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Podcast|August 04, 2021

How to Make Every Store A Store of the Future | Future Shop Podcast EP21

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In this episode:

Wendy Liebmann and Jo Horgan, Jo Horgan, Founder & Co-CEO of Mecca Brands, discuss how retail innovation must be a discipline embedded into the culture of organizations to stay relevant to what shoppers want in a fast-changing world.

They discuss:

  • Putting shoppers at the center of a company’s innovation culture
  • How retail innovation is not something that companies can stop and start; it must be a continuous process
  • How to build the discipline throughout the company
  • Building a process of innovation that goes beyond product and store design to include all aspects of business -- from backroom efficiency, to supply chain, and team education
  • The tools to evaluate innovation continuously in order to refine, adapt and continue to iterate

Explore the new Mecca Flagship store in Sydney, Australia with our exclusive Retail Safari® Virtual Tour:

What is a Retail Safari®?

Retail Safari® is our proprietary tool designed to get you and your teams out of the [home] office and into the retail world to stimulate thinking and build new strategies to grow your business. We curate and showcase best-in-class examples that are boldly disrupting retail. Get more information here.

 

Don’t miss upcoming episodes, stay up-to-date by visiting the WSL Shopper Insights Library, or our Podcast page.


Podcast Transcript

Wendy  00:09

Hello, my name is Wendy Liebmann. I am the CEO and Chief shopper at WSL Strategic Retail and this is Future Shop.  Today my guest is Jo Horgan. Jo is the Founder and Managing Director of Mecca, the largest specialty beauty retailer in Australia and New Zealand with over 100 stores. And a dynamic digital presence. Mecca carries a wide range of beauty categories from luxuries and more popular price global brands, as well as its own beloved Mecca Cosmetica brands. At the end of 2020, right in the middle of the pandemic, Mecca opened a 20,000 square foot flagship store in Sydney's central business district. Yes, in the middle of the pandemic. This was the opportunity for the company to consider all manner of innovation. In fact, Jo told me when I interviewed her for one of our Retail Safari®s, just after the opening that the new concept had 200 points of innovation. And that's what caught my attention. And that's what we're going to talk about today. Welcome, Jo.

Jo  01:19

Wendy, thank you so much for having me. It's an absolute pleasure to be talking all things retail with you today.

Wendy  01:26

Everybody should know we're doing this on a Friday afternoon in New York. And it's seven o'clock on Saturday morning, a winter Saturday morning in Melbourne where Jo is.

Jo  01:37

As I said, it's a pleasure. And seven o'clock on a Saturday morning is the perfect time to be talking to everyone in America. So this is a very normal time for me to be up.

Wendy  01:47

I'm sure it is. This notion of innovation. Obviously this began before the pandemic, you weren't opening a 20,000 square foot store on a whim. But that notion of how you thought about innovation, how did that come about? How did you even begin to envision that, that's what I'm really curious about.

Jo  02:08

Mecca is now nearly 24 years old. Mecca was born on an idea of wanting to disrupt the beauty industry and how we sold cosmetics to customers. And to disrupt, you have to innovate. And so really, innovation runs through Mecca DNA from the very first store that we put together with seven nascent, exciting, niche brands, in one boutique shop. You could choose whatever products you wanted to try. And you had a best beauty friend next to you. That was a very different experience in the late 90s. When the department store counter by counter model dominated. Mecca has always looked to put the customer first and create whatever innovation was necessary around that to build an experience that customers would want.

Wendy  03:12

The thing that I marvel at what Mecca has done both in its small format 100 plus stores, as well as this, the new flagship is it feels like there's so much learning whether it's beauty or health care or groceries, about how do we innovate and bring news and freshness and relevancy to shoppers customers. So that's what's so intriguing to me about the model, the ongoing model, but particularly what you've done, who would have thought of 200 points. But how did you even come to that number? Do we even put a stake in the ground,

Jo  03:46

We didn't come at it from that point of view, there has to be 200 points of innovation. It really was the situation where we went how exciting we have a store that's 20 times the size of our original store, it is three times the size of our biggest ever store. Imagine what we can dream up for the customer in this space that is different. It actually takes discipline to be this some disciplines. You know, not saying right, we're going to have a model now for the next three years. And we're going to stick with that before we move on to a new store format. Every single store that we open is iteratively different for the customer as we try and learn from what we've already seen. And that's very painful for everyone from the visual merchandising team to the operations team because every store is slightly different. It does mean that when we went into this store, we were able to bring the concept development team together in a way where they were ready and primed to be let loose with this Blue Sky thinking blank page opportunity. Again, we have thought leadership every Thursday where we just sit there for a couple of hours and literally kick the ball around on what do we think customers want to dream up in beauty? If we could give them whatever they wanted? If we could bring digital experiences together with real life experiences, what would that look like? What would we want? What do we want next from beauty he wants to services do we want? And then we have pretty extraordinarily dedicated group of what we call the mecca makers, where we went out to key Mecca customers on an email blast and said, Would any of you like to help create the future of Mecca, and literally within 15 minutes, we had to pull the plug out because we'd have about 2000 people already replied to me, I want to be part of the future of what you envision. So I do think that we had this way of working that set us up to be able to dream up, or reimagine everything from the basic back office operations through to the finding fun and different ways to take people and products through the three levels of the school because we've never had three levels be that a bright red escalator, or yellow resin clad lift, or big product shoots, that goes through the whole store in neon colors, right through to if we want people to interact with makeup differently, what sorts of makeup application areas, both incidental and dedicated, and studio and supported, there's about five different ways just to stand in front of mirrors, or sit with mirrors or sit with team members and apply makeup through to what sorts of services do we want to offer? And I could go on, but we literally broke down every single aspect of the journey. And when what would we want, now that we have unfettered opportunity to provide it.

Wendy  07:22

I've seen this amazing space that you've created. But actually even more interesting than that dazzle, which is dazzling. Is You said something about the discipline to innovate and that it's built into the culture. Now I think about you know, having 105 I think stores you have is that 105 106, you know, in the context of a country of 25 million people, right? So now I say 10 times. So that's 1500 stores in America, right? So this is a large number of points of real estate, you've built a culture that says with every one we open, we are thinking about what else? That's a philosophy when I talk to our clients about Store of the Future. And it's like this the execution of a real estate play, I need to be on this corner at this moment at this time, or in this mall or this strip center or whatever. But it's more about the cookie cutter and not about using every store is a thing of learning. When you said that it takes discipline to be this crazy or something

Jo  08:27

to be this undisciplined,

Wendy  08:29

this undisciplined, right, yeah. disciplined to be undisciplined. That's amazing. When I think about a culture of retail, especially today, when there's so many places I can buy everything, not just beauty, but healthcare and food and fashion and everything. technology that's really fascinating to me, people would say, Oh, they built a flagship, anybody can do a flagship tossed money at it, and then what, but actually, you were ready, you were primed for that.

Jo  08:55

And interestingly, two points just coming out of what you've said, when you say it can be a real estate play, to work out what you do next, or how you innovate. And I would say that Mecca never would have had the opportunity to take truly the most iconic store in Australia on the busiest corner, or what was the busiest corner pre pandemic in an Australian CBD. And the only reason we had the opportunity to take that prime real estate is because the landlord knew that we would lean in and that we would do things so differently. And we had to go and pitch and show how differently we would approach this retail space to beat out international operators who were also looking for flagships but probably more generic approaches to a flagship. So I think that actually this approach to innovation goes hand in hand with real estate opportunity.  And the second point I'd make is, yes, people join me Mecca from large retailers. And they come because they want the energy and the customer experience and the reputation of Mecca. And then they arrive and they bury their head in their hands and they go, Oh my goodness, are you telling me that we have this many different product lineups for stores, we have this many different units for merchandising that we have to address, we have this many different services across this many different stores. And my point is, yes, we have all of those things. And we are not wanting to streamline anything that touches the customer experience, we can streamline to our heart's content behind the scenes, but you have to embrace dare I say, I would say the chaos of being adaptive and innovative on an ongoing basis to be successful within the Mecca environment. And I think it is a big head shift for people coming in. And they truly cannot believe the ongoing year on year sales increases, you know, our same store sales increases yer on year, are unheard of, honestly, in retail. And it's because there's issues if changes that we make flow through all stores. So customers right back at store one, but still five or 10, off store 20. They are benefiting from the learnings that we've made in store 50, and 70, and 90 and 105. And we flow those through all stores. And those innovations also flow through onto our digital experience. And that by definition touches all stores.

Wendy  11:54

So hold that thought. Before I continue my conversation with Jo Horgan, you can see the Mecca flagship in all its glory on our website at wslstrategicretail.com. It's part of our Retail Safari® series where we continually showcase and analyze retail innovators from around the world from grocery retailers who are building sustainability labs in the UK, to direct to consumer technology driven specialty retail in India, and healthcare innovators in the US, amongst others, you can subscribe to the service. So your teams are continually inspired and constantly in full innovation mode. Now back to my chat with Jo. They're the things I find so compelling in this discussion, because I do think that's a very different mindset. I was talking to a head of one of the retailers the other day, and they were talking about looking for a new head merchant. And you know, the thinking was about it'll be in product that will create this innovation in all of us. And, and yes, of course, it's an incredibly important piece. It's got nothing, it wasn't a beauty retailer. But it made me realize and thinking about the Mecca example and the philosophy and culture of Mecca, that if you're a retailer today, that importance of learning, adapting, learning, adapting, learning, adapting what also you made me think about was the localization because then you are that opportunity to localize in the suburban mall versus the city store versus, you know, in Ponsonby Road in Auckland, that ability to do some of those things, which shoppers tell us today in our research, that's more and more important than ever to feel like it's my store, especially in a, you know, in an omni channel world,

Jo  13:46

I think this is an interesting point that you make about the localization and how incredibly important the local experiences for customers. And so something makers now looking to do is to try and take that sense of what's most important to our customers at a local level. Honestly, it's the team members that they are connected with. And so obviously, during the pandemic, like everybody else, we immediately pivoted online and we did these big master classes and all of this different digital content for our customers to engage with and they loved it, loved it, loved it, loved it. But again, this time around because we're back in lockdown half the country 12 million people are in lockdown at the moment. And so the innovation that we're doing actually, literally this week, it's starting instead of doing master classes by theme or by category, we're actually doing master classes by store team starting this week, we're at Toorak Road, our first or we've done an email blast to our Toorak Road specific customers to say do you want to join a master class of 30 people where Your Toorak team will take you through these different points of beauty. And we're rolling that out on a totally localized level. So it's still a digital platform, but we are actually localizing it so that customers get that sense of community and connection, even online. That's the sort of way I think that innovation can be so incremental, and it can be intuitive. The response, again, has been phenomenal.

Wendy  15:30

It's not just about product, right? I mean, I know in the Sydney store in the flagship, you've expanded categories, you've gotten a variety of services. But what intrigues me about this is you talked about everything from back office innovation, to people to the digital platform, to obviously a dazzling experience, which it is and will share with everybody some pictures that you were kind enough to participate in. But the holistic nature of how you've approached that is the thing that's interesting. Did you always envision the flagship as a source of learning for the 100 plus stores? Or was that something you learned, again, along the way,

Jo  16:08

When we envisaged and ideated for the metro flagship, we knew that we would be pushing so many points at that innovation through the rest of the network. And I do think something that allows that to happen is this discipline that we had where we have taken an absolute top talent from Support Center, and we have put them in charge of the flagship, for this year, and their total job is to one, make sure that all of the innovation, absolutely lands, one, two, that we learn how we should change that innovation for our next flagship? And how do we ensure that we take all the learnings into the next flagship, then thirdly, that knowing what works best, how are we pushing that through other stores? And so that's why we've gone right top talent in there. And I had a meeting on it this week, every two weeks, we have a meeting on the flagship, where are we on everything that we set out to do? And what are we doing about codifying this for the new and how are we executing it and other stores? very disciplined approach to that piece?

Wendy  17:24

Yeah. And when you talked about involving, you know, as you've involved, either your customers certainly the support the your internal teams, you talked about your Mecca makers? How did you involve your brand partners, did you because for those of you listening, Mecca has really to Jo's credit, has had to encourage global companies to see the opportunity in a market like Australia, when in the beginning, they're like, Oh, it's too small. It's too far. It's too, whatever. So Jo has been able to build those relationships. But how did you engage your brand partners in the flagship,

Jo  17:59

so again, 24 years ago, when we started, Mecca, saying to these tiny brands come to Australia it will be great. They were very much you know, the NARS of this world are now enormous brands, for example, but they were sitting there going, listen, we're in America, we're not even in Europe, we're not even in Asia, why would we? Australian next. And when they did agree, they pretty much left us alone, to get on with it. So we had unfettered runway to do pretty much what we wanted now over 100 brands, but they've got more and more comfortable just continuing to leave us alone to get on with it. And they now trust that we have their brand, first and foremost, because I think Mecca again has a very different approach where we act in effect as the distributor of a brand in the Australian and New Zealand market. And we are responsible not just for retailing that brand, but we are responsible for literally building the brand, presence, equity and ensuring strong performance. The brands are super supportive, and help us not only in the ideation and execution of the store to open it, the build and the services to open it. But ongoing we've had a very dynamic program in flagship where we have been asking brands to lean in and work with us on content.

Wendy  19:38

The other thing I was thinking about here was and you've done a few provocative things in this concept, but the thing that most interested me is you took this notion of beauty as inner and outer which you've said very much more holistic.

Jo  19:51

One of the things we really realized with the flagship is that do you see is not just about how one looks. It just as much about how one feels. And so with the flagship, we really lent into this and said our services not just going to be makeup or skincare or haircare, but we are going to bring the very best providers of inner health and be that for example, Anthia Koullouros, who's an extraordinary naturopath, be that Quinn Garner, which is the leading health retreats in Australia, having their practitioners come in and do a three month incursion at Mecca. Be that the fertility suites with Jenna McDonald, And yes, for example, the fertility suite was a controversial addition to the services. I think Mecca's perspective has always been, we are a platform of information and education. And we will bring you the latest information and put us in a context in which we recognize that you are able to take from that that which you want or what is right for you. And that has always been Mecca's view that we are a curator, we are the editor where we try and bring the latest experiences. And interestingly Mecca life went one step further, again, where we said it's not even about outer and inner health. It's also about your mind and how you think and one of the events we had actually had Australian of the Year, Grace Tame, and the First Nations choreographer, Amrita Hepi, the model activist, Mahalia Handley, the Olympic athlete, Michelle Jenneke, all of who'd had their own challenging experiences in different ways coming together and talking about how they managed those experiences and how they were leaning into life. So Mecca has tried to go further than traditional beauty conversations. And with that comes controversy. And we're okay with that.

Wendy  20:19

That does talk to inclusiveness, relevance, and boldness that I do think when I look at retail, actually around the world, there are very few retailers who are leaning in like that as Selfridges perhaps in the UK, let's change the way we shop and telling everybody that sustainability and values are really important. And you need to pay attention to it or everybody's beautiful, and everybody's included. But there aren't many retailers who are doing that kind of thing. So I think it's incredibly relevant. And particularly as we listen in our How America Shops® research and our global research, to what shoppers around the world are now expecting of their retailers and their brands. And they're not clear about what a company stands for. So why should I be loyal to you?

Jo  22:08

And I think that Mecca has been very fortunate because from the beginning Mecca's purpose and the way we explain that is why do we roll out of bed every day, to do what, why has been to make people look and feel and more importantly, be their best. And so that's been plumbed in from the beginning. And that has touched so much of what we've done from the beginning, for example, that education was critical. And that started with our team members. And that's morphed over time. And again, most recently, we launched Mecca Versity. In the pandemic last year where we took all of that education online, team members did over 150,000 hours of education, during the pandemic, and that was on everything from makeup, hair, skincare brands, founders, but it also included mental health, financial acumen training for being a young woman as you enter the workforce. And there are so many aspects of how to build yourself into a really competent person in all areas of life. And that's then fed into mechas whole positioning around gender equality, the fastest way to close that 100 year gap is through education of young girls. And so we've really lent into that is our key area. And so this once you do have a purpose, customers are really demanding it. But I think that when you have one and it's been in your DNA since the beginning, it is so easy to then inform everything you do in a way that's authentic is an overused word, but I think our customers really appreciate what Mecca stands for.

Wendy  24:55

So when you did the flagship was anything off limits. Was there anything you said? Can't do that, as long as it fits with our purposes, it's okay.

Jo  25:03

To be honest with you, Mecca, his whole philosophy is, let's put the customer in the center of this, they're like the pebble that gets dropped into the lake. And we just try and make sure that all the rings of their needs that flow out from that, that we kept to them, ideate them, scoop them up and find a way to execute them. So no, nothing was off limits, nothing is off limits.

Wendy  25:30

You know, we always say it's the shopper stupid. You know, if you think about that, then that becomes your proverbial North Star. You travel a lot around the world who did travel a lot around the world. But how do retailers in particular have to think about this process, particularly as we move into this, whenever we get there, this post pandemic world, but what's this roadmap in terms of innovation,

Jo  25:55

There is inspiration everywhere. Often, for me, it comes from bespoke experiences, or small and very expert experiences, I will go to Japan, and I will go to a stationery store or I will buy a single mirror and the entire experience will blow me away. The first time I went to Frederick Malle store, literally as it opened and Rue Grinnell and they were talking about fragrance, like an edition of a book. And there are these sparks of extraordinary creativity, and service obsession, and total customer focus that can come from any truly passionate person who is a master of their field. And then I look at some really large format retailers. And like everybody else I look at Nike was at Nikes flagship in Shanghai just before the pandemic and was blown away by the customization of products that you could create there. And then the totally digital basketball court and the way the app was brought to life, in the different category areas, that run club and I could go on and on forever. So that then gives me great inspiration that it doesn't just have to be this small operators that it can be scaled up again, if you put the customer first and that you have to be willing to break all the fabulous, lovely cozy things that are already working. And there's a mantra Mecca, which is we are not interested in "No", we are interested in "How" and innovations. It's hard and it can be exhausting. And it's not until you see it working, which is definitely not all of the time, that the reward is there for the customer. And for you as a result, I genuinely believe that unless we adapt, we will fade into insignificance with alarming speed.

Wendy  28:23

Well, that's certainly inspiration for all of us in pandemic days, or not pandemic days, actually. And I was I was intrigued to hear you talk from Frederick Malle, you know, specialty fragrance to Nike big box, right. And I do think about those opportunities where sometimes companies, whether they're brands or retailers, or service companies where we get so inside our own heads that we're not continuing to look around that if we as retailers or marketers or corporate leaders. Think about the culture thinking who are putting that consumer shopper in the center of at all that there is so much opportunity. There's so much here to learn from I will share with everybody what the Mecca flagship looks like you'll be able to see that in our Retail Safari®. So I am incredibly impressed by the discipline to be undisciplined, I don't think you're undisciplined at all. I think it's a discipline to innovate always and ever and I think that's a really powerful message for people so I can't thank you enough. As always, I love to be able to see you I see the sun coming up in chilly Melbourne today. So I hope it's not too cold and I hope locked down finishes soon. And we all get on with this and see each other in person that would be wonderful.

Jo  29:42

And I have gained so much inspiration from listening to and learning from all of the examples that you give and the lens that you put around them. And thank you so so much for giving me the opportunity to chat with you today. I love it.

Wendy  29:58

So here's the thing. What Jo told us in essence is that every store is a store of the future that innovation is in fact, an iterative process, not something you stop and start, and she defined five core actions. To drive this.  First, begin by putting the shopper at the center of the experience and then deliver what the shoppers want and need in their lives now, and as their lives evolve, you'll get no disagreement from me on that one.  Second, she said that innovation is a discipline that you need to think of the store and every part of the shopper journey, physical digital, as part of a continuing process. And to support that Mecca had a great idea. They have created the thought leadership Thursday, every Thursday, to embed this into their everyday routine in the company, I'm going to steal that idea.  Third, it can indeed be painful for everyone to adapt to this culture, from the merchants to visual merchandising teams to operations, but that his team see the value. They're primed every day to consider the next opportunity to innovate everything from back office operations to digital engagement.  Fourth, she said engage shoppers in the process as they did with their Mecca makers, they will be so enthusiastic to share in this innovation process. And finally, she said, bring together an internal team of top talent to be part of the process to continuously assess what works and doesn't with analytic support and all the other analysis to drive continuing innovation. You know, well, Jo was talking in the context of retail innovation. This holds true for brands and service companies for any organization's at large. She said, Unless we adapt, we will fade into insignificance with alarming speed. So that's the thing. Thanks for joining me. See you in the future.

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