Latest / Talk Commerce / Transforming Retail Through Strategic Operations with Rebekah Kondrat
Transcript
- Brent Peterson (00:02.018) Welcome to this episode of Talk Commerce. Today I have Rebecca Kondratch. She is the founder of Recon. Rebecca, I think I got through that right. Go ahead, do an introduction for yourself. Tell us your day-to-day role and one of your passions. Rebekah Kondrat (00:12.786) You got it. You're right. You're right. Yes, I am Rebecca Condrat. I am the founder and managing partner of Recon Retail. Geez, day to day. Every day is different, but I'll say what I do on the whole broadly is help brands open stores. So, you know, for example, we'll be on site later today with a brand in Soho. So, you know, I think that's it's... Every day is a little bit different, keeps me on my toes, but helping brands open and expand their retail presence is what we do at Recon Retail. I guess passions, mean, obviously very passionate about retail, customer experience, you know, just wanting to make retail, sorry, I'm getting an error message. Okay, hopefully that's okay. Sorry, passions. So passions are obviously retail and the customer experience. And I think what sets us apart is really recognizing that operations, the hidden stuff behind the scenes like inventory management or employee training that happens before the customers enter the store are just as critical as. the beautiful fixtures or the chandelier or the flooring or even just as important as the product, right? You have to have both. You can't have great product and a crappy experience. People won't wanna come back. So that's really kind of our sweet spot. We're operators at our core. So. Brent Peterson (01:55.17) Yeah, that's a really good balance. I think people do forget both sides of that, that operations are so much more, are so important as well as the presentation and marketing. It's a big piece that everything has to work together. Rebecca, before we get started though, you have volunteered to be part of the Free Joke Project and I have a guaranteed bad joke for you today. So here we go. Last week I saw a 3000 year old stain on some clothing. Rebekah Kondrat (02:06.407) Yes. Rebekah Kondrat (02:14.586) Yes, I'm excited. Brent Peterson (02:24.106) It was from ancient Greece. Rebekah Kondrat (02:27.762) that's a dad joke for sure. Okay, rating that joke. You know what? It was really entertaining. I'll give it a nine. Brent Peterson (02:39.278) All right, thank you very much. Good, all right, so let's dive into Recon a little bit. Tell us how you got started, why you got started. Kind of give us your founder story. Rebekah Kondrat (02:48.924) Yeah. Yeah, so Founder's Story, it actually has to go back to kind of my retail journey at Starbucks and then Apple and eventually into D2C land with Warby Parker. I was in-house at those brands, running stores on the front line, eventually running multi-unit and then running the entire channel, channel expansion. And, you know, I think... when the pandemic happened, obviously all retail closed. Nobody went to stores, pre-vaccine, of course, once the vaccine happened, then we had a little bit of a reprieve, but nobody was going to stores. All of my friends in retail got laid off. I had actually been for a couple of years with a, I guess you could call it like strategy and consulting firm. called Lose Threads that we were just starting to build out a division where we would help advise founders as they were opening stores. A little bit more on the strategy side, not so much on the execution side, although we did do some of that. And so when everything shut down, that also shut down. So I was kind of left looking around going, well, there's no jobs for me to apply to right now, because there's no stores open right now. So, you know, what if... what if I kind of started my own thing and decided to go out and kind of keep in this like strategy, know, lane, but also adding execution, which is really what I was passionate about wanting to be, you know, in there with the brands actually on site, overseeing the construction, setting up the operations, training the teams. And so started what eventually became Recon Retail started it just as Hondrat retail LLC and landed a couple of clients even before the vaccine, just about theoretical projects, more like what if we were to open stores once things reopen again, what would that look like? Or actually, I know this is something that you have talked about on your program before, client telling, like how do we reach our customers when stores are closed? Customers are still buying things, everyone was buying everything online. Rebekah Kondrat (05:08.272) So, you know, how do we do that? And so I did a couple of projects with some brands like Roan and Mizun and Maine during that time. And I gotta say once, as soon as the vaccine hit in early 2021, suddenly there was all of this pent up demand to open retail that kind of came out of the woodwork and suddenly became very busy. very quickly, you know, built out a team, found a partner, we'll... went ahead and like opened a bunch of stores that year and then kind of into the next year rebranded as Recon Retail. And here we are and we just turned five. So that's the story. Brent Peterson (05:49.73) Wow, that's amazing. I know that you have Retail is Alive as a trademark, right? So tell us, where did that come from? Is it dead? Rebekah Kondrat (05:55.973) Yes. So, so, so it's funny, even before the pandemic happened, there was kind of this like saying in the ether that, you know, retail is dead. E-commerce is going to kill retail. People don't want to go to stores anymore. The store experience is so bad. You know, and so this was actually back when I was with that strategy firm called Lose Threads. the founder of that firm was like, we should trademark Retail is Alive. And I was like, yes, we absolutely should because Retail is Alive. It is a belief that I hold. And so, you know, when I started Recon, what became Recon Retail, I fully took ownership of that trademark and have maintained it because it is what I believe. Retail is alive. No matter what happens online, people still want to see the products they're buying, if it's a sofa they want to sit on it, if it's a dress they want to try it on, if it's glasses they want to wear them. People still want to experience their products in real life and there's this interesting connection point to the brands where they want to get to know the brands almost as if they're like a person, a friend. The really good brands do this quite well like Apple is I think best example, I am biased because I did work for Apple for five years in store expansion and running stores for them. So, but you know, you really feel like you're connected to Apple, like the ethos of Apple when you walk into an Apple store and you start talking to a specialist or a genius or, you know, any any of the technician because they they kind of embody that brand for you. Brent Peterson (07:47.416) You mentioned retailing, client telling, sorry, I'm gonna get it right. You mentioned client telling earlier. Do you think a lot of brands either keep their two entities disconnected, the online and the retail, and don't intermix enough? Is that a big problem with any size brand? Rebekah Kondrat (07:51.28) Yes. Rebekah Kondrat (08:08.018) Yes, and I think there's a couple of reasons for that. think the systems and we've talked about about them before, so I'll give them a plug. There's like system, you know, apps like Indir that integrate into Shopify that have made it easier. I will say until apps like that launched, there are others as well. It was kind of a very disjointed process because you had the like classic black book, right? This is like the luxury, you know, where I would write down Mrs. Berkowitz bought the Hermes blah, blah, you know, whatever. And then in three weeks, I would call Mrs. Berkowitz and be like, Hey, we got some new products. And how's your thing that you bought? And how was the wedding that you attended and whatever. And I would have all of my notes about my customers, right? And so it kind of had to be a disjointed process because there weren't systems in place. And I will say in luxury, it kind of still operates that way. A lot of the time there are some of these bigger, more enterprise systems that have helped with like digitizing the client telling experience. But, you know, I think, I think that's one, one thing is just the sheer, like it took interconnected systems in order to make that happen. I think the second thing is, you know, up until a couple of years ago, client telling really wasn't thought of for something for a purchase that was less than I don't know, a several thousand dollars, right? And so of course, like the big luxury players, you're buying a Birkin bag. Like, yes, you're gonna get clientele too. You're gonna get, you know, someone personally calling you. You're dropping so much cash, right? That like, that's what's expected. That's what those customers expect and have come to become accustomed to. But really what started to happen with some of these, let's call them like accessible luxury brands, and I've had it happen to me, like Jenny Kane or M.M. LaFleur and a few others is even if I had just visited a store and met someone, I would get a text or an email a few weeks later, like, hey, so nice to meet you. Three weeks ago, this is. Rebekah Kondrat (10:28.624) so-and-so, your sales associate who helped you, how's that thing working out, we got some new product. And it was really, the first time it happened, it was surprising. This was several years ago now. And I think what brands, those brands have learned is it is worth the time and the attention and the bandwidth, right? Cause it's all labor that it takes to continue that customer relationship because... What we know statistically, and this has been proven over and over again, is when a customer shops in multiple channels, they buy something online, and then they later go into the store and then they buy something in the store, and then they see something on TikTok, and then they click the link, they buy something there. Their customer lifetime value is three, four, I've even heard brands report that it's 5X, what it is for a single channel shopper. Brent Peterson (11:16.44) From a macro level, do you think the Amazon Whole Foods integration, and I think it's getting tighter even now, is like a no-brainer, and why isn't there more of a shopper Amazon experience at Whole Foods? Rebekah Kondrat (11:33.061) I mean, this one's tough because I'm like, I'm of two minds about this. So I kind of bucket retail into two separate experience categories. There's like retail is utility, which is like, I have to eat. I need Tylenol. I need whatever cosmetic thing that I need. I'm going to go to XYZ pharmacy or grocery store or whatever. And I just Really my goal is to get it as quickly as possible. Now Whole Foods kind of toes the line between this like retail as utility and retail as leisure or retail as experience where like you wanna go in and you wanna have, you wanna be educated, you want to be spoken to, right? Like when you go into pharmacy, I'm like, don't talk to me, I just need to buy this thing and get out, right? But like you go into Whole Foods and it's like a little bit of both. worlds. And so yes, while I do think that a lot of the conveniences of the like Amazon experience, quote unquote, like things like lightning fast checkout, or like remembering my purchase history and asking me to reorder or like subscriptions, I use that a ton, you know, toilet paper has to come every so often. And I kind of have learned how often I have to order it. So you just put it on automatic subscription. Fine. You know, I think those like what I would label as low value interactions. You're not really gaining anything. You know, the customer, the faster they are almost the better your brand looks. Those are fine to kind of give the Amazon experience as you're saying. But I think what Whole Foods does and has done well historically, and I haven't been in recently, so now you're making me want to go back into a Whole Foods, is they kind of also offer some education about new products or they have kind of employees roaming around ready to talk to you or different, let's call them mini experiences. You're certainly not going to sit at Whole Foods for a class, although I don't know, cooking classes might be smart for them to do, but it kind of is that in between. And I think they need to be really careful about continuing to have that, build that brand affinity. Rebekah Kondrat (13:51.109) as like experts in whole foods or healthy foods, wellness is such a big thing right now. And also just being like the fastest checkout around. Brent Peterson (14:02.69) Are you seeing more brands, you mentioned luxury earlier, are more brands realizing that client telling is a no brainer? They should be doing it no matter what, even if they're, you know, they're selling one and $2 items or they have some kind of item that could they already sell online and why not get people online to buy more? Rebekah Kondrat (14:23.098) Yeah, yes. I think in especially in the categories, mean, like historically apparel, accessories like handbags or like luxury footwear, that has been kind of the client telling, you know, the mainstays of client telling. But I think even brands that have products that are have a very high repeat purchase rate. So things like beauty and wellness are hopping on the client telling bandwagon, previously you kind of, like my makeup person doesn't, you know, like the gal at the makeup counter, I'm going back to Marvelous Mrs. Maisel days now, right? The person at the makeup counter, you know, typically wouldn't be reaching out to me all the time. That's what my apparel person does or whatever. So I think, yes, a lot of brands, even though some of those are very low ticket items, like I don't know. lotion for $20 because the repeat purchase rate is so high. That's where the value in that customer is. And so you want to continue to reengage that customer so that they don't go to different brand. Brent Peterson (15:31.648) And as a merchant, important to at least get to know who's buying and connect that in-store purchase with a client profile to get to know them better. And even outside of the Mrs. Maisel example where you have more of a one-to-one relationship, you have a brand to customer relationship that's also important, right? Rebekah Kondrat (15:40.198) That's right. Rebekah Kondrat (15:50.983) That's right. Yeah, yes. And I think with so much choice available, you know, you used to have to physically go to the store to discover new brands. Now you have influencers telling you new brands, have ads popping up that you didn't even ask for telling you about new brands that are like or similar to the brands that you already buy. You know, there's just so much choice available to consumers now that it is even more important to maintain that kind of customer relationship. Brent Peterson (16:23.438) How much does the person at the POS play into that influencer role? I shop for makeup, not for myself, but for my wife and my daughter. Rebekah Kondrat (16:35.878) Good! You know what makeup to go by? That's fantastic! Impressive! Brent Peterson (16:39.342) Well, my daughter gives me a list, so it's a little easier. you know, there is a person who's helping you and influencing you to buy a product, right? And they also have a personal preference. And I know you talk about employee training. Is that all part of your package that you do in terms of training an employee, helping them understand the customer, helping them get to the right point, and making that experience as good as possible? Rebekah Kondrat (17:05.222) Yeah, yeah, so that is something that we work with our brand clients on is not only how do we develop a bespoke customer experience for your brand, like steps of service or some of the like, again, going back to lecture, you call it like a selling ceremony, where there's something that's like memorable, there's education, it's not just transactional, you're building a relationship. But it also does, I think you're hitting on something that's really important, it is critical that the brands are continuing to educate their employees about the products, especially if it's a multi-brand retailer, like takes a fora, for example. They have hundreds, probably thousands actually of products, you know? And so to your point, like, how can you make sure that... this associate who's helping you get stuff for your daughter is helping your daughter when she goes into Sephora is knowledgeable about all of the latest and greatest brands. Employee training is not just a one and done, oh, we train them when they join the company or we train them when we open a new store and then release them to the wild. No, the good brands and kind of going back to Apple, constantly retraining employees, constantly updating and making sure that they're understanding the newest GPU or whatever, the newest graphics cards that are coming out or what a solid-state drive is versus a regular hard drive. They're constantly retraining, which is why then when you go into the Apple Store, you're like, holy crap, these people know what they're talking about. It's not because they all went to MIT. It's because Apple invests a lot of money and time in training its employees. Brent Peterson (18:53.426) I kind of want to close out our conversation today and have to talk about AI once. I remember last year at Shop Talk, I interviewed the CEO of Xhoppers and they have an AI tool that helps them to understand what clients are doing in the store. So they have all these gestures that people are doing and it helps if an associate comes up and wants to talk and they're using it to measure the in-store experience. And I guess there could be a... Rebekah Kondrat (18:58.62) have to. Rebekah Kondrat (19:07.623) Mm. Brent Peterson (19:18.542) a factor in there that may be intrusive as well, but it also, I guess from their standpoint, it helps them to know when you should approach somebody and when you shouldn't, and even helps them on shrinkage because you may, an AI tool may recognize that somebody's put something in a bag when they shouldn't have. Anyways, I do wanna talk about a little bit about... Rebekah Kondrat (19:34.406) Mm-hmm. Brent Peterson (19:45.048) how AI is being used in store, even with cameras and things like that. Rebekah Kondrat (19:49.831) Yeah, yeah, I mean, I think to speak specifically to the functionality that you're talking about, think AI, and actually, I think this broadly, AI is a great supplemental tool to well-trained employees and a really thoughtful customer experience, right? Like AI is not going, you can't just. release your employees to the wild and then have AI fix everything for you, you have to have a foundation. I think we know this, right? Like AI is great, but it's only as smart as the prompter giving it the prompts, right? So like it's going to give you bad information or good information or you know, the prompter has to be able to recognize those things and adjust the prompt, right? So, you know, I think AI in physical retail is a little bit similar where it's like a, it's a companion helper. but it's not like the main, it's not the main thing, right? So I think that's correct. Like we, again, going back to my like pre-recon in-house retail days, spent a lot of time talking about verbal and nonverbal cues, like reading body language, we do role plays and exercises around it, right? Those things still need to be done. AI does not replace that, right? Like you should be able to look at a customer, And by the second time that they're going like this, you need to approach them and start talking to them because they need something. So I think it doesn't replace human intuition. But I do think that it can help brands understand one, customer behaviors. We have this whole science of choice that has been, again, really well studied about where on the like in a grocery store, which shelf you want your product on, and then how many of each type of product you want, and then at what point does it become overwhelming and the customer just walks away. I think AI will help us continue to go deeper in understanding customer behavior, understanding how choice is changing, because frankly, it is changing for the next generation you mention your daughter. I also have a daughter, she is 13. Rebekah Kondrat (22:03.832) her knowledge of beauty products is so vast, I like don't understand how it all stays in her brain. And so maybe that science of choice study from Wharton from, I don't know, 15 years ago needs to be updated, right? And I think AI can help us with that better understanding customer behavior and therefore make better products, sell more products, et cetera. To talk about AI more broadly, where I think it is... most valuable currently, actually, and this goes back to the very beginning of our time together, is in the like unseen, is in the operations. I think that AI can greatly help and replace, although I hesitate to use that word, but like, you know, do some of these functions that we want to free up employees from doing so that they can get back to helping the customers, know, so things like tracking and counting inventory and sure you mentioned shrinkage that's very important whether it's lost from theft or lost because We didn't get enough of that product and we didn't count it correctly or it fell behind the rack or whatever You know, I think AI can greatly help with tightening up operations. I think about replenishment Right like tracking how many of XYZ widget we sold and at what point do we need to ship more of those widgets to make sure that you're not walking sales like those things are things that are somewhat automated for some brands, but honestly, a lot of brands still actually, that is a very manual process. So I think the more that we can integrate AI into those operations and back of house systems, the more that we'll be able to then push the value out to the front of house and help employees do their jobs better, more effectively, offer better customer service, et cetera. Brent Peterson (23:58.723) Yeah, I do feel like the next generation of AI is going to be around the efficiencies you get in operations and finding patterns and data rather than just writing blog posts and creating really cute Jack Russell images on the internet, which... Yes, absolutely. Rebecca, we have a few minutes left. As I close out the podcast, I give everybody a chance to do a shameless plug about anything they'd like. What would you like to plug today? Rebekah Kondrat (24:11.952) Right, right, yeah, like, you know, great gifts, you know. Rebekah Kondrat (24:27.132) man, I feel like I would be remiss if I didn't at least plug recon retail a little bit, you know, but, but I think actually specifically right now what, what we are focusing on and seeing a lot of is brands that are, you know, we had this kind of weird time in the beginning of the year where it was tariffs, not tariffs, tariffs, not tariffs. Who knows when that will change again. I, know, whatever. But I think brands are now deciding like, okay, we have to move forward. We have to go on with our lives. So we're going to. continue to move into retail and open stores. And we're here to help that. There's nothing that makes me more sad than when a brand has either overspent or is paying dark rent. Please, please don't pay dark rent. We can help you, even if it's just a conversation and then we refer you to someone else. So we really do love retail and want brands to succeed in it. just know that we are here. Recon is your friend. Brent Peterson (25:25.738) and tell us where we can find you. Rebekah Kondrat (25:28.22) So you can find us on reconretail.com. You can find me on LinkedIn, Rebecca Condrat. You can find our other managing partner, Libby Shawnee on LinkedIn. You can find us, actually you can find me on X. I'm at RD Condrat on X. yeah, we're in all of the usual places, Recon Retail on Instagram, all the usual places. Brent Peterson (25:55.214) All right, and I'll make sure I get those into the show notes. Rebecca Condrad has been such a great conversation today. Thank you so much for being here. Rebekah Kondrat (26:02.278) Thank you, Brent. Brent Peterson (26:05.039) All right, that went great.