0:14

Welcome, everyone, to the AI in

0:16

Business podcast. I'm Matthew D'Amelio, senior

0:18

editor here at Emerge Technology Research.

0:20

Today's guest on the program is

0:22

Poonam Goyal, sector head and senior

0:24

e-commerce and athleisure analyst at Bloomberg

0:27

Intelligence. Athleisure is frequently a canary

0:29

in the coal mine for many

0:31

business challenges across supply chains and

0:33

online marketing. She joins us to

0:35

talk about the e-commerce space more

0:37

broadly through the lens of athleisure

0:39

and how AI capabilities are helping

0:41

to solve many of these challenges.

0:44

Without further ado, here's our conversation.

0:54

Poonam, thank you so much for being with us on the

0:56

show today. Thank you so much for having me.

0:59

Athleisure is an incredibly interesting

1:01

space, tells us a lot about

1:03

retail. We're going to get to

1:05

that in a moment. Maybe the

1:07

biggest headline, at least taking retail

1:09

holistically through the last few years,

1:11

is COVID at the time being,

1:13

for all intents and purposes, is

1:15

over and we're seeing consumer discretionary

1:17

spend trim from what we saw

1:19

in the onset of the pandemic.

1:21

There's evidence this is driven by

1:23

inflation and dwindling sales and ultimately

1:25

this is manifesting in a few

1:27

ways, including consumers, quote unquote, trading

1:30

down and paying for cheaper alternatives.

1:32

How should retailers compensate for this

1:34

trend and how can data tools

1:36

like personalization help offset losses? Yeah,

1:38

you're absolutely right. The Athleisure wave

1:41

that had peaked during the pandemic

1:43

isn't a fad. We're continuing to

1:45

see Athleisure sales rise and really

1:47

outpace the broader retail landscape. But

1:49

What I'd say is when it

1:51

comes to personalization, customization, retailers are

1:53

learning through data, through AI, through

1:55

generative AI, that they can really

1:57

use these findings to help them.

2:00

Make. A more personalized connection with the

2:02

consumer. When you think about shopping, aren't

2:04

you know? There's so many choices today

2:06

because today everyone has access to the

2:08

World Wide web. They have access to

2:10

social platforms. They are really in the

2:13

know about where and when and how

2:15

they can find a good that they're

2:17

interested and so to be able to

2:19

sit next to each unique visit or

2:21

whether it's door person lived web page

2:23

a personalized mobile page that kind of

2:26

caters to with the are interested in

2:28

you're going to drive better conversion conversion

2:30

today. In the digital space is

2:32

loaded with single digits only. So

2:34

a very, very small group of

2:37

people that browse online actually clicked

2:39

the track alpha and and finish.

2:41

Checking out less than ten percent, but that's

2:43

incredible. I really think that I thought that

2:45

would be, and this is my totally uninformed

2:47

opinion. Just you know, interviewing folks in the

2:49

space, but not not read, not near reading.

2:52

Nearly enough is that I, I thought it

2:54

might be somewhere near forty. I think that

2:56

says a lot. even just about online habits.

2:58

Saw that Told Resale is growing in a

3:00

big wake up. There are double digit gains

3:02

in the space that are outpacing the rest

3:05

of the industry, our resale brands using data

3:07

to take advantage of those trends. Yeah,

3:09

I think an item factor. We talked

3:11

about how we're out of the pandemic,

3:13

the yet there's a search for values

3:15

and when you think they'll do you

3:17

think resale because you're able to structured

3:19

always further and we still isn't a

3:21

new concept right? It's been around for

3:23

decades but we'll be seeing as a

3:25

younger generation. the millennials. The Jerseys really

3:27

embrace reseal because they're okay way the

3:29

wearing something out of someone elses closet

3:31

as long as it's in the conditions.

3:33

Companies like Rent the Runway which rent

3:35

of hero rather than having to buy

3:37

it and also sold see a feral.

3:39

used over even brand new is

3:42

is thriving really a new ways

3:44

and you read revolution and how

3:46

people wardrobe and will eat outfit

3:48

their own closets we have the

3:50

companies like brought up posh mark

3:52

e bay elites and allow a

3:54

lot around for the longest and

3:56

it's they've proven that the value

3:58

for a good already in the

4:00

world still have value and they don't need

4:03

to end up in the dumpsters, right? We

4:05

want to be more environmentally, more socially competent,

4:08

so we need to make sure that not

4:10

only are we helping ourselves by saving money,

4:12

but we're also recycling and reusing products. That's

4:14

still pretty in good condition that you

4:17

can reuse. Yeah, absolutely.

4:20

And I think it's really kind of built

4:22

into at least the dynamics of resale to

4:24

be a part of that. I

4:26

talk to folks at Colgate, Palmolive, and

4:28

they'll tell me, sustainability, this isn't just

4:30

grandstanding. It is at the bottom line

4:32

at the end of the day, especially

4:35

for being a health company, especially trying

4:37

to gear ourselves towards a younger generation

4:39

that's really conscious of this stuff. It's

4:42

just bottom line. We're not being sanctimonious

4:44

about it. It also appears

4:46

that Amazon is staying on top of

4:48

new digitally native gains and not going

4:51

anywhere anytime soon. What's significant about Amazon

4:53

returning to the high single digits and

4:55

gains here in Is

4:58

this a return to normal or representative of

5:00

what everybody likes to call post COVID that new

5:02

normal? Yeah, so Amazon is clearly

5:05

the e-giant, the web giant when you

5:07

think of online, especially in the US.

5:10

It commands more than 40% of

5:12

total digital sales in the US.

5:14

It is in every single business

5:16

that I can possibly think of,

5:19

food being the latest, biggest questions,

5:21

their acquired whole foods. I'd say

5:23

with Amazon generating more than $600

5:26

billion in GMV, which is the gross

5:28

merchandise value that they sell on their

5:30

platform between their own goods and goods

5:32

from third party sellers, they have

5:34

definitely stepped up in their efforts

5:37

to really target more customers. Today,

5:39

they have over 200 million

5:41

prime members worldwide, over 160 million in the US.

5:46

What we've seen is Amazon can still

5:48

continue to grow by double digits for

5:50

many years because they're still very under

5:52

penetrated in many of the categories they

5:54

compete in. And that's what

5:56

we really think is what we're going to see

5:58

when we move forward with Amazon, we did

6:01

see a big boost, a big jump

6:03

in sales through the pandemic, because people

6:05

couldn't go to stores. And the only place to

6:07

shop was online. The only place to get your

6:09

goods was really to get it online and then

6:11

be safe, right? So it gets delivered to your

6:13

door. But after the pandemic, there was an itch

6:16

by consumers to I want to go back

6:18

to stores, I want to go out and

6:20

see things and be in front of people.

6:22

And that's what really caused not just with

6:24

Amazon, but with many digital players

6:26

in the space and even digital arms of

6:29

existing brick and mortar retailers, their

6:31

digital sales slowed, the growth slowed.

6:33

But that was a natural slowdown, because

6:35

we kind of swung the pendulum way too

6:37

much in one direction during the pandemic. So

6:39

we were just returning back to normal. And

6:42

I think we're near that normal now, as

6:44

we said today, which is why we still

6:46

believe that Amazon can generate high single digit

6:49

sales gains in its online business or in

6:51

its GMB this year, and then return to

6:53

double digit gains in future years. Yes,

6:56

it makes a lot of sense. I

6:58

also have to wonder how much Amazon

7:00

was able to train on specialized data

7:03

from the pandemic of everyone being online. I

7:05

know they, you know, they're scraping, you know,

7:07

consumer behavior, you know, across their online platforms

7:09

across the board. But that seems like that's,

7:11

it might be a little bit of a

7:14

unique case, I'm sure behavior just isn't the

7:16

same in both circumstances, but you just have

7:18

this deluge of people online. And now you

7:20

have this greater pool of data

7:23

and insight to pull from in order

7:25

to really get into people's heads and

7:27

how they think about the products they

7:29

buy. Your reporting also takes

7:31

a look at the impact that

7:33

generative AI I almost want to say

7:35

that this should be a segment on

7:38

the show, we can't, we almost can't

7:40

get through an episode talking about a

7:42

different sector without touching even slightly on

7:44

on how generative AI is going to

7:47

impact the space. But you take a

7:49

look in your writing at the impact

7:51

generative AI will have on retail search

7:53

and driving conversion. You mentioned the endless

7:55

aisle as a problem in retail that

7:58

generative AI can help self. I

8:00

know it sounds fairly self-explanatory on the surface. Tell

8:02

us a little bit about the mechanics of this

8:04

problem and how what we're seeing in generative AI

8:07

and how that can help make

8:09

selections easier for consumers. Sure, and

8:11

I'd 100% agree with you that

8:14

we can do a whole episode on just generative AI.

8:17

But in a nutshell, generative

8:19

AI is being adapted at

8:22

a very quick pace because it's

8:24

driving immediate ROI. And

8:26

what generative AI is just

8:28

basically taking in information and

8:30

then giving back to the

8:32

customer, to the retailer, exactly

8:35

what the customer wants. So

8:37

for example, you know, today

8:39

the generative AI market is

8:42

only about 40 billion. Only

8:44

40 billion in investments have been made

8:46

in 2022 for the generative AI market.

8:48

Our BI study, the Bloomberg Intelligence

8:51

estimates, now see that market going

8:53

to $1.3 trillion. So

8:57

40 billion in 2022 going to $1.3 trillion in 2023. Just

9:03

to think about that investment that's like going

9:05

to go through in just one year alone.

9:08

So we are seeing companies jump on the

9:10

bandwagon. Amazon is no different. You know, Amazon

9:12

has probably the best technology among retailers that

9:14

I cover or that I've seen in the

9:17

US. So in my mind, there is no

9:19

doubt that they already have many of these

9:21

tools in place. In fact, you know, when

9:24

you go to Amazon, when you talk about

9:26

the endless aisle, right? I think one of

9:28

the biggest pain points of shopping online is

9:30

when you're searching for that black dress. And

9:33

imagine being surfaced a thousand black

9:35

dresses. And you know, the whole thing about

9:37

clicking next, next, next from the first page

9:39

to the fifth page. And then you start

9:42

to get tired, right? Okay, I can't click

9:44

anymore. You go to the 20th page. So

9:46

generative AI is going to streamline that process

9:48

where you're going to get the black dress

9:51

that you were interested in. But not only

9:53

can it improve search, It

9:55

could improve every single piece of the

9:57

organization. Whether It's customer facing, whether it's...

10:00

Back off it's weather can supply chains?

10:02

you really can streamline your operations and

10:04

leading. This is going to drive margins

10:06

back up in retail which has been

10:08

challenged. Great Seventy Three Wages are going

10:11

hiking has a growing up. Transportation costs

10:13

are going up, everything is going up.

10:15

so how do you can have pulled

10:17

out? That and within technology is one

10:19

way to do that. For. Sure, or

10:22

the entertainment industry is one that doesn't get

10:24

a lot of spotlight on the show. but

10:26

I almost wonder how much the endless I'll

10:28

problem is is really been a at least

10:31

in addressing it. You. Can look at the

10:33

recent history of Netflix because they've had that

10:35

problem for a little while of. you know

10:37

you're giving customers endless choices and then they

10:39

kind of sit there. I'm totally guilty of

10:41

this. I'm ah, my. my wife's yells at

10:43

me all the time for this of your

10:46

spending more time scrolling through, deciding what to

10:48

watch than you are watching it. and a

10:50

that seems like kind of an endless i'll

10:52

problem you know, downstream from it. at least

10:54

the entertainment side of. Think a lot of

10:56

folks skyn and really relate to. you know

10:58

whether or not they've spent that much time

11:01

necessarily on their retail website. You know, deciding

11:03

on that black dress he I might

11:05

I might have that much pasa especially

11:07

when it comes to still a Amazon's

11:09

books election as as much as that

11:11

goes back into history at you, Your

11:13

reporting also takes a look at the

11:15

rise of social commerce, Live streaming and

11:18

image based shopping's tells a little bit

11:20

about what this means for retail leaders

11:22

as a trend. National. Socialist

11:24

for shopping is probably the biggest

11:26

driver to increase conversion. rather that's

11:28

image based shopping. So in the

11:30

past in a you went to

11:32

amazon.com and you searched for that

11:35

black dress you clicked on it

11:37

sound that you purchase it. Since.

11:39

The rise of Save the

11:41

Earth, Instagram, Twitter, You Tube

11:44

People are spending more and

11:46

more time on the social

11:48

platforms and retailers are there.

11:51

But. Now they're They're in a

11:53

way to convert shoppers. They're presenting

11:55

them through influencers. to their own

11:57

france and pain and even through

12:00

video shopping. They're basically trying to

12:02

curate assortments. You know, going back

12:04

to that endless aisle, right? There's

12:06

so much inventory in retail. But

12:08

once I can understand what you

12:10

are interested in, I can surface

12:13

up the right influencer, the right

12:15

black dress, the right brand, the

12:17

right size, the right outfit

12:19

for the right occasion. Because when I know

12:21

what you want, then I can present you

12:23

with a better choice, but I can present

12:25

it to you where you are. So if

12:27

you're on Facebook, you'll see a Facebook reel,

12:29

you'll see an image. But now those

12:31

images aren't just something that you'll watch

12:34

and then go search for it somewhere

12:36

else. Those images are directly transactional. You

12:38

can click on it, you can check

12:40

out instantaneously. The process has become seamless.

12:43

It's taken friction out of shopping. It's

12:45

reduced the pain points. And I think

12:47

that's really key. They're there where the

12:49

consumer is, and they're making it easy.

12:52

They're making it seamless. Right.

12:54

And the interesting thing I

12:56

always find when taking things from a

12:58

data perspective and leaving how it looks

13:01

like to us from desktops and going

13:03

through these digital retail

13:05

experiences is at that point, in

13:07

my mind, it becomes difficult to

13:09

differentiate personalization from voice of the

13:12

customer in terms of social commerce.

13:14

And if there's a more definite

13:17

frontier here or border here between the two, feel

13:20

free to fill me in. But is

13:22

there a voice of the customer element in terms

13:24

of that data collection that retailers

13:26

should be thinking of in order

13:28

to better take advantage of social

13:30

commerce? Or does this more fall

13:33

under personalization and data scraping of

13:35

that social output from individual

13:37

accounts in order to curate

13:40

a tailored e-commerce retail experience

13:42

online? Yeah, I'd say it's a combination

13:44

of both. But really, we get

13:46

a lot of reviews, right? Think about when you

13:48

shop on amazon.com. When I see five different items,

13:50

what's the first thing I do if it's not

13:53

branded? I look at the reviews, right? How many

13:55

reviews are there? How many people have purchased it?

13:57

And then that's how I make my purchase decisions.

14:00

The reviews are a very important

14:02

part of how and when consumers

14:04

choose to transact with well-branded more retailers.

14:06

But reviews aren't just for

14:08

the customer to make their purchase decisions.

14:11

There is a feedback loop here. For example,

14:13

I'll go back to Rent the Runway. Rent

14:16

the Runway is a platform where you can

14:18

rent your apparel rather than purchase it. You

14:20

can constantly feel good about the way you

14:22

outfit yourself and you don't have to repeat

14:24

your items as much as you would. In

14:26

a world of social media, you're uploading your

14:29

pics from every event you go to and

14:31

every social gathering you're at. Many

14:33

people don't want to be seen wearing that

14:35

same black dress again, right? So it's a

14:37

great way to get new product in an

14:39

affordable manner. But when you do that, when

14:41

Rent the Runway sends you that black dress

14:43

and you provide feedback saying that it was

14:46

too small on the waistline or it was

14:48

too long or the zipper fell off, it

14:50

was not good quality, what they do is

14:52

they take that feedback right back to the

14:54

brand. And this is something that not

14:57

many other retailers can get because

14:59

once the wardrobe is in your closet,

15:01

there's no feedback half the time. You don't know

15:03

how long it wore for you. You don't know

15:05

how many washes it had. But when they recycled

15:07

that black dress 20 times to 20 different customers,

15:10

they know how well it washed. They know if

15:12

it faded or not. They know if something fell

15:14

off of it or not. They know if it's

15:16

tight, if it's loose, etc. And

15:18

they pass that feedback back to the brand to

15:20

make the product that they make next even better.

15:23

That's a lot we can do with reviews.

15:25

And I think it comes back to data.

15:28

I think the next decade is all about

15:30

taking all the data that we have, whether

15:32

it's through reviews, whether it's through PLF, whether

15:34

it's through social influencers, wherever it may

15:36

be. But it's about taking that data and

15:39

really making the product better, the

15:41

experience better, and the back office

15:43

operations better. Very, very interesting stuff.

15:45

I want to dive right into one part

15:47

of your answer that you just gave, especially

15:49

in light of recent interviews that we've had

15:51

in the retail space that I find illuminating

15:53

on this front. So is it that retail

15:56

or resale, the resale side

15:58

is... basically

16:00

sharing intelligence with the bigger

16:03

end retailers, the front end

16:05

retailers for these products in

16:07

order to kind of rise all the

16:09

boats. If so, that's something

16:11

I know that is really unique to the

16:14

retail space of as fierce

16:16

competition as it is, especially when it comes to

16:18

data, there's this sense of, oh, we need to

16:21

be able to share all of this intelligence

16:23

for everybody to make sales. It's

16:27

almost a communal, I don't want to use

16:29

the yes word. It's almost a communal

16:31

feeling. I'll call it that. Yeah,

16:33

I'd say yes, but not every

16:36

retail company can provide the feedback

16:38

loop because you can all really

16:40

truly provide the feedback loop if

16:43

you are being able to take

16:45

the product that you have and

16:47

have it in multiple consumers' hands,

16:49

right? So if I'm buying a

16:51

product on eBay, I bought that

16:53

product and the only information that

16:55

I provide in terms of feedback

16:57

loop is my feedback. So if

16:59

hundreds of people have bought the same

17:01

product, it's the reviews that you can count

17:03

on. But how much of those reviews are

17:05

really being circled back to the brand, we still don't

17:07

know. Whereas I think Rent the

17:09

Runway is unique because they're trying to build

17:12

product that's better so that they can have

17:14

more rentals out of it, right? So for

17:16

them, today if that black dress was able

17:18

to be rented 12 times

17:20

before it fell apart, they want that to

17:22

be rented 20 times because that's greater ROI

17:24

for them. So it's in their best interest

17:26

and the brand's best interest to really improve

17:29

that product. So it's a game for both,

17:31

not just one end of the stream. For

17:34

sure. And I'm sure as we've

17:36

seen from Web 2.0 to 3.0,

17:38

you could probably even argue this, Web

17:40

1.0 and even before with just

17:43

the development of personal computing, there's all

17:45

of these spaces where there is shared

17:47

intelligence between different parts of industrial sectors.

17:49

And then those just become business models

17:51

eventually at some point because that can

17:53

be sold and there's money to be

17:55

made there. Very,

17:57

very interesting stuff. all

18:00

about black dresses, Boonam, but I

18:02

know, unless there's athleisure that qualifies

18:06

in the black dress category, and I almost know nothing

18:08

about black dresses of any kind

18:10

in my own expertise, but we'll

18:12

have to have you back to talk more about

18:14

athleisure. I would love to. Thank you

18:17

so much for the conversation. Enjoyed it very much, and

18:19

I look forward to talking to athleisure with you. Before

18:31

closing out today's show, there was one point that

18:42

Poonam made in the course

18:44

of talking about the extending

18:46

relationship between the resale sector

18:48

and the traditional retail sector

18:51

in terms of sharing information

18:53

and providing deeper customer insights

18:55

in that usually through social

18:57

media, etc., there's a feedback

18:59

loop from resalers in

19:01

terms of that feedback

19:03

from the customer that includes just telling

19:06

the resaler, oh, this dress wasn't in

19:08

my size. It doesn't feel this

19:10

way. Those are being shared with the

19:12

broader retail ecosystem for customer information. As

19:15

Poonam pointed out, there's no feedback loop

19:17

in the closet, and this is what

19:19

I want to talk about for the

19:22

end of this show just because I

19:24

think in the advent of wearable tech

19:27

and the internet of things, and especially these

19:29

are very niche use cases for right now.

19:31

This is not tech that is in everyday

19:33

people's hands. But as wearable tech down to

19:35

a shirt that can tell you how many

19:38

times it's been washed, it can also

19:40

tell its parent company how many times it's

19:42

been washed. We're not there yet. This is,

19:45

I want to say, a half decade

19:47

away, a decade away. Obviously, all of

19:49

those predictions should be taken with a

19:51

few grains of salt. But I think

19:54

when we get to wearable tech being

19:56

a ubiquity, or at least being so

19:58

universal that folks and they

20:01

trust that their products are providing

20:03

a feedback to their

20:05

parent companies to improve those products.

20:07

That's where I think we will

20:09

see the closet no longer becoming

20:11

this sort of feedback

20:13

silence chamber. In fact, that's actually going to

20:15

be one of the places where I think

20:17

customer information is going to be most critical.

20:19

But we have a long way before we

20:22

get there. Just a little snapshot into the

20:24

future as I see it. On behalf of

20:26

Daniel and the entire team here at Emerge,

20:28

thanks so much for joining us today and

20:30

we'll catch you next time on the AI

20:32

in Business podcast.