Logan Ensign: 0:01
From Alloy AI. This is Shelf Life. Today, we're featuring a conversation with my colleague and co-host, joel Beal, ceo and co-founder of Alloy AI, about how retailers are increasingly looking to monetize their data and how consumer brands are paying steeper costs. How far will this trend go? Are the insights worth the cost? What does this say about the state of retailer-supplier collaboration in 2025? On every episode of Shelf Life, we answer questions like these and more, with the help of leaders across the consumer goods industry. I'm your co-host, logan Ensign, chief Customer Officer at Alloy AI. We'll be back with Joel right after this.
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Logan Ensign: 1:37
All right, Well excited to be here and talk all things retail data. Joel, To kick us off, I thought it'd be good to just orient on what we're talking about here. We want to talk all about that retailer-supplier data sharing relationship. I know you've been in the space a while. Maybe you catch up on what type of data we're talking about and the history of data sharing between retailers and their suppliers.
Joel Beal: 2:00
Yeah, I think it's a fascinating topic. It's one I've been thinking about for years. There's some interesting trends we're going to jump into about what is broadly called retail direct data. This is the direct feeds, essentially, that a retailer is providing to their supply base. So if I sell through said retailer, they give me access to data about how my products are performing there. And this space really got kicked off by Walmart.
Joel Beal: 2:44
Walmart's been an innovator in retail in a lot of different ways over the years. In the 90s, they released a system called RetailLink. Retaillink was a data portal built so that they could come in self-service and download data about their product's performance what's selling, what price points, how much inventory do you have and over the years it developed, it got more and more robust and, as we'll talk about a little bit later, has now been replaced by the newest system. So once Walmart did that, they're a leader in this space. Other retailers started to follow, and so in the subsequent decades, hundreds and again particularly as you talk about in the United States or in Europe are sharing data with their suppliers in one way or another. But the way that they're sharing data, how they're charging for it, those relationships, those are constantly in flux and there's a lot of trends that we'll talk about today.
Logan Ensign: 3:58
And Joel, you'd mentioned, hey, mid-90s, Walmart being innovative, starting to share this data. It clearly worked. If other retailers followed suit and they continue to do it. Why did it work? What were some of the benefits or objectives of starting to kind of expose all this data to the?
Joel Beal: 4:13
suppliers. First of all. These retailers are working with thousands, maybe tens of thousands, of different suppliers. Right, they have a team, they have their merchants who are working with them, deciding what to buy, when to buy it, how to promote it, et cetera. The idea was how can we push some of that responsibility on our suppliers? So let's give them information and then expect more from them. And if I'm on the brand side, I'm excited. I'm going to see more about how my products are performing, I'm going to have, hopefully, more predictability and can be a better collaborator.
Joel Beal: 4:45
So that was the mindset behind why they started to do it and I agree, clearly it worked well enough that pretty much every retailer decided to do the same thing. Now, somewhat in parallel to this I don't know the exact timing off the top of my head, but you have companies that have been in this world of buying and selling point of sale data, the notable examples being what historically was Nielsen, now I think it's Nielsen IQ. That was a whole industry where they were buying and aggregating this up and kind of paying the retailers for it and then charging suppliers. So they were a middle person in this. They do other things as well, and so there kind of became these two avenues for understanding really how your products were performing One that was more of a survey of the market and one that was much more direct, specifically about your business. A little more operational nature, a little more real time.
Logan Ensign: 5:37
You kind of also alluded to, hey, other retailers followed suit but maybe had a variety of strategies. We'd love to just kind of talk to what we saw post retail link to today, the different strategies and sort of what retailers have kind of tried to monetize this and how that's looked, Something that I've seen continually is retailers believe this is an absolute treasure trove of value right All the information that they have about you and me and our shopping behavior.
Joel Beal: 6:07
They spent a lot of time and a lot of money over the years collecting this. Think of all of the loyalty programs. Why do those exist? Why do we get discounts when we use them? It's because the retailer is able to get more and more data about us. In their mind has always been how do I make more money from it? How do I monetize this data Whether you monetize it by selling it, whether you monetize it by improving your own operations, marketing, sales, et cetera by using that has not always been quite as straightforward as probably people initially thought decades ago when they started to do this, and so I've definitely seen that tension Retailers.
Joel Beal: 6:44
It does make them better. It makes their suppliers better, it's, but they want to get an ROI from all this investment that they've made. And so, to your point, walmart really came out and said we're going to do this for free because we're going to use this to create a more efficient supply chain. And I assume implicit in all that was suppliers were giving you something, and so we expect you to reciprocate by giving us better service and being able to drive down the price of products, and that's really been Walmart's MO right, that's how they operate as business.
Joel Beal: 7:15
Other retailers, I think, have certainly gone down the route historically of saying, well, how do we monetize this more directly? Can we charge for this? And so we've seen over the years examples of retailers doing this themselves, of partnering with software or third parties to essentially sell through them. Kroger's done that, home Depot's done that, the Walgreens has done that Costco A lot of retailers have taken that approach as well. So I think we've seen in the hundreds of retailers that we worked with at Alloy, most of them have provided ways to get the data for free, but not all of them.
Logan Ensign: 7:53
And what's interesting is those ones you kind of ticked off, many of them partnered with software companies to kind of help accelerate that data sharing right. And so there's another sort of challenge for these retailers probably to provide a front end and sort of the infrastructure to be able to share the data. You know Walmart went in-house but other retailers looked to partner with other software providers to kind of make that happen.
Joel Beal: 8:17
Right, you're absolutely right. Some went in-house, some worked with third parties, and we've seen a lot of retailers change strategies Charge, then decide not to charge or not charge and now start to charge. So everyone's trying to figure out this dynamic. The other thing I'll throw in I teased it a little bit earlier is e-commerce has changed, I think, the perception of how this should work. So I think Walmart was the first big shift and started this movement. As e-commerce grows, especially when the brand themselves are the ones shipping the product, they have to coordinate very closely with the e-commerce marketplace or the retailer that they're dropshipping through, whoever it is. So they're going to know where the product's going. They have to know when the order comes in, they need to know where to send it. So I think e-commerce has kind of showed what a much more tightly integrated supply chain can look like, and now the more wholesale, traditional part of retailer is starting to catch up with that, but it's taking time.
Logan Ensign: 9:19
What's going on with Walmart, luminate and RetailLink so 90s we have RetailLink come out a pretty big shift over the last 12, 18 months to Luminate. What's going on? Where are we at now?
Joel Beal: 9:30
Yeah. So I think for years there were all sorts of rumors about what is Walmart doing with RetailLink. I mean, two to three years ago they announced that they were going to release a new platform called Illuminate. That has officially happened. There was about a year transition period. Now RetailLink has been at least discontinued when it comes to sharing the point of sale, the inventory data, and now everything goes through Walmart Illuminate, which actually was just rebranded, I think, like today, walmart Centilla.
Joel Beal: 10:04
So the big shift here is Walmart has continued to provide a free tier, but they're really pushing folks to use what's called Charter, which is their for a fee, part of Luminate. Now, the great news here is it's a robust, modern platform. They're making it better all the time. They're investing a lot. We really love what we see. I think it's bringing retail into finally, the 21st century here. But they charge for it and you get a much more limited thing if you go on the basic side.
Joel Beal: 10:33
So what does that mean? Well, walmart I think publicly has stated that it's going very well. A lot of brands are signing up. They're seeing a lot of growth from that. I think we're going to see this cascade now of other retailers. Try to follow suit. Of course, the big question is Walmart does $500 plus billion a year in revenue. When a retailer that's doing $5 billion or $10 billion a year in revenue tries to do the same thing, you know, are they going to have the same amount of leverage over their suppliers, etc. And I think that's what's playing out right now.
Logan Ensign: 11:06
And to your point that modern sort of data access feels like Walmart is more embracing. Hey, use this data for collaboration with us, Absolutely, but also you can use this in your internal systems to be thinking about demand planning and forecasting. How have you sort of seen how brands make this calculation of? Hey, should we pay for data, and maybe not just in the context of Luminate, but more generally, like there are monetized POS data out there. How do brands think about this and how does this impact broader financial considerations for companies.
Joel Beal: 11:41
You touched on two things. Let me tackle the first one around. What do you use this data for? Retailers are going to be motivated to say, well, you use this data in a limited way. I want you to become a better supplier to me. What does that mean exactly? If I'm a brand, ideally I'm using this sellout data right the consumption data to better plan, to better understand how much should I produce, when should I move those products so that I can have it ready to meet the demand that I expect to come.
Joel Beal: 12:12
I think that's been a bit of a tug of war as retailers trying to limit what the data is used for. For a brand, it's really beneficial if they can connect it with a lot of other data sources and look at their business holistically. So I think that's one thing that is playing out. You're right. Walmart Luminate Charter is making an API available. They're kind of inherently saying this is going to be a system to system conversation versus historically, portals have been a human logging it on Monday morning and downloading a bunch of data right To manipulate in Excel, really. So I think you have that side of it Now.
Joel Beal: 12:46
What's the calculation a brand is going to make?
Joel Beal: 12:49
We talk to hundreds of brands about this, and so we hear many different ideas of how they want to approach this where they're willing to pay money, where they aren't.
Joel Beal: 13:01
So I think one thing that is shifting, that I've certainly seen trend over the last five, six years, is more of a recognition that this is a must-have data set, not a nice-to-have data set. Brands, I think, are recognizing more and more the value of this data. How valuable is it? How much are you willing to pay? Well, so much is going to depend on what your distribution looks like and, as I mentioned earlier, if I'm doing hundreds of millions of dollars worth of product through Walmart, it's going to be pretty valuable for me to be able to optimize that. When another retailer comes to me and I'm doing a fraction of that it's a lot harder to justify those dollars. So people have to decide where they want to invest and where they're not going to. It doesn't always seem that retailers, I think, have maybe had an honest assessment of that. I think sometimes we'll see that retailers seem to be expecting a lot from suppliers that don't even do a lot of volume.
Logan Ensign: 13:59
When? What other levers do the brands have to pull, maybe to offset these costs right? I think it's going to be interesting to see. Obviously, you want to deliver value if you're providing this data to the brands right. At the same time, there isn't a ton of margin baked in to play with, and so I think it is putting some brands in a tougher position to kind of make an assessment.
Joel Beal: 14:19
I think this is for those who know retail, you think of the world. As I sell a product to a retailer, I make a margin on that sale and then the retailer sells it to the consumer and they make their margin. The way that that margin is determined, there are so many different fees and costs associated with that. It is not I sell you a product at $5 and you go resell it at 10. And I make this margin and you make that. There is the price per unit, there's all the trade spend, all the joint marketing we're going to do there are slotting fees, there are chargebacks and deductions.
Joel Beal: 14:57
Ultimately, the finance team is going to look at that. They're going to do there are slotting fees, there are chargebacks and deductions. Ultimately, the finance team is going to look at that. They're going to say this is how much we spend, this is how much that retailer is giving us for this much product and this is our margin. They're just different buckets and that will be interesting. Does this just move things around in those buckets? Do I say, okay, I'm now being charged for something that maybe I used to get for free and, as a result, I'm going to cut my trade, spend dollars a little bit, or I'm going to change my prices when I'm selling in wholesale, and I think obviously retailers don't want that. I think there's pretty established norms for what these margins look like, and so I imagine there's some reshuffling of budgets really.
Logan Ensign: 15:34
Makes sense, Makes sense Maybe. Last question here for you, Joel where's this headed right? I think it's a developing story, lots of moving pieces. We have sort of this big revolution around LLMs and AI and big data. So, yeah, where do you see the state of POS data, this relationship between suppliers and retailers? What happens next and where does it go from here?
Joel Beal: 15:55
I think there's a recognition that wasn't necessarily there before of how valuable it is. I think people are finally getting the value out of it that they probably expected they were going to get 10, 20 years ago, but are realizing it now. So it is becoming a core part of brands data strategy. So they want this data right, they need this data. Retailers are stepping up their game. I think they are responding to that and they see an opportunity to monetize this and they're going to start charging more.
Joel Beal: 16:23
I think there is no doubts Walmart is going to lead that. I'm hopeful that you're going to see the mechanisms, the modernization of the technology on that side. I think that it's still very much to be determined. How does the pricing play out on this? So it's going to be a fascinating couple of years. I think it's very exciting. We are moving forward. That is the thing. That's awesome is everybody's going to get smarter. This is going to benefit retailers. This is going to benefit their suppliers. We're going to have better, smarter supply chains. But how it's getting paid for is going to play out in the market.
Logan Ensign: 16:59
I'm probably similarly optimistic. At the end of the day, it's going to calibrate. And then also, I think it represents a really exciting modernization of okay, we're finally going to give really modern ways of sharing data and likely even richer data sets, which should help supply chain resilience, should help, I think, in a lot of ways for the brand. So exciting time we're in Exciting times ahead. Well, excellent, Joel. Well, thanks for the conversation and we will end the conversation here. All right, Always fun, Logan.