AI Won’t Replace Merchandisers — It’ll Make Them Superhuman - The Retail Podcast

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Again, I don't think this is going to replace anybody.
I don't think this is going to suck the creativity out of
people. It's not going to reduce that at
all. What it's going to be able to do
is just make you better, more accurate and have a lot of
financial implications. Hello, welcome back to the

(00:27):
Retail Podcast. Now you can't leave a conference
or scroll on LinkedIn without seeing how AI is having such a
disruptive impact on the industry and specific identity
AI. And I thought, why don't we get
some experts to come and tell uswhat's really happening so you,
Mr Mrs Retailer, can understand,you know, where am I going?

(00:51):
Am I on the right track? Am I not?
Should I be looking at this? Should I not, what's the reality
right now? Because I think again, sometimes
I've, I've been at conferences thinking that is this really the
reality that we where we are nowor it's just people's sort of
biassed or built impressions? And I think there's no better
person to have this conversationwith.
Noah Hirshman, ex Microsoft colleague.

(01:13):
So Full disclosure, but someone who I've worked with and someone
who can, you know, hand on heartsaying that he's got some
merchandising experience just a little.
Noah, Hello, welcome to the show.
Hey Alex, good to be here. Thanks for having me.
Well, it's an absolute pleasure.So Noah, why don't we frame this
for people who are like they're super interested in AI?

(01:34):
They are. From a merchandising background.
And so therefore, their lens is not necessarily the same as
someone from tech because tech will probably take a different
view on this and just frame the conversation that we're going to
have today, if you don't mind. So my background is really about
retail merchandising and I've been doing it since many, many,

(01:55):
many years. I started out in the electronics
business and I also will help build iconic businesses at
Amazon and at eBay. But merchandising obviously
extends to all categories, grocery, fashion, you know, all
sorts of all, you know, Home Depot kinds of things.
And so it's really, in my opinion, and of course, I'm

(02:16):
biassed, right? It's the hub of the wheel.
I mean, I always make. He added to Yeah, sure, the
Apple Store has great fixtures and fantastic customer service,
but if it didn't have the iPhone17, nobody would care.
Yeah, right. It's really about the product.
And so it starts from there. And that is sort of the hub of

(02:36):
the wheel of retail because oncethere's an assortment and the
product is great and somehow better than the competitors
price better, better quality, more features, etcetera, then
that can be pushed out to the rest of the organisation,
including obviously supply chainand things around vendors and
manufacturers, marketing in store merchandising and and and

(02:58):
set up sales training, e-commerce, etcetera, etcetera.
So really getting the assortmentplanning right and the product
and the pricing right is the whole all what?
And once that and gone, you can move it out.
Now the problem is, is that thathas heretofore been a very
manual process, right? And, and you know, for me coming

(03:21):
back and you know, even as far back as the 80s and the 90s
where you had to do things on spreadsheets and do manual
calculations. Let's see, I have 50 in stock.
I sold 30. I need to buy another 20.
Don't let kind of stuff and all the way to, you know, it's on
sale, you know, it's usually 999.
Now it's on sale for 8, 99 and pushing all those things out is

(03:42):
very cumbersome thing. So yeah, AI is a great use.
Now I am going to be very opinionated about this one part
of AI, which is AI can be, you know, something that can be, you
know, take, take, take people's jobs or take people's things
that'd be more efficient and therefore save working hours.

(04:06):
But that's not really, in my opinion, the great thing about
AI. The great thing about AI is that
it could do your job. It could do a better job for you
as an assistant. You know, Microsoft has Co
pilot, obviously, and a lot of people are thinking about, OK,
this is sort of my the person who works for me.
This is my underlaid, you know, that that that that is in in my

(04:30):
department. Now.
They don't they're not a human, you know, they're an algorithm,
but still like kind of work for me.
And the truth is, is that when you look at the creativity, the
that goes around buying and merchandising, it's really a
half, half night. It's got your right brain, which
is what's hot. What's my gut feel?
What's the fashion trend going to be?

(04:50):
What's the colour next season going to be?
And can that be replaced by AII?Don't think so.
I mean, I think that that is thehuman to human conduct,
understanding your buyer, understanding your customer in
your market. Can AI hope you get much more of
the information of the trend prediction faster?
Absolutely. But you use that as as a tool,

(05:11):
right? Yeah.
So then, you know, the next thing is how do we price it?
Well, right now a lot of people are still pricing on gut feel.
Oh, or based on the competitor. But the truth is there's a whole
other thing about pricing elasticity, which is a very kind
of long and involved mathematical analytics process
that most people either don't know how to do or they just

(05:34):
don't want to be bothered with it because it's really painful.
So that's something that AI could do very, very quickly.
And that doesn't really replace something.
It just enhances or augments what you already do.
And there's a million examples besides that as well.
So what I hear is you still needa human in the loop to bring
that element. But obviously the data that

(05:55):
human has access to is faster, wider, broader and that can be
bought to them, right. For this sort of looking at the
future of trends and how am I going to what am I going to
focus on in next season or what,what are the products that I
need or colours. But in my mind they're still
losing the signals because when I look at.

(06:17):
I mean it's. Such a silly thing, but when I
look at for example, K Pop DemonHunters and now most, most
retailers missed that opportunity because they weren't
they didn't have the signals built into their business to
pick up on trends, real trends, not what Disney's telling,
right? They completely missed the
marketing opportunity. They weren't able to bring out

(06:39):
product, they weren't able to bring out relevance.
And so therefore culturally during that season, they're a
little bit less relevant, they're a bit more dated.
And so I obviously, I think maybe that takes the
conversation in a different way,but I, I just think that the
signals that retailers need are still lacking.
So if we zoom in a little bit more into merchandising and how

(07:02):
the merchandiser of the future take me through what that looks
like, what does the merchandiserof the future look like?
Yes, So, you know, first of all,you're spot on with the K pot
even hunters thing, right? I mean, this is really about
identifying trends. You know, there's companies that
will scrape 10 million Instagramphotos to try to figure out what
the next colour of the feature is going to be.

(07:23):
And those are the kinds of things that again, is that mix
between left and right brain movement, creativity and
analytics. Be able to have the data, but
not only just the data, sort of the compute power and the
processing power to make sense of that.
So how you find those trends? OK, well, once you can do that
and either you're a manufacturing retailer, what we

(07:45):
call an own brand retailer like a Gucci or River Island or
something like that, that makes their own stuff, you have to go
to get that made and you have tobe able to find the right
colours, the right styles. Then there's the guys who are
the buy sell retailers like a Best Buy, you know mostly by
name brand products from suppliers.

(08:05):
You have meal that identify which suppliers you're missing
and what things are going to be hot.
And so this is really where the all of this trend analysis comes
in and where AI, the particularly agentic AI is able
to be able to help. But that's only number one part.
Number two-part is OK, well, where does it go and, and how

(08:26):
much should it be priced for andhow should it be displayed in
each store? I mean, then when you have 1000
stores or something like that, that becomes a very cumbersome
process. So how do you price it?
What's the information coming from the competitors?
How do you have pricing that's in a logical line step?
And then when you look at the whole product life cycle, how do

(08:48):
you price it so that you don't get stuck at the end with a
whole bunch of overstock that you have to mark down
precipitously and lose a bunch of money on because the new
product is coming and you're not, you know, able to look at
that? A lot of this stuff is basically
human capacity. I just don't have the capacity
to do all this stuff myself, right?

(09:09):
I need an agent and a digital assistant, as it were the
helping, right? And also, I don't know how to do
it that well. I can have the data, but then
what do I do with this data? How do I process it?
How do we turn it into somethingthat's actionable?
Yeah, I think, I think for me and I maybe when we come into
what the solution is, is how do I trust the data?

(09:31):
I don't have faith that this is actually, you know, if I'm
making business decisions on it,there's no, there's no
hallucinations, there's no, you know, left field data thing
data, broken data that is givingout a bad answer to me.
So I'm curious. So tell me what, what does that
look like? I appreciate you work for

(09:52):
Intellio and obviously you guys have a, an agenda model, but I'm
forgetting, forgetting in telly of one second.
What do you, what do you think the agentic agent can do for me
then? As a merchandiser in today?
What should I be expecting from technology?
Right now, you know, what it cando is it can first of all help

(10:12):
you create a very comprehensive merchandise financial plan, you
know, and that's a lot of times is done in cahoots between the
CFO and the EVP of merchandisingor whoever is it in charge of
that. So how do I say, OK, look at all
of this stuff that's going on inthe world.
Look, and what's been happening in my company specifically, how

(10:33):
do I make those two things kind of come together and build
something that is going to be able to take to the board if
we're public to be able to, you know, you used to be able to you
know, predict future performance, etc.
And then how do I turn that intoactionable?
We call the bottoms up kinds of forecasts.
So that's the first thing you could do.

(10:53):
Now the thing about AI in this agentig AI or generative AI is
that it can reason. But more importantly, you could
do these instantaneous what if scenario planning.
So you can say, OK, what if I wanted to bring my margin up by,
you know, a 200 basis points or 20 basis points or something
like that. What are the other things that

(11:14):
would need to change in order for that to happen?
Or what happens if I say, hey, you know, I'm going to close
these three stores next year or I'm going to open this or other
kinds of competitive factors. This allows you to do, you know,
super instantaneous modelling and then be able to kind of come
up with a plan that makes a lot of sense through what this would

(11:34):
normally take. If you had, you know, in the
olden days with Excel and financial planning guys, you
know, it would take weeks to be able to build these kinds of
model out these scenarios where it's in, you know, it's in only
in seconds. I got you and so therefore give
me some outcomes. What can I?
So I expect my day will be shorter in terms of because now

(11:57):
I'm getting to the conclusion a lot.
Awesome. What's the what's the outcomes
that I'll be getting from this? What did the you know the the
gas will expand and hit the you know, whatever the the vehicle,
the vessel is that I think no way your day is going to get
shorter authentic. What's going to happen is you're
just going to be better, right? You know, the output's going to

(12:17):
be better. It's going to be more accurate.
The other thing about AI, as youknow, Alex, is that it learns
from its mistakes, right? It continually gets this through
the feedback loop. And so it, you know, you can
say, all right, I'm, I'm going to forecast this.
And then it looks at the actual and says, whoops, you know, and
then it makes adjustments with the algorithm so that it it's
more accurate over time, right? Yeah.

(12:39):
So again, I don't think this is going to replace anybody.
I don't think this is going to suck the creativity out of
people, you know, as that was mything.
I always thought I could buy thebest deals and the hottest stuff
and beat my competition. And this is even more true in
the world of fashion and things that really require a lot of
vision and creativity. It's not going to reduce that at

(12:59):
all. What it's going to be able to
lose just make you better, more accurate and have a lot of
financial implications. Because if you're, look, if
you're out ahead of your productlife cycle and you are saying,
OK, I'm going to mark this down 10% now so that by the end of
the cycle, I'm down to 0 inventory or whatever, that is a

(13:21):
much better financial outcome. Then if I get to the thing, I
still have 5000, I need you to mark it down 50% below below
cost, right? So there's immediate financial
implications around not being out of stock, having successful
line steps, managing your product life cycle, being very
much more accurate in terms of your overall financial plan.

(13:43):
I mean, I think it's really the future.
It's per regular. Obviously you, you know this.
I'm not a merchandiser, but if Iwas a merchandiser, what's the
one question I would have asked you that I've not asked you?
How does it affect well, you know, how wouldn't affect my
open to buy might be one of the bits right, Because, you know,

(14:03):
you've got and as a merchandiser, you know, a lot of
people separate out supply chainfrom, you know, merchandising or
buying or what they call Venyor management lower than Amazon.
We had a vendor managers and supply chain.
But the truth is, is that how you know, how can this help me
bet you'd be better at managing my open to buy?

(14:24):
Because a lot of times what happens is, is that you get
stuck with core sellers and thattakes away your ability or
chequebook to write something for hot sellers.
And then you start to really lose traction there.
And so, you know, this is the kind of thing where you know,
where AI, especially agentic AI,can, you know, help you get out

(14:44):
ahead of that game. Another thing is running, how
does it affect market? How can we do better promotions
using AI? And I think the future of this
is, you know, people say, OK, you know, we always do this
every year we do a buy one, get one or buy X, get Y or whatever
the, you know, these, these promotions are.
And you know, is this, is this really the right promotion?

(15:06):
How do we know that a straight discount or a coupon or
something like that, is he goingto have a better result, meaning
that it's going to sell more, but at A at a higher margin
because we're just used to doingwhat we're always doing.
But this kinds of things can really challenge everything, it
can leave no stone unturned and it can really maximise or

(15:27):
optimise every kind of every part of the business.
I got you. Okay, well listen, no my brains
boggling over thinking OK all right, I got you and if I was a
merchandiser I'd be thinking I need to pick up the phone and
call you and and ask you well tell where we're intellio based.
Oh, we're based in New York. OK, fantastic.

(15:49):
All right. Well, listen with that, no.
Thank you so much for coming on the show and I look forward to
hopefully seeing you at NRS in New York.
It's always a pleasure, Alex. It's nice to see you.

All Episodes

AI Won’t Replace Merchandisers — It’ll Make Them Superhuman

Episode Transcript

Popular Podcasts

Stuff You Should Know

Las Culturistas with Matt Rogers and Bowen Yang

Crime Junkie

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}AI Won’t Replace Merchandisers — It’ll Make Them Superhuman