Transcript
Peter Crosby:
Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age.
Peter Crosby:
Hey everyone. Peter Crosby here from The Digital Shelf Institute. Omnichannel has always felt like kind of an unsatisfying word, maybe slightly better than all the other bad options for describing what we are trying to achieve. Our guest today thinks of it from the consumer lens with the concept of seamless shopping. Michael Klein as a consultant who brings a wealth of experience as a retail buyer and merchandiser. And for the last 14 years at Adobe as global director industry strategy and marketing for retail travel and consumer goods sectors. He joined Lauren and me to talk about what is required for brands and retailers to turn that concept into action. So Michael, thank you so much for coming on the podcast. We are excited to have you.
Michael Klein:
Oh, it's great to be here. Thanks, Peter.
Peter Crosby:
So, you have such a wealth of experience, a merchant by trade. You've seen a lot of the shifts in the industry firsthand, and I love the way you talk about seamless shopping, and what consumers, they want that experience. It doesn't matter to them, whether it's in store or online, to enable them to shop conveniently where they want and when they want. And it's really a challenge for brands and retailers as they strive to build out the processes that would support that because there are siloed teams and tactics that have often been built just for brick and mortar. And so I was wondering, with all of your work across the companies that you work for and particularly for Adobe, and what are you seeing from brands as they navigate a lot of these challenges?
Michael Klein:
First thing that comes to mind, and going back to my legacy of being a merchant, there was a time in the late nineties when I was working at Harry & David, and I was responsible for the catalog. And then somebody came to me one day in 1997, 98, I think it was, and said, "Oh, you're now going to be responsible for this thing called the internet." And-
Peter Crosby:
Just like Al Gore.
Michael Klein:
Yeah. And we found a lot of the activities were being taken on by existing teams. And then we went through this other kind of cycle where you started seeing organizations, brands, retailers, start to build out teams specific for the digital space, for e-commerce. And that, I think, in some respects, it obviously made a lot of sense, but that's where a lot of this idea of having silos started to happen because you had teams that were responsible for specific channels, they weren't thinking about the customer as their experience as a whole.
And what I've started to see now, of recently, is pivoting back to that story that I had in the nineties, where organizations are realizing that if they set up teams, merchandising teams in particular, obviously operations needs to be a little bit specific, but things like marketing, merchandising in particular, you're starting to see them come under one umbrella, and the folks that are in those organizations or those teams within, are now responsible not just for a particular channel, but they're responsible for either the product assortment, the messaging, what does email look like, both from an online and an offline perspective.
So that's the first thing that comes to mind in terms of the evolution we've been through. And I'd like to think that as we continue to move forward, brands are going to retailers really take that to heart and not create silos within the organization just by the activities and the channels that one might be responsible for. Certainly underneath all of this is data. The 360 view of the customer, which is the holy grail for everybody and trying to get to this 360 view.
So much of it is transactional based, but we need to see more of, not just what you bought, but the intent, the behavior, which is very rich in the digital space, but it tends to be a little bit more lacking in the physical space, where so much of retail still takes place despite those that thought that the store was going to die. So those are some of the key challenges I see are the teams and how organizations are set up. And then the data that tends to live in a variety of systems, both for the online and the offline space, and how we start to bring that together.
Speaker 4:
And to your point about people saying that the store was dead, the majority of retail is still happening in physical stores, it's still the majority of sales for a lot of brands. And how are you really seeing brands work to create a seamless experience knowing that there's still in store shopping, it's still what the consumers want, but they also have that digital element and they want to have that seamless shopping experience between both. How are you seeing those two pieces come together?
Michael Klein:
I think there's a whole variety of ways that it's coming together. The first, probably most basic example, is what we're seeing with BOPUS buy online, pick up in store, and leveraging the physical space as a distribution center for online orders, whether it be for the customer to allow them to pick up, or using the store as a hub, is another element of leveraging the real estate and creating a better experience for the customer to get their product a little bit quicker, and how they want to receive their product. And also the return the other side of this is while we see BOPUS being or curbside pickup, because we put that all together, whether you make me physically go in the store, you just drive up and pop it in the trunk of my car if I pop the trunk, and you can just put my groceries in the back of the car.
So that's one of, I think, the more simple examples of where the store and digital, the online and offline are starting to blend together. We certainly see a lot more enablement of store associates, and I think this is happening very much in home furnishings with the likes of a Restoration Hardware. I was just doing some research and listening to another podcast, as a matter of fact, that highlighted the success of Restoration Hardware going into what they consider a more luxurious gallery type spaces, and what they're doing to enable their stylist, interior decorators, as they want to be considered. They're not store associates. They're helping you actually decorate your home, and the capabilities that the organization are giving those stylist, interior decorators, on the floor to be able to tap into inventory that is not only what is physically available in that store, but other inventories available and designs that they can take the shopper, the consumer, through when they physically show up into one of their studios.
And then fashion, fashion is... I always use Brooks Brothers as a bit of an example because many, many years ago you would walk into a Brooks Brothers store and your stylist, they had a black book or index card in a very analog format that knew what your sizes were, what your color preferences were, what kind of collar you may like, one over the other, whether it be a point collar or round collar, things like that. And now you see many fashion brands enabling their store associates, their stylist, as well with more information. And then in addition to that, within the fashion world, not only the stylist mentality is also what they're doing to bring digital screens into the store.
There are some great examples across the globe. Hugo Boss is, I think, one that has proliferated screens all over the world in their physical stores to not only provide product information, but features of runway shows, ideas for outfitting, and how mix and matching that could be. Express is another fashion brand, not perhaps as high end as a Hugo Boss, but certainly they've been testing out, over the course of some of the stores I've seen, especially in New York City, I think it was on Madison Avenue where they had a big digital kiosk and they were able to interact, and it was a very interactive self-service experience, but then that would also allow a store associate to engage with a particular consumer when they went in.
Peter Crosby:
I love what you're talking about here, Michael. As you start to talk about these experiences that are really, I think of the sort of what's happening behind the curtain to enable those salespeople to have these kinds of informed conversations. You know were talking about you've got to know real time inventory and availability or avoid putting in front of your customer something they can't have. When you think of the data that's required to understand that customer and then to link them up with products. When you think about the product information that's necessary from the suppliers to be able to link the products together in a way that makes sense, and to have that information at your fingertips on the physical store line. I'm excited to hear you talk about that starting to come to life, but I can imagine some of those things that you talked about in the first answer, about the siloed teams and the need for data, incentivizing salespeople appropriately to push these kinds of behaviors. I just think it's exciting to hear that coming to life.
Michael Klein:
Yeah, well there's a lot of pipes that need to be connected, that's for sure, in order to make this become a reality. And I think that's where, while as a consumer, we see the results of these efforts, the fruits of the efforts, but it definitely takes quite a bit of time to get this pulled together. If you think about the client telling, as it is known in the fashion world or the high touch retail world, and having that CRM type data, and connecting your loyalty program in the backend, whether it be an Epsilon, a Merkel, so many different providers of loyalty programs. [inaudible 00:12:34] is another one that comes to mind.
And being able to have the open APIs that allow me to pipe in that information to another solution like a Salesfloor, and Salesfloor is another one that I've started to see at more of the conferences, whether it be at NRF or Shoptalk that are helping enable these capabilities on the store associate floor, and delivering it directly to the store associate. When I was at Adobe, and this is a well-published case study, Adobe is right now enabling Walmart to communicate with over 2 million store associates across the globe. That has 50 different integrations that move into from SAP to even Salesforce all running through the API layer, to then deliver it to a store associate on the floor on either a handheld device or a physical terminal, POS screen. And then that's going through Adobe Experience Manager. So lot of heavy lifting. I think about the data piece as well and what is happening in the physical store.
Just recently, and only in the past week or two, Kroger made a big announcement with their expansion of the program with cooler screens. And that's going to be, I think... Well Kroger's already very much in the retail media network space with 8451, and this is another kind of generation of that retail media network piece, where now it's not just what's happening in the digital space, but now it's taken into the physical space where they can present advertising merchandise on the door of a refrigerator. They can do this on a wall, they can do it on a self-standing screen. And there's a lot of data that's sitting behind that. And that data is valuable, not just for that retailer, but very much for the brand, the CPGs, the vendors, that are working directly with Kroger.
Peter Crosby:
So I would love it if you'd... Because these examples that you're giving are so inspiring and evocative. I wonder if you have some other examples of brands that are doing this approach to really investing in this seamless shopping capabilities. Love you to run through a couple of those for us.
Michael Klein:
So the others that come to mind, Haynes brands is another one that comes to mind. And it also brings to mind the recent announcement, I don't know if you saw this, Lauren or Peter, that Nike, couple years ago, they made a big announcement that they were pulling back on their retailers, and that they weren't going to have as many retailers selling their product because they wanted to go direct to consumer. Well, they just made an announcement, I think in the past week, that Nike is actually going back to some retailers that they weren't doing business with.
So I think about Haynes, because Haynes has a variety of brands, some of us may not even be aware of it, under their umbrella where they're enabling direct to consumer, they're creating a seamless experience for their own products directly, but they're also creating great relationships with the likes of a Target. So if you go into a Target and you buy what's called C9, that's a Haynes product under the Champion brand, but you can't find Champion in a Target. So they're really proliferating their brand and allowing a consumer to engage with their brand depending on what tier level they want.
And they're understanding that, while direct to consumer is a great space to be in, the idea of having retail partnerships is not going to go away. Dyson is another one that I think does a great job with a seamless shopping experience online and offline. You can walk into a Dyson showroom and you can actually set up a... You go in there and get your hair dried with one of their great hair dryers, and they'll wash your hair and they'll show you how great their hair dryer is on Fifth Avenue. And then they've obviously got all the air purification with all the crazy air quality that's going-
Peter Crosby:
Oh my gosh.
Michael Klein:
.... on in New York. Dyson-
Speaker 4:
[inaudible 00:17:59] Boston.
Michael Klein:
Yeah. There's a product that came out with quite a bit of skepticism, which was the Dyson portable air purifier that attaches to a set of headphones and everybody was like, this is crazy. Well, you know what? People are walking around with it in York City.
Peter Crosby:
I bet they're sold out now.
Speaker 4:
I saw a huge article that was written about it and there were pictures of people wearing them all over New York City. Yeah.
Michael Klein:
Yeah. And this is not an inexpensive product, and that's where the seamless experience comes in, because am I going to maybe plunk down a thousand dollars for something I don't know, but if I can walk into a physical store, do my research online, and then walk into that physical store and have an experience like Dyson offers, then it's more likely that I might be able to buy that product and also have a great experience while I'm doing it.
Speaker 4:
And Michael, where do you see this going? Let's look five, 10 years down the road, and we have malls, we have stores, we have brick and mortar stores. Do you see the blending of physical and digital continuing to grow and just become more experiential? Do you think that it will go away? What are your thoughts for the future of the in-store element now that we're seeing all these pieces blend together?
Michael Klein:
I think the answer is overall experiential, however the caveat's going to come in is that it depends on the space that you plan. A lot of the examples I've talked about are in either luxury, highly considered purchases like home furnishings, where you are looking for that, you're willing to spend the time, and that's the type of engagement you want. But then when we go over to things like general merchandise, walking into a target or a Walmart, or going into a grocery store, the idea of experience is not going to be all about how do you keep me there and engage with me. It's really going to be about delivering a great experience that probably is much more convenient, seamless, and gets me in and out of the door as fast as possible. So I think it's going to take on different flavors really depending upon the type of product and merchandise you're selling, in particular, and what that means for that customer. And that's where we come back to the idea that one size does not fit all.
But what is important, and we've been talking about that today, is that the data underneath all of this is critical to be able to deliver on this. And whether it's your product information, or your customer information that's maybe sitting in a customer data platform, those are the critical elements to be able to deliver on this promise, is really the ability to stitch the data together. We hear so much around media networks. The other big piece in terms of data sharing, and as I think about the audience, and a lot of the brand manufacturers that may be out there, getting involved in data sharing for both the benefit of the brand manufacturer as well as the retailer, it's not going away, it's going to become more and more important, especially as we think about third party cookies going away, whenever that does happen because Google continues to threaten it, but it hasn't happened yet. But there will come a day. Apple's already done it in their own way in terms of the mobile device and what they're willing to share or not share.
Peter Crosby:
So Michael, I just want to dig in on what you're talking about there, when you talk about data sharing isn't going away, but then you confuse me a bit with Apple because I think of Apple as sort of locking down privacy, but what do you mean when you talk about data sharing, is it between brands and retailers or is it the consumer not share... Sorry, I just lost you bit there.
Michael Klein:
Sorry for that.
Peter Crosby:
No, no, it's me.
Michael Klein:
No, there are different levels based on privacy. And what's really being locked down is using my third party cookie data that would be available through a cookie and being able to then share that without my permission. That's what's going to be locked down. But once we engage with a brand, either on the consumer manufacturing side or on the retailer side, and that becomes first party data, then we have this other concept of second party data and that's when two entities, using typically a mechanism like a clean room, and Snowflake technology right now is probably one of the biggest providers of clean rooms, where the two entities, typically retailer and brand, are sharing their data in the clean room, and then the clean room allows that data to be anonymously shared with the other party without violating any of the privacy rules and parameters that you've put in for your customer.
But you're able to share traits and behaviors that can drive a better experience in personalization, leveraging governance and security and privacy. So it's not sharing any PII, none of my credit card information, or anything that's going to identify me as Michael Klein, but it's going to be able to put me into a particular segment, that then when I come back to either one of those properties, I can then be delivered a better experience because more about me, because of the enriched data from the two parties. Does that make sense, Peter?
Peter Crosby:
Yes, that makes total sense and it gets me all excited, because we really have the philosophy here that the only way that we get to the next phase of the Digital Shelf and sort of Omnichannel is by retailers and brands sharing more data with each other. And some of it's going to be paid because retailers are trying to raise money for their balance sheet and so they might charge for some of that data. But I do see this and hope for this future where this safe way of combining resources to better target, to better deliver personalized, I am doing air quotes, experiences by collaboration between brands and retailers, I think is a great opportunity if done safely. And there has to be enough potential at stake to be able to bring down the walls that have formally existed to making those kinds of things happen. Does that make sense?
Michael Klein:
Oh, completely. As you're talking, the first thing that always comes up to me, in the example of grocery and food, is the ability to really understand a consumer and do I have certain dietary restrictions? And if those restrictions are not recognized and I'm maybe vegetarian or gluten-free or whatever my restrictions may be, but if I'm getting generic advertising that it very highly likely a product is going to be put in front of me that I will never ever consume because of my dietary restrictions. And if we can enrich data from whatever resource, and every source is through some of these partnerships, to really understand who that consumer is, then the products we put in front of consumers and promotions are going to just be that much more relevant.
Peter Crosby:
I love that idea.
Speaker 4:
And with the wake of retail media and the fact that there's over 600 retail media platforms now, and that's main focus on the retailer side, and the brands are trying to navigate it, one of the challenges there is obviously data. Because the brands want to see the data to understand is there an ROI? Like what am I getting from investing in these specific ads for this retailer? What have you seen brands start to do in terms of talking to their retailers about that data? Because right now it's not widely shared. It might have a cost or barrier to entry of some sort. And that, I think, in my opinion, and I think Peter and I agree from our side, that needs to change to his point about that relationship. So what are you seeing brands move towards and how are you seeing retailers react to that when they're asking for more data and they need more data to make these informed decisions?
Michael Klein:
Well, I might actually put a note in that, in the sense that the retailer really holds the keys to the castle. They're the ones who have the data and typically they're not necessarily looking for more data. They're looking to extract more value out of the data they have, hence the rise in an increase in retail media networks, which we could probably spend a whole other podcast just on retail media networks and the future of them. I believe that they're not going away, but I believe that we'll probably have fewer of them in the next couple of years as folks realize that that might not have been a great business strategy for their business in particular. While it's obviously a very wildly successful business for the likes of an Amazon, a Kroger, Home Depot, Best Buy and a few others.
So it's really the consumer brands that the endemic advertisers that are really looking to get more data because they have always been first data party, first party data poor as I sometimes call it, where the retailer is first party data rich. And you make a good point because not every consumer brand is looking to pay for that data, or they don't see as much value out of that data. So we'll continue to see that. I think it's when both parties are benefiting and there are certain, without giving away any proprietary information that I've been privy to, there are just certain brands that are doing a better job of understanding that quid pro quo and the value for both sides.
One program that is out in the wild in public is what Kellogg's does in order to allow a consumer to take their physical receipt, and then take that information and apply it to the Kellogg's CRM and loyalty program. So there're going to be certain mechanisms that we continue to see, but again, there's going to be some challenges, as you pointed out, of who wants to make money off the data versus who wants to drive a better experience off the data. And can't always be the same because making money off the data may not necessarily drive the best experience.
Peter Crosby:
Well, here's what my optimistic personality might suggest, is that brands are accustomed to paying their retailers for things. So I think that's there. I think what's incumbent upon the retailers is if they're going to charge for it, then they ought to be able to show clearly the value that was achieved because of it. I feel like they have a responsibility, not just to ask for money, for more money, but say... Because I think brands are willing to invest if they can see better results coming out of it. And I think, in some ways, maybe if you set up these paid data sharing programs, great, but I'm going to need to see the return on it, or I'm not going to spend that money. So I think ultimately, unless they're going to try and force them to do it, I think, which many times they have, I feel like to get to this next phase, there's going to have to be some responsibility on the part of the retailers to show clarity in terms of the performance gain out of sharing that data. And that's what I hope for.
Michael Klein:
And it kind of comes a little full circle to the conversations we've had. Because as we mentioned earlier, the majority of transactions are happening in a physical brick and mortar store. Therein then becomes the big issue of attribution. A consumer sees an advertisement, a digital advertisement, through a retail media network on a website, on their mobile device, on social media, wherever it may be, because the they're available in all those channels. But then how do I connect that impression to somebody then walking into a store and then purchasing that product? That is the difficult, big challenge. And there are certain technologies, again, coming out of Adobe after 14 years, there's a customer journey analytics solution that's helping solve for that problem.
But it is a big problem in being able to associate, not only the digital, the e-commerce, because that's a little bit easier, is to say, "Okay, I saw this advertising on my webpage and then I went over and I put that in my shopping cart online." That that's an easier connection for the retailer to then feed back to the brand. It's then being able to tell the brand, "Well, they saw this digital advertising somewhere and then they went into the physical store and picked up that product." That's the loose connect that folks in analytics providers are trying to solve for. Because that's going to be the holy grail of really being able to tell that brand the value of that advertising.
Peter Crosby:
Lauren, I know this is a big topic on your mind, particularly as you've been working with so many of our great content partners on the idea of the new P and L for Omnichannel and for e-commerce. So I'm hoping that you feel positively about where this is headed.
Speaker 4:
I do. I think, to Michael's point, it is the biggest challenge. If I think back to my brand days when I was trying to find e-commerce data from an IRI or a Nielsen to understand things like that, they didn't have that kind of information available, or they didn't have any kind of direction. They've come a long way from there. And I think there's the right technology in place to be able to do it, but to what we were talking about in the beginning of the podcast, the silos don't make it easy to do that type of attribution. And at the end of the day, if you can't prove it on your P and L, it's really hard for e-commerce teams to get more funding and to get more resources.
But we know statistically that digitally influenced sales drive a lot in store. I'm hopeful that we have the right technology in place and we have the right understanding of how impactful the Digital Shelf and e-commerce is both in store and online, that we'll be able to get there. But I think the hard part, and Michael I'd love to hear your thoughts on this, is the brands first, internally, need to have the right understanding, have the right teams in place, have the right data, have the right technology to get to this next step. And I don't necessarily know if every brand has all their ducks in a row first to understand the basics around the data to be able to get to that attribution piece, which is a little bit more complex.
Michael Klein:
Yeah, well, I think there are very few that have all that in place today. Some of it is their own fault of where they are in the maturity curve of digital. And some of it is just, again, the challenge of the attribution. I do want to make one comment in terms of what Peter was talking about, and I am hopeful, in terms of more of this perhaps shopper marketing advertising, the 50% of my marketing is working, but I just don't know which 50% is working mentality. Shifts more to the digital mindset, but the reality is that it isn't an endless bucket and we're going to start to see small shifts. I don't know if we see incremental advertising going into these programs. We see, I think, portions of the traditional shopper marketing moving into a retail media network, as an example. So brands just don't have an endless pot of money, and they're going to take it from Peter to give to Paul in many of the cases, but do they pull back on shopper marketing? Do they pull back on traditional TV, radio, print? We'll see.
Peter Crosby:
Why is it always Peter that gets taken from, and who is this Paul that's getting my money? Michael, you've spent so much time in industry, and now you've hung out your own shingle. I was just wondering, as we close here, I would love to know what is it that you are particularly excited about working on in this new phase of your career? What's really, "Oh my gosh, I can't wait to go work on this with some folks?" What's on your mind?
Michael Klein:
Yeah. What's on my mind? I'm fortunate. So because of the different parts of my career that I've been able, and brands I've been able to work for on both the vendor side and on the merchant side, as you said, I just hung my shingle out. I have three active clients right now and they're all vastly different. I'm working with a trade association in the grocery industry to help them with their event in September in some of the keynotes. I'm always very interested in field events and marketing to and driving demand generation and thought leadership. So I'm touching on thought leadership. I'm working with a large ISV, large technology provider that needs a little bit more help in bringing together their messaging to the retail industry. And my third client right now is a retailer, and we're working on their 2024 strategic planning.
Peter Crosby:
Wow. That's a cool range.
Michael Klein:
Full leadership, strategy, and I'll always be involved in retail in some way, shape or form. Hence, I'm fine for retail, but I'm going to try to stay on both sides of the fence and engage with both brands as well as providers.
Peter Crosby:
Well, we are certainly grateful to have you, as I understand it, make your first podcast appearance. We are very grateful that you chose to start this with us and I hope we didn't scare you off from doing this anywhere else. But really thank you so much for coming on and sharing your experiences and this view of seamless shopping that I think we're all excited about. We really appreciate it.
Michael Klein:
No, I've had a lot of fun. Thanks for having me and hopefully we'll get a chance to do it again soon.
Peter Crosby:
Thanks again to Michael for joining us. Forgot to mention you can reach Michael on LinkedIn through his handle, Michael Klein, K-L-E-I-N-S-F, or by email at michael@klein4retail.com. The four is a numeral four, not F-O-R. So michael@klein4retail.com. Klein is spelled K-L-E-I-N. Gosh, I think that's all of it. If you were shopping for commerce strategy wisdom, seamlessly join the Digital Shelf Institute by becoming a member at digitalshelfinstitute.org. Thanks for being part of our community.
