 All right, hello there. This is Gerard Leonhardt, CEO of the Futures Agency, Futurist in Basel, Switzerland. And I'm very happy to have with me today Carla Donzello from Rome. He's going to introduce himself shortly. And he's the Wizard of the Smart City. And the topic today is going to be handled by Doug Stevens, who is otherwise known as the retail profit. And we've just recently met here in beautiful Switzerland. I had a great chat and figured we should do something. So let's start with Doug. Just kind of briefly say what you do and then we'll ping pong back and forth. Thanks Gerard. My name is Doug Stevens. I'm the president of Retail Profit. Retail Profit is a futures consultancy that specializes in the retail industry, looking specifically at changes in retailing and consumerism, who work with large brands, trade associations, government, and mid-sized retail companies as well. Just to give them a sense of where things are changing, where things are going into the future. My name in a retail profit, I take a lot of balls to say that you're the profit. Which I like. Let's have another profit over here. He looks like a profit over here. That's Carla from beautiful Rome. About 100 meters from the Pope, he said. We were hoping that Carla would be the next Pope, but it didn't pan out. Maybe he wasn't religious enough. So Carla, what do you do? Tell us briefly what you do. Hello everybody. Yeah, I'm mostly based in Rome. Even if I travel very extensively, as most of you, and consulting to public agencies in Rome about the future of smart cities. Rome, of course, has the ambition of being one of the cities. So I'm overseeing a number of applications in this area, mostly digital applications, and also overseeing the plan for this new district of digital technologies. Great. Particularly interesting and interested also in the future of retail, because I'm too quite convinced that whatever is related with digital commerce and digital retail is really still very important for cities. Okay, great. Let's go back from the city to the retailing part. So, Doug, you want to bring up something that had to do with Mark Anderson and what he said. Let's start there. Yeah, it's kind of interesting. A few weeks ago, Mark Andreessen, and for those who aren't familiar with who Mark Andreessen is, if you go all the way back to the Netscape days, Mark Andreessen, of course, was one of the co-founders of Netscape, today he's a very influential venture capitalist in Silicon Valley. He's invested in things like Pinterest and that sort of thing. So he was interviewed, and I believe it was in Wired Magazine, and he came flat out and he said, retail is dead. Basically, if you're a retailer, you may as well turn out the lights, lock the doors, it's over. We're going to buy everything as consumers from the internet and he made this sound very, very impending. So for the industry, there was this collective sort of gasp, people couldn't believe it, and so it caused a lot of conversation in the industry. I wrote an article in response to that, and I tried to look very objectively at this, and then, of course, when you look at the statistics, they're compelling. You know, upwards of a trillion dollars in e-commerce business worldwide, it may only be about 6-7% of total retail sales, but it's growing at a pace of about 12-15% a year. So it is very likely in 30 years, or rather in 10 years, that 30% of everything we buy conceivably could be coming to us through the web. In a digital way. Then again, Mark Anderson sat this 1999 when he invested in Bepp Van and lost, what, 700 million. He said the same thing was going to be the end of retail. He lost all that money, I think. I'm pretty sure. I think he's a genius, but is he right now, or is he, you know, Carlo, what's your view? Make it swift. Well, you know, I believe, first of all, that he's well known for this very, say, journalistic title, rather than, I remember the one about one year ago that was the famous, the software is eating up the world. That's why I like him. He was from Andreessen. So probably, again, you have to distinguish the title from the substance. So probably, maybe we can reword what he was saying. It's the end of the retail as we know it. We can agree. You obviously don't agree, Doug. I don't agree that it's the end of retail. And the reason I say that... As we know it, that I agree with. I think that the thing that's key here is that if we only shopped in order to acquire things, I would totally agree with Andreessen. Why would you go out to a store when you could just have things delivered to your home? But we don't shop purely to acquire things. We shop because I think there's an embedded social need. I think it's in our DNA somehow that we long to go to the market. So to Carlo's point you think that's absolutely right. It isn't the end of retail, but it is absolutely the end of retail as we know it. Well, if this is the end, what's the future? Tell us. I mean, you're an expert on this and you just spoke in Switzerland a couple weeks ago about this. Ironically, right after I met you, I met these other guys where I was giving a talk on the future of retail to the Tengelmann group in Germany. And I was able to use some of the stuff that we talked about. But if that's the past, if retail is changing like this, what is the future? Where is it going? Well, I think one of the key things, I really think that the key acknowledgement that retailers need to understand is that for centuries retail was about distribution. I mean, it's what the word means to take something and to divide it up into smaller parts and to distribute it. And so we live in a world now in a internet, post-mobile, post-digital world. We live in a world where access to the product is no longer a problem for the consumer. They don't rely on retail to provide distribution of products. So the question becomes, if product distribution isn't the purpose of retail, what is? And so it conjures up these questions for retailers that, what is it exactly that you sell now? And my belief is that retail is now in the business of selling experiences. This is happening in other media also, but if Sony said five years ago at CES, they're not in the business of selling products. This is what the CEO of Sony said, and they do sell products, boxes. So this is a huge shift, clearly, but you mentioned this idea of collective branding of the third shelf. This is your book right over there, by the way. I've just got it on the Kindle. It's in my queue. I think it's available on the Kindle that I ordered and printed. But anyway, I've got a huge queue of stuff here. So continue. This is a good topic. Well, yeah, and this notion of the third shelf, right now, I guess everybody in the industry is trying to determine which channels are dying. And I know, Gerd, you probably see this in the communications and entertainment channels too. We're trying to come down to this binary sort of answer which channels are dead, which channels are live and which are prospering. And I guess the real awakening here is that channels aren't dying, but they're emerging. And they're coming together and consumers are crossing these channels very seamlessly on an increasing basis. So this idea of the third shelf is sort of the idea that we need to stop thinking in terms of channels and devices, and we need to start thinking in terms of the moments in a consumer's life when they actually need a certain product. Because we now have the technology not to just advertise them to them, advertise to them at that moment, but to actually take the opportunity to buy the product to them in that instant. And it doesn't matter what media they're looking at. So there's very, very transformative times right now, and a lot of it is being spurned on by mobile technology. Yeah, Carlo, I mean, a quick question as to Italy. I'm not the expert on Italy, even though I'm going there on Monday, and I do like Italian food. But what's happening in Italy? Are people actually switching the behavior of how they're shopping? Are they shopping with mobile devices? Are they comparing prices in the store? Well, this is a very interesting trend. In fact Italy is not being really avant-garde in terms of market for e-commerce. But for instance, mobile commerce is coming up very quickly. And there are very, very interesting increases here over here. And so this is an interesting trend. But apart from this, there is something that I wanted to add. And I think it's quite common to many people. So this idea of the fact that you can be delivered to everything at home, and this is by definition better than having to go to pick it up. I mean, it's not always true. Not for Italian. Not for all audience, for instance, for people constantly on the move, like me, it's a pain, honestly. It's a pain to have something delivered at home. I much prefer to go in a very convenient place and pick it up. I never know where I am, and I have almost spread over at least three places. Yeah, I mean, clearly. This is a cultural question, Carlo. Let's go back to Doug here for a second, because I think the big point is here, the stuff you're talking about, are you talking about on a global scale? Are you talking about North Americans? Because clearly, in Korea, the Tesco stores they take a shot in the subway, and then they have it sent at home, which is completely robotic, so to speak, in terms of the... We wouldn't do that here in Switzerland. But we do order stuff and have it delivered, and there's more and more e-commerce. So is this a global thing, or is it really cultural? I think it's both, and I'm not just saying that because it's the easy answer, but I really do believe that it's both. I think that globally, I think, certainly everybody is being touched in some way by mobile at a consumer level. But that does change by country. So you'll find in Africa, for example, banking on your mobile device is absolutely common place, whereas in North America we're very reticent to do that. Price checking is really the predominant usage right now at retail by consumers of their mobile devices. They're price checking, they're quality checking, they're looking for social proof before they make a purchase. It's very, very nascent. These are very, very early times. I would say if this was a baseball game, we are in the first half of the first inning. The thing is that about 15 years ago I predicted in the music business that half of all the revenues were going to be mobile and digital, and everybody had a huge laugh, and this is basically what's happening now, but it's not too hard to predict that maybe half of the retail revenues will be in some way related to some interaction with digital device in five years in most countries, somewhat related to, for example, coupons and location and all this stuff. My view, this is not a bad thing for the record labels to go through this transformation to become more ubiquitous if they actually have value, and it turns out they didn't. Just kidding, in most cases, but if the retailers can add more value, then they'll be fine, but this whole debate about being replaced by technology or so in my view is not really real. It's more like you get replaced by those that use the technology, rather than the technology itself. Yeah, you're absolutely right, and I think the key thing that you hit there is that you need to find the new value that you as a retailer add to the equation, because of course for centuries, the value you were adding was really two things. Access to the product and a little bit of product knowledge to put it behind it, so you would add a little service element, give the consumer knowledge that they didn't have access to otherwise, because of course we all lived in a black box with no information, but now the consumer has probably more information at their fingertips than most of the people working in the store have, so the retailer needs to find new value to add, and I think it's in, the value is in the production that they put around. The context there. Yeah, it's the environmental production. It's strikingly similar to what's happening with the publishers and the magazines. It's the context of how you read it. For example, I am a subscriber to The Economist, only because they allow me to read it while I'm driving because it's reading to me in MP3, and this is the value of The Economist for you. Let's go back to Carla for a question about Italy. Italy has a lot of large, I wouldn't say monopolies, but media set for example is very prominent in the media landscape and television and so on. What about retailing? Are there big retailers who are worried about this? Are they doing anything about it? Well, I think that at the moment they are considering this but I think that they are maybe more concerned about certain trends which I know they are very strong in Italy and I do not know how relevant they are outside of Italy. For instance, I don't know if you have ever heard of this terminology. In Italy it's called kilometer zero or kilometer zero, it's zero kilometer. It is a sort of movement normally related with say good food and good health and good environmentalist that gives a premium to all kinds of, for instance, restaurants and also small retailers and local products. So there is a premium to this. So clearly this is something which is exactly at the opposite of this idea of products which are totally anonymous and can travel everywhere and what is important is simply that you can find it at home at the lowest price. This is something which is very important and picking up quickly and could have an impact I believe also but of course the digital trend actually works very nicely with that because when you have local products that you can have a local network you know you have locations where things and people are willing to pay a bit more if they know that it benefits the community and so on. I don't see a difference there. I think that this natural food movement for example is a perfect fit with the social network movement of what's called social commerce that you buy things because you care about the other people who make them to me it's a perfect fit. In fact this is what most of the success of Whole Foods in America for example is based on this kind of digital networking and of course on the food itself. There's one thing I want to ask Doug about the role of data in retailing. You mentioned it once, your destination is you kind of thing. We call this big data or data as a new oil or whatever you want to call it. So what is the role of knowing exactly who these people are or what they are doing and what they like? It's just such a fascinating we could have dedicated a whole hangout just to this topic the whole data topic but right now the big movement in retail is to now try to capture this data and overlay it onto the retail experience. So a lot of the great attributes of the internet and of e-commerce, things like knowing who came to your site knowing how many times they came to your site, length of stay, unique visitors what they purchased, how they purchased it, all of that information now is information that can actually be captured and overlaid onto the physical retail experience giving retailers now a completely new level of insight into the performance of their stores so that's the one big frontier now for retailers is to try and understand the implications of big data, how to use it it's going to be a very bumpy road one of those things is that they don't really know what in the world they have there. I work with telcos and they have lots of data on their customers but they're really scared of using it and they never cared about it so now they've got these terabytes of stuff on each person but they don't know what permission they have and so on and I think privacy is a big issue but I agree with you I think that once you can harvest that data and get permission from people to serve them better like coupons, location aware things and location sensitive I downloaded this app yesterday from LinkedIn, I think it's called Beware or something where you can find people around you that are on LinkedIn like in a conference and you can connect with them that you met before. These tools are going to be very powerful like Carlo has already talked about with the Future of City, the same thing with location aware, there's a lot of Jews in there but there's also a lot of concerns about can people track my behavior and deduct if I'm pregnant or not from my shopping behavior. Those things will be very strange, right? What's your take on this? They will be and I think the natural tendency on the part of most marketers is to regard these new tools as just a craftier way of achieving the same old goal of interrupting people. Adding that's the natural reflex reaction that most marketers have to this, they figure, oh this is just a better interruption tool and of course the enlightened marketer will look at it the way you've just described and say, look if we can truly promise a consumer a better experience and a more customized, personalized experience as a result of them sharing it with us willingly, then we're into a mutual exchange of value and that's really the key thing and my guess is that very few retailers will actually be that enlightened to take that approach but some are already doing so. Carlo, a question about Italy again Italians are crazy about telefoninis, about their mobile phones most of them have too, you have to mute the mute button. So the question I have is like are Italians going to take to this kind of sensitive location or we're shopping like using smartphones to broadcast where they are culturally speaking, are they going to do this? Are they going to be as crazy as say people in Korea or in Japan or even in America who are very quickly switching this location or we're a way of moving around? Well, it's really difficult to predict Italians are mostly unpredictable, that's the point. Let's think about them. Certainly I think that now it's still the country with the highest density of mobile numbers compared to population but in terms of smartphone penetration is not number one in the world but close to and what is really important is that it is the ratio, so it is the preferred way of accessing internet to the largest part of population so there are many many people who never access internet through a desktop or a laptop but they do it systematically with the smartphone and concerning privacy, I think here again for this kind of aspect, I think that rather than considering it purely from the point of view of the principle of privacy, most of the people would balance it what I can get if I can relinquish some privacy, so it's a balance between say the perks and the advantages versus the privacy I sometimes call this the Faustian bargain after the story of Faust, making a deal with the devil so when you are broadcasting your data and you're opting into the shopping networks and you're using all these apps to compare stuff and you get greeted by some robot when you get to the store who sends you a message for a coupon are you making a Faustian deal or why not just pay more and live in peace which way is it going to go in the future? which is that right now we're in a very chaotic stage, we are as consumers if you just look at any of us, if you take me for example if you look at me on LinkedIn, you're going to think I'm one kind of consumer if you look at me on Facebook, you'll think I'm a completely different consumer you might not even be able to tell it's the same person and the same would apply on Google Plus or eBay or wherever because I go to those places for different things, so I have these disparate profiles that are spread around the internet, I'm not even aware half the time of what information I am sharing with retailers, so I think there's this tremendous sense of insecurity right now in the part of consumers that they feel that all these different parties may be infiltrating their privacy and their security and they're not really sure what it's adding up to in terms of value to Carlos point, so I think that where we're going is I think that there's ultimately going to be a market, a significant market for what I call a meta-service, so as somebody that comes along and says look, we will become the center of your consumer universe, we will guard your data, we will allow you to curate what you do and do not share and you can do that from one, I mean, like a data bank. Exactly a data bank and also a service that brings you things that you're interested in and filters out the stuff you're not interested in and I think personally, I think we can already see businesses like Facebook and Google and others are already moving in that direction to try to become that center of our consumer universe, but I think it's a good market for it. I think that this is one thing I'm trying to get across to my customers all the time is that the future is not about building better mousetraps. This is a constant obsession with this because you sort of think that when you build a better mousetrap, then you can make more money and you're going to be in the same position as before so that people cannot live without you, but by building a mousetrap you become dispensable because people don't like mousetraps and this is a big obsession. When you're not indispensable then eventually you become dispensable and this is what happened with Tower Records for example and this is what happens to other retails and this is what happens to bookstores if they don't figure out a way to become indispensable, which admittedly is difficult. I don't know what your advice would be about bookstores so I think this is definitely something that we should refer on a little bit more. Let's talk about your book for a second because I want people to look at your book and it's over there so tell us about the book briefly. Yeah, the book is called The Retail Revival Reimagining Business for the New Age of Consumerism and I guess the key for me is that notion of reimagining. I think we're in a period of time now where we're experiencing exponential change and some companies are still making the mistake of responding with incremental improvement and it becomes a failing proposition so I really believe that we're at a time where retail businesses in particular need to reimagine what they do and they need to do it before some 22-year-old kid from California invents an app that does it for them. Beijing is going to be Beijing, not California, Beijing. Exactly, yeah, that's right, or Morocco, yeah. Or Sicily maybe, I don't know. So it really sort of approaches this from a historic perspective and looks at where we've come from in terms of consumerism and retailing and consumer behavior and then where of course we're headed and the big change is on the horizon. Okay, this is available on Amazon at the usual formats, right? It is, yeah, available on Kindle or in hard cover. Okay, great, and we're going to do some more work together on the future of retailing. We're working on some interesting projects and hopefully you get to see more on this channel. So let's go to Carla for a second to just let us know, Karlie, where can people find out more about your work and in general about the Smart Cities thing that you're working on? Is there any website you can point us to? Or maybe just use your Twitter account? Yeah, I mean, you can follow me on Twitter. I'm quite active in it. My nickname is Narissimo, N-E-R-I-W-S-I-M-O. That means Deep Black in Italian. And also there is an interesting site where you can see some of the application, digital application that I'm following here in Rome. There is this portal that's called Futureing and that's Futureing.it and it's a portal for digital application for cultural heritage and it's quite rich and you can see many applications already fully working here and also some ideas of evolution. Very good. And Doc, tell us about your Twitter handle and your websites. Yeah, the Twitter handle is at Retail Profit and it's ProfitPRO P-H-E-T as Garrett pointed out at the beginning and the website is retailprofit.com so you can go there to get any information you like about me. We've also got a Facebook page. You can just search Retail Profit on Facebook if you're interested in seeing things about the future of retail. Great, so you can find out more about me at FutureWistGurl.com. There's G-E-R-D like the gastrointestinal reflux disease, but better. And I'm G-Leonhardt, G-L-E-O-N-H-R-D on Twitter and the Futures Agency and Work and Worldwide together whenever we can. And the futuresagency.com has our blog posts and all that stuff. We also have a really great new site called FutureFeed, which is a Twitter feed and if you just go to add futurefeed, F-E-E-D, you see all our combined tweets that we're putting out every day, a couple of them, quite a bit on the future of commerce and retail and stuff. So I think this is a hard topic. This won't be the last time that we're talking. I think this retail and what I call the future of buying and the future of shopping and which basically is the future of commerce. It's going to be a huge topic in the future. So I look forward to talking to all of you again.