Competition is part of business, both large and small. If you don’t prepare enough to overcome the multitude of competitors out there, then the industry will be tough on you. Host, Ben Baker, brings someone who is providing so much help to the retail world, helping retailers compete today and prepare for what the competition is going to look like in the near future. He sits down with George Minakakis, a global retail executive and the CEO of Inception Retail Group. In this episode, George shares with us some great ways businesses can stay in the game even as the world gets tested by the current COVID-19 pandemic. He also talks about why some retailers fail and how you can keep yourself from being one of them. Looking onwards, George then gives his insights on the future of retail and the opportunities that lie there, including the move to eCommerce. Explore the history of retail and more in this great conversation.
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How To Compete In Retail Today And In The Future With George Minakakis
I love my audience. Every single week, you ping me, you ask me questions. You want to know a little bit more about me. You want to know a little bit more about the things that I do and the people that I work with. I appreciate it. You guys subscribe to my show all the time. If you go to YourLivingBrand.Live show, you can hit a button and subscribe. Pick the list of your choice. If you’re an iHeart person, great. If you’re a Spotify person, great. If you’re an iTunes person, great. Subscribe what’s good for you. I am on all the different channels. Do what works for you. Share the show. I’ve got another great guest, George Minakakis. George, you and I have known each other for a while through LinkedIn. I’ve always followed your stuff. I love what you’re doing about retail and the consulting that you do in the retail world. Let’s start off letting the world know a little bit more about you, who you are, what you do, why you do it, and then let’s go from there.
I started early in life being in the retail world because my parents were entrepreneurs. I understood what it means to serve the public and to own a business and how important it is to putting food on the table. When it comes to a lot of independent retailers out there, my heart goes out to them because I know how hard they work. That life unexpectedly took me into retail on the corporate side. I grew through the ranks. I made it to CEO and Country General Manager. I brought in as many as four retail chains at one time. I went to China and I built a brand of 200 stores in China. It has been a real rocket ride. You end up with a plethora of experiences that a lot of people don’t get to have. I’m grateful for that and grateful for the people that I got to work with because I know that me alone, as an entity, there was no way that could have all happened. In about 2013, 2014, I decided that was enough to travel the world. I’ve been everywhere but Antarctica.
I decided that I was going to get off on my own. I had come back from Australia on a vacation with my wife. We were gone for a month, traveling on the highway and my cell phone rings and the guy says to me, “Have you ever thought about owning this company?” I said, “Sure. If you’ve got a couple hundred million to lend me, I’ll go and buy it tomorrow.” That was the beginning. A light bulb went off and I started working alongside private equity firms. I brought deals to them. They called me up to go and sit down as a CEO partner or as an advisor to deal with what they were doing.
As you probably know, chasing deals can be complex, time-consuming, and sometimes a lot of risks and absolutely no reward. I’ve chased deals that only took a couple of weeks and you get nowhere. I’ve chased deals that take two years and you get nowhere. It’s that up and down world. I ended up being a CEO, partner, and advisor. I didn’t grow up in a consulting world, but you learn to become a good consultant rather quickly. I help retailers, large and small. I look at their businesses and how the world is changing outside of them, what they’re going to compete, and what the competition is going to look like now and in the near future.
As we both know, we’re in a major tipping point here with this virus that has changed the retail category completely. Everybody asks me, “George, how do I start this up?” I’ll say, “We’re all in a good place.” All nonessential businesses are shut down. No one is making any money. Maybe some are doing a little bit. When the starting gun goes off, everybody is starting at the same time. It’s like starting a brand new business. If you’re smart about it, you need to start thinking more like an entrepreneur like you’ve never had before. If you’ve forgotten your roots, you need to tap into them again because that’s the world we’re heading into.Chasing deals can be very complicated and time-consuming, and sometimes, can take a lot of risk with absolutely no reward. Click To Tweet
I couldn’t concur more. I was having a conversation with somebody and he says, “Now is the time to take risks.” Now is the time to sit there and say, “Let’s take a little bit of capital, not the whole farm. Let’s take a little capital and let’s take some risks. Let’s try some things.” You’re right. We’re all in a position where we’re all taking a hit. Everybody’s taken a hit. Everybody’s moved backward a little bit. Everybody’s changed direction a little bit. Everybody’s refocused a little bit. We need to sit there and say, “What could reality look like? Let’s try it.” The worst that can happen is it doesn’t work. What you’re doing isn’t working at the moment. There’s little downside to sit there and say, “How can we change, augment, pivot, bring in new product line, bring in a new thought process to be able to move ourselves forward?” I’d love to hear your thoughts on that.
This is all about personal leadership and your courage to take a risk. There are a lot of people unemployed. I heard that in the US, 40% of the households that earn less than $40,000 a year are unemployed. That’s a frightening number. I’m not sure what it is in Canada. We don’t get those stats that quickly. If you are out of work and the prospects don’t look good, I agree with you. If you have a little bit of money or ability to take risk, why not? Everybody has something to offer, by the way. We all do. Whether it’s a service that is from a management point of view or a service from a product point of view or a service that has a technical side, everybody has something to offer. If you believe that nobody wants your services, you’d be surprised. There’s a market for everything, but there’s more of a market for someone who does it well. It’s a matter of belief in yourself and what you do.
The belief is that everybody says, “I’ve got to be an entrepreneur. If I can’t scale this 10x, what’s the point?” That’s the wrong attitude. We need to go back to Seth Godin’s Minimal Viable Audience. Who are the people that we can build that we could absolutely wow? We’ll get back to that on a retail basis. We need to take a look and say, “Who are the people that can be the true fans? Who can we truly help?” Instead of thinking, “I’ve got to help everybody. I’ve got to serve everybody. If I can’t grow and have this thing explode, it’s a failure.” There are a lot of successful businesses under $1 million. There are a lot of successful businesses under $500,000.
We need to sit there and say, “Who do we want to be as a company? What does great look like to us?” It’s not what great looks like to the world. It’s what does great look like to us and how can we differentiate ourselves to be able to be special to people that we can truly help? I wanted to see how your thoughts on that are because I don’t see that in retail anymore. I don’t see people trying to be special. I don’t see people try to differentiate themselves. I don’t see people try to be unique. It seems to be more and more cookie-cutter and more of the same. That’s been the downfall of retail.
When you look at it, there’s a value in BenBaker.com. To start this off, I would say there’s nothing wrong with making a good living with one business. If you’re good at what you do, you could be a tailor or seamstress, it doesn’t matter. I remember my mom. She was a seamstress when she came to Canada. My dad was working and she couldn’t go back to full-time work. She was doing work for department stores and they would bring her the work. She was good at what she did and well at what she did. She made a good living doing it. I don’t think that there’s any limitation. The only limitation is you. When you look at retailing, once you start scaling things and you want to become bigger, sometimes that hurts. Not every business can be scaled. You can open a whole bunch of stores and all of them sell apparel and the same garments from one store location to the other, but what’s it about? What’s the service proposition? Why am I paying you this price for this dress, for this shirt, for this jacket? What makes it special? What makes it special is the service that comes into it.Stop being a commodity, start being a brand worth loving. Click To Tweet
I’ll give you a good example. I hope he reads this. His name is Johnny. I don’t remember his last name. He has to forgive me. Johnny worked at a men’s store. I went to that men’s store, it’s a popular one. Johnny was there. He met me. I kept going back there for three years. As soon as something came in, Johnny would call me up, “George, we’ve got these new shirts in. We’ve got these pants in. We’ve got this jacket in.” That personalized connection made that store financially well-off because they had a great employee. They treated Johnny well.
I don’t know what happened later. Johnny was no longer there. He calls me up one day and he goes, “George, its Johnny. I’m at this department store.” It was a high-end department store and he says, “You need to see the product over here.” I went there. The point is it’s that employee that makes the difference. If you could surround yourself with good people or you become that great employee yourself, you can scale your own business from $250,000 a year to $1 million a year on your own. A lot of people miss that and that’s what happens in larger retail chains. That personalized connection with the public gets diminished over time.
I worked for a company that had 10,000 stores. We ran a good company and it’s still in business and still does well. When I look at other retailers, why are they failing? They’re diluted. They’re not able to take that strategy, tactic, operational execution, and send it across the board smoothly and be consistent. It doesn’t happen. When that doesn’t happen, you start to fail. I’ve gone into retailers who are chain operated and do a bang-up job on delivering that execution, but there are more of them that don’t. The ones that don’t are the ones that you start seeing failing.
I’m not old enough to remember retail in the ‘50s, but I remember hearing stories. I had a great uncle that was in the retail starting after World War II. I hear stories about the retailers growing up. They were small personalized businesses and everybody had a sense of purpose. They knew what they were there to do and they were trained. When the traveling sales guys came in, they weren’t just selling you the clothes, they were telling you about them. They were telling you about the fabric. They were telling you about the buttons. They were telling you about the zippers. They were telling you about all the things that went along with it.
When you were going out there and selling to your customer, you had a story to tell of why this product versus that product. Why should you buy this versus that? You were knowledgeable enough and you were trained well enough to be educated to be a value to your customers. Now, you go in the shoe store, you try on 6 or 8 pairs of shoes. You find the one that you like. As you’re walking out the door, you’re saying, “Thank you very much.” You go on Amazon or wherever and you buy them for 10% less online with free shipping. The problem is it’s not the fact that it’s 10% cheaper. It’s the fact that you didn’t get the service from the person that was there helping you buy that pair of shoes and enabling you to feel special when you were in the door, getting that velvet rope treatment. They’ll be able to do that.
That comes down to leadership. It comes down to communication. It comes down to training. It comes down to the onboarding of employees that we don’t treat people with the purpose of the company anymore. Why do we do what we do? That’s what’s lacking. In retail and a lot of different businesses, that’s why businesses become a commodity. I’m famous for saying, “Stop being a commodity, start being a brand worth loving.” It’s a matter of looking at it and going, “How do we get back to that?” I want to talk about the future of retail and where the opportunities lie. There are opportunities, but how do we get there? People are going, “Bottom line.” It can’t all be about cost-cutting to be able to make a profit.
I remember one time somebody was saying to me, “Everything will be fine if we had one customer that would pay us $1 billion.” That is a reality of retail. There’s a new reality coming as the doors open up. You’ve touched on them. One of them being the personalized service is going to be key here. Convenience is going to be key and being able to repeat that on a regular basis with customers. One of the challenges because of social distancing, which is not going to go away anytime soon, how do you deal in that environment where you can only have so many customers in the store? I’ll give you an example. A 2,000 square foot store, 70% to 80% of its space is already taken up by merchandise and displays and change rooms, etc. You have about 20% to 25% of that space leftover and every person needs about 36 square feet. That’s the case. You may get in ten customers in there but with the aisles being narrow, you may only have five customers at a time in there. That doesn’t work. You’ve got to find a better way to do this.
I’m seeing retailers talking about booking appointments for customers. I got an email from somebody telling me that if I want, I can have a private appointment. That’s brilliant, making those touches happen. If I’m uncomfortable walking into a crowded room, I’m going to walk into a room that maybe there’s only one other person. I’m going to get the personalized attention that I want and that’s going to help me drive my business. I get what I want and help the retailer get what they want. That’s the world. If you think back years ago when retailing in the ‘50s and ‘60s, that was what service was all about. It was all about those personal touches. You’re reverting to the past. I’m calling it retail street fighter. You have to earn every transaction, every customer. You have to earn every one of them.
It is going to be a different marketplace, but it’s going to take that level of service. You’re going to have to hire yourself a whole bunch of Johnny’s and train everybody to be Johnny because otherwise, it won’t work. It’s not going to be a comfort level that we used to have. I’m not saying a lot of businesses are going to fail. What I am saying is they’re going to downsize. They’re going to have to get focused on that personalized end and it could become more convenient. Online is going to grow exponentially because it is more convenient, to your point, about walking into a store and waiting in there and not getting the service. Why wouldn’t you turn to online eCommerce if you’re comfortable with it? You can send the shoes back and they’ll send you another shoe back to try them again. The cost is theirs. I don’t know how long they can do that for by the way. Let’s pretend that they can. That changes the dynamic a great deal.
If you look at how the workplace is changing, society has proven it can be more productive at home than they can be in the office. That changes what you want to buy. If that stays, and some of it will, it will only grow over time. If that stays, how much clothing do you need to buy? The competition changes so you’re going to have to work a lot harder than you ever have in the past to get to keep that customer, because it’s always going to be about what’s fresh and new. What service am I getting? Am I the first one to know about this? If you’re fashion-driven, are you the first one on the street to wear it? All of this is going to be key. I’m telling people, “If you want to know what the future is going to be like, look at the luxury stores. Look at how they operate.” Every customer walking in is a special occasion. They go through a particular process and the staff is extremely well trained. That will be the future.In retail, your online and your offline experience needs to be the same. Click To Tweet
I need to share this with you. When I was writing my second book, I did a lot of research on retailing historically. Back in the 1800s, everybody got upset because the street merchants, they were seeing more department stores open up. They complained to the city that they should stop the department stores. By the ‘50s, everybody was complaining that malls are opening up and the downtown business districts were failing. They need to stop the malls from expanding. You then had that entity called Walmart shows up. Everybody is trying to sue Walmart, the small business districts and small towns. There’s this entity outside of the end of town who’s taking business away from them. Now here we are fighting Amazon. Why? We’ve been through this cycle before. Retail continues to go through the cycle.
It’s not the end of retail. It’s new retail. It’s new retailing. Are stores going to go away completely? No, that’s not going to happen. Consumers like to go out and be seen. That’s never going to change. What we want to have is more convenience. That’s when the eCommerce platform tied into a strong retailer even if they have a small location. If you can do all of that and make that service look seamless from the time they browse on your website to the time they come into your store and go back home, you’ve got a winner on your hands.
That’s it, it’s that seamless brand. It’s that seamless service. Your online and your offline experience needs to be the same, whether they are on your chat, whether they are in your store. Whether they’re using a shopping cart, whether they’re returning an email because they have a frustration, you need to have that system set up. That high level of customer experience has to be there throughout the whole thing. You’re right. Look at the Gucci’s and the Ferragamo and all those types of things. It’s all about high touch. It’s all about that white glove, velvet rope type of service.
There’s an outlet mall near the airport in Vancouver. It’s an outlet mall, but they have the COACH store. They have all the high-end stores. The COACH store has a lineup in front of it every single day. They’ve got a velvet rope and they have a doorman that only lets a certain number of people in there. It doesn’t matter if the store is packed or if it’s empty. They have that velvet rope because people sit there and say, “It must be phenomenal in there because they’ve got a doorman letting in many people at a time.” People line up. It’s building up that anticipation. It’s building up that want to be part of the crowd. You are the person that’s getting that amazing service. You’re the person that’s being treated specially. That is going to be the success.
Amazon should have had their butts kicked by Sears. Sears was the original online retailer. I remember, as a kid, thumbing through the Sears catalog and ordering stuff online. The mail guy would show up 2, 3 weeks later with the package and it was an amazing experience. If Sears had kept that model going and they built on that, Amazon probably never would have been able to get the foothold that they did. I want to pivot a little bit. Let’s talk about probably one of the biggest failures and what we’ve learned from it in retail. I’m talking about Target. I don’t know if people know about this. I’m going to let you talk about this. Target came in hard and came in fast into Canada and built 100-plus stores in less than 1.5 years. Two years down the road, they’re gone. From an expert’s point of view, what went wrong from a company that is a staple in the United States? Why did they fail poorly in Canada?
They didn’t read the tea leaves right to begin with. Canadians were crossing the US border in droves and going to Target stores. It’s a great brand. What was driving us there? It was the selection. It was the pricing. All of the chemistry was working for them. They could see the trend. They could see the data coming their way. Whenever they were located near a Canadian-American border, the volume was there. They thought, “We’ve got a market there. They want us to get rid of Zellers.” It would’ve been a good strategy, but they rushed it.
I went to a Toronto speaking engagement and the Canadian CEO for Target was there. He talked about how much he has in common with the Canadians, loving sports and hockey and everything. I sat at a table with a whole bunch of retailers and we’re all shaking our head in disbelief, “You don’t get this. You need to be competitive because you believe you’re coming into this marketplace with pent up demand for your brand. You better have it right.” They didn’t. The shelves were empty. They couldn’t get the logistics right. They couldn’t get the product in that the consumers were looking for. If they did, they couldn’t get it at the right pricing. All of that backfired on him. The service wasn’t there.
That goes down in history as probably what you don’t do as a retailer when you want to launch an international business. They failed at every point. They should have taken their time, opened a few stores. Even buying Zellers completely, they could have kept Zellers operating as Zellers for a while and learning from a few key stores on how they could operate better in Canada and what Canadians are looking for and get it right. They pushed themselves too far and too fast.
It’s not unusual to see that happen. You’re going to expand internationally 1 or 2 ways. You’re going to do it organically or you’re going to do it through acquisition. Once you do it through acquisition, the pressure is on you from the market to open all stores, convert all stores, rebrand them, and get this culture done right. Let me tell you something, that doesn’t work. They got rid of a lot of people from Zellers. They alienated a whole bunch of stuff. They alienated a whole bunch of households. Not everybody got hired. There were a lot of mistakes made.
Organically, if you had done that, you would have maybe opened up ten locations. You would have been more strategic about it and more thoughtful about it. They hired the right people, train them. You wouldn’t have been in a rush to open that many stores at one time and make a plethora of mistakes from the front door to cash. As you were in them as much as I was, walking through the aisles and they were empty. They would be pulling product forward on the shelf to show you that they had products. They had nothing. That was the most damaging part for them. Their credibility, integrity, and trust with the Canadian consumer went out the door quickly. It happened at the grand opening. They didn’t have to wait 6 or 8 months. They should have stopped their expansion. They should have gotten their act together and solved a lot of their operating issues, the supply chain being one of them. They could have still been here and a formidable player if they had done it right.The culture feeds into the talent in the organization and how they behave. Click To Tweet
You mentioned two things. You mentioned culture and customer expectations. Those are two things that are critical for any business to understand. What is your internal culture? What’s the culture of the community that you’re going into? If you can’t understand those two, it doesn’t matter what retail location you’re creating, you’re probably going to fail.
When I went to China and we launched LensCrafters, we didn’t launch an American LensCrafters. We launched the Chinese LensCrafters. We did everything we could to launch a premium brand in a Chinese market that fit the Chinese market. We weren’t going to try and change the Chinese consumer. We did it differently and it was successful. Not to digress from Target or your question. When you think about managing cultures, you’re a guest in a country. You’re not there to change their culture.
Never mind the country. You’re a guest in the neighborhood.
All of that plays back to what Target should have done. Culture is key because that culture of the organization feeds into the talent in the organization and how they behave and all the other instruments that are behind the culture. We’ll go back to product. You can’t deliver the product to put it on your shelf. What does it say about your organizational culture? A lot. What does it say about your concern to develop a brand in the Canadian market? A lot. All of that backfires. When I talk about culture, I tell people, “If you take culture plus talent and you hire talent as a competitive advantage and you multiply that by strategy plus operational execution, you have market leadership and that’s survivable.” That is the secret to this. It’s a lot of hard work. The formula is easy, but the work is hard. Target did not execute and it’s a shame. They could have pulled it off.
Knowing what we know now, where do you see the future going? If somebody was reading this and they’ve got retail, whether it’s a storefront, whether it’s a restaurant, whatever it is, what would be the key things that you would say to people? We are where we are. We’ve gone through what we’ve gone through. These are the key things you need to be focusing on to be able to move forward successfully.Don't keep looking over your shoulder. Keep looking ahead because that's where the future is. It's waiting for you. Click To Tweet
It’s clearly service. Whatever service is going to mean to your brand, be the best at it and be consistent at it. Find ways to be more innovative. I find that retailers, too many of them are chasing trends versus creating them. What makes you unique if everybody needs to be selling the same type of ice cream and the same ice cream cone? It doesn’t make sense. The other part of it is going to be that convenience factor and conveniences being that you are marketing at every channel possible, like you are, Ben.
In every social media channel, you need to be marketing and you need to be visible. You need to be able to tell your brand story so that it’s compelling and people make a connection with you, the founder or the retailer themselves. Without that, it’s going to be difficult to open up shop and hope that people are going to walk a path to your door. It doesn’t work that way anymore. The number of failures that we were expecting in 2020, prior to the pandemic, there were at least another 10 or 15 major retailers that were on the bubble and now they’re closed. We’re going to see how that plays out. They’re going to fail anyway. More will probably follow. There’s going to be new retailers that flourish out of this who get that chemistry right.
Do you think that people need to go back to ground zero and take a look at what their original purpose was, evaluate what’s changed and be able to augment their purpose and communicate that purpose more effectively moving forward?
Absolutely. I am writing an article. I could tell you the title of it and it says, “Relaunch, don’t reboot.” There’s a big difference between the two. You need to be more entrepreneurial. When you open up those doors, you need to go back to your roots. What made you successful? What drove you to open up that store to begin with? You need to bring all of that back to the table, every ounce of it, because that’s how challenging it’s going to be. I don’t know if retail sales are going to open up. They’re not going to open up to pre-pandemic levels. They could be 50%, 60%, 70% of what they were. No one knows for sure. It could be worse than that.
At the end of the day, the only way you’re going to win that traffic back and those customers back is going back to your roots. What compelled you to open up that single shop or those 100 stores? Everyone is facing the same issue. The interesting part about it is that when that gun goes off at the start of the race, no one has an advantage. Everyone is starting from the same place. You might as well start fresh as an entrepreneur. Take the risks that you took 5, 10, 15, 20 years ago, and do it all over again. That’s what will keep you in business.
You may have to get smaller to get stronger. I’m talking about this at the keynote. A big thing is that every single employee needs to be re-onboarded. Every single employee needs to understand what are the changes that have happened to your business because of all this. What are the things that make you different? What makes you unique? What makes you valuable now so they can tell that story in a way that’s compelling, that people want to listen to it, and then your customers are going to go on and retell it? A key component is that we need to make sure that we are telling the story both internally and externally about what our values truly are. What makes us unique? What’s our purpose? What’s our vision? How we serve differently than the person that’s selling hammers three doors down the road from us who’s a different hammer seller.
Part of that is don’t let your own old paradigms get in the way of the new paradigm. There is the rubber that hits the road and many will struggle. I’ve heard someone say, “I can’t do curbside pickup because of the way my business is designed.” That’s an old paradigm that you’re living in. You’re not signing up for the new one. Figure it out. How innovative can you become? It may be a small procedure that you have to do. Talk to somebody who says, “I don’t mind getting into my car and delivering something to a customer. Even if it’s 7 or 8 blocks away, I can pull it off. I’ve run this business with my wife. I can drive it and deliver it myself.” Can you imagine that? The owner brings it to your home. It’s a big deal. It is going to take that level of street fighting to bring back your retail revenue. I don’t know how the larger guys are going to do it.
That’s the thing. Larger retailers are not going to be able to pivot as easily. That’s the nice thing about being a small business. You can change a lot easier and refocus a lot easier and refocus your employee a lot easier than the large companies can. George, this has been amazing. Two questions, how do people get in touch with you?
Last question I ask everybody before I let them go is, as you leave a meeting, as you get off the stage, as you get in your car and you drove away, what’s the one thing you want people to think about you when you’re not in the room?
What I want you to think about is what I always say, “Don’t keep looking over your shoulder. Keep looking ahead because that’s where the future is and it’s waiting for you.”
Opportunity is out there. George, thank you for being such a wonderful guest, I appreciate your time. It’s been invaluable.
Thank you for having me on.
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About George Minakakis
George Minakakis is the CEO of Inception Retail Group; leading consumer-facing businesses to rebuild and innovate their market positions. George is skilled at guiding businesses through competitive and disruptive transitions, leading change management initiatives, and helping to build leadership teams to future-proof lasting success.
With over three decades of experience in the retail industry, George has managed both luxury and mainstream lifestyle brands nationally and internationally. He has also driven mainstream brand expansion internationally into Greater China. He has led as many as four retail chains at one time. George is a retail sector leader, working as an advisor to Private Equity Firms and as a CEO partner. He has written two books and a third is at its final stages of production.
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