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Monday, April 15, 2019

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Monday Eye-Opener: Questions Rise


by Kevin Coupe

Friday was a big day for Star Wars fans - it featured a couple of big reveals for the ninth film in the core series.

First, we got to learn its all-important subtitle: The Rise of Skywalker.

Second, we got to see the first teaser trailer for the film. (Many of us monitored a Star Wars festival in Chicago to see it as it debuted … but you can watch it at left if you are not one of the almost four million people who have watched it on YouTube to date.)

There’s no enormous business lesson from either of these, except maybe that questions are critically important to a successful enterprise.

Let’s face it. Each of these reveals provokes more questions than provides answers.

After all (spoiler alert!), Like Skywalker died at the end of the last movie, and we know that his sister Leia’s role in the new movie will be somewhat limited by the fact that actress Carrie Fisher passed away before The Rise of Skywalker went into production (though she’ll have some presence through the use of footage shot by not used for The Last Jedi). So who is the Skywalker who is going to rise? Rey? Kylo Ren? Someone else? Can Luke be resurrected?

And there are plenty of other questions, such as about the relationships between Rey and Finn and Rey and Poe Dameron … and that eerie laugh at the end of the trailer that sound suspiciously like a certain Emperor who we though was killed at the end of Return of the Jedi.

I think there’s another question worth pointing out within a business context.

There’s an excellent piece in Fast Company about the movie’s director, JJ Abrams (who also directed The Force Awakens, and who came on this movie when the original director left because of “creative differences” with the producers). The story looks at how Abrams is casting his company’s role in a fast-changing entertainment industry. Bad Robot, Abrams’ company, “has been a response to the question, ‘What if?’ ” Abrams says. “The great stories, the ones I love, all seem to come from a ‘what if?’”

That is a terrific and Eye-Opening approach to any business.

And in case you didn’t know, Star Wars: The Rise of Skywalker comes out at Christmastime.


Face-Off: Why Retailers Embrace Tech That May Alienate Shoppers

The Wall Street Journal has an excellent piece about how the US Congress, concerned about privacy issues and the growing perception that technology companies care less about it than they should, has begun scrutinizing “how advanced technology increasingly follows shoppers around bricks-and-mortar stores.”

The story looks at how beacons are being used “to detect customers’ smartphones as they enter the store, allowing them to ping shoppers with promotions as they browse —and see where they linger,” and how “facial-recognition technology is being marketed to retailers as a way to flag people who have previously shoplifted or sought refunds for stolen merchandise.”

The Journal writes that “retailers say new technologies are largely aimed at improving the shopping experience, helping old-fashioned stores stay competitive with online merchants. In-store tracking helps alert customers to sale items, for example, and facial recognition can let shoppers breeze through checkout stands by speeding up the payment process.

“Stores say they’ve been forced to adopt high-tech data collection tools like beacons to remain viable as consumers do more shopping online. But in-store beacons haven’t been as impactful as hoped, often sending promo messages only to customers who have the store app open, for example. So while there is trepidation, there’s also strong interest among retailers in moving to the next stages of technology, particularly facial recognition.”

Sen. Roger Wicker (R-Mississippi) recently said, “It is clear to me that we need a strong, national privacy law that provides baseline data protections [and] applies equally to business entities—both online and offline.”

The Journal goes on: “The inclusion of bricks-and-mortar stores in privacy legislation is supported by online companies like Amazon.com Inc., where executives are concerned that internet businesses could be singled out for restrictions. But it’s drawing concern from traditional retailers who worry that their cutting-edge technologies could be banned or disrupted if they are included under the privacy law.

“Retailers also fret that uniform privacy rules could limit their ability to use longstanding data-collection techniques such as customer-loyalty programs. A landmark privacy law passed by California last year prohibits discrimination against shoppers who decline to share certain personal information. That could restrict businesses’ use of loyalty programs and leave stores vulnerable to litigation, retail groups say.”

KC's View: There are competing interests at work here. Retailers - at least the savvy ones - understand that data is the coin of the realm. The more they know about their customers, they better they can serve them. (Of course, they also know that they can sell this data to outside parties, which gives them another revenue line on balance sheets that often are in distress.) This applies to both online and physical retailers, though the online variety - especially Amazon - has really shown the power of actionable data well acted upon.

But clearly, there are privacy concerns. Facebook has illustrated this vividly, and just last week, the story about how Amazon may be listening in to customers via their Alexa-powered system managed to get all of our antennae up.

This all is complicated, and I’m not going to solve the problem here. But it seems to me that a bottom line to the discussion has to be a high level of transparency - tell people what data you are collecting, explain how you are using it, delineate what the advantages are to shoppers, and then create an opt-in mechanism that empowers the customer to make the decisions.

Retailers need to be passionate, resolute advocates for the shopper. It is harder, it may not necessarily maximize every revenue option, but in the long run, it is the best and most defensible position.

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Corporate Drumbeat

From Samuel J. Associates...

"It’s a bad time to be in the business of selling groceries, and the headlines are as bleak as you’d expect: "The Retail Apocalypse Is Coming for Grocery Stores" ... "Grocery Retail ‘Bloodbath’ Is Here" ... Conversely, it is a great time — arguably the best time ever — to buy groceries."
- New York Magazine/Grub Street


At Samuel J.Associates, we have a response to this assessment:

Bull.

We think it is a great time to be selling groceries, whether you are a retailer or a supplier. That’s because a more educated and demanding consumer, no matter the demographic, will reward businesses that are innovative, disruptive, and in touch with what people need, even if they don’t know they need it.

And, we know this: Those businesses require, and are fueled by, great people.

People who don’t just get the job done, but who set the tone in an organization, establish cultural and business priorities, who build teams, and who are able to not just adapt to competitive realities, but see the future and thrive in it.

And yes, ignore dire warnings about a "retail apocalypse" and see opportunities.

At Samuel J. Associates, we have a winning record of connecting great talent and innovative businesses ... as well as innovative talent with great businesses. We exceed your expectations so that you can do the same thing for your customers.

No bull.

Click here to find out more.

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Industry Drumbeat

Join The Fresh Case Revolution!

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Stop & Shop Strike: Bad Timing For Ahold Delhaize

Bloomberg has a story about how the strike late last week of some 31,000 Stop & Shop employees, all of whom are represented by the United Food and Commercial Workers (UFCW) is both “almost unheard of” in this day and age and a matter of timing for the chain’s parent company, Ahold Delhaize.

The story says that “the discord comes at a bad time for the grocer, which generates about 60 percent of its sales from the U.S. and is trying to revive Stop & Shop after several years of sluggish performance. The company has pledged to invest up to $150 million annually in the 413-unit chain, remodeling stores to devote more space to categories like fresh produce and meat.”

Stop & Shop isn’t making the investment on a whim; the fact is that toughening competition, both from online retailers and an array of bricks-and-mortar retailers ranging from Whole Foods to Aldi, has demanded that Stop & Shop do something with an aging fleet of stores.

Bloomberg writes that “the United Food and Commercial Workers Union and the company disagree on health-care benefits, pensions and Sunday premium pay,” with some quarters describing the distance between the two sides as a “big gap.”

KC's View: Drove by a couple of Stop & Shop stores near me this weekend, and it looked as if there were more protestors walking the picket lines than there were cars in the parking lots.

I know I didn’t go in - I live with two members of the teachers union, and so in our household we respect picket lines.

I cannot imagine that Stop & Shop wants this to go on very long … as Bloomberg correctly points out, there is much for the company to do, and distractions like these aren’t good for business.

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Corporate Drumbeat

From The Organic Produce Summit...

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FDA Goes After Walmart and Kroger Over Tobacco Sales To Teens

CNBC reports that the US Food and Drug Administration (FDA) has sent letters to a number of retailers - among them Walmart, Kroger, Family Dollar, 7-Eleven, BP, Casey’s General Stores, Chevron, Citgo, Exxon, Marathon Petroleum, Shell and Sunoco - threatening them with fines for illegally selling tobacco products to minors.

According to the story, the letters were dated April 5 and gave the retailers 30 days to submit “detailed plans” for how they are going to rectify the situation.

“Retailers in particular are on the front lines of these efforts to reduce the health consequences of tobacco use and nicotine dependence,” the FDA said. “Because tobacco use is almost always initiated and established during adolescence, early intervention — including making sure tobacco products aren’t being sold to minors —is critical.”

In addition, FDA has suggested that “breaking the law and paying the fines ‘should not simply be viewed as a cost of doing business’.”

KC's View: It shouldn’t be. But it probably is. Shame on them.

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Industry Drumbeat

From Cornell University...


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Almost 6,000 Stores Have Closed This Year, More Than In All Of 2018

The New York Times reports on new data from Coresight Research saying that “as the internet continues to change shopping habits, stores across the United States continue to close. Less than halfway through April, American retailers have announced plans this year to shut 5,994 stores, exceeding the 5,854 announced in all of 2018.

The story goes on: “Retailers in good financial shape are paring locations as their leases expire, while brands like Payless ShoeSource and Charlotte Russe are filing for bankruptcy and shutting hundreds of stores within months. Payless and Gymboree — which both filed for bankruptcy this year for a second time — account for almost half of the announced closings.”

And, the Times writes: “The announced closings still have a ways to go before they reach the 2017 record of more than 8,000. And openings and renovations are still taking place. Coresight has tracked announcements of 2,641 store openings by retailers in the United States this year, compared with 3,239 for all of 2018. Many of this year’s openings are dollar stores and other discount chains — areas that are less threatened by e-commerce right now. Online retailers like Warby Parker are also opening stores, though on a small scale.”

KC's View: It isn’t an absolute rule, but I think it is a pretty good starting point to work on the following premise…

Bricks-and-mortar stores will survive.

But not all of them.

Just the good ones. The ones have have differentiated experiences, products and people. The ones that are both relevant and resonant. The ones that leave no stones unturned in their desire to satisfy shoppers and create their own kinds of ecosystems that make their stores the first and often best choice for consumers.

But if you don’t do this stuff? If you are just a mediocre, undifferentiated store that depends just on location and the illusion that being a local retailer makes you entitled?

Well then … turn out the lights., The party’s over.

Debate Persists Over What ‘Natural’ Means. Also, What ‘Transparency’ Means.

Bloomberg has a story about a lawsuit over misleading advertising that Hormel, the accused company, managed to win … though it may have been on a legal technicality that makes it a hollow victory.

Here’s the context from Bloomberg:

“On April 8, the Superior Court of the District of Columbia - a jurisdiction with stringent consumer protection laws - dismissed a lawsuit by the Animal Legal Defense Fund (ALDF) alleging Hormel was misleading consumers. The court held that as long as manufacturer labels are approved by the USDA, the advertising can use the ‘natural’ claims. ‘[I]f a producer can accurately use a term in a label,’ the court wrote, ‘the producer should be able to use the same term in its advertising’.”

But … in another filing, Hormel has described how “it makes some of its Natural Choice products, as well as its perception of what consumers think they’re buying …In statements disclosed in the filing, a company executive said the same pigs it uses to make its famous Spam brand meat product are also used in Natural Choice pork products. Those pigs are often given antibiotics and are rarely allowed outdoors.”

According to the story, Hormel says, “Our position has always been that Hormel Natural Choice products are produced, labeled, and marketed in conformance with all applicable laws and regulations. The USDA’s Food Safety and Inspection Service has specifically reviewed and approved the labels for Hormel Natural Choice branded products, including scrutinizing and approving the ‘Natural’ and ‘Preservative’-related language.”

However, David Muraskin, a food project attorney at Public Justice and lead lawyer for the ALDF, call it “a massive attempt to manipulate and dupe the consumer to purchase something they have no intention to purchase.”

KC's View: Speaking as a civilian/consumer - I am neither a lawyer nor a food company executive - I’d like to suggest that while Hormel may be disingenuous in its approach, the core problem is with regulations that in some cases are a joke. I cannot imagine what the regulators were thinking when they posited that meat from animals given antibiotics could be labeled as ‘natural.’ I’m pretty sure that’s not what consumers are thinking when they see that word, and maybe it is time that regulations reflect reality, not what lobbyist gave the most money to some political party. (Forgive my cynicism.)

This is especially true at a time when, as Bloomberg writes, “American shoppers are reaching for healthier, more environmentally and animal-friendly meat products, with 39 percent saying ‘all-natural’ is the most important claim when purchasing red meat, according to a recent survey by Mintel.”

Is USDA’s definitions don’t match consumer expectations, then we have a problem - and the problem is with the USDA, not shoppers.

By the way … it’d be nice if Hormel went beyond what the government expects and actually live up to what consumers expect. They should be transparent, not tricky.

Time Crunch: Alibaba Co-Founder Raises Overtime Hackles

Bloomberg has a story about Jack Ma, the billionaire and co-founder of e-commerce behemoth Alibaba, who has created a bit of a firestorm by endorsing “the sector’s infamous 12-hours-a-day, six-days-a-week routine as de rigueur for passionate young workers” and dismissing “people who expect a typical eight-hour office lifestyle.”

Essentially, Ma has endorsed what is called “996” - a 9 a.m. to 9 p.m., six-day a week work schedule. “Those who can stick to a 996 schedule are those who have found their passion beyond monetary gains,” Ma says. While he has conceded that forcing employees to work grueling hours was ‘inhumane,’ Ma has pointed out that some want to do so because that’s how they achieve personal and economic fulfillment.

The Bloomberg story points out that “beyond Ma, several of China’s most prominent industry figures have also weighed in on the controversy. Richard Liu, chief executive of Alibaba arch-foe JD.com Inc., said in a recent post on his WeChat moments that, while he would never force staff to work a 996 schedule, people who slacked off were not considered his ‘brothers’.”

Acknowledging the controversy, Ma says, “I could have said something that was ‘correct.’ But we don’t lack people saying ‘correct’ things in the world today, what we lack is truthful words that make people think.”

KC's View: Well, he accomplished that.

It is worth pointing out that some of these words are being uttered from a defensive posture - tech workers in China have been protesting working conditions, in part because of stories about “programmers and founders dying from unrelenting stress.”

Look, I can’t remember the last time I worked a 40-hour week. I didn’t even do it when I worked for other people, whether management deserved that level of commitment or not. It just isn;’t how I’m built.

But I have to say that I find this managerial veiled embrace of a “996” work environment to be sort of medieval and exploitive … a way of taking advantage of people’s commitment. It also could be argued that maybe they need to hire more people to get the job done, and maybe pay people more money to compensate them, or force people not to work hours that can be unhealthy and unforgiving.

E-conomy Beat

Curbed San Francisco reports that Amazon has assured city lawmakers there that it will begin accepting cash at its checkout-free Amazon Go stores in the city, a response to a proposed city law that would ban stores that do not take cash.

There are two Amazon Go stores in San Francisco, with plans for a third.

“At a meeting of the Board of Supervisors Public Safety and Neighborhood Services Committee,” Curbed writes, Supervisor Vallie Brown said that “Amazon will begin to accept cash in their stores after folks like me and others correctly called out the discrimination and elite nature of the current business model, which requires customers to have bank accounts and a smart phone>”

Brown also said that Amazon had assured her that it is also “looking at ways to accept SNAP benefits.”

FastNewsBeat

…with brief, occasional, italicized and sometimes gratuitous commentary…

• The Atlanta Business Chronicle reports that Macy’s is rolling out Story, a retail concept it acquired last year, to some 36 of its locations nationwide. Macy’s described Story as “taking the point of view of a magazine, changing like a gallery and selling things like a store. The shop reinvents itself every four to eight weeks, completely redesigning the interior of the store and its selection of merchandise in correspondence to a theme.”

"The Story at Macy’s experience feels a lot like a real life version of scrolling through Instagram," Story founder and Macy's brand experience officer Rachel Shechtman says. "You discover things you weren’t looking for but are inspired by all the fun finds – the second you see it, you need it!”

I am all in favor of retailers reinventing all or part of their stores as a way of reinvigorating the experiences that people have when they walk into those stores. But, to be honest, I think they need to be careful about the comparisons they draw. Suggesting that it is a physical version of Instagram makes a lot of sense … it is a reference that the modern customer gets. But comparing it to a “magazine” … maybe not so much.

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Industry Drumbeat

From FMI...

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Your Views: Closing Gaps

Responding to a story last week about the generation-rooted gap that seems to exist between what young workers want and what some employers are willing to offer, MNB reader Rich Barle wrote:

The headline should read “Younger workers have always had a gap between work expectations and reality (and the trend continues)”.  The following might sound like a “Who’s on 1st spin off” but….

When you are first starting out, you always think you know more than you do, faster than you do, and you don’t realize what you don’t know until you are older and have life experiences of ups and downs for you to realize that you didn’t know as much as you thought you did when you were younger.  It was that way when I started out back in the dark ages, and it hasn’t changed, and will likely never change.  It’s common for a generation to say that the generation after them are lazy, entitled, not smart, etc. and that will likely never change.  Our parents did it to us and now we’re doing it to our kids.  I’ve met a number of hard working younger kids (my daughters included) that are very hard working and ambitious, just like I’ve worked with people 50+ that have less than stellar work ethic, so it goes both ways.




Regarding the cashless store debate, MNB reader Tim Moman wrote:

I like they idea that has been raised previously in your blog … only Amazon Prime members can go in. Now the store has “club status” and I bet there is a legal loophole somewhere for that as it relates to being cash-free. Also, anyone shelling out the prime membership dues .. likely has some association with a bank .. therefore they are “Banked”.



Kate McMahon wrote a piece last week about how she was less than impressed by the new price cuts at Whole Foods, which prompted one MNB reader to write in, linking her story to the speculation about Whole Foods moving into abandoned Sears locations:

I compare retail meat prices as a part-time job. I have been monitoring Amazon's "lowering prices at Whole Foods" and I assure you that this is a relative term. Other than the fact that Whole Foods offers a clean store with a variety of expensive foods, I truthfully do not understand why anyone would want to shop there! Their prices a sky high. The clientele that shops there appear to be upper middle to upper income levels which begs the thought that this is more status than anything else. (Probably a little to do with location.) With this in mind I can't see WF looking at many closed locations, of the listed stores, as a possible location for a "bricks and mortar" location. Their appeal is high-end and truthfully I can't imagine many of the closed locations fit that scenario. Just my 2 cents.



On the subject of concerns about Amazon personnel listening - via Alexa-powered devices - to the people who own and use them, one MNB reader wrote:

Feels like there’s been just a little too little outrage on the ‘Alexa is listening’ topic. One of the more insidious, dismissed as ridiculous Orwellian conspiracy theories turns out to be true!

We've been taping over the cameras on our laptops, now I suppose someone will make some money coming up with a way to defeat the ambient listening mode of Alexa. Hate to think which of the remaining 3 senses (smell, touch, taste) will be secretly deployed next.

Separately, I am now regretting calling Alexa a bitch all those times when I thought she wasn’t listening.


MNB reader Tim Phillips wrote:

For many years now I have been trying to convince my better half to place an Echo in our home to assist in our daily activities. She has shut me down at “hello” due to her concerns about our privacy and what the Echo may capture in its memory.

She (as usual) has been absolutely correct on this. Amazon has not been forthcoming with its consumers and she feels very justified with her decision on this. This product will never show up in any of our homes or those of our family. To me they have been a bit shady in their dealings on this. I am a passionate Prime member and viewer of their content but also think differently about them now and it may impact my transaction with them.




And finally, regarding the contretemps between Amazon and some of its competitors - Amazon challenged them to raise their minimum wages, and they challenged Amazon to actually pay federal taxes - one MNB reader wrote:

I am in agreement with most of your comments regarding Amazon and I am a huge Amazon customer and Prime member. However I am shocked by the US Corporate Income Tax issue of 11 Billion in profits with a tax refund of over 100 million.

I have no doubt that Amazon pays corporate income taxes in some states and they obviously return millions in collected sales taxes to various governments and agencies and in fact they may pay corporate income taxes in some other countries. But a tax refund from the federal government of the USA on profits of 11 Billion?????? How is that supposed to make me feel about the deficit, about what I pay in Fed taxes, about the poor infrastructure in this country, about the high cost of health care, etc, etc, etc.

I am rethinking my attachment to Amazon in spite of the benefits that they offer me as a shopper.

I also fully realize they are using legal means to avoid paying the taxes. This is about our tax laws, about fairness and equity, about building a better world not just a bigger more intrusive company. For me it becomes a moral issue.


I would totally agree (especially today) that the US tax system needs to be overhauled.

But I have an admission to make. I have never, ever paid more taxes than I’ve been required to because of any moral or ethical concerns.

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From Webstop...

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From The MNB Sports Desk

Tiger Woods yesterday completed a decade-long comeback - a period that was punctuated by physical and personal tribulations that added up to a championship drought - by winning his fifth Master title and his 15th major tournament.

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Industry Drumbeat

“RETAIL 2020: What’s The Future (WTF)?” - A New Presentation by Kevin Coupe


In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see the fast-evolving retail world through a radical new technological, demographic, competitive and cultural prism. These issues all combine to create an environment in which traditional thinking, fundamental execution, and just-good-enough strategies and tactics likely pave the path to irrelevance; Coupe lays out a road map for the future that focuses on differential advantages and disruptive mindsets, using real-world examples that can be adopted and executed by enterprising and innovative leaders.

Constantly updated to reflect the hand crafted news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed over 30 years of writing and reporting about the best retailers and retail strategies, “RETAIL 2020/WTF” will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand. See a sample at left…




Here’s what Lori Stillman, Executive Vice President - Analytics, Insights and Intelligence, Advantage Solutions, has to say about a recent appearance:

"Kevin joined us as a moderator and facilitator for a two-day client executive event we hosted. His role in the success of the event went far beyond his time presenting and sharing his great wisdom and content. From the moment our planning process began and we selected Kevin as a key part of our program, he dove in and worked with our team to review session topics, ideate on programming and help ensure our overall event delivered on the goals we had established. His quick wit, deep industry knowledge and ability to synthesize conversations into key take-aways enabled us to hit a home run!”

And, from Joe Jurich, CTO of DUMAC Business Systems:

”Kevin recently participated in and spoke at our Annual User Conference.  Our group consisted of independent retailers, wholesalers, and software vendors – a pretty broad group to challenge in a single talk.  While his energy, humor, and movie analogies kept the audience engaged, his ability to challenge them to think differently about how they go to market is what really captured them!  Based on dinner conversations afterward, he appeared to have left everyone thinking of at least one new approach to their strategy!”

Want to make your next event unique, engaging and entertaining? Contact Kevin at kc@morningnewsbeat.com , or call him now at 203-253-0291.

Now back to regularly scheduled editorial...

A Retail Tomorrow Podcast: Storytelling & Influencer Marketing, From AI To Pop-Ups

Hooray for Hollywood! This podcast comes to you from the Retail Tomorrow Immersion conference in Los Angeles, which may have more storytellers per capita than any other place on earth. With visits to Google’s new campus in Playa Vista, in the converted hangar where Howard Hughes’ Spruce Goose once resided, and to some of the most interesting and experiential retail spaces in the city, this conference also featured several sessions that, now as podcasts, bring this fascinating content to you.

First up - a discussion of disruptive storytelling - told through stores, pop-ups and, coming soon, AI and VR - that is changing the way marketers connect with and influence existing and potential customers.

Our guests:

• Cody Rapp, CEO of Calmist, a fascinating and growth-focused retail concept recently featured on MorningNewsBeat.

• Lori Schwartz, founder of Tech Cat, which helps marketers shape their narratives in a fast-evolving environment.

• Amanda Solosky, co-founder/CEO at Rival Theory, which is developing game-changing AI capabilities that definitely will impact the relationship marketers have with shoppers.

• And Mariya Zorotovich, director of Responsive Retail Strategy and Incubation, at Intel Corporation, which helps to make all this possible.

The host: Kevin Coupe, MorningNewsBeat’s “Content Guy.”

Pictured, from left to right:

Kevin Coupe, Mariya Zorotovich, Amanda Solosky, Cody Rapp, Lori Schwartz.





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