A Chat With Mike Halula, Retail Analytics Practice Lead for the Americas, Teradata
In an interview at the Teradata Partners Conference in Anaheim, Calif., last week, Mike Halula, retail analytics practice lead for the Americas, Teradata, touched on a variety of topics regarding the current and future state of the retail industry:
On Marketing to Millennials
"Marketers are trying to figure out how customers want to be connected with. There are a lot of different ways to communicate. When you start talking about different types of communication vehicles — for example, Snapchat, Pinterest — you start realizing the next-generation customers, millennials, want more instant messaging. That means figuring out how you burst in information to them while they’re in the store. It’s real-time communication.
"Marketers today are really challenged by millennials. They’re not like baby boomers or Generation X. They think differently, they use technology differently, so marketers need to understand how to allocate their budgets to the right channels or mediums to connect with those customers."
On the Evolution of Email Marketing
"The days of email are starting to wind down. I was working with one retailer looking at its email strategy, specifically its cadence. About five years ago, it was four days a week and it between 500 and 1,000 emails. So it was a little more personal and it wasn’t clogging up the inbox. What’s happening today, that same company is sending out emails seven days a week and over 1 million per day. It’s become noise.
"Retailers are starting to realize that the new consumers that they need to start to go after are millennials and Gen Zs, and those folks have a different way to communicate. My generation was email and Facebook. You ask a millennial now, ‘What do you use your email for?’ and they respond with, ‘when I have to do a security reset or set up an account, but I never look at it.’ It’s not an effective way to engage a millennial customer anymore."
On the Future of Brick-and-Mortar Retail
"Retailers are realizing they cannot promo themselves out of a bad retail strategy. They’re just killing their margins. They have to realize that when millennials go to a store, they want an experience. In days gone by, retailers would stack out merchandise and put signs all around, 25 percent, 30 percent off. For a millennial, that’s noisy, it’s clutter; it’s not a good experience.
"Look at Macy’s. It has tried to promo itself into a good position, and all it did was lose margin, sales went down, and customers have found it too chaotic — you need to have your phone to show the store associate you have a coupon, plus the credit card to get the promo. Millennials won’t put with that. For them, price isn’t the ultimate determinant on where they shop. They want the experience.
"Retailers are starting to realize that it’s not just about buying a piece of merchandise. It’s about the experience of buying that piece of merchandise. You’re seeing companies like Macy’s, Target, and Best Buy all re-evaluating their in-store experience.
"Physical stores will never go away. Why? Millennials like socialization. Physical stores are always going to be there, they’re just going to evolve, and that’s OK."
On the Trends That Will Have the Biggest Impact on Retail in 2018
"Buy online, pick up in-store is one. Everyone is going after that because of the convenience factor. We’re looking at how much space it requires within a store. It automatically ticks up the sales per square foot.
"Home Depot has made the conscious decision that it’s not going to open any more physical stores. Everything is going to be driven from its dot-com business. And it’s done a phenomenal job of growing its online business. When you walk into a Home Depot, it’s allocated X amount of square feet per store based off of transactional volume of buy online, pick up in-store orders. Retailers are investing square footage into buy online, pick up in-store, which is brilliant in my view."
On Competing With Amazon
"Brick-and-mortar retailers have something that Amazon can’t — that personal relationship with customers. When you think of Amazon going into a partnership with Kohl’s, it’s doing so to get returns logistics. That’s an important relationship with the customer. The convenience of the return logistics becomes a value prop for the brick-and-mortar store.
"The brick-and-mortars are going to start getting market share back because they’re finally waking up to the fact that this is the new reality and the new consumer and the new way they want to buy. They will start assessing the square footage in their stores to take advantage of their physical presence. That’s something Amazon realizes it doesn’t have, and that’s why it invested in Whole Foods and partnered with Kohl’s.
"Retailers can either go down the road Wal-Mart has chosen and fight Amazon, building a fort around your world, or if you’re a Kohl’s, and your online presence is OK, maybe we look at partnerships and we both win at this. We’ve got the physical stores that they want, we’ve got the store operations expertise that Amazon doesn’t have, it [Amazon] has the logistics that can help us, it can help us increase our assortment acceleration so we can be more agile and not have as many markdowns. You either fight ‘em, or you join ‘em."