Okay, good morning, everyone. Welcome to the Tuesday at NRF. Thank you all for joining us this morning, braving the weather to talk about the weather. All right? So we're gonna have, we're gonna have a bit of fun on this one, aren't we, right, today? Well, I'll give them an opportunity to introduce themselves. I should introduce myself as well. Scott Bernhardt, President at Planalytics. Joining me is Josh Niebler, Senior Director E-commerce Experience at DICK'S Sporting Goods, and Aaron Cano, SVP, Analytics and Marketing Operations for FreshDirect. So we're gonna go ahead and get started and, you know, go through the obligatory on this one, right? We have to-- Oops! Right. Lawyers, right? We'll go through the appropriate slide. And then, Josh, I'm gonna ask you to go ahead and introduce yourself, if you would, please.
Thanks, Scott. So Josh Niebler, like, like he said, I lead the E-commerce Experience team for DICK'S Sporting Goods. It's a team of program managers across search, browse, attribution, a few programs centered around marketing channel performance optimization, and then the one that I'll probably talk a lot, lot about today is leading our on-site personalization efforts.
So, Aaron Cano. So I head up the analytics team at FreshDirect. Been there roughly 10 years. At FreshDirect, what that means is that anything dealing with customer data, me and my team gets involved in. So yes, a lot of it is marketing, but it also drives around merchandising, the planned production and transportation. Anything to deal with customer data that drive better decisions, we'll get involved in.
Great. Thank you both. All right, welcome. I'm glad you could be here, right? Braving the weather, right, to get here. Love that. Okay, so today, just we're gonna clear out a couple of things, what we refer to as terms and definitions. We're gonna be talking a lot about the weather's impact on these different businesses, what it means, what it's about, how to quantify. So there's a couple of just terms and definitions that is very helpful to know. So if in our conversations, one of us were to toss out a term like weather sensitivity, right, you know and understand that is the, that is the amount of movement, right, in the business for a product, at a store, at a online, what have you, but it's that movement possibility. You know, how sensitive could the product be?
Could it go, be up this high, down, down this low? Is weather sensitivity. Volatility is basically taking that sensitivity and translating that into the economic impact that it's, that it's gonna mean, right, in a dollars and cents kind of, kind of perspective. And then one you're gonna hear a lot is Weather-Driven Demand or WDD. So if we say WDD a lot, a WDD for this, for that, and the other thing, that's kind of the, the metric, that's the, the action point, something you can use, something your systems can use, something you can do about the weather, right? It's an old joke, but it's a good one, right? Everyone complains about the weather, right? Now it's time to do something about it. And that's really where the WDD comes in, right?
It's that, it's that metric that allows you understand either a percentage or a unit, lift or drag, that the weather and only the weather causes to that intersection of product location and time. We all got that, right? Real easy, right? So if we say WDD, everyone knows what we're talking about. That's fantastic. Okay, so with that out of the way, let's go ahead and get to... Oh, yeah, forgot about the other one. What it means, right? This is kind of important. Talking about WDD is great, but it's really about that value return to the business, and how best to use it, how best to action it, how best to, frankly, make money off the weather, right?
So, you know, there's a lot of improvements for planning, for margin, right, markdown reduction, right, all sorts of opportunities within different retail environments, right, to frankly, make money off the weather. And again, a key point to that is the integration. As if you know anything about Planalytics, we have a lot of integration partners, and some of the key ones here up on the board. And you know, 'cause it make it easy to action the weather. You know, people don't typically want to learn yet another system, right? So if you can plug into the existing environment and just improve it, right, it goes a long way. So happy to talk to you about all of that, as, excuse me, as we go forth. We are in booth 4156. Right?
Happy to have a longer discussion about all of these key points. All right. So let's go ahead and begin. I'm gonna start off with you, Aaron. Right? Let's direct this question towards you. We're coming off the end of the holiday season. Here we are in the start of 2024. We're at the biggest retail show of the year, right? And all of those points. Anywhere you walk in the show, you hear a lot about artificial intelligence, machine learning, you know, buzzword, buzzword.
Yep, all that.
We get plenty of that, right? So but predictive analytics and the outputs, right, that we use, similar to Planalytics, right? Being AI, right, we're an output, an AI output. What does that mean for FreshDirect, right? How do you expand on that? How do you expand on those predictive capabilities? How do you action it? What do you do about it?
A lot... So, you know, at FreshDirect, is very big on data and analytics. You know, but technology today is much better than it was even just two years ago. When you think about AI, which to me is a very broad term, right? But when you get down to machine learning, in terms of automating a lot of processes, but more so about engaging the customer and making that experience and that shopping experience that much better. So as we go into 2024, for us, it's about that. What can we do to enhance that experience? You know, examples of, you know, our loyal customers, which the most of our customers, shop every week, every other week, right? So why have them put stuff in the cart, pre-populate the cart? Technology exists today, put stuff in the cart that they already want.
And then when you think about the supply chain, if you know, as soon as that truck hits the bay with the salmon from Alaska, you know, automatically send out the marketing campaigns and the internet messages. And you can use tools today to automate those things more efficiently than we did even two years ago, and they're much more accurate today in terms of the process. Then on the analytics side, it's you know, making more efficient the process and the supply chain, as well as the forecasting. So the analysts can now spend their time doing more complicated things and let the machines do the more mundane processes on information. So for us, it's about automation and the customer experience.
... No, it's important, right, to get that action and to make it happen.
Yeah.
Right, to make it happen. Anything to add, or should go on to the next?
No, we're really in the early stages in kind of figuring out what AI means for our organization.
Mm-hmm. Okay. Good. Thank you. So I'm gonna direct this next one to you, Josh, right? We'll start with you anyway, right? Most retailers understand the impact that the weather impacts the business, right? And not all of them are measuring how much, but they understand it's like today. You stole my joke, Aaron. I was gonna like walking into the Javits Center this morning, right? There's a significant weather impact that happens, right? And they're a lot different for FreshDirect than for DICK'S Sporting Goods. What are the challenges from DICK'S Sporting Goods' perspective to address the help with your partnership with Planalytics? How does that work?
Yeah. We work with Planalytics in a number of different ways across different parts of our organization, but what I'm really excited to talk about is what we're experimenting our way into right now, which is personalizing our online experience. We're very quickly trying to get from a one-size-fits-all website to one that's highly tailored based on everything we know about our customers, which is a lot. And we view weather relevancy as a big part of that strategy. So we're actually working with Planalytics right now on a test to use WDD to put different homepage creative, so when somebody comes to dickssportinggoods.com, they see a very different message depending on the weather in their area.
We're obviously, this time of year, really focused on outerwear, outerwear accessories, product categories like that, but really excited to see what this can do and just make our website more relevant at a local level.
That's great. You know, getting back to today, right? [Hat, scarves] today.
Should be getting some results today. We'll see how it's going.
Absolutely. Absolutely. Aaron, what about, what about from your side, from your perspective?
So in the grocery-
Pretty different business, right?
Yeah, I mean, so the grocery business, you know, weather has a huge impact on how demand fluctuates, not only day to day, but also what they're actually buying every day. So like a day like today, you know, will be different, and we're working with Planalytics on is early stages of the analytics in terms of if it snows for 2 in versus 5 in, or it rains for one day versus five days in a row, how does that really impact the demand, and who are those customers coming in? You know, loyal customers are gonna come in every day, but those new customers come in, what's that demand gonna look like? Or those infrequents, how often are they gonna come back in? But also, the media plays part of that.
So two weeks ago, when it was all over the media, we're gonna have a lot of rain and snow on Saturday and Sunday. The more it's in the media, the more it impacts our business, right? So we had an increase of 20% on Thursday and Friday before the rain, you know, and somewhat snow, depending on where you are in Westchester or Jersey. And it really is very different by geography, right? So Westchester is different impact than Manhattan. But the more that we can predict, you know, three, four, five days out when that's gonna happen, we can then adjust everything. Right, so it's the supply chain in terms of how much do we bring in, but also what do we bring in, right? So a day like today, yeah, it's gonna be more booze, right?
It's gonna be more of the dairy and the, you know, the milk and eggs kind of thing, as well as some berries. And if it's a long period of time, it's the frozen food, right? So we can bring more of those things in first, but then it's about staffing because we know that a day like today, we're gonna get 10%, 15% of staff are gonna call out. So beforehand, we can increase that staff. So the better we can identify, you know, whether it's margins are gonna be better for the business, because in grocery, the margin's small, so the better we can do operationalize, we get more efficiency out of it, the better, and the Planalytics ideal will help us do that.
Yeah, there's just so much, you know, so much. A storm like this one-
Yeah, it changes everything, right?
There's such a ripple that goes through, right? Like, so much happens. Again, that's why we keep coming back to-
But again, the more you know beforehand, it doesn't have to be five weeks, but you know, two, three days before, and if you know when that is, then you plan for it.
Well, if you know what it is and your systems know what it is.
Yeah, yeah, yeah.
You can tell the people all day about the weather.
Yeah.
They know what to do. The systems don't know what to do.
Yeah. 100%.
Right? So but you got to tell them what to...
Yeah.
If you tell the system what to do, it'll do it.
Yeah, same thing with the machine learning, where you can automate, "Hey, if the machine knows it's gonna snow on Tuesday by 3 in, then it automatically rejiggers the supply chain and demand process.
Yeah, exactly. Exactly. A lot easier than all the-
Yeah
... hundreds of people trying to efficiencies.
It's what we used to do.
Yeah, exactly. We want them out loading the truck. Right. So Aaron, I'm gonna stick with you on for this next one a little bit, and, you know, talk about, you know, it's FreshDirect, right? Fresh is in your name.
Yeah.
Right? So, the freshness of the product and frankly, wastage-
Yep
... and reducing spoil waste. You know, there's a lot of different terminologies for it, but it's, you know, it's pretty important to that-
Yeah
... to that margin and that bottom line. Right, so talking about Weather-Driven Demand and WDDs, how about, you know, optimizing inventories-
Yeah
... reducing waste? How does that work for you now?
Well, FreshDirect is a little bit different than. You know, we're purely online, right? So our warehouse, we're here in the Bronx, but our in the building, produce, you know, it's two days to five days. We don't keep a whole lot. So the more that we can understand what that supply needs to be, the less, we call it scrap, right? The less waste. So again, like today, we bring in more food for the weather, but we take in less of other things. Therefore, we actually very much reduce a lot of the scrap or the waste and the sustainability of that in the building. So we're giving more things to the customer, more what they want when they want it, and less waste.
Again, is very much driven by the weather, and our ability to predict that helps those margins very much.
I like that term, scrap.
Yeah.
I'm gonna steal that one.
I think we're the only ones who use that word, right, in the, in the grocery business, scrap.
Yeah, wastage, spoilage, you hear all that. Scrap.
It's a conversation every day in our building.
Oh, I love that. That's good. All right, Josh, turning to you for this one, right? You have a very different business than than FreshDirect, but there are some similarities, right? And so can you talk about the impacts of how weather influences customers who shop online, right? How do you see that weather influencing e-commerce in particular, if you could call that out?... look for opportunities, and how do you get that sensing for the sales signals that are coming-
Yeah.
-WDDs?
Yeah, I think it's like I talked about, obviously, days like today, it's all about cold weather, snow happening, outerwear, outerwear accessories, heavyweight jackets, things like that. But I'm excited about what we're learning here and see a lot of other application, especially as we get into spring. We know parts of the country will get warmer, drier earlier than others. People will get outside and look to play golf sooner. Kids sports, spring sports start at different times based on what the weather's doing in local areas. So I think there's a lot of application beyond just kind of the obvious, and maybe it's just obvious because of where we are and what today looks like. But I think there's a lot more application year-round in how we absorb weather signals and become more relevant to the customers who are shopping on our website.
Yeah. I think so. It's a complicated one as the seasons progress, too. It's easy to think about the weather, and you come in from the snow outside, but then you think about-
Mm
... what the weather is like out right now in Dallas versus Detroit versus-
It's jackets, whereas, as a company, we talk about it because it's such a large business, it impacts the entire, entire company's performance. Again, I do think that there's a lot more application beyond just that category.
Yeah. It's funny, too. So we had one of the best compliments I ever got was from a CFO from one of our customers, and he came over like, you know, like, shook my hand, like, they've just signed up with us. They're only a couple of months in, and he said, "We love you guys 'cause you stopped the weather conversations around here.
Mm.
Right? I thought that was great, right? So I asked him to explain. He's like, "People used to use the weather as an excuse. 'Oh, the weather killed me.' Not anymore." Right?
For us, it's similar. For many years, there's always, "It snowed, what was the impact?" You guess, but now we have real information.
Now you have, now you have a number, right?
We put the end to the conversation.
Right. Yeah, exactly. End of the conversation, you can do something about it.
Yeah.
Instead of like, yeah, it's crap, right? Waiting to use that one, right? Okay, Aaron, I'm gonna go back to you, right? Can get through one of these, talk a little bit about the effects of COVID, right, a little bit. Now, FreshDirect was, you know, well-positioned for the world change, better than a lot of retailers. Everyone was surprised, but.
We were surprised, too.
Yeah. I have no doubt, but it's just a unique business.
Yeah.
I was thinking about that a lot, what you guys do, and so how did it affect FreshDirect? You know, what-
It was. Well, besides, you know, the drama and the impact of it, but it took us a good, I would say, two months to really reset our processes around where we were. Those first several weeks, we couldn't handle the volume, right? So everybody's just coming onto FreshDirect, you know, ordering $600-$700, $800 worth of food and leaving nothing for anybody else, right? So it took us some time to reset that, and again, using some data, you know, making sure our best customers had what they wanted. We proactively gave our customers a time slot or a reservation, and so, "Hey, Mary, you're Tuesday at 10:00. John, you're Wednesday at 3:00." They wanna change their time, but make sure that they had what they needed.
That gave us then time to reset the supply chain, reset the staffing, and it took about two months where we reset that, where we can now start to grow and take advantage of the pandemic in that way, right?
You're among friends here, it's okay.
Yes. Yeah. Yeah, but it tastes a little bit different, right? So now we're on the other side of that, and, you know, the pandemic did one thing: it changed people's perceptions of food. Before, wanted to go to the store, they wanted to feel and touch the tomatoes because it's about trust, right? Now, you didn't have a choice. You had to have someone deliver the tomatoes, right? But when they got them from FreshDirect, like, "Oh, my God, these things are wonderful. I have to order them again.
Yeah.
Right? So now, post-pandemic, a lot of folks, yes, they went back to their old habits, but we ended up keeping a lot of those customers who now built that trust over time, and now we're in that position now, right? But now you get a different situation where we're still in that post-COVID travel mode, and you get when the weather's nicer, people are not shopping, right? They're out on vacation. Columbus Day and MLK Day yesterday, you know, people are just off, more so than they were pre-pandemic, which now also impacts the business, which we're not quite there yet on the, where we were before, but definitely a lot more business, a lot different kinds of business.
Yeah. It's very... Yeah, that's unique to say. It's quite a different impact from, say-
Yeah
... DICK'S Sporting Goods, right?
But not entirely dissimilar. I mean, we saw a huge shift into our e-commerce business and out of our store business when some obviously were forced to close, but even others that were open, a lot of people just gravitated toward e-commerce, and we've been able to kind of keep a lot of those customers online and grow the whole pie as a result. So that's actually, despite the very different businesses we're a part of, a lot of similarities from what happened in 2020.
Mm-hmm. Some similarities, some differences. So I'm gonna direct this next question first to you, Josh, that, you know, DICK'S Sporting Goods, you know, you talked about personalization and really making that a website. I mean, that, you know, certainly retail, politics, and weather, right? It's all local. So when you start thinking about that from a DICK'S Sporting Goods perspective, you know, you have teams, right? Rooting for the home team, the rise of, you know, pickleball and running shoes and, you know, all sorts of different, you know, things that go on. How do you take that all on? I mean, what do you do about it? And... 'Cause the weather is gonna be different, you mentioned before, from one market to the next, every single day.
Yeah, I think this is something that's really been critical to our store's success. They've done a phenomenal job of this for as long as DICK'S Sporting Goods has been around. Really kind of local assortment planning, really relevant products in the right stores at the right time. That's been a lot of what's fueled the successful in-store business. What's nice about online is we don't have to curate the assortment. We can carry everything for everyone who comes to our website to shop, so that's definitely a plus. But I think the challenge and what we're trying to solve for is how we still appear local and relevant, recommend, encourage, surface, highlight the right products for the right person based on all those signals.
So we wanna make it look like we've curated that assortment specifically based for you, based on everything we know about you, when in reality, we carry every product on the website that is carried across the entire chain, so-
Yeah
... So a little bit of a different approach, but, trying to really get that local feel that I think our stores have a great reputation of achieving, trying to get that online.
... I think so.
You know, FreshDirect is way more of a regional player, but you still have differences, right, across the various parts of the region?
No, 100%. Like, so Manhattan is very different than, you know, Jersey and Long Island in terms of how they buy. And the weather, like today, you know, Manhattan, we're gonna get more business because, you know, people don't want to walk.
Yeah.
So in the suburbs, they'll get in the car, right? So that, that changes everything there. But for us, a lot of it, the personalization is around the habit. You know, similar to groceries, it's how do people get into a food habit? And weather plays a part of that, especially in the wintertime with us, how do we personalize that experience? Because for us, you know, it's the winter is the biggest time of year for us in terms of customer acquisitions, right? So people are they, they're back at work, kids are back in school. They're starting to get back into, I call it, a food habit, where you may be going out to eat once a week, but your food is more on a regular basis.
So in the wintertime, you know, is when we do a lot of acquisitions, but depending on the weather, you get some of those infrequents back in, right? And the new customers back, back in, and there's the opportunity where they don't want to go outside, so it's that one-time order, but make it a great experience and then personalize the second and third one, so they come back two or three times. Once you get that a fifth order, it becomes a habit, right? And if you can get 20, 30% of those folks to get on that food habit with you before spring, right, when the weather gets nice and everyone's spring break, and the habits break, then you're hooked.
Because then, you know, late spring, you're back on the habit again, and then September comes around, again, summer's over, and you're back on that food habit. Those same folks in the wintertime that were with you on, they'll come back in September. So the weather drives a lot of that habit and how we personalize that experience going forward.
Yeah. It's interesting. It's such a seasonal business.
Yeah.
It's, it's good. All right, so I'm gonna to move on, you know, question for you both, right? You've been great. I, I appreciate all of this, that we've talked about, this, this storm and the, the various storms that are coming up, and there's still some storms to come. So just kind of talking about the future a little bit, how you plan on using Weather-Driven Demand, how you plan on using the weather to make more money. Like, kind of what's next? And I'm not asking you to give away any trade secrets within the business or anything like that, but just talking a little bit about what's next. I think, Josh, I'm gonna ask you to start, and just a little bit about what's ahead.
Yeah. I think I've talked a little bit about what we're trying to do. What I haven't talked about and where I think WDD and kind of this weather prediction can help us is personalization at scale. Like, we can't be kind of manually making decisions, trying to use our best judgment internally, quick spin up a piece of creative, try something different. We're really trying to put the data, the tools, and the processes in place so that we can react quickly, but have a real scalable approach to what we're trying to do in terms of on-site personalization. So that's where I think the WDD model plays really nicely with that. That's our, our source of truth, that's our data model.
Now we need to, on our side, figure out kind of the tools and processes side to absorb it and put the right experience forward on the website. But it's that scale piece, scale and, yeah.
It's a great point, right? Because you can, if you only had one customer, you'd know just what to do, right? But, every day, all day, every day, but you don't, right? You got to do it at scale, and tricky.
Yeah.
Tricky. Aaron, what about you? Can
Well, again, we're in the early stages with Planalytics, but the plan is, number one, it's around the forecast and how do we operationalize the weather down to the zip code level, right? Because, again, every zip code is different. But if you can... You increase the margins and change operationally the demand forecast in every zip code, one, your plan becomes more efficient, your transportation becomes more efficient, your supply chain becomes more efficient around that order forecast. Once we get that down, then it's really around the supply chain, and how you take that down the funnel and really use that to operationalize everything in the system, right, based on that demand.
Which again, at the zip code level, if it's snowing in Long Island, which is worse than here in New York, we're gonna have a different SKUs out in Long Island or a different personalization experience. When you show up on the website, you'll have a different experience than in Manhattan based on what's going on outside. Or in that messaging, right? If it's snowing out or raining out, "Hey, Mary, it's gonna rain tomorrow, so here's your order already. Just go in and change it." So again, it's around pre-populating the order and the offers and getting those infrequents to come back in. "Hey, John, it's gonna snow this weekend. Remember us? It's FreshDirect. Hello?" You know, come back, right? So automating those things is first order for us.
Once we get through that, then, of course, it's measuring it and how it works. But I think that's the easy part of it. But it's enhancing the customer experience with using whatever data that you have available to us, and for us, the weather is that next step.
Good. Good, good. All right. Again, thank you, Josh. Thank you, Aaron. I appreciate it. Can we get a round of applause, please. And thank you all for coming out today. If you have any questions, you'd like to learn more, we're at booth 4156. Please come by. All right. Take a coffee mug on your way out as well, and thank you again.
The hot chocolate.
What's that?
You have to push the hot chocolate.
Hot chocolate. That's right. All right, have a hot chocolate. It's a good day for that, isn't it? Weather, weather-driven hot chocolate day. Thank you all very much.
Thank you.