The ICSC Blog

Q&A with Retail Prophet’s Doug Stephens

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Interview conducted by Michael Lagazo  

Doug Stephens is one of the world’s foremost retail industry futurists. His intellectual work and thinking have influenced many of North America’s best-known retailers, agencies and brands including Walmart, Home Depot, Disney, Microsoft, WestJet, Citibank, Razorfish, Intel and WestJet. In 2013 Doug was voted one of retail’s top global influencers by Vend.com.

Prior to founding Retail Prophet, Doug spent over 20 years in the retail industry, holding senior international roles including the leadership of one of New York City’s most historic retail chains.  Doug is the author of the groundbreaking book, The Retail Revival: Re-Imagining Business for the New Age of Consumerism. He is also the consumer technology contributor on the acclaimed international television series App Central, as well as the retail contributor for CBC Radio. Doug also co-hosts the popular web series, The Future In Store and sits on the advisory board of the Dx3 Digital Conference.

His unique perspectives on retailing, business and consumer behavior have been featured in many of the world’s leading publications and media outlets including The New York Times, Bloomberg Business News, TechCrunch, The Financial Times, The Wall Street Journal and Fast Company.

“In the new age of consumerism, the world is your store.” –Doug Stephens

Q: What inspired you to start Retail Prophet?
A: Having spent over 20 years in retail in both Canada and the U.S. two things occurred to me; the first was that retail (as an industry) tended to be terribly short sighted in its outlook – often not looking out much farther than the next quarter. Secondly, I felt that we were entering a period of unprecedented change across economics, demographics, technology and media and that unless retailers began embracing a more forward looking attitude, many would be at risk. That was almost 6 years ago and I think we’re now seeing the fall out among industry players that failed to assess market changes and adapt.

Q: How is business this year?
A: Our business in North America continues to grow year on year and we’re now also increasingly working in Latin America, the Middle East, Asia Pacific, Europe and Scandinavia. The world is indeed becoming a smaller place all the time.

Q: What percentage of your work is in Canada and how much is in the U.S.?
I do about 30 percent of my work in Canada and about 40 to 50 percent in the U.S.

Q: In your book, The Retail Revival, you talk about ‘transporting buying opportunities to consumers where they may be…’ How does a physical store maintain relevance when a path to purchase is progressively bypassing the store?
A: The value of physical retail stores isn’t disappearing but it’s definitely transforming. 25 years ago, in many cases, the only way to get certain products was by visiting a store. Stores were distribution vehicles first and foremost. But today, in a world where we can order anything we want and have it delivered in as little as an hour, we increasingly won’t rely solely on stores for distribution. Therefore, stores need to move from simply distributing products to distributing remarkable branded experiences. They need to focus primarily on creating such a powerful and galvanizing shopping experience that it creates a permanent emotional and cognitive bond with the customer. Then, regardless of which shopping medium the customer chooses, the hope is that the imprint extraordinary experience will prompt them to buy from your brand instead of someone else’s.

Q: Mainstream shopping center rhetoric says malls are dead. Would you like to offer a counterpoint?
A: Virtually every form of retail that has ever existed exists today. The only thing that changes are the forms that happen to be dominant at the time. For many years the downtown department store ruled, then the suburban mall, which gave ground to the the big box power center model, which is now succumbing to ecommerce. Ultimately though, the strongest in each format survive. Malls will be no different. We will see (and area already seeing) some malls completely reinvent themselves into really outstanding food, entertainment, lifestyle and shopping centers. But successfully navigating this transition will also involve adopting a new perspective on how malls are planned, built, infused with technology, tenanted, operated and measured. Most won’t make the necessary shift. So, I doubt we’ll have nearly as many malls as we do today but the ones that remain will likely be quite extraordinary.

There is also an important transition taking place between major cities and their suburbs. Many major North American cities now experiencing greater levels of growth, wealth, income and even safety than their neighboring suburbs. This is a sharp reversal of a long-running trend and one that will likely result in more “malls” being woven into the landscape of urban centers.

Q: Brick-and-mortar stores give shoppers a sense of place as well as brand immersion while mobile and ecommerce engage a hyper-connected consumer at their moment of need. What does the intersection of these two retail environments look like?
A: I firmly believe that over the next five to ten years we’ll see digital commerce become much more immersive and tactile while in-store shopping will become more digitally integrated. The intersection is what I call “Phygital” retailing – an entirely new form of retail. For example, look at the potential for wearable computing like Google Glass combined with augmented reality to create a digital overlay in the retail environment that can be completely personalized and unique to a given shopper. Coupons, offers and recommendations are tailored to my preferences. In addition, while we’re shopping in a store we may be able to see the not only products that are physically on the shelf, but also virtual products sitting next to them that can be seamlessly ordered for delivery while standing at the shelf.

Likewise, I envision technologies akin to the recently acquired Oculus Rift, virtual reality headgear, eventually giving us the ability to shop in any store in the world without leaving our home – to actually walk the aisles of stores along the Champs-Élysées, for example, and even interact with store staff.

Are these online, mobile or physical experiences? Who knows? And more importantly, does it really matter?

Q: You wrote about redesigning stores to deliver high octane experiences in your blog post, “The Future of Retail: Experiences Per Square Foot.” How should retailers measure store productivity and how do these metrics affect the square footage required?
A: I find it somewhat curious that we measure the productivity of a retail store today much the way we did at the turn of the 20th Century. Sales and profit per square foot, per hour, per associate etc. But when online is taking a bigger and bigger chunk of sales each year, this can only result in a viscous spiral of downsizing, which I think we’re seeing. Some brands are simply allowing their stores to downsize to the extent that there’s no remaining opportunity to create a store experience.

Meanwhile we’ve got a new arsenal of analytic tools that enable us to measure the physical environment much more the way we glean great analytics from web sites. Bounce rates (how many people enter and leave immediately), time on site, path of navigation, cart abandonment, demographics etc. are all measurable now in-store!

So, if we agree that the store needs to deliver an experience and that shoppers are shopping across multiple channels, then we simply can’t measure stores the way we did 200 years ago. We have to use a new set of analytics to measure the execution and value of the store experience.
In other words, don’t simply downsize the store and hope for better results. Right-size the experience and measure the results.

Q: In your web series with Amber Mac, ‘The Future in Store’, you talked about solutions, like NOMi, which track customer movements in the store.
Some people think this level of personal data capture is creepy. A creepy experience leads to a creepy brand. How can retailers deliver intensely personal, contextualized digital experiences to customers without creeping them out?
A: If you’d told my great grandfather that a satellite could track his physical whereabouts within a few feet and guide him wherever he wanted to go or that people could be beamed into his living room inside an electrified box, he probably would have been pretty creeped out by that too. History shows that we’re often initially uncomfortable with new technology until, that is, the obvious benefits of the technology outweigh that discomfort. We’re in the very early stages with many of these technologies, like location-based services for example, where the benefits simply haven’t yet been fully realized. Right now, all the privacy infractions, mobile tracking, push notifications and ad retargeting haven’t really delivered much real, tangible benefit to us as consumers. If and when it does, we’ll be far more likely to embrace it.

Q: If you could learn one thing about shoppers, what would it be?
A: What they all want so I could sell it to them! Seriously though… I can’t wait until neuroscience is better able to map the chemical responses in the human brain when we’re having a great shopping experience and what sorts of specific external inputs actually cause those responses. I guess you could call it the biology of being remarkable!

Q: Where would you like to see Retail Prophet in the next five years?
A: I have never been more fascinated, fueled and delighted with my work than I am right now. I have the privilege of meeting and working with tremendously bright, adventurous and talented organizations and people from all over the world. I really couldn’t ask for more than that!

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