September 6, 2018
We are extremely excited to have Gary Hawkins, Founder and CEO of CART, speak about “Retail Disruption in Real Time” at Tech Trends in Retail – Fall 2018. Amazon’s acquisition one year ago of Whole Foods triggered an innovation arms race in the massive grocery industry. Hawkins will speak to the impact of innovation across the industry and the transformation taking place as the industry moves online and massive marketing budgets shift from mass promotion to strategic personalization.
1. As Founder of CART, what has been your proudest moment as an entrepreneur?
CART’s mission is to connect retailers to new innovation and its when we help a retailer successfully discover and partner with some new innovative capability that makes a very real, positive impact on their business that we have accomplished our job.
CART is a family business and I am proud of seeing my son and daughter speak at conferences around the world, helping retail industry executives understand innovation, the implications of ever-faster change, and what it takes to create a company culture open to new innovation.
As a pioneer in the loyalty space, I have long known the power of customer data to transform retail. More recently, I have had a personal focus on the power of marketing personalization and am very proud of the work Birdzi is doing in the space, helping key retailers make the transition from mass marketing to strategic personalization and digital engagement.
2. How has the Retail industry changed in the past 5 years? What do you predict will happen in the next 5-10 years?
Looking back, I think the greatest change has been the shift from mass marketing to a focus on the individual shopper and personalization. Retailers and brand manufacturers alike understand that the carpet-bombing of mass promotions in years past is no longer the most effective way to go to market, especially when battling a national retailer like Kroger who has used marketing personalization to drive their success over the past decade and Amazon who is well known for marketing relevancy.
This has been a major change as retailers have had to look beyond CPG brand marketing funds to cover costs and supplement margins and really focus on gathering, understanding, and using customer level data to drive marketing investment decisions.
Looking forward over the next 5-10 years I believe we are going to see a dramatic restructuring of the industry.
The shift to a new world of retail as the digital and physical worlds merge to create new shopping experiences and the need for new skill sets and technical know-how are triggering the next industry restructuring. In calls I do with analyst teams from Deutsche Bank and Citibank there is a consensus that many smaller, independent retailers are very much at risk as big companies plow ever-growing resources into new innovation, leaving smaller retailers behind. I think the big battleground is going to occur in the mid-market, regional retailers that have resources to deploy and can move faster than the largest retailers.
3. In your opinion, what is the biggest challenge facing the Retail industry at the moment?
I think the single largest challenge facing the retail industry is the growing innovation gap that has triggered an innovation arms race. Amazon spent something like $24 billion on new innovation last year, Walmart created Store No. 8, its innovation lab, and Kroger recently partnered with the University of Cincinnati to set up its own innovation lab. Very few retailers have these kinds of resources to put towards new innovation – and yet new innovation is driving the industry, from AI powered everything to Amazon Go type technology that eliminates cashiers, to faster-than-ever consumer adoption of new tech like VR, AR, and Voice driven digital assistants.
An obstacle that all traditional retailers face is speed. It takes time to pilot and deploy new capabilities; the larger the company the more time it takes. New digital-only merchants don’t have legacy stores and systems and people they have to deal with and so are able to move far faster.
4. What is one piece of practical advice you would give someone starting out as an entrepreneur in the retail field?
For entrepreneurs, especially those lacking firsthand retail industry knowledge and experience, I strongly recommend finding a mentor or guide, someone who has deep knowledge of retail and that can provide feedback and thoughts on solution positioning, pricing, go to market strategies, competing products, and more.
For all startups, finding a retailer to partner with to prove out benefits and help you understand the value created by your solution is invaluable. As a friend of mine positions it, young companies need to find that ‘referenceable’ customer, a retailer who will work with you, believes in your solution and the value it can create, and then be willing to share their positive experiences with other retailers.
The retail industry, for as massive as it is, is pretty networked. Having a retail customer who will provide good references and share experiences with other retailers is huge and will help a young company get launched into the market successfully.
5. What is the biggest problem CART has managed to solve?
As a former retailer, one of the largest challenges facing retailers today is simply gaining awareness of what solutions and capabilities are available in the market. This challenge is magnified as tech innovation grows exponentially, and new innovations enter the industry at a growing pace. To give you some sense of that, CART looks at over 1,000 new capabilities each year. Few retailers have the bandwidth and resources to dedicate to staying on top of that.
CART is focused on helping solve that challenge and we do that through several services. The first is our site, advancingretail.org, that serves as an industry resource center where we curate over 7,000 solutions that are available to anyone in the industry to search through. Beyond that, twice a year CART runs an Innovation Pitch Event as an industry webcast, enabling retailers to hear from some of the most exciting startups coming into the industry. Any appropriate solution can apply to pitch; we typically receive at least a couple hundred applications which we then filter through, often with feedback from a panel of key retail executives. We ultimately come down to 6 or so startups that can pitch to the industry; the last event we did had over several hundred retail executives participate including people from many of the largest and well known retailers across the country.
CART also coordinates private innovation day events for larger retailers. The idea is that the retailer brings together their senior management team for a day, identifies 2-4 areas that they want to focus on (like merchandising or operations) and then CART coordinates bringing together exciting and innovative solution providers appropriate for those areas.
Lastly, while gaining awareness of new innovation is a massive challenge, it is not the only one. Many retail executives lack the time to think through and understand the implications of new innovation for and across their organizations. I try to help with that by speaking at events and writing; leveraging my retail experience and unique perspective to new capabilities to help executives understand what’s happening – and going to happen – in the market.