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10/15/2020

How Pernod Ricard is Pivoting Past One-Size-Fits-All During COVID-19

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COVID-19 has been an unexpected catalyst for tech adoption among CG companies. With unparalleled shifts in shopping habits and supply chain disruptions, brands need real-time visibility into product performance more than ever.

Even then, with performances varying wildly based on variable likes geographic location, it can still be a struggle with a sharp learning curve. In “How Tech Enables Brands to Keep Pace With Unprecedented Consumer Changes,” a webinar hosted by CGT in partnership with Trax, we explored how alcohol beverage company Pernod Ricard is leveraging tech to better reach its customers during a period when a one-size-fits-all strategy simply won’t cut it.

Presented here are an edited transcript and the presentation slides.

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Alarice Rajagopal: Good morning everyone and welcome to “How Tech Enables Brands to Keep Pace With Unprecedented Consumer Changes.” My name is Alarice Rajagopal, and I'm senior editor of CGT. I'll be your host for today.

Please note all the materials in this webcast have been reviewed by our editorial staff. The views of the speakers and their organizations are their own, and do not necessarily reflect the opinions of CGT, or its owner EnsembleIQ.

I'm delighted to introduce our subject matter experts on this topic. Our moderator for today will be Jennifer Foreman, SVP of marketing for Trax. Jennifer is a marketing and demand generation expert with a track record of delivering results with award winning marketing programs that drive sales, profitability for brands in the B2B and B2C space. Before joining Trax, she was CMO for Denovo where she transformed the brand and brought forth a highly effective integrated marketing approach through five successful acquisitions.

Prior to that she was VP and head of marketing at Oildex, where she developed a brand turnaround strategy. Jennifer has a degree in sociology from the University of Colorado, and her work has been celebrated by industry and community groups, including the American Marketing Association and Stevie Awards.

Jennifer will be joined today by Cara Taylor. Cara is currently an IT business relationship manager for Pernod Ricard U.S.A, supporting the commercial and transformation organizations. Prior to Pernod, she held various roles in CPG consulting and entertain distribution. For majority of her career she served as VP of financial operations for Sony Pictures Home Entertainment, overseeing groups handling pricing, trade spend management, digital contract compliance, inventory accounting, and account payables.

She holds an MBA and JD University of Laverne, and a bachelor of arts from the University of Redlands, lecturing on topics including change management, strategic planning, trade promotions, and project management.

Our next panelist will be Kevin E. McCurdy, global CPG segment lead APN for Amazon Web Services. Kevin is responsible for identifying and engaging relationships with strategic ISV, and SI partners for the AWS global CPG vertical. Prior to that he served as VP, demand signal management at E2open, and he was co-founder and VP of strategic accounts for Orchestro Inc, which was acquired by E2open. Kevin has led engagements with companies including Coca Cola, General Mills, Kellogg, PepsiCo, and Newell Brands, to name a few. He was co-founder and VP of business development and services for Mercari Technologies Inc, and previously served as director of business consulting at Manugistics GDA.

Last but not least rounding out our panel will be David Gottlieb, managing director Americas for Trax. David is responsible for Trax strategy, sales, marketing, business development and customer success for North America and South America. David has spent more than 20 years of his career working with retailers and manufacturers to harness the power of analytics, to improve sales, merchandising, store operations and other functions.

Prior to Trax he was president and COO of crowdsourcing company Quri, and has held leadership roles with Market6, Netezza, Oracle, and Accenture. David is an alumnus of John Hopkins University where he earned a B.A in psychology. As you can see, we definitely have an experienced and diverse groups of experts on hand today for this discussion. Jennifer, Cara, Kevin, and David, thank you all for joining us, and I can't wait to dive right in.

With that I'd like to go ahead and hand things over to Jennifer to get things started. Please go ahead Jennifer; the floor is yours.

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Jennifer Foreman: Thank you so much Alarice. We're honored to be here. Thank you everyone on the call today. We're really super excited about our discussion topic today. Today we're going to lead this webinar in a Q&A format.

We're going to have three major topics, changes in consumer behavior in 2020, sales and product strategy in 2021, and accelerating technology to increase resilience and seize opportunity.

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To start off, a little bit like Alarice said, there has been a lot of changes in consumer behavior in 2020.

We all know that the pandemic has disrupted nearly every facet of everyday life. Lockdowns and business closure have forced people to change their most deeply ingrained habits, with everything from eating in restaurants, shopping for groceries, and even how they entertain themselves.

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According to a recent study by McKinsey in the U.S., for example, 75% of consumers have tried a new store, brand or different way of shopping during the pandemic. We can see that on our slide here. The first question that we have, I will start off with you David; What are the most significant changes to consumer behavior that you have seen as a result of COVID-19?

David Gottlieb: Thanks Jennifer. Very consistent with the McKinsey study, I think the most obvious shift that we've seen is a huge and very accelerated adoption of online shopping. I think it may have been in that study, or in a related one that said that roughly 10 years of the expected shift from cash and carry in-store shopping, moving to online happened in a 30-day timeline.

It's been a huge shift, and I guess the question is how long, or how much of that will be persistent, or how much will be COVID temporary. After surveying some shoppers, I think our sense is, there may still be some kinks to work out before that shift really becomes super sticky for the mainstream shopper. People expressed some concerns about the quality, the product, especially on a perimeter, the produce, the meats that were being chosen for them as they didn't have a chance to go into the stores themselves. I think there is also concern about the long term cost to the shopper if that's something that can become part of the normal every day shopping behavior.

Foreman: Great. Thank you so much. Cara, what are the changes that you've seen?

Cara Taylor: Obviously for us being an alcohol distributor, or actually alcohol supplier, a lot of our business actually goes through what we would consider bars and restaurants closed down, the expectation was there would be either a loss, or we would have to pivot. I think what we were very surprised about was the, one, on alcohol in the off premise, and in-stores, especially comfort brands that people know.

From that perspective I think we were caught a little bit off guard but pleasantly surprised by the embracing of buying actual alcohol in the off-premise, as well as going to sites like Drizly and Instacart to be able to buy alcohol where allowed, based on regulation within the state. That's been the biggest surprise.

Foreman: Okay, great. Kevin, for you being from AWS, and a technology company, what changes have you seen from your customers, and consumer behavior as a result of COVID-19?

Kevin E. McCurdy: Working with a lot of our customers, we've obviously seen much as ourselves as consumer's demands focused on the most basic needs. So sending demand for things like antiviral, cleaning paper products, soaring, a lot of noncritical categories typically have been declining.

In food, it's been interesting. You've got two sides. One, a shift, as folks can't go out to eat as much. Folks looking for healthy, conscious eating, in some cases. Then in another case you've got a large group that's still going for comfort food, and things that are either cheap or self stable, because there was a large buy-up at the beginning where folks stuffed up as run-on as certain items were going.

What we've also seen, and I'll say this for most of our consumer product companies, and this goes to what David said, the e-commerce shift has been dramatic. For those that already have some kind of online presence, it's been accelerated. Separate from that, for anyone that has not, we've seen huge demand for how do I stand up an e-commerce site very quickly to get to my consumers with the products that we have?

We are also looking at it. We're seeing the shift continuing for consumers online, even though you've seen a little bit of a deadline come August, but for our consumer goods companies, there are huge initiatives right now to push to that online presence and it continuing.

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Foreman: Great. Thank you so much. All of you mentioned differences in consumer behavior, and the things that they purchase, the way that they purchase. Cara mentioned restaurants moving quickly to buying in-stores, and Kevin you mentioning an e-commerce. Cara, what trends do you think along these lines will continue on 2021? And how will that influence business decisions by brands like yourself and retailers moving forward?

Taylor: In our space, obviously because alcohol is heavily regulated, some products aren't allowed to be sold online, or through say delivery services like Grabhub and Postmates. Some of those contingencies were waived when COVID hit to allow people to actually purchase more online, and also purchase through delivery.

I think it remains to be seen how long those states will allow those rules to continue to be waived, to allow the business to continue the way it is. I think we're hopeful that there will be some continuation of that as we move forward post-COVID. I think the goal too is for us to understand how e-commerce is actually grown, and how we can continue to grow it within our platform, as well as how we can continue to connect more directly with our consumer through digital, because obviously a lot of people are now connecting digitally.

Those are two big pieces that we're focused on as our forward-looking strategy is pivoting to making sure we understand what the consumer wants, and making sure it's available to them in as many ways as they want, and can consume it within their state.

Foreman: That's great. Thank you so much. How do you see that Kevin? Tagging on to what Cara just said about the continuation of the e-commerce continuing to grow in other channels that we didn't have previously available?

McCurdy: Absolutely, we see that everywhere for lots of products that before had no online e-commerce, or definitely e-commerce DTC, or direct to consumer initiatives are going to grow substantially.

You've got customers that shopped online previously feel very comfortable. You've got a larger customer base, including even examples of my mother, who would never buy grocery items online before, become very comfortable with this, and even getting comfortable with recurring purchases or setting up recurring type shopping patterns as a part of that.

What you'll see also I think is brand marketers that have an online presence, it's going to be accelerated but for those that are new to direct to consumer, one of the other areas that we see also here is, brand marketers, it's a different engagement engaging online. Understanding how consumers shop by search online will be critical for those brand marketers as they make their digital marketing campaigns as a part of that.

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We also, it's interesting, obviously being a part of AWS seen increased usage of IoT or internet of things to enable real-time purchases. As I'm able to sit at home, and I see an ad or something, being able to say, "Let's look for this item." Being able to leverage those types of technologies, and from a brand and retail side, how do I leverage those within my planning processes?

Foreman: Thank you so much. Just tagging onto that David, as we continue to see more e-commerce as Kevin mentioned and Cara, as different ways of customers to shop, what trends do you think are going to continue and influence those business decisions by brands and retailers from the customers that you have at Trax?

Gottlieb: First of all, I hope that what Cara said ends up being right, just about the new normal around the way that some of the restaurants are operating with outdoor sitting, and closing down streets. I think that's been really an unanticipated positive outcome of this weird time. From an e-comm standpoint, building on what Kevin said, if you look at the shift that's happening, where e-comm has gone from being a hobby to being a really important lifeblood of a lot of retailers engaging with shoppers.

It's becoming more critical that they rethink the technology infrastructure they can put in place to better support that shopping experience. Really what I mean by that is a version of what Kevin just talked about. In the past if you think about a shopper going online, or using a voice tool like Alexa to create a shopping list, that often happens asynchronously. Meaning, they build their list, and then at some point later if they go to the store to pick up the products, or someone comes to their house. At that point they find out, we didn't have A, B or C. So, we made our best guess, or we substituted, or we just left it out.

I think the future involves just like Kevin talked about the notion of how can a retail leverage technology to monitor the shelf on a more real-time basis, so they actually update the catalog in the e-commerce environment, such that you don't have that shopper disappointment but rather if you know you're out of something at the point of order you can offer a replacement, a promotion, engage the shopper at that point. Just create an overall better shopping experience.

Foreman: Great. Thanks David. Our next major topic here is sales, and product strategy in 2021. I think that's a good segue based on what some of our speakers have been talking about, with Kevin talking about IoT, and David talking about implementing technology for the future. With consumer changes and a slow return to new normal the retailer landscape may be permanently different. Now is a pivotal time for CPG companies to assess their sales strategies, their channels, and their product offering for moving forward in 2021. What changes have you seen in the marketplace, or your company in part assortment and rationalization?

Cara, I'll start with you since you guys have such a huge product assortment, and are potentially thinking about product rationalization as you moved into how you're going to stock shelves, restaurants, et cetera, in 2021?

Taylor: It's a tricky question quite frankly, because within the alcohol industry there's been a move towards premiumization of brands, which flies in the face of what we've seen with COVID, where people are reverting back to things they know, and are comfortable with, which are ... maybe more economical. It throws the wrench in our overall premiumization strategy, but the good news for us is that, I think what it has triggered on us is trying to understand what's moving? Why it's moving?

I think one of the questions you come up is, do you just cut off the short end of the tail? At the end of the day, that's not necessarily the wisest strategy, especially as a knee-jerk reaction to a marketplace. It is not normal. I think we are still probably a little bit out from understanding what the new normal is, but we also are cognizant of the fact that we need to think about what that normal will look like, and how we can rationalize to your point.

I think that's where technology really comes into play is knowing what people are ordering, and what's flying off shelves, and what displays look like, and how they resonate or help us understand what we can sell, where we can sell it. It becomes a better way to put a better mix in front of the consumer where they're at, at the time when they want to make a purchase.

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Foreman: That's great insight about adding in the technology. I love that word, premiumization, I've never heard that one before, but it makes a lot of sense. David, how do you see Trax as a technology company playing into that? From our customers at Trax, what changes have you seen in the marketplace in product assortment and rationalization?

Gottlieb: It may be category specific, but certainly in many categories, in the groceries space, our customers who are mainly the manufacturers are sharing that they're under reasonable pressure from the retailers to simplify. As supply chains have become constrained, I think retailers really want to look at how can they be more efficient? Maximize availability on the shelf by focusing on a more limited assortment of the key SKUs? That's creating an opportunity but also a challenge for manufacturers to say, "Okay, we have to fill the same space with fewer products." Then make sure that we're maintaining high levels of on-shelf availability.

I think the market reality for the CPG players is space as a measure is becoming more important than ever. They can't count on innovation to drive predictable volume growth at an outlet level. So, they have to make sure they understand what is their share of space? Are they getting what they expected? Is it consistent with the plan they've agreed to with the retailer? Then how can they manage the supply chain with the retailer, and partnership to make sure that they are maintaining high levels of availability?

Foreman: Makes sense. Kevin, how about you as a technology provider? What have you seen from your consumers and where they're focusing?

McCurdy: Absolutely. I have to agree with David, especially grocery stores have pushed ... It's probably the first time in 40-plus years where you've actually seen a SKU rationalization program, we talked about it forever in the consumer product industry. This forced it in some regard. We've seen them focusing on the core items, and pushing for things like pasta, detergents, cookies, et cetera, to drive sales.

You even saw one of the leading snacks manufacturers cut down unique barcodes by 21%, in order to get their product on the shelves faster. As David said, that space becomes critical, and how do I make that up to drive sales and making sure you've I've got the right product there in stock?

One other note I would just say that we've also seen is a shift by consumers to private label. You've seen a little bit more of a shift for this. That squeezes out some of the brands, or even attention for new items on the shelves. This becomes more cost conscious in some of these categories, and the private label pushed by consumers as well.

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Foreman: Great. Thank you so much. Just to tag on to that Kevin, what are some best practices that you have seen when it comes to portfolio rationalization? Because you mentioned a lot of these different shifts. Have you seen anything from your customers that you would consider the best practice?

McCurdy: Yeah. I'm going to say, one size doesn't necessarily fit all. So you need to understand your consumers in each channel, and or market, and where they're shopping. Some CPG or consumer product companies are going to focus on core items to ensure availability.

In other cases they'll continue to innovate. As you see Frito-Lay, they continue to expand with things like Cheetos, mac and cheese, as an example. They're still branching out with a variety of products within there, but really understanding what markets are you trying to serve? Where are those consumers buying online? Picking up in store, buying online, having ship to home. So you understand which of those products in those markets you need to focus on.

Foreman: Thank you. Cara, I'm really interested to hear your point of view being an expert working for a leading alcohol manufacturer. What best practices do you use when it comes to portfolio rationalization?

Taylor: When it comes to how we look at our portfolio, again, we've been more focused on the premiumization of our brand. We've been looking at different ways to age, from a distillery perspective, higher aged brands, different looks of the same type of brand, like it's aged longer, or barrel, things like that. Just to offer a different twist of what is an existing comfortable product, I think from our perspective, and we also have a product, glass doesn't age, it doesn't expire.

In some cases it has a longer shelf life than some other products. What we've really tried to do is look to see what our overall strategy is? Then slowly phase out things that aren't selling, or aren't as popular. That's been the strategy so far. Again, like I had mentioned, we've seen a spike in things that we wouldn't have expected over COVID.

From that perspective I think for us we're in a middle ground, where we're trying to figure out what that looks like. I think it all goes back to really I think what the gentleman mentioned was, you really have to understand what's turning in the store, and where it's turning. Because we do have a rise in our e-commerce business, it's really understanding how people can get our brand through different locales, and understanding what that looks like, because what happens in Florida doesn't necessarily resonate in Texas.

“What resonates, and how can we continue to make sure it resonates, or buffer it, or move it out to a different market if it's performing better in a different market?”

From our perspective the channels are very different state to state, even based on regulations, and what you're able to put out into the market. Again, I think we're really trying to understand what's at the shelves? And what's online, and who is reacting to it? Then pivoting based on that, and looking at what we need to do to maybe re-rationalize it in one market versus another, because something is selling better in Texas than it does in Florida.

We tend to have seasonality that plays into that as well. I don't know that I've answered your question but it's still I think up in the air for us based on COVID, but it's still always the same basic thing. What's on the shelves? What's turning? What resonates, and how can we continue to make sure it resonates, or buffer it, or move it out to a different market if it's performing better in a different market?

Foreman: I think that's a great answer. What I'm hearing you saying is that it's not a one-size-fits-all approach.

Taylor: Correct.

Foreman: And that you have to really take a nuanced approach that takes into account hyper-localization, what's going on the shelves, and so on.

David, what's your opinion from seeing what Trax sees from a data perspective when it comes to portfolio rationalization and what customers are doing? Maybe along the lines of what Cara was talking about with a more nuanced approach.

Gottlieb: I would say it's a variant of what both Cara and Kevin talked about. In the sense that it's not a one size fits all. It's really important to take a multi-data approach to deciding what products to keep. What SKUs to keep, and which ones to potentially consider deleting. They've talked about understanding shopper preferences, and path to purchase, and channel behavior, et cetera.

The other dimension I think that I've seen that's important to consider is, what does the actual store look like around those items? What I mean by that is, if you could imagine looking at a set of products in a category, that are in your portfolio, it might be tempting just to look at the overall ACV numbers and say, "All right, I'm going to cut the tail." I'm going to cut the lowest performer. I think the other ingredient to that conversation that's really important in addition to what Cara and Kevin talked about is, how does that product perform at the shelf? How available has it been historically? Where is it located?

There are learnings there that I think if taken into consideration, looking at all those data sources together could lead you to different conclusions than if you just looked at sales data for example by itself. I think that's the other critical element that forward thinking companies are looking at when they try and make these decisions, and do it in a way that drives the best possible impact for the business.

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Foreman: Thank you. Moving on to our next question, Kevin, you mentioned a little bit about private labels. How do you see the sales strategy changing in 2021? And the product rationalization affecting challenger brands, or newcomers into the market that might not have some of the luxury of being able to take such a multifaceted data approach?

Gottlieb: It's a great point. New brands actually may find it challenging it in the near term, especially as the brick and mortar is focusing on the core items, or as you said some of the shift to private label. What's interesting right now with some of our consumer product companies, we actually see some new products all entirely, or even divisions within large CPG organizations starting to build their online presence for new items.

Their new items are being launched solely online, before going in the store. They're trying to build awareness with consumers, leveraging social media and other online advertising to capture the eye of the consumer. Then from there they may choose, where do they take that into particular markets if it makes sense? Or it may be something that they just continue to build online? That's where we see the focus continuing with this DTC or direct to consumer by many of the large CPG organizations.

Foreman: Thanks. What about you Cara? What's your opinion on the challenger brands, or newcomers to the market?

Taylor: I think the level to entry, or the barrier to entry in alcohol is fairly high, even before COVID. You need to have a distributor. You need to have a distributor within multiple states in some cases. I think it's still going to remain challenging in the short term. I think they don't have, unless you're a wine producer in most cases, you're not able to sell spirits online.

“You can have a digital presence, which will push people to look for your brand, but without having an ability to sell it direct to consumer online, that's going to be a challenge.”

You can have a digital presence, which will push people to look for your brand, but without having an ability to sell it direct to consumer online, that's going to be a challenge, especially when you think about a majority of our brands incubate, or innovations within the brands, or new brands incubate in restaurants and bars. That's where we tend to push new products is within the restaurants and bars through tastings, and things of that nature, or at a distillery or even through a tasting at a store.

If people aren't going into a store, or into bars, or into a distillery, you're limited to your access to these people outside of being just digitally, and then you have to figure out how I can get that product to them digitally. It's not a small challenge, especially for a small distiller let's say who also has a huge amount of overhead, has had to age their products for a period of time.

I think it will remain a challenge for the small brands, especially in the near term, until we reach a new normal, where we can go back and have standard play where they can use this playbook to get to their consumer.

Foreman: That makes sense. Thank you. David, what is your opinion on how you see challenger brands or newcomers coming into the market?

Gottlieb: I think what Karen and Kevin said is definitely true. Although on the flip side I guess of what Kevin mentioned, I really think there could be an opportunity here for up and coming brands. It really links to what we talked about a minute ago, as retailers are looking to simplify the assortment, and reduce the overall SKU count, they may be willing to hold existing, major and national brand suppliers to a reduced set. At the same time, I think they're going to be very nervous about impacting shopper choice.

I think at the end of the day this is all about making sure that shoppers are happy and satisfied. I think part of me believes they may be willing to keep a certain amount of space to introduce those types of new brands. Especially given the trend in the market, where at least in the food business, a lot of the growth comes from that innovation from small and up and coming brands.

I think most retailers are going to be reluctant to miss the Kind Bar, the next company like that, that really is grabbing a lot of shopper choice, as they build relationships with their shoppers.

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Foreman: That's a great point of view and counterpoint. Thank you so much. Now we'll move on to our final topic, accelerating technology to increase resilience and seize opportunity. With consumer behavior changing almost daily, and companies focusing on sale strategies for 2021, they must accelerate their adoption to technology to understand consumer trends and early warning signs that might prevent any future changes.

All of you have mentioned something along those lines. How can technology solutions help CPG companies inform their sales strategies for 2021?

Cara, let's start with you: How are you implementing per now technology solutions? What kind of technology solutions are you thinking about doing specifically to help ... You mentioned, understanding what's going on in stores, understanding what's going on the shelf, providing opportunities for you to understand that data at that hyper-localized level.

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Taylor: Shout out to Trax, because we do use the shelf pack technology that they provide to give us an idea of how displays and shelves look in our large chain stores. We're looking to rely a lot more heavily on that to understand the on-premise, and what's turning, what's not turning? And understanding what the location looks like.

We really shifted our focus to getting some shelves back. That will help us understand what the shelf looks like, and how we're being successful there, or need to pivot there. The other thing we're relying on heavily right now is our CRM tools, to collect data at stores. At stores, and locations as they start to open up. We've taken our activation force, and given them a few more tools to collect information about basically how the market is reacting, and recovering.

We're using that data to track the recovery. What we're trying to do is understand from market to market, state to state into the different retail channels, how each of them are rebounding from COVID to figure out how we can resource appropriately to how the market is basically recovering.

Foreman: Thanks. It's clear that the data about the consumer behavior patterns, your product performance and store conditions is increasingly important. David, what do you see from customers at Trax? How are they using technology to help them solve those problems, and inform their product strategy?

Gottlieb: Just like Cara talked about, this is our bread and butter. I think Trax customers, and manufacturers in general, I think have become much more adept at using data about what's actually happening in the store? What's the mix of products on the shelf? How does each of the manufacturers look with respect to share of shelf, linear space? How does that compare to dollar sales in the category? Where do we see evidence in the market that different conditions may help drive better category outcomes? Then ultimately, how do all those pieces of data get transformed into both a selling story, and a category plan that retailers can get really excited about because it's data driven and it's built around a win-win manufacturer category/retailer.

Foreman: Thank you. Kevin, how do you see that as another technology provider for CPG? What kinds of trends and technology do you see helping companies inform their sale strategy?

McCurdy: I agree with both comments from before. Especially on the brick and mortar, as we look at these times right now working backwards from the customer is critical. Understanding more than ever what the point of sale is, to understand what needs to be replenished. Also, as you've seen within COVID, retailers are shy to have brokers or merchandisers into the store.

I think this is the greatest time for Trax with the shelf pack technology providing real-time visibility to the shelves, to each of the consumer product manufacturers, understanding what their share is, how the shelf conditions look. So they have the ability to react in real time for those markets.

Then on the other as we talked about before, when you look at DTC, or direct to consumer, it's really understanding those e-commerce trends, how we need to do, and leveraging the marketing to those, and then how do we need to fulfill and manage a fulfillment of those products? Whether it be from store, or from a fulfillment facility.

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Foreman: Great point. Thank you so much. Pre-pandemic, many CPG companies relied on qualitative field based research to inform their sales strategy. The recent marketing conditions that we've discussed here have forced the need to adopt automation, and technology solutions at an unprecedented pace. What kind of technologies are helping them to get better data insights?

We recently talked a little bit about the technologies for driving the sales strategy forward. What specific kinds of data do you think are important for consumers to be looking at? David, I'll let you start with that question.

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Gottlieb: Sure. I think we talked a little bit about in-store conditions data, and the role that Trax plays. And really I guess our perspective would be, there is a real place here for the automation that can be afforded by image recognition technology. That's really becoming I think much more mainstream. We started doing this quite a few years ago; it was on the front end of the early adopter curve.

Now we're seeing many of the large players in this space adopt this kind of technology, because it's really critical that they understand what's happening at the shelf, and just as Kevin said, not things operationally like in stock availability, but, am I getting the space that I'm expecting? Am I getting displays? What's my competitive position with respect to either secondary display or main shelf?

Then what does that mean with respect to what kind of sales I can drive out of that type of execution? That's become a key ingredient in many of the manufacturer's strategies as they look to drive more sales in 2021 and beyond.

Foreman: Thank you. How about Kevin? What kind of tech data insights are you seeing that customers and companies need through the use of technology?

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McCurdy: Customer POS obviously is one. As David talked about, in the past you had technology that tried to predict an early stock. Now I can leverage what technology like Trax provides, real-time visibility, also leveraging that image recognition drives more accuracy back in through the supply chain. Another key element I think that we're starting to see is ... We were going along a seasonal path. Our forecast now has to readjust post-COVID. One of the things understanding, especially for brick and mortar is planning, leveraging food traffic data.

We've started to see a lot of the consumer goods companies wanting to leverage food traffic data into their forecast models, to see how those might influence. Then online you see things as pageview sign ups, and purchases combined with demographic data. Still, that becomes critical.

Foreman: Great. Thank you. Cara, is there anything else that you want to add? You mentioned that you're using CRM tools and additional tools to gain additional data and unique data that you haven't looked at before. Is there any technologies that you'd like to mention that you're using to help you get better database insights?

Taylor: No. I mean, I think a lot of it has been collaboration with our distributor partners as well as people like Trax to say, "What data is available to us?" Like Kevin brought up for traffic. Things like food traffic, buying patterns, and openings and closings of stores. Those are all very important data points that we can collect individually using our CRM tools, but it also helps to get it across in a more synchronized way, for a want of a better term, because you're not going to be able with the workforce, you're not going to be able to capture everything.

To the extent that we can reach out and get data from outside sources to provide us with that information to tell us who is opening/closing? Who is doing well, not doing well? And see what's happening foot-traffic-wise within on and off premise, that's incredibly critical for us as we talk about how we recover, and how we target the consumer.

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Foreman: Of course. Thank you. New data about consumer behavior, and patterns, product performance and in-store conditions is important as we mentioned. What additional kinds of data could you look at to create an early warning system for major changes in consumer behavior? So that if something along the lines of a COVID pandemic, or a major change in the marketplace were to happen. What kinds of things can you put in place to create those early warning systems for unexpected changes in consumer behavior? I'll start with you, Kevin.

McCurdy: I think one of the major ones that I talked about before was obviously what's happening at the stores, or the POS. The foot traffic is one of the better early indicators now. There is different ways of imaging that provide that. One of the other things I will say is the shift in buying that's occurred for a lot of CPG or manufacturers, as well as retailers, understanding where the customer is buying, and then how do I fulfill the item? Dictates where inventory needs to be staged.

Customers may be buying online, picking up in store, buying online, having it shipped to them, or having it delivered to them at home. Understanding those trends, understand where product may need to be staged as I'm maybe fulfilling it directly store from the store shelves to those customers. Then on the online side, the different types of pages and sign ups become critical inputs to that process.

Foreman: What are your thoughts, David?

Gottlieb: I guess I would go back to what we talked about a minute ago around innovation and challenger brands. I think one of the challenges that manufacturers have historically faced is it's not impossible to get caught by surprise by an emerging competitor who is gaining share. The reason for that is, oftentimes syndicated data that most brands are looking at doesn't start to really register competitive sales until the ACV hits a certain threshold.

Really understanding how space is changing on a more outlet by outlet level, and seeing competitors emerge before they start showing up in the syndicated data I think would be a really good capability for manufacturers to have as they try and make sure they're not being caught by surprise by competitive threats.

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Foreman: What are your thoughts on that, Cara, and any final thoughts on additional data that can help you create opportunities, or create early warning systems?

Taylor: I'm not going to say we were caught off guard. I think everyone was surprised by COVID and what it did, and how it reacted to how we expected it would react and didn't. I think both the gentlemen mentioned, it's really critical, especially for someone with a long tail. Alcohol has a long tail, because at the end of day your product has to age in some case. It has to be bottled, and then it has to go through a distributor network to get where it needs to go. For us, partnering and getting inventory level from our distributor as well as stores is really important. Understanding where there are spikes in demand in different parts of the country, versus other parts of the country is really important.

Really, it does for us get down to a market level. We tend to keep track of what type of alcohol, let's say, is popular. If there is a spike in gin in certain regions, we tend to focus gin there, and things of that nature. For us, we have to develop an early warning system that includes data around shelf space, what's there? What's in the inventory at our distributors? And how fluid we could move it through the market to make sure we can meet demand?

Again, because we're also importing in alcohol from Scotland. There's still a tail on that. It's a longer tail than most are experiencing. For us, any type of data we can get ahead of time to get ahead of that, and make sure that we're planning our inventory and our demand appropriately is critical. I'm not going to lie to you and tell you it's not been a struggle for us. I think we've fared better than most, but it's been a lot of work to get there.

Foreman: Of course, this has been very unexpected. Kevin, how about you? Any kinds of data that could be an early warning system? And also just to finalize your thoughts on how data can help create opportunities as well.

McCurdy: Yeah. I think leveraging the point of sale, and that food traffic data, combining with different AI ML solutions. For forecasting as an example, to enable availability of products. We see a lot of that. A lot of folks try to drive different types of new models in there.

The other is understanding your customer, and personalization of products, how and where they're going to shop? Becomes critical to driving those sales.

Foreman: Great. Thank you. With that I'll turn it back over to Alarice, who will lead us through the Q&A.

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Rajagopal: The first question coming in talks about customization, especially when it comes to e-commerce. With this trend, how can the customization translate into the C.G market? I don't know if Kevin, David, and Cara, if one of you wanted to jump in?

Gottlieb: I can jump in. It's a great question. In a sense, one of the design points of how we've built Trax was really with a view towards e-commerce. Customization is one part of that, but the idea was really e-commerce marketers and retailers have always had the benefit of an amazing amount of data of path to purchase, and dwell time, and click rate, and all those sorts of things.

They're really, really good at using that information to consistently be A/B testing, and improving the experience of the shopper to drive better outcomes. Really the idea of how could we apply some of those ideas to physical retail was the idea that we had when Trax was born. The notion is, if we can measure, and we can understand the impact of various in-store conditions against shopper experience, and we can very quickly again A/B test, learn, iterate and respond. We can do more of the types of things that work really, really well in e-commerce.

It's, of course, a hard physical environment to have total hyper-personalization, at least today. But for example, some of the things that we do see as new market realities are, one example would be, you're doing a display program. If instead of doing one display program, maybe you do three programs that have configurable POS, or configurable shippers, you measure the impact of each of the three of those, and then you very quickly can adjust as you get market feedback to say which one is driving the most incrementality, and by doing that across the board you can really drive a significantly better sales outcome. That's just one example.

McCurdy: I was going to say, we've seen some of the manufacturers as they've launched some of their DTC sites, they're leveraging the data that they have seen from in-store. So what customers buy together. In some cases they're offering online not to buy one or two products, but a predefined assorted pack, based on like items that customers would typically buy together. That's some of the way that they're using that data also from traditional to define some of the online offerings.

Rajagopal: Thank you. The next audience question we have coming in has to do with sales. For brands that have had a surge in sales, what are you hearing from retailers on how they're adapting their supply chains in order to keep up the increase in demand? So that you're not missing out on sales due to added stocks?

Gottlieb: I'll speak more I guess generally to the overall industry where I think this comes down to a question of simplicity. Really it goes to some of the conversation we had about assortment rationalization, portfolio rationalization. Some of that is being done on the supplier side, and some of it is being done on the retailer side.

“Simplicity is really the answer to how supply chains have needed to become more streamlined during these unnatural spikes in demand for whatever reason underlies them.”

A great example is, actually linked to what Cara talked about, there's been a pretty well publicized shortage of aluminum as a raw material. A lot of that's being driven by the shift in bars, restaurants, and specifically fast food, and all those restaurants that have been closed or not had the same type of volume as typical.

So you see a shift of let's say soft drinks being consumed from fountain to being now consumed in the grocery store in cans. That's just one example where the cans haven't been available. The Coke Company as an example talked about having to make decisions about how do they focus on key SKUs in their supply chain, so that they can actually fulfill most of the shopper demand, even at the expense of some variety, and some choice.

I think that simplicity is really the answer to how supply chains have needed to become more streamlined during these unnatural spikes in demand for whatever reason underlies them.

Rajagopal: Great. I'll go Cara, Kevin, and then David to close out. You guys talked a lot about CPG companies being able to pivot. I know, Cara, you said you're pleasantly surprised with being able to pivot with certain trends and things.

I just want to ask, is there a certain — I don't know if it's a characteristic or a piece of technology — but what is it that the successful CGs have had that has allowed them to pivot, and come out of this on the bright side? Again, I just want to leave the audience with a best practice tip before we go. Then based on what you think, where can companies start to build that foundation so that they're prepared for the next big disruption? Cara, can I start with you?

Taylor: I think a lot of it is just pivoting how you think about your consumer, and how you reach out to them, what data you collect from them, and that you need. And again, understanding how they are consuming your product. Starting from that very point and understanding what you need to build, whether it's a better digital framework, a better online site, a better demand focus.

Whatever it is, is understanding the best way to pivot to wherever they're going to consume your product, and how you can get to them so they know your product is there and is available for them.

Rajagopal: Absolutely. Kevin, I'll go to you next. What do CGs need in order to pivot successfully, and then how do they start? How do they get there?

McCurdy: I think they need to be able to pivot, and do so quickly without, and I think take a risk. A lot of this is, we talked about trying something on DTC, understanding. But understanding the consumer, the makeup. I think as a foundation for a lot of companies we've talked here today I think between David, Cara, and myself about all these different data sources.

“One of the unanticipated benefits of the pandemic is, it feels to me at least like, it's helped to create some urgency around a culture of innovation.”

At the advent we've talked a lot about the data lake. But how do I bring this data together and then drive insights off of that? Becomes critical for consumer good companies that maybe haven't started that journey yet. Understanding that as we go forward in new conditions to come about.

Rajagopal: Thank you. David, any last thoughts?

Gottlieb: Yeah. I mean, I think I would agree with everything that Cara and Kevin said, but also add to it that maybe one of the unanticipated benefits of the pandemic is, it feels to me at least like, it's helped to create some urgency around a culture of innovation. I think the most important ingredient in being able to weather this sort of uncertainty is to try new things, and take chances, and explore, and test, et cetera.

I think even some of the manufacturers who historically haven't had that innovation bias in their culture have really found themselves, almost giving themselves permission to take those sorts of risks. I think that's a real positive because we've seen some great outcomes, and I think that will likely persist post-pandemic as well.

Rajagopal: Absolutely. I would agree with that. Consumers are more patient than ever before. Why not use it as an opportunity, right?

Gottlieb: Exactly.

Rajagopal: Great. I'm afraid that's all the time that we have for today. We'll have to wrap things up. Again, I'd like to thank our speakers, Jennifer, Cara, Kevin, and David for giving us their subject matter expertise today. I'd also like to thank Trax for sponsoring today's webinar.

Finally, I'd like to thank all of you our attendees for devoting some of your valuable time to be with us today. We hope you found it worthwhile.