On this episode of It’s a Customer’s World podcast, host Andy Murray speaks with Kevin Ervin Kelley, principal and co-founder of Shook Kelley, a strategy and design firm based in Charlotte and Los Angeles. Kevin is an expert on progressive retail format, acting as a leader in the practice areas of restaurants, retail, grocery, and leisure. From superstores to cities, Kevin combines business, science and design in an approach known as “perception design”. Kevin holds two architecture degrees from the University of North Carolina at Charlotte. He joins Andy to discuss everything from his entrepreneurial journey with Shook Kelley, his approach to design, and the ways retail stores are creating emotional connections with consumers in a post-COVID world.
Learn more about Kevin Kelley and connect with him on LinkedIn and Twitter.
Read more about Shook Kelley’s design process.
0:00:07.6 Andy Murray: Hi, I'm Andy Murray. Welcome to, It's a customer's world podcast. Now, more than ever, retailers and brands are accelerating their quest to be more customer-centric, but to be truly customer-centric, it requires both a shift in mindset and ways of working, not just in marketing but in all parts of the organization. In this podcast series, I'll be talking with practitioners, thought leaders and scholars to hear their thoughts on what it takes to be a leader in today's customer-centric world.
0:00:51.3 Andy Murray: I'm really excited to bring you a very special guest that I have known for over 20 years in the retail and design space. The Kevin Kelley of the strategy and design firm, Shook Kelley. Kevin is the co-founding partner and principal of Shook Kelley, and leads the practice areas of retail stores, restaurants, grocery and leisure. Think of the most progressive retail spaces from malls, to cities, to superstores, and you'll probably find Kevin's fingerprints. He holds two degrees in architecture and has spent a large portion of his career developing a process that combines business, science, and design into one integrated approach he calls perception design. He'll talk in this episode about how he gets inside the minds of consumers to determine how the physical environment affects consumer behaviour and purchase decisions, and some great examples. Because we covered so much ground in over an hour of conversation, I've split our discussion over two episodes. So during this episode, we're going to discuss Kevin's entrepreneurial journey and starting Shook Kelley and his perception design approach. We'll also cover how retail can reclaim an emotional connection in a post-covid world.
0:02:02.1 Andy Murray: Hey, Kevin, it's great to see you today, and you're one of those guys that's just got a fascinating background in retail and design, one that I've admired for many, many years. I don't wanna say how many 'cause that's gonna date both of us, but we've been in some of the same circles with some of the same big clients, trying to just figure this space out, of what is, what should a good store environment look like, shopping processes, path to purchase, all of those elements, and so just tell me a little bit about your journey and how you've gotten to this point.
0:02:33.3 Kevin Kelley: Okay, great. Well, thank you for having me, Andy, and I think this program is great. It's a fantastic platform. Yeah, I definitely have a kind of an unusual arrival into retail and journey really along the way. I wanted to be an architect when I was six years old and never considered anything else. My father was an advertising professional. His degree was in advertising and he merged in a lot of psychology, and he was part of that mad men era of when advertising was a dark art that understood motivations of human beings and their compensation issues and although he never drilled any of this into in my head, I was just around him all the time and saw that whole atmosphere, but I was the only one in my family that didn't wanna go into that direction, and I wanted to be an architect. And so I got into architecture school and was fascinated with how they could never really measure the effectiveness of place. They would really talk a lot about aesthetics, and composition, and scale, and color theory, but they never really talked about a word that was so key to me, which was behaviour, and it was almost as if people didn't matter, that these objects were the thing that mattered. And so early on in my college years, I started working on a thesis which was, "How does environment affect behaviour", and as a college student, I was, and this is in the '80s, I was idealistic and didn't really have an interest in commercialism or capitalism or marketing.
0:04:19.3 Kevin Ervin Kelley: I wanted to do something noble for the world, and I really started focusing on this idea of less focus on style and much more on behaviour. And then I started, got out of school and worked for a couple of big retail firms without even thinking about that I was working in retail, but we did a lot of malls, and you remember, malls were everything. Fast Times at Ridgemont High kinda focus, and there was a mall in every community, in food courts and again, the same thing would happen. I would be working at these firms, and everybody was talking about style. Even the clients were talking about style, but nobody was talking about behaviour, and I started doing something which was writing down a manifesto of what type of behaviour we would want at these places, and I was just doing it for myself. I was intense, introverted individual, and I started writing these documents and my staff that I worked with, and they didn't work for me yet, they were just my colleagues, really enjoyed them, and I thought they would be threatened by them. They were like, "Well, this is really interesting." I wrote it in a very novel-esque manner. Well, then our clients started reading these books, and for the first time ever, one of my clients called it a brand bible or a brand book, and I had never really thought about it as a brand.
0:05:44.0 Kevin Ervin Kelley: But I was trying to figure out what is the meaning of the food corridor? What is the meaning of selling baking soda or just generic commodities? But I was trying to figure out how these products would enhance your life or improve your life or help you imagine new possibilities, and so the client started paying for these little booklets. They became very interested in and, 1992, my business partner and I were thinking, "You know, we think we wanna leave architecture", which is hard because if you thought about being an architect since you were six, it's a hard thing, but I thought, "You know, I wanna go in and measure this idea of how environment affects behaviour, what convenes human beings and physically, and how people perceive their world, and I don't mean just perceive it intellectually, but biologically, emotionally, socially. And I didn't think I could do that at traditional firms, and my partner had a similar robust theory that intertwined. Although his was at a very large scale and mine was at the more micro-scale, and so in 1992, we set up a firm called Shook Kelley, and that was 30 years ago.
0:06:56.5 Kevin Ervin Kelley: We didn't think it would work beyond five or six people. We said, "It'll just be our little pet project." And it was hard for me to walk away from Ambition, but I said, "I'm gonna do this." And the first areas I focused on particularly were restaurants. I really started trying to understand how behaviour impacts people's behaviours in restaurants and I found all kind of fascinating studies that men, what they see in a restaurant versus what women see are radically different. Men don't care about bathrooms and they destroy them and they don't notice the lights and women judge a restaurant food quality based on the bathrooms. And a lot of men were leading restaurants at the time and so they would design bathrooms like frat houses, literally bulletproof and vandal-proof. And I would notice where people stood in restaurants and where they'd sit and you'd have a giant restaurant, but all 600 people are on one side of the restaurant, nobody's on the other side. And what I was really digging into was places impact us and influence us on a subconscious way. It's kinda like if you watch a dog come into a room, a dog will always lay in the light and will never turn his back to the door, will always know his way out.
0:08:07.4 Kevin Ervin Kelley: And so I started really studying that in depth and we can get into some of those discussions, but the short and simple of it is humans kinda look for enhancements to life on one level or impediments to life. It is our lizard brain reaction and we swim towards things we like and we avoid things that we don't like. And that may be dangerous people, kids with colds, crowded areas, or it might be somebody making a great fajitas or pizza that intrigues us. And so I was really interested in that behaviour and somewhere along the line, a grocery store, and I'm talking early '90s Harris Teeter, came to my business partner and said, "Hey, this is the first moment in history that over 50 cents of the American food dollar has shifted into restaurants." Not even take-home at the time, just restaurants, which we take for granted was a watershed moment. And they said, "You guys are experts in restaurants. Could you help us think about what's wrong with our restaurants?" And that's another story in itself, but the way they were approaching prepared foods...
0:09:14.3 Kevin Ervin Kelley: And so we started working in grocery and my partner was the first one in and I kinda just hung out in the back doing some other stuff and then he got me involved in it and I fell in love with it 'cause I thought, "There's 60,000 products could use in a store and I can measure everything about how environment affects behaviour. And I finally have something to really compare it against, which is the cash register." So instead of thinking in feet, I started thinking in inches and started really looking at, "Well, let's prove that environment affects behaviour. Let's not change the price, let's not change the product. Let's not even change the service level. Let's just change the environment." And then our stats were off the charts. Our claim to fame, well, one of them, was 86% increase in sales, but almost never did we get below, I'd say, 13% increase. Our average is 26-42% increases in sales just by changing the environment. And what it says a lot about is how humans work, that we use our senses first to make decisions before it becomes an intellectual idea. We describe people as slick or rough on the edges or tough as nails. These are all real physical qualities and it's how we learn, it's how babies learn, it's how we communicate with ourselves as we tangibilize things.
0:10:35.5 Kevin Ervin Kelley: And so what I started looking at with grocery, I was like, "Well, you have these ideas that you're trying to do." And the joke we would say in the South is, "If I can't touch it, it ain't real." So if you say community or family or heritage, it doesn't matter if that word... If I can't touch family, if I can't touch community, it's not real. And so I started building a team around this idea of tangibilizing ideas, rich and robust ideas and manifesting strategy if you can imagine that. So companies have a strategy or value proposition and I'm like, "Well, it doesn't matter if I can't turn it into a two-second icon or a surrogate or what we really live by, cues and triggers." And we pull all this information from the collective consciousness of the world.
0:11:24.2 Kevin Ervin Kelley: And so I'll try to round this down, but that's a big intro, but I found I couldn't just hire designers early on. I really needed really three different types of thinkers in three categories and those thinkers are traditional designers. So I have architects, graphic designers, interior designers, merchandising designers on one column. I also have social scientists, culture anthropologists, other types of social thinking and we really just pull the information we need from those fields and kinda discard the parts we don't need. And then the third one, field column, is really looking at business thinkers, people that understand return on investment, branding, public relations, strategy, all of those aspects. And again, I didn't totally have a place where I was going. I thought this would work... I said earlier, five or six people. Well, sometimes we get as big as 75 people. We average around 50 right now with two offices, work all over the United States and in Asia and focus... The side of the firm I run focuses heavily on retail convening and food theater. And so that is a whole lot at you, but I'm an odd individual in the sense that I don't come from an MBA or marketing background. And when you're ready, 'cause you probably need to take a drink and sit back for a second, when you're ready, I'll tell you kinda where we see things evolving now.
0:12:53.5 Andy Murray: Yeah. Wow, that's fascinating. I love the story, I love the entrepreneurialism and the challenge that you've taken on to grow something new that's really very, very fresh in terms of how things come together. You were talking about how people experience these retail spaces and they experience it emotionally first and that connects in pretty deeply. One of the things that I was thinking about the other day is how I couldn't explain it, maybe you can explain it, but it didn't feel the same going to a grocery store over the last year when there's police tape around the bathrooms and walk this way down an aisle in this way, and we're all adapting and coping.
0:13:38.0 Andy Murray: But I wonder what kind of emotional impact that's really had on that retail shopping experience, and it felt like... It just didn't feel the same. Even though I was getting the same cart full of groceries, there was something about it that felt differently, and I'm just curious, from your perspective, as you cast your look forward into the next six months, a year or so, I wonder what kind of residual effect that might have on the way we look at physical space. Part of me says, I can't wait to go back into shops and really experience them differently, but there's a little bit of how do you reclaim that emotional connection that just feels great.
0:14:23.7 Kevin Ervin Kelley: Yeah, there's a number of variables in that, but as humans we're really good at reading situations. The thing we say, don't judge a book by its cover is a nice thing we say to make everybody feel good, but we're hardwired to judge. And again, men and women judge things differently, but we're hardwired to sense danger and we read eyes and we read faces, and we scan for that. If you think of scary movies and HorrorFlix, they normally show an animal that has no eyes, no depth to their eyes, a shark or those items. And that scares us, but we read really quickly and you've heard famous stories of people walking down the street looking across a river and diving in the water involuntarily and not knowing why they dove, it's because they saw a scary face on the other side that said somebody is drowning. We just read so much. And part of that is why we don't really do a lot of statistical surveys when I work with clients, they will show me room fulls, floors full of research and data, but it very rarely gets to a human truth. It's generally just at that level of data information maybe knowledge but it doesn't get to human truth, and we're just really good as human beings kinda seeing that.
0:15:43.0 Kevin Ervin Kelley: So 90% of their research we need, we get through body language. So we study facial expressions where people stand, how they stand, do they look like they were flogged on the way out? So how that really... Like you went to a place and just feel beat down, and really the way I describe it is, consumers are a Prius battery and they go in every day, they wake up in the morning fully charged, and by the end of the day, they're either drained or restored and it's very important that retailers understand, are you filling your customer's battery, or are you draining it? And it's very easy to see places that drain it, and really human beings divide their lives into work and pleasure, and work is like loading the car, having to navigate human beings standing in line.
0:16:34.3 Kevin Ervin Kelley: These are all things that grocery stores retailers are guilty of forever and that we make customers work too much and we put them in anxious, stressful situations. As I said earlier, a line is a very stressful situation. So what is happening right now in this COVID period was all the cues and triggers and faces and garb and all that stuff, send out a message of danger. It's kind of like when you see a bunch of police lined up with face masks on, or military equipment, your mind instantly says, "Something's going," or it might be a parade, but our initial instinct is, there's danger. And as I said earlier, we really function in two minds, we look for things, enhancements and things that impede our life, and all those cues and triggers send out danger.
0:17:27.1 Kevin Ervin Kelley: Now, the one thing that's been interesting is humans are highly adaptable, unbelievably adaptable. That's why when you sometimes watch kids in other countries that are through war zones and bombs, you see kids out there playing ball and dealing with situations. We can deal with a lot, but it takes us a little time to adapt. We're not good with change, and so all of this was so disruptive, but we're coming back to it and sad to say memories are short. If you look at SARS or AIDS, or you look at other crisis 9/11, other events, remember too big to fail. We're right back to way big to fail. And so our memories kinda get short and we adapt to that and move on. And so if I could add one more point in there.
0:18:18.7 Andy Murray: Yeah.
0:18:23.1 Kevin Ervin Kelley: Again, it would be too long, but if we go back 100 years ago, people died from food that wasn't pasteurized, wasn't secure. Packaging goods certainly gave people that trust and security and clinical-ness and cleanliness was a big factor in grocery. If you went to grocery stores, which you did and I did in the '70s and '80s, the managers would brag about how clean it was, how wide the aisles were. And they used colors that were very sanitary. Well, as the pendulum swung in the '80s and '90s, more of the late '90s, early 2000s, we started loving agrarianism and farms and markets, which looked like some... It was bragging rights to say somebody made this in their kitchen or out of a back of a truck.
0:19:10.4 Kevin Ervin Kelley: We're now swinging back to the other way where cleanliness, sanitary-ness are issues, but all of these are perceptual. So most things aren't fact-based. Mad cow, less than one person died from mad cow, but they kept showing that video of the cow stumbling and falling and that scared everybody. We're totally used to flus, right? 60,000 people, 40 to 60,000 people die of flus, and we deal with that. No doubt COVID's on a scale we've never seen before, but the cues and triggers we're looking at now, when customers walk into a grocery stores, they're looking for a couple of vital things that say, you've sanitized this place. And that can be the smell of chlorine, Purell. It can be uniforms that reassure us. It can be gloves. It can be a variety of things that reduce that risk that customers have, and so we are definitely designing stores differently now. Our salad bars are different. Our salad bars looked like ATM machines with people hand washing them, and we would take them out, except consumers complain, certain strand of customers complain, so we're definitely in a new period, which to me is exciting.
0:20:30.9 Andy Murray: It is exciting and you know what? It's funny to hear you talk about it because pre-covid, a lot of grocery store environments were going for the... Even if they were a national chain, the chalkboard, hand signs, anything to give those visual cues that this is a local environment, fresh, and I've even toured stores where some leaders have said, "We don't want things to look too pretty because that's gonna communicate expensive", where actually, cleanliness and a tidiness might actually communicate safety. Couple of years ago, that might have communicated too corporate or clean, or maybe even cost more, which is again, one of the fallacies in I think great human-based design is that it has to be more expensive, and I'm not so sure it is.
0:21:26.8 Kevin Ervin Kelley: Well said. That's well said.
0:21:27.0 Andy Murray: In your experience.
0:21:28.7 Kevin Ervin Kelley: No, it drives me insane. And then it really was bad in the '80s and '90s is that there was this automatic assumption if something was designed, it was expensive, and that was an old world. That was my dad's view and a lot of leaders of stores. But in the era we live in now, premiumisation, groominess, all of these things are meant to be everyday now, and customers are furious, younger customers particularly are furious when something is not fun or is boring or is dull, and I think something you're speaking to is a bit of the conflict we have and that we really want claims-based food and we're still afraid of big. So customers are still afraid of very large entities, they don't trust big, and that's because it's been drilled in their head. They trust small, but they get a little nervous when people say, "I made this in my bathtub", and so people are starting to go, "Where is that balance?" The interesting thing that I... It really surprised me was before covid hit, most grocery store...
0:22:40.6 Kevin Ervin Kelley: The smaller regional ones I work for, I work for all of them, big and small, but a lot of them weren't really feeling a lot of pride and love for working in grocery. When they told people they work for grocery, the common thing people say, "Oh, you're in a dying industry." It was like you work for newspapers. But, since covid has happened, the local, small merchant is a hero and the love of that is really big, and we've been trying to study, what is it? 'Cause with all the delivery services, why do people love it? And that goes back to our fear instinct of not having enough, and the idea that I could walk down to a physical place that has enough meat, enough bottled water, enough of these things really comforts us. And so the local, regional, small players are really having a moment right now, which is exciting, and they're using that moment to innovate and rethink what they're doing.
0:23:38.8 Andy Murray: Well, along those lines, I guess a obvious trend for larger retailers and probably small as well, is to continue to try to drive down store labor costs because it's such a big factor in the total P&L and contactless payment. Okay, well, that accelerated. That makes sense. I get it because of covid, but going to more self-checkout, less human touch, I found from my experience that there's a good-sized customer segment wants that human touch, and that might be the only human touch they get or encounter is the cashier checkout. And then I've seen here some of the Amazon Fresh or Go stores closing. That's almost all human-less in terms of contact and engagement, where do you think it's gonna go? Do you think there will be a customer backlash at some point or... 'Cause I do think, especially in grocery, there is a human connection factor that's hard to put a pencil against when you're doing ROI analysis as compared to other things that you can pencil against. But it does, I think have a human factor to it, and I think my opinion is, retailers that could figure out how to make that human experience work while still dealing with the operational scale issues of the P&L are gonna be in a magical place.
0:25:00.5 Kevin Ervin Kelley: Yeah, I think you're hitting right on the $64000 question that everybody wants to know is, where's retail heading and where's grocery heading? And you and I wouldn't think this, but the common assumption out there is that it's gonna go to one track, and there's always room for multiple tracks in retail, and so there will always be a place for the low price variety leader, and there will always be a place for the more high quality leader and those two dipoles are really out there. I think what doesn't work is something in between. That's what's really dying and regional grocery stores were famous for riding the fence and our society rewards extremes.
0:25:47.2 Kevin Ervin Kelley: We love to go through the place that really understands mattresses or really understands luggage but we don't wanna go to a department store that understands perfume, luggage, jewellery, and a variety of other things. Buying a mattress at a department store feels weird now, when there are specialized mattress places. It's not impossible, but it just feels weird particularly for younger folks, and so we're rewarding these extremes and previously, you could have the biggest mattress warehouse in the town or the biggest leather couch place or the biggest shopping experience, and that did great, but the problem is Google is so big now, that we've learned that there's five million options, literally five million search options at minimum for mattresses. And actually, that sounds crazy, it goes up to 200 million depending on how you slice and dice it online versus the mattress King and locally. So this whole idea winning on price and a store is kind of gone. It really is very hard to compete against but this idea of winning on a different side of the brain... And that to me is really interesting, really important is that there are kind of two sides of the brain.
0:27:01.3 Kevin Ervin Kelley: One side of the brain is really about acquiring things at the lowest price, that is a real big driver. And we tend to have that acquisition mindset and harder times. But when things are good like we're getting ready to go into a 6% GDP growth economy, people then say, "Well, I've acquired." It's kind of a Maslow thing, but much bigger than that, I've acquired things and now I want to live, and so the side of retail that seems to be really booming, and it's gonna continue to boom, is the retail that focuses on the leisure, the recreational, the social, the curated, the expert knowledge side of retail, and I have a mix of clients, but my clients that are in the premium market are double indexing the value players. And so it really begs the question, "Do you want, as a retailer, brick and mortar retailer... Do you wanna get out in that slug-fest of lowest price with entities that are willing to lose money? Entities that say, I'll lose money for 10 years, that have an investment capacity, that overwhelms.
0:28:07.3 Kevin Ervin Kelley: The scary thing is, imagine being with somebody that says, "Well, I can lose money in your business for 15 years." You can't lose money in your business for a quarter. And this switches other side, which is kind of the premiumisation, are the living recreational side is really having a lot more value, and we see that continue to go... The last point I'd make on that is, you know, we use a lot of kind of frameworks. But most frameworks in retail aren't things we put in our mouth, or in our belly or in our kids bellies or dinner table, and this stuff we put in our mouth and as human beings, we're hard wired to think very carefully about what we put in our mouth. And we have a lot of rituals and traditions around. Food is really kind of what we call food with meaning, you think about when people break bread, how important that is when enemies break bread. It's such an important thing. And this is a hard thing to turn into just a dry commodity, and my concern about some of the cashierless concepts, which I think are great 'cause they're getting rid of the work part, but some of them are soulless and meaningless. And I don't think consumers long term are gonna say I wanna eat without meaning.
0:29:26.4 Andy Murray: Special thanks to Kevin Kelly for joining me. This was only the first part of an enlightening conversation I had with Kevin. Be sure to listen to the next episode of It's a Customer's World, where we'll continue our talk. During that episode, we'll cover the future of store design based on trends and customer choice, macro versus micro stores and the need to innovate to meet the needs of the customer.