Omni Talk Retail Podcast Summary

Episode: How AWS & Amazon Ads Are Moving Retail Forward in 2025 | 5IM
Release Date: January 27, 2025
Hosted by: Chris Walton and Anne Mezzenga
Guest: Justin Hahnemann, Head of Worldwide Retail Restaurants and Consumer Goods Business Development at AWS

Introduction

In this episode of Omni Talk Retail, hosts Chris Walton and Anne Mezzenga engage in a comprehensive discussion with Justin Hahnemann from AWS. The conversation delves into the pivotal trends shaping the retail landscape in 2025, the innovative strides of Amazon Ads in retail media, and the evolving dynamics between physical stores and digital commerce.

Key Trends for 2025

Justin Hahnemann outlines three major trends that are steering the retail industry towards 2025:

1. Artificial Intelligence (AI):

   • Generative AI Explosion: AI remains a dominant topic, particularly with the advent of generative AI. Justin highlights AWS's launch of the Nova models, a new suite of foundation models encompassing text, image, and video generation capabilities.
   • Quote: “AI has been around since the '50s, but a lot of new use cases around generative AI are emerging” ([00:36]).

2. Retail Ad Services:

   • Amazon Ads Expansion: AWS recently introduced Retail Ad Services, leveraging Amazon Advertising's robust engine to empower retailers to execute ads on their own platforms. This service enhances retailers' ability to drive traffic and sales independently.
   • Quote: “We just launched a whole new set of models at AWS called Nova” ([00:36]), and later, “Amazon Advertising is a very significant business underneath Amazon” ([02:47]).

3. Unified Commerce:

   • Seamless Integration: The concept of unified commerce emphasizes the integration of in-store and digital experiences, fostering a cohesive environment for consumers to interact with retailers seamlessly.
   • Quote: “Unified commerce is still bringing together the in-store experience with the digital experience” ([00:36]).

Business Value and Data in AI

The discussion pivots to how retailers can harness AI tools to drive business value:

• Data as the Foundation:

  • Customer and Operational Data: Effective use of generative AI hinges on access to comprehensive customer and operational data. AWS observes a significant push towards cloud migration and investment in data cleaning to support AI initiatives.
  • Quote: “A big focus of our customers is on the customer data, the operational data, the connection of operations in the stores data” ([01:59]).

• Cloud Acceleration:

  • Flexible Data Platforms: Retailers are accelerating their move to cloud-based, flexible data platforms to facilitate advanced modeling and AI applications like the Nova models.
  • Quote: “Acceleration investment in cleaning up data is the foundation to allowing you to take advantage of things like the Nova models” ([01:59]).

Amazon Ads and Retail Media Networks

Justin elaborates on the newly launched Retail Ad Services and its implications:

• Retail Ad Services Launch:

  • Empowering Retailers: This service allows retailers to utilize Amazon Advertising's sophisticated ad execution capabilities on their own websites, enabling better traffic and sales management without relying on Amazon.com directly.
  • Quote: “Retailers can use [Retail Ad Services] to drive ads on their own site” ([02:47]).

• Future of Retail Media Networks:

  • Revenue Potential: Justin discusses the vertical chart of potential retail media revenue based on ad spend, emphasizing the significant interest from retailers in leveraging these new tools to maximize their advertising investments.
  • Quote: “We had a lot of interest actually this week from retailers that are looking at ways to better leverage retail media spend” ([02:47]).

Implications for End Consumers

The conversation shifts to the consumer perspective:

• Enhanced Personalization:

  • Data-Driven Experiences: Increased investment in data and AI will lead to unprecedented levels of personalization, delivering tailored experiences that better serve consumer preferences.
  • Quote: “You're going to see a level of personalization that you have not experienced elsewhere” ([04:01]).

• Role of AWS:

  • Facilitating Connections: AWS plays a crucial role in enabling retailers and brands to connect with consumers through advanced tools and infrastructure, enhancing the overall shopping experience.
  • Quote: “We really have an important role to play in the end customer experience” ([04:01]).

Integration of Physical and Digital Commerce

Justin addresses the challenges and solutions in harmonizing physical stores with digital platforms:

• Legacy vs. Digital-Native Retailers:

  • Legacy Retailers: Many established retailers struggle to integrate their separate physical and digital infrastructures. AWS supports these retailers through composable commerce, enabling seamless multi-channel operations.
  • Digital-Native Retailers: These retailers, having launched in the cloud, are more adept at adopting new technologies and enhancing their customer experiences rapidly.
  • Quote: “The challenge for most retailers is they built their physical store kind of infrastructure, technology platform separate from E Commerce” ([04:53]).

• Employee Experience:

  • In-Store Insights: Enhancing the in-store experience extends to employees, providing them with better insights into customer behavior and inventory management, thereby improving service quality.
  • Quote: “How do you enable the staff member to have better insights into a customer or better insights into actual inventory” ([04:53]).

Conclusion

Justin Hahnemann encapsulates the transformative journey of the retail industry powered by AI, advanced advertising services, and the seamless integration of physical and digital commerce. With AWS at the forefront, retailers are equipped to deliver personalized, efficient, and unified shopping experiences that cater to the evolving needs of consumers in 2025.

Notable Quotes:

• “AI has been around since the '50s, but a lot of new use cases around generative AI are emerging” ([00:36]).
• “We just launched a whole new set of models at AWS called Nova” ([00:36]).
• “Retailers can use [Retail Ad Services] to drive ads on their own site” ([02:47]).
• “You're going to see a level of personalization that you have not experienced elsewhere” ([04:01]).
• “How do you enable the staff member to have better insights into a customer or better insights into actual inventory” ([04:53]).

This episode provides valuable insights into the future of retail, highlighting the critical role of AI, the expanding capabilities of Amazon Ads, and the importance of integrating physical and digital retail strategies to meet consumer demands effectively.