Is observational research still effective in today’s modern world of big data and analytics? What’s the best way to learn what customers really want? What is the best way for students to gain experience in the ever-evolving retail space? Today on the “It’s a Customer’s World” podcast, host Andy Murray interviews Paco Underhill, who founded Envirosell in 1986 as a testing agency for prototype stores. Envirosell has worked in 46 countries, with more than half of the companies on the Fortune 50 list. Paco is the bestselling author of “How We Buy,” which is available in 28 languages and used in both higher education and career training programs. In this episode, Paco and Andy discuss the importance of observation and understanding the customer experience, knowledge that can be gained by visiting other countries, and more!
As the conversation gets underway, Andy and Paco consider what’s going on in the physical retain space, and Paco explains consumption remaining a constant but taking on an altered face.He talks about the concept of composting, cash use and advanced technology in Europe, cooperation between public and private interests, and the need to both get local and get on the sales floor. In connection with questions provided by Professor Molly Rapert, Paco and Andy consider the importance of observational research, the need for actionable data and the combination of art and science, and the evolution of language and information. Listeners will hear Paco’s thoughts on design, current customer experience objectives, personal inspiration, how students can become customer experience experts, and the need for empathy in the customer experience.
Podcast:
Episode Transcript:
Andy Murray: (00:05)
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. In this episode, I have with me Paco Underhill. Paco founded Envirosell in 1986 as a testing agency for prototype stores. Envirosell has worked in 46 countries and with more than 1/2 of the Fortune 50 list. Paco was also the author of the best selling book, How We Buy, The Science of Shopping, which is out 28 languages and is used in MBA programs, Design Schools and Retailing Training Programs across the world.
Andy Murray: (01:07)
During my talk with Paco, we discussed the importance of observation and understanding the customer experience and the knowledge that can be gained in retail innovation by visiting Boots on the Ground and learning from other countries. Well, Paco, welcome to the Customer Centric Leadership Initiative Podcast about the customer world that we live in. It is such a privilege to have you on the show today. Obviously, I've, from my shopper background, been a huge fan and you've influenced a lot of the thinking that the whole industry has benefited from for many, many years. And so first, thank you for having the time to come and talk to me today.
Paco Uderhill: (01:52)
Andy, it is a privilege to be with you and to yet again, indirect with the University of Arkansas and the Walton School of Business.
Andy Murray: (02:03)
Excellent. Well, we are going to get into some cool topics today because there's never been a time I think where there's so many changes happening upon us that could create some great conversation. I think a lot of people would like to hear your thoughts, given your experience over the years in looking at retail spaces. And so if you kind of step back and look at what's happened with COVID and you look at the physical space, we were just reading today about Marks and Spencer's 7,500 jobs. It's a really challenging space for a lot of people. But from a big picture, 50,000 foot view, how do you describe what's going on with physical retail in stores and customer experience?
Paco Uderhill: (02:41)
Well, Andy, one of the things that's really important to understand is that the monster of consumption is intact. We need to eat, we need to drink, we need to love our children, we need sheets and towels, we need gasoline, we need all of those things that keep life going. What is at risk and what is changing is that face of consumption. And that historically, retail, particularly in the 20th century has been about birth, life, death and compost. And we have a lot of compost out there now. And-
Andy Murray: (03:20)
So explain a little bit more about this word compost. That's an interesting word. I think in this context, I'd like to hear you talk about that.
Paco Uderhill: (03:28)
Well, some of it is recognizing that there are fundamental changes in retail. Retail is a reflection of the evolution of us that the all of the biological constants that I've written about 20 years ago, right handedness, butt-brush, evolution of bias, all of that stuff. Part of what we know is that what made a good store in 2000 and what makes a good store in 2020 are different and they are reflections of the evolution of us. And one of the reasons that you enjoy your job and I've enjoyed mine is keeping track of what those evolutions are and recognizing there's both danger and opportunity.
Andy Murray: (04:16)
Yeah., it's interesting because I think if you think about some of the things we started doing in practices because of COVID. All of a sudden, contactless payments. For those that had that on their roadmaps in the shopping was probably went from maybe a three-year out to happening very, very short. It's all of those core things that we would never have seen contactless be pressed this fast. Or I would love to hear your thoughts on cash. Where do you think cash and handling coins and how are you seeing some of those things play out?
Paco Uderhill: (04:49)
Well, as you probably know, Andy, that the evolution of payment issues has been much more accelerated in the Western European market when merchants have been confronted, particularly by labor costs here.
Andy Murray: (05:05)
Yeah.
Paco Uderhill: (05:05)
And therefore, whether you're in a supermarket in Sweden or a supermarket in Germany or a supermarket in Italy or certainly markets in Amsterdam, that those processes have been eminently more accelerated. And in a way, looking at self checkout here in the US, even the technologies that are in use at Walmart and at my local Stop and Shop here in Connecticut, trail the system being used in Europe right now by 15 years.
Andy Murray: (05:40)
Wow, that's amazing.
Paco Uderhill: (05:42)
If you think of it, you walk into a Swedish grocery store, you [inaudible 00:05:48]. You put the bags and maybe your kid and your pocketbook into the cart and you pick up a scanner. You scan your card and you push the cart onto a scale. And the scale weighs your cart with your kids, your handbag, your bags in it. And then as you move through the store, you scan, you put stuff in the appropriate bag and the scanner records the product, the price and the weight.
Andy Murray: (06:18)
Wow.
Paco Uderhill: (06:19)
And then as you go to leave, you push your cart across another scale. And if the weight turns out to be correct, you scan your card and you're gone.
Andy Murray: (06:33)
That would also have a huge impact, I would think on shrink because some of the challenges with self-checkout is shrink and the ways in, there's really probably no way around that one.
Paco Uderhill: (06:43)
No, I mean, and it's I think the idea that it calculates the weight of your handbag and factors in the weight of your kid.
Andy Murray: (06:51)
Yeah.
Paco Uderhill: (06:51)
In fact, that you have to pack your own, pack your own bags here. So there's a bag for... You may bring an insulated bag for your refrigerator or freezer goods. But it changes much of the dynamics. And is that going to come here? The answer is, yes. The only question is when.
Andy Murray: (07:09)
It's interesting. One of the things that I've found helpful with Envirosell is you always have these local stories across the globe from these innovators that are trying things and showing us what's the art of the possible. And as you think about what's happening with COVID and we're all having a kind of a more common experience now, I'm wondering if we're going to see some of the things that are further out and further behind start to get a little closer together as we all now have these shared concerns around whether it's touch and experienced somewhat. I wonder if we will see some of these new store prototypes being a bit more common and some of the things that are trialing than what we've seen across the globe so far?
Paco Uderhill: (07:49)
Well, certainly I think one of the responsibilities that you have, Andy, given your experience at Asda and for the Walton School of Business is to bring that international perspective in. And one of the things I have always admired about Walmart is that they have done a very nice job about harvesting the talent in the offshore enterprises and brought them back to NorthWest Arkansas. And Bentonville today is one of the more small cosmopolitan communities that I've ever seen and that's a huge asset. But yes, whether it's looking at growing vegetables in the concourse of the mall the way they do in Shanghai or whether it's recognizing that putting a supermarket and a shopping mall and an apartment building together makes an enormous amount of sense. And that there are people who will pay for the privilege of being able to shop a supermarket in their bedroom slippers.
Andy Murray: (08:55)
Yeah.
Paco Uderhill: (08:56)
And if that model of being able to weigh what do I get from rent from the retailers versus what do I get from the rent from somebody who wants to live in closer proximity and get the convenience factor factored in is something that is a much more progressive model outside the US than it is here. Much less. Andy is that if we go other places, the cooperation between public and private interest is eminently more developed. So you can go to a shopping mall in South Africa and for more than 20 years, they've had a stadium for high school sports built into the shopping mall, much less having a drive in movie within the context of their parking lot, which is something Walmart is just talking about doing right now.
Andy Murray: (09:48)
Yeah, and that's such a good point. And I can see that in the UK a bit where I felt Asda had a very strong, the local store have, was called community champions and they're colleague, their job is to connect into the local community and the Asda Store becomes a really important connector for the different charities and different pieces that come together in a real powerful way. And so I do think a public country by country or maybe some regions that the role of that store in its community can be a bit different than it might be here or in other places. And it is something to think about in terms of why it's so important to go out into the markets around the world and observe and see things for yourself because you can't just look at the store, you have to look at what's happening in the total culture in the community for these ideas to even make sense.
Paco Uderhill: (10:41)
I have an image which I have used in, I would say at least 100 lectures, which is of a halal meat section in a Walmart Canada store in a suburb of Toronto. And the point that I make there is that Walmart Canada has done a reasonably good job of recognizing that there are key segments that if you put a halal meat section into a select Walmart, that the Muslim community not only buys their meat there, but they bought their laundry soap and they buy their clothing and they do other things there too that there are key aspects to it. But certainly, Andy, one of the issues in a post COVID era is how do we get more local? One of the ways I've been characterizing is just merchants need to get closer to the front door.
Andy Murray: (11:39)
Yeah.
Paco Uderhill: (11:39)
We used to have an adage that we would walk into a branch bank or even an office building and the desk farthest away from the front door was where the person in charge sat.
Andy Murray: (11:50)
Hmm, because that's not a great place to be.
Paco Uderhill: (11:53)
I know. I know. Have you ever been to Gallery Furniture in Houston?
Andy Murray: (11:58)
No, I've not been to that one in Houston. No.
Paco Uderhill: (12:00)
No. It is a eccentric one-off store, but Doc, the owner of it, and it's a significant enterprise has a desk right by the front door. And he is very adamant that he will spend a certain number of hours every day, including Saturday and Sunday with that desk right up at the front door where he can interact with people and people can interact with him. And certainly in a post COVID era, one of my suggestions for retail management is that senior management needs to take one weekend a month and get out there on the floor and folks standing up.
Andy Murray: (12:42)
That's fantastic. I've got a couple of different questions that I'm anxious to ask you because you've raised two topics here. One is where we think local and thinking local and how local versus national will play out post COVID because I think there's some real interesting challenges with that, but it certainly feels like a national chain is got to really think harder about local and how that works because we've almost experienced the pandemic, if you will, in different ways locally. And so that's kind of helped stores think a lot harder and we've all now field our communities there. But the other question, I guess, I want to really go after is this importance of observational research. And so as we were talking, maybe before we got started, I love having being connected to Walton College because you get great questions from students and unfortunately, schools not in just yet as the recording of this.
Andy Murray: (13:36)
But Professor Molly Rapert, who leads the marketing department really is a very highly engaged teacher and creates very interactive classes and courses. And so when she heard that you and I were going to have this talk, she sent me a number of questions. I could tell now she's a raving fan. One of the questions that she asked that I want to share with you is this. Bringing the concept of observation to the marketing industry served as the foundation for so many key brands today. For example, in our focus on the customer, observing that customer in real store as opposed to just sending them on a survey provides insights that we can't get any other way. What was your favorite aspect of that methodology and why does observing the customer still remain critically important today? Now I'll just add to that question. Especially since today, we've got all this customer data and big customer databases that should give us loads of insights about how customers behave because you can just go look at the data, but still that's not the same what you learned from observational methodology. So what's your thoughts on that?
Paco Uderhill: (14:46)
Well, first of all, when I stepped off into the world of research, it's now been 40 plus years ago. There were two ways that people collected information. First, was the tools of media research, which were surveys, focus groups. You could do it in-person. You could do it online. You can do it quantitatively. You could do it qualitatively. But one of the things that I knew as a student of environmental psychology is that what people say they do and what people actually do are often different. And I can remember early in my career, following a family through their shopping trip to Walmart and they were in the store for 40 minutes. I was very careful not to intrude on them. But as they were packing their bags in the car, I went up to them. I introduced myself. I said, "Can I ask you a few questions about your shopping?"
Paco Uderhill: (15:41)
And the amount of time that they reported spending in the store and my stopwatch time were distinctly different. They told me that they shop parts of the store that didn't exist. And they said that they bought stuff that I knew wasn't in their shopping basket. And I don't think they were lying to me. I mean, some of it may have been that they were telling me what they thought I wanted to hear. The second tool and that's observing here is a very important way of getting at a certain level of truth. Second tool that people used is sales research.
Andy Murray: (16:20)
Yep.
Paco Uderhill: (16:21)
And it's a catalog of victories and Andy, you and I know that understanding where you're winning is really important.
Andy Murray: (16:30)
Oh, yeah.
Paco Uderhill: (16:30)
But if you're a merchant, understanding where you're losing is one of the key aspects to being able to win victories. And one of the things which I've always maintained my research crews when they go into a store is please come back with things that we can do in two weeks or a month, things that we can do in two months and things that we can do next year. But if I can come back to a client and win quick immediate victories by getting them to buy into the bigger and larger concepts are eminently easier. Okay, 2020, collecting data is really easy. And many of the methods that we used 20 years ago in analog form, we can do digitally now. And Envirosell has a number of AI partners that we are dealing with, where we're dealing with in store camera work, retail methodologies and it is very exciting. But it's a combination of big data and small data, okay?
Andy Murray: (17:36)
Mm-hmm (affirmative).
Paco Uderhill: (17:39)
And the key here isn't the size of the pile of data that you cumulate, it's the actionability that you get on the other side of it. We also know that in the broader world of retail, we are desperately looking. And this is whether I'm talking about physical retail or I'm talking about digital retail is I am looking for a better combination of art and science and that whether it's in physical retail figuring out the traffic patterns of how do I bundle better. I mean, a bunch of different very key issues in terms of being able to be customer centric and focused and realizing what the anxiety levels are of somebody walking in the door.
Paco Uderhill: (18:21)
But it also when you think about how you organize an online presence or you think about the visual merchandising of what picture is and how the context of that picture that you have in an online shopping experience, the way it differs between how someone accesses it on their phone versus their tablet versus their laptop, much less, what is the difference between how the novice shopper for that product and the experience shopper for that product perceives the details of the image in terms of understanding the context of what their purchases. And Andy, part of what is very poignant in a post COVID world is that the challenge to the evolution of language and information that existed pre-COVID has been accelerated now.
Paco Uderhill: (19:20)
And that even at my age, I am asking my 19 year old stepdaughter to be able to solve digital issues that I should understand, but I have it. And that the recognition on the part of both merchants and some of the global technology firms that we work for that digital literacy is in a state of evolution and much of our digital education up until recently has been largely ad hoc. And that one of the key aspects to this for physical merchants, okay, is that the line between the digital and the physical world doesn't exist anymore. And that whether I'm an Adidas or whether I'm a Macy's or whether I'm a Walmart or whether I'm an Asda or Legal, that one of the best places to teach somebody how to interact with me digitally is in store. How do we take that opportunity? That's one. Second is how do we recognize that I can teach the parent? But if I teach the child, that is often a really clever way and an easy way of being able to teach the parent too. And this is a really exciting time.
Andy Murray: (20:44)
Wow. Well, and you think about it, restaurants recently, a lot of them because of the touch challenge has started using QR codes and QR codes, as you know, have been around 20 years I think. And I remember trying to do a QR code project probably six years ago at Walmart on using their tabs to QR codes. And part of the pushback was customers will just won't use that, it's too technical, whatever. But today, you see QR codes in physical retail spaces and pretty much it's pretty quickly adapted technology. It's just how fast that's happened with probably two or three months. People are pretty familiar with QR codes. Menus have QR codes. So if they don't have to have a physical menu, you don't have to touch it. That's a good example I think if you're seeing this happen, the digital physical in that space at the same time.
Paco Uderhill: (21:33)
I think it's also key here that one of the sad realities of our digital design world is that most of the designers sitting at their CAD/CAM screens are under age 30 and there are deep learning for their eyes. And the way they see and the way Andy, you and I see are different. If I'm in China, we know that money is in the hands of younger consumers. But if I'm in Western Europe or I'm in North America being able to recognize that the way I see at my age and the way someone sees at 30 is different. And that there are often just some very important tuning to be able to do to, whether it's a menu design or menu organization that makes an instant difference in terms of what the size of the order and the comfort level of the customers are. And this is, again, from the stand standpoint of that art and science of design fix this a really interesting dynamic time.
Andy Murray: (22:43)
One of the things you talked about was language and how language hasn't kept up. And if you kind of look at a couple things here, one, the digital physical people in organizations coming close together because the omnichannel is coming closer together. Product management, I've worked in the digital space, product management is a pretty common way to look at things. But in a physical retail, a product manager isn't really understood from a language standpoint yet. I mean, so there's two different ways of looking at it. Product management is quick, lots of experiments. You're trying to do a lot of testing with customers to learn things.
Andy Murray: (23:18)
Now, if you're in store prototype area, that's pretty common to be thinking a bit that way. But for the large part, that's pushing some languages challenges together. And what I found really difficult at times just selling in a new customer experience idea to more senior levels to get funding and support, you really have to work on the language and simplify it and clarify it. And back to Professor Molly Rapert, one of the questions she had that I want to ask about is you use memorable terminology to describe phenomenon. To do that, was groundbreaking she felt. Moving marketing away from the ambiguity of academic terms by selecting terms that clearly tell the marketing executive what it means. For example, butt-brush factor, the decompression zone. And so her question is basically those are really effective. How did you come up with those concepts of language and label that because it does help paint pictures inside an organization to make what could seem a complex art into something people can really put their head around quickly?
Paco Uderhill: (24:26)
Andy, I have a confession for you. I have never taken a business course in my life.
Andy Murray: (24:33)
Oh, okay. Well, that is a confession. I wouldn't have thought that.
Paco Uderhill: (24:38)
I got in to business completely by accident. I backed in. I made so many mistakes. Some of them over and over again, including mistakes I'm making in my own practice right now. That said, I have always been a story teller. And I have enjoyed writing books, hopefully not to show how smart I am, but to do books that are enjoyable to read. And part of what has been astonishing for me is that there are books that I wrote 20 years ago and I think they'd been touched up and reissued and whatever, but some of them are still selling today, 60, 70,000 copies here and are used in business schools all across the world. And part of the reason why they used is just because they're easy, fun, informative reads and somebody walks away going, "I will never look at the world the same way having read this book."
Andy Murray: (25:41)
Yeah.
Paco Uderhill: (25:41)
And butt-brush may go on my tombstone later on.
Andy Murray: (25:48)
Well, it's so clear. It does sound like a word that came from observation. I mean, you kind of come back and you see it happen and it's something there, it's deep to what you're seeing happen. You're going to get that out of data.
Paco Uderhill: (26:05)
I am deeply grateful that in the late 1970s and early 1980s, the federated building executives committee, which was the heads of store planning for all of the federated department stores opened up Bloomingdales in New York, Filene's in Boston and said, "Paco, please come in and do whatever you want to. And if you find something out that you think is interesting for us, tell us." And I am perennially grateful for their acceptance of a interested researcher coming in and invading their turf. And I can remember just watching the time-lapse of movies of somebody shopping a tie counter at Bloomingdale's. And recognizing that every time they got brushed from the rear, they moved on. And going back and going, we don't even have changed the counter. Let's just put a chair at the counter to create a little shelter for somebody doing it.
Paco Uderhill: (27:12)
And then the head of store planning coming back to me and say, "Paco, we have been tracking sales off that fixture and sales have gone up four times just in the day that you did it." And this is... Part of what I found is that if you can win victories, it doesn't matter whether you speak MBA, that's what people want is victories. And part of what is clear for you and your students at the Walton School of Business is that that focus on winning victories is looking at that combination of art and science. And it made sense in 1981. In the eyes of Bloomingdale's, it makes sense today, whether you're talking about a physical or a digital presence.
Andy Murray: (28:01)
One of the things that you talk quite a bit about and I've always been an evangelist for is design and this area of design. And I think when you look at customer experience and trying to improve it, for some people, I think there's a mental block that we can't afford that. But that's going to be expensive. Yet, your example of the tie counter by just so simple, small change could greatly affect things. And I've been a believer that great design isn't about cost. And I think we trick ourselves or trap ourselves to then maybe not take progress. And I love that the things you can do in two weeks is a very agile way of thinking in terms of getting to that customer experience with those small things. And do you still believe today and it's true today that we could make a lot of improvements in customer experience without spending a lot of money in some cases because it is still sometimes those simple things in design that we just overlook?
Paco Uderhill: (28:56)
One of the things which I really like about doing research on websites is that we can work with a web design team and meet every week and come up with a series of quick and easy experiments that whether they work, we know it instantly.
Andy Murray: (29:12)
Yeah.
Paco Uderhill: (29:13)
And that crossover here, I think is interesting. Just Andy, two things here to be very cognizant about. We at Envirosell have almost a 35 year history testing prototype stores. If you think of the 25 largest merchants in the US, we have done some prototype testing for more than 2/3 of them.
Andy Murray: (29:37)
Wow.
Paco Uderhill: (29:37)
And one of the key aspects to it is that if you have a prototype that succeeds 100%, it's a bad prototype because you haven't looked to stretch the envelope.
Andy Murray: (29:49)
Wow.
Paco Uderhill: (29:50)
And that stretching that envelope is one of the ways in which you learned. That you've learned from winning, but you also learn from understanding where you're losing and why. Second issue here, which I think is a very interesting model is that the commercial design in the street at my observation has been one of the last creative professions to be gender integrated. It is really hard to find a senior store planner, female who's over age 50. Today, the profession is much more gender integrated and that the interest in collaborative design is eminently more with us today than it was even 10 years ago. And I think that's very exciting. One of the very nasty truths of the commercial design and the retail design in history is that up until 2010, a remarkable number of prize winning stores were closed a year after they opened because the critics loved them and the public did.
Andy Murray: (31:06)
Yep.
Paco Uderhill: (31:07)
We need to get closer to the public and we need to get closer to the realities of what people need and what people want and how people see and how people move.
Andy Murray: (31:18)
Well, it's interesting to talk about prototypes and how that is all changed. I've been around in this industry since 91 and there certainly was an era of keeping the store longer because they'll buy more. And boy, we saw a store formats, didn't we, that had all the things you needed for a quick trip. They did understand that trip, there was a time budget and you've got a money budget, a time budget and a frustration budget. And if you're going to exhaust those budgets because you want them in the store longer and that was such a powerful thought that was influencing store prototypes and concepts for a while. In my opinion, is it feels like maybe in the last 10 years, a lot of the prototypes I've seen a bit more around operational metrics, efficiency, making those stores run better, get more sales per square foot perhaps, those kind of key objectives. But what are you seeing and what do you think the briefs are going to be now and as they go forward, how much do you see it being weighted towards more efficiency out of space versus better customer experience?
Paco Uderhill: (32:19)
There are several issues, Andy. First of all, that the union between store aisle, shelf and package is being rethought as we think now. Second is there are some basic ways in which we organize the store that are rooted in the 20th century that need to be rethought. And it's everything from maybe organizing based on meal group to organizing apparel section based on size as a post to style. That said, one of the other issues in a post COVID world is that our radar for hygiene has been acutely affected. And one of the issues that we asked it pre-COVID and we're asking it post COVID is when in the design process are you factoring in keeping it clean? I have-
Andy Murray: (33:18)
Interesting.
Paco Uderhill: (33:18)
I have worked in Mariano, a Mexican supermarket chain. And I can remember visiting them several, several years ago. And one of the things that management told me then is that when they started moving store cleaning from only happening after hours to happening all during the day. So that as somebody pushed their carts through, they saw somebody cleaning the front of the refrigerator and the freezer cases that their scores for store cleanliness based on the same money that they were spending on store hygiene, that their scores went up because people saw it.
Andy Murray: (34:00)
Oh, I know. Great.
Paco Uderhill: (34:02)
If you ask me, where is some of the best supermarkets on the planet, I would go, I really like taking people through Mexico City because there are a lot of really good stuff going on there. But I think that hygiene question. And certainly, we also know that one of the most important factors over the past 10 years has been supply chain management.
Andy Murray: (34:26)
Yeah.
Paco Uderhill: (34:26)
And there isn't a big box merchant out there that isn't looking to shrink the footprint of the store because I can fit the same number of SK using, but I could shed 20 to 30% of the space and the question becomes, what do I do with that 20 or 30%?
Andy Murray: (34:43)
I can understand that. One of the things that I've realized at Asda is the customer expectations can change quickly and have a dramatic effect on store design, whether it's single use plastic, for example, in produce. As you know, in the UK, it's a bit more packaged produce since such for lots of reasons mostly because it does help reduce waste and shelf life in the pantry and such. But the public focus on plastic was so high and very active and very, very vocal that you really couldn't sit there and debate the topic. You just needed to move and just start getting rid of plastic in some pretty profound ways that society moved us there pretty quickly. And I think that's probably going to be true with hygiene where it's just where we're at today that the customer is ahead of us sometimes, aren't they, in what they want out of something and it's getting easier for them to tell you what they want.
Paco Uderhill: (35:41)
Well, I think that's also that they have choices here and that's really what is for our society is both scary for the merchant and progressive for the state of our species here. I'm working on a new book right now for Simon and Schuster called The Future of Eating and Drinking.
Andy Murray: (36:00)
Nice.
Paco Uderhill: (36:00)
And one of the things that we're looking at is, for example, once we reach age 40, roughly 80% of our weekly purchases are the same thing. Why do I either have to go back to a store or why do I have to have it in a package that is designed to screen from the shelf rather than fit into my kitchen or fit into my green consciousness? Is there a better way of doing it? And as we talked to people in the larger packaging design community, part of what they're asking is it is one thing to be recycled, it's another thing to be repurposed. And is there a way of taking product packaging and rather than recycling it, repurposing it in some way that makes sense, whether it's the box that you come in is actually turns into animal feed that you can feed your chickens. Stuff like that.
Andy Murray: (36:59)
Yeah.
Paco Uderhill: (37:01)
May sound absurd, but being able to make a box out of animal feed or seeds or something could be eminently sustainable. Or it's the degree to which there are certain product categories that maybe I buy by subscription and therefore it comes to me in some recyclable sack, which goes into a container in my laundry room as opposed to the plastic container, which I have now. I mean, those are all things which we see examples of in other parts of the world. If you go to an Israeli supermarket and milk and laundry soap and other things are given to you in a much more ecological form. And I think part of what could be really cool for you guys in your program is to start doing an active job of collecting what those global innovations are.
Andy Murray: (38:00)
Well, it's really interesting. I agree with you. I don't know if you follow what Tara Cycles is doing with this program called loop. We're basically taking and creating a durable package instead of a single use package for a lot of different skews and then having a refill cycle. I know Tesco's trialing it for exclusive trial for six months. I know Kroger is doing it here. But that's kind of an interesting business model on it that could completely make you rethink the package for package brands.
Paco Uderhill: (38:27)
Okay, did you ever know Charlie Zimmerman?
Andy Murray: (38:31)
Are the names familiar?
Paco Uderhill: (38:33)
Well, he was the Head Engineer for Walmart.
Andy Murray: (38:36)
Yeah.
Paco Uderhill: (38:36)
He worked at Walmart domestic for many years, Walmart International. But one of the more dedicated and interested retail environmentalist that I have ever met and he lives in Bentonville. He's retired now. I would recommend asking him to come in and do some lectures and programs for you because the work that he did at Walmart in terms of lowering the energy profile of the Walmart building is some of the most progressive work I have ever seen.
Andy Murray: (39:08)
Oh, that's fantastic. We'll definitely have to talk to him because I think that's where the world's headed and it's not slowing down on that front at all. One of the other questions Professor Molly Rapert asked is who inspires you? You've been inspiring people to think differently about all of these spaces, but who do you look for and how do you get inspired to stay on the cutting edge of this?
Paco Uderhill: (39:32)
Well, first of all, I'm still an active reader. Can you read this?
Andy Murray: (39:36)
Yes.
Paco Uderhill: (39:36)
This is The Fall of Human Empire, which is by a French author who is writing the memoirs of a robot in 2050 about what the former world of humans looked like before the robots took over. I think it's-
Andy Murray: (39:52)
Oh, great.
Paco Uderhill: (39:54)
But I have a couple of people that I follow. There is Dr. David Bosshard, who's the Executive Director of GDI, the Gottlieb Duttweiter in Zurich, who has his PhD in Political Science. But GDI is a retail consumer focused agency. And he's a very interesting guy because he brings political and macroeconomic issues into the mix. And being someone who is outside the US, his vision about what's going right and what's going wrong in the Western Hemisphere, I think is always very interesting. I have another colleague who teaches at the IESE, the Spanish Business School in Barcelona. Has his PhD from the Harvard Business School, José Luis Nueno. He sits on the board of a number of major Spanish retail agencies. And he's just a wonderful contrarian. Smart, funny, irascible. I just love listening to him talk.
Andy Murray: (41:08)
Well, it's interesting. I think in that same school, Lluis Martinez-Ribes, I don't know if you know him, but does quite a bit of work in Barcelona on experientials. And he was the guy I would call to say, "I'm coming to Spain. Can you set me up some interesting store prototypes to see and what's happening in the future?" And I don't know what it is in Barcelona, but they're really pushing some of those prototypes and have some really good retail thinking, I think
Paco Uderhill: (41:32)
I have a thesis here, Andy, and it isn't based in knowledge or fact, it's just based in observation, which is that the countries that have centers have a difficult time exporting retail. So if you think about France, everything that happens in France happens in Paris. If you think about Japan, everything that happens in Japan that they address happens in Tokyo. Same thing is true of the UK. Everything is in London. But Spain has no center. Italy has no center. And those are places where the innovations of Zara and Mango and the broader retail design community have been their retailer. The Spaniards have been seminal in the reinvention of the design of the airport and the design of the hospital. Those are all things where, again, it's a matter of looking, seeing, processing and trying to be contrary.
Andy Murray: (42:38)
Yeah, well-
Paco Uderhill: (42:41)
If you [inaudible 00:42:41]airport.
Andy Murray: (42:41)
Well, I haven't been to the airport. Obviously, the Cathedral Familia is pretty strong. Goudy, 100 year project to think about design. But it's not just even short-term, but even long-term big design projects like airports and cathedrals.
Paco Uderhill: (42:56)
Now, what kind of psychotropic drugs was Goudy doing 120 years ago?
Andy Murray: (43:04)
Definitely, I would hate to see his business pitch and how that worked out. But yeah, exactly. Speaking about learning and we'll kind of go toward the end here with students. And a lot of students are coming into a business school, whether it's the Walton College or other business colleges and they're seeing this space and they're reading a lot, probably hearing a lot about the customer experience and that. Any thoughts on how a student might approach becoming an expert or building a career in this space that really does look at that customer experience inside an organization?
Paco Uderhill: (43:39)
Okay, if I were coaching a business school student at the Walton School of Business today, I would say, "Take your courses." But I would also recommend acquiring another language.
Andy Murray: (43:54)
Interesting.
Paco Uderhill: (43:54)
And that historically in the world of business, you got through your Harvard Business school, you went to corporate headquarters and you made your way up through the ranks. I think one of the ways to prove yourself quickly and to gain experience is to go elsewhere, okay?
Andy Murray: (44:13)
Yeah.
Paco Uderhill: (44:14)
And that is, if you want to work for Walmart, go work at Walmart India or China or Walmart Mexico or Brazil. And that part of what you'll find is that your learning curve is higher, your exposure rate is better and that the accelerant to your career is you're going to get places faster and maybe even have a little more fun doing it.
Andy Murray: (44:41)
Well, I can speak from experience, the international seminar I took in the UK for four years completely and I thought I knew a lot about retail. I knew nothing about retail once I got to see it in a different context and different culture and the different competitive environment. And I couldn't agree with you more, there's a lot of power in that. Some people talk about customer journey skills and customer experience skills. And as I've asked this question, what is the one thing you could learn? And I love the idea of international because you can't unsee what you see internationally. It just changes you. But the power of empathy, and some will say, you got to really and if you could learn one thing, learn how to be empathetic. That does tie a little bit to what you're talking about in terms of observation and having empathy. And so as you guys look at Envirosell, do you guys talk about empathy and the importance of empathy in changing the way you think about this space?
Paco Uderhill: (45:33)
This is what I recommend is that we have gotten all too comfortable, learning by staring into our screens and thinking sitting down. And that one of the keys to our education is learning how to think standing up. I am reminded of my interactions with the Israeli Defense Forces and say that battles are won when generals get to the front lines. And that experience of being able to get out there and see, look and process is in part about learning empathy, but it's also about having a tactical real understanding of what is going on at that point of intersection. And rubber soled shoes and spending a little time on the front lines, I think is very valuable.
Andy Murray: (46:32)
For those that you're on a podcast, you won't know this, but what Paco did was hold up his shoe and show me what the answer was. And so that'll kind of give you, in case you're wondering what was going on there for that pause. But I love that idea. I love the idea of getting out, get away from the screens and go see the world in this context of what's really happening. And I'm a huge believer of that. That's a great insight. Anything else, Paco, you want to share? This has been fantastic. What a great conversation. We've covered a lot of good areas.
Paco Uderhill: (47:03)
Well, thank you, Andy. Please give my regards to Molly Rapert.
Andy Murray: (47:09)
Yeah.
Paco Uderhill: (47:09)
And wait for her attention and contribution. And I hope that at some point in the not too distant future, that we can be having this same conversation in Fayetteville and talking to your students. Thank you very much for having me.
Andy Murray: (47:29)
We love for that to happen. Thank you so much for doing this so much. Thank you, Paco. You've just listened to an insightful conversation with Paco Underhill. We learned that one of the most important things when understanding the customer experience is observation. The best way for students to gain experience in this field is in the front lines. And how the pandemic accelerated innovation in retail, but yet we still have a lot to learn. Check out the show notes to find out more about his newest book with the working title of The Future of Eating and Drinking available in 2021.
Andy Murray: (48:07)
And thank you for listening to this episode of It's a Customer's World. That's it for this episode of It's a Customer's World. If you found this helpful and entertaining, I would be so grateful if you could share our show with your friends. And I'd be super happy if you subscribe so you can be updated as we publish new episodes. And if you really want to help, leave us a five star rating and a positive review on Apple Podcast or wherever you listen. It's a Customer's World podcast is a product of the University of Arkansas Customer Centric Leadership Initiative and a Walton College original production.
