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.
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.
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]).
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:
- 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.
- Dynamic Merchandising Business: Deploys representatives to manage in-store execution, such as fixing displays and restocking shelves.
- 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.”
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:
- Promotional Execution: Extending signal-based merchandising to monitor and ensure the proper execution of in-store promotions, such as end caps and secondary displays.
- 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.”
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.
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.