In this Cloud Chat episode:

Wendy Liebmann, WSL’s CEO and Chief Shopper and Justin Honaman, Head of Worldwide Retail & CPG, GTM & Segment Leader for Food & Beverages for Amazon Web Services, continue Cloud Chat, a short, sharp, sometimes provocative take on emerging technology and the implications for the future of retail.

They discuss:

  • The holiday season – binge or bust – and implications for 2024
  • What’s up – and down – with Generative AI
  • E-commerce and creating a more flexible platform
  • Soon-to-be-revealed AI use cases from brands and retailers
  • All in 10 minutes or less.

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Watch the video episode:

Wendy 00:09

Hello, everyone. I'm Wendy Liebmann, CEO and chief shopper at WSL Strategic Retail and this is Future Shop. Today I'm here again with my partner in crime for all things cloud retail, digital, e commerce, and all of the above. In our new feature called Cloud chat. My partner is Justin Honaman. He's the head of worldwide retail and consumer goods, go to market, and everything else. Justin, welcome back to our Cloud Chat on Future Shop.

Justin H. 00:46

It's great to be here. And I look forward to these every month. And I have a lot of fun, like thinking about what what's happened in the last couple of weeks since we last talked. And so and this is things are moving back quickly right now.

Wendy 01:00

So what's happened in your last couple of weeks? What are you seeing out there now CPG, Retail, Cloud, kind of world.

Justin H. 01:07

It's interesting. One thing that I find super valuable about our team's role here at Amazon is every day we're with customers, like every day, and sometimes multiple customers in a day. So what I think so interesting about that is firstly, you get the real view of what's going on from actual customers, right? And not just reading about it. But also, you get an idea of what could work or what might work. And also the ability to test ideas and really sense for where things are like with generative AI, which we talked a little bit about in the past. We'll hit that again today. But now here we are. And I mean, quickly, we're into holiday. And so in the retail space today, a lot of retailers are kind of battening down the hatches, right? Retail stores are open and busy, ecommerce is booming. And so you know, we've got a busy next couple of weeks in retail, and then we go right into NRF in January.

Wendy 02:03

Yeah. And it is that interesting balance of everybody's you know, we've got people on our team who, you know, who are hugely excited holidays are coming, let's say getting written starting to buy taking advantage of, you know, the early deals everywhere. Already building their lists, you know, thanking checking them twice. So a lot of excitement. On the one hand on the other. We've got, like us spending time with clients, retailers and brands, who are like, Oh, those last results weren't so hard, traffic's down, what can we expect all of those things? So it feels like that very, I'm excited. I want to get the season going. On the other hand, you know, let's be sensible and cautious, and all of those things. So what's your view on that the NRF was quite aggressive with their forecasts for the year. So what's your point of view?

Justin H. 02:57

Certainly when you look at the metrics around households, unemployment, CPI, ppi, shopping behavior, but basket sizes and whatnot, you definitely see a resilient consumer, you also see tensions in some parts of retail, where, you know, products like groceries are super expensive, and so that that's really challenging for budgets and whatnot. So while yes, you know, there's a lot happening in retail back in stores, and then in e-commerce, there's also this tension playing around out where, you know, prices have not come down on significant items. And so that's causing some budgetary issues for the shopper.

Wendy 03:38

Yeah, and I think that's one of the things so I share with you hot off the presses our latest work looking at the end of the year and into 2024. And we you know, that just unsettled. pneus on the part of consumer as shopper who's saying, we don't think prices are going to come down period, just in case we're going to be cautious. You know, credit card debt up savings down, and college debt, those sorts of things, you know, rolling back onto people. So just that sort of speaking of cloud, but gray cloud, not to mention all the other things that are cloudy in the world. Always do get that moment when you say but it's the holidays, and say, you know, it's been a rough couple of years, carpe diem, seize the moment, and then we'll worry about it in January. So you're right, the tensions are really, you know, really quite prevalent in all of this.

Justin H. 04:32

Yeah, another interesting thing to think about for those of you that are in retail or consumer goods, you'll this will make sense and if you're even if you're not just think about this for a moment, the input costs that go into making like a beverage product or snack food or, or apparel and whatnot have gone down, right, the costs have gone down supply chain is back to operating pretty efficiently right now. And so therefore, the cost of making goods has come to For CPG brands, the question is, are they passing that savings on to retailers? Okay. And then if they are retailer passing it on to the shopper or consumer. And so, you know, there really hasn't been a good benchmark in the past of price decrease. So I think that's an interesting tension playing out across our industry. Yeah.

Wendy 05:22

And I think that was that's been reflected in some of the big CPG companies results, where they've talked about, you know, growth, you can see the growth. But if you look at units, it's not unit growing, you know, whether it's the Unilever's of the world, or GES of the world, in that sort of space. So I always say, have they been speaking to the shopper at the checkout, to see what they're doing and how much they've got leftover? So I think you're absolutely right, tension is the perfect word for many things in our life these days. And so we'll see where that goes. And just, you know, the efficiency though, of being able to still buy through ecommerce, if I want a deal, I know where to go buy early, all of those kinds of things that people are doing, beyond you know, services and, and leisure and entertainment and things where people really are saving up their money to spend as opposed to you know, another cocktail. Well. So, coming into the you know, you and I talked about AI, we talked about generative AI, interesting things in that space continued to be I hope lots of companies are experimenting, testing, learning. What are you seeing out there? Yeah.

Justin H. 06:33

So just let me frame the year a bit in NRF of this year, we as a business are focused with our customers on everything around like Unified Commerce, like a personalized experience connected commerce moving to new, more flexible platforms for e-commerce, modernization and migration. Obviously, the cloud was obviously a big topic, supply chain efficiencies, looking at new technologies in the backend. And then around March, you know, generative AI kind of took over every conversation. The last couple of weeks, though, I would, I would say, a from the generative AI perspective, many companies now testing and trialing models on specific datasets around specific use cases. And in the bucket of generative AI, it's specifically around text around images and around coding, okay, so those are the first three areas that are really prevalent across, you know, the customers we're working with, and retail, and same on the consumer goods side, those are the three big buckets. At the same time, though, we're also seeing, you know, renewed focus on sustainability, and that being built into how you operate and in the products you make and sell. And, you know, as I mentioned earlier, back to thinking about your ecommerce platform, and how do you make it leveraging micro services and API's and, and composable. These are the buzzwords in the e-commerce space right now around basically making a much more flexible platform. And finally, customer experience and things like personalization, that have been around for a long time, are, are, there's an opportunity to leverage the tech in that space to drive incremental upsell, cross sell and engagement with customers like never before. So a lot of excitement and energy around these different areas. And yes, I'd still put generative AI like at the top of the list, because it's such a game changer. But these other areas are also I'd say, progressing nicely as we go into holiday.

Wendy 08:30

I think the other thing about that I we had this issue Lynch on the podcast, and she is a former J&J. And then Google executive, doing a lot of work in the startup space, now in healthcare, and very focused on healthcare. And so she and I talked quite a lot about, you know, where technology and AI and generative AI will really is already having a positive impact in terms of everything's, you know, testing, evaluating tests, building out new platforms for innovation, and, you know, obviously, wearables all of those things. So it was a really exciting conversation about the sort of positive impact, and then talking to one of our retail clients about loyalty programs and how, you know, you can build some of these programs that are real loyalty programs, not just discount programs, using personalization using AI to help personalize everything from the offers to the experienced all of those things. So, you know, seeing that on two fronts has been quite exciting actually beyond, you know, beyond what we talked about last time, so, yeah, it feels like it feels like we're, hopefully as you and I have said that people are testing and learning and thinking about application in lots of different ways beyond writing their school papers. So something

Justin H. 10:02

my observation has been it's been market dependent. And some geographies are more progressive or more progressively diving in and testing out and trialing and you know, in developing ideas and concepts, versus others. And the next three months, four months, I you'll, we will all see many examples of retail brands and consumer brands, bringing to life use cases, leveraging all kinds of different models, and around specific data and solving interesting and unique problems. I believe that NRF it will be the flagship like they might as well raise a generative AI flag over the Javits Center. And most companies are building this in as well. You'll see this in Salesforce and others, it's already and you already see it playing out like with an iMessage on your phone. And so this is moving quickly. And we need to everyone should be paying attention and have someone engaged in this is not an IT thing. Do not just say it has got it. This is a business and technology, opportunity.

Wendy 11:09

And the mailbox right on the phone is now just blowing up with everything from I'm getting stuff from boots in the UK and Mecca in Australia, actually some really great personalized work. Our latest results from our How America Shops® research national survey of shoppers said 50% will spend less this year versus only 15% of you said there will spend more. So there's another about a third in the middle who will spend the same. We're really wrong in this. But let's see where they spend it. That will be the issue. So who knows where we will speak before all of that comes to play. But as all thank you for the state of things. And next time I might take a little bit and talk about Amazon and retail.

Justin H. 11:53

That sounds great. I look forward to it. All right, yeah.

Wendy 11:57

See you in the future and happy generative AI days.

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