In this exclusive Insider interview, Ellen Davis, Senior Vice President of research and strategic initiatives at the NRF, shares her key retail strategies for the holidays, her thoughts on Generation Z, and why indie retailers are best positioned to thrive in today’s fast-paced marketplace. Take notes: Davis is the person who first coined the term “Cyber Monday.”
The ASD Insider caught up with Ellen Davis, Senior Vice President of research and strategic initiatives at the The National Retail Federation (NRF), the world’s largest retail trade association representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants, and Internet retailers from the United States and more than 45 countries.
Davis is also the executive director of their non-profit arm, the NRF Foundation — and was actually the first person to coin the term “Cyber Monday”(!).
She shared her key strategies and essential resources that will help retailers this holiday season (and beyond) in our exclusive interview below. Let’s get started.
ASD Insider: You coined the term “Cyber Monday” back in 2005. What should independent retailers do to compete and take advantage of the Cyber Monday Holiday, this year?
Ellen Davis: For retailers in general, both large and small, preparation is key for the holiday season. Certainly there is a lot that retailers need to be doing on the backend, ensuring that their websites are running smoothly, that their fulfillment and backend inventories are steady or strong as they lead up to the holidays. A lot of small retailers can take cues from what larger retailers have done as it relates to any Cyber Monday promotions that resonate with certain customers. You have the marketing and promotions side, as well as the backend element that needs to be taken into consideration in order to make sure that the day is as profitable as possible.
AI: Speaking of the Holiday season, you just released the absolutely essential, NRF’s 2017 Holiday Planning Playbook — in it you state that 54% of consumers utilized recommendations from retailers when making a purchase. What action steps can retailers take to leverage this?
ED: One of the simplest ways that retailers can leverage the fact that consumers want information and guidance from a retail employee is to just make sure they’re staffed appropriately during the holiday season. It’s not easy for any retailer but for an independent business — and certainly the business owners that will probably be working almost non-stop during the holidays. You also have to make sure you’ve got the right people in place taking care of your customers during what is an incredibly busy time of year — and making sure employees are trained to think about things like that. So it might be, “Oh I see that you’re looking at this beautiful jacket, here’s a great pair of earrings to go with it, or a bag. Or I love these shoes, let us show you the best stockings that go with them.”
There are all sorts of ways that you can cross-sell. I also think that especially when people are buying gifts, that sometimes there might be a certain product that they’ve never bought before. For example, men buying jewelry or women buying neckties — a lot of times you need help from someone who is more familiar with that product because you haven’t worn it, tried it, used it yourself and it can be valuable to have someone else’s opinion. So from our perspective, recommendations can be really helpful. And small retailers especially can make sure that they take advantage of that by spending additional money on payroll to make sure that the customer is being taken care of.
TRENDING: The NRF expects holiday retail sales in November and December to increase between 3.6 and 4 percent for a total of $678.75 billion to $682 billion, up from $655.8 billion last year!
AI: Also in the NRF Holiday Planning Playbook, you state: “[Customers] aren’t abandoning bricks-and-mortar. So much inspiration still comes from the store — consider ways to blend digital and in-store experiences to spark in-shop conversions.” What does this mean in practice for the indie retailer?
ED: From our perspective, NRF represents retailers in all channels, of all sizes. So we don’t spend a whole lot of time differentiating between stores and websites because we know a lot of retailers like to shop through both formats, depending on what they’re looking for, what amount of time they have, etc. What we do know, is that many retailers are finding that their stores serve very different purposes from their websites, and stores certainly offer a level of convenience that stores can’t match, but they also give consumers the ability to have an experience that really doesn’t translate well on a website. So especially for small retailers and especially during the holiday season, looking for a real way to make your store a destination for a passive shopper or a shopper who might not necessarily know what they’re looking for, can be a game-changer as it relates to increasing sales.
And everything that’s old is new again, in that retailers have been doing this forever. Whether you’ve got Santa in the store or a holiday storefront that people can see, or you have hot cocoa and cookies one afternoon for kids, or you’ve got special art projects for children, there are so many things that retailers have done for decades that have helped their store be a destination. It just takes planning and some creativity. It also takes a good bit of marketing and that doesn’t need to necessarily be a lot of ads — it can just be making sure that in the leadup to the holiday season, you announce key dates and deals ahead of time.
“We know that especially during the holiday season, people are looking for enjoyable experiences with their families, and small retailers can have just as much of a dent in this space as a larger retailer could.” — Ellen Davis, SVP of research and strategic initiatives at the NRF and executive director of the NRF Foundation.
AI: We’ve heard people say, “brick-and-mortar isn’t dead, bad brick-and-mortar is!” And, according to another NRF study — and despite expectations that the digitally native Generation Z would only want to shop online — 98% of Generation Z still prefer to shop in-store. What’s your take?
ED: When people talk about shopping, they think about gifts and big purchases. We also know the average person spends about 90% of their money in the store, because about 90% of money in retail is actually spent in-store vs. online — but that’s not what usually gets reported. You might use a website to make a major purchase or to buy something that isn’t carried in your local area, but we forget about all the times that we buy milk and a last-minute birthday present and ibuprofen and a new pair of shoes for our kids when we stop at the mall or stop at the corner store. So yes, most people shop in stores for most of their purchases, but it’s especially interesting to see that Gen Z does seem to value the store experience. You’re seeing a little bit of a renaissance in that area with this generation being so consumed by technology at such an early age that they think that the concept of going in-store is really novel, and that’s great for the future of retail. So, even though Gen Z might seem like an outlier, and they are in some ways, the majority of spending still happens in the store environment.
“You’re seeing a little bit of a renaissance in that area with Generation Z being so consumed by technology at such an early age, that they think the concept of going in-store is really novel, and that’s great for the future of retail.” — Ellen Davis
AI: In a recent press release, you mention that “retail is generally misunderstood to be dominated by big businesses. The truth is that 91 percent of retail businesses have fewer than 20 employees.” Does this mean we’re entering an indie brick-and-mortar renaissance?
ED: Not necessarily. That number has been pretty consistent for a long time. I think what we need to do, is just continue to demonstrate that retail is an industry that is largely represented by small businesses, and we need to emphasize what small businesses continue to mean to the U.S. economy. That’s not to say that large retailers aren’t important, that’s not to say that big malls in big developments aren’t important. But it’s easy to drive by a dozen shops on your way home and forget that those are 12 little businesses that all need support and get supported by a local community. So really it’s about drawing more attention to the fact that 91 percent of retail businesses are small and have fewer than 20 employees and make sure that we think about those retailers as well as the large ones when we’re thinking about where to shop – and how we can best represent the industry.
Fact: Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy. – NRF, in this report
AI: 2017 has already been a massive year for store closings at malls and big chains, between the Gap closing 200 Gap and Banana Republic stores, as well as the closures at Sears. Are you seeing any exception to this? Who is succeeding and why?
ED: From our perspective, there are retailers in each category who are succeeding and who are struggling. I don’t think you can say in general that “Toy stores are going to have a horrible holiday season!” or “Jewelry stores are really struggling.” It’s more about how company leadership is thinking about the evolution of their brand and company, what their customers want, and how to get it to them. So we don’t necessarily look at store closings as a sign of failure. There has been a lot of discussion around whether we are “overstored” in America, and this is just a correction. And you see a lot of retailers who are closing stores who say they are doing it to double down on their digital investments. So from our perspective, retailers are pulling back on investments in certain areas in order to be able to invest more where their customers want to shop. From a store perspective, it comes back to conversations about experiences, products and product mix in a store and thinking about where a store should be located. It’s understandable for people who work or live in urban areas to feel like the world revolves around the big chains but you see a lot of growth in retail and you see this happening in smaller markets and rural America, and places where you might see a handful of stores opening at a time but because it’s not in a major metropolitan area it doesn’t get a lot of the same coverage. There’s actually a report out from IHL Group that was released a few months ago that says that despite the hype, that you’ll actually see more retail stores opening than closing this year. But that’s not what’s getting reported. If you only read the newspaper you’d think the retail industry is dying when it’s not, it’s certainly transforming and evolving and stores aren’t going away but they are changing, and that’s what a lot of retail leaders talk about quite frequently.
AI: What would be your main piece of advice/takeaway to independent retailers to thrive in today’s fast-changing marketplace?
ED: “The old ways of doing business don’t apply anymore” is the biggest piece of advice that I have.
Consumers are changing too much, it’s not enough for retailers to rely on a merchandising mix that they’ve had for years or marketing that they’ve had for years or a sales strategy that they’ve had for years. Instead, all companies really need to be thinking about how to leverage a digital world. And that doesn’t necessarily mean online sales, that means mobile phones and the Internet. Engaging with customers, it means thinking of better ways to understand who your customers are and create experiences for them. It means finding new ways to surprise and delight people when they come into your store. That’s whether they’re on a hunt for something interesting or just looking for an experience that’s going to encourage them to come back.
From my perspective, the industry is transforming at a very rapid pace, because of the consumer and because of technology. Independent retailers can absolutely take advantage of this.here are lots of opportunities for them to succeed here, but success is not going to come with inertia. You can no longer just sit back and hope that people come in the way they always have. The benefit of being a small store is that you don’t have the infrastructure and layers of bureaucracy to be able to make some decisions, you can just decide to do it, and that’s really exciting. And so in some ways, a smaller retailer is better positioned for these types of changes than a large retailer. And in some cases, they are closer to their customer and can see, hear and understand what customers are saying, and make decisions differently or more quickly. There a lot of advantages to this. The small retailers that are finding success are looking at every day as a challenge and an opportunity to do business differently.
“The benefit of being a small store is that you don’t have the infrastructure and layers of bureaucracy to be able to make some decisions, you can just decide to do it, and that’s really exciting.” — Ellen Davis
AI: The NRF already provides retailers great resources to prep for the holidays. What other NRF initiatives and education should our readers, especially indie retailers, keep an eye on?
ED: We’ve got a couple of tools that are free to retailers that many companies find valuable. The first is a podcast that we launched earlier this year, called Retail Gets Real. We have a different episode coming out once a week, and it’s always a really interesting viewpoint on the retail business from business leaders and people around the industry. The second is something called NRF SmartBrief, it’s a daily digest of the top retail news of the day, it’s a great way to find out information, and we also have a SmartBrief called Retail On Main Street for smaller retailers, that provides more actionable tips and tools for how to run a business. Both of those can be great resources for small retailers who don’t have a lot of time, but you can listen to a podcast while closing up your register for the evening and you can read SmartBrief in about five minutes a day. So those can be easy things for store owners who have a limited amount of time.
(Editor’s Note: ASD collaborator and founder of Retail Minded, Nicole Reyhle, co-hosted an episode of the podcast direct from Shop.org. Listen to “From Customers To Community: How A Niche Brand Built Loyalty” here.)
NRF’s Holiday Planning (and Beyond) Resources for Retailers
Ellen Davis is senior vice president of research and strategic initiatives at the National Retail Federation and the executive director of the NRF Foundation. In her role as executive director of the NRF Foundation, Davis oversees a team charged with shaping retail’s future through awareness building, training and education, and scholarship programs. As senior vice president of research and strategic initiatives, Davis leads the Retail Research and Analysis Center, created in the spring of 2015, which serves as the hub for economic, legislative and regulatory policy, consumer and industry research.
Take advantage of ASD Market Week’s 90+ free retail strategy sessions this March 11-14, 2018 in Las Vegas. Get your free buyer’s ticket here.
By Karin Eldor and Jed Wexler