May 16, 2020 2:00:00 PM
Bob Phibbs interviewed Nikki Baird, VP of Retail Innovation at Aptos Retail. In this episode Bob and Nikki talked about the state of retail and the need to get the circulation back into our economy.
Bob: Today, I get to speak to Nikki Baird, VP of retail innovation at Aptos. Thanks for joining me today, all the way from Colorado.
Nikki: Thank you for having me.
Bob: Well, of course. Then I'm also curious about, we are recording this actually with video. Unfortunately, you will not be able to see it, but Nikki said in her notes to me that she's still grappling on how to keep her cat from being a ham during video calls. And clearly the tale is all around you.
Nikki: Yes. I try to set the camera angle so it cuts most of her out, but she still finds ways.
Bob: Yeah. This little fox tail kind of going up. Well, we had to re-record actually due to a technical difficulty when everybody thinks we're all going to go to virtual meetings. I think there's a few things that make them not as great as we might've hoped, but one of the things we were just asking about that you started at Kmart and I was just wondering if you could fill me in a little bit about what that has done, in your early life, and then how does that experience take you forward into what you do now?
Nikki: Yeah, I was an original blue light special girl at Kmart, worked in the apparel division. And, yeah, I mean like how do you decide to stick in retail? Like nobody goes into retail typically in their first job. And for me, that was a high school summer job. Right?
It wasn't like I was looking at that as a career option, but I will say, while I was there, Kmart was transitioning over from the tickets to barcode scanning at the registers. And, so I had to live through that implementation of the scanners and the barcodes and all of that. And that very first Sunday when they cut over, I will never forget it. I ended up being the only person in my department who showed up, which was often problematic.
One thing that I learned about retail, was attendance, but I was there maybe five minutes when the first call came in, you know, price check for apparel register two. And so I troop over there and while I'm over there, you know, well, this was on promotion. I don't understand what's going on.
You know, here it is. It's in the flyer. While I'm standing there, “Price check for apparel at register five.” It was like, “Oh, crap.” In the first 30 minutes, like the head cashier came over and then the store manager had to come down, and everybody was like, “Oh, no, none of the promotions that are supposed to be running in this store loaded today.”
And so I learned a very valuable lesson of the impact that technology has on business and the impact that it has on the employee, the impact it has on the customer. I mean, that was a nightmare day, and I was so glad when my shift was finally over, cause it was really just crisis mode.
Like we had to go and reprice all the items manually that were on promotion.
Bob: Oh my God
Nikki: Just so that we knew what was coming to the register. It was awful, but it was also an excellent learning experience. And I would say it definitely shaped my career trajectory from there. Not that I particularly pursued retail technology, but my interest in technology was always high, and it was always high from the perspective of the impact that it had on business.
And, and that's kinda how I got to where I am today.
Bob: Well, I love that. That’s a great story. And I also love the fact that you also firsthand understand what happens. That employee realizing that, “Oh, trust me, this will be seamless.” I can't tell you how many clients I've talked to and you hear about a botched rollout of a new computer, whatever it's going to be.
You come from a line of technology people, right? Your mom used to make computer chips.
Nikki: Yeah, she did. She actually made computer chips for Cray computer. So, they were, they were not your typical silicon chips. They were gallium arsenide, so yeah, it runs in the family.
Bob: Nice. All analytical. And previously, we'd talked about how QR codes are making a big comeback in China. The ability that you can scan, for example, like a king crab, and you can find out the name of the boat that it was on and where it was done and how long it's taken it to get to market and all the little steps, all that supply chain, that it took.
And then maybe there's recipes and maybe you can have it delivered now or made or whatever. Do you see QR codes coming back?
Nikki: Yeah, I think, I think it's a really interesting question. Definitely lots of people are paying attention to how they're being used in China. And, I mean, depending on where you stand in the world, the point of view of the benefits that that creates versus the privacy challenges that that creates.
But I think from like a product perspective, right? We don't see a lot of barcodes yet, 2-D barcodes, QR codes, in the U.S. But I also see a lot of people trying to solve that problem with other technologies. So augmented reality is another place where instead of even having to have a space on the package for that QR code, that the package itself becomes the code, if you will.
And so if you scan that, then now it connects you to all kinds of information, supply chain information. But also, you know, lifestyle information, you know, recipes and stuff like that, that all become a part of the digital life of that product. I think for sure there's a need for an easier facilitated connection between the physical product and all of that digital life of that product.
Is it going to be a QR code? I feel like we're still trying to figure out what the right way is and It's not a hundred percent that it's going to be QR. Right? There's other options.
Bob: And I think, like you said, with AR and VR and R&R, I don't know.
Nikki: Mixed reality.
Bob: That you have to tell them pick this up and pick out your phone and open the app. And most of us don't want to do that. And the other one is, I don't know, with Covid-19 who the hell is going to be strapping an Oculus on their head and doing VR? I think you had some experience with that, didn't you? With your son.
Nikki: Yeah. I tried. So, the office is closed and I knew I was going to be home, we were looking at what are potentially other ways that we can make just meetings more engaging and virtual reality really does. I mean, as soon as you put the mask on, as soon as you enter that world, I mean, it really does fool the senses.
Like there's plenty of YouTube videos of people running into walls, right? Because they forgot that they were in their house. But I'll tell you, I've made my son sign in and I signed in and we found like a virtual teams meeting room space, and we went through all the setup to get in, which was not trivial, by the way.
That took at least a couple hours and I think two or three tries before we finally could get both of us in the same room at the same time. So, he's in the family room. I'm in the living room and with our safety spaces staked out for each other we finally got in that conference room together with our little avatars that we could see.
And it lasted about 45 minutes and we both were like, this is heavy, it hurts my head. I have a headache my eyes are sweaty, like I'm done. I don't need to be in here anymore. So first attempt at a virtual meeting space, I would say it was not a success. No. I would not recommend it.
Bob: It sounds worse than Zoom. I'm just saying.
Nikki: Definitely worse than Zoom. For sure.
Bob: Well, you know, Nikki and I met a long time ago in the bus, actually going to NRF. And we've been, we look at the world a little differently. And, Nikki is much more of an analyst and, you know, I think that what I'm struggling with right now is there's so many doom and gloom stories out there.
Another worst, it might, it could. We're off the deep end. There's no Santa Claus. Give up hope and let me connect even more dots. You know, one analyst had said half of all malls will be gone by the end of 2020. I don't get the point of those honestly, because if retail is responsible for one in four jobs, Nikki, we damn well better hope that that doesn't happen, much less that way.
And I also ask what does that guy get out of writing that either? I mean, are we getting close to crying fire in a crowded theater? So, what's the balance for you?
Nikki: Yeah, that risk of becoming a self-fulfilling prophecy, right? It's like if you scare everybody, then they're going to act scared and then nobody's going to do the things that we need to do that help keep the economy going.
I definitely try. I want to thread a path, right? Like I believe in being real about what the problems are, but I don't like making those kinds of predictions. I mean, I think that's just clickbait to some degree. It's like we don't know. We don't know. So, I mean, honestly, there could be a cure tomorrow and all of this could be over and we could all be dancing in the streets in a week.
Like, it frustrates me to see all of that kind of speculation. Now I'll contrast that with like I just published a piece where I was speculating about how much of a problem returns could be, right? Like that's a good question to ask because you know, we're in a whole different world.
There’s so many things that we've never had to think about before. And here's yet another one that we need to think about. But honestly, when I went through, I at first thought, Oh my God, there's going to be like a ton of returns. Like all these people who canceled all their vacations and they bought all this resort wear and it's been sitting in their closet, and if they've been furloughed or laid off, then they're looking at that as “That's cash I could get back.”
And that's the last kind of return that a fashion retailer wants right now is the very inventory that they're going to have to mark down like today. So, you know, I was like, “Oh my gosh, it's this horrible thing.” And it was like, well, you know, when you start thinking about it though, you know, one, there was a good trend of people who were like, screw it.
If I can't go on my vacation, I'm gonna wear this anyway because I own it and I'm going to feel like I’m on vacation.
Bob: It makes me feel good.
Nikki: Right. Yeah. Even if I'm home. People wore their Easter finest on Easter, right. Whether they went anywhere or not. So there's that part of it. And then, you know, we had talked to an essential retailer who had said that they didn't know what to do with clothing returns in particular.
They were worried about contamination. And so, it was like 1% or less of their sales, right? They didn't sell a lot of clothing. And so, they had directed all of their stores to destroy anything that was clothing that was returned, destroy it in the field. That they weren't going to try to figure out how to disinfect it.
They weren't going to put it back into circulation if they couldn't be assured that it was not contaminated in some way. But when you look at the length of time that the virus lives on different kinds of materials, clothing is actually one of the better news items on the list, actually.
I think they say maximum of two days and also that like heat, right? High heat, and steam, high steam. Right. That actually has a high probability of destroying the virus. So, clothing may not be as bad news as it looked to be, especially with regard to returns, when you first looked at it.
So, it's worth asking the questions and it's worth imagining the worst-case scenario, but it's not about just diving to the worst-case scenario. We've got to be realistic, you know. You want to understand what the worst could be, but. But you can't act like it's going to a hundred percent be the worst.
You have to be prepared for what shows up at your door. But I think it's worth going through some of these thought exercises. Like to me a better question. It's not about 50% of malls are going to close. But it is a good question for a retailer to ask, what would it mean to me if 50% of malls closed?
What would it mean for me if malls can open in three months or what if they open in a month or what if they open in six months? Right? Like you need to ask the questions, but all these proclamations over how awful this is all going to be. I don't think it helps anybody either. I'm with you from that perspective.
Bob: Oh, that's good to hear. People openly saying they think Macy's is going to be gone. It's like I get it. They're leveraged. It's one of the classic brands of America. You don't get it. There are too many vested interests that Macy's will survive and Neiman's is going to survive and there are a lot of other hard retailers that there's too many people saying we need you.
They'll find a way out. But it makes great clickbait. And you brought up a good point about essential retail. You know, let's face it, Walmart and Target got it passed, they’re essential retail. So, they're giants. You know, they were able to put the money in years ago to do curbside, trunk side, dog side, whatever, and they have been able to reap it.
But at the same time, a lot of regional chains didn't have that luxury because they didn't have grocery. So, they were closed and they didn't get that option. And with all of the prognostication, I know a former colleague of yours had said we shouldn't open any stores until there's a vaccine.
And I have to ask, you know. If that was the case, then wouldn't you have thought that all those Targets, all those Walmarts, all those grocery stores where so many of us walked in without any protective gear, masks, social distancing, would have been hotbeds of this disease and that's not what we're hearing. Now I know that you have one exception for one, but just in general, it's not like we all have bubonic plague and fleas are going to give it to us.
I think there's a reasonableness. That, you know, retailers are going to have to try to ameliorate the risk. That was a very big word, but ultimately we can't remove it, you know, I mean, if I order a sweater from Nordstrom, am I assuming it's been steamed and I try it on.
How many items can you return, I mean, torch in the field before it becomes like, we're in crazy town. How do I manage any of these systems?
You can answer any and all of those points.
Nikki: No, I mean, like I look at my own behavior. So, when we first shut down my family said we want to support some of our local restaurants, right? And so that first food delivery that we ordered, and, they brought it to our house and then we were like, “Do we open the door? Do we, how do we give you a tip?”
It was like, “Oh my gosh.” And then you got to a level of “Yes, I can bathe myself and bleach every time I interact with any human being or I can live.” And there's definitely a space between being completely at a hundred percent reckless and being completely at a hundred percent paranoid, and there's a space in there that is still safe.
I mean, like the governor of Colorado, he talks about reducing the level of the number of interactions. So, what percent reduction in interactions do you have physical interactions with people? So, they project their modeling based off of like 75% reduction in interaction is kind of where Colorado has been up until the 26th when they started releasing some of the constraints.
But you know, they're modeling, they're like, look, if we fall below 50%, so if you start having as many, you know as half or more of the interactions that you would have before everything shut down. If you fall below that rate, we're going to get a resurgence of the disease and we're going to have to lock down again in order to protect our hospital systems because we just can't have so many people get sick all at once.
So they're sort of framing it in a way that it's hard to kind of think about, cause you don't really think about, well how many people did I interact with today? But, but it gives at least kind of a framework for thinking about that. So it's like they're not saying a hundred percent right.
They're saying 75 and then 50 and we have to stay in that 50 to 75 range. So what kinds of activities can you do in that range? You can do more activities than just sitting at home, but you have to respect the masks and the six feet and you know, all of that stuff. So. Yeah.
Bob: That could be a challenge, right? Because not everybody is going to respect that.
And that's the other challenge for retailers because are you going to have infrared scans like they have in China? If I was a retailer, I would have everyone that walked in my door, my employees, they're going to be infrared scanned for that 100.4. It's not a foolproof test, but at least it's something that at least says I'm being reasonable.
I think that's going to be the key to retailers is signage and procedures. You're not going to protect everybody, you know, I think whoever opens should have masks. But I would prefer to say let's limit the number of people that can be in a store to a number of employees and social distancing, but opening to just curbside delivery, is that practical for everybody?
Nikki: Yeah. No. And, and I mean, I will say like I see some, especially larger chain retailers who are saying if I can't do that in a system driven way, right? Like if my IT systems do not support curbside delivery or curbside pickup, then I'm not doing it.
Like, let's not just shut everything down just because you can't do that in a centralized way. It doesn't mean you shouldn't try. I mean like you can still call the store and if you've got somebody there who can answer the phone and who can pull product, you could sell product, that can still happen.
But, to your point, like apparel fashion, right? They live off of the brows. They live off the fitting room, right? If fitting rooms are going to be closed, it doesn't even matter if an apparel store can be open. I mean, half of the value of coming to that store was just taken off the table. So, yeah, I mean, it's tough.
Like, it is so tough for especially fashion retailers, because they're just not relevant in customers' lives right now, but you don't give up the ghost. You got to fight for your customers.
You got to survive until they are ready to engage with you in that way again, and you've got to be prepared to be relevant to them in whatever ways they want that from you.
Bob: You know, it's interesting, I was talking to somebody the other day and they were talking about one of the problems they have, I want to say in the mall in Russia, that they're having a real problem with Tiktokers, that they're making these short videos of these outrageous behaviors.
And I can certainly see the same thing. Somebody goes into a Macy's and, you know, look, I'm not wearing it, and I ran up and I touched the employee. We didn't have to deal with that in 2008, we didn't have to deal with that in Y2K crisis. And you know, at some point, I don't know how retailers don't just throw their hands up, like, fine, if that's it, then, we are closed and you'll have to deal with it because I think the community is going to have to respond as well.
Right? They're going to have to realize that no, it's not going to be a hundred percent. And if you want to be a pandemic shamer and you want to find something, you'll probably find something. I know I might've told this story before, but a woman up here in upstate New York, she's working in her store alone.
There's no air conditioning or heat in the store. So, she opens up her front door just a little crack, and this woman comes back, you're supposed to be closed and takes a picture of her, and it's like, well, what are you doing out? I mean, at some point, it's like, are we here to try to get through this or are we here to make an absolute rule?
And that's what I kind of have trouble with, with some of the side that believes that unless there's a vaccine, no one should be out or open. And realistically we have to get the country moving. As you said, we've got to get the circulation going again.
Nikki: Yeah. In the safest possible way. I mean, like it doesn't mean being completely reckless, but yeah.
I don't believe that, you know, that this should be just left up to the retailers to figure this out for themselves either. I mean, it helps to have governments say what people can and can't do. I know we're Americans. We don't like to be told what to do, but, you know, the challenges with reopening stores and doing that in a safe way, I mean, it's already complex and challenging.
Bob: Did you read NRF’s 18-point document? I mean, it just goes on and on. I thought. I mean I get why they wrote it. Don't get me wrong if you're NRF, sorry, but realistically it has so much, it is so dense that it's almost like, so are we moving into food service?
Is that what we're going to be doing?
Nikki: And I read it and I thought, “Oh, look at all this stuff they didn't have in there.” Cause like just the technology side of it. Just the tech side of it. So, if you clean a pin pad wrong you can kill the device. Right?
Bob: Wow, that’s significant.
Nikki: Yeah, you can void your warranty. So, even if it didn't break right away, if they open it up and find Lysol on the inside, right, then you're out that device and those are not cheap. Right? So. There's an immense amount of detail. There's all new processes and procedures, and just like, you know, when I took my first food delivery to my door and I was like, do I touch you?
Do I touch the bag? Do I need to Lysol the bag? How do I give you a tip? Every retailer is going to have to go through that same process again. I mean, even grocery retailers are still trying to figure out the rhythm of the business that keeps everybody safe. You know, it's a massive rewrite of the store operating procedures.
And I say all that knowing that, yes, we have to slog through all of this stuff because it's what we have to do in order to reopen safely. Not to say you shouldn't do it at all.
Bob: No, I don't think anyone's getting that. I'm curious, do you think that we're going to see global brands and retailers have to put on like a chief medical, I don't know, officer, person advisor on a strategic level going forward?
I mean, people say that we're going to be dealing with this for a while and the whole idea of cleanliness will not go away.
Nikki: I could see where you could potentially add it into your security, risk compliance, you know, kind of that part of the world. Will you then need some kind of medical advice?
I don't know. I feel like outside of the very largest companies, I think most retailers are going to look to outsource that, right? I'm going to hire a janitorial services firm that is going to do a Covid cleaning for me, and if something goes wrong in that, then I'm going to point to them and say, well, I paid them to make sure that there was nothing wrong there.
And so, if you've got a problem with that, you go after them, not me. Right? I can see that happening.
Bob: And I can see that there will be none of those services left after one or two weeks. Like are you telling me that we clean this 60,000 square foot building? And if somebody gets sick, it's our fault?
That's what we're telling you. No. And so if you were, and you've been gracious with your time today, Nikki, if you had the ear of, let's say a medium size retailer, what do you think the first three things or three things that they might not be thinking?
I think we all get, okay, cleanliness. We’ve got to protect our employees. Okay, so there's masks. Okay, got it. And maybe gloves, but what are some of the things they might not be thinking about? The pin pad was a great idea that I hadn't considered at all. I don't want to put you on the spot.
Nikki: I feel like I've been thinking about all of these for so long that I've, I'm not sure what people are thinking of or not at this point.
I mean, you know, we had an initial conversation around returns, right, thinking that through. Can you take clothing back? How do you sterilize clothing? Is there a title wave of returns that are waiting to come back into stores for people who didn't go on vacation, and you know, are maybe furloughed and need the cash.
You know, what kinds of return policies do you need to set? You know, there's definitely some people who are thinking about that, but it's not something that I've seen necessarily top of mind. I feel like now is the moment for digital and I think retailers have long underestimated the impact that they can have in digital channels for their brand.
And so I would say now is the time, not just at a brand level, but at a community level, at a store level, get that store manager and get your store profile, and bring that to life because people want to help their community. Right? Just like I wanted to buy from my local restaurant to help keep them in business.
Maybe it's a national brand, but it's still that store manager and the 10 people who work in that store. They all live here in my community. And putting that face out there, and even if that's make you feel vulnerable in doing so, cause most retailers are like, Whoa. The store associates online?
No, no, no. I think now is the time to do that. So that would be probably one big thing that I think retailers have consistently overlooked, and I don't see this necessarily changing in the Covid area, but that digital presence, and I am a part of your local community, I think that is more important than ever.
Bob: I think that's a really great point. I know a guitar center had changed the way that they did their website, that each location, like if you're in Vegas, there's a store manager and he talks about these are the brands I like, and this is the studio setup I've got, and this is what I do. And then you click on each of the employees and they have their little story and you can ask them a question or email them.
I think they started that like five years ago, and I thought everyone will be doing this.
I mean, it was a lot of money and I'm sure people say, well, you know, by the time we put it up, Nikki, they'll be gone. But fundamentally, I think we'll have to rethink, after Covid, the relationship with employees, right? It’s interesting how Amazon was, you know, asking Whole Foods people can you give up your spare time so other people could take it off to be sick and then suddenly realized, Oh, that's not a good story you have out there.
And then suddenly said, Oh, we're going to give you time off. And all of those things, but we are going to have to value employees more. Wouldn't you think? I mean, going back to you as the shopper at Kmart, I mean, it was accepted like, well, you'll just put up with it or you'll just deal with it, and I don't think we can say that anymore after this.
Nikki: No, I hope so. I mean, on the one hand, I hope so, but on the other hand, that model I think leads to structural changes in retail employment. And so, you know, you had mentioned one out of four workers is a retail worker, but, when you're a cog in the wheel, low wage format, you can afford to hire a lot of people, when you're in a higher value and much stronger relationship kind of format, that suggests fewer people.
And so my concern is striking the right balance between those two extremes, like, you know, we have to find a way to get there. But we have to find a way to get there that doesn't leave a whole bunch of people behind.
Bob: Well, that's the key, of course, with as many people that are going to be on unemployment this week, and for the next several, who are furloughed and they're all wondering, you know, I think the thing that's really concerning for me, and we'll wrap this up, is how dark the brands all went.
We're not hearing information from the brands. What is going on? You know this, if I think if I was CEO, I would be updating you at least, maybe not like Mario Cuomo, but I would at least be saying, you know, we're looking at all of our options, we are exploring the cleaning things, we're talking to IT.
But they're just silent. Or it’s, we’re not paying our rent. That's not the story you want out there right now.
Nikki: Yeah, no, I agree. I mean, I think, you know, I saw an ad for Super Cut that was hilarious. It was a Super Cut of like all of the, we're with you at in this trying time and yeah, it was, it was an outline.
It was basically, yes, this is like every commercial that is on TV right now, a hundred percent. And so, yes, there is that message, but I also think that brands and retailers both, whether they're the manufacturer or the reseller, they have a story. They should find good stories to tell about what's happening with them and what they're doing and how they're looking at the future.
Like you have to talk to consumers in a way that gives them hope. Right. And, and you're right. I don't see a lot of them. I mean, we saw the rush of retailers and brands, especially brands who were like, yep, we're going to start making masks. Right. We'll make masks. And, there's great stories of like Crocs, for example, who said, we're going to give free shoes to all health care workers.
But those stories have kind of died down and nobody's really found the next story to tell. And that is a gap, I think. I think, you know, the industry needs to figure out, you know, we need to start talking about good things that consumers can relate to.
Bob: Yeah. It's a confidence gap. I think that's it.
And, you know, the economy runs on hope. I've said that over and over again, and I think we've explored that today and found, again, I appreciate having Nikki on because she is one of the most literate and fun analysts that I get to talk with and to share. And, you know, we are just trying to figure it out.
The sky isn't falling, but there are a lot of things that are happening around us that are making it, I think opening a different world for us, for retail, which might be more connected. It might be more authentic. It might be more transparent. And who wins in that? We all do.
Nikki: Yes, a hundred percent.
Bob: Excellent. Well, thanks so much for joining me today and as always, Nikki, a pleasure.
Nikki: Yes, thank you.
Find out more about Nikki here.