Ad Read Announcer (2:27)

Great.

Greg Kilstrom (2:27)

Great.

Interviewer / Host (2:28)

So yeah, let's dive in here. Want to start with the strategic view of this and touch on what I talked about a little bit in the intro. Is moving beyond purely reactive measures and certainly this is tough when brands are faced with tariff driven cost pressures other type of economic concerns. The default playbook often involves Layoff, passing costs directly to consumers, things like that. How is AI fundamentally changing that C.

Greg Kilstrom (2:59)

Suite conversation and offering maybe a third.

Interviewer / Host (3:02)

More sustainable path forward?

Sai Coppola (3:04)

Sure. If you actually look at what's happening over the last year, we are actually seeing brands rewrite the P and L playbook using AI. And it's not just how can I find profit with precision and not necessarily just price hikes. So if we take a step back, what a lot of the brands, leading brands have been able to do is combine a variety of data, right. Working with the retailers, sales, operations, media data and then figure out, okay, what are the places where we can actually increase prices and where we cannot afford to increase prices. That's one piece on the revenue side. Right. So we've seen this by the way, throughout the year. If you look at, when we did analysis by price bands, we looked at pick any category, like let's say toys, we did three different price bands. What we actually seen is the higher price bands, the prices have gone up like 10% plus over the last year. So significant price increase. But on the lower end you are not seeing a very flat pricing. There's no pricing because there's pricing because we know the consumer is having difficulty at the bottom end. So therefore the prices have not gone up as much. So that's one aspect of it.

Ad Read Announcer (4:20)

Right.

Sai Coppola (4:21)

On the cost side, like the example of retail media, brands are much more sophisticated now looking at, okay, how am I doing organically on the retailer's page? And if I'm doing really well, let's not go spend too much money on that particular search term. Right. Let me invert up there. So brands are looking, using AI to both optimize on. Hey, what shoppers can I. There's price elasticity, so I can increase my. So improves our revenue. At the same time, where can I reduce my investment, be more efficient with my investment? So that's what we're seeing brands do.

Greg Kilstrom (4:55)

Yeah.

Interviewer / Host (4:56)

So you know, in, in talking about moving away from purely reactive discounting and, and other things like that. How does using AI to manage pricing not only protect margins but also build and maintain consumer trust? Because I think that's the other aspect here is obviously we need to think about profitability and, and internal operations, but we also can't lose the consumers through this, through this journey. So how does, how can I help there, you know, especially when shoppers are.

Greg Kilstrom (5:29)

More price sensitive than ever.

Sai Coppola (5:31)

Yeah. This is all in the context of over the last few years brands have engaged in essentially shrinkflation. Right. Which actually hasn't really helped with trust. So I think shrinkflation has stopped right now. So the brands where the focus a lot is on as I were talking about, especially now how shopper data, which is all the click through signals, the sales data and promo data to figure out. I'm able to do micro targeting by segments and identify hey, which SKUs need price support on which SKUs. There's some elasticity that I can afford to and not erode my margins. And that helps brands maintain a pricing strategy which is still meets where the consumer is. And in many ways frankly being transparent about price increases. We are actually seeing a couple of the retailers have come out publicly and said hey, because of tariffs we are trying to absorb as much of the cost as possible.

Sai Coppola (6:35)

And we've seen margins also go down at the same time they are passing costs onto consumers, especially where there's price elasticity.

Greg Kilstrom (6:46)

Yeah.

Interviewer / Host (6:48)

And so another kind of shift in consumer behavior, major events like recent prime days for instance, reveals some other shifts in consumer behavior like splitting between premium purchases and bulk buying essentials. Can you walk us through maybe a practical example of how AI helps a brand not just spot a trend like this, but pivot its media pricing, inventory strategies, all of those things in real time, if not near real time.

Sai Coppola (7:21)

Let me walk you a couple of examples here. We have a few leading brands who are use 50 plus real time data signals that would be like CPC, Sheriff Shelf and inventory data to kind of identify hey, what's the optimal demand curve and make media investments based on that. Right. So during Prime Day 10 + of our customer brands actually saw like 140% + increase in incremental ROAS. Incremental ROAS is essentially is how much incremental sales I'm actually driving with this media spend while also seeing their CPCs drop. And the reason they're able to do that is essentially they're able to optimize now in real time based on variety of signals. Hey, where is the opportunity for me to invest on the right keywords for the right SKUs I have based on inventory and we're already doing not doing as well in organic search so we can be a lot more precise in where I make my media investments and that's been very valuable for a lot of retailers where yes, you're spending a lot of retail media dollars but you're able to stretch your dollars a lot more. One of the examples of the auto care brands we work with optimize their traffic by growing 3x in traffic and 200% increase in sales while not having to increase the retail media spend so you can be lot. There's a lot more efficiencies that can be gained if you take a step back. If I'm a brand with 500 plus queues and I'm selling this across 20 different retailers in the US it is manually impossible for me to optimize each and every aspect of it. That's where AI steps in, right? The manual, the execution of it, where the scale is so much. I can't just hire so many analysts and hands on keys. Is where we see AI really being impactful.

Greg Kilstrom (9:21)

Yeah.

Interviewer / Host (9:22)

And another part of this is not only is that impossible to do all that manual work and just have the resources to do it in any reasonable way. Looking at dashboards and reacting to the. There's a time lag. Right. I mean you can, you can look at the most beautifully designed dashboard with all the information that you could possibly have added, but you're still reacting to information and need to take that process. It versus the idea of an AI teammate, for instance, that is a little more proactive and things. So maybe could you talk a little bit about what does something like that look like in practice and for a marketing or operations leader, what is transitioning to an approach like that actually look like?

Sai Coppola (10:13)

When we launched earlier this year, early beginning of this year, when we launched Ally, which is essentially our AI teammates for commerce, the whole, we spent a lot of time actually thinking, what is this? As an AI agent, as a teammate, what is it? The reality is the best. And from a business impact perspective, yes, AI can give you recommendations based on a variety of data. You still need human in the loop for some decisions. So what we're seeing more and more is the teams are not spending as much time chasing data and putting the data together and cleaning the data and analyzing the data, but they're more focused on strategic activity as well as decision making. Right. So for example, when it comes to out of stocks, we can automatically quickly tell you, hey, here are a set of SKUs that are out of stock, so let's not invest retail media dollars on those. The way we build the systems is AI makes the recommendations. The human can then approve those recommendations to automate that. So we give the flexibility for brands to make the right decisions. Because I still believe you need in many cases human in the loop. But take the grunt work out of having to do those things.

Greg Kilstrom (11:32)

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Interviewer / Host (13:54)

And so in terms of measuring success of all of this, obviously there's some metrics that are. I mean sales are revenue. You know, there's certain things that are not going to change regardless of the tactics or even the strategies used. But as brands move towards this, let's just call it more AI driven stability versus more rapid fluctuations promotion heavy strategies. What KPIs do matter most, but also perhaps change.

Sai Coppola (14:26)

I think for the longest time the focus has been most companies focus on growth, growth, growth. You know, like look, it definitely focuses now on more Profitable growth, not just volume. Right. That means in the media side shifting from just roas to incremental roas, net ppm, contrib, those are the factors end of the day, you know, I'm sure you've seen the recent McKinsey report or the prior MIT report where they said like hey, a lot of companies are focused on AI pilots, but how many of them are actually seeing, you know, real business impact? In many ways our approach to AI has been that let's pick a couple of use case and go deep. Right. Whether it's in content. One other. By the way, another interesting thing is on the content side, if you look at it in several categories, 30 to 40%, 30% can be all digital sales or at least digitally influenced sales. Right. In those cases. And once again going back to the example I told you, if I'm a brand with 500 SKUs across 10 plus retailers and yes, I have the ideal how my brand should show up, how the PDP should show up in terms of the imagery and the text and everything like that. But now to how am I going to make sure that's all consistent across all those retailers? And also being able to adjust it. You suddenly realize, hey, increasingly customers are searching for a specific keyword in pet food. It may be picking an example, maybe protein is a big keyword people are searching by how do you now incorporate that into it's extremely manual process? Today we are able to automate with AI we can see hey, what keywords are trending and based on that, how do you improve your product page on a given retailer and have your marketing approve it and automatically updates it? Right. Things like that. We're seeing more and more where yes, the focus has to be more and that of course improves conversion. So that's where it's all about efficiencies and profitability. Either it's improved conversion, reduce cost or you know, being very strategic where you increase prices is all the things we're seeing brands do increasingly.

Ad Read Announcer (16:49)

Yeah.

Interviewer / Host (16:49)

And looking at from the customer standpoint, you know, customer loyalty, retention, lifetime value even.

Interviewer / Host (16:58)

What role does transparency play in? Whether that's transparency and pricing or other other ways. Like how can brands measure the impact of greater transparency on things like customer loyalty and retention?

Sai Coppola (17:15)

Yeah, look, in a market that is defined by uncertainty, trust is essentially the new currency of loyalty. Right. So we can correlate transparency, different driven messaging with changes in sales, ASP and sentiment across retailers. What we are seeing is, you know, brands are increasingly being public about like Walmart. I think a couple of months ago said that hey, we'll keep prices as low as possible, but the reality is, you know, we have to increase where needed because we are already on very thin retail margins. P and G also announced recently that hey, we're going to increase prices by 25% of their portfolio across the board because of increased tariff costs. So in many ways being transparent with a customer, the end consumer, about the need to increase prices where we need to, at the same time, willing to absorb some of the cost is a way you would build some trust.

Greg Kilstrom (18:16)

Yeah.

Interviewer / Host (18:17)

So I'm going to talk a little bit about.

Interviewer / Host (18:20)

Some of the future of AI powered commerce and certainly one of the topics that comes up a lot these days, agentic AI, it's becoming more and more integrated into retail operations. But as, as this continues automating, you know, decisions across media, sales, supply chain, what becomes the new core competency for the human teams in this equation? And, and what should leaders be thinking about when looking at things like talent development and, and other things?

Sai Coppola (18:50)

Look, AI is taking over some of the day to day manual execution of it. Right. Reality is the human in the loop is still critical. The human is moving to more into the deciding and the collaboration aspect of it. If you take a step back today, if you look at, on one side you have retailers going increasingly algorithmic. Right. Like if you look at what Walmart and Amazon are doing. So brands need to keep up with that. If you look today, typically a joint business planning between a brand and a retailer, it's extremely manual process. There's lots of time spent on the brand side by the category management teams and the sales strategy teams building together a whole plan for the joint business plan. Then there's a negotiation going on with the retailer and then on the execution side, on a monthly basis, on a weekly basis, you're literally sitting face to face with the retailer figuring out what's working well, what's not working well. Today a lot of that stuff is still done on PowerPoints and Excel sheets. All we are saying is AI can simplify that aspect of it where it can streamline getting data and analysis, but you still need the human to make decisions and collaborate with other humans on the other side to drive results. So there is a lot of gloom and doom about hey, AI is going to replace jobs. And I firmly believe AI is an extremely powerful force that can streamline a lot of the work, helping humans transition to more of the strategic and the collaboration kind of work and decision making. Right?

Greg Kilstrom (20:27)

Yeah.

Interviewer / Host (20:28)

So thinking ahead a little bit here, you know, thinking about whether it's the next major frontier for AI and retail or other things. You know, if we were having this interview a year from now, what is one thing that we would definitely be talking about?

Sai Coppola (20:43)

What we will see is the collaboration between retailers and brands would become more streamlined because of AI. As I was saying earlier today is extremely manual and slow process. What's going to happen is I foresee a world where that collaboration becomes much faster and streamlined where you have agents on the retailer side, you have agents on the brand side and they will work together. Let me give you a concrete example. I was talking about digital shelf. We see a world where when the AI on the brand side will identify here the 10 things you need to fix to improve your conversion on the retailer website.

Sai Coppola (21:36)

On the brand side, the person responsible for the commerce team would approve those recommendations. Based on the recommend, they'll review the recommendations. Once they're approved, it automatically hits the retailer side. On the retailer side, the retailer agents goes and updates the website. That's where we're headed. Right? I'm very bullish on where this can go, frankly. If you look at the value chain, retailer margins are so low. Right. The only way to increase profits without having to increase prices is to be a lot more efficient.

Sai Coppola (22:10)

And that means personalization, better conversion, all of that comes into play. One of the things we haven't talked about is shopper behavior. Now I can combine shopper behavior which includes sales clicks and all these things with my SKU data and everything as well as shelf data. We can do a lot more personalization which improves conversion and more sales. So lots of interesting stuff. I'm excited about coming over the next year.

Interviewer / Host (22:36)

Yeah, we'll have to have you back on in a year and we can talk about all that. Definitely interesting stuff.

Interviewer / Host (22:44)

Thanks so much for joining today. One last question before we wrap up though. What do you do to stay agile in your role and how do you find a way to do it consistently?

Sai Coppola (22:53)

What I found more for my teams is because there's so much change, you need to have.

Sai Coppola (23:02)

A culture of psychological safety within your teams that allows people to experiment, do a B testing, try things out.

Sai Coppola (23:12)

Without worry about that role. Because we are in a time of uncertainty and that's where also gives you the most opportunities. But you need to let your teams feel free to try, test, experiment on things so that way they can find something that really works for for their business. That's one. The second one is when I'm recruiting now I'm looking for people with a growth mindset. People are willing to say that hey, I haven't done this way before, but I'm open to look at from first principles and see if this is something that makes sense. Let me try it out right? Those are the things I'm looking at when I'm building my teams. And even personally yesterday for example I was trying to build an automated workflow within marketing on how I can go and look at what are leading thought leaders on LinkedIn saying about this specific topic. How can automated using an 8N right. So even I'm getting my, you know, as even a marketing leaders have to get their hands dirty to understand how AI can help their teams. Yeah.

Ad Read Announcer (24:14)

Love it.

Greg Kilstrom (24:15)

Well again I'd like to thank Sy.

Interviewer / Host (24:16)

Coppola, CMO at Commerce IQ for joining the show.

Greg Kilstrom (24:20)

You can learn more about CY and Commerce IQ by following the links in the show notes.

Greg Kilstrom (24:26)

Thanks again for listening to the Agile Brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show as well. You can access more episodes of the show@theagile brand.com that's theagile brand.com and contact me. If you're interested in consulting or advisory services or are looking for a speaker for your next event, go to www.gogregkillstrom.com that's G R E G K I H L S t r o m.com the Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, stay curious and stay agile.

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