How “Retail Apocalypse” Is Misunderstood

In this episode of Industry Focus: Consumer Goods, host Emily Flippen has Motley Fool contractor Dan Kline in the studio to talk about the "retail apocalypse." Dan has firsthand retail experience and provides some great insights on how things work behind the scenes. They explore the reasons behind shop closures and what are some best practices to prevent them. Find out all these details and much more in today's episode.

To catch full episodes of all of The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Feb. 18, 2020.

Emily Flippen: It's Tuesday, February 18th, and I'm your host Emily Flippen. It is such a treat today, because not only do we have Dan Kline with us, but we have Dan Kline in studio with us.

Dan Kline: It's always fun to be here, but it's double fun when it's someone -- so, I feel like I've known you for years, like, you've been here a couple of years. I've always been told by Chris Hill that you're the person who's most like me that I should most listen to on the podcast. So it's been very exciting that we've gotten to do three shows, maybe, in the last couple of months together, but to do one in-person, I find -- and, listeners, you can tell us this, I find that the chemistry leaps like, you know, you go from slowly building a chemistry to when you can see someone's eyes and do a show together, that everything we do when I'm not here, when I'm randomly in whatever tropical island I'm usually on -- that we will do better shows.

Flippen: Yeah, try not to dive into cruises again for the millionth time with you, but I do feel extremely jealous of your life down there in Florida, right?

Kline: West Palm Beach and going to Cozumel in March.

Flippen: Oh, wow! So what is bringing you up to the dreary land of D.C., where it is now cold and rainy?

Kline: So I try to put some face time in at the office. You know, I am a Motley Fool contractor, so I have a little bit less of a direct connection to the company. And this is a lesson for all of you who are contractors or remote workers: Sometimes if they don't see you, they forget you exist. So I work as part of two different teams here, plus the podcast, and just sometimes, whether it's your boss or your coworkers, they look, and it's like, "Oh, yeah, Dan is here, maybe he could do this." So yesterday, Matt Frankel, another Industry Focus contributor, and I shot a bunch of Instagram videos for Millionacres, our real estate site. That's not something that would have come about had we not physically been here. And if it works, maybe it'll become something we do, part of our job, part of something we do for fun. Matt and I like to talk to each other, so who knows.

But the real reason is, we didn't realize the office was closed Monday, and we booked and they comped us at MGM. We're both gamblers, as we've talked about a lot. We're actually doing a show with Nick Sciple next month on gambling. They gave us two free nights, which, it's very easy to get free nights in Vegas, it is very hard here in Baltimore to get free nights. And we both went, "Well, what meetings can we schedule Monday to make it worth our while?" And you'll hear next Monday's Industry Focus, Matt taped a really excellent interview, and we did just enough stuff to be able to sort of say to our significant other, like, "Yeah, it's totally work. There's a reason to be here." [laughs]

Flippen: [laughs] Well, I can't imagine how busy your days must be while you're here. So I appreciate your jumping on with me. It's always a pleasure.

Kline: Always happy to come in.

Flippen: And this is a topic we're going to talk about today that I know is, say, close to your heart, that's a strong way to put it. But we had talked about it a lot over email previously, thinking about when the best time to kind of get into this topic -- I guess, the topic of the retail apocalypse -- is. And I know that you have some strong opinions about the...apocalypse is such a strong word, but --

Kline: So here's the thing. I'm a journalist by trade. And I think the problem is, when you don't cover something regularly, when you are coming to the retail apocalypse from "The Macy's in my town closed, other stores I've heard of have closed, this must be a disaster for retail." And the reason for it is, clearly, Amazon; people are shopping at Amazon. And I'm not going to totally say, of course, people shop at Amazon and some shopping is gone there. But you will see things misreported as much as, I've seen the number, half of all sales are happening online. That is not true; 13% of sales -- not including autos and the vast majority of cars are bought not online -- 13% of sales are taking place online. That number has ticked up basically a percentage point a year. So what it exposed is badly run retailers.

So let's take -- and I hate to pick on J.C. Penney (JCPN.Q) and Sears (SHLDQ). But if you go to Sears, Sears sold products that it used to have exclusives on. So you no longer need to go to Sears to buy Craftsman tools -- I forget if it's Lowe's or Home Depot. I think it's Lowe's. You can go to Lowe's, and they make Craftsman Tools, they have the same rules that Sears had with warranties. So they sold away something that made you go in. They dismantled some of their home services. They stopped having the money to turn over their merchandise.

And one of the examples I'll give -- and I think I've actually used this on air before -- is, I went to a JCPenney and I needed size-10 slides. Any brand, any price point, I was going to a water park the next day and I needed -- and it was a holiday, so not a lot was open, and I needed size 10. And I walked in, and JCPenney had seven different kinds of slides, none of them in the size I needed. Because when you get tight on money -- and I know this from my retail days -- you can't order until you've hit below a certain inventory on that product. So maybe your reorder point with Nike is $10,000 for an individual JCPenney to place an order. I'm making that number up. But that was at the toy store, like, Hasbro was $5,000.

So we could bring in the initial $5,000, but if we sold out of Candy Land, we couldn't place a $2,500 reorder, which was the minimum point for the reorder, because you're tying up $2,500, and you don't know what's going to sell aside from Candy Land sold well. That's what happens at JCPenney and Sears. You go in and it looks like they're well-merchandised, but you'll be like, they're out of extra-large and large, they only have small and medium in all the men's shirts. That's super-awesome for my son, who is a small or medium, less good for me, who isn't.

And so, you start to see all these little cracks. So people say retail apocalypse, but the apocalypse is that they didn't invest in their stores, that other people did it better. That there are better ways to buy many things. Target has been absolutely disruptive in creating clothing brands that would take away from Sears and JCPenney and what they sell. If I'm buying a basic black polo shirt and I could buy that at Target, where I'm already at, they're probably going to get that business, and I'm not going to go to the mall, and I'm not going to do certain things.

So you see all this reporting of the retail apocalypse, and it's based on sheer numbers. And here's another number people get wrong. There's going to be 9,000 store closures this year; what will happen to the malls? What they don't report is there are going to be more than 9,000 store openings. The difference is, when a Macy's closes, it has a material effect on a lesser mall. An "A" mall can say, "Hey, let's put a skating rink in, a co-working space, a hotel, residential, a gym, a supermarket, like, whatever enhances the value of our plaza," which is very healthy, because all of those new additions are stores like Casper mattress and UNTUCKit and Peloton and things that are going into top-tier malls.

So is there a retail shakeout? Yes. Bad malls are dying. Toys R Us was always in the bad mall. Like, it was always in the shopping plaza that has a supermarket that's not a name brand and maybe it had a Sleepy's, like it was never the best place to be. It didn't have good fast food; it had a Subway. Those are very hard spots to rent. And the reality is, those probably need to get knocked down and turned into houses or parks. [laughs] Hard to make money on a park.

So you're seeing this narrative of, "I used to shop at Payless, now there's no Payless, that's because Amazon or Zapatos knocked Payless out." And the reality is, no, Payless knocked Payless out. Toys R Us closed because they were purchased in a $6 billion leveraged buyout that didn't give them the money to make the changes their CEO knew they needed to make. The new Toys R Us's that have launched are interactive and there's all sorts of stuff to do. And, again, I ran a toy store, it was interactive, had all sorts of stuff to do, had a huge -- still has -- a huge model train setup, had places for people to build things. We would do LEGO events. Readings in the store for parents with little kids. That's what Toys R Us needed to be, but when all your revenue is going into servicing your debt, you can't change, and it becomes a self-fulfilling prophecy.

JCPenney, Jill Soltau, has great ideas about yoga studios and all sorts of things she can do in JCPenney. Those things cost money, and she doesn't have any money.

Flippen: Yeah. So when I think about traditional retailers, I think JCPenney and Macy's -- you kind of hit it on the head there -- I think about the fashion industry and how maybe the fashion industry itself has been disrupted over the past decade or so. Because you see the success of companies like TJ Maxx and Marshalls, Ross; companies that are discount clothing retailers that are still driving a ton of foot traffic into their stores at a lower price point but not offering a particularly good experience. I mean, you kind of have the treasure-hunt experience, right?

Kline: Well, yeah, see. So I hate that experience. I had the straightest Marshalls story of any person. Five or six years ago I needed a suit, I didn't know Marshalls worked that way. I went to Marshalls, they had a suit in my size, tailored -- like, basically fit me off the rack, other than you have to get the pants finished at the bottom. And I bought it and it was cheap, and I thought that's how Marshalls worked, like, you went to Marshalls, they had what you wanted in your size. I then went to Marshalls again because I needed a dress shirt, and they had -- like, they have white, they always have basic color, they didn't have whatever color I wanted, and it was a miserable experience, because I don't want to treasure hunt. I don't go to the mall going like, "I wonder if there is stuff I like here?" I go to Marshalls because I need socks, so.

But, yeah, for most people, Marshalls, Costco, Five Below, that's shopping as entertainment. And, yes, there is some value to finding something you need, but there's also value -- and my son went through a period that when he was into designer labels, "Oh, my God! I found a Supreme shirt at this price point." But do you like the shirt? And he'll be, like, "Well, no, but it's a Supreme shirt and it's only twelve..." And I'm like, this is a bizarre way to shop.

Shouldn't you shop, like, I need a shirt, I like the shirt, the shirt fits? But obviously, a lot of people shop that way. And I understand, because I like going to Five Below. If you go to Five Below, you don't know if it's going to be like Japanese candy or sweat pants. And there might be something you want there, and it's going to be $2.50, or at least it's going to be below $5. So they have a few things now. They have a $10 and above section, but that section --

Flippen: [laughs] ... they're cheating.

Kline: ... well that section is, like, board games that will be $50 for $15. So yes, they've broken their rules. And Costco; I will go to Costco because I know I need bulk toilet paper for our vacation home, so someone doesn't get there at 2:00 in the morning and there's no water or toilet paper or toothpaste. So I go for a reason, and then maybe I come back with an 8-foot teddy bear or something. I've never fallen for that one, but I've come very close to buying a kayak despite not having any place I could use a kayak.

Flippen: [laughs] Yeah, when I think about going back a decade, though, knowing what I know today, is there a way that you can save Macy's? Is there a way that you can save JCPenney? Because from my perspective, it's always been that the merchandising has been what killed them. They were so tied to their inventory that they had absolutely no flexibility, whereas these other stores, like Five Below, like Costco, like TJ Maxx, the inventory was almost second. They got what they got, and they either have it or they don't. But like you mentioned, when you go into a Macy's or a JCPenney or Nordstrom, you expect them to have a size-10 shoe, and if they don't have it, then you're like, "What the heck?"

Kline: So I put Macy's and JCPenney in different baskets. Macy's is largely pulling out of bad malls. There's four or five malls near me, but there's a mall on Boynton Beach, Florida, that has a Macy's -- oddly, not one of the ones that's closing. But when you walk around that mall, it has stores that aren't chains and way too many stores that sell cell phone cases or hats. Like, those aren't businesses. So it makes sense to close that Macy's. And if you look at a good Macy's -- Macy's is still profitable. So Macy's is making strategic decisions to close stores.

And there are some things -- now, if you tell me five years from now, there will be an easy way for Amazon to measure me and sell me a suit and have it fit and work and I'll like it and I'll know what the fabric feels like. But if I'm going to buy a $500 suit, I am going to Macy's, and a mean older person who doesn't want to sell me a suit at a good value -- it's always the same person -- will put me in a suit and make me feel bad about myself, and I will buy a suit. And then, somewhere during that process, I'd be like, why didn't I just spend a hundred dollars more and go to Brooks Brothers, where they would probably be nice to me? But that experience still matters. So I think with Macy's, they are in much less dire shape. It's much more about rightsizing their retail. They are going to strategically open smaller stores in lifestyle plazas.

JCPenney -- Jill Soltau has great ideas but she got there too late. So unless there is a multibillionaire benefactor who sees the value of JCPenney. And I don't expect this to happen, but transforming JCPenney with new labels and more fast fashion and more reasons to go to the store is great, but every move JCPenney has made that seemed like a good idea has been executed badly. And the example I'll give is toys. I thought it was very smart when they said they were going to have a full-time toy section once Toys R Us closed, because toys make kids happy to go to the mall with Mom and Dad. And there's generally not a good toy store, there's usually a bad toy store in most malls. If there's one at all, it'll sell calendars and a few toys, and it's just never that great, since KB Toys Stores, which was a mall-based chain, closed many, many years ago.

But what JCPenney did is get whatever toys someone would sell them and put them in a pile in the middle of the floor. And I'm exaggerating a tiny bit, but it wasn't well merchandised. They didn't go out and find someone like me who worked in the toy industry and could tell them what the movers are. So they might on one hand have, like, one toy that needs to be sold, a board game that costs $75, no one is going to buy that on a whim, you have to be sold that by someone knowledgeable. It's why Barnes & Noble struggles to sell high-end board games. But if they happen to be near a local independent toy store that can't discount as much as Barnes & Noble, they might sell more in that market because the local toy store did the work. But they would just have random, not necessarily the right toys, very badly merchandised. So they took something that could have been profitable.

And certainly, while it was not a driver for Walmart this quarter, they specifically cited toys as a weakness. Toys has generally been a no-margin traffic driver, and it would have made sense. Same thing with appliances; there was some niche to sell appliances with Sears going out, but even when the JCPenney's that added appliances, did not add the appropriate expertise to sell you and upsell you. Sears, say what you will, has experienced appliance salesmen.

So you walk in and you can say...And Nick Sciple was at my vacation home and my washing machine died or my dryer had caught on fire and Nick called, and he said, "Does it always shoot flame out the back?" And I said, "No, probably don't use it." And I didn't go to Sears, because there wasn't one near me, I went to Best Buy. And I told Best Buy, I said, "Well, it's a vacation home. The dryer is used to do sheets, like, twice a month, towels, it's not heavy use. Can I get away with the cheapest one?" And they said, "Yeah, absolutely. For what you're describing, you shouldn't buy the $600 one where we can watch your stuff tumble around." And it was the salesman who knew what he was doing or she was doing, I don't remember which, and it was a good experience, and it made me feel good about what they were recommending.

Now, if they had any reason to recommend the more expensive one, they certainly would have, and that would be the smart thing for them to do. JCPenney, it felt like, "Oh, if you know what you're doing, you can buy this, and otherwise ... "

So most struggling retailers, if they have cash in the bank... GameStop, it's another one we talk about on the show a lot. I don't feel there's a need for GameStop, because video games are downloadable, and that's going to get better. And even if I buy a physical disk in GameStop, it's still like four hours before I could play it, because it has to catch up. So it's not a good experience in any way. It doesn't shortcut me getting to play the game. And sometimes it takes so long I forgot I bought the game, and then it's like three months later before I touch it again. So most of the struggling companies know, but Macy's probably.

Flippen: So I want to pick your brain a little bit more about the e-commerce aspect of this retail apocalypse. Again, I hate calling it that. But before I do so, I want to remind all of our listeners that if you're looking for more stock ideas and recommendations, you can always check out our Stock Advisor service. You'll get Stock Advisor recommendations from David and Tom Gardner every month, Best Buys Now and a whole lot more. You can go to if.fool.com. We have a special 50% discount just for our listeners. So check it out at if.fool.com.

So Dan, let's talk about e-commerce here, because you named some companies that I'm interested in thinking about what their future looks like. Notably, you mentioned Walmart, the fact that they reported today they didn't have a great quarter. It wasn't disastrous, but their online sales was by far the biggest driver of growth. And the same has typically been true for companies like Best Buy. So wouldn't that make an argument for more purchases moving online?

Kline: So that doesn't change the overall percentage, but what is becoming squishy in the omnichannel world is what is a digital sale? And different companies, I am pretty sure, account for it differently, but largely the definition would be the actual transaction was completed online and it was delivered. The reality is, now you can walk into a Best Buy, have someone help you, decide that you don't want to put the television in your car, order it, and they will bring it to you. And you could then walk over to a counter and pay for someone to set it up, or you could go home and order that online.

So I think the definition of what a digital sale is, I don't think you should look at those breakdowns, I don't think they matter. Because if you say the function of a physical Walmart has become more about being a distribution hub for grocery delivery, curbside pickup, some digital orders, the ability to -- in the case of Amazon and some of its retail locations, Whole Foods mostly, their ability to do same-day and one-day orders. If the value of a store is no longer foot traffic, you know, same-store comparable sales, because arguably you could have a store do 20% less. Like, imagine if Walmart reported a 20% drop in same-store sales. There would be analysts throwing themselves off buildings -- not this building, because we're not like that -- but people would flip out. But if a paragraph later, it said, "Oh, by the way, each store processes 50% more goods in addition ... You know, there's a 20% drop in register transactions, but we are sending stuff out the back door that was paid for online, so we're booking them as online sales. You have to look at the total picture and the total value of a store. And I think you're going to see a lot more repositioning.

One of the things Kohl's has done is change how much space is devoted to merchandise and how much space is devoted to back-end processing. I think you're going to see that transactionally at grocery stores, Florida is full of Publixes and there is a 10,000-square-foot system, I saw at Shoptalk last year, that can pack all your orders -- mostly robotic, a little bit of human intervention -- that could serve like a four-mile region. A 4-mile region is maybe like, I don't know, 20 Publix in most of Florida, which is very densely populated. You have to decide what 10,000 square feet you're going to take away to do that. It doesn't fit in your existing back-end operation that is designed to stock store shelves -- that's hard to say, "stock store shelves"; I'm not going to try that again. So you might see changes in how retail is done. We just got a Sur La Table in my neighborhood. And there is a huge section of it devoted to classes. They're only going to teach classes a couple days a week. But my guess is it is a revenue-neutral/maybe a revenue driver use of the space that puts people into the store, and if one of them buys a $1,200 toaster it was probably worth having a $10 "How to make toast class" or whatever the class was in.

So you're going to see a lot of repurposing in, that number -- what's a digital sale, what's a physical sale? I don't think that's going to be an easy Bureau of Labor Statistics number anymore.

Flippen: And there's a story that you passed on to me last week, I believe, or early this week about Staples. And Staples is a retailer that we don't think about all that often, but the story you passed along was Staples' kind of doing -- I wouldn't call it the Sur La Table thing, I feel like that's probably throwing Sur La Table under the table. But the problem is that they're rebranding their stores into the Staples Connect, which is like this lounge working space.

Kline: Yeah. So it's only six stores. And this follows Office Depot doing similar things. And full disclosure, I have a cousin who works in marketing for Office Depot, not that he's in on any of this decision-making, but he is reasonably high up, so it's worth saying. But what they've done with Staples Connect is they're putting in a co-working space. And that makes sense, because Staples is generally in a good location. It's usually not in the top-tier mall, but it's often on the main drag in a town.

They're also adding in -- and I think this is very unique, nobody else is doing this, a podcast studio. And I like that, because as someone who does podcasting from home, it's actually sometimes difficult. Like, maybe my building is doing maintenance that day, I have an office space -- but maybe the office next to me is playing music and doesn't want to turn it down, being able to have dedicated bookable podcast space where you pay, whatever, $30 per half hour to use it, is value. Having co-working in a strip mall that's well located as opposed to in an office building, there's built-in parking, there's built-in restaurants, there's a lot of good factors to it.

And if you're Staples and if you're Office Depot, if you're a lot of retailers, you have to look at it and say, "I have this footprint. How else can I make money off it?" It's one of things I've often talked about with Barnes & Noble. When I ran the toy store, we had -- and now they have a beautiful second building -- but we had a basement devoted to game play. And you could buy your collectible miniatures, take them downstairs, out of the package, and go play. And we had all the tablescapes and all the scenery and all the things you needed. Barnes & Noble has an empty CD section, in almost any one of its stores, that's like 6,000 square feet. You could own gaming. So you could probably add $0.5 million in annual sales to every Barnes & Noble by hiring one $30,000 dollar-a-year kid who knows this stuff to work from 4:00 in the afternoon to midnight, and run this. And you'll sell an awful lot of candy on top of that, and Starbucks coffee.

And I think more stores need to really think about, "What can I offer that's experiential, that fosters the use of our product?" So you can't just be a store that sells musical instruments. Like, Walmart has music and arts in some of its locations, where you can go take music lessons inside a Walmart. Well, that gives Mom a reason, Dad a reason, to go to Walmart. And they might do their grocery shopping there, when otherwise, they would have gone to the grocery store or to Target or used Instacart or Shipt or any of the 17 other services you have for that.

So it's all about, it's harder to get me to leave my house than it ever has been. I can order anything pretty much just with my phone. So you need a draw. Okay, I go to Whole Foods because Whole Foods has a really good coffee counter, and that doesn't travel that well if I order from it. Or they do a sushi counter and hot lunches and other things that I might get off. So instead of going to Publix, which is cheaper, I go to Whole Foods. That's going to be the future of retail, is figuring out reasons, like Staples is trying to do, probably too little too late, to get people to come to Staples. If your office is a Staples and you need a pen, where are you going to buy it?

Flippen: That's a good point. And while we're on the subject of disruption in industries -- not to leave it there -- but there's a big news that came out. I know that Dylan covered this in Industry Focus on Friday, but that's the merger of T-Mobile and Sprint. And it was essentially going to leave John Legere, the outgoing CEO of T-Mobile, an open candidate for new ventures in the future to disrupt.

Kline: So interestingly, John Legere, a few months ago, announced that he was moving on. And there was a lot of speculation at the time that he was going to WeWork because SoftBank, which owns Sprint, has a major stake in WeWork, and that would make sense. But that's not the case. He may know where he's going, but we don't know where he's going. So the question we asked each other as we were Slacking back and forth this week was, what industry would we like to see John Legere in? And I love -- I mean, we talked about my issues with their Super Bowl commercial, but for the most part, he's my favorite CEO. He's brash without being a jerk. So he's doing that sort of like PT Barnum/Vince McMahon character but without being mean about it. And he's very customer focused. He's broken a lot of things at T-Mobile that were bad about the industry.

So where would we like to see him go and basically force the industry to be better? In my example, I want him to go into the rental car space. And I see no possibility that he will do this. But when you rent a car, which I do at one of the airports near here -- I won't throw the airport under the bus. Every time, every month -- I'm here once a month, sometimes more -- you can either opt to join one rental car company's loyalty program, book through them at a much higher rate, but have a good experience, or you could do what I do, and book by rate through -- I use Southwest Vacations, but you could use Priceline or probably other discount services -- and you might pay, I think I'm paying $18 a day for my rental car versus it was $65 to book direct or through Amex or through some of the other options. But I have to wait in line. And if you have ever done a rental car, no person in front of you in line has ever rented a car before. They don't have a license. They don't have fingers. They don't have a credit card. They don't know how any of the things work. So it always takes, like, 25 minutes per person.

And I look at it and I say, "Couldn't somebody force this?" Like, could John Legere come in and say, "Okay, fill out all this once, we'll have all your stuff on file." Even though you have to wait in line, you can short-circuit a lot of that part. Like, what's your insurance company? Do you want the supplemental insurance? Do you want to get all of those things? I know those questions are coming, so I just rattle through them.

The other thing that I think that John Legere can fix in rental cars is what I will call deceptive practices. And the example I will give is, sometimes when you're in line and they say, "Hey, I see you're in a compact car, would you like something bigger? The upgrade is $10 a day." Sometimes they're doing that because they have those cars and they have the cheaper car you want, and maybe you'll spend the $10 and it benefits them. Usually that is not my experience. Usually they will try to get money from you, and then you'll walk to the lot and realize they don't have the size you rented. And when you ask the guy in the lot, "What do I do?" He tells you, "Oh, just take a midsize." So they're trying to sell you something they fully know you were going to get for free, and it is disingenuous. It is just not correct. So I would like to see John Legere or someone go into that space and figure out how to make it as easy as possible. I will pay slightly more for convenience. I will not pay two or three, maybe even four times as much, just to have a good experience.

Flippen: I don't want to derail the conversation too much about rental cars, but you speaking reminded me of the one or two times that I have rented a car. Once, when I was traveling abroad, which was a fine experience because it was abroad, it was in the U.K., everything was much simpler over there. But it reminded me, when I moved within the U.S. here, I used U-Haul, which is owned by a company called AMERCO. And that process, the U-Haul process that AMERCO has lined up, is outstanding. I don't know if you've ever gone through the process yourself.

Kline: Oh, many times. It takes 2 minutes.

Flippen: Yeah. Two minutes. You download an app. I did everything without ever seeing a person's face, which to me is the best. If I could do something without having human interaction, I will. I mean, I went in, I got a code, picked up the key, took the car, dropped it back off. It was all-in-all a fine experience. So I agree with your analysis that there's probably room for disruption there.

Kline: And they're letting you rent a 32-foot truck or 28-foot truck. They shouldn't be letting you rent that. [laughs] That's the breakdown of the process. There's no test. Like, I drove whatever the biggest size you could rent without a special license, from Connecticut to West Palm Beach, Florida. Straight, 24 hours. It took, like, 20 hours. Stopped for meals and gas and that's it. White knuckled the entire time. Because who knows how to drive this?

The other thing I will say about rental cars, just to further go, my wife and I have different last names. She kept her maiden name, it made sense, her first name is Celine, all the same letters as Kline, doesn't look right. So we rented a car, and she needed to be an additional driver. And she shows her license and they said, "Oh, you're married?" I said, "Yes, we're married." And they said, "Oh, do you have a copy of your marriage certificate?" And I just looked at them and went, "Oh, yeah, I carry that around." Like, I wouldn't know where that is at home, let alone have it with me. And it just became the disconnect. And eventually we had my son's passport with us, because he's too young to have a legal ID, and it's always good to have ID. And we convinced them that we were married and that we could be covered, but it took, like, half an hour. And we wouldn't have done it, except she literally needed to drive the car someplace where I wasn't going to be. And stuff like that needs to get fixed.

If I could download an app and take a picture of our marriage license or whatever to prove we're married or do whatever needs to be done. When you check in for a cruise ship, you can pre-do everything, down to, you take your picture, you scan your passport, it will be stamped on your ticket "expedited arrival." Now, I obviously get some perks because of loyalty tiers.

Flippen: Oh, we're on cruises again. [laughs]

Kline: But, like, it's an embarkation process, it's travel, very similar to a rental car. But if you do the work beforehand, you can cut the line, no matter who you are, get on board faster. So a lot of people aren't going to do that. We've experienced, there will be plenty of people that show up at a rental car counter and don't know you pretty much need to have a credit card. It's going to be much harder if you don't have a credit card. Those people are just going to take a long time in line. But those of us who are kind of savvy travelers, I mean, you're headed off to Kilimanjaro after this.

Flippen: Oh, don't remind me. [laughs]

Kline: [laughs] Yeah. This is our last show together. No, she'll be back. But, yeah, a lot of this, no one is thinking about, because they just have a good business. "Hey, the Super Bowl is in town, all the cars are rented, who cares if you wait four hours?" So they don't have to. A John Legere could force them to have to.

Flippen: Yeah. And I hope John Legere is listening to this podcast, because, to me, that sounds like a great idea.

Kline: I think he has. Based on Twitter, I think it's not out of the question that John Legere is listening. [laughs]

Flippen: Well, we'll take credit for that idea then, John, and, yeah, be sure to cite us whatever your next move is in the car rental space. [laughs] Well, Dan, thank you again for sitting down with us. Like I said, it's always a pleasure to have you in person.

Kline: Thanks for having me. Austin, thank you for putting up with whatever level of tomfoolery we've been up to today. [laughs]

Flippen: [laughs] Well, listeners, that does it for this episode of Industry Focus. If you have any questions or just want to reach us, just shoot us an email at [email protected] or tweet us @MFIndustryFocus.

As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against any stocks mentioned, so don't buy or sell anything based solely on what you hear.

Thanks to Austin Morgan for his work behind the glass today. For Dan Kline, I'm Emily Flippen. Thanks for listening, and Fool on!