The Shelf Follows The Feed | TikTok Operator's Pod

For weeks I've been harassing Matt Goldbloom to join me on the pod. Selfishly, I've been captivated by his LinkedIn content and needed to learn wtf 'Off Price Retail' is. 

Matt is the founder of Common Shelf, helping modern CPG brands grow through off-price retail without sacrificing brand equity. Sound familiar?

The parallels between TikTok Shop and this rising retail lane of "off price" speak to a consumer market vastly misunderstood by us marketers that audit funnels, analyze the beverage aisle, and know how to pronounce Erewhon. 

If you're interested in Matt's work, give him a follow on LinkedIn here. 

Transcript

SPEAKER_01 0:00

Uh beauty sales alone is like a billion a billion dollars. Like that's insane.

SPEAKER_00 0:04

Not the retail world. I guess I know as much as I need to know as the TikTok guy. I just got to drive people there and then my job's done.

SPEAKER_01 0:09

It's I would say it's like the discount channel, the discount store is on steroids these days.

SPEAKER_00 0:18

Matt, how are we doing? I have been trying to pin down Matt for the past few weeks to come on as I've been stalking his LinkedIn very aggressively as I look to educate myself on not just all things retail, but a new term that I've I've attributed to Matt, although although I don't think he claims to fully own it or have it coins, but some interesting uh propositions, if you will, for folks in our CPG marketing world. Matt, thank you for uh taking the time today.

SPEAKER_01 0:49

Yeah, appreciate you having me, man. Excited to jump into it.

SPEAKER_00 0:53

So I got a lot of your posts queued up as Amma here because you have definitely not fallen victim to the AI slot posting of LinkedIn. Like I I generate a lot of ideas from there, but I can tell you're actually kind of thinking through here, putting some good stuff on paper. So one of the things I wanted to ask you on is actually you made a post recently about the need for mass retail to have Challenger and emerging brands in store and on shelf. And I think we all take this as an assumption that retail is after the new hot emerging challenger brands. I've referenced names like Target, the Walmart folks in Bitonville, in others. I I know Airwan is kind of the black label obsession of every CPG brand, they're kind of dreamed to get into there. But I think we kind of just take that as an assumption in my world, I'll say. I don't fundamentally know why they actually want that. I have some guesses, but I guess I'd rather ask you why is it that there seems to be a more aggressive push right now for these larger retailers to get new brands and new packaging on shelves everywhere?

SPEAKER_01 2:06

Yeah. I mean, first and foremost, thanks for having me. I think in terms of these larger retailers, what they're realizing, and Target's a perfect example, is that now more than ever, you know, the influence of social media is profound, not just on, you know, what you're actually watching, but what people are purchasing. They're realizing that, of course, they're they're slow to the game. And they're realizing that these legacy brands that have sort of carried a lot of the the volume in these categories, you know, the brands that Proctor Gamble owns or Unilever or Nestle companies like that, they just they just don't bring major innovation to the table. They're not really bringing anything new and exciting. And that combined with the influence of you know creators, but also, you know, UGC and authentic nano influencers, for example, that's translating directly into sales and more importantly, directly into Gen Z foot traffic in these stores. And even now crazy to say Gen Alpha as well. So it really comes down to how do I get these younger people to walk these, walk the aisles. And the best way to do that is to create the products that they desperately see, that they're engaging with online. It's really that simple. And some retailers are realizing it sooner than others. I think the ones, you know, Target obviously had some challenges. They're now sort of coming, coming back and going all in on the space, which I think will be a positive, have a positive impact on their business. Walmart was has been doing it very well. And then transparently, I think they're just seeing the rise of things like TikTok shop. You know, I just saw something today that TikTok shop's Q2 beauty sales alone was like a billion, a billion dollars. Like that's insane, right? For a platform that doesn't even have a store. So to keep up the realizing that they have to bring these exciting new products into their shelves as quickly as possible.

SPEAKER_00 3:48

Yeah, I know I've spoken on this anecdotally of some of our brands getting hits, getting call-outs, more folks underwriting their growth strategy to DiscoveryLair and TikTok and sometimes Amazon, routing directly into retail, deprioritizing traditional D2C, spending less in Meta and more traditional D2C kind of funnels and flows, optimizing everything for the top of funnel discovery engine and the bottom of funnel conversion engine. And we've seen some borderline harassment from the bigger retailers after these brands. I've even seen them publicly advertised. And one note I'll add in there is Target recently has gone to market with their, I believe they label it as Bullseye. They're actually set up as a retail brand on TikTok shop now. They've been testing with their own affiliate programming. My guess is they start to get into live stream. So as much as they've been forcing downstream action to their brands, I think they're gonna start to get into the game. One of the things you're known for in the in the space here, and and I cite it as kind of having coined is off-price retail. I know way too little probably about the retail world. I guess I know as much as I need to know as a TikTok guy. I just got to drive people there and then my job's done. What is off-price retail in terms of like its definition and why should these TPG brands today care?

SPEAKER_01 5:15

Yeah, so the the term off-price retail has definitely gained a lot of traction recently. It's not a new concept. These are stores that are offering their products at a discount. They're not advertising what's in the store. However, when you walk in, there's sort of this treasure hunt model where you're finding either exciting new products that are trending online, or you're finding nationwide brands that are recognizable at an affordable or a more affordable price point. They've sort of become, they are discovery hubs for products, innovation, trends, and brands. And traditionally these were known as more discount stores. So things like TJ Maxx, Marshall's, Ross, Burlington, and they still all they still operate in that more in more of that discount clearance way. But if you looked at any of their stock prices over the last five to 10 years, they've actually absolutely exploded because increasingly Americans are valuing that product brand discovery and that deal that they're getting when they're walking in these stores. And there's also a benefit to the brands because they're not being advertised at a lower price point, which potentially can protect against direct-to-consumer channels or other full price retailers. So because of the shifts in the macroeconomic space with social media and people valuing a deal, less disposable income, and then also these stores really upping their game and building these exciting new assortments, off-price has become a huge, huge opportunity for CPG brands, especially those that are looking to attract that young, younger demographic. Just take one example for example would be like TJ Maxx in their beauty section. If you walk into a TJ Maxx today, it almost looks like you're in an Ulta and a Target from their from a beauty perspective, which is just incredible compared to five, 10 years ago. And that is partly led because their strategy has been we need that younger shopper in there. That shopper wants exciting new beauty products that are traditionally doing well, no matter how the economy is doing, right? So let's build an exciting assortment and allow brands to be discovered and trends to be discovered in that space. And what I found in beauty and some of these other more consumable uh categories that are a bit newer, you know, traditionally the likes of TJ's and Ross and Burlington. I mean, Burlington used to be called Burlington Coat Factory, right? They've been traditionally apparel resellers, apparel retailers, is that they're just putting a huge emphasis on these higher growth consumable categories that are attracting Gen Z into the stores. So with that, they're an incredible way for brands to get discovered and products to get discovered. And you're seeing a lot of brands in the CPG space lean into that by putting their products in those stores. So that's sort of off-shell, excuse me, off-price in a nutshell. It's you know, it's I would say it's like the discount channel, the discount stores on steroids these days.

SPEAKER_00 7:59

Well, this is why that matters a lot. One, I need to let the audience know I still to this day regularly shop at Aldi and I will for the rest of my life. It does not matter my net worth. I will always be religious and loyal to Aldi for the rest of my life. I know that's probably not your traditional because it's all grocer, it's a lot of their own private label stuff, but that's the type of consumer I am. One of the challenges that we uniquely have in both CPG, marketing, brand, social, influencer, all the folks like in this interesting sphere, is there was a report years ago, right post-COVID, and they attributed a coefficient ratio to specific fields that that folks work in. And what was really intriguing, call it because of our consumption patterns, our media patterns. I don't I don't exactly know what drove this, but folks that work in the marketing industry had a stronger coefficient ratio, aka more similarity with one another in terms of worldview, perspective, all of those things than folks in the military by about 50%. And it was the highest among any other field, including military, doctors, nurses. It doesn't matter what it is. Marketing was the most monolith from similarity in terms of worldview. One of the things I think we struggle in our assumptions is our awareness of the US consumer because the algorithms that we live on, use, deploy, work to optimize, have a fine, have a way of finding people who buy things, which online, which I'd already say is in itself a unique consumer, you could argue. Who are people who click on ads and buy things through Instagram funnels, for example? What about TikTok Shop? I can tell you it's less than the totality of that consumer base, probably less than half in the instance of TikTok shop and more new channels. All of that to say we are so in our own heads that everybody shops like we do, that they go to Erwan and they go to Whole Foods and that they go to the beverage aisle and they look at everything on the wall like we probably do, and they go to the protein bar aisle and they look at all the new brands and the new flavors and the new structures. But the reality is that's that's probably not, I can probably say confidently, how everyone shops in today's world. So I guess to the point here, what does the actual like economic outlook look like? Where is the US consumer? Are you seeing shopping increasing in these off-prece retail locations, particularly for younger consumers? Are you seeing it for older consumers? How is the dollar? We're not going to, you know, talk about the Federal Reserve or things that I certainly want to understand, but like what the hell's happening in the market and how's that probably impacting all of us, but we're probably not aware of it.

SPEAKER_01 10:52

Yeah, I think without getting too technical or you know, going into economics, I think fundamentally what you're seeing is that because of a lot of these things that are happening at a macro level, things like inflation, things like you know, stagnant wage growth, I think what you're seeing is that people just have less money to spend and they're being a lot more particular about how they spend that money. It comes down to that. Like you've you've probably heard of the K-shaped economy, the people at the top are doing exceptionally well. But every, you know, but that that that gap, that quote unquote middle is getting increasingly large. And more and more people are in this sort of middle space. And those people, even if they have a decent household income, they're still looking for a deal. Because over here at the gas station, they're getting squeezed or with eggs, they're getting squeezed. So everyone's sort of looking for a deal. But if you think about all the things that go into a purchase decision, the value that someone perceives that they're getting with a product is increasingly high. So like they want a deal more now more than ever. And these stores offer that deal. So you see a lot of stuff about like consumer sentiments at an all-time low. You know, you know, people just are not pleased with the economy. And those things are probably true, but they're still spending their money. They're just doing it in certain places. And one of the places they're doing it is an off-price because they're seeing they can get more things there and they can get those things at a deal. And, you know, the perception of these stores has drastically changed. You know, again, traditionally they were more clearance, liquidation, discount stores where you just went, you know, place of last resort, if you will. It is not like that at all anymore because the consumer, especially that younger consumer, just has less money to spend and they, you know, they want to stretch that dollar. You know, so you know, when you know the typical demo might be like a 35-year-old woman walks into a TJ Maxx, she has $100 and she's gonna try to make that $100 go as far as she can in that store, right? That's who's shopping in these stores. They're still spending that money that they have, they're just being a lot more particular about how they do it. So places like Aldi, for example, even though that's not technically off-price, you know, they're leaning into more value options or private label, those places are exploding because people are deciding, you know what, I don't need to go to the nicest grocery store every time or even at all. I would much rather get a high quality product at Aldi, you know? And so that's what you're seeing across the board. And that's why these price, these, excuse me, these stores are really outperforming their competitors, their peers.

SPEAKER_00 13:17

Yeah, it's fascinating. And on that note, I guess one of the things uh that has been very popularized in new product development is evolving form factor. So, you know, taking proven proven categories, evolving pro, you know, form factor in some capacity, changing it. And typically, whenever you hear you know, the term bargain shopper or shopping for a discount, the brand default is to change some sort of online offer structure or give away more for less or to discount their product, which for newer and emergent brands is sometimes an impossible financial outlay for them unless they have a really strong sense of their LTV, which becomes a larger kind of data question. I guess is there anything to be said, and this is on the spot, so there's probably not going to be a legitimate example here, but is there anything to be said about a that that value relationship being a dynamic of form factor, not literally, but hey, this form of this thing, I'm getting more value for my dollar here. Like, for example, something that was super popularized in bro culture on TikTok was like protein per dollar was the the metric used across how you would measure fast food chains, protein bars, protein powders, like what's my protein per dollar? And I can tell you as a guy, like I think about that a lot a lot of times. So I guess when you speak to value or are advising of some of these emerging brands that probably have limited budget capacity to do these things, how are you underwriting that? Like, is it an LTV bet? Is it some other strategy that is about changing, hey, we're gonna give away more for what is still a higher price that we can make work? I how should brands think about potentially getting into off-price retail?

SPEAKER_01 15:12

Yeah, I mean, I ideally, you know, first and foremost, you're selling your top-selling products elsewhere, right? Like you want to obviously, you know, put your winners on the shelf if you can. That's what these buyers, these stores want. But if you walk in these stores, more for less is working across the board. So bigger, bigger sizes, bundle packs, gift sets during the holidays are huge in these stores, right? And the reason why people are potentially willing to, you know, to do that, and you know, or excuse me, brands are willing to do that and take less margin or take, you know, make less money on those deals is because they realize the power of acquiring that customer in in this store, right? You know, it didn't used to be like that, you know, but you're competing with so many different people online. It's a very similar model in stores. Like, why are people discounting their products on TikTok shop? Why do I get ads on YouTube Shorts for these these CPG companies that are offering like you know, three, a pack of three plus a bag, plus a gift. Like it's the same sort of concept. You're trying to get people in and get them to hopefully then repurchase. Now, you know, that second purchase, third purchase, the ability to, you know, to stretch that that that that that LTV happens off uh not in the stores, right? But you know, you can acquire that customer in the stores. You know, one of the things that we will some of my clients do is they'll put a QR code on their exclusive TJ Maxx box that basically says, hey, we're giving you a deal now, but if you go online and you buy it again, we'll give you a discount, right? So it's it's how do we um acquire customers and then retain them? But then how do we make them feel like they're getting, again, it's all about that value, right? So how do we stretch their dollar as much as possible so that they can have a positive, you know, impression of us? Hopefully they like the product as well. And then they come back and they purchase it again at full price in a Walmart or on our TikTok shop platform or on Amazon. So that's really the play. And that's how these these clients can win in the long term, not just these small buys here and there.

SPEAKER_00 17:02

Well, it's wild as the similarities here to how we think about merchandising for TikTok shop, and sometimes this can also be an excess inventory issue. For example, there's a lot of brands we work with where the first thing I'll ask in merchandising strategy is do you have excess inventory of a unit or do you have a product that's incredibly inefficient in other channels right now that we could use for TikTok because we're gonna get the marketing either way. Maybe the conversion rate's a little bit less, but that's not why we're playing this game. So if we can do it in a more efficient way with a laggard product, that could work well. Within gifting, especially in Q4, what we always advise, especially beauty brands, this is very common, but I bet this is the case for a lot of folks in Food and Bev too, is beauty brands will always have these travel sizings that they use for all their events, their road shows, their tours for salon-centric and that whole retail world for salon folks to try. I always immediately go to that. And I'm telling you, there's not a beauty brand at scale I haven't met that doesn't have like 10,000 of those units sitting in a warehouse somewhere, collecting dust. They're not going to be used. And if they are, we got to ship it all the way across the country for an event, give away 50, do the same thing. So we've designed a lot of our strategy around gifting in these bundles, stack a hero skew, add other skews kind of into it. It's interesting that the similarities there in merchandising. So I guess the last thing I'll ask you here is let's say I'm a brand and we're doing well with our D2C. We probably have an active presence on TikTok shop. We're getting a lot of awareness and discovery there, maybe a solid revenue position, maybe some profitability. What's my immediate step into the retail or potential off-price retail space? What should I be looking at? I know you had had a checklist and some other resources for this that I might, I'll confirm with you what we should drop down for people, but how should they, how should this fit in their mental model?

SPEAKER_01 19:00

Yeah, I mean, I think they should, I mean, if if we're talking about, you know, D2C native brands or brands that live primarily on TikTok shop, it's not an incredible, it's not incredibly different than what they're currently doing. You know, we have to work within certain price point bands that work within each category or sizing, and we have to make sure that it looks good on the shelf, something that is maybe a little bit different than if you're just selling it online and it shows up in a brown box at your door, for example. But for the most part, it's very similar. It's like, how can we leverage either bundles or value packs or larger pack sizes to entice people to purchase in this in-store? It's the same shopper that's not only is it the same shopper that's on TikTok shop, they're oftentimes on TikTok in the store, you know, looking at, you know, potentially content or influencers that are talking about this product. And that potentially goes into the decision-making process when they before they even pick it up. So there's huge synergies there. So I think it can be complimentary. I think it's not an incredible, like the incredibly big step for a lot of these brands. So as you're planning Q4 seasonal, as you're planning Q1, Q2, and you're thinking about what products can we potentially sell at a discount to acquire customers on TikTok shop, I think, yeah, you can use the resources that you know, disposal on commonshelf.co, my website. But also think about what this would actually look like in a store. Go to your local TJ Maxx and take a look at what it's selling. Because if you have a product that is, you know, that looks like a good fit and it's selling well on TikTok shop, oftentimes, you know, the buyers at these retailers would agree. And even if it's a small one-time buy and you just get it in there, you try it out, that's better than nothing. And your customer, you know, you can actually potentially acquire that customer. You have to remember, these stores have thousands of locations around the country. Millions of people are walking through those stores. So I'm sure there's definitely some overlap with TikTok and who's get, you know, who's scrolling your content, but you're immediately putting yourself into in front of a new audience. So think about it from the same acquisition strategy, discounting product strategy. But then how can we actually make that product look good, like physically on the shelf in the store is something I would take into consideration as well.

SPEAKER_00 21:08

Amazing. Well, Matt, thank you for taking the time. I know this is a quicker episode. We'll see if we run things back in the near future with Kevin or some of the other brand folks, but appreciate your time. I'll drop some of your info below for folks interested. And also I want to thank you for your efforts because there's a million TikTok shop agencies. It doesn't feel like there's as many retail folks. I'm sure there are, but they're they, you know, they probably started their business in the 60s and you know, are quite up to date with the modern stuff. So we applaud your efforts because we and all the other CPG brands need you so we can just make fun TikToks all day, and then you can translate it into economics and store, which is way past my logistical bandwidth. So thank you for your time and for your uh macro efforts here in in retail.

SPEAKER_01 21:56

I appreciate it, man. Keep doing your thing on your side, and uh yeah, I would love to run it back soon. All right, so thanks, Mike.