The Center For Retail Transformation with Gautham Vadakkepatt (RTS #32)

Guest: Gautham Vadakkepatt
Topics: Marketing, consumer experience

Transcript:

Chris Ressa 0:01
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.

Welcome to retail retold everyone. Today I am super excited. We have a unique guest. Today I’m joined by Gotham wad K pot. He is an assistant professor of marketing at George Mason University. But more interesting to me. He is the founding director of the Center for retail transformation at George Mason University. Welcome to the show Gotham.

Gautham Vadakkepatt 0:47
Thank you, Chris. Thank you for having me.

Ressa 0:50
So Gotham, tell the audience a little bit more about you who you are.

Vadakkepatt 0:55
Okay. Well, so first and foremost, I’m a husband, and father to a three year old, almost four year old now.

Ressa 1:02
Same with me, my daughter turns four in June, my daughter does have four in September, actually,

ah, so we’ll have to change stories on that.

Vadakkepatt 1:11
For sure. And I’m an academic, I have been an academic for the past nine years teaching marketing first at the University of Central Florida and then moving to George Mason University about six years ago, to do the same. I was an engineer by training, I came from India to pursue my master’s in engineering. And long story, long story short, I ended up getting a PhD in marketing with a focus on data analytics and pursued a career in academia teaching people how to use data and technology for their marketing perspectives. I worked for GE for a few years on the digital transformation of the shop floor. And through my career, I have worked with mentored students and small businesses, particularly retail, on customer experiences, technology adoption, how to use data to kind of manage the customer experience. And that led me to the stage that I’m in where I’ve, I’m the founding director of the Center for retail transformation.

Ressa 2:18
I’m excited to talk about the Center for retail transformation. But before we do, I have three questions for you. Are you ready? Yes, sir. Question one. Okay. What is one thing? Most people agree with? What you do not?

Vadakkepatt 2:32
Okay. Maybe I’ll give two quick things. One, the retail Apocalypse that people talk about? I think it’s non existent. I don’t think that’s the case. I think physical stores will survive. But the the raging debate that I engage in these days is about social audio. And if that’s a fad, if it’s here to stay, and my own personal belief is that it’s just going to be another channel that people will have to engage them and not something that’s going to be that popular when people start going back to work and having other activities to engage. So Gotham, are you on clubhouse? Well, so this is the reason why we have a raging debate. So I am an Android user. I can’t be on clubhouse so it’s the side grapes kind of a story. So not yet no, hopefully one day soon. I will make my presence Felton’s clubhouse.

Ressa 3:26
Okay, well, you’re on an audio social audio platform now my opinion on a podcast so

Vadakkepatt 3:31
it’s a I love it. I love that aspect of it. Podcasts are my favorite listening thing and drive into work and out.

Ressa 3:38
Fantastic. Okay. Question two. What is one skill you do not have, but you do wish? You wish you did.

Vadakkepatt 3:46
Okay, so I began by saying I’m an engineer, and I spent like a lot of time doing foundry, Smithy stuff, carpentry and all of that. So one would think I worked on big engine small engines, one would think I’m pretty handy around the house. But I’m not I’m terrible. I can’t even change the gasket on the flapper on my toilet yesterday. So that’s the one skill that I really wish I could build on and, and kind of get some expertise in. And that’s something that’s my plan to work on for 2021.

Ressa 4:19
All right, I like that. Last question. When is the last time Gotham you tried something for the first time?

Vadakkepatt 4:27
That’s a good question. Um, so pandemic has made people do different things. So in our household, we’ve started trying to cook new things. And that’s kind of thing that we’ve taken. So I’m Indian, my wife is a Latina. So she’s gotten into cooking Indian food. And so I get to try new things. And I have a three year old four year old and so it’s every day is a new thing with her. So I came in just as an example. I came in one day from my work, and she had this camp set up like and like, Hey, Dad, we’re going to go camping in the backyard. I actually I’ve never done that. But it’s kind of my backyard. And it’s kind of a fun thing to do.

Ressa 5:05
I camped out in my backyard where I grew up, but I haven’t in my new home. And it’s not new. I’ve been here for five years, but maybe we’re do.

Vadakkepatt 5:13
Yeah, it was a fun experience. I’ll recommend it actually to just unwind sit back days of the stars.

Ressa 5:20
As the weather gets warmer here in New Jersey, right now, it’s a little cool. I’ll do it when it gets a little warm. Make sense? Let’s get into the heart of the episode. Okay, I want to talk about the Center for retail transformation. My first question, what is the Center for retail transformation?

Vadakkepatt 5:38
Great question. So the center of retail transformation is a center that has been set up in November of 2020. And its focus is to be a support and a partner for small and medium sized retail. So, before you ask me, let me answer that what small and medium sized anything under $500 million in revenue is small and medium sized retail, by the Centers definition. And as you know, small and medium sized retail is the largest part of the retail ecosystem. And there’s been a confluence of factors that’s causing them to struggle way before COVID head, mostly from a technology perspective, trying to figure out the better supply chain aspect. What’s the reason for existence? How do they connect with a customer better. So the idea behind the center is to bring together various partners in the retail ecosystem, to try and support this group, allow them to be more nimble, to be more innovative, to allow them to engage in activities that allow them to thrive moving forward. So that’s the fundamental idea behind the center. In a nutshell,

Ressa 6:56
how will you do that? If I’m a small business, I have a retail store? How do I actually partner with the Center for retail transformation?

Vadakkepatt 7:05
So great questions. So the way to partner with the center is the three ways that the Center hopes to be this agent that allows small businesses to succeed. First is that we have a large population of students, right. So we want we will use the students to kind of work with the small retailers on projects, allowing the actual transformation of retail be at the marketing aspect, be it operations and so forth. The second aspect is to try and do people make the statement that small and medium sized businesses are struggling, no one really knows why they’re struggling. What’s the reason? So as a center will undertake research that really sheds light on the true problems that small and medium sized retail are facing, allowing them to direct resources to address the problem. And the third part, Chris, is that we’re going to hold current thought leadership around this issue trying to bring together luminaries that you have bought on your podcast, like for instance, and Nichol right. And trying to talk about like, hey, how do we actually support small and medium sized retail? So putting together a group of thought leaders to see collectively How can we support this group? If that makes sense?

Ressa 8:35
Totally. Is the plan for you to proactively reach out to small, medium sized businesses? Or do you hope to market yourself and they reach out to you?

Vadakkepatt 8:47
It’s both. So the thank you for having me on the podcast part of it is to make the awareness out there that hey, there is a center. If there are small retailers who do want to associate with the center, he has a way to reach out. On the flip side, we’re also actually collecting the database of all the small retailers and trying to proactively reach out to them. And third, we’re going to start hosting events that will actually bring these small retailers either digitally or in person to the campus to kind of get them to engage proactively with the center, figure out the problems collectively solve or not solve, try to figure out activities that can help address these problems.

Ressa 9:30
Does this cost a lot of a lot of money to start and run?

Vadakkepatt 9:36
So it it costs a lot of time and a lot it’s been a year and a half process. We have about 30 People 35 People who have joined the the retail centers Advisory Council. It’s been a year and a half convincing people to support the costs and kind of put their effort behind the cost OS. When it comes to money, yeah, there is there is a cost associated with kind of keep the center’s sustained. But when it comes to the actual transformation part, we have students who are very keen on doing these kinds of activities, it gives them a real world experience that they are seeking to engage. So there’s there are costs associated, but not as much as you would think.

Ressa 10:23
And the students are in the marketing world Correct? Or do you have a retail offering at George Mason.

Vadakkepatt 10:31
So we do have a few courses that cover various aspects of retail specific, like supply chain marketing, data analytics, and so forth. To be clear, it’s not just a marketing thing, it’s anyone in the school can install it. And outside of the school, university, if we want engineers, for instance, to the center, we can connect you with engineering students, if you want policy, folks, that’s a possibility as well. So it doesn’t matter, the whole gamut of the university could be reached through the center. And if you’re trying to do sustainability aspects, for instance, yeah, we got multiple different stakeholders who can help you with that aspect. So we’ll just a connector in some ways,

Ressa 11:14
do the students get credit, or any type of reward outside of just working on it for doing these.

Vadakkepatt 11:24
So, so we’re still figuring out the details with regards to that. So the typical way that we bring in companies into the classroom is through class projects, which means that they it’s part of the course credit that they get, they get to put it on a CV, that, hey, they’ve worked with these companies, and so forth. So there is credit that they do get for being associated with that specific project. Understood, that makes sense. So it’s a CV building activity for them. It’s a real world experience for them really trying to bridge that gap between academic work as well as the real world applications of some of these things. And if you incentivize them economically with saying, Hey, you get credit for your course, they you need this amount, of course grades that are associated with it, but you also give them the the real benefit is that your CV looks a lot better going out than you would without it.

Ressa 12:23
That’ll stand out on a on a resume, for sure. Are there any initiatives that you all are working on right now as a focus for the centers. For the center,

Vadakkepatt 12:36
we have a few of them. So the first is what we’re calling the transforming retail power series, where we’re bringing together startups on various issues, specific issues, let’s say supply chain and fulfillment. Britton, who I know has been on your path share for is going to try and lead that initiative, we have Lisa who’s going to do a sustainable fashion panel by the bringing for startups on how you can make the apparel industry more sustainable. So that’s one initiative will plan to bring in most startups to the center platform, allow them exposure, talk about innovative solutions that’s out there, create a buzz around these innovative solutions so that we can really transform also, in the process of doing a retail Summit, with regards to startups and bringing them together, understanding their problems, allowing them to interact, connecting them with different members of the ecosystem. That’s a year down the line in 2021, and or 2022, you should see the first genesis of that. We’re also doing a few research projects with like Fairfax County locally, with a few retailers where they give us access to that data. And we are trying to provide solutions to their problems. So these are the three initiatives that we have going already that try to really address some of the issues that the retailers are facing, both with regards to exposure with regards to solutions with regards to strategies to implement. And we have a few other things that are in the pipeline, like a transformation clinic, that students are going to actually help companies transform, retailers transform their way of business and so forth. That’s a little bit longer in the pipeline.

Ressa 14:28
I like the initiatives. I like some of the things you guys have planned. Looking forward to the retail summit and some of the panels,

Vadakkepatt 14:34
April 20. Chris, join us if you have time. That’s the first one.

Ressa 14:39
Send me the link we’ll do how right what is your focus as it relates to this center of retail transformation? What is like one thing over the next 120 days that you want to accomplish?

Vadakkepatt 14:48
Two things one is to create awareness for the center. That’s a big thing because ultimately until we get people to coalesce around this idea that small and medium sized business are critical and we need extra all, the tide raises all boats kind of an argument, it’s not going to succeed. So that’s the first thing that I’m going to focus on. The second aspect that I’m going to focus on is to actually bring more retailers on board to try and get them to partner, what I’ve seen is that the collaboration is kind of a, it’s not as common in retail, spend a year and a half trying to talk to retailers about this idea. And there’s almost always a concern that, hey, we’re competing with each other, instead of thinking of coopetition, where you compete and cooperate. And so that’s the second thing that I’m going to focus on is to try and bring together this environment of cooperation amongst the different members of the retail ecosystem, with a specific focus of how do we take the bread and butter small and medium sized business and move them to the new retail? And by new retail? I’m talking about? How do we get them to be more driven by technology? Identify the right technology to adopt themselves? How are we going to allow them to reimagine their business models to be successful? In a post pandemic? World? A pandemic, if that makes sense?

Ressa 16:17
Are you doing anything with restaurants? Is that part of this? Yes.

Vadakkepatt 16:23
So we actually hosted a panel of with regards to restaurants and how restaurants were reacting, that was right when the pandemic was, like it was a couple of months ago. And the idea was like, Hey, how, how should restaurants rethink themselves moving forward? So yes, we are, restaurants definitely are part of the retail ecosystem. So let me define retailers as anyone who has a touchpoint with the customer. So that could also be service providers, like the head, Country Place, next door, and so forth.

Ressa 16:55
Wow. I’ve heard a million definitions with regards to what is the definition, definition of retail. I love that definition. Anyone that has a touchpoint with the customer. We need to get Webster to change the definition of retail. I’m not sure if you’re aware, in most leases, right? Every brick and mortar store has a lease unless they own the building. There’s typically a definition of retail, and it is not the same across the board. I love and it causes many challenges for both landlords and retailers across the United States. What a great definition anyone that has a touchpoint with a customer, that could be an urgent care.

Vadakkepatt 17:51
We got it couldn’t be. So So here’s my let me just go for a brief tangent, right. independent retailers. If you think back to the 1980s, where a large proportion of the sales today it’s a chain stores, why did that happen? Is that in my personal opinion, I think they lost the focus on the customer. How do you actually create value to the customer? How do you make that engagement with the customer. And so that’s why I define retail as anyone who touches the customer because I want it technology data. They’re just enablers of things not and customer is the essence, the secret sauce, the one that will make you succeed. And so as long as you keep your eyes on the ball, right on the customer, in this case, I think retailers will and that’s why I said retail apocalypse is not going to happen if you can keep your eye on the customer and how customer trends are evolving.

Ressa 18:44
I love that definition. I have to process it post this call to see if I can poke any holes in it. But at the moment, right now, as we’re recording, I think that’s a great definition. Because in my world that broadens the landscape of who a retailer is to many different categories and sectors. And that is that definition right now that’s transformational. That is a really great definition.

Vadakkepatt 19:15
By keeps eye on the ball. Customers are the essence and retail was supposed to be the place that brings together the community. Right. And at the at that essence is the customer, the individual household or the multi household that you’re talking about these days.

Ressa 19:30
I love that. That’s great. Thank you. Well, Gotham, what else have I not asked you that I should have asked you?

Vadakkepatt 19:39
Well, that’s an interesting question. So you asked most of the questions, Chris, that I would like but I didn’t hear you ask what’s the secret sauce for small and medium sized businesses to actually succeed now? I’m not sure.

Ressa 19:57
Let’s go give it to me. What is the what is the secret ingredient?

Vadakkepatt 20:02
So I’m going to, I’m going to take give you a truly academic answer is that I don’t know. And you’ve got like, I’m gonna go back to your podcast and you had over 100 people, many of them small and medium sized, you had Britain, you had Nicole, you had, Ron, all of them talk about different aspects of what it takes to make a small and medium sized retail succeed. So I’m going to just pivot back to the center for a second. And I’m going to say like, so if you think about the center the ideas, it’s, you don’t know what the future is small and medium sizes. What’s the direction? What happens if you bring these 3040 people with very disparate viewpoints into a room and force them to paint a picture? This is a massive experiment that the center is going to engage in in a few weeks. But who knows what that what is the three or four things that is their efforts? My personal thing is it’s experience, right? It’s all about providing a superior experience for the person take sporting goods is in the news now because they got the track out there in the stores and all of that stuff. But that’s about experience creating those moments where you get to connect with yourself, your community, and have a lasting memory. And so for me small or medium size, retail, that’s the secret sauce, but the technology is there, you’ve got data that’s on the layer down, you’ve got a lot of other things changing workforce characteristics, and we’ll see. So the answer is no, I don’t know, what is the secret sauce. But I’m hoping that collectively, but within a few weeks, we’ll have that secret out there in the public view.

Ressa 21:38
I think experience is important. However, it only matters once you get the fundamentals right. Oh, that’s a great point. So starts to me, with great leadership, the best retail organizations have the best leadership. And we often forget that the people running the business are typically the biggest secret in the business. So you have to get the fundamentals. Right, right. You need great leadership, you need operational excellence. And these are just, these are the bare minimums today. But you need that stuff, you need a balance sheet. That strong, right, if you’re late, if you’re if you’re late end with unproductive debt, that’s a problem.

Vadakkepatt 22:27
If I can add, when we did the plan on restaurants, what they what was kind of striking to me was that they said, look, the amount of cash reserves we need to have has changed, right? And they’re like, Okay, now we got me to have a much larger cash reserves. So it’s not just debt, but it’s also the country so that many small retailers don’t have

Ressa 22:48
the balance sheet fundamentals. And then last thing is you have to have a product or service added value that people want to pay for the product or service. And when you get those fundamentals down, then, you know, the customer experiences is really important. What one of the things that’s concerning me with the the innovation age in the technology age that we’re in right now, is some of the fundamentals to scale quickly have gone away, which is we have a significant amount of businesses that are growing unprofitably So they can flip out to a VC get funded, go IPO, and they’re so their customer acquisition costs are more than legacy retailers rent and marketing combined. So customer acquisition cost is the new rent, and they are doing this in a manner which is unprofitable and and they’re hoping to get to profitability through scale. And I don’t think the only way to get through profitability is through scale. It’s one way but many have pivoted that way. So I want to the fundamentals are important. And experience matters once you get the fundamentals down

Vadakkepatt 24:15
and are denied. And I love the point that you just said about customer acquisition costs, especially in the online world, skyrocketing and being more than the rent that they pay, for instance, variable costs too, right? It’s not. It depends. So it’s an excellent point that you have raised Chris, and I agree that the foundations and the fundamentals are critical to being successful.

Ressa 24:39
Totally. Well, Gotham. This has been great. I’ve got three questions for you. We call this retail wisdom. Okay, are you ready?

Vadakkepatt 24:49
I am ready.

Ressa 24:50
What is the last item over $20 that you bought in a store? Who

Vadakkepatt 24:57
books Barnes and Noble Papa children’s books. My daughter and I go every month it’s a pilgrimage where we she picks out three books. And so that’s that was the last that just happened two days ago.

Ressa 25:12
Two of my favorites. Pout pout fish. Oh, and giraffes can’t dance two of my favorite children’s books.

Vadakkepatt 25:20
Giraffes can dance we have gray posh will be the next one. We get a

Ressa 25:24
question too sure. What extinct retailer Do you wish would come back from the dead? God?

Vadakkepatt 25:31
How lots Sharper Image borders. I love books myself. Toys R Us now. I know they’re online, but I really liked the physical store would love to pick my daughter in there. So those would be three.

Ressa 25:46
Last question. Gotham. If you and I were shopping at Target, and I lost you what I would I find you and

Vadakkepatt 25:54
usually the electronics aisle. I’m an audiophile I love music. I love listening to things podcasts included. So that will that’s where you’ll find me but now with a daughter. I’m most often in the toil, or the clothing aisle picking up diaper well. She’s fast the diaper aids now but generally that’s where you’d find

Ressa 26:17
I understand your place. Well listen, Gotham. This was great. Thank you so much for doing this. Really excited about the Center for retail transformation. And there’s anything I can do to help let me know. Thank you for listening to retail retold. If you want to share a story about a retail real estate deal that you were a part of on our show. Please reach out to us at retail retold at DLC mgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney. Also, don’t forget to subscribe to retail retold so you don’t miss out on next Thursday’s episode