Lolli and Pops CEO Sid Gupta on the Future of Retail
Nine years ago, Sid Gupta left behind a career in investment banking and private equity to become the founder and CEO of Lolli and Pops. At the time, he admittedly knew nothing about running a retail company. In order to learn everything he could about the business, he took a slightly unorthodox approach and served as store manager, shop clerk, buyer, maintenance man, and everything in between. Sid’s entrepreneurial spirit and curiosity drove him to learn the ins and outs of operating a brick and mortar retail business. With an eye toward the future — and an awareness of the current challenges of retail — he partnered with Qualcomm Ventures’ (the investment arm of Qualcomm Incorporated) portfolio company RetailNext, to optimize all aspects of his stores. After speaking at our State of the Retail Industry dinner, he shared additional insights on the current and future landscape of retail, what role brick and mortar stores can continue to play in the lives of consumers, and how technology is empowering retailers to enhance the customer experience and drive sales.
The retail industry is being compared to the housing market that crashed in the last decade, with many saying that the bubble has burst. What is your take on what is happening and is there still a need for brick and mortar retail?
I think it’s pretty clear that the bubble is bursting, and we’re in the early stages of what will probably be a big shakeout in the retail landscape. It’s driven by technological change, not unlike what happened to the horse and buggy when the car showed up. In terms of technology, people migrate to the next thing.
The question then becomes is there a place for brick and mortar? And there absolutely is. But it has to be done with the right purpose in mind. Every retailer has to ask themselves, “What’s my use case, and is it best served in a physical or online presence?”
For example, if your use case is convenience, then you probably don’t have that long of a life span in bricks and mortar. Who wants to go to a store and wait in line when it can be delivered? Consumers looking for convenience or routine purchases will end up seeking those out online.
“The web offers every product imaginable, the challenge is discovery and curation.”
But when you think about discovery, taste, and new ideas, I think those are the places where there’s a real need for brick and mortar businesses. The web offers every product imaginable, but the challenge is the discovery and curation. “I don’t know what to buy!” The real reason for brick and mortar stores to exist is to act as curators. The reason stores exist is to introduce you to real things, things that are hard for you to get yourself, and a unique experience that you couldn’t get on the web.
We’re also seeing a significant shift in the retail landscape, particularly since the news of Amazon’s Whole Foods acquisition. What are your thoughts on what this acquisition means for retail overall?
I think grocery has been an interesting challenge for Amazon. The last mile is really expensive on perishable goods. I think autonomous vehicles might be able to solve that over time, but that is likely far off.
How do you inexpensively deliver milk to your door? That’s hard to do cost effectively. They realized this, and the only way to have that last mile was to own brick and mortar groceries. Strategically, it’s a real benefit. As Walmart and Amazon compete both online and offline, the big question becomes: who can be the cheapest in that last mile of delivery in the country? Moreover, just like Walmart eventually moved into perishable goods to increase frequency of visit and purchase, Amazon is moving into perishable to leverage the prime ecosystem.
So how do traditional retail stores compete with the Amazons of the world and the convenience of online shopping?
I think one of the things that’s a big challenge for legacy retail is the tech that’s underpinned the way they do business for so long. It’s not that they don’t have tech, it’s that it’s really legacy and tied to legacy processes. We had the benefit of starting in 2012 with a tech stack that is far different than what a traditional retailer is using, and that affords us some key benefits that are hard for legacy brands to get. For instance, everything we have is cloud infrastructure and we have an ability to deliver the right data or insights to the right people at the right time.
Brick and mortar doesn’t mean lack of technology. Brick and mortar companies compete by becoming a destination for discovery through the products and customer services they provide. And all of that needs to be powered by technology and data the way e-commerce companies do, RetailNext being one of these foundational technologies.
“Brick and mortar doesn’t mean lack of technology”.
How have you used technology as a competitive advantage and optimized your in-store experience to build connections with customers?
The most important thing for all brick and mortar businesses is excellent customer service. People are more likely to buy when they’re being helped. For example, RetailNext allows us to know when people pass our stores, when they come in, where they are in the store, what they spend, and when they leave. These findings help us understand how to schedule employees, which addresses the huge disconnect between the demands of customers and supply of your staff. One of the most common mistakes made by retailers is underinvesting in their labor and not having the right people at peak times. We recently partnered with a company, Legion, that is helping us improve our customer experience through scheduling automation.
On top of scheduling, we’ve also been turning our attention to evaluating the quality of our team and their different strengths and weaknesses. This shapes how to train them, and how to reward people who are good for the business. There’s a lot of turnover in retail, and quality has to be valued over quantity.
Ultimately, we can’t build businesses the way existing retailers did in the 20th century. We have to be smarter and more cost effective in today’s e-commerce world. Technology is amazing at dramatically improving all aspects of the customer journey.
Your approach to retail is obviously quite different from the traditional methods of brick and mortar stores. How has that manifested itself in your shops?
When we started, the candy industry was a large opportunity because it was a very low innovation category and we didn’t feel like people were selling quality products with any type of guest service. We knew that people have an emotional connection to candy, so we asked ourselves, “How can we delight our guests?” Again, it goes back to finding your use case and targeting it appropriately.
A store was a logical first place to start and an efficient way to deliver a one of a kind experience that you can’t get online. We pride ourselves on incredible products that are sourced from all over the world, and scout out talented artisans to bring them to the marketplace. We have a really authentic hospitality model that revolves exclusively around delight. We love getting sweets in customers’ mouths and making their day!
The focus on environment, carefully sourced candies, and customer service has definitely differentiated us from others and has proved to be successful.
What’s your boldest prediction for the future of retail?
Brick and mortar businesses and online stores will thrive together, as complements.
Are people surprised to hear you say that?
They were until Amazon purchased Whole Foods!
The opinions expressed in this piece are solely those of the interview subject and do not necessarily reflect the views of Qualcomm Ventures.
