Behind the Numbers: Signal-Based Merchandising and The Impact of the Empty Shelf

Summary

Behind the Numbers: Signal-Based Merchandising and The Impact of the Empty Shelf

In the March 28, 2025 episode of EMARKETER’s podcast, "Behind the Numbers," host Marcus delves into the critical issue of empty shelves in retail and explores the innovative solution of signal-based merchandising. Joining Marcus are key industry experts: Sky Canavas, Principal Analyst based in Austin, Texas; Blake Drosch, Senior Retail Analyst from New York; and David Gottlieb, Chief Revenue Officer at Trax in Colorado.

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Guest Introductions and Personal Insights

Host Introduction: At the outset, Marcus introduces the panel, setting the stage for an insightful discussion. The initial segment includes a brief personal introduction, fostering a relatable atmosphere among listeners.

David Gottlieb’s Background ([01:33]): David shares his roots, stating, “I grew up in Connecticut, born and raised there and now live in Denver. I've been here for about 20 or so years with my wife and twin 17-year-old daughters” ([01:33]). This provides a personal touch, connecting the audience to his professional insights.

Favorite Childhood Toys ([02:19] - [03:17]):

• David’s Favorite Toy: David reminisces about “little balsa wood airplane kits” he loved as a child, highlighting the imaginative play they inspired ([02:19]).
• Sky’s Collection: Sky reveals her enduring passion for Barbies, noting, “they were the original brand that had all the, like, limited editions and collaborations and exclusives to keep you buying more” ([02:55]).
• Blake’s Preference: Blake confidently states, “Oh, Legos. Definitely Legos” ([03:13]), underscoring his love for building and creativity.

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Fascinating Facts About the Grand Canyon

Before diving into the main topic, the panel engages in an enlightening discussion about the Grand Canyon, blending personal experiences with intriguing facts.

Size Comparison and Exploration ([03:10] - [05:38]): Marcus shares a surprising fact: "The Grand Canyon national park is bigger than the entire state of Rhode Island" ([03:10]), eliciting amazement from the panel. They discuss the vastness of the Grand Canyon, mentioning its extensive cave systems—“2,500 according to the National” ([03:10])—and the solitary Cave of the Domes open to the public ([03:10]).

Personal Experiences:

• Blake’s Visit: Blake confirms his personal visit to the Grand Canyon ([04:52]), while Sky shares her adventurous run across the canyon for her birthday ([05:14]), showcasing her determination and zest for challenges.
• David’s Perspective: David admits he hasn’t visited the canyon, expressing admiration for Sky’s feat ([05:22]).

Cultural Insight: The conversation touches on the Havasupai tribe, emphasizing their long-standing residence in the canyon and adding depth to the discussion ([05:11]).

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Main Discussion: Signal-Based Merchandising and Empty Shelves

The core of the episode revolves around understanding the impact of empty shelves and how signal-based merchandising offers a strategic solution to this pervasive issue.

Understanding Signal-Based Merchandising ([07:00] - [10:21]):

David Gottlieb Explains Trax’s Solutions ([07:00] - [10:10]): David provides an overview of Trax’s offerings:

1. Image Recognition Solution: Enables manufacturers to “understand the nature of the execution at the shelf” by analyzing photos from stores to ensure accurate product placement and pricing.
2. Dynamic Merchandising Business: Deploys representatives to manage in-store execution, such as fixing displays and restocking shelves.
3. Shopper Marketing (Shopkick): Drives shoppers to stores, enhancing brand experience and product purchases.

Notable Quote:

David Gottlieb ([07:00]): “We're helping manufacturers who don't have eyes inside of every store understand the nature of the execution at the shelf.”

Marcus highlights the widespread challenge of maintaining real-time stock visibility, citing Zebra's Global Shop Estate survey: “84% of retail decision makers said maintaining real-time visibility of stock levels is a challenge” ([09:05]).

The Frustration of Empty Shelves ([12:08] - [16:04]):

Impact on Consumers: David discusses the negative customer experience caused by empty shelves, noting that “40% of shoppers will brand switch when they can't find the item they're looking for” ([12:08]). This shift erodes brand loyalty, as consumers may permanently switch to competitors after a single negative experience.

Notable Quote:

Sky Canavas ([14:37]): “People are brand loyal to a point. But if they need something for a recipe or to complete their shopping mission, they're probably not going to go home empty-handed.”

Operational Challenges: Sky elaborates on the complications arising from online shopping and order substitutions, emphasizing the demand for inventory transparency ([14:37]). Blake adds that empty shelves lead to increased competition from private labels and negatively impact retailer and brand loyalty ([15:43]).

Notable Quote:

Blake Drosch ([15:43]): “It's not necessarily, you know, there's a lot of friction with the physical stores that, you know, these online retailers are really jumping out to replace.”

Signal-Based vs. Traditional Merchandising ([20:55] - [22:28]):

David Contrasts the Two Approaches ([20:55] - [22:28]): David delineates the fundamental differences between traditional and signal-based merchandising:

• Traditional Merchandising: Deploys representatives on a fixed schedule based on geography, often resulting in inefficiency as “up to 50% of the locations that you're spending money to go try and impact... were actually pretty good” ([20:55]).
• Signal-Based Merchandising: Utilizes data-driven strategies to target stores where interventions can significantly boost sales, optimizing return on investment.

Notable Quote:

David Gottlieb ([22:28]): “The major difference with signal based merchandising is we are using a data driven approach to prioritize which stores we visit and when we visit them.”

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Future Directions of Signal-Based Merchandising

Looking ahead, the panel discusses the evolving landscape of signal-based merchandising and its potential expansions.

David’s Vision for Trax’s Solutions ([22:33] - [25:13]): David outlines two primary directions:

1. Promotional Execution: Extending signal-based merchandising to monitor and ensure the proper execution of in-store promotions, such as end caps and secondary displays.
2. Enhanced Data Collection: Broadening the scope of data collected to include metrics like share of shelf placement and pricing, supporting comprehensive category management and joint business planning.

Notable Quote:

David Gottlieb ([24:12]): “We're not only measuring availability of the product... but, like, how many of them are there.”

Industry Insights: Sky and Blake emphasize the increasing importance of these technologies amidst rising competition from private labels and shifting consumer behaviors. They highlight that mastering in-store technology and maintaining inventory transparency are critical for brands to stay competitive.

Notable Quotes:

Sky Canavas ([24:42]): “It's more important than ever to really understand what's happening, where the rubber meets the road at the point of decision for shoppers.”

Blake Drosch ([25:26]): “The only way that brands can really stay ahead of the game... is by continuing to invest in technology.”

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Conclusion and Final Thoughts

As the episode draws to a close, the guests reiterate the significance of adopting advanced merchandising strategies to mitigate the challenges posed by empty shelves. They stress that leveraging real-time data and technological innovations is essential for enhancing consumer satisfaction and maintaining brand loyalty in a highly competitive market.

Closing Remarks ([26:55] - [27:09]): Marcus thanks the guests for their valuable insights, signaling the end of the episode. He also teases the next episode's topic on the impact of AI on the job market, encouraging listeners to stay tuned.

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Key Takeaways:

• Empty Shelves Are a Critical Issue: Affecting both consumer satisfaction and brand loyalty.
• Signal-Based Merchandising Offers a Solution: Utilizing real-time data to prioritize and optimize in-store interventions.
• Future Enhancements: Expanding to monitor promotional execution and collecting more granular data.
• Investment in Technology is Crucial: For brands to navigate increasing competition and evolving consumer expectations.

By providing a comprehensive analysis of the empty shelf phenomenon and introducing signal-based merchandising as a strategic solution, this episode equips marketers, retailers, and advertisers with the insights needed to stay ahead in the dynamic landscape of digital media and retail.

Transcript

[Marcus]

Are you struggling with out of stocks, phantom inventory or lack of shelf data? Well, if you are, Traxxas signal based merchandising is designed to give real time visibility into what's happening in stores and on shelves. So you can take action when and where it matters most. For more information on this, head to Traxtrax retail traxretail.com and click the get started button in the top right hand corner today. Hey gang. It's Friday, March 28th. Sky, Blake, David and listeners, welcome to the behind the Numbers show, an E marketer video podcast made possible by Tracks. I'm Marcus. Today we'll be discussing the impact of the empty shelf. For that conversation, I'm joined by three people. Let's meet. And we start with our principal analyst living down in Austin, Texas, it's Sky Canavas.

[Sky Canavas]

Hey, Marcus. Hey everyone.

[Marcus]

Hello there. Also joined by our New York based senior retail analyst, Blake Drosch.

[Blake Drosch]

Hey everyone. Good to be here.

[Marcus]

And we have with us the chief revenue officer at Trax who resides in Colorado, it's David Gottlieb.

[David Gottlieb]

Thanks for having me, Marcus.

[Marcus]

Yes, sir, of course. Thank you for being here. We start with a speed intro. This is when we get to know our external guests a little better. First three questions are just for David, the fourth is for everybody. Let's do it. David, you are based in Colorado, but where are you from?

[David Gottlieb]

That's right. I grew up in Connecticut, born and raised there and now live in Denver. I've been here for about 20 or so years with my wife and twin 17 year old daughters.

[Marcus]

Oh, so when people say ask you where home is, you say Denver. Okay. Denver.

[David Gottlieb]

Doubt. Yeah.

[Marcus]

Very nice. What do you do in a sentence?

[David Gottlieb]

I'm responsible for the overall go to market function within tracks.

[Marcus]

Okay. And what's your morning drink?

[David Gottlieb]

Coffee. 100%. Splash of skim milk?

[Marcus]

Just a splash. Okay. What was one of your favorite toys to go to the store to buy off the shelf when you were a kid? Something that kind of Toys R Us experience, if you will.

[David Gottlieb]

Yeah, I think for me, and I don't know if this was something, probably you could find it at Toys R Us, but you could also find it at like a CVS or a convenience store. It's those little balsa wood airplane kits. And I, I think it was, it was always the possibility that it was really going to fly really, really well. It never did, but that hope was.

[Marcus]

Always there when you fly.

[David Gottlieb]

Yeah.

[Marcus]

You're always like, I can do it. I'm the one person on the planet that can make this work. Oh, such a good choice.

[Blake Drosch]

All right.

[Marcus]

A lot to stack up against here. Sky, what do you have?

[Sky Canavas]

Mine were Barbies for sure. I was always in the Barbie section, and they were the original brand that had all the, like, limited editions and collaborations and exclusives to keep you buying more. So I am asked. Quite a collection.

[Marcus]

Good choice. All right, Blake, bring the heat.

[Blake Drosch]

Oh, Legos. Definitely Legos.

[Marcus]

Yep. Very nice. Very nice indeed. There are three guests for you for today's episode. Let's move now to the facts of the day. The Grand Canyon national park is bigger than the entire state of Rhode Island. I don't know whether this is surprise, like, shocking how big Grand Canyon is or how tiny state Rhode island is. Sorry, Danielle. Danielle works on her team. She's from Rhode Island. Can't believe it's that small. So according to National Park Service. Well, first of all, let me say this. So you can drive around the whole grand canyon. Take about 15 hours. It's a 900 mile drive. That's far. That's like driving from Portland, Oregon to la or from driving from New York to Jacksonville, Florida. So it's. It's very far. It's a. It's a big place. There are a ton of caves there. 2,500 according to the National. Estimated. According to the National Park Service, there's only a few hundred that have been documented. So they're kind of guessing that these others are there. But there's only one that you can go in. Of all the caves that exist there, just one is open to the public. The Cave of the Domes, located near Horseshoe Mesa at the end of the Grandview Trail. So if you're planning a visit, that's where you should head if you want to get inside of a cave. Have you guys been not to the cave, but to the Grand Canyon?

[Blake Drosch]

I have, yeah.

[Sky Canavas]

I was just there last October. And while driving around takes forever, running across the Grand Canyon is only about 20 some miles.

[Marcus]

You ran it?

[Sky Canavas]

Yes. It took longer to get back to the other side than to cross on foot because of the driving. You have to loop around.

[Marcus]

Was this an organized race or you just took off?

[Sky Canavas]

Just. Just an adventure for my birthday.

[Blake Drosch]

Wow.

[Marcus]

That is very cool. Go on, David.

[David Gottlieb]

No, I was. I've never been there. I'm embarrassed to say. I live probably the closest of all three of us.

[Marcus]

Yeah, yeah, yeah.

[David Gottlieb]

But I'm impressed by. By Skye's run across the canyon. I have to wonder who was chasing her or was it just.

[Marcus]

This was just.

[David Gottlieb]

This is like voluntary run across the canyon.

[Sky Canavas]

Yes.

[Marcus]

That's the only reason to run, David. Or you need to get to someone who's taken something from you. But no, Sky. Sky did a double marathon once. She ran the marathon and then ran it backwards and then ran it when everyone else ran it. So this, this comes as no shock to people who know her, but, yeah, shocking to everybody else. Absolutely remarkable. Final thing on this, the Havasupai tribe, Native American tribe, they live in the Grand Canyon still. I don't think as many of this, a few hundred people. So it's not a huge community. But they've lived there for the last 800 years residing the Havasupe Indian Reservation in the canyon. What an amazing place to live or run away from. Something we'll talk about later, Sky. Anyway, today's real topic, signal based merchandising and the impact of the empty shelf. All right, we've all experienced an empty shelf or two in our lives, but what actually happens when the shelf is empty? And how can retailers avoid this happening in the first place? David's here to talk about this with us as well as Blake and Sky. But David, let's start with this concept of signal based merchandising and how it relates to the empty shelf. What is it?

[David Gottlieb]

Yeah, absolutely. Maybe before I talk specifically about signal based merchandising, I'll just give a a quick overview for our listeners about what is tracks. Because many, many people may not have heard of us. So we really have three core things that we bring to market to help CPG companies win more at the shelf. The first is our image recognition solution. And so if you can imagine sort of taking a photo of something that happens inside of a grocery store, like a shelf or a display or a cooler, we're essentially helping manufacturers who don't have eyes inside of every store understand the nature of the execution at the shelf. So where are my products accurately and correctly represented? Where are they priced correctly? All kinds of questions like that. We also have a dynamic merchandising business where we deploy reps essentially to go execute inside of stores. So boots on the ground, fixing problems, building displays, packing shelves out, building inventory, etc. And then finally we have a shopper marketing business that we call shopkick, which really sort of brings it all together in the sense that once we've helped manufacturers understand the shelf execute better, we actually can drive shoppers to go into store to experience the brand, experience the product, buy the product, et cetera. So we're sort of providing that end to end set of Capabilities. Where that sort of puts us is we see very clearly that what you mentioned at the outset, product availability at the shelf is a real challenge, right? Shoppers, they have a lot of choices, they can buy online. When they make the choice to pack the kids in the car and show up at the store, it's really, really frustrating when they can't find the things that are on their list that they need. And manufacturers, CPG companies know pretty well these problems exist. But despite all their efforts, they're historically really challenged to kind of address this. This challenge. Right. To address this issue quickly.

[Marcus]

On that point, there was, I was looking at some research. 84% of retail decision makers said maintaining real time visibility of stock levels is a challenge.

[David Gottlieb]

Absolutely.

[Marcus]

According to Zebra's Global Shop Estate. So this is. Everyone basically is struggling with this.

[David Gottlieb]

Everyone is struggling. A lot of money has been spent on it, a lot of tools are out there. But at the end of the day, the real challenge, it's very, very difficult for manufacturers to know with a reliable sort of scalable view what's actually happening in the store. Right. In any given store, on any given day, is my product available for shoppers to purchase? And that's really the sort of. The notion of signal based merchandising is to help address that challenge. And what it does for our clients is it combines a near real time understanding of what is happening at the store. So a very objective, empirical view of, you know, is my product on the shelf today, you know, tomorrow, etc. With our ability to then essentially deploy reps only to the stores where we know we can have material impact on shopper experience and sales. So it's those two things together.

[Marcus]

So talk to us a bit more about this. How does signals, signal based merchandising, how does signals, as you call them, translate into actionable store level decisions?

[David Gottlieb]

Yeah, so it's. When we talk about signal, really what we mean is what's happening in the store and the way we're getting that signal. I mentioned a minute ago, we have a very robust shopper engagement business. And because of that we have millions of shoppers, roughly a 35 million strong kind of network of shoppers who are, as a normal part of earning rewards for shopping are in store and they're engaging with products and brands. And as they're doing that, they're actually generating highly valuable sort of quote unquote exhaust data for us. And that data helps us understand what's available and what's not available at the store level. Right. On a sort of near Real time basis. And that's when we talk about signal. That's, that's really what we mean. And sort of think about how you react to those signals. There's two things you have to understand. There's how, how disrupted is a location, meaning how many items are missing from the shelf, how many are not available for purchase and also how valuable is the remedy. So not every store is created equal. Right. Each store has sort of its unique sales, you know, selling pattern and volume. And so part of our, our solution and our job essentially is to help each manufacturer each week look at that data. And this is done automatically. It's not, not people, but essentially deciding which stores are most valuable to go visit to spend money on merchandising, knowing what kind of impact we can have and what the resulting sales increase will be for the manufacturer. And that's, those are the actions that we're store level.

[Marcus]

So let's think about the, the consumer from their perspective. What happens when the shelf is, is, is, is empty?

[David Gottlieb]

It's, it's really frustrating. We've done some interesting shopper research. I think there's probably a lot of, a lot of literature on this. In our, in our specific primary research, we find that 40% of shoppers will brand switch when they can't find the item they're looking for. Right. Probably not for Barbies, like this isn't for sky, but when you, when you, you know, if you're buying a consumer good like a soup or a Mac and cheese or you know, a home cleaning product, people are brand loyal to a point. But if they need something for a recipe or to complete their shopping mission, they're probably not going to go home empty handed. And that's a real challenge for brands because brand loyalty is built slowly over time and it can erode very quickly. Right. If somebody is sort of forced to try a competitive product, you're giving them an opportunity that you don't want them to have essentially as a loyal brand shopper.

[Marcus]

Yeah, yeah, I guess the brand wants you to. Because I found some research from the same source from Zebra. They were saying out of stock items. The number one reason customers leave a store without buying what they came for. The hope there, I guess is that they leave the store and go buy it somewhere else for the brand, not for the retailer. Either way, it's a, it's a problem. But to your point, worst case scenario for a brand is they pick up another brand off the shelf. This was also an issue for store associates. Over 40% of associates complaining about out of stock items. So it sounds like it's a big headache, not just for the customer, but also for the people that work in the store.

[David Gottlieb]

No doubt.

[Sky Canavas]

And that seems like it would become more important as more consumers shop online and they're looking for products online and doing buy online pickup in store. And then you need to have store associates or third parties that go into stores and are able to pick the orders and find the products. I know for me, it's very frustrating when I place online orders and then I get out of stocks and all these substitutions and it's like, 50, 50, do I actually want that substitution or not? Sometimes it's really not what I. Not what I want, and I end up going without it. And now a lot of shoppers, because they do a lot of research online before they buy, they want to know what's in stock. They really want that invent transparency and visibility. In research that we've done before, this was one of the big features of online shopping that consumers want. They want to know not only what's on the store shelves, but, like, how many of them are there. So they know, like, whether they need to buy it now or if they can wait to go in the store and pick it up there.

[David Gottlieb]

Absolutely. I mean, this problem's going to persist. And it's. And it's amplified by the fact that just like sky talked about the, there's not multiple fulfillment paths for shoppers. Right. So whether you're buying online, whether you're buying through one of the big delivery companies, you know, Instacart, doordash, at the end of the day, somebody's picking that product off that same grocery store shelf. And so you have all these different sources of demand that are creating a lot of havoc for store associates to try and keep those shelves full. And interestingly, if you. If you look at sort of the instacart and doordashes of the world, one of their biggest challenges is to avoid that substitution problem that sky just talked about, because no shopper wants that, and nobody really wants to trust somebody else to make that choice or have to have those interactions while they're waiting for their. For their groceries at home. So really understanding what's actually in the store available for purchase clearly isn't. Isn't working well yet as a result of sort of the. I mean, as evidenced by those challenges that we see both from shoppers as well as from the third parties and, and kind of retail click and collect execution.

[Blake Drosch]

Mm.

[Marcus]

Blake, when you think about the impact of the empty shelf what comes to mind the most for you?

[Blake Drosch]

Yeah, I mean, I think, you know, we've already touched on basically, you know, you don't want to give as a brand, you don't want to give your customer another opportunity to try a competing product.

[David Gottlieb]

Right.

[Blake Drosch]

I mean, we've seen a lot of research that consumers who switch from brands to private labels, labels or other competing products because they're trying to, you know, save a few bucks at the grocery store because of inflation, their likelihood to basically go back to the brand once they've had a positive experience with a competitor is, is very unlikely. And that's already happening, happening just because of the ways that consumer preferences and the way that macroeconomic conditions are impacting the way that people shop. It happens way more often now than it, than it used to. So I think just having the, the out of issue, you know, compounding that only makes things worse for the brand. You know, and then on the, on the retailer side, looking for a product at another location obviously doesn't hurt the brand, but could really hurt the retailer if, you know, as David mentioned, you put the kids in the car, you go to the store, sometimes you're driving 10, 15 miles. If this is a problem that you encounter frequently, you know, brand loyalty for retailers is also on the table here in a lot of these instances. And then of course, as sky alluded to the online shopping competition as well, I think as someone, you know, who lives in a, in a city dealing with, you know, pharmacies and retailers locking up shelves and things like that, it's not necessarily, you know, there's a lot of friction with the physical stores that, you know, these online retailers are really jumping out to replace. And as delivery gets faster, the competition is just, it's getting even, even more stringent by the day and having basic. And basically what it comes down to for retailers or physical retailers is mastering the basics is really the best thing that you can do to weather sort of this competition that's coming from, from all different fronts, from retailers, from online and also just matching, you know, how consumer habits, how consumer expectations are rising and habits are changing very quickly.

[Marcus]

David? Yeah. To that point, in your opinion, how do retailers stay ahead of the empty shelf?

[David Gottlieb]

Yeah, I mean, I think the sort of conventional approach to this is not working terribly well. Right. If you look at sort of industry metrics, it depends on the category and the product, but in general, out of stocks sort of persist at the low double digit 11, 12%, depending on who you, who you look at and how they measure it. And what the general sort of the approach has been. Well, I have perpetual inventory, right? So I have a system that tells me I took X product into the back when it was delivered to the store, I packed it on the shelf and then I measure it as it scans through the till. And the difference is what I should have on, you know, on the shelf. And the problem is that data just isn't accurate. There's too many ways that it gets out of sync. You know, a shopper buys 6, 6 yogurts of different flavors and the, the person in the front doesn't think much about it and scans six of the same flavor, right? So those, those kinds of things happen all the time. You know, Blake mentioned the, the stop loss procedures because, you know, shrink is a real problem, right? Retailers lose product to, to theft all the time. And so part of what we find when we actually execute these types of signal based merchandising programs, we're not only measuring availability of the product using our shopper and data collection, kind of continuous data collection capability. When we go in and we execute at the locations that are problematic, we find things like phantom inventory, right? We find that the store thinks they have product that they don't have. And that's problematic not only because it causes a near term shortage for the shopper, but because it's not going to get fixed automatically. Right. The, the ordering system is never going to be triggered because it thinks it has inventory. And so these things can be really harmful for the long term health of the shelf. And so long winded way of answering your question. Retailers have to get more aggressive about getting a pragmatic and real time view of what's actually happening in the store and use that to kind of fine tune how they think about inventory management and make sure their ordering systems are informed not just by sort of a sort of older view of perpetual inventory, but actually a real time view of what's in the store at any given point in time.

[Marcus]

Could you, I mean, we talked a bit about signal based merchandising and people might be familiar, more familiar with the traditional merchandising approaches. Could you outline how those differ? Like some of the main ways or the main way that those two methods differ?

[David Gottlieb]

Yeah, absolutely. It's pretty fundamental, I would say. Traditional merchandising is you say, hey, I really care about this retailer, Target or Walmart or whomever. And then you invest some money in a program with a merchandising company and they say, great, thank you very much. Here's our schedule, right. And we're going to cover this store on Monday and then we're going to go to this store on Tuesday. So it's quite fixed. Right. And it's based on geography and it's based on every week I'm going to hit, you know, X percent of the chain. So it's, it's, it's sort of static. And the reason that we think that that approach has a lot of room for improvement is we were doing some sort of, some work similar to that as well. And what we found was a lot of the stores that we go to visit to try and drive value for a specific manufacturer. What our reps found and supported by photo evidence is, you know what, this store is actually pretty good. Right. So you have up to 50% of the locations that you're spending money to go try and impact and all you're learning is, hey, it was, it was, it was a good visit. The store is, is okay. So it's incredibly unproductive from kind of an investment and ROI perspective. So the, the major difference with signal based merchandising is we are using a data driven approach to prioritize which stores we visit and when we visit them, such that we're only going to locations where we have a very, very high probability of being able to move the needle on sales. And that is the fundamental difference.

[Marcus]

Okay, so what's next for signal based merchandising? Where does it go from here?

[David Gottlieb]

So we have two sort of vectors that we're excited about. First, the current solutions really focused like we talked about on this episode, squarely on addressing the kind of persistent out of stock problem like product availability. We have a variant coming pretty soon that will use these same principles and techniques to address the promotional execution problem. Right. So this is not the everyday home location, but you know, brands invest a lot of money in trade marketing to put secondary displays in store points of interruption that, that could show up as a pallet, a shipper, an end cap. Right. These are incredibly big investments that manufacturers make. And just like measuring the home location, there isn't really an effective scaled way today to measure whether or not those promotions are being executed in the way they've been planned and to help sort of provide better transparency between the brand and the retailer in that conversation. So that's, that's one focus. We're also going to be really expanding the breadth of the kind of data that we collect as part of our continuous shelf monitoring or signal creation. So today it's really quite binary. It's the product there or not there on the shelf in the relatively near future. It will also include things like share of shelf placement, price, think about your category management type principles. And so very quickly we're going to start adding that to our packaging either as kind of an add on to a signal based merchandising program or as a standalone data product that manufacturers can use for planning retailer engagement, you know, joint business planning, etc.

[Sky Canavas]

It seems like these would be even more important now for brands, these kinds of tools, given the competition with private label and figuring out how to stand out from that because retailers are increasingly becoming sophisticated with their private label strategies, offering broader assortments, better products, better quality at premium price points. Brands need to find every tool and technique that they can leverage to, you know, stand out and get ahead of that 100%.

[David Gottlieb]

Yeah, private label is a huge factor and innovation is a huge factor. I think, you know, it continues to be the trend in the industry at least from, from our viewpoint. There's just a lot of new market entrants in, in key categories where we see just intense competition. I'm thinking about, you know, sparkling water, better for you, soda. So it's, it's absolutely. You're right, Sky. It's more important than ever to really understand what's happening, where the rubber meets the road at the point of decision for shoppers.

[Marcus]

Blake, final thought from you on what Dave was saying about where single based merchandising goes next and just how people continue to think about the empty shelf going into the future.

[Blake Drosch]

Yeah, I think competition for brands is only going to get more intense. I think we've seen a lot of the major CPGs, latest rounds of earnings, you know, they're continuing to struggle. There's a lot of shifting consumer habits, supply chains becoming more difficult. There are, you know, the issues, a lot of uncertainty around tariffs, costs of production. It's, it's. And that's really going to impact sort of the bottom line. And I think that the only way that brands can really stay ahead of the game and sort of meet this uphill challenge head on is by continuing to invest in technology, particularly around in store technology. Right. I mean we've seen E commerce sales, particularly in a lot of CPG categories. The sort of the boom years of the pandemic, they're starting to taper off and I think the writing on the wall is really maintain is really, you know, becoming clear that, that you know, upwards of 80% of total US retail sales, perhaps much higher in a lot of household categories. You know, the store is going to still be King and the way that these brands can continue to, you know, keep their sales healthy is by this type of, you know, smart strategy. So only going to get more important as in the years to come, that's for sure.

[Marcus]

Yeah. A great point to end on. Thank you so much to my guests for hanging out with me today. Thank you. First to David.

[David Gottlieb]

Thank you very much. Pleasure to be here.

[Marcus]

Yes, sir. Thank you to Sky.

[Sky Canavas]

Thanks Marcus.

[Marcus]

Yes indeed. And of course to Blake.

[Blake Drosch]

Always a pleasure.

[Marcus]

Thank you fella. And thank you to the whole editing crew, Victoria, John, Lance and Danny Stewart who runs the team and Sophie who does our social media. Thanks to everyone for listening into the behind the Numbers show and E marketed video podcast made possible by tracks. We'll be back again Monday talking about how AI is starting to affect the job market and some tips for using it at work.