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Suzy Davidkhanian (00:00):

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(00:21):

Hi, everyone. Today is Wednesday, November 19th. Welcome to EMARKETER's Weekly retail show, Reimagining Retail, an EMARKETER podcast made possible by DG Media Network. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Suzy Davidkhanian, and on today's episode we're talking about how AI is changing the face of retail, and what that means for creativity, connection, and keeping things real. Joining me, we have two podcast regulars, Arielle Feger, who's in the studio with me. Hey, Arielle.

Arielle Feger (00:57):

Hey, it's fabulous to be here.

Suzy Davidkhanian (00:59):

And Sky Canaves, joining us from Texas. Hey, Sky.

Sky Canaves (01:02):

Hey, Suzy. Hey, Arielle.

Suzy Davidkhanian (01:04):

Hey.

(01:04):

So today we're talking about AI. It's everywhere, powering ads, generating content and reshaping how brands connect with customers. It's changing the creative process, the marketing playbook, and even how shoppers discover products. But the question really isn't if retailers will use it's more like how will they keep using it and maintain the human touch along the way.

(01:31):

So today we're tackling the AI boom in three quick rounds, part debate, part reality check. We'll start with Coca-Cola's polarizing holiday ad and whether AI creativity is progress or parody. Then we'll look at how the rise of AI generated content is making human creators that much more valuable. And finally, we'll wrap up with some smart ways brands are using AI while keeping their customer connection real.

(01:57):

Okay, so with that, let's get started. It's our first segment, our opening round aptly called Debatable. The question we're asking is Coca-Cola's AI holiday ad a bold move forward or a soulless shortcut?

(02:14):

So if you haven't been following the latest ad news, let me tell you what happened. Coca-Cola's iconic holidays are coming campaign just got another AI makeover. So for the second year in a row, Coke used generative AI to bring back its red trucks and polar bears. This time though, it's with fewer humans and what it's calling 10 times better craftsmanship. Some see it as proof that AI is becoming a real creative partner, faster, cheaper, and global. But others say it's one more step toward soulless, pixel perfect nostalgia.

(02:50):

So one more thing to remember before we get into the round is for the audience who does not know our podcast guests super well, the opinions that they're both going to present are not necessarily their personal views, but I arbitrarily gave them a side to debate. So with that, I'm going to start with Arielle, who this is a big no for you. Tell us more.

Arielle Feger (03:13):

Yeah, so I think it's a very interesting move considering that last year, Coca-Cola did AI ads and had a pretty negative response from consumers. And so I thought it was a pretty bold choice to double down and do it again this year. Granted, they did remove the humans, which I think were a big part of people's complaints last year. But I think for Coca-Cola, a brand that is so embedded in Christmas and known for their Christmas ads, to take what I'm kind of calling a shortcut is I think a little bit of a wrong turn. I think they should have really leaned into their nostalgia. They created the Santa Claus that we know and love. So I think they should have done that instead of what they did do.

Suzy Davidkhanian (04:05):

I'm sorry, I have to correct that. The Santa we know and love is the Macy's Santa. It's not the Coke Santa.

Arielle Feger (04:12):

Okay, fair enough. But I will say they continue to play on that imagery.

Suzy Davidkhanian (04:19):

They do have a magical touch with their ads that some say this ad is losing. What about you, Sky? I know that you might have different feelings about this, but there are some good things about the ad, no?

Sky Canaves (04:33):

So I'm in the fortunate position of presenting the Devil's advocate view for this ad that has been very polarizing, but in some ways I want to say, what is the big deal? It's very much the same story from last year. The music is the same, the ads are very similar. Even the continuity issues with the truck wheels that jump around and sometimes you see three wheels, sometimes there are six, [inaudible 00:05:00] they're the same, so they couldn't fix that.

(05:03):

Coca-Cola's attitude has been like, "It doesn't have to be perfect. We just have to move forward with AI because this is the future." And they've said that for the most part, consumers actually responded very positively to the ads last year, and that was the justification for bringing them back. And I think some of the research we see on consumer attitudes towards AI and advertising, it's pretty split.

(05:27):

On the one hand, consumers might feel uneasy about it, but on the other hand, we've also conducted research that shows that AI doesn't make ads inherently less likable among consumers. And in fact, among younger consumers, it might cause them to like ads more or improve their brand perception. At the very least, it doesn't hurt. And I think from where we sit, we do see a lot of hand-wringing in the industry around what this means for creative industries, for knowledge workers. But the reality is that AI is the next revolution. We've had the industrial revolution, the tech revolution, and that's going to change how creative industries and knowledge workers work.

Suzy Davidkhanian (06:15):

So on one hand, the vibe kind of feels like it fell flat, and we do know that I think the state is 65% of consumers feel uneasy about AI and ads. The ad is missing that magical touch. But on the other hand, do people really care? If it's transparent, the wheel is missing. We were talking about this before. Sometimes in real movies there's a Starbucks cup on one side and then they cut, they do so many cuts that the Starbucks cup is on the other side. Wasn't it in that Harry Potter where the Starbucks cup was actually... Game of Thrones. And that kind had some interesting backlash, but not really, it was kind of comical too. Is that what's happening now?

Arielle Feger (06:57):

I mean, it is. I think something that I think is a little bit of a risk when you do this is when you announce loud and proud that you're doing an AI ad, you invite scrutiny. The Starbucks Cup, Game of Thrones, yeah, it was a mistake, but it was kind of funny. And everyone knows that happens, but the minute you say this is an AI commercial, people are zoomed in, they are looking for the inconsistencies. And I just think that's a pretty big risk. Maybe not necessarily for Coca-Cola who's a giant brand, but for smaller brands who maybe don't have the strong brand loyalty on their side, I just think it's such a big risk to take.

Suzy Davidkhanian (07:40):

Sky, do you think we're training consumers, maybe the younger consumers are already trained to start thinking about efficiencies in a different way and to not really care as much about the evolution of creativity?

Sky Canaves (07:52):

I think in advertising it's a little different. Top executives or leaders in advertising, we'll say it's an art form, but consumers don't necessarily see it that way. They see it for what it is, and I think that they'll be more willing to accept the AI part of it as it becomes more prevalent.

Suzy Davidkhanian (08:12):

I mean, I think that's a great place to end this conversation because it teases us up so well for the next round, which is all about the human connection. So on the one hand we're saying consumers are going to start to accept AI in the creativity process. But at the same time, with AI generated content flooding our feeds and brand channels, it's really everywhere. And the synthetic data, synthetic creation of content is looming large. So retailers are turning to real people to keep things real and feel authentic. They're craving that authenticity.

(08:46):

Sky, it's one of your spoiler alert is one of our top trends for 2026. Consumers still feel that authenticity is important and that creators deliver it. And our data shows that shoppers discover products 10 times more often on social than through any AI tool. And more than half of US social users say a creator influenced a recent purchase. So as we see bots taking over on the back end, brands are starting to think about how do you double down on the human front, on the front end?

(09:19):

So my question to you both then is when everything can be generated, does authenticity become the new premium? Sky, I'm going to start with you on this one.

Sky Canaves (09:29):

Yeah, I think that at this time, creators and human content become more important both to build those emotional connections with human consumers, but also as AI plays a bigger role in mediating consumer interactions with brands, it's what AI platforms and LLMs turn to in producing relevant and trustworthy responses. We see that LLMs like ChatGPT frequently cite platforms that feature a lot of community user generated content like Reddit ranks at the top, YouTube, Wikipedia. All of these that are based on authentic content because if LLMs are training on artificially generated content or using that content, then their output deteriorates. So there's really a higher priority on human produced content both for human connection and for the AI LLM connection.

Arielle Feger (10:25):

Yeah, I think we're also going to see and have been seeing companies differentiate themselves in saying, "No, we're not using AI." I think that in itself will become kind of a way to signal to consumers, "We are real, we're authentic." I believe it was Dove, I believe that took anti AI pledge to not use AI in their advertising. And I think not every company has to do that, but I do think that we're going to see the different ways in which brands use AI. It might be, yeah, maybe they're using it in the back end, but maybe they say, "No, we're going to keep real people. We're going to keep real models." So I think that's going to become a differentiator as well.

Suzy Davidkhanian (11:12):

I do think there is a place where AI can sit well with the human connection and both have a place in a retailer's playbook. So are you guys seeing anything around where that sort of dovetails well together? Because creators are a part of community and authenticity, so everything won't look and feel the same, but AI helps things become more efficient. Like Ulta has said that they use AI for marketing so that they can really personalize that lipstick color to whatever it is that you typically buy or the foundation or whatever it is, so it matches and makes your life easier. So is there a place where we see that working together?

Arielle Feger (11:50):

Yeah, I think any place where you can solve a consumer problem, you're probably going to have a lot of good luck with that. Thinking about Amazon's Rufus or Walmart's integration with OpenAI, it's just giving consumers more ways to sift through the massive amount of products that are out there, help them make better decisions, help them find the best price. And so I think those are tools. Those are things consumers are already doing, right? They're kind of using the way we shop and just streamlining it. And so I think that's a really great way to use AI.

Suzy Davidkhanian (12:30):

And Sky, I know for this trend we were talking a lot about the creator platforms that retailers are using to help differentiate and cut through the noise of all the content that's out there. Do you feel like there is a place where even imperfection that comes from creators will be valued? Versus obviously in AI, we just heard from the Coke ad, everybody was upset about the imperfections.

Sky Canaves (12:56):

I think we'll see them blend more, and as we're seeing now, OpenAI has just released a AI video-based social network, Sora, and I think that's going to be where we start to see a new generation of creators that are AI native or take AI as their medium. So the output is ai, but what's behind it is human.

Suzy Davidkhanian (13:19):

I think that's great, because there's so many different ways that this can go, and as the different tools evolve, brands will have to pay special attention to figuring out how they can both cut through the noise, but also be authentic and be real, and consumers will start to value them even more. Which brings us to our next and final round of the day. Let's be practical now for a minute. We've talked a lot about AI, the good and the bad, but can you give us each an example of how brands are actually keeping it real with AI? We've seen that the tech is moving fast and there are lots of challenges to staying human. So what can we do to use AI to deepen that customer connection? Arielle?

Arielle Feger (14:05):

Yeah, so I'm going to use, it's actually an example from a few years ago, which I think is really interesting. Heinz Ketchup had a campaign, its AI Ketchup campaign, and I am a Heinz Ketchup lover. So there's basically the commercial was talking about how they asked, it was really around the time that DALL-E had blown up and people were using DALL-E to create images and they in the commercials say, "We asked DALL-E to create images of ketchup and this is what it came up with."

Suzy Davidkhanian (14:39):

Oh, I remember this one.

Arielle Feger (14:43):

And the big idea is that every iteration that DALL-E came up with was very much looking like a Heinz Ketchup bottle. But it also showed these images, the text was messed up, they looked wonky, they looked weird. And so I really think it was this way of, "Yes, we're embracing this, but we're also showcasing the weird little inconsistencies that we all know exists with AI, and reinforcing that we are ketchup." It just did a great job of being kind of real, being honest, but also showing that innovation. And I really, I think it resonated really well. It was funny and it just worked.

Suzy Davidkhanian (15:28):

It was like a tongue in cheek moment, right?

Arielle Feger (15:30):

Yes.

Suzy Davidkhanian (15:31):

"We're cool. We're using the new tech, we're ahead of the curve, but-"

Arielle Feger (15:35):

"We're also aware." Exactly. "We're also aware of the downfalls or the little inconsistencies." So I think that's just a really fun way, to be honest. Be transparent and my advice is be clear about what you're doing and understand that it's not going to be perfect. Like Sky said, there's mistakes in the Coca-Cola AI ad, but I think you can play with it and I think you can be self-aware.

Suzy Davidkhanian (16:05):

Did Sky turn you around, and now you love the Coke ad?

Arielle Feger (16:08):

No.

Suzy Davidkhanian (16:10):

Not yet. Not yet. We're working on it. Sky, what's your brand example?

Sky Canaves (16:14):

So I'm kind of building on that and thinking about how brands can lean into the AI-ness of AI, which nowadays we're seeing more AI-fueled viral trends. One that's really taken off with Gen Alpha, like my daughter, are these Italian brainrot characters, which are just these very random silly characters and they are part of that meme culture in AI. And we've seen a couple of brands working with these characters. I think one that it really tied in well into its core brand identity is Duolingo, because it took its little mascot and had him dressed up as one of these brainrot characters and makes some noise. And then of course that ties into the language learning part of Duolingo, which is you can learn Italian on Duolingo.

(17:07):

And it became a kind of joke, but it also drove app downloads and a lot of engagement around that core audience of young Gen Z and Gen Alpha that's really paying attention to AI, experimenting with AI and receptive to AI advertising that's creative and fun and engaging. And then there are opportunities to engage in co-creation.

(17:31):

I've heard that OpenAI is really pushing for brands to allow Sora to use its mascots, which would create new opportunities for a very different kind of consumer engagement. It raises a lot of brand safety issues, of course, and then going to come down to what Sora and OpenAI can do to protect the brand mascots from being used in inappropriate ways.

Suzy Davidkhanian (17:57):

I love that. Because it's how do you take your brand and modernize it without steering so far away from your original core mission or the sentiment? And you just make it easier for people to find you, and that's amazing.

(18:11):

I love all these examples. I was kind of thinking about this in a different way in terms of a tip for retailers, which is more around how can you use some AI tools before you get into advertising and marketing campaigns that are really big splashes. So mine was Warby Parker is now launching an app called Advisor app. And so they're moving to not only the virtual try-ons, which they've been doing for a while, but it's an app that's AI driven that will make suggestions because they've announced that at the end of the year they're discontinuing what was their signature move, which was sending the eyeglass frames to your house for you to try them on, then send them back.

(18:50):

This digitally native brand that now has stores and a lot of outposts started with this move around sending glasses to you for free so you can try them on. And now they've moved away from that. And I think it goes back to staying true to your core, but using technology to, one, this for sure will help their margin, but it also modernize them and bring them to the AI fold.

Arielle Feger (19:15):

Yeah, I think it's interesting. I mean, I am not a big fan of them discontinuing the at-home try on, but if they're going to take it away, I do feel like this is a really good way to still give people that ability to try things before they walk into a store or before they commit. So it's still saving people some time and creating efficiencies. So I do think it was a smart choice.

Suzy Davidkhanian (19:44):

Yeah, they've increased access in some ways. To be fair, according to their press release, they were moving away from the at-home trials, because everybody was so close to a store now that they didn't feel like it was necessary. I think it was like waning in terms of numbers.

Arielle Feger (19:59):

Makes sense.

Suzy Davidkhanian (20:00):

Unfortunately, that's all the time we have for today. Thank you, Arielle.

Arielle Feger (20:04):

Thank you. This is a great discussion

Suzy Davidkhanian (20:06):

And thank you, Sky.

Sky Canaves (20:07):

Thanks, Suzy.

Suzy Davidkhanian (20:08):

And thank you to our listeners and to our team that edits the podcast. Please leave a rating or review and remember to subscribe. I'll see you for more Reimagining Retail next Wednesday. And on Friday, join Marcus for another episode of Behind the Numbers, an EMARKETER podcast made possible by DG Media Network.