How the Store Can Do More: A Q & A with Oliver Chen; Cowen and Company, LLC

Ray Hartjen
Ray Hartjen
Guest Contributor

Oliver Chen, managing director and senior equity research analyst for Cowen and Company, LLC, recently sat down with RetailNext to talk about the findings of his latest report, "Experiential Retail: The Store Must Do More."

Oliver Chen is a managing director and senior equity research analyst covering retail and luxury goods for Cowen and Company, LLC. After developing a passion for retail at the age of 12 when he began working with his parents at their gift store retail business in Natchitoches, Louisiana, Oliver has developed into a highly renowned and recognized retailing expert. Oliver has appeared on CNBC, Bloomberg, PBS, Business News Network, Fox and Monocle, and has been quoted in the likes of The New York Times, Financial Times, The Wall Street Journal, Associated Press and other outlets.

In early April, Oliver and his team published a 210-page report, “Experiential Retail: The Store Must Do More,” and he recently sat down with RetailNext to talk about the current state of retail and where it’s headed.

In early April, you and your Cowen and Company, LLC team distributed the report, “Experiential Retail: The Store Must Do More.” What was the impetus for that report – why that topic, and why now?

It’s been a disruptive time for the industry, and the revolution in retail has a lot to do with the transformation of the store and the need for the entire shopping experience to change and be relevant to the changing needs of both new and existing customers.

Customers have drastically changed over the past several years, based primarily on enabling technologies and the way everyone is empowered to interact with retail through mobile devices and through social media platforms and the like. The new customer needs to be engaged entirely through a pre-purchase, purchase and post-purchase shopping journey, embrace product trends faster than ever before, and appreciate brands that take on ‘values.’ New customers are also interested in what we call ‘deep-value,’ which more simply means low prices, time-saving, or good value for price products or activities.

This changing dynamic with respect to the shopping journey has led to a need for stores to rethink the retail enterprise and its processes, and reinvent how to use or alter existing assets to use in creative, customer-centric and more engaging ways.

“Our thesis is that the store must do more. The store is no longer only a place where a shopping transaction may take place. Rather, in today’s new retail environment, the store is another in a series of customer touchpoints, and in particular, stores are a tremendous customer acquisition tool.

The report expands on Cowen’s belief that a critical task for retailers to minimize the “task” of shopping and maximize experiential retail through a model you refer to as the 3 C’s. Can you explain that model and how retailers can best develop a sustainable competitive advantage?

Cowen’s three C’s are 1) Convenience, 2) Culture and 3) Curation, and I think retailers need to think in the context of this matrix across everything they do. They are easy principles to articulate and understand, but can be extremely difficult to execute against.

Convenience matters as shoppers’ expectations are so high – they demand products and services that are easily purchased, and quickly delivered and fulfilled. Retailers must fit into shoppers’ lifestyles, and it’s challenging to put into practice as values, desires and needs differ depending not only on the individual, but also on the retail sub-sector as well. An example is the move to mixed service shopping experiences – in sectors such as beauty, some customers appreciate 100 percent service to 100 percent no service or self-service. In grocery, we are seeing a spectrum of options from curbside pickup, to human-assisted pickup and delivery, to same-day delivery. Meanwhile, in apparel – mobile geolocation, dressing room pickup, and buy online pickup in store are important convenience features. There’s complexity in what customers want because customers consider different methodologies easier depending on their preferences and life needs.

With respect to Curation, a retailer must have a special product and/or brand which enables it to be differentiated in a crowded, competitive marketplace, and most importantly, that differentiation has to be of value to the customer. Curation to us also means differentiation through emotions, design, and/or features. Lifestyle brands, for example, remain an important concept when there is compelling storytelling. Another relevant related question is if the brand inspires a sense of community or tribalism. In this age of rapid digitalization, I believe humans still crave and value analog relationships and connections to other humans.

Mobile phones have unleashed outstanding availability and comparability to consumers, and the result has been intensified competition on price. Therefore, retail brands need an innovative, edited point of view. If you are over-assorted, you can cause harm to the shopping experience. Brands need to have curated product assortments with redeeming qualities. Less can be more, and I believe customers value thoughtful simplicity.  It’s really important to find the balance of features versus needs versus choices.

The final C is Culture, and I firmly believe the future of retail is about the minimization of the task of shopping and the maximization of the experience. In today’s era, retail finds itself competing more broadly against entertainment, travel, video games, social media and everything else wedging its way into our very busy lives. It’s a new retail reality, and brands have to fundamentally transform to compete within this new paradigm.

These 3 C’s are the building blocks for creating a sustainable competitive advantage in the world of big retail super powers like Amazon, Walmart and Target, and it’s a critical time for all retailers, as those super powers are only growing stronger and more influential over time. Data, loyalty, supply-chain, M&A capabilities are all hugely important factors – and scale here may lead to more consolidation, partnerships and creative collaborations.

So, like I said, the 3 C’s are foundational and a relatively simple concept to articulate. The challenge to putting this concept into practice is a full understanding of the context and how to unite the 3 C’s together for the benefit of customers. Retailers can email Cowen for a copy of our 210 page report and videos on this topic at

A retailer’s strategies around the 3 C’s can’t exist in isolation. Tell us more about the new, all-encompassing purchase journey.

The purchase journey is a fairly straightforward model which challenges retail CEOs to think beyond just the purchase event. Our 3 Ps consist of 1) Pre-purchase, 2) Purchase and 3) Post-purchase stages. In applying the model to today’s new world of retail, it’s important for retailers to rethink and embrace customer engagement. Now more than ever, it is absolutely critical to have a customer think of you at every stage of the purchasing journey – before, during and after the purchase.

For example, brands today are well aware that consumers are doing their product research online, closely examining user reviews and utilizing avenues like social media and the brands’ own websites to offer feedback. In that Pre-purchase phase then, brands should seize upon the opportunities to interact with customers and provide benefits as well as earn the right to ask for data. If customers trust you and if there is a value to them in return, they will offer up information, and savvy retailers can use that data to further engage with shoppers and inspire great loyalty with customers.

It’s important, too, to consider that the purchase journey does not end at the purchase. It’s so much easier to maintain a customer than acquire a customer, and a lot less expensive too. In the Post-purchase stage, brands must prioritize informing customers of where their purchases are, and when they can expect them. Furthermore, Post-purchase provides wonderful opportunities to engage with customers and other consumers within the context of a community, where, of course, individuals are influenced by influencers and others in their own personal networks. Also, a customer will likely value help, assistance, and suggestions after purchasing an item, and this is another excellent opportunity for retailers to reach out and touch the customer. But, it’s also important not to be annoying and to find ways to surprise, delight, and help customers reach their best selves.

Your research shows that shoppers still enjoy stores, particularly some of the younger shopper generations. What’s the future of brick-and-mortar stores, and what must stores do to change and reinvent themselves over the next decade in order to remain relevant?

The future definitely involves physical stores and I like to say this repeatedly. The ‘but’ is that physical stores have to continue to minimize the less fun tasks that are part of the store and maximize the discovery, education, entertainment and social aspects of the store. How much of your store is Instagramable? Do you provide nourishment to the customer – culturally or with calories? Stores need to think of themselves as opportunities to entertain and educate, to feed or provide beverages, to provide exhibits and find new ways of marketing to stimulate emotions, drive purpose, and show customers new things. Stores need to embrace their rather unique opportunities to engage with customers on a personal level, and help customers connect with and socialize with like-minded customers. A store can be a community point, a customer acquisition point, and your best ambassadors to your brand or product can be your store employees.

To amplify experiences and eliminate tasks, stores should seize upon the opportunity to become sources of cultural inspiration. Physical stores should always strive to make shoppers feel as though they’re walking into an Instagram story rather than a flat spot with no imagination or dimensionality – just rows of shelves with products. Stores need to be more like a live magazine. Some stores used to be slightly nicer looking warehouses of stuff and that just does not work very well for most categories unless you are very deep-value.

Aside from experiences, stores also have to execute against the very basic fundamentals, and that’s providing consumers with the products the way, when and how they want it. For some consumers in some retail segments, that might entail online pickup in store, curbside pickup and never seeing or interacting with any sales associates. For other circumstances, it might require a very high-touch engagement.

You’ve stated your belief that upwards of 30 percent of U.S. malls will close or become repurposed over the next 10 years. What’s the interplay between the shrinking mall landscape against the changing role of stores and the movement of brands to more direct-to-consumer strategies?

New retail brands and digital native brands are born direct-to-consumer. And, of course, like I’ve shared many times previously, I firmly believe the future of all retailing brands is a combination of online clicks and physical bricks, and we’re seeing these digitally native brands venture into physical retail as they seek growth and can understand in a data-driven manner where their customers would enjoy them being physically.

The future of retail is also about data, specifically brands collecting data and using information to determine how to best optimize footprints and better personalize toward customers.

However, despite the growth of digital natives into brick-and-mortar, the United States still has too many low productivity malls and big stores – we have too many stores and too much selling square footage per capita than what’s needed and can be supported. This needs to be changed, and when we eventually reach an equilibrium, it will create a healthier overall retail environment.

Many malls will be partly repurposed to be more experiential in concept, with more food offerings, health and wellness and other experiential opportunities. In addition to partial repurposing, I also anticipate more underperforming mall space to be turned into residential units, office space and health care facilities. And, the broader idea of entertainment is undergoing generational and technological transformations.

That being said, I think it’s important to note that some malls and other retailing formats are extremely successful. Outlets are an attractive long-term trend given a customer focus on deep-value and getting bargains, lifestyle centers are experiencing a surge in popularity, and we’re seeing a tremendous amount of innovation in off-mall. We also need to acknowledge areas of attractive retail growth, particularly in beauty, off-price and experiential food segments, for example.

You’ve suggested brands like J.C. Penney’s and Macy’s close stores, yet you’re optimistic about Kohl’s strategies. Explain the thinking behind the effectiveness of one type of department store strategy against another.

There are a few reasons why I’m impressed with Kohl’s. First of all, Kohl’s has a solid foundation to build upon and grow with its industry-leading loyalty program. Its stores also have a product assortment that has speed-to-market capabilities and its own private label brand assortments. I also believe Kohl’s has a strong focus in the active, health and wellness segments, and I appreciate Kohl’s creative partnership with Amazon.

Kohl’s loyalty program enables them to execute on personalization at scale. Additionally, the company has invested in innovative technology solutions for inventory management, and that’s helped them in this new digital paradigm with omnichannel fulfillment, which both enables convenient delivery options for customers and helps manage shipping costs.”

In this new world of retail, having customer data and using it to effectively engage with customers isn’t enough, and having the right product requires a rapid digitalization of the supply chain. Having good product has to do in large part with the need for speed, particularly that which can enable the identification of trends and, therefore, the execution against those trends, matching supply with demand.

Kohl’s being off-mall is also strategically advantageous, as it’s convenient for customers to access, and that makes it easy to either shop the store or use the store to pick up online orders.

Customers are shopping in new ways, and they’re not necessarily as brand loyal as they have been in the past. Customers have choices in where they shop, and brands have to do more too in this new world of personal style.

For department stores in general, I believe they have to fundamentally rethink how their stores are laid out, and product displays need to change to become more engaging, more experiential, and more flexible. Store operations need to keep pace with changing times too, as customers have repeatedly shown they appreciate mixed service models and displays which are layered and often solution-driven versus brand-driven. And, of course, customers tend to love off-price channels and they certainly care about price. All stores, and department stores in particular, must provide exceptional value.

Lastly, don’t forget Amazon, which is the primary retail lens now of most of America given that most people begin their shopping journey there no matter what. Eighty percent of Americans shop Amazon, so there is a tremendous amount of cross over and it’s really had a negative impact on department stores, primarily because of Amazon setting the industry standard on convenience, product availability and speed. Other retailers will lose market share if they do not execute on the 3 Cs and 3 Ps which we talked about earlier.

Any final thoughts you’d like to share on how the store should be doing more?

It’s our mission, as a retail industry, to find the best and most sustainable ways to inspire today’s shoppers when they embark on their shopping journeys. It’s a mission-critical task, it’s very much an opportunity, and it’s exciting.

There’s no question in my mind the future of retail is a combination of physical and digital, and to be successful, retailing brands have to harness the power of both. Within that converged physical and digital future, a key factor will be personalization, but only personalization that is helpful to shoppers. Ultimately, shoppers will determine what’s helpful and what’s not, and customers will only share their personal data if they trust the brand and the retailer, and only if the retailer can drive tangible benefits.

With regards to retail technology, I believe that the best technologies are those that aren’t necessarily seen or heard, but rather those that might be invisible yet extremely helpful to shoppers. I believe that time is a luxury for everyone, and retailers need to really think about giving customers value in the form of time, particularly time saved so they can do more rewarding and meaningful things than just shop. To play an important role in the lives of their customers, retailers have to think about what customers value most and then deliver. In addition to being customer-centric I also think that retailers need to invest in trying to discover innovation which customers can’t even imagine as well – so you can’t just focus on focus groups.

In my view, every retailer will need to pay attention to voice. Voice is the new mobile, and mobile has effectively become the new mall. The future of stores and retailers will also be driven by the exceptional use of sensors. Voice and smart speakers will permeate many more aspects of our lives.

Lastly, data will remain critical, for it will drive innovation and support fashion, and customer data, in particular, is the key to unlock the promise and potential of personalization. Rapid innovation in technology needs to be counterbalanced by analog forces and human interaction – people are your best tools for conversion, customers want to know other customers, storytelling isn’t going to be done by robots (yet), and the dynamic between community versus the individual will always be a part of retail too.   

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Oliver Chen’s disclosures:


1) Any financial interest held by the analyst, member(s) of his team, or his household members: NO

2) Firm and affiliates 1% or more ownership interest:  NO

3) Any other material conflict of interest:  NO

4) Subject company a client of the firms or its affiliates:  NO

5) Position as officer or director of the company:  NO

6) Analyst received compensation from company:  NO

7) Cowen and Company received compensation from company:  NO


1) Any financial interest held by the analyst, member(s) of his team, or his household members: NO

2) Firm and affiliates 1% or more ownership interest:  NO

3) Any other material conflict of interest:  NO

4) Subject company a client of the firms or its affiliates:  YES

5) Position as officer or director of the company:  NO

6) Analyst received compensation from company:  NO

7) Cowen and Company received compensation from company:  YES


1) Any financial interest held by the analyst, member(s) of his team, or his household members: NO

2) Firm and affiliates 1% or more ownership interest:  YES

3) Any other material conflict of interest:  NO

4) Subject company a client of the firms or its affiliates:  YES

5) Position as officer or director of the company:  NO

6) Analyst received compensation from company:  NO

7) Cowen and Company received compensation from company:  YES