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Episode 25
February 23, 2017

NRF Series: Interview with Andrew Busby

Brian continues our NRF interviews by sitting down with Retail Analyst and IBM Influencer Andrew Busby

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Brian: [00:00:23] Welcome to Future Commerce, the podcast about cutting edge technology for commerce and implications thereof. I'm Brian Lange, your host. Today I am without my co-host, Phillip Jackson. I am actually here in New York at NRF Live. And I have Andrew Busby, who is the CEO of Retail Reflections with me. Andrew's got a lot on his resume. He's here to the show today as an IBM futurist, an influencer. Super excited to be interviewing him today and excited me to hear his thoughts on retail and where it's going. So, Andrew, introduce yourself. Give us a little bit of your history, who you are. How do you get to where you are? And we'll get into what your thoughts are on the future.

Andrew: [00:01:13] Okay. Thanks, Brian. It's great to be here. I mean, my background is in IT. The passion for retail was really ignited when I joined UK retailer Kingfisher, who I think maybe the listeners will know about and I was running IT operations in part of that operation and that really, as I say, fired the passion for retail. And it is kind of one of those what we call a Marmite thing. You either love retail or it's really not for you. I happen to love it. I love going into stores, looking at what people are doing, how they interact, all that sort of thing. And for me, retail is relevant because we're all consumers, we're all shoppers, so we've all got a point of view. And that's what makes retail such a dynamic, exciting place. So I spent time there. I then spent a number of years working in various IT vendors. I was with Computer Associates. I was with Kronos. But always dealing with retailers who happen to be in the UK. And then very recently, last year in 2016, I left what I call the corporate life and set up Retail Reflections. And it's really a retail analyst operation. I write and I commentate on retail. And that's certainly what I love doing because it doesn't feel like a job, which is really where you want to get to.

Brian: [00:02:47] That's good.

Andrew: [00:02:50] And being a NRF like this has been a great three days. Have a real buzz around the place on the floor and much of that is because it's so exciting.

Brian: [00:03:01] Yeah. These are exciting times. No doubt. The future of retail is bright and kind of scary probably for a lot of retailers. We'll probably get into a little bit. Yeah. So just to kick things off is there anything really interesting that you saw on the floor at NRF that really piqued your interest, maybe something you hadn't seen before? There is a lot of technology that's been released in the past few weeks. At CES as well. But maybe just give me a couple that you thought were really cool.

Andrew: [00:03:33] Well, you absolutely. And you're right. There is a huge amount of technology. And I think for retailers, the key, the secret to it, is just trying to understand what they need to be looking at and investing in. But certainly what I imagine was going to be the case and I was pleased that it came true was anything around artificial intelligence and in particular, machine learning and cognitive. And the reason why I was so excited about that and so forth and in that Watson is clearly... And perhaps we'll talk about that because Watson is clearly a leader in that. And the reason why for me it's so exciting is it is a game changer. And the reason for that is if you ask any retailer what they are looking for, and this came out in the conference, they will tell you it's better personalization, better customer engagement, better experience, whether that be online or in-store. And to date, retailers have used because the technology's only been there in fairly what I call traditional big data analytics. But of course, that doesn't tap into the huge amounts of data which we all generate.

Brian: [00:04:52] Right.

Andrew: [00:04:53] I don't know about you, but you I'm sure it generate an awful lot of digital data every few days. I know I have.

Brian: [00:04:58] Oh, yeah.

Andrew: [00:04:59] Yeah. I've been tweeting like mad. I've been blogging, I've been video, all this sort of thing. And there are 35,000 other people who are at this conference who will be doing exactly the same thing. Well, with cognitive, you can tap into that and that drives that personalization. And for me, that is the really exciting thing about where we are now in retail.

Brian: [00:05:19] Yeah, I definitely agree. It's interesting. I was talking to someone and they said that they were here last year, and they were really excited about Watson because of everything you just said. And they're like, oh, I bet you will see some more people come into this space and really kind of, you know, start to challenge Watson. And then they got here and they're like, wait a minute. IBM is really still the only leader in this game. Like, there aren't even many upstarts coming after them. This as far as the way that they're applying AI mean, and Watson is so much broader than say, just Alexa or Siri. It's not just customer facing. It is applying AI to just about every aspect of your business. And there's just not many businesses out there that are doing that in any meaningful way right now. Yeah.

Andrew: [00:06:14] I agree.

Brian: [00:06:14] So, yeah. And you've been in the Watson space for a little while now, maybe because you highlighted a few things that you've seen done with Watson that you think are really good use cases.

Andrew: [00:06:27] Yeah, absolutely. And the way that I look at Watson, it's for me it's kind of like analytics on steroids. People don't necessarily see the full potential, but the use cases and certainly people like 1-800-Flowers and Staples are really starting to bring that now into their operation. And the value that they're delivering to their customers, is that it's easy. It's convenient. It's frictionless. And it means that you have something which is intelligent, which is interacting with you. And it puts what I term standard. What we've known as personalization into a completely different perspective. Where it's very clunky. We all know when we've done a search on whether it be Amazon or whatever. And we'll get that played back to us.

Brian: [00:07:25] Retargeting. Yeah.

Andrew: [00:07:28] Absolutely. And that's... It's very clunky. And Watson and cognitive means that it's relevant. And it's in context. And it's engaging and is actually adding value to people's lives. And I think that's what... And by doing that, it does away with one of these things that I know that retailers kind of fear almost is the creepiness.

Brian: [00:07:53] Yeah.

Andrew: [00:07:54] So what I mean by creepiness is that it's not within context and it's kind of invasive. And that's really what people... They don't see that as adding value to them. So with Watson and cognitive, you get around all of that.

Brian: [00:08:16] Yeah, it's true. No, that's really a point. I was talking with Amber Armstrong and we talked about, you know, actually giving permission versus just having things happen. And, you know, you're going to need both. You're gonna need both. But building that trust also is another thing that I think... Building trust with your customers, so that when you do provide personalization, they understand that you're actually adding value. It's actually not something that's necessarily creepy, but because they trust you, and I think Amazon's probably best example of this, because they trust you they are actually like, "Hey, thanks. This is something that's going to help me save time and actually provided me with a relevant product or experience that I wasn't necessarily thinking about before. And it's going to add a value to my life and what I'm trying to accomplish."

Andrew: [00:09:16] Yeah, that's absolutely right. I mean, trust is a huge thing. I think within retail retailers talk a lot about loyalty. And for me, loyalty doesn't really exist. The best that you can get is what I call stickiness.

Brian: [00:09:32] Yeah.

Andrew: [00:09:34] You can get people to come back and return. We're loyal to our family, to our dog, to whatever happens to be. We're not loyal to a retail brand. We don't feel any sense of guilt when we buy our shirts or our groceries from another brand.

Brian: [00:09:52] Yup.

Andrew: [00:09:52] So the best the retailers can do is to keep us coming back. Well, you're absolutely right. Trust is a huge thing.

Brian: [00:09:57] That's good. So let's talk about some other technology that's coming out here. It's making quite a move. Augmented reality. Virtual reality. Voice. You've spent a lot of time in retail. I'd like to hear how you think some of these technologies are going to be applied in the relatively near future. And then I think you probably have some distinct thoughts also on what's not quite there yet. Maybe barriers to entry, things like that. Maybe we'll start with augmented reality.

Andrew: [00:10:29] Well, augmented reality. And I'll put into the same category virtual reality, although we know that there are two different things.

Brian: [00:10:35] Yeah.

Andrew: [00:10:36] But it's very exciting. But, yeah, you're right. My view on that is it feels a little bit as if it's technology searching for a use case. I can see that with augmented reality and retailers. There was one department store, Debenhams, about five years ago experimented with augmented reality and it meant that you can just set up a pop up shop virtually anywhere you like.

Brian: [00:11:08] Nice.

Andrew: [00:11:09] Now that for me has got an awful lot. So it can be in airports. And if it's concert sites or anything like that. So you can do... And of course, that was five years ago. We haven't heard really of drones and so forth then.

Brian: [00:11:25] Right.

Andrew: [00:11:26] Watson was only in embryonic stage and so forth. So you put all those together and you've actually got something there that is going to change people's lives. And it's going to be useful for people. I think with the other thing that I saw a lot of on the floor is virtual reality, where I think my only reticence there is are we all can be prepared to put on the headsets?

Brian: [00:11:53] Right.

Andrew: [00:11:54] Now, we have to believe and think that in the next few years, or maybe sooner that, the headset won't be required or it'll become much, much easier to use. And so on and so forth. But I can see some certainly within fashion, particular for travel where it's some lovely island, or it appears to be in the brochure. You can look at a video. But you can't really imagine yourself being there. You can use virtual reality, and you can actually be there before you make the decision that that's where you want to go for your holiday destination.

Brian: [00:12:31] Yeah. I've heard of even like potentially like using it to view certain rooms, specific rooms within a hotel. You really get a sense of what you're actually... What kind of experience you're actually getting.

Andrew: [00:12:44] Yeah.

Brian: [00:12:44] And that's huge. I mean, travel, I think, is one of the best possible use cases for it. Well, like you said, fashion is going to have a space for it. Definitely. Especially with sort of, and this is a topic that was discussed in some some minimal detail on the floor but is definitely coming into its own, which is body data. So as body data gets better... Right now there's technology out there and if you go look at like Body Labs where you can take a 2D picture and create a 3D model of someone's body based off just that picture, which is mind blowing. It's actually done with some pretty advanced algorithms and actually, I think AI as well.

Andrew: [00:13:34] Yeah.

Brian: [00:13:34] So I think as soon as that data makes its way into virtual reality and we're able to then take clothing and put it on ourselves or get relevant suggestions for purchases based off of our body type and so on, that's going to be a very large step towards virtual reality for shopping in clothing.

Andrew: [00:14:06] Yeah. And I think you make a good point there. So it's not going to be one single technology, it's going to be multiple, and it's the way that they are integrated and pulled together. I think I'd add to fashion and travel, any retailer who is in what I call a specialist. Somewhere where you go and you need advice. So I'm thinking of pets. I'm thinking of cycling.

Brian: [00:14:33] Yes.

Andrew: [00:14:34] Cars. Automotive is an obvious example of that. Could be in electronics. But somewhere where you need, you're not just going for like groceries, you're picking up your shopping or in some areas of fashion, you know. Okay. I know what I want, and I'll get that. Where you need that advice, that's where I think you'll start to see some of technologies trialed.

Brian: [00:14:56] Yeah, that's really good. It's really good. Do you see anything like any use cases for voice? Voice related technology on the floor that you thought were good uses?

Andrew: [00:15:08] I think voice will... I think the thing with with voice is that our interface with technology is going to rapidly change. So for how long it's been, it's been with our fingers on a cable.

Brian: [00:15:26] Yeah.

Andrew: [00:15:27] It will be with voice, and we will come to expect it. We won't use apps. We'll use bots, so Alexa, and so on and so forth. But that will become commonplace. And again, one of the things that really challenges retail, I think, is the level of expectation of us as consumers. We talk a lot about millennials, and we talked in NRF about I call it Gen Zed. Gen Z. We know what we're talking about. Again, levels of expectation are much higher. So for them, they will use voice and expect to be able to use voice because it's easier. It's quicker. It's seamless. It's frictionless. Call it what you like. That's what they'll use.

Brian: [00:16:12] Yeah. I say this all time but like I'm not quite sure if my kids fall into Gen Z. I don't think they do. They're probably whatever is after that.

Andrew: [00:16:20] That's even scarier.

Brian: [00:16:21] That's even scarier. Right. Because some of their first words were, "Alexa." They wanted to interact with technology. Their first interactions with technology were through voice. And that's mind blowing.

Andrew: [00:16:38] Yeah.

Brian: [00:16:38] And so, yeah, I really look forward to see how retailers apply it. I think the use cases are very limited right now, or at least the known use cases are. There are not many people applying it actively. But there are a few I talked about, a few with Amber, like banks and so on.

Andrew: [00:17:00] It'll come. It'll come through. But as I say, it's one of those things where retailers are traditionally risk averse. Okay. We've heard at the conference some of the newer ones who I wouldn't necessarily put into that category, but your traditional well-established retailer who's been around for a hundred years or whatever, their business model's virtually unchanged. You look at images of stores of 100 years ago and you look today and actually there's not a lot of difference.

Brian: [00:17:36] Not a lot of difference. Yup.

Andrew: [00:17:38] So they're risk averse. But the pace of change is forcing them, forcing their business models to change. And they will adopt it. But I think the interesting thing is how they will adopt it, how they will... I don't believe that it will come into the mainstream of the organization. They will have separate satellite operations. You've heard some of this at the conference from Staples, where the fail fast is not necessarily a bad thing whatsoever provided they don't bring down the whole organization, and I don't bring down your supply chain or your eCommerce site or whatever.

Brian: [00:18:21] Yeah.

Andrew: [00:18:22] We'll see more of that. And I think that's where retailers need the help the most.

Brian: [00:18:27] Yeah, I think it's a good point. It's almost like they have to start startups within their larger organizations because the truth is migrating all those legacy systems over to some of this new technology is going to be almost impossible. I mean, I'm not saying it's impossible, but in all reality, it's going to require major overhauls. And if the technology doesn't work, it could bring down the whole business.

Andrew: [00:18:54] Yeah, absolutely. It is. And that legacy and how you build in new technology when you've got all this legacy. There isn't a retailer out there that I know of who would, if they were starting tomorrow, would start where they are today.

Brian: [00:19:10] Yeah.

Andrew: [00:19:10] So that is a huge challenge for them to bring in and to introduce new things when they've got to keep the business running. They've got... If you're a retailer, and I'm thinking of UK examples. If you're on every high street in the UK, you've got about 600 stores, and you've got an online presence. You've got to keep that infrastructure going. But at the same time, you've got all your consumers who are demanding things that you're not sure how you're going to deliver them or whether business model allows that. And that's the issue that they have. I think shows like NRF are absolutely vital and great because it shines a light on what is possible, what is just around the corner. The big difference today from maybe five years ago is that that pace of change, what's around the corner, is virtually going to be upon them by the time we get home.

Brian: [00:20:11] Yeah, that's a good point. I think you're sort of tag line for your business is... What is it? It's "where retail and technology converge." Converge, I think is an interesting word. I heard it thrown out a few times here at the conference. And in all reality, I think this might be the year... Quick aside, I heard that this is the year of customer experience at the show, which I felt like was the safest possible labeling of a year I have ever heard. People have been focused on customer experience for a long time. And so that kind of bothered me a little bit. But I actually I would say this coming year is going to be more about the technologies coming together and then I'm going to call this convergence, if you will, and then companies actually being able to recognize, merchants being able to recognize a real ROI on those technologies. That's where I think convergence happens. When those two pieces of technology come together or a business model on a piece of technology come together and build something that's actually viable, real, and that is measurable. That's when I see a lot of these retailers actually finally making the jump to technologies that have been sitting around and sort of been available to them for years, you know, four or five years now.

Andrew: [00:21:44] Yeah, you're absolutely right. And I think your point about retailers thinking, I think they need to think like startups. I can still go back to my days when I first started, as I was saying earlier, in retail of Kingfisher. And I had guys who were on my team, and they wanted to play with the latest technology. And I would say to them then, if you want to do that, go and join a technology company. Now, if it was in the same position now, I'd say, yes, great. I want you to be playing with the latest technology. Because we as a retailer have to think like a technology startup, in many ways. Now, that is a huge challenge for what I call traditional retailers.

Brian: [00:22:25] Yes. Right.

Andrew: [00:22:25] So I'm not... We heard it during the week from Indochino and Shoes of Prey. Their malls are completely different. And they're disruptive.

Brian: [00:22:34] Right.

Andrew: [00:22:34] It's exciting. I think there are a lot of traditional retailers who would love to be in their shoes. But for a number of reasons, technology being one of them, they simply find it that much more difficult and for them to change, you're looking at turning a big oil tanker around. And that takes time. And the challenge for them is they haven't got that time anymore.

Brian: [00:23:00] Yeah they really haven't. What you have been saying here has made me think of Kroger and Walmart and what they've been trying to do with pick up grocery. And I just heard, I think was on Monday night or maybe Sunday night, Kroger and actually I've talked to people who have experienced the pick up grocery that Kroger has... I think they've experienced some major challenges trying to roll it out because of the way that their businesses are set up to think about inventory and to handle inventory. And so a lot of times customers will place their order online, and they're going to go pick it up, and their order won't be ready within the window of time that Kroger provides them because Kroger was not set up to go run around through their store. It's really inefficient to go run around through a store and try and find things. And plus, you've got cold and frozen versus, you know, canned goods or dry goods and so on, and fruit and vegetables have their own handling. And so trying to provide a good experience for something that innovative is something that I just think these traditional retailers are not set up to accomplish with their existing structures. It might have been better for them to open up for Kroger to go up and instead of try to run this through their traditional stores, go set up a completely different infrastructure that's dedicated to pick up instead of leveraging things that they already have. Now that's a hard balance because you don't want to miss out on applying what you have and easy wins with things that you already have. But, man, I think, it's going to take a few iterations before we get there.

Andrew: [00:24:57] Absolutely. And I think that one of the challenges that you touched upon is the supply chain. And supply chain used to be trucks and sheds. Distribution centers.

Brian: [00:25:11] Yeah.

Andrew: [00:25:11] Now, supply chain is front of house because consumers have visibility into the whole of the supply chain for the reasons that you mentioned there. In other words, the expectation of delivery, they have that visibility of the whole supply chain. That, again, is another huge challenge for retailers. There are technologies around... Because what you're talking about there, again, was about delivery and talking about people collecting. Well, the only reason why they collect is because they don't want to sit at home all day waiting for a delivery. In the U.K. there are organizations now who are providing secure lockers that you have outside your home.

Brian: [00:25:59] Right.

Andrew: [00:25:59] You don't need to be in all day. It does away with one hour of delivery slots completely. And that will free up and take the pressure off the supply chain. So that will change. Because there are some things that we want or we need, and we need them within the hour.

Brian: [00:26:17] Yeah. Absolutely.

Andrew: [00:26:18] Wherever we happen to be.

Brian: [00:26:20] Yep.

Andrew: [00:26:20] There are other things that let's say today's Tuesday, and we go online and we order something. We don't need until the weekend. So we don't mind a four or five day delivery. So we're going to see that change. But at the moment, retailers are building their supply chain and their business model all around click and collect.

Brian: [00:26:43] Yeah. Just one more little tangent here, since we are talking about delivery and timeframes and picking up. It's funny, actually, I have a subscription to the Smith Brothers, which is a local dairy company in the Seattle area. And frankly, they have done grocery delivery the best that I have ever seen. So it's my milk man that's innovating here. And so they have a little cool box. They deliver at a consistent time every week. And you can purchase all kinds of stuff now, not just milk, but eggs and coffee and all kinds of things. And they'll deliver it to you in a weekly fashion. And it's actually really effective.

Andrew: [00:27:32] That sounds great. And that's the direction that we'll be heading because it's effective because it's easy. It's convenient.

Brian: [00:27:39] Yeah.

Andrew: [00:27:39] And that... If it's not, if it doesn't fit into those three categories, then it's not going to be adopted.

Brian: [00:27:44] Actually I one hundred percent agree with that. Actually one of the things that I've been thinking about lately, and we've talked about a little bit on the show, but I want to get into more detail, maybe not completely today, but in a future show probably... Is that concept that I have called essentially a personal efficiency based commerce. And I know that that's kind of obvious. But I think it's going to get a lot more focused on that efficiency side even beyond what we have now. We think that we're being efficient. And we saw a little bit of this at the show. It's going to be integrated not just into little points in our lives. It's going to be integrated into our entire day where we're driving in our car, and we're going to be talking with Watson. That's one of the integrations that I saw here at NRF. Watson in our car. And Watson is going to say to us, "Hey, it's most efficient. Here're the things that are missing from your personal inventory. And here's the best way you can go get those things and basically replenish them or pick up a special item along the way. And here's the route you should take to be most effective."

Andrew: [00:28:54] Absolutely.

Brian: [00:28:54] And then you will say, "Okay, yeah. And I'll purchase those things now and then they'll be waiting for you as you're driving along." Just go grab them out of the store and hop back in your car and go along your merry way.

Andrew: [00:29:05] Yeah and what that does is save you time. That's the most precious commodity.

Brian: [00:29:11] It is the most precious commodity.

Andrew: [00:29:12] And people will, I think, be prepared to pay a premium for that.

Brian: [00:29:18] Yes.

Andrew: [00:29:20] We know that price, in every survey that I've ever seen, it still is the most important. However, at the same time, people will pay a premium. They're very happy to to do that.

Brian: [00:29:34] Great. Yeah. I love talking with you, Andrew, so much. And I feel like we should probably have another interview here at some point because we didn't even get into a lot of stuff that we wanted to cover.

Andrew: [00:29:44] Yeah that'd be great.

Brian: [00:29:44] But I know that we're out of time. So thank you so much for coming on the show. It has been a real pleasure talking with you and experiencing your insight you have into the space. So thank you. Thank you so much.

Andrew: [00:29:55] That's great. Thanks very much, Brian.

Brian: [00:29:56] Yeah. All right. Have a good one.

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