Episode 83
October 1, 2018

Right on Target

Target released its earnings just before we published Episode 80 - and our whole perspective shifted. Plus: Salesforce's Benioff is on a spending spree; Apple's major differentiator - creating products you literally can't live without. Literally. Listen now!

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this episode sponsored by

Main Takeaways:

  • Salesforce CEO Benioff goes on a multi-million dollar shopping spree.
  • Amazon is setting up a new headquarters; Will it be in DC?
  • Why doesn't anyone want to work for Target?
  • Apple is creating lifestyle products that you can't (or won't) live without.

Highlights from Shop.org 2018:

  • The innovation lab outpaced last year's conference by far.
  • Body related technology was a major focus. Amazon's acquisition of Body Labs earlier this year seems to have paved the way for a lot of new technology.
  • There was a lot of interesting shelf-technology. Specifically, some cashierless stores using tech to update in-store displays on the fly.
  • Tusk Ventures put together all the businesses for the conference. Brian congratulates them on a job well done.

2018 is a True "Content is King" Market:

Head to Toe Tech Enabled Clothing: The Future of Fashion and Health?

Partnerships Between Tech Companies and Fashion:

  • "Textile Tech" is now a thing, with companies working to make their customers lives easier.
  • With the Nike Epic React sneaker release, the company changed the construction of the sole to be optimal for all sizes.
  • Tech is being woven into everyday life, and it's changing the way consumers view both fashion and technology.
  • Brian says that this head to toe tech phenomenon is allowing for users to build their own mini Iron Man suits.

Apple: Is the Company Prepared for the Future?

  • Apple, the world's first trillion dollar company, is uniquely skilled at creating products absolutely essential to everyday life.
  • Apple needs to partner with the right brands.
  • Phillip can't live without Alexa and really wishes Siri would step it up as a virtual assistant.
  • Brian contemplates switching from Android to IPhone.
  • Apple did just announce an A12 bionic chip that could decrease energy usage by 50%. This is a total technological breakthrough.
  • While Apple may be able to create data centers in the palm of consumers hands within 3-5 years, there is still a question of what their competitors, namely Walmart, Amazon, and Google will come up within that time period. It really could be anyone's game.

Amazon's Second HQ: Is Politicking Ahead?

  • Business Insider speculates that Amazon will set up its second headquarters in Washington D.C.
  • Clinical Professor of Marketing at NYU, Scott Galloway has a lot to say about Amazon on "Recode Decode."
  • Phillip and Brian agree that all business get political eventually to protect their interests.
  • Up until now, the President and Amazon haven't quite been on the same page about, well pretty much anything. In fact, President Trump has taken some real swipes at the retail giant. Could this change in 2020? If the President was granted a second term, perhaps.
  • Amazon's probably been stealthily lobbying for years on regulations, will it's rumored location change bring their advocacy into the light?

Why Can't Retail Companies Hire For The Holidays?

  • Target had its best quarter ever, and yet like other retail companies is having trouble staffing up.
  • A lot of retailers are having severe problems staffing up for the holiday season, possibly due to record-low unemployment.
  • Retailers need 757,000 holiday employees this year, which is up 100,000 from the previous year, and they just cannot round out the numbers.
  • Possibly due to this gap in the market, retailers have had to lower standards, which Brian's wife learned when she tried to shop at Macy's and found the staff there lacking in professional courtesy(to put it mildly).
  • Since retailers are being forced to compete for workers, they are now beginning to offer unheard of incentives. Macy's is going to be offering "path to growth incentives", Kohl's will have discount days for associates, and JCPenney, whom none of us knew still existed, will be providing eligible part-time workers 401Ks, paid training and paid time off. This is a considerable departure from the way retail has operated for a long time.
  • Also, the retail apocalypse? Still not a thing.
  • This shortage will actually lead to more jobs in the retail tech economy, as retail continues to both innovate and automate.

Retail Tech is moving fast, and Future Commerce is moving faster.

Download MP3 (45.8 MB)

Brian: [00:01:39] Welcome to Future Commerce, the podcast about cutting edge in next commerce. I'm Brian.

Phillip: [00:01:46] And I'm Phillip.

Brian: [00:01:46] We are here with episode...

Phillip: [00:01:46] Eighty three

Brian: [00:01:48] ...we'll be...83?

Phillip: [00:01:50] Sounds right. You just got back from Shop.org.

Brian: [00:01:56] I did. I did. It was great. Hopefully our listeners will have heard a little bit from that show already by the time this airs. Great show. In terms of the innovation lab, I thought it was better than last year.

Phillip: [00:02:10] Which was better than the year before. Give me give me the highlights. They've probably already heard a little bit of it on the show, but we haven't talked about it.

Brian: [00:02:18] Yeah. The highlight is that there was a lot of body related technology there.

Phillip: [00:02:29] And we all know that Brian's always on the lookout for a lot of body related technology.

Brian: [00:02:37] {laughter} I thought that was pretty interesting. A lot of stuff we were talking about coming to fruition. It's funny, I was talking to one company and they were like, "Yeah, the Body Labs acquisition by Amazon actually really opened up the door for the rest of us."

Phillip: [00:02:55] Well, we had them first. They were on our show first.

Brian: [00:02:57] Because now they're...

Phillip: [00:03:00] Period.

Brian: [00:03:01] That's right.

Phillip: [00:03:03] Cool stuff. And what else?

Brian: [00:03:05] There was some other cool stuff, a lot of like interesting in-store, shelf technology. You know, cashierless store stuff. Technology for updating displays on the fly... And really interesting, actually. And you're going to hear some samples of stuff, or you're already did, I hope. Stuff off the floor. So, yeah, I mean, from that perspective, I really thought this show was worthwhile. I thought it was interesting and really, I think, a better selection, and it was all curated by a VC company. Now I'm blanking on the name of who that was. I really should remember.

Phillip: [00:03:59] But that's who should be doing these sort of things.

Brian: [00:04:02] Yeah, exactly. I think it's really cool.

Phillip: [00:04:09] Otherwise what you wind up with is a whole bunch of homogenous "We can put AI on your web site," companies whose names you'll never remember, which is like, you know, 1-900-Chargebacks or whatever. People with generic names with generic logos, who do generic things that say they have a machine learning baked in.

Brian: [00:04:27] Yeah it was Tusk Ventures.

Phillip: [00:04:30] There you go.

Brian: [00:04:33] They put together the group of businesses that were in the Innovation Lab. And I think they're doing that for the NRF Big Show, as well. So I expect to see really cool stuff come out of the Big Show this year.

Phillip: [00:04:48] And Big Show actually had a phenomenal lab last... I don't know what was it in January? It was so good.

Brian: [00:04:56] This past January. Yeah.

Phillip: [00:04:56] Great Innovation Lab.

Brian: [00:04:58] So good. Yeah. And I feel like this was building on that and so I expect a lot out of this next show. If Tusk Ventures is listening. Great job, guys. And I have high expectations.

Phillip: [00:05:09] Awesome. All right. Well, let's move off of old news. Let's talk about new news. Can I hit a couple of things right here at the top?

Brian: [00:05:17] Yeah, let's talk.

Phillip: [00:05:17] So something that caught my eye, caught my attention. Salesforce Chairman and CEO, Marc Benioff, is on a buying spree. I got an e-mail recently. You've probably heard on the show that I've become a bit of a sneaker head. And it's interesting, actually, I gave a talk at Connected Commerce last week in New York City. I wasn't able to stick around for Code Commerce, which we'll talk a little bit about, which is a bummer. But I did speak at Connected Commerce, and a lot of my talk was about secondary markets and talking about sort of powering, you know, building on peer to peer purchasing and the power of peer to peer purchasing. And, you know, artificial scarcity, limited edition products, collaboration, how brands are partnering for success. So very cool talk. And when that's available, I'd love to kick it out. Love for you guys to be able to see it. But one of the marketplaces for secondary sale, especially of shoes and other luxury goods like handbags and watches, is a company called StockX, which is a startup out of Detroit. And I got an email recently, earlier this week, that they received 44 million in an investment from Battery Ventures, I believe, and from GV, which is formerly Google Ventures. And they've already had investment. They've  been around for a little while. They had investment formerly from people like Eminem and some other folks. But they're basically a stock exchange, and they're sort of the cutting edge of people buying and reselling things like fashion shoes. What's interesting is that they have a little bit of a different take in that they are truly a stock exchange in that they manage indexes like the Adidas, Jordan, Nike index. And they also sell options to purchase ahead of the product dropping, which is a very stock exchange like sort of thing. But Benioff is actually Salesforce's Benioff is putting in money into this, which is really cool. And it comes around the same time as the news of Benioff purchasing Time magazine for 190 million, which...

Brian: [00:07:37] He is on a tear.

Phillip: [00:07:41] You know, what's funny is that Salesforce had a record quarter recently after the acquisition of MuleSoft, which was six, eight months ago now here at the time of this recording. So a lot of really interesting investment from Benioff, from Salesforce. Of course, this is a personal investment. But when he's investing, I'm taking notice now. Very interesting. So both in content and... StockX is in a new area of retail consumer enthusiasm, especially around shoes. Shoes are all the rage right now. You know, especially when you have artists like Kanye West who are doing broad releases of things like Yeezys. Adidas is now dropping for the first time ever, a broad release of Yeezys.

Brian: [00:08:34] Which is super cool.

Phillip: [00:08:34] Like most everybody will be able to get themselves a Yeezy shoe, which is a first because they were doing limited edition, you know, lottery runs before. And what's really interesting is that as more brands are taking notice of the hype around this, I think it only serves to feed media back into creating more hype in that channel. So you have brands like Highsnobiety, you have HYPEBEAST, which are content properties that are specifically serving that market. And you see Benioff now investing in things like Time magazine and StockX. StockX has... Benioff understands that content is important. And this Time magazine investment shows that. I see things like StockX now has video. They have a YouTube channel. They have really compelling written content that talks about, you know, the new hype shoe that's coming out, which I just think is really interesting in that, you know, it's also sort of a content play as well in that investments. So really, really cool. And then some other things that are happening sort of in the shoe world while we're on it. But, you know, we never talked about the Nike Colin Kaepernick Just Do It ad, which has been very successful for them, you know, as far as investor confidence and their stock has just hit an all time high. But I took notice of other brands that are sort of using this, as well. Like, I don't know if you saw recently, but REI had that marketing campaign on its front page a few weeks ago that basically said Donald Trump just stole your lands. And they had this whole like, you know, anti... It's actually a few months ago, but they had the home page takeover of how federal lands are... It actually didn't say Donald Trump said the president stole your land, and it was earlier this year. But basically, you know, Patagonia, and REI, and other brands are selling to their market directly, and they're not staying away from taboo subjects, which I just think is crazy.

Brian: [00:10:39] Right. Well, it's interesting. I saw something about how if you boycott Nike, you're not firing them. They actually just fired you.

Phillip: [00:10:49] Yeah, that's true. You weren't their consumer anyway. You're not their biggest... You were you weren't actually their fan. You weren't really who they sell to.

Brian: [00:10:58] You may have been. I think that you may have been. I think that they fired you, though. That's sort of the thing.

Phillip: [00:11:12] {laughter} I like this.

Brian: [00:11:12] They said that's not the customer that we want. They're clearly not catering to that customer.

Phillip: [00:11:23] I like that take on it. So Nike told the people that are burning your shoes. They said "You're fired.".

Brian: [00:11:26] Exactly. Except for probably not since that's probably like the contingent that they would be firing.

Phillip: [00:11:38] Really? Yeah. That's what I think is really interesting, too, is that even people like Jim Cramer are out there saying, "Oh, you know who's killing it right now? Vann's." VF Global... Vann's is a brand to watch, because outside of Nike and outside of Adidas, who is next in line who is really crushing it with retail stores and in an omni channel way?

Brian: [00:12:08] Under Armour.

Phillip: [00:12:09] I mean. Well, yeah. That's a whole other thing. We really I could go on forever. I will not. But it's interesting how many people are taking notice of these types of brands who are doing really innovative things and moving faster than I think anybody else. This isn't just fashion, and it's not like fast fashion. It's ultrafast. Like the stuff changes over three or four times a week. And if you're not clued in... I'm serious.

Brian: [00:12:36] Yeah it's crazy.

Phillip: [00:12:36] It's absolutely incredible how quick trends change in the shoe space. And it's setting precedent for other fashion brands and even for tech brands to say, "You know what? I'm thinking that Adidas isn't necessarily a fashion company or a footwear company or an athletic apparel company. They're a technology company.".

Brian: [00:12:59] Right.

Phillip: [00:13:00] They've built, just in the same way that Amazon is not a retailer, they are a platform company. That's how we have to start looking at brands like Nike and Adidas. Period.

Brian: [00:13:10] Absolutely. You know, think about it like back in 2016. Apple and Nike.

Phillip: [00:13:15] Yeah.

Brian: [00:13:16] Partnered together to launch the Nike Plus watch. Right?

Phillip: [00:13:23] I feel like it goes back even further than that.

Brian: [00:13:26] Yeah.

Phillip: [00:13:26] For sure. Yeah.

Brian: [00:13:28] No, I mean, how quickly are we going to start to see more technology companies, like specifically Apple or others, start to partner with shoe companies around shoes? I think Apple's always been a fashion company. Right?

Phillip: [00:13:47] Yeah. And they really have... They were right there at the cutting edge 15 years ago. I remember having an iPod with a run tracker like shoe pod that you could put into a specific type of Nike shoes back in the day with an iPod. Before the iPhone ever existed. Now you look how much Apple is invested into understanding the total body. And that's probably our next story.

Brian: [00:14:15] Bingo.

Phillip: [00:14:15] But you look at that, and it makes total sense to have that type of technology built in. It's not just wearables anymore. It's tech enabled clothing from head to toe.

Brian: [00:14:26] Yeah, exactly.

Phillip: [00:14:27] Right.

Brian: [00:14:27] And like that's going to be more points where we're gonna be able to capture body data and create products for it and create...

Phillip: [00:14:35] There it is.

Brian: [00:14:37] Yeah. I mean...

Phillip: [00:14:37] Take a drink, everybody.

Brian: [00:14:38] A great segue into Apple. The new Apple Watch.

Phillip: [00:14:44] It really is.

Brian: [00:14:45] Which includes an FDA approved EKG device, which is insane. Insane.

Phillip: [00:14:54] Unbelievable.

Brian: [00:14:55] This is kind of everything we predicted way back in Episode 8, right?

Phillip: [00:14:59] Well, yeah. I think it's a continuation, too. Also I'd like to point out the the difference between just the connected sort of quantified self that you might think of as body data. And then you could look at there are other brands that are doing like crazy things with body data that aren't at all what you would think. There's a brand out of Japan which I'll look up because I wasn't prepared to share this. There's a brand out of Japan who sends you a suit that has white dots all over it. That's sort of like a mo cap suit that you might see... A motion-capture suit that might see in the movies, where using your phone and an app on your phone, you can take selfies of yourself wearing this black and white suit. And using those dots, it reads the dimensions of your entire body and gives you... It gives you basically Stitch Fix type access to clothes that perfectly fit you, but also might push your limits in style.

Brian: [00:16:05] You don't even need that. You don't even need the suit, man.

Phillip: [00:16:08] But in that case, you can also take that image of yourself and put you into other scenarios.

Brian: [00:16:16] Right.

Phillip: [00:16:16] There are brands that are solving this. And the point that I'm making is okay, blah, blah, blah. We could use AR for that. I'm saying there are many people that are solving the same problem 20 ways.

Brian: [00:16:28] Yes.

Phillip: [00:16:28] And that tells me that there are tech platforms that are building. It's not just about, you know, AR is the be all end all solution. It is a solution to a problem that many people recognize that has many means to an end.

Brian: [00:16:42] That's why I think Body Labs was so revolutionary in their messaging was the body is a platform, right?

Phillip: [00:16:49] Sure.

Brian: [00:16:49] And so, yeah, I think going forward we're gonna continue to see innovation focused on the body from tech companies specifically and that partnerships with branded brands in the fashion, footwear, and accessory space is just going to continue to be at the center of tech innovation.

Phillip: [00:17:15] For sure.

Brian: [00:17:18] And so retail is going to get connected to all of this as well, because this is going to really help, not just help the tech companies, but it's going to really drive the way that we think about what we wear. And I think there's gonna be a bit of a sea change in our psyche around what clothes even mean. That's a statement. But...

Phillip: [00:17:43] Yeah, but I'm curious if it's even further than that to say that when we're talking about technology, look at how much technology is built in. I know we talked about the, going back to shoes again, but we talked about the Nike Epic React shoe, and how they changed the construction of the soul so that it was optimal across all shoe sizes instead of imaging just for the like size 10 and then scaling it up or down. I think that we are seeing technology woven into every... Woven. No pun intended. Into every part of what we wear, whether it's a belt, whether it's shoes, whether it's you know, I see more textile innovation happening, especially in like upper body wear, like shirts, that you reduce friction or wick away sweat. And these are all things that... Or you have, you know, licensed products built into them, like 3M reflective or, you know, Scotchgard. These are things that you're starting to see on everyday apparel, which is just... It's tech, but it's not body data tech, but it is tech.

Brian: [00:18:58] Right. It's textile tech and, you know, material tech. And it's all of that as well. Yeah, I think you're absolutely right. That's that's why I said, you know, I think we're gonna start to see a rethink of how we view clothes. It's not just something to cover our bodies. It's part of how we are able to be more efficient and function better and stronger and faster. You know, it's our own mini Iron Man suits, you know what I mean? That's obviously the extreme. But like, the idea is we can do more with our body and capture more data on ourselves and be more efficient as humans if we wear clothes that are designed to help us do things.

Phillip: [00:19:45] Yeah. And there's so much consumer... There's consumer brand awareness of certain technologies that that help sell products when they either license or partner with those brands. We mentioned Vans already, but Vans is selling a particular winter boot with Scotchgard already applied to it right now. And I'm thinking about like, you know, there's a Converse out that has Gortex built in, and they market it in that way to say it has this technology built in. I think we move and transcend five years from now, I'm speaking about like textile or chemical innovation, but I think it becomes, this has Apple iFit built in.

Brian: [00:20:29] Yes. Yup.

Phillip: [00:20:33] Or this is a technology enabled and partnered piece of... It's a garment or a piece of clothing... Oh like the Levi's jacket.

Brian: [00:20:40] iFit's a real thing, right?

Phillip: [00:20:44] I don't know. I don't know.

Brian: [00:20:46] It just feels so right, you know what I mean?

Phillip: [00:20:50] I feel like that's the thing. Right? iFit? It feels like iFit should be a thing. I don't know. It probably isn't. They've moved away from "i" more and more. But it's an interesting thing. Yeah, actually. So speaking of Apple and body data. Did you actually hit on that? Did you hit on the EKG?

Brian: [00:21:10] We did. We said EKG. We said the words EKG. We didn't say...

Phillip: [00:21:14] I feel like we need to go deeper on it, though. This is kind of... This is...

Brian: [00:21:17] Yeah. I mean, if you're unfamiliar with what an EKG is, it monitors your heart, and you can detect arrhythmias or other problems. And actually, I think if you fall and your heart has issues, you can set it up to call for help. So this isn't just a toy. This could save people's lives, potentially. And yeah. I mean, people are sort of criticizing it saying it's sort of like a pared down version, or that people can't even read the results of EKGs. So that what does it even matter? But I think, you know, it's a great step towards including technology as a part of our lives that is beyond just a toy. This is actually going to help help save lives and get out ahead of things that we couldn't get out ahead of before because you're going to have an EKG on your wrist all the time.

Phillip: [00:25:04] What's crazy about this is Apple is better than anybody at taking products to market that have some sort of curious application in your daily life. Or maybe even like a spurious application to your day. It's like a novel device. And a lot of people would say, like, why would you even want that? They'll crap on it endlessly, and within two to three years, turning it into an absolutely vital part of your everyday life. You look at people pooh-poohed on the ear pods, or the Air Pods. And there's more than one review out there that tells you it's the highest consumer satisfaction device that Apple makes.

Brian: [00:25:49] Yup.

Phillip: [00:25:49] And slowly, it took four iterations, but we look at the Apple Watch now as absolutely a standalone device. If you have Air Pods and Apple Watch, you can listen to music, you can stream things from Spotify and now you can have an EKG on your wrist.

Brian: [00:26:04] Yeah. I never thought I'd say this, but like, actually, I've been an Android guy for a long time. I'm seriously, seriously considering switching to Apple.

Phillip: [00:26:14] It's compelling.

Brian: [00:26:15] I'm going to be upgrading my phone in the not too distant future. And Apple is top of mind right now. Unless Samsung can do something really amazing with the Galaxy 10, which maybe they will. But like, this is the kind of feature and the kind of tech and the kind of iteration that makes me say I want to be part of the Apple ecosystem.

Phillip: [00:26:38] And I would almost say, too, that the Apple ecosystem is... What's sad is I don't see, while they are a trillion dollar company... And the first trillion dollar company, by the way. Are they best setup for the future?

Brian: [00:27:00] Yeah.

Phillip: [00:27:00] They're innovators, for sure. Are they best setup for where things are headed 10, 15 years from now?

Brian: [00:27:07] If they partner they will be. If they partner they will be.

Phillip: [00:27:10] Who do they partner with? Who do they partner with?

Brian: [00:27:12] Retailers. Brands, I should say. Not retailers, but brands. I really believe that you can start embedding deeper connections with the Apple ecosystem into other parts of our lives. That's what I would do.

Phillip: [00:27:25] Apple needs to find... I think the biggest let down in the Apple ecosystem is that they just do not have a voice assistant that is capable or connected to anything that actually matters. Even if you are all in on the homekit ecosystem, I don't think that Siri is... Siri is not a dependable, reliable part of your everyday life. I can't live without Alexa. I just can't. I figured that out.

Brian: [00:27:59] You could probably live without Alexa if you switch to Google, but not to Siri.

Phillip: [00:28:04] Ok. Yeah, but not to Siri. The point is, is that there's a five year head start that Amazon has in AI technology and that Google now has in cloud technology and the very wide distribution that both of those have with their devices all over the world that Apple ostensibly should have had. But they consistently seem not to want to invest in making Siri a better product. You know, what they'll do is they put out nine versions of the iPhone now. And they come out with a $1600 version of the iPhone, which, you know, has a bigger screen...

Brian: [00:28:44] Complaining about products that are meant for Apple... I understand the case there. I think you're saying something different, though. I think what you're saying is you're not complaining about their assortments so much as you're saying you would be a lot more interested in the Apple assortment if the brains behind it, ie: the operating system of all... If you if you look at the most consistent piece of software across all Apple devices, it's Siri. So you could basically say that Siri is kind of the new... Voice assist are the new operating system of our lives.

Phillip: [00:29:28] Let bring this back to where I think it could go.

Brian: [00:29:31] Sure.

Phillip: [00:29:32] OK. Because right now that is a probably a bad and uninformed take that I have of the way things are right now. Apple did just announce their new chip. And they are a chip manufacturer now, which is, you know, incredible. But they're A-12 bionic chip is a technological breakthrough. Like it is an absolute mind-blowing technological breakthrough. You know, 10 years ago, a 90 nanometer chip was a feat, an engineering feat. Apple just produced a 7 nanometer chip. And not only did they produce one of the smallest chips ever, they've improved power efficiency by 50%. So not only is it faster and more capable and have machine learning capabilities built into it and have more cores, but it's also going to consume 50% less power. OK, what's insane about this is that if they could get those types of chips into more handsets over the next five years, they will have no need to have to do all of their AI processing in the cloud like the Google and the Amazons of the world. They won't need to have an arms race of data centers. They will have those data centers in the palms of everybody's hands. And that is extremely compelling. And that means Siri can operate without a constant 5G or 4G Internet connection. But we're not there yet. And it's going to take a long time for it to happen.

Brian: [00:31:13] How long? I mean, how long does it take for Apple products to turn over and and propagate?

Phillip: [00:31:18] I don't know. IOS 12 came out yesterday and 10% of handsets supposedly haven't installed. Apple adopters are fast adopters, right?

Brian: [00:31:30] Yes.

Phillip: [00:31:30] They're early adopters. So potentially, you know, not long. But I do think it's three to five years. And what does Google do with retail partnerships in the next five years? What does Amazon do to gobble up more retailers? What does Walmart do in gobbling up tech and retail and partnering with, you know, everybody but Amazon? A lot can happen. A lot can happen in four or five years.

Brian: [00:31:53] A lot can happen. I think Apple still has tons of... I'm typically not a huge Apple fan. I feel like right now I'm actually, I'm a little bullish on where they're headed.

Phillip: [00:32:04] If you ask Jeff Galloway, though, Code Commerce this week, he said that Amazon's gonna eat their lunch.

Brian: [00:32:12] Scott.

Phillip: [00:32:13] I'm sorry, Scott. Scott Galloway. I don't know what I'm talking about. So Scott Galloway says, "Hey, this one trillion dollar mark. Yeah, that's old news. Two to three weeks from now, Amazon's gonna take that over, and they'll never look back." And he had a lot more to say. What else did he say?

Brian: [00:32:32] Yeah. Amazon is going to overtake Apple and surpass Apple. That's not even a question. I think that if you look at Amazon's strategy, it's so much broader than Apple's strategy.

Phillip: [00:32:50] Sure.

Brian: [00:32:50] They are just in so many more businesses, and they're winning so many more businesses than Apple is. So it's not even really a fair comparison. It's a silly comparison, in my opinion. You can't say...

Phillip: [00:33:08] But they are the only two companies who have the ability to be considered trillion dollar companies.

Brian: [00:33:13] Sure. Sure. They're very different companies, though. Just because they're the biggest doesn't mean you're similar.

Phillip: [00:33:22] So what else did he say, though? He said something to the effect of, you know, this is a ruse around HQ2.

Brian: [00:33:32] Yeah. Scott's been down on Amazon and in the way they operate for a long time. So it's not a surprise that he would call a second headquarter thing a ruse. And his points actually not that far off base. I think his point was that the second headquarters was always going to go to Washington, DC, the whole RFP process they had was sort of a joke and a waste of time because it was always going to go there. Maybe that's not true. I think Amazon's pretty thoughtful about when they do something, and they like to test a lot of different angles. But yeah, I think I agree with him that it will end up in the DC area, maybe not in DC, but like near DC. And the idea being that they want to have the ability to litigate and break down regulation because that's what's stopping them from going to a two trillion dollar company. And of course, there's truth to this. Every big business gets political. They have to. Whether or not that litigation, or that...

Phillip: [00:34:52] Regulation.

Brian: [00:34:52] Whether or not their motivations and what they actually accomplish in Washington is detrimental to consumers is a different question. Most big businesses have to do some sort of, or feel compelled to, get involved in politics at some point.

Phillip: [00:35:17] Yeah, it makes a lot of sense if you're Amazon and you're getting involved in everything from retail and tech and machine learning, AI, but also in health care and grocery. If you're in all of those areas, yeah, it makes sense for you to... They've probably been lobbying for 20 years in Washington to some degree. Especially around tax 10 years ago. There's definitely some... They've already got all those relationships. And to say that they have to put a second headquarters there to maintain that. That sounds like a silly take. Of course we'll probably come back in and say how wrong I was.

Brian: [00:36:04] I think it's silly because physical presence does matter. I mean, we're seeing this in retail. In fact, that'll be our next topic.

Phillip: [00:36:15] Yeah.

Brian: [00:36:17] But yeah, physical presence has real impact. And if you have a whole host of employees that are working for Amazon running around Washington, you're going to have a deeper set of connections. One hundred percent. You're going to have more inroads. You are going to have more people that move from Amazon to politics and vice versa. And so it would not be hard to have more influence with a physical presence. So I don't think it's a silly idea that they would set down there just for the political benefits.

Phillip: [00:36:57] Potentially. I do agree with the fact that the only thing keeping them from growing even bigger than they are and exerting more influence in the world in all that is around us is regulation.

Brian: [00:37:12] Yeah

Phillip: [00:37:15] It's not long...

Brian: [00:37:15] Ok. Here's a hot take. Here's a hot take.

Phillip: [00:37:17] Yeah. Go ahead.

Brian: [00:37:19] Donald Trump has not necessarily been super friendly with Amazon in the past. Let's envision a future for a minute. If he wins a second term... If. Big if. I will go out on a limb and say that there could be, that they could get friendly pretty quickly. That would be my take on this because it would make sense for Amazon, obviously. And it could be a big win for Donald Trump, too, for him to make peace with Amazon. So that's a political statement, I guess, or maybe not. It's just a kind of a... I don't know. I think that's a...

Phillip: [00:38:04] It would behoove both parties in that case, that Amazon doesn't want the government to regulate them without them being part of the discussion of that process. And I'm sure others like Google really, really care what happens within those scenarios, because it probably hints at what the next four years would look like for them, too.

Brian: [00:38:24] Exactly.

Phillip: [00:38:25] Companies that are platform companies that have survived this long without being heavily regulated, you know, are facing down regulation. Where commerce and agriculture and other sectors are being deregulated. The one thing that you can expect in the United States hearing... And we're harping on this a little bit. The one thing you can expect is that there is definitely more of a focus on antitrust on businesses like Google and Amazon who have their hand in, horizontally, in every area of the economy. And especially when a lot of their infrastructure, Amazon in particular, is enabled by things like the United States Postal Service. That seems to be a favorite topic of our president. But anyway, I can't speak with any sort of authority around there. I think it's interesting. We'll have to watch it. But we digress.

Brian: [00:39:36] Yeah, speaking of...

Phillip: [00:39:37] You can watch all of Scott Galloway's sort of waxing poetic on the future of Amazon over at Recode. And we'll link that up in the show notes.

Brian: [00:39:47] Yeah. Speaking of physical retail presence, I think we were dead on in saying that it has a huge effect, a positive effect, to have a huge retail footprint. A couple of days after we dropped our last episode where the two of us were just talking. Without any interviews or anything like that. But the news on Walmart and Target was super positive. And I definitely have to take a couple steps back because I think I kind of hit a little hard on Target in that episode, which I mean, I think it played into our bigger point. Definitely. And I also I think I was like, "Where's Shipt?" I haven't seen a thing about Shipt. And I think it was like they said that if someone signed up for a Shipt, there were three times more likely to convert, or something like that, when they went shopping on Target. So clearly, Target's moves have been paying off. And I think you hit on some really great points about how they were differentiating their generic brands. And it was just really interesting to see that news come out right after we talked about that on that episode.

Phillip: [00:40:53] It was like literally hours later.

Brian: [00:40:55] I was laughing pretty hard about that.

Phillip: [00:41:01] Yeah. Target is actually beloved, and I'm impressed to see that they had a record quarter. Good for them. Doesn't help the fact that nobody seems to want to work for them. Which was an interesting story that just landed that we're definitely on time and on message on this one. Big story that came out just this week, I think. But yeah, Business Insider had a story about retailers like Target and Macy's who depend on sort of the middle of the road workforce having a hard time staffing up, especially as we enter the holiday season.

Brian: [00:41:42] Which is interesting. My wife went shopping at Macy's recently, and I think that she was not happy with the staff. They were really not helpful. She went over to Nordstrom, and it was like so much better, which I think is an indication that Macy's and others are having to reach further, sort of further down and maybe lower their standards on the types of retail workers they bring. And I think that's been happening for a long time, though. This is not a surprise to me, and I don't feel like it's that new news except for us probably getting worse given the level of employment we have right now.

Phillip: [00:42:24] Well, I think that that's the take on this Business Insider article was the historically, low unemployment is causing major retail gaps in retail employment. So the figure cited here is 757,000 job openings for seasonal retail employment for Q4, and only 1000,000 available workers. So everybody got a job and nobody wants to work for Target.

Brian: [00:43:01] Is that right? They said only 100,000O workers?

Phillip: [00:43:05] That was the figure cited. But, you know, go check it out for yourself. The thing I'm concerned about is not about so... Yeah...

Brian: [00:43:14] I think they said it was 1000,000 workers more than they had last year.

Phillip: [00:43:19] Let's double check this here.

Brian: [00:43:20] So I don't think it was that there were 100,000 workers available for those job openings. I think it's that there were... They're looking for 100,000 more people than they were last year.

Phillip: [00:43:31] Oh I see. Ok, ok, ok.

Brian: [00:43:31] Which is crazy given that we went through the "retail apocalypse" two years ago and "Brick and mortar is dying..." Blah, blah, blah... Oh, wait, we're hiring more seasonal and retail players than we ever have ever. And there's not enough of them available. Definitely an indication that the retail apocalypse was really just a way to weed out some over branding or something along those lines.

Phillip: [00:43:58] There's two things in this article that I think actually are gonna to set the precedents of... This is just market forces. If you are Kohls or Macy's, and you need to hire tens of thousands of people, how do you make sure that they come work for you and not for your competition? Because there's a limited amount of people who are actually going to be available for those jobs because most everybody else has a job. And the point is, is that companies like Macy's are are going to be launching incentive plans. That means quarterly bonuses for part time workers. That means Kohls is announcing discount days for associates. It's J.C. Penney's, who I can't even believe is still in business, is making some part time workers eligible for 401K benefits and some paid time off. We've never seen that before in retail and not in the last 20 years. And I think maybe employees being happy will lead to better service for people in store. The other outlook is that let's say they can't fill all those jobs and people have a really terrible time with in-store shopping in Q4, at least here in North America, what happens afterwards? That means continued growth in investment and in other omni channel initiatives and in tech and digital commerce.

Brian: [00:45:24] Tech. Tech. That's what I hear here. Investment in retail tech. That's going to continue to be a theme for our economy. When wages are rising, and you can't hire enough people, you find ways to eliminate jobs that you could automate. I don't think that's a bad thing necessarily. We've talked about this extensively on the show. I think that retail jobs will always be available at the level that Macy's and Target are talking about. There's always going to be jobs that kind of run at that level. And so automating this... And actually there is a whole session that Shop.org on this exact topic. When innovation comes in, actually the number of workers in a given industry doesn't go down. But as a percentage of total jobs, they do go down. And so more jobs are often created by innovation, and the types of jobs that are eliminated are typically ones that that are more mindless or lower skilled or related to physical activity. And so this is actually a good thing. I think that the shortage is a good thing for the overall economy in that there's going to be more work available for people in the retail tech industry. And that's probably a lot of our listeners. And it's a good thing for the economy, as a whole.

Phillip: [00:47:15] This is awesome. I think that's a great last word.

Brian: [00:47:18] Another great episode on the books.

Phillip: [00:47:21] Whew. We did it. And well, thanks for for listening. Thank you for joining us here on Future Commerce. We want you to give us feedback about today's show. Make sure you leave us some feedback on our Diqus comment box available at FutureCommerce.fm. And if you are subscribed on iTunes or at Apple podcast, give us a five star review. That helps us get the Future Commerce message out to more people. And you can also subscribe anywhere that you can get podcasts these days. On Google Play, or iTunes, or Stitcher, or Spotify. And you can listen from any smart speaker device with the phrase "Alexa play Future Commerce podcast" or whatever your smart speaker assistant would be. Probably not Siri though. Thank you for listening. What do we say, Brian?

Brian: [00:48:10] Retail tech is moving fast...

Phillip: [00:48:11] And Future Commerce is moving faster.

Brian: [00:48:14] Thanks, everyone.

Phillip: [00:48:15] Take care.

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