Use AI and analytics to make the future part of the present.
At the Northwestern University Retail Robotics and AI Conference yesterday, grocery industry thought leader Ron Lunde presented on the changes happening in retail and the use AI and analytics to make the future part of the present. I recently sat down with Ron to discuss his presentation in more detail.
Gary Drenik: Could you give us a brief overview of your topic SHIFT HAPPENS?
Ron Lund: Thanks Gary. My presentation focused on the areas of retail AI strategies and analytics trends…with a focus on grocery, but including channels such as conventional grocery, dollar stores, hard discounters, mass and internet. I focused on groceries due to the dollar volume and frequency of grocery transactions as well as the segment’s sensitivity to why SHIFT HAPPENS.
Drenik: Could you give us an example of why SHIFT HAPPENS? Some examples of the impact of “Shift Drivers”?
Moon : We’ve covered several in the presentation…but look at the table below as an example. (This historical data is from the monthly Prosper Insights & Analytics survey.) You can just visualize the dramatic, multi-year relationship between consumer confidence and grocery spending.
Another example of SHIT HAPPENS is a temporal study of the evolution of the average number of minutes per day between digital and media usage trends. (This historical data comes from the annual Media Behaviors & Influence™ study conducted by Prosper Insights & Analytics.)
Dr. Martin Block of Northwestern University was a co-author on a paper published in 2017, A quantitative relationship between signal detection in attention and approach/avoidance behavior, which deals with how the domains of reward and attention interact at the systems level. The document provides a foundational and transitional understanding of consumer interaction with media and messaging.
Drenik: How do you think the transition from traditional media to digital media is affecting the global market?
Moon : Today, the number of people owning a smart and versatile phone would be around 7.3 billion, or 91% of the world’s population. The “Signal Detection” article I mentioned earlier perhaps helps explain why today 21% of all global retail sales are online and why 63% of all purchase journeys begin online, whether consumers buy online or in-store.
Result: the information is global. Two-way communication is instantaneous. The digital consumer is disrupting both product provider and distribution models. Adam Smith’s age-old concept of the law of supply and demand is being disrupted and shifting to a new model of demand and supply. The fundamental rules of trading strategies, tactics and economics are changing.
Drenik: What do you think is the impact on retail?
Moon : Historically, sellers, both product suppliers and retailers, have dominated the market model. Today, however, consumers | buyers rule. Product suppliers need to shift from selling what they make to making what they can sell. Retailers need to shift from selling what they buy to buying what they can sell.
New rules require new tools. Suppliers and retailers need to ensure they have the right products in the right place, at the right price, at the right time, and that they comply with changing regulations and global consumer privacy laws.
Rick Fizdale, then president of Leo Burnett wrote a preface to the classic marketing book, Integrated marketing communications Assemble and operate. “The database will prove to be a more powerful marketing tool than television ever was.” He further noted that in the United States, with its remarkably diverse population and clearly defined regions, aggregating consumers by raw demographics (as well as the very idea of ”mass”) was always an illusion. “The old assumptions, strategies, and tactics of reaching a broad base of people with a single mass media sales message are no longer valid.”
So here we are today. Yes — new rules require new tools. The conceptual framework of marketing as a premise is now turning into everyday reality, as the technology of information and digital message delivery makes it possible to segment a once faceless mass audience into a number of cohorts or even markets. clearly defined, different and highly relevant… with both metrics and ROI to validate effectiveness.
Drenik: A final thought?
Moon : Yes. In the Retail Analytics Council presentation, I will cover a wide range of topics that all relate to why Shift Happens. Intuition The impact, I believe, is that product suppliers and the retail organization must learn to replace decisions based on intuition not simply with “big data”, but contiguous, regulatory-compliant 1st party and/or 1st anonymous data or “intelligent data”.
Organizations must collaboratively develop a pool of alternative mental models – to view their customers and markets not in linear terms of the past, but as adaptive, data-informed entities. When intelligent data replaces the historical insight patterns of the past as the framework that frames business opportunities, issues, and challenges, the organization can begin a process of transformations to seek out the types of initiatives and connections that make things happen.
Drenik: Thanks Ron. Your idea of making the future part of the present is a very compelling concept that deserves to be considered by retailers who have to manage the changes that are happening to consumers.