How Sprouts Is Tapping Tech to Double Down On Its Target Customer and Win During COVID

Over the past year, shoppers’ needs have changed quicker than ever before. Consumers were already becoming more digitally engaged before COVID-19 hit, but the pandemic drove faster adoption of tech-based shopping and far higher expectations for personalization as part of the shopper experience. In “Evolving Best Practices in Personalized Digital Shopper Engagement,” RIS explores what consumers really want and what retailers need to do to meet those needs through a panel discussion with Sprouts Farmers Market. Topics discussed include how operational, data management, artificial intelligence and machine learning are making it increasingly possible to read, interpret and respond to the clear data signals that customers are providing to retailers through their online, in-app and in-store transactions. Read on for an edited transcript of the webinar and all of the presentation slides. Tim Denman: Hello and welcome everyone to “Evolving Best Practices in Personalized Digital Shopper Engagement,” which is hosted by RIS News and presented by Hypersonix. I'm Tim Denman, Editor-in-Chief of RIS. Thank you for joining us today. With me today, to examine digital shopper engagement best practices and how to understand and shape customer behavior across channels, are Dan Sanders, Todd Michaud and Randy Crimmins. Dan is the COO of Sprouts and oversees operation of all of its stores. Prior to Sprouts, Dan served as division president at SUPERVALU, leading store operations across various divisions including Albertsons and ACME Markets. He's a military veteran and a New York Times and USA Today bestselling author of two business books, Built to Serve and Equipped to Lead. Todd is president and chief customer officer at Hypersonix, a fast growing Silicon Valley company specializing in artificial intelligence, analytics for retailers and brands. Before Hypersonix, Todd was the president and chief customer officer at SymphonyAI, a company focused on groceries and CPGs. Now, Randy is the EVP and chief strategic officer of Relationshop, a leading provider of highly personalized customer engagement technology and solutions for retail. At his role at Relationshop is a combination of 25 years of tactical and strategic experience, helping retailers generate incremental sales and loyalty through greater relevancy and individualized personalization. Gentlemen, thanks for taking some time today. I'm going to turn the reins over to Dan, who will get us started. Dan, take it away. Dan Sanders: All right. Thank you, Tim. I appreciate that very much. Good afternoon, everyone. It's my pleasure to speak with you today about some of my industry observations and some of our ongoing work at Sprouts Farmers Market. I'd like to recognize our CEO Jack Sinclair, pictured here, and his call out regarding our team members and the great work they're doing during this pandemic to take care of our guests. I think the frontline workers in the entire grocery sector of the food industry, deserve our appreciation and recognition for the extraordinary work they're doing despite very difficult circumstances. The pandemic has had a profound impact on our business as customers shop less frequently, consolidating trips which leads to bigger baskets. We had to quickly modify areas of the store like bulk and solid bars and all the bars and soup bars to reflect the new environment. We've prepacked our bulk items in individual bags and prepared more packaged salads. We've had to repurpose some of the self-serve fixtures along the way. Fortunately, many consumers are looking to eat healthier and build immunities during this pandemic and we've seen an increase of sales in organic, grass-fed beef and vitamin supplements to build immunities, which is a good segue into Sprouts the company. As some of you know, Sprouts is a specialty grocer, focusing on healthy living for less, by offering primarily fresh foods and good-for-you groceries. We’ll end this year with 365 stores coast to coast and we're growing rapidly. We employ just under 36,000 team members in 22 states. We're currently transitioning from a one-stop grocer, trying to be all things to all people, to a specialty grocer, really focused on segmentation of healthy enthusiasts and experienced seekers. Now, this transition requires us to double down on pursuing our target customers, while candidly parting company with customers whose loyalty is dependent on this week's ad and nothing more. To successfully make this transition, we're employing five strategic plays. First, we really want to win with our target customer. I can't tell you how clarifying it is to an organization to know that you're not trying to win over everyone. Focusing on what you do best and seeking customers have embraced what it is you have to offer is a sustainable model. Chasing everyone, unless you're a really big player, is very difficult to do profitably. Second, we've refined our brand and marketing approach to reflect this change. Third, we're updating our format by reducing the size of the footprint from about 30,000 square feet to less than 25,000 square feet, which will allow us to grow faster, more economically, and especially in select markets where we already have a presence. Fourth, we're really working hard to create an advantage supply chain, capable of serving our needs as we continue to grow in size and scope. Fifth, we're excited to be able to deliver on our financial targets in our box economics because at the end of the day, it's not just about sales, it's about profitable sales. I placed this slide in the deck as a reminder that when we're talking about food at home, we're talking about roughly $1.2 trillion of opportunity. Sometimes I think analysts get sidetracked into believing that every grocer needs a big chunk of the pie to be a long term player. At Sprouts, our research suggests that just a 3% share increase would effectively double our sales. When you consider the merits of segmentation, I think you have to keep in perspective that just a few crumbs off the table can still allow a company to grow into a $20 billion business, and most importantly, do it profitably. I mentioned segmentation and that's critical for Sprouts in 2021. We're very fortunate, our model and offerings are mostly geared towards better-for-you healthy products. We carry a large assortment of organics in our produce and grocery areas and plenty of non GMOs, grass-fed beef and plant based alternatives. Most importantly, we know there's a large audience of customers who want what we have to offer. We're very optimistic about the future. But one thing we've learned about serving customers in any segment, is that in this day and age, people want what they want at the moment of desire. Any retailer interested in securing a trusted relationship for the long term, must be equipped to meet their customers’ needs, wherever and whenever the customer desires those needs to be met. I think the pandemic accelerated this reality for most retailers and you're seeing a great deal of effort now to partner with firms that really understand how to leverage data in a way that allows the retailer to accomplish this objective. Now as an example, during the pandemic, certainly in the early stages, we quickly rolled out pick up to every store in the portfolio, giving our customer another option for shopping with Sprouts. In the third quarter, we launched delivery and curbside pickup through shop.sprouts.com, so customers can order directly from Sprouts, either through our website or Sprouts app on their phone. While this service still utilizes the Instacart order management technology, this improvement keeps the customer in the Sprouts ecosystem, and allows us to leverage data for customer insights. And it doesn't require the customer to have an Instacart account to place an order, creating a seamless Sprouts experience for the customers. Online shopping, either home delivery or pickup in-store has increased dramatically in 2020. At Sprouts, our pace and penetration has been growing faster than many in our space. Now, additionally, our messaging and promotions are evolving. Gone are the days when all our marketing dollars were spent talking about price. Starting in June, we began to significantly adapt our marketing spend to focus on more digital, social, radio, and for the first time TV, those are our two targeted customer segments. In the past, our heavy reliance on a print ad, keep us from optimizing our connection to the customers that our brand and experience resonate with most. In the middle of August, we launched new branding through TV, social, digital and radio under the campaign, Sprouts Where Goodness Grows. The campaign which includes our first mainstream commercial on farm fresh goodness, drives home our farmers market experience by highlighting progress, the heart of our store, and inspires health enthusiasts and experienced seekers to engage with our brand. Today, the new branding has been well received. We continue to see our Net Promoter Scores among our target shoppers rank best in class with our peers. Of course, brand building takes time. But our digital impression have been impressive. We had more than 1.4 billion impressions of our master brands since its launch and over 2 billion overall media impressions as we extend our reach with our target customer groups. Again, critical to the discussion is that our evolved advertising strategies are aimed at our target customers, instead of attempting to blanket flyers to everyone in our market areas. We're now reaching more than 70 million confirmed views of our weekly digital flyer versus the 21 million print flyers distributed in the past. Additionally, we're leveraging the flexibility of digital communications, to make our customers aware of what's new and different in our stores real time. Finally, our promotions are starting to become more around storytelling. The products we carry are unique and our marketing stories will bring them to life. This in no way means we're eliminating promotions, even during this COVID pandemic; we're still promoting but we're being smarter, we're buying better and we're targeting our promotions to our target customers. Our investments are focused on items that are elastic and drive volume. We stopped the deep promotions in price that didn't change the customer's decision or drive additional traffic, and only resulted in deflated sales and margins. I hope this retailer perspective is helpful to you all. Now, I'd like to turn the presentation over to Todd at Hypersonix, to talk about how emerging data AI capabilities are changing the way retailers understand customers. Todd Michaud: Thank you so much, Dan. I really appreciate your perspective. I'm going to focus on a couple of things during my brief talk. First, just to quickly introduce Hypersonix to those of you who may not be familiar. We are a San Jose, California-based artificial-intelligence-powered analytics company focused on retail. We are well funded and known by prestigious investors like Intel and Boston Consulting Group and a number of others. Essentially, what we have built is a next generation solution to help retailers with a full array of descriptive diagnostic, predictive and prescriptive analytics, helping them to understand, what's happening, why it's happening, and ultimately what they can do about it. Now importantly, in all retail enterprises today, one of the challenges around personalization and digital engagement of shoppers, is the fact that we have such a complex IT infrastructure with different software solution providers that usually result in either data silos or people silos. Key aspect of what Hypersonix brings to the table is to tear down those data silos and people silos, to essentially synthesize those disparities into a full 360 view of our shoppers, of our products and, of course, ultimately, our retail operations. Last point on Hypersonix, before we kind of get into the meat of things is that today, our enterprises are mostly comprised of non-technical business people that are making these decisions. But unfortunately, a lot of the analytical capabilities built in the past couple of decades have really had a dependency on in-house experts. One of the things that we think differentiates Hypersonix is the fact that we built our technology to be used by non-technical business people. I'm happy to say that just recently, we got some recognition, particularly in the food and grocery space by Gartner as an up-and-coming cool vendor. That's all I'm going to say about Hypersonix. What I really want to do is focus on kind of the main focus of today's session. As Dan communicated, understanding our shoppers today in this crazy year has never been more important. It's been quite a unique year and of course, we're all looking forward to getting back to normal but maybe some of the things that we've experienced this year, in terms of changing customer behaviors will stay with us past the pandemic. As we think about what shoppers are really looking for, I think this chart does a pretty good high level overview on what we're generally hearing from our retail partners and ultimately, their shoppers. One, shoppers are looking for retailers to simplify their life, understand their product and brand preferences, understand their channel preferences. By the way, their buying behavior could be very different when they shop in-store versus when they're using one of the digital channels. Give them relevant and timely recommendations, help them to save money, keep them safe, especially in this pandemic era. Securely manage their data and only use their data to better serve their needs. Last but not least, ultimately, shoppers are looking for retailers to keep them better informed about things that they need to know. With that as kind of a backdrop and using Dan's comments as sort of a springboard, what I want to do is, help you to understand how artificial intelligence and machine learning is changing the game for both personalization and ultimately, digital shopper engagement. What I'm going to do is quickly walk through an infographic and we'll go from left to right here. But the basic question I want to answer is, how can artificial intelligence and machine learning optimize personalized shopper engagement? It starts by ultimately, having customer data platform that is consolidation of your shopper history, your CRM data and ultimately, bringing together all of the various disparate sources that we're using to manage our shopper intelligence. Ultimately, we can essentially change the game by leveraging auto machine learning to automatically ingest, map, glance, stitch together and securely govern data from disparate data sources. This is so important for where our shoppers’ expectations are going. Now, we're not just managing internal data sources like point-of-sale or self-checkout or e-commerce or loyalty data, whatever the case might be. There's also a plethora of external data like competitor intelligence, market data, panel data, social feeds, that could ultimately influence our understanding of shopper behavior. Ultimately, as we build this customer data platform, it's so important that we keep it up to date with the latest and greatest data from those raw commerce platforms that we're ingesting data from. Now, ultimately, kind of the second piece of this is, understanding and analyzing shopper cohorts. The way that we think about it is, we want to be able to understand our shoppers based upon data-driven tiers and segmentations, to help us understand recency, frequency, monetary spend. Help us to understand who are our top customers or secondary customers or tertiary customers. That's important that we do. But ultimately, we've got to get far more intimate with the data signal that we're able to pick up on our shopper behaviors, and ultimately understand things like their category level participation, product and brand affinities, and ultimately use that understanding to determine micro segments or lifestyle segments. Some examples could include, understanding parents, vegetarians or vegans, organic shoppers, pet owners, wine lovers. There's so many micro segments that actually may exist within our enterprise. As Dan mentioned, it's so important that we understand where our shoppers are and how we're ultimately shaping their experiences. Understanding the location and channel preferences is such an important part of what we're needing to do today. Then you kind of get to the third part of it, which is understanding the full universe of offers that may be in our repository. Understanding mass promotions, whether they be digital circulars, print circulars, temporary price reductions, coupons, points, whatever those mass offers are. Then importantly, as we look at what are the needs of our shoppers, understanding what the offer gaps are. Now, if you think about personalization over the last decade, the winners and the losers have seen separation based upon the availability of relevant content down to the segment level, down to the one-to-one level and so, understanding offer gaps and then ultimately, by understanding those offer gaps, generating with our brand partners when possible or independently when not, an array of personal offers that are individually relevant at the segment, micro segment or one-to-one level. For a lot of retailers this can mean creating an array of 300 to 500 ongoing targeted offers that can be allocated across the array of shoppers. It's not just about offers, Dan mentioned this, it's about informing and influencing our shoppers with other relevant content and valuable insights along the way, which can include things like recipes or whatever the case might be. A lot of this can be done using artificial intelligence and machine learning. Now, with these foundations in place, ultimately, this results in AI-based targeting. Again, at those different two levels with an awareness of the needs of our shoppers and certainly understanding as well what the one-to-one requirements are. I guess the way that we think of this is, this is where we're utilizing diagnostic, predictive and prescriptive artificial intelligence, to automatically do kind of a three way match between shopper insights, shopper cohorts, and offers in content that will ultimately drive bigger baskets and increase loyalty, that's the name of the game. We need to curate individually relevant but massive personalized content from this full array and then complement, as I said a moment ago, the offers with other relevant content such as what's for dinner recipes that might be mindful, and we need to ultimately deliver this the way that our shoppers want to consume information. How do you essentially shape shopper journeys, whether they had home before the shop, in the store or after the shop and really today, it's about digital transformation and digital engagement. Your shoppers want their favorite retailers to engage with them in a fashion that works best for them. When you think about multi-channel shopper engagement that Randy will speak about in a minute, it’s about distributing highly personalized and contextual content through the shoppers preferred engagement channels, whatever that is. We can't presume that print is the way that they want to engage anymore. Ultimately, they may choose to engage with us with multiple touch points. But again, it is about their preferences versus ours and influencing before they shop, during the shop, and after they shop. We need to publish and synchronize this data ultimately, with the commerce engines, whether it be point-of-sale, self-checkout, mobile shopping or e-commerce platforms, so important to do with as much automation as possible to reduce the lift on our already taxed IT staffs in making sure that our market Chairs and merchants can focus on things that move the needle as opposed to administering the programs. Then ultimately, some of the things that we're going to do, most of the things we're going to do are going to work. But we can't be complacent, especially in this world where shopper behavior is changing so quickly and so, ultimately, one of the most essential parts of an effective personalization digital engagement environment is to essentially, one, learn quickly as consumer needs change quickly. This can really only be done today with machine learning and artificial intelligence, it's so difficult to do across so many different locations, item mix, etc. Ultimately, let's leverage machine learning to optimize the results close correct and know what's happening, why it's happening, and then understand and shape ultimately, their shopper journeys. Now, if we do this right, Dan mentioned something that I thought was quite excellent. We want to diminish bad behaviors, maybe our least desirable customers coming in and consuming the majority of our promotional investment for example, and we want to instead, make sure that our best customers are spending more and visiting us more regularly. How about if we set as goal to reduce cherry picking or offer stacking or pantry loading behaviors to instead, better serve our most loyal and attractive shoppers? Yeah. Let's conduct post mortem and insight analysis such as camping, lift analysis, shopper attrition analysis, wallet share analysis and categories, and let's also put in place smart category expansion campaign, so that way, we're picking up more share of wallet along the way. Again, with artificial intelligence and machine learning, at least becomes much easier to do because the automation can do a lot of the heavy lifting. What I've just done with this quick infographic is, I really simply explained artificial intelligence role and machine learning's role in personalization and shopper engagement. Now, why would you want to do this? What's the prize? Ultimately, that becomes the big question. One, is we certainly want to know our shoppers better and you'd be telling us what their needs are through their data signals. Two, we want to respond to their changing needs much faster, especially in a dynamic new year like 2020. We as retailers want to get bigger, more profitable baskets, we want to increase the frequency and wallet share. Ultimately, in a world where print circulars and circulars in general are diminishing in terms of importance, we want to be able to optimize trade spend in shopper marketing towards our more engaged shoppers. That's kind of the goal with all of this. Now, in seeking to do this, Hypersonix has formed a partnership with our next speaker, really interesting company called Relationshop, who tries to take the rich analytics that we offer, and ultimately digitally engage with shoppers to execute smarter campaigns, smarter personalization, engagement with our shoppers that work. I'm happy to say that one of the exciting things that we've done recently is form a strategic partnership with Relationshop, and here to do a brief discussion on digital shopper engagement is Randy, and so I'll hand the baton to him to take it from here. Randy Crimmins: Okay. Thank you, Todd. As Dan spoke about how Sprouts is working dear, closer to their customers, engage digitally and Todd covered the infrastructure requirements, advanced data and algorithmic like analytics that are powering in new and unique ways, to personalize the shopper experience. I'd like to focus on what that personalized digital experience can look like to the customer. First, a quick note on Relationshop, we focus on delivering connected, highly personalized engagement, e-commerce applications for retail. Our digital experience platform DXP facilitates the way shoppers shop today, sometimes online, sometimes in-store, sometimes from my desktop, sometimes on an app, blending, curating and personalizing the digital experience based on what matters most to each shopper. For the next few minutes, I'd like to first explore what personalization means and how consumers view it and then share some examples of how personalization can enrich the mobile experience. Lastly, touch on how personalization can be operationalized across all the digital channels. Let's start first with the question about what personalization means. Personalization is a subjective thing. It's a hard question to answer because it means different things to different companies depending on where they're at in their journey toward personalization. Sprouts has a different format, a different type of approach. Personalization means one thing to them, may mean another thing to a different retailer. When we look at personalization, we back up a little bit. Look at that a macro level, and we start with, how do you customize to the brand? That's kind of branding one-on-one. You want the digital experience to reflect the brand. Next, you want to localize it to the store level, there's a localization opportunity that a lot of retailers don't take advantage of, that helps get you closer to the customer, helps you connect in a more relevant way based on localization, and what you know about that customer from the store that they shop or that they decide is their favorite store. Next, you want to contextualize to the persona, to better understand that shopper in terms of how they engage with their digital platform. Are they an e-commerce shopper? Are they an in-store shopper, are they like most shoppers, a blended shopping experience? How do you contextualize your digital experience to give them the kind of experience that's relevant to them. Then ultimately, we want to personalize down to the individual. Every retailer is in a different place in terms of these layers of relevancy that they can begin to operationalize and to deliver to a shopper as part of their digital experience. Of course, personalization matters and consumers tell us it matters. But most consumers aren't concerned about personalization for the sake of personalization. They want personalization from the retailer based on what their needs are, and what their family's needs are. They want those needs satisfied, so 81% of consumers express a willingness to share personal information, to help the store become more familiar with their shopping needs, because most shoppers see personalization as a benefit. One thing that's interesting about this chart, is that the very top benefit that they see is not a surprise, it's giving me personalized discounts. We all like a deal, no matter what our socio economic class, no matter what our demographic cohort, we like a good deal. That is the primary benefit of personalization according to consumers. But if you look at the other seven benefits, as both Dan and Todd alluded to, it's not always about a deal. It's not always about an offer. There are other opportunities to inform the relationship in a relevant way that matter most to a customer. How can you make that experience more convenient by personalizing and curating the experience based on what matters to me as a consumer? How can you make sure the products in the store reflect my needs, based on what I buy? At the end of the day, I'm not too concerned about satisfying other's needs, I'm really concerned about satisfying my needs as a consumer. Personalization is seen as a benefit as long as it's satisfying the needs of the shopper. One thing that's interesting, if you look at other ways besides deals and besides always being a price marked down that you can offer to a shopper to engage them in a relevant way, look at this statistic on dietary plans. Over 33% of households say they have at least one person following at least one non-medically prescribed dietary approach. That's a pretty amazing stat, 33% of all households, 50% of Gen Z households are following some kind of dietary approach. If you can marry products to a dietary plan, and you can marry customers to those plans, you have a significant opportunity to add relevance in a richer, deeper relationship with that customer that goes beyond 50 cents off a can of green beans. Personalization takes many forms. Ultimately, it's about satisfying that consumer expectation because consumers expect connected, curated and personalized digital experiences that make their shopping more valuable and convenient to them. Consumers want personalization and it's also good for retailers. In one study at a regional supermarket chain, approximately $2 billion in annualized sales, they looked at the incremental value of their personalized digital engagement efforts, and they found that it was worth $60 million in incremental value for the organization — not just lift but incremental value that they gained by having a personalized digital engagement strategy over not having it. You look at that over the three-year study; they were approaching a quarter of a billion dollars in incremental value to the business. Personalization matters to your customers and it matters to your business. As we move into more of a mobile-centric society as a consumer, I wanted to share with you how personalization manifests itself in the digital experience using the form factor of a mobile device. We want to deliver that end-to-end approach through mobile, from recipe meal planning, to list making, to e-commerce, and to enhancing the in-store experience by the utility of the mobile device that cannot only attract more customers, they can also help you engage in new and meaningful ways with these customers, especially if you're able to personalize that experience. Some of the ways that you might want to consider personalizing their experience and some of the best practices in terms of mobile engagement and personalization, is starting with the personalization, what we call HQ or dashboard. All these having a central place that your customers can go to find all the ways that you engage with them personally, it could be you have a points-based loyalty and rewards program. You're allowing them to track their points. You're showing them what points are expiring at the end of the month. You're curating a set of rewards that they can redeem those points for and those rewards using algorithms and advanced analytics that Todd was speaking to, can be personalized down to the individual customer. It's not a mass set of rewards but it's rewards that matter to me as a shopper. Targeted offers, digital coupons, curating all the manufacturer's coupons down from 150 coupons to the 25 or so, that matter most to me as a shopper. Promotions, tracking your savings, tracking your spending. These are all ways that you can add transparency to the relationship, you can personalize it to the consumer, and you can deliver on what matters most to me in the form factor of a mobile app. Another way is to take the personalized ad, the concept of a weekly print ad is yesterday, today and where we're going tomorrow is re imagining that weekly circular. Starting from the entire process of how you put what items go on the circular, using AI to help and big data, machine learning to help understand what items should be put on the ad, what items should be prioritized at this time of the year. Once you create that item pull, applying recommendation algorithms to recommend which items go to which shopper in a digital version of that circular, so completely re-imagining the process of the personalized ad in delivering all the active promotions to a specific shopper based on their shopping needs. Another example is targeted offers, utilizing recommendation algorithms, purchase probabilities, it looks at, not only that the item is relevant to me, but it's relevant to me now because my purchase life cycle is coming up and I have a higher probability to purchase that item at this time. Applying rules logic to help you optimize the distribution of those targeted offers across your customer base and also, rules logic that help dictate what type of offers are delivered. You may have a lot of produce offers that are relevant to you but you don't want to always see produce. Those rules logic help synthesize the distribution of those offers in a relevant fashion but across the customer base. Another example that we're seeing and Starbucks does a great job with this. This is foundational to their loyalty program, is personalizing journeys to the shopper. The ability for the retailer to set strategies around how they want to target shoppers and instead of just being a single one off targeted offer, it's a promotion spin, over time promotion to reach a certain threshold. You can push those promotions out to a set of shoppers, let's say those that you want to encourage to buy supplements. They may be shopping in a related category and not really shop in supplements and you want to establish purchase behavior over time. You can initiate a journey targeted to that specific set of shoppers, they spend a certain amount, they earn a reward. It's a way of gamifying engagement and gamifying, targeting and personalization. Consumers like it, and it's also strategic from the retailer standpoint, to deliver on what matters most to the shopper. As we've alluded to, this ability to, it's not always an offer but to serve a content that's relevant to the consumer based on their needs and based on what their interest are, so it could be a dietary plan they're following. Or it could be an association of recipes that are relevant to the items that you add to your cart or your list or based on your buying behaviors serving up those recipes that are relevant to me. Also, in terms of how you engage with those shoppers, you have to think about the ability to target offers to specific shoppers and use all of your channels as Todd spoke to you earlier, in terms of omni-commerce and being relevant with the offers but also being contextually aware of when you deliver those offers to the customer and how you deliver them. Setting up recurring programs like loss shopper programs, lapse shopper programs, best shopper programs, those can all be automated, certain criteria can be set that can trigger to go out at a certain time, making sure that you're optimizing your targeting to those specific shoppers. Behavior-based triggers based on digital activity, based on e-commerce activity. All of those can be automated, again, to optimize not only the relevance to the shopper but the time to when those go out. Then creating multi-layer journeys that take advantage of an omnichannel approach to execution, and just an example of what that might look like, if you're managing a large offer bank, you're applying recommendation algorithms, purchase probabilities, business rules that control the ultimate output, you can push those promotions out to the website, to the mobile app. In this case, I've received two new offers this week that have been added to my pool of available offers. At the same time, you want to push that to the email as well. In the weekly newsletter that goes out on the ad break day, you see those same two offers in email. Additionally, on the website and in the mobile app, I see a promotional content for pets and a new offer for a new item on pets because I'm a pet household. I see that same content in email. Lastly, they recommend items to me that are relevant based on my purchase behavior. In an email, I see those same recommended items. Whether I go to the website, I go to the mobile app, I go to email, I'm seeing the same personalized content that's immersing the consumer in all the different channels they may opt into, because the consumer's making the choice on what channels they want to engage with you through. It's not up to the retailer anymore, the consumer is dictating the terms. At the same time, I may send out a push notification that says, "Hey, Randy, you've got some great deals," when I swipe here, it takes me into the app. At the end of the day, and Todd alluded to this, you want to track, measure everything you do. You want to connect all the dots, correlate digital activity to in-store activity. If you recommend an item to a shopper on your website, you want to track the impression that item generates. You want to see if that item was added to a list or to a cart. You then want to follow that item to an e-commerce transaction or if they resulted in an in-store transaction. You create this holistic view of the shopper, how they engage with you both digitally and in an analog in-store environment, and understand all the ways that they engage and what channels they engaged through. Being able to track and measure all activity gives you a significant opportunity to monetize your digital footprint. This is kind of the next big opportunities in retail and particularly in the grocery sector, is the ability to understand shopper behavior and then monetize your digital footprint accordingly. At the end of the day, we understand that it's a journey and we look at it in terms of three key phases. There's the foundational components that Todd spoke to. You need a unified data platform. You need an advanced analytics personalization framework. You need a unified digital platform that I just spoke to. The ability to engage your shoppers digitally in personally relevant ways and then to execute your promotions across all your digital channels. Then you have to consider operationally, all the data and insights in the world, algorithmic models are one thing but if you can't operationalize those to engage with your customers, and to move your business forward, then it's not doing you any good. Lastly, you want to optimize the experience. Again, through some of the things that Todd spoke to, with machine learning to drive promotional efficiency. AI and purchase probability do not just deliver relevant items but deliver [inaudible 00:42:36] the right time to the right customer. Then this opportunity to monetize the digital footprint. Everybody's in their own journey. The time to start is now wherever you are. I'm going to flip it back to Tim, and let you take it from here. Denman: Thanks, Randy, Dan and Todd. Great presentation, every one of you. We got a lot of great questions here. I think we have a few minutes left that we could get to some questions from the audience. Dan, we got a couple of questions for you. Obviously, you talked a lot about the changing approach, focusing on your higher merging clients, your best clients, your best customers. Have you noticed an increase in engagement since you made that switch and started focusing on your core customers more? Sanders: Yeah. Tim, thanks for the question, whoever out there sent that in. That's one of I think great benefits of clarifying who you're pursuing and tailoring your messaging to meet their specific interest. Our view is, this level of engagement that we're beginning to see, is becoming so profound and so important to the way we think, that we actually envision becoming more active in creating strategic partnerships in which the ecosystem that these customers participate in, is more easily accessed. For example, if someone's a healthy enthusiast, and we're resonating with what it is that we have to offer, we also understand that there are partnerships, whether it be in organizations that promote, exercise yoga, hiking, companies that sell items that are of interest to our customer segment like an REI, advocating outdoor health and exercise. We're finding that there's a real desire, given that there's a lot of trust between consumers and their supermarkets, the people that they trust to curate the assortment for food, to open that up and really grow the ecosystem and become a very long term, very sticky customer and that of course, is the pixie dust of any great retail brand relationship. Denman: We have another question here. We spent a lot of time today talking about retailers obviously, but there's a question here about the role manufacturers play in this whole personalization effect. I'll throw that out to the panel, anyone that wants to grab that question: What is the role of manufacturers in this new age of digital personalization? Michaud: Take the first stab at this, if it's okay. First, this doesn't work without their participation. They need to be part of this digital transformation that's happening and so, there needs to be a willingness to make investments and collaborate with the retail partners on these new methodologies for engaging with shoppers. Now, again, the price is actually pretty high for them where we're seeing diminishment of return for traditional trade funds, mass promotions, etc. The ROI for brand partners ultimately, by collaborating with retailers on more personalized, targeted campaigns and engagement is much higher. Lower spin higher return and so, my view is this doesn't work without that the brand partners collaborating all the way. Crimmins: I think too I'll just add on onto that, that this opportunity to get closer to the customer, to be able to, as Todd said, to collaborate but to be able to deliver relevance to the shopper, both in terms of the CPG brands and the retailer experience creates a unique opportunity that they haven't had before. The use of data and the leveraging of analytics and this ability to personalize that experience is just going to benefit both the retailer and the brands. Denman: We got another question here about personalization. Obviously, we talked a lot about the digital aspect. What about in-store? Can you give an example of in-store applications that are either available today or that will become available? Michaud: First comment will be time and location awareness. We do need to think about our channels in-store, whether it be signage, digital signage, engagement ultimately with the self-checkout engagement with the point of sale. There's all of these touch points that are shaping the experiences of our shoppers. I want to know ultimately, when you think about location awareness and time awareness, I want to know the shoppers walking down aisle three and I want to know that they're essentially connected and I have the ability to encourage them to buy something that they would like to add to their basket, save some money or just help them through that in-store shopper journey. I see this is influencing the shopper at the most important point when they're in the store rather than we've seen models where many of us have been at the point-of-sale where we get all of those coupons after I've already paid for my groceries. That model where I'm trying to shop for the next time, I think is giving away yet shaping the shopper experience while they're in the store and engaging with them, not in an intrusive way but in a value adding way. Crimmins: Yeah. I think just in terms of using personalization and there's a variety of different applications for the in-store, the ones that Todd spoke to in terms of all adjacencies, in being relevant as part of the in-store experience but also, it's extended at the kiosk and extended at the pads. We're seeing a lot of customers that are using iPads in-store from a customer service standpoint, but also to help give the customers another channel that they can access to personalized content. Especially with older customers may not have access at home or they're more reliant on the in-store experience and getting some of that same personalization and that same experience that you might get on web and mobile and in-store through iPads and through kiosk. I think there's a lot of different applications for bringing that same experience into the in-store experience. I might also add just in terms of the physical building and the people in it, anytime we can know that one of our best customers is in the store, it's great opportunity for our store manager to interact, perhaps provide some special surprise and delight that would make that customer feel really special and it's something that I think is possible today. Maybe not pervasive, but I think it will be in the years ahead. Denman: Awesome. Dan, we actually have some question for you. Are you doing anything around that information that Randy presented about the changing diet concerns of for your 30% who have some sort of non-medical dietary restriction? Can you use that information to personalize any communication with non-medical dietary restrictions? Sanders: Yeah. It's a really great point that Randy made and the Todd echoed as well and that is that so many of our customers have reached a point in life where either they have the time now as boomers to really research and think about how they want to live their celebration years, most of them are thinking in terms of travel and golf, and tennis, and kayaking, and all of these things that require mobility. They are eager to come to the store and interact with our teams to talk about supplements and foods, fresh foods in particular, that will help promote that sort of lifestyle. But I would say also, you have a lot of folks on the other end of the spectrum that are just now entering the workforce and they have a very different sort of idea about the companies they want to do business with and the products that they want to purchase. I'm 61 years of age, when I grew up my thinking was heavily persuaded by consumer packaged goods and their television advertising and all of that era of branding that became so powerful. But today what we're finding is, as Sprouts, which is a classic example, we're a format that doesn't sell Coca-Cola or Pepsi or Frito-Lay, not that those aren't good products, but they don't fit the curated assortment that we're offering. But our customers are coming in, they're looking for great stories about smaller companies that have a real commitment to clean eating and to clean ingredients and to really responsible harvesting and so forth. This wave of folks that are coming into the workforce today seem really interested in putting their money with organizations that walk that talk. Denman: Great. I think we are almost at the top of the hour, so we're almost out of time. But I think we have time for at least one more question. I know we touched on this in the beginning. Obviously, the world has changed with the virus, obviously, grocery has been very much affected especially in the beginning. If the case is, and they are going back up, if we see a rush on panic buying again, if we're not allowed to go to stores as much. What effect does that have on personalization? When it's no longer the great experience you're looking for but you're really just looking for a place you could get the food and the supplies that you need, what does that do to the world of personalized efforts? Crimmins: I can take a stab. I think you have to kind of think about what kind of take a step back and look at what personalization means to your organization. During the pandemic, there obviously have been certain priorities in terms of what they're trying to operationalize and what they're trying to accomplish. But the commitment to an approach of serving your customers and their relevant needs makes sense no matter what the situation is. There're applications of: How do you manage inventory? Or for e-commerce, how do you provide in contact with shopping apps that you're providing more relevance to the shopper and more ways that they can engage with you to meet the demands of the time. I think it's not so much about personalization, as [using] personalization and data and AI and some of the things that we talked about, to meet the conditions of the market and the demands in the market at any given time. Michaud: I just had one comment to what Randy said, and Dan's really the expert on this. But one thing we know for sure is shopper demand patterns when they're in the store versus when they're doing curbside or home delivery. Those are different channels, the way they behave is different. We can't take this universal approach and just assume it's going to work in these different channels. Shoppers are maybe less price sensitive to certain items when they're shopping online. They're engaging with retailers fewer times, bigger baskets and so, ultimately, this is all the more reason for us to be very channel specific in how we engage with shoppers. Ultimately, it is about understanding what the shopper and their data is telling us so we can best serve them. Denman: Wonderful. Best serve the customer, that's as a great final word. That's what it's all about, right? We are out of time, if anyone has any more questions for the panel, please feel free to reach out to them directly or through RIS News, and we'll put you in touch with them. But for now, deep thanks to Randy, Dan and Todd for taking the time today. Thank you everyone for listening. Thank you to Hypersonix for sponsoring this event. Until next time, take it easy and be safe out there.

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