Ned Hayes [00:00:01] Welcome to SparkPlug, where we talk to smart people working at the intersection of business and technology. Brought to you by SnowShoe making mobile location smarter. Welcome to part two of our two part interview with Trevor Sumner, CEO of Perch. I’m curious what kind of surprising successes have you seen? What things surprise you that you didn’t expect to see that were really, you know, knock the charts off? Like, Hey, that worked. I didn’t expect that to work.

Trevor Sumner [00:00:32] I think one of the most, I think pleasing intellectually to me is the value of the data. And I think we’ve hang our hat on the sales list concept and we sell into sales teams. But fundamentally, Perch is shining a light into the black box of physical retail in ways that are providing surprising insights. I’ll give you an example. So the way the products are organized on the shelf is called a planogram, it’s just a diagram of product A goes here, product B goes here, et cetera. And on an end cap, if you ask any retailer or brand what is the most valuable space on the planogram from where do you want to put your best products? They’ll they’ll say, eye level, or they’ll say eye level is buy level like every time 99% of the time. And here’s the thing with now that we’re actually looking at, it turns out it’s not the best place. And this is this is like decades and decades of of a of biblical level understanding that like this is the one rule that we must abide by. And oh, by the way, yes, eye level is good because you get about 25% more engagement, but the edges of an end cap are better and you get about 35-50% more engagements like, whoa, we showed this to one of our clients in the pet space, and they said, That can’t be right. It just can’t be right. That would overturn decades and an organization of literally tens of thousands of people who all agree on this thing. And we’re like, OK, well, let’s when we do the next product refresh, we’ll measure it again. And sure enough, it just came out on top again. And so they said, Wait, and you actually can like you can actually see this now, now, now that’s like you kind of open your eyes to the fact, like next time you’re in a shopping cart, you’re going to have an end cap like the at the end of an aisle, you’ll see like the products on the edges you can read. But then once you go to two or three products and it all kind of blurs together. And so all of a sudden you see that the edges do stand out. It’s like an optical illusion kind of thing. And. And so all of a sudden, this tech companies like, oh my god, we’ve got to rethink about how we put products on the shelf everywhere, not just Perch stores but non-Perch stores. And so, you know, it’s been really fascinating to see the data insights that are changing behavior. So I’ll give you another example. Johnson&Johnson is marketing their beauty products with Perch in grocery, and you know, they had Jennifer Aniston for Vino and Kerry Washington for Neutrogena. And they said, Well, we got this clean and clear launch. It’s a new launch and we don’t have a spokesperson. Perch, can you tell us how much that hurts us to have to use Instagram influencers instead of Kerry Washington and Jennifer Aniston? Any guess what percentage? How does that? How does that hurt your sales? What would you guess? Ashley? Ned? 

Ned Hayes [00:03:20] I bet you it’s a 1% change, if that. 

Ashley Coates [00:03:24] 1% change. I do this in my conversations. Ashley, what’s your guess? 

Ashley Coates [00:03:29] 10%. 

Trevor Sumner [00:03:30] It’s always a trick question with me. So the answer is it actually increases digital engagement by 20% to have Instagram influencers and increases sales by about 10%. 

Ned Hayes [00:03:42] Wow! So it’s the opposite. 

Trevor Sumner [00:03:46] It’s the opposite, right. And the reality is it’s actually probably different by demographic, right? Like an old man like me. Gen Z, Gen X, rather male probably prefers Jennifer Aniston or Kerry Washington. But you know, Gen Z is going to want Instagram influencers. And so you know, where we’re going long term is to be able to segment the message by demographic and by which product you’re touching. And also to use this real time data so that you can A/B test it right? So we’ll do Jennifer Aniston versus Instagram influencer and see what actually changes behavior at the shelf. And based upon that, know kind of like Optimizely online or some of these multivariate testing suites like we’ll just print out a report, you give us a, you know, a data dump of a various different media and creative and we’ll say, OK. Jennifer Aniston works for Gen X Women, Kerry Washington works for Gen Z men, Instagram influencers work for that, and we can actually just show you what the best things to do and auto optimize. And by the way, it might be different by demographic. It might be different by geography, it might be different by retailer. And now you’re going to have all this data to understand what actually goes on at the shelf. And that, to me, is super exciting. 

Ned Hayes [00:05:00] Right. So one thing we’ve seen in working with small retailers, especially, is that there’s a lot of data coming in, SnowShoe provides some of this data, companies like Perch provide other data, but sometimes retailers, especially small ones, are not that interested in the data. They feel like they have a kind of hands on connection to the customer that it matters more to them. So do you see this shifting? Do you see retailers beginning to look at the data instead of just trusting their gut? 

Trevor Sumner [00:05:30] Yeah, I think I think retail for a long time has been treated as an art. And the reality is it’s both art and science. And just like anything else in every other industry has told us, like, Oh, it’s not about the data, it’s about the brand. It’s about the fact that, well, like Chanel, especially like Chanel, Gucci, it’s it’s about the brand, it’s about the brand. But if you go to their marketing teams, they’re absolutely doing AB testing, they’re absolutely doing some of the stuff because they can. And I think there’s a resistance to bringing that in store in certain segments. Smaller, smaller retailers like you mentioned, luxury segments, et cetera. But ultimately, data matters, right? And I think, you know, when you’re dealing with a Chanel, Gucci, et cetera, you don’t want to AB test something that you know you’re you’re really not sure about the B test because you’re worried about the effect on the brand. You may do some type of test bed on a limited basis online and use that to inform your decisions. But I think ultimately, you know, one of my favorite quotes is in God, we trust all else must everybody else must bring data, right? I think we are seeing across the board that this notion that I like buyers who have to pick up, you know, what are people going to buy 18 months from now? Like, that was an art. Now it’s increasingly becoming a science right, and it’s going to be data informed and use data to help inform how you choose your art. And I think those that resist that will be left behind. And what we’re seeing increasingly is that the people have scale leverage that to get data, to make better decisions and offer better things to their clients. And that’s why I like the breakout successes in retail. Are Walmart, their Target, their Best Buy? There are these these kind of Home Depot, these people who have scale, who have reach, who are leveraging data who are able to offer these differentiated things and really create insights based upon that data to better serve their customers. 

Ashley Coates [00:07:35] So this next question might let expand on what you just said, Trevor, but you’ve become such an expert in the world of retail. What changes have you seen in retail? Sorry, we’re going to say that again, he said a very large car, very large truck come by. What changes have you seen in retail during your time at Perch? And what trends are happening faster than you expected? 

Trevor Sumner [00:07:59] It’s great question. I think so much has changed, especially in the last 18 months with COVID. And there’s I think one of the that’s one of the changes is just around the value of data and the agility in technology. So COVID forced people to start implementing technology a lot faster than they were comfortable. And so and deploy things that weren’t fully baked in all t’s crossed and i’s dotted. And guess what, had a huge ROI? And so I think it’s really changed the mindset of a lot of people in retail that, you know, we can’t be as slow as we have been in the past, that that agility matters, that we can put out offerings and test them when they’re 80% complete so that kind of that agile kind of methodology lean, lean startup kind of methodology actually can work in the retail environment. And so there’s a really big acceleration there. I think the other thing that I said that I’m really pleased when I came into Perch. Everybody’s talking about retail, apocalypse, this retail apocalypse that and that just hasn’t come to be like, you know, physical retailers, retailers and brick and mortar stores took e-commerce share from Amazon. 40% of e-commerce orders are delivered locally by stores, right either by buy online, pickup in-store or through store delivery. Stores have become more important over the last year or two than less important, despite all the hoopla around e-commerce. And if you look at it like all the direct to consumer retail brands are opening up stores because that’s the only way to create profits. Because online is, you know, Facebook, Google, they all squeeze all the profits and all the margins out of it, and you hit a wall in terms of scale. And so I’ve been really pleased with, you know, I’ve been saying this for four years and I think over the last year and a half, people are like, Wait a second. Stores are actually, you know, if you actually look at year over year, brick and mortar is gaining market share versus e-commerce. And everyone’s like, Whoa, what’s going on? Ah, I’ll read my blog post to you, 

Ashley Coates [00:10:12] Right, I predicted this. 

Trevor Sumner [00:10:14] Well, it’s it’s nice when you get a couple of things, right? 

Ashley Coates [00:10:17] Absolutely. Well, so Trevor, can you speak to the different shopping behaviors, sorry let me say that again? Can you speak to the shopping behaviors changing by generation? Specifically, how are millennials and Gen Z shopping these days and where does the in-store shopping experience intersect with the social media landscape? 

Trevor Sumner [00:10:41] It’s a great question. One of the things people are like Oh, millennials and Gen Z, they just like to shop online. Wrong. 82% of millennials and 83% of Gen Z prefer to shop in-store. Now, if you create a bad shopping experience in-store, they will not want to go to your store, so they want to support their local communities. They are actually more cause driven, they’re more experience driven overall, and they spend more money on experiences. So if you lean into that, you’ll capture more millennial and Gen Z spend. That said, I think one of the more interesting trends in retail overall is this notion of social selling. And so whether you’re looking at Instagram or TikTok and you look at what Shopify is doing to you, basically allowing anybody with a storefront to be able to push their products onto Instagram onto TikTok and advertise, because that’s how Instagram and TikTok make their money off that. That’s a really, really big push to integrate the e-commerce experience with them to the social experience. Because I mean, you see the numbers, especially during COVID, you know, we’re spending an inordinate amount of time on our phones, on social media. And ultimately, I think the detriment to our health. But that’s another that’s another podcast. And so I think increasingly people want social validation. And the challenge right now is, you know, I think one thing off of Instagram, it was like, now it is about Christmas time last year and there was this like little fluttery pink fairy thing that you wind up. And then it’s, you know, it hovers in the air. And I was like, Oh, this is awesome. My niece is going to love this so I bought it. And it came two weeks later drop shipped from China. The packaging was completely crushed, it was so disappointing. And so then I tried to figure out where I bought it so I could reach out to them. And it was it was in my feed, I purchased it, it’s in my feed. I don’t know. That’s it. And so I think one of the things that needs to be solved here is trust. And again, like, this is why a Home Depot or Target, a Wal-Mart or some of these retailers where you have a trusted relationship with is like like, we’re struggling right now as a society with decentralization versus trust, right? Whether it’s cryptocurrencies, great decentralization. You can get scammed. You can lose your bitcoin. We’re doing, you know, drug dealing and terrorist stuff, you know, ransomware based on bitcoin. So there’s like a good and bad side and the social shopping side of the house. It’s good because we get in our feeds part of our social. We may hopefully get our friends to help validate it. But it’s bad because you’re going to get dropship broken products from China with very little way to kind of resolve the issues. And so I think they’re going to be some new interesting models to social selling that mix the retailers trust and Nordstrom’s doing something with NordstromLive here and bringing content and creating social communities around brands. I think there are going to be a bunch of interesting models that will especially appeal to Gen Z and millennial audiences. 

Ned Hayes [00:13:46] Got it. Well, we have two more questions. One is if you could predict the future for us, if you could gaze into your crystal ball or look out five to 10 years, where is retail headed? Is it all going to be livestreamed? Is it all going to be on camera? What’s the future of retail? 

Trevor Sumner [00:14:03] I mean, people, people think I’m crazy, but I like it. The future of retail is brick and mortar. Believe it or not, again, it’s like people are like, Oh, brick and mortar is dying. It’s like, OK, if I told you, Hey, I’m losing weight and you said, Trevor, how much you losing? Oh, I’m gaining two pounds every year. You’d be like, Trevor, you’re crazy. Like, brick and mortar is dying. Really, it’s gaining 2% every year. Like, it’s just, you know, it. Look, there’s I think of e-commerce as a buying layer. Like, think of it as completing a transaction, right? And. Brick and mortar is like a shopping layer where I can discover products that can touch them, I can feel them, I can choose how I decide what to buy. Now these are increasingly it’s going to be unhelpful to separate e-commerce and brick and mortar because I’m going to go into e-commerce, buy something to pick it up in brick and mortar. I’m going to go to brick and mortar, discover a product like bonobos, right? Like you’re going to bonobos, you discover the product you like, you buy it online, it gets shipped here to your house. You never actually have any inventory in the store. These models are going to blend, and I think you are talking about five to 10 years from now. One of the things that’s really interesting is what happens when you have 15 minute delivery. Like, imagine going to the grocery store and instead of having lots of products on the shelves with lots of inventory, right? You have one of each product on a shelf and you’re like, Oh, I need some Tide Pods, great. I need some Old Spice. You add it all into your cart, you click buy and then you had to your car. And by the time you get home, the delivery people have beat you there. Right? Like, those are some of the models that are going to start blending these. These this, this concept of discovery and buying together in these new and interesting ways. And then you want to lug your groceries into your car and that’s at the top. The only thing there is you will pay a premium for that, that stuff will not be free. And so if you actually look, for example, on the grocery side of the house like online grocery has declined 30% in the since since March of this year. Let me say that again, Online Online’s online is killing it. It’s stealing and murder. It’s down 30% since since March, right? Because it costs, you know, seven bucks to to deliver it. And people don’t want to pay seven bucks and they want that discovery in store anyway. And so I think the best models will start marrying the best to discovery the best of commerce leaning into. There’s a lot of buy now, pay later type stuff. I think retailers are increasingly when they become financial institutions. That was one of my 2021 retail projections and you’re seeing people adopting bitcoin payments. Buy now, pay later, loyalty, all kinds of things. And and and retailers are going to stick their hooks into you, from a loyalty perspective. I think the other thing big thing is going to be private label brands. So one of the challenges for retailers is that this discovery layer and I decide, OK, great, I want to, I discovered that I want Purina Dog Chow. Great. But next time, am I going to buy it necessarily from the retailer because I can buy it from anywhere after that point once I discovered it? So what brands, what retailers are doing is saying, like, Hey, we need our own brands so that people have to come back to Target. So, for example, Target is launching their own private label pet brand called Kindful, and that’s going to be a billion dollar brand in the next six months. That’s huge. And by the way, I think they have 10 billion dollar brands, private label brands and five that are two billion or above Target is this amazing platform for driving customer loyalty and then incubating private label brands on top of it? And so, you know, the brands are launching their own stores because they need to own the relationship that the retailers are open, they are doing their brands because they need to own the relationship. And here’s here’s the crazy one. What about Instacart, right? If you allow Instacart to do delivery, ultimately, people start shopping on Instacart and guess what happens? Instacart is going to say, Oh, you’ve got carrots or juice and milk. I’m going to get the carrots from Target, the orange juice from Walmart and the milk from Kroger’s, and I’m just going to mix it all together. I’m going to save you five bucks, and all of a sudden, all that retailer loyalty is going to go away. And oh, by the way, the year after that, they’re going to have their own micro fulfillment center and it’s going to be delivered by Instacart. And all of a sudden, Instacart owns the customer, the distribution and the fulfillment, and it’s vertical integration. It’s going to be interesting. And at the same time, while we’re seeing vertical integration, we’re also seeing like modularzation, right? So Walmart is offering their delivery service to third party retailers because they’ve got stores within 95% of Americans within, like five or 10 miles. So they have their own delivery store networks, and they’re going to offer it to the retailers. You’re going to have people offer delivery services, marketing services, marketplaces online. And so it’s going to be this interesting thing where you can get your inventory from Amazon, your delivery from Walmart or your payments from Klarna and all that and all these different pieces. And you can build a whole retail engine from all third party services. Launch it, scale it to hundreds of millions of dollars without actually having to build much yourself. And then you’re going to have to try and compete with people who want all nailed stacked. And so it’s going to be fascinating to see what happens over the next five to 10 years. 

Ashley Coates [00:19:37] Well, we’re going to revisit this episode. But in five and 10 years and see how accurate you are, we do have one last question for you, Trevor, which is what is your personal mission and what do you want to be remembered for? 

Trevor Sumner [00:19:51] Yeah. You know, it’s always a hard one because I feel like, you know, how do you encapsulate something in a personal mission? I always envy people have a very specific personal mission. And I’ve worked in retail, I’ve worked in social media, online media, e-commerce. And ultimately, what drives me and what I I like to create transformative technologies with amazing people and work on hard problems and surprise people by what we are capable of doing. I like being the underdog and transforming an industry, and I I think to me, the mission is, you know, I’m interested in lots of different things. So like next five years, you know, I will certainly be kind of more retail focused, who knows what happens 10 years from now, but I know I’ll be working with great people doing kind of working on great challenges. And I think ultimately, when I look at what has given me the greatest satisfaction, it has been creating these high-performing organizations, mentoring people and accelerating them in careers. And ultimately, it’s like, how many people do you touch? Right. And I think of like, you know, when I think about what I’m most proud of at my last company, which I founded local locks, you know, yes, it’s growing to 100 people selling to the Blackstone Group having that success. But the things that really give me kind of like that warmth in the heart type of pride are specific people who I got to work with, and I’ve seen them accelerate their careers, and now they’re doing really meaningful work. And you know, I think, you know, the social mission can be your, you know, career network and the people that you touch and just working with them. And it’s less about the problems that and sometimes more about the people. 

Ned Hayes [00:21:45] Great. Thank you so much for your time, and this has been a great conversation. Really appreciate it. 

Ned Hayes [00:21:51] Yeah, thank you. Thank you, Ashley. This is great. I appreciate you having me on. 

Ned Hayes [00:22:04] Thanks for listening today to the SparkPlug podcast and brought to you by SnowShoes, Snow.sh for smarter mobile location, Spark Plug is a wholly owned property. It’s not all content. Copyright 2021 SparkPlug Media.