EP090 - Nordstrom.com Ken Worzel and Danny Ryder

EP090 - Nordstrom.com Ken Worzel and Danny Ryder http://retailgeek.com/podcast An interview with Ken Worzel, President of Nordstrom.com and Danny Ryder, EVP, Online Merchandising & Experience.  Nordstrom is the #17 retailer on the IR500 list.   They are one of the most storied retailers in North America, founded in 1901.  Today they have 354 stores in 40 states and Canada (including full-line stores, Nordstrom Rack, Jeffrey Boutiques, Truck Club, and HauteLook). In this episode we discuss Mobile, Fashion Retail, Amazon, and Retail Disruption. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 90 of the Jason & Scot show was recorded on Tuesday May 23, 2017. Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. New beta feature - Google Automated Transcription of the show: Transcript Jason: [0:25] Welcome to the Jason and Scott show this episode is being recorded live from Sunny Seattle Washington on Tuesday May 23rd. 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo. Scot: [0:41] Hey Jason and welcome Jason and Scott show listeners. [0:44] Today we have a pretty exciting treat for everybody we have the number 17 retailer on the IR 500 list Nordstrom. [0:52] Which was one of the most storied retailers in North America founded in 1901 and today they have over 350 stores in 40 States and Canada including full-line stores Nordstrom Rack. [1:05] Jeffrey boutiques Trunk Club. [1:07] Do I need to sign the show today we have kin worzel who is the president of nordstrom.com and Danny Rider who is the EVP online merchandising and extreme. [1:16] Welcome to the Jason Scott show Kenna Danny. Danny: [1:20] Very much right now. Jason: [1:23] Thank you so much and we can start right off the bat by educating me because I'm always self-conscious when I say how look whether I'm saying it right so can we get unofficial pronunciation. HauteLook so I am correct that I'm not saying it right. [1:48] My overlords in Paris are going to be like horrified that I that I butcher that one my apologies monsieur. So This is another first for the Jason and Scott show we are both live so Danny and Ken are here with me in the remote Jason Scott Trio Studio. And Scott is at our executive studio in Raleigh North Carolina. Scot: [2:18] Bicoastal in a mixture of live and not live it's pretty. Jason: [2:23] Exactly I feel like the five-second delay that Scott has will be super helpful because is is some some loyal listeners will know he he can get a little profane. Danny: [2:34] Do you have a bleeping machine. Jason: [2:36] We've only had to use it when former razorfish are on the show actually but yeah. Scot: [2:45] We really appreciate you guys taking time out of your busy days and it would love to start off with just hearing a summary of your background. You're rolling compasses at Nordstrom can we start. Jason: [2:54] Sure yeah my roll. Ken: [2:59] I'll let you not been ignored so I can. Jason: [3:01] Exactly cement Nordstrom 7 years now. Ken: [3:03] Now I guess I am I joined actually after a long time probably 20 years as a strategy consultant. So that was really where I spent most of my time pre Nordstrom. But I guess the relevant part about that is Northwest a core client of mine for about a dozen years before I join the executive team so. [3:26] Interesting perspective as a result of having had an internal perspective now but for a long time an external perspective having worked with a lot of other retailers in consumer companies in in the US and in Europe. And I joined initially to support our strategy team and build out a strategy function for the company is as we were sort of transitioning out of the recession and looking for for new ways to grow the company. And then subsequently picked up some other responsibilities including our corporate and Business Development activities. Are data science and analytics teams and then about eight or nine months ago took on the the p&l responsibility for nordstrom.com. Which I was. Is important I think because all those things connected mean if you look at our agenda really for the last 3 or 4 years increasingly everything comes together around how we going to deliver what's been a storied. Brandon and customer experience how we going to deliver that in a digitally connected world so you know our focus is clearly on continue to be customer obsessed. Digitally enabled and I'm lucky enough to. Get to sit in a position where a lot of those pieces come together across the company and I'm also lucky enough to have been able to have pulled Danny long on his journey cuz Danny and I work together for a. What time in Consulting and when I ended up in in in this gig I decided I should bring the smart guy with the English accent to help me sell our ideas. Scot: [4:53] Danny how about you. Danny: [4:56] Yes. That's kind of quite pointed out with the accident so I was born and raised in the UK I ask you went straight from college into Consulting a little bit of a not wanting to know. No knowing what I wanted to be when I grow up and so I went to the Consulting really thinking about to be something to gain experience and then go off into into. Career somewhere else but I should stay for number of years and really what's my way all the way through the different ranks within Consulting until she managed to work with a lot of really interesting gun. Dynamic different consumer goods and Retail companies around the world so that series of projects in your. North America in the Asia and then about five years ago I received a phone call from Ken. What was really interesting to me is. It's really the combination of the fundamental changes happening in the retail world right now and just the opportunity to really be at the house or something that's interesting and dynamic and changing. [5:54] But also from the outside I always thought notion was I really good company very well-run I didn't realize I didn't realize the level of ambition. Until she being in the retail that is very well-run but also having this constructive paranoid about the world and where things are going but also not patient keep changing is is pretty pretty interesting so. I joined the company about four and a half years ago originally is policy of the Cobra strategy team what's in a lot of different things across the whole old different parts of the company and then moved into more of an operational Rolla by 18 months ago with an ocean. So my title is online merchandising and experience and is really three different teams that I support the first assault online merchandising team, so a large part of what they do is really help inform up buying team on what these election stress you should be for a website and for app. Using a lot of the customer Behavior data to my she points out where we have opportunities for a Bratz Odette for white space opportunities. As well as they also then take the merchandise strategies and then strategies and play that out through the content the navigation on the actual product information on the website. The other two teams I support a focus much more on the features and functionality of the web in the app I'm so this the user experience design a research team so if they do a lot of work in terms of understanding the customer need and then I should going through too much you designing the features and functionality themselves, the news team is in the product management team to interface directly with our engineering team when she done go build those different features and functionality. [7:25] So it's a pretty wide-ranging said of interesting different topics, one of the best things I love about my job is I can go in one day from having a meeting with someone like a Gucci or Balenciaga to that walk down the wall to a different meeting room have a conversation with our Tech Team about the architecture of all different. What's the difference aleutians and it finally and the day by going to look at some new features and functionality designs and think about how we can create some Co experiences so it's I definitely love those if not almost my job. Scot: [7:55] Cool and I'm not an expert but aren't there sold Nordstrom's at North. Ken: [8:01] There are a team of. [8:04] 11 of us on the executive team from have the last name on the door so late Pete and Eric are co-presidents of the company. I have different responsibilities Pete manages our merchandising areas Eric is responsible for a full price. Brand are Nordstrom brand across stores and nordstrom.com and and Blake Spencer lot of his time on or off price business including Nordstrom Rack stores and Nordstrom rack.com and. And HauteLook and then Jamie Nordstrom is president of Full Line stores so my counterpart in the full price business managing our store business. Scot: [8:43] Course need to see there's not many retailers where you still have the family involved to that level set that must be fun. Ken: [8:50] Yeah I think it's fun it's also it's it's inspiring and I think they really they deserve a ton of credit for maintaining I think both the ambition that the Danny highlighted in terms of the admission to be as relevant. 20 and 50 years from now is as the company's been for the last 50 hundred years so. Jason: [9:10] Yeah and that actually brings me to one of my favorite things about. All of our jobs is it is it Danny's you mention earlier retail is really going through a significant change or disruption right now and I mean you can look at that and say it's a negative thing and scary and all that but do I to me. It's fun that that Playbook that Danny is Grandfather wrote that was so successful. Isn't the Playbook that we can all follow today that like the circumstances have changed so much that we all need to. Sort of invent what retail feels like for these digitally disrupted consumers that we're all facing today in my premises. The fundamental thing that's disrupted them more than anything else is ubiquitous access to. The super computer that we all carry with us now though the smartphone in so I wanted to dive into how you guys are addressing that that transition and so I guess I'll start with a softball question is. Mobile in Portland to Nordstrom do I have that right is. Ken: [10:14] I'm still hung up on the fact that you just promoted Danny to be a Nordstrom that his grandfather. Jason: [10:19] No no not Danny grandfather. Ken: [10:23] There is nothing more important I mean you know I think Danny can can win in this as well but we're sitting here today and I think we're excited to be sitting here. In large part because we're in the middle of a huge revolution in in customers experiences and what their expectations are in a lot of that. Is directly related to super computers that started on people's desks and are now sitting in people's pockets and it has fundamentally changed. Virtually every part of our customer journey and what customers expect from us which again I think you're right you can need to look at that as scary and risky or you can look at it as this massive opportunity and I. [11:02] We want to embrace the latter. Danny: [11:06] Yeah man just by the Numbers alone it's I think if you don't say mobile is really important to you as a company or as a retail of then I think you're missing a big big big point. Play quantify we have roughly 700 million unique daily visitors to our website or app. [11:21] I'm roughly now 2/3 of that comes through a mobile device and that is only growing the actual usage of mobile desktop web experience is declining and saw them at your own TV engagement that was seeing with Nordstrom in additional space is coming through my body Vice. The big thing is eating things like three causes of emails that we send to customers and now opened on the phone so it's a big deal to buy she think about and I don't need two hands right with customers when they come to a premises but also when we send Communications to them. [11:50] And I need to make thing for me with mobile is it is the device with which we can she lingcod digital and physical space. [11:57] And if we truly believe that when one of our adventures is company is the legacy of the great stores we have in the people in the stores and then she. Giving people great experiences in those doors the phone is the one device that cuts across both the home experience the on-the-go experience in the store. Scot: [12:14] Cool it looks peeled onion on that a little bit how would you guys grade the progress you've made so far on. Ken: [12:22] I guess from my perspective of back to this constructive paranoid I mean it's it's mixed I mean I think there's plenty of things that I think we can. [12:33] Play Comfort Inn and take pride in in terms of what the organization's delivered and what we've delivered to customers. [12:40] At the same time we look at how fast everything is changing around us and you know I don't mean just customers expectations but competitors are making us better. [12:50] And challenging us so I think we we recognized in a wee one of the earliest retailers to be in the digital space a lot of our categories starting. [13:00] A catalog Heritage that we had and then Translating that into it a desktop e-commerce experience and we were also early to get into the mobile. As it is a platform in SA. Vehicle to connect with customers but we see a huge amount of opportunity and and need for us to continue to make progress so mean from my perspective it's a cc plus I mean we still got a long way to go. To give ourselves the kind of great we'd like to give in to give the experience I think that our customers expect us to give them. Danny: [13:33] Yeah I would haul hot leak in car with AC grade I think we've made some really good progress. [13:38] Just looking at I think you have to separate out more about web from app and I think on the mobile website we've gone from having a translated version of our desktop experience to watch you having a specifically designed version of arteries. Specific for the mobile phone itself. Is part of that doing simple things like designing the interfaces so they all touch friendly on a small screen and as well as making sure that performance is a big deal because of a sea. Usage on a mobile phone on mobile web is Israelites and very Broad. And then in the app we actually have a very good Fashion retail app so gets roughly phone off store star reviews in the in the App Store, but obviously the challenge of that is that reads Fashion retail apps in particular I'm not really taken off in terms of Engagement and that is something that we're going to have to continue to push on his how to make you get people to engage with all app more. Because apps are expensive. Scot: [14:30] Yeah one thing I Jason I debate a lot is the gulf between conversion rates on desktop and and the mobile web and or apps, is that one of those you guys grade yourself and do you think that will is closing or will close or at 10 to think it probably won't close it just kind of different things and Jason thinks if you put enough. [14:50] A payment systems on there it'll eventually. Danny: [14:53] Yeah that's that's a really tough one when you look at the dates. What will the use queso Festival all the conversion in the conversion rankings of all different channels is highest in the app. [15:07] That it's not next in desktop and then it's lobotomize web and there is a very significant difference across that Spectrum. Ken and I to be this a lot about how much do we think we cannot she closed them about Gabba I think we can close a fair amount solve it but I don't think all and I don't think the reason you got, the reason you can't close all of it is the use case quite often is you're on the bus so you're walking around and you want to just browse and get information, what's really interesting to me is when you look at the dates of the drop off so I see the product for you rates on the mobile web is very similar to desktop. Where it really work start to fall off is the antibiotic and then completion rates and that's if I got you as a big drop-off and so I think that just shows that people are coming to look look at products internationally added to the cart. And then when sums of the actual how that and flows through the rest of the funnel what you get to check out there's a pretty significant drop off and nothing a large part that is the friction in the checkout and that is it's it's hard to check out on this little screen I take it you don't have your payment. All your payment details saved. Ken: [16:07] Also think that you guys are debated this as well but I think single-session conversion is a bit of an apples to oranges comparison across these devices I mean you look across almost any. Activity there's more frequent but less lengthy interactions with mobile sessions than there are with desktop sessions and that's certainly true in our categories so I think. No increase in the we look at even this conversion and engagement kind of measurement we look at it over a. Of time relative to a customer assuming that we're going. I have experience as we can and should build that in Mobile that's going to encourage more frequent engagement even if it's lower duration. Can you really I think while look at conversion as a function of that which is can we drive more frequency you might have a lower single-session conversion but against that customer over a period of time. We think we can close a lot of that Gap now again I think to Danny's point I don't think you're going to close all of the Gap because part of what makes the phone so powerful as a supercomputer sitting in your pocket. Is it in your pocket so you can use it to look up reviews when you're in a store to validate the purchase you're going to make it a physical environment you look at it on on the bus to see where the closest store is that has that Tory Burch. A purse that you're interested in so I think there are a set of use cases that are just enabled by the fact that it's portable and that it's with you all the time. That are different so I also think more generally you know certainly for us and the kind of retailer in the end the brand we have. [17:42] I think we want to be careful that weird don't get so focused on conversion. That we're not serving the customers who are coming to us for all those occasions where they're not yet ready to buy or were there looking to be inspired or they're looking to learn about fashion. And that's a lot of folks I mean that happens in the physical environment but it certainly happens a lot digitally as well. And so whether that's on a phone or on a desktop I think we're always looking to get the balance of creating a richness of experience and engagement as well as being there trans actually when that's when would people looking to do. Jason: [18:15] Dad said record show I wholeheartedly agree the. Single session conversion is you know one of the convenient things we have to measure and so I feel like it it has gotten in it in appropriate amount of focus and I certainly agree they're a bunch of. New use cases that are Nable by that smartphone. That we never had on the desktop in some of those don't have by intent and that's okay you like there they're great brand Impressions and your point like. That might be buying 10 tickets fulfilled in the store or some fashion advice to share with a friend or whatever the case is so I think we're all sort of the land on that but I do want to double click on. Danny made earlier hey there is a big gap between. Are mobile web in our desktop web but we also have this mobile app which actually has the best conversion in this brings up this. This frequent dialogue that I have to have with retailers in the whole debate about the role of apps and webs in your customer ecosystem. Like I'll just say it a front I walk into a lot of retail environments where there's a huge amount of the corporate Treasurer being invested in an app. And oh by the way there aren't very many active users on that app how do you guys think about that. Danny: [19:35] Yeah so so we definitely think that should be a differential stretchy between the mobile web and app I think that's that's aligning that we've had internally over the past couple of years. I think you have to take a look at the similarities and differences I think the similarities between the two is that first of all the phone, it's a small screen with a touch screen in pots you don't have a keyboard you don't have the ability to achieve navigate in the same where you can on a desk of experience so you have to design the user experience in a way that's easy to use an intuitive but also. Really optimizes for that phone Factor. [20:10] The second is you can almost guarantee that when somebody is using whether some mobile web or not it's in the context of the world around them. Which is the desktop you about your. You're looking at a biggest green you're more engrossed Wars on the phone you basically up Harley parallel-processing either being on the bus or quite frankly I sit home and watch TV and I see I'm on my phone all the time anyway. Answer the phone itself is actually it's a connection device that lives in the context of other things happening around you and so therefore how you design the experience has to be compelling enough or easy enough that you're not going to make it. Optimized for that use case. I guess you think about the differences between the two I think you have to look at the use cases and just the just add a troll owned on how people use the two different form taxes. I'm so I think you guys are said this in the past but mobile web is a very Broad and very shallow engagement when you want to look at the time that people are spending a mobile web it's a very small proportion of time on the phone. [21:09] People spending more time in a very narrow and deep playing in apps and so the actual the frequency vs. engagement piece. Between the Tucson people go to mobile web very frequently but don't spend a lot of time though people go to apps and they go very deep in those apps and spend a lot of time. [21:25] Unpretty the most compelling piece of data for me is that roughly only fat people on average only use 5 to 7 apps on a regular basis but they go right. [21:34] And so from that perspective unless you're one of those Fighters have an app so you may have the best shiny app that does a bunch of really cool stuff. But if people on engaging with and then you spend a lot of money to build something that actually probably isn't doing anything. [21:47] Look at when you look up the types of Ops people to spending time in and most of them are Awesome form of Google. Ken: [21:55] Yeah I think I think you've guys have talked about this before but we certainly agree that. They're very different rules for these and I think it would be a mistake for us or any retailer to over-invest. [22:07] In the app is an example at the expense of having a really convenient engagement experience in Mobile optimized web which is where the vast majority. [22:16] Archer. [22:18] The same time there's a subset of customers and in our case it's it's going to be probably our top 20% of customers who have a deep relationship with us as a brand and they're willing to make the investment. [22:29] To let us live on their phone and you know that's so that's a privilege for us that we need to intern provide them with a lot of value off of that and so I think it's. [22:38] The learning to Danny spoke so I think it's really clear to us that we need to have an app that serves those customers in a really deep way that gives them the value that they deserve for letting us live on the. On this precious real estate that's their home screen but we all have to be realistic that that's always going to be a pretty small portion of the total number of customers that engaged. Jason: [22:58] Number customer. Ken: [23:00] Check early if you look at the kind of categories when I mean people we're not a financial institution where people are engaging with us every day. And you know we're not a financial institution this sense of you know people generally have a checking account with One Bank. So most people have a banking app on their phone because it's makes our life better with their One banking partner we are usually part of a dozen retailers that customers are choosing between and they're not going to give us all the privilege of living on their phone so we better. We'd better have compelling experiences both ends of that Spectrum a really great will block them eyes web experience for the vast majority of lightly engage customers and I really high value-added. Engaging app for those customers that give us the privilege to live in their phone. Danny: [23:46] Yeah it does the last dates race so I think showed that only 3% of time spent in apps on a mobile device is in retail apps and that's because a lot of people. Facebook always has by Far and Away the most used app in and you really go through social you go through entertainment then you go through Services which could be Banking and Kobe taxis all these different use cases that have been enhanced by put to make you happen to turn up. Scot: [24:08] Yeah yeah I agree I've seen the comscore data there what what's an example of a feature that the app. [24:17] Offers that's not available maybe on the mobile Weber or the desktop in full disclosure of my wife is a card-carrying Nordstrom member so I kind of know the answer. Danny: [24:25] Thank you I appreciate that. [24:28] Great things out it's really anything for you accessing the unique capabilities of the phone that could be the camera it could be. [24:37] That's probably the main we have right now so we threw up right now you can visual search in multiple different ways so you can scan about the barcode of an item in the store, I know what I should bring up the part of details and you can make a purchase or you can see additional inventory the other thing we have is visual search so you can take a photo and then we'll give you like iTunes to that. Titan. Ken: [24:58] Yeah it hasn't rolled out yet to your Marketplace got but another example that takes advantage of of the unique capabilities of the phone is something we're rolling out. This year and Ashley we've tested here in the Seattle Market over the past six months which is something cold Store Reserve. And that specifically takes advantage of G location awareness so nature that experiences. Imagine as it as an engage customer you do with a lot of customers do which start that product discovery on your phone. And you start the journey there but a lot of you know a lot of challenge in our categories as you still want to physically evaluate the product you want to make sure it looks like what you thought I was going to look like that it fits the way you want it to fit. And so the stories of experiences start that Journey on your phone put it in a put these items in a digital closet. Will then before your local stores that you can try a little store will then find the product our team will find a product in the store send you a text message to let you know that indeed we found it for you and we're holding it for you to try it on. Animal use a geo location awareness of the phone so that we can see when you're approaching the store will let you know that it looks like you're on your way in those products are waiting for you in dressing room 2 on the Metro level of the downtown Seattle store with your name on it. You come through the door at the products already waiting hanging in the dressing room free to try it on. You go straight to the dress and you try on the product you can be in and out in 10 minutes having done everything you wanted to do in terms of. Discovering the product on your terms on your time but also being able to physically evaluate it without having to go through the hassle of sending it to your house and potentially having to return stuff. [26:32] And you know that's something we've made a mobile only experience because it's really only a great experience if we can connect the dots with the messaging both ways and and the g locational awareness and. Known the same way that Uber doesn't make sense if it wasn't an mobile only experienced something like that only makes sense as a mobile only experience it doesn't really make sense unless we can connect the dots and really personal way with you. So I think we're looking when we talked about the sea grade I think it's because we have a whole set of those kind of experiences that. [27:03] Customers tell us every day it would be great if you could do this for me and we need to do that we need to. Need to use the phone really to to leverage all the assets we have in particular that the local market assets we have of of people product in place and how do you connect. [27:19] Those assets to our customers via their their mobile device in a way that makes their life really seamless and really easy and on their terms. Scot: [27:27] Yeah the wheel of the curbside stuff so this sounds like a nice kind of even and now kind of taking it to the next level there, so one one other question you guys at the top of the show talked about using the phone in the store is there anything else I get you can take a picture and and scan a code and see the online reviews about using with deacons wear, I approached a shoe display and maybe there's something that lights up on my phone that tells me more if you guys experiment with that. Danny: [27:55] Yeah we've definitely done some testing around that the big lining on anything like that is it has to be really tied to a compelling merchandising strategy because if it's if it's just notifications for the sake of notifications and it's just annoying, but if you can link it to a great product strategy that I she enhances the experience and somewhat we've really been thinking about is, whether it's pecans or scanning or other Technologies like some of the light fixtures that I she help you with geolocation to Pieces as well, it really has to be linked to what are we trying to achieve from the actual product induction diving strategy or the wise it's technology for technology sake. Jason: [28:31] We we like to call those Mass pushes where you just push the same message I've been when they walk by the beacon go spam. Scot: [28:41] One last kind of on this topic of the store I've noticed your Associates are all very well connected their there either they seem to be able to access internet on their point-of-sale system and then many of them have like a mobile tablet of some kind, I never been to tell if it's an iPad exactly or what's going on at least he's in a case and hard to tell is there any connectivity there where, you know maybe I have something in my digital closet on my phone and I can push it out to the store associate anything like that. Danny: [29:10] Yeah so we don't quite have exactly that functionality right now but one of the things that were most excited about that is in the process of rolling out right now is really and Hunt selling tools for all sales people, and that's going to hopefully live on the on that mobile devices so right now we've historically had a text to buy functionality that is really not a very rich experience and pretty clunky and Sons of the signup, what we just launched about three weeks ago and is in the hands of 400 stylus to be testing right now is a an enhanced, stop for a sales people that she allows them to search nordstrom.com and then send what we call style bullets to customers and then customers can buy from that. So that will always you continue to enhance and rollout feather but then the flip side of that is can then customers use that as a protest wins right way so it would sales people as well. Ken: [30:00] Yeah we've got a whole road map of of these kind of experiences I think precisely to that that question. Of of additional ways that we should be making it easy for salespeople and customers connect went when that's when customers want and so to your question I think you will see in the not-too-distant future are starting to turn on. A functionality for example that would allow customers to both see a visual representation of their closet of what they bought from us in their closet but also to share that inappropriate way with salespeople and stylus when that's what they want to do. I think is you guys can appreciate me one one of things we're really sensitive to in that context is is making sure that that truly is on the customer's terms I mean what do they want to share with whom and we want to be very. Transparent and put all that control very transparently in the customer's hands. So that they get to decide when that's valuable for their experience and so we're just we're working through that. From a technology perspective but as much as anything also thinking about it from a user experience perspective how do we how do we make that really both easy but also very transparent. [31:10] Is it they're able to control their information to make their Journey. Jason: [31:16] What are the things that super interesting to me is a lot of the successful mobile experiences we talked about they all 10 to be in. Certain categories right like so you think of Starbucks and it's you know such a high-volume fast turn and you think of these General merchants and it's it's a lot about like volume of transaction and convenience and ease and all those other things. In your mind is there anything like different or unique about how you have to think about mobile experiences in the fashion business then some of those sorts of. Danny: [31:48] Yes yes. [31:56] I'm sure pretty much every kasperi would tell you this but selling fashion online. [32:00] And part of that is because fashion is an emotional purchase so much of it won't fashion retailers have been good at overtime is helping you find the right product then evaluate the product by trying it on. [32:12] Helping you all to the products are fits correctly in so it's not positive fashion Discovery is that she very hot so I think what a lot of. [32:19] How's the next consultant I think in sounds with two by twos a lot. For me this is 2x2 of experience versus convenience on the mobile space and particular Oshie lends itself to think about that. Can you take on one axis you have convenience that's what things like the Starbucks of the world have really done an incredible job of making it very convenient so I. [32:40] Make your life easier and that's where the banking apps Fallen is well because I. Jason: [32:44] I don't pay checks in the Run Channel. Danny: [32:44] Paychex in a brunch anymore I let you do for my phone in my life. [32:49] On the flip side you have the experiential things which I'm all things like. [32:53] XO the Facebooks of the wall which is more right entertainment The Sweet Spot is always easy people to do both convenience on experience and that's why things like ways really coming for me or even by which is they've taken what is a truly commodity tide experience historical and made it more interesting. [33:07] Retail that's hard because retail isn't exactly something you do every day so you don't. I'm sorry Taylor everyday and you don't mess I asked for product to Vice everyday and so making it whether it's experiential convenient we need to be thinking about what is it that we could be doing for the phone to my she hits on one or both of those. And that's where I think the challenge comes in and just to make one final plug for fashion in general is. If you look at the dates or overtime Fashions as a percent you spend a disposable income is going from roughly four and a half cents a two and a half percent. Can I sync the well this is me hypothesizing but I think the biggest reason for that is more of the move to one line. Because yes people to buy more experiences ammo Technologies but buying Fashion online is hard. I'm not basing means that when people use to go to the mall to get product information and guidance and I used to be entertainment people don't do that as much and the facial online shopping experience doesn't lend itself as much to Fashion. And it doesn't do anyone near as much of a small screen the end of that you have to see the product to buy and you have to evaluate it and take the gets harder and harder to small screen. Ken: [34:17] Agree with all that but I also think it's very easy to sit here and make excuses for why you know retailers and retailers Like Us in fashion haven't been able to Leverage. Mobilize it as a channel engagement better with customers and it's certainly true that. Uber revolutionized Transportation but before Rober nobody had done it and certainly true that Starbucks created an amazing and engaging experience particularly in the integration of. A payments in their loyalty program but before then nobody else had done it in that sector either and so. You know I think it's easy to point to kind of the convenience aspect and I think it's true that that lends itself. [34:58] Back to the beginning of the show we were an industry in transformation I think what we're really seeing is that nobody's cracked the code yet exactly but that's not because there wasn't a huge opportunity there I mean if you generalize. You know even a bit broader I think there's a bit of a. A narrative going on about how retail is kind of one to the Future Tech and traditional retailers in. You know I'd like to take the the positive aspect to that we're in a huge business that's a fun business it's an energizing business but you know if they head of zalando recently said you know you can't lose track of the fact. Fashions a huge business and it's undergoing a huge amount of change but pretty confident that in 10 years you might not have a car but I'm pretty sure you're not going to be walking around naked. You people are still going to want to buy clothes right and so we're in a business that has had its core. You know on the one hand the challenge particular as a fashion retailer that you nope the Pete the stuff we sell it if people want to want it they don't actually need it. [36:00] But at the same time it lends itself to fun and engaging and energizing inspirational experiences so The Challenge on us to how do we take. This amazing opportunity we have with technology to supplement what we've always done. Witches to win with fashion Authority and service an experience with our customers how do we translate that. Into a world where they have a lot more information at their fingertips to their phone but do it still in a fun energizing way so I think it is a hard problem but just because nobody's cracked it completely. Doesn't mean that it's it's not an opportunity that we should take advantage of her feel really optimistic about. Scot: [36:40] Cat that opens the door little bit I kind of have to ask the question I asked every show wouldn't be a Jason Scott show if we didn't talk about Amazon your neighbors there in Seattle. [36:52] Yeah yeah Bookseller there in your area. Jason: [36:56] I thought they were just the guys they gave away free bananas. Ken: [37:01] I've taken some of those free bananas as I walk by. Danny: [37:04] I should we we we joke about that so what I asked you tell people is one of the other things I love about my job is. So we have most of all offices don't located in downtown Seattle and so we have a number of buildings and we're lucky enough Ken and I to be in one of our buildings that she has an amazing view, and so we have an amazing view Westover the Puget Sound while the Olympic mountains amazing sunsets all that's great however we used to be able to see the Space Needle. And we can see the Space Needle now because unfortunately there are two new tile blocks between us and the Space Needle that went up in the past two years and that is all friend literally a block away from us right now. So on the one hand you can say that's a real challenge the other hand as she gives us a very real reminder every day that if we don't continue to move quickly then. The world is going to end up in the Amazon sphere and so that's something that we really need to be focused on and so. Takashi to build on what Ken was saying she is really about. How do we continue to make fashion an emotional patches that people engage where than that she has an elevated experience and truly differentiate from what is more of the convenience and camozzi business of Amazon, I want we need to do is really focus on working with all best fashion Partners to read navigate the world of digital so the, they feel there is a very compelling growth path with us so they don't need to go down that commodity path and so that's something that we spend a lot of time on which is how is it that we can work, with the bronze to create compelling experiences and really showcase their brands in the right way because. In the same way that we're facing the squeeze on traffic death that feeling it even more and I think for the best friends they want to be in an environment. [38:40] They feel like that with other great Brands and there is really brand integrity and that's something that we really focused on and I'm making sure that the additional experience really allows us to elevate that. Ken: [38:50] Yeah I agree with that I think you know Amazon is a great company Amazon's a great competitor and I think Amazon. We owe you know that a gratitude for Amazon for you know helping. Create a paranoid about how to improve customer experience every day and in a digital world so I you know I think that's with all great competitors and we have a lot of them they make us better. But I don't think that we look at the world and think that. Amazon's going to put every other retailer out of business I think there's a little bit of a narrative out there right now that resembles you know The Narrative of that was out there 30 40 years ago about Walmart and the reality is that you know what Walmart was in that massive growth phase. It's true one more put a lot of retailers out of business. Yeah it's also true that a lot of great retail stories and a lot of great retail bands came to prominence at exactly the same time that Walmart was growing. Weather that was Costco or Whole Foods or a lot of other great retailers so I think there's always opportunity whenever whenever there is a competitor that's doing new things and I think we it's up to us to make sure that. You know wheat we compete in a way and serve customers in a way that continues to build on the things were uniquely good at and the things that customers look to us for. So I think it's important to be aware of every great competitor out there but also to make sure we're we're right in our own Playbook and we're delivering on that and I think in the context of that. You know we. [40:20] The challenge we have is we're a brick-and-mortar retailer that has been an early as always been an early mover into serving customers across every Dimension and we were only move her into. A digital Commerce in and that served as well but we need to make sure we continue to move forward. [40:38] Again on the on the dimensions that customers look to us to be great at and I think they look to us. As a fashion retailer who's going to help them look and feel good and also as a retailer that's going to win on by doing that in a way that makes them feel like we're personalizing that interaction with them. I think that's the great opportunity we have I mean if you look at digital and mobile and the personalization opportunity that that creates in terms of connection with customers. [41:07] There's a huge opportunity for us to take what's always been a calling card of ours which is personalized service. Historically that was defined a lot through just a one-to-one. Jason: [41:16] Relationship. Ken: [41:18] In a store we now but opportunity deliver personalization ATS. Jason: [41:21] Still needs to be done. Ken: [41:22] But it still needs to be done in a way that you know is relevant to our brand and so. Jason: [41:27] I need where we. Ken: [41:28] I think where we are always trying to strike the right balance is a we we need to take friction out of our shopping experience whether that's a digital experience or in-store experience there's no question. Jason: [41:38] Customers want more control they want to be able to. Ken: [41:39] That customers want more control they want to be able to have the journey that they're looking for any given day on their terms and that means. Take a lot of friction out of the experience but we also you know where where. Business which is fun and exciting because it's fashion it's you know it's supposed to be fun it's supposed to be energizing it is social and we can't lose. The context around that we're not in a commodity replenishment business we're in the business of making people feel good not just about what they bought but the whole process of engaging with us and shopping and discovering. And so I think there's real opportunity win there whether it's in a world where Amazon is or any other great competitor we just have to. Scot: [42:26] It sounds like your strategy is to partner with Brands what we see a lot of other retailers doing is saying. [42:34] Oh my gosh these Brands can be anywhere so the way to differentiate is to get exclusive brands or by the brands like what Walmart and Mark Lloyd jet are doing you guys invested in bonobos I believe. [42:47] Is that also part of your strategy or you're really just kind of partnering with the brands and saying hey. [42:53] I guess part of that would be don't sell on Amazon or you know we can drive a better experience Tulsa Lil bit more about that Strat. Ken: [43:03] Yeah I can I can take a shot at that immediate into context. Our business development corporate development strategy is very tightly linked to your customer strategy so. Take the specific example that that you highlighted their Scot which is bonobos. [43:21] We partnered with Andy and Andy done the founder of pronobis and his team now must be five or six years ago. And that was really because we we saw that brand born on the web. A brand that was highly relevant to our younger mail customer we thought it was a real opportunity there that was a win-win for customers for bonobo sent for us for. For us it was an opportunity to have a Prada. [43:51] That was limited distribution wasn't being sold everywhere but that would be appealing to two customers that were already in our store. Alfabeto Bose and I think for a lot of other aboard on the web brand since then it realize that it's really expensive to scale a brand if the only touch points you have with that brand are digital. And especially when you're in categories were physical evaluation of the product is important and so for them there was a real opportunity to scale their business and scale their brand. Through our relationship with us and for customers customers want to have the opportunity to to get exposed to brands in multiple places so for us the investment at the time was linked to a customer strategy was never our intent. Set to own Brands and it was never our intent for example in that context to buy bonobos as a brand our investment there was to align kind of our agendas but also to provide damn at the time with some capital and commitment from us that we were. Important to them and and they were important to us and that. Intern really set the stage for a whole number of other relationships we've had since then with a number of great or on the web brands that are important for our customers some of which have involved investment most of which habit. We've also continued to invest in things that can build our business and our customer experience so that they're not. They're going to be things that we're investing in because we think the investment. Is aligned with helping to scale the business or to create alignment in terms of how we serve our customers so we recently invested. [45:26] In a company called Dropship.com disco as an example because it's a Dropship. Capability a platform that really makes it a lot easier for us to engage with Brands who are and Dropship relationships with us and really make that a lot easier for them lot better for them a lot better for us. [45:43] But I think back to the limited distribution question you know are our message to Brands is not you have to be exclusive to us our messages though that we we think that. We are a great partner for helping to build Brands and expose brands in a full price context where. We we can provide an opportunity for Brands to scale their business. [46:07] Providing the full expression the brand of the customer and that's knows you guys know that's harder and harder to do if you're distributed everywhere if your distributor everywhere. I think for Brands that's a recipe were often times you lose control of your brand you lose control the pricing of your product. [46:25] And we are frontal turn it for that and alternative that still we think has a lot of growth and I think we've had a lot of success. I would light a branch and Danny can speak to this about showing them just the power of being in our ecosystem both full price and off-price both in stores and an e-commerce we can bring all of that. [46:44] To our brand Partners in a way that I think they really value the commitment we have to presenting their brands in the right way and exposing their brands to younger customer and a customer they might not otherwise have. But we're excited to be in business with brands that have their own direct-to-consumer business have their own stores week we think that. Recipe works well works well for brand white bonobos but also, for the more recent things you've seen us do with the likes of J.Crew and Madewell and Topshop and Ivy Park we have a long list of examples where I think it works for customers it works for a brand partners and it works for us as a business to do that. Danny: [47:23] Yeah I would answer that that I think history is told us that exclusivity free exclusives you say can I should be more hurtful I think, part of that is the stew way you can do a swim until you can have to take exclusive parts of a lion, all you can have the whole brand exclusively in and historically what we've seen is if you take exclusive parts of the line then you may not get the best products because of see the Browns going to want to sell the best items in more places, and then with regards to Brand awareness we definitely see that there was a huge benefit for. Apollon is that she having more exposure both online and in stores in this definitely places where we actually feel that. Weather is the wrong retail premises or select part is that I shall We Tell Pond is for them that she do allowed the Brand's be elevated and maintaining the brand Integrity Russian pretty helpful. [48:11] The only thing I would add is that we have a pretty proactive stance now that if we see people becoming Chumash distributed and actually not maintaining the brand Integrity then. That's a good sign for us that we think the brand is going to be on a sudden points of relevancy and so what we do need to be doing is looking for those next new bronze coming through and taking a really healthy portfolio approach to giving those new emerging Brands a great place to be. Jason: [48:34] Cool you know one of the things that's interesting to me is. As as consumers get used to all these mobile devices their expectations that are set and so then you got you going to figure out what what the right mobile experiences for that. Customer expectation but then as we talked about a little earlier. There's unique and an elevated expectations for how I would use Mobile in a fashion context and it heard means you're just talking there's actually even another tear that you guys have to worry about which is. Like Nordstrom isn't simply a. Apparel retailer like you you enjoy a unique place in the sort of fashion ecosystem and have a very unique and differentiated. Brand value proposition so. If you thought at all about like what's the the truly unique mobile experience the truly unique Nordstrom experience manifested on mobile. You know can there be such a thing is that possible. Danny: [49:35] Well I think the Ken's coins earlier there is there was a huge opportunity if we can get that right and so definitely working pretty hard right now to trying to find what that is and I think it starts with having a break definition of what's the role of each of the channel I think with the mobile web. [49:50] It's really about creating a fast friendly Discovery experience and customers would like to check out they can do that. What's interesting to me is we actually get more engagement with some of the content on our website on a mobile phone then we had she done him about website that we actually doing all day. [50:06] How to search people coming to the homepage and then she clicking through to a story so I think. [50:10] Does a set amount of fast easy convenience that needs to be through mobile web but also is that the sort of fast hit convenient content. Ons not something that will definitely be playing through and then from the up experience. It's really in kentish town this how do we create a great experience that our best customers are going to engage with on a regular basis cuz if we want to be one of those Fighters have an apps that customers engaged little regular basis. How do we do something that allows for freaking engagements and allows a great eCommerce outside of one of our premises but also then also enhances the in-store experience in the linkage the stores. So all rap is good really going to be all Powerhouse in times of how do I should create richer engagement or not she Elevate the experience and Sons of the shopping and Simpson experience and feed the mobile web is about. How do we have customers come to on a regular basis cuz they think it's interesting but it's convenient if they want to check. Ken: [51:04] Yeah I think it's fascinating that I. [51:07] In retail at least a lot of people when they first think about mobile they think of it purely through, the convenience lens and think that that's that's why how people are using the device and again to Danny's point I think what's interesting in the day that we see. Jason: [51:17] What's interesting in DC. Ken: [51:20] There's a lot of Engagement with content that's how. Jason: [51:22] Makes sense to me people are. Ken: [51:23] Make sense mean people are doing bite-sized engagement all the time with their phone as as a source of information and entertainment and inspiration and we're in. Jason: [51:31] Retainment inspiration. Ken: [51:36] You know we're not unique position I think to Leverage. Is we have with customers around Fashion Authority do that in a fun way in an engaging way so I think the balance of how do you get that content out there. In a way that really engaged just customers while still letting them have a frictionless shopping experience when that's the thing they're looking for that's that's the balance were looking to strike. Danny: [51:55] The idiotic right thing about mobile phone is it is a unique device to an individual and so therefore you can truly person lies on the phone and actually. Does a lot of great things we have in terms of what lives in the brain of all sales people with regards to styling guidance in the ability to show people the right product and so we've been working really hard in the background or really on the days room services that would allow us to do that scale through a mobile device. Scot: [52:19] Quick here's a quick one and then kind of a long one so Apple Android a lot of the data out there suggest that even though people's traffic. [52:28] Tends to be half and half this is both a pin mobile web the iOS users represent on the web like 80% of of actual sales even though they're they're smaller in traffic do you guys can you guys see something like that on your side. Danny: [52:43] Yeah so actually I think I'll dates are excused for the even more heavily towards iOS nothing apart that is the demographics of our customer so roughly 75% of all traffic comes through an iOS device. But Android is definitely growing quickly and so I think from from all perspective we don't see needs you thinking about how is that we're all going to play out and between what are system what what are investment in iOS placements through a native app vs. website, on some light on on an Android device how that looks in the futurism is a pretty interesting question and it's a little bit of all of the above, not thinking through what that what are the Dynamics between those two platforms cuz I has a big impact on where we want to invest. Scot: [53:27] And then the longer one is just listening to you guys Jason I talk to a lot of retailers and a lot of them have kind of that that Merchant King kind of mentality that you know we're going to go and figure out what's the right. [53:39] Dress for next season and that kind of thing and what I'm hearing for you guys as data personalization data scientist feels like a real commitment on your side to that to the extent your control sharing it knows this one dude locked in the basement. [53:56] Did the Guilfoyle picture from Silicon Valley or like tell us about you know sounds like you got some pretty serious horsepower behind this thinking. Danny: [54:02] Yes I'll let Ken's Pizza that cuz he actually supports all data science and analytics team but one thing I would say before he goes into that is, tell me what's really interesting is if you just sent it over to Daytona algorithms and it's going to give you a lot of good predictions on what's happened in the past. And Ashley fashion is something choir there is trillion art elements and that's where I buying too much you have a real talent is being able to pick Trends and pick ones can be important to the customers and that curation elements of what customers should be thinking about is that she a big deal. And so I think, Paws Of The Magic of where all welcomes together is how do we take that knowledge that exists in the head of all Bonnie team and all sales people it's really see the machines because machines are only going to tell you the review married, respective, and so from my perspective we looking at some really interesting ways of how do I take the knowledge of the people who I should know product really well so I she get it into the right attributes that then we'll feed the algorithms that it will be more forward-looking is fashion changes all the time. And that's the one challenge of using data science analytics and something whether there is no constant in terms of customer demand. Ken: [55:08] Yeah I think that's absolutely right I would say data science analytics a big topic it's a big topic for us and I suspect for anybody like us in our industry and what I mean by that is it's cuts across. All different parts of our business so we've made a big investment it's probably one of the. The biggest growth areas in the entire company right now is the way we've been scaling that team over the last 18 months and will continue to scale that capability. Because it cuts across every part of the business including. Supply chain and where we where we deploy our inventory how much we should be buying of the stuff we're buying but also. The point about as your Highline Scot I think like what sorts of product we should put in front of customers in a given point in time to be relevant. [55:56] But there's also basic things that we're working on that customers expect and we should do a better job on which is. No personalization I think through a customer's eyes is a lot about. The more they engage with us and the more they let us know them the better we should serve them which means do you remember what size I am do you help me, by remembering you know which brands I really like and help you keep informed about what's new in those Brands but also, help me understand what other brands I might be interested in in and to do that in a in a seamless way that you know keeps track of. How will those activities happen in stores on a phone on a desktop think that's the expectation that we need to live up to and I think to Danny's point that used to live all in. In a salesperson's had the fact that it now cuts across doesn't diminish. [56:47] What part of this and it doesn't diminish the value that comes from this long Heritage and in deep experience we have and all of our people with those those folks are emergent teams or whether it's our sales people in stylist. We have a deep well of expertise I just use a small example. You know we found that it when we do things like product recommendations even though there is algorithms to support that those algorithms for us perform a lot better. If we don't just take the buying information from customers have purchased these baskets but we also feeding information about what are best stylist put together. And so if we can bring the RT in with the science we know that that actually has a better outcome for customers and so we need to put that all together but at the end of the day that's a big data science problem you can even just getting the data. Connected in a way that you can connect to single view of product across the whole Enterprise with a single view of customer across all their touch points with us. It's not trivial particularly when you have a lot of legacy. A technology that that you're in the process of replacing as we are so it's a big focus it is a big growth area there's lots of different places that we see data science and analytics adding value. But none of that sat the expansive of the art in the business it's it's a supplement to it in our view. Scot: [58:09] Goat sounds I'm getting a mental image of a stylus and a merchant floating in a pool with computer brain connections like Minority Report people are said she needs to see the side of right now. Danny: [58:22] I like it we should think by quest list. Jason: [58:24] Fashion fashion precogs. You know it's funny cuz this is very Timely. So we've been talking a lot about mobile there's a huge buzzword I can't believe it hasn't come up yet in Mobile is the the whole mobile-first philosophy and so I kind of wanted to hear you know where you guys. Come down on that but what what's been interesting in the last week like Google had their IO this this week and their big thing was. Hey we've been mobile-first now we're shifting its AI first which is the the topic we were just talking about so. I guess super question like you know are you embracing a mobile first philosophy and is that important and you know is it. If you're not is it already too late like should we be moving on to the next thing. Danny: [59:16] Yeah I would say so we are embracing my boss first I think to me the definition of mob office versus a fuss. Is a little bit Falls because if you brought in the definition of marble to go beyond just a mobile device and I see how you are connected to the world which isn't in realities was happening more and more. [59:32] Then I think my ball first hold and it's really about how do you. How do you think about the mobile device relative to other connected devices relative to the physical environment except for and so we are definitely still thinking about my ball first. [59:46] In terms of what about physically mean so I think the greatest example for me is when you look at the way we design not she then execute on features and functionality. [59:55] Really we definitely are user experience team now stop with the mobile phone screen first and so they will design for the small screen and so the optimized for the small screen make it make it user-friendly make it compelling and then scale it to a biggest green lights on. [1:00:09] And I see the way we didn't go code again sign execute against eyes very much part so I suppose the mobile device Fest. [1:00:15] So I think that there's a very real practicality of mobile phones which is you do the work from about fuss. But in reality what she means is it forces you to be a lot more thoughtful about design because the use of interactivity of a phone with a smaller screen with a touchscreen actually is hotter than a big screen. I'm sorry I think it makes you fat so and so whether you believe. [1:00:36] 10 clear what it means in terms of whether it's the mobile phone prices of the connected device starting with the smallest Creole starting with a different use case in the big screen I think makes the design hot or. Ken: [1:00:47] I also think more powerful I mean it's a touch screen and has a camera it has a voice in her face it's geolocation Aaliyah where it's personalized to an individual those are all huge advantages in the kind of experience we're trying to create in terms of connection with customer. I don't know how to distinguish that from AI first mean AI isn't bringing data in science and AI into the equation in terms of creating a better customer experience th