Keeping Up With the Retail Trends in 2022 & Beyond

Apr 21, 2022 1:30 pm2:30 PM EST

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Key Discussion Takeaways

Consumers are moving away from the standard eCommerce model and demanding a more personalized, transparent experience that makes them feel connected to businesses. How do you navigate emerging digital trends to scale your brand? 

As brands shift into a cookieless world, how can your brand use zero-party data to leverage resources? Subscriptions and automation are available to retailers so they can deliver a unified personalized and omnichannel experience. How can you leverage the data available and create lasting relationships? Unfortunately, not many retailers understand the value of building and presenting these personalized tools. 

In this virtual event, Tiffany Serbus-Gustaveson sits down with Michael Klein, Global Director of Industry Strategy and Marketing for Retail Traveling Consumer Goods at Adobe and Daniel Smythe, Vice President of Retail, Travel, and Hospitality for EPAM, to discuss retail trends for personalization in brick-and-mortar and digital stores. Together they talk about consumer habits of aligning value with purchases, utilizing customer database platforms, and using first-party data as a way to resonate with consumers. 

 

Here’s a glimpse of what you’ll learn:

  • Daniel Smythe explains the dynamics of the consumer shopping habits pre and post COVID
  • Why the consumer purchasing habits are aligned with personal values 
  • How to leverage artificial intelligence and machine learning
  • What channels can you use to increase personalization from the digital to the physical stores?
  • Presenting brand value in a covert fashion to target consumers
  • Delivering personalization through customer database platforms
  • Michael Klein discusses the importance of understanding first-party data
  • The shift to live streaming as a way to resonate with your audience 
  • How can you evolve your brand into the metaverse?
  • Personalizing holistically and authentically in silos
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Event Partners

EPAM

EPAM Systems, Inc. provides digital platform engineering and software development services worldwide.

Adobe

Adobe offers products and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, measuring, optimizing and engaging with compelling content and experiences.

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Guest Speakers

Michael Klein

Global Director, Industry Strategy Retail, Travel and Consumer Good at Adobe

Michael Klein is the Global Director of Industry Strategy and Marketing for Retail Traveling Consumer Goods at Adobe, where he is responsible for Adobe’s point-of-view and messaging in the commerce verticals and works with Adobe’s global commerce clients to help them develop best-in-class digital marketing strategies. He has over 25 years of experience working for multiple brands, including Williams-Sonoma, Harry & David, Discovery Channel Stores, eLuxury.com (LVMH Group), and wine.com. He is a member of the NRF Digital Council and the Global Retail Marketing Association.

Daniel Smythe

VP of Retail Consulting at EPAM

Daniel Smythe is the Vice President of Retail, Travel, and Hospitality for EPAM and has over 20 years of consulting experience. Prior to EPAM, he led teams at Accenture and BCG with a diverse client list that included fortune 100 companies, waste management, professional services, supply chain, and front-line operations. He has magazine publications in Digital Window Dressing, Moving Beyond Like, and Overcoming Digital Disparity.

Tiffany Serbus-Gustaveson

Senior Digital Strategist at BWG Connect

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.

Event Moderator

Michael Klein

Global Director, Industry Strategy Retail, Travel and Consumer Good at Adobe

Michael Klein is the Global Director of Industry Strategy and Marketing for Retail Traveling Consumer Goods at Adobe, where he is responsible for Adobe’s point-of-view and messaging in the commerce verticals and works with Adobe’s global commerce clients to help them develop best-in-class digital marketing strategies. He has over 25 years of experience working for multiple brands, including Williams-Sonoma, Harry & David, Discovery Channel Stores, eLuxury.com (LVMH Group), and wine.com. He is a member of the NRF Digital Council and the Global Retail Marketing Association.

Daniel Smythe

VP of Retail Consulting at EPAM

Daniel Smythe is the Vice President of Retail, Travel, and Hospitality for EPAM and has over 20 years of consulting experience. Prior to EPAM, he led teams at Accenture and BCG with a diverse client list that included fortune 100 companies, waste management, professional services, supply chain, and front-line operations. He has magazine publications in Digital Window Dressing, Moving Beyond Like, and Overcoming Digital Disparity.

Tiffany Serbus-Gustaveson

Senior Digital Strategist at BWG Connect

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.

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Tiffany Serbus-Gustaveson

Senior Digital Strategist at BWG Connect


BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution.

Senior Digital Strategist Tiffany Serbus-Gustaveson runs the group & connects with dozens of brand executives every week, always for free.


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Discussion Transcription

Tiffany Serbus-Gustaveson  0:18  

Well, happy Thursday everyone. I am Tiffany Serbus-Gustaveson, a digital strategist here at BWG Connect. And for those that don't know, we are a network and knowledge sharing group. It's what we do, we stay on top of latest trends, challenges, whatever it is that is facing the digital landscape. We're on track to do almost 500 of these webinars this year, due to the increase in demand to better understand everything digital. And we will also be doing at least 100 in person small format dinners. So if you haven't been in a tier one city, feel free to send us an email and we'd be happy to send you an invite. These dinners are typically 15 to 20 people having a discussion around a specific digital topic. And it's always a great time. We spend the majority of our time here at BWG Connect talking to different brands to better understand what are the trends and the topics that you want to learn more about. So feel free to send me an email and we can set up time to have a chat. It's Tiffany tiffany@bwgconnect.com. It's from those conversations, we generate the topic ideas for the events. And it's also where we gain our resident experts, such as Adobe and EPAM, who's here today, welcome. Anybody that we asked to teach the collective team has come highly recommended from our network. So if you ever need any recommendations of any software providers, we have a short list of the best of the best, always feel free to reach out and I would be happy to share that with you. Also, we know a lot of people are hiring right now. So do note we have a talent agency BWG Talents, that it also be happy to connect you with. So a few housekeeping items. We want this to be educational, fun, conversational. So feel free to put any comments questions in the chat throughout the duration, we'll definitely get to them. If you feel more comfortable, you can email me at Tiffany Tiffany@bwgconnect.com. And I'll be sure to get to them. We started a little late three to four minutes after so rest assured we will wrap up at least three to four minutes before the end of the hour to give you time to get to your next meeting. So with that, let's roll and start to learn retail trends in 2022. And beyond. The team at Adobe and EPAM have been great friends, partners, supporters of the network. I'll kick it off to you, Michael and Daniel, if you could give a brief introduction on yourself. That'd be awesome. And then we'll dive into the information. Thank you.

Michael Klein  2:36  

Thanks, Tiffany. And hi, everybody. Thanks for being here today. Michael Klein, I'm the Global Director of Industry Strategy and Marketing for Retail Traveling Consumer Goods here at Adobe have focused on our digital experience business. Over to you, Dan. 

Daniel Smythe  2:54  

Thanks Michael. Dan Smythe I lead EPAM continuums, Retail Travel and Hospitality business consulting practice, and I'm passionate about what's driving retail brands. Very excited to speak with you about that today.

Tiffany Serbus-Gustaveson  3:07  

Awesome, well, let's roll. 

Daniel Smythe  3:13  

So I think I kick it off. This is our view of the world pre during and post COVID as it affects retailers and brands that target consumers. What we like to say is hybridity and flexibility are key right now. And we're kind of approaching the new normal, I'm going to call it kind of the end of the temporary normal the beginning of the new normal. If you think about kind of before COVID Pay 2019 is your baseline right? There was largely a pretty clean distinction between traditional brick and mortar shopping and eCommerce shopping Right? We saw that changed dramatically. Right? During 2020. We saw a lot of omni channel shopping behavior people starting a transaction and one finishing it in another right we saw a lot of Omni to what I call omni channel workarounds, especially in segments like grocery and restaurants were pretty much every grocer who said no, I'm not doing home delivery, because it's just not profitable for my business all of a sudden found a way to do home delivery because that was how everyone was ordering their groceries. Right. So a lot of a lot of band aids. Now we're coming out of that right. And we're getting into, hopefully the new normal, right, hopefully soon to be post COVID world and people's behaviors have have widened, right, and that the widening that happened at that peak of that pandemic and 2020 are really not going back to that that pre COVID state they're going to stay a little bit wider than they weren't right. We're going to see a lot more hybrid behavior a lot more flexibility. And we're gonna, and we're gonna see more retailers adapt to that with new formats that really blend the digital and the physical and the human elements of shopping. So I'll get in a little bit more into what I think is going to happen in the coming year. It's really around four dimensions, right? There are four shifts that were that we're seeing. One is what people need, right during, during the peak pandemic, right? It was all about toilet paper, it was all about sweat pants, it was all about puppies, right? We're going to see some rebalancing, we already started to see some rebalancing in 2021, as things started to get closer to normal, we're gonna see that continue in 2022. Second is, is when and why people shop, right? Think about pre COVID. Most people did their grocery shopping on the way home from work, right, you'd go to the gym, you'd stop at the grocery store, you'd go to the store to stock up before a party before having out of town guests over to your house, you maybe go shopping when he got home from a business trip because your fridge is empty, and you need to replenish, right? We're not traveling, we're not having guests over. And we're not going to work, when and why we shop is very different. And we saw that over the last couple of years. Now we're going to see, again, some kind of rebalancing in 2022. The third thing is format, right? Where people shop and where they transact, it's no longer a linear process, right? People often start a transaction on one channel, continued and another and completed and yet another and we're seeing more and more of that it's an acceleration, something that was beginning before, but it's really accelerating now. And I think that's going to stick coming out going into the rest of this year. And lastly, labor, we're all hearing about the shortage of labor, labor costs on the rise, people not showing up for shifts because they're sick, or seeing a ton of interest in automation, in ways of getting more efficient, requiring less labor in stores and warehouses, etc. So these four shifts are affecting both what kind of operational efficiency you need in order to be competitive, as well as what level of customer engagement to be competitive. So we're going to talk a little bit about what I what I've kind of we narrowed it down to five trends that we're seeing this year and into next one is personalization at scale. And this is something that Michael is going to talk about, in a lot more detail here. Coming up after after me, I think I hand it over to him on the next slide. And you're gonna hear a lot about personalization at scale, but everything is interconnected. Right unified frictionless commerce is is the name of the game. And I continue to be surprised how many retailers don't have that that Unified Commerce solution. And as we design the customer experience, we really need to understand that customers don't think in terms of separate channels, right? They think if I'm shopping a certain brand, certain retail banner, they they know all of my previous interactions, whether it was online or with you know, even the call center or in the store, right. And they don't think in terms of separate stages. shopping journey, again, isn't linear. The second trend that we're seeing this year is data and loyalty. Right? A lot of companies are really good at collecting first party data, not great at using it to personalize experiences. So understanding customer data and how to use it is really important. And we're gonna see people upping their game in that this year. Consumer sentiment, right? We are seeing things people you're seeing things shift in a way that people are seeing disruption is just normal, right? It used to be a, you know, a disaster if a product brand and about a stock. If we had stock outs on a shelf, it was like well lost sales. We got to fix it right now. It's kind of people just expected, right? And delivering seamless omni channel experiences, even when the supply chain is disrupted, and prices are going up in terms of our costs, in terms of wages, in terms of transportation, how do we still up our game, and in terms of the customer experience is becoming vital. And then we're also seeing now this year, last month was the first month in quite some time where retail sales were actually down. They were they were roughly flat down if you account for inflation. So consumers are finally saying oh gosh, you know what? I'm feeling the pinch. I can't afford to fill up my car. I can't afford my rent. I'm not going to buy. I'm not going to buy as much stuff as I've been buying because I need to I need to conserve cash. Right. So what we're seeing is for retailers, pricing is becoming key last year. it was okay to take those cost increases and pass them along to consumers in the form of higher prices this year that that's no longer okay. So having really good ability to maintain price perception, knowing your elasticity is your individual consumer elasticity is your original category elasticities. So that you can optimize price to maintain a strong price perception, while at the same time observing higher costs is going to be really key terms of cultural shifts, right, we're seeing a doubling almost, of the number of people who say that they can't they, they only shop at retailers that share their values, right, that almost doubled last year, 90% increase year over year from 2020 to 2021. We expect that to continue to grow exponentially in 2022. So it's really important that you know, your consumers brand values, you know, their personal values, and that you will align with them and communicate that. And lastly, business models, we would be remiss if we didn't talk about business models, right, we're seeing a much, much better take up of marketplaces, it used to just be you know, Amazon was the marketplace now. Walmart's adding 1000s and 1000s of SKUs to their marketplace, other retailers are getting much better at managing their marketplaces. And it's becoming a more and more a popular way of connecting customers with suppliers. And so that's something that we're gonna see continue in 2022. People are now talking about the metaverse, right? Where should we play in the metaverse. And that's something that that a lot of retailers are trying to figure out how to fake how to separate the reality from the hype is pretty, pretty important. And then live streaming is becoming another digital channel and other media channel that's becoming important to retailers. And lastly, subscriptions. Subscriptions are everywhere, right? You've got coffee subscriptions, jewelry subscriptions, you've got all manner of subscriptions at the same time. Traditionally, subscription based businesses like Stitch Fix, are now moving away to a standard eCommerce model. So it's really important to figure out what products and what categories and what brands are right for subscriptions, rather than just, you know, offering them willy nilly. So I'll hand it over to Mike to talk a little bit more about some of these trends in particular personalization. But that's the lay of the land as we see it this year.

Michael Klein 12:38

Thanks Dan that’s great. And we're gonna double down on a couple of those emerging business models later in the conversation, as you and I pontificate on some of these emerging business models. And what's kind of the big buzz around the industry and subscriptions, we were talking earlier about. Tiffany's from Minneapolis, and we've all worked with our friends at Best Buy. And they even have a subscription model now for some of their reusable so in terms of cartridges, and if you buy a printer from them, you can get a subscription from our friends over Best Buy as well. So I definitely hear you on the subscription side. So as Dan said, I'm going to dig a little bit further into personalization at scale. And some of the other trends that we're seeing at Adobe, we are driving personalization at scale for our customers, we believe very strongly that there are three key elements to that. And that's data content, the collaboration of content. And then thirdly is the orchestration of the journey. And personalization really isn't anything new for the retail segment, consumer goods travel. We've been talking about personalization for many, many years. But what is really important today is trying to drive this at scale, being able to do that for every customer in every channel. And the key here is real time. Because it had for a while we have been able to deliver personal as gate personalization in some way shape or form against a segment that we might have built 24 hours ago, two days ago as we think about mining our database and the customer platform. But today, the big challenge and the important challenge is for consumers is being able to do that in real time and take all of the different signals and criteria in place and being able to leverage those in order to drive personalization. So that it is much more relevant than it was when you were only doing it with a batch process segment model 24 hours ago. You Adobe commissioned incisive in 2021, to do a study on personalization at scale. And we wanted to understand the leaders, the laggards. And this was one of the big key takeaways for personalization at scale was that there is this isn't a one size fits all, and isn't only about getting to One to One. And what this slide illustrates is that there are huge payoffs along the way, going from basic segmentation, basic personalization going up to one to one. And while yes, one to one is a very noble pursuit. If you look at the red to the gray bar, which is going from that segment, base personalization, to a micro segment based personalization, this is where the biggest payoff actually is. And when we talk about a micro segment based personalization, that's when you start looking at real time, that's when you start leveraging artificial intelligence and machine learning, to be able to bring all these data points together at the moment of truth, whether that be on a mobile app, whether that be on a kiosk in a store, a store associate application for Klein, and telling, or of course, the traditional website. And across all of these parameters, conversion revenue, per visitor average order value, the retailers that we've spoken to, as well as travel providers, because this study was across both retail and travel, indicated that their biggest lift in these key performance indicators was when they were able to go from that segment based persona personalization, to a micro segment that, again, is really bringing in that real time criteria into the equation. When we think about what's important, and this was a study, we just released the Adobe Digital Trends report for 2022. One of the key questions we asked during this particular study is, how important are the following and meeting customers omni channel service expectations. Now, I'm not a big fan of the term omni channel, I think that it just continues to perpetuate the silos or the different channels, customers don't shop in channels. So whether you call it omni channel, Unified Commerce, hybrid, or just business as usual, this is what retailers feel that they need to be delivering on being aim. And a lot of this is the online and the offline space. It's the ability to have a geo targeted message for the in the physical store, when somebody is close, being able to personalize the in store experience. Extending that shopping, they as Daniel mentioned, we've got live streaming coming up, and more folks are looking into that. And as these new channels emerge, being able to have a seamless experience across all of these particular channels is important. So a few key takeaways from this slide is that there isn't only one element that's going to satisfy the customer and that retailers are going after different aspects of that experience. And a lot of it does have to do with the the bridge from the digital to the physical world. So before we get into some of our key buzz areas, three areas that we're talking about when it comes to personalization in 2022 and beyond. The first is the concept of zero party data. And if you haven't already heard about zero party data, I guarantee you, you will continue to hear about it more and more especially as we move into 2023. And we have full deprecation of third party cookies from Google and the Google Chrome browser. So zero party data is more or less a another form of first party data. But it is data that is explicitly shared with the from the Cust consumer with a particular brand. So as Dan mentioned, we have the subscription services. subscription services are a great way of receiving zero party data where there is a preference center and a consumer is telling you explicitly what their likes and preferences are. And as we move more into the cookieless world, this zero party data is going to be extremely important in building out the full first party data strategy in order to drive personalization so that you're able to acquire and really have a Full 360 view of the customer, absent of third party cookies, automation, another area that Dan also brought up in his opening where retailers need to be able to do more with their existing resources. And in order to be in real time to be able to bring in AI and ML, we need to consider automation. And of course, with the workforce, we need to make sure that with the resources that are available with a retailer that they're leveraging those resources, the people for higher value activities in automation can help with that, to make sure that the tedious tasks that might have once been bogging down certain resources both in the corporate office, as well as as well as on the sales floor, that automation is a way of helping the retailer become much more efficient when they think about a better personalized, Unified Commerce omni channel experience, again, whatever you may call it. And then the third piece that I always want to call out in what we've learned, especially from the studies that we've done over the past year, is that everybody is at a different part of the journey. So having an awareness and an understanding of where you may be because this is a crawl, walk, run, and that we need to understand where we are with the data Foundation, another element of Dan's opening in terms of data and loyalty, and how important data is and being sure that you have a great foundation of data. Because without a great foundation of data, you can't get to the Run face. And when you're in that crawl in that walk area of the phase of the journey for personalization, you really need to make sure that data and content are in the right place at the right time, in order to make sure that you can deliver on that promise of personalization at scale. So I don't know, Tiffany, if there's any questions for those of you out in the audience, please use the chat if you if you have any questions for us. And before we move into our next section, Tiffany, any any questions that have come up that we should address before we continue?

Tiffany Serbus-Gustaveson  22:24  

Yeah, personalization has been definitely a hot topic and 2022 that we've seen a lot of people have a lot of questions about it and where to put it on the roadmap. So one would be are you able to share any success stories about a brand that did personalization, great, that perhaps people could learn from? 

Michael Klein  22:47  

Yeah, I'll I'll share a couple. And then if Dan has some examples you'd like to share. We have two customers that just presented their personalization at scale story at the Adobe Summit. Only last month in middle of March. And this is all available at the adobe.com website. And these sessions are on demand. So one of them is Victoria's Secret. They've been doing quite a bit over the past couple of years to move past just product recommendations. But once again, tapping into artificial intelligence and machine learning to be able to, within product recommendations specifically, really work very closely with data and swatching. So that as you're going and this has been supported with data in terms of uplift in their revenue per visitor, that now with their product recommendation engine, their cross sell upsell is much more robust and personalized than ever before. They're also using a feature with that we call auto allocation. So while they are able to understand what one experience may work for one particular customer, they actually through artificial intelligence, they and machine learning, they can understand the different variations of a test within their personalization program. And as those results come in, they can then automatically change the experience for within the page on the fly. As those data points in the metric start building up so that a human doesn't literally have to go and change the experience by watching the performance measurement of the metrics. So those are a couple of they have a 30 minute session. The other is Marks and Spencer in the UK that have built a framework that leverages certain hours rhythms and business models that drive a whole plethora of use cases. And today, Marks and Spencer can deliver 20 million personalized interactions over the course of this coming year, and will be moving to 500 million. Very impressive. Dan, over to you. 

Dan Smythe 25:23

Thanks, Michael. I think those are great examples. And, you know, I always like to say that the best personalization is the personalization that you don't notice. Right, you don't realize that it? You know, there's the obvious personalization that, you know, it was it was clear that, that I was just shopping for something, and then I get that, you know, immediate, immediate prompt for something similar. I think that, you know, when you find a retailer is offering you exactly what you are looking for what you need at exactly, exactly the right price point and offering up suggestions that just, you know, just just just they're like, that's, that's perfect, I didn't even know I needed that. But that's exactly what I need. That's the best personalization, you don't even notice often that that was, you know, not the same offer that other people are getting, you're just like, oh, this is perfect. So, you know, there are a few companies that I like when it comes to personalization. Nike is one that I am actually particularly fond of, I think, do a great job of gathering information in a non intrusive way. And then and then using that information, of course, that ties into the customization, right, that you can do with designing your own shoes. And the fact that when you go to the store, there's incentive to actually scan your, your mobile app, so they know you're in the store, right? And then you can easily check out without getting your credit card, right. So there's a lot of a lot of a lot of great stuff going on there. And I think, you know, probably more more to be done. But those are the things that I'm seeing. And then I'll give one other example, which is a wine club that I belong to right? Again, really good at making it fun to gather information, letting me let them know, you know which ones that they've sent before I've liked disliked why. So then they can actually offer up similar wines to the ones I've liked, and avoid offering me wines that are similar to the ones I didn't like, right. And I'll get more into that probably when we talk about subscriptions. But those are a couple examples that come to mind. 

Tiffany Serbus-Gustaveson  27:29  

Those are great examples. Because another comment that I hear a lot is, well, we don't want to be creepy, with the creep factor of personalization, like how do you do that and not be creepy? And I think those examples that you laid out, are great. But is there anything else if those are on the fence of I don't know what to do? Or I'm scared to do that untested? Because I might come off a little creepy. Like, how do you mitigate that?

Michael Klein  27:59  

I think it's a trust factor. And respecting privacy and not. You know, I remember it was a few years ago, especially when we started to think about beacons in the store. And I had a slide in a presentation that was tongue in cheek that, you know, walking into a a pharmacy or a health and beauty. You know, there's a big billboard that, you know, flashed up a sign that said, Hi, Welcome, Michael. Your Hemorrhoid Cream is on aisle number five. And, you know, that's kind of going that's where you kind of draw the line, right, in terms of the creepiness.

Tiffany Serbus-Gustaveson  28:45  

Maybe it was helpful.

Michael Klein  28:47  

Might have been helpful to me, but certainly turn turning bad, right. So I think it does come back to the brand promise. And it's kind of what Dan was saying is that it really has to be about the utility, and that it's not coming off as marketing. It's not coming off as being pushy. And that is there's a value that is inherently attached to it. And it's not just there to try to get you to buy another product and it's there's value in it, it would be the way that the lens that you have to take and the other quick comment I'll make before I pass it back is no personalization is better than bad personalization. So we've all seen it before. And really make sure and that's where I go back to the this idea on the slide about crawl, walk, run. And really making sure you have the data in place and that you can deliver on the promise because if you are delivering bad personalization that's probably worse than you know, not doing anything you know All and having someone feel like, you know, there's they're still part of a larger segment. So those are my comments on that. 

Tiffany Serbus-Gustaveson  30:11  

Awesome. Again with personalization, the next topic that's always brought up is CDP's. So customer database platforms, where does this come in with personalization? How do you use it to improve personalization? And just I guess from this, like crawl, walk, run, where does it fall into that strategy? 

Michael Klein  30:36  

Well, it's it's certainly in the data Foundation. And we're proud at Adobe, because we were just named as the leader in customer data platforms by IDC marketplace for retail and consumer goods companies. So we've been spending a lot of time engineering our customer data platform, the strategy around it. And that is the function that's going to allow you if you go back to my my slide on the benefit of the payoff of personalization at scale, in order to go from a segment based persona, to a micro segment based persona, that you need a CDP to get to that level, to be able to have the speed to have the aggregation of data in a central location, and then bringing in the artificial intelligence and machine learning capabilities that are attached to the CDP to then activate and send those segments out in real time, to those systems of record, that are going to actually deliver the experience at all those different touchpoints. So we certainly believe very strongly that in order to get to personalization at scale, you need to be investing in the CDP. Now, the data lake, and we know many folks have been investing in data lakes. That's a whole nother conversation. And that is also required. But that is not a friendly place, so to speak to the marketers in the business. And that's where the CDP comes in, because the CDP is going to read from a data lake and allow that marketer be a lot more agile, where the data lake is really meant for the IT organization and the greater enterprise.

Tiffany Serbus-Gustaveson  32:32  

And there's a compliance value there to correct with the CDP helps you stay in compliance and not having to keep up with all these changing laws and things that are

Michael Klein  32:41  

sure Exactly, yes. Yeah, privacy, keeping up with GDPR, CCPA. All those wonderful acronyms that we know in terms of the California Consumer Privacy Act, the GDPR over in Europe that has been out there for many years since 2018. So yeah, consumers are going to be looking to make sure that we respect their privacy and their data and trust is certainly a big part of that.

Tiffany Serbus-Gustaveson  33:16  

Excellent. Well, we're unpacking a lot of information. So reminder, y'all to put in your questions, comments into the chat, and we will get to them.

Michael Klein  33:25  

Great. So let's, let's move through. And this is kind of going to be open for Dan deli. Just to debate on a little bit. Many of us have went to Vegas a few weeks ago for shop talk. And as I went to shop talk, Dan, we were shop talk, I didn't know that we didn't get a chance to canal, I had to catch it on the replay. Okay, well, if you're walking down the aisles or trying to hit some of the sessions, like I was a lot, a lot of stuff that was talked about it was retails break for unit because many of us, myself included, did not get to NRF this year in January. It was there was quite a buzz going on. And there were three areas and Dan already hit on two of these three that I certainly saw as being spoken about in the sessions in the hallways in the conversations and the first one is about the retail Media Network, monetizing the existing traffic that we have. And for those of you who aren't already thinking about this, we're aware of this. This is essentially what Amazon has been doing for years and years in terms of their media network and others like a Best Buy, like a Home Depot, Macy's, Walmart, all these large big box retailers and also mid sized retailers are building out some form of a retail media network that allows endemic and non endemic advertisers to leverage their traffic to advertise on that eCommerce property or also bought that property. And allowing somebody like a Best Buy or a Home Depot to actually advertise on the behalf of the vendor. So as you can see from me marketers data here that just was released last month in March, in 2020, to $36 billion of advertising went through a retail Media Network, an eCommerce website, and that's going to grow to almost 45 billion for this particular year, 23%, year over year increase, and these numbers, the increases will go down as the volume goes up, because it's just not that easy to keep building those kinds of high percentages. But these are dollars that are moving from the traditional advertising space, that is not as precise as a retailer that can really understand through their first party data, what the likes and the preferences are. So Dan, just curious, in terms of your customers that you're speaking to, is this top of mind? And what what's happening with the EPAM customers when it comes to retail media networks?

Daniel Smythe  36:22  

Yeah, absolutely. This is huge. And we actually were big in the immediate space, you may be aware, we acquired a large agency last year in Europe and digital media is absolutely huge, not only and I shouldn't say it's a retail media, not just digital, but also even physical. So some of that media can actually be real estate can happen inside of stores, as well as online. And it's going to become we just published an article recently about how this is going to be so much more critical in a cookieless world, right? Like Michael said, you've got a captive audience, right, that there are the customers already shopping there in that retail channel already. So at that point in the funnel, this isn't an ideal way to reach them. And, and it can be very much personalized, because like Michael said, chances are that audiences already logged into the platform that they're on. And so all of their information is, you know, fair game, to that retailer, and they can serve up your content and at the most in the most relevant way at their most relevant time and the most relevant consumer. So I think, I think it's, it's going to be huge. 

Michael Klein  37:39  

And there's a win win for the advertiser and for the retailer, because as we know, retailers are many of them are margin constrained. And the dollars that come in from the retail Media Network, have a much higher margin than the product, the the actual sales from a product. And it's no secret that that's part of the Amazon model, right, there is a type of margin they can command just for advertising as opposed to selling a product in having that ship and all the labor and the cost of logistics to get that product to you. Any questions? Tiffany on this as we, before we move to our next?

Tiffany Serbus-Gustaveson  38:24  

I think it's a great reminder, because I previously worked in home furnishings as a director of eCommerce. And that was the pain point as we grew, our margins kept shrinking, and especially on these platforms that we speak of like an Amazon and thinking outside of like, okay, how do you make that incremental revenue and build up that profit that you are losing with all those other facets supply chain being a big one and logistics costs? So to see these numbers, it's pretty incredible. Exciting.

Daniel Smythe  38:55  

If you're a retailer and you don't have a retail media business, then you're missing out on a huge revenue stream. And like Michael said, if you're profitable one. 

Michael Klein  39:05

You know, I think it's one of the challenges and I don't know. No, we have, I think, varying sizes of attendees today. One of the big elements of this is traffic, right? Having enough eyeballs to make sense for the advertiser. So my response to that if somebody's curious out there in terms of, well, I'm not as big as a an Amazon or Walmart or Home Depot, I don't have that kind of traffic. How do I get into this? You know, what, what makes sense for me? And my answer to that would be first, how do you perhaps work in a more of a niche advertising area network, and also, maybe not explicitly having a media network but creating partnerships, and as we go into the cookieless world, as Dan mentioned, this is going to be important as we go into the cookieless. How do you create partnerships IPPs with key vendors and suppliers, partners that you can actually share data with respecting privacy of the consumer. Within a second party data sharing kind of cooperative one to one, we've seen the examples of calls and target and Ulta, beauty and Sephora all coming together. And that is all about data. And, and you too can can create those types of relationships and, and leverage the data that you have. For the benefit of both. It's similar to the retail immediate network if you're not as big as some of these big box retailers. So Dan, I'm gonna, I'm gonna pick your brain here a little bit, because you had this as one of your emerging business models. And we've got a few examples here of current live streaming. Now we know that China is huge with live streaming, and depending on the brand, and you know, Tmall Taobao, whoever it may be they can, they can put out a live stream and hit a billion dollars in revenue, and in no time, but this is still nascent here in the United States, with some of the examples on the slide. What are some of your thoughts or suggestions for the audience on live streaming? How should they approach it? Because it is fairly new here for the US. 

Daniel Smythe  41:32

Yeah, it's it as a nascent, a nascent channel, it's something that I like to look at sort of proxies from other industries to kind of think about what works and what doesn't, right. So for for one, it's not really, if you think about a live streaming, if you define it more broadly, it's not new at all right? Think about home shopping network, I think we were talking about before, before the call, you know, it's just, it's just basically a microscopic version of that, right? That you're getting through your typically your mobile device, or potentially your laptop, as opposed to your television, right? So so if we look to home shopping as one proxy, and think about what are the right sort of channels, categories, consumers, and what works and what doesn't. And that platform, I think we can learn a lot. The other I think of is I worked for a little bit despite my 20 years in retail, I worked for a little bit and in life sciences with a pharma company on multi channel marketing. And one of the things that they were focused on was how do we touch more healthcare practitioners with a smaller Salesforce and what they relied on heavily was e details, right? So think about a one on one interaction. And in live streaming, you can basically take that one on one, turn it into a one to many, right, where, how would you actually be selling face to face and apply that to a live stream situation? Right? So I think there's a lot we can learn if we kind of look to these, these proxies. And then I think the key is to just try it right test and learn is the way to go and fail fast, just like a startup what. And I think that's before we know it, live streaming might be might be mainstream here like it is in Asia. 

Tiffany Serbus-Gustaveson  43:33  

It's exciting for us having worked in production, it doesn't have to be polished. I think back in my home shopping days, and you know, you have the big studio and the hair and makeup, and a lot goes into that production. And this doesn't have to be that and actually, from what I've seen, and you guys can correct me if I'm wrong, the more less polished it is, the more genuine the better it does, because it's real and authentic. 

Daniel Smythe  43:57  

That's right. 100%. And, you know, a good analog would be, you know, the early days, the early days of YouTube, right, so some of the most popular YouTubers are not necessarily the most, you know, polished and predict, you know, produced because there's that, you know, think about tick tock, right. I mean, there's that, that authenticity that comes from, you know, a homemade, homemade production that, that it can be appealing.

Michael Klein  44:23  

Yeah, I really like you're in this slide, does it overtly talk to it, but there's two elements here, it's the one to one and the one to many. So we look at the Gucci example on this slide that is the one to one and that could be the right direction for your brand where the Nordstrom experience is a little bit more one to many. So I think that there's going to be couple of different flavors of this. Depending on the type of product and the brand that you may be where maybe this is in Gucci just did this really in the face of the pandemic. They couldn't you couldn't go into a store. So they're like, Okay, we're going to start to enable live stream one to one shopping from our call center out of Germany, for their European customers. So. And then the other thing, Dan, I really liked, what you mentioned was the idea of testing and trying it doing something, and maybe not going out and having to have to be so polished. But just, you know, thinking about, what can I try fail fast. That whole idea, I think is, is a great message for the audience as well as our next slide. Because we wouldn't be able to talk about retail trends and what the buzz is around the industry without talking about the metaverse, right. So I don't know I can't go anywhere these days without somebody thinking or I know that there was just a new headset that just came out the medic quest, I think it's called headset that's specific for, you know, coming out of the metal group. So, you know, my two cents on this, at the moment is that it still is a little bit of hype. I'm still at times as a traditional retailer trying to get my head around of, you know, am I going to strap on a headset to go buy a banana, my groceries a t shirt? It probably will have applications like we've seen with the likes of Nike that you've mentioned already today, and Gucci and some of the other luxury brands. But you know, and the other piece is when we can get to the metaverse without a headset, and that's maybe with a mobile device and how we can use other technology or or we're here today in a simulated virtual Metaverse, so to speak on a zoom call, you know, how do we bridge that and not require that it be so device specific? And how do we get to the metaverse without that? So I think to your point, and that's where I kind of like to bridge here. This is an opportunity to start to play around and test. I don't know if I would put all my eggs in this basket right now because I think there is a little bit of hype and that it will remain to be seen how this really does affect retail and shopping because it isn't going to be the only way one shops. So what do you think Dan? Hyper or the future of retail? 

Daniel Smythe  47:42

Yeah, I think it depends on on the day, right. So one of the things that I heard actually coming out of Shop Talk even though I wasn't there, I was kind of following the buzz that nobody seemed to care about the metaverse it was kind of like the retailers that are it's all vendors or vendors are all excited about the retailers don't get right. So I read that one day and then the next day I read about Dolce and Gabbana selling a you know, a $300,000 virtual tiara the metaverse, right. So we actually have done a lot of work with clients to help them think through what role the metaverse should play in their future, right. And if you kind of think about the real world, the digital world and the virtual world is kind of your three channels, if you will, right. In the old in the old days in retail, it was all about the physical world. It was the store, right? And then now we're seeing 80% of commerce is still going through the store. But 20% is going through the digital world and a heck of a lot more media is going through the digital world. Well, the virtual world is just a teeny slice now, but I expect it to grow in the same way that the digital world did. But what does that mean? I think there's a role right now for a lot of things within the metaverse and again, like with the Gucci, or the Dolce and Gabbana Tiara example. You can't talk about Metaverse without talking about NFT's right. So there is a role for shopping in the metaverse. There's also a role for community in the metaverse and I think that right now the low hanging fruit for retailers in the metaverse is brand perception and loyalty. So if you were to talk about the value case, right now, it's around improving or evolving your brand perception through we're often referring to it as a more broadly web three Dotto, right, which is Metaverse, NFT's, et cetera. How your brand is perceived, is going to be affected by your presence in a matter of hours, right? And then how you can drive loyalty through web 3.0 Technologies is going to be really important especially for certain demographics. So I think the key really is within A true growth strategy is to take a step back and look at how this might affect your business model how you might use Metaverse to create new revenue streams, right? Because if you can't create a value case for it, it's going to be hard to get the funding to invest. Right? And then what kind of recurring revenue streams can you drive? Because you have different you can actually there's opportunities for royalties in the middle of metaverse. Right. And then how do you like I said, around brand perception? How do you build your community and create brand equity through affinity in the metaverse? So there's, and that's just kind of scratching the surface. But um, you know, there's kind of maybe a few more things that I like to think about, like, how do we get more data? So we can make better decisions, data that we get through the metaverse. And that's true, you know, in physical and digital worlds as well. Partner models, right. So there's huge opportunities for collaboration in the metaverse and who you partner with in the metaverse in your Metaverse play is going to be key. And then how do you create more relevant experiences and engagement through the metaverse and in some cases, you can do more immersive things like storytelling, right and innovative, immersive experiences, you know, just like live streaming Michael was talking about is another way to engage your customers. That Metaverse is also a way to engage your customers in a way that's a lot more immersive than you have in the traditional digital world. So there's a lot a lot there. But that's kind of how we're thinking about it. And it's something that again, we're engaging with clients to really help them think through what does it mean for them, because it's going to be different depending on your customer and your brand. And the image you want to put out. 

Tiffany Serbus-Gustaveson  51:57  

Yeah, it is a big topic. And one of the highlights of my job is I get to learn these things. So for me, I knew nothing about the metaverse. Now I've been digging into it. I actually went to the forest to report on the E Pam site and was reading about it and I pulled up some very interesting stats here. So they said 77% of marketing executives are eager to explore the metaverse 76 plan to invest some budget towards Metaverse related activities. But when you look at a consumer lens, just 34% in the US and 28 in the UK are excited about it. And only 29% feel it's good for society in the US and 25% in the UK feel it's good for society. So my first reaction is people just don't understand it like myself included. The more I'm digging in, I'm realizing, Oh, it's a 3D web experience. Facebook doesn't own metaverse. They're called meta, but nobody owns the metaverse. Correct. It's it's a whole website experience a whole web ecosystem experience.

Michael Klein  53:08  

I'm going to that is the answer. Thanks, everybody for listening then. And Exactly. That's great. Well, Tiffany, if we have any more questions, I think we still have a few more minutes before the bottom of the hour. So if you're still out there you have anything you'd like to ask Dan or myself, please go ahead and use the chat. Yeah, definitely.

Tiffany Serbus-Gustaveson  53:32  

I always have team questions, and like how to operate across team. So how do you have this seamless experience? That is this holistic way of looking at the business when businesses still tend to operate in silos? Loaded question, with a few minutes left.

Michael Klein  53:53  

So I'll just quickly chime in that coming out of the study we did last year on personalization, we did ask about the org structure that the leaders in the laggards had. And the the leaders had one of two different operating models that they had implemented. And this is also very much part of the story that Marks and Spencer was telling at the Adobe summit last year, last month is that either there needs to be a center of excellence around the digital discipline. So how do you build a team that is responsible for personalization as an example? And that's the most important one that we're seeing or having subject matter experts. So kind of the hub and spoke model either build a centralized group that is focused on this and then they support the organization or peper subject matter experts in digital personalization in different parts of the organization. So that there is this and then there's a continuous feedback loop that has to then be created along with that, to make sure that the the successes and the failures are communicated and democratized across the enterprise. When these disciplines are owned, either by either marketing or it alone, or it's spread out in all these different silos, that's when we see failure, and Center of Excellence or subject matter experts throughout the organization. And there is no one size fits all. But those are the two models that we've seen, is the best way to set up the work. And then you work with so many customers and EPAM you guys are, you know, hired guns to go in and actually run this stuff. So what do you see? What do you see in terms of best in class or struck? 

Daniel Smythe  56:00

So I think it's so to me, it's, it's, it really comes down to three things, if you want to foster collaboration across silos, it's metrics, incentives and tools, right? If you think about what most frequently drives behavior that is, you know, maybe counter counter to collaboration, it's because if I actually do this, it's not going to help me achieve my objective, individual objectives. And so measuring things in a way. So metrics, right, if for I'll take an old school example, women's General Manager, the store doesn't want to encourage customers to shop the commerce channel of their own company, because they don't get his because it's only the in store sales, that that are factored into their metrics, only you can change that metric. And he started that happens in that certain zip code counts toward that General Manager of sales. Bam, suddenly, he's encouraging people to shop both channels, right. And then incentives, right, so people behave in a way that there's incentives are intended so so making sure that that, that the metrics drive the behavior that the incentives are already encouraging. And then lastly, tools, right, if we don't have people who are, or if we don't have the tools that enable us to collaborate, for example, let's say, I'm out, I'm going to hit on the commerce, you know, topic as an example, if we don't have a tool that enables me to actually see that customer's order that they created on my, on the Commerce channel, that's gonna that's gonna make it really hard for me as a store employee to actually behave in a way that doesn't make us look silent. Right, so So metrics and styles and tools, I think are key and I know we're at the bottom the hour, so I'll leave it at that.

Tiffany Serbus-Gustaveson  57:47  

No, that is a great way to end it. Love it. Dan, Michael, thank you so much. That was a wealth of information greatly appreciated. We definitely encourage follow up conversations with the Adobe and EPAM team. So we will do follow up post events and we'd love to have a conversation with you as well. So always feel free to drop me a line Tiffany@bwgconnect.com. And we can put some time on the calendar. So with that it's a wrap everybody have a great week weekend. Take care, stay safe, and we will see you at the next event. Take care. Bye too.

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