Episode 139
January 7, 2020

How Accurate Were our 2019 Predictions?

It's time to look back on our 2019 predictions to see how accurate we were. Death of Apple? Nope. The departure of Walmart from DTC? Yep. Acceleration of customer expectations? YES. Lots to unpack in our first episode of the year. Listen now!

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It's time to look back on our 2019 predictions to see how accurate we were. Death of Apple? Nope. The departure of Walmart from DTC? Yep. Acceleration of customer expectations? YES. Lots to unpack in our first episode of the year. Listen now!

Main Takeaways:

  • Brian and Phillip are journeying back to our 2019 predictions episode, episode 92, to analyze which predictions came true.
  • As of 2019, Apple is still alive and somehow thriving
  • Second-hand commerce is growing and will continue to grow, probably forever.
  • Has social mobility eliminated the middle class?
  • Epcot is its shadow self, and Phillip is sad about it

Predictions Check: Back To February For 2019 Predictions:

  • Phillip's first prediction of 2019 was to declare that 2019 was going to be peak Apple, but it looks like the tech company/over-priced lifestyle brand is not slowing down.
  • Exact prediction: "We're going to start to see the beginning of the end of Apple as a dominant force and a player in both culture and technology.
  • Some of the best Apple's best moves in 2019: The new MacBook Pro, and the AirPod Pros with noise cancellation.
  • Phillip has decided to go as far as maybe to go full Apple and switch to an iPhone

Boring Retail is Over: Is The World Better Off?

  • One of Brian's first predictions of the year was that 2019 would be the end-all-be-all of boring retail
  • Brian says that it was more of a co-prediction, and was made because of the "retail apocalypse," which is not a real thing.
  • What the whole fear-mongering around the retail apocalypse was, was an indicator of the end of boring retail (or the boring middle), which is a mixed bag.
  • What the retail apocalypse is beyond all the talk, is a transformation in the types of retail that will continue to exist
  • But here's a question to think about: What does boring retail even mean?

Walmart Changed Its Game: Added Fun Brands:

  • Walmart made significant moves this year, trying to shed it's low-cost, low-quality reputation, and it might have started making waves in that direction.
  • And maybe to some extent, they did succeed, they've escaped the boring middle, but are they on par with other grocers like Trader Joe's?
  • Walmart's best quality also tends to hurt them, like endless selection, which produces long lines and cluttered shelves.
  • Walmart did add some newer brands to its portfolio this year: Eloquii, Bonobos, and Modcloth.
  • Though all of those brands do seem to be losing Walmart lots of money.

Second Hand Commerce is Rising: And People Are Giving Back:

  • One of the biggest trends in 2019, was the rise of two things: second-hand commerce and charitable commerce.
  • These two trends point to a few things: one that more people are comfortable buying second-hand versions of the brands that they love, and that some brands are even willing to encourage that kind of brand engagement.
  • This is especially prevalent in luxury retail, where the second-hand market allows consumers who may not have otherwise been able to afford luxury brands to get to participate in the brand's conversation.
  • This prediction came from things like Salesforce CEO Marc Benioff making a massive investment into StockX
  • We also saw the rise of online resellers like Poshmark and ThredUP, which represents a massive shift in the conversation around re-sellers.

Transportation Repurposing: Building Communities In Travel Hubs:

  • One of Phillip's prediction's for 2020 was that travel hub would build community-based retail spaces around their locations.
  • So, was the Virgin USA's move to build a community around their trains indicative of a more significant trend in commerce?
  • Maybe. Airports have seen massive growth in retail spaces, and have become a hub for shopping, and it's only going to grow as travel becomes more accessible.
  • And as Phillip points out: it does not just travel hubs, malls are seeing a lot of repurposed space.
  • Malls are repurposing retail space for movie theaters or waterparks and or a megachurch.

Brian: [00:00:00] Welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Brian.

Phillip: [00:00:04] And I'm Phillip, and we are talking about 2019 in review. It's our very first podcast of the year in 2020.

Brian: [00:00:12] Yeah.

Phillip: [00:00:12] And this is... We did something like 44 or 45 episodes in 2019, something like that. Official episodes. And we launched... We did a lot of things. We'll get into that. We launched a YouTube channel, we're on Instagram, we've tripled our audience in the last year. It was a huge year, and we got a lot right in our predictions, and we got a lot wrong in our predictions. So I thought, why don't we just open the here and just own what we got right and wrong.

Brian: [00:00:44] Own it. Own it.

Phillip: [00:00:44] Let's just look at 2019 in review. I think for most people, and by all accounts, it was a pretty stellar year for eCommerce and for retail in general.

Brian: [00:00:54] And for the economy.

Phillip: [00:00:57] Yeah the economy did okay against all odds and despite all the circumstances and people telling you that it wouldn't. It's done pretty well.

Brian: [00:01:05] Yup. Yup. Yup.

Phillip: [00:01:06] Yeah, let's get into it.

Brian: [00:01:09] Let's talk about one of your predictions first.

Phillip: [00:01:12] Yeah. If you actually step back in a time machine, then you go back to 2018, the end of 2018...

Brian: [00:01:20] If you want to follow along with us, by the way, go to Future Commerce Episode 92: 2019 Commerce Trends and Technology.

Phillip: [00:01:29] I'll post it. We're actually live right now. I'll post the link in the chat. I'll post the link in the chat to it.

Brian: [00:01:35] So we're just going to go through this like literally point by point.

Phillip: [00:01:38] Yeah. And I think that's the best way to do it really. Just hold ourselves accountable and and kind of get into the meat of the content.

Brian: [00:01:47] Yeah. One disclaimer, we made many predictions throughout the entire year. So this does not represent our full life predictions. I would say we make on  prediction on like every other episode.

Phillip: [00:02:02] That's true. That's true. Also, this is probably the first episode we've done with just you and me in maybe six months almost.

Brian: [00:02:08] That's a really good point. Yeah. So no predictions typically in those interview episodes. So yeah, it's been a while when it's just the two of us, which I'm really excited about. I missed these.

Phillip: [00:02:16] I missed these too.

Brian: [00:02:19] I know, I know.

Phillip: [00:02:20] I know. But at the same time, you know, we tend to descend into very dark places, which takes me to my very first prediction. {laughter} You know, if it's just you and me, I tend to go big or go home. I went big, real big in  my first prediction, I'm like, basically "death of Apple" is what I said in my very first prediction honor on episode 92, which was our annual predictions episode that opened last year, I said, "We're gonna start to see the beginning of the end of Apple as a dominant force and a player in both culture and in technology." And I pointed to a bunch of reasons why I thought that. In no way was I saying that it would... And go and listen to the episode because I actually did. In no way was I saying that that was going to happen in 2019. But I said that in ten years time we would look back and say you 2019 was the year that it started to turn the other way.

Brian: [00:03:25] Yeah.

Phillip: [00:03:25] ,Now I'll have to say I think I'm wrong here because there's a few things that they did that I felt like we're really right moves this year. And I think probably the biggest of which were all of their investments they made in health care, which I know you're a big fan of.

Brian: [00:03:41] Yes, huge fan of. I think that the future of Apple is health care, and we're gonna continue to see improvements out of them in this area. In fact, you know how like retail and brands have been such a big deal for a long time. We've seen a lot of venture come in here and make disruptions and so on. I feel like health care might be like the next personal tech, the next retail of the next few years here. We are going to see a lot of venture in this. I mean, we've seen a lot of venture in health care for a long time, but I'm talking like we're going to see leaps and bounds here. We're starting to see this already. Maybe we'll talk with that in their predictions episode coming up, but I'm very excited about Apple and healthcare. And I think that we didn't necessarily see Apple coming in here when we talked about this point, initially.

Phillip: [00:04:36] I think we had mentioned, too, like there were some, you know, positives in the Apple portfolio. But I think that from a health care perspective, they continue to make strides in Apple Watch... Airpods Pro obviosly was the hit of Christmas. I think if you go and look, there were sold out pretty much everywhere. You know, Airpods Pro with noise cancelation.

Brian: [00:04:59] Did you get them?

Phillip: [00:04:59] No, I don't have them. I will say that I am considering moving to Apple. You know, I have had a Pixel for the longest time. I'm considering moving to Apple, which would be my first Apple smartphone in 10 years, although I have Apple, everything else. But, you know, they did have some flops, too. I think Apple TV+ doesn't look great from a content perspective, but they're sort of forced to do it. They have to. You're talking... Actually you mentioned something about venture. I think, you know, corporate venture could be a big theme for 2020, which is not part of our predictions officially.

Brian: [00:05:33] Yeah.

Phillip: [00:05:33] But corporate venture is a huge emerging category amongst venture capital.

Brian: [00:05:41] Yes.

Phillip: [00:05:41] And I think that when you look at corporate venture, you could consider a lot of the things that Apple is making strategic bets on as a form of corporate venture, not in a traditional venture way, but more in sort of an Apple-esque way if Apple were going to do something of that nature. But anyway, I think it's really important to say that there are features that they're rolling back, like face I.D... Kind of it seems like... It's just Apple. I don't know. But they made some really good positive moves. They're getting some great reviews of their MacBook Pro, etc. I think it's very important. It's hard to believe that there's been a big and like almost indelible mark in the culture of the way that Apple has actually changed the world. And last thing I'll say about this is I gave a talk that actually started Future Commerce five years ago, which was called "The Future of Commerce." And I actually talked about, you know, the rise of voice technology and Siri and the moment that I mark as the important cultural impact, not just that the iPod had in society, but that the Apple iTunes music store had in society, was the one click Amazon license that allowed us to purchase songs out of context of albums.

Brian: [00:07:07] Right.

Phillip: [00:07:08] And that one click purchase and that application of utilizing technology that had already existed from other people. But putting it into a context that consumers want and desire was, is, and always has been Apple's mode. Doing things perfectly. And Apple has struggled to do things perfectly. So anyway, 10 more years, we'll see if the prediction played out. It definitely didn't happen in 2019.

Brian: [00:07:34] Well, and I think actually it's interesting. We talked about how Apple kind of became the leader, and they weren't... During their rise, they weren't necessarily the leader. And then they kind of took dominance. They're having to figure out... And I actually do think this is true. This is one thing that we talked about. They're having to figure out how to be an innovator in a truer sense, and so when they're stepping into health care, and they're like putting an EKG device into their watch, and they're the first ones to do that out of anyone. And they're doing Face I.D. And they're the first ones to do that out of anyone. It's really hard to be perfect when you're the first.

Phillip: [00:08:16] Yeah. But they weren't the first MP3 music player and they weren't the first to use one click...

Brian: [00:08:22] No, they weren't.

Phillip: [00:08:22] And they weren't the first person to have a home device. But they were the first to have an assistant on the phone.

Brian: [00:08:28] And that was all during sort of their rise. I guess what I'm saying is now that they're at the top, when you're at the top, your strategy has to change a little bit.

Phillip: [00:08:38] Yeah. Well, we've talked a lot about things we got wrong. You got one very right. Let's shift gears. What was your first prediction of that episode?

Brian: [00:08:47] So my first prediction of the episode, actually, this is sort of a co-prediction, I think. The next one. Which was the end of boring retail. And I think we both talked about this at length. I think that this is actually more of your prediction, I think, that you've got here. I don't know.

Phillip: [00:09:10] No. And I think this was years. I think we took turns. I think this was yours. And I added some color.

Brian: [00:09:15] Yeah. Yeah, we both talked about this at length. But, you know, because the retail apocalypse was in the full swing... {laughter}

Phillip: [00:09:25] Well because Coresight, remember, made some dastardly number, which, by the way, nobody is touting anymore. Right.

Brian: [00:09:33] Well, they aren't. Although this was again, like the most store closings out of any year. This past year in 2019. So again, it's not the retail apocalypse. This has been talked about ad nauseum. It's just a transformation in retail. Like we're getting rid of the boring middle. This is our prediction was dead on. It's not that retail is actually doing poorly. Retail is fine, but there's a whole bunch of stuff out there that's in retail that just needs to go away because it wasn't good. It was boring. It was not exciting. And it was difficult to use. It was clunky. I think about Payless Shoes and Dress Barn and others that have gone through struggles. And it's not the kind of shopping experience I wanted. I can tell you that right now. It's not the kind of shopping experience that a lot of people wanted. And when people are making those kinds of purchases, they want something more convenient now. When they're making a down market purchase, they want something that's more convenient.

Phillip: [00:10:39] When you say down market, you mean, off price.

Brian: [00:10:43] Off price.

Phillip: [00:10:44] Right.

Brian: [00:10:45] Yup.

Phillip: [00:10:45] My understanding has shifted here because this idea of boring retail, how do you make... Is Aldi boring?

Brian: [00:10:56] No. Have you been through an Aldi?

Phillip: [00:10:56] For sure. Yeah. Yeah. But they don't have a AR and VR in the store.

Brian: [00:11:03] No. No. What does boring mean? That's a good question.

Phillip: [00:11:06] Yeah, that's the thing that I think we need to recontextualized that I think we came into a better understanding of this year is that broad retail that is thriving that is low price or off price is not necessarily thriving because of technology or engagement experience or stellar social. Right? Or even brand voice. It's because they're delivering higher than average quality and a decidedly more up market experience at a lower price. And that I think is due to a maturing understanding of the boring middle is not just people don't want to shop at boring stores. I think it's that we've had 12 years of economic growth, and people are actually growing out of middle class into higher earning wages and that the people who aren't experiencing that are receiving trickle down benefit of things like Toast and Shopify POS, and the world is changing to allow smaller, more regional stores and brands to have better technology. So the lower off price stores and local mom and pops are better able to compete with upmarket experiences, which leaves things that are in the, quote, boring middle like, you know, most Walmarts... It leaves them without a real audience. And that means that they have to mature and change. And that's why I think that when we make our new predictions episode, things like curbside pickup and grocery delivery are so compelling because they help penetrate into an upmarket audience. But we can get away from that. I think this boring middle thing, though, is because we have a disappearing middle class and boring middle isn't really for anybody anymore. You either haven't grown into middle class in the last 12 years or you grew out of middle class. There's very few in the middle anymore.

Brian: [00:13:07] Interesting. Yeah. That's a really interesting point. I would argue that we still a decent amount of middle class out there, but it's shrinking.

Phillip: [00:13:20] It is shrinking. Like statistically it's shrinking.

Brian: [00:13:22] Yeah. It is shrinking. It is shrinking. And the ways that people are purchasing are different. So like Walmart had a great year as well. I wouldn't put them necessarily in the boring middle. But the way Walmart used to be, I would put the boring middle. I think that's a good way to put it, because Walmart used to being exactly right in the boring middle where they had no compelling reason other than price to be there.

Phillip: [00:13:49] Yeah. And even then, it's not it's not Trader Joe's. And if you want better price and better quality, you can go to Trader Joe's or even Aldi in most instances and still get... You're not gonna be inundated and overwhelmed with, you know, all of the things that make Walmart great, which is endless selection, are also the things that hurt them because endless selection draws endless droves of people, and its lines at checkout, and its cluttered shelves. And it's impossible to get from one end of the story to the next. And it's like millions of SKUs of the exact same thing. And it's just overload. By the way, in this prediction, if you look at the fine detail here, we talk about a lot of brands that are like basically luxury brands. So, you know, Canada Goose, Coach, in store engraving and Nordstrom... I remember when we went to Shoptalk, we actually evolved our understanding a bit, and we talked a lot about Levi's.

Brian: [00:14:46] Yeah.

Phillip: [00:14:47] Remember that?

Brian: [00:14:47] Yes I do.

Phillip: [00:14:49] Levi's after that did pretty much nothing all year long and sort of rode that wave of, "Hey, we put the tailor shop in the front of store." I actually went to one at Disney Springs when we were on vacation this past week. And man, it sounds so much better in a keynote than it actually is. {laughter} I just think that's kind of the truth for almost all of this stuff.

Brian: [00:15:14] Yeah, unfortunately, a lot of these retail experiences sound a lot better in a keynote than they actually are. I would totally agree with you there. There are a few exceptions to this. Like we just did a nice little shopping trip recently in Las Vegas. You and I were on one with our friend Tony, and I thought that was... Were we at the Crystals? No. We were at...

Phillip: [00:15:41] The Plaza Shops.

Brian: [00:15:42] The Plaza Shops. That's right.

Phillip: [00:15:43] Yeah. And at the Wynn in Las Vegas.

Brian: [00:15:46] We visited Le Labo and...

Phillip: [00:15:49] James Perse.

Brian: [00:15:51] James Perse. And you know, I'll be honest, James Perse to me still felt like sort of a typical shopping experience, like really quality stuff for sure. But like, it was a very standard store experience. It was a good one. Great knowledgeable associates.

Phillip: [00:16:11] Yeah. I know where you're trying to go. Just to cap it off was very few other stores you can walk in and say, "Give me one of everything in the dressing room.".

Brian: [00:16:19] Right.

Phillip: [00:16:20] Right. But that's a whole other thing.

Brian: [00:16:21] That's a whole other thing, right. But Le Labo, on the other hand, that was an interesting...

Phillip: [00:16:26] That's totally different. Yeah.

Brian: [00:16:27] But you had a whole mess of stuff to say about that in a recent article. I think in the luxury category, I think if you're boring, you're done.

Phillip: [00:16:40] Yeah. You can't even exist. Right.

Brian: [00:16:42] Right.

Phillip: [00:16:43] But I would say that when we talk about boring middle, someone might suggest that Target is like an upper middle class retail establishment, but they have found a way...

Brian: [00:16:55] Upper?

Phillip: [00:16:56] Yeah, upper middle class. Yeah, absolutely. They're not off price. They're a more premium experience. They have a Starbucks in the store. It's a more expensive version of Walmart. And it's better.

Brian: [00:17:08] I would put it firmly in the middle class. But keep going.

Phillip: [00:17:11] Well, I think that they've actually found a way this year. I'm supporting your theory, by the way. That this is the end of boring retail. They found a way to make it more compelling at an off price. They have launched more and more in-store white labeled brands, or what they call owned brands.

Brian: [00:17:29] Yeah.

Phillip: [00:17:30] This year than any year prior. And they were known for designer collaborations already. And they were already known for working with Michael Graves and working with Lilly Pulitzer. And they were already known for collaborations with designers. This put them this year to take that, take the reins themselves and create their own in-store brands that have that millennial aesthetic. Right? The Brooklyn design aesthetic.

Brian: [00:17:53] Yup.

Phillip: [00:17:54] And they look like brands that, you know, if you could be fooled as a consumer to thinking that these are just brand new brands that you'd never heard of before, but Goodfellow and Co and Smartly are not actually. And Good and Gather. They're not. They're Target owned brands. And that is what led Target to a banner year. And Walmart is abandoning the direct to consumer owned brand strategy. They acquired a bunch. So if you want to tie these two things together, I think that there is a through line amongst these predictions, which is you really can't acquire culture.

Brian: [00:18:36] Yeah.

Phillip: [00:18:37] You have to develop it from within. And that's the real differentiator. It's really hard to acquire Bonobos, and then say, "OK, we have the direct to consumer thing nailed as Walmart." You have to grow it from within. And that's what actually resonates with the consumer. And also Smartly... To go back to the off price thing. Smartly is a $2 and under price point for personal care products and bathroom products. So it looks beautiful, and they're great products. I buy them myself.

Brian: [00:19:11] Yeah, it's interesting. No, I love it. And I think Target's done a really... I think you're right. Target is a perfect example of taking itself out of the boring middle because I would have put Target into the boring middle know a couple of years ago. A few years ago.

Phillip: [00:19:28] Yeah.

Brian: [00:19:28] And moving itself in to the branded middle, if you will.

Phillip: [00:19:33] Yeah.  The branded middle.

Brian: [00:19:36] The storied middle. Like whatever is. The storied middle. The branded middle. That is where they have landed now.

Phillip: [00:19:43] Yeah.

Brian: [00:19:43] And I think so... Good on them. That was a really smart move. Also, Target seems more committed to ethical practices in terms of sourcing. We recently bought a rug from Target, and I forget that certification that they gave it, but they had a whole video on like how the people that made the rug were fairly compensated, what kind of a factory it came from, how it was made... It was really cool, and it made me really happy about buying that rug from Target. Like better than buying it from somewhere else.

Phillip: [00:20:16] You know, we might look back in 10 years and say that between, you know, venture capital and no code, we had sort of an interesting magical moment of a lot of entrepreneurs who probably 15 years ago would have started tech businesses, started retail brands.

Brian: [00:20:35] Yes.

Phillip: [00:20:36] And they were able to pretty easily and pretty quickly because the infrastructure was there, the logistics were there. Things like Shopify. Like you could get up and running pretty quickly. If you had some sort of a design aesthetic as a founder, you could probably bring it all together. What we might look back in 10 years and say is it was a really magical time to teach, to capture the consumer mindset around, and get consumer attention around what beautiful design and what story can do to things that are really, truly, you know, only valuable and profitable as in-house brands. We've taught CPG how to do it now.

Brian: [00:21:16] Totally.

Phillip: [00:21:16] We repurposed a bunch of venture capital to teach big CPG how to break off the rust of the way that we're doing things for 20 years.

Brian: [00:21:32] It's a really interesting point. And I actually like your point about this. This is a really interesting point. It's a reflection probably on the past few years, I would say. But the point is that in the past, we've seen a lot of tech startups happen and a lot of money made that way. And I think that it kind of peaked out and slowed down a little bit. Right? And what we've seen recently, as people realize that by applying tech, you could make a lot more money. There's a way to monetize that.

Phillip: [00:22:01] Yeah. Yeah. There's a multiplier on how much money you can raise or how, you know, you can wave a banner and say, "Oh, well, we have this gimicky feature."

Brian: [00:22:09] "We sell stuff."

Phillip: [00:22:09] Yeah, yeah, yeah.

Brian: [00:22:10] ,Yeah. Exactly. Like if we can make money that way. There's a way for people to actually make money on this. And so yeah I actually I love that thought and that reflection.

Phillip: [00:22:21] Well in some ways we've already touched on the next one which was that, you know, Amazon has to compete now. It enjoyed a pretty long head start in every way. They've even gone so far as this year alone... I think we talked about it with Kiri Masters on the show. All the things that Amazon has done have grown. Many, many, many channels within its own, you know, owned audience. And along the way this year, they've tried very hard to say, "Well, Marketplace still makes up the majority of our sales. It's not just Amazon brands or Amazon technology that gets pushed." But, you know, Prime Day, they're doing their own QVC style shows. And they've created their own sales holiday. At the same time, like as much as Amazon might be doing right, they've had some pretty big flops this year. And we said, you know, we called it the year of Walmart. I think we got it wrong. It was probably the year of Target, especially since so many people left Walmart. Like, we have a lot of departure from from Walmart in the...

Brian: [00:23:29] It's true, but they get great. They did great. I think there's a point here, actually, you're right. I think that what we should have called... So actually, I think I realized what we did. You took two predictions then I took to predictions.

Phillip: [00:23:40] Is that what happened?

Brian: [00:23:41] Yes.

Phillip: [00:23:41] Ok, so this was yours.

Brian: [00:23:42] This was mine. Yeah, definitely mine. I was like, this is the year that Amazon has to compete. And this is going to be the year Walmart. And I think you're absolutely right. It wasn't just the year of Walmart. It was the year of other large, you know, classic retailers, large retailers that were able to look at Amazon say, "Actually, we have the ability to do that." And even Best Buy, which they've sort of lagged behind.

Phillip: [00:24:17] They've struggled. Yeah, they've struggled for some time. But they're doing great.

Brian: [00:24:19] They've done interesting things. They've done some interesting things. And so basically, this is the year of big retailers other than Amazon. Of course, Amazon still had a great year, but this was the year, and I think we correctly called this, that they saw for the first time, slowing. They saw some slowing. And so...

Phillip: [00:24:39] Well, and, you know what... And by the way, we haven't said this before. But if you want deep prediction, if you want deep analysis of quarterly earnings, and stuff like that, go listen to Jason and Scott.

Brian: [00:24:49] Absolutely.

Phillip: [00:24:49] We don't do that. So you're just going to get what we think. But if you want some deep analysis of quarterly earnings and strategy from a big retail perspective, you know, go listen to someone else. But at the same time, what we're saying has merit. And it really is true. Sorry to cut you off there, but I had to get that little jab in. And it's like, we're enthusiasts and we love this stuff as much as anybody. And we could talk about it all day long. But you're not going to get research level analysis on quarter to quarter earnings. We don't read those tea leaves.

Brian: [00:25:27] No. We have some awesome research happening right now, but...

Phillip: [00:25:31] No, we do. But it's not in that way.

Brian: [00:25:32] Not quarterly earnings.

Phillip: [00:25:35] Just wait. Give it a week. You guys are gonna be blown away by some of the stuff we're doing. We don't need to toot that horn. But Yeah, by all accounts, Walmart had a little bit of pullback its dot.com sales. Walmart, I think they sold off ModCloth this year.

Brian: [00:25:54] They did. Yes.

Phillip: [00:25:55] Their head of direct consumers left. Amazon has a great strategy that they're continuing to execute against. Walmart seems to be spinning a little bit on how it's going to compete against Target. I think Walmart was poised at the beginning 2019 to take on Amazon. Now, I'm not so sure.

Brian: [00:26:16] %I think that this actual threat was Target, not Amazon.

Phillip: [00:26:22] I don't know. I feel like Amazon actually, because Walmart has a marketplace. Target does not. Like Walmart was definitely ready to punch up in a big way.

Brian: [00:26:30] Target has a marketplace.

Phillip: [00:26:31] But Amazon did something. Amazon did something very, very compelling this year, which is they took over last mile delivery.

Brian: [00:26:37] Right.

Phillip: [00:26:37] And by not a small margin. 50% of last mile delivery is happening by Amazon delivery drivers themselves now.

Brian: [00:26:45] You know that is mind blowing. And of course, this is just representative of what Amazon's always done, which is, you know, takeover stuff. {laughter}

Phillip: [00:26:57] But you know what? They keep doing it better.

Brian: [00:26:59] I know.

Phillip: [00:27:00] That's the problem, right? So when they take it over from FedEx, I think to myself, I'm like, "Oh, it's just they're just gonna take over delivery." But that's not how it works. Just one day, all of a sudden, I get a push notification and a text message that says your delivery driver's 10 stops away. I could see him driving into my neighborhood. He texts me and asks for the gate code. And then I get a picture...

Brian: [00:27:20] A picture of the package on your doorstep. This is an expectation that just happened. And we all want it now.

Phillip: [00:27:24] Yeah. Yeah. It'll be the de facto like every single customer is going to request. They're going to say, "Why don't I have this feature when I buy from from Walmart, why don't I have this feature?" And at the same time Walmart has, I think rightfully, decided that their strength is in their physical retail store presence, and they do need the website, but the website is driving in-store engagement, like grocery pickup. And when we talk about our 2020 predictions on our next episode, we're going to talk about things like ghost kitchens. We're going to talk about things like, you know, curbside pickup. And we're going talk about in-home delivery. And those are the things that I think will actually create new category for Walmart to be able to... If Walmart doubles down there, all bets are off because Amazon, even with Whole Foods, I don't think can provide anywhere near the retail footprint, at this point.

Brian: [00:28:24] Right. At this point. Yeah.

Phillip: [00:28:27] But a lot can change in a year. As we've seen in the past. Let's keep moving.

Brian: [00:28:30] So here the next prediction. As retail shifts higher wages for changing labor force, which absolutely came true. We saw wages rise not just at the top end, actually, but, you know, we saw wages rise at the bottom, as well. And we're seeing a lot of movement towards even raising our minimum wage now federally. I could see that happening coming up here. It hasn't happened in a long time.

Phillip: [00:29:03] %Well 21 states had minimum wage increases in 2019, according to CNBC. So you know that definitely is part of it. Yeah.

Brian: [00:29:14] %Yeah. So ultimately what this is going to do is you're going to be able to, or what we said was we're going to be able to, see more, experience more adaptable, more cross trained workers. I think that you're seeing this across the board. You're seeing smarter associates in store, you're seeing more thoughtful training. You're seeing just better engagement of employees. Things are moving up, and I think that this is going to be a continued trend in 2020, at least through the election.

Phillip: [00:29:52] Yeah. I mean, if you're just talking about percentage growth, there was CoreLogic data that was synthesized. Where is this from? Hilary George-Parkin from... Oh, you gotta doubt the source. So I'll just own it up front. This is Footwear News. Who even knows how...? This is one of those like someone like me hired someone, NPR, to get some retail trade to pick up the story that never went anywhere. So but... Oh, OK. So this is, it's synthesized from CoreLogic data. And the first version of this report came through Glassdoor and hiring trends. But it looks like in 2019 we see the Labor Department says that the bottom 25% of earners saw their pay increase at a faster rate than higher income workers over the past year. Places like in San Francisco where there was almost a 6% increase in wage growth. And so, yeah, like you are seeing across the board, not even just in minimum wage change cities. It's very interesting. Places like Houston are steady. But places like Atlanta are growing. And I think, you know, as people...

Brian: [00:31:15] Get this like this is from the Atlantic in October, and this is by Derek Thompson, who I think does some pretty great work. He talks about he's like, "So let's play a game of wish casting. Imagine a world where wage growth was truly stagnant only for workers in high wage industries such as medicine consulting. Imagine a labor market where earnings growth for low wage workers such as those who work in retail and restaurants has doubled in the past five years. Imagine an economy where wages for the poorest Americans are rising twice as fast as hourly earnings for high wage earners. It turns out all three of those things are happening right now."

Phillip: [00:31:57] Yeah. You know, if you're making 32,000 dollars a year, a 6% increase is not as much as a 2% increase for 250,000 earner. {laughter}

Brian: [00:32:05] Absolutely. Don't get me wrong. I totally get that. But we are seeing it, and again we've talked about this before. This might have been sort of an indication of inflation and maybe the final indication of inflation. Potentially not. But, you know, we are seeing wages rise this year. And I think it's going to continue to happen, even though that's not our predictions.

Phillip: [00:32:30] Yeah. Should we go ahead and bust these last two open?

Brian: [00:32:36] Let's do it.

Phillip: [00:32:37] OK. So. Yeah. And I hope we see more wage growth. I'm going to go on the record here because it's not part of our 2020 predictions episode. I do not want to memorialize it on that episode because we are recording that in partnership with Gladly. It's about a report that we're putting out called Vision 2020. And that's a whole separate topic. But I'll put it out here, and somebody who's listening to the show make a note of it. I believe that we are guaranteed economic growth until the election in November. I feel like.

Brian: [00:33:10] {laughter} You've been saying this for a while.

Phillip: [00:33:10] Yes, I know. But I don't know if I said it on the show. I feel like it doesn't matter what has to happen. We will bomb Iran thirty seven times if that's what it takes. We are guaranteed another 10 months of economic growth. After the election, all bets are off. But but we have to. That's the only way that this administration stays in power in the United States.

Brian: [00:33:35] I don't know about that. But... I agree with you...

Phillip: [00:33:38] {laughter} I'm just saying... If the economy is garbage in November, then the chances of Trump's second term are quite low in comparison to if we have a strong economy. But I'm not Nate Silver. And by the way, you know, like synthesizing data from a lot of different sources is probably your best bet instead of just, you know, doing exit polling. I think we've all figured that out. I really do believe, though, it doesn't matter. It doesn't matter. It seems like there is... I was just listening to an economics podcast. I can't remember. I listen to a few of them. The Economics Today, something like that. I was just listening to one. Somebody said something like, "There's an economic theory. We basically lost control of the economy. Nobody has any control of this thing anymore anyway." I'll have to source that because I think it's an interesting take. But, let's talk about something I think that does actually break the economy. But it's probably for the social good. There's this really interesting emergence of a trend that we talked about in late 2018 that was on our predictions episode last year, which is second hand commerce, what we were calling second hand commerce. It's picking up steam is being called re commerce. But when you look at the investments in that space... I think we had looked at just a couple of reports. The first was you look at, you know, Marc Benioff, Salesforce CEO who made an investment in Stock X. You look at the Thredup who had a report that second hand commerce could overtake fast fashion by 2027. This was a talking point, but we saw a huge consumer uptake in not just online second hand, which was for most of 2019 focused at the luxury market, which was resale of things like watches, handbags, sneakers, streetwear, that kind of thing. But we saw the platforms like Thredup and even Poshmark, which are allowing people to resell, you know, common goods. And they are taking off in a big way. In fact, there's been an overall trend upwards in physical thrift stores and foot traffic to physical thrift stores. And that's a really interesting engagement. We actually have talked about a new psychographic of a consumer that we put out about a month ago called Carly, which if you've heard of Henry. Henry is a psychographic of a consumer who's a high earner but is not rich, yet. Right. High earner. Not rich, yet. That's Henry. Carly is can't afford real life, yet. And Carly is a person that we haven't talked about on the show, but has been mentioned on a number of occasions in our FC Insiders newsletter. Carly is the kind of psychographic of a consumer who might be Gen Z, but not necessarily, but who takes a lot of pride in repurposing and reusing items that already exist to make them her own. And when you think about the idea of a sustainability message that is really taking hold with younger consumers now and the consumer demand that they're putting on retail. Some of the qualitative insight that we've gotten back from this 2020 report that's forthcoming is this idea that consumer demand towards brands and the brand experience they want to have is so expensive for brands. We used to worry about whether consumers could afford the products or services. We now worry whether brands can afford the consumer. And you know what brands can afford a consumer? Thrift stores. Because they come in looking for the hunt. It's part of the experience. They want to get something that, you know, shows signs of previous life. They get joy out of repurposing and reusing. And they give garments that already exist a second chance at life. Or they repurpose items of furniture. And it's not just because they're, you know, they have less money to spend. I think that's part of it. But there's a sense of pride in ownership in that they're not creating additional waste in the world. And I think that that's a huge trend. And if you had to rank quantitatively what we got the most right out of this predictions episode from last year, I think this might be it. We saw a massive uptick in not just charitable commerce, but second hand commerce.

Brian: [00:38:28] Yup. And we're going to continue to you see that. I think the Thredup report has been updated. And I think the next five years, it's going to be over a 50 billion dollar opportunity in apparel alone.

Phillip: [00:38:41] Yeah. It's amazing.

Brian: [00:38:41] And we also saw some unbelievable partnerships this past year in the second hand space. Even Macy's, I think, partnered with Thredup. We saw Cuyana and Thredup. We saw Goodwill and OfferUp do a partnership. We're seeing a lot of innovation in this space right now. I mean, we've been beating the second hand for a long time...

Phillip: [00:39:07] Yeah like three years now.

Brian: [00:39:10] And I think that second hand is going to continue to see opportunities for formalisation of markets that were sort of off books before or are going to continue to become on books. And there's going to be more fair prices and more controlled and more thoughtful ways of approaching the second hand market. Brands and retailers are going to continue to... They're going to see that their footprint extends well beyond just the initial sale, and they're going to find ways, better ways, to own that. Again, none of this is in our predictions episode. I don't know why. Because this is all really good. {laughter}

Phillip: [00:39:49] {laughter} Yeah. There is a Bloomberg article saying that used stuff is the next big trend in Christmas shopping. I kind of love that whole... I love that take just on its own. It's the best headline ever. "Merry Christmas. Here's a piece of garbage that I found." But I think that when you do think especially around, you know, luxury goods, that might be more durable, you probably aren't buying an IKEA desk second hand.

Brian: [00:40:22] I have.

Phillip: [00:40:25] It's way less durable than something that, you know, might be a Herman Miller chair. Right?

Brian: [00:40:30] Totally. Absolutely right. Much shorter life.

Phillip: [00:40:32] %It doesn't have to brand cache.

Brian: [00:40:33] Usually it's like throw away. You know, it's like you buy something and you're gonna use it for a while, and then you're gonna donate it back. And actually I've done that, as well, where it's something you use for a while and then you donate it back.

Phillip: [00:40:45] Yeah.

Brian: [00:40:46] I think this is happening more and more where you're seeing even stuff that's not as durable get run through the second hand market and get passed around a few times because people want to have different things more often. And so like there's a thrift store in the Seattle area called Value Village, and they give you a 20% off coupon if you donate something. And so what you see people do is they'll do a lot of like buying and re donating. It's like it's a cycle through thing. You're seeing things pass hands more than just once. It's multiple times. And it's not always like high end stuff. It's middle-market stuff now, too.

Phillip: [00:41:27] Yeah. It's interesting. All right. This last one was sort of an odd ball that we threw out there. Which I might take a different take on here. But the idea is that retail space being repurposed as sort of like building entire planned communities around the idea of transportation or around public space and...

Brian: [00:41:52] Well, actually. So I think you nailed something here, which was airports have become one of the like biggest, most large, largest growing segments in retail right now.

Phillip: [00:42:06] Yeah.

Brian: [00:42:07] Airports are out of control. You've got to be in airports. This is where a lot of commerce happens. And so actually, I think this whole connection to travel that you've made with this prediction is absolutely on point. I don't know if that's where you're going to go, but...

Phillip: [00:42:23] I'm happy to look in in retrospect and say how right I was. I don't know that I had it in mind that way when I said it. {laughter} But I do like this idea of repurposing what Jenny Odel in her book, "Resisting the Attention Economy" would call fake public space. This idea that, you know, you have a retail space like a mall that nowadays, there are malls here in Florida that have a movie theater in it where Dillard's used to be and where the Nordstrom is being torn down, they're putting in a waterpark. And on the other side of the mall, you know, there's a mega-church moving into one of the old retail spaces... It is like the idea of mall being fully and wholly only around the idea of retail or commerce is is changing dramatically. And if you look at the brand new investment in retail space, that's actually not how retail space is actually designed anymore. And you and I, we've talked about this. I did a tour with Brandon. What's his name from Macerich?

Brian: [00:43:40] That's Brandon Singer?

Phillip: [00:43:42] And no, that's no, that's Brandon. No, he was on the show, although he would probably be pretty...

Brian: [00:43:45] I think actually mixed up twice now with Brandon Singer.

Phillip: [00:43:50] Is that twice?

Brian: [00:43:50] Which is super embarrassing.

Phillip: [00:43:50] Brandon Hoffman.

Brian: [00:43:50] Brandon Hoffman.

Phillip: [00:43:50] Sorry, Brandon.

Brian: [00:43:55] Two times.

Phillip: [00:43:55] That's what you get for a live episode. Yeah. Brandon Hoffman walked me around the Century City, Los Angeles, Westfield. And when you look at the way that they're designing health and wellness right next to eating and dining next to yes, retail, but there's a co-working facility in the space. And then it's part of the retail plan to have multifamily housing right next door, and an office environment in an adjacent property. It's all being meticulously planned so that all parts of your life can exist around this new idea of the town square. And that's what I think that, you know, a lot of these mid-level malls that are falling into, that are prone to that boring middle store closure, could see new life by inviting in a more professional workforce, inviting the likes of Google to come have offices there, opening up co-working facilities, you know, creating more than just a reason to be there other than the next sale. And so I do think travel is a big part of that. And having hubs, you know, that repurpose some of that parking and make them new green spaces would be really interesting. But we'll see. Yeah, this is also probably more of a long term prediction. I don't know that we could have ever seen that happen in just a year, but we do see signs of it.

Brian: [00:45:22] Yeah, I agree. Well, there you have it. Predictions from 2019 analyzed and looked back upon, reflected upon.

Phillip: [00:45:31] Yes.

Brian: [00:45:31] We made some good ones. I'm happy.

Phillip: [00:45:33] I think so.

Brian: [00:45:35] Yeah.

Phillip: [00:45:35] Thanks to those in the chat that participated. Mark Johnson actually just jumped in and said, you know, look at what the Denver airport's doing. They're redoing the whole terminal to make it into a mall. Europe's been on this train for a while. In fact, if you want luxury goods in Europe, you go to the mall in the airport to get it duty free as you're going to another place. So they've been on it for a long time. Yeah, I think it's interesting. Well, can you tease a little bit about what's going to be on our next episode and how we're gonna handle that one?

Brian: [00:46:06] Our next episode is going to be probably my favorite episode of the whole year.

Phillip: [00:46:11] Is that a prediction?

Brian: [00:46:13] Predictions 2020. We have a report coming out, which we are absolutely excited about. It's called Vision 2020. It is in partnership with Glady, who has been a great partner in this process. And we are going to talk about what is coming in 2020. And, you know, and reflect on the decade ahead. This is going to be the 20s, the new 20s. I was just talking with Elizabeth, my wife yesterday about how now, we can't refer to the 20s as the 20s. We've referred to them as the 20s our whole lives. And now there's going to be the 1920s, and these are going to be the 20s.

Phillip: [00:46:59] Wow.

Brian: [00:46:59] Which is just a really weird concept. We've never really had this before like this. Because you never call nineteen teens "The Teens.".

Phillip: [00:47:08] {laughter} The Teens. Yeah.

Brian: [00:47:09] Yeah. And so it'll be interesting. We have a new 20s. This is where things really renew, and we're really onto the next decade. We're onto the next century.

Phillip: [00:47:19] Yeah.

Brian: [00:47:20] This is where the real meat of the century starts. We're just getting started, well the past 20 years.

Phillip: [00:47:26] It's kind of an incredible thing to think about, like the length of a generation, and what life could be like. Last thought... I had a whole rant that I had planned to do on Twitter yesterday. And then I was like, I'm on vacation, so I'm not going to do that.

Brian: [00:47:43] Good for you. {laughter}

Phillip: [00:47:43] But we visited Epcot. It was the first time I had been at Epcot at Walt Disney World Resort in maybe 15 years, maybe 20 years, maybe. I was pretty much I was a kid. The last time I went to Epcot, and I remember Epcot, it was always my favorite theme park. That's how I remembered it, because I love the idea of the future. You know, to live in a future where we're exploring space and men are going to Mars and if you go to Magic Kingdom, and you go on the carousel of progress, it's pretty sad because we caught up. Right? His idea that future, the idea of the future that they were projecting is actually the future of 10 years ago. Like we got there. And Epcot is basically in shambles. It's under construction everywhere. All of the things that were about the future of humanity have left. They're gone. They're all being torn down, and they're all being repurposed to be Pixar rides. And I thought that was really, really sad.

Brian: [00:48:59] I mean, I think that this is a perfect anecdote, actually. We've talked about a lot about technology on the show.

Phillip: [00:49:09] Yeah

Brian: [00:49:10] And we've talked a lot about what the future is going to look like. And I think we can safely say that technology will play a part in the future, but it's just happening in very different ways than everyone thought that it would. And yes, we've caught up on that Carousel of Dreams or whatever it's called. But a lot of stuff that was at Epcot, like the idea of going to Mars, and the idea of having flying cars, and the idea of hoverboards and all the movie stuff, it's not been as glamorous as we all thought.

Phillip: [00:49:49] But is it ever really?

Brian: [00:49:51] That's my point.

Phillip: [00:49:51] It will be in hindsight, right? We tend to romanticize the past.

Brian: [00:49:55] Yeah. Good point.

Phillip: [00:50:00] But I. Yeah. It's not as glamorous, but in some ways I think I'd ask you this question at dinner a couple weeks ago. Do you think that the decades, the two decades between 1980 and 2000 were the biggest cultural shift in in the last 40 years, or do you think that the two decades that we just finished were the biggest cultural shift of the last 40 years? From 2000 to 2020.

Brian: [00:50:30] Yeah, I think we you know, we both said that there's some points on both sides. I think you initially didn't ask it as a culture shift. If its culture shift, I would say the last two decades.

Phillip: [00:50:40] Yeah.

Brian: [00:50:40] Definitely.

Phillip: [00:50:41] I think it's the biggest change maybe in all of human history to say that not only are we globally connected, which is what the Internet brought us, but it's literally on our hip at all moments. We have smartphones in our pockets.

Brian: [00:50:56] Yes.

Phillip: [00:50:57] We have. Everything is different. Right? Everything is different. And my point that I was making about Epcot is I think it's really sad that we caught up to an idealized version of the future. We don't live in an idealized future.

Brian: [00:51:14] Right.

Phillip: [00:51:14] But it was a future that we were dreaming about of a common welfare, a common good that everybody was participating in for the best of humanity. And to represent the best of us. And that was our version of the future. We do not hold or dream about a future where we innovate for the common good of all man. We live in a present that is for the common good of one person, and that's yourself. And I think that's pretty sad.

Brian: [00:51:40] It is.

Phillip: [00:51:41] OAnd everything else aside, it's being torn down to celebrate new mythology, which is fun and exciting. And I love Pixar stories. You know, I love me some Captain American Avengers and you know, I love that stuff. But we have a lot of that in our culture. We're tearing down, you know, the last part of what made that park so special, which was a vision of the future. And we won't have it anymore. And I think that that's pretty sad. Well, this took all your turn. I'm sorry about that.

Brian: [00:52:15] Hey, you predicted it at the beginning of the episode. When we're together it ends up dark at some point and boom, at the end, you just...

Phillip: [00:52:24] Brought it home. You can always trust me...

Brian: [00:52:25] You were just fulfilling your own prediction. I love that. It's awesome. {laughter}  

Phillip: [00:52:28] You can always trust me to bring it to the dark side a bit. OK. Well, that's it. It's been a great episode. Thank you so much for listening or watching. And you can get everything Future Commerce over FutureCommerce.fm. Lend your voice to the conversation. Got a new website coming pretty soon in the next few weeks.

Brian: [00:52:44] Oh. You just announced it. Just like that.

Phillip: [00:52:45] Yeah. Sorry.

Brian: [00:52:47] Hey, guess what? New website... Big announcement... Actually, so you actually can't find everything about Future Commerce right now at FutureCommerce.fm. You could find most things by Future Commerce at FutureCommerce.fm right now, but we're gonna be launching a new website which will include our other forms of content all in one handy place to get them, which is super exciting. Cannot wait to see this take flight in this new year.

Phillip: [00:53:14] I want to show it to some people. If you want to see it, drop us a line at hello@Future Commerce.fm and subscribe to our FC Insiders newsletter, which has a lot of these pieces of content like we were talking about. Like some of the pieces about Carly and some others and long form essays about the future of your retail business and how you can take some of the insights and the thoughts that we're putting into long form. And you can use those to shape your idea of what your business is all about. And you can actually take it and really apply it into your business in a way that is meaningful for your customers, because that's what your customers care about. And I think that's what we all care about, is helping you grow. And that's it. We love that you spent a little bit of time with us. Thank you so much for listening. And we'll see you on the other side of 2020.

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