Andy Murray, Molly Rapert, and Rod Thomas on Retail Media Networks with special host, Brent Williams

Andy Murray

Hi, I'm Andy Murray. Welcome to It's a Customer's World podcast. Now more than ever, retailers and brands are accelerating their quest to be more customer centric. But to be truly customer centric, it requires both a shift in mindset and ways of working. Not just in marketing, but in all parts of the organization.

In this podcast series, I'll be talking with practitioners, thought leaders, and scholars to hear their thoughts on what it takes to be a leader in today's customer centric world.

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Hello everyone. And welcome to this episode of It's a Customer's World. I'm Andy Murray, and today I'm excited to preview brand new research on retail media networks from the Sam Walton College of Business's Customer Centric Leadership Initiative.

This whitepaper will be our second release of academic research on retail media networks. The first being a little over a year ago. This year's research was conducted by myself, Dr. Molly Rapert, an Associate Professor of the Sam Walton College of Business, who specializes in marketing, and Dr. Rodney Thomas, who's an Associate Professor and Director of the Undergraduate Supply Chain Management Program, also at the Sam Walton College of Business.

Now, because I was part of the research team, I've asked Interim Dean of the business college, Dr. Brent Williams, to host the episode as moderator, making it a little bit easier for me to participate. Brent is well versed in retail media networks, and he participated in all the interviews last year and has been intimately involved in helping this year's whitepaper come together.

In this episode, we will highlight some of the key themes we discovered through our in-depth interviews with industry executives who are in key decision-making roles regarding retail media networks.

Before we go to the episode, though, I want to say thank you to all the interviewees who graciously gave us their time and point of view, as well as a special shout out to two Coca Cola execs, Simon Miles, Vice President of Global Omni Channel, and Elaine Bowers-Coventry, Chief Customer and Commercial Officer.

Both have generously supported us in this work from day one. So, without further ado, let's go to Brent, who guides Molly, Rodney, and I through quite a lively discussion.

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Brent Williams

Well, Andy, Molly, Rod, thank you for joining me today to discuss our upcoming whitepaper that will be released really shortly on Retail Media Networks. Thank you for being here.

Andy Murray

Yeah, thank you.

Brent Williams

st whitepaper in September of: 2022

What kind of, what was the same, but what was different? And we certainly have seen that. I think I'm really excited for everyone to get a look at this paper. It's a little more in depth than the last one, because it seems like there's been a lot going on.

Andy, I'm going to start with you just macro start last year, over the last year, what have you seen happening in this retail media space?

Andy Murray

Brent, I'd probably like to put this in the concept of a metaphor to maybe begin to give people a picture of this. Pretend you're a family of five. You got three kids, and it's Saturday morning, and you need to go do the laundry. Except your washer and dryer that you've been using for the last two decades is starting to wobble, and you're not sure it's going to hold up.

So, you go to the laundromat. The new omni channel retail media laundromats that are popped up all around your town and you go in and you have to put your quarters in first before you enter the building, right? So, you're putting your quarters in, and you put it on this one big new complicated machine.

You've never seen before, but boy, does it have a great label about what it can do. And you put, you dump your darks, your whites, your delicates, your bedding, everything into one big bucket and out it comes. But then when it comes out, you got to put it in a bag. You can't look at it. You got to take it home and then start folding it to see what happened.

And you don't really know. And so, this time last year, it was like, gosh, some of the whites are a little pink. Some of the delicates got fried. The darks are looking pretty good. And I think that's where we were last year. And I think where we are this year is people have figured out, okay, we need to sort the laundry we've got, and it's a bit more sorted.

So, the darks are together. You're not throwing it all in one piece and you're beginning to understand what works and what doesn't work and not all the laundromats were built the same. And there's a real difference there. And I think what we saw from last year is that we didn't know that these were popping up like mushrooms after the rain.

And I think what we're finding is that most of the big CPGs are looking at five to seven. And that number is quite a bit smaller than what we might have thought might have happened over this last year for a variety of reasons. And I think we got into the whitepaper. We started to uncover what are some of those reasons and where this industry might end up going.

Brent Williams

And so, what you're saying there is, you know, you look back a year ago, we were in that. Retail media networks were popping up everywhere. I think at that time there were five or six hundred that had been recently stood up. Some [are] more mature clearly than others. But many retailers were standing those up.

There's probably been some additions over that last year, I'm sure. But what you're saying is that people are really starting to get their head more around this and identifying key retail partners that they're going to really invest in and the industry is... I don't know that saying mature is right but starting in that face.

Andy Murray

Yeah, I think that's fair. And I think you guys probably agree that no one feels yet that the laundry is perfect of what's coming out the other side for the quarters that are going in. But the learnings have been tremendous. Lots of test and learn over the last year. Lots of learning how the machines work and how does this come to life.

And I think that's really evolved and surprisingly so in one year.

Brent Williams

probably, hopefully read the: 2022

Set of people, experiences, parts of the world that they're working in, different retailers, different brands. Rod, you do a really good job, I think, of explaining, how do you take all of those interviews and then get down to some insights?

Rod Thomas

We start interviewing and you got to talk to people that are willing and able to talk to you with expertise in the domain.

And then once we've talked to a couple of them, we get together and go, what'd we hear? We start looking for common patterns. It's a pattern recognition process. What are the themes that are coming out? In these discussions, and then we go talk to other people and we say, we think these themes are here, but let's make sure this isn't just a US-centric theme.

Let's go talk to people in Europe, or let's go talk to people in Asia. Or maybe this is just for this specific retailer, an issue. Let's go talk to other retailers or other CPGs or suppliers. And as you get broader and broader, and you talk to more and more people, those themes of those codes that we use to go over transcripts become much more refined and we get to key insights.

So it's a pattern recognition process based off of what's happening in industry. With people that do this every day. It's our lab.

Brent Williams

We termed our first paper as the promise. I'm going to ask you a question. I've got my own sense of this. I'm always excited with the new phenomenon like this. I'm excited by new technology. I think this is transformational potentially, right?

There's a lot of work to be done. Did you hear a bullish or bearish perspective out there?

Molly Rapert

I think that goes in a theme of, that I have coming out of a macro trend that there's a bifurcation. The answer to that is yes, we heard a bullish and a bearish. And it really seems to be, we could split that look so many different ways, but to me it seemed to be based on whether somebody was an early entrant, or had been sitting back a little more passively, some of our early entrants were making comments to us.

We're not sitting and waiting on somebody to tell us how to do this. We're building micro sites internally as part of our training and capability building where another person said we're developing new capabilities internally and we're sharing them. with our retail partners. That more assertive approach taking ownership of it definitely came out with a lot of the early entrants.

Brent Williams

And when you're talking about early entrants here, you're talking about brands that have decided that they are really going to invest into retail media networks into their own capabilities to extract value.

Molly Rapert

Yes. And taking ownership of it.

Andy Murray

I agree with everything Molly just said on that. But I also think there's another cut at it that defines the bullish versus a bit bearish.

And that is the size of the company most of the early investment has been done by the largest CPGs who have resources, the data science, the capabilities to test and learn. Budgets are big enough to test and learn it behind. I think where it gets more bearish is mid-tier suppliers who are into this space, whether they've been compelled to be in it or they just, it's part of what they feel like they have to do.

May not have the sophistication to this is a laser operated thing and when you treat it like a blunt instrument and just write a check that your results aren't going to be near as much and it's complex and difficult. So I think the newer entrants that are more in the mid-tier suppliers that Probably didn't grow up TTC and have that digital capability are the ones are probably going to struggle the most right now because the cost of entry is not cheap and you might spend your whole annual budget on just getting in the game versus having the funds there to do A/B testing and trying to experiment to figure out what you're going to optimize.

So, it is a bit harder for the mid tiers to do it. I think the big have gotten better and the mid tiers are going to be struggling a bit to catch up.

Rod Thomas

The other demarcation point I'll make is providers of retail media are very bullish. Those that give retail media services, consulting firms, agencies, the retail media network managers themselves tend to be very bullish.

I don't, I'll say the users of retail media, I won't say they're bearish.

Brent Williams

By that you mean the brands?

Rod Thomas

The brands, the customers of it, and they could be internal, external, it could be the merchants. It could be the brands. It could be other functional areas. I won't say they're bearish. They're more demanding.

They're more informed this year. So, they're asking for more. And they're seeing because it is relatively new. They're seeing more opportunities. So, they'll be critical of some things in a bearish manner. But I don't think they're necessarily bearish. They're just trying to make it better.

Andy Murray

And we, we asked the question, would you still invest in, in retail media network if there was no sense of being compelled to do that?

And everyone said yes, because they do believe in the promise. They may not be investing at the same level. They might be doing more tests and learn levels of investment, but I don't think we found one person that we interviewed that felt like this isn't the right way forward.

Rod Thomas

Here's the other thing that came out.

We're talking about this offline a second ago. Retail media networks, you do get sales lifts out of it. It is incredibly micro targeted. It might not be enough of a lift at the price point some people are charging, right? But it works. When we hear the bearish comments, it might be a function of price point, right?

If you're willing to take a little bit lower margin, right? Retailers, retail media networks. If you're willing to take a little bit lower margin, you might get more business out of this, right? Or have more bulls, if you will.

Molly Rapert

And we had one executive that referred to it as a really mixed cornucopia. I loved that word of retailers where we might be.

They might be fulfilling 60 percent of the promise that brands expect. But maybe some of those. Retail media networks are fulfilling 5 percent and others are fulfilling 80%. And so, we really see this mixture of performance on the part of the retailers that's still driving a bit of concern.

Andy Murray

I agree, Molly, and I think what I've seen different happen versus last year is retailers were just being compelled to stand up a network, right?

They just like something you got to have, but those that seem to be more successful have really clarified their value proposition to brands about what makes them unique. And I think of Dollar General and what Chad Fox has done there saying, look, we can own the rural customer. And really provide data and insights there and they don't have a big e commerce traffic base for that at Dollar General, but the insights he's been able to provide because he focused his value proposition is really allowing them to play in this space in a much bigger way.

And so, I think the clarifying of your value proposition and what, how are you going to get those brand dollars? What makes you unique is something that we saw emerge over this last year, frankly.

Brent Williams

Well, one of the things our listeners slash readers will see in the white paper is where gaps closed and where have they not?

Andy, there's a section in there about strategic clarity and what you just said reminded me of that. Maybe expand a little bit on what you mean by you're seeing some of the gap really closing in strategic clarity.

Andy Murray

Yeah, I think last year when we talked to different interviewees, they talked about needing to have certain things but not necessarily having them.

Some didn't. But what we saw pretty universally is that the ability to assess a retailer's capabilities and really understand what's there and what works for them is everybody. It's got that right. That's now table stakes, a segmentation strategy for your market. That's table stakes, having work processes lined up table stakes, having an upskilling program where you really are intentional about training, that's really paying off fruit and that clarity about where that's going is there. And I think there's more clarity now around things like, should this be part of the JVP process or not? That there's real clarity whether, and it's divided in terms of different companies' approach, but that company has more strategic clarity about where they want to play in that space, where before these were more like unanswered questions that were bid up in the air and a lot of experimenting.

Molly Rapert

And I'll add, we each sort of took ownership of different aspects of the papers that we have the promise, we have the gap, we have the way forward. They're so interconnected. So, when we see this increased strategic clarity that's taking place, really, that's resulting in the goalposts of the promise are moving as one bit of the promise becomes an expectation that's been met. Another part of the promise is emerging. Our consumers are becoming more discerning. Our brands have more strategic clarity. Our retailers are gaining capabilities that they didn't have a year before. And so, these goalposts of the promise keep moving and elevating. And, for me at least, with a velocity I've never seen in my career.

This is just happening so fast.

Brent Williams

Same, but different. I keep going back to that phrase, that's, been put in the paper. This is, it's a customer's world podcast. In the first paper a year ago, we focused really intently on the consumer, the customer, and how value is created. As like a core, like this is a premise that you're going to have to base yourself on.

That change at all?

Andy Murray

No, I don't think it changed, but I do think to Molly's point about the goalposts moving, I think what's different is look what's happened, chat GPT, right? So all of a sudden now the search bar, where is that going? And that's a 70% of the investments in retail media network is based on search, right?

As a tactic. But that could transform consumer experiences or consumer expectations rather of what they expect to see. And if retail media network was built around that. Type of consumer interface. That interface is now getting disrupted. Amazon's announced new things happening with AI, to allow for you to shop differently, right?

So, here's a goalpost that may have moved from where we were last year about that. But it does make retail media network infrastructure even that much more important to get right, because you have to have those components in order to enable that. So, I think as you look forward this time next year or a year after.

We're going to see expectations continue to change as new technologies come into the store around RFID. One of the big questions, things that was expected we heard was, where's this play out in store? 85 percent of my sales are in store, right? There's a lot of missing components in store to enable this kind of capability to be, to work.

And I think some of the things we're seeing like RFID, electronic shelf labels and others are real technology investments. Being made in many retailers that will then allow some amazing things happen in terms of how the consumer might experience their shopping differently.

Molly Rapert

And I'm glad you brought that up because that to me was one of the key differentiators between this year's interviews and last year we had minimal reference to in store and this year we had.

So many references from a variety of perspectives, whether no matter who we were talking to, it kept coming back to the bottom line is I want my consumer to feel personalized, relevant messages no matter where they are, and that is becoming part of the expectation that was not present last year

Rod Thomas

And they want bundles, right?

Not just a retail media ad via email. But that has to tie into what's happening at the store and that has to tie into merchandising messaging. They want all those things to come together for synergies, alignment, if you will, to get everybody pulling in the same direction to make retail media investments even more effective.

Andy Murray

And that's going to be challenging. What I see happen, what I see happen the last year is many of the people we interviewed on the CPG side had taken an end-to-end approach. They use that word quite a bit. Their education, their training, their upskilling was end to end. Their coordination was end to end.

But if you look at how most retailers are set up today, the word silos came up quite a bit. The silos. Are there that's going to make it challenging to deliver what Rodney just said, which is I want this bundled in more seamless, but I would just ask the question. Who's the maestro that's organizing and coordinating that in the retailer space?

And I've got a personal belief. It didn't come out of the research is that the merchant's new role is that of a maestro to be able to coordinate that and get the music working across all those different parts. Because now you got everybody playing at the same time, and that's an orchestra. But yet we haven't seen the What role will step forward to be the maestro to get everybody on the same page and in tune at the same tempo?

And I think that's the evolution where we're seeing it more happen on the CPG side as they've tried to work through this. But it is harder coming from a retailer's perspective. It is harder to integrate those points. And the store has always been who owns the store question. Is it merchandising? Is it marketing?

Is it customer experience? Is it operations? And some of those things are age-old problems in retail.

Rod Thomas

You were nailing the metaphors today from laundry to symphonies. I'm all over it. I love it. Other pictures? My, I love it.

Andy Murray

I got more, there's more coming.

Brent Williams

Rod, without giving away the whole punchline, the way forward, just tell us a little bit about what are some of the key themes that we heard.

Rod Thomas

We've talked a lot about the alignment already. Measurement is always going to be a big issue. Measurement is the differentiator with retail media. Retailers need to, they have this treasure trove of historical sales data. They need to leverage that first party data. And they need to provide it in a way that these suppliers can really dig into and get meaningful insights.

And the paper goes into much more depth on what those would be and what it would look like. The integration of systems. In our supply chain world, point of sale has been out there for decades. Anybody can get point of sale information on how many widgets sold in the Rogers Arkansas store last Tuesday versus last year.

Retail media needs to get to that same point where everybody has access to that information to do their jobs better. And we touched on the human capital piece. There are still training needs. It's still a relatively new area. People need to understand what retail media is, what its capabilities are, how they can contribute both on the retailer and the supplier side, the CPGs probably need to invest in some different skill sets as well, right?

Data science is going to continue to be a bigger and bigger piece of this, but not just a data scientist that understands marketing and consumers, right? And that's a unique combination that everybody's going to need. So those are the four key themes that I think people could look forward to in the white paper.

Andy Murray

And I hope to Rodney's point on integration, I think there's an element that needs to come forward for the future to standardization.

Rod Thomas

Yeah.

Andy Murray

That standardization is so key. One more metaphor, Rodney, that I think you may like, I don't know, we'll see, but imagine if you're in your living room and you've got your coffee table there and you're wanting to look at the different streaming apps, right?

You got Disney Hulu, Amazon Prime, but each one required its own physical remote. Or it wouldn't work. And so how many remotes can you have on your coffee table before it becomes intolerable, in terms of complexity? And I think that lack of standardization is like sitting down and watching television where you've got 15, 20 remotes.

That's why I think we're seeing... This lack of standardization, many CBG can't deal with that complexity. The word overwhelm comes to mind, and we heard that a bit in terms of the feeling it is to try to harmonize all of these different disparate pieces. And so hopefully we'll see more standardization.

There is no universal remote right now that would work across these apps, and I think that's a real barrier.

Rod Thomas

Can I run with the metaphor?

Andy Murray

Yeah, please.

Rod Thomas

Not even just multiple remotes. It's you got to go next door to a different TV. Or upstairs, downstairs.

Andy Murray

Yeah, it's definitely more like that.

Rod Thomas

Ease of use for purchases of your service is what's needed.

Brent Williams

For those of you that want to download the paper, I promise it's not only a set of metaphors.

Andy Murray

I don't think there's any metaphors in it, unfortunately.

Brent Williams

Fair warning, it is a little more in depth. It's certainly a little longer. And I think that there's, that's a metaphor actually in itself, I think, for how far...

The industry has come in a year. And so, I hope that everyone listening will download the paper. I hope it's useful. Whether you work for a retailer, a brand, an agency. If you're involved in this ecosystem in any way, I think it's worth the time to read.

I'm very thankful for all of the executives that gave their time, gave their expertise so that the Walton College and this research team could create insights that we hope advances the industry. Molly, Andy, Rod, thanks for your work and thanks for spending time today.

Andy Murray

Excellent. Thank you, Brent. I want to get my job back as host though.

Brent Williams

You got it.

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Andy Murray

That's it for this episode of It's a Customer's World. If you found this helpful and entertaining, I would be so grateful if you could share our show with your friends. And I'd be super happy if you subscribe so, you can be updated as we publish new episodes. And if you really want to help leave us a five-star rating and a positive review on apple podcast or wherever you listen, it's a customer's world.

Podcast is a product of the University of Arkansas is Customer Centric Leadership Initiative and a Walton College original production.