[Music] Hello everyone, I'm Brian Emeryle and welcome to the Clientelling podcast. In each episode, we'll be talking to the retail industry's most knowledgeable and successful executives, those luminaries that are creating value with the intersection of retail and technology. In every episode, you'll hear about new, innovative and transformational customer-centered ideas that are redefining shopping and creating high-value customer experiences. If you haven't already done so, be sure to subscribe to the podcast and let your friends know by liking us on social media. So, let's get on with the show. Welcome! I'm thrilled to have a couple of well-recognized retail experts and long-time friends here with me today. Both of whom are founders of an exciting new retail consultancy called Zenza Consulting. Our first guest is David Ressinger. David is a strategy and operations consultant with over 25 years of making business-impact risk clients, in areas like retail and brain strategy, store operations, and technology innovation, as well as having done quite a bit of work in consumer services, financial services, hospitality, food service, and the public sector. And it's even done some work in wholesale and franchise dealer-licensed organizations. Now, one thing we could say about David is that he has deep retail expertise and has led several successful projects focused on productivity improvements, customer experience, and revenue growth, and has implemented technology and best practice and analytic solutions across distributed organizations both large and small. Earlier in his career, David held a senior manager role at Anderson, which is now Accenture, and has been a founder, partner, and VP with Boutique Consulting firms. He's also served as an independent advisor and board member, both here in the US and abroad. So most recently, David is the co-founder of Zenzor. Welcome David. Thanks Brian. It's great to have you. Well, your illustrious partner who's here with us today is Jim Malafronti. No, Jim quite a while as well. Jim has 30 years of retail experience with a concentration and workforce management, retail strategy, retail technology, omnichannel retail, customer engagement, analytics, merchandising, and process re-engineering. Prior to recently launching Zenzor Consulting, Jim had leadership roles in boutique retail consulting firms and also 12 years of big four consulting experience with KPMG in Deloitte. Now, deep down, one thing we know about Jim is he is a retailer, and he has lots of retail DNA, having spent several years with NACES in New York and in Atlanta, with roles ranging from store operations, merchandising, and financial analysis functions. Jim has extensive knowledge and expertise in a wide range of retail categories and formats, and a track record of designing and implementing practical solutions that drive ROI through top-line sales growth, cost reduction, consumer engagement, and margin improvement. Well, Jim, it's good to see you and welcome. Thanks, Levin. Thank you for the introduction. It's a pleasure to be invited to this podcast and be with someone who shares the same passions for retail. Yeah, and in these times, sharing a passion for retail is an interesting thing, isn't it? So in any event, this is great to have both of you gentlemen here. Thanks for finding a few minutes in your crazy COVID compromise schedules to speak with my listeners today. It's really good to have you here. I thought perhaps we could start by talking a little bit about Zenzocht, and what it was that you saw happening in the marketplace that made you decide to really create this new kind of consultancy. Who wants to start with that? I'll jump in, Brian. What we're fine is the needs for consulting in the consumer space have changed tremendously over the last few years. We're really thrilled to be able to offer consumer retail and consumer facing businesses to access to experience consultants, to prove a methodology and the ability to team together to quickly create business impact. That's great. That's great. And Jim, you're one of the co-founders here. Tell me a little bit about your thoughts about why you decided to kick this off. Yeah, I mean, one of the things we consider also is even pre-COVID, Brian, our clients wanted to see as the customers have more options than ever before and new needs. And this really looked at COVID as the accelerator and really saw a paradox where there's tremendous amount of need for the services we provide based on the up people and the new strategies that have to be built. And we were able to come in with experienced people and really with very low overhead offer, a great experience, great expertise, you know, at very cost and that is very palatable to our clients. Oh, that's great. That's great. You know, I mean, when I heard you guys were starting this and we had that initial conversation, what excited me about it was the fact that we're kind of taking this, you know, deep, deep subject matter expertise, having been in the industry forever. And at the same time, having, you know, you two are unique in the sense that while we may all have been around in this industry a long time, we're also been very, very close to the innovation, the next generation of what's happening is staying very, very close to what's happening tomorrow. And the tomorrow moved up a lot faster than we thought it was going to. But I think you're able to bring a context that a lot of other consultants can't. So I think you're going to be very successful with this and I want to wish you some luck with getting that off the ground. Let's talk a little bit about what's happened to retail the last several months. You know, we know that that retailers, especially those in fashion home and other seasonal soft line categories that we tend to spend a lot of time around all three of us, you know, they're really reeling. It seems that there are really still a lot of problems to contend with. You know, they have these issues with still aging inventory that needs to be cleared out from the shutdown. I've been in a bunch of stores in the last week. And I'm still seeing, you know, some winter merchandise there. So some nominal traffic, obviously even when the stores are open, they're seeing only a handful of customers coming in where they used to have a lot more traffic. And, you know, there's some impact, right? I mean, homeschooling, you know, it's going to impact the back to home shopping season, which is a very important thing to say nothing of what's going to happen if we have a challenging, you know, winter between flu and and and COVID and how that might impact retail, traditional retail sales anyhow at Christmas time. So, you know, we have to watch all of that, but I think in general we're seeing this lacklustry demand on a lot of discretionary categories and obviously the discretionary categories, a lot of declaring bankruptcy right now. We're seeing some issues around all of that. So I wondered kind of what you were both seeing out there that's impacting operations today at that more fundamental level. What do you think the longer term impact might be? David, you want to start with that? You bet. I mean, you really nailed it. You know, when I think about what has changed, it's so much has changed for so many and so quickly. You know, Jim mentioned earlier that the adoption is just, you know, of certain things has just, you know, accelerated beyond belief in other cases. It's one of the demand is falling off the table. You've got the aging inventory that you mentioned. Other retailers don't have any inventory. You've got you've got people trying to face decisions about whether to pack away less these seasons product and bring it out again next year. And they're trying to balance that out with, you know, cash flow and operational risk and all kinds of different aspects of that part of the business. You know, really forecasting every aspect of forecasting is up for grabs right now. It's almost impossible to forecast demand. People are staying in. So there's a lot of demand, you know, less demand. Some consumers have less noticeable income. As you mentioned, others have more, you know, so the ability to forecast product need to forecast labor demand. It's very difficult right now for virtual, you know, virtual everybody in the business. Our new processes have been introduced or under pressure, you know, think about ship from store and buy online pickup in store. You know, the adoption has jumped 1,000% for some of our clients. And, you know, and they're trying to they've got pressure on those processes. It's very difficult to do those things profitably. Every aspect really of the engagement of a customer engagement needs to be rethought. Yeah. And I would jump in from a, you know, everything that David said has nailed it and create a lot of challenges. You know, one of the areas I've done a lot of work in is workforce optimization, workforce management. And really, this becomes a time for, you know, all reticals to really stop and re-evaluate, you know, all the activities that occur in the store. And to see if they make sense of the by value in this COVID world that we're in right now. You know, this is really the time to streamline, maybe move, eliminate low value activities. And also to add more topical on the channel related activities to the labor model. You know, the world right now, Brian, retail is cannot afford to bleed payroll and low value activities. They also have to ensure they are allocating the right labor standards to account for the additional workload being placed on our stores. The examples are curbside pickup and online, buy online and ship from stores. It's creating a lot of stress and on the stores. And in some cases, the current labor model doesn't even take this into account. Yeah, the roles are changing for the people that are in the stores as well, right? So it's not just that the models don't work. It's that we're expecting out of our employees. It's very different than what we were expecting out of our employees before. Yeah, and it's really creating quite the paradox in the sense that you know, retail is now may have to move to a new labor model, which likely includes early should more, you know, challenge and, you know, I'm the related activities. And it having to do this in the time of declining sales. So we have seen retailers reacting by being aggressive and cost cutting, but same time again, acknowledging the fact that key customer facing activities have to be funded. Anything is on the table right now, including we're seeing reduced store hours, sharing employees across multiple stores and really just anything creative to, you know, reduce payroll, or it's not a value add to the customer. Yeah, no, that's great. And thanks for those insights. You know, I think that.
As I've been looking at it, I'm seeing some of the categories obviously are in really big trouble. Right? And, you know, I think that perhaps a good way to kind of look at that is discretionary categories, at least a lot of discretionary categories have really been hit very, very hard. The traffic is not there. They're not going to sell their way out of the problems they have. They have a certain amount of fixed costs. I think that's why we're seeing a lot of retailers going into bankruptcy. If you kind of think about it, there was that first wave of retailers that already had a heavy debt load on their balance sheet, they were never going to be able to borrow enough money to keep themselves alive through this process without having to trim dramatically and they've moved into chapter 11 and we've seen a lot of that happening. The next tier down are really healthier retailers that were able to get the extra capital they need to keep themselves operating as they try to dial down their businesses into to right size. The concern I have with those retailers, of course, is, you know, how many of them are going to start looking like that first category that have too much debt in place. They're all they really did is kick the can down the road and it really comes down to how long does it take before things start to return to a more profitable retail model. We can only operate behind zero for so long before the business is not recoverable. So there's some concerns there and then of course, there are smaller retailers that I really and pain for that are not able to get out there and acquire the debt that they need in order to keep their businesses moving forward and often enough those businesses are just either not going to reopen or if they do, it's not going to be for long. So it's kind of a difficult time out there. So I think that retailers are having to look at all of these questions and saying, okay, so what is it that we're trying to do? But maybe Jim, you can talk a little bit about what are you seeing out there as how are retailers thinking about this from an options perspective of what they need to be doing next? Yeah, well, unfortunately, one of the things we're seeing that's very prolific now is store closures and in reality, this was inevitable, even prior to the pandemic, consumer shop and habits had changed online that if you look at the US, square footage of retail space per person compared to other countries, we were overstaturated in the brick and mortar segment to begin with. And really what we see now that COVID has just accelerated the process. So it's happened and fast and anyone had anticipated, but we all kind of do. It was coming. One of the other things we're seeing and speaking with some more operators is this whole area of lease renegotiations, you know, to be in flooded with request from the attendance. In some cases, it's actually cancelled. A lease is altogether based on more anchors leaving and that being an out clause in the current contracts. So that's a big trend that I've been seeing in the marketplace. And really just looking at some key areas, inventory decisions, do you accelerate your private label program and that brings risk in terms of being able to cancel orders? What does that look like? Staff and decisions. Is there opportunities to consolidate areas to maybe increase a district management span of control? So everything is on the table. One thing that we've seen before COVID that we expect to continue is the whole idea of small store formats. So there's no longer the need to have as big of a space to have all the SKUs and assortments that you had in the past when there's other ways to obtain it. Right. Right. Going back to your whole point here around the anchor stores. So we know that even May sees is talking about the large number of stores that they may end up having to shrink down to, shrink their size down dramatically. We're looking at bankruptcies with some of the big anchor stores, department stores. And we know that that's going to lead to some number of stores being closed. The malls were already in trouble. So those retailers that are fortunate enough to say, my mall is going to die. Let me get out without having to declare bankruptcy. Great. You think they're applying a lot of pressure back to their landlords and saying, my only option is going to be bankruptcy if you don't renegotiate with me. I mean, are they playing that kind of hardball? And how do you think? How many thoughts in terms of how the landlords are responding to that right now? Well, we're absolutely seeing that. So that's taking place. And that's a big fear, particularly when you get out of the AMOS. So it is happening. Unfortunately, for a lot of the mall operators, they do not have a lot of leverage. So as bad as it is right now for retailers, that's the one area where they actually, do you carry some weight in terms of looking at to renegotiate those leases for much, much favorable terms or get out of it? So right now, in that one aspect, that's the one area that they're a little bit in the driver's seat. Yeah. Now, it's a tough time to be a landlord, tough time to be a retailer, you know, kind of a painful cascading effect. And of course, the banks behind that at some point, I think we're going to start to see, you know, kind of the financial partners starting to have some challenges too, you know, essentially, one of the real estate that's being boarded up here in retail and that will be over the next year. So that's something else for us to watch. Maybe we can talk a little bit here, David, about kind of your thoughts around all of that. You know, retailers are their backs against the wall out of waste. So it's driving innovation. They're accelerating development of different ways to reach their customers, different ways to sell, different ways to complete the sale. You know, by online pick up in store, ship from store, those initiatives were well in a way when all this hit. But as mentioned earlier, the adoption is off the charts. So they're continuing to work to streamline and improve those operations. You know, we're seeing people, you know, even retailers are looking at how to merchandise and serve customers in the parking lot, literally outside of the stores. If you look at all the construction going on in the parking lots out there today, their companies are putting in Wi-Fi, they're equipping their employees to go operate outside the stores. They're directing traffic differently in the parking lots to be able to be able to almost really literally serve customers who never get out of the cars. They're the retailers are making investments in all kinds of digital assets, everything from, you know, store tools to improve process and ability to serve customers e-commerce drive, you know, to drive sales, acquire customers, a tremendous push right now in analytics, you know, big data and, you know, while a term from before, it's very true. Analytics, data science, there's a tremendous effort to understand what's going on, you know, what the needs are for the customers, what the patterns are, you know, in operational tools. So things are all being invested in very heavily right now. You've got people trying to engineer new processes for safety. You've got to be able to execute consistently. You've got to be able to have traceability in case you lost it. You've got to, you know, do audits and record the audit. And all you've got to be able to do all that at a cost that allows you to be profitable. Yeah. So from the operations perspective, all these additional costs associated with trying to conduct business in a COVID world is probably impacting the cost of operations pretty dramatically at the same time that business is down, right? So that's got some real challenges. Absolutely. Everything from, you know, protective gear to, you know, to just slower rates of, you know, throughput based on, you know, look at the cash, look at the cash wrap operations now. You've got masks on everybody. You've got plexiglass between your associates and the customers, communications that will transactions are taken on. Yep. Well, let's talk a little bit about, you know, what I'd like to call the Installer Labor Conundrum. But with all this uncertainty brought about by the pandemic, what kind of approach from a labor perspective, are you recommending to retailers? Maybe Jim, you could start with that. Yeah. Thanks, Brian. I mean, really the first key point for me is you need to start with, you know, redefined the role of the store, you know, and how does that fit into the shop and journey? So, you know, we all know that the store is going to continue to be a big part of the overall shop and experience. It has customers shop and purchase of course channels. You know, the transaction may ultimately take place online, but the store visit may very well have happened. You know, as part of that journey, stores must become, you know, more about distributing experiences and less about distributing goods. And, you know, for retail, you have to ask your question, well, how do we deliver on that? So first thing you have to look at is, you know, define what that new shop and experience needs to be. You know, only being transactional is not going to cut it anymore in the new world. We'll have to be delivered by, you know, combination of correct and relevant merchandise assortments, correct staff and levels and service levels and ultimately execution. Wow. What else are you thinking, Jim? Yeah. So, you really have to look at, you know, the concept overall. And the way I look at it, Brian, is, you know, stores are going to continue to play a vital role, you know, in social gathering, building brands, learning and experiences. And they can be an effective way of a choir and new customers and promote non-line sales. And you just have to think a little bit differently. So, you know, some examples of, you know, some retailers that are out there that are executed on that mindset or, you know, a war be Parker, a non of us, a Sephora. So, the real thing is some pretty creative things to really shift what that in store experience looks like and really combining it with a seamless, you know, on the channel experience. Yeah. So, I think what we're really seeing, and I think you're speaking to it directly, is that, you know, these are conversations we've been having for the last couple of years about the innovative retailers that really started to think in terms of their physical store being that space where we can create extraordinary, you know, brand advocacy, real experiences for our customers and allowing.
and being innovative and changing the way we think about retail as being a pilot high and watch it fly, but actually creating a reason to get somebody into the store and have them engage around our brand, our brand narrative, our story, one-to-one customer relationships, all of those things. So I think that its store is reopened, what's gonna be perhaps most critical, really is going to be getting, creating an environment that makes a store worthy of a customer coming in. And they're gonna get very comfortable the idea of not coming in, unless we create something really special for them. And we treat them differently when they come into that store than perhaps what it was. All along, I have said, and I'm sure many others have, that in a world where you're not creating demand, there isn't a lot of a reason to have a store. So if they're not doing the story, if you're not actually solving specific problems through a consultative sale in some way, creating demand, the stores don't really have a legitimate reason to exist. You know exactly what you're gonna buy in all likelihood, there's some kind of online or direct to consumer option to buy that product. So I think that where we're going here is that this has accelerated the need for retailers to really start to think experientially, to really think about what it is going to take to really engage customers in a way that makes an exciting lifestyle place, that extra place for them to go into, that they get some real joy out of, and then they happen to purchase product while they're in there. And I think that's really kind of just moved everything ahead, several years probably from where it was. - Yeah. - But I think there's a polarization happening there too, right? I mean, not every retailer is gonna do it that way. So we have the retailers on the one hand that are really kind of taking labor out of their model, and then at the other end, it's these retailers sort of creating relationships in one to one human experiences. You know, I think that finding that right blend, and I think it's a lot of opportunity, for looking at where, you know, kind of digital and physical human interaction happens, creating that idea of curation and community and ultimately commerce, bringing those three concepts together, you know, how much of it is digital, how much of it is human. And I think each brand have to figure out that equation for themselves, and that's how they're gonna define themselves in this next marketplace. So, Jim, what are some of the things that you're thinking about? - Yeah, I mean, everything you said is spot on, I told you, "Grey," and ultimately it comes down to assuming those things transpire. Really have to rethink the performance metrics, you know, of a store. You know, for a hundred years, the key metric has been ComStore growth, and that's not really relevant anymore, you know, particularly right now in the COVID world, but then you're even going forward. If the role changes, the metrics have to be aligned with what that new role is, you know, conversion becomes, in my opinion, a key metric across the board. You know, looking at C-Stat scores, you know, not only for the store, but in the same geographical footprint to account for transactions that may be were made online, but may have been impacted or started with a store visit. So some metrics have to be blown up, and really, you know, rethought it and implemented, you know, going forward that supports what that new strategy and the new role store is. - David, you have any additional thoughts on that? - Well, yeah, I mean, that really sets up a tremendous amount of work, right? Once you go through and have to tell those difficult questions, then what does that mean for your retail model? What does that mean for your operating model? What does that mean for your labor model? What do you need to do? You know, where do you, how do you forecast? How do you forecast? How do you measure execution? I think execution is never going to be more important than it is going forward. There's going to be no room for error, there's going to be less room for variance. You know, the simple things like, you know, working the schedule, you know, adhering to a schedule, looking at the labor utilization while on the service seems very simple, it's very difficult to do. You know, so really figuring out what the right thing is to do, focusing on execution every day, every week, you know, to really deliver to that new operating model is going to be critical. - Guys, this is really, really, you know, fantastic stuff. As we wrap this up, you know, maybe you could share with me the three golden nuggets of advice that you would like to give retailers today. Kim, you want to start with that? - Yeah, you bet, Brian. So the first thing I would say is that we've heard up to now the need to bring tech into the store shop and experience. But now we're really seeing progressive retails begin into bringing the store experience into the online shop and experience. You know, virtual reality has advanced to create, you know, a store like Look and Feel on a website to make the customer feel the visual feel of actually being in the store, as opposed to just shopping from an online digital catalog. So we think this is going to be a trend that's going to continue to be big going forward. - Yeah, I think you're right. I think that, you know, as we look at CuffSpritz become more and more comfortable with the online, you know, just in general, not coming into a store, but we still need to approximate those things that really happen in the in-store environment, right? - Absolutely. - Absolutely the kinds of interaction, the kind of browsing. And, you know, stores have spent a lot of money. They're still going to have stores open. They've spent a lot of money creating exciting environments to showcase their products. And so it's, you know, you want to approximate as much of that as you possibly can through the online as well going forward. And I think we're going to see some interesting projects done around all of that. - Right, right. - Yeah, so maybe David, you got a couple thoughts here? - Absolutely. I think, you know, it's really important that retailers use this opportunity to really think through their customer promise to really rethink their differentiators that they offer, you know, to their customers. Everything from the value proposition to safety of the folks that are visiting them in their stores to really the path to purchase, what's, you know, how are they inspiring purchase? How are they providing information and service in the purchase process? How are they eating and selecting the right solution for their customers? How are they fulfilling the order? How are they supporting after the purchase? I think, you know, they really need to think through all of that. I think they really need to take a hard look at operations and how it's really integrated. It's no longer store-ops and supply chain-ops. It's really all integrated. - Yep. - And fulfillment is a blend of the DCs and the supply chain and the stores. How do you support it after the fact? And there's just so many things that need to be really re-evaluated and built into the model going forward. - Yeah, that's great. - You got a third one for me, guys? - Right back to execution. I think you need to really focus on execution. The messaging, the singular view of the strategy, everything from, you know, think about from the CEO all the way to the cash rap to the associate at the front end of a retail organization today. You know, aligning all those people through the field, through the different stores, through all the different support center departments. It's really, it's really gonna become critical. I mean, prior levels of execution, some retailers were very good at it, some were not. But I think in the future, better execution is gonna be really good. - Yeah, I agree. If I'm a operational perspective, if it really honest with ourselves, historically, you know, many retailers, particularly at the store level, you know, execution has been a challenge in the past, being polite there. And in the world we live in now, you know, that's, it has to be done. So as the strategy has changed, you know, as the competition has occurred and just everything going on, you know, it is so critical that everyone is on the same page. And the operational processes and strategies are lying and are executed flawlessly. They really just have to be flawlessly executed, going forward. - Yep, I agree. I agree. You know, guys, we're down to the final time here on today's show. These are all been some great ideas and certainly, press it, given the current retail situation. I wanna thank both of you for coming on the show when sharing some of your wisdom. If any of my listeners wanted to get in touch with either of you, how would they do that? Maybe you could share your website and social handles with us? - Yeah, thanks Brian. Probably the easiest way is our website is Zenza Consulting, Z-E-N-Z-A, consulting.com. And certainly email is a great tool in today's world. It's D Recindure, R-E-S-S-I-N-G-E-R, at Zenza Consulting.com. - And Jim, your email is? - Yeah, it's Jay Malafrontay, that's Jay, M-A-L-A-F-R-O-N-T-E, at Zenza Consulting.com. - Great, and I'll make sure that we put those along in the show notes there with the podcast. - So David and Jim, thanks so much. I really appreciate you finding some time to be on the show. We're looking forward to having you back on the show one day soon. And in the meantime, let's go do some happy retailing. Take care. - Thank you Brian. Thanks. (upbeat music) - Well, that's today's show. Thank you for listening. If you like what you heard, be sure to subscribe to the podcast and like us on social media. Or drop me a line at
[email protected]. If you'd like to learn more about what we do at Clientricity, visit www.clientricity.net. Until next time, stay well and go do something amazing for your customers. (upbeat music)
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