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Reinventing Smart Stores as a Medium: With VSBLTY

Jay Hutton

Fact or myth? Brick-and-mortar stores are dead and buried. Given the recent trend toward online shopping, it must be true, right? Wrong. Believe it or not, it is a myth.

Brick-and-mortar stores are alive and well. And they are only improving as they undergo a digital evolution and search for new ways to create “intimate” in-store customer engagements in a world that increasingly embraces the convenience of online shopping.

In this podcast, we take a close-up look at how offline and online are merging—and how this developing omnichannel relationship will impact consumer engagement going forward. Plus, we examine how retailers are successfully sifting through massive amounts of customer data to hyper-target messaging and drive in-store sales.

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Our Guest: VSBLTY

Our guest this episode is Jay Hutton, Co-Founder and CEO of VSBLTY, a retail technology solution provider. At VSBLTY, Jay works with retail customers to realize the store as a medium and help brands drive impressions at the point of sale.

Podcast Topics

Jay answers our questions about:

  • (2:56) Evolutions in the physical retail space
  • (4:18) The Store as a Medium movement
  • (7:20) Creating a complete omnichannel experience
  • (9:14) Benefits of Store as a Medium from a customer perspective
  • (11:13) Successfully undergoing a retail transformation
  • (13:23) Ongoing Store as a Medium collaborative efforts
  • (15:57) The IT and technology investments for Store as a Medium
  • (18:12) Store as a Medium customer examples

Related Content

To learn more about ongoing retail transformations, read Retail Digital Signage Gets an Upgrade with Computer Vision. For the latest innovations from VSBLTY, follow them on Twitter at @vsbltyco and LinkedIn.

Transcript

Christina Cardoza: Hello and welcome to the IoT Chat, where we explore the latest developments in the Internet of Things. I’m your host, Christina Cardoza, Associate Editorial Director of insight.tech, and today we’re talking about retail stores as a medium. Here to tell us more about what this means is Jay Hutton from VSBLTY. Hi Jay, welcome to the show.

Jay Hutton: Thank you, Christina, it’s my pleasure.

Christina Cardoza: Before we dive into the conversation, I want to learn a little bit more about you. So, what can you tell us about your role, and the company VSBLTY?

Jay Hutton: Well, me personally, I’m a 25- 30-year-long suffering tech entrepreneur, serial startup kind of guy. I’ve worked for large companies, but I’ve also, I mean, I feel most comfortable when I’m digging the ditches of small companies. That’s my place and my role in this world. I’m the founder and CEO of VSBLTY going back to 2015, and we scanned the horizon of the tech space at that time, and we tried to figure out a place where we could provide meaningful growth and progress in a suite of software. And we identified at that time that the digital-signage domain was about to explode. Thankfully, we got that one right. It was, and the traditional players had really atrophied, Christina. They hadn’t evolved their product. And so we felt there was an opportunity to come in with the best practices and really capable software that was able to perform in a way that satisfies and addresses a pain.

That’s often what you’re looking for as an entrepreneur. You’re looking for a problem to be solved, a piece of pain that can be addressed. And we then got gifted with the idea of computer vision, bringing to digital signage the ability to measure consumer experiences. So that is the creation of the company. We’ve been in business now for about seven years and still consider ourselves to be in the startup domain, although, honestly, we’re probably more in the emerging—if you could discern the difference, I suppose, startup is the initial phase—emerging as the phase that comes after that, however long that takes. Yeah.

Christina Cardoza: I know you were joking maybe just a little bit when you said you’re long suffering in this space, but I can see how it could be a hard job to do or to take on, especially in the retail industry. We’ve seen so many transformations happening little by little with self-checkouts, but now, over the last couple of years, stores are having to transform even more and compete. Customers have this new expectation, they want convenience, and with online shopping they can get that without even leaving their home. So that’s having physical stores having to rethink: “How do we get people in the stores and make things more convenient for them?” So, to start off the conversation, I’d love to hear your thoughts on the recent trends in the retail space, and how physical stores have been able to compete with online shopping.

Jay Hutton: Physical stores are not dead, nor are they dying. There’s a modification of our consumer behavior for sure, which is resulting in some amount of commerce to be fulfilled through an online presence. But that doesn’t mean the store is dying; it’s evolving. And really, frankly, the pandemic has caused retail to really look at their consumer experiences, the customer journey, and modify it in a way that—I don’t want to say it’s more like online—but it’s more like online; it is delivering to the customer immediate response, immediate engagement with brand in a way that the brands value and the consumers value. So there’s this merging of online with offline in a way that is requiring the store to be reinvented more digitally embracive, more consumer engagement, more consumer-centric, which I think is a challenge to a lot of traditional retailers. But I’m delighted to report that they’re really stepping up to the challenge in all ways, I think.

Christina Cardoza: And as part of that evolution—we teased in our intro—stores are becoming more of a medium, and I know this is a mission of the company, is to transform the retail stores—stores as a medium. So, what do we mean by that, and what goes into this new transformation?

Jay Hutton: The store has always been a medium for messaging. In the past, that has taken the form of poster boards or stickers on the floor in front of the Tide detergent. We’ve all seen it. And it has been meaningful in the way it has redirected brand spend. Brands spend money to drive impressions at the point of sale, at the moment of truth where you are most likely to be influenced by a message. What’s different in the last two or three years is how all that’s becoming digital. And so we’re talking about stores embracing digital surfaces. Could be a digital cooler, a transparent LED in a cooler, it could be an endcap that’s got a digital screen embedded. It could be shelf strips that are interactive, that drive attention, gaze, and engagement at the point of sale.

These are always in which stores are embracing and investing in turning the store into an advertising medium. And what does that mean? This is what we say when we say it’s an advertising medium. We know the internet is an advertising medium. We know that broadcast TV is an advertising medium. We know print is a less meaningful, but still an advertising medium. We know that billboards on the side of highways are an advertising medium. We’re now at a point where the store itself is an advertising channel.

So when the big brands like Unilever, Coca-Cola, PepsiCo, etc. are making decisions on which channel they invest in, now the store is a legitimate channel to invest in because it is where the consumer makes decisions, it is where they can be impacted, is where the brand can deliver a brand narrative. These are all really valuable. There’s not a brand on the planet that doesn’t want a more intimate engagement with their consumer, which is exactly what the “Store as a Medium” is.

And so we’re relieving from the stores the responsibility of investing in the infrastructure. Instead, that gets invested in by parties that are interested in building up the channel, and then it becomes viable as a media channel. So that brand manager who’s responsible for a significant budget makes a decision about whether or not this specific campaign gets delivered through print, through out-of-home (outdoor), through store, through the internet, or maybe all of them. And that’s the big sea change.

Christina Cardoza: I love hearing about all of these physical digital transformations, like you mentioned: the digital shelves or digital signage, digital coolers. But I’m curious, as a lot of retailers have started on their digital transformation journeys, omnichannel has been a big focus for them, and that’s sort of blending their online storefronts with their physical storefronts. So how does “Store as a Medium” fit into that retail omnichannel experience?

Jay Hutton: Well, we all knew that the game would change when we were able to measure audiences. So, as you frequently do in the evolution of technology, you’re kind of waiting for the technology, right? You’re waiting for the technology to keep up or catch up to the demands of the marketplace. And Intel® among others have proven leadership in delivering high, powerful, high-capacity, powerful processors at the edge. So now we’ve got the ability to draw inferences, computer vision, looking at audiences and deriving meaningful data. How many men, how many women, how many 25-year-olds, how many 35? Not privacy data, not data that would make any of us feel creepy, but data that is relevant to a brand.

So we all knew that once we cracked the code of that, that it would open up the store as a valuable medium and now realistically become among the channels that are represented by this phrase, “omnichannel.” It wasn’t before and now it is. And now we’ve got this opportunity to drive really meaningful insights—what brands would call the data dividend. Not only are they interested in delivering advertising at the point of sale, but they’re interested in lift. They want to sell more stuff and they’re interested in this unbelievably complex and robust data set that they’ve never had before. And they’ve really evolved. All brands on the planet have evolved to a point where data—knowing more about their customer—allows them to segment, laser focus, and understand their customer engagement much more acutely than ever before.

Christina Cardoza: That’s a great point. Being able to get those instant customer behaviors in real time can allow brands to sort of change messaging on the fly. But I can imagine it can also provide personal services for the consumer looking at that signage or in that digital shelf cooler. So, what—can you talk about some of the benefits that the customers get over this too?

Jay Hutton: Sure. So we talked about brands to get lift to get more data and consumer engagement. The brands begin to have a direct and meaningful dialogue with the customer. In a world where there is no consent, no consent is secured from the customer. We’ve got a bunch of very focused marketing that can be delivered to the customer as if that customer is a member of a group, a gender group, an age group, whatever.

But in a world where we’re getting consent, maybe we’re aligning a loyalty app with what we’re doing on the digital display. Now we’ve got a customer that’s consenting to get personalized advertising, and that’s meaningful to a customer. That’s what’s in it for the customer. Now it’s not just general broadcast, shotgun advertising; now it’s laser focused. Jay likes Coca-Cola more than he likes Pepsi, so I’m going to drive coupons, digital coupons, or I’m going to drive campaign promotion to him specifically because of his brand affiliation and because of his brand interests.

This is really the first time we’ve begun to drive consent-based advertising in a way that consumers value. I don’t care about stuff I don’t ever buy; I’m not influenceable necessarily at the point of sale. But if I get choices on brands that I’ve already made, have a predilection or a preference for, then that’s more meaningful to me as a consumer.

Christina Cardoza: So how does the company VSBLTY and retail stores and brands—how do you actually make this happen? What are the components? You mentioned digital cooler, shelves, signage. What are the technology components that these stores and brands really need to have to make this all possible?

Jay Hutton: That is perhaps the most significantly complex part of the business model, that took a couple or three years to figure out, and this is why we work with WPP and Intel and others that are stakeholders in this overall problem and have figured out some of the components.

So let’s talk about what’s meaningful to a retailer. Retailers function their business on a 3% to 4% gross margin. Like it’s a very, very thin margin. So, what is the probability that a retailer is interested in a multimillion-dollar capital infrastructure for digital overlay? But what’s the probability? Almost zero unless you’re Target, Walmart—some of the big players who really understand media and take a very sophisticated approach to media. Unless you’re in that 1% of 1% of retailers, you’re not interested in doing all the heavy lifting associated with the digital transformation.

So then the hypothesis was if a group of us called the “Store as a Medium” consortium could get together and solve those problems on behalf of retailers, therefore creating a media infrastructure, capitalizing it, deploying it, managing it, even doing brand-demand creation for the media network, it seems to me that that would satisfy all the requirements and therefore it simplifies their value proposition to a retailer by saying, “You don’t have to do anything. We’ll open up the doors. Let’s have an agreement to do this together over three, four, five years. Let’s do it at scale—5,000 stores, 10,000 stores—and together we’ll create this channel.”

That is the evolution of the value proposition that we’ve created over the last several years. And, of course, it’s based upon a foundation of mistakes and learnings and evolution of thought. And we’re really at a point now where we’ve got a really unique offering amongst the group of companies, and an opportunity to really lead this category—not only with a practical application, but with the thought leadership that this requires at the moment.

Christina Cardoza: So does that “Store as a Medium” collaborative effort exist today beyond VSBLTY?

Jay Hutton: Sure. I don’t know beyond VSBLTY—we’re certainly among the players that are part of driving it. And so, do others understand this? Of course. Boston Consulting Group said this—says this is a $100 billion market by 2025, and it’s under $5 billion today. Even if that statement is hyperbolic, we know it’s exploding. There’s every indication that it’s exploding. So this is no longer a whiteboard exercise. It was, “We’re doing this now.”

Our largest deployment with Intel is in Latin America, where together with Anheuser-Busch, who are, interestingly, Christina, both a CPG and a bricks-and-mortar retailer in Latin America. So they own physical bricks and mortar. We really couldn’t find a better partner than them, because they actually speak both glossaries. They have the vernacular of a retailer, and they have the vernacular of a CP—of a consumer packaged—goods brand. So, together with them, we’re building a network of stores which will reach 50,000 stores by the end of year four. And were we to reach that objective, and I firmly believe we will, it’ll be the largest deployment of a retail-media network on the planet. And I think we’ll represent a leadership position with respect to growing this. And remember, we’re doing this in Latin America, where it’s not modern trade; this is traditional trade. This is a 10-square-meter convenience store on the side of a dirt road in Guadalajara. If we can do it there, it gives us a leg up on doing it in places where it’s got a less challenging environment.

So we are leading, and here in the US we’ve signed together—the consortium—we’re working together to deploy a 2,800 location fuel and convenience. We’re also working on traditional c-store, which by the way is probably going to be one of the early adopters of this category, because they don’t have the complexity of 110,000 skews that a large grocery might have. They might have 6,000 skews, where it’s just manageable; it’s more bite size. And so there’s an opportunity to do it there, and we’re delighted by the leadership we’re getting from Intel and others as we drive this idea and mandate.

Christina Cardoza: I’m very familiar with Anheuser-Busch brands—not too familiar—they’re beer brands. So I’m very interested because I didn’t know they were a physical store either. I want to come back to that and hear more about how you worked with them. But, first, going back to the retail stores where you have brands making these technology investments and bringing those into the store, are they leveraging any of the retail existing technical infrastructure? Or when they bring in these components is it brand new?

Jay Hutton: Everyone has the fantasy that existing infrastructure can be leveraged, but generally speaking we discover that is not the case. The Wi-Fi supplied in a Target or a Kohl’s or Walmart usually sucks. And we would have to deploy on top of that in order to get the dedicated access to bandwidth we would need. Now we’re edge, so we don’t have a disaster-recovery problem if the network goes away, but if you’re driving new content—to your point made earlier, adjusting content and creative on the fly—well then you need internet access to do that. And if we’re functioning over an in-store Wi-Fi that’s got consumers on it and the point of sale on it, it’s not workable.

So we have that fantasy that we’d be able to do that and therefore lower the cost of the total capital expenditure. But we no longer have that fantasy. Camera and network obviously exists for the purposes of loss prevention in retail, but, generally speaking, Christina, they’re up in a 30-meter ceiling or a 25-foot ceiling, and they’re looking down on heads, not direct on faces. And so when we deploy our technology, we generally deploy it with camera. And, again, we’re not picking up privacy data. We’re only picking up demographic data, which of course is useful to the brand to understand the overall, macro buying behavior, which of course is—that’s the yield, that’s the data dividend we spoke about earlier.

So for the most part this is new build, but new build, I should hasten to add, that we’re removing the capital-expense responsibility for from the retailers. So if they deliver us a number of stores that is large enough, we’ll go and assemble the capital necessary to make it happen. And I think that’s probably the most important part of building this consortium—to have a legitimate group that’s got—and everybody playing their part—have got the ability to deliver these kinds of networks on scale.

Christina Cardoza: So let’s go back to the Anheuser-Busch example, or any other customer use cases that you have. What were the challenges that they were facing? Why did they come to VSBLTY? And what was the result of your partnership with them?

Jay Hutton: Well, well if you scan the globe from the American perspective—this is difficult to understand—but to start with what problem we are solving: in America, 65% to 75% of overall retail fulfillment. So, the entire commerce landscape is fulfilled by big box—Walmart, Target, Kroger. In the rest of the world, with the exception of Western Europe, it is fulfilled by traditional trade—what you might call mom and pops. So it’s completely reversed in the rest of the world. We know modern trade has a really, a good capacity and very good sophistication as it relates to the deployment of technology. But mom and pops—we knew that if we could solve that problem with the assistance of folks like AB InBev—Anheuser-Busch—that we would have a global runway, we’d have green fields that would extend to a global landscape. And really, that was the challenge.

So what’s the problem? The problem is there’s virtually no technology adoption in mom and pops in traditional trade. There’s not even point of sale in traditional trade, Christina. So there’s very little visibility, if you’ll allow me the pun. There’s very little visibility to what’s happening in traditional trade. So the deployment of camera technology initially satisfies the requirement of doing screen-based advertising—Corona, Heineken, you can imagine. But now I’ve also got a virtual window into the retail, which means that I can layer on other capabilities—planogram compliance, fraud compliance, POS.

So we’re just at the beginning of this technology adoption, which started with a revenue-generating platform called “Store as a Medium.” There’s other things we can do, all part of this remote-execution mandate, which is really critical for traditional trade. But we’re excited by the fact that we start with a revenue-generating model. And to have AB InBev—Anheuser-Busch—as a side-by-side partner for us allows us to tell that story with just considerably more legitimacy. We’ve got the ability to do this and deliver it. Right now we’re just over 2,000 stores in at about eight months. So, pretty good deployment so far. We’re going to accelerate it, but we’re happy with where we are at the moment.

Christina Cardoza: Great. And we’ve been talking about beverage stores and grocery stores, but I can also see a use case for this in other retail stores. I’m thinking like a cosmetic store—helping workers. I know when I go into a store, I want to know more about a product. Or you learn more about what’s going to be the best for my particular features. The workers are sometimes caught up, or I don’t normally want to go up to a human person and speak to them. So I can see digital signage, or some of these solutions giving you a lot more information and freeing up employees from doing other important tasks.

Jay Hutton: If there’s one category, if there’s one brand category, that can afford the investment in the digital infrastructure, it’s health and beauty. The margins are out of this world. There’s a technical sell, right? Because it’s not just pasta. And there’s a labor problem right now to getting skilled labor to be able to perform that role at the point of sale. So there’s an adoption happening in health and beauty that’s happening, that’s outpacing everything else, because it does have that ROI. And if there’s a place where the brands themselves will underwrite the cost of the digital infrastructure, it’s in health and beauty. Because there’s an opportunity there in a marketplace that has really kind of ridiculous gross margins; where they can invest and the ROI is almost immediate; and there’s an education issue right at the point of sale. You want to educate at the point of sale.

So, look for health and beauty to be probably a brand leader in the category. This doesn’t necessarily run in contrast to a grocery deployment or a big box deployment, because health and beauty can be co-resident—they can do it together. But we’re going to see one of the brands that’s leading the way will be health and beauty. One of the brand categories that leads the way is health and beauty.

Christina Cardoza: I can definitely see that. You’ve mentioned that we have computer vision models running, making all of this possible, gaining that customer analytics and behaviors, and they’re analyzing that data at the edge to make it fast and make it real time. And I know these are big areas for Intel—and I should mention the IoT chat and insight.tech as a whole, we are sponsored by Intel. So I’m curious how your work with Intel has made “Stores as a Medium” possible, and all these initiatives that you’re bringing to customers possible.

Jay Hutton: Intel has enormous global reach. If we’re having a particularly difficult time reaching the C-suite of a retailer, Intel can get there because they have a team dedicated to ensuring thought leadership. They’re not necessarily a company that’s—of course, at the end of the day, Intel wants to move silicon. But you would be surprised, or one may be surprised, as to the level of expertise—subject matter; narrow, specific vertical expertise—that Intel develops, and we lean on them all the time.

And of course the legitimacy they give to us—not only in domestic engagements but internationally as well—helps us enormously. When we can say we’re a side-by-side partner with Intel, and proud to be the 2022 Intel Channel Partner of the Year, VSBLTY is—it gives us a letter, a degree of legitimacy that gets us into the conversation. So—and also Intel has a track record of putting their money where their mouth is—when it comes time to really manifestly drive that thought leadership in a trade event or a speaking event or a published document, Intel will always be there with us, assisting us wherever we need that assistance, and we’re enormously gratified to be in that position.

Last thing I should mention, just occurred to me is, as I was making my last remarks, on the technical side, the silicon is evolving, right? And today we’re in a certain family of silicon that drives our solutions, and we can already see the next layer of silicon coming and we get early access to that. So by the time it’s available in production, we have a product that can run on it, which to us is an enormous advantage from the competitive point of view. We all have competitors, and for us to be able to run on the chip set that was released, like, last month, we’re already able to run on it, and a production variant is a huge advantage for us.

Christina Cardoza: I’m glad you brought up those technology advancements, because it sounds like we may be in the early phases or at the beginning of bringing these technologies and these transformations in the physical store, and technology is only going to get better. So, what do you think we can expect from this space, or what will happen to make “Store as a Medium” truly a reality?

Jay Hutton: So, it’s no longer conjecture, it’s no longer guesswork. We were in the guesswork/conjecture category in 2015, 2016, but there’s been enough evidence that this model works that we’re now looking at large-scale deployments. If you just look at Amazon and Walmart, between the two of them—and I may get my numbers slightly wrong—but $2 billion each in advertising revenue that was not there in the previous year. So, if you’re ever doubting the veracity of this category, just look to that. And really others are going to follow that, because if you’re not afraid of what Amazon and Walmart are doing and you’re in retail, then you’re just not paying attention, right? So they’re leading the charge with respect to that.

And I think that this, as I said earlier, there’s no longer any guesswork about whether or not this category will take off. The challenge now is the speed. And you’ve heard this a hundred times in technology in your career probably, but it’s a land grab at the moment. It’s getting contracted retailers to sort of do the dance with you and commit to you long term. And that’s going to be the difference between the leaders and the also-rans in this category. It’s the speed with which adoption can be secured, deployment can be secured, and revenue can start to happen.

Christina Cardoza: Well this has been a great conversation, Jay. I’m excited to see some of the technology come to my own local stores. But, before we go, are there any key takeaways or final thoughts you want to leave our listeners with today?

Jay Hutton: Well, just to strap in, because your retail experience is about to change. It’s going to become more experiential; there’s going to be more for you for the customer journey. And if you decide to opt in to some kind of loyalty program, it will become profoundly more personalized to you. And that experience will extend to your home, where you’ll be able to engage with brand from the comfort of your home, if you wish to. And that whole customer journey, that whole engagement modality begins at bricks and mortar, and it’s unable, it cannot begin in an online experience. So, what we’re now able to offer you in an offline world is the thing that we only fantasized about offering just three or four years ago. So, the entire experience will change, and retail is not going anywhere. Bricks and mortar are not going anywhere.

Christina Cardoza: Great final point. And with that, Jay, I just want to thank you for joining us today on the podcast.

Jay Hutton: Thank you, Christina. My pleasure.

Christina Cardoza: And thanks to our listeners for tuning in. If you liked this episode, please like, subscribe, rate, review, all of the above on your favorite streaming platform. And until next time, this has been the IoT Chat.

The preceding transcript is provided to ensure accessibility and is intended to accurately capture an informal conversation. The transcript may contain improper uses of trademarked terms and as such should not be used for any other purposes. For more information, please see the Intel® trademark information.

This transcript was edited by Erin Noble, copy editor.

About the Author

Christina Cardoza is an Associate Editorial Director for insight.tech. Previously, she was the News Editor of the software development magazine SD Times and IT operations online publication ITOps Times. She received her bachelor’s degree in journalism from Stony Brook University, and has been writing about software development and technology throughout her entire career.

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