PODCAST - Unpacking the digital shelf

Roundtable: Tectonic Shifts or Snap Back?

There are some dramatic shifts happening right now in commerce. Are they likely permanent, or will they snap back? Peter and Rob highlight the major shifts and how digital pros can respond.

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Peter: Welcome to unpacking the digital shelf where we explore brand manufacturing in the digital age. Hey everyone, Peter Crosby coming to you from the digital shelf studios, remote headquarters. All right. It's my dining room table in South Boston and Rob is at the digital shelf Institute, Western Mass location. Okay. He's at his in laws in the Berkshires. Hey Rob.  

Rob: Hey Peter. 

Peter: Crazy times are audio quality may suffer because we're not in our big fancy studios, but dammit our content will not. Rob actually wanted me to start this podcast with day six of captivity, but I don't know, I felt the Anne Frank references were a step too far, but  

Rob: Gallows humor, my friend Gallow’s humor.

 Peter: A lot of that going on. But so Rob, I thought it might be fun to sort of dig into, you know, as we're, we're all searching for information about what's happening, what shifts are going on, all that kind of stuff. And I was wondering if, if you had any statistics that you wish you had that we haven't been able to find some.

Rob: Oh yeah. So I think what we want to talk about today is a whole, a bunch of different ways of thinking about winners and losers in this shift. How much of the change is durable [inaudible] how budgets are shifting, how manufacturers are reacting? Let me tell you some of the stats that yeah, we're on. My mind is I've been living in quarantine and thinking through how people's behaviors are changing. First is I am really curious whether the number of showers taken per capita in America has decreased. Like how many people just get up, turn on their computer and are on zoom and you know, that's, that's the new morning routine. I would see. I would think maybe they've gone up cause people were like freaking about out about being clean all the time. It could go either way. That's what's so interesting about this. And then it's got implications.

Peter: Like are you using more soap? Are you using less stuff? What about shampoo? Right. And related to that is how much laundry are you doing or doing less laundry. I mean, I think, you know, I'm dressed like a schlub right now, but I had a zoom yesterday with a guy who had a suit with a pocket square on in his kitchen. I think. I think some people feel like I still need to go through the routine of dressing up and like not being in that schlub thing, I've got a sort of helping them pull it together. Okay. I wonder. So you know, I don't know about you, but my Barry's bootcamp shutting down is killing me. And so I was just wondering what are the pounds gained per capita with every gym in the nation shutdown, you know, related to that. So I ordered a, a kettlebell I met my in inlaws, I ordered a kettlebell so I can keep, keep a fit here and I, I, it's a big kettlebell. It's an 80 pounder and I ordered it from Amazon and it was crime and the way that it was delivered is they just slapped the delivery label onto the kettlebell itself. Didn't wrap this thing. It wasn't in anything. It was just the kettlebell with a delivery label and they'd left it on the stoop.

Rob: It was like, was it like ups or was this like a local delivery thing?

Peter: Local delivery. I was so impressed. It arrived almost immediately. And then I talked to another friend of mine who was trying to think, you know, what, what do I do at home? And he had ordered a kettlebell too. And so there's, it's one of those shadow categories where there just might be huge numbers of kettlebell orders going on across the nation right now. A giant spike in demand.

Rob: It's actually really cool because also a lot of personal trainers are going online and on Instagram and like having workout sessions. Like there's a lot of Barry bootcamp, Barry's boot camp instructors that you know, with just some simple bands and stuff like that, you can just get online on Instagram and get your workout in. But I hate sweating at home. So as I'm trying to figure, what do you think about, so speaking of gaining weight what do you think we know, right? That the, there's a gain in the use of alcohol

Peter: That's certainly happening right now. Yeah. Huge in my household. Yeah. The online order spikes across a number of the largest alcohol providers is just astounding. I mean it's, it's, we're seeing some of the largest alcohol ordering across categories, beer, wine, spirits, Mmm. Of all time, much higher than Superbowl, much higher than 4th of July. So yeah, I mean, I think that, that those groups are doing, doing well and also they're doing well in new channels that traditionally were smaller channels.

Rob: Yeah. I had actually, there was the chief e-commerce officer at our hole said that they're seeing a larger percentage of customers over the age of 60 that are coming online. So, so I think there's a lot of like kids that are talking to their, their parents or their grandparents and saying, you got to do it this way. You can't be going to the store anymore. Or grandma, and they're getting online and, and 

Peter: That's from nanny Nathaniel Meyerson at CNN business, an article that he wrote. Yeah. I mean, I think the interesting question for this right is some of those stats that Nathaniel had in CNS business where downloads of Instacart, Walmart's grocery app and shipped, which is owned by target, increased 218% 160% and 124% respectively last Sunday compared with a year prior, despite promises for contact list delivery from several providers, including Uber eats, food delivery apps are not experiencing a similar surge in daily download. So this is saying that for groceries, staples, essentials, people are shifting to online orders. And I saw somewhere else that the online buying grocery penetration had spiked by as much as 10 points in over a week or two.

Rob: Yeah. Descartes said that 20 times in California, New York, Washington and Oregon. Yeah,

Peter: 20 times. I didn't see that. Oh man. So the real question here is how much of this is durable? So, you know, we get th this, this too shall pass and people are going to get back to their lives. [inaudible] Is the experience that they're getting through Instacart, through ship, through Walmart, grocery, through Kroger. I'm clicking collect and all those, all those programs, is it good enough that they're going to say, you know what cheese, you know, during quarantine for a couple months I ordered it online and it was nice and why am I going to the store? So it the, I think, my guess is some of that is going to be durable. Some of the gains that online grocery order are, are getting during this, this exceptional period are going to stick around. It's, it's the real question is how much of the game, you know, yeah. It seems unrealistic that all 20 points are going to stick around. But yeah, even a five point stick around. That's a massive shift in the industry over almost overnight.

Rob: So an analyst at credit Suisse, a guy named Seth Sigman said you know, wrote an analysis saying that they see the structural changes, you know, accelerating the changes in online shopping possibly by five years is, I don't know where, I don't know. Yeah. I read, been able to get access to the report, but yeah, that seems

Peter: Possible. And logical. Yeah. I mean [inaudible] the, it's early days still. Yeah. But we've seen shifts in budget immediately from store to online within many of the fortune 1000 companies that we've spoken to. And this, this is, this seems to be across categories. You know, whether we already talked about alcohol, but Mmm. Apparel, which no apparel is going to, I think suffer quite a lot from this. We've heard Macy's, Kohl's, target, Amazon, Hm. Stopping Q2 orders the whole season.

Rob: Yeah. And the supply chain for apparel is, is really difficult to [inaudible]

Peter: It's really difficult, right? So those, those companies that we're relying on sell through the department store channels or, or target [inaudible], they're going to move online and aggressively to see if they can make up some of that volume, right. That they're probably going to be, they're not going to make up all the volume, but maybe they can make some of it up. So you've got alcohol, you've got apparel, obviously all the grocery categories with Instacart and shipped and so forth are, are putting a lot of effort into, into digital right now. Home jam. So Peloton stock is way up. We just talked about kettlebells,

Rob: Right?

Peter: Probably every piece of home gym equipment you can imagine is doing quite well right now. And so I, I crossed the industry. It's it feels like that, that five year, like early shift that, that you just this whole thing is gonna accelerate digital five years that, that, you know, that might not, that might not be that wrong. Right. It might like the budgets and the people and the attention for all these companies are going to shift hard right now. Yeah. There might not be a compelling event for them to go back to business as usual in three months. Yeah. Business insider had a list of the stocks that have soared during the virus Peloton, as you mentioned, Netflix of course. Zoom. I mean here we are podcasting over it. Thanks. Thank you. Zoom, zoom, zoom, zoom, zoom. So anyone that knows that song, because of my age group, I blush a blue apron, which goes against kind of the people not using Uber eats, but at least maybe they people get to cook at home but not have to go out Lakeland industries, which makes hazmat suits so dicey.

Peter: Go Lakeland. I know. Please crank them out. My God. So I get, I get the blue apron 3m because you're at home. Cooking is a great activity, but also it's packaged. Yeah. NPR had a study that came out about three months ago that said more than a quarter of home delivery restaurant drivers admitted to eating the food on the way to delivery. And a lot of people saw that. So you sort of, you can imagine, you know, there's, there's some fries sticking out of the package and they just grab a couple fries. Yeah. And so I think a lot of people saw that and were like, Oh no, is home delivery from the rest of Toronto. But they're willing to do things like a blue apron, which are, are packaged. And also, you know, the, the whole, the whole point of those, those meal kits is that they relieve some of the stress of having to think through what are you going to cook?

Peter: Yeah. Recipes you pick up. With the grocery stores being a little bit empty right now they might be lacking some of the ingredients that you're looking for in blue to green doesn't have that problem. Right. Hey Rob, what do you think of? I have this you know, particularly with the news that Amazon suspended FBA shipments for three P sellers that are not in the, so three piece seller ship, FBA shipping shutdown so that they can open up their warehouse space for the critical core products that people are trying to buy right now. It just seems to me that this also will put pressure on brand manufacturers to expand the number of channels that they're able to show up on their, kind of spread their bets a bit more. Do you, do you, is that that thought, right? Do you feel like three piece sellers who really are relying on Amazon and, and are, you know, see that possible channel being unless they have their own fulfillment capabilities themselves, they really might want to start to spread their bets around to, to other retailers.

Peter: I think there's anything to that maybe, I mean, ultimately this whole thing is it yeah. Is about demand management. Yeah. And in some cases the demand is falling off a cliff and other places the demand is spiking and that's putting a lot of sudden whiplash pressure all up and down the supply chain and various ways. Amazon's logistics that work is, I mean, ludicrously impressive, but it runs it near capacity. Most of the time they're not sitting there with a lot of spare capacity. I mean, they're there, one of the theories that we talked about with amen earlier in, in an earlier episode had to do with Amazon pushing to 3:00 PM in part because they just can't build warehouse capacity fast enough. Right. So there's, I see, I'm willing to take their strategy. They're at face value. They're hiring a hundred thousand additional workers. Yeah.

Peter: They're clearing out warehouse space. They're trying to meet the demand of the crisis, which is, you know, for, for, for toilet paper, for example. And, and, and they're doing, they're doing it as aggressively as they can. So I don't, I don't think it's necessarily, I'm telling about the durable demand change in other categories. I think it's more about the current demand change that's, that's very spiky. And Amazon's able to do this because they've just got so much nimbleness and agility and execution for their supply chain as an organization compared to many. Mmm. So, yeah, I, I, I think that if you're looking at the demand drop and Amazon, I don't think it's going to be a durable demand drop for your category. I think it's, I think it's just the nature of this, this crisis happening to everyone right now. Yeah. Yeah. And it's just hard to imagine that once we, once we renormalize people aren't going to just go back to it.

Peter: Back to Amazon habitually. I mean, I'll tell, I'll tell you that our grocery store, I bake a lot of bread. Our grocery store was out of flour, so I went to Amazon to order flour. Amazon's out of flour. So then one of the brands I really like for my sourdough is King Arthur. So I went to King Arthur. They're, you know, they're their direct to consumer site and that was out of flour. So I think you'll see a lot of that where people try Amazon and then try something else and then try something else. And you know, maybe maybe some of those purchases will bleed out. [inaudible] I think a lot of that behavioral snapback back to Amazon once the, once the inventory's backup. Yeah. It'll be interesting to see how Amazon, Mmm, sure. You know, their algorithm, if you're out of stock, you get destroyed and you're at the bottom of the sales results for three months to climb back up. I wonder if somehow they will be working on their algorithms so that the out-of-stocks that have happened as a result of what's happening right now, we're not punishing. Suppliers who had no control over whether they were staying in stock or doubtful. I think they're just, you know, like the good thing is everyone's good at it. Everyone's out of stock. So that's an interesting thing because it does say be be ready when, when things do snap back have, and you, when we think about

Rob: What are the, what are the attributes that will drive rediscovery, you know, what are the experiences you can create online? Make sure that your, your content is UpToDate taking advantage of the latest attributes from your retailers. So when you do get on, you've got really solid, solid content experiences that drive those algorithms, right?

Rob: Or even right now, right? Like there's a lot of people, let's go back to the gym example. There's a lot of people who want to stay, stay fit at home, but don't necessarily have a lot of experience managing their own fitness routine. They're not really sure what's good or bad. You could imagine as, as a manufacturer, updating your listings on Amazon too, to mention, you know, workout at home during the, during the pandemic, coven 19 workout at home, like whatever the, whatever the search phrases are and and having that actually be, be useful to people. Right? So workout bands, kettlebells, jump ropes all that type of stuff that consumers may not be thinking about. Exactly. One of the things that I used to use were captain crush. Yeah. [inaudible] Mmm squeezers so you could, you could improve the grip strength of your hands. Captain crush. Yeah, captain cry. So it's, yeah, I know you, you definitely worth making fun of me for those things. It's like they're the things that you put in your hand and you squeeze and you'd try and make your hand and forearm strength stronger so that you can hold more weight with it. It makes me want cereal. That's why I was reacting like tagging.

Peter: So this is a little bit of, we should probably link to this in the show notes, but one thing that you can do if you've got enough grip strength is you can tear and tired telephone books in half. It's one of those like little carnival tricks that's pretty fun. Yourself doing that. No, so, but, but, but like I, you know, right Brighton. So there, there are the things that you gotta be prepared for when the demand picks back up, but then they're the things right now to help your brand be relevant to people and solving their problems in a moment right now. And that's what's so interesting about the digital shelf as a whole is that you can change your brand and adapt your brand to whatever the current market condition is much more quickly than you can on a physical shelf. Like you can't update your packaging on the product that's already in Kroger, but you can change the packaging on amazon.com and on kroger.com

Peter: To communicate value and the moment of crisis. And so I think we're going to see, we're going to see more and more of that depending on how long this goes on for. One company that I would love to see doing more of this. I'm a huge fan of theirs, especially given the toilet paper. Crisis of 2020 is Toto. They make the Japanese toilets, right? Yeah. I don't understand why their stock is not spiking like zooms or three M's or pelotons. Cause if everyone in the, this is the, this is the moment where America should embrace Japanese toilets. Everybody should be going to and ordering a Toto right now because that is your forever solution, not just to the short term toilet paper crunch. [inaudible] For toilet paper forever in your house.

Rob: Is that what I, you're going to need to educate me here. What is a Toto? What does a Toto toilet does that does not involve toilet paper?

Peter: Well, so the Japanese style of toilet is a, it's like a big day built into your toilet, you know, so you do your thing and then it's got water jets and hairdryers and stuff like that going on. And so you don't need toilet paper.

Rob: So that really does eliminate the need for toilet paper.

Peter: Oh yeah.

Rob: Oh wow. I mean, I've honestly, I mean this is probably more information than our audiences, but I've never used a big day. I've seen them and then they just, yeah. I, they, I just couldn't,

Peter: Right. I moved to my family, moved to England in 1990 and yeah, we stayed first in a hotel room that had a day that, that was separate from the toilet. And I remember vividly my brother and I, we're thinking, what [inaudible] this thing? [inaudible] It's toilet like an appearance, but it's clearly not a toilet, like a water fountains. Well, that's the thing is that, so that, what do you do as a kid? The first thing you do is you, if there's a knob or a button or a lever or a switch, you are going right for that thing. And so we go right for the, for the, for the the water nah. [inaudible] Turn it and the water darn near hit the ceiling. I mean we're talking six, seven feet of, that's a tremendous amount of pressure. So like the Japanese toilets are more gentle than that UK toilet, you know, it makes sense. But, yeah. So why not tell America this is my call to action for America, America, Japanese toilets.

Rob: I dunno if I want a plumber in my house right now, but I, I hear you. Yeah. Hey, so let's close out you had mentioned this earlier, but this what w the trend that we are starting to see where manufacturers, where suppliers are really rethinking their budgets and frankly their team organization when it comes to shopper marketing and advertising spend, we we had a conference call with some executives and and some partners through the digital shelf Institute the other day. And Rachel Tipa Graf, who's the co founder of MikMak that's you know, a show in a way kind of a shopper making shoppable moments happen through, through digital means. It's an amazing agency and, and capability. But she was on and she, she had four sort of pieces of advice to the executives on the call.

Rob: About what geez, seeing working in the midst of this pandemic and one was move your dollars, you know? Mmm. In store TV plus event dollars. She's seeing that move into eCommerce marketing to diversify your spend. That if everyone takes those millions of dollars that they're repurposing and put it all into Amazon, your customer acquisition cost is going to go through the roof. And so you've got to pick some other lanes where you can reach your audiences that are not necessarily Amazon. Let me just stop there with those first two Robins, see if you have any, any thoughts or anything to add in those two?

Peter: Yeah, those are, I think there, there's, there's categorically a couple of different ways to look at shifting business operations from a brick store focused you a more, I'm not going to say online, I don't think that's exactly right, but more of an omnichannel digital shelf focus. And one type of shift is simply accelerate changes that are already happened. Like, there's not a, there's not a manufacturer in the world that isn't shifting some, some trader brand dollars over two, you know, PR online performance marketing and some people call it shopper marketing. Some people just call it, you know, digital advertising. So, you know, falls into different buckets. But that's been happening for years. This is just getting those. So one type of shift is you just accelerate stuff that you're already doing. So yeah, I think that's going to happen. How durable that shift is again, is going to just dependent on when the demand snaps back, how much of that demand goes back to the store. The second type of shift is a more durable shift, which isn't just accelerate what you're doing but instead do something differently. [inaudible] That's the more interesting thing for me is that over the last seven years, you see, or 10 years you see 'em online as being a guy in a basement, in a corner, managing Amazon

Peter: Two then a team somewhere within the sales group, managing Amazon to then a team that has like a center of excellence that not just manages Amazon but also participates with walmart.com and Google manufacturing center. And you know, if you're, if you're in B2B industrial supply, the Graingers and MSCs of the world that have invested heavily in digital. And then then you move to like a CDO model where you get a span of control over supply chain plus maybe some advertising and then the sales organization. And so the, the, there's an evolution of organizational model that has happened for a lot of companies Mmm. In response over a long period of time to this, to this digital shift. So, so the second type of shift, which she then she, it goes on onto I think is once you change the org structure that's more durable, that's really hard to, that's really hard to snap back in the face of snapback demand.

Peter: So she says, number three, redeploy your teams from physical retail, marketing to virtual. If you actually make that change, it's really hard three, four months from now to say, okay, go back to that job that you used to be doing. Right? Yeah. I mean, but what I would, where that shift does is encouraging one, those silos need to come down anyway. We all know that. And I think the digital people were having trouble in some places. Mmm. Having the influence, the, the sort of power, because it's still an [inaudible] five 15, I mean that, you know, 85% offline dollars, you know revenue and 15% online, you know, sort of a broad number. And so it's always been difficult for the digital side to say, [inaudible] got to over invest in this channel. And you know, there's always some tension that, that Springs up there.

Peter: And I think this sort of, hopefully, even if, if people, people are still going to retain their physical, you know, online capabilities, but if, if some of, if more of the merging of those teams happen and some knowledge sharing and skill sharing happens, even if they all sort of returned somewhat to their corners, that awareness of each other's sort of expertise is and, and that knowledge sharing I think could be really positive. Yeah, I think that's right. Actually, one of the first episodes we did was with a snap shot from Bosch and one of the values that he had mentioned specifically in that, in bringing the digital and the physical marketing teams, the brand and the trade under [inaudible] [inaudible] functional team at Bosch power tools was the surprises in the ways that getting excited, Oh, so across those different teams to each others concerns was beneficial in a durable way that changed behavior.

Peter: And it wasn't just, you know, the offline people learning, you know, e-commerce challenges, but it was also the e-commerce people learning things about branding that are really important. For sure. And so, yeah, I, I mean even if I'm wrong and the organizations are more aggressive to snap back to business as usual after this is done, I think, I think your point is well made that there's going to be lasting, lasting changes just due to the experience of this that will echo throughout the industry final. Her final point is you have to figure out creative ways to make new content and yeah, that's a lot of what MikMak does with their customers. But I think the point is, is right. You know, when you can't gather more than 10 people in a room, you need a content delivered online that's creating those connections between people and thinking about what forms that might take and how they get delivered through social channels, et cetera, I think is a really cool challenge and opportunity that will last beyond the snapback. Cool. All right. So the Rachel will actually be with us on a podcast on April 2nd, and that's actually going to be the first the first piece of content in our newly announced digital shell virtual summit series. As, as many of you know, we had planned a alive gathering in may for the digital shelf Institute and we were, had an entire summit plan and we are pivoting to take that content online and create a mix of content. Some of it might be just videos, some of it will be these podcasts, some of it will be interactive webinars, digital roundtables videos of hand puppets where we're making it up as we go along. But the first issue will be Rachel on our podcast talking about about this advice and much more of what she's seeing in the industry and digging into these things deeper. So join us. You can sign up to get updates on all of the content that we'll be shifting out or there we'll be sending out during this virtual summit series and you can go to salsify.com/digital-shelf-summit-twenty 20 that's salsify.com digital dash shelf dash summit dash 2020 throw your name into the form, your email address into the form and we'll just keep you up to date as all of these things that had been planned at our live summit now start coming out virtually. It's going to be some tremendous content that I know will will resonate not only for this next period, but also for your comma strategies to come in 2020 and beyond. So Rob, thanks for joining in from from DSI West or Western mass. Anyway for all of you out there, please follow us on the institutes LinkedIn page. If there are things you want to hear about. During this time drop us a line is we would be, we will find the experts to talk about it. Tweet us, wind, digital shelf, you know, and we'd love a review just to keep people coming. But really most of all, thank you so much for being part of our virtual community.