How can retailers adapt to the 15-minute city trend?

Chris Hunt: Hello and thank you very much indeed for joining us for this Gowling WLG podcast. We are an international law firm working in major sectors, including energy, life sciences, infrastructure, financial services, real estate technology, and retail. Make sure you subscribe to receive our latest podcast episodes and visit our website Gowlingwlg.com for all our latest insights.

My name is Chris Hunt and I'm head of the retail sector at Gowling WLG.

In this special one-off podcast, we'll be exploring how consumer trends accelerated and encouraged by the pandemic have meant challenges for retailers in terms of their online offer, bricks and mortar, the refocus on local and the growth in 15-minute neighbourhoods.

We'll be discussing all this and more with two retail experts. You'll hear from Katie Nugent, who is from the global support team at British cosmetics retailer, Lush and Dr Tamira King, senior lecturer for strategic marketing and sales at Cranfield university.

Chris: So, a very warm welcome to both of you.

Tamira King: Hi.

Katie Nugent: Hello. Morning, thank you so much for having us.

Chris: Pleasure. I thought we'd kick off this very interesting subject by touching firstly on your differing perspectives to our central question, which is how can retailers adapt to pandemic induced to consumer behaviour and the increase in buying local, which is a subject I think in retail terms is very dear to most people's hearts. So perhaps Katie, if I could kick off with you.

Katie: I will kick off by saying first and foremost, we sell, so at Lush we sell fresh handmade cosmetics. So, the change in habit towards buying locally, buying more often suits our business model quite nicely. We were inspired by fresh fruit and vegetable markets when the company first started out and the products are still made freshly by hand.

We want our customers to enjoy them fresh. So, somebody kind of popping along to their local shop to pick up their skin care routine in the same way as you would pop along to your local bakery to pick up your, your bread and what you need for the next kind of couple of days is actually great.

And we love to see our customers shopping in that way. So that part is, has really lent itself well to the way that we operate. Having said that, obviously we've got such a kind of diverse property portfolio. We've got shops that are in more kind of local locations, as well as the more kind of central city centre, touristic locations you would expect around the world.

Which, we still see as playing such a huge part in our brand and in the future of retail as real kind of destinations that people still are and still will go out of their way to come and visit for that full retail experience.

Chris: Excellent, thank you. Tamira, same question to you.

Tamira: So, I was just reflecting while Katie was talking about how, during the pandemic and people had to stay at home, people rediscovered their local shops and the breadth of services and the products that they had to offer. And in many instances how those local shops kept their local community going. They had so much to offer in being part of enabling people, to be part of a community, reduce the loneliness and the impact that COVID had.

So, I think the interest and the people that related to their local stores and the interest in them is here to stay. But I also want to reflect on the changing consumer confidence of online shopping since the pandemic. And I think smaller retailers and local retailers are going to have to also build in their online presence. Be aware that people might pop in one day and then shop online the next and try and marry up those customer journeys and to help consumers depending on how they're shopping and where they're shopping and whichever device they may be using.

Chris: Very interesting, thank you. And so, you come at it from similar but different perspectives. And it's perhaps good that we move on to a more of a group discussion between us, because there are some interesting topics that arise out of this. The first I think we probably ought to cover something that's very COVID related. So, since restrictions lifted and we're all glad they, they have in one form or another and people have got back to offices. What are you seeing as the main differences in shopper's behaviour in comparison to where we were before the pandemic, have we seen a sort of acceleration of what was happening before? Have we seen changes happening that are directly as a result and really discuss that because I think we're all interested in that topic.

Katie: I think one of the biggest challenges as we're getting back to that footfall return into the high street, into our shopping malls has been that kind of unpredictability in terms of trends. So, the footfall over the last kind of 18 months has been so up and down which makes, rotas for staff, a real challenge in physical retail. And similarly with buying habits and what people are buying. We've seen a real shake up, and I think that's a reflection of how people are spending their time as Tamira was just, was just saying that people are spending more time at home. People are - a lot of people are spending more time on things like self-care and rituals and routines.

And that's why we've seen, one of our kind of most famous categories is bathing items are bath bombs and bubble baths and we've seen these absolutely sky rocket. So, in terms of the trends, we have been keeping an eye on that so that our managers are in a good position to be able to, anticipate and be there for our customers, whether that's staffing wise or having the right products there.

And then in terms of how customers are responding to being back out for the most part, people are just delighted to be back in shops, able to have that, that social experience, having a chat with someone, being able to pick up a product and smell it, try it on your hands. Again, coming from beauty and cosmetics, its such a tactile thing, right?

So, when you're shopping. For a fragrance, you want to be able to smell it. You want to be able to wear it before you're committed to buy. If you're shopping for a new skincare routine, it's so important to be able to have a chat with somebody who can give you that best advice. So, I think we're seeing people really appreciate that hands on experience and that one-to-one service that is just not the same when you're shopping online.

Chris: So, have you seen, would you say you've seen a surge since restrictions are properly lifted and people clearly feel a little freer and a little safer going out into the world? I mentioned to you before we started that my local store, which is in Stratford-Upon-Avon, and even this appears to be extremely busy, not least by certain members of my family, with certain members of my family shopping there. Have you seen a surge in people wanting to, and actually visiting physical stores?

Katie: Yeah, the footfall is picking back up for sure. Obviously, some channels are bouncing back a lot quicker than others. We are seeing the more kind of local high street stores really bounced back, the malls that people can drive to quite easily. Those were the first ones to pick up. And now we are seeing things like our train station stores just ease their way back up to pre pandemic levels. So again, it's having that diversity in places that people can choose to come and shop with Lush, I think it has been really helpful to meet all of those different customer needs.

Chris: And the local nature of it is particularly interesting. Isn't it? Because if people are reluctant to travel and there's a move obviously with ESG and the increase in the price of petrol and diesel, for example, that local point is really interesting. And I know that a number of your stores are very much local and focused, aren't they?

Katie: Yeah. We're looking at capital cities. So, London, Paris, Tokyo, as more of a series of connected, almost villages than before where we might've thought of it as a homogenous, this is London. And we have seen people shopping more in their local stores. So yeah. As an example, I was working in our Wimbledon shop last week. And I was so surprised that so many of the customers who were coming in were known to the team by name, they were recognized as they were coming in. That's such a lovely thing to see.

Chris: Your usual, Madam.

Katie: Yeah. It's so lovely. And I think, people are responding so well to that from a customer perspective. After, the last few years that we've had and that disruption to be able to go into a shop to be remembered, for the last conversation that you had when you last visited to be known by name it's just, it's an incredible thing to be able to bring to the high street.

Chris: Yeah, very powerful. And Tamira, what's your research telling you on a, and work you're doing in this area, telling you on pandemic related trends in this area?

Tamira: Yeah. So, to reflect on Katie's first point about trends, I think there was a lot of research coming out on certain products were real winners in the pandemic. Like you've talked about hygiene products, cleaning products, fresh products were doing really well. And leisure wear, for example, in fashion was doing really well, probably suits, not so much.

So, I think we need to keep an eye and eye on the trends. And the other thing that Katie was highlighting is the building up of back of communities. In local stores, firstly, people need to feel safe and secure in their store and feel that it's COVID safe and trust. Trust the staff and the environment.

But I think this building up of communities is vital for retailers who want to survive and to give customers rich, immersive experiences. You're competing now against the convenience, the transparency of price and choice online, which people are very much keen to do. So, if I think about bookstores that offer coffee space and space for people to have time and relax and think about how they're going to compete against the likes of Amazon.

And I think about bundling up of products, for example, Ikea, enabling you to have your services of your products being built at home, and also reflecting on customizing and creating personalized experiences. So, enabling people to make that experience their own, to make it really memorable for customers.

Chris: Yeah, really interesting. And in my world, the smarter amongst us would say that even in legal services, we win not just competing against other lawyers. We're for service delivery, we're competing. We're also competing against the likes of Amazon, because what the online retailer, the best online retailers have done is take service levels to new heights that we've just not seen before and matching. I understand that point about matching the physical store. The local approach with that level of service is quite a challenge. And I can see that being, driving a lot of what you're doing, Katie, for example. So that idea that someone remembers your name when you go in and quick and responsive and all of that goes to make up the whole offer.

Should we move on to another pandemic related subject? We've sort of touched on it, the value of human contact and community. Again, a question of that question to you, I think Katie. You've touched on some of this in the context of the increase in the importance of community and your offering. Are there any other things that you're doing that are very community focused?

Katie: so much, to be honest with you, Chris, like this has always been a part of the Lush business model, and I think it's, part of the, this part of the reason that we've got the reputation that we do for having that great customer experience on the high street.

It's well, it's quite fortunate that a lot of the things that, we've had to do because of the pandemic, we've had a good kind of a head start in doing that. We do pride ourselves on having the best managers on the high street, everything that you've just described there in terms of that level of expertise, expectation from the staff like that starts with having amazing staff who are well-trained, who are invested in and having those managers who are not only responsible for running the business in all of the ways that you would expect from a retailer, they're also at the heart of their community. We value them understanding what is going on in the city or in the town that you're working in. As much as we do, like knowing what you stock on your shelves, like that is a part of that.

So, the initiatives that we see in our shops are manager led and they're team led. They'll be looking out to what is going on in the community what's needed and then look at, okay where can Lush fit in to that? And how can I be a part of that? An example we've just had last night, actually, our shop in Munich, which is one of our global anchor shops. They have cleared a floor and dedicated it to an art exhibition. There's a photography exhibition that has been travelling around the world. It's being run by an LGBTQI+ group called Call Out who we've partnered with before and raised money for them through selling charity products but they're now using our retail space to show a photography exhibition. So, this is again thinking beyond retail beyond okay, people are coming in because they buying their soap is what else can we provide? And what other reasons can we give people to come out into the high streets and those things?

Not only did we get incredible feedback from our customers and honestly, people who maybe weren't our customers before, but they see us doing that kind of thing. And then they want to, support businesses who are actively trying to make a difference. But you also see it from staff engagement level as well.

And staff being able to come to work, bring their whole self, bring their value system, bring ideas about who we should be collaborating with. We've seen so much of that over the last kind of few years. And it's been amazing to see. Yeah.

Chris: And that's interesting. The idea of experiential retail, which Tamira, I think you, you touched on the idea that experiential retail, isn't just about a big Apple store and then buying online. It's about the experience that you get in every touch point with the retailer. What does your work tell you about that community feel? The idea of something local and the experience that goes with that?

Tamira: Yeah. So, there's lots of research about building community, why it's really important.

Building a connection with customers and actually lots of research on understanding your customers and knowing them better using data and data analytics and metrics to try and relate to them better. There are certain stores where they integrate, for example, that data, when you walk into a store, for example, in Nike, in Berlin, the 3D facial recognition will connect with your personal WhatsApp. And they'll be able to respond to your needs on your own social media, as you go around the store and their media, all in the stores doing live streaming in relation to their brand. So, there's ways we can connect consumer data and use it to understand and connect with our customers.

I think the examples Katie was giving in store and reflecting on using this space for important causes like charities and or using it again to build communities, so the local flower shop near me was doing classes before the pandemic, flower arranging classes and I think things like that will pick up again.

And there's lots of examples of sportswear shops now having exercise equipment and juice bars to give people the opportunity to connect or there's a local yoga, its yoga sportswear in my local high street and actually they're running like kids street classes in the back room, which lots of the local school children are really enjoying.

So, I think it's finding ways in which your customers want to connect with you and actually also using the data to try and understand and connect with them better, and then maybe you could build that into customizing or personalizing their experience.

Chris:, That data point. Katie, I'm assuming in your world, data is also extremely important because people will have repeat purchases and you'll understand what they're looking for when they arrive in the store. I dare say you haven't yet got the face recognition, but will that be coming I suppose, is the question?

Katie: I mean that sounds absolutely fascinating. It's not a direction I could see Lush going in anytime soon.

I think a lot of the data that we get just literally comes from conversations. We are quite lucky in that we do have relatively high staffing levels. We invest in having staff on the shop floor to support customers with their purchasing decisions. And part of that also means that we can get to know our customers and we can get to know them in the traditional sense of just having a chat, finding out their name, what they're up to with the day. Sharmadean Reid, who is the founder of The Stack World.

She is an amazing entrepreneur who I'm very inspired by. She said there's no such thing as small talk, it's all intelligence gathering, which is something that I bring into a lot of the kind of training that I do within Lush. And it is, it's all intelligence gathering. So you might be, serving someone who's come in for a bath bomb, you might find that they actually work for a school and they're working on recycling this term.

And there's an opportunity there to say, okay can we do a school talk? Could we send some people along could we do something online for you. So, in every customer interaction, there is an opportunity to find out what matters to them. And then how does your brand connect with what it is that they need beyond those basic product needs.

And I think that helps when you've got a brand that has very clear ethics and values, so it doesn't feel completely disconnected. It's got to be authentic as well, and it's got to feel authentic in the minds of the customer. But there are so many different ways that you can connect with customers beyond the kind of the commercial interaction.

Chris: Yeah. And it's that connection that's vital, isn't it? And you've both alluded to that very powerfully. One of the challenges I think, and this is not just from a connection to a local community, but also from an environmentally conscious ESG perspective is to what extent are you - you can source and sell locally produced product?

There's a quote from a Deloitte survey here, which is 57% said that they would be more likely to spend money at a store which sold locally produced products. I can see that being a challenge for retailers who are national, international. Katie, again, start with you I think probably on this, from a retail perspective, how would you go about doing that? And do you go about doing that?

Katie: I mean, speaking from a UK perspective, Lush is a local brand, like I'm based here in Poole in Dorset, which is where Lush started 25 years ago. So, my local shop is literally, the products are made by hand down the road, and you can buy a fresh face mask that was made yesterday.

So, we, we do have the benefit of that when we're in the UK. We can really celebrate the fact that we're providing local jobs, that we do have that local supply chain as well. Obviously, we are operating internationally. And we have a buying team who work incredibly hard to make sure that we are sourcing the best ingredients in terms of quality, but also in terms of who we're partnering with. Businesses that are buying ingredients from around the world, shipping products and ingredients around the world, have a vested interest in making sure that we are working towards not just sustainable, but regenerative models of buying and manufacturing and supplying.

And it's something that, we have teams that work very hard on kind of day to day here.

Chris: To what extent do you make it clear to your customers that much of what you do is locally produced.

Katie: I mean, I think like in terms of our messaging, we definitely always have opportunities to be able to get those messages out there.

We have these conversations on our shop floors from a retail perspective. On our packaging it tells you exactly where the product was made. If you go on our website, you can find out more about where the ingredients are sourced. So, we have stories to tell behind every single ingredient that goes into our products.

And what's been interesting again about the pandemic and the shift in customer behaviour is we've always been telling those stories, but it feels like now people are ready to listen and people are paying more attention to finding out where their products are coming from and what's gone into that.

So, I think it's a move that we welcome and it's an amazing sign that people are caring more about where they're putting their money.

Chris: Yeah, absolutely. And Tamira from a wider retail perspective, you presumably say that this is a hugely important shift for retailers and but it, but at the same time, it does present a challenge for those who are more international in the nature of the products they sell. So I'm interested in your take on that.

Tamira: Absolutely. It's a challenge, but it's really important that international retailers focus on making sure that they've got a sustainable supply chain with as limited miles as possible. We've seen a growth in the local high street here of green stores where you fill up packages and you fill up jars.

Or for example shampoo, conditioners, fabric washers. So, like Katie says it's a really good move that customers are moving towards less packaging and supporting those retailers. I feel that we have a, another role to play in educating retailers where, when we're doing things sustainability, everybody's very quick to pick up a company that presents themselves as green and they do something wrong.

We've seen incidences of that in the past. So, I think it's our job to educate customers, to actually vote with their feet and support retailers that are trying to do a good job in being sustainable and reducing those miles around the world where they can.

Chris: Yeah, for those that produce stack them high and sell them cheap.

That's even more of a challenge. Isn't it? Particularly around the locally sourced products. What's your work telling you about how retailers, those sorts of retailers are managing to cope with this or they, are they paying lip service to it? Or is it a bit smoke and mirrors or are they genuinely cracking it, would you say?

Tamira: I think a few years ago we saw a large shutting down of manufacturing plants in the UK and everybody's going offshore to make it cheaper. But actually, I think now we see more companies bringing back manufacturing to the UK, especially with the problems with Brexit and trying to move their operations to be a more seamless and more successful. And actually, to be closer to the customer. Businesses probably thought it was cheaper to have tele services abroad, but actually they realized that customers weren't getting very good service that way and that led to a lot of complaints and it was better off being based closer to home.

So, I think retailers are trying, and learning to try and improve this as they're going along.

Chris: Yes. And you might, we might see - and some retailers have led the way on this, some supermarkets have led the way on this haven't they, in terms of vertical manufacturing, vertical supply chains which must be, cause when we talk about local, we don't necessarily just mean within 10 miles or so.

We mean perhaps, as you've alluded to, The UK. So on shore in the UK, which is another really interesting development, isn't it from both locally sourced. So, all of that, everything that entails everything from environmental to, to, to a local connection.

Tamira: And we really want to support mass market retail. And food chains that are supporting local farmers. So again, I think it's educating consumers on that point and making sure that they support them. Cause we've had in the past, big retailers being sued by farmers for not being fair to them. And I think absolutely we don't want to support retailers like that.

So, we want to make sure that they're being fair to our local farmers in the UK.

Chris: Yeah. Moving on to something which I know is close to your heart Tamira in terms of the work that you've done. And this, I think this is particularly important because the message I get from retailers is that it's all about variation and flexibility and integration. And making sure that you don't just go down one route or another but the simple question is, how has the rise of online shopping affected city centre retailers?

Because after all, that's really what we're talking about. So Tamira, do you want to just talk for a bit on that?

Tamira:  Okay. Yeah. As you know we've seen a huge closure of many retailers in the high street. So for example, gap in the UK has gone and decided to close all their stores, about 83 stores and decided to go completely online now.

However, you see the other end of the scale with Primark, who were saying, we're absolutely not going online. They're queuing up around the corner when to get into every Primark possible when the pandemic finished. [00:25:00] So, I think it's also about counties and councils, looking at the space where retailers are vacated and try to engage the community more.

And retailers can definitely help with that with fashion shows or charity supporting events. My local shopping centres got dinosaurs in during half term. I think it's important that where retailers have closed their high street, because they're building a bigger online presence, so they don't need such large stores.

We use that space to engage our communities. And more green space, I think we saw people wanting to see during the pandemic as well.

Chris: well. Interesting. Yes. And the balance of online as opposed to physical stores and clearly, we're not settled down yet, are we after the pandemic? But can you see, and I doubt you'd be able to tell us what the percentage now is of retail is online. Is it 20% now? 30%. And do you see that settling to a point, which is, just a steady increase or how do you see that, that going post pandemic?

Tamira: I was just looking at figures about Christmas and they're expecting 71% of people are expecting to do their Christmas shopping online, which is huge increase since pre pandemic.

But as I'm, as I mentioned before, about using multiple devices and helping customers through whichever journey they take, they might be on their iPhone looking but they actually pop into the shop on their way home. So, I think retailers have to be multichannel and they have to help customers in that journey.

So even if we are actually going to shop online, we're still going to visit our stores.

Chris: Thank you. Yeah. And I think that must be right, mustn't it? Retailers have a very fine line to walk here and getting it right is, you've got to be really ahead of the game. Katie, how are you confronting that notion of the combination of, or the conflict with online and in store? How are you coping with that? And what do you see as the next trend in that?

Katie: We definitely see them as compliments in each other, rather than kind of in competition with each other. And I can definitely speak to what Tamira's just mentioned regarding people's shopping habits.

We're seeing so many more people do their research pretty thoroughly before they come into store. So, people will come in, often having been on the website, made their wish list, done all of their kind of reading about which ingredients are in which, or what's in the gift sets. And then they'll come into the store again because our product is very tactile.

Often people will want to get their hands on it, smell it, feel it before they commit to the purchase. Or, it might be the other way round. They come in, they have a great consultation, they might leave the shop with some samples, go away and then make their purchase online. And I'm part of the retail team, we work very closely with our online team to make sure that those two things do complement each other.

And at the end of the day, because some are shopping with us, we're very happy with whatever works best for them in terms of channel. That's yeah, that's fine. And I think, at the beginning of the pandemic, we had a lot of conversations about what is the purpose of physical retail. It was a bit of a scary moment where we're like, okay, everyone's now, everyone who wasn't shopping online before has now got it figured out.

They know how it all works. So, what are the reasons? Yeah, exactly. What are the reasons then for people to bother to come into town and pay the parking fees or pay to get the trains to come in? And that's again, where we go back to leaning on our respective strengths. So, within physical retail, we know where our strengths lie.

It's not necessarily all about the convenience store kind of model, which is fine because for our Lush customer who wants that convenience, they can do it on a website without speaking to anybody. If somebody wants that expertise, that real kind of experience, that's going to leave them with a spring in their step, putting a smile on their face, then they will make the journey into the stores.

So, we recognise that we've got customers that are shared across both channels. And I think as long as that foundation is there, they know what to expect in times of great service, then we should be leaning into our respective strengths.

Chris: That's interesting, isn't it? Is there a challenge for you around, one of the benefits as I see it, of having an online presence is you can carry far greater range of stock, which you can't necessarily do in stores.

Is that the case for Lush? Do you tend to stock pretty much everything that you would have online or, and in that sense, do you, because then if someone comes in and they've seen something online that they can't buy it in store, does that present a challenge or, and then what do you do to counter that?

Do you help them to make the online purchase so you don't lose the trade? Or how does that work? Because I can see that being a tension.

Katie: Yeah, it's definitely something kind of over the last, I would say maybe five years or so, as the number of products that we stock has grown and grown and our shop size, or average shop size, hasn't necessarily grown by the same proportions.

We've had to [00:30:00] figure out that balance between not overloading the shelves in such a way that it becomes difficult to navigate as a customer, but equally making sure that we have a product for every need. So we have our core range, our core range of products, one of our kind of top box goals as a business is to have a product for every need.

So that is a very kind of specifically curated and it is an abundant range that you can come in and you will find something for everyone. We have that across all of our stores. And then we have our anchor stores, so the kind of larger format stores like Oxford Street, Liverpool, Shinjuku, where we've got two, three floors of retail space where we can have those extra, carry that extra range of products, as well as services.

So those are things that you can only buy in those larger format stores. And again, we lean into the model of a bit of like hype marketing around that as well. You might not be able to get it, if you just pop down to your local store. But we find the feedback from customers generally is pretty good.

They will make the day trip to go out to one of the larger format stores or shop online if that's something that they really want. So we're not trying to create carbon copies of our stores and have exactly the same thing everywhere. We are leaning into who we've got locally, what space we've got and curate an experience that does make it worthwhile when you're in another city popping into a Lush store, to see what's different compared to your Lush store in your hometown.

Chris: Yeah, so again, loads of variation and flexibility - really interesting. Tamira, as I mentioned, we touched on the notion of returns, which is a vital part of online, isn't it? And again, how that works with city centre, physical stores. Have you got any thoughts on that?

Tamira: So there's been an increase in returns over the last few years. And I think retailers have tried to make it easier for customers to take things back, especially in the pandemic when they could only shop online. So, people aren't frightened to take things back anymore and people expect good customer service and a good customer experience when they're doing so.

So I think that's just becoming a large part of retail. From a retail perspective, it can be very difficult to manage. It takes up huge warehouses full of stock. And part of the research I look at is on fraudulent returns, so people possibly using products and then setting them back, which is extremely naughty.

It happens in certain categories more than others but this creates huge challenges for retailers who try to be very fair and transparent and offer a competing returns policy in their own sectors. Whether that's fashion, I'm not sure it happens so much in beauty, but, or homeware for example.

Chris: Yeah and that idea then, and actually encouraging people into physical stores so they've been able to touch, feel, try it on perhaps, is compelling. Because, as you've rightly said Tamira, that the retailers are so keen to please, and the legislation is very helpful towards consumers in terms of what they can and what they can't return and how they do it. And the law around that is helpful, more helpful I think probably to consumers, perhaps quite rightly, than it is to retailers.

But it's that idea then, that if you can get people into stores and they've touched it and felt it and perhaps tried it on, then maybe the chance of it being returned is less. So there's a real impetus to keep that going isn't there?

Tamira: Yeah and just to say with online retailers, if they were to describe their product or create videos, or give more detail, it would also reduce returns as well. Because as you were alluding to Chris, when you're in the store, you can see the physical product and maybe have a play with it depending, is it a hoover, is it a computer? Can you have a go? And you can't always do that online. So I think there are things retailers can do to remedy that and improve the returns rate a bit.  

Chris: Yes, although as Katie touched on earlier, smelling something is, until we've got smelling over online that's going to be difficult.

Tamira: Yeah, but people are now happier to buy things like makeup online with VR and makeup shades.

And there are companies out there doing it. So things are changing, no you can't smell online, but beauty is a product that's slow to take off online and things are changing.

Chris: Yeah, massively of course. Yeah. And one of the central themes of this podcast, it's actually important from the perspective of just local, but it's a buzz phrase that we're hearing quite a lot.

And it's the idea of 15-minute neighbourhoods, which is a very neat way, a very shorthand way of describing the way of the world. And I just mentioned actually, the Birmingham City Council, Future City plan, where a major tenet of that plan is to [00:35:00] almost, not divide the city, but to have it in 15-minute neighbourhood models.

So, you would live there, you would shop there, you would get healthcare there, you would do leisure activities there, all within a 15-minute walk. And it's quite, it's a very powerful idea. And it's one that, retail has to keep adapting to whatever demographics and consumer trends.

And this I think is going to become really important. The idea that within a very short space of time, you can walk to whatever you need to live and to enjoy yourself and to stay fit and healthy. So it's going to be a really important part of what we're doing and it's sustainable and all sorts of very good reasons for going in that direction.

And so, the question here is for both of you, how might online shopping also change to become more environmentally viable? Back to that point about community, perhaps starting with you, Katie, do you have 15-minute neighbourhoods in your lexicon now? And are you approaching that in a way that will cover the whole issue?

Katie: Ooh, 15-minute cities, it's not a new idea, right? It's something that has been talked about for a long time. And I think, it's great to hear local councils taking this on, especially from an environmental perspective and thinking about being less reliant on transport and being able to get about by bike and by foot and building the infrastructure around that I think we'll all be welcomed.

In terms of, has that then changed our direction around like, property and where we're retailing? I think, as I said before, we have already got that diversity built into our business model. We have got lots of examples of local shops and for sure we'll be keeping an eye on the trends and what our customers are telling us about where they want the stores to be.

A lot of our decisions about where we put stores are based on either customer feedback, heat maps, looking at where they are shopping online, but also what our staff are telling us and using that local knowledge to find out, where are the locals shopping? Where are they spending their time and their money?

So yeah, it's definitely something that we'll be keeping our finger on the pulse for, but I don't think that that is going to replace the destination style shopping, where you do have that kind of "let's go on a day trip to central London to experience the magic that Oxford Street has to offer". I think, you know, that's still such a huge part of our culture and I think those two things don't have to be in competition with one another.

Chris: No. And then the supplementary point there, which is, and that's a, it's a very much an environmental focus, isn't it. But also, as we've touched on the community focus can you see online shopping offer becoming more environmentally viable in that sense too, in the same way that the focus on local is for bricks and mortar.

Katie: I mean, one of the things that we've been exploring again, sort of accelerated by the pandemic again is local delivery and using our stores to, to fulfil those. And we've been partnering with a lot of bicycle delivery companies around the world to fulfil that. I think that's, that's another excellent example of using local resources, thinking about what's the right decisions to be made from an environmental perspective about getting products into customers' hands. So that's something that I can see, like just again, enhancing the offering of services that we have for customers.

Chris: Tamira, what's your take on that? The notion of 15-minute neighbourhoods, and then how online fits into those.

Tamira: I think the idea of a shopping and doing everything close to home is a great one. I think we see retailers buying smaller stores and closing their larger stores so that they can be in these smaller towns - so the local John Lewis in the large shopping centre near me, which was their anchor store has unfortunately closed, but we're seeing opening up of smaller stores near me, we've just got an M&S local store and Tesco Express. So, I think retailers are changing the way that they're trying to deliver to the customer to ensure that they're there within their 15-minute walk. I think also in terms of big retailers, we might see some marrying up of retailers so that they can build on each other's strengths.

For example, when Sainsbury's bought Argos they were able to piggyback on their catalogue and all that knowledge that Argos already had. Another good example of that is Uniqlo the fashion retailer from Japan. They have very few stores in the UK and they made a marriage with 7/11, the local convenience store so you can go and pick up your skinny jeans while you're buying your milk. So I think there's a marrying up of retailers which can really be beneficial

Chris: Yeah. And that will be an interesting trend won't it? It's got to be where they're complimentary to one another. The idea of buying skinny jeans and milk though- that to me... but I can see the point!

Across physical stores - what changes in physical stores are we likely to see over that period [00:40:00], on the subjects of click and collect, experiential, and adapting store interiors and exteriors to the local landscape, and those three, by way of example, but not necessarily intended to be exhaustive or exclusive. So in other words, not looking at the now, but looking at the near medium and then longer term future.

Katie: So again, I think, we will be building on our strengths as a retailer, as being very experiential, very hands-on and a place where people can come and get that expertise. We've been building up our services side of the business over the years, and this is something that we definitely see as playing more of a role in physical retail spaces moving forward. So, we have spas around the world where you can go and have a massage, have a facial as part of the Lush shopping experience. So again, they're in our larger format stores at the moment.

We have hair salons, there's plans to expand that part of the business. We have fresh and flowers as a service within some of our stores as well, where you can get locally sourced, organic flowers that are in season. So, these kind of concepts that we've been experimenting with over the years, y'know we are seeing as playing a key part in again what is going to bring people out into bricks and mortar stores.

And there's so much innovation around the services and around expanding that offering that I think, y'know there's plenty more where that came from. And again, that does marry up with what other community wanting - what gaps are being left behind from some of these other businesses closing and how can Lush step into that and provide those services in a way that's aligned with the ethics and values of the customers who come and shop with us.

Chris: And that point "innovation" is such a key word, isn't it? And it encapsulates so much of what we're talking about here. The more innovative you are, the more that you're staying at least up with, but preferably, ahead of trends, that the better you'll do. How does that work at Lush? Do you have a, is innovation part of your - it's an often used cliché - but DNA, and do you have a formal approach to it?

So if you, Katie, had an idea for a particular approach, like for example, selling flowers which sounds like a great idea - very complementary, but also taking you off in a slightly different direction. How does that work in your business? Because it strikes me that innovation is so important.

Katie: Yeah, it definitely is in the DNA of the brand. Like we've been innovative since the nineties, when the brand was founded and even before then, the founders worked together on, on various other businesses, and a lot of the things that were considered innovative and a little bit different at the time, like making a stand against animal testing, like being activists and being quite open about our politics and our opinions on what the governments are doing or aren't doing. Even 10 years ago, people were saying why is this being mixed with my bath bombs and soaps? But I think now we're seeing more brands and businesses speak out about the issues that matter to them and customers are responding really well to it.

So I think, a lot of that innovation, it's not contrived, it's not necessarily a, "okay, this is the innovation team, or this is one person's responsibility, it really is part of everyone's responsibility. And again, to bring it back to the store experience, a lot of the innovation comes from the shop managers themselves and their teams.

And, it's my job in the support team to listen to them and they will tell us what their customers want. They will tell us where they should be on the high street. They will tell us where the opportunities are and our job is to facilitate that and make it happen and then amplify that best practice. So, I think, you know our whole business model of leading with trust and not having a kind of top-down approach to business lends itself well to being agile, to being innovative and to being flexible enough to meet the needs of the customers as they change.

Chris: Which must be key here, mustn't it? Same point to you then Tamira, the idea, and I'm assuming that you're very much focused on future trends in retail. So, the idea of the effect on stores or how stores, physical stores can deal with more click and collect, more focus on experience and then adapting interiors and exteriors to the locality.

Tamira: Yeah, I just reflect on what Katie's saying and, to me it's all about knowing your customer and knowing what they want for the future. You mentioned click and collect. I think click and collect has been around for a long time now, and retailers are getting much better at building up their supply chains and their return supply chains, and if you can't find it in store, they'll have it posted to your house or you can then return it in store. I think retailers are getting much better at marrying those [00:45:00] different customer journeys together.

Chris: Yeah. And I was speaking to a retail client the other day and the supply chain challenges are a big issue, aren't they? And they seem to be, retailers seem to be hit by a sort of perfect storm with the pandemic - pre-pandemic supply chain shortages, the shortage of freight capacity, all of those sorts of things, and how they deal with that is an interesting one. And a retailer I was speaking to was saying actually, because they have quite a long lead in time between order and delivery, they were saying, actually it's easier for them just to say, something's out of stock, whether it is or not, because then they're not setting expectations too high a level and letting the customer down. They believe there's less damage to their brand and to their customer relations if they say, "I'm sorry, that's out of stock", rather than say, "we'll take your order. Okay. It's now going to be six weeks, then it's going to be 12 and it's going to be 18". So, managing expectations. So, there are all those sorts of things that they that retailers have to think about.

Tamira: Yes. So, we call that delighting our customers rather than disappointing our customers. I think it's, I think it's planning that into your scenario, but also, that's about transparency, availability, and having open communications.

Chris: Indeed. And it's something, obviously you don't get when you go and buy something in store because you get it there and then, and you get the instant gratification and delivery don't you, which is interesting.

Tamira: I think there's lots of research that say when people are in store, they're still looking on their mobile phones to see if they can get it cheaper somewhere else. And they also might be thinking "I can't get it in store, but if I order it online, then I can have it delivered and I don't have to carry it. So they're, they're using their other devices, in a challenging way for retailers to manage.

Chris: very challenging. So, it's a very challenging world, isn't it? It's not easy being a retailer, I'm sure you would agree, Katie. It's very enjoyable and very rewarding, I'm sure, but really not easy. The landscape is ever shifting and because consumer demands change with the wind almost, don't they, in some cases,

Katie: Yeah, I think in just listening to you describing the plight of some, of, some of the retailers who are dependent on suppliers outside of their own business, we are in a really fortunate position in that, we own our own manufacturing. So, end to end manufacturing to retail is all done in house, which does make life a lot easier. And it means that, we can flex a lot more easily to the needs of the customers and to changing buying habit, so our manufacturing team are absolute superstars.

Chris: Yeah. And that's, that's a designed position, isn't it? So that hasn't happened by accident, but it's fortuitous with when we're living in the times we are.

And then it would be remiss on, on a podcast, which is timed, as it is, leading up to Black Friday, but then also Christmas... I'd be very interested to hear both your takes on how Christmas will go this year... We're coming, we're hopefully coming out of a pandemic, and then obviously how Black Friday will go.

And I'm particularly interested in the movement from in-store shopping to online deals and whether there are going to be any trends that we see in this very busy period, how that might affect larger online purchases, returns of "de-shopping" and then the supply chain anxiety, and all of those really, particularly in the context of Black Friday and then Christmas. Tamira, what do you think we're likely to see on those fronts?

Tamira: No, I think in the past, this huge push towards Black Friday, which is very American concept has actually impacted sales at Christmas so if you've done really well on Black Friday, you might find that you have a slower Christmas. And I think retailers, in response to that, were bringing in products for Black Friday, knowing that that may be bigger for them than for Christmas.

I think hopefully, whether it's Black Friday or Christmas, or hopefully even both, consumers are going to be out there shopping. Whether it's online or in store, I think consumers want to buy and they want to celebrate their first Christmas together in the UK.

Chris: Fingers crossed.

Tamira: Yes. Let's hope so!

Chris: What about you then, Katie? What sort of Black Friday? And, you're right Tamira, it is a very American introduction, a bit like Halloween and all those other things. What are you expecting for Black Friday and Christmas this year? Are you just expecting to be really busy?

Katie: With regards to Black Friday, it's not something that we've ever participated in as a brand.

We don't... Our business model isn't designed for inflating prices so that we can discount them. So that's not something that we've ever done. And what we tend to do instead is while there are more eyes on websites from people looking for deals on Black Friday, we'll tend to use our platforms to get across a message. So I would say watch this space.

We'll definitely be using it for some kind of campaign as we have done in previous years. But Christmas really that's our bread and butter - and we've already seen, we launched our Christmas range at the end of September.

And Christmas sales compared with, even if we skip last year, cause last year, it was a very strange one. If we go back to 2019, our Christmas sales are looking incredibly strong and some of that may well be because people are shopping early this year. With a little bit of that supply chain anxiety across the industry, the wider industry. So we're seeing people are doing their Christmas shopping already. We're feeling really optimistic about Christmas on the high street as we have to be.

And, last year or our retailers, our managers and staff had to deal with the opening and closing of shops and getting the products out and distributing products that we knew we weren't going to be able to sell once, once we had the lockdown enforced. I think, if they could handle that and get through that, we can get through anything this year.

And we're really pleased to be welcoming customers back in and showing them a great time and helping them with their Christmas shopping.

Chris: What a fantastic message. And here-here to that.

Before we close are there any final comments on this area? The focus being on the local, the bricks and mortar, how that integrates and interacts with online experiential retail, all of these things are really important and all interlinked and all about facing the consumer and making a success of retail.

Tamira, have you've got any final comments on any of that. And indeed what you think we're going to be seeing in the near and long-term future.

Tamira: Oh, I like Katie's optimism for Christmas.

Chris: Yes, so do I.

Tamira: I'm hoping that's a great way forward. The thing that's coming to my mind is that we haven't talked about the growth of social media and how we can connect with our customers and retail and how we could use that to connect and create personalised and customised experiences.

And I'm thinking about your 15 minute high street and [00:48:00] having social media opportunities for the generations that need, that would like, those flower walls to stand in front of and post pictures of for Christmas. So I'm thinking about using marketing campaigns and knowledge of our consumers and what they're doing and on their data to try and make things much more personalized for them. So we can create a really rich immersive experience for them at Christmas, and in retail, that they haven't had in the past

Chris: Yes. Remissive has not to touch on social media really. And it's in the context of picking up data obviously, but then also most, most people live their lives in some way, shape or form on social media. Don't they? So yeah, clearly very important.

And for you then, Katie, any final comments on that whole interaction between experiential, local, bricks and mortar, online and what you think you might be seeing in the near and long-term future?

Katie: Yeah, I think for anybody working in retail, I think the biggest focus right now has to be on leaning into our strengths.

Shopping is a national pastime. It is a hobby of mine. It is something that if you look at my Google maps, I will save shops that I will make a point of going into whenever I'm in that town or city. And I don't think that is going to go away anytime soon. We've been shopping since we've had towns and cities and it's such a key part of the community, but I think the challenge for retailers more than ever is to make sure that you are staying relevant, like staying relevant to what it is that people want.

I think just opening your doors and expecting people to come in and shop with you is no longer enough. What is the show that you are putting on? How are you making an experience that, as Tamira was saying, is curated and personalised for the person who is in front of you shopping. And if you can get that right, you will have loyal customers and those customers will go off and tell their friends whether that's talking to them face to face. Whether it's talking about it on social media. That's how we've built our business. And I think that is still going to be the bread and butter of how we work moving forward.

And you can't do that without amazing teams without listening to your teams. And without really centering them to be part of that strategy of how retail should look moving forward.

Chris: Powerful and positive words there to end on, I think. Thank you both, Katie, Tamira, very much indeed. Really interesting discussion. And look out for more.

Katie: Thank you.

Tamira: Thank you.

Chris: Thank you

Chris: Thank you for listening to this Gowling WLG podcast. If you like this episode, please be sure to check out our website, Gowlingwlg.com for more useful podcasts and articles.