Digital innovation and technology trends in retail

As Walmart places growing emphasis on digital innovation, the company’s CFO and head of investor relations outlined how supply chain automation, in-store technology and remodels are impacting labor, sales and consumer behavior. 

Executive Vice President and CFO John David Rainey and Senior Vice President and Head of Investor Relations Stephanie Wissink shared details about what the mass retailer is doing while at investment banking advisory firm Evercore Inc.’s conference on June 14.

Customers who have a very good experience with e-commerce are more likely to come back, Rainey said, noting that as they become more accustomed to the online experience for grocery shopping, they mix in general merchandise to their baskets. Digital upgrades for its supply chain and stores are changing how workers do their jobs, Wissink said, according to a Seeking Alpha transcript of the Evercore ISI Consumer & Retail Conference. 

Supply chain and store tech investments

Walmart is looking to make its stores more efficient by using micro-fulfillment centers and automated storage and retrieval systems in its facilities, according to Rainey. “We're making a tremendous investment in our supply chain,” he said.

In October, the retailer announced plans to buy MFC developer Alert Innovation for an undisclosed amount. Walmart President and CEO Doug McMillon said at a conference in December that Walmart is working with four different partners on four types of fulfillment centers along with using store-level fulfillment. Walmart has also worked on outfitting its existing distribution centers with automated storage and retrieval systems, McMillon said.   

These efforts to create an automated supply chain are “making it a lot more efficient for us and enabling us to better serve our customers, reduce wait times, have more accuracy in terms of the items that we're picking for that basket because we're continuing to see consumer behavior shift in that direction where they recognize that it is a very convenient process,” Rainey said during the Evercore event. 

Walmart is expecting the unit economics around fulfillment to improve by roughly 20% in roughly five years when the retailer has finished its supply chain transformation. 

“We're going to have roughly 65% of our stores that are served by automation,” Rainey said. “And so this provides a better experience, more integrity to the experience with our customers also lowers our unit costs.” 

While the retailer is placing an emphasis on its supply chain technology, investments in electronic shelf labels are saving workers from hours of work, Rainey said. 

The retailer disclosed during its recent Associates Week that some of the remodeled stores are seeing an uplift in sales by as much as 20% after the remodel is finished, Rainey said, noting that the refreshed locations include improved waypoint finding, signage, wider aisles, displays around apparel, more brands that the retailer doesn’t usually carry and overall a “different look and feel.”

“We've seen this historically, when you have a remodel, you're going to get a little bit of an uplift in sales and sometimes that abates over time as that newness wears off,” Rainey said. “The uplift that we've seen around this [remodel effort] is much, much higher than what we traditionally see.”

Rainey continued: “We would again expect it to decline over time. I don't expect any of us to believe that we're going to have a 20% uplift in sales [in] perpetuity. But even if it's a fraction of that, this is a highly accretive ROI initiative for us. And so we're quite excited about it.”

Rethinking labor allocations

As Walmart continues to automate its supply chain and also revamp its stores, Wissink said the company is reconsidering how to integrate its associate workforce. 

Walmart does not expect to make major changes to its associate headcount and is planning for that workforce to stay relatively flat over the next several years, Wissink said.

“It's redeploying each individual person to do different jobs and upskilling a good majority of our workforce into places that they're serving the customer or more close in proximity to the customer or doing things within the automation sequence where they're serving and contributing to the overall technology,” Wissink said.

McMillon said at the December conference that Walmart is turning to automation to not only boost productivity but also to cut labor costs. 

Pulling back the curtain on Walmart+

While Walmart has remained tight-lipped about Walmart+, its membership program that launched in September 2020, Rainey and Wissink shone more light on its subscriber base and how the retailer is evolving the offering.

Walmart+ subscribers tend to be more affluent, younger, more tech-savvy and value convenience, Rainey said, adding that roughly 50% of Walmart+ members come through the grocery delivery or pickup channels. The customer lifetime value (CLV) of a Walmart+ member is “appreciably higher” than nonmembers because they tend to spend more and shop more frequently, Rainey said.

Walmart+ allows for more digital engagement with customers, Rainey said: “We better understand them and can tailor our offerings that are most relevant to them versus trying to guess and pick and choose certain things that are really based upon more macro level customer stats.”

To that end, the retailer is “co-creating” Walmart+ with its customers, Wissink said.

“There's a very strong feedback loop embedded in the development of Walmart+ as a platform. ... You're seeing value added to the Walmart+ platform based on the feedback loop we're getting from our customers. Going out to the market and finding things that help them live better and making that available as part of their overall plus experience,” Wissink said. 

Recently, the retailer in August added Walmart Rewards as a new benefit to Walmart+ and a month later, made Paramount+ available to members. 

Scan-and-go is taking off

At Sam’s Club, Walmart has seen consumer usage of scan-and-go serve as a successful digital engagement strategy, Rainey said. 

Scan-and-go dates back to 2013 for the club retailer, which rolled the offering out chainwide in 2016. In 2021, the retailer piloted a Scan & Ship program, which allows customers to place direct-to-home orders in the aisle by scanning merchandise included in the program.

Now, scan-and-go accounts for roughly one in four of our transactions at Sam’s Club, Rainey said. 

“If you step back and you think about that for a second, that's a digital experience in a brick-and-mortar world, right?” Rainey said. 

Gaining goodwill with consumers 

Digital innovation is just one piece of the pie as Walmart looks to stay within the good graces of its shopper base. 

While some shopper behavior trends took off during the pandemic but have since reverted back to pre-pandemic times, the convenience and value of grocery delivery and pickup offerings are sticking with consumers, Rainey said. 

“Convenience is a really important part of where we're going here. I think importantly, when we survey the mind share scores from our consumers, we're rated right now for convenience almost as high as value,” Rainey said. “We've never been there historically. And so I think it suggests ... that what we're doing is working and it's resonating with customers. And we want to continue to do that going forward.”

Wissink noted that Walmart’s focus on its value proposition, such as its “inflation-free” promotion for holiday meals and offering last year’s prices for Easter items, is appealing to shoppers. Consumers can expect to see similar efforts later this year, including ones linked to the return to school at the end of the summer, Wissink said. 

“I think we're gaining some goodwill among consumers right now in addition to overall working very closely with our suppliers to make sure that their dollars are the most effective for them to drive the volume they need as well,” Wissink said.

Last year, non-fungible tokens craze picked up steam and many brands wanted to get in on the action. For the uninitiated, NFTs are defined as digital tokens connected to digital goods such as art or music. 

Though the NFT industry made headlines for generating billions in trading volume, the once-hot NFT market appears to have cooled. NFT trading volume reportedly reached $24.7 billion in 2022 and $11.7 billion in 2021, according to Decrypt and The Motley Fool, respectively. However, a report from Dune Analytics found that NFT trading volume plunged from $17 billion in January to $466 million in September, according to MarketWatch. Citing data from DappRadar, Bloomberg reported earlier this month that the NFT trading volume dropped 81% between January 2022 and July 2023, and other reporting indicates many may now be worthless. 

It’s also unclear how many NFT transactions are genuine. A 2022 report from Chainalysis reportedly found that wash trading, a financial fraud in which consumers sell assets to themselves for a higher price to artificially inflate the asset value, drove $44 billion in sales in 2021.

Still, retailers and brands have ventured into the space to attract shoppers interested in digital goods. Nike reportedly generated more than $185 million from its NFT releases. Many retailers and brands, including Tiffany, Macy’s, Gap and Puma, have jumped on the NFT bandwagon. 

In an October 2022 Forrester report, the Cambridge-based research and advisory firm predicted that NFT projects released from this year on will no longer be considered innovative. 

Instead, going forward, NFTs will be a tool for retailers to attract customers seeking exclusive experiences and incentives, said Martha Bennett, vice president and principal analyst at Forrester. 

Given the fluctuating and possibly overblown value of NFTs, is it worth it for brands to invest in them as part of their marketing strategy? Experts told Retail Dive that the industry may rebound again, but brands must proceed with caution. Additionally, brands and retailers must be aware of scams associated with the space and connect their NFTs with enticing perks to make the tokens worth possessing. 

When NFTs go wrong

Following in the footsteps of other brands and retailers, MeUndies was one of the many companies that decided to experiment with non-fungible tokens. But after the brand experienced swift social media backlash, it quickly retreated from the space.  

In a statement posted on March 9, 2022, on Reddit, MeUndies explained why it canceled its collaboration with Bored Ape Yacht Club, an NFT project involving 10,000 illustrations of personified apes. The company said it “just didn’t do the work we should have to make such an impactful decision” and cited concerns about the cryptocurrency and NFT industry’s environmental impact.

“Since our announcement, we’ve spent time researching and educating ourselves on the NFT space, and most importantly, listening to our community,” the intimates brand wrote on Reddit. “We’re not immune to making mistakes, and we own this one.”

MeUndies didn’t respond to Retail Dive’s request for comment. 

For retailers and brands continuing with their NFT experiments, these projects will only be a fit for a small pool of affluent customers familiar with the NFT industry. 

Kim Grauer, director of research at Chainalysis, a cryptocurrency investigation and compliance firm, said she surmises that the overall bear market is the main driver behind the NFT market drop. Chainalysis’ research has identified many NFT purchases where buyers are rushing to resell their tokens for a markup, but the bear market likely played a role in curtailing that speculation, she said. 

Forrester’s Bennett said that such tokens would be most appealing to a small subset of younger, wealthy cryptocurrency holders who have the funds to spend on NFTs and are interested in digital assets or have become wealthy through technology. The firm’s March 2022 survey found that 72% of U.S. respondents said they have never owned an NFT and aren’t planning to do so. 

To illustrate this point, Bennett offered an example of two car-related NFTs. Lamborghini released an NFT in January 2022. Chevy introduced its own NFT that came with a 2023 Corvette Z06, but it reportedly didn’t receive any bids. The lack of offers for Chevy’s NFT illustrates that narrow pool of high-end consumers who would pay for an NFT, let alone one tied to a luxury vehicle, Bennett explained. 

Younger, tech-savvy, affluent buyers “are a small target audience, but they're a target audience,” Bennett said. “There are people who spend hundreds of thousands of dollars on a rare Corvette because the target audience just isn't a match.” 

 Despite the narrative that NFTs have changed the nature of digital ownership, the brands and retailers offering NFTs must be clear to consumers about the rights associated with the NFT, Bennett pointed out. If a consumer buys NFTs issued by Disney, for example, they don’t own the rights to the artwork, but they may be able to access some sort of content-related perk in exchange for buying the token, she explained. 

“Essentially, an NFT is just a glorified receipt,” Bennett said. “What makes an NFT different from any other receipt is that it's programmable… [for] exclusive access can be to something digital, to something online, to an event or to some preview catalog or whatever it may be, but it can also be a physical access ticket to somewhere. And so it's that utility that you can have as part of that that makes it attractive.”

Can brands be safe in the NFT world?

Though brands and retailers seek to profit from digital goods, the rise of NFTs has also coincided with the rise of NFT fraud and scams. Through a Freedom of Information Act request to the Federal Trade Commission Retail Dive has obtained, 1,478 filed between and September 2017 and December 2022 alleging that consumers have lost more than $809 million NFT scams, ranging from business imposter and investment fraud to online shopping and art, gem and rare coin scams, the data show. 

The majority of the complaints pertain to niche NFT projects and schemes, but some complaints mention notable brands and cryptocurrency companies such as Adidas, Gucci, OpenSea, PayPal, eBay, Coinbase and Bored Ape Yacht Club, the data show. 

As word spreads about the risks of NFTs, can companies engage in the space and keep their brand reputation safe?

Chainalysis’s Grauer acknowledged that there are frauds and scams in the NFT industry, but there are fraud detection tools brands can use to determine whether the funds used in an NFT transaction came from a cryptocurrency wallet containing illicit funds. 

While there's some scamming and fraud in the NFT market, "We can write algorithms that allow us to quantify the wash trading happening in the NFT space based on who the buyers and sellers are. Every time there's a sale, we know the buyer and the seller. It creates an entire new toolkit to analyze and safely interact with the space,” Grauer said.

In light of the fraud allegations arising from the space, brands and retailers have taken various measures to safeguard consumers from unsavory practices happening elsewhere in the space. 

The NFT world has already become infamous for wash trading, rug pulls and other illicit activities, Bennett said. (According to crypto news site CoinDesk, rug pulls are when a new cryptocurrency project solicits funds from investors and suddenly drain the funds from the projects, leaving the initial investors to take the loss.)

Some brands have bypassed public blockchains when issuing NFTs to avoid “any of the things that can go wrong there,” but others want to use a more controlled environment instead of the public blockchains where fraudsters could view the contents of customers’ wallets, Bennett said.  

As brands began partnering with tech firms to release NFTs beyond public blockchains, the consumers who saw the NFTs for loyalty perks continued to engage with the brand, but NFT enthusiasts who wanted to trade those tokens for profit weren't enthused about these assets not being available publicly to being sequestered, she added.

For example, the NBA teamed up with Dapper Labs, a company that uses blockchain technology to facilitate NFT transactions, to debut its NBA All-Star VIP Pass NFT Auction and Giveaway, per a February 2022 press release. As part of the launch, the organization issued 30 NFTs, digital collectibles, VIP passes and other perks. But for clients looking to use its Flow Blockchain, there’s an option to not make the blockchain publicly accessible to anyone. Bennett pointed to the NBA NFTs as an instance in which a brand has turned to a blockchain company to create their own sealed off environment. 

Even for brands that have used NFT technology platforms like OpenSea, an online marketplace for buying and selling NFTs, the experience has been bad, Bennett said, adding that the platform has customer service problems. Though OpenSea appears to be the largest NFT trading company, others have had similar issues, she said. 

Questions also linger about how some NFT platforms operate. In June 2022, the U.S. States Attorney for the Southern District of New York and the FBI indicted Nathaniel Chastain, a former product manager at OpenSea on wire fraud and money laundering charges stemming from NFT insider trading on the platform, according to a statement from the Department of Justice. The DOJ alleged that Chastain used his advanced knowledge of what NFTs would be listed on the OpenSea and exploited that for his financial gain.

Brands entering the space were either looking for a quick profit or to increase brand engagement via collector’s items, but they weren’t aware at first of the theft of digital assets, rug pull scams, money laundering and other illicit activities occurring in the public NFT market, Bennett explained.  

“What a lot of brands weren't really so aware of at the time they got into it [is] that they're actually that they were allowing their customers to get into a shark tank, essentially,” Bennett said. “

Regarding whether the NFT market will return to record highs remains to be seen. Chainalysis was in the middle of compiling a NFT analysis when they spoke with Retail Dive, but Grauer said that NFTs were in decline alongside crypto assets. 

“I think that many of the [decentralized finance] and [cryptocurrency finance] activities move together. When there's a bull market, you'll see a surge in NFT activity and I think that's what's borne out over the past few years,” Grauer said. “It really depends on what happens in the greater market.”

One of the hottest sneakers right now has holes in it.

With a standout footwear design that has caught the attention of runners and office workers, On has successfully grown its business over the past few years to compete with giants in the athletics market.

On sells a variety of sneakers ranging from road running to hiking to tennis, all in the $100 to $200 range. The brand also sells a number of lifestyle sneakers that still incorporate performance elements, even releasing a limited-edition style with fashion powerhouse brand Loewe.

On’s distinctive look has helped it stand out in a crowded field, and the proof is in the numbers.

On’s latest earnings report in August showed its second quarter broke records again, with net sales up 52.3% year over year to 444.3 million Swiss francs ($506.5 million at the time). Its net income dropped 93.3% to 3.3 million Swiss francs, but its gross profit margin jumped to 59.5% from 55.1%.

Its annual fiscal year 2022 also brought the company back into profitability, swinging to a net income of 57.7 million Swiss francs from a net loss in 2021 of about 170.2 million Swiss francs. For the full year, On reported net revenue surpassed a billion Swiss francs.

The brand is expecting to double its net sales by 2026 to at least 3.55 billion Swiss francs, On announced during its investor day earlier this month. As a more long-term target, the company is aiming to grow net sales by 20% to 25% per year.

The Swiss brand isn’t exactly new to the industry, though, as On officially came into existence in 2010 thanks to co-founders Olivier Bernhard, David Allemann and Caspar Coppetti.

There are plenty of other sneaker brands out there sharing the shelves with On, but lately the brand's been on a tear. So what’s contributed to its meteoric rise?

Visible innovation

A major component of that success is the Swiss brand’s innovation, particularly its easily recognizable CloudTec footwear technology.

CloudTec is a cushioning system on the bottom of sneakers that’s integrated across On’s footwear portfolio. The technology, creating noticeable holes, is meant to absorb impact and reduce strain on runs — all contributing to what On describes as “running on clouds.”

“In everything we create, performance always comes first, whether it’s for an everyday athlete or an Olympian,” Britt Olsen, On’s general manager of the Americas and head of global commercial strategy, told Retail Dive via email. “That focus has helped us continue to build credibility with our fanbase.”

Such features have contributed to the company’s popularity, according to analysts. 

“It comes down to innovation and with On, it’s visible innovation,” Abbie Zvejnieks, senior equity research analyst at Piper Sandler, told Retail Dive. 

Plenty of other performance brands hype up the technology in their shoes, though some of it might be slightly less obvious to the average consumer’s eyes. Depending on the sneaker style, Hoka touts its foot frame, which intends to keep heels in place; Brooks points out its carbon fiber plates; and Nike has created its Flyknit fabric to make more breathable running shoes.

“Where [On was] originally able to take a lot of share was the specialty running channel, which is very important for gaining share with runners,” Zvejnieks added. “Nike and Adidas don't compete as much in that channel as they've tried to go more direct with their businesses. And so that was a clear place for both On and Hoka to gain a lot of share.”

The brand’s balancing act between performance and aesthetics hits the right note with many consumers, according to Cristina Fernández, managing director and senior research analyst at Telsey Advisory Group.

“They've been able to play in the unique case where they are a performance brand, but the consumer has really liked the style of the shoe,” Fernández told Retail Dive. “So it's worked as a lifestyle brand shoe as well.”

With the COVID-19 pandemic, the adoption of more casual footwear grew as people spent less time in office and social environments. However, the trend toward mixing style and comfort has actually been growing over the last 20 years or so, according to Zvejnieks.

“There's that more affluent consumer who's now demanding technical performance capabilities from their everyday shoes, their everyday clothes,” Zvejnieks added. 

And the brand’s famous sneaker innovation isn’t just for runners anymore, as the company officially expanded into tennis in August and is soon to launch its first training sneaker. 

But On’s visible innovation is only well-known thanks in part to its distribution approach, and the company hopes to fuel its growth with various expansion plans.

Heavy on the wholesale

Historically, On has focused on its wholesale distribution channels. 

“Back in 2015, 2016, 2017 — we got so many questions on why we’re doing wholesale,” co-CEO Marc Maurer told Retail Dive in January. “We always said, you know, we’re doing wholesale because it allows us to acquire new consumers in a cheaper way and to scale the brand quite efficiently.”

The foundation that wholesale has built for the brand is enabling the company to grow its direct-to-consumer channel.

During its second quarter, On grew its DTC channel faster than its wholesale business, though DTC only represented a 36.8% share of the business. DTC sales increased 54.7% year over year to 163.5 million Swiss francs while wholesale jumped 51% to 280.8 million Swiss francs.

“They did a very unique thing with the way they thought about distribution,” Fernández said. “Obviously, they did DTC … but they went into wholesale very early and they were very strategic with whom they did wholesale with. Some of the partners entered were probably not your typical partners for performance brands. … I think just winning online is just not enough to get that kind of growth.”

While On does work with specialty running retailers for its wholesale business, it also entered into more fashion-focused doors such as Bloomingdale’s and Nordstrom, Fernández added.

Historically, the brand has entered about 400 to 500 new wholesale doors per quarter, but it expects this rate to drop looking forward, executives said on a call with analysts in August.

Looking ahead, On is trying to continue scaling through wholesale while growing at least two areas of the business: product categories and owned distribution.

On said in its investor day presentation that it is “significantly increasing the pace” of owned store growth, expecting to add 20 to 25 stores per year in the mid-term (with roughly half in China and half outside).

“We want to reach a wider audience of athletes and fans worldwide, so we are expanding our premium multi-channel distribution, growing our own retail presence globally, and increasing our footprint in China,” Olsen said.

Currently, On operates 23 stores worldwide — four of which are in the U.S. — and it has more planned for cities such as Paris, London, Chicago, Austin and more, according to Olsen.

The brand is also working to expand its apparel offerings and grow into new athletics categories, such as training — a plan that will help fill in space at its growing retail footprint. On intends to expand into the category with full head-to-toe looks, according to Olsen.

As a long-term target, On hopes to reach an apparel share of 10% or more. Its Williamsburg neighborhood store in New York City has an apparel share of 16%, whereas its Yitian Shenzhen store has a 26% apparel share.

“Where apparel does help some of the brands is that apparel is a more frequent purchase,” Fernández said. “On — it's still very early on in apparel and to be honest, it's not where it needs to be.”

Specifically in some of its stores, On’s apparel showcasing hasn’t been very strong, according to Fernández.

For fiscal 2022, net sales from apparel for On increased 30.2% year over year to 47.3 million Swiss francs — representing just under 4% of its overall net sales that year.

“While we were founded in running and that will always be core to who we are, we want to inspire people to move, whatever that means to them,” Olsen said. “One way this really comes to life is in our retail stores. In our Brooklyn store, which we opened in June, we group our footwear and apparel together in three areas: running, outdoor and movement.”

The On executive added that this approach shakes up the traditional store model where footwear and apparel are typically displayed separately. Olsen said the approach allows for a more tailored shopping experience for athletes.

“The next step of that will be expanding the assortment to cater to a broader market and part of that is creating price points that are more in line with that of competitors like Lululemon," Zvejnieks said. "So still premium, but at least you're not going to the shelf and seeing a $140 pair of leggings when you know that Lululemon is $90."

Target is expanding its Roundel retail media network on several fronts, a move that arrives as advertisers are in the thick of their holiday planning. Roundel is broadening its capabilities with the introduction of a self-service buying tool along with adding a number of premium programmatic publisher partners and experimenting more in shoppable connected TV (CTV) at the height of the gift-giving season, Marketing Dive can exclusively share. 

Increasing the breadth of Roundel’s offerings comes as retail media grows more crowded, pushing brands to be selective with their dollars and adding appeal to platforms that can provide a deeper level of technological sophistication and audience insights. Roundel draws on first-party data derived from the tens of millions of shoppers who visit Target weekly both in-store and online, as well as the company’s Circle loyalty program that commands 100 million members. Calls for retail media standardization have also grown louder in recent months to address the fragmentary nature of the channel, where there are currently few ways to uniformly track and measure the success of campaigns across networks. 

“We feel strongly that, within this industry, we’re in the early innings and we need this business to mature,” said Sarah Travis, president of Roundel, of the standardization question, adding that the company supports the Interactive Advertising Bureau’s efforts in this area. “There needs to be more transparency and there needs to be more standardization.”

Aligned with the mandate around streamlining and simplicity is the launch of Roundel Media Studio, a self-service buying tool focused on Target’s owned properties. Self-service offerings are intended to welcome more small- and mid-size advertisers into the fold, helping platforms achieve scale. Travis could not share growth targets for Roundel Media Studio but said Roundel’s current advertiser network numbers in the thousands.  

Roundel Media Studio initially carries Target Product Ads, a sponsored product format, but eventually will serve as the destination for many of the network’s solutions. Roundel Media Studio is in the pilot phase now and will expand to more advertisers heading into 2024.

“We’re calling it the future home for advertisers to access the breadth of Roundel’s media experiences,” said Travis. “It’s going to make it easier for smaller brands to work with us, which we think is really important.”

Roundel Media Studio is also positioned around giving advertisers a variety of buying options. Roundel is continuing work with third-party supply- and demand-side partners like Criteo, aiming to stave off accusations that the service could act as a walled garden, a point of concern in the retail media space.

“We’ve always believed and advocated for a more open and flexible way to buy our media,” said Travis. “We want to make sure that we continue to deliver flexibility, that we’re giving brands multiple buying options.”

Experiments and experiences

Roundel Media Studio complements the network’s other self-service tools, including Kiosk, a campaign reporting and measurement feature, and Programmatic by Roundel. The latter helps brands create custom audiences and reach them on brand-safe inventory off-site using real-time bidding and a demand-side platform of the marketer’s choice. The hand-curated product is adding over 40 new premium publishers to its roster, including The New York Times, AMC Networks and Hearst properties, as well as opening more app inventory. At the same time, Roundel is moving from a fixed to dynamic pricing model. 

“That is really important in terms of allowing brands and agencies to have more control and deliver even better performance,” said Travis. 

The executive added that Programmatic by Roundel data will be added to Kiosk so that brands can measure their programmatic performance data alongside other buys on Roundel. Roundel’s programmatic business has grown by about 10 times since it launched in 2019, but Travis declined to share specific figures. Roundel, in total, generates millions in revenue for Target and stands as one of the largest retail media networks based on third-party analysis.

On the more experimental end, Roundel is broadening the availability of a shoppable CTV format that entered testing several months ago. People watching ads on select streaming and TV partner services, including Animal Planet, Crackle and Sling TV, can scan a QR code to add products to their cart for purchase, with Target fulfilling the order for pick up. 

The goal is to move CTV from passive to more commerce-oriented viewing occasions, according to Travis, an area that rivals like Walmart are also pursuing. A spokesperson shared Innovid CTV data that show over half of surveyed Target shoppers are subscribed to an ad-supported streaming service, a 24% jump from last year.  

“Brands can continue to lean into our first-party data for targeting and measurement but, in this case, also tap in more closely to our same-day services,” said Travis. “Holiday is a perfect time to have this available to a wider range of our advertiser base.”

Also on deck for the holidays: Shoppable digital rooms that will allow multiple brands to advertise around seasonal moments based on specific categories or guest segments and more bets on in-store retail media activations.

“As we head into holiday, we’re really thinking about experiential,” said Travis. “Think things like big sampling events and offering unique Circle deals during those sampling events.”

Dive Brief:

• Walmart on Friday will celebrate the grand reopening of 117 stores representing over a half a billion dollars in capital investments across 30 states, the company announced Monday. Walmart is investing more than $9 billion over two years to modernize over 1,400 stores across the U.S. 
• The retailer said it has revamped the stores with better layouts, wider product selections and various technological improvements as part of its “Signature Experience” initiative, which aims to enhance the shopping experience for customers. 
• Among the improvements the retailer has made to its stores are interactive corner displays, larger pharmacies, rooms for nursing parents, QR codes and digital screens with helpful information for shoppers and a Dollar Shop at store entrances with seasonal products.

Dive Insight:

Walmart is tapping into its network of brick-and-mortar locations to better serve customers.

Walmart U.S. CEO John Furner in April called the company’s stores “the key nodes” in its omnichannel operation. Chief Financial Officer John David Rainey also at that time said that nearly 90% of Walmart’s capital expenditures will be in “high return areas like e-commerce, supply chain and store investments,” over the next five years. 

Friday is the largest single-day rollout of re-grand openings in company history. Other store enhancements include larger online grocery pickup and delivery areas and a new grab-and-go section for quick meal and drink options. Stores also have refreshed exteriors and interiors, more shopping carts and a new checkout design that was based on customer feedback. 

In February, Walmart announced plans to shutter two stores in Arkansas and Illinois that only served pickup and delivery orders. That month, Rainey said during a fourth quarter earnings call that Walmart’s store-fulfilled deliveries nearly tripled over the past two years. The retailer said more than 3,900 out of its 4,717 stores now offer same-day delivery. 

“With nearly 90% of the U.S. population living within 10 miles of a Walmart, we understand how important our local stores are to customers and communities, and these construction investments allow us to create more local jobs and make it easier for our associates to get customers what they want, when they want it,” Furner said in a statement about the reopenings.  

As small businesses pursue international expansion, their evolution might involve adopting new payment tools, a recent survey from card network company Visa revealed. 

Small and micro-businesses envision a cashless future, and they’re investing in payment technology as part of their growth strategies, Visa’s survey results showed. In the card network’s global survey of 2,250 small and micro-businesses and 1,500 consumers, more than a third (35%) of business owners surveyed said they are considering accepting new forms of payment as a critical way they can improve their businesses.

About 95% of small business owners planned to become cashless “someday,” and more than half (51%) anticipate going cashless in the next two years.

“Our previous data has shown that small businesses that embraced digital payment technologies over the last few years were more resilient and better able to compete than those who did not,” Jeni Mundy, global head of merchant sales and acquiring at Visa, said in an emailed statement.

To be sure, Visa has an interest in businesses being more digital in their payments schemes because credit and debit cards are often used in those channels. In any case, the COVID-19 pandemic super-charged a worldwide trend toward increased digital payments.

Nearly eight in 10 business owners said they are expanding to new markets to drive growth, Visa said. Among other measures small business owners expect to fuel growth are: bolstering their social media presence (44%), offering new products or services (41%) and increasing marketing investments (40%). 

“It used to be that only big businesses could scale to access customers across the country or around the world, but today’s small business owner can be virtually borderless,” Mundy said in the release. “At Visa, we’re seeing the small business mindset shift from survival mode to growth mode, as SMBs harness the power of digital payments to improve efficiencies, reach new audiences and simply thrive in today’s increasingly digital world.”

The shift toward accepting new payment technology is partly driven by changing consumer behavior, Visa’s survey suggests. More than half (55%) of consumers surveyed said they expect to use digital payments more in the coming year.

Among the factors driving consumers to adopt cashless technology are the convenience and speed they offer as well as the ability to track expenses, Mundy said in the statement. While small and micro-businesses want to integrate new payment forms into their operations, they may face hurdles such as cost, lack of training and security concerns, Mundy added. 

Although nearly half (49%) of consumers told Visa they planned to shop more locally, 72% of shoppers are comfortable shopping with international merchants, the card network reported.

Visa’s latest survey builds upon previous research indicating that small businesses are counting on digital payment acceptance to further growth. The card giant released a survey last year showing that 82% of small and micro-businesses planned to accept digital payment options that year.

Other research has illustrated the decline of cash and the ancillary impact of dwindling cash use. 

A Gallup survey released last year found that 13% of respondents use cash for all or most of their purchases, down from 28% five years earlier. Plus, June data from Euromonitor International indicated ATMs declined to 451,500 last year from 470,000 in 2019.

Though business owners want to transition to cashless, legislators are weighing whether to prevent them from doing so. In June, Congress members introduced bills in the House and Senate to prohibit businesses from refusing to accept cash for in-person transactions.

The legislation is meant to prevent discrimination against unbanked and underbanked Americans who rely on cash to pay for their essentials, according to bill authors Representatives Donald Payne Jr. (D-N.J.) and John Rose (R-Tenn.) and Senators Bob Menendez (D-N.J.) and Kevin Cramer (R-N.D.). 

Meanwhile, local government officials are having a similar debate. In Atlanta, for example, Atlanta City Council members met Wednesday to discuss a proposal that would require retail businesses to accept cash payments, The Atlanta Journal-Constitution reported.

When Estée Lauder decided to focus on making technology more inclusive for employees and consumers, the IT team adopted it as a big part of its agenda, according to Michael Smith, chief information officer at Estée Lauder Companies. 

“This was really spurred from what I believed for a long time to be a completely untapped kind of opportunity around inclusive tech,” Smith told sister publication CIO Dive. 

With innovation as a core part of the company’s DNA, Smith said, he wanted to amplify what already existed. The company held hackathons and ideathons, meant to serve as cultural touchstones.

“As a company, we want to be the most inclusive beauty company in the world,” Smith said. “And that really starts with understanding who your consumer is, spending time with them and really trying to understand their needs, sometimes even before they do.”

By incorporating accessibility targets into the development of apps, websites or internal facing applications and systems, businesses can foster inclusivity — a value that customers and employees look for when interacting with brands. 

Many people take for granted the barriers to entry when using an application, Ross Engelhardt, director of product strategy and digital growth at business consulting and services company AlixPartners, said in a report published by TechPACT, a group focused on promoting diversity, equity, inclusion and belonging across the technology community.

An estimated 1.3 billion people in the world experience a significant disability, according to data published in March by the World Health Organization. To adequately foster inclusivity through technology, Estée Lauder knew it had to address accessibility needs.

“So if we’re going to be inclusive, that means if we don’t address accessibility, we’re missing 16% of the world’s population,” Smith said. “That’s a huge group of people that deserve more from the beauty industry and from technology.”

Accessibility targets can vary, but Engelhardt said implementing keyboard navigation, including people with disabilities in user testing and updating audio and visual content with alternative options when applicable is a good place to start. 

Making makeup application easier

Estée Lauder, which hosts brands like Clinique, MAC and SmashBox, launched an AI-powered voice-enabled makeup assistant mobile app in January aimed at supporting those with low vision or those who are blind. 

The free mobile app, developed using machine learning, identifies makeup applied on a user’s face and assesses the uniformity and boundaries of application and coverage. Users receive feedback and tips, audibly identifying areas of improvement. 

The idea for the app was presented to Smith from multiple different touchpoints several years ago. He quickly realized it was a project that aligned with the overall objectives of the company. 

“We spent a tremendous amount of time working with visually impaired community members that were blind or have low vision to determine what about this app is usable, what is helpful, what really would be a benefit and a value to them,” Smith said. 

The consistent theme Smith found was that many people felt their makeup routine created a dependence on others. They would put on their makeup, take a selfie and send it to a person that they trust, awaiting feedback. 

“As their makeup changed throughout the day, they couldn’t be sending dozens of selfies, so their concerns revolved around that intersection of, how does the makeup wear throughout the day and then also this reliance on others,” Smith said. 

The IT team had experience with AI and augmented reality technology and used that experience to build out the app, Smith said. The team trained a learning model on thousands of images of people with different face shapes, face sizes and skin tones.

From there, it was all about connecting with end users, establishing the feedback loop and iterating to make the app better.

Fostering inclusivity

Building technology with accessibility in mind isn’t about a single product. On some level it’s about the company’s culture, Engelhardt told CIO Dive. 

Distributed decision making, strategic clarity and being purposefully adaptive contribute to a culture that is more aware and connected, Engelhardt said. 

“Distributed decision making enables people closest to a given problem or opportunity to make a decision,” Engelhardt said.

This goes hand in hand with being purposefully adaptive, Engelhardt said. If a distributed decision maker identifies an area of improvement, whether that comes from end-user interactions or from somewhere else, the team can pivot to address the opportunity without it feeling like a setback.

One aspect of Estée Lauder’s app that changed over time was its voice. 

“When we first started talking about this, we thought, ‘Oh, we can use a celebrity’s voice or an influencer’s voice or something very calm and soothing,’” Smith said. “What we found in the research was that a lot of people in this community use screen readers and that voice has a lot of familiarity that they appreciated… so we shifted gears and that’s exactly what we deployed.”

One user told the company they were impressed that every time they tested the app, it was a little different with noticeable changes so they could tell that the company was taking into account what the participants were saying. Smith said since the launch, the team has received feedback from users and will likely add different voice options.

“I think it’s mostly been about the usability and we’re continuing to really incorporate feedback,” Smith said about the future of the app. “We’re taking it to Android, and we know that we want to take it to additional languages so that it can truly be global.”

The hunt by consumers for more affordable versions of premium products is nothing new. However, the rise of TikTok has been marked by a surge in popularity around “dupes” — a term short for duplicates meant to denote a less expensive product alternative — tasking marketers with doubling down on their value pitch for fear of losing sales. For Olaplex, one of TikTok’s most duped hair care brands, that meant asserting that the only brand worthy of being its dupe is Olaplex itself. 

On Sept. 25, Olaplex with the help of over 100 earned and paid influencers launched an unboxing campaign around a new fictitious product, Oladupé. The product, which was actually a repackaged bottle of the brand’s Olaplex No. 3, is meant to tease how often Olaplex is duped on TikTok — with the hashtag #Olaplexdupe having over 30 million views alone — while also educating the app’s users about the quality of its products. Just days after launching, the hashtag tied to the campaign, #Oladupe, had already gained over 5.5 million views. 

“Imitation is the highest form of flattery, and I think what we wanted to do is really use this imitation, this discussion around dupes to really have fun with the fact that you can imitate us, but you can’t replicate us,” said Olaplex Chief Marketing Officer Charlotte Watson.

The influencers selected for the effort were meant to reach the global hair care professional and consumer communities, with individuals chosen including Lelani Green, Yesly Dimate, Shae Alexis and Audrey Boos, among others. To further cement the dupe concept, the brand also enlisted celebrity “duper” Taylor Madison, a creator who shares a strong resemblance to Kylie Jenner.

Olaplex is a premium hair care brand — with its No. 3 product ringing up at $30 — and is available both online and in stores like Sephora and Ulta. The independent brand in August announced its second quarter earnings, reporting that net sales were down 48%, led by a drop in sales for its professional channel of 61%. In the company’s announcement around the earnings, CEO and president JuE Wong said that the brand is attempting to stabilize demand trends in the second half of the year while increasing and optimizing its marketing investment. 

Unveiled through an unboxing, creator videos promoting Oladupé revealed the product as the best alternative to the real thing. Packaging looks nearly identical to Olaplex’s actual product, though its label instead reads Oladupé No. 160 — a number selected in a nod to the company’s 160 patents. Viewers were then directed to a microsite where the first 160 visitors could secure a free bottle of Oladupé, actually a bottle of Olaplex No. 3, which was sent to them along with an explanation of the stunt. Consumers had a wide range of responses, Watson said, and every free Oladupé bottle was claimed within two hours.

“Obviously there were all sorts of reactions, people kind of bought into this dupe because there are so many other dupes out there,” Watson said. “We were seeing conversations happening around [it], and people calling Olaplex out — it was great to see a lot of people also hopping into our defense and sort of saying, ‘Well, you can't dupe Olaplex.’”

A few days following Oladupé’s debut, Olaplex revealed the truth behind the faux product through additional influencer content along with a video shared on both the brand’s Instagram and TikTok. The post notably featured a deepfake version of Wong, who asserted that nobody can copy the brands’ “patents, ingredients or bond-building technology” before actually appearing as herself, a move meant to drive home the message of how easy it is to get duped. The marketing stunt was strategized with agency Movers+Shakers and marks the first collaboration between the two companies.

The Oladupé campaign by end of day Wednesday, Oct. 4, had received 20.1 million impressions and 24 million views of the hashtag #Oladupe. The effort was strategized for the U.S and was also replicated and shared in the U.K., Canada, Australia and France markets, marking a milestone for the brand, according to Lisa Bobroff, vice president of global communications and consumer engagement for Olaplex.

“We have the same advocacy and love for the brand in all those territories, so it’s been great to see it as a coordinated global campaign as well, which I think is probably a first for us,” said Bobroff.

The beauty of social listening

Beyond directly addressing the popularity of Olaplex dupes, the company’s latest campaign also aligns nicely to its ethos as a socially native brand, Watson said, noting that Olaplex, founded in 2014, spent its earlier days on Facebook communicating with its stylist community via online forums as a way to help inform its strategy. Since then, much of that community has naturally navigated to TikTok, she added, where the brand currently has over 334 million followers.

“Our social landscape is sort of critical to the way that we go to market … We pride ourselves on really staying very close to the community, social listening, understanding what the community is engaging in and the various insights and trends that are happening on the different platforms,” Watson said. 

A focus on social listening has also helped the brand tap into authentic conversations and organic trends that stretch beyond the #Oladupé campaign. For example, the brand in early 2022 noticed a trending hashtag on TikTok called #Olaplexbun, a label used for consumers to share their Olaplex-supported bun up-dos, and used it as inspiration for its own hashtag challenge and first official TikTok campaign, #Olaflex, a marketing move tasking consumers to share before-and-after content using Olaplex. Within 72 hours of the campaign’s launch, the hashtag reached over 3 billion views.

A focus on TikTok is becoming increasingly valuable to Olaplex given the popularity of the platform for sharing hair content — the hashtag #hairtok has over 86 billion views alone. Further supporting that value is the app’s ability to help the brand shore up a stronger connection with a core younger user base whose spending power is growing, Watson said.

“It’s a demographic that’s increasingly important for us, and I think TikTok enables us to really speak to that audience in a way that resonates with them,” Watson said. “We know that the audience has a huge influence on beauty trends and on other generations and will be the consumer of the future for us.” 

To continue engaging with the community, Olaplex will stretch its Oladupé marketing campaign with additional influencer activations and content recapping the cheeky effort, making a point to plug into hype surrounding dupes while at the same time making a case for all the reasons why the brand is “undupable,” Watson said.

“What we're doing is we're identifying trends and conversations that are organic on the platform that happen to have our brand, because we have very high awareness on the platform in the center of it, but then we're able to build upon these trends ourselves to, I guess, shape the narrative and have fun,” Watson said. “And if we are at the center of this conversation, let us have a stronger voice in the conversation.”

Meta Platforms is introducing new advertising products that use artificial intelligence to help marketers run campaigns more efficiently. The tools, detailed to reporters at Meta’s offices in Manhattan last week, show the Facebook and Instagram owner following its tech peers in investing more heavily in AI as the sector hits fresh peaks of hype driven by the popularity of software like ChatGPT. 

While Meta has leveraged AI for years, its latest moves represent a push into the experimental category of generative AI that can quickly produce images and copy that are more convincingly lifelike. Key to this strategy is a new AI Sandbox tool that will initially offer three functions. Billed as a “testing playground” for generative AI, the feature lets advertisers create multiple variations of text copy and generate background images based on text inputs, along with automatically cropping images to best fit different Meta surfaces, like Stories or Reels. 

Executives acknowledged the popularity of rival generative AI products that have already been on the market for months but suggested that the sophistication and scale of Meta’s ad infrastructure could set it apart. AI Sandbox is being trained on Meta’s internal data, along with information from public sources and data that the company licenses.

“Where we see our unique opportunity is to tightly integrate these features over time into our products, which will allow advertisers to do a number of powerful things,” said John Hegeman, vice president of monetization at Meta, during the event.

AI Sandbox is currently being tried out by a “pretty small” number of advertisers, including the direct-to-consumer cosmetics brand Jones Road Beauty, which was present at the event. Starting in July, availability of AI Sandbox will be expanded.

“We are using it in our business to write copy, we're using it to help with asset production and ideas,” said Cody Plofker, chief marketing officer at Jones Road Beauty, of generative AI. “There's still a long way to go with a lot of the tools, but I'm really excited about the potential ability to produce and create more creative in less time.”

Meta hopes to get buy-in from a diverse range of industry verticals for AI Sandbox, according to Hegeman. The executive also indicated that the capabilities could eventually extend into more complex formats like video. Other aspects of the development roadmap seemed contingent on how advertisers respond to the tech.

“This will be a gradual process where we ramp up to more and more folks over time,” Hegeman said. “The exact timeframe will depend on some of the feedback that we're getting as we continue to evolve and improve the capabilities.”

AI in the spotlight

While AI Sandbox is the flashiest new offering Meta is launching, the company highlighted other AI-powered advertising services. Deeper in the weeds, the firm showed off a system called Meta Lattice that can better predict advertising outcomes and improve optimization without relying on multiple, siloed models, which was common at Meta in the past.

Meta is also building out its Meta Advantage suite of ad products focused on automation that launched last year. Advantage+ Shopping, the program’s commerce-oriented feature, improves cost-per-action by 17% and return on ad spend by 32% on average, according to slides shared during the presentation.

“These sorts of results are really leading to higher adoption,” said Nicola Mendelsohn, head of Meta’s global business group. “We're seeing now three times as many advertisers using [Advantage+ shopping campaigns] weekly than just six months ago.”

Within the next month, brands will be able to switch over their manual campaigns to Advantage+ at the click of a button, a bid to spur even more brands to try out the AI tools. Automated reports that compare the outcomes of Advantage+ campaign to manual sales campaigns are in the process of going live as well. 

Meta Advantage is also trying to help advertisers broaden their reach through Advantage+ audiences. Brands can share their target audience suggestions, which Meta’s system scans to see if it can identify people outside of those parameters who are likely to convert. Other AI perks include the ability to make small tweaks to creative, like adjusting the brightness or text placement in an ad, and a method for picking the best videos to display in Catalog ads.

Meta has put AI front and center in recent months, viewing it as a central pillar to growing its TikTok clone Reels and its longer-term metaverse ambitions. Meta’s revenue grew again in the opening stretch of the year after several consecutive quarters of declines, a bump leadership attributed to the new efficiency enabled by AI. One of Meta’s fastest-growing categories is business messaging on platforms like WhatsApp, where the firm has envisioned the potential for future-facing tech like virtual agents. Customer experience is one of the most valued use cases for generative AI among executive leaders, a recent Gartner survey found.  

“We really see that messaging is the next pillar of our business,” Mendelsohn said. “You’re going to see us investing more in this space.”  

Meta’s ad sales have been hampered by a weak economy and ongoing challenges from Apple’s App Tracking Transparency that have required fundamental aspects of its infrastructure to be reworked. AI is one of the ways Meta is addressing the headwinds, though Hegeman said AI Sandbox and Advantage+ are not specifically responding to ATT.

Weeks after the appointment of a new chief technology and information officer, Nordstrom confirmed that it underwent layoffs in its tech division. 

“As we continue to invest in technology as a critical area of our business, we have made the difficult decision to reduce our technology workforce, adjusting the team structure and eliminating certain roles to remain agile and operate more efficiently,” a company spokesperson said in a statement.

Nordstrom declined to respond to questions on how many people were impacted. A number of people in program and product management, engineering, and data science and analytics roles have posted comments on LinkedIn as being laid off from their positions due to Nordstrom’s restructuring. 

“We are committed to treating impacted team members with respect and supporting them through this transition,” the spokesperson said.

Last month, Nordstrom named Jason Morris as its chief technology and information officer, wherein he will manage the company’s technology functions including engineering, data science and analytics. Prior to Nordstrom, Morris served as Walmart’s senior vice president of enterprise business services. 

The retailer’s previous tech chief, Edmond Mesrobian, left the company last fall. Mesrobian oversaw a restructuring of Nordstrom’s tech team in 2019, which also resulted in an undisclosed number of layoffs. 

Forty-percent of Nordstrom’s offering is digital, according to Michael Maher, Nordstrom’s chief accounting officer. “We continue to see it as a meaningful part of our overall business,” Maher said on a call with analysts in March.

The department store recently reported that Q4 net sales fell 4.1% year over year to $4.2 billion, with Nordstrom down 2.4% and Rack down 8.1%. Digital sales fell 13.1%. 

The company also decided to wind down its business in Canada. Six full-line Nordstrom stores, seven Rack stores and its Canadian website are shuttering, impacting about 2,500 employees. Last fall, the company also laid off over 200 workers at a distribution center in Iowa.