Future of Retail

Phillip: [00:00:20] Hello and welcome to Future Commerce, the podcast about next generation and future commerce technologies. I'm Phillip.

Brian: [00:00:28] I'm Brian.

Phillip: [00:00:28] And today we are very pleased to welcome one of our first guests to the show, Scott Emmons, head of the innovation lab at Neiman Marcus. Welcome, Scott.

Scott: [00:00:38] How are you?

Phillip: [00:00:40] Doing good.

Brian: [00:00:40] Glad to have you. Yeah, why don't you go ahead and introduce yourself and give us a quick summary of the innovation lab at Neiman Marcus.

Scott: [00:00:48] Ok, so as you said, Scott Emmons and the Innovation Lab is about four years old now. I came to Neiman Marcus back in 2003 and sort of have done different roles over those years. And one of the things I did was founded the enterprise architecture team there and we got to work. We didn't call it innovation then, but we got to work on doing some foundational innovation in the stores with the way we did data and the ability to actually sort of modernize our digital capabilities in-store, which we didn't have a lot of when we started down that track. And I think that that work is what earned me the tap on the shoulder when it was time to do an Innovation Lab. So I founded that and have been doing that for the last four years. And it's the best job at Neiman Marcus for sure.

Brian: [00:01:41] Very cool. Yeah, it sounds like quite the adventure and sounds like you get to do some pretty cool stuff just about all the time.

Scott: [00:01:52] Yeah. So it is a job still. So, you know, it's not always excitement, but I do get to do a lot of really interesting things and see a lot of new things. It's certainly never a dull moment. And I think we started down the kind of the Innovation Lab at just the right time where it was really something that know as a retailer, we really needed.

Brian: [00:02:22] Makes sense. Yeah. Right now, with so much coming out, I think that an Innovation Lab is almost necessary for someone like Neiman Marcus.

Phillip: [00:02:34] And I would almost say that you kind of caught the curve a little bit before everyone started talking about and thinking in the space. And so, you know, to spool up a program like that internally at a company the size of Neiman Marcus is... I can't even imagine the amount of work and effort that went into that. And so you guys kind of got out ahead of the curve there. And because you have so much experience in retail and because you've been doing this for a long time and you started in the enterprise side of the business, could you kind of help us understand, like what has surprised you in the last 10 years of retail? And what were some of the events or maybe some of the developments in retail that led you to head up the Innovation Lab?

Scott: [00:03:20] Well, you know, when we started the lab and even before the lab in that enterprise architecture sort of period, when I was doing things, there was not a lot of technology and retail, at least not in our stores. There was a point of sale systems and kind of systems to help inventory and that sort of thing, you know, but very little else going on in the store. So I would say that even just looking at how rapidly technology has become kind of table stakes, you know, it's not an add on and it's not something that's nice to do, it's something you must do, has really been surprising. And, you know, we all expect change. I mean, that's part of life. But, you know, the pace of this change has really been quite amazing.

Brian: [00:04:17] Absolutely.

Scott: [00:04:18] Where we've gone from, once again, almost no technology into the stores. So technology is a recognized corporate core value now. It's quite a shift.

Phillip: [00:04:33] Yeah, I would say so. It's incredible, though, to go from point of sale and sort of just the utilitarian use of technology to run a business like Neiman Marcus and then to go to, you know, Magic Mirrors. So it's quite the leap. What do you think, if you could sort of prognosticate a bit, what do you think that the next 10 years looks like maybe with your influence in the retail space? What can you see coming?

Scott: [00:05:04] That's going to be a... Ten years is going to be a pretty tough call. You know, sometimes it's hard to tell what's going to happen in the next month when the kind of the latest rate of change. We know that technology continues to insert itself into the shopping experience and that it has to. And it's all part of that sort of natural blurring of the lines between the online retail business and the physical retail business. And we're all ready to get away from calling them channels because the lines are blurred. To the customer it's Neiman Marcus, right? It's not Neiman Marcus online or Neiman Marcus in-store. It's Neiman Marcus, the retailer.

Phillip: [00:05:51] Right.

Scott: [00:05:51] So we continue to look for ways to use technology to bring some of the magic we can do with online into the stores. And I think that's what a lot of the early efforts have been. But there's the flip side of that, too, and that's bringing that high touch, very rich experience we can deliver in the store and trying to deliver some of that on the physical side, or on the digital side as well. Right?

Phillip: [00:06:28] The good news is that nobody will ever you can't say that you've missed a call or somebody. I didn't hear the call come through because they know how to get in touch with you.

Scott: [00:06:45] Yeah.

Phillip: [00:06:47] It's actually a really good example. When we sort of started the show in the pre show you, we were working out the audio visual issues and and sort of getting synched up. And you said you had our voices were coming through your Alexa on the other side of the room and or through your Echo in the other room. And it's amazing how pervasive this sort of next generation technology has taken hold in our lives. And in such a quick amount of time, do you think that you guys are just uniquely positioned to be able to rapidly implement these next generation technologies that come out of the Innovation Lab? Or is that unique to your business? Or is this just the speed of innovations happening so fast that everyone in retail is kind of getting on this new pace?

Scott: [00:07:36] Well, yeah, I certainly don't think it's necessarily unique to our business. I think that the unique part for us was that, like you said earlier, that we sort of recognized the need maybe earlier than some of our competitors, but all of them. But that and the ability once again to go out and execute a plan to adopt and embrace technology rather than rest on our laurels, if you will.

Brian: [00:08:13] Makes sense. Another question I had, how are millennials, and I use that word kind of with a little bit of disgust because I think Millennial is an overused term.

Phillip: [00:08:30] It's because you are a millennial, Brian.

Brian: [00:08:31] I know. I know. It's a little bit lazy, I should say. But I'm going to go and ask, how is your younger audience identifying with the Neiman Marcus brand? And how do you feel like you're adapting to fit their shopping behaviors?

Scott: [00:08:47] Well, I think that the the lab itself is part of that. When you have the recognition that, you know, younger customers grew up surrounded by technology, fully embrace technology when it helps solve a problem for them. And that's one of the reasons why we think technology is so important as we think about the next generation of customers. In our business, the luxury retail business that is sort of unique in that to be able to afford some of the things we do, you're typically kind of further along your career path and further along, if you will. So we're getting ready in some cases for the next generation. And we're trying to also be attractive to the Millennial now.

Brian: [00:09:47] Sure, absolutely. That makes sense. I think so what you're kind of getting at is, you know, I think it's more about how someone wants to shop on Neiman Marcus. Their age, maybe is a little bit less important than what methods they use to to interact with your brand.

Scott: [00:10:08] I think it is. And, you know, I think you say that, you know, when the younger generation adopts a technology it doesn't really take that long for that to become pervasive.

Brian: [00:10:20] Yeah.

Scott: [00:10:22] When it's really good, when it really solves the problem, you know, then I don't think your age matters as much.

Brian: [00:10:30] Yeah. So what would you say some of those methods are right now? What do you think? Well, you know, like you said, it doesn't really matter what age. It sort of depends on what method and certain methods solve problems for everyone. You know, those types of solutions. Which ones do you think that Neiman Marcus shoppers are utilizing most right now?

Scott: [00:10:59] Well, you know what started all this was the smartphone. I think that's what started the current sort of tidal wave of change in technology and adoption of technology. So I'm sorry, it's not a super secret.

Brian: [00:11:21] Yes.

Phillip: [00:11:22] We say it on every episode.

Scott: [00:11:24] Everybody's got one. Right? And they just keep getting better and more capable. And, you know, I think that when that first started, when the early iPhones or whatnot started, it started wandering in our stores and customers hands. That was one of the warning signs, right, that we were about to be outgunned with technology if we didn't pay attention and do something about it. I think that when you watch customers shop, they're not it's a myth that they're wandering around staring at their smartphones while they shop.

Brian: [00:11:58] Yeah.

Scott: [00:11:59] And that they are looking, you know, searching the Internet for the best deal and all that as they travel around the store. You know, what we observe or at least what I personally observe when I'm watching shoppers is what they're into is the kind of that act of discovery as they wander the store. And so I think that when we're thinking about technology. One of the things we have to be thinking about first is how do we introduce technology that helps them with that discovery process? We're not trying to replace the physical experience. They already got out of their house and got in their car and drove to the store to be in the store. So when we're putting technology in the stores to be enhancing that.

Brian: [00:12:50] Yes.

Phillip: [00:12:51] And one of the ways that you've done that, if I'm not mistaken, is the launch of your new in-aisle shopping app, the SNAP app. And congrats on that launch, by the way. That's pretty amazing.

Scott: [00:13:05] Yeah. So the Snap.Find.Shop, which is basically Shazam for fashion. You know, it was almost science fiction that it was even possible to do it. And it just keeps getting better and better. So with that app because we're going to take a picture of a shoe or a handbag and submit it. And in a couple of seconds, they get a list back of Neiman Marcus products that are either exactly like that or similar to the product that they're looking for. So we eliminate the need to have to type it up a bunch of text to try to find something that we're interested in. We can just send the picture and then like magic, we can return back meaningful results.

Phillip: [00:13:55] And I think that, yeah, that kind of speaks to a few things that we've been talking about, it's a great example of visual commerce in that we talk about a lot of buzzwords on this show. Conversational commerce, cognitive commerce, and visual commerce is something that I don't think that the retail in-store experience has been able to capture just yet and sort of linking the in-store experience to that in-store sort of that almost in real life to digital conversion. And I think that this app does that perfectly. Could you give us a little bit of the inside baseball on how that app came to be and how that whole project came into play?

Scott: [00:14:48] And I'm going to apologize and ask that you repeat the question.

Phillip: [00:14:52] Yeah, sure. Yeah. Yeah, I was just asking do you have any interesting stories of how that app came into being and what the strategy was? And is it fulfilling on that strategy?

Scott: [00:15:04] Yeah, and we're talking specifically about Snap.Find.Shop?

Phillip: [00:15:08] Correct.

Scott: [00:15:08] Yeah. OK, so Snap.Find.Shop is actually integrated into our Neiman Marcus mobile app rather than a standalone app. But it's one of those Eureka moments where someone reached out to me and said, hey, we can do this. And I had a few conversations with the company, which is named Slice, that produced it.

Phillip: [00:15:35] Yeah.

Scott: [00:15:35] And I was heading out to New York for the... NRF, the National Retail Federation has this huge show in New York every January. And we had our VP over customer analytics out there. And I introduced him to the Slice folks in the hotel lobby where we were staying for the show. And it became a thing I mean, pretty much right there, then and there, you know. We got the contractual stuff in place and began experimenting with the technology. We've been experimenting with it for about two years now.

Brian: [00:16:14] That's fantastic. Sounds like it's been something you've been able to refine as you go. How have your customers been responding? How do you feel it has helped them do more discovery and ease their purchasing behavior?

Scott: [00:16:32] Yeah, no, we really think it does. And so we've continued to add categories searchable items to the system. I mean, one of the learnings from this was it was a completely new way to search. And it was not, in some cases, we had to kind of hold the customer by the hand and lead them through the process.

Phillip: [00:16:53] Right.

Scott: [00:16:55] When you introduce something that's a completely different way to accomplish the task, in this case find the thing I need, sometimes there's a little bit of, I think, training to get users acclimated to this new way.

Phillip: [00:17:13] Yeah, for sure.

Scott: [00:17:14] Right? Of doing things. So that was a learning that we got along the way. We didn't have everybody just pick it up at first. Right? It took a little time.

Brian: [00:17:25] For adoption. Yeah. Makes sense. It is such a revolutionary way to shop that I think of course adoption is going to take a minute. You know, another question that I have is we've seen the Memory Mirrors. You know, maybe you could just say a little bit about those maybe before I dive into any questions about them. But I'm just curious to see if you have further plans to use in-store augmented reality and how you sort of might leverage mirror technology in the future and maybe even are you guys planning to even do maybe an in-store AR app or something to that effect?

Scott: [00:18:10] Yeah, well, so Memory Mirrors were definitely a slam dunk success and not everything you try is that, by the way. But Memory Mirrors definitely, you know, sort of resonated not only with our customers, but I think with retailers and people around the world. I can't tell you how many places and times I've been asked to talk about the Memory Mirror. So definitely garnered keen interest from folks.

Brian: [00:18:43] That's awesome.

Scott: [00:18:44] It's a pretty basic concept, right? It's a really nice video screen. You stand in front of it. You take a little eight second video of yourself, do a twirl while you're standing in front of it. And what you get when you're done is the ability to play that video back. So you can see with your own two eyes exactly how you look. You don't have to rely on your spouse or your girlfriend or your sales associate. You can see. You can do multiple trials and you can compare those side by side on the mirror once again, something that was not necessarily possible before. And then the third thing is that I can share those try ons with anybody I'd like, friends or family, instantly and get instant feedback from my friends and family that can't be with me when I'm shopping. Which one's the best one? Which one is going to work best for the event or whatever it is I'm shopping for? So those three things are really compelling when you put them all together.

Phillip: [00:19:50] For sure.

Scott: [00:19:51] One of the secret sauce is that we don't talk about that much with the memory bears is that they use some image correction so that the image, even though the camera's above the mirror, the image is played back as if the camera was directly behind the mirror. In other words, it plays back like a true reflection in a piece of glass, as opposed to a camera that's looking down at you trying on the item. So we really have digitally recreated what that glass mirror had done for so I guess, centuries, right?

Brian: [00:20:29] Right. That's great.

Phillip: [00:20:32] That's really interesting to me because I've wondered, you know, some of the technical challenges in trying to create that interactive mirror experience. For instance, we've seen some of the other examples in the space that the mirror comes out looking kind of dull. You're never quite sure where to look or where to kind of you know, it requires that element of training, I guess is what I'm trying to say, much like you were talking about earlier there, Scott. It was the requiring some training on the end, you know, from the part of the end user. And I think that those are hurdles to adopting new technology. It sounds like you use technology to solve the training problems so that it was an intuitive process.

Scott: [00:21:21] Yeah, that was one of the really great things about the Memory Mirror. Once you saw it used one time, you knew how to use it for life. Right? It was not complex. In fact, we actually when we first launched the Memory Mirror, might have had too many features. Really, as we kind of observed how customers were using the mirror, we reduced some of that to make the whole experience faster and less friction and even further refine that learning curve where it was even simpler to use it. Once again, through observation of how customers actually wanted to use the mirror. Certainly we felt that the mirror platform as an apparel try on was just one use case for it. And so just a couple of weeks ago, we released the sunglass try on mirror, which is a countertop version, the same technology. But we've changed the UI to fit trying on sunglasses, which if you've ever done that or been with your spouse who has done that, you try on lots of pairs of sunglasses, typically looking for that one that's just right. And so we've built a very nice user interface to help make that easier as well. And we partnered with MemoMi, the folks that built the big mirrors, as well as Luxottica, they supply lots of the sunglasses that we have for sale. And it was a great kind of three way partnership to deliver another use case for the Memory Mirror. So that won't be the end of it. I fully expect that you'll see additional use cases for that mirror technology coming as we go through this. Actually, the next several months, we expect some additional announcements in that area.

Brian: [00:23:31] Nice. Any of those announcements you can dig into right now or do you need to hold off?

Scott: [00:23:38] Soon.

Brian: [00:23:39] Ok. Great, well, we'll be sure to watch for that, and we'll definitely draw some attention to that once you guys do you watch anything new via our Twitter feed.

Scott: [00:23:49] So I guess that I completely ignored the VR and AR part of the question about the mirrors. And there are definitely virtual reality possibilities with the Memory Mirrors. We just have not... We're trying to perfect the main use case first. But certainly MemoMi has already been showing color changing and pattern changing and all sorts of other things that you can do with the Mirrors. And I think if you think about virtual try ons, that certainly is a future possibility with technology like the Memory Mirror.

Brian: [00:24:31] That's great. We just spent our last episode almost entirely talking about body data and virtual try on and other uses for it. Do you see any do you see any other uses for, say, capturing body data and services that you'll be able to provide to your customers?

Scott: [00:24:52] Yeah, instantly I would think about, for the online customer, maybe being sure that I was delivering the correct sizes so that she didn't have to order three different sizes of a dress or a shoe when she ordered it. She knew she was getting the right one. Would be an example where I think that could come into play. And certainly as we think about VR getting better, we're going to need some body data to make that clothing look realistic when we are virtually applying it to you. Just like just about everything we have to think very carefully about, you know, privacy and other things, right? So if you're going to be collecting that kind of data, you're going to have to be really up front with the customer that you're going to collect it. Here's what I'm going to do with it, and here's how I'm storing it, and here's what I better do to protect it. And all those things have to be very, very clear. And so you have to, I think, proceed with caution when you have kind of very personal information like that.

Brian: [00:25:58] Yeah, that's a great question. I think, another question that I have for you to kind of follow up would be is this something that you guys would try to accomplish on your own or would you bring in a third party? Have you looked at any companies yet? Are you out that far or is this still sort of just a conceptual topic that you haven't made any moves on?

Scott: [00:26:18] It's a conceptual topic at this point. I would not rule out using a third party, but it would have to be the right third party and they would have to adhere to the same rigorous kind of standards that we adhere to ourselves.

Brian: [00:26:37] Totally. Yeah, this might be a little bit of conjecture, but how far out do you think you are from being able to leverage some body data or to actually start making real moves on this?

Scott: [00:26:48] Well. With the Memory Mirros in place, you know, it would be possible to do it, you know, I think today with that equipment that's in place. We've just elected not to.

Brian: [00:27:02] That makes sense.

Phillip: [00:27:05] I feel like with the amount of foot traffic and the people using the mirrors today and the ability to share, there's probably a wealth of data that, you know, you have enough data just from... Think about the marriage of the technologies that you currently possess. And if you were able to link these technologies together would be an incredible amount of data to learn about your customers. For instance, if you could use the same technology that's in the SNAP app to sort of learn what people wear when they're coming to shop in your store and sort of get people's, you know, browse and their fit behaviors or maybe even just from visual image processing you could figure out size and fit. Those are all very interesting to me. And they do raise very, very, very real privacy concerns. But I think if there's anything that Facebook and social media have taught us is that people are willing to give up a little bit of privacy if it means that they're more connected, that their experiences are more personalized, and it provides a greater convenience.

Scott: [00:28:19] I think it's fair to say that, you know, everybody's different and you have some people that are, you know, sure, I would love to do that because it's going to help give me a better experience. And you have others that never want to do it. So, like I said, you're up front with it and it's an opt in process customers that want it you deliver them that experience. And for customers that don't, that will deliver them what they need a different way.

Brian: [00:28:47] I love that. Yeah, I think we we talked about this a little bit. Utilization. You know, once people realize the utility of opting in, once that sort of overcomes the fear of privacy concerns, that's when you're going to start to see more mass adoption. And it seems like, you know, if you look at, Phillip mentioned Facebook, it seems like people are very ready to maybe give up certain privacy and certain pieces of personal information very easily in today's society. And so I think it shouldn't take much for people to recognize how useful that info is.

Scott: [00:29:33] If you are delivering value in exchange, then you have a compelling case for them to opt in.

Brian: [00:29:41] Exactly.

Phillip: [00:29:42] Right. That's the key. And I think for such an established and well-known retailer and soon to be a public company that Neiman Marcus is, all of these things are extremely important. And part of a larger strategy. Yeah, I'm curious. Kind of moving away from that a little bit. We talked a little bit about the end in-aisle digital experience. And I feel like there's such a big shift that I'm seeing. You look at the malls today and the big box retailers are slowly being surrounded in our malls and urban spaces by, you know, digital pop ups and showroom stores and different concepts that aren't necessarily, you know, playing in the same playground as you guys. And I'm curious if you have any thoughts about if the digital or in-store showroom sort of focus, like a Warby Parker or Bonobos kind of a strategy, is shaping your investment of your digital strategy.

Scott: [00:30:59] Yeah. So that may be beyond my ability to answer for Neiman Marcus. But, you know, I can tell you from my corner of Neiman Marcus, certainly, you know, there are interesting aspects to that. Do I see... And I'm giving you Scott Emmons viewpoint at this point.

Phillip: [00:31:24] Sure.

Scott: [00:31:26] I don't necessarily see that we go ever all in with that. But there are places where that works. Especially if you think about I have these very large stores in the NFL cities, if you will.

Phillip: [00:31:45] Right. Right.

Scott: [00:31:47] But if I want to extend my physical presence out to areas that may not have the population to support a full on store, maybe that's one way we could deliver that is that showroom experience. Maybe that's one way we could do really interesting pop up stores, for instance. That would be really interesting to me.

Phillip: [00:32:11] Yeah, yeah. And I think it's interesting to as a consumer having that sort of that ambient commerce, what we would call ambient commerce, or I would describe as ambient commerce experience, where shopping is coming to me wherever I am in that sort of realm of convenience. I think of the shopping mall as a destination. It could be that maybe I want to you know, when I go to Bonnaroo.

Scott: [00:32:38] Exactly.

Phillip: [00:32:39] Or some other festival, maybe that's somewhere that I'm not expecting to encounter an opportunity for commerce. And this would be a new and an advantageous play to be able to get into those spaces.

Scott: [00:32:52] Yeah, I think that's really, really exciting. Events, like you just mentioned, would be a really interesting opportunity. And places where, you know, airports and things where you're really a lot of times just trying to kill time. Maybe we could help you spend that time at a more interesting way.

Brian: [00:33:16] That's good. I think that kind of plays into something we talked about a few episodes back called passive commerce too, where you end up in a spot. You know, someone's making a purchasing decision and they've been thinking about it for a while and then that particular product ends up somewhere they didn't expect it, maybe at a price they didn't expect it. And they just make the decision without ever having really thought that they were going to make a decision at that moment. So I think that's really cool stuff. Yeah.

Phillip: [00:33:53] Yeah. I think that's where digital really comes in, is the ability to capitalize on the term is the harvest of the intent. Harvesting the intent to purchase. They've been meaning to buy, but they've never actually just pulled the trigger. And if you as Neiman Marcus can be there and through some offshoot of the Innovation Lab or some other digital strategy, you can be there when they're ready to purchase, all the better.

Scott: [00:34:23] Agreed.

Phillip: [00:34:24] Yeah. So I'm kind of interested in a little bit about your thoughts on some of these emerging in-person technologies around location. So there's all kinds of interesting things like in-store beacons and contactless payments, those sorts of things that are being used, geo fencing that are being used to sort of leverage, to gain data about consumer habits and consumer behaviors and also provide convenience for customers. What do you think are solutions in that space that are best in class for a retailer of the size of Neiman Marcus?

Scott: [00:35:11] Well, so the whole micro location thing is obviously fascinating to retailers. If I can figure out exactly where you are when you need service and my technology knows where you're standing, then I can personalize that experience even more. Right? That's what we're trying to do. We've been able to do that very exact location as long as you were out under the blue sky for some time. But as soon as you get inside the mall, that it all gets iffy. So the beacon's, I think, are a stop gap way to do indoor GPS. You know in a lot of cases I don't think it's the perfect solution, but it's one of the best solutions we have today when you're not able to utilize full blown GPS to get an accurate reading of where you're at to make sure that the messages I'm sending to you are relevant to your location. This is another good example of customers consider their location fairly private information. So this is another this is another opt in deal. So you have to say it's OK for us to do it, and we have to be good stewards of that and not over use that that information. It's going to have the opposite effect if I'm inundating you with location messages as you wander about.

Brian: [00:36:51] Yes.

Phillip: [00:36:52] For sure.

Scott: [00:36:52] You have to find the right balance.

Phillip: [00:36:55] And it can be creepy, too. If I'm at Neiman Marcus, I'm looking for world class service. I'm not looking for a world class annoyance. I think that's...

Scott: [00:37:10] I agree. So we want it to be magic, not annoying. That's exactly right.

Phillip: [00:37:16] How hard is it to find the balance between magic and annoying?

Scott: [00:37:20] It turns out that you probably do not want to message customers as much as you think you should. How about that? Like I said, I think you have to tread very lightly with that stuff.

Brian: [00:37:37] Absolutely. So Phillip do have any more questions on that topic?

Phillip: [00:37:44] No, I think we pretty well covered that.

Brian: [00:37:48] Nice. So I kind of got an off the wall question, this is a little bit another kind of futuristic idea. How do you view kind of on demand and 3D clothing printing, like there's Kniterate out there. I think there was a company called ElectraLoom. I think that that project kind of fizzled. But do you think it's viable technology? And do you think it will be competitive to what you're doing or just will be something that you draw into your strategy? What are your thoughts on 3D printing and sort of custom on demand sort of clothing?

Scott: [00:38:29] So it would be foolish to ignore it because we've seen what happens with technology just because it may not be good enough today for us, for Neiman Marcus anyway, doesn't mean that it's not going to continue to evolve and become something that is more interesting to us in maybe the state it is in today. I'm talking specifically about 3D clothes printing, which for the most part, still, a lot of it looks kind of weird still. {laughter} It's not necessarily...

Brian: [00:39:04] It's not quite there yet.

Scott: [00:39:07] It's not classic high fashion. Right? It's its own thing. So, you know, I think that it's going to continue to improve. And it's something that we're going to have to keep our eye out. And certainly we are keeping our eye on it.

Brian: [00:39:23] Certainly. Yeah, I think this kind of plays back a little bit to the body data discussion that we were having, because, I mean, the idea that we could use our body data and have clothes printed that fit us perfectly and sort of eliminate the idea of size or custom tailor, you know, post tailoring and have that available for us on the spot very quickly with it basically created in an ethical manner. That's pretty compelling,

Scott: [00:39:59] If you think about it. I mean, bespoke is not a new concept to us. You know, we just did it... So if the technology gets, you know, good enough where we can deliver a bespoke outfit, items for you, then of course, we would be interested in deploying that technology.

Brian: [00:40:21] Absolutely. Well, you have to hit us back once you get to the point where you're ready to...

Phillip: [00:40:27] Yeah, man, I would love it. I'd love to talk about that. I personally think that like Scott said, I think it's a little ways off just in the look in the feel of it, it does definitely tend toward the dramatic. And so we would have to see a lot of innovation in that space or maybe some adoption. You know, these things sort of surprise me. For instance, I've always thought that interacting with bots online was just this really esoteric and sort of a geeky thing to do. But as far as we're being told every day, conversational commerce is here in a big way.

Scott: [00:41:07] I certainly think that's the know this year's beacons, chat bot and especially powered with better and better AIs and so forth. There's going to be a lot of buzz about that for some time.

Phillip: [00:41:26] Yeah, and I think that, you know, we'll see more and more retailers and service providers begin to interact with their customers in that way. And that takes us you know, I have this talk that I give called The Shopping Cart is Dead, which is sort of a bold prediction that we're going to be moving less and less toward, you know, at least for SMB, not necessarily for huge retailers, but SMB is going to be trending more towards as they've been moving toward marketplaces, there's going to be a democratization of commerce to some degree. And I think conversational is a great way to get there, because we're going to be interacting and transacting in commerce outside of the normal branded portals that we see. And that's a really hard place to compete in. Do you have a conversational strategy that you could sort of tell us about?

Scott: [00:42:21] Well, it's pretty early on for us, so I don't think I'm ready to talk about it at this point. You know, let's just say that it's in the lab and that, you know, certainly we're thinking about it.

Phillip: [00:42:31] Is there anything that you see out there that you feel like is a really great conversational experience that exists today that people should kind of be looking toward as the standard bearer?

Scott: [00:42:47] Well, you know, it's early still. So I don't know if I have great examples. You know, as we began this conversation, you saw Alexa got in the way for me.

Phillip: [00:42:56] Yeah.

Scott: [00:42:57] And she decided to intercept by audio here for my laptop that I'm sitting in front of. So I think that the Alexas and Siris and Cortanas of the world  have begun to sort of train us. That we can talk to this technology and, you know, have meaningful answers with meaningful results happen based on those conversations. So I think this is the 1.0 that we're still working with. It's clear that once again, the kind of the intelligence behind the processing that occurs, what I ask for something, you know, still needs improvement and still needs to eliminate some of those awkward moments when you're trying to say something that the other end of the conversation doesn't understand what you're really asking for. Which we've all experienced.

Brian: [00:44:02] Absolutely. I think my follow up is that, you know, maybe not from a Neiman Marcus perspective, but from a Scott Emmons perspective, what aspects of conversational do you find that you kind of feel like are going to be most useful? Like is it more of a customer service or is it going to be discovery or where is it? Is it transactional?

Scott: [00:44:26] I can tell you that I think at least what I've been thinking about in our early phases of it is, for customer service. And especially for, you know, sort of these simple requests like "Where's my package?" Or "Is my alteration ready?" Or, you know, things that I don't necessarily... That this chat bot machine ought to be able to deliver a great experience for the customer with very accurate information for the customer.

Brian: [00:45:05] Absolutely.

Phillip: [00:45:06] And you probably, I think most retailers of most, various sizes probably have those types of systems already in place today. And if I wanted to find where my packages or the status of my order is, I'm pretty well accustomed to signing into my account and looking at the status of these things. I think it's more about sort of 15 years ago, we would have probably called it a mash up. It's just making this data available to the systems that will provide them. I think the problem for me right now is that the systems that provide them are owned by a couple juggernaut companies that typically compete in the direct spaces of other retailers who probably would most benefit from the technology. So I think that's a big hurdle that we'll have to get over.

Scott: [00:46:04] It's definitely a piece of the puzzle. And that is who's providing the technology? And how much information, by having that middleman, how much information are they getting out of that relationship?

Brian: [00:46:20] Do you really want Amazon?

Scott: [00:46:22] It's a concern. I think so. I think everybody's once again, sort of, you know, everybody's experimenting, but they're also being cautious about it.

Brian: [00:46:32] Yeah, well, I mean, with that, I think, you know, we kind of wrapped up most of what we wanted to cover. What near-term recommendations would you make to our merchant listeners? Like, what if you could say, you know, if you take your budget that you have for tech and throw it at these things? What would those things be for the short term? And then maybe a little bit long term also? After a short term recommendation, sort of a practical thought. What about the next five years? What would you say that they should put their money into?

Scott: [00:47:05] Yeah. So in near term, I think we've discussed quite a bit of what's important. I think near-term conversational commerce, as you call it, is something that you should be thinking about and that AR and VR are going to play a part probably in your business at some point. So you ought to begin investing with some early experiments and getting smart with handling those kinds of technologies and having the backend systems that are required to deliver that kind of technology. I think that you shouldn't lose sight of the tech. When you're thinking about technology in your store, you need to be think about technology that really solves a problem for your customer. And that new shiny doesn't last very long. If it does, it actually makes something better for the customer experience. You know, it'll be interesting and they'll probably be some buzz about it. But it's not going to last very long if it's not really making their experience better when they're in the store. So I think it's going to be tough to cast a wide net of specifically what you should be looking at when it comes to technology for your stores over a five year period, because we don't know what we don't know and there's things on the horizon that we don't know yet. They're going to come. They're going to be breakthroughs that are going to be game changers. I think that you have to build an organization that's willing to adapt and be agile and have innovation as a core value and not be afraid to try and fail, which is really easy to say and it's a lot harder to do. I can tell you from experience, but it's kind of a different way of doing business than a lot of us did. In our case, you know, we've been around for more than a hundred years. And we've done lots of innovative things over that hundred years, but not necessarily at the pace that we're being asked to do it today. So it takes kind of a different mindset to be willing to go out and do these many different kinds of experiments and to fund those things as well. It affects all areas of the business.

Brian: [00:49:35] I love it. Great advice. Be agile. Make innovation a core business value. And be ready and willing to fail. I think that those are really great pieces of advice. Phillip, do you have any final notes or questions today?

Phillip: [00:49:54] No, no, we appreciate your time. Thank you for joining us, Scott. And once again, Scott Emmons, thank you for being here, Head of the Innovation Lab at Neiman Marcus. And is there a site that we can point people to to learn more about the Innovation Lab?

Scott: [00:50:06] I don't have a specific site for the Innovation Lab, so I can tell you that if you go to your favorite search engine and search for the Neiman Marcus Innovation Lab, we've generated quite a bit of press and coverage about the lab. There's no shortage of information about things that we've been working on out there. I'm very active on LinkedIn. And, you know, people are welcome to check in and check in with me. And I'll be happy to answer specific questions as well.

Phillip: [00:50:35] Do you have any speaking engagements coming up in the near term that you could pump a little bit?

Scott: [00:50:40] I don't have anything local. Well, you know, I'm going to be at Shop.org. There's going to be something called the Retail Innovation Lab, or the Retail Innovation Lounge. And I'm going to do a little presentation there. That's coming up at the end of this month.

Brian: [00:50:57] That's great.

Phillip: [00:50:58] Awesome.

Scott: [00:50:59] So if you'll be in Dallas for the Shop.org event, which is a huge retail event, you know, I encourage you to come by and check it out. Check out the Retail Innovation Lab.

Phillip: [00:51:09] Great. Well, thank you. And we look forward to having you around again. Thank you, Scott Emmons, Head of the Innovation Lab for Neiman Marcus. And remember you can always listen to the latest episode of Future Commerce and go ahead and subscribe. Check us out on iTunes. And while you're at it, if you're listening on FutureCommerce.fm right now, click on the episode title, scroll down to the bottom and leave some feedback. We'd love to hear your thoughts about this episode and maybe some of your questions that you might have for Scott that we could pass along. But at any rate, thank you for listening. And until next week, keep looking toward the future.

Brian: [00:51:44] Thanks again, Scott. See you.

Scott: [00:51:46] All right. Thanks, guys. Appreciate it.

Phillip: [00:51:48] Thank you.

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