The $20K Mistake 99% of Retailers Make (Adapt or Die) | James Keyes DSH #1033

Summary

Podcast Summary: Digital Social Hour – "The $20K Mistake 99% of Retailers Make (Adapt or Die)" featuring James Keyes

Introduction: Embracing Change as Opportunity

In the December 30, 2024 episode of Digital Social Hour, host Sean Kelly welcomes business legend James Keyes to discuss the critical mistakes retailers make and the imperative of adapting to survive in a rapidly evolving market. The conversation sets the stage with an analogy comparing Amazon to Sears, emphasizing the cyclical nature of catalog companies and the relentless pursuit of improvement.

James Keyes [00:01]: "Think about what Amazon is. It's a catalog company. I mean, it goes full circle, all the way back to where Sears was."

James Keyes' Entrepreneurial Journey and Intrapreneurship

James Keyes shares his unconventional path to business success, highlighting his roots in Grafton, Massachusetts—a small town where his initial understanding of business was limited. He reflects on his entrepreneurial spirit within corporate structures, a trait often suppressed by large organizations.

James Keyes [01:37]: "The reason I was successful in business is I'm an entrepreneur. You don't think of that. You think of corporate entrepreneur as almost an oxymoron."

Keyes underscores the importance of taking risks and stepping outside conventional corporate roles, coining the phrase "change equals opportunity."

The Evolution of Retail: Amazon, Sears, and the Need for Adaptation

The discussion delves into the transformation of retail giants, starting with Sears' origins as a catalog company and its eventual decline due to resistance to change. Amazon is presented as Sears' modern successor, having "found a better way to do it."

James Keyes [05:15]: "They just made it better. Yeah."

Keyes emphasizes that the inability to adapt leads to the downfall of once-dominant companies, advocating for proactive and confident responses to market changes.

The Blockbuster vs. Netflix Narrative: Debunking Myths

A significant portion of the episode addresses the commonly held belief that Blockbuster's CEO turned down Netflix's offer of $50 million. Keyes clarifies the misconceptions, revealing the real challenges Blockbuster faced during the 2008 financial crisis, which hindered their ability to refinance debt and compete effectively.

James Keyes [06:24]: "If you think that was a dumb move to turn them down for 50 million, why didn't you buy the stock at 79 cents a share?"

He explains that Blockbuster had already initiated similar strategies to Netflix but was ultimately overwhelmed by external financial pressures, leading to its eventual sale to Dish Networks.

Retail Strategies: Prioritizing Quality and Customer Loyalty Over Pricing

Keyes discusses the delicate balance between pricing and product quality in fostering customer loyalty. He cites Starbucks as a prime example—initially perceived as overpriced, yet customers remained loyal due to the superior quality and experience offered.

James Keyes [12:02]: "It's all about the product. You are what you sell."

He contrasts this with 7-Eleven's success in international markets, where the focus on high-quality, fresh products has cultivated strong customer loyalty without relying heavily on discounting.

7-Eleven's Success: Leveraging Technology and Freshness

A deep dive into 7-Eleven's business model reveals the company's early adoption of technology for inventory management and product assortment customization. Keyes highlights how leveraging technology allowed store managers to tailor offerings to local preferences, ensuring optimal stock levels and reducing waste.

James Keyes [15:21]: "They were able to harness technology in a way that let them change the product assortment literally by store."

This strategic use of technology not only improved operational efficiency but also enhanced the customer experience by providing relevant and fresh products consistently.

Retail Innovations: The Slurpee Day Story

Keyes recounts the origins of Slurpee Day, an iconic marketing campaign that began as a company celebration. An unplanned promotion with David Letterman unexpectedly demonstrated the overwhelming popularity of Slurpees, leading to permanent changes in how the product was offered.

James Keyes [17:42]: "They were so popular that people came in and we didn't provide a little cup."

This incident underscores the value of being adaptable and responsive to customer demand, even when initial plans don't go as intended.

The Role of Technology and AI in the Future of Retail

Looking ahead, Keyes envisions a significant role for Artificial Intelligence (AI) in retail, particularly in inventory management and customer behavior analysis. However, he cautions against adopting technology for its own sake, advocating for practical applications that genuinely enhance business operations.

James Keyes [24:08]: "AI will be able to do a lot of that thinking for them, but never replace the person."

He emphasizes the irreplaceable value of human intuition and community relationships, arguing that AI should complement rather than substitute the human element in retail.

Leadership in Business: Adaptability, Overcoming Fear, and Cultivating Humility

Keyes shifts the conversation to leadership, advocating for adaptability and continuous learning as essential traits. He challenges traditional leadership styles, particularly fear-based approaches, and promotes a philosophy of relentless positivity fueled by knowledge and humility.

James Keyes [26:14]: "Leadership is all about change and all about learning to adapt."

Drawing inspiration from Yoda's wisdom in Star Wars, Keyes links the concept of fear with the loss of potential and underscores the importance of knowledge and faith in overcoming challenges.

James Keyes [28:19]: "Fear leads to the dark side because ignorance leads to fear. And fear leads to anger, and anger leads to violence."

He further elaborates on the synergy between confidence and humility, advocating for leaders to remain open to diverse perspectives and willing to pivot when new information emerges.

Key Takeaways and Conclusions

James Keyes wraps up the discussion by highlighting the central message of his book: embracing change, leveraging technology wisely, prioritizing product quality, and fostering strong human connections are paramount for retail success. He encourages listeners to pursue continuous learning and maintain a positive, adaptable mindset to navigate the complexities of the modern business landscape.

James Keyes [30:20]: "If I choose to be led around by a bunch of perceptions, I'm vulnerable to that. Alternatively, I can use that portal to unlimited learning, and I can find truth."

Sean Kelly concludes the episode by directing listeners to James Keyes' website and social media platforms, inviting them to explore his insights further and apply the lessons discussed to their own professional and personal lives.

Sean Kelly [35:28]: "Thanks for coming on today."

Final Thoughts

This episode of Digital Social Hour offers a comprehensive exploration of the challenges and opportunities within the retail sector, enriched by James Keyes' extensive experience and thoughtful insights. From debunking industry myths to advocating for a balanced approach to technology and leadership, the conversation provides valuable takeaways for entrepreneurs, business leaders, and anyone interested in the dynamics of modern retail.

Transcript

[A]

Think about what Amazon is. It's a catalog company. I mean, it goes full circle, all the way back to where Sears was.

[B]

Wow.

[A]

They just found a better way to do it.

[B]

And then eventually there'll be a company that can make it even better. Right?

[A]

Exactly. Change equals opportunity. Sears, had they stayed the course, could have been Amazon today.

[B]

All right, guys, Jim Keys here today, business legend. Thanks for coming on, Sean.

[A]

It's great to be here.

[B]

Yeah. You've been part of some of the biggest companies in the world.

[A]

Yeah, I've had a few adventures over the years.

[B]

Yeah. Incredible, man. How'd that all get started?

[A]

I did not take the normal path. I was one of these kids, literally. I didn't know what business meant. I thought business. When I was in high school, I literally thought business was like typing class, you know, and literally, we had no frame of reference in the small town I grew up in.

[B]

Where'd you grow up?

[A]

Factories. Grafton, Massachusetts.

[B]

Never heard of it.

[A]

So.

[B]

Yeah.

[A]

Yeah, Sounds like a small town. Yeah. Central Mass. And you get. You get west of Boston about 30, 40 miles. It gets really, really fast. And so, yeah, I just had no frame of reference. And. And so, like so many kids, I had no idea what I wanted to be when I grew up. Right. I thought, I don't know, maybe if I work really hard, maybe I'd be a. A doctor or a lawyer. I didn't know and ended up almost by mistake in business because I was planning to try to get to law school somehow, some way, I thought, yeah, that's a career, man. They make a lot of money and they wear suits and it looks sharp. I would have made a terrible lawyer. Terrible lawyer. But, yeah, I found in the. Found the business path. And, and, and here's the irony. You're an entrepreneur.

[B]

Yeah.

[A]

The reason I was successful in business is I'm an entrepreneur. You don't think of that. You think of corporate entrepreneur as almost an oxymoron.

[B]

Right, right.

[A]

I mean, there are very few people that see themselves as entrepreneurs in a corporate environment because a corporation will beat the entrepreneur out of most people.

[B]

Right.

[A]

It encourages conformity. Right. And it discourages stepping out and taking risk that entrepreneurs do. The irony is all corporations need entrepreneurs. And so my career really was propelled by my willingness to step out and take those risks and be an entrepreneur within a corporate environment. And it paid off. It does work.

[B]

I love that. Yeah. Well, they call them intrapreneurs now, right?

[A]

Yeah. That's a fancy name for them. Yeah.

[B]

Yeah, yeah. It's definitely an interesting dynamic. Because as companies grow, they kind of lose that entrepreneurial flair that started the company.

[A]

They do. And here's the irony. I talk a lot about change, and I see change as opportunity. I've kind of coined the expression change equals opportunity, ironically, the acronym CEO. Right. Think about that. It is so powerful that every bit of commerce begins and ends with something changes. Someone responds to that change, and they get compensated for it. Right?

[B]

Right.

[A]

So what happens then? They get big and they get afraid to keep changing, and someone else says, well, I can do it better, and they stimulate another change, and then they get compensated for it. And sometimes that company that started with the response then goes away.

[B]

Right.

[A]

And, and, and that's unnecessary if you can manage that response to change. Proactive, confident response to change in a way that makes you virtually an entrepreneur.

[B]

Right. And these days, you got to change quicker than ever. Right. Constantly because of technology and all these advancements. If you're not embracing AI now, you're kind of falling behind.

[A]

Exactly. You want to. You want to. I've got a great example I haven't really used. I didn't put it in the book. But think about when I grew up. We had something called a Sears catalog. You're too young to remember Sears.

[B]

I heard of Sears.

[A]

Yeah. Well, they. Sears started as a catalog company.

[B]

Okay.

[A]

Right. So when I was a kid, they didn't have Sears stores all over the place. In fact, in my little rural area, we had a catalog. So I'd flip through and look at. They had these like, Halloween costumes, and I wanted to be a marine, you know, marine costume and in there, and you'd look at all these cool things in the catalog, and you'd buy something, it would show up at your door.

[B]

You would call them and buy it.

[A]

Yeah. It was like an 800 number that you'd call and you'd order something, and then they would deliver it in a. In. In a week or something like that. Well, then Sears decided as they got bigger, we need stores to satisfy that demand. And then along comes Walmart and changes everything. Right. They started doing more aggressive pricing and bigger and bigger stores. And pretty soon Sears went by the wayside. And, well, they're still around, barely. But then what happened? Amazon comes in and says, well, we can do it better. We can go online. But think about what Amazon is. It's a catalog company. I mean, it goes full circle all the way back to where Sears was.

[B]

Wow.

[A]

They just found a better way to do it.

[B]

They just made it better.

[A]

They just made it better. Yeah.

[B]

And then eventually there'll be a company that can make it even better.

[A]

Right, Exactly. And that's what change is all about. Change equals opportunity. Sears, had they stayed the course, could have been Amazon today. But when you get big, that inertia sets in. Resistance to change creeps into every organization. And instead of being the Amazon of today, which is ironically where they started, they've pretty much gone away.

[B]

Yeah, there's been a few big companies that. That's happened to you, right? Radio Shack. Yeah, I think Red Lobster is bankrupt right now.

[A]

Yeah, there's.

[B]

There's been quite a few recently.

[A]

Blockbuster.

[B]

Blockbuster. I wasn't going to bring it up until you did.

[A]

I had to. I mean, here's the irony. I'm out there talking about, and I get, you know, of course you'll post one of these and somebody will be out there going, oh, yeah, this is. This is the guy that turned on Netflix for $50 million. And what they don't think through is the real story because there's so much more to learn in the Blockbuster story about.

[B]

Yeah, I want to hear your side of that. So you got presented that deal to buy Netflix. What's going on in your head?

[A]

No, I didn't. Ironically, here's where people get their information. We're living in a world of perceptions. I'm going to talk more about perception in a while, but. But we're living in a world of perceptions where you flip on the Internet and you. And you. You're scrolling through things and you see something and you just react to it and then you take it as fact. So on the Internet, there is this perception that the CEO of Blockbuster turned down Netflix, offered to sell for $50 million. Here's the reality that happened in the year 2000. In the year 2000, Netflix stock was trading for 79 cents. So what I like to tell people is if you think that was a dumb move to turn them down for 50 million, why didn't you buy the stock at 79 cents a share?

[B]

Right. So it was public at the time.

[A]

It was public.

[B]

I didn't know that.

[A]

Yeah, but they were doing DVDs by mail and struggling. And so Blockbuster looked at that deal. This is seven years before I got to the company got it, year 2000. And they said, we can do the same thing ourselves. And they did. So they had built a DVD by mail business just as Netflix did. And Blockbuster's plan was to stream. It's just that in 2007, people forget that streaming was a very, very ineffective vehicle at the time because of buffering, the lack of WI fi, the lack of bandwidth that created not a great user experience at the time.

[B]

Right. So the quality wasn't there.

[A]

Quality wasn't there. Now, we did buy a streaming company. We bought a company called Blockbuster called MovieLink, that renamed Blockbuster on Demand. So again, people don't know the story, but Blockbuster was very well prepared for streaming in 2007 when I arrived with the acquisition of this company that was really built by the studios to prevent the fragmentation that's occurred as a result today.

[B]

Interesting. So you were prepared for the streaming error. So then what exactly happened?

[A]

Absolutely. Well, again, change happened. So here we were. We were. We had significantly increased earnings for the company, made some improvement in store operations, bought a streaming video company. We had something called Total access. You get DVDs by mail, online, in stores, kiosks, even to compete with Redbox. And then all of a sudden, in 2008, Lehman Brothers collapsed. The financial markets completely shut down. The banking system was basically in disarray worldwide. This wasn't just the United States. It's a worldwide financial crisis. And Blockbuster had a billion dollars of debt that had to be refinanced in 2009. That's the real story of Blockbuster. It was very difficult to get that debt refinanced. We ultimately did restructured the company and sold the company to Dish Networks.

[B]

Oh, got it.

[A]

Yeah.

[B]

Okay. So you never hear that part of the story.

[A]

Yeah, I know. No, people just take. Again, perception. I'll just take. I'll take the. I'll take the nickel version of the story and then I'll accept it. Real. But there's so much more to learn, right. If. If someone digs in and gets the truth.

[B]

That's interesting because you hear that with Google and Yahoo too. You're like, oh, they could have bought. Yahoo. Could have bought Google or something, right?

[A]

Exactly, exactly.

[B]

But they don't know. No one's ever heard Yahoo side of it.

[A]

Right? Exactly.

[B]

Yeah. That's interesting.

[A]

So many stories.

[B]

When was that shift from physical stores to streaming? Was it a specific year you remember?

[A]

It didn't really. It wasn't really viable. It began in the year 2008, 2009. We had Roku, came out with a device. TVs weren't smart, there weren't apps and sort of time stamp this, the iPad, which now the first time we had a device that was viable to watch movies on, that was launched in 09. So by 2010, 2011, we were just then beginning to see viable streaming capability. Prior to that, there Was a little streaming going on in 07 08, but it was primarily kids on an Xbox.

[B]

Got it. That makes sense. So Redbox must be struggling now, right?

[A]

Yeah, Redbox is struggling, but Redbox, it was an interesting business model. They had a very, very low cost device. They created these little, little kiosks for probably 10,000 each and put them in front of Walmart stores and 711 stores.

[B]

Wegmans too.

[A]

Yeah, yeah. And ironically the studios did not support that model. So the studios wouldn't sell them DVDs. You know how they got their inventory? They would literally go to Walmart.

[B]

No.

[A]

Yeah. And buy, they had a whole army of young people. Basically they'd send in a Walmart and buy five copies of a movie.

[B]

They're paying full retail price. Yeah.

[A]

Well, but here's the deal. Walmart was using DVDs as a loss leader.

[B]

Oh.

[A]

So to attract customers.

[B]

Interesting.

[A]

And they didn't realize that Redbox had made a whole, built a whole distribution model around going into Walmart stores, buying them. Their cost of goods, believe it or not, was lower than mine at Blockbuster.

[B]

Whoa.

[A]

Yeah. Yeah. Because they were buying the, the discounted DVDs at Walmart.

[B]

That's crazy.

[A]

I know, I know.

[B]

What a strategy.

[A]

I know.

[B]

Does a loss leading strategy still work you think these days?

[A]

Yeah, I, I am not a big fan of loss leaders at retail. I know a lot of retailers use them, but I think it always comes down. You know, prior to blockbuster, I was CEO of 711 and I'm just a big believer. It's all about the product. You are what you sell.

[B]

I agree. Because I feel like customer loyalty isn't as strong as it used to be because people are now just shopping prices.

[A]

If we're being honest, their shopping price, price will always be a factor. Price has been a factor since retail was invented. But ultimately it comes down to the product you're going to buy. I mean look at, look at Starbucks. I remember when Starbucks came in 7 11. At the time we were the biggest retailer of coffee in the world. And Starbucks came in and you know, I'm guilty. I looked at them and said, who's gonna spend four bucks for a cup of coffee? Right. But the quality of their product and the experience was so good that price didn't matter to that customer. They were willing to pay for the quality of the experience and the quality of the product. It's a great lesson in that.

[B]

Interesting. Yeah, you're right. That's a great example actually. Yeah. Because some people do have that loyalty if they like the experience and the overall. It's not just the price, Right?

[A]

Exactly. If you go to 711 in Japan, they are selling restaurant quality sushi. And people will use 711 in Japan. Not just Japan, but Taiwan, Thailand, Korea, they'll use 711 three meals a day.

[B]

Whoa.

[A]

Because the quality of the food is so good that it keeps them coming back. 7:11 in Asia doesn't have to discount. They don't play that game. They don't have to play that game. It's a good value, but it's really about the quality of the product.

[B]

Yeah. I used to go to 7:11 all the time, probably when you were CEO actually, because I went when I was a kid.

[A]

Yeah.

[B]

Boston cream donut.

[A]

Awesome.

[B]

Oh man, those are good.

[A]

Yeah. That was an innovation. Believe it or not. Putting those donuts in the store was a big deal. We had to build a whole nationwide infrastructure with bakeries that were in every market partnering with bakers and the ability to distribute that product at least once a day because you can't have a donut sit on the shelf for 48 hours and it's just not good anymore. So we had built, basically had the advantage of being able to replicate the thing that made 711 in Japan and in Asia so successful, which is daily delivery of fresh products.

[B]

Yeah. Because the stores are small. So how do you decide what gets in, what gets out?

[A]

This is the secret sauce for 7 11. They were able to harness technology in a way that let them change the product assortment literally by store. By figuring out, because convenience is literally neighborhood by neighborhood. Sometimes a store on one side of the street has different needs, different customer needs than a store on the other side. You might have one on the drive side that people are stopping for coffee on the way in. And then on the way home, maybe they don't drink as much coffee and the coffee sales would be lower. So the idea is to use technology to know every item in the store, every sku, which is the stock keeping unit, and be able to manage that inventory appropriately. So you're never ever out of stock on the best selling products and on the slow moving items. Since the store is so small, the, the, the challenge is to eliminate those items and replace them constantly with things that have a better chance of success.

[B]

Wow. So you were using that tech in the early 2000s?

[A]

Yeah, yeah. We were one of the first to adopt it.

[B]

Whoa.

[A]

It was fabulous. And it really, it made the difference. 7:11 in Japan first launched this tech and they, it totally transformed their business.

[B]

I bet. Because before is manually so it was what would sell Exactly.

[A]

And 711 in the United States. When I first got there, we had a history of negative. Same store sales really declining every year because we were building a lot of stores and perhaps cannibalizing some stores. But. But the real problem wasn't the number of stores. The real problem at the time was we really didn't know what sold. More importantly, what didn't sell in every store.

[B]

Yeah, they're everywhere. Seven elevens.

[A]

Oh, yeah. Almost 80,000 stores now.

[B]

Holy.

[A]

Yeah.

[B]

And the ones at gas stations, I assume, do the best.

[A]

In a window of time. Yes. Think of gasoline as another convenience item. And the nice thing about 711 is it will continue to morph and sell those things that you need conveniently. So literally. The company started selling ice for people's icebox.

[B]

Oh, wow.

[A]

Yeah. And they transformed over time by keeping up with change.

[B]

Right.

[A]

So every time something changes. I mean, take ATMs. We had when during my tenure there. ATMs used to be only at banks. And then they started putting them randomly at a few locations. Well, we decided it's a convenience item for people to get access to their cash. So we put. We made the hard call, put them in every seven eleven store.

[B]

And that was probably expensive at the time.

[A]

It was very expensive because some stores didn't generate enough revenue to be able to make the ATM the cost of the machine work. But we, by making that decision then people began to realize, any 711 I know I can get cash. And then it became a huge revenue generator for the company.

[B]

Smart. Wow. Yeah. And vapes became big. And I'm sure they started selling vaporizers and caught that trend.

[A]

Yeah, exactly. Vapes. Tobacco was declining, but then as tobacco declined, vaping started to grow.

[B]

Yeah.

[A]

Again, came in, provided the convenience. And that. That one thing that is consistent. The need for convenience will never go away. Absolutely right. When did I keep up with change? You're going to win.

[B]

Absolutely. When did Slurpee Day launch? Because that's one of the most viral marketing campaigns of all time.

[A]

I know you'll love this story. So here's how the Slurpee Day started. We played with the idea. Let's. Let's. Let's give a free Slurpee on 711 day. In fact, I think the first time we did it may have been in 2002, which was the company's 75th anniversary. We had a big, splashy thing at New York City. We rang the bell on Wall street and had a big event at Radio City Music hall and Ellis Island. All this to celebrate the company's birthday. And we provided free Slurpees. Well, we hadn't really thought it through. Franchisees were a little upset because it was so popular that people came in and we didn't provide a little cup. Yeah, it was just. Just take a Slurpee. And people were loading up these 16 ounce slurpees and walking out. And so we. We stopped doing it for a couple of years. And then around 2005 is right around the time we sold the company. We ended up selling 711 to the Japanese licensee. David Letterman had a little red ass.

[B]

Oh, yeah.

[A]

Well, here's what happened. Our race team was Michael Andretti and the Andretti Racing team. And we had a car at Indy. The Andretti team then hired Danica Patrick.

[B]

Oh, nice.

[A]

Away from Raul Letterman Racing. Oh, right. And that happens all the time. I mean, drivers get hired back and forth. It's like football players changing teams. Well, unfortunately, when a guy's named David Letterman and he's got a show the next week, he puts an actor on stage. I'm at home watching TV and this guy comes out and Jim Keys, CEO, 7 11. I'm going, what's up with that? And the guy comes on stage and says, dave, congratulations. Thanks for helping us feature Seven Eleven's free Slurpees. Anybody that goes into a seven Eleven gets a free Slurpee.

[B]

Whoa.

[A]

Well, of course, this caused chaos. The company wasn't prepared for it. People all came into the store and literally that triggered the realization that this is so popular. Why don't we just do this? So, so what started as a joke on 711 day with David Letterman being upset at us for stealing his race car driver ended up being a good thing. And we put they. And the company ended up putting the small cups in.

[B]

Smart.

[A]

Yeah.

[B]

Wow. So you turn a negative into a positive.

[A]

Turned a negative into a positive.

[B]

What do you say afterwards?

[A]

Well, it was funny because he. He. Then he did this twice with 7:11. First he did it with free Slurpees. A few weeks later, he came back with free hot dogs. Well, now the lawyers, of course. Yeah, maybe it's not a good idea.

[B]

Those are a little more expensive than Slurpees.

[A]

Exactly. But ironically, I had already left the company by now.

[B]

Okay.

[A]

And. But he still used this guy, Jim Keys CEO, and every time a company, Carnival Cruise Lines toilets were overflowing. It's Jim Key, CEO of Carnival Cruise became a bit. Oh, yeah, he had it going for like 10 years. Damn. It was his story.

[B]

He was petty with you.

[A]

He was petty.

[B]

He was really mad. You took Danica. Shout out to Danica. She's been on the show.

[A]

Yeah, yeah, yeah, she's great.

[B]

Yeah, she's great. Yeah. Hot dogs shout out to Costco because they kept the same price for 22 years.

[A]

Pretty amazing.

[B]

$50. They're obviously losing money on that at this point.

[A]

That's a classic class leader, but it's a Costco looks at as a service because people love the hot dogs and they love to come in and.

[B]

Yeah.

[A]

And let's face it, they're going to buy a lot while they're there.

[B]

Oh, yeah. Well, just their food court in general, all the prices are super reasonable. You're not spending that much and it's pretty good meal.

[A]

Yeah. I'm a big Costco customer.

[B]

I love Costco.

[A]

I get teased because, you know, half my wardrobe comes from. They have. They have great value, they got good clothes. Buy my Levi's there.

[B]

I buy my socks, my underwear. Yeah, sometimes some. Yeah. Apparel and interesting business model.

[A]

Too much information. You just told the whole world that you buy your underwear at Costco. It's not going to be good for.

[B]

Yeah, yeah, nah, but interesting model because they don't make high margins.

[A]

No, I know, I know.

[B]

Membership model, they.

[A]

That membership model works and Costco did a really, really good job. I mean, think about competing with Sam's and Walmart. They've done quite well.

[B]

Yeah. I wonder how Walmart's doing these days.

[A]

Walmart, I think, is doing well. I've done a lot of business with Walmart over the years. A huge respect for Sam Walton, when he came in, what he started, the culture he built and they have a fabulous corporate culture there, but they, they suffer from being big when, when you're as big as Walmart, you have a giant Target on your back and it's. And it's tough because people are going to. To challenge virtually everything you do.

[B]

Oh, yeah, yeah. I know. The theft was a big deal, right, with Walmart and Target.

[A]

Yeah. A little bit of a challenge. But, you know, Sean, a lot of that stuff, retailers, I've been through these cycles throughout my career and cycles come and go and we went through a really tough time during the pandemic and crime went through the roof and retailers suffer the brunt of that challenge because people are desperate in a way.

[B]

Yeah.

[A]

And they will do some pretty stupid things, but, you know, at the end of the day, these things will pass and a good retailer will find you don't have to lock up the whole store. You build trust with your customers. And ironically, I used to have some stores in the toughest parts of town with the lowest amount of shrink.

[B]

Really?

[A]

Yeah. Because what the trick was, if you keep that store well, you hire great staff, the neighbors know them, the store is clean. That store becomes almost a sacred treasure of the neighborhood. They don't want to mess it up.

[B]

Right.

[A]

So they'll defend their own store and protect their own store from others who might come in and want to want to do damage.

[B]

100%. Yeah. I'm big on energy and big on environment.

[A]

Yeah. It really does work. And again, when you're a big company, sometimes you don't see that you lose that, that people touch and the importance. But I don't care how tough the neighborhood is, you can make it work with the right people and the right products in the right store environment.

[B]

Yeah. So obviously self checkout was pretty revolutionary. Do you see AI being part of retail moving forward?

[A]

Yeah, I, I think is going to do a lot for retail. I think there's some vulnerability though. A lot of people when new tech comes, they want so badly to embrace it that they'll try things that I call tech for the sake of tech.

[B]

Yeah. Too fast.

[A]

Exactly. Well, or they, or it's gee whiz, stuff that maybe looks good but doesn't really move the needle on the business. I do think tech will help us significantly in being able to manage inventories. We were at 7:11 very early in the idea of using technology to empower the store manager, store operator to make much better decisions about things like product inventories and in stock capability. AI will be able to do a lot of that thinking for them, but never replace the person. Here's the difference. The computer, the AI that's the best systems in the world will know what's selling and what's not selling. But that store operator who's there talking to the customers, they're the only ones that really know, you know what, there's construction that's going to start in two weeks on this street. It'll really be hard. By the time AI realizes that construction has happened and is having an impact on the sales, by then it's too late. The operator with the eyes and ears and the pulse on the community empowered with AI can do a far better job than just the computer alone.

[B]

Yeah.

[A]

So I don't really worry about the future of AI taking away all these jobs. I think AI is going to supplement jobs and really help people do a better job. But it's hard for Us to eliminate the importance of that person. And you know, it's the story I said a minute ago. Yeah, the neighborhood, that store is part of the neighborhood and that person in there has a relationship with those customers. It's a very, very valuable element of retailing that's easy to overlook.

[B]

Yeah. So you still value that human connection.

[A]

Exactly.

[B]

With your businesses.

[A]

Exactly.

[B]

How has your leadership style changed over the years?

[A]

I've got a different point of view on leadership. I, I don't think there is one leadership style. There's a lot of people that teach servant leadership, this kind or XYZ leadership. I believe leadership is all about change and all about learning to adapt. Because the reality is, as I said, change equals opportunity. Things are going to change, people are going to change, systems are going to change, customers are going to change. The leader must be able to adapt to those changes in order to effectively lead. Unfortunately, too many leaders get stuck in a model that may have worked in a robust economy and all of a sudden the markets collapse. They have to pivot.

[B]

Right.

[A]

And they're, they're just unable to do it because they're used to one leadership style. One management style.

[B]

Yeah. Because a typical one I see in big companies is like a fear based style. Right?

[A]

Yeah.

[B]

Like the employees fear the, the boss or whatever.

[A]

Yeah, yeah. That's just not just in companies, by the way, that, that's pervasive in society today. If you think about it, that's everywhere.

[B]

But that's not an optimal working environment in my opinion. Right.

[A]

It's not an optimal working environment. It's not an optimal societal environment. Right. And unfortunately, the, the change in availability of technology with the Internet and social media, etc. Etc. Has I, I think accelerated this propensity of fear. I mean, think about it. You turn on any news channel or just flip through social media.

[B]

Yeah.

[A]

It's a fire hose of they're coming to get you, look what they're going to do to you. They can do this, they can do that. And you know, the irony is fear is our worst enemy as individuals and as a society. What are we afraid of?

[B]

Right.

[A]

With knowledge, we can accomplish anything. In fact, I quoted Yoda in the book.

[B]

I love it.

[A]

Yeah, well, it's better to quote Yoda than to quote ancient philosophers because people don't care what ancient philosophers say. They care what Yoda says. Yeah, but he was talking to Luke about the importance of. Well, about the force and about fear leading to the dark side. Said fear leads to the dark side because ignorance leads to fear. And fear leads to anger, and anger leads to violence. And that negative cycle. We're there in so many parts of society, so many parts of the world in this cycle of fear and anger that is fixable. His advice to Luke was use the force, which to me is kind of a metaphor for faith. I don't care which faith, but a faith in something, a belief in the universe or in God. He encouraged Luke to use the force and knowledge. And those two things were the antidote to that negative cycle, because he could turn understanding and knowledge into hope and into peace.

[B]

I love that.

[A]

Yeah. Isn't that cool?

[B]

That's so cool.

[A]

I mean, I was in Star Wars. It was right there. If you think about the messaging behind that, that we're in control of our own destiny, and if we have a belief in ourselves and we learn how to learn, we can overcome virtually anything and we have nothing to fear.

[B]

Yep. That's such great advice, because knowledge is pretty accessible these days. You could go to your local library, you could go to YouTube, and you could use that to escape your negative environment.

[A]

That's exactly right. That's. That's really the message that I've been out talking about, that. That today, technology, the advantage of technology is, you know, I have right here in my pocket, a portal to unlimited learning.

[B]

Right.

[A]

So if I choose to be led around by a bunch of perceptions, I'm vulnerable to that. And it may make me angry, it may make me want to fight. Alternatively, I can use that portal to unlimited learning, and I can find truth, maybe hard, sometimes, may have to really work at it, but the truth is there. And if we have the personal discipline to seek the truth, then we can replace our own anger and our own propensity for aggression or reaction. We can change that with what I like to call relentless positivity. I'm a positive guy. Why? Because I don't have any fear. And I know that I can learn anything to overcome any challenge that somebody might throw at me.

[B]

Love it. Yeah. That's a great mindset to have, because a lot of people do deal with anger, but you could channel that in the right way.

[A]

You can channel it the right way. Yeah. And think about, as an entrepreneur, it can kill your career as an entrepreneur. You can't allow that fear to creep in. You can't allow that anger to creep in. It's that relentless positivity that will make you successful as an entrepreneur and, you know, outside of the business world.

[B]

Yeah.

[A]

It's just a good, good way to live.

[B]

Absolutely. Did you ever have Any struggles with ego because you had all this success?

[A]

I, you know, I, I, I like to think that I know where I came from. So for me, everything was upside and I know I could go back if I had to. So I, I think that helps keep me humble. But, but I have struggled. I've had people say, hey, dude, you think you know everything. You're so arrogant, right? I mean, because confidence can be perceived as arrogance.

[B]

Yeah, there's a fine line, right?

[A]

Really fine line. But, but here's what I learned in, in researching for the book, I, I found Norman Vincent Peale, right? He was a old time preacher, wrote the Power, the Power of Positive Thinking. He was a big influencer of the day, right. And he was big on confidence. But he preached in equal amounts the importance of humility because confidence and humility have to go hand in hand to avoid arrogance. But his definition of humility was really interesting because it wasn't humility in the sense that, oh, gee, I'm not so smart, you know, blah, blah, blah, not self effacing. Which is fine to be self effacing. But he said true humility is when you're smart enough to know that you don't know everything and that every other human being walking on this planet has something that you can learn. And if you just always try to learn from them, then you're going to stay this side of that line of arrogance because they'll know that you don't know everything.

[B]

Wow.

[A]

Isn't that cool?

[B]

It's very cool, yes. You got to get different perspectives, right?

[A]

You got to get different perspectives. And you may not agree, you don't have to agree, but to be able to entertain another thought, right. It's really important.

[B]

And what comes to mind when you're talking about this is politicians, right. Sometimes they lose touch with reality because they're so in their bubble, they're not getting different perspectives.

[A]

Exactly. And, and we're caught up in a, in a time when there is a perceived strength around sticking to your position even if it's wrong. I call it in the book, I called it militant ignorance, right. Where somebody knows something's wrong. But, well, that was my position. I don't want to be thought of as a fool.

[B]

I used to do that. It was a terrible habit.

[A]

Yeah, no, everybody does it. We're all, we're all. But, but that's where, that's where confidence comes in. If you have the strength of conviction yourself as a politician or as a business person or just a, a guy on the street, absolutely. If you have that strength of condition of conviction, then it's okay to be able to say, you know what? I said XYZ yesterday, today I have more information. And now I'm going to say something different. But that's because I'm armed with knowledge and more information.

[B]

Yeah. I love when people open up like that, too. It's a good sign. For me, it is in business and friendship.

[A]

Exactly. Good way to pick your friends.

[B]

Yeah. Where people find the book and keep up with you, man.

[A]

I'm out there. James.Wkes.com I've got a website. They can order it. It's available on Amazon, Barnes and Noble, all the online sites. And I've got J Keys, author is my social media handle on TikTok and Instagram and others. And, yeah, I hope people will help me spread the word because I think there's a. I think there's a message here that can help all of us. Whether you're in school and, you know, you want to do a better job academically, whether you're an entrepreneur, you want to use learning to succeed and build confidence. I think there's a good message here.

[B]

Absolutely.

[A]

Share it.

[B]

Yeah. We'll link everything below. Thanks for coming on today.

[A]

Thank you, Sean.

[B]

Yep.

[A]

Appreciate the opportunity.

[B]

For sure. Thanks for watching, guys. Check out the book. Check out his site. See you guys next time.