[Music] from the cube studios in Palo Alto in Boston it's the cube covering the IBM think brought to you by IBM hi everybody welcome back to the cubes coverage wall-to-wall coverage of the IBM think 20/20 digital event experience my name is Dave Volante we'll be going really all week and and focusing on the impact of the pandemic how IBM is responding how customers are likely to respond I'm really excited Luke Niazi is here's the global managing director of consumer industries at IBM Luke good to see you nice do you see even that nice to be on the cool I mean if I think about consumer all the assumptions that we made about consumer behavior they're really up in the air right now I wonder if you could share with us what your current thinking is I mean the consumer has powered this global economy years what are you thinking about the consumer right now in the consumer behavior well was he some a massive shift in terms of the immediacy let me this back a little bit Dave and give you a bit of context we did some research at the beginning of the year that we launched the National Retail Federation and we surveyed over 19,000 people globally and that survey showed that they were do be on a shifts that are appearing first of all there was a shift in of the purpose given consumer of the 19,000 people that we surveyed 40% of them said that they were making decisions that were purpose different compared to 41% that make visions that were convenience and that's people who care about sustainability and where products are coming and the other big thing that we saw was popping in micro moments increase digital shopping and of anytime anywhere now of course with the and Emmy we are seeing an acceleration and fastening of those first of all beyond the immediate move panic buying that occurred we've seen a big big shift in online buying and we think like Ron and driver also a reinforcement of this move to more sustainable product and services yeah I mean so right now you have I guess buying for what's available you need something it might not be available as a consumer you're making a lot of trade-offs okay well I'll go for you know alcohol-based hand sanitizer you know as opposed to just conventional hand sanitizer as an example oh well I'll make some trade-offs in tissue paper etcetera etcetera and maybe there's some boredom buying I don't have you've seen that your people are shut-in but though all kinds of of daily changes weekly changes so how do you see this exiting how do you see compute consumer behavior you know changing as we exit this pandemic in waves and we're only sure how we're going to exit well let me kind of break it down in terms of what's been going on right now so of course we saw this massive waves of you know a shift to sanitary products a shift or groceries then we've seen a shift about how can I keep my kids entertained while they're at home and kind of more discretionary choices being much lower so when you kind of look at that in terms of actual impact on business we've seen grocery say in the u.s. up by about twenty seven and we've seen a move on digital in the u.s. about three percent of the of the US population shifts about buys online that's do 43 percent during this period and of course we think that these are things that are going to sustain what it's done is it's accelerate the type of purchases that people are doing in a digital context and we think that that is you know continued by some thoughts the data on the pandemic looks like it's been to continue for many months and and in ways those that we've seen the shifted digital and initially people are kind of looking for things anywhere but it's going to be combined with a kind of a new type of delivery model there's much more buy online pick up in center distribution center pick up our part whether that's you know your groceries or whether that's health related so it's going to change the delivery models it also means of course that stores are going to change a great great deal at the moment grocery stores all have social distancing with the protection of the store associates been you know a key element of that you're gonna see not the same amount of people in those stores going forward and you know a different configuration and application of technology also in store to keep monitoring both the safety of the employees and the safety of the customers but also make sure that occupancy levels are appropriate etc so big shifts the digital the big shifts to different types of delivery models you know big shifts of safety related technology of course what we're also seeing and this is the difficult piece which is if you have discretionary spend fashion apparel luxury the open those volumes are very very significant I mean look I've actually been quite impressed with some providers that have pivoted very quickly to things like curbside pickup and have really responded you know quite fast to that at the same time I've seen others where I mean it's clear that they really didn't have the infrastructure or the processes of their asking hey how how did we do do you mind taking a quick survey because they need to iterate how can I be M help those that really weren't that prepared and it sort of band-aided together some solutions get to the point post pandemic before this thing ends where they really need to be what are you guys doing with client yeah so well first and foremost as the pandemic we focused very much on resilience making sure that our clients but operators as robustly as possible in fact you know 95 percent to our services are being delivered it just began and remotely right what then happened was how do I deal with these massive volumes of airing in my two centers where by the way I have less staff because the people are I having to even themselves safe and social distance and so we deployed immediately beyond our resiliency solutions all centers that are helping our clients booth by aura ties and scream one of our major retail clients in the u.s. said you know I thought that the Watson Chapman knowledge ease were going to be helpful they weren't just helpful they saved us and so that kind of things occurring in the immediate that's the next piece of course you then start see is that finds have realized that both their digital panels and their fulfillment models have not been able to keep up nobody is being able to keep up with the demand that's not even Amazon's been able to keep up and what was you know a 24 or 48 hour delivery slot those those kind of slots have gone out the window so we are going to see a wave of reinvest in enhancing digital channels and we will leverage no both our our services business as well as our cloud knowledge ease to support that and then underpinning that you you're also seeing a need to rebalance the supply chain because of course where products come from have changed where is vsauce is now having to move much more from a global supply chain to a global local supply chain and we're having to balance supply with more local providers and so is a there's a demand supply balancing to be done that means that eyes are and i think about the practicalities of that but they were investing in next-generation technologies to support that for IBM that things like our IBM sterling portfolio but it's also the activation of our supply chain AI this massive demand set by and of imbalancing and we've been helping certain clients look at that and move stock most appropriate locations we've been doing that to help clients kind of rethink that there's this budgeting so we're gonna see a lot of that we have all of the intelligence of by chain and we're going to see no investment in the intelligence of buy chain just like we see this investment at baring in the change in the commerce engines last thing to say is wrap in trace is going to be hugely important reckon trace of all products and where they come from where they were handled and people and so technologies like lock pane and what we do with food trusts are also going to be a really important element yeah another really piece of digital I mean the cube we go to physical events and we've been saying that hang that this is not going to go back to 2019 the people are going to learn through this experience that there's really some additional value that they they can create through digital you think you think about consumer that's a much much more complex environment tens of thousands and fully hundreds of thousands or even millions of fights the product dimension chat thoughts you know the entire experience that we talked about a curbside pickup lead times people you know managing demand with lead times you can only or limiting the volume you mentioned supply chain track and trace block pain so a whole new set of digital assumptions are going to emerge or are emerging I don't want to make it sound like there's a there's some kind of binary beginning an end to this thing this is this is going to be a slow but yet fast iteration of constant iteration and continuous improvement yeah it is what am i - the newer faculty were talking earlier this week and they said look as difficult the environment is right now and of course we've been focused on our current operations and fulfilling our customers as best we can it's actually bringing us through a whole new window about who we think the priority is of our investment and how we look at that going forward and you know he's almost saying well I'm gonna have to zero based budgeting approach and against that we're gonna see a much better investment in almost regardless of what your model is whether you are digital first or physical first you're gonna see much better focus on kind of dealing with the pasady and the variability that we've experienced because organizations weren't geared up for that and you're going to see them the investment in the intelligence and the supply chain who support that backed up with trust and traceability and now back to the points that I start at the beginning of this session it means that the trends that we saw and we assess actually are going to be almost perpetuated because we think this move to sustainable and more local sourcing more balanced sourcing will continue to be a big factor and we think that this kind of idea of shopping in the micro moment but shopping in a much more digital way is here to stay the consequence of that is it's gonna have a what a big impact on the physical environments and unfortunately there aren't gonna do there are going to be as easy in this with certain sectors that are not going to be able to sustain the the big shift in the model so obviously physical down for the immediate and probably mid and maybe even long term digital up you one of your areas of expertise is agribusiness we thought you note you know tumour in general I wonder if you could share with us what you're what you're seeing there I'm inferring more more local sourcing which obviously has some impacts on what's available at different times a year potentially on on pricing thoughts on agribusiness and how they're responding yeah well it's it's fascinating you know if you take it into first of all of course you know agriculture has been impacted right now by not so much for the professional farming which has a large-scale mechanization before a lot of farming in large parts of Asia or Latin parts of Latin America or parts of Africa and even parts of Europe there's a lot of transitionary labor that occurs in order to be able to harvest crops and so that's a that's a really difficult immediate problem we've seen you people volunteering in certain countries like here in the UK where I live either people volunteering you can't work in their current job see how can I help that's kind of it an immediate thing that's needed right now but the broader topic in the work that my teams do is that actually the application of digital technologies and science who is behind what it is in other industries and there's such a great opportunity by leveraging digital only be more effective in actually hitting the most out of farming land without over farming the land and so we're working quite a lot on digital economics of buying base ability you truly from farmed or and no but have been together data sources that were not in the same base to be able to help build effectively an AgrAbility for the benefit the farmers and cross those things were going to see farmers empowered with more information in it more insight so simple things like The Weather Channel application that we have from our weather comm we're deploying that to millions of farmers in Africa and Asia and on top of that we're being able to and for the deployment of other related information though how to farm but also we could start to look at how to provide safety related information etcetera to those farmers so so we are going to see through effective use of technology increase appropriate digitization of no farming processes and there'll be in a very practical level what I'd put onto my phone so so definitely this is a big thing and and of course as you know the traceability that we do with our food resan isn't just about safety and talk about how food was produced how far it's traveled what conditions was it handled in what's a co2 footprint and so that traceability engine can actually accelerate also this is and as I referred to earlier Luca mean as we're discussing you know the moment-by-moment the assumptions are changing you know the narrative this weekend of course at least in the US was pay we've got it now get out there and and many are saying this not all but but just effect mass unity that it's really going to be the only way vaccines aren't coming anytime soon young people will go out retail environment of course you're gonna have social distancing people that are compromised or older aren't going to go out the clearly volumes are going to be down but it's a very fluid situation so business resiliency and flexibility is critical here and it sounds like you're helping organizations really build that into their operating model that is critical yeah absolutely and you know for some of the grantees that I haven't boomer you what you're seeing in things like a chorale fashion luxury is a a move to try to drive that engagement to you the customer in a much more digital sense so how do I interact with the brand how do I experience the band how can I all the way through to my purchase digitally when I don't have the ability to get stores so this digital transformation agenda will affect pretty much all major segments obviously the foods by chain the health by chain is the focus right now but we will see on the increasing digitization and a need to rebalance the in-store experience even for the segments so there will be a lot of transformation to be done a while of course having to deal with the cost balancing that need in these industries as they effectively shift more towards digital yeah you're right I mean the cost structure may dramatically change yet at the same time it may be critical for or maintaining or even gaining market share so a lot of potential disruption Luke I'll give you the final word your thoughts bring us home well you know first of all you know people's well-being in safety is our paramount purpose and that's what we've been looking at the outset but I think people would be positive that there is a lot of opportunity in which we can deliver the things that they need in a safe way in a secure way in a digital way that is able to cope with the environments that we see today and may prevail and it's about winning that intelligence and innovation into both the promise and the digital channels and into the supply chains all the way through to the track and trace which is what we focus on well look thanks so much for coming on the cube was great to have you with your your insights on the IBM very clearly has its hands and a lot of these different industries and it's great to have your industry expertise sharing with our audience I really appreciate your time take care thank you all right thank you for watching everybody this is Dave Volante for our continuous coverage of IBM think digital event experience 2020 you're watching the cube right back right after this short break you [Music] you