MikMak’s Rachel Tipograph on Consumer Spending, Retail Media & Holiday Shopping Trends

Okay, I think we are good to go. This is Matt Britton from Suzy. I'm joined by my good friend Rachel Tipograf, who's the CEO of Micmac. Rachel, how you doing today?

I'm doing great. I'm so excited for this.

Yeah, me too. How was 2020 for you? Obviously operating a very hot, you know, software startup in the New York City area. Tell me about how the year's gone with you guys going remote and sort of adapting to this new world.

Yeah, I mean, like you, I never could have predicted what was gonna happen in 2020. Good news for companies like Micmac is that e-commerce has literally accelerated by 10 years overnight and we get to ride the wave of that growth. I think what's been most exciting is just to see the growth in new categories that have been totally underpenetrated in e-com, such as grocery, alcohol. I'm very optimistic also on automotive as a raising category. That's interesting. Yeah. And so it's been super exciting. What about in your world?

It's also interesting that you talk about automotive as an e-commerce play because that to some people would seem like a completely new element. I guess that's Tesla driving that. Is that kind of how you see it?

Well, actually automotive since the beginning of this last year was one of the fastest growing categories on Amazon. It started with car parts. Yeah. And now they're making an aggressive push full-fledged cars. The hardest thing about automotive, which is really similar to alcohol, is just the archaic system, the dealership model. And so once sort of auto lobbyists can break through that, you're going to see so many direct-to-consumer auto businesses come to market.

Wow, you're just, you're just dropping gems before you even get started. So we're going to get a little bit more because I want to hear more about that. But first, I want everyone to at least to give you the chance to talk about NicMac and the great thing you guys are doing. So why don't you tell our audience about NicMac and what you guys do?

Yeah. So we're an e-com acceleration platform for multichannel brands. So if you're a brand where the majority of your sales come from places like Amazon, Target, Walmart, Instacart, Drizzly, Ulta, Sephora, Petco, you will probably become our client because you live in darkness with e-retail data. So we give you more insight into the e-commerce customer journey than you've ever had before. And we also enable multi-retailer checkout experiences. So if you've ever been in an environment like Instagram or Hulu or a brand website where you're given the power to choose where to check out— Amazon, Target, Walmart— that's us behind the scenes powering it.

Wow.

And what's the biggest misconception about e-commerce amongst the clients? Like the big aha when you talk to them for the first time? And what, you know, and maybe it's something that you're surprised that they don't get that they should.

Well, I would say the biggest challenge with e-commerce right now and a lot of the companies we work with is how they're organized. It typically is sitting under the sales organization or it's sitting as a center of excellence. And there are trade-offs with both of those models because it's historically completely disconnected brand. And so I would say the biggest misconception is not understanding that what happens in e-commerce is your brand.

Right.

And I think that's the transformation that we're going to start to see accelerate over the next few years.

Yeah. And it's just incredible that e-commerce has— it's suddenly been a thing where, you know, to me it's always been so important and we've seen that play out this year, you know, with the acceleration and we'll get into it, but that's great. I assume you guys have had a strong year just given what the pandemic has done in accelerating e-commerce.

Yeah, the company will have tripled in size and in revenue this year. So there's a lot to be proud of. That's amazing. What about Suzy? So much is happening. You closed a massive round of funding.

Yeah, I mean, it's been a great year for Suzy. Our team has— I couldn't be more proud of our team. We're now up to 120 people, doubling the size of the staff this year. We had to pivot really hard, as you guys have, in terms of how you operate, how you talk to customers, how you win customers. But like your product, our product's been in demand because the conventional notions of what the consumer is has been thrown out the window. Everything from how they eat, how they play, how they work, how their kids go to school, you name it. So you can't really rely on the information you had going into this year. You constantly have to have your finger on the pulse of the consumer. And because of that, we, like you guys, have had a ton of interest and demand with our business. And we're really excited about our prospects heading into next year. Know you guys are as well. So, but yeah, it's been great. And again, thank you so much for joining. For those of you who are new to our webinar series, this is our 16th State of Consumer webinar. Our first one was way back on March 6th, right when the pandemic first hit, and we've consistently stayed with this platform. It's been tremendous for us in terms of reaching out to the industry, our clients, partners at large, using our tool to help our clients keep their finger on the pulse of the consumer, you name it in terms of the different lens we've looked at. We've looked at everything from the future of New York City to the future of the automotive industry, to obviously how consumers are shopping, how they're reinvesting in the home, et cetera. And we are definitely gonna be doubling down on this heading into next year. All the research that we're gonna be calling out today, the first-party research was driven through our Suzy platform. And we surveyed 1,000 US consumers, and that was census weighted across age, demographics, income and geography. So you can be sure that the information that we're citing is nationally representative. So we're going to dive into it. And as always, for those of you guys who are longtime watchers of our State of the Consumer series, we're going to do our session called Ask America. We let you, the viewer, tell us what you'd like us to ask our consumer panel. At the end of this webinar, we'll tell you how they answered. So right now, popping up on the screen, you'll be able to answer a poll of what you want us to ask our audience. One of these 4 questions. 1, which brand's marketing stuck out to you the most during Black Friday, Cyber Monday? 2, do you feel like it's hard to find the products on your holiday shopping list? 3, were the Black Friday, Cyber Monday deals stronger this year versus previous years? And 4, what is the top item left on your holiday shopping list? So I don't know about you, Rachel. I'm trying to get my hands on the PS5 for my son. I'm not sure he deserves it, but I'm definitely going to try to get it for him. And oh, hi from Nigeria. We have people calling in from Nigeria. So we're already going global, Rachel. Anything high up on your holiday shopping list?

Well, I just bought this new home, so I'm furnishing it like the rest of America. And everything's backordered. But PS5, I mean, those things have literally been out of sale since Amazon Prime Day in the middle of October. Yeah. So good luck.

I know, I know. Maybe I'll add a housewarming gift for Rachel on my holiday shopping list. So heading into e-commerce and really what we're heading into. One thing that stuck out this year, and I always try to reinforce when we talk about the broader economic environment, because no matter what, what space you're in, obviously the macroeconomics matter, is that personal savings rates are at an all-time high. This is from the US Bureau of Economic Analysis. You can actually see in the month of March and April, personal savings rates actually spiked to around 35%, which is a level that we've never seen before. Before that, the highest level of personal savings rate was half that amount. And that was way back in 1975. Which I know was long before you were born, Rachel. So it's come down, but it's still at its highest level ever. So we're talking about, about 16, 17% savings rates. So consumers have money in their pockets. Now we all know that that is not evenly distributed. There are many people in pockets of America and in pockets of the economy that are really struggling. And this is not at all to make light of that. But overall, if you look at the data, consumers are spending less on or have spent less on discretionary purchases and certainly travel of that nature. So you do have consumers to have money in their pocket. And I also think they're at a time during the holiday season where they're feeling depressed. They don't really have the ability to maybe see their families. And sometimes a little, you know, shopper therapy helps consumers as well. So I mean, from a, I guess, almost like a psychological standpoint, Rachel, like how do you look at that pent-up demand as it relates to the holiday season?

I love that you're laying out the macroeconomic story. I mean, the other thing is that capital is cheap right now. And if you just think about mortgage rates, it's one of the best times, but also the most competitive times to buy a house and then fill it with things. In terms of what we're seeing from a consumer standpoint, you know, it's wild to see how everyone's go-to-market has had to change, especially with people who are going after the millennial Gen Z customer. Marketers for so long have been preaching that the younger generations are craving experiences. The experience economy went away in 2020. And now what millennials are doing is investing in their self and their comfort at home. So we do an enormous amount of work across CPG, food and bev, alcohol. And this holiday season, the unanimous trend, no matter what category we're talking about, is that the consumer was buying for themselves. Very few gifts were being purchased, and they were making really big purchases, but at fewer places.

Right.

So they were—

the data behind that is crazy, which I know you guys helped us pull together. But yeah, I mean, it would stand to reason that that's the case. So yes, they have pent-up savings, but it's not necessarily going to the same places. To your point, they're not traveling. And yeah, I mean, I wrote a book, Youth Nation, back in 2015, all about the experience economy and how that's what people are prioritizing, right? Experiences over stuff. And now, you know, and you're seeing it play out if you look at an Instagram feed and people aren't doing the things that they used to. And if they are, you're kind of judging them. It's like, why are you going to a packed restaurant when this pandemic's going on? So it's changed. I know I, you know, I've had a lot of discussions of when is it going to kind of whiplash back, right? What's going to happen? But we could talk about that sort of as we move on. But at the same time, and Rachel, you know this better than anybody, but what we've seen part and parcel with the growing rates of savings is this massive leap in e-commerce. This is the very famous e-commerce slide, probably the slide that I've put on more presentations this year than any other. But for those of you who don't know it, you know, from essentially a 10-year period from 2009 to 2019, the percentage of overall sales that were e-commerce went from 6% to 16%, right? A 10% growth. And in an 8-week period from March and April went from 16% to 27%. So you're essentially seeing 10 years of acceleration in 8 weeks. And obviously, you know, there are some that believe that this is sort of an artificial boost. I'm on the side that this is basically— we're here for good. And that's just— yeah. And I think that the craziest thing— and I— this is the slide that just drives me mad, right? And it's, it's so crazy that I'm actually going to make it bigger. Uh, but so this is CNBC, right? And I really want to hear your thoughts on this. They're putting up the stay-at-home stocks, right? These are stocks that, that Wall Street believes— and this is the day that, um, the big vaccine news came out., right? And, and basically, so everyone now, oh wow, we see light at the end of the tunnel. And all the quote-unquote stay-at-home stocks tanked. So you see companies like Zoom, which I get, right? It's like, okay, we can go into the office, that remains to be seen. Companies like Peloton, right? And Peloton is, is probably as a stay-at-home stock as it gets because it really got its sleep. But then you see companies like Amazon and Shopify, which signals Wall Street believes that when people can leave their homes, they're going to stop on e-commerce when the reality is that, A, people were spending money on their phones, e-commerce, which you can do away from home last time I checked. And why would they go backwards? What are your thoughts on this? Because, A, not only did it get me— drive me crazy, but the first thing I did is I bought as much stock as I could in Shopify and Amazon because obviously— what are your thoughts?

Same with you. And I added Walmart to the list as well. Yeah, interesting. So my big thing is All everyone needs to do is look at what happened with China and SARS just a few years ago. That is when the digital economy accelerated and stayed. China is the market leader. They're even 5 years ahead of US and Europe, even with our acceleration when it comes to e-com penetration. And it's because of what happened around SARS. So this is not changing. I'm willing to put my whole career against it. Now, will it change a small amount? Yes. And so to give everyone an idea, within CPG, at some points this year, uh, certain categories saw nearly 30% of their total revenue come from e-com. On average, it's closer to 16% right now. And so tons of industry analysts, BCG just put out a great white paper around this. They expect that in the year 2022, it's going to get closer to 8 to 10% of total revenue.

Wow.

That's huge because 8 to 10% is actually the point. It's the tipping point. It's the point of maturity. It's where beauty and toys were in like 2008. And so if you're working at a brand right now and you're not understanding that e-com is about to become a significant portion of your revenue forever, then your organization is going to fall further and further behind.

That's right. And it's funny because— well, not funny, but it's, I think, poignant that you see companies like Century 21, right? Discount retailer in the New York area. Great experience, great business, family-owned. They went out of business. And the reason they went out of business is pretty clear. They did not have the e-commerce infrastructure in place. So you look at companies like Kohl's and Michaels and Best Buy, right, that they're doing just fine, thank you, as a result of this. Because they've been investing for quite some time at the shift. And this left a lot of companies sort of like blindsided. And it's too late if something like this hits, the acceleration happens, you're the outside looking in, no one in New York City is going to your stores. And unfortunately, you see a business like Century 21 going out of business.

Yeah, I think another great case study, and I believe we both have worked with this person over our history of our careers, Dick's Sporting Goods. The CEO is Lauren Hobart, who used to be at Pepsi. We were both inside. You know, for the longest time, the narrative around sporting goods was that Amazon Amazon killed the sporting goods retail business. Dick's Sporting Goods is having their best quarters ever. They've had 7 incredible quarters and it's because they've invested in digital.

Right. It's also because there's a huge amount of renewed demand in outdoor activities. Obviously, as people can't travel, they're, you know, things like hiking and snowshoeing. I saw snowshoes are up 500%. So I think, you know, they were in the right place at the right time, but you're right. And they had the infrastructure and they were ready to flip the switch.

And the other part of this story is that there's actually a competitive advantage advantage to having physical retail and digital. So one of our big partners is Petco, and Petco can beat out Chewy because they actually can get products to consumers faster because they have more distribution centers. They're physical.

Wow, that's, that's fascinating. All that being said, you know, our research shows that shopping in person still matters. You know, we ask consumers what they're going to miss most this holiday season, and it was interesting because we're hearing consumers say stuff, oh, I just got very little. We're hearing consumers say stuff that they're gonna miss shopping just as much as they're gonna miss getting together with their family. So, you know, people do, shopping is sort of a nostalgia. There's something about it that makes people feel like it brings my family together, especially during the holiday season. So, you know, while I think that traditional retail is gonna have pressure I don't see traditional retail completely going away. Like, how do you see it evolving, or do you think it's gonna go away?

Yeah, I think that the customer is going to really care about two things once the world is safe, like premium experiences and convenience.

Yeah.

And so the customer is not gonna be okay walking into Sephora, getting a great makeover, and then having to wait online for 20 minutes. Yeah, that's not gonna work. Yeah. And so I'm a retailer right now and I'm planning for 2022, 2023. That's what I should be saying to myself, which is that the digital POS has to be at the heart and center of every single store associate's hand. And, you know, Apple is a perfect example of nailing that many, many years ago. But yeah, I think humans crave experiences. Believe me, I can't wait to travel again. I actually miss business travel, you know, so—

Me too. Although, and this is a whole nother point, and I know we never get through our slides because it's just how me and you roll, but we've been so successful this year at pivoting our business model to virtual events. I miss South by Southwest and CES and Cannes and all these places that we've both been at. But in terms of efficiency, I know my West Coast clients no longer need to see me in person to conduct business. So, and they might not want to see me in person, right? So like, I won't be traveling out to, you know, the West Coast for 7 hours of travel to see one client in Seattle and wasting 2 days to do it anymore. Do I want to send my salespeople to these events anymore? That's a question. So I don't know. Business travel won't go away, but how are you looking at that as you plan for the future?

Yeah, well, first I want to give you a shout out. If anyone here has a services B2B business Matt here is probably one of the most brilliant marketers in B2B marketing. So I really follow your playbook and your lead. Thinking about it from my own lens, because both of you, you and I were on the conference speaking circuit, I feel what's gonna happen is that we're all gonna start being more selective and going to maybe 4 60-person events a year. Yeah. And it needs to be really premium and really special.

That's interesting. Kind of like the MediaLink model where they put these high-end events together and things like that.

Or like WPP was doing with Stream in like the early days.

Yeah.

Yeah. Or I don't know if you're, you, uh, my friend Jonah who had this company Moat that was acquired by Oracle. He did an event in Montauk every year where it was sort of handpicked and you, because you're creating deep personal experiences that can't be, I went at it with somebody on Twitter this morning, um, who basically said. The office is dead and headquarters are shutting down, et cetera. And I know you guys, I mean, you, you, Micmac has basically said we're doing a work from anywhere policy. And I was so, I mean, it was great to see. I was somewhat surprised just because I know that your company like ours has thrived on culture. Right. And for me, it's very hard to create culture remotely. And I think culture can be a secret weapon for people like you and I, because we understand the value of people. And I think larger companies don't. So like, how are you looking at that as well?

Yeah, so we have gone fully remote. We call it McMack Anywhere. We now have employees all over this country. We used to be based in Manhattan, in SoHo. And do I think we're going to have a physical presence one day again? Absolutely. Will it be an office? No. I, I call it a hub. I see it as an event space. Yeah. And people will come for like employee onboarding, fancy client meetings. But in terms of what culture means, I think what we've learned is that culture isn't your cool office and culture can't be fun happy hours. I think culture now in the remote world is about how you treat your employees.

Well, yeah, I, I just say treat your employees though. I do believe, Rachel, that relationships is also culture and trust culture. And I can tell people who I trust the most are people who I've met in person. So like, we, we did an event this year at Governors Island, like in October. It was completely outdoor, social distance, and 70% of the people there had never entered Suzy's offices because we hired them after the pandemic hit. So like, some people I thought were 6 feet tall that were 5 feet tall because I only saw them from the shoulder up, right? But now after seeing them, I feel like I know them better.. So I think the hub, whatever you want to call it, we want to have more like a— my vision is more like a Soho House environment, right? Where it's like, if you want to crank out emails and do calls all day, stay at home. If you want to collaborate, brainstorm, meet with people, there's a place for you. So I think that we're saying the same thing just the way that we're doing it because I do think it matters. But you're right. It's going to be redefined. And I think in the way— that's the details, and you know, devil's in the details, so to speak. And the way it's redefined really is gonna— there's gonna be winners and losers in that regard for sure. So, um, so let's talk about going back to e-commerce, you know, online shoppers. Where's the best way that you're seeing online shoppers find out and actually become acquired on behalf of brands at the top of the funnel?

Yeah. So I think the easiest way to talk about product discovery is through the mindset of discovery, search, and recall.

Yep.

And so you go to Amazon when you specifically have something in mind. So you might literally type in Diet Coke, or you might type in triathlon cookies that you can eat while you're, you know, on the race around a need state. When you're in an environment like social, this is where you're looking to be inspired and products that you might never knew existed before, like every single darling direct-to-consumer brand under the sun is brought to your attention. And then there's where you're like, wait a second, I saw that really cute pajama company. I can't remember what is it called? Luna. And that's where retargeting comes in. Right. And so in terms of where you win and you lose, You lose if you think that all you can do is invest in Amazon Media and win at e-commerce. And why I say that is if you can't get your brand to appear in the top 10 search results within a retailer, organic, yeah, then you really, you're gonna have to spend a lot of money to even show up there. Or you have to understand that you need to offset that by investing in environments like social where you can be discovered.

And even if you're not, even if you are in the top 10, I spoke to a prominent private equity investor last week who told me, we're not investing in companies that are in the top 3 of a search term because there's only downside. That's what's driving their growth. And being in the top 3 today, Google changes their algorithm, all of a sudden you're off the first page. So you really can't rely on that either. You're not in control of your own destiny. SEO can be a kind of false indicator sometimes.

And then, I mean, if we're gonna go through the PE investor lens, you know, then the new model for e-com for investors is understanding that you can't place your bet on one brand.

Yep.

And so the idea is that everyone's trying to build their own mini P&Gs right now where they have one infrastructure and 50 brands that they can bring—

Who's doing that best?

From an investor standpoint or?

From a new, what's a new CPG? Yeah. Direct-to-consumer company. That you really—

there's a really interesting company that actually reflects both of our ethos. So there was an agency called Gin Lane. Yeah, based in New York City. Yeah, they were doing branding for a ton of these darling direct-to-consumer brands. They realized, they realized that they probably could make more money if they built brands themselves. So then they shut down the agency, they launched a new holding company called Pattern, And essentially they're buying companies and bringing them to market.

Wow.

All are around like the millennial home. They're trying to go after the millennial home furnishing market.

Right.

Yeah. And their acquisition strategy is that they're acquiring brands that are doing less than $5 million in revenue, and then they're gonna put them through their machine to accelerate it.

So almost like a Williams-Sonoma model for Yeah, we all know that, you know, we did a webinar about the home and that's where so much investment's going, as you know better than anyone. So yeah, that would make sense. So let's talk about this year. Um, so Prime Day this year was in October, it's usually July. Uh, Amazon never really said why they pushed it back, but you know, we all know that the people at Amazon are incredibly smart and every decision is data-driven there. And you know, many said that Essentially them doing that, first of all, their fourth quarter is going to be just massive because you have their Black Friday, Cyber Monday, holiday sales, and Prime Day all in one quarter. So over $100 billion, maybe $130, $140 billion in revenue. One quarter will probably be the greatest quarter in the history of corporate America based on that. But besides that, they're pushing this back. What did that do to the holiday season and the general timeline?

Yeah. So I mean, the first thing about why Prime Day came into existence was to get rid of inventory before the holiday season. So in the beginning of the pandemic, we experienced massive inventory management and fulfillment issues where literally retailers were emailing brands and saying, your product is deemed non-essential. We are actually going to push you down in search results. We're not going to fulfill your orders. Um, and so that's where a lot of the science from the pushing of the date comes from, is that Amazon was analyzing inventory management and fulfillment and what they needed to do before the holiday season. The thing about Amazon Prime Day is that it was very reflective of COVID But, you know, we work internationally, the US, Canada, Europe, and it was different from geography standpoint. So to give you an idea, in North America, the top 10 products were essentially all home essentials like Scotty paper towels. You went to Europe, 8 out of the 10 products were booze. The last 2 top-selling products were Jason of them.

Hey, care.

Wow. Yeah.

And then does that mean people in the UK don't care about, you know, keeping their house clean? Like, it's crazy.

Not as much, right?

Just drinking more.

Yeah. And so this, you know, this also speaks to another dynamic that I don't know how deep we'll get into on this webinar can be another one. But the idea of global approach and localization.

Yeah.

And that is a big factor to being successful in e-com.

So talk to me about that. So basically what you're saying is some companies have a monolithic approach. They think all consumers are the same and maybe they'll localize the language or even the creative. But what you're saying from a consumer standpoint is, and I remember this, so it feels like worlds ago when I did the speaking tour in the Nordics., right? And Amazon, and it was Australia 2 years ago, Amazon wasn't in Australia yet, right? And when I was in the Nordics a couple of years ago, it wasn't there either. And what I heard from a client there locally who told me, he said that the people here in Norway, they don't want Amazon here because at 4 o'clock when they leave, they want to just shut it down. They don't need to get things the next day. So Prime is not as important culturally. Norway as it is in the US where we all want things not only tomorrow, we want it now, same day. So are those the sort of kind of cultural nuances you're talking about?

Yeah, there's a lot of like, there's a ton of cultural nuances. You just look at Europe and in Poland, for example, you can't deliver booze after 9:00 PM.

Right.

You can deliver booze around the clock. So there's a lot of things to manage. What I would say is the best thing to do is to try to group based on efficiencies. So US and Canada operates really similar. There's, you know, some differences in terms of retailers, but the digital platforms and the software to drive customer acquisition and manage your e-commerce presence is similar. So if it was me, I would be creating a North America e-com team. Right. In Europe, you can break it down by region. Again, look for similarities. The good news is the major tech platforms are the same. Like you're still gonna drive an enormous amount of customer acquisition via Facebook dollars. Yeah, but the nuances country by country really shift.

Wow, really interesting. So we saw Amazon obviously 13th and 14th, and of course Apple comes in on the 13th as well and said, you know what, we're going to launch a new iPhone. So all of a sudden you're at this year, the calendar instantly became different because Apple doesn't usually announce new iPhone in October. They do it earlier in the year, sometimes September, and they also do it in March. And then you have Prime Day. Now all of a sudden you have consumers at home record savings, pent-up demand, didn't spend money on their trip to Disney in December and boom. So it's— so did the holiday season officially start with Prime Day? Is that what we're seeing? Is it smoothing out? Talk to us about how that's worked.

Yeah. So holiday season started leading into Amazon Prime Day. So it's like October 10th. Yeah. And then we saw it continue super, super strong until November 21st. Okay, we saw some of our strongest media traffic days happen around November 12th to the 21st.

So that's before Thanksgiving. So you're saying that the traffic dropped off and it was lower for Black Friday and Cyber Monday for e-commerce paid traffic?

Because the traffic— yeah, the, um, sort of the philosophy behind this is, you know, for a long time we've trained advertisers to go really heavy on Black Friday, Cyber Monday. Everyone's competing for the same CPMs. It really doesn't make any makes sense. Meanwhile, it's become a cultural moment. You don't actually need to convince consumers to shop on Black Friday or Cyber Monday. You let promotions drive the traffic.

Yeah.

The fact that we saw such strong traffic from October 10th to November 21st just shows how the holiday season started a lot earlier.

Crazy. And just talk about tectonic shift. I mean, you have companies that have 50%, 60%, 70% of their revenue happen over the holiday season, and their organizational design is based upon them launching on what was Black Friday. And if you think about it, it makes sense, right? Black Friday, people travel for Thanksgiving, they go shopping with their family. Cyber Monday, first day back in the office. After that, everyone's going online. Well, none of those— but neither of those things happened this year. No one went to the office on Monday. So it stands to reason that people are dictating their shopping trends, not kind of the retail industrial complex, if you 100%.

And I wanted to comment one thing you said about Apple. The brands that are winning this year, really winning, are the ones that haven't stopped. And what I mean by that is in the beginning of the pandemic, a bunch of brands got scared. They're like, let's wait and see. Those are the brands that keep falling further and further back.

Like Matt and Suzy, right? We didn't stop. When this hit, we stepped on the gas and our competitors, they didn't know what was happening. They tried to, you know, risk mitigation, etc. And we went for it. And that's why we've continued to build. It's the same thing in any business that we're talking about. So let's talk about mobile shopping because I've seen studies sort of across the board that, and I did a keynote yesterday for the Radio Industry Association and about podcasts. And what we found with that is that when the pandemic first hit and people stopped commuting, podcasts saw a major dip because it was part of the consumer habit. They listen to podcasts on the subways, etc. And now people are establishing new habits., right? And in a world where less people might be going to offices, the day parts are going to change, you know, the rush hour, etc. So you look at mobile shopping and you see the growth of desktop computers up 134%. Companies like Dell, which some people thought were dead, are now having a renaissance with sales of laptops. Kids need it for school, people need to work, etc. Are we seeing a shift during the pandemic to more desktop shopping, or is mobile growing during this?

Um, it's both. Consumers spend an enormous amount of time at home on their phone and on desktop, but yet desktop has grown in ways that no one suspected. Um, because people are home and, you know, they're shopping while they're Zooming at work.

Of course. And, and their comp— have companies sort of overcorrected for mobile where their experience on desktop isn't as good? And what are the considerations for companies in a mobile shopping environment versus a desktop shopping Yeah, I mean, it's, it's what the industry calls the digital shelf.

Okay. You know, there's more real estate to play with in a desktop environment. So a lot of companies have been trying to, you know, add more content to their product detail pages, especially video-based content. If you have a more premium product, like one of our clients is Bose, you know, they do phenomenally well when video is on their Amazon product detail page for obvious reasons. Right now we also, you know, sell things like goldfish, right?

We're going with all the categories, right?

You might not necessarily—

snacks, not actual live fish, correct?

Correct. Not yet, right? Um, but yeah, but with our Petco client, I can tell you that exotic pet sales are way up.

Oh really? Wow. I'm in the market for an iguana, so maybe I'll check that out. Um, make me feel nice and warm since I'm out in Florida. Um, So it's interesting when you talk about the digital shelf because we, like you guys, work with all these CPGs. And if I'm selling candy bar or gum, obviously you have that sort of impulse purchase at the checkout aisle in a physical retailer. And now you find, I mean, California recently mandated that companies can't have certain candy bars and stuff in checkout aisles, even at stores. But even putting that aside, in a traditional retail environment, like I was at Michaels the other day, and their merchandising basically pushes every candy bar under the sun right before checkout. And I know that's a big volume driver for them and for the, for the, for the CPG manufacturer. So how are they, how do you get that stick of gum or candy bar thrown into the cart in a digital environment? And how are they responding to that?

Yeah, so there's a lot to say about impulse buys. So we'll talk about the food category right now. So gum and mint sales are way down during the pandemic. Because people aren't socializing. So we saw that with our clients on literally March 12th, right? It started to plummet. So put that aside. The good news is for the pandemic is that America is turning to comfort food and especially nostalgic brands. Hershey, a client, they're killing it.

Yeah. Pepsi, Pepsi's Frito-Lay, those companies, they've killed it. Yeah.

But the problem, the challenge is that the unit economics around impulse buys in e-com don't make a lot of sense. That's why you all of a sudden see people pushing like 36-pack.

You mean because, because you have low volume, so the margins don't make sense? Well, because shipping—

you can't ship just one.

Yeah, right.

So there's a, there's a few things that are going on here. One is when you're in an impulse category Hopefully the leverage that you can have is at a portfolio lens. So for example, like if you're Hebrew National Hot Dogs, you're not just gonna buy the hot dog, you're also gonna buy the buns and hopefully ketchup.

Yep.

So what you'll see right now is there's a lot of portfolio e-com plays and a lot of—

That'll probably drive consolidation too, won't it? Yeah.

And product bundling and the way that people are buying media is really around like this idea of demand planning and meal planning. And so that's one angle. The second thing is there's a whole new crop of e-com players that are in the last mile delivery space like Instacart, DoorDash, Postmates, Gopuff. And so a lot of people who are in impulse categories are investing in more of these new pure play systems that focus on last mile delivery.

Right. Well, it's interesting. It's like the hardware and the software, the analogy of Apple using its own software and hardware, like Instacart should probably just come up with its own private label brand of gum and they could just be like, do you wanna add sticks of gum. I mean, whoever owns the last mile is going to win, right? Apple has all the control over the App Store because they have their phone in people's hands. So I think that's going to be a push. Delivery is going to be a push. If I were a CPG manufacturer, I'd buy Instacart, right? Yeah. They're going to do what's most convenient. I never thought of that before, but that's an interesting play.

I totally agree. And if everyone wants a fun read during the holidays, there's a book called The Secret Life of Groceries. I actually just had the author on.

That would be a fun read for you and me, Rachel, but that's cool.

That book is great. Whoever shopped at Trader Joe's, like they get into the story of Trader Joe's and there's just like amazing business lessons in this book. But anyway, during the heights of recessions and—

How about this, Rachel? What we're gonna do is anyone who's listening, if you tweet anything about today's webinar and put the hashtag #SOC16, which is our webinar today. The first 25 people that do that, we're going to be sending a copy of that book to you.

I love it. The author is a good guy. Anyway, I won't give away the whole story, but there's a lot in there, especially about private label and what happens during times of economic recession.

Right. I mean, it makes sense. So I think the whole space is obviously going to be changing in terms of the distribution is going to drive the business. And I think a lot of these companies need to completely rethink that. The other thing I was going to say is that we work with all the CPG companies. And they're actually reorganizing internally. So instead of them actually being organized by product category, they're actually organizing around the occasions and sort of consumer insights. And that is all based about reaching a consumer about an occasion on how they consume the food or consume the product. And it not always means that— it means that you may have companies that, you know, that have different categories kind of reorganized if those same categories are purchased around the same occasion, if that makes sense. Yeah, these companies really have to. And the other thing just about D2C and consumer packaged goods is big consumer packaged goods companies up until recently really didn't have to know who their consumer was. They just had to be able to go to Bentonville, sell a little bit more shelf space at Walmart, and they were going to have a great year. It didn't matter who their consumer was. They just need to know what the merchant at Walmart wanted to buy. Right now, all of a sudden, if they're targeting, if they're reorganizing, they need to understand who their buyer is in a way that shockingly a lot of these companies never did. They have first-party data. So that's a completely new business model. And I think grocery, CPG, food and beverage, that's where it's hitting the most, I believe, right? I mean, this year. Yeah.

And you've seen a lot of initiatives come to market. Like Pepsi had Snack.com this year. It's not about selling snacks, it's about collecting first-party data.

Right. That's interesting. I, I think that's— and is that so they can kind of model, create audiences, targeting? Like, why is first-party data important to CPJ?

Yeah, I mean, first thing is you understand who your customers are. Then you get to figure out what products you should be bringing to market or how do you better improve your product. Then you get to figure out everything else that they buy, upsell the rest of your catalog.

Well, and like modeling and all the sophistication, not to mention all the changes that Apple's implementing and with the third-party cookies and Google, you can't retarget and cookie consumers anymore. And because of that, you need first-party data. So it's become so valuable.

Yeah, I mean, I believe that you will be able to do those things. It's just going to cost you a whole lot more. You're going to go through many more gates.

That's right. That's right. So we're going to go through some of this stuff and see if anything you think pops out. But 70% of people shop by themselves rather than with friends or family for Black Friday, Cyber Monday. So the group shopping is done. I mean, that's, so obviously it becomes a less social experience and it's, it's really a dichotomy because heading out of this, I think that shopping is going to have to be the opposite where it's going to have to be a social experience. Like if I am a retailer and I want to survive coming out of this, you have to provide something above and beyond the product or service you sell. If you expect people to walk in your doors, it's just that it's that simple. So, you know, Warby Parker, you can try it on, you can talk to somebody, they're going to be fine. Warby Parker will always have a need for people to go to a retail establishment. Other companies, maybe not. And I think, you know, I don't know if you have anything else to add there, but that's what popped in my mind for this.

Yeah, I think it's all going to be about premium experiences and convenience, and that retailers are going to have to deliver on that. And I, you know, what's going to be interesting is the role of specialty retail. You know, I know we're going to talk about this, maybe you want to jump ahead, but you're starting to see very interesting strategic partnerships. So you have Sephora and Kohl's, Right. And you have, uh, Ulta and Target. And so all of a sudden these retailers are coming together to play nice with each other so the consumer has to make fewer trips. Now, in a post—

talk to me about that because, yeah, we have seen that. Sephora, Kohl's got announced. You have Ulta and Target. I found it interesting that these companies were announcing it now where, like, in Los Angeles you can't even dine outside. So I mean, they're obviously looking towards the future and painting a picture of the future of retail. So the timing to me was interesting that they didn't at least wait till next year, but it popped the stock prices in both companies.

I mean, I was just gonna say, that's why they did it, right? But listen, we see basket-level data at Micmac, and I can tell you that when someone's buying Legos, they're also buying bananas. So this is a real consumer behavior. Now, something like this, this type of partnership was happening way before the pandemic. These things take a long time to pull off. And so what I believe these moves are really about was a reaction to the marketplace strategy. So if you look at what Facebook did, if you look at what eBay did, if you look at what Amazon is constantly doing, Walmart, the name of the game is how do you get more merchandise into your ecosystem to keep the customer there? And so retailers like Target and Ulta—

convenience, time saving, blah, blah, blah. It's basically Right.

They're creating moves to create a moat from Amazon and Walmart. And that's what this is really about.

But that makes it harder when you talk about some of these big CPGs. And I can't mention any of them because so many of them are clients. But big CPGs, right? They're probably going to struggle going direct to consumer because they don't participate in every category. So am I going to want to have a login and go to one company to buy toothpaste and another company to get laundry detergent? Probably not. So yeah, I'm surprised there's not like a consortium or like a Costco would come in, launch their own version of Prime, you know, bring in the CPGs to go up against Amazon. Because to me, that's the only way, because Prime is such obviously a moat as well. Yeah, I think the only way the CPGs really get around this, because at the same time you have Amazon coming out with private label brands, you know, you want to buy our Amazon private label batteries for $2 cheaper, or do you want to buy Duracell? Like, And people are trusting Amazon and it's like, and they're using Alexa to push it. And we've talked about this for a while. So that's where the pressure really comes in is on private label from the last mile retail companies.

100%. But the reality is these CPG brands are not going to turn their back on Amazon. It's a drug, right?

Right.

And some of them are seeing 70% of their revenue come from there.

Yeah. It's interesting because Nike did pull its products from Amazon.

Right?

They're a lifestyle brand. So they're a high involvement category.

Right.

Made that decision and it's worked really well. Lululemon will not be on Amazon anytime soon. Right. In fact, they're going the other way. They bought Mirror. They're trying to create an ecosystem. They can actually do that. So I guess it's about the high involvement lifestyle brands. And that's why, that's why you see companies like Under Armour really struggling. They didn't do enough to create themselves as a lifestyle brand. Right. They focused a lot. And because of that, right now it's like, where do they really fit? They're going to still have to be on Amazon. And commoditize their brand. Your brand needs a certain gravitas to be able to be pulled off.

Yeah, I mean, everything that you're saying is about brand, brand, brand. I think one of the craziest acquisitions this year was Supreme, $2 billion. They have 20 stores, 20 stores. So that's about brand, and brand is what your moat is in a consumer product category.

It's also about scale, Rachel, just on that one, on the Supreme acquisition. And I don't know if you saw on Twitter, you see a lot of the the street kids being like, oh, they sold out, blah, blah, blah. But people don't realize that when VF Corp bought North Face, they were doing $500 million in revenue and now doing $4 billion in revenue. Because another big part of retail, and we were talking about this yesterday, is just scale and distribution and inventory management and these things where if you get into a broader kind of institutional design, you can scale just because of the pipes. So talk about inventory management and things like that because I know that's something that you're seeing a lot of in terms of issues.

Yeah, I mean, that's a huge part of the e-com game is marrying consumer demand to where inventory is available and then being able to do that at a local level. What we've seen at Micmac throughout this pandemic is that when products are out of stock, the consumer puts a competitor in the cart and the behavior is typically replenishment. So once the consumer puts a competitor in the cart, you begin to lose market share.

And so it's a different type of loyalty, isn't it? Because it's not about brand love, it's just about habit, right? Because I think it's much more functional, utilitarian than it is about having love for the brand. It's—

or not. And this goes back to what category you're playing in. Obviously things are different in apparel and consumer electronics than it is in CPD and personal care. But that is a major, major issue that people struggle with. But when we go back to infrastructure and everything that we were talking about, global approach, localization, scale, the whole new D2C model of looking like a P&G, the unit economics of e-com are really expensive. And so you need to—

I mean, you're so right.

And I'm just—

my mind is thinking about like, you know, availability matters so much. Just yesterday, first of all, so my monitor broke. My microphone hit my monitor and it cracked, and I needed a new monitor for our webinar today, right? Um, and I like the wide one where I can do et cetera, spreadsheets, et cetera. It was cheaper first and foremost, and I tweeted about this, for me to buy a new monitor on Amazon and have it shipped via Prime than it was for my team to package up an old monitor and ship it. Which is, so I'm like, okay, now I know I'm getting a new one. I knew I needed it tomorrow. The monitor that broke was a Samsung monitor, but I couldn't get that until Friday. So I bought an LG one because it came the next day, and this is my monitor. And now next time I probably get, so there you go. It happened to me yesterday, even with a higher involvement category, like consumer electronics.

Yes, the consumer, what we've seen throughout the entire pandemic this year is that the number one thing that consumers are looking for is, is the product in stock?

Yeah.

After that, it's about price and how fast can you get it to me.

Crazy, crazy. I never thought about that, but when you see it come to life in your own mind, so it's crazy. So let's talk about, I'm flying around here, talk about Amazon.

Okay.

You know, I walk into my building, I live in a doorman building in Brooklyn. Every day I walk in, 90% of the boxes are from Amazon. Right. So when you look at the future of Amazon, and obviously companies like Shopify are doing incredibly well right now, which power the mid-market small business, where do you see Amazon headed? And what do you think their kryptonite is, so to speak, for new companies out in the space? We've mentioned some of them, but I'm really curious to hear your thoughts.

Yeah, I mean, Amazon's winning in all— obviously Amazon's winning overall. But where Amazon has opportunity first and foremost is with grocery.

So they bought— we all know that.

So yeah, but Target acquiring Shipt, that Austin-based company, 3 years ago was the best decision that they ever made.

Why is that?

Because consumers are turning to Target to buy their groceries more than they are turning to Amazon.

Wow.

Yes. So we are actually seeing Target win right now when it comes to grocery. And the big change in the consumer behavior is that consumers are now not just going to Target to buy their groceries, they're then putting all these other products into their cart. And because again, the consumer is looking to make fewer trips. So you're going to see—

Go on, sorry.

You're going to see Amazon make a huge push into grocery. You're going to see Amazon continue to buy up liquor store branches. So this is a whole other topic. But in order to sell booze online, you have to have a liquor license. So what all of these retailers are doing right now is they're going to places like Miami and they're literally buying up mom-and-pop liquor stores. So you're going to see Amazon make more moves like that. A lot of industry analysts believe that one of the reasons why Amazon acquired Whole Foods was to have their liquor license. So because they sell, you know, beer at some of their locations.

Is that a growth area for Amazon? Because I know Drizzly and other companies in the alcohol space has done really well.

So you'll see Amazon continue making roads there. I'd say where Amazon has struggled historically, and I do believe we'll continue to see positive momentum because it's just growth opportunity for them, is in beauty and luxury.

Yeah.

And so I— that'll be another frontier. And then my—

it's been a luxury this year, didn't they? Amazon recently.

Yeah, a ton. I mean, they have a lot of fraud issues. And then on top of that, luxury brands believe that Amazon is brand erosive. But I know that Bezos will pull it off. In 2 years, you and I will be doing a webinar about Amazon's luxury business.

I mean, some would say that the luxury experience is part and parcel with luxury brands where you go into a Cartier or a Louis Vuitton store and you get sort of a feeling that you wouldn't get, you know, whether it's the packaging of the Tiffany box or whatever it may be. So that's the question. Those who say that luxury will not be won by Amazon, that's the rationale.

Mm-hmm.

Mm-hmm.

You know, the interesting thing about luxury, Oscar de la Renta and that whole environment, like, they're still seeing some incredible sales days. So it's, you know, we talked about what's happening in the economy. One of the things that's happening in the economy is that the 1% keeps getting richer. So, ah.

The K-shaped recovery they talk about.

Mm-hmm.

Wow. Okay. This has been, I mean, obviously Rachel, we can go on until next holiday season talking, but I want to obviously be cognizant of time and open up time for questions. So I know that it seems like Abel is just fighting off questions and comments left and right. So let's welcome in Abel from our marketing team and see what questions we have from people. And I know, Abel, you want to share the results of our Ask America. So, and Rachel, thank you for doing this. It was even better than I thought it would be. And obviously, we both have seen the market from two different angles, and it's just fascinating to see it come together. Here is Abel. Abel.

Hey, how's it going? Good. The question that you all wanted to know today was which brand's marketing stuck out to you during Black Friday, Cyber Monday? We ran this question at the very beginning of the webinar, and it's interesting to kind of see the results. So the people that really won during Black Friday are very much the people that you also see here. So you see Amazon, you see Target, you see Walmart, you see Kohl's, and then you see a lot of those retailer brands, including Nike, Macy's, Adidas, and then some of the tech brands as well, including Samsung, Sony, and Apple here. So very much in line with kind of what you guys were talking about throughout of the webinar. Wow.

Okay. That's great. It's good to be reinforcing. So yeah. Do you want to maybe go through some of the questions and we'll see what we can answer here?

Definitely. So kind of the first question for you all here is, it's really interesting to see that there seems to be far fewer deals on smartphones this season. Could this be related to the release of the new iPhone that you guys talked about being way later this year and a perception that wireless consumers aren't being driven by discounts right now? And much more in terms of product functionality.

Yeah, I mean, if you're in a position to drive sales without promotions, do not issue a promotion. That is a downhill slope. So I think that these are high consideration categories. They're need states, not want states. And folks like Samsung aren't having trouble pushing new technology.

Interesting.

Definitely. And I'm just going to do a little plug right here. But actually, if you guys enjoyed this webinar here, Next week, we're doing another webinar with our Chief Client Officer Katie and one of the insights leads over at Kraft Heinz, and they're going to be talking about how they're really planning their market research into 2021. So just another really interesting conversation. So hopefully you can join us for that as well. But my next question for you guys here is that, Rachel, you mentioned that two things that are important when the world is safe again is premium experiences and convenience. But this person want to counter that and saying these are two things that are actually pretty important and prioritized before the pandemic as well. So I don't know what your thoughts are on, on this person's kind of rebuttal to that.

I agree that that's what should be prioritized. I would say most retailers fail at it. So they're really going to have to deliver on it because the consumer is not just going to casually go window shopping. They're going to crave an experience.

Definitely. Matt, here's a question for you. So Have you seen any shifts into how people are approaching ads and marketing/advertising this holiday season as compared to some more traditional seasons in the past?

I think it's more of a barbell-based approach. I think you have some companies that are doing offers despite the feedback Rachel gave. And I think that they're doing so in a very performance marketing-based way, whether it's retargeting, very finite-based targeting. You talk about something with a friend and all of a sudden you start seeing the ad. Ads. It's all happened to us, right? And then you have some brands, and I think they are the winning brands that are just doing branding and they're building their brand as a lifestyle brand and reinforcing what they're doing. And I think companies are either saying we need to drive bottom line, we're going to be very performance and offer driven. And you have other brands that are really focused on content and engagement and letting consumers understand what the brand stands for. And I think less and less brands are doing this in this world where everything's measured, but I think brand is more important than ever before. And that's why a company like Nike can afford to come off Amazon.

Definitely. Here, Rachel, a question for you. But do you feel like the pandemic lockdowns has contributed to potentially shopper fatigue in any categories? Like, we're all shopping online all the time. I think you may have mentioned that people are shopping during Zoom meetings now. So has purchasing online maybe lost some of the thrill that it traditionally might have had? Huh.

I mean, we're not seeing decline of sales. We continue to see increases. So nothing is indicating to us that it's slowing down. You know, I'll pull from the alcohol category. The first Sunday, so it was like March 15th, there were more alcohol sales on that Sunday than Super Bowl Sunday. Fast forward, that day was beat on the Wednesday before Thanksgiving. That was, there was more e-com alcohol sales. That was the highest sale day. And then that got trumped by Cyber Monday. So I just use alcohol as an analogy. Like here's a category where there's so much excitement to buy it online because it was never bought online before. And we're continuing to see that growth.

Definitely. Um, next question, uh, here maybe for both you, Matt, and Rachel, but Amazon, uh, is largely trying to supplant some of the CPG companies by launching their own private label, uh, food and beverage products, etc., of some very common household products, uh, very similar to what we've seen in kind of supermarket private label lines, but obviously they have much more of the distribution than the supermarkets ever had. So, um, you know, what are your, your thoughts there in terms of how these CPG companies really can combat that Amazon wave.

Rachel, you wanna take this?

Yeah, I mean, private label is really a story about brand. And so you have to invest in your brand. You have to continue to make it a namesake brand to drive the consumer to want to choose you. Because if the decision is going to be on cost, no, you're never going to be able to win that game.

Or the name, right?

Yeah, yeah, they'll always underprice you. One of my favorite e-com stories of this year was in Target's Q3 quarterly earnings. They announced that Good Gather, which is their private label grocery line, did $1 billion in revenue in one year. There is no darling direct-to-consumer brand that's ever done $1 billion in revenue in a single year. And that goes to show the power of private label e-com and retailers that leverage data in the right ways.

And they're getting better at it. I mean, what the e-com retailers have is they have the luxury of all this consumer data. They're seeing what moves, they're seeing what fonts, what colors, what prices, what descriptions, you name it, are moving. And they're basically just replicating it and they're getting more sophisticated. So, you know, there are some big brands that consumers trust that they'll always buy, whether it's Tide or Coca-Cola or what have you, just because it's sort of, you know, would they buy a random soda brand from Amazon? Probably not, because I think that Coca-Cola is such a strong brand. But that's why, because it's such a strong brand. So it is all about brand. That's why companies need to continue to invest in it.

It's interesting. Mike M here had actually a question for you all. But if Amazon controls the display algorithm that can hypothetically beat out CPG companies without having a strong brand for their private label, like how does that kind of play into the question? The equation here?

So this is, and then I unfortunately have to go to a meeting. This is the power of Zoom. But this is the same story. Bottom of the funnel, top of the funnel. We all have access to the same tools. If all you do is focus on bottom of the funnel, then you're going to only win on price. If you want to be able to beat someone on price, you have to invest in brand. Yep.

Awesome.

Rachel, thank you. We'll be in touch soon. Pleasure having you, and happy holidays to you and the Micmac team.

Thank you so much for having me.

Absolutely. And Abel, to you and the marketing team, thank you so much. This is Matt Britton from the Suzy team, and on behalf of us, happy holidays to all of you. Until next time, take care, everyone.