Hi, I'm Doug Bannister, founder and CEO of Omnivex. Thrilled to be here today at Chicanela Lacroix, talking with JP Lacroix about his experiences in the digital industry over the last 25 years. So I'll be interested in asking you how has this impacted your business? The technological transformation over the last 25 years, how has it impacted your customers, your employees, and all aspects of your business? It has a huge impact. Everything we do now, even if it's consumer packaging or retail environments or corporate identity and branding programs, digital is a core element of that experience. And it's obvious, right? Consumers today use their mobile phones to connect with most brands. Most retail environments are being challenged to engage with customers, competing with online, and so digital plays a really important role of being that link between online consumer behavior and the physical environment.
So every project has a digital experience component. It's at the core of what we do. One of the things I find is in our business is as we move through these different types of technologies, the core values of our company, I'm sure you find the same, interested in hearing your thoughts on this, stay the same. What we fundamentally do is we share information with people. We provide a mechanism to accomplish that. Technology may change, but that need always stays. Do you see similar kind of things? We've seen a major shift. It's a mindset. Clients put value on where they spend their money and where they allocate their capital. And for many years, the capital allocation was on hardware, size of screens, media players, all that great stuff. And actually, very little attention was given to the content or the software driving that content. And I would say it's only in the last five years that we've noticed a shift in focus by our clients,
for many reasons, one of which they've already deployed their entire digital platform, and they're looking at how do I get a better ROI on this investment? To begin, it's not about saving money on hardware, it's about engaging with customers and driving more sales that's going to deliver that ROI. And so our clients are shifting their attention towards effective content management. And it's about time, because to us, content management is really the core of the value that digital provides for the retail environment, for corporations and training, and a variety of other things. The content is the element that's actually going to change behavior. It's not the size of the screen, it's not how many lumens go through that screen. It's really what message are you communicating on that content. And we're seeing that refocus, if you like, towards content management. Now, how well do you find your customers are implementing
digital? I was just reading a quote this morning, by Cisco ex-president, Mr. Chambers from Cisco, and he was saying that 70% of companies have embarked on a digital transformation and only 30% will actually achieve effectiveness in that transformation. And I think that's really representative of our work with our clients. Every single assignment that we do, specifically in retail brand transformations, has an important digital component. The client clearly identifies the need to develop that digital component, they identify a willing to make an investment until they need to sign the check, deploy the digital platform. We've worked with, I won't name clients, but we worked with banks where we did an RFP that you were involved in 10 years ago. Yeah. 10 years ago. And they're still trying to justify the investment for the hardware. The great news is the cost of hardware is coming down dramatically. Its intrusiveness in the retail
environment is disappearing. We now have digital technology that's invisible, bringing down the cost, and so we're seeing more and more an eagerness to invest. But it's still a challenge. It is still a heart attack, "Wow, didn't realize it was going to cost this much. Didn't realize a national deployment was going to be in the millions." And I think for a certain degree, those that haven't stuck their toe in the water, that ticker shock is enormous. But for those clients that have actually embarked on digital technology and the immersion of mobile and digital and online, they see a huge benefit to their business. They see a huge return on business. They know that consumers shop online, and if they can make that connection from an online experience to a mobile experience in the stores, they're going to retain that customer in their shopping. And so it's just a matter of time. The number one question that clients ask us every time is, "Can you
demonstrate an ROI on the investment we're going to make?" Sure. And the good news with much more deployment in the marketplace, the established benchmarks, we're getting closer. We're not there yet. We're getting closer to being able to justify numerically the ROI on an investment and deployment in digital. What do you think is really driving the digital transformation within businesses? Is it primarily the customer focus? Let's provide this better experience for our customers. Is it more internal facing? We want to improve productivity of employees. Is it reducing costs? What do you think is the main kind of area of the business, or do you see several? All of the above Depending on the industry category you're competing in, it's about being relevant to your customers. And if your customers are digitally enabled and digitally focused, then not having a digital platform, be it mobile apps or mobile
website or tablet-enabled sales force to be able to be smarter on their feet with customers who have done all the research ahead of time, or finding those efficiencies. How do you leverage big data? Today, most large organizations have spent billions and billions and billions in establishing and building infrastructure for big data. The problem is that last foot in the sales process between big data and the customer experience is lacking. Yes. And it's finding that link, and this is where mobile and digital technology are playing a pivotal role, is how do we enable the sales force to provide things like inventory, just-in-time inventory analysis of a customer who's looking for that TV. They can tell immediately if that TV's in stock. They can tell if it is, and which store is closest, and they can actually capture that sale by having the TV sold there using Smart Wallet and delivered to the home the same day.
And so you're seeing organizations looking at how do we build relevancy for our brands when the consumer's focus is digitally oriented. How have you seen digital transformation affect your business? The reality is the design industry has always been digital. When I started the business, we had markers, and we had a thing called paste-up, and we had typesetters. Then some guy with a computer that was called an Apple- Oh. ... really disrupted- Sure ... the industry. I believe the design industry was the first industry to be digital. Okay. Because we replaced typesetters with Mac computers, and Mac computers had better software with Adobe and InDesign and all these great platforms. And so we were always digitally enabled as an industry. However, the connection between our digital enablement with our clients' focus on digital only happened about 10 years ago, and it's much more of a transformation than how we look at business
opportunities and business challenges. Now we have a whole component to solving our clients' problems by looking at a digital lens and looking at what's that customer's digital path to purchase, and how does that link to conventional path to purchases, and where are those key moment of truth that digital can play a pivotal role? And so, yes, it's transformed our business, but we've been on this journey for about 20 years. It's difficult in many cases to really show a pure ROI because things change slowly or things change dramatically. Here's the way we used to do things, and now we're doing things in a completely different way over here. So how do you show an ROI on that? What are the benefits and advantages that you're showing to customers to say, "Here's what you can do differently. Here's what the digital solutions will allow you." You touched on the big data and getting the last mile in there.
Turn it around. I'd say what- Sure ... the benefits to the organization is the ability of communicating effectively at the moment of purchase. Consumers buy emotionally. They don't buy functionally. They don't buy rationally. Consumers are irrational, and we all know that. The beauty of digital technology is that ability of connecting emotionally. Pictures connect to our hearts. Visuals connect to our hearts. Not words, right? Not sound. Pictures. And so there's a real opportunity for brands to connect with consumers emotionally when they're making their purchase decision. For consumers, it's simple. They're looking for knowledge and answers to their buying decision, and they're looking for cues and clues that will help them make the right buying decision. Today, the big challenge for consumers is complexity of choice. We have too much choice. Our stores are too big. Look at the average supermarket when I grew up was
20,000 feet. They're 100,000 feet. The average supermarket then had maybe 12,000 products. They have 100,000 products. Shopping has become a challenge because we have too much choice, and digital provides an opportunity to cut that clutter and help that consumer to make that buying decision either before they visit the store or during their shopping pattern in the store, or having the staff better educated and better enabled to answer the questions they have when they're trying to make that buying decision. So we see that being a true ROI. Maybe it's not return on investment, but then I would challenge, look at where the money's being spent today. It's being spent in advertising. Trillions of dollars every year is spent in advertising, in social media. They haven't proven an ROI for both those models. Right. But they're spending billions and trillions of dollars, hopefully connecting with the consumer, hopefully making it work.
And the reality is, the place to connect with consumers is at the moment of purchase. If we know the consumer is making irrational decisions and they're impulsive in those decisions, we know that it's emotionally driven. That last split second in that buying decision is the most pivotal. It's not the TV commercial. It's not even the online platform. It's that moment of purchase, and that's where digital plays a very critical role. Do you see particular industries or particular areas in retailing where digital transformation has more of an impact and more of a benefit? That's a great question. I would say there is a balancing act happening, being disrupted and leveraging digital technology. So the industries who are the most prone of being disrupted, who are vulnerable to new startups and new technologies, or new business models, are also the firms that need to, not necessarily have, but need to embrace digital more effectively.
And I'll use banking as a great example. If you talk to any banker today, it's not about omni-channel, that's 10 years old now. They were one of the first to develop banking platforms or to create a digital online experience for their customers, because they know customers like doing banking online. But you have now fintech startups, technologies that allow you to transfer money easily, to bypass filling out 50 forms in order for you to get a loan. That simplify, again, the elimination of friction points for the customer in the banking industry. And I think the banking industry are awake. They're not going to let themselves being disrupted by fintech. They are embracing fintech technology, and that has a huge play in what happens in the branches. Less and less consumers are going into the branches. Those branches need to change their meaning and their value to their customers. It's not about transactions, it's about knowledge and empowerment.
And so you're seeing the banks, the smart ones, slowly shifting their attention from transaction to knowledge, to empowering, going to universal bankers where that teller now is enabled and empowered to talk about retirement plans, investment plans, things about the financial security of the customer. And so there's a great example of an industry that has embraced digital, not because it's a nice thing to have, but because it's a necessity for being avoided to being disrupted. I would say general merchandise retailing, the Canadian Tires and the Walmarts of the world who are selling commoditized items, is another industry that needs to wake up when it comes to digital technology. Because they're all about transaction. They're all about selling to consumer. It's about basket size. It's about increasing the amount of products customers do when they visit their stores. And digital can play a really important
role at reminding them about things. "Oh, Ms. Consumer, you bought toilet paper the last time you were here. That was a month ago. You may want to replenish." I didn't think of it, because most consumers who go to a supermarket don't have a shopping list. Only I think 12% of all consumers who go to a superstore come with a shopping list. And so there's a great opportunity to drive impulse sales for the Walmarts and the Canadian Tires of the world. But they're not there. If you go to those stores, maybe Canadian Tire is picking up the pace, but you go to those stores and that shelf activation using digital technology is still not there. They still haven't figured out the value, that basket size value, and the smart ones will. Right. Now it's all about big screens. It's not about shelf- Right ... communications. It's about big screens, creating a lot of excitement, which is great. It reinforces the brand's relevant.
But at the end of the day, that split-second purchase decision, digital plays a very minimal role in that, and it shouldn't. So what you're talking about there, is moving from the large screens down to almost a personal experience at the shelf. This peanut butter, that peanut butter, this item, that item. That's what the shelf displays can drive. And if you look at the drive and advance of technology, it's always coming down to personalizing things, making things relevant to this particular consumer. Again, I'm back to my analogy of my reference to advertising. They spend trillions of dollars building an image from the consumer, and then the last split second, the consumer switches to another brand. Yeah. So to me, the model's upside down. To me, the money needs to be spent in the store experience. Right. It needs to be spent when the consumer's making their buying decision. Not online, not on the radio. Yeah, those are great to build brand
awareness and affinity, but at the end of the day, when most consumers can be switched at the shelf level, that's where the real battleground is, and that's where the money should be spent. Right. That's where big data plays an important role, that connection between mobile devices and all shelf communication. This is where the real battleground's going to be won and where the smart retailers are going to invest their money. It reminds me of a little story. So about four years ago, we were hired to do the reinvention of OfficeMax. And online sales had huge impact on the performance of the stores. Those stores were average 25,000, 27,000 square feet. Our mandate was to create urban micro stores, stores that were 17,000 to 20,000, even smaller than that. And we looked at digital signage, shelf signage, and we looked at the, what do you call it? Electronic ink sign elements, and we costed it out then.
The client was very interested in having digital signage because it allowed them to change their pricing by zone and to move very quickly at a competitive response. But it was going to cost $300,000 for that, and that's one store. So you imagine them multiplying. Right. And so, the challenge still remains that it is a huge nut financially for retailers to embrace digital. And it's great, those platforms, I'm sure today that platform would be $100,000, still $100,000. Still a lot of money. But I think it's more of a mindset by retailers to say that flyers is our most effective marketing vehicle, when really their stores are most effective marketing vehicle. And effectively communicating to the consumer at the shelf level is going to drive more revenue, more sales for them than doing advertising and radio and promotions and billboards. And so it's just a mindset. And that brings me another comment.
I think what digital has done is it has forced organizations to rethink their business model. The business model before was build it and they will come. The game was, as many stores as I can open, the better off I am, because that's how I'm going to gain market share. That no longer works. And, what digital's providing is a platform for people to reevaluate their business model. So you look at Loblaws, market leader in the supermarket category in Canada. They're smart. They're digitally savvy. They spent their money now on a loyalty program that rewards behavior, not just purchase, but behavior. That is very smart. They're now exploring order on your phone and pick up at a drive-through, or they're exploring eliminating these anxiety points. They're reevaluating their business model, and I think most organizations now are being challenged through digital to reevaluate their business model.
And if you're not, if you're a retailer or a packaged good company or a corporation, if you're not reevaluating your business model based on digital, the odds are you're not going to be around long term. Where do you see things going kind of in the further out, in 25 years from now, when you and I sit down and have this chat again? Obviously, in our roles- Yeah ... and out of our positions, it's to be somewhat of a futurist, and to be able to look forward and say, "Well, here's some other crazy ideas." Who knows if they're going to come to pass or not, but you must have thoughts on that. Oh, yeah. So I would say there's a couple of factors that are going to have a huge impact on our behavior as consumers, how we buy, how we think of things. One is artificial intelligence. So, the cause and effect. Cause is we have so much data, we don't know what to do with it. Yeah. Effect, introduce artificial intelligence that
eliminates the human factor, that is able to, through algorithms and learning processes, take that information and customize it to every individual. Right? Because today, the consumer wants personalized service. They don't want an email that's been sent to everyone. They want an email that talks specifically to their needs, reminders, and services and offers based on their buying patterns and their behavior. And artificial intelligence is going to provide that in spades. The second technology is what I'll call invisible technology. I believe that innovation happens when you eliminate steps and friction points in the way consumers live their lives. Right? So you think of Wallet Pay. Well, with Wallet Pay, you don't need to carry your wallet anymore. You've got your phone.
Google Maps allow you to travel and never get lost, and it's getting better and better. So eliminating these friction points or these steps is where innovation has succeeded at bringing value to consumers. And so one of those steps is how we absorb visual information, and now technology is we're going to hang a sign, a digital sign, on the wall. We're going to have to cable it to that sign, and we're going to have to build a network. And to me, all of that's going to go away with, they're testing now digital paint. I don't know if you're aware of this, but, in I think it's Sweden, they will paint a wall, and they will put a bar at the bottom of that wall, and the wall will become an LCD screen. Yeah. And so the physical restrictions of digital signage will go away. It'll be whatever you want it to be. Yeah. And so that will open up all kinds of great avenues of experiential and immersive experiences. We think of VR and AR as being kind of
trailblazing. I view those as interim steps because they're still... You got to wear this clunky thing on your head. To me, immersive experiences are going to be real. They're going to be 3D and 4D projection screens, where you're going to be in that space, and we're just at the cusp of that technology. JP, I want to thank you for your time here today. It's been a very interesting conversation. Mm. And I look forward to working with you for many years to come. Great. Thank you very much, Bill. Again, it's always great to talk about digital. Yes. Thank you. Thanks.
