Visions Episode 2: The Discourse

Phillip Jackson: [00:04:19] Hello and welcome to Visions. We are live at Visions Summit in West Palm Beach, Florida. I'm Phillip.

Brian Lange: [00:04:23] And I'm Brian.

Phillip Jackson: [00:04:25] And I am so excited to bring to you our newest annual report that is covering what I think are some of the most intriguing themes that are happening in our world and changing the way that we think and behave in culture. Today with us, we have an amazing panel and we cannot wait to show you what we've been working on. But we also cannot wait to model discourse and how I believe that we can work better together in our industry to effect change. So today let's start there because I really believe that this crew of people are some of the most empathetic and smartest people that I've ever met. All of you are experts in your own right. I really want to open up our discussion here today by kind of diving into a heady topic in philosophy, Aristotelian discourse, which is kind of like, oh, gosh, that's how we're starting. I really don't know that we talk about it enough. I think we talk about experiences a lot in our industry, in eCommerce or in retail. We talk a lot about how we can affect an outcome like a conversion rate optimization. But I don't know that we've ever really touched on the meta topic, which is what makes people happy? What actually makes people happy? I think if we start there, it will guide and affect everything that we do. It will be an outflow of that. I might actually kind of throw a little softball over here to Michael. What do you think, in your opinion? What do you think makes people happy in this world?

Michael Miraflor: [00:06:00] I think it's different for every individual. Obviously, you can fall back on the Maslow's hierarchy of needs and that forms the foundation for how everyone feels satisfaction for any action or any compliment that they get or how they go about their day-to-day. But I feel like through the past two years of the pandemic, the way that people seek happiness has fundamentally changed, both in the home and outside of the home. I think a gathering in real life, meeting old friends or new people is a different level of satisfaction for a lot of people now than it had been prior to the pandemic because we had that taken away from us. And I think that the relationship between things that we felt that we had lost over the past couple of years, whether they be physical objects or connections with people or experiences out in the real world, has restacked how people think about what makes them happy. And I think people are being honest with themselves and with their families and with their friends about opting into things, opting out of things, and relationships with physical objects and products are much the same. I think there's a reevaluation and a different lens versus what there was prior. And this isn't to say that things like external signaling power isn't important. It's just it has to satisfy you before you can feel comfortable signaling that out to the world, whereas that might have been flipped prior.

Phillip Jackson: [00:07:25] So, Miya, we were talking yesterday about your experience walking into some retailers locally here, and you actually tapped into something really powerful there about the unhappiness that you felt when you were browsing some of these retailers, without naming names, or maybe I don't know, maybe do. Without naming names, what do you think are some of the things that we see right now in the world of retail that are causing maybe some latent unhappiness in the mind of the customer?

Miya Knights: [00:07:56] Building on Michael's excellent response, I think our value system has changed, has altered. I think we really from a retail experience, we want to know that we've got the best, the best deal, the best product. And the fall over from two years of pandemic basically led to a lot of stock in a lot of stores. And the experience that I was telling you about yesterday was literally walking into a fashion store and being overwhelmed, literally overwhelmed by every kind of summer dress under the sun. And in that, you get the impression that the retailer has gone, "I know what you're going to want when you come out of lockdown and I'm going to give it to you. But also, I don't quite know what my demand levels are going to be like, so I'm going to hedge my bets and buy more stock." And it just led to a really unpleasant experience in the store that was confusing, confusing and overwhelming. I think consumers want retailers, the commerce experience nowadays to help them find the better choice in that sense that they are not... Consumers do not want you to blind them with so much choice that you become the destination because you can get everything there. I think for retailers nowadays to want to be everything to everyone is an impossibility. I really think you have to know who your best customers are and go deep on that. Let Amazon be the everything store in that sense.

Phillip Jackson: [00:09:26] You were saying that like trying to get something off the rack, that there's this psychological impact that happens after the purchase, right?

Miya Knights: [00:09:32] Absolutely. You walk away and you think, "Have I bought the right thing? Have I got the right price for it?" Because there was so much stuff in that shop, there was no way I was going to be able to see it all, experience it all, feel the fabrics, for example. So yeah, I mean, there are many, many examples over the years of range rationalization being required because people just get so confused when you give them so much choice. And I think where we've come from has been, particularly in terms of eCom, the opportunity to have endless scroll, endless aisle means I can have endless numbers of choices, but actually, that works in reverse for consumers. It actually destabilizes them, makes them feel insecure. I think, to give them the security that they've walked away with a purchase that they're going to be happy with for a lifetime, to make them a loyal customer so they return, you've got to curate that so much more finely and be really, really clear on why you're doing what you're doing, why you're offering them products that they're looking at.

Phillip Jackson: [00:10:33] I couldn't agree more.

Brian Lange: [00:10:34] That's so interesting what you're saying. I wrote an article a couple of Black Fridays ago about how depressing it was to shop online with endless scroll and endless aisle, just like constant products and just isolating experience because you're just scrolling through like millions of eCommerce sites or whatever the number is, and you just feel like it's endless. And all the while you're just looking directly at a screen, not interacting with the people that you love. And it's a very isolating experience. And so as we look ahead to coming sort of out of the pandemic or wherever we're at and we think about what makes people happy, actually, Michael and Grace and I were having a conversation last night. [00:11:30] It's actually not necessarily about being happy. It's about peace. It's about feeling whole. And when you're just looking at a screen and you're scrolling through, that doesn't make you feel that. [00:11:47] Grace, I'd love to hear your thoughts on this as well. What do you think is important about... What makes people feel that sense of purpose or happiness or wholeness?

Grace Clarke: [00:12:01] Well, at least as it pertains to branding, I think there's a relation, a relationship between the desire for serendipity and discovery, which can lead to these endless scroll experiences and the balance for certainty and peace, just like Miya was saying. I think it is so important for consumers to feel confident in the decision they've made. We see the way companies are hedging around that. Free returns, people buying online, trying everything at home, returning things. But really, everybody is just looking for the solution that's right for them as a person. But like Michael said, to signal and perform their identity. So more and more the conversations I have as I spend more time with Gen Z, a little bit of Gen Alpha, and also when I'm working with brands who have older audiences, the theme emerges that people are not looking for this default of feeling happy. They want to feel confident or at peace with their decision. It aligns with the bigger trends we're seeing in the wellness market and the reaction to the wellness marketing, which is people want to understand what the desire is that they're going for. That happiness is not this panacea. It's not realistic. It's not necessarily the default state people want to be in, but they want the ups and downs of life and great products to underpin that. So that doesn't mean necessarily they want the best dishwasher to take them through the ups and downs of hosting parties. I think each product is now having a more niche place in people's lives, and some products aren't meant to be something that you buy and keep forever. People are understanding that there is still a thrill of newness and they're trying to find different ways to experience that with regard to being a sustainable consumer and someone who is ecologically minded, people want to understand that their values connect to the things that they buy.

Phillip Jackson: [00:13:53] If we're looking at this the theme that actually emerged in our report, in our survey, was the consumers in our research told us that the things that they believe model their identity the most and the possessions that they own are actually the ones where we have the fewest amount of choice. Smartphones, cars, sneakers emerge. And I said that's preposterous. There are a billion sneaker brands. And I was challenged on that. No, actually, there's like four. Right? Really. There are actually four. So I think that's really interesting because things like booze, things like coffee. No offense, Mike. Things that have become sort of heavily commodified in this world have no bearing on our identity or at least according to our research. As our sort of resident Amazon expert, don't want to throw you down that rabbit hole, Kiri, is it possible for a company like Amazon who is one of the largest corporations in the world... We look at that, I think many people see Amazon as just being eCommerce. That's what Amazon is for many people. They don't know about the wealth of direct to consumer brands. They don't know about emerging brands. They think of eCommerce and Amazon as being a synonymous thing. How are those two sort of polar views of identity realized in Amazon, and does a consumer even care or think about that when it comes to personal fulfillment?

Kiri Masters: [00:15:25] I think Amazon is... You talked about commodity and Amazon is the ultimate utility. I know what I'm going to get. I know that I can find anything that I'm looking for there. The difference is that there's not that curation element. There is not that sort of discovery experience, the thrill of the hunt. It's the everything store. And in that sense, that utility is there to serve up what I'm looking for when I need it. So I don't think that Amazon is really... That's not the reason for being for Amazon is to provide any sense of fulfillment or identity for people. It's more along the lines of the everything store, the endless aisle, and being a utility and with the penetration into US households with over 50% of US households having an Amazon Prime subscription, it's a part of people's lives like their utility provider essentially.

Brian Lange: [00:16:37] Ooh. Yeah. So I think that's super, super interesting in that we live in a world now where utility, this utility of products sort of taken care of by some of the major big box providers: Amazon, Costco, Walmart, etc. And actually, if you shop at those stores, you can live a pretty fulfilled... All of your needs can be met by those things. One of the trends that we've covered for a long time at Future Commerce is this idea of art and commerce coming together. And speaking of Greek philosophers, that was one of their questions. What is the value of art? And what role does it play in our lives? And so when we think about fulfillment, in some ways, brand kind of doesn't even matter at the moment when it comes to living a life that's got those Maslow's hierarchy of needs, the base level covered. And every purchase beyond that is a purchase that is all about art and identity. And so as we make decisions about purchasing, we can go get what we need from Costco or we can go get something that is actually sort of a fulfillment of identity and enjoyment and art. And so Mike, working at Trade Coffee, a lot of your products are actually sort of that step up. They're actually they're art in many ways. They're saying, I want beyond the base Costco level experience. And so I'd love to hear your viewpoint on where art falls into the realm of that fulfillment that we've been talking about.

Mike Lackman: [00:18:35] Well, I think we're talking with a pretty broad brush here. And so when we start with the original question that we undertook with this conversation, we've never been more individualistic in the way we're pondering these things. So there isn't an answer for what the consumer wants. I think the simplest thing you could say broadly is that this is becoming a currency of what promises you can make. Who cares about that? And then can you keep that? And the less authentically or the less consistently you can keep that promise, the less meaningful that promise is, the less value you're creating on either side of that relationship. And so when you look at something like art in a coffee bag, you can get coffee anywhere, even one week into the lockdown, there were places that would sell you some coffee. It wasn't that hard to find. And so I think as you get away from the early days of eCommerce and things like getting things delivered to your house as a convenience is no longer all that novel, the question is, who cares enough about those things that you can deliver a tremendous amount of value by doing something artful? And is that something you can deliver sustainably? Keep those promises and build something sustainable around that. And so then when we look at something like coffee from the country's best craft roasters, I think it means that we're going after customers who want both in music terms, the song, which is the coffee and the way it tastes and all the utility of that and the album cover. Because when I say to people, "People shop by the labels," of course they do. Sergeant Peppers is Sergeant Peppers because of the art and how different that was from the White Album. And more people will actually remember those things than what order the songs were in or exactly how they sounded.

Phillip Jackson: [00:20:05] So true.

Mike Lackman: [00:20:05] And so I think when you say art in the context of something like Hellenistic philosophy or something along those lines, I think there is an interesting element of being able to break through and making some of those exceptional things more accessible as consumers become more and more individualistic. And you have a broader group of people looking for some of these exceptional experiences at a time when they're working harder than ever for every dollar that they can get their hands on. And each of those dollars gets them so little.

Brian Lange: [00:20:34] Interesting.

Phillip Jackson: [00:20:34] And actually, in your field, I was speaking with the founder last week and she was telling me that one way that they found to sort of stand out on the shelf if you will, is they just went full, full, maximalist on the package design. It's glitter, it's unicorns, it's rainbows. It's like I am going to stand out because if you stand and look down the coffee aisle, there is a lot of brown and taupe packaging. But I'm sure if that works, a lot will follow suit because we all engage in mimetic behavior at some point, sort of art becomes commodified. And Michael, I really respect your opinions on this. When art is everywhere, do we really value it anymore? Is there anything really special about it? And how can we, not to try to tease out the answer from you, but is there a way to even avoid that in our in the way that we are all trying to affect an outcome with a consumer?

Michael Miraflor: [00:21:36] It's really tough because I mean, I hate to say this because I think it's overstated, but art is subjective. Everyone has an opinion. Everyone knows what they like, or they go through a discovery process of figuring out what they appreciate about art. And [00:21:52] there comes a certain point where, yeah, there are diminishing returns on the efficacy of leveraging something like art in packaging in a commercial sense when it reaches a certain level of ubiquity. [00:22:02] But that's only when you're utilizing it in the moment as a promotional tactic and without really exploring the back story or doing any storytelling to lead up to the point that justifies the use of art. So as a promotional tactic, sure, it might work in the short term, but if there's no real investment, if it's not really part of the story of the brand that's leveraging the art, then there's almost no point. So the expectation should be that maybe they are short-term, short-term gains on that, but maybe not any long-term kind of relationship between the brand, the consumer, and that particular promotion or integration. I hope that answers the question.

Phillip Jackson: [00:22:45] I think it does. I'll even come back to you then again because I think so much of what we talk about in that world is trying to find complementaries, things that sort of work well together. More partnerships than ever, more team-ups than ever. We're like in collab culture. That's the next part of the discourse is really what are friends for? And if we're kind of thinking about how this collab culture has emerged, it itself has become commodified. I see three way collabs. Four way collabs.

Michael Miraflor: [00:23:12] Absolutely.

Phillip Jackson: [00:23:13] Where does it stop?

Michael Miraflor: [00:23:15] That's tough and it's evolving in real-time. But it is a shame to see collaborations go from novel and special in creating value for everyone involved in a one plus one equals three sorts of way to it being part of the business plan now. Like if we don't do another collaboration this upcoming quarter, we might not fulfill whatever stock or delivery. And that's sort of a shame because it used to be what I just mentioned, a value add for the consumer, something that's unexpected, something that is original, something that you wouldn't expect otherwise. It's become an expectation. So you can argue that brands have to do collaborations because it's just what you do as a modern, relevant brand. But I think the whole thing needs to be reevaluated or if not rebooted in some categories like sneakers, apparel, anything having to do with the youth culture. One can argue that it's been overdone and needs to be reevaluated or cool down a bit.

Phillip Jackson: [00:24:14] Let me just kind of rewind you, if you could say that last bit again, just real quick. It needs to be reevaluated. Try to pick it up if you can.

Michael Miraflor: [00:24:21] I forgot what I just said.

Phillip Jackson: [00:24:25] No. You're fine. Yeah, just kind of rethinking the model. And that's where I sense that we're the niche-ification of everything kind of makes it really tough to do because I feel like you're speaking very... Where you weren't speaking to any one person at one point in time, now you're speaking only to one person. Please...

Miya Knights: [00:24:44] But this is where I often talk about working together to stand apart. Hearing about, I think, you made a great point, Mike, that we're all working so much harder for our dollar. That value proposition has taken on so much more significance to us. So we really need to see the value in what we're investing in. We're investing in a brand when we buy from them. And the other thought that was going through my head when we started this discussion is even before the pandemic, I was constantly hearing that we need to have a purpose, we need to be a brand with purpose. If you fully understand what that purpose is, which I think has to stem from your best customers are, who do I resonate with most? Who's my most loyal customer? That should give you your map to who should I be collaborating with? And your customers are going to change. They're going to age. Are you going to want to stay with the same demographic? Are you going to move with your customer? Necessarily, in that sense, who you collaborate with has to change as well. It all starts with understanding who you're selling to, and what's going to resonate best with them. And in that sense, picking up on Brian's point about art, it's subjective, it's intangible. There's a little bit of magic to it, which is why I think we all like retail in that sense. But that's what retailers have to tackle, to contend with. That's what they have to tackle head-on. But we're in this really odd situation at the moment, this tension between merchant curation smarts and thinking, [00:26:11] "I know my customer, I don't need to be told what they like." But then, on the other hand, retailers are absolutely drowning in data that should be able to tell them what we like and what we don't. And it's marrying that tension, finding the balance between the two, and using that to guide your business model and who you collaborate with and the products you innovate with. That,  [00:26:32]I think, is absolutely key. It's really difficult. I said it's like magic. It's like a little bit of art, but it all starts with the customer. It all starts with understanding who you're selling to.

Phillip Jackson: [00:26:41] I see a lot of heads nodding here. Seems like everyone's in agreement. Jump in.

Brian Lange: [00:26:45] Yeah. No, I think something that's really interesting in what you're saying is that brands have to have an evolutionary identity. A story that Phillip has that I tell this story all the time. You were talking to Ben Chestnut, the founder of Mailchimp.

Phillip Jackson: [00:27:00] Mailchimp.

Brian Lange: [00:27:01] And Phillip asked him, "How do you keep a culture like this intact?" And Ben said...

Phillip Jackson: [00:27:08] When you're hiring ten people every second day.

Brian Lange: [00:27:11] Right. And he's like, "No, we don't. Every time you add someone, your culture changes by virtue of bringing that person in." When you add a customer, you're changing your community as a brand. You're changing who you are, and that's okay. That's not a bad thing. That's a good thing. You're right. We're drowning in data, and the last ten years, in particular, we've added more data to our mix than ever before. The only way that we're ever going to be able to establish the significance of that data and this is, I think, one of the fundamental challenges that retailers have in the next five years is to actually get to know our communities. And that's not done by data collection. That's done through relationship. And so to get to the friend's point, I think you have to be interested in people. You can't just collect stuff off of them. You actually have to care about them and want to know them. And that's a there's a human discernment aspect of this. It's a phenomenological experience analysis. And that's something that I think brands and retailers need to focus on these coming years is actual experiences and being able to discern and analyze the significance of those experiences.

Phillip Jackson: [00:28:38] Lackman, you look like you want to jump in. I don't want to give you I don't want to cut you out of this.

Mike Lackman: [00:28:42] No, I mean, it was funny that a couple of weeks ago I was talking to a management team that had asked me for some advice on a customer segmentation thing that they were working on and trying to figure out about repurchase rate or something along those lines. And we'd gotten pretty deep into the rabbit hole on this thing. And okay, you understand what these segments are. You've identified some correlations between them. There wasn't anything really all that coherent about what customers do in fact like, what's missing, and what strongly grounded hypothesis you have about what would make them happier. [00:29:13] And it got to this point where they said, "Well, I'm not sure what they want." It's like, "Well are you talking to them?" "What do you mean? I mean, I have the data in front of me. How do I talk to them?"  [00:29:22]Pick up the fucking phone.

Michael Miraflor: [00:29:25] Talk to your customers. Right. Right.

Brian Lange: [00:29:26] Exactly.

Mike Lackman: [00:29:27] It doesn't matter what role you have in the company. Go to the CX team, sit down, plug in, and talk to three or four people a day. And I think we do get so worried about some things being anecdotal in a world where there is this burden of statistical significance that we've lost some of that.

Phillip Jackson: [00:29:56] You're on something good. I want to pull on the thread.

Mike Lackman: [00:30:00] So speaking of things becoming commoditized, it's not that remarkable to understand what an R squared is, what the ability to match some data with some other set of data looks like, and what might be correlated. I think on the flip side, we're so worried about things potentially being anecdotal that we're losing some of those more authentic human-to-human narratives that do, in fact, explain those customer stories which tend to create that value.

Phillip Jackson: [00:30:25] Is that because we want to do things the easy way? Because I don't think that data analysis is necessarily easy. Grace, you seem like you're jiving with that.

Grace Clarke: [00:30:35] Yeah, this is a big part of what I'm working on with some of my clients right now is making sure that they're understanding both how to collect that information, and how to synthesize it. So [00:30:45] every company needs to build a culture of being curious in every single level of the business. And everybody has to be a behavioral psychologist. There's no way around it, no matter who your customer is. You have to understand, to everyone's point here, what it is that they want. [00:31:01] And I have never found a situation where you can shortcut it. You can certainly harness and gather as much data as you want. But think about refining crude oil. It needs to go through the process and there needs to be a shepherd for it who can translate all of that information and make it real for the different stakeholders in the business who are making decisions, whether it's collaborations or who the right art partner is or what it looks like to evolve as your customer base grows or potentially changes. So every company has to have that culture of curiosity in there. And the best thing that I have done for my clients is pick up the slack there because they're moving very quickly, they're growing, they're changing. Their priorities are better spent somewhere else. And my job can be to pick up the phone and to build a program of speaking with their customers, not just their customers, their lapsed customers, the people who are unhappy. So sometimes my best partners in my work are CS teams or people who are actually running operations where they're more directly interfacing with the customers. It might actually be a paid agency who is supporting, understanding what it looks like when that product is showing up in front of cold audiences for the first time. My job is to really sit, have those 1-to-1 conversations, and then synthesize a few key learnings on a regular basis, so people start to understand that data is really just a way for us to say what other people are thinking. I want my customers, my clients to be in the business of re-acquiring people, which is a different way to talk about retention. It's not the same thing.

Phillip Jackson: [00:32:33] If you're working with a lot of early-stage teams, though... I see more and more in our area of the world, people are doing so much more with so much less and not necessarily less capital because we definitely haven't seen less capital in the last few years. But the small, smaller teams. So they're putting this capital to work on the acquisition side or in the data collection side, and they're interpreting all this data, but it's a small group of people who are holding these insights, and what they're trying to do is automate the rest of it away. Is that even possible? Softball to the whole team here. Is that possible? Is it possible for us to try to do what we're trying to do in our industry with a five or six-person team and actually be really damned good at it? Because that's where I'm coming down to. I feel like a plurality of identities behind the scenes that a brand really helps to bring a better perspective to what the customer wants. So you're not filtering everything through two or three people's lenses.

Grace Clarke: [00:33:28] Let me share a quick story that might help answer this question or open the conversation. The more companies I work with at both the enterprise level and the early-stage level, what I've found is nobody is building their business by themselves and everybody is having siloed conversations like this and sharing insights with the people that they're comfortable with. So I have a vision for the future where brands start to see their competitors more and more as their peers. Not to collaborate and necessarily share audiences, but we're all trying to build from the same playbook. So the most efficient thing and the most human thing we can do, to your point about what friends are really for in this industry, is start to have those conversations and realize we're all supporting the same person. So it might be in our best interest to share some of those insights if we're all answering the same questions. I have started to get people together in Pattern Match founders to introduce them and say, "You're solving the same problem. You don't have to share openly, but you might find that you're going to answer some questions here that you would never find a solution for if you're operating in the dark."

Miya Knights: [00:34:29] Yeah, I agree. I agree. I think funny though when you've got few people concentrated, everyone's really clear on the direction. Everyone's got a clear idea of who their customer is. You've probably got a limited number of products. It's when you get to that enterprise level, that Tier-1 level, that the brand starts to get diluted, that the dollars and the shareholders become more important. They're not more important than... The customer is still the most important thing. But you've also now got shareholders to satisfy. And I think I always talk about using data with empathy. So we have managed to create Tier-1 retailers because of technology. We've been able to scale. I often say to big grocers, for example, you've got your point of sale, your tills. Your stores would not exist without those tills because you could be selling stuff and making transactions and taking money, but the bank is not going to recognize that you've made that sale until you push it through a technology platform that's allowed you to scale. And we are drowning in this data where we're kind of letting the algorithms rule. But I think we need to find a way of collaboratively raising the level of insight to a collaborative level where everybody's sharing it and then go and validate it by actually talking to the customers. I think right now at scale, particularly the bigger, bigger retailer companies are just relying on the data, they're just relying on the algorithms and they're kind of forgetting their voice of customer programs. They're forgetting, they're kind of tucking their customer success people in a room, darkened room, and bringing them out once in a while to sort of report. All of these things need to be interconnected, and we've kind of lost sight of the human relationships and the collaboration and the value that that can bring and replaced it with the fact that the data will tell them what's happening.

Phillip Jackson: [00:36:22] Yeah.

Kiri Masters: [00:36:24] I see this at odds with all of these silos and walled gardens that are being built with media, and with retailers as well. And every major retailer out there is trying to stand up a retail media platform right now because it's profitable and they need the margin. And it's usually a great opportunity for a brand or an advertiser to get in front of customers as well. But that's moving away from what you're talking about. [00:36:56] We're moving towards more silos, I think, in terms of distribution, and more intermediaries vying for space, that valuable space between the brand and the customer and getting in between being able to collect that data and sell it back to the brand. [00:37:15] So it's becoming a truly pay-to-play model that's increasingly siloed.

Miya Knights: [00:37:20] Then leading to more disintermediation, unfortunately, which takes brands and retailers further away from their customers. It's difficult, though, because retailers want to feel that they want to own the customer, own the customer relationship. And to your point about friends, you absolutely have to, if you want a 360 degree view of who you're shopping from and that they might only want to come to you once a year or when their kids come back for spring break or something, you need to understand that nuance. I think retailers don't necessarily seem that interested in understanding the nuance now.

Kiri Masters: [00:37:52] Another example is Instacart, who intermediated the relationship between retailers and shoppers at the end of the day. And there was a study from Barclays showing that there were only two retailers in the Instacart ecosystem who shoppers would leave the Instacart app for. Everyone else was more... For any other retailer, shoppers were more aligned with Instacart being their interface and where their loyalty was. And so that's where I think the retailers have really recognized what is our reason for being? If Instacart can come along and disintermediate us, we need to get back closer to the customer. So everyone is trying to desperately hook back into the customer relationship. Because it's very, that's their reason for being and that's where they're going to ultimately collect the data and continue operating.

Phillip Jackson: [00:38:52] I have heard for like a decade now that big retailers are complacent, but can you really say that anymore? I don't think they are. I think they're doing a lot and I think they're investing a lot. And I think it's sort of a mistake for us to write them off, to say that they're incapable of innovating. I think we're actually in an interesting reversal cycle of maybe the innovator's dilemma has become inverted and it's the imitator's dilemma now. We see Instacart disintermediating. And it's not just the fact of competition, it's that they figured out how to have a better user experience. They figured out how to have better partnerships. Why can't I do that? I can absolutely do that. And so these disruptors are being disrupted, not for the fact of the marketplace or liquidity. It's because the big retailers have the bodies and the processes to actually make it happen and make it sustainable over a long period of time. Thoughts?

Miya Knights: [00:39:50] But can they be nimble and agile at it? I think it's like moving supertankers.

Michael Miraflor: [00:39:56] And are they as good as cultivating community? And getting insights from community to help evolve the product and ultimately the brand over time? I still see that being the advantage of smaller incumbent direct to consumer brands, however you want to characterize them. But you're right in saying that larger enterprise brands have caught up in terms of design, have caught up in terms of CX, and have caught up in terms of finding relevance in culture. But I think that battle is still very, very active, especially in the hearts and minds of consumers who tend to root for the underdog. So that's something to consider.

Brian Lange: [00:40:33] I mean, do you think, though, that I mean, there's also the acquisition strategy that we've seen and it's panned out for some and not for others. But Walmart did very well, not necessarily in making those businesses successful that they acquired, but in learning from them.

Phillip Jackson: [00:40:48] The Borg Collective sort of assimilated.

Grace Clarke: [00:40:51] Yeah, well, there are two counterpoints that come up for me as we think about retail, both at the enterprise level and then moving up to enterprise level. So an argument against what we're talking about, which I think is interesting, is Costco, which is...

Phillip Jackson: [00:41:04] Sorry, Brian's ultra fan.

Brian Lange: [00:41:05] I almost brought them up already, but I'm so glad you did it and not me.

Grace Clarke: [00:41:09] Okay, well, let me reverse what I'm going to say. So I think Whole Foods is a terrific example of a company that is plugged into all sorts of other parts of the supply chain and the way that we spend our money and time in grocery stores. Just anecdotally, the Whole Foods in Brooklyn, where I shop, is increasingly every time I go in, a larger percentage of the people on the floor are fulfilling orders rather than shoppers for themselves. So I would look at that. But then also I spent time at a Connecticut Whole Foods recently and the assortment was merchandised very differently, especially around the holiday or Mother's Day. We see things like larger bouquets of flowers or Christmas trees or holiday decorations that are all catered and their ability to really localize or attempt to localize the experience of the store, I think, is an indicator that they do want to have the experience of customers, real people in the store. Then we look at something at the other end of the spectrum, like Costco, which has done such a good job of really understanding people's needs at a base level that they can be a solution in certain markets. And going there when I travel reminds me that as a marketer, it's important to get outside the bubble of what I understand to be an early adoptive consumer who is living in a small urban environment, that there is a whole country of people, at least as we're talking about the American market, that are shopping with different priorities. Costco really doesn't need to or hasn't seemed to need to change the way that they sample in certain regions, or maybe their merchandise or their assortment changes from place to place. But their private label development is an indicator that they really get to call their own shots and they make their own decisions. And it seems to be working as we think about what the consumer wants and how far they can actually take their own dollar.

Brian Lange: [00:42:55] And I would argue that in certain stores and regions that they've done a very good job of bringing in local products and catering to local customers. Granted, I live next to their headquarters, so it's possible that I get a different Costco experience than the rest of the world does. But you're right about sampling, and you're right about the private label. What they do is they're so great at learning about their customers, understanding them through their broad market purchasing habits, and then applying them to product, which I actually think is huge. Regardless of whether we're talking broad market or niche, the ability, the moving product closer to your marketing team and product development and speed to market with product is becoming more and more important. We've all seen it. Marketing has the lead to DTC, not necessarily product. And as we step away from sort of the DTC as it's been the past four years and we think about what's next, bringing that customer closer or the marketer closer to the product and letting the product speak for itself, especially when we have these...

Phillip Jackson: [00:44:15] Infinite choice.

Brian Lange: [00:44:17] Exactly. I think that's going to be essential coming up here.

Phillip Jackson: [00:44:20] Mike, I want to give you a chance to jump in here. There's I think when you're looking at how many people obtain goods, they think about the corner store. That is, I think, most people's default modality. When you kind of revert back to your defaults in a world that's kind of hungry to get back outside. And then you have this dichotomy between you've stoked my intent with some ad, I want that thing now, but I can't have it for five days or three days. I can just go down to the store and get it. How do you sort of see us combating that right now?

Mike Lackman: [00:44:55] Well, I think there are two things. There's going to be some real cost to capital, hard logistics immediacy stuff where there have been some tacit things that were free in some of these ecosystems that are becoming much more expensive very, very quickly. And so I think the broad proliferation of 20 minute on-demand at the same long-tail inventory availability, we're going to see some resistance to that in terms of how scalable that model is. From there, it does go back to that notion of promise-keeping. I think we've talked a lot about how much value DTC has created. I think that's in a bit of an echo chamber, especially from the conference-going population where if you actually look at the enterprise value created from folks that have gone directly to consumers, it's mostly been from folks that kept these broad category promises. If you look at the successes, there has been more value created for employees working at those companies and for the way those companies worked by the Jets and the Wayfarers and the Backcountry.coms and those folks that keep those broader promises where you can solve a couple of different problems than the folks that provide a very individual small point solution that is probably reliant on some arbitrage around cheap traffic. That's just not going to be a part of our future. And so I think to that end, how do you think about the competition when there are things more immediately available? It just comes back to this notion of are you making a sustainable promise with real differentiation? And there was a period ten years ago when being able to build a website quickly and being able to use some of these social media to advertise and being able to deliver things with eCommerce in categories that had been done before was differentiated. The modalities of what's going to be differentiating in the next ten years is going to be very different.

Phillip Jackson: [00:46:28] Very different.

Mike Lackman: [00:46:29] And that's just going to keep continuing. So there's room for folks that are really disruptive DTC or eCom solutions within larger offerings that are omnichannel. And there's going to be lots of continued success in the parts of the Whole Foods and the Costcos and the other folks that execute super well in those more traditional business models.

Phillip Jackson: [00:46:50] We've got a lot of work. We've got a lot of work to do. As we're kind of thinking about... Let's shift gears, and let's think about the next phase of the discourse. And that is really how you stand out because that is the key. If we can stand out, hopes are that someone might notice us. Most people probably aren't looking for a protein laden better-for-you ramen, but maybe those people who are looking for it... Finding your audience is a little tougher now than it used to be. This is just for the panel, and I'll let you guys sort of weigh in. What's working right now and maybe give me a reason why that's not sustainable. What are ways that brands are trying to stand out right now in a way that's probably short-term arbitrage, but it's probably not going to last forever? Is it the packaging on the shelf? Is it TikTok? Michael, any thoughts?

Michael Miraflor: [00:47:48] If I can give a specific example, there's a Matcha brand called Taika and they collaborated with a DAO called Friends of Benefits to collaborate on product development by allowing fans of the brand to purchase an NFT that would give you the rights to vote on the next flavor that would be distributed or created and distributed. I participated in it as a fan of the brand, and it made me feel empowered as being part of their R&D engine. It's very unique, it's very novel. It puts you in direct contact with the founders. It gives you a forum to interact with other fans and members of a community. I don't see how something like that could scale, but as an experiment, I think it is one of the best examples of leveraging new technology to unlock different ways of creating value for everyone involved in the ecosystem. And the fact that there will be product on shelf to reach not only the people that participated in this community but just consumers in general for where they're distributed is sort of amazing. But again, I think the big question about if this is something that could be repeated in scaled. There are limitations to the technology. There's a limitation to you the attention that you can hold from the types of consumers that can get involved. And this all goes back to the notion about community is talked about, talked about a bit too much without it having much of a definition. It's like a capital C that every brand is trying to figure out. Some brands are just throwing people in a Discord, hiring a community manager who's familiar with the platform, and letting everyone have at it. I think the difference with this particular example is that it had purpose from the very beginning. And it utilized a technology or technology platform in a way that most other brands had not been thinking about it. People have been looking at NFTs as a source of additional revenue. This was less about the secondary market, less about holding, less about flipping. It was more about, Oh, there's utility that I can unlock. And I see it immediately in the ability to vote and the ability to connect with like-minded fans of the brand. So I hope that's a leading indicator of things to come. Not from just a functionality perspective and an R&D perspective, but a willingness of young brands to find different ways to grow. And I would have to think that this is making investors think about like, well, there is a lot more than a brand can do than shovel more money into the social media fireplace to set on fire to acquire new customers. You can get creative with it.

Miya Knights: [00:50:21] To Michael's point, I think I might be completely wrong here, but everybody, every brand, and every retailer has seen their cost of customer acquisition burden rise because of the rise of the walled gardens, to Kiri's point. I think if you're going to create a community, you've got to give it a purpose. I think a lot of retailers just think, "Oh, I'm going to gather you all and allow you to just go at it." But you have to give them assignments, give them purpose, and to marry those two points I think hopefully we're going to see brands and retailers retreating from the walled gardens a bit because I think I was reading the results of your survey and so many consumers said that they were disappointed by something they bought from social media. Over promising. And it takes six weeks to arrive. And then you're so disappointed when it gets there. I'd really like to see the other trend that's coming out now. C to M, direct to consumer, in that sense. I'm not manufacturing things in the hope that you'll like them. I'm waiting for you to tell me what you want and then I'll go. Nobody's mentioned Shein. You know, Shein, you've got what? I don't know. Tens of thousands of SKUs, but none of that products actually exists in that sense. They're waiting for people to ask.

Phillip Jackson: [00:51:42] I see.

Miya Knights: [00:51:43] And they are now a bigger fashion retailer, the biggest app in the US, they have just overtaken Amazon. Now that's scale, but on the C to M level. I think also folding that in personalization, just allowing consumers to tell you, to Michael's point, what they want. It might not be to the nth degree where I'm going to allow you to design your own t-shirt, which actually Amazon recently did. And they said, personalize your own t-shirt, the cut, the size. You can take it to an extreme like that. But I think there's got to be a marriage of listening to consumers and actually being seen to respond to their desires rather than looking for lookalikes. And I was talking a lot about spraying and praying broadcast advertising, and we're still doing too much of that. I mean, again, to the point about letting the algorithms rule, programmatic advertising has gone crazy in that sense, and I think we're going to see diminishing returns from that.

Mike Lackman: [00:52:42] What you said was so smart. You used the word utility three or four times. And I think your question may have been with the conceit of other channels that are more arbitrage than other channels. And it might be that when you look at some of these brands like FIGS or On Running, there's an emerging workwear brand called Brunt that's finding incredible product-market fit. They're always rooted in these elements of real deep utility. They are the best shoes for running. These are clothes that are the best way that you can dress if you're a medical professional. This is the best way to take care of your body if you work with your hands. And at that point the channels are going to work themselves out. But to your point, if there's that utility that is deeply authentic, the customers are finding that it's very hard to call it arbitrage. You can look at all the same tactics from a place where the utility is lacking and it probably is going to be pretty unsustainable.

Miya Knights: [00:53:29] The point of sort of information for me on that front is the way when Kiri talks about Amazon being a utility, they offer a very utilitarian customer experience. When you're talking about utility, I understand more that that relates more to knowing my purpose as a brand. I have one thing that I do and I do it better than anybody else. That's my point of differentiation. So there's a negative side to utility when it comes to customer experience. You want to inspire and delight. But at the same time, with the products that you're developing, they have to do what they say on the tin, right?

Mike Lackman: [00:54:03] Yeah.

Miya Knights: [00:54:04] Yeah. And the more precise you can be about what they do and deliver on that promise, the more successful you're going to be.

Phillip Jackson: [00:54:09] You were going to jump in...

Grace Clarke: [00:54:11] Well most of the brands that we've just spoken about, aside from retailers, have a few things in common. And one of them is that they traditionally have a pretty narrow SKU base. Even On Running has a few specific models that are differentiated in the upper and the style and the color. But for the most part, we talk about Brunt, we talk about FIGS. Not only have they kept it really conservative in their products and perhaps they don't feel pressure, maybe from external capital sources or the leadership internally to over assort. So you ask the question, what are brands doing trying to stand out? Trying to do too much. And that might mean collaborating with too many partners, or it might mean trying to create too many products. Interestingly, Instagram just released a report that is pretty damning for brands who are trying to just pump content into that experience, which is that 8% of your audience sees every post you publish. So it is a bit of a volume play unless you decide to take it easy on your marketing team, your product development team, your retail relationships, and understand really, truly what products are your best bet. And you can certainly get there by testing. Lightweight tests through collaborations are a great way to understand the appetite in your current customer base for different types of products. If you want to understand what you might assort into. However, FIGS is a great example of a company that really stayed true to its functional mission. Brunt as well. I think we'll probably see something similar happen, which is that by understanding both the way you're using your working capital and the way you're developing products, you can really understand your customer and hang on to them. Keep that promise to be totally true for your business, but also re-acquire that customer over time. Stay with them because really I think the relationship is different. Brands don't have customers, brands are chosen by the customer. So I like to tell my clients that we're being chosen right now. We don't have that customer forever. We're just their brand right now.

Phillip Jackson: [00:56:05] I can't wait to dig into that dynamic in our next session because I do think that that's the era that we're moving into. It's a rebalancing of power between the consumer and the retailer or the brand. And this idea that the power dynamic between the two shifts dramatically, like a pendulum swing. We're moving into a place where our customers are making us make things now. We're giving them power to do that. Our customers are telling us what they do and don't want. It's not just voting with your dollar anymore. And this may be this phenomenological era that Brian is talking about, maybe that is any strength over extended can become a weakness. I think that that can also quite limit us in the way that we're building sustainable organizations. Last word, Brian.

Brian Lange: [00:56:59] I think this comes down also, I think, Grace, to your point to power. This is a conversation about where does power actually come from? And I think what we're doing right now in this room is actually how you derive power, which is sharing, understanding, building relationships, and discourse. And so as we say, that person is not our customer. They chose us. I think that there is a second side of that as well, where actually when someone buys something, there's a bit of an identity exchange that happens. And so they're giving you their hard-earned dollars, as we've talked about. And that's actually part of their identity because money often comes from what you put your life into. They're giving you part of themselves to get what you have to offer to them. And that in itself is actually a knowledge transfer as well. And so if we're going to ever, as we look ahead to how do we scale relationship building, I think that we have to look and say where do I sit in that balance of power with my customer right now? And where should I sit in that balance of power right with my customer right now?

Phillip Jackson: [00:58:45] That was amazing. That's it. We will be back here in just a little bit. Thanks, everybody. That was great.