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The Science Of Shopping — Paco Underhill

The Science Of Shopping — Paco Underhill

Real Talk: The Charles Mizrahi Show podcast

The Science Of Shopping — Paco Underhill

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Coming soon to your kitchen table… Our food system is facing a complete overhaul, and all of us have been impacted in some way. Bestselling author and researcher Paco Underhill reveals the future of food in his latest book, How We Eat. And he’s also the author of one of the most important books on retail, Why We Buy. Host Charles Mizrahi sits down with Underhill to talk about where food and retail are headed — and how companies strategically influence the customer experience.

Topics Discussed:

  • An Introduction to Paco Underhill (00:00:00)
  • Stumbling Into It (00:02:16)
  • Revolutionizing Retail (00:12:09)
  • Staying Power (00:21:59)
  • The Power of Bundling (00:31:17)
  • Magic Pixie Dust (00:37:16)

Guest Bio:

Paco Underhill is a New York Times bestselling author and Strategic Advisor of Envirosell Global LLC. His clients include more than a third of the Fortune 100 list. And his breakthrough book, Why We Buy: The Science of Shopping, is used in college courses, training programs, and research studies across the world.

As a seasoned speaker and presenter, Underhill has traveled to over 50 countries to discuss his research with students and professionals across various industries. His latest book (below) details the transformation of our food system — from how things are grown to where we buy them.

Resources Mentioned:

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Read Transcript

PACO UNDERHILL: Retail is a reflection of social change. What made a good store in 1990 and what makes a good store in 2020 is a reflection of some of the evolution of us, the evolution of money and the evolution of our access to information.

CHARLES MIZRAHI: My guest today is Paco Underhill. Paco is the founder of Envirosell, a global research and consulting firm. His clients include more than a third of the Fortune 100 list. Paco has been the expert behind the most prominent brands, consumer habits and market trends for the past 30 years. His latest book is titled How We Eat: The Brave New World of Food and Drink. I recently sat down with Paco, and we talked about our food — from where it’s grown to how we buy it, is in the midst of a transformation. And he shared with me what will soon be coming to our kitchen table.

CHARLES MIZRAHI: Paco, thanks so much for coming on the show. I greatly appreciate it, I’ve been looking forward to it since we spoke last week.

PACO UNDERHILL: Charles, thank you so much for having me. The pleasure is mine to be with you.

CHARLES MIZRAHI: Outstanding. All right, Paco, you’ve written that your latest book is How We Eat: The Brave New World of Food and Drink. But before we get to any part of this, I want to talk about a book that you wrote close to 20 years ago that really became the Bible of how retailers set up their stores. And that is why we buy the science of shopping. You wrote that book in 1999 or so, correct?

PACO UNDERHILL: That’s correct. And part of what was interesting is in 1996, I was the subject of a profile by Malcolm Gladwell in The New Yorker called The Science of Shopping, which became one of the most reprinted pieces in New Yorker history. And I had agents knocking on my door. Is there a book? Is there a book? And that’s what that’s what came out. And that and that book. It is now more than 22 years old. It still sells 60 to 100,000 copies a year. It’s out in 28 languages. And Charles, do you know what the largest market for it was last year? Simplified character, Chinese. 40,000 copies.

CHARLES MIZRAHI: Wow, nice. Okay. So before we get into the book, I think the key thing here is a lot of. A lot of what you bring to the game. No one ever really, really quantified before, which is how we walk into a supermarket, why we go to certain shelves, why we walk to the right. You basically had teams of people observe consumer behavior and then came out with a science, if you will, of why we buy some more or less right?

PACO UNDERHILL: That’s correct here. When I stopped off, I stepped off Charles into the world of retail almost by accident. Merchants had two tools. One was the tools of media research, which was asking people questions. You could do it in a focus group. You could do it in a survey. You could do it online. But I knew as somebody involved in in via environmental psych that what people say they do and what people actually do is often different. And the second tool people used is sales research, which is very valuable, but it tends to be a catalog of your victories. And one of the key aspects to being a merchant is not just understanding where you’re winning, but understanding where you’re losing. And the fact that we were able to come to a table with some very practical issues where here is something you can do in a week. Here is something you can do in two weeks. Here is something you can do in a month. And here’s something you should think about doing next year was a revolution.

CHARLES MIZRAHI: Okay. Now, many of us have stepped into supermarkets or stores or any type of brick and mortar. I’ll talk about online just a few minutes from now. But many of the things that you’ve uncovered or you observed that are now implemented, it consider you wouldn’t open up a retail store without them. What would be the top three things that every retail store has because of you?

PACO UNDERHILL: Okay. Three things here. First is understanding how our eyes work and that the way someone sees at 20 and the one someone sees at 70 is predictably different. As we age, the lenses in our eyes yellow. The way you and I see color and the way your children see color is different. Second is that 90% of us are right handed and we tend to pick things up with our right hand and we tend to push with our left hand and therefore understanding a counterclockwise circulation pattern. But the third one here is understanding that one or two of the fundamental issues in consumer behavior, one is driven by gender, meaning the way your wife does some of her shopping and the way you do some of your shopping is different based on male and female. But the other corollary to it is generational. Meaning that at our age, Charles, 80% of our weekly purchases are the same thing. We’ve already decided. We’ve made choices. But if we think about a 25-year-old, much less an 18-year-old, they are still deciding on what it is that they are that is them.

CHARLES MIZRAHI: Gotcha. So now quick question that just jumps to the front of my mind is I walk into Costco. And I don’t know if it’s a little different or what have you, but on the right-hand side, I mean, I know 90% of us are right handed, but on the right-hand side are huge, huge, uh, 65 plus inch TVs. Is it intended that I grab them or I take them? Or do I look to the stuff on my left-hand side, which is pretty simple, like soaps and grabbable products. Why do they have what is Costco have huge TVs on the right-hand side. As soon as you walk in the store.

PACO UNDERHILL: You know, there’s a wonderful expression in French, which is you do propose so much of what greets us at the door is to plant the seed of. Oh, I never thought about that. I walk in the door and there’s a huge display of Coke products. And I’m going, well, Coke’s not on my list, but my kids are coming back from summer vacation. Do I want them drinking beer or should I get some coke to put in their refrigerator? One of the keys of visual merchandizing is to is to insert something in your head and that is to get you thinking about it. What? That TV, that’s amazing. It’s huge. And it’s only $800. And as you move through Costco, you start thinking about that TV. And maybe you don’t get it then, but when you come back two weeks later, you go, Man, I think it’s time for me to get a new one.

CHARLES MIZRAHI: Mm hmm. So they don’t. Looking for the impulse sale. Right. There is a they would have, let’s say, candles or their famous brownies or what have you or their corn muffins. Basically stores of manipulating you to plant ideas into your head. So the next time you do come or even maybe later on in the store, you’ll come back and purchase that item. Is that more or less right?

PACO UNDERHILL: There is there’s another complex, complicated process here, which is that so much of the position on the floor is often driven by a slotting fees, meaning that that manufacturer, whether it’s Coke or whether it’s Sony or whether it’s Samsung, has gone. I want to be up front, and I’ll pay for the right to be there. So I part of those choices are both done by Costco, but they’re also done in the negotiation in the Home Office, across the buying table.

CHARLES MIZRAHI: Gotcha. So you came and observed shoppers really observe them. Because you’re right. You know, studies have shown all the time, people always overestimate how much they exercise and always underestimate how much they eat in terms of counting calories. So to trust people, what they see and what they do are two different things. I totally get that. So you observe them. You had cameras in the stores. You had all these things. My question to you was this, Paco. From a retail perspective, I totally get what you do. It’s phenomenal. As a retailer, as a retail customer, how am I supposed to view all this manipulation? Are you are you sharing this information so I can learn to be a better shopper, to watch out for certain tricks out there? Or are you basically giving this book and this information to retailers to say how could they get more money out of Charles?

PACO UNDERHILL: Well, part of what we have to recognize is that I tend to write books for a popular audience, meaning that, yes, it why we buy is used in business schools and design schools, but it’s also read by the broader public, because it’s an interesting and funny book. Part of what we have to recognize here is that the premise of a retailer is to sell new stuff. Okay. I think about the history of modern retail and it goes back to the founding of the department stores in the mid-19th century. Up until that point, Charles, a merchant, expected you to buy if you walked in the door. And they almost all sales where you came up to a counter and said, this is what I want. When the department store opened, people were invited to come in and look. And I think it was one of the engines of social mobility because people would come in and see what the rewards of economic change were, and that prompted them to be able to start businesses to go different places. But it also created a science, which is how do I present things as well? How do I cluster objects? If I go back to Zara and Mango, the two Spanish who were going this top with this bottom with these accessories. If I was talking to a major merchant today, you want to sell backpacks in August, maybe merchandizing them with some schoolbooks in it is a very good idea. Think part of what we’re looking for is we as shoppers have responsibility for our own behavior. We have responsibility for what our purchase habits are. One of the aspects about being a mature person is going, I have some behavioral issues which I take responsibility for. Should I blame a merchant for somebody by shopping sickness? The answer is, I don’t think so. But in terms of being able to say, I’m going to make your shopping trip as enjoyable as I can, I’m going to make it easy for you to make your selection. I’m going to give you a basket to be able to get your stuff out, and I’m going to pay attention to the amount of time that you have to wait, because I understand that wait time comes in three forms real time, perceived time, and some combination of the two. And if you like what you’re being offered and you like how it’s being offered; the chances are you’re going to come back. But what actually goes in your basket and what goes into the trunk of your car is your decision.

CHARLES MIZRAHI: Got it. Okay. I want to step back a bit. One amazing businessman, which most people have no idea about, which I’m sure you’re totally familiar with, was Sol Price, who passed away at 93 years old, started fed more at Costco. He, Sam Walton, learned from Sol Price. Costco was founded from Sol Prices, his amazing, revolutionary way of looking at retailing. Here’s a guy who just learned it on the fly. What made him so successful in terms of creating a an environment where people, like you said there was back in the day, you went up to a counter and there was a much ready to wear stuff. That was you were expected to. I’d like to see buy £5 of sugar or £3 of this. What did he do that just changed everything?

PACO UNDERHILL: You know, Charles. Let me answer that question completely differently. Okay. I won’t answer that question. If you go to Paris or you go to London. The role of being a merchant was a respectable profession. You had a long history of merchants selling to an aristocracy. If you come to the U.S., merchants and retailers tended to be a category for a lower middle-class immigrant family because they were locked out of the broader world of banking and whatever by the fact that they were immigrants. So whether it’s looking at Bloomingdales or other, is part of what you look at is merchants who had it in their bellies. They were merchants who started they had instincts and they were processing things from their belly to their eyes. And I think of, you know, the person who started Costco who’s in Painted Kirkland products and took the concept of a house brand to be something that you were ashamed of buying to something that you were proud to buy big because it showed how smart you were that you were spending your money. Well, not that you were compromising on what the quality of and that white box that you pushed up and that you were buying with food stamps. There is one of the things about American retail is that if you go back to its origins from Bloomingdales to Macy’s to CVS to whatever there is generally at the start an immigrant family who starts out and just grows it and they do it by incredible hard work. They do it by leadership. One of the challenges, though, about American retail is that often when the founder goes. The resulting bureaucracy sometimes gets a little stale. We can look at Sears, our Montgomery wards. We look at here at the U.S. and we look at the lineup of the top ten merchants starting in 1960, 70, 80, 90, a remarkable number of them, ten, much less 20 years later, are not there anymore. I think we have to recognize something, Charles, which is really interesting, which is there are biological constants that stay the same. And we just talked about the early aging, devised some issues of gender, our right handedness, but also retail is a reflection of social change. What made a good store in 1990 and what makes a good store in 2020 is a reflection of some of the evolution of us — the evolution of money. The evolution of our access to information. I often say that retail is about birth, life, death and compost.

CHARLES MIZRAHI: Compost. So if you look at someone like Sam Walton who revolutionized, revolutionizes retail, you know, pile him high and watch him fly, you know, he comes up with that whole concept that he learned from Sol Price to take goods and cheap goods and just pile them up and just watch him sell. You have to put them out. Displays weren’t that important, that kind of thing. These are all instinctual. These are just smart people just figuring all this stuff out.

PACO UNDERHILL: Oh, you know, I. I wrote a biography of Sam Walton here, which for a magazine article, and it was it was a wonderful exercise for me to go back and read some of his thoughts and read some of it. Sam, I appreciated something that starting in small town America. He recognized that his core customer was a single mother raising her children. And the degree to which he could offer her the goods to be able to raise her family in a way that was healthy and well meant that everybody else would come, too. And one of the things about Wal-Mart is Wal-Mart’s done actually a very good job of evolving with change. It started off as a company, as you said, stack it high and watch it fly, because Wal-Mart’s success at its launch was truck. It was getting stuff to the store at the best possible price in the least amount of time and getting it out the door. Today, Bentonville is a remarkable small, cosmopolitan city. Wal-Mart has done a remarkable job of harvesting the best of their brand from outside the U.S., from Mexico, from India, from the U.K., from China, and bringing them all in. And they’ve done a nice job about changing the tone. And that the evolution of the Wal-Mart store from where Sam started to where it is now is a reflection of good leadership and a progressive vision.

CHARLES MIZRAHI: So looking at the retail landscape and you’re right, you know, if you look at some of the oldest retailers, for example, Brooks Brothers started in 1818, Lord Ann Taylor started 1826. These companies are no longer in the same form. Brooks Brothers dramatically changed. Lord Ann Taylor is no longer here. Macy’s is still around. Bloomingdales is still around. Saks is still around. Barnes and Noble started in 1873. They’re gone. Sears started in 1886. They’re gone. What makes one is some retailers survive and thrive and others just. Become, you know, just in the dustbin of history.

PACO UNDERHILL: And I, I think it’s about understanding what should stay the same and what should change. And I think also within the 21st century is recognizing that there are a series of things that are e evolving. First the connection between our eyes and our brains, courtesy of screens, has shifted and therefore understanding the evolution of sight. Second is the evolution of gender. I don’t mean to make any religious or moral judgments, but one of the most seminal issues in our species since we tamed fire is birth control. We started off selling women food, cosmetics and apparel. But I know now from having worked across the broad industry that whether you’re a hardware store or whether you’re a technology store, the presence of women on the floor is really critical. And that shift here, I think, is a very interesting one. The third one is what is global and what is local? Meaning that there are dresses that will fly off the shelf in Dallas. Nobody touches in Philadelphia. And understanding what that process is, the fourth one is the role of time, and particularly in a post pan world where so many of us are multitasking, and particularly for the women within our culture who are both trying to make a living, trying to take care of their kids and trying to take care of their homes. That the role of time is something that is factored in to both online shopping and shopping within the physical world. And then the final issue, which I think is, again, a really poignant one, is that we passed over a magic moment in the late 1990s, where, up until that time, the overwhelming majority of global wealth was in the hands of an aristocracy. Today I look at the 20 wealthiest families across the world. 19 out of those 20 earned their money in the course of their own lifetimes. And whether you’re talking about Jack Ma or Carlos Slim or Mukesh Ambani or Warren Buffett here, part of what that has meant in the context of retail is that often in order to sell, I also have to educate. Why does this thing cost one price and this thing cost three times as much? Those are all things that that factor into the to the wonderful world of retail. And those guys who pay attention and start figuring things out and start going to the front lines and under an understanding that the line between the physical and cyber world doesn’t exist anymore. It’s being a merchant in the 21st century. I think of as the Chinese character for chaos is that combination of danger and opportunity.

CHARLES MIZRAHI: You know. And yeah. I’m sorry to interrupt you, but as an investor and I’m always looking at all sorts of businesses and retail’s a pretty simple business to figure out. But I want to tell you, over the years I have. Not been that successful finding retailers with staying power. You know, one company I really, really liked back in 2000 for 2005 was Bed, Bath and Beyond. They were just a category killer. They were just doing everything right. And now they’re just you know, they’re on the they’re on the seat of the pants. They’re flying there. You know, their whole strategy, they just got rid of their CEO, their whole strategy of cutting all these coupons from other brands they brought in private label, which alienated people who were looking for Mikasa. You know, people walked in. It looked for the brands. So they just were so out of touch. And then you look at J.C. Penney, for example, you had Ron Johnson, who was brought in as the savior to J.C. Penney. He did a bang-up job with Apple, with the Apple stores, highest gross per square foot destroyed, J.C. Penney. And then you have Costco and there’s so much better than BJ’s. I you know, I look at this area and I just have to have to agree with Warren Buffett that retailing is an extremely hard business to stay on top for a long while.

PACO UNDERHILL: A true and having worked with every single one of those companies that you just mentioned here, I would I would agree. I think there are a couple of things here, Charles. I am talking is one of the problems that big American retail has had is do I pay attention to Wall Street or do I pay attention to my customer? Am I committed to change when change in the broader world of retail is going to take me longer than one quarter to be able to execute? And I know, for example, in the broader world of shopping malls that I can go to the American shopping mall industry and point to what other people are doing in other parts of the world where it isn’t shopping. It’s all. It is where I can shop, I can work, I can recreate. And that the shopping mall may have a preschool in it. It may have doctor’s offices. I may have a dentist office, may have yoga. That doesn’t necessarily pay major league rents, but they do drive traffic. And that if you go to Europe, if you go to Australia, you go to parts of Asia, that that combination of things has made a modern 21st century community. But you go to, you know, Simon Properties or whatever. And that change to be able to incorporate housing, put in a supermarket, put in a drugstore. Think about a more progressive relationship to your tenant mix is a transport transformation. It’s often a minimum of two years.

CHARLES MIZRAHI: Okay. So let me ask you this, Paco. Let me ask you this. I went to a retail store just yesterday. Michael’s. I need to paint. I do oil painting. I needed some paint and I never stepped foot in any of these stores. It’s a pain in the ass for me. I have to go. I have to drive. I have to go into the parking lot that I have to go to the store in convoluted aisles. I hate it. I hate shopping. I guess I’m a typical man. Hate shopping. And then when you get there, I have to spend time looking for the exact brand as well as color. And guess what? Color and brand I want that wasn’t there. What a waste. What a time suck. Much easier for me to go online. Click, click, click. I get in 48 hours. What is the future of retail brick and mortar?

PACO UNDERHILL: Okay. I think part of what we’re looking for here, Charles, is recognizing that retail is both a place to shop, but it is also a modern distribution center. And that if we think about it, almost all of the online delivery services work really well in a gated community in San Jose, and they don’t work particularly well in parts of Brooklyn, much less easy. St Louis. One of the challenges that the broader retail industry has is looking at the distance between the truck bay in the back and the trunk of your car in front. We know that in the 21st century, with supply chain management issues, that I can take a typical normal Costco, Michaels and shrink it. I want you to do some of your pre-shopping online. And be able to pick out the things that you want, but also to understand that while you may want the colors and whatever, that there are things about the paint that paint brushes, much less the pre-stretched canvases that you would like to see before you bought. And understanding in that hybrid process is part of where our modern shopping is going to go.

CHARLES MIZRAHI: So you see this as a hybrid, which is obvious right there. The growing of Amazon, the growing of e-commerce, and those companies that are able to do that and do it do it well or, you know, this hybrid model, they’re doing well. Like, for example, Bed Bath did not have a hybrid model. There’s their system was antiquated. I just know that because I used I still read their read their annual reports. Their systems were antiquated as well as their pick up at the store, their hybrid. Your order online pick up the store was really terrible. So they’re suffering. But you’re telling me that I need a retail store, I need a retail, a brick and mortar to do what? Now, I’m not understanding. Why do I need to go? I don’t need to go to find in the yellow paint to actually see an in touch it. I could order it. Don’t like it. Go and return it. In fact, I could walk into Kohl’s if a Walmart order went through. What do you call it? A Whole Foods like return there. They make it very easy to return. Why am I going through this whole process of going to a brick and mortar store?

PACO UNDERHILL: Well, some of that is recognizing that there are so many things, particularly for consumers who are younger than you are. That. Ah, I need to be able to go look, I need to be able to see what the range of stuff is. I need to be able to touch, smell and whatever before I start to decide what it is. Just as we said earlier, when we reach a certain age, 80% of our purchases are often the same thing. And you ask the question: Why do we need to go back to a store? But that is, again, going back to that question that we talked about earlier, which is generational issues.

CHARLES MIZRAHI: But you’re telling me younger people are going to stores are going to retail.

PACO UNDERHILL: Younger, younger, younger people are still hungry for that in for information to be able to help them make their choices really well.

CHARLES MIZRAHI: I know my boys I have boys ranging from 32 to 21. I don’t think they ever were the only the only retail store I think they will get to is Apple in order to get a product or to exchange a product or to fix a product, but everything else, if they can order it online in the stores down the block, I have one son who literally lives maybe 50 feet away from me from a Target, and he orders from Amazon. He says, I don’t even just come. The doorman takes it goes downstairs finish I’m done and he uses he uses all these other stores as return places.

PACO UNDERHILL: Okay. Well, Charles, lucky that you have boys.

CHARLES MIZRAHI: I have one girl.

PACO UNDERHILL: I have I have I have stepdaughters and I do the stepdaughters go into stores. The answer is yes. I think we have to recognize here that one of the things that retail is a reflection of social change. We also have to recognize that even before the pandemic hit, that the U.S. was over-stored.

CHARLES MIZRAHI: That’s an understatement. You had so many brands/stores that were just I used to look and I used to tell my wife. When they came up with this business plan, what were they thinking? This store is not going to be issues. Oh, look, there are people are too. Of course there are people that the drop in price in order to attract customers, it can’t. And these stores have just gone away and became niche. If the new shift the nation gets more. It’s just ridiculous. Absolutely ridiculous.

PACO UNDERHILL: Yeah. You go out there are a lot of vacant strip malls and a lot of vacant, you know, B and C malls out there. And it’s a reflection of being over store. But I think it’s important to recognize, Charles, that we still consume stuff. We still need to be able to see stuff we still often need. We are an analog species in that we still need to touch, smell and taste stuff. And yes, I can order it and return it. But if you live in an urban setting or you live in East Saint Louis or you live in Harlem in that the act of being able to do that is very, very different than if you live in a suburban community in New Jersey.

CHARLES MIZRAHI: That’s true of Grinch. Of that I’ll Grinch. That’s only asking another question. PORCO You and I sit down for lunch and we draw on the back of a napkin because I’ll supply the money. You supply the brilliance. Paco, you’re the retail master. No one knows this market as well as you like. You wrote the book on it. Okay, now I want you to come up with a brilliant idea for retail. A product we can sell, how we design the store is all up to you. What would that be? What would it look like?

PACO UNDERHILL: I think one of the things that is very interesting that I’ve seen in other parts of the world is doing a better job of bundling.

CHARLES MIZRAHI: Explain.

PACO UNDERHILL: Bundling means that if you if you walk into IKEA in the U.S. and you see this dresser, this bed, this wider. If you walk into Aetna, which is that the Brazilian knockoff of IKEA, there is a price on each object. There’s a price on the room. If you come in and love the room, we can do it for you.

CHARLES MIZRAHI: So you’re saying IKEA, right, that you’re just pronouncing it different or talking about a different store?

PACO UNDERHILL: Well, this is the way the Swedes pronounce this idea as opposed to IKEA.

CHARLES MIZRAHI: Okay, so I’m American, so I’m looking at IKEA. Okay, good. If I see IKEA, I don’t think anyone’s going to tell me where the heck that is. Okay, so I went to IKEA. You’re telling me IKEA and this other store name? What was the name again?

PACO UNDERHILL: Etna. It is a Brazilian knockoff.

CHARLES MIZRAHI: Okay. So you’re saying and it is basically packaging the room, this room for $4,000. And IKEA is giving me the Billy cubbies and the whatever name they call something else they give get to be piecemeal. So you’re saying.

PACO UNDERHILL: That’s correct.

CHARLES MIZRAHI: All IKEA has to do to be to be more progressive in terms of progressive with a better word in to be a term. We move forward in terms of their retailing is to come up with a one package price for the living room.

PACO UNDERHILL: Is giving people that option of being able to walk and say, I love that room. And they go, well, you can buy that whole wing at this price. Just in the same way, for example, is. Wouldn’t it be better in the apparel industry in the 21st century to be able to organize stores by size rather than by brand?

CHARLES MIZRAHI: So I have a store just extra-large. I want extra-large.

PACO UNDERHILL: Polish store that might work or particularly in the women’s apparel business is this is a store that specializes in sizes ten through 16.

CHARLES MIZRAHI: She told me there was none of that in any of these junior stores that they used to have these junior retailers or these.

PACO UNDERHILL: Well, part of what it is, is if you go into any apartment store or whatever, it’s all organized by brands or outfits rather than going, man, if I’m in a crush for time, I want to be able to go in and say anything in this store. It would is probably going to fit me. So I need I can spend my time picking out what is good for me.

CHARLES MIZRAHI: Okay. So your best idea, Paco, for a business idea for Paco and Charles’s venture. I’m telling you, you could do anything you want. You’re telling me you’re not really telling me yet? Well, one great idea that you have is we create a store by size for certain product, like ladies’ dresses, for example. Right. We females. Or would it be the females would be the females because we can they shop more if we had the choice.

PACO UNDERHILL: Well, females are one of the evolutionary things within the context of our broader order. Is that females are stepping into professions where they need uniforms. And for a man stepping off into the world of employment, uniforms are reasonably easy. It’s pants, it’s an Oxford cloth shirt and it’s, you know, loafers or something. If you’re a woman and you’re stepping off into the world of banking or insurance or something, the prerequisites are different. And the way you’re judged are different. And that often it is. Not only is it the outfit, but it is the accessories that define who you are. For example, let me just give you an example. If you go in to often a jewelry store in the Middle East, there is often a dressing room in the jewelry store, meaning that they have recognized that their client is an a man buying for a woman to woman buying for herself, and that if she can come in and bring in the outfit that she’s going to wear, whether it’s to work or the wedding and be able to get the jewelry that accessorize, is it? Well, it’s a very different equation.

CHARLES MIZRAHI: So tell me now, what are we doing? Well, you give me your best retail idea now.

PACO UNDERHILL: I think the best retail idea now is to find ways to be able to get local and to be able to be solutions seller and that solution selling is something that’s going to attract somebody away from the Amazons and whatever, where they’re frustrated about what they’re getting and their limited selection. That doesn’t always have to do with what it is that they’re looking for.

CHARLES MIZRAHI: Got it. So you’re so. So that’s going to be a big differentiator between a brick and mortar and an online Amazon, for example. So I could walk into a store and it’s be it’s more specific. See who you’re talking to basically specialty stores. But to it to the nth degree.

PACO UNDERHILL: Right. That’s right. And it’s it is it is localizing. And it is the store that is both the store. But in a way, it’s also a bit of a clubhouse.

CHARLES MIZRAHI: Mm hmm. Okay. So, Paco, with the few minutes we have left, you bring up a really good point. Tell me what magic pixie dust does Apple have to create retail stores with the highest, I believe, growth per square foot. And I went to a mall a few years ago. The Apple Store had a line of people waiting outside before the gate was even up. And I walked down to the Microsoft store and they were basically inviting me in there because there was no one in there. What brilliance, what, what? What magic did Apple have or do they have that no one’s really copying?

PACO UNDERHILL: Do you know who in Brazil’s largest client is?

CHARLES MIZRAHI: Who’s who? I would say Apple. So that genius is. I’m staring right at him. So what? What are you telling Apple to do that other retailers just are not getting the message? Because if I’m Microsoft and I look at these stores, I’m just saying, my gosh, why can we just copy this?

PACO UNDERHILL: I think there are a couple of issues there. First of all, if we look at the difference between Apple and Microsoft. Apple sells solutions. And they sell it to a ubiquitous cross-section of people. That they also learn something from Sephora where Sephora stopped and recognized. Rather than selling you nose to nose across the counter. It put the salesperson and the customer on the same side of the counter and that the act of selling or the act of understanding solutions become became much more complete in Europe as opposed to selling. One of the things that almost all of the technology stores have struggled with is particularly in a post-pan world. There’s a certain number of people were standing at the door angry because they’ve been unable to solve the problem over the phone or online. And they realize that they have to come to the store to do it. And with the genius bar at Apple, Apple has done a very nice job of being able to understand who it is that’s walking in the door. And how can I help you get out the door with your problem solved?

CHARLES MIZRAHI: Mm hmm. Yeah. You know, it’s just. It’s as simple as that, right? So it’s. I walk into stores like I wanted to Michael’s. I walked out angry, hearing him. I traveled or looked, and I was just pissed anyway, because I just found it. You know, here’s a deal I didn’t really want. I didn’t really need the paint for that day. I might have wanted to paint later in the day. I could have waited 40 hours. But I said, you know what? Let me just go anyway. It’s only about 10 minutes from the house and my wife had come along. She needed something else. But just the whole act of doing it was just.

PACO UNDERHILL: I don’t know.

CHARLES MIZRAHI: It was just it just seemed so inefficient. It seemed a terrible waste of my time yet to go to the Apple Store to replace a product or buy product. It seems so. It seems there’s nothing easier.

PACO UNDERHILL: It is, and also that the number of things that Apple sells is so much different, smaller than all of the things that Michael sells. Yeah, 100% Apple’s has focused and that is again one of that topics that we just talked about is retail being focused.

CHARLES MIZRAHI: So one on one retailers just pick up this you didn’t bring anything in that’s rocket science. Why are these many of them going in the opposite direction with tremendous amounts of inventory and selection and confusion? As you talk about focus, it’s the exact opposite what they’re doing. You walk into a store, I don’t know. I’m not a woman. And so I don’t shop the way a woman does. But I walk into a store and I just want to get out of there as quick as possible.

PACO UNDERHILL: I think one of the things that I keep stressing to merchants is, is there a way to be able to exercise your curatorial judgment inside a store? Let me just give you an example. Have you ever been to the design store at the Museum of Modern Art?

CHARLES MIZRAHI: No.

PACO UNDERHILL: In New York?

CHARLES MIZRAHI: No.

PACO UNDERHILL: That’s one of the industries that I think is on the cusp of revolutionizing retail, meaning that they have recognized it. Yes, on the one hand, they’re selling souvenirs. But on the other hand, they are selling to as sophisticatedly public. And it is a combination of the buyer. Picking potential items out and the curated curatorial staff collaborating with.

CHARLES MIZRAHI: Hang on a second, was this the store? Because I remember they used to be one of JFK where they have like ancient Egyptian, I don’t know, vases that are modern that you could, you know, replicas. Is that what it is?

PACO UNDERHILL: You know, there are there are a series of museum stores. One of my favorites is at the Peabody Essex Museum in in Salem. But you go to the Museum of Modern Art. You go to the American Museum of Natural History. Yes, they’re selling souvenirs, but they’re also selling things that have a curatorial judgment, too, to people who have a sense of appreciation.

CHARLES MIZRAHI: Mm hmm. So. So that that consumer, that retail client walking in is extremely motivated.

PACO UNDERHILL: Is motivated and knowledgeable. Hmm. You know, you can you can say, here is this beautiful crystal. It’s $1899 and you don’t have to walk out the door with it. Will ship it to your hotel, much less to your home.

CHARLES MIZRAHI: Could those stores scale?

PACO UNDERHILL: Some of those stores are doing extraordinarily well.

CHARLES MIZRAHI: Amazing. Amazing. In the few seconds we have left. Paco, last question for you. Which retailer do you think is at the top of their game and should do well for the next 3 to 5 years — doing everything right?

PACO UNDERHILL: Well, obviously, we have talked about some of them here.

CHARLES MIZRAHI: We have talked about some of the. You’re not going to piss off any of your clients. I gotcha.

PACO UNDERHILL: Okay. I’m a happy customer of Costco. You know, at my age, I talk about buying smart. Am I buying Kirkland products? Yes. On the other end, I wish at Costco that there was a Kirkland section so I could shop all the Kirkland products.

CHARLES MIZRAHI: By the way, brilliant. You know, I Kirkland, I think is 25% that folks that’s Costco’s private brand. They do 25 to 26% private label; much better margins and their products are fantastic. In fact, there were a whole sites showing the behind the scenes like this product you bought. Kirkland is really a knock off of so-and-so made in the same factory, like they’re interchangeable. In fact, just so you know, I’m wearing a Kirkland pants now that I bought that, a knockoffs of Lululemon for like $15. I just love Costco. That store is just absolutely amazing. There are people who follow our Instagram will constantly putting updates. It’s the treasure hunt, but the display. I can’t speak enough about Costco. They’re just such a fantastic store.

PACO UNDERHILL: One, I think there could be a Kirkland section within Costco, which I’ve seen in Carrefour and other places across the world. The other thing that I keep asking for at Costco is addressing them to be able to try things on. And the third is better signage, so I don’t get lost. If this is a Costco, I only visit twice a year.

CHARLES MIZRAHI: I love it. I love it. By the way, dressing room would be huge. I don’t know why they don’t have one, but I guess they want you to come back if it doesn’t fit. Every time I’ve ever returned anything, I’ve always spent more money on the way up. It just absolutely ready. With everything I’ve ever returned. I get the thing they put on the credit card and I’m there ready. And of course, you need another 36 pack of Coca-Cola. But that’s it. Folks, the name of Paco’s latest book is How We Eat: The Brave New World of Food and Drink. This is the man. If you want to know anything about retailing, I highly, highly recommend his books. They’re enjoyable. Paco, it sounds like you wanted to be a screenwriter at one point. I’m reading some of these here and they sound like plays. You actually have the script.

PACO UNDERHILL: You know, Charles, Simon and Schuster did a great job hiring actors to do the audio version of that book where the actors are playing out that that that script. And the answer is yes, I am working on a script.

CHARLES MIZRAHI: Beautiful.

PACO UNDERHILL: That’s something completely different.

CHARLES MIZRAHI: Outstanding. Ladies and gentlemen, the amazing Paco Underhill. How We Eat: The Brave New World of Food and Drink is his latest book. He also has a fantastic book that’s been out for 20 plus years, with a couple of revisions already is Why We Buy: The Science Of Shopping. Paco. Thanks so much for being on the show. I really appreciate it. I could speak for hours here. Thanks so much.

PACO UNDERHILL: Charles, my pleasure. Thank you.

CHARLES MIZRAHI: Great man.

CHARLES MIZRAHI: Thanks for listening to this episode of The Charles Mizrahi Show. If you’re a new listener, welcome! If you’ve been listening for a while, we’re glad to have you back. Either way, we’d love to know what you think of the show. Please leave a review if you listen on Apple Podcasts. Reviews make it easier for others to find the show. You can also see the video of the interview on The Charles Mizrahi Show channel on YouTube.

 

 

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