EP 298: What AI Can’t Deliver

Speaker A: Technology can't change that. Technology can enhance your learning capabilities. It can, um, help help you become more efficient so that you have more time to maybe work on other activities or kind of self development like. The list of how it can support you is, is endless.

Speaker B: Retail Unwrapped is a weekly podcast hosted by Shelly Cohan from the Robyn Report. Each episode dives into the latest trends and developments in the retail industry. Join them as they discuss interesting topics and interview industry leaders, keeping you in the loop with everything retail.

Speaker C: Hi everybody and thank you for joining us on Retail Unwrapped. I'm Shelley Cohan and I'm super thrilled to today to welcome Ron Thurston, who actually, you don't really need an introduction, to be honest.

Speaker A: Of course I do. I will take, you know, any, any warm notes that you've got there in front of you.

Speaker C: Oh my gosh, Ron, it's amazing. Thank you so much for being here on the podcast. First of all, I think the topic we're going to hit on today, about human pride in the age of robotics, is so spot on. But also, it's great to have you here because you've been around the industry for a long time. You've worked at what, Apple, Gap, Wellst, Tory Burch, Yves St. Laurent, Bonobos. I mean, on and on and on. Right. Uh, you also have two bestselling books already, which is great. Retail Pride, which really struck home with me because I call myself a retail warrior and that fits in with this whole idea of retail pride. And then recently your new book came out, Human Pride, which is great.

Speaker A: Thank you. Thank you. You know, it's been retail as, as the subtitle of Retail Pride says is often an accidental career. And I went to school on the West Coast. I'm from California. I went to Fidom, and at the time they had a retail. They called it Retail Administration. And I was like, that sounds interesting. You know, I was 17. I'm, um, like, that's. And so I did that for two years and then I studied fashion design because I knew I wanted to, to be in this industry. I just didn't know what I wanted to do. Not unlike many fit students. You're not really sure, you know, you love the business, you're just not sure of your skill set. And I was a terrible designer. I know, I, I got in there, I was a pattern maker, I did all the work. But the minute I discovered retail, I was like, this is where I belong. These are my people.

Speaker C: That's so funny, Ron. I'll tell you Two quick, fun facts. First is, I don't know if many of our listeners know this, but I actually taught at fidm, um, when I lived in Cali. Really?

Speaker A: Oh, wow. Yeah, I'm a longtime fan and supporter.

Speaker C: Yeah, it's a great school. And the other thing is, uh, you just get, you just said my life story. I graduated high school at 17. I turned 18 in August. I walk into Bloomingdale's not knowing, quote, unquote, what I wanna do with my life. I started, uh, working in Bloomingdale's on the sales floor in New York City on 59th Street. And I've been in the business ever since. Very accidental. Wow.

Speaker A: Well, and, uh, I think when you discover your ability to create an impact both on, um, like I'm working on a team and for your customer and for brands, you know, I've been so honored to work for some of those brands that you listed at really important moments in time. It is, in my opinion, one of the most rewarding careers you can have because your impact is so broad and it's so memorable and you have so many stories to tell. It's very different than working in an office. And I just feel so honored to have had the career that I've had.

Speaker C: No, it's great. And you know, it's like you said, um, in our business, it's a people business and it's either the people you work with or the customers you're serving. And that's where all, where all the excitement for me always took places in those two areas, the people part of the business. So, and we're going to talk about people today. So I know you do tons of consulting now. So, um, but one of the things that's been really happening is all this AI coming in and a lot of retailers and brands trying to figure out AI. But you know, the big question out there is, are robots going to replace humans? And so I know you have a very opinionated, uh, point on that, so let's start by talking about that.

Speaker A: Yeah, I would love to. And you know, sometimes robot works. Robot is a replacement word in many cases to just general technology. Because robots are fun and sexy and we love self driving cars. And uh, this idea of the future feels like robots. And we're seeing more and more videos. But when I think about technology itself and the evolution and the speed at which large language models are helping us all work differently, I think about technology and replacement of retail. And the reality is, what you and I have done my entire life, Shelley, is connect with other humans. And there's no other way to do that other than be the best version of yourself. Human Pride is a book about being your best, the best expression of yourself you can be, whatever that may look like and being really proud of how you show up. Technology can't change that. Technology can enhance your learning capabilities. It can um, help you become more efficient so that you have more time to maybe work on other activities or kind of self development. Like the list of how it can support you is endless. And now we're talking about um, AI supporting ongoing learning and development in stores, supporting things like easy POS solutions, some fitting room work. But the most valuable asset that cannot be replaced is that incredible human that's full of storytelling and emotion and life experience and taste and a confidence that cannot be replaced. And that's the most beautiful part of where we sit today.

Speaker C: It's so true. And I like the way that you're describing the robots and the technology because it is technology. And you and I now, I think we live through the uh, dot com boom and then the mobile commerce and then the social commerce. Now it's uh, you know, AI agentic commerce. So we've lived through a lot of these technologies. And I remember when different things rolled out like self checkout, remember when that rolled out? And then it was, oh my God, it's going to take all the jobs away from all the frontline workers. But that's not what happened, right?

Speaker A: It's not what happened. It's not what happened. And so you think about grocery specific big box, Target, Walmart, you know, big box. But you know what I love about Costco, as everybody does, is you can have this idea of like self checkout, scan your cart, um, easy. I don't want to speak to anybody, I just want to get this done. And there's a role for that. But then you think about food sampling and you think about engagement, you think about membership. Not everyone wants to scan their own cart and check out. It's your local store, uh, it's your community, you want to still engage. And as big as Walmart is, as you didn't talk about it in the beginning, but I was on tour with Retail Pride for over a year, living in, in an, in an RV and camping.

Speaker C: Wow.

Speaker A: And so I spent a lot of time in Walmart, you know, where I went coming from New York City, that was not my life. So all of a sudden like Walmart becomes this most important foundation of often like small cities in this country and some Walmart where you think would be the first one to say everything's going to be checkout, self checkout, technology based. They, there is a portion but those are people who know each other, who kids work in the store, it's their first job. You know their, their eye doctor is in there like the post office is in there. Like this is an entire city built into a four box retailer that self checkout can't change. And I, that's what I love about this idea of where self checkout kind of, it gave some options for people but the reality is we still go in there because it's part of our life and it's part of our, it's our friends and our family.

Speaker C: It's absolute. I want to just uh, follow up on something you said. So um, sometimes customers want self checkout and sometimes they don't. But sometimes like me, sometimes I want it. I'm the same customer and sometimes I don't. So like when I'm by myself I am a master at self checkout. I'm organized. I put in the card, boom, boom, boom. I'm so happy. Get out of there. Done. But when my husband goes with me I hate it cause he keeps putting stuff in the card. He's not understanding the scanning part and it's a big mess. So I don't do it. So even not just different customers but people want different experiences at different times, right?

Speaker A: That's exactly right. And the idea um, of then understanding what your customer wants. This is exactly where we sit in retail today because the options are so wide that you could say where can I lean in to technology? What does our what and where do I way step away from it? What does my customer really want and how do I build my business to with this channel now of stores it has, it continues to be more and more important because now we're starting to talk a lot more about customer acquisition that you couldn't do just through E commerce or direct to consumer loyalty. Average spend, lower return rates, higher conversion rates. Like we five years ago we were trying to push everyone to a website because we weren't sure what was going to happen with stores five years later which is a minute in time in history. People are back and uh, they want to go back to stores. And Gen Z as much as you think about them growing up with a phone in their hand or only shopping online are uh, the highest penetration of in store shoppers of any generation. They want to go into a store, they want to have experiences, they want someone to tell them what to buy. And I love this about like this, the shift in human behavior is very like technology on one hand and human on the other.

Speaker C: Yeah, absolutely. And the other thing that's interesting. So when we look at technology, so there's technology, AI specifically is very good at some things. Some tasks it just excels at, and then there's some tasks well it's not so great at. So maybe you can kind of delineate between, you know, what are good use cases of AI and maybe what aren't such great use cases of AI.

Speaker A: Sure. So if I think about, um, I'll use one that's training. Um, so I'm on the advisory board of a company called Frontline iq. And Frontline IQ is developed, um, because the challenge of ongoing learning and development and coaching has been relied solely on humans. You and I both know a great store manager is fantastic at coaching. They're great at uh, merchandising, they're great at store operations. They could knock out a line at the POS if you needed to. Those people are magic. I was one of those people. You were too. This idea of you can do it all, but the pressure that was pre E commerce and so the pressure of all the other tasks that have happened have put a lot of time constraint on managers ability to coach. So could you say, could I have a coach in my pocket that um, listens to how I engage, can think about language, um, that I want to learn that's based on the company. What does onboarding look like? What does kind of scrimmage or role play look like? Um, how can I learn from other people, people within the company and listen to them sell all of this? So AI is helping us create this idea of a coach in your pocket and in your hand where you're learning and you're developing your skills, but it doesn't necessarily require a human to do that with you all the time. And we've all been in those awkward role play where we're all standing around in the morning of like, oh, Shelly, why don't you play the customer and I'll be the sales associate. No one likes to do that. And there's like, like idea of like, what am I actually getting better at my job? But if I had, but if I was this invisible person next to me listening to me sell and engage, or how did I greet, what did I say? How many customers did I convert? That changes the game in my opinion. So I think there, there's, that's one example. But there's things like inventory management which has been, you know, just the uh, pain for all of us through decades of like twice a year inventory hiring, you know, a team to come in, scan every item. I mean, those people that work at brands like Claire's, I was like, I don't know how you did that. But, uh, today we have rfid. And so today you would say, well, every single item in the store has a tag. It has an RFID mark or it has a thread, has something that identifies that unique item. And technology sits in the ceiling that tells us every given moment where every single item in the store is. How much do we own? You know, where does it sit? Can I sell it on E Commerce? Like, we. We have live inventory at our fingertips 24 7. That is for me, a massive shift in like, oh, we got a web order. Like, where's that dress? I can't find it. Is it in the fitting room? Oh, did you sell it? Is it on hold for someone? That's the life we've always had today, now we know because of rfid, we know where all the inventory is. So just two very simple things, but two that I think have been such pain point for the industry that's only going to get better. And we don't need humans to do inventory. I'm sorry, that is one thing of. I'm happily disengaged from inventory.

Speaker C: Oh, uh, you and me, Bo, I was back when we were hand counting everything on paper and pencil, you know, so. Oh, yeah, uh, happy to get rid of that. But, you know, you bring up a good point. So AI is really good at taking a lot of pain points away. So self checkout can be a pain point. Inventory is a pain point. But let's talk a little bit about. So a lot of what we do in this retail pride and a lot of what happens, the magic in the store is that relationship between the customers and the associate and the, um, associates remembering, oh, this customer went on vacation last year and she bought these five things and now she's going on vacation again. Like, tell us a little bit about how is that something that can be replaced by AI or is that really the human side of what we do? Yeah,

Speaker A: I think to answer the short answer to your question is it can very much be supported but not replaced. I think the tools that help us then, um, do things like outreach. We've called it clienteling for a long time and we've thought about. And I've worked in the luxury space for many years. Those relationships are everything to you and those. And. But how you maintain relationships at scale require technology. And so Some of it is, you know, can. Can my AI partner help me craft text messages or emails to my top 50 customers that are all fully customized, that are based on their purchase history, their likes, their family, their notes, things that I know about them. Can AI help me on Monday morning send 50 customized emails? Absolutely, it can. And where before you spend four hours in the office, maybe writing a note or texting someone or calling someone. And so this idea of, like, relationships are so important, but you can do it at scale and you can be better at it. And so I actually think that relationship building part is what people really crave. They create, like your website. You may not know who you are, but the store does. And the store knows what you like in the store can make recommendations and AI and AI agents, shopping agents can certainly they're building trust with people, but stores. I just actually read a, uh, report today. I think 18%, um, of all decisions that are made by, like an agent, an AI agent through different platforms that are using them are trustworthy. But the store associate that, um, is making that recommendation is significantly higher than that. And so this idea of we haven't fully, we're not fully ready to trust what the robots are telling us.

Speaker C: Yeah, that's interesting. And I think another piece of that is that when you look at the associate like, so if you're shopping online and you have the, um, agents online with recommendation products. So, you know, 10 years ago or eight years ago, the recommendations were based on algorithms. Very like kind of Kurt short algorithms. Now they're a little bit better, you know, when you're online. And I guess it's okay if you're online. I want to dress it, knows my body type, but the difference is in store. And when I'm dealing with an associate, that person knows my personality, my actual likes and dislikes, and quirky things about me that the agent's not going to know.

Speaker A: Right, Correct. And your hair color, your body types, uh, like none of that can be done truly by an agent. Uh, at least not, uh, today. But when I think about my own career, my own time and store, the last decade of my career running brands was bonobos and St. Laurent and intermix. Like, those are. Those are three. That was 10 years of leadership. And they're very different brands, Very, extremely different brands. Yet at the same time, they were all rooted in relationships and styling in some ways. Bonobos, the guy shop for bonobos, we built that. I, I opened about 60 stores for them, store one through 60. And they were rooted in teaching men how to Find their perfect fit. Teaching men how to dress and style and, like, how should your clothes fit? We didn't even, you know, as you know, we don't sell. The guide shop doesn't sell anything. It's a sty. It's a store for styling. And to everyone I would hire, every store that I would open, we would just spend hours talking about how men's clothes should fit. And there's no technology that's going to solve that of a man that comes in and says. And I say to him, you know, welcome. You've got a wedding in the Hamptons this summer. Let's start out with, like, what size suit jacket do you wear? And he says, I don't know. Like, my wife buys all my clothes for me. Like, that's usually the answer. And so then you move into Saint Laurent, which is rooted in history and, like, some of the most important influence in, like, fashion history. And. And what? Every color and fabrication and print and store design. Like, it was a. It was a. It's a brand built on storytelling, just like all big luxury houses. And Intermix was, in many ways, the combination of both, because that. That brand is rooted in styling. 200 brands all mixed together in one store, Teaching women about styling. That's what we were built on. And so this idea of, like, none. If I share that story, because none of that can be replaced, none of that would change. Those are very successful. You know, Intermix isn't around anymore, but very successful businesses at their time. That is, um, a way to think about retail of the future, certainly fashion retail.

Speaker C: And I loved Intermix. I thought it was way ahead of its time. I remember shopping in New York City, and every time I saw an Intermix, I would just go in to get inspired, like you said, for the styling. It was awesome.

Speaker A: Exactly.

Speaker C: So, um, you talk about memory, trust, and the standard. Can you kind of tell us a little bit about what that means?

Speaker B: Sure.

Speaker C: Ah.

Speaker A: So memory, as we've been discussing, like, the idea of, like, I know you, I have memories of you. I have memories of your family and special events and insane. Those three brands that I just mentioned, they're so rooted in memory and history and, um, that relationships would go on for decades in some cases. I mean, Intermix is one of those. That young woman, New York City professional. Her career grows. The brands that she wears grows, and she has kids. We would have moms with their daughters, and they would come in and say, I got my dress, you know, for rehearsal dinner at Intermix. And Then she brings in her daughter to buy a prom dress. Like that happened, it happened at Bloomingdale's. Of course. Like it happens everywhere. Like those memories of, of how you build relationships, um, are so important. Uh, and then the, the components of how you continue and what the rest of that relationship looks like never um, stops. It just, it's a critical component to the um, what I think will continue to be something we crave very much so.

Speaker C: Is that the trust factor?

Speaker A: I think it's trust. I think, uh, it's the idea of. And AI in many ways is also deteriorating. This, we're not really sure what we're seeing is real. Um, we all know that our writing is better today. Our communication is better. It is kind of this idea of being smarter is just price of entry. Everyone now is a great writer and so do we really trust it? Is the imagery really trustworthy? Um, you talk about AI models, fashion design. So yes, trust is, is one. I want to see it and I want to touch it and feel it. And I've seen some now ideas of things being tagged as made by human, including art, including print design, including words and books, you know, written by human, designed by a human. Um, that's happening really fast.

Speaker C: Yeah, I've seen a surge in that as well in the industry. So that's important though I think a lot of people are actually looking for that now.

Speaker A: Yes, I think so too. And we're seeing this, ah, kind of Gen Z, put down your phone. Um, let's make it a little more analog. Uh, who was this made by? I do think there is a swing that's happening. It's not fully business developed, but you can get this sense of in person events, analog experiences. Your phone gets locked up when you go to a concert.

Speaker B: Um,

Speaker A: all of that feels like it's something people are craving to me.

Speaker C: So Ron, maybe you can kind of help some of our listeners out there, the leaders that right now they're trying to really identify the balance between the technology and the human side. And I know you kind of have this three test thing that you do, so maybe you can talk a little bit about that.

Speaker A: Sure, I do. This has been a newly developed idea because this question's been coming up a lot. So the first one is, does the work require recommendation or judgment or human input? So if the work requires some level of human engagement. So you think about restaurants, you think about luxury, retail, you think about hospitality, things that require recommendation. I was in a restaurant last night here, uh, in Miami with a sommelier and uh, had A great waiter and like this idea of um, it was a very human experience while World cup was playing on like a giant screen outside and we were sitting outside. That experience would never have happened, um, and couldn't be replaced by if it didn't require recommendation. The third one is does the relationship compound over time? So does it get better? When we talk about some of that like the history and trust, it compounds over time. You build relationships with brands that are not done in just pieces and parts and single transactions. That's what E commerce does so. Well it doesn't. Your relationship with, with a website doesn't compound over time. It's like uh, you know, I got the price that I want, I got the item that I wanted in the time that I wanted in the price that I wanted. And it's uh, it's transactional. But you, if you don't need something from that brand, you're not going to go back. Your relationship doesn't compound over time. It didn't require a human recommendation and it doesn't change. Your relationship with those websites don't change over time, I think.

Speaker C: Oh, that's so interesting. I never really thought about that. But you're right, my relationship with the website doesn't go anywhere. It's static.

Speaker A: It's static. I mean we all use Amazon. And I think that my relationship with Amazon doesn't really change because they think about it as a very like functional, tactical um, you know, it's integrated ourselves into our life with medical things and prescription orders. Like there are things that happen but it's a very one, it's a very one sided relationship. Put it there. And the third one is like is, is the work setting a standard? So when you think about luxury hotels again, retail, um, events, everything that requires like what is the standard for our brand and how do we maintain that standard? So AI can help you brainstorm like brand ideas or marketing tools. You can think about what you want to create. But if it requires you setting and holding the standard for the experience for your brand, it requires you to be human. You have to be able to line up those points and say does it require recommendation? Does the relationship compound over time? And am I setting a standard? And if the answer to any of those is yes, it requires a human, requires a human to do that. And I don't care what you're selling, those three filters still apply. It's not just a fashion conversation.

Speaker C: I love that. And it kind of sums up to AI gives a lot of great data. And I think you said earlier can support some of this judgment element of the human side. But the humans give the judgment and that's kind of the difference.

Speaker A: Right, right, exactly. And that will, it will I think continue to evolve. A lot has happened the last two, three years and a lot is going to happen the next two, three years. And I think we have to be able to differentiate what our role is in this business and what will continue to evolve around it. And there are very traditional roles in retail and I think about buying, planning, allocation, finance, um, some store op, store design, all of it. There's a lot of technology being introduced into all of those roles and it doesn't mean that those roles don't exist. But I consistently say, but you need to continue to be curious, learn the tools, don't sit back and wait for the tool to maybe do some of your work for you like be. But uh, understand your judgment is the most valuable asset you have and to lean into that.

Speaker C: I love that. Ron, oh my gosh. Thank you so much for being here. Is there any closing thoughts that you want to make or say to our listeners before we end?

Speaker A: Yeah, I, number one for anyone that's student wise that's thinking about this business and the industry and retail. When I'm on the FIT campus I talk a lot about stores and I, and you know, if I ask a class, you know, how many of you have worked in stores, it's a handful, it's not everyone. And those that like want a career in stores, it's almost no one. And then I tell them stories of like why these are such good choices early on. Because you're learning store operations, you're running a multimillion dollar business, you're learning how to sell, you're learning how to speak to strangers. Like all of this human engagement, you can learn how to do that by getting a part time job in retail and take that with you to the rest of your career. Um, but this for me is probably the most exciting time in this business for a long time. There's so much newness, there's so much um, potential support and new ideas that we never had before. We never had technology to help us do staffing or to do training or to think about inventory management. All the things that were the, you know, maybe not fun, not as efficient, now they can be. And that puts us, puts time back in front of the customer. And that's what, that, that's why I can't get enough of what's happening in retail because it's so ever changing and in a really good way today.

Speaker C: It's great. And I have to say, like, in the past five years, I've seen retailers really become, have a lot of agility, uh, like I've never seen before. And it's very exciting to see. So I'm with you on that. And you and I are the two people trying to get more, more young people into store management for retail. Because it is an amazing career.

Speaker A: It's an amazing career and it doesn't mean it has to be forever.

Speaker C: Exactly.

Speaker A: I think you can. I wouldn't have changed it, but it doesn't always have to be that way. You can move between ideas and that's um. Career paths today are not linear. And it's okay to start in a store and then go to corporate and then go to back to stores or think about design and you move from even myself. Move from apparel into technology, into home furnishings into luxury. There's no linear path. And be ready for the ride.

Speaker C: That's great. Well, thank you, Ron. Thanks for being here today.

Speaker A: You're welcome. Thank you. Shelly M.

Speaker B: Thank you for listening to Retail Unwrapped. We'll be back in one week with another podcast. Please subscribe on Apple Podcasts, Spotify or any podcast service. If you have questions, ideas for a podcast, or anything else, please contact us via therobinreport.com.