← The CPG Guys
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- [00:01]
Peter V. S Bond
Hey, it's PVSP with the CPG Guys. If you're planning on attending CES, please join us on Wednesday, January 8th for a breakfast briefing sponsored by CVS Media Exchange. I'll be hosting a panel involving Parbinder Dhalarwal, the General Manager and VP for CVS Media Exchange at CVS Health. Joining us will be Andrew Lipsman from Ads, Media and Commerce. And we'll be talking about some research that Andrew recently conducted interviewing CPG brands about their retail media investment plans for 2025. Really great information. You'll find it incredibly insightful. Again, it's on Wednesday, January 8th from 8 to 9am if you're interested in attending, drop us a line at contactpguys.com or click the link in the digital liner notes of this episode and you'll be able to learn more about this and we'll get you registered for the event. Look, looking forward to seeing all of our industry friends at CES this January.
- [01:08]
Michael Zucour
Hi, I'm Michael Zucour and you're listening to the CPG Guys.
- [01:15]
Sree Rajagopalan
Welcome to the CPG Guys Podcast. Your hosts, Sree Rajagopalan and Peter V. S Bond explore how brands and retailers engage consumers in an increasingly digitally driven world. And now, here are the CPG Guys.
- [01:34]
Sri Rajagopalan
Hello and welcome to this episode of the CPG Guys. I'm of course sri, co founder and co host of the CPG Guys and co founder and partner of Think Blue, your key to unlocking your profitability potential. As builders, connectors and amplifiers, we shape the future of commerce to drive your growth. Please do listen to my older daughter Rhea Raj's Music www.riaraj.com ihearaj and my younger daughter Lara Raj as a member of the Geffen Records Universal Music Group Cat's Eye and they just completed the tour of the jingle ball cities different places in the US the hit single Touch is now 200 million plays on Spotify and we're headed to the Apple Music Awards Tokyo on the 29th to see him perform live. One of the fastest bands in history to reach those numbers. Joining me today is of course my BFF and fellow co founder of the CPG Guys, Mr. Peter Vs. Bond. And he's not co hosting this podcast. He serves as head of client engagement at Flywheel, the E Commerce acceleration division of Omnicom. Peter, you're coming off some fun exercises with your daughter down in New York City, Radio City Music Hall. Do you want to elaborate where you are and how that how much fun you guys had?
- [02:43]
Sree Rajagopalan
I'm increasingly beginning to believe this podcast is just an advertising platform for the Raj family media empire. Yeah, but you get like five times the amount of credit. But that's okay. I'm okay with that. Sri.
- [02:56]
Sri Rajagopalan
Is it my fault that it's 200 million plays in three months?
- [03:01]
Sree Rajagopalan
Can you plug that one more time? Shree.
- [03:03]
Sri Rajagopalan
201 million. Let's be accurate.
- [03:05]
Sree Rajagopalan
Okay. There we go. Okay. Yeah. I took Nadia in for the Radio City Christmas Spectacular. We had lunch at American Girl Cafe, picked up a doll while we were there. It's the limited edition Disney Anna, or Anna. If I said Anna, my wife would. My daughter would clobber me. It's the Anna doll, though. She really wanted Elsa. It wasn't available, so. So then she turned to me after she got the on a doll and said, you know, daddy, Santa could still bring me the Elsa doll. So we'll see.
- [03:37]
Sri Rajagopalan
There we go. Well done, Nadia.
- [03:39]
Sree Rajagopalan
And then of course, the. The requisite family photo in front of the Rockefeller Center Christmas tree. So good adventures. It's been such a busy travel time for all of us. Sri. Between the P2PI live in Chicago, the issue summit New York, I had to go down to Santiago for the Walmart for the Walmart Chile event. And then I was actually down in Landover, Maryland yesterday bestowing one of our 2024 CPG guys Omnichannel hall of Fame awards to a very worthy recipient recipient. That'll be. That'll be in an upcoming episode. But Landover should. Should tease you as to the kind of company I might have been at for this recording. But it was good anyhow.
- [04:28]
Sri Rajagopalan
You can't give it away, Peter. That's looks like you're getting into the holiday mindset. I'm certainly trying to get there, but I'm working through Wednesday morning, so hopefully after that I will be able to turn my mind off and spend it with the kids as we head to Tokyo. But thank you for that, Peter. Pleasure doing this with you. Week over week, episode over episode, and especially as we get around in the industry. We're thankful this holidays to all of you that actually partner with us, follow us, coach us, and keep it coming on the CPG guys. But before we get to our guests, I will ask you to consider following us in your preferred podcast listening app. If you already don't do so. This will ensure you automatically receive new episodes as they release, such as this one we're about to have. And while you're at it, follow our sister podcast, the FMCG guys and CPG scoop. Also highly rated on Chartable announcing the first retail media exec ed program in our industry from May 5 to 8, 2025 at Cornell Tech. The CPG guys are strategic partners with Cornell University for this immersive four day program that brings together industry thought leaders and renowned faculty to share best practices for building compelling retail media platforms. You discover how to collaborate in creating best in class tech stacks, measure performance to ensure brands Access the necessary KPIs based on Campaign objectives and establish strong partnerships between brands and retailers so we can serve the community. We love the consumer. In addition, the program covers optimizing brand strategies using AI driven campaign design at scale to achieve marketing goals. Links to our podcast Sister Cast social media profiles of my daughter Ria and Lara offer more information on the Cornell Retail Media program. You can simply refer over to the digital liner notes of this episode. And now drumroll please as we head to the main event on this episode, we have a repeat guest actually from I can't believe it's been three years since we've had him, and one that I've over the years followed closely and waited for. Insights and analytics from with expertise in Digital Commerce and E Comm. Immersive commerce New Word we're going to discuss today Digital Transformation, New Retail Modern Retail Data Science I really want to get into the China APAC market that this country largely ignores from a technology and infrastructure growth perspective. Consumer E Commerce, Unified commerce and then new retail strategies including ideas for global business expansion. He's the author of the Wiley books, Amazon number one best sellers China's Super Consumers and the New Retail. He's provided research, strategy and execution services for global brands, retailers, CPGs and manufacturers on retail evolution. B2C DTC, B2B Digital Commerce E Commerce Global Expansion Operations. You can also find him as a regular guest on BBC, cnn, npr, NBC. He's appeared in the Wall Street Journal, Forbes, wwd, msnbc, NYSE TV and countless other print, digital, web and broadcast outlets. An acclaimed and sought after professional speaker lecturer, including hundreds of industry and corporate conferences and events. We're lucky to have him on the show today. He's a guest lecturer at Yale, UPenn, NYU, Kellogg, Columbia, BWG, Ecom advisor conferences, and the China Institute and others. Man, that is one heck of an accolade.
- [07:45]
Sree Rajagopalan
But sri, I didn't hear Cornell on that list.
- [07:48]
Sri Rajagopalan
I'm just we're gonna have to change that, Peter.
- [07:50]
Sree Rajagopalan
We may need a guest lecturer at the Retail Media Strategy course to kind of round out that incredible curricula. Or rather, you know, the credentials he brings from those other Ivy League institutions.
- [08:07]
Sri Rajagopalan
No doubt about it, Peter. And without further ado, let me welcome Mike. Thank you for joining the CPG guys late on a Friday afternoon.
- [08:14]
Michael Zucour
Hey Sri. Hey Peter. It's, it's great to be back again. Yeah, I think I was maybe among the first 10 or 15 guests of the CPG guys. Right, right when you guys started out. I'm not sure how I should interpret that. I haven't been back since. But it's good to be back here nonetheless. Yeah. So just a little bit about my background. I I've spent 30 years at the intersection of technology, consumption, data science, retail and international expansion. I've worked in house at some of the biggest technology firms in the world. I spent a lot of time working with CPG companies like Unilever and P and G and Church and dWight. I'm a four time founder with two successful startups and my most recent ventures Adventures I would say too. I'm currently the founder and CEO of 5New Digital we are an agency that works with brands, retailers, CPGs and manufacturers on digital commerce. And I use that term precisely because we talk about digital commerce end to end, from product development all the way through reverse logistics. E commerce is certainly a big part of that and all aspects of new retail modeling, unified commerce, immersive commerce. And we just celebrated our five year birthday in September, so it's very exciting. I'm also a managing director at the M and A firm, Sellside Group. I sit on the consumer product and services desk as well as the technology desk and I was just recently named the head of European and North American investment for Tompkins Ventures. On that side of the table we look more at early stage seed through Series B investments. Whereas with Sell side Group it's, you know, it's really mergers and acquisitions. And really what that's done is given me kind of a unique perch to sit on because there's a lot of cross pollination between the worlds of, you know, what's happening actually with the brands and the retailers and the technology companies I work with and who's investing, who's not investing, you know, you know, what are the hot areas in M and A. And so that network has provided me, you know, kind of a unique perspective of seeing the world from the brand point of view, from the agency point of view, from an investor point of view, and then from a mergers and acquisitions point of view.
- [10:49]
Sri Rajagopalan
Thank you for that overview. In the digital liner notes of this episode, we'll of course include links to your LinkedIn profile. Your company's corporate websites and LinkedIn pages for listeners to access while we go on with our conversation. So Mike, I went back and looked at what episode number you were on the CPG guys. You were in the top 50 and now you're in the top 450. So yeah, I am amazed we've gone 400 episodes without having you back. But hopefully that won't happen and that's not the way this it'll happen in the future. You know, love for you to come back, especially as you do those quarterly visits on the TV shows come and this is a media outlet you can choose to be on as well. Right. So putting that as a backdrop, Mike, 2024 coming to an end. We got a few days of business commerce left. How has what is your observation for the holiday season 2024? Was Black Friday the biggest ever in history of the United States? How did it go in the rest of the world? I'm very curious to learn. Global imports exports, just like Halloween is now celebrated all over the world whether it's a US Based holiday or not. Did Black Friday drive traffic elsewhere with offers, etc. And what are you seeing in terms of with a brand and retail lens, is everybody happy about this holiday season?
- [12:08]
Michael Zucour
I'll start with the domestic outlook. I think it's been an incredible holiday season. You know, some of the numbers that are coming out are really, really healthy. You know, two and a half percent to 3% overall year on year growth in total spend by consumers during the holiday period. Black Friday, you know, 10% year on year and the Saturday and Sunday that followed were in the 8, 9% and then, wow, Cyber Monday 13% year over year. And so it was really a banner year for digital commerce and E commerce. And I think part of that is there are more places and more ways to buy more things than ever before, both in the digital format and, you know, the wide variety of innovative physical footprints that we're seeing. But there's no doubt in my mind that, you know, digital has grown its slice of the overall retail pie, but it's also driving, you know, the upticks in the stores that are getting that halo effect. So overall, I think, you know, consumers were spending, I would say what differentiated this year a little bit is they were definitely concentrating their spending on a smaller group of retailers. You know, it really didn't take long after Thanksgiving to figure out who was doing really well and who was struggling. You know, obviously Walmart was a huge winner. You know, probably right next to Amazon had a great holiday season. You know, Target, not so much. You know, I think Target's gonna have a big comeback year in 2025. They took their eye off the ball with, you know, online offline integration and digital development about three years ago, and I think that cost them. And, and, you know, we saw obviously, you know, part of a cyclical or, you know, trending downturn with, you know, Home Depot and Lowe's and do it yourselves. But, but overall, you know, people were, were shopping, you know, healthy middle market, healthy mass market, a little bit of a downside on luxury, but that's being global from an international perspective. Black Friday is, is, is an event now in Europe, especially in the uk. You know, talk to a lot of my UK partners and colleagues, and they're, they're not quite sure how it happened. And, and, you know, my answer to that is commercial holidays are fairly easy to adapt on a global basis as long as they're pretty straightforward and simple to understand.
- [14:53]
Sree Rajagopalan
I mean, look at what Amazon has done with Prime Days. They're now big shopping events. It doesn't have to be related to Thanksgiving. They've just created festivals. And the UK and Europe is now embracing Black Friday. Right.
- [15:09]
Sri Rajagopalan
Mike, nephew of mine, on the 31st of October, this, this year, a couple months ago, when we were chatting, said, I'm going to be celebrating Halloween. I said, you didn't tell me you're here in the United States. And he said, no, Halloween is a big event in India. And I'm like, wow, driven by candy and costumes.
- [15:27]
Michael Zucour
Yeah. And, you know, we could use the same example, you know, when, when Alibaba's singles Day, double 11, you know, started to accelerate beyond the borders of China and became a major event in Southeast Asia and other peripheral countries. And, you know, so I think there's just that, that drive by merchandisers to fill the sales and promotion calendar as much as they can. But I think there's also a willingness by consumers to adopt fun reasons to go out and spend on themselves and splurge and, you know, have a party. So, but just, you know, kind of filling out how, how things look during the holiday season overseas. You know, I think Europe had an okay holiday season. I think China did not have a traditionally great holiday season that generally stretches from the October 1st National Day in October straight through 1212. Right. So we have, you know, national week, what's called the Golden Week. We have, you know, singles Day, and then we have 1212. But what I think you're seeing, right, as we look to the U.S. europe and China is look at how Each economy is doing, and consumer spending and enthusiasm was reflective of that. And, you know, the truth of the matter is, of all the developed nations in the world, the US Economy is in the best shape. We have the lowest inflation, we have the lowest unemployment. You know, we have high GDP growth and, you know, consumers. Yeah. Was inflation scary? Was it a big deal last year? Absolutely. But what I think, you know, my theory about, you know, what inflate why inflation became such a central issue over the last six months, especially a year, is while the prices of everything else were coming down, the prices of the one thing that everybody touches every single day didn't. And that's groceries. So it doesn't matter if the price of hotels were going down or Gucci bags were going down or gas or cars. You are still picking up your food every day and saying, my basket doesn't get as full as it used to on the same 200 period. And so, you know, listen, there's a lot of issues with consumer numbers in China especially, but you know, overall, for the US and for good parts of Western Europe, it was a really good holiday season.
- [18:02]
Sri Rajagopalan
Could you take a quick five seconds here and just explain for the benefit of our audience what is singles day and then the significant importance it has become in retail in other parts of the world?
- [18:15]
Michael Zucour
The first singles day, interestingly, it started out as a homespun fake holiday in a college dorm room in China. Like how many great things come out of, you know, college dorm rooms? Essentially, it was a group of lonely young male college students who didn't have dates for Valentine's Day. And they decided, why don't we invent our own holiday? And we're going to have the holiday on 1111 because it represents 1111 for single guys without dates. And then it started to spread across college campuses and it became a big movement and it became an event where people were buying stuff for themselves. And then, you know, a few years later, Alibaba adopted it and turned it into a commercial holiday. And, you know, it basically went, you know, in the first year from, you know, maybe $20 million in sales to year after year, it was growing 30%, 35% year on year and reaching total 24 hour sales peaks of 40, 50, 60, $150 billion.
- [19:32]
Sree Rajagopalan
Wow. Single Chinese men. Let's connect, let's connect. Let's connect that back to the one child only policy. The Legacy continues. Sorry, Sri, didn't mean to get too political there, Michael. Mr. Z, welcome back to the podcast. You know, as Sree was regaling us with all of your accolades. One thing he forgot to mention is do correct me if I'm wrong, but you are a Rethink Retail top retail expert. Are you not recognized as that? Sir?
- [20:02]
Michael Zucour
I have. I was named rethink retail top 122, 23, 24 and the honorees are going to be announced for 2025, I think January 7th.
- [20:18]
Sree Rajagopalan
I too have been named a member. You know, there are some people that haven't on this podcast. Maybe this year, maybe, maybe this year he'll make the cut. I don't know. What do you think? I think he's got the street creds. What do you think, Mike?
- [20:34]
Michael Zucour
For anybody who's interested in getting involved in Rethink Retail, it's just a really special group of communities made up of top retail experts, global retail leaders, the in house people. And then there's our new community, the, the air, the AI and retail community. And so I encourage anybody to look into what they're doing.
- [20:55]
Sree Rajagopalan
Paul and, and Julie are big friends of ours. We love them here at the cpg. Guys.
- [21:00]
Sri Rajagopalan
Hey Mike, before, before Peter asks you the second question, I'd like you to clarify one more thing for the audience. This is purely a scale question. So you look at Prime Day or Black Friday and you look at Singles Day, which one is the largest of the three? Purely in dollars and volume.
- [21:15]
Michael Zucour
I could have answered that a little bit more clearly three to four years ago but, but two things happened. Not only Alibaba, but the likes of JD and all the other, you know, PDD and all the, all the big e commerce players in China. What they ended up doing is they ended up creating a three week long festival. So you know, does that sound familiar? As the holiday season has gotten stretched and stretched and you've heard people say, oh, it's not Black Friday, it's Black November now. Right. Well China did it first. And so you know, they would start the pre sales three weeks before the actual date and they would count that towards the quote unquote 24 hour total. So that was one factor that made it difficult. And then also after the crackdown on Chinese tech and e commerce companies four years ago, they stopped reporting their total sales. So it's hard for me to do a side by side but I would say, you know, it's in the neighborhood and relative to Black Friday, Cyber Monday and Prime Days.
- [22:29]
Sree Rajagopalan
Michael, now I get to my question. As we approach 2025 in the center Store world, it's all about retail media driving those sales. Particularly obviously in grocery right brands are Facing incredible volume changes. What's worrying you and what's exciting you about going into 2025, particularly in the grocery class of trade?
- [22:57]
Michael Zucour
I think it's part of a larger trend that is over indexing the importance of the bottom of the funnel KPIs. I'm a big believer in balance. Right. And measuring the entire consumer journey and wisely spending your money across channels that touch. Right. And when we start talking a little bit about immersive commerce and points of experience. Right. To me, what I've been focusing on the last couple of years with my clients and my talks is everybody is hyper focused on point of sale and very few people talk about or think about or act on point of experience. And my working theory that seems to be being proven out in the field is that it's pretty easy to turn a great point of experience into a great point of sale, but it's really hard to turn a great point of sale into a point of experience and you lose sales with that model. So I think the focus on retail media is just part of that larger bottom of the funnel, last touch trend where we're ignoring, you know, creativity, branding awareness and spend on points of experience. Well, there's a good reason why, because it's the easiest thing to measure, right? So if you're, you know, if you're a CMO at a CPG firm or you're, you know, a brand manager, they're the simplest KPIs to measure. And so I think overall what we've seen is, look, I think the entire CPG FMCG world has been transforming, but is in for a big transformation in the next two years. They have to be. It's just not that simple anymore. And so there's a lot of confusion about retail media. There's some would argue an over proliferation of retail media. How many drops of blood can you squeeze out of the stone? Right? The other thing I worry about with.
- [25:10]
Sree Rajagopalan
Retail media, Michael, let me stop you there for a second. In terms of retail media, is it you're saying that there are too many RMNs with too much fragmentation, Is it that the inventory is too limited? Like, what is the problem with retail media in your eyes?
- [25:34]
Michael Zucour
I don't think retail media is a negative thing, right? In it's a healthy part of the marketing and advertising ecosystem, right? But if you're a brand owner and now you're having to do retail media with Kroger and with Albertsons and with Walmart and with Target and with Amazon and 12 others, that brings up some Very tricky questions. You know, as you're planning your media about how to allocate and then what that does, it creates a compounded problem in which most brands are heavily over indexed in paid media to begin with. So now you're over indexed on paid media. You're not working hard enough on owned and earned media, you're not working hard enough to utilize the new channels technologies that are available to lower CAC and increase convert. Right. So, so you're, we know you're over indexed on paid media. We know you're over indexed on Meta and Google. And now you're over indexed on retail media. And now you're over indexed on the last touch. That's my problem with it.
- [26:45]
Sree Rajagopalan
Okay, fair enough. Thank you.
- [26:47]
Michael Zucour
And you know, look, that's, you know, that's what my experience.
- [26:50]
Sree Rajagopalan
No, Michael Flywheel did some research earlier this year and they looked at this is published so it's not private information. They did some work with Georgia Pacific and they were working with 26 RMNs. And when they analyzed the work they were doing, they said they could get the same amount of success by consolidating it down to nine. And I bet they could take a couple more out and still get pretty close to that result. The problem is it takes as much effort to build a campaign at an RMN with 300 brick and mortar stores as it does to take to do one with 10,000. And the question becomes, at what point do these RMNs realize that they're too fragmented and if they don't form some kind of alliance in terms of getting points of distribution right and audience size, that they're never going to be anything more than another trade investment. And that's not the promise that their leaders were given. When someone came to them and said, let's open up an rmn, they were promised we're going to get you those brand dollars. And if you're not getting brand dollars, you're just getting a shift from an end cap investment. Well, guess what, when you buy an end cap, 100% of that money goes into the pockets of that retailer. Whereas when you buy a programmatic ad campaign, you gotta share with your dsp, you may have to share with some of the other targeting mechanics that are in there. Suddenly you're actually losing money compared to what you did. So what's the, you know, this is the problem for me is that there's gotta be a reckoning around these RMNs. There has to be. You know, like it makes a lot of sense if I have no previous knowledge of this. Okay, but what Kroger obviously tried to do with Albertsons, I would fully expect H E B and Wegmans and Meyer and you know, to get together and say, hey, we've got a national audience, sizable enough audience, it's worth making us one of the four or five you invest in. And that means that the, you know, KVAT and Rite Aid and other ones, they're just going to be out in the cold until they form an alliance with somebody else. Because it's just, it's not the juice isn't worth the squeeze, I think is what I'm trying to say.
- [29:15]
Sri Rajagopalan
Didn't mean to get into a rabbit hole here with retail media. The one thing I did want to ask you, Mike, on that angle is retail media is a piece of this for sure. But from a center store perspective. And I don't want you to limit this answer to grocery. This includes department general merchandise toy stores. I wonder if there are any toy stores left in the world now. But I'm talking about the world, Sreet.
- [29:42]
Sree Rajagopalan
I was up in Halifax two weeks ago and I saw Toys R Us is back in business with Babies R Us. I don't know what's going on. You never know. You just never know.
- [29:51]
Sri Rajagopalan
That's the Connecticut one. I'll never forget that one. So tell us about Mike in store. What's the hottest, most attractive 2025? What should people be focused on?
- [30:03]
Michael Zucour
Here's where I think the focus should be and what I'm excited about is when we start talking about immersive commerce. Okay. And this is going to relate directly to center of the store across those categories. And by the way, it's also going to relate to the retail media conundrum, the over index, unpaid conundrum. Okay. What excites me is we are really starting to see the blossoming of immersive commerce. And you know, I started my working theory of immersive commerce about five years ago when I realized that 90% of the websites that I was shopping on looked, felt and acted the same way they did 5, 8, 10, 12 years ago. It's a flat, two dimensional, scroll, click, catalog job. Yes, you can spruce it up. Yes, you can do your pictures better. Yes, you can optimize your PDPs, but guess what? You're still largely scrolling and clicking. And then I asked, okay, trillions of dollars invested in this type of commerce and it looks and feels the same. And yet people's jobs depend on hitting a 2.1 conversion rate.
- [31:25]
Sri Rajagopalan
Okay?
- [31:26]
Michael Zucour
People's careers depend. Getting a 2.5% conversion rate. So we're still measuring success as 98 people walk out of your store and buy nothing. We're still looking at 60% card abandonment rates. Right. And then I took that parallel and I started walking the floors of, you know, about 30 or 40 retailers in a couple weeks. And what did I find? I found the same feeling. Most of them looked and felt and acted and smelled the same way they did five, eight or 10 years ago. And so the solution I came up with is people want fun, they want to shop, they want to socialize. And by the way, on a side note to that, we are starting to see today's teens start flocking back to malls. Malls are getting a lifeline from teens because the good malls have created experiences. I mean, I don't know if you.
- [32:29]
Sri Rajagopalan
Guys, is that a US Phenomenon as well or is it a global phenomenon? Asia phenomenon?
- [32:35]
Michael Zucour
I've seen it Primarily in the U.S. i mean, you know, the big legacy malls and department stores in Europe still do pretty well. Most of the malls in Asia are just, you know, places for people to do lapses. But we're really starting to see because why have you walked the American Dream Mall in New Jersey? It's a fantasia. It's a dream world. It's experiences, it's games, it's restaurants.
- [33:00]
Sree Rajagopalan
I find it overwhelming. It's too much compared to what I'm used to.
- [33:04]
Michael Zucour
Good, because they want you to come back. You're not going to get.
- [33:07]
Sree Rajagopalan
Yeah, my daughter loves it. She adores going to that mall.
- [33:10]
Sri Rajagopalan
How does it benchmark to Mall of America up in Minnesota?
- [33:14]
Sree Rajagopalan
No, not, not, not very different.
- [33:16]
Michael Zucour
Very totally next gen. Right. It really what you think about is, you know, Mall of America and I don't can't recall the name of the big one in Edmonton was vying for the biggest. But what they are still those, those places are just still warehouses for storefronts.
- [33:31]
Sree Rajagopalan
They're just square, very organized boxes of the. It's like you don't. You're just, you get into the store and you're just forced to walk around and go by different sections and experience it. There is no real, very obvious set way. And that's intentional from my perspective. They want you to have to go buy everything and see different things and be completely immersed and suddenly you're at a skating rink and the next thing you're at a shopping, you know, the toy store. And then there's, it's just crazy.
- [34:05]
Michael Zucour
They have an aquarium and they have one of those illusion museums. Right. Oh, by the way, they also have an amusement park and a ski slope.
- [34:13]
Sree Rajagopalan
And a hockey and a water. Water park, let's not forget that.
- [34:16]
Michael Zucour
And a water park. Right. Okay, so now let's, let's just, you know, quickly just focus in on it for a second. I'm going to create a composite character here to keep all parties innocent. I've talked to several people who are significant players in the commercial retail real estate game and here is the composite of the feedback I got from them. Our job used to be build something, fill it with tenants, charge the tenants as much as we could. And we couldn't give, you know, watts about whether they succeeded or not because we just filled them with the next in line. Well, well, well, the chickens have come home to roost because there are about a third as many malls left in America as there were 30 years ago. One third. And so now admittedly they're saying it's only in the last three years that these big operators are saying, oh, we need to do technology and we need to do an online marketplace and we need to do things like American Dream are doing, right? So the people who are doing that are responding to it, they're filling the buildings. So we got kind of on a sidetrack there at the mall. But it is a part of the story of immersive commerce, which is how do you take this digital storefront whether it's on your mobile. And by the way, that's another trend from this holiday season. 84% of shopping look ins were made on a mobile browser. Only 31% of sales were made on a laptop or on a laptop or a PC.
- [36:04]
Sri Rajagopalan
Doesn't it give rise to a complete different issue? You said browser, you didn't even say app. That retailers have to really focus on optimizing the Safari experience and then correspondingly the Google Chrome experience for Android worldwide. And that should be a very high priority of CTOs.
- [36:25]
Michael Zucour
And so what immersive commerce does is it creates a three dimensional dynamic experiential. And I don't use that word lightly because a lot of people overuse it. I have a much higher bar standard for what experiential means. And you make this three dimensional, fun, shopping, exploration, social. Make your screen like the American dream mall. Okay? And then on the other side, physical retailers need to make their interiors more immersive, more fun, more interactive, more digital. You know, I'm a big fishing guy, I go into Cabela's and I'm in my happy place. And is there a better experiential immersive? You know, there are plenty of them. But that's my favorite. You walk in and they've got an aquarium and they've got the taxidermy and they have a mountain and their sections are beautiful, beautifully merchandise. And oh, by the way, their staff knows their stuff inside and out. Right? That's an. So if you can do that immersive digital experience and that immersive physical experience and then holy grail time merge those, that's what I'm excited about in 2025.
- [37:41]
Sree Rajagopalan
I tried taking sho a Cabela's once. He was afraid I was going to have him stuffed so he wouldn't go in the door.
- [37:46]
Sri Rajagopalan
But I'm sorry, I don't even understand the joke. But next one's yours, Peter.
- [37:52]
Sree Rajagopalan
That's okay. That's okay. So Michael, in today's oversized, overscaled brands, are they going to be able to adapt in this tight dividend focused P and L world that we're in? Because that seems to be for all this talk of investing inexperiential. You know, at the end of the day, the chief sales officer of a very large publicly traded CPG company said to Shereen me that she's being told by her cfo, I know you like to focus on winning the decade, but first you gotta win the quarter. And that seems to be everything they're thinking about right now.
- [38:38]
Michael Zucour
Listen, that's been the story of the last 15 years. You know, there's nothing new under the sun. It's just the difference makers are the ones who can stretch beyond that even a little bit. So let's say what are some traditional things that they can do with an edge a little bit better? First of all, these big, oversized, overscaled brands have to adapt to a new era of supply chain. We are now in an era where we no longer should be talking about supply chain disruptions. We have to live in a world where the supply chain is disruption constantly and you need flexibility and optionality built in from end to end from your, from your raw materials right through your reverse logistics. There's a lot of money to be saved and made. If you get that right, that's number one. Number two, if you don't invest in automation and AI, you are not going to be around for very long. You can focus on those quarters, but you're not going to make the decade. You're not going to make the half decade.
- [39:50]
Sree Rajagopalan
You know, that's an interesting one, Mike, because I saw who was it Sree that was talking to us about this? But basically what they said is there are a whole lot of CPG brands that at last year's, you know, Cagney said yeah, we're investing heavily in automation, blah blah blah. And they made all these commitments and the analysts are looking at it and they don't really seem to have done much. And that's going to come back. You know, when they stand up in front of Cagney next year they're going to feel some heat from the analysts saying you claimed all these things. I don't see a lot of, a lot of return on that. What are they going to do?
- [40:33]
Michael Zucour
Yeah, I mean listen, it's, it's, we are, we are now at the point and if you want to look at it from a dollars and cents point of view, whether you're an E commerce platform, a manufacturer, a retailer or a brand, we have crossed the threshold now where it is actually, it is like actually less cost to invest in automation than it is imploded workforces. So I mean I can make a great financial argument for the investment in automation and AI with that human collaboration. And then the other thing that this is a big one that I'm seeing especially in the CPG world, they have to go through a portfolio rationalization where we're going to see a year here where I believe we're going to see record numbers of divestitures of non strategic, non performing brands across the global CPG world and we might see some global records on how fast they can replace them with more strategic and more thesis aligned. Right. So they have to re rationalize and say look, I have a brand who for 20 years has been selling well on the middle shelf at A and P and Kroger but now circling the drain. Sure it's doing fine in Asia but I'm gonna, I'm gonna offload this brand and I'm gonna replace it with a brand that's doing well on TikTok and YouTube and you know, through DTC.
- [42:08]
Sree Rajagopalan
This bodes well for Nutter Butter by Mondelez. This is a TikTok trending brand. A big one.
- [42:14]
Michael Zucour
Yeah. And so I think those are the big three, you know, the optionality, the reality of a constantly disrupted supply chain automation and getting your portfolio right.
- [42:25]
Sri Rajagopalan
I have a question on the supply chain side since you're acutely tuned into that space commodities. Are we finally in a world where commodity costs have kind of plateaued out? Are we still in a rising environment? Are we in a permanently risen environment but has plateaued up?
- [42:42]
Michael Zucour
I, I think, I think it's plateaued and I, I just, I don't see it coming down anymore. I, I don't see a big retreat. It's just, you know, once you implement that, that kind of thinking and that kind of action, it just becomes permanent. It just becomes baked in, you know. So the, the, the question I would ask back to you guys is do you think that real wages over inflation will continue to increase so that people no longer feel the sting of that pricing?
- [43:17]
Sri Rajagopalan
That's a tough one to answer, Mike. Over the course of the last four years, readily available economic data, United States government data, indicates wage inflation hasn't kept up with price inflation, cost inflation, expense inflation, call it what you may call it. So the gap is actually pretty wide at this point. So if commodity prices are going to stay elevated, which I anticipate, just like you might, that it would, wage inflation is the only way to pick it up from, from my conversation with the industry at the cpg. You know the world we live in, Peter and I live in the wage inflation for recently concluded year. You know, fiscals happen all through the year. Somewhere in the middle of the year, at least for those is not significantly higher than a 0%. So not the greatest story you hear to report, right? And bonuses have been tougher because the volume expectations versus plans which are built on year agos also weren't great to begin with because versus year agos no one's really performing at a pace if you're a large overscale, large market cap, publicly traded company. Right? That's the reality we live in today. So I'm going to take a minute here and remind our audience that you can find all of our content by going to a web browser and typing cpguys.com and if you think you or your company has gone through thought leadership to contribute to our community discussion, drop us an email@contactpguys.com and maybe you can join us on the podcast just like Mike did. Don't forget to drop us a rating@cpguys.com and the navigation bar up top. It helps us understand if having the right conversations with the right guests to our 35,000 plus followers on LinkedIn. I can't thank you enough for the clicks likes DM's followership, downloading our podcasts and keeping up up there is one of the highest, if not the highest, downloaded marketing podcast on Chartable Mike. This is episode one of two episodes on overall Unified Commerce and Omnichannel. So I can't thank you enough for joining me on episode one. But before I have you talk to us and about Being on this episode, let me tell our audience what's in store for episode two. So they know. So we closed episode one with TikTok. Episode two will start with TikTok because the clock is ticking. TikTok. You like that, Peter? Then I want to get into the M and A where lots happen in the CPG industry this past year and then the stock of Hershey's and mandelaires and acquisition there. And then we're going to hit up the Far East. I definitely want to get into China and China is one country, but also Japan, Korea, let's just say the Far east and what trends you're following that are next to come here. And then any conversation today will be remiss without AI. So that's what we'll look forward to in episode two. Thank you for joining us. Sincerely, Mike joining us on this podcast.
- [46:17]
Michael Zucour
My pleasure as always. And you know, it's holiday season, so I would just want to wish Sri Peter, your loved ones, your families and everybody listening today, happy, healthy, prosperous New Year. And also, you know, as we come out of the holidays, it's NRF time. And so I'm gearing up for NRF four amazing days. And I'm really super excited this year because I was unbeknownst to me, but I'm quite honored named one of NRF's retail voices for 2025. So a group of 45 of us were chosen from a very large pool of industry veterans and it's going to make that week even more fun.
- [47:01]
Sree Rajagopalan
Sree we now have another list we aspire to join. We'll add it. I'll add it to our list of lists, but congratulations on that, Michael.
- [47:09]
Sri Rajagopalan
Congratulations on Michael. The CPG guys, of course, will start the year right after the first Monday at ces, followed by NRF will also be at fmi.
- [47:18]
Sree Rajagopalan
January is acronym month.
- [47:20]
Sri Rajagopalan
Acronym month. And we're going to be at all the events. I think February has a few in store as well, but let me not spoil this.
- [47:27]
Sree Rajagopalan
Yeah, Cagney, Cagney are your favorite tree. My too.
- [47:31]
Sri Rajagopalan
So will Peter will be media personalities there. So we're looking forward to engaging in good dialogue with senior leaders on the future of our industry. Let me thank the audience one more time. Peter. Fun doing this with you. Week over week, episode over episode. Look forward to episode two. And with that, that's a wrap of this episode of the CPG Guys.
- [48:04]
Unknown
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