Reva Bhatia:
You're listening to Next in Retail from Publicis Sapient, the podcast that shares insights on unlocking what's next in digital transformation. Gen Z, or those born between the mid 1990s to the early 2000s are starting to beef up their wallets. The context of their upbringing is different from those who came before. They haven't known life without the internet and were on social media in grade school. These nuances mean where and how they want to spend their dollars varies in many ways from what we've seen in generations prior. Today we will focus on the imperative for retailers to adopt a LEAD approach in order to appeal to this growing consumer base. One that is light, ethical, accessible, and ‘dataful.’ Joining me today are Jon Riley, business and customer strategy lead at Publicis Sapient, {and} Andy Halliwell, retail strategy lead. I'm your host for the session, Reva Bhatia. Thanks for joining me. Now let's go ahead and dive in.
Reva Bhatia:
So, to kick things off, what do you both think are the biggest gaps that retailers will need to overcome to appeal to Gen Z? I'm going to start with you, Andy.
Andy Halliwell:
That's a good question. I think Gen Z is an emerging group of shoppers and so we're still not 100% sure exactly what their buying behaviors are going to be like in the future. We have to remember that they're still relatively young, so you know, they're up to the age of 24, 25, and so they haven't yet necessarily gone through a lot of the life stages that your Gen Y and Millennial shoppers will have gone through. They're unlikely to have started a family. There's a decent chance that they don't actually own property. So, some of those things I think will really play into exactly how they purchase and what kinds of things are going to appeal to them. What we do know, though, is that the Gen Z shopper is more connected to things like transparency and sustainability. They're much more interested in how a product is sourced and where it's come from and they're conscious of the impact on the environment. However, we also know that they are still going through the early stages of their careers and so they may not necessarily be as affluent as some of the Gen Y, Millennial and certainly the Baby Boomer generation, which seemed to have a lot more disposable income at this point in time.
Reva Bhatia:
Great, Andy. Thanks. Over to you, Jon.
Jon Reily:
Yeah, totally true. Can't emphasize enough that last point where we are creating experiences and changing business models, changing the way we do our business day to day for retailers for a demographic that doesn't really have any money yet. That's kind of a funny thing that you have to do., But in a way, a lot of retailers are probably still struggling with the Millennial question and now there's this new cohort coming over the horizon and they still don't have a good handle on the previous one. The funny thing for me about Generation Z is that we get to watch them dominate the way we talk to customers because they are the main influencers, and I use a small "i" when I say that; over the course of the conversation, we'll use the word “influencer” a fair amount because we're talking about people who influence in social media, but in this case, I mean they're influencing how we communicate with customers and these new channels, and social media and Instagram, Snapchat, Facebook-- for the few of them that use Facebook. They are the driving force of how retailers are communicating with their customers and up-ending basic models of how we have communicated as marketers and retailers for 50 years. As a result, it's super exciting to watch that from the sidelines, as well as in the trenches when I'm with retailers-- but retailers are putting their hands up and going, "Oh my gosh, I don't really know how to handle this yet." And once again, to Andy's point, we don't really know where they're going to sit because they're at a different stage of the timeline than later generation Millennials and even Generation X on the timeline. They don't have houses. A lot of them have eschewed cars. They want to live in apartments and not freestanding buildings. They don't want to buy things necessarily. So, it's going to be super fun to watch them mature over the course of their lifetimes in the 2020s, but for right now, retailers are grappling with the, "Oh my gosh, now I have to deal with a new generation. What do I do?"
Reva Bhatia:
Yeah, that's great context, Jon, both you and Andy mentioned sustainability and being conscious of the world around them as key attributes to Gen Z. So, I'd love to dive into a little lesson on LEAD. What do you both think light, ethical, accessible, and ‘dataful’ means to retailers? Since you guys both teed up beautifully what it means to Gen Z, I'd love to turn the table and understand what you guys feel it means to retailers.
Jon Reily:
I would say retailers are probably struggling a little bit with the new definitions of what it takes to communicate. And when you look at the LEAD framework, which is a new way of communicating, a new way of establishing an experience for customers, we've already taken care of a lot of the “light.”The old days of the really heavy websites, the media rich experiences, those have largely been pushed off to other places and not necessarily living within the retailers' ecosystem. “Ethical,” once again, we just touched on the fact that “where my stuff comes from and how it gets to me” is now part of that conversation, and retailers that ignore that portion of it will be passed by for ones that don't. I think that's a critical point that a lot of retailers don't necessarily have a firm grasp on right this minute. “Accessible” means it's everywhere, and it doesn't necessarily mean “accessible” in the traditional sense of it has to be easy to get to, but rather it needs to be where I want it to be, when I want it to be, and how I want it to be. And that's a little bit of a line in the sand for a lot of retailers who have struggled with the model of "I put up my sign, you come and buy from me, and that's the model I've used for a hundred years and that's what I want to keep doing." But Generation Z is different and they want to be able to interact with brands at any moment from any place. And then lastly, “dataful,”’ and I was just actually chatting with someone about this this morning -- we're swimming in data, we have all of this information and retailers haven't really gotten their arms around yet of how best to use that to service their customers. In the case of Generation Y, Millennials, Generation X, there's an interest in personalization, but we -- and I'm speaking of myself as a Gen Xer -- aren't really comfortable with sharing the amount of information that retailers need in order to offer those true personalized experiences. I'm sure we've all experienced the, "I talk about something and then a half an hour later it's in my Facebook feed”-- that makes us uncomfortable. Generation Z looks at that as a currency -- they're willing to spend that. So all of those put together I think creates a really good playbook for retailers to say: "These are the types of things I need to do in order to reach this generation."
Andy Halliwell:
We did a bit of research recently. We talked to 600 Gen Y versus Gen Z consumers in order to try and understand some of the differences in their shopping behaviors and their attitudes. And the interesting thing for me was that Gen Z came across as being more inclined to pay a fair price for an appropriate product. The difference there was around about 25% more of Gen Z were willing to consider paying a price which, as long as it was supported with transparency and honesty, demonstrated the people were being remunerated appropriately, or according to kind of the value of the product as they saw it. But you also have to bear in mind that the Gen Z consumer is not as time poor as Jon. I suspect you and I are, especially given what you were saying about the daughters in your household this way.
Jon Reily:
Yes, very true. I have six children, five of which are daughters.
Andy Halliwell:
So, I can imagine you're probably very time poor, whereas Gen Z don't have that same kind of challenge right now, which means they will put the time into actually finding the right product at the right price for them. And they're willing to do the research. They are willing to shop around. They're willing to put in a little bit more legwork to find the thing that they're going to purchase. And frankly, that means that the whole shopping experience is something which they really want to embrace and they want to be plugged into. That's not to say that they only want things quickly, they don't want things to be easy, they don't want things to be frictionless for them. And again, looking at the research and what we've discovered is that the new consumer is looking to spend way less time in the process of actually purchasing things, and way more time enjoying the brand, enjoying the experience, engaging with the content and the slightly softer side of the purchasing journey. I think that's where we are starting to see a real difference between Gen Y behavior, which it's all about, "I need it quickly. I need it here as soon as possible." And the Gen Z, which is a little bit more considered and a little bit more willing to put a bit of time into the purchase process.
Reva Bhatia:
Do you think there's a potential benefit at play for retailers to really lean into some of the attributes that Gen Z are seeking in their retailers? As an example, the other day I purchased some makeup from Glossier, an up-and-coming online brand that has a couple of brick and mortars popping up here and there. And when I purchased my products, they offered me packaging-free shipping, which is obviously a benefit to them and their bottom line in shipping more efficiently, but also for me as a consumer, made me second guess what I was buying and made me think again about what exactly it was that led up to the supply chain of me receiving my product. So, I'd love your take on whether you think retailers can and should lean into, as quickly as possible, some of the potential benefits of employing that LEAD framework.
Andy Halliwell:
I think what you've stumbled upon there is what I've realized recently to be one of the truisms of this kind of evolving focus on sustainability, which is when you're getting rid of the packaging, and when you're starting to think about the total end-to-end cost of shipping, and whether you should be manufacturing stuff more locally because you then got lower shipping costs and lower carbon taxes or lower carbon costs. I think people are starting to look at the whole thing in the round a lot more and be a lot more realistic about the actual cost of these things. And it's better, generally speaking, for people to focus on that because when you're doing the right thing from an environment perspective or from a sustainability perspective or from a packaging perspective, you're {also} doing the right thing for your business. You're actually driving down your costs and you're making your organization more efficient. So I do genuinely believe it's a win-win for both the consumer, who's going to feel much better about the product they're purchasing because it's going to come with less packaging {and} is going to come with less damage to the environment from their perception; and for the retailer who's going to benefit from better margins and lower costs.
Jon Reily:
However, the tricky part is, and coming back to the LEAD acronym and the ethics of it, you have to be honest because if you're just trying to whitewash it and look like you're being sustainable or look like you're offering environmentally friendly items, that's going to be seen through so quickly. The way the world works now, it's not just you tell your friends and they tell their friends, it's that you can stand on the soapbox of the entire planet and call a brand out. And I think that's a critical piece of this. To your point about Glossier, if you thought about this and you thought “wait a minute, this is good. I like this,” you might have that conversation on social media. Alternatively, if you were to see through a retailer who was trying to fudge it a little bit in order to cut their costs, that would also be seen in a very negative fashion. So, the ethics of it I think are very important to be doing the right thing for the right reasons and not do the right thing, or act like you're doing the right thing, for your own reasons.
Reva Bhatia:
Totally.
Andy Halliwell:
I do think that transparency is key. You've got to be doing things which are not just being done for the sake of it, but you've got to be creating a product and experiences, and you've got to be selling in a model which is in harmony or align very closely with your overall company brand vision and brand principles. If not, then it very quickly becomes really obvious that it's false. It rings hollow. It doesn't ring true. People pick up on that superfast. You'll see the same thing with the kinds of experiences that people are engaging with. People will engage with experiences {that} make sense for the brand and make sense for the kind of products that you're purchasing. We've seen when we've been doing some concept testing, again, with the same 600 Gen Y and Gen Z customers we spoke to earlier this year, that those experiences which people felt were light or ethical or accessible - they over-indexed with Gen Z consumers as things that they would actually pay a premium to engage with because they felt it worked well and it worked in harmony-- not just with what they were trying to achieve, but also with the kinds of companies they wanted to engage with. I think that's really important to understand that it worked well for everybody. It works well for the consumer because they feel better about things, but it works really well for the brands because they can potentially charge a premium for a service, which isn't necessarily more expensive for them to deliver, but is an experience, which is more harmonious with their overall principles and their overall objectives.
Reva Bhatia:
Right. So, going back to Gen Z-- the dichotomy asks with that generation is often hard to unravel for retailers. Gen Z wants their products quickly, but delivered eco consciously. They want retailers causes to align to theirs, but also demand great experiences and efficient buying processes. How should retailers approach unpacking all of these seemingly dichotomous concerns of Gen Z?
Jon Reily:
So, I get to say most of what I said in one of the previous episodes, which is either you can have it good, quick or fast and pick two. The problem is that the majority of Gen Z wants all of it, and that expectation is there even if the reality doesn't support the expectations. So, the race to the bottom in terms of shipping, for example — when Gen Z and late stage Gen Y started entering the marketplace, two-day shipping was the standard, then it was one-day shipping. Now it's one-hour shipping, then it's going to be 30-minute shipping. Here we're getting to the point where everything is delivered to your front door like it's a kidney and not a pizza or some paper towels. And finding the "what works for that specific model" I think is important, and we're just not there from a social construct yet. We're in the mode now where we have the ability to have everything delivered immediately, but we don't need that. Food delivery services are a perfect example of that. Obviously, nobody wants cold food. You can have food delivered to your home in 30 minutes from a bevy of restaurants in your city. That said, you don't need that same model for other things. I think as we, I use the global “we” as consumers, mature with these new technologies and with these new services and get a handle on, well “this type of item can come in this delivery window and I feel comfortable with that because it's larger. It requires a bigger truck. Maybe you could use an electric vehicle for that to offset the environmental cost of that” versus "I don't want cold pizza." Finding the fine line between those two things I think is something that will occur in the years to come… in the right now of where we are, retailers just need to not necessarily train their customers, but coming back to the previous conversation of “just be upfront with your customers;” be honest with your customers; explain what's going on and why you're doing what you're doing. And most of the time that will work just fine.
Andy Halliwell:
I actually think this is a really scary time for a lot of retailers because retailers are going to have to decide what they do and what they don't do. They're going to have to double down on the things they want to be known for and they need to be really, really amazing at that. They're going to have to stop trying to be all things to all people. I think that in general is a good principle for retailers anyway because that's how you become famous and that's how you become efficient and successful. But I think it's even more important with Gen Z consumers. What we're seeing is that they are more inclined to buy things that they really like from brands that they really resonate with or that they really appreciate. So you've seen the rise of some of these new food products, things like Halo Top, for example; it has just exploded out of nowhere and has got a lot of the traditional ice cream manufacturers really worried just because it's come with a lot of innovation and a lot of inventiveness. But they just do this one thing -- they just make really interesting, really nice ice cream and they haven't gotten bogged down with standard recipes. They're always listening to consumers. They've done a great amount of work listening and using social channels to try and understand what other innovations or experiments people want to try in ice cream, and that's what they do. I think you're saying similar things with some of the other more successful general retailers. Target is a good example. They doubled down and they focused on one core audience, which was effectively young mothers, and what they've done is they have built a lot of their experience purely for “what do young mothers need in order to make their lives simpler, easier, more efficient?”
Jon Reily:
So could I get some of that ice cream delivered while we're doing the podcast? Because that would be awesome.
Reva Bhatia:
I would say {I} all of a sudden have a hankering for some Halo Top ice cream. But Andy, I think you bring up a really interesting point. It's interesting to unpack whether or not this emerging generation may already have established brand loyalties. Do you think that they do already have brand loyalties, and do you think there's a space for newcomers to come in and play? And what does the notion of brand loyalty and being a brand evangelist in today's age mean for retailers as it stands?
Andy Halliwell:
That's a really good question, and I don't know that there's one answer for that because I think so much of buying behavior is inherited from the family that you were brought up in, the environment you were brought up in, the country that you grew up in, and a lot of your influences throughout that period. You have to bear in mind that the oldest members of Gen Z are three to five years out of college or school and they are only just starting to establish themselves in their own home and they haven't necessarily had a lot of time to establish “what are the brands that I like to buy from on a permanent basis?” and “what are my defacto defaults?” I think you're going to see right now a lot of these younger consumers just experimenting with different brands before they start to set along things. There is a real opportunity for brands, and for new brands and for new products, to try and capitalize on this kind of period of experimentation. But there are going to be the home comforts and there's going to be a lot of the things that people were brought up with, which people will just want to continue to engage with. It's very difficult from what I've seen and certainly from the research we haven't seen; anything that indicates that people are inclined one way or the other to experiment more or to just settle down with what they know.
Jon Reily:
Brands are in an odd place right now because of exactly what Andy mentioned in {that} these consumers are still setting their preferences. They're still getting a handle on the matriculation that they're experiencing from moving out of universities, moving out of their parents' homes into their own worlds, their own homes, their own houses, their own jobs. As a result, they don't have the same brand loyalties that other consumers do. This generation wasn't raised the same way that Generation X was and Millennials and even Baby Boomers, where we have a shared experience via our media consumption of “we all know the same TV shows.” Even though Andy and I grew up thousands of miles away from one another, we still have that shared experience of television shows. Generation Z doesn't have that because of the myriad of entertainment options they via YouTube, and as a result they don't have that same brand loyalty that I had in the moment I stepped out of my parents' home, even though I'd never bought my own paper towels before. This is going to be a little bit {of a} light period for brands and many retailers as they seek to reach those consumers and get in their minds and say: "We're the ones who solve your problems. You should buy us versus our competitors." In addition to the fact that those consumers are coming online so quickly, and we haven't really touched on this, Generation Z is going to be the largest generational cohort by 2023. Forty percent of consumers will be born between 1997 and on, if you separate generation alpha out, which are people who are born after the year 2010. That's a huge market for retailers to get their arms around. They don't have a lot of time, they don't know a lot about those consumers, and more importantly, those consumers don't know a lot about them. So the gauntlet has definitely been thrown down for retailers and brands to reach these consumers and reach them quickly.
Reva Bhatia:
Andy, I know you mentioned earlier, and Jon you did as well, Gen Z and the impact they're making on the world around them. How do you anticipate Gen Z is already impacting purchase decisions for those around them? Say, their parents?
Jon Reily:
I can definitely speak to that one. In my home... Well, obviously we're feeding a lot of people here. We have a lot of preferences here. It's not necessarily the, "I want this peanut butter versus that peanut butter. I want to have this TV versus that TV." But the spirit of the way they live in the world has definitely affected my wife and I, who are both solid Gen Xers, and watching them change over the course of what seems like moments to us but is a quarter of their life to them has been fascinating -- to watch them go from being children to young adults and as they have done so, they are absolutely influencing the purchases for the rest of the household. Now, on paper it would look like this is a two-parent household: Generation X preferences are going to be X, Y, and Z. But in reality, our purchase decisions are heavily influenced by Generation Z, and that makes it difficult to reach us because we are a household that doesn't consume a lot of media. As a family the Generation Z's do, but as I mentioned just earlier, they don't have the same advertising reach that previous generations do. So their influences are, "Why is there all this trash?" I just had a conversation with my daughter this very morning about “It’s Christmas time, we're buying a lot of stuff. There are Amazon boxes all over the house” and she was just kind of looking around kind of absentmindedly and saying, "Wow, there's a lot of cardboard in our house right now." And that got me to thinking. I'm like, “You're right. Do we have to do it this way?” So even those little subtle influences I think are beginning to take hold and those are hard to quantify for retailers to say, “This is something we should be thinking about.”But paying attention to what your consumers are interested in andwhere they want to be talked to within social media and not necessarily traditional advertising is the key for retailers to learn what those consumers want.
Andy Halliwell:
I do think it's interesting that amongst the young people in my family there was less a focus or obsession around specific brands and specific household goods in general. You're right about the fact that people don't obsess over the particular brand of peanut butter, but all hell will break loose if you've got smooth when everybody wanted crunchy. What I'm actually seeing recently is it's less about the specific brands and it's more about the ingredients. None of my nieces will drink using straws because they find the idea abhorrent because of the Blue Planet episode, which aired a couple of years ago, around pulling straws out of blow holes of wildlife, where the straws were causing really colossal ecological damage. Things like that are just absolutely prevalent and they come up in many, many conversations. There’s a lot of concern in my family around where the product is sourced from; has it got the right ingredients or not, do people want to eat it, can people eat it? Which is fine when it comes to food, but what I've started to see is that it's definitely tripping over into other things that people buy. One of my nieces recently was very concerned about buying some jewelry. She was looking at it and she's saying, "Well it's, it's very pretty but, I won't wear it very often. And then I worry about where the metal {is} coming from and {if} was it mined out of the ground," because I know she's seen a documentary on Netflix around the impact of strip mining on poorer parts of the world. There's this greater access to information like that, which is really causing people to second guess every single buying decision. And I do think that is going to slow down the rate at which people acquire, not just personal belongings or clothing, but even things like trinkets or gifts or the broader retail portfolio. I do think that is definitely already having an impact certainly in my family.
Reva Bhatia:
Yeah, the prevalence of unintended consequences today, I'd imagine, is much more profound than it was, say 50 years ago. There's much more transparency and as a byproduct of that, people now have to be more aware of the decisions that they're making. So, quite an interesting notion there Andy.
Andy Halliwell:
One of the things that we saw was when we were testing a few concepts with consumers just in grocery delivery models; one that really resonated with the younger consumers was the idea of a farmer's market-- basically a way of pulling together local produce, putting all things into a single place where people could purchase easily from it — from the back of a van or you could expose it online and those kinds of things. That was by far and away the concept that resonated strongest with our consumer group. I think that is a really good example of people thinking about, "Well I don't really have access to that, but this is a way of guaranteeing it's coming from local farmers and it's got the right kind of provenance and the right history behind it." I kind of buy into that as a concept. I'm really interested to see if brands that do this already here in the U.K. on a very small scale like Abel and Cole, for example, if they {are} able to scale and grow that to a sort of a mass market proposition.
Reva Bhatia:
Right. Do you guys feel the various segments within retail, and I know you touched on this already, Andy — but do you feel the various segments within retail have different considerations to ponder? Say grocers, thinking about the LEAD imperative with Gen Z vastly differently from, say, apparel. How do you think the different segments of retail are nuanced and how they should be thinking about the LEAD imperative?
Jon Reily:
Yes. One hundred percent no question about it. What I was mentioning earlier was the concept of "when do I need this specific thing?" I think {it} will become more prevalent both in consumers' minds as well as retailers' minds. Everything showing up at your house the next day is not sustainable. It's not sustainable economically. It's not sustainable environmentally. It's not sustainable from the transportation side of it. It's not sustainable from {the} human capital side of it. We can't keep doing this. So, retailers of all spectrums need to start think this themselves to the point where “What conversation do I need to have with my customers to set the expectations of how long it will take for them to get things from me and how they interact with me?”. To your specific point of grocers, grocery is of course being completely up-ended thanks to the digital revolution coming to grocery. It had largely been insulated from that, where nobody really thought their phone was really compatible with the grocery store, as opposed to being able to order everything from Amazon. Now that {the} Amazonification of expectations has come to grocery, where people expect to be able to do their shopping on their phone, {and} buy online/pickup in store is now commonplace. Food delivery services, not takeaway, but actual groceries is becoming more common. Ironically, in a way, we're moving back to the mid-20th century model where you expect your grocer to deliver items to you. Now take that to a brown goods dealer where you're talking about having paper towels delivered, or stereo equipment. Those types of things aren't right now. You don't need a gallon of milk the same way you need a new TV. And I think that retailers would be wise to put on some blinders a little bit — still pay attention to the world, but be aware of their own specific sector and what the expectations are from their customers in their sector, because someone who sells televisions doesn't have the same needs that somebody who sells groceries {does} and their customers are not going to be the same in terms of expectations.
Andy Halliwell:
You've actually struck upon one of my favorite subjects there, which is the fact that if you look at grocery specifically, the reason why people always have this reticence around online grocery shopping is because they can't touch and feel the produce before they purchase it. They can't guarantee that they're not going to get a slightly squishy avocado or that that head of broccoli isn’t slightly chewed up on one side, or that apple doesn't have a black mark on it, or a bruise or something. That's the thing that puts people off of online grocery shopping in general. Actually, if you look at a basket of let's say a $100, $30 to $50 of that basket is going to be made up of dry goods that are pretty much the same every single time. You know, a box of Coco Pops or laundry detergent or Kleenex or toilet paper. Nobody really cares. I mean, nobody wants to touch and feel their toilet paper before they put it into their basket and go to the checkout, right? I think you're going to start to see a lot more of Amazon's subscription model for fulfilling some of those products {to} be pretty differentiated from the idea of “How do I purchase fresh produce and fresh goods?” I think we're going to start to see those experiences, even within grocery and within food retail, I think they're going to start to diverge a little bit. When you start to explore some of the other categories… I was lucky enough to be at a supply chain dinner with a number of U.K. businesses just three or four weeks ago- and a I'm not going to lie, I was fairly taken aback by how much the subject of Gen Z consumer shopping behaviors were impacting a group of hard-nosed, slightly gray-haired, unfortunately, mostly male traditional – (imagine the traditional supply chain stereotype)and that's {Gen Z} who we were talking about. But the subject of the evening was all about sustainability. It was all about: “How do we respond to Gen Z's demands to do things in a more efficient way, but also more eco-conscious way?” There was a lot of commonality amongst the different sort of categories, be it online, big box goods, be it apparel, be it food, be it outdoors equipment. There's a lot of commonality across the different solutions that people were looking at in order to try and resolve and solve some of those problems. So as much as I think they're all going to need to be different point solutions for different brands and for different experiences, I do think there's going to be a lot of commonality across how the organizations are going to tackle some of these challenges, which I think is good because it means that some of those solutions will be efficient and will scale more easily and they will become the new norm for most organizations.
Jon Reily:
Definitely true. Two things to add about that. One, regarding brand and what your paper towels and your toilet paper are… The impact of conversational commerce is going to have a huge effect on retailers and Generation Z is a cohort that is going to be far more comfortable with conversational commerce and talking to their Alexas, their Google Homes, etc., in order to interact with brands and retailers -- and we haven't even scratched the surface of what that's going to be yet. It's already having huge impacts. One statistic I like-- this is very CPG heavy -- but after Amazon introduced the Echo and allowed people to actually be able to buy things on it, within 24 months they dominated one third of the online battery market because when you ask Alexa to “buy batteries” it chooses the Amazon basics brand and not Energizer, Duracell or any of the other companies. That is a perfect example of the erosion of brand thanks to technology. That generation is going to be far more interested in interacting with the automated assistants, especially as they become more and more advanced. And coming back to the comment about my children, my wife and I have discussed my two youngest children will never live in a world where they can't speak to inanimate objects. My three year old can have conversations with the Alexa in our house, which is kind of creepy to be candid. But that non-withstanding, she's going to live in a world where she expects that, and retailers need to start to think about: “What does the world look like when people can’t touch and feel my product and they can't see it either, and they're actually talking back and forth to a device to purchase it?” So, that's one point. Last but not least, I have to ask, what is eating your broccoli at the store before it gets to you? Right? Because you said it might be eaten away a little bit.
Andy Halliwell:
I just meant it can be a little bit mangled on one side. I suppose like a caterpillar has got to it or something like that.
Jon Reily:
All right. I'm imagining little rogue bunnies in there, sneaking in there and eating the vegetables. Okay.
Andy Halliwell:
Actually, on the point you were making around conversational commerce, one thing I just wanted to share with you that I thought was really cool. So, I'm building a shopping list using emoticons in WhatsApp so that you can send a picture of pizza, a picture of an apple, {a} picture of a banana, a picture of a pear, {a} picture of a noodles or a curry or something…- and just sending 10 emoticons to — I can't remember who was testing the concept -- and they would just pick a generic brand, and it would arrive for you that evening so you could literally take over your food order. I just thought that was such an amazing idea. But again, it does a fantastic job of massively eroding the value of the brand and just giving you basically some kind of pizza.
Jon Reily:
You never know what little things are going to be the next big thing. And that's the tricky part of the world we live in, that something as ludicrous as a meme of a woman yelling at a cat — which didn't exist four months ago — is now on everybody's Facebook walls and we had no idea what that is. It is weird the way the world we live in is now that way, and it's tough for retailers to be able to exist in that world while seeming genuine, while seeming they understand it, while not being ham-fisted about it and going, "We're going to make an ad campaign with the woman yelling at the cat," and that just doesn't work at all. So to your point, Reva, joke, hilarious — but you never know what's going to be the new weird type of topping for pizza in 2021 and everybody will have it and we have no idea what that is today.
Reva Bhatia:
Yeah, though we tried to be fortune tellers, we can only try our best. So, wrapping today's dialogue, I'd love to get your thoughts on how retailers should best prepare for Gen Z and LEAD. Where should they begin with focusing their efforts, if they haven't begun already?
Jon Reily:
One of the things “L” has to be is also listen. I speak with retailers all day long., Not 24 hours a day, although it seems like {that} sometimes, but a lot. I find frequently a mindset of not necessarily, "We've got this all figured out. We don't need to worry about these young kids," but rather "We don't know where to listen. We don't know what to listen to." I think coming into any strategic decision with as much data as possible is the critical path to success, and retailers have to be open enough in their own organizations and their organizational structures to allow them to be able to do that. I think that's a little bit of the tricky part too, is many retailers have an antiquatedorganizational structure that doesn't share information across the organization well, especially not in a fast fashion that's required to be able to interact with the constantly shifting sands of consumer sentiment. In order to do that successfully in the 2020s and beyond, they have to listen. They have to have their finger on the pulse of what's going on and act and react the right way and, coming back to that ethical conversation, doing it because you want to do the right thing, not because the right thing seems like the right thing to do.
Andy Halliwell:
Yeah, I agree with that. I think for me the thing that a lot of organizations are going to have to get comfortable with is innovating and creating more experiences which are going to speak directly to this new generation of consumers that are going to be the majority of the buying power over the next five years. Having an organization, number one, that can experiment and can move quickly I think is going to be key, and then to creating and innovating new experiences that these new consumers are going to want to engage with in a way which is, like I said earlier, sympathetic to their brand, that rings true when people engage with it, and is just different enough that people are willing to spend a bit of time with them and build up a relationship with them as a brand. I think that it's going to be really important. Because otherwise what happens is you're going to try and be all things to all people and you are going to fail because that is apparently not what these younger consumers are interested in.
Reva Bhatia:
Love it. Well, thanks Jon. Thanks, Andy for joining.
Andy Halliwell:
Thank you. Most welcome,
Reva Bhatia:
Lively discussion today. I appreciate your time.
Jon Reily:
Always happy to do this. This is awesome.
Andy Halliwell:
Cheers, guys.
Reva Bhatia:
Thanks for tuning into Next in Retail. Be sure to subscribe so you don't miss a beat on the future of digital in retail.
