Tyler Brûlé’s retail projections: Bullish on Walmart, bearish on Farfetch.
On the back of Walmart’s aggressive e-commerce acquisition spree, and Farfetch’s newfangled Store of the Future concept, we spoke with the Monocle man about why US and European retail is failing, how it can be fixed, and why the Japanese still to get it right. (1,267 words)
LONDON — Listen to or read enough from Monocle chief Tyler Brûlé and you’ll start to notice a recurring theme with him: He absolutely detests a bad retail experience. By his definition, that scenario is characterized by any mix of the following: store spaces that are far too large, salespeople who are stuck tapping away on tablets, poor service (either inattentive or too invasive), lots and lots of glass, and anything involving gimmicky tech ‘upgrades’ (a ‘smart’ touchscreen mirror might come to mind).
Unfortunately for Tyler, this nightmare is becoming increasingly common. On the back of Walmart’s aggressive e-commerce acquisition spree, and Farfetch’s newfangled Store of the Future concept, we hopped on a call with the Monocle man to talk more about why retail is failing, how it can be fixed, and how these talking points might also be on the docket for the “Future of Retail” panel (headlined by Lean Luxe subscribers Lyn Harris of Perfumer H and Mohamed Haouache of Storefront) at this year’s Monocle Quality of Life Conference in Berlin in June.
The condensed highlights:
Don’t underestimate Walmart and other ‘corporate beasts’ like it.
Since installing former Jet.com CEO Marc Lore as its new head of e-commerce, Walmart has been on a buying tear (and are close to buying Bonobos). They’re hogging the headlines at the moment, but “it’s not just [about] Walmart,” he said. It’s about players of scale internationally. Walmart operates on both sides of the Atlantic, he pointed out, but there’s also Otto, a retail group operating out of Hamburg, which happens to be the number two e-commerce operator in Europe after Amazon.
Said Tyler: “These are corporate beasts. But we could point to a number of players [like Walmart] that have kind of been written off because they’re big and they’re faceless, and they’re bolted onto various ends of parking lots all over the world. But yet because of muscle and cash — but also necessity, as well — I think you’re going to probably see a number of these big players who already have a real estate portfolio, potentially be playing a bit of a retail reinvention game.
Nothing is ‘right-sized’ anymore.
“When you look at real estate portfolios all over the world, whether they’re malls, or whether they’re a traditional shopping street, nothing is right-sized anymore,” he argued. “Retail is just the wrong scale. It doesn’t matter if you’re a hairdresser or you’re selling footwear — do you need 5,000 square feet? And yet we see time and again, all of these new developments are the same size store, and it’s like, ‘What are we getting here, people?’”
Human scale is making a comeback.
“I think that we focus [on this] so much: Everyone talks about the customer experience and getting close to the customer. But it’s very difficult to get close to the customer when you’re limited on how many staff you can have on a shop floor, and your shop floor is too big. That’s very clear. So certainly having a smaller footprint, which is going to work from a P&L point of view, [is a good start].
But when you talk about human scale, that is implying an intimacy that I think people do want in a retail environment, because everything’s sort of upsized at such an extraordinary scale over the last two decades. I think your point is a very interesting one: We’ve seen just whole blocks completely razed in cities, developers come in. Don’t we want to be in retail environments that haven’t been fitted out to the Nth degree, that everything is the sharpest right angle with LED lighting?
People of course — they do want tone and texture and light and shadow, and they don’t mind a bit of a scuffing in the floorboards either. That goes back to your point about humanity, as well: We’re used to wrinkles and frown lines. We want the same thing out of our retail environments, as well.”
Skepticism for the showroom model.
“We think that the entire fashion supply chain is going to be reinvented by ‘see now, buy now’. I think that part is running out of gas. And by the way, it’s not particularly new. It’s these generic sort of journalists writing about something, but we’ve been there before — we’ve had catalogue showrooms where you might be able to go pick up an item there, or have it sent to your house. I think we’ve been through that cycle before, and it hasn’t worked. Now logistics have changed and things are a little bit faster, but listen, I think if I’m going to go to a store, why am I doing it? I want instant gratification. The larger problem is retail in general.
One of the things that have happened to the shopping experience right now is it’s all become so glass-fronted and perfect. In a funny way, retail starts to mimic the tablet, mimic the phone frame — it’s just all glass. Take any number of luxury goods stores or go to the Apple store: We’re just in a very, very cold world. When I go to a store, I want the opposite: I want to go to a place where I feel enveloped and cozy, and that’s welcoming.”
On Farfetch’s Store of the Future concept.
“I’ve read the press and I’ve canvassed retailers’ opinions, and it comes down to people [simply] wanting great service. I can look around — and I’ll just speak from my own experience — if I look at our own bricks-and-mortar retail portfolio, where do we succeed? We succeed where we have great shop managers, and great people running the stores — and that can give you a 60, 70, 100% uplift suddenly, just by making sure you’ve got people who are engaged, who are fresh, who are there.
What I hear about the Farfetch concept is [that they’re] adding all this tech and all these layers of information. What’s interesting, is that a couple years ago sometimes what we’d do is just invite some random Monocle subscribers to a dinner at the office with advertisers, and everyone gets to have a conversation. This was before the dawn of the tablet, and [digital] reading habits, and ‘print is dead’.
This one person was from a media buying agency and he said to our subscriber, who happened to work for one of the big US banks in London, ‘Why is it that you read a print magazine like this, when you’ve got information at your fingertips?’ He goes, ‘It’s for that very reason! I’m on four trading screens all day long. As soon as I get home, of course my phone is near me, but I just do not want to look at a backlit screen anymore. I’m getting information fired at me through a thousand different directions, and I have to distill it.’
This is why I don’t like getting in a Tesla, having a massive vertical tablet in front of me. I sort of think it starts to remind you of work. I think it’s the same with retail. Do the trousers fit me or not, and can someone go out and get me another pair? Can I engage with somebody?”
Who US and European retailers should consult for ideas.
Time and again, the Japanese do it extraordinarily well. No surprise here. Said Tyler: “I jump to our friends at United Arrows and Beams and SHIPS — and this is why I’m amazed whenever I look at US and European retail — the Japanese are so good at turning their salespeople into proper ambassadors. These boys and girls have got it so figured out.”