AI's Impact on Retail and Consumer Behavior

Novi is an AI shopping optimization platform for consumer packaged goods (CPG). It seeks to help retailers and brands ensure their products can be accurately found, trusted, and recommended by AI assistants such as ChatGPT and Claude by verifying and structuring SKU-level product data. Retailers including Macy’s, Sephora, Target, and Ulta, along with thousands of CPG brands, rely on Novi to optimize their product data for AI-driven discovery.

Kimberly Shenk, the company's CEO, discusses the impact of artificial intelligence on the retail sector during the holiday season as consumers increasingly use AI agents to perform deep-discount hunting, real-time product comparisons, and personalized gift curation. Kimberly speaks with Carol Massar and Vonnie Quinn on Bloomberg Businessweek Daily.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.

Speaker 2 (00:08):
You're listening to Bloomberg Business Week with Carol Masser and
tim Stenoveek on Bloomberg Radio.

Speaker 3 (00:14):
Right, we do want to talk a little bit more
about artificial intelligence and how it could influence the retail
sector in the coming year. Our next guest says, AI
driven traffic to retail sites this holiday season surged by
five hundred and twenty percent over last year. So what
does it mean. Let's ask Kimberly Shanks. She is CEO
of nov It's a firm that uses AI to help
connect brands with retail customers.

Speaker 2 (00:35):
Kim, great to have you here with Vonnie and myself.

Speaker 3 (00:37):
Tell us a little bit more about your company and
what exactly the role of AI to connect customers.

Speaker 2 (00:43):
What actually happens? Is it chatbots? Is it something more?

Speaker 4 (00:47):
Thanks so much for having me. Yeah, So, Novie's technology.

Speaker 5 (00:49):
We're actually helping retailers and brands increase their sales by
ensuring their products are found and trusted and then ultimately
recommended by AI models.

Speaker 4 (00:57):
So thank chat GBT, Gemini and Claude and so we
do this.

Speaker 5 (01:01):
We work with you know, leading retailers including Macy's Sephora,
target Alta thousands of CpG brands and they rely on
us to optimize their product data for AI driven discovery
by consumers.

Speaker 3 (01:12):
So when you say that, it's basically a consumer who
does something and their data is processed and recorded and
they're saying, oh, you bought that pair of pants, maybe
you would like this pair of pants.

Speaker 5 (01:22):
Is that?

Speaker 2 (01:22):
Is it as simple as something like that or is
it more sophisticated.

Speaker 5 (01:25):
It's a little bit different in terms of consumers now
flocking to chat, shipt or Gemini and asking questions to
actually do their shopping. So they're outsourcing a lot of
their research, discount hunting, you know, personalized gift curation to
the AI agent who's then gooing and finding products and
recommending it to them based on just questions and prompts.

Speaker 1 (01:47):
So who are your competitors and how do you stand
out from them?

Speaker 4 (01:52):
It's interesting.

Speaker 5 (01:52):
So there's a couple of different up and coming competitors
in the tech space who are helping brands and retailers
stand out in AI shopping. But we also have a
lot of the older, more traditional data companies because we
are a data company and we feed data with through
our partnerships with our retailer partners. So think about Syndigo
or Salsify or even Nilsen IQ some of those older
data partnership players.

Speaker 1 (02:13):
And how then do you get the edge over them.

Speaker 5 (02:17):
Yes, So a lot of what we're doing in these partnerships,
and we'll be able to announce some of them really soon,
is feeding trustworthy personalized information to the models themselves, which
is what we have seen at NOV to increase your
potential as a brand to show up in AI shopping.
So we found that you know, products that have verified
trust signals are a selected two hundred and fifty nine

(02:38):
percent more often than random chance to think like certifications, reviews, badges,
third party testing. And we're feeding this directly to the
retailers and the models so that they help the brands
show up in AI recommendations to consumers.

Speaker 3 (02:51):
So one of the things I always think about, Kim
is like, how much of what is spent on AI
to kind of attract consumers retailers or folks to retailers. So,
in other words, that AI driven traffic to retail sites,
how much of it is productive that results in actually
a consumer buying something?

Speaker 5 (03:10):
Yeah, that's actually a very interesting question. So we're seeing
the traffic start to increase. There's actually we saw from
Adobe Analytics, like we just said, five hundred and twenty
percent over last year from AI.

Speaker 4 (03:22):
But what we're not sure about yet is conversion.

Speaker 5 (03:24):
And this is just because CHATCHABT, Gemini, none of them
are publishing the conversion results, but we at NOV What
we did see is that chatgbt's shopping research answers sent
consumers directly to the brand's website eighty six percent of
the time, which means that the remainder of traffic, you know,
only about fourteen percent was sent to the large retailers
like Walmart or Target. And so what brands are starting

(03:45):
to see is more and more direct consumer traffic to
their website, which is driving conversion in sales for them.

Speaker 2 (03:51):
Interesting.

Speaker 3 (03:51):
Okay, So would you say, based on the data that
you see, because you see so much data that the consumer's.

Speaker 2 (03:57):
Doing well, that retail's doing.

Speaker 3 (03:58):
Well, like how much you can obviously break it down,
probably a lot, So give us a little bit of
insight as we get ready to wrap up this holiday
shopping season.

Speaker 5 (04:07):
Well, so what we're actually seeing is, you know, consumers
are using AI as their category manager. So think of
it as we all used to trust the big box
retailers for their ability to manage each shopping category, do
the curation for us, and that's why you walked into
a target, right. They scoured the earth for the best,
most compelling products and we trusted them.

Speaker 2 (04:24):
To do that.

Speaker 5 (04:25):
But now, and what we say saw play out this
holiday season, the consumer has shifted their trust to AI
to do the research and curation for them. So we're
seeing strong numbers and users using chat to bet and shopping,
but it's just not quite played out yet and we'll
see that in twenty twenty six.

Speaker 4 (04:42):
Is where that conversion is going to happen.

Speaker 5 (04:43):
If it's going to happen direct on the brand websites
are still in retail.

Speaker 1 (04:46):
Kimbridy, just a word on yourselves. How difficult is it
to raise money? What are the key words that investors
are looking for these days? And you know the key ideas.

Speaker 5 (04:57):
Yes, AI is definitely the hot topic. If you are
not involved in AI, doing something future with your company
that's progressing AI.

Speaker 4 (05:05):
So for example, we're an agentic commerce.

Speaker 5 (05:08):
That is what is hot for investors these days, and
that's what is raising money and getting the majority of
the capital in Soli Valley.

Speaker 1 (05:16):
Well, the very best of luck. It sounds like a
fantastic endeavor, and I know you have a lot of experience,
so I think if anybody can continue to do it,
you certainly can. That is Kimberly Shank, CEO of nov