:00:15.800 Her name is Professor Barbara Con and she teaches retail 0:00:16.200 --> 0:00:20.240 and marketing at the Wharton School of Business. If you 0:00:20.320 --> 0:00:25.000 are at all intrigued by the impact of not only 0:00:25.239 --> 0:00:30.720 Amazon on the worlds of retail, but how overbuilt retail is, 0:00:30.880 --> 0:00:34.440 and why it's inevitable that B and C class malls 0:00:34.840 --> 0:00:38.839 would would go out, why so many retailers are failing 0:00:38.880 --> 0:00:42.280 to keep up, failing to compete, why it's inevitable that 0:00:42.320 --> 0:00:44.520 we're going to see a lot of these retailers go down, 0:00:45.080 --> 0:00:51.320 and how all these really interesting applications of data, analytics 0:00:51.400 --> 0:00:57.560 and technology is completely changing how retailers operate. Uh the 0:00:57.640 --> 0:01:01.480 experiential aspect of it, the ability need to capture data 0:01:01.720 --> 0:01:06.920 in stores that previously only existed online is a very 0:01:07.040 --> 0:01:11.560 very significant change, and the ramifications from that are going 0:01:11.600 --> 0:01:14.240 to be felt for quite a long while. With no 0:01:14.319 --> 0:01:18.040 further ado, here is my conversation with Professor Barbara Con. 0:01:22.000 --> 0:01:25.040 I'm Barry Ritolts. You're listening to Masters in Business on 0:01:25.120 --> 0:01:29.160 Bloomberg Radio. My special guest today is Professor Barbara Con. 0:01:29.720 --> 0:01:32.920 She is a professor of marketing and a director of 0:01:33.000 --> 0:01:37.040 the J. H. Baker Retailing Center at Wharton, part of 0:01:37.080 --> 0:01:40.839 the University of Pennsylvania. Previously to that, she was dean 0:01:41.040 --> 0:01:44.479 at the University of Miami Business School. She is the 0:01:44.520 --> 0:01:49.760 author of The Shopping Revolution, How successful retailers can win 0:01:49.880 --> 0:01:55.440 customers in an Era of Endless Disruption. Barbara Con Welcome 0:01:55.440 --> 0:01:57.720 to Bloomberg. Well, thank you very much. It's fun to 0:01:57.760 --> 0:02:00.320 be here. Uh, it is, and and this is such 0:02:00.360 --> 0:02:05.440 a fun topic. I really enjoy uh the subject. And 0:02:05.600 --> 0:02:07.880 let's just jump right into it. It's a chapter in 0:02:07.920 --> 0:02:12.560 your book. I have to start with how disruptive is Amazon. 0:02:12.639 --> 0:02:16.240 It seems like every announcement they make royal is an 0:02:16.360 --> 0:02:19.359 entire sector of the stock market. Yeah, it's really amazing. 0:02:19.480 --> 0:02:22.400 Every day something new from Amazon, and every day there's 0:02:22.480 --> 0:02:25.639 massive reaction and a lot you do see stocks move 0:02:25.720 --> 0:02:28.920 up and down as Amazon says something or other threatens 0:02:29.000 --> 0:02:33.800 to go into health industry, into financial services. People are afraid. Um. 0:02:33.840 --> 0:02:37.639 And it's interesting because what Amazon does is a disruptor. 0:02:37.680 --> 0:02:40.560 There's no doubt about it. Um, and they disrupt. One 0:02:40.600 --> 0:02:43.080 of the most famous Jeff Bezos quotes, which I have 0:02:43.160 --> 0:02:46.440 never seen actually written down, but everyone on the internet swears. 0:02:46.480 --> 0:02:50.600 He said, this is your margin is my opportunity, and 0:02:50.639 --> 0:02:54.440 that idea of taking out margin, in other words, taking 0:02:54.440 --> 0:02:57.680 out profit is pretty scary and when they can do 0:02:57.720 --> 0:03:02.280 in a sustainable way, that's disruption. So let me broaden 0:03:02.360 --> 0:03:07.799 the conversation. Online retailing isn't even double digit yet, it's 0:03:07.840 --> 0:03:12.120 not ten, of which Amazon is just under half. Are 0:03:12.160 --> 0:03:15.680 we getting a little all worked up for five of 0:03:15.760 --> 0:03:19.280 the market, or is the overall trend what's scaring the 0:03:19.480 --> 0:03:21.600 Jesus out of everybody? You know, I don't think it's 0:03:21.639 --> 0:03:24.519 that online per se. I think it's changing the whole 0:03:24.560 --> 0:03:28.120 shopping experience. People talk about as omni channel, but right 0:03:28.120 --> 0:03:32.840 now it's just retail. Retail is now become a seamless 0:03:32.880 --> 0:03:37.960 integration between online and offline. The the original online retailers 0:03:37.960 --> 0:03:40.920 are opening up stores. Even on Amazon is opening up stores, 0:03:40.960 --> 0:03:43.600 which is kind of mind boggling that they're opening up bookstores. 0:03:43.680 --> 0:03:46.520 You know, well, it's been so successful for Apple. Are 0:03:46.640 --> 0:03:49.920 some of the other technology companies trying to imitate that? 0:03:50.240 --> 0:03:53.080 You see that? Also Microsoft, and you know, I mean Sony, 0:03:53.120 --> 0:03:55.720 which is electronic they're opening up a direct store for them. 0:03:55.920 --> 0:03:58.280 But when they open up these new stores, they're different 0:03:58.280 --> 0:04:00.440 from old stores. They're not the same thing at all. 0:04:00.480 --> 0:04:03.440 They're much more concentrated on customer experience. Some of the 0:04:03.480 --> 0:04:05.680 new stores that open up a showrooms, they don't even 0:04:05.720 --> 0:04:08.680 carry inventory per se. And that's part of the point. 0:04:09.000 --> 0:04:12.119 You really can't say what's the percentage of shopping online 0:04:12.160 --> 0:04:15.160 anymore because some people will shop online pick up in 0:04:15.200 --> 0:04:17.360 the store. Then where do you where do you code 0:04:17.360 --> 0:04:19.400 that you know what what is that is that online 0:04:19.400 --> 0:04:22.680 shopping or offline shopping? So I've experienced that with both 0:04:22.720 --> 0:04:26.760 Home Depot and Lows. You want something specific, they may 0:04:26.800 --> 0:04:30.719 not have this particular snowblower, but you can buy it online. 0:04:31.120 --> 0:04:33.320 They're shipping stuff to the store anyway you pick it 0:04:33.400 --> 0:04:36.960 up there. There's no additional shipping cost. Yet you feel 0:04:37.040 --> 0:04:40.839 like you're actually making it as friction free as the 0:04:41.000 --> 0:04:44.920 usual online shopping. Is that what's meant by omni channel 0:04:45.000 --> 0:04:48.760 is everything to everybody. Omni channel is thinking about not 0:04:48.920 --> 0:04:51.760 dividing up whether it's online or offline. It's all one 0:04:51.800 --> 0:04:54.520 big channel, and that's going to become not a real 0:04:54.520 --> 0:04:56.040 word anymore, and we're just going to think of this 0:04:56.080 --> 0:04:59.120 as retail you know, when you buy retail, you can 0:04:59.160 --> 0:05:01.160 go online, you can go in the store, you can 0:05:01.200 --> 0:05:03.839 pick up there, you can buy there, whatever, shop it 0:05:03.880 --> 0:05:09.000 on your phone. So I've noticed at stores like my 0:05:09.000 --> 0:05:11.719 wife calls is a retail therapy, but it's stores like 0:05:12.320 --> 0:05:16.200 Macy's or Lord and Taylor. If you're looking at something 0:05:16.279 --> 0:05:20.880 in a salesperson, some of these stores still have sales assistance. 0:05:21.960 --> 0:05:24.919 If you're looking at something and they don't have it 0:05:24.960 --> 0:05:28.240 in the color, size, whatever you like, they're very quick 0:05:28.279 --> 0:05:30.600 to say, we can order it now and have it 0:05:30.680 --> 0:05:32.440 shipped to your home for free. Would you like to 0:05:32.480 --> 0:05:35.320 do that? And if it's something you're familiar with the size, 0:05:35.360 --> 0:05:37.160 it's like, yeah, sure, it's one less package I have. 0:05:37.839 --> 0:05:42.040 They don't want to let any transaction slip away without 0:05:42.240 --> 0:05:45.799 converting it to an actual sale. Has that been your experience, 0:05:45.920 --> 0:05:48.360 Oh for sure that's the case. So there's not all 0:05:48.400 --> 0:05:50.960 the traditional retailers are doing that now. So this is 0:05:50.960 --> 0:05:54.839 a purposeful approach, not just one savvy sales person. Yeah, 0:05:54.839 --> 0:05:56.559 you know, but I wonder when you tell that story, 0:05:56.600 --> 0:05:58.440 one of the things that's interesting to me about is 0:05:58.480 --> 0:06:02.280 whether that salesperson's on commits or not, because and that's 0:06:02.320 --> 0:06:04.480 what I think is interesting about say, what I consider 0:06:04.560 --> 0:06:08.160 a very creative retailer like Sephora, where the salespeople are 0:06:08.200 --> 0:06:10.359 not on commission. And the reason I bring up this 0:06:10.480 --> 0:06:12.839 point here is when you say I'll send it to 0:06:12.880 --> 0:06:15.760 your store, send it to your home, is she really 0:06:15.760 --> 0:06:18.440 trying to she or he the sales associate, really trying 0:06:18.440 --> 0:06:21.160 to give something of value to you, which is the 0:06:21.200 --> 0:06:23.279 way you told the story, or were they trying to 0:06:23.360 --> 0:06:26.719 upsell so they make a commission. And that's a subtle difference, 0:06:26.760 --> 0:06:29.400 but I think it's an important difference. Well, if you 0:06:29.640 --> 0:06:32.680 walk in to a store and you find something you 0:06:32.760 --> 0:06:36.200 like and I'm looking at three Let's say we're looking 0:06:36.200 --> 0:06:40.119 at shirts and there are three different colors and extra 0:06:40.200 --> 0:06:43.240 small up to double XL and I want this color 0:06:43.279 --> 0:06:45.640 and the size and they don't have it. It's not 0:06:45.720 --> 0:06:48.480 so much an upsell as a lost opportunity, right, And 0:06:48.560 --> 0:06:50.719 that that's how I took it. Okay, in that case, 0:06:50.760 --> 0:06:53.520 it's positive. But but I want to make that point 0:06:53.640 --> 0:06:57.360 because I think this idea retailer that retailers had in 0:06:57.400 --> 0:06:59.760 the past of doing whatever they can to make the 0:06:59.760 --> 0:07:03.599 next sale backfired when Amazon came in, Because I think 0:07:03.640 --> 0:07:06.000 what Amazon is trying to do is really make the 0:07:06.040 --> 0:07:09.360 customer experience easier, you know, and they make you so 0:07:09.400 --> 0:07:11.400 you can get in and out of the website very quickly. 0:07:11.400 --> 0:07:15.880 When Amazon famous for is they patented in one click 0:07:16.000 --> 0:07:18.720 shopping at the and I when I found out that 0:07:18.720 --> 0:07:21.040 that was patented, that was shocking to me. It's like, 0:07:21.200 --> 0:07:23.400 why would that be patentable? And then you have to 0:07:23.400 --> 0:07:25.880 go back to think what was the way retailers thought 0:07:27.360 --> 0:07:29.920 and what they used to think when you're online is 0:07:30.000 --> 0:07:32.800 keep people online as long as possible. They would talk 0:07:32.840 --> 0:07:35.520 about web strategies where you have a landing page and 0:07:35.560 --> 0:07:37.960 if it's designed right, you go further and further into 0:07:37.960 --> 0:07:40.960 the website with the idea the longer people are on 0:07:41.000 --> 0:07:44.440 the website, the more they're likely to buy a store. Right. 0:07:44.600 --> 0:07:47.200 And that's why I was saying with the salesperson too, 0:07:47.360 --> 0:07:49.760 if it's a function of just trying to make sure 0:07:49.800 --> 0:07:52.360 you make a sale, like you said, anything I can 0:07:52.360 --> 0:07:55.120 do to make a sale, that's not what Amazon does. 0:07:55.200 --> 0:07:58.880 Amazon said, let's make it as easy as possible for you. 0:07:59.200 --> 0:08:01.600 And that was the first time people really tried to 0:08:01.640 --> 0:08:04.160 do that, and that's why they could patent one click 0:08:04.280 --> 0:08:07.200 shopping so going back to your example, the way you 0:08:07.280 --> 0:08:09.680 told the story, it was easier, it was better. But 0:08:09.760 --> 0:08:13.120 you could also imagine an alternative scenario where people are saying, 0:08:13.160 --> 0:08:14.600 I don't want you to walk out of the store 0:08:14.640 --> 0:08:17.360 without making a purchase, and they start doing a harder 0:08:17.360 --> 0:08:21.120 and harder sell. That's not really customer focused anymore. That's, 0:08:21.200 --> 0:08:25.320 you know, sales focused. Quite fascinating. Let's talk a little 0:08:25.320 --> 0:08:30.480 bit about retail and specifically, I have to discuss the 0:08:30.760 --> 0:08:36.479 con retailing success matrix. Tell us about those four quadrants 0:08:36.480 --> 0:08:39.200 and what they mean. Yeah, well, I mean I did 0:08:39.400 --> 0:08:43.160 name it that, but I think it's interesting. That's what 0:08:43.640 --> 0:08:45.840 that name is. Something I could think of nothing else. 0:08:46.160 --> 0:08:49.360 But anyway, the idea behind the success matrix is when 0:08:49.520 --> 0:08:52.960 when I um I recently stepped down as director of 0:08:53.000 --> 0:08:55.680 the J. H. Baker Retailing Center. I had been there. 0:08:55.800 --> 0:08:57.640 I had been the director for the last six and 0:08:57.679 --> 0:09:00.400 a half seven years, and during that time I ran 0:09:00.480 --> 0:09:03.640 into a lot of changes in the retail industry and 0:09:03.720 --> 0:09:05.960 being an academic, when I stepped down, I wanted to 0:09:06.000 --> 0:09:09.240 take a deep breath and try to organize everything into 0:09:09.280 --> 0:09:11.160 some kind of framework, and so I went back and 0:09:11.200 --> 0:09:15.720 looked at traditional retailing matrices, and they focused on the product, 0:09:15.960 --> 0:09:19.200 and they focused on operations or logistics if you want. 0:09:19.720 --> 0:09:22.080 And that was it. And if you want to talk 0:09:22.120 --> 0:09:24.360 with this about someone is a great retailer, let's say 0:09:24.360 --> 0:09:27.839 Mickey Drexler. He was called the merchant prince. But that 0:09:27.880 --> 0:09:29.920 meant he knew how to merchandise, he knew how to 0:09:29.960 --> 0:09:33.400 assort product, he had a good eye. And nowhere in 0:09:33.440 --> 0:09:37.080 any of these traditional retail matrices was the customer. As 0:09:37.080 --> 0:09:39.959 a marketing professor, the first principle of marketing is the 0:09:40.000 --> 0:09:43.199 principle of customer value. And what does customer value mean 0:09:43.240 --> 0:09:46.400 in retailing? Give them a product they value from a 0:09:46.520 --> 0:09:50.560 retailer that they trust, that idea of retailer that they trust. 0:09:50.720 --> 0:09:53.720 That was missing. The second principle of marketing, which was 0:09:53.760 --> 0:09:56.880 not in any of these traditional retailing matrices, was the 0:09:56.960 --> 0:10:00.080 principle of competitive advantage. If you're in a very a 0:10:00.120 --> 0:10:03.120 competitive market, you've got to be better than the competition. 0:10:03.520 --> 0:10:06.880 That means either increased pleasure or take away pain. So 0:10:06.960 --> 0:10:10.760 those two ideas form the underlying theory of the matrix. 0:10:11.040 --> 0:10:15.320 The columns are the principle of customer value, product benefits, 0:10:15.480 --> 0:10:20.040 or customer experience the rows are the principle of differential advantage. 0:10:20.280 --> 0:10:23.320 Do it better by increasing pleasure or do it better 0:10:23.400 --> 0:10:25.800 by removing pain? And that gives me the two by 0:10:25.840 --> 0:10:28.640 two matrix that I call my so I I broke 0:10:28.679 --> 0:10:32.480 it down in your book, which let me um, is 0:10:32.480 --> 0:10:38.720 called the shopping revolution. Brands, experiential friction, lists, and low costs. 0:10:38.760 --> 0:10:41.160 So each of those things either make it more fun 0:10:41.360 --> 0:10:46.680 or less painful, or what's the sect or focused on 0:10:46.760 --> 0:10:50.920 making the product more fun or less painful, or focusing 0:10:50.960 --> 0:10:54.360 on making the customer experience more fun or less painful. 0:10:54.600 --> 0:10:57.679 And what's really new in the matrix is that second 0:10:57.720 --> 0:11:02.640 column of customer experience and what Amazon redesigned, in my opinion, 0:11:03.000 --> 0:11:07.920 is making the customer experience frictionless easy. That's interesting. How 0:11:08.000 --> 0:11:13.120 much of this is driven by this millennial generation? And 0:11:13.400 --> 0:11:16.040 I guess I was going to ask a dumb question, 0:11:16.080 --> 0:11:18.400 which is how much of it is technology? But how 0:11:18.400 --> 0:11:22.640 do you really peel apart millennials and technology and second 0:11:22.720 --> 0:11:25.400 nature to them? So the let me rephrase that question. 0:11:25.440 --> 0:11:31.959 The combination of millennial preferences and the very use of technology. 0:11:32.080 --> 0:11:34.000 Is that what's driving a lot of this? Yeah, I 0:11:34.000 --> 0:11:38.160 think it is, actually because when Amazon started, they started online, 0:11:38.480 --> 0:11:40.480 you know, and they started with books. And you have 0:11:40.559 --> 0:11:43.040 to think back, why did they start with books? And 0:11:43.120 --> 0:11:46.040 I would argue they started with books because the product 0:11:46.240 --> 0:11:49.960 and the shopping experience could be completely digitized. Once it 0:11:50.000 --> 0:11:52.640 can be completely digitized, then what they did is have 0:11:52.720 --> 0:11:55.240 an endless assortment. So they had more assortment than any 0:11:55.240 --> 0:11:59.120 physical store, and they reduced prices by ten to That 0:11:59.240 --> 0:12:02.240 was a dominance Lucien and attracted customers. But you're right, 0:12:02.559 --> 0:12:06.280 it started with technology, but the basic idea of removing 0:12:06.360 --> 0:12:10.120 pain from a customer experience does not have to be technology. 0:12:10.160 --> 0:12:13.360 Because think of what Walmart's doing now curbside pick up. 0:12:13.559 --> 0:12:15.920 They could have done that a long time ago and 0:12:16.000 --> 0:12:19.040 made shopping easier, but they didn't. They made you come 0:12:19.040 --> 0:12:21.559 into the store, walk up and down the aisles, stay 0:12:21.600 --> 0:12:24.320 in the store as much as possible, impulse shop, you know, 0:12:24.400 --> 0:12:26.760 all the ideas, put the milk in the back, All 0:12:26.840 --> 0:12:29.160 of that was to keep you in the store as 0:12:29.160 --> 0:12:32.439 long as possible. This new idea of you're a very 0:12:32.480 --> 0:12:34.680 busy person and you don't want to spend your whole time, 0:12:34.760 --> 0:12:36.760 the whole day in a Walmart, so you should be 0:12:36.760 --> 0:12:39.040 able to pick it up as you drive home. That's 0:12:39.040 --> 0:12:42.880 a new idea, but that's not technology. Coincidentally, we're having 0:12:42.880 --> 0:12:46.959 this conversation the day after a New York Times column 0:12:47.000 --> 0:12:49.800 front page New York Times column came out discussing some 0:12:49.960 --> 0:12:54.640 of your work, amongst other things, how Amazon has affected 0:12:55.240 --> 0:13:00.360 retail and how retailers have finally began to learn from 0:13:00.400 --> 0:13:04.600 their experiences with Amazon. How far along in that process 0:13:04.600 --> 0:13:09.280 are we that retailers are finally waking up and saying, hey, 0:13:09.320 --> 0:13:11.840 we better do this and this, or Amazon is gonna 0:13:11.840 --> 0:13:13.880 eat our launch. Yeah, I mean, I think they're seeing 0:13:13.880 --> 0:13:16.760 the retail apocalypse. People are talking about that. If you 0:13:16.840 --> 0:13:20.199 don't understand these two basic principles, the principle of customer 0:13:20.280 --> 0:13:23.480 value and the principle of differential advantage, you're not going 0:13:23.559 --> 0:13:26.480 to succeed radio shack, circuit city borders. You know, it's 0:13:26.520 --> 0:13:29.600 soon Sears and Khmard who knows. But these retailers that 0:13:29.640 --> 0:13:33.240 are not really up to snoff on customer experience, they 0:13:33.320 --> 0:13:35.679 just can't make it in a world that has an 0:13:35.679 --> 0:13:39.440 Amazon in it. Sears, I think that has to be 0:13:39.520 --> 0:13:42.960 inevitable going that way. The local Sears and New where 0:13:42.960 --> 0:13:47.040 I grew up has been there forever and finally it's 0:13:47.080 --> 0:13:51.120 succumb And yet how are shops like best Buy and 0:13:51.280 --> 0:13:55.320 Target seemingly thriving. Target just announced their best quarter. I 0:13:55.360 --> 0:13:59.920 think in something like there was a game. What is 0:14:00.160 --> 0:14:04.000 the drivers of the successful companies like best Buy, Target, 0:14:04.120 --> 0:14:06.920 and Home Deeple and Lows for that matter, versus the 0:14:06.960 --> 0:14:10.679 sears and the circuit city targets are very interesting example 0:14:10.760 --> 0:14:13.200 because it shows the importance of stores and this quote 0:14:13.280 --> 0:14:16.200 unquote omni channel experience. So one of the things they've 0:14:16.200 --> 0:14:19.600 done that's very successful is opened up the small urban stores. 0:14:19.880 --> 0:14:22.400 So they used to have these big boxes in suburbia 0:14:22.400 --> 0:14:25.320 and rural markets, right, but now they have these small 0:14:25.480 --> 0:14:29.120 urban stores where singles are, young people are living in 0:14:29.120 --> 0:14:31.880 the city's more. They also opened them close to campuses, 0:14:32.280 --> 0:14:34.320 and they're getting a lot of people who like to 0:14:34.360 --> 0:14:37.840 have the physical store experience. They've been They've been tinkering 0:14:37.880 --> 0:14:40.000 with their product assortment. They've come up with a lot 0:14:40.080 --> 0:14:42.360 new store brands. They're trying to get the cachet of 0:14:42.520 --> 0:14:45.600 tar J back, you know, that design kind of idea 0:14:45.600 --> 0:14:48.280 of fun shopping, and it seems to be working. They've 0:14:48.320 --> 0:14:50.520 been doing a lot of things. The biggest thing is 0:14:50.600 --> 0:14:54.040 changing that store having a different assortment and it requires 0:14:54.160 --> 0:14:57.560 rethinking your assortment when the store gets smaller. And then 0:14:57.600 --> 0:15:01.360 these ideas of curbside pick up and making shopping easier 0:15:01.400 --> 0:15:06.800 and making shopping fun. So how do firms differentiate on brands? Well, 0:15:06.840 --> 0:15:09.040 you know, the luxury brands are still doing very well. 0:15:09.280 --> 0:15:12.560 So you're looking at Louis Vatan air Mas, those those 0:15:12.600 --> 0:15:15.360 are really doing very well. They're staying off of Amazon, 0:15:15.640 --> 0:15:18.960 but they understand the importance of online. Also, they're partnering 0:15:18.960 --> 0:15:22.040 with things like far Fetched or Netta Porte, which are 0:15:22.080 --> 0:15:26.560 some kinds of online marketplaces that are dealing. But they 0:15:26.680 --> 0:15:30.160 understand if they're going to charge those premium prices, they've 0:15:30.200 --> 0:15:35.040 got to give superior product, pleasurable product, and a really 0:15:35.080 --> 0:15:37.960 good customer experience. You have to feel pampered when you 0:15:38.000 --> 0:15:40.920 buy luxury, so that's another piece of it. So what's 0:15:40.960 --> 0:15:43.280 the flips? Are the everyday low prices the e d 0:15:43.440 --> 0:15:47.000 LP How important is that is at a totally different 0:15:47.480 --> 0:15:50.080 market segment or is there any overlap? Well, you know, 0:15:50.160 --> 0:15:52.680 that's interesting thing because I think somebody might have a 0:15:52.720 --> 0:15:56.280 Louis Vatan purse and then a Target T shirt. You 0:15:56.320 --> 0:15:59.040 know that that's possible, but there's always going to be 0:15:59.040 --> 0:16:02.920 a price sensitive segments. So Everyday low Price, the Walmart strategy, 0:16:03.000 --> 0:16:07.240 Costco strategy, TJ Max, they're all doing very well, even 0:16:07.240 --> 0:16:10.200 though the luxury brands are doing well too, because they're 0:16:10.240 --> 0:16:13.760 going after being the best at something. So luxury is 0:16:13.760 --> 0:16:16.480 the best at product, and everyday low price is the 0:16:16.520 --> 0:16:18.840 lowest price. And it seems that it's a bit of 0:16:18.840 --> 0:16:23.040 a barbell the middle where the middle class used to shop, 0:16:23.120 --> 0:16:25.000 that's become a bit of a void. It's either high 0:16:25.080 --> 0:16:27.920 end or lower right, Yeah, it's yeah, something special, And 0:16:27.960 --> 0:16:30.800 that's what I mean by differential advantage. You've got to 0:16:30.840 --> 0:16:33.120 be better. You can't just be good enough. You've got 0:16:33.120 --> 0:16:36.200 to be better at something. Let's talk a little bit 0:16:36.240 --> 0:16:41.920 about your academic career. What motivated you to write a 0:16:42.000 --> 0:16:45.520 book on on the Shopping Revolution? Well, I mean for 0:16:45.560 --> 0:16:47.920 the last seven years or six and a half years, 0:16:47.960 --> 0:16:50.920 I was the director of the Baker Retailing Center at Wharton, 0:16:51.240 --> 0:16:53.880 and the goal of that retailing center was actually to 0:16:54.000 --> 0:16:57.840 convince Wharton students to go into retailing. Typically, the Wharton 0:16:57.880 --> 0:17:00.880 students didn't go into retailing. They went into vestment banking 0:17:01.080 --> 0:17:04.560 or hedge funds or consulting. But Jay Baker, who had 0:17:04.640 --> 0:17:06.960 retired as the president of Coles, thought this was a 0:17:07.000 --> 0:17:11.120 missed opportunity, and so he developed the center to encourage 0:17:11.160 --> 0:17:13.480 people to think about retailing. And I was the director 0:17:13.520 --> 0:17:15.600 of it, and so my goal was to really learn 0:17:15.680 --> 0:17:18.040 as much as I could about retail and what the 0:17:18.080 --> 0:17:20.280 excitement was, to try to convince our students to go 0:17:20.320 --> 0:17:23.040 into the industry. At the time I was doing this, 0:17:23.359 --> 0:17:27.399 retailing was changing radically. You know. We had all sorts, 0:17:27.440 --> 0:17:31.160 not only Amazon, but these digitally native vertical brands started. 0:17:31.200 --> 0:17:33.800 Those are the digitally native vertical brands of brands that 0:17:33.920 --> 0:17:36.640 start online and they go direct to the end user. 0:17:36.960 --> 0:17:40.560 Warby Parker was started for Wharton students, so that was 0:17:40.600 --> 0:17:43.119 particularly sense, you know, something we were very proud of. 0:17:43.320 --> 0:17:47.000 But there's also Casper that did it. More recent Mattress Company, Yeah, 0:17:47.040 --> 0:17:50.640 the mattress company Bnobos which was subsequently bought by Walmart. 0:17:51.119 --> 0:17:53.639 Um All Birds is a new one that's getting a 0:17:53.640 --> 0:17:58.359 lot of your wearing over. But these are digitally native 0:17:58.440 --> 0:18:01.760 vertical brands that are going out and this Nate this 0:18:02.320 --> 0:18:04.879 We were trying to make retail sexy, but retail was 0:18:04.960 --> 0:18:08.639 becoming sexy, you know. It was really the technology referenced 0:18:08.640 --> 0:18:12.160 before really did change the way people think about retailing. 0:18:12.359 --> 0:18:16.320 So so when a student graduates Wharton and goes into retail, 0:18:17.000 --> 0:18:21.200 what aspect of this are they doing? There's it seems 0:18:21.200 --> 0:18:24.399 there's a universe of things that makes sense and are 0:18:24.440 --> 0:18:27.880 applicable in a modern technology world. Where do you see 0:18:27.880 --> 0:18:30.760 them going into? Well, you know, Amazon right now, it's 0:18:30.840 --> 0:18:33.840 big a hire of Warton students, as Goldman was really, 0:18:33.920 --> 0:18:36.800 so you know, we're not talking warehouse workers. These are 0:18:37.080 --> 0:18:39.119 people who knows what they're I think they're working for 0:18:39.119 --> 0:18:41.679 AWS or whatever else. I don't know what they're were. 0:18:41.800 --> 0:18:45.240 But Amazon is a huge company, right right, they'll eclipse 0:18:45.240 --> 0:18:48.399 Walmart as the biggest employer if things continue, if you 0:18:48.520 --> 0:18:51.719 extrapolate that to infinitely, which is never a good you know, 0:18:51.760 --> 0:18:53.880 even some of our students are going to Walmart now, 0:18:53.960 --> 0:18:56.119 which was you know, it was in the past. They 0:18:56.160 --> 0:18:58.399 weren't so intrigued with going to Arkansas, you know, and 0:18:58.520 --> 0:19:01.240 working in like you said, and operate actionally efficient company. 0:19:01.520 --> 0:19:04.280 But now Walmart dot com is in San Francisco. Jet 0:19:04.320 --> 0:19:09.639 dot Com isn't there, yea, So now it's a sexy, interesting, 0:19:09.720 --> 0:19:12.720 fun place to work. So do you recall there was, 0:19:12.960 --> 0:19:15.600 I want to say, a New York Times story. You 0:19:15.680 --> 0:19:18.960 just made me think of this um where someone came 0:19:19.000 --> 0:19:23.600 into Target to complain that their daughter was getting pregnancy 0:19:23.640 --> 0:19:26.439 stuff in the mail. She's in high school? How dare you? 0:19:26.520 --> 0:19:30.600 And then subsequently he had to go back and apologize 0:19:31.160 --> 0:19:35.240 Targets Big data analytics figured out that if you buy this, 0:19:35.240 --> 0:19:37.600 this and this, hey, you're probably pregnant and you're gonna 0:19:37.600 --> 0:19:40.840 want this. Is that the sort of stuff that that 0:19:41.320 --> 0:19:44.040 NBA students are doing. Yeah, that's one thing for sure. 0:19:44.359 --> 0:19:46.919 The Wharton School, Ardine is advocating over and over and 0:19:46.960 --> 0:19:49.919 over again data analytics, data analytics. You really can't go 0:19:49.960 --> 0:19:52.840 into marketing anymore if you didn't understand customer analytics and 0:19:52.920 --> 0:19:55.760 data analytics. You know in that story I remember when 0:19:55.760 --> 0:19:58.919 it came out maybe five years ago. Was surprising, but 0:19:59.000 --> 0:20:01.320 you know, you really didn't need data analytics to do that. 0:20:01.359 --> 0:20:04.080 A smart salesperson could have watched this girl come into 0:20:04.080 --> 0:20:08.600 the store via pregnancy test and by you know, vitamins 0:20:08.760 --> 0:20:11.199 and prenatal vitamins or all these other things and what 0:20:11.240 --> 0:20:14.120 it really wasn't rocket science to figure that out. So 0:20:14.240 --> 0:20:17.879 given your vantage point, how has the curriculum for NBA 0:20:18.000 --> 0:20:22.560 students changed relative to to this industry. Yeah, we've definitely 0:20:22.600 --> 0:20:26.439 included more analytics in our marketing in everything um Adam 0:20:26.480 --> 0:20:29.399 Grant is another professor at the Wharton School. He started 0:20:29.480 --> 0:20:34.679 people analytics generals, yeah, or givers and takers and planed 0:20:34.720 --> 0:20:38.320 B and M. He but he's really you know, all 0:20:38.359 --> 0:20:41.520 of that stuff. It's even management, which maybe used to 0:20:41.520 --> 0:20:45.040 think of management and marketing is quote unquote softer sciences, 0:20:45.040 --> 0:20:47.879 were all using data analytics. Of course, finance has always 0:20:47.880 --> 0:20:51.000 been dated heavily data driven. You'd be surprised that's a 0:20:51.040 --> 0:20:55.200 relatively recent phenomenal. By relatively recent, it's a couple of decades. 0:20:55.240 --> 0:21:00.200 It was not as endemic as you would suppose any 0:21:00.320 --> 0:21:04.240 forty six years ago. That's interesting, quite fascinating stuff. Let's 0:21:04.320 --> 0:21:07.840 talk a little bit about some of the older brands 0:21:07.880 --> 0:21:11.399 who may not be quite as hip as um the 0:21:11.440 --> 0:21:15.160 Warby Parker's or the old birds of the world. How 0:21:15.200 --> 0:21:19.680 would you advise companies like Kellogg's or Coca Cola to 0:21:19.880 --> 0:21:22.920 appeal to the next generation. You know, it's really interesting 0:21:22.960 --> 0:21:25.800 to watch because I've been teaching marketing for a long time, 0:21:26.040 --> 0:21:28.240 and we would teach branding, and we would talk about 0:21:28.280 --> 0:21:34.000 what are the biggest brands forever the same biggest brands Coke, IBM, whatever, Toyota. 0:21:34.359 --> 0:21:36.280 All of a sudden, the last five years, we all 0:21:36.320 --> 0:21:39.320 know who the biggest brands are, right I mean, And 0:21:39.400 --> 0:21:42.080 that's a change that happened very very quickly in the 0:21:42.160 --> 0:21:46.000 last five years. And if you look at their stock prices, Kellogg's, Gillette, 0:21:46.000 --> 0:21:49.119 they're hurting. The CpG companies are hurting, and they do 0:21:49.240 --> 0:21:51.600 have to do something to wake up and smell the roses, 0:21:51.720 --> 0:21:56.000 just like the retailers. So Gillette, for example, has you know, 0:21:56.280 --> 0:22:00.680 started subscription services to compete with Dollar Shave Club and Harry's. 0:22:00.880 --> 0:22:04.280 Coca Cola just bought a coffee company. Look what Nike 0:22:04.400 --> 0:22:07.320 is doing. That's pretty interesting. So let's let's discuss that 0:22:07.359 --> 0:22:09.960 because I was just reaching from my phone to grab 0:22:10.000 --> 0:22:13.000 a data point that I wanted to ask you you're here. 0:22:13.040 --> 0:22:17.240 The day after it was announced that Colin Kaepernick is 0:22:17.320 --> 0:22:20.720 going to be UH, he received an extension of his 0:22:20.840 --> 0:22:24.600 contract with Nike, and on the thirty year anniversary of 0:22:24.720 --> 0:22:28.800 their launch of the Just Do It campaign, they made 0:22:29.119 --> 0:22:32.639 um they made him part of that. And there seems 0:22:32.680 --> 0:22:36.360