Ariel Haroush, Outform & Future Stores

Sixteen:Nine - All Digital Signage, Some Snark

The 16:9 PODCAST IS SPONSORED BY SCREENFEED – DIGITAL SIGNAGE CONTENT

One of the particularly interesting things about Outform is how a company that's been doing digital in retail for 20-plus years is not all that well known in digital signage circles.

Not that it's hurt the Miami-based company, which has offices and manufacturing facilities all over the world, and has delivered countless tech-centered shopper engagement solutions for some of the world's biggest brands.

I'd been operating mostly with the impression that Outform designed nice-looking digital fixtures for retail, but there is a lot more to the company than that. They do the whole nine yards of retail from idea through execution.

I had a great chat that could have gone on for a few hours with Outform founder Ariel Haroush. We started with the company's roots and how Haroush kind of fell into scalable digital solutions for retail. We get into how the company works and the state of things like retail media.

Then we spend quite a bit of time talking about Haroush's ambitious new venture, called Future Stores. It takes the notion of pop-up stores, and gives it the scale and digital experience demanded by big global brands. The first location opens in central London on October 30th.

Subscribe from wherever you pick up new podcasts.

TRANSCRIPT

Ariel, thanks for joining me. For those who don't know, can you give a rundown of what Outform does and their background?

Ariel Haroush: Outform is a retail marketing company in essence. We've been referred to as an innovation agency because we are very much on the cutting edge of retail, experiential, and innovation in retail. The company does everything from design all the way to execution, which is quite unique because we have the ability to ideate and strategize like a typical agency that you would expect. But we are transitioning seamlessly into the execution room. So everything we ideate, we engineer, we prototype and we manufacture.

So while the business has a very, I would say appeal of an agency, we are, in essence, a manufacturer at scale, and we have manufacturing facilities all over the world in three main regions in Europe, in Asia, and in the States alone, we have two manufacturing facilities, both in Chicago and in San Francisco.

Did you start as a manufacturer and evolve into an agency or vice versa, or none of the above?

Ariel Haroush: My journey as the founder of Outform was quite unique. My passion for the industry actually started when I watched the movie Back to the Future. I'm sure you remember Marty flying all the way to the future with the DeLorean and then you see this billboard transform into a shark, and I was just mesmerized by it, and there's something in it that made me say, “oh my God, this is what I want to do.”

So when I started my career, I was always very much leaning to the visual aspect of things. I had an office in Times Square and I was looking at all the signage there and I went, geez, why no one is doing it on a commercial level, and that was the seed of founding Outform. So I started really with no manufacturing background, but with a lot of passion towards how spectacular signage should be, and I was able to convince one customer to give me an opportunity. Back in the days it was Siemens and I had done this huge mobile phone replicas in, one of the biggest trade shows called CeBIT and that was an experience, and one thing led to another, the second customer was Samsung, and I was moving from one customer to another, creating those experiences.

As things evolved, one of the biggest opportunities that I've got was a customer, in the United States, in Chicago that said, “Hey, are you doing all this massive, spectacular signage. Would you mind doing something smaller in scale?” I said what do you mean by that? He said, we don't need giant signage. We need something that we can fit into a retail store, and I said, okay, what do you have in mind? He said, I need 20 mobile phone replicas in a size of, not bigger than a meter or three feet. And I said, gee, that sounds like a lot of units, and back in the days I used to do those things in the Philippines, and he called me about two weeks later and he said oh, by the way, it's not 10 units, it's 500, and I was like, what? So the factory owner in the Philippines said, “Hey Ariel, we cannot do 500.” I said, so what do I need to do? He said, you need to fly to China and look for someone to do injection tools for molds.

So I took my backpack and I went into China and the guy called me again and said, it's not 500. It's actually 2000, and I'm like, what's going on? I discovered retail in essence and the scale that you have within retail. That time was actually the launch of the Razor phone. I don't know if you remember that Motorola phone. It was a massive success. I've done, in a period of about, I think it was 12 months, I did 70,000 units that went to every single store globally, because there was just a smart way of how we design it, in a way like it's cutting the ceiling or the wall or the floor. So you just apply it, and it seems like the phone is so sharp that it's cutting whatever surface you place it on. So everyone wanted to have it, and then, I realized retail is where the scale is, and the manufacturing aspect of it is what gives the business model way more substance.

So with that in mind, I started to invest in factories, and one thing led to another, and I started to get into a place that, we're now buying factories, and we started to scale the business from there, and here I am today with more than a thousand people at Outform in various regions, doing what I enjoy the most, which is shaping the future of retail.

Wow. Maybe there's not a when moment, but, I'm curious how you evolved into doing the agency ideation through the execution side of it as you did these things, you realized, the best people to actually manage this and deploy it and so on are my own people as opposed to trying to sub this out?

Ariel Haroush: Part of the journey of working with customers, I worked with a very big tech company in Cupertino and you can guess who, and they were so secretive about everything, and we could not outsource anything in terms of the thinking side of things, and I just needed to bring people in house and I always had a tendency to creative, and I was very involved in that side and one person and then another person, and then you find yourself with a creative team and you start to conceptualize and bring in ideas, and because a lot of the stuff that we do had a highly fused tech integration, we started to create our own kind of R&D team to deal with those things.

Many times I face situations where clients come to me and say, " Oh, my agency created this and they could not deliver on that, and we are super disappointed how we can ensure that it's not going to happen with you guys”, and that's always been a differentiator because everything we design we actually do. So we just start building up on those experiences, and one of the things as I built the company that I never really liked when customers or people refer to us as the vendor because the vendor is something very, in essence, commoditized type of a description, right? But I really enjoyed it when I was a partner or an agency, and I invested heavily in that because I felt this is where we create value, and every time I had a conversation with clients, which was on the C-level. It was more about how we can win in retail. It wasn't about how we're going to make it exactly, and what's the engineering and how many screws and the thickness of the material and all that good stuff, it was more about how we can influence the shopper?

That's always been the passion. So investing heavily into that, and that was a differentiator for Outfrom, because, in essence, if you think about the industry in a nutshell, and you ask yourself why advertising agencies became so big as they grew, like the Ogilvy, the Y&R, the Saatchi & Saatchi, they had a really unique business model. They competed heavily on the pitch, right? And they put everything in front of it. Design, planners, strategy, and once they win the pitch, in essence, the reward was the media buying. So if you compete on a Coke pitch, you know that they're going to spend 300 million on advertising, which you buy media on and you're getting a commission on that. So that was the scalable business model.

For Outform, it's been the manufacturing side of it. That's the scalable part, but you have to put all the upfront investments to have a seat at the table, and to me, that was a model to replicate. When I look at our industry, it was very fragmented to mostly moms and pops type of operation, and they always looked at it in terms of, “I'm a manufacturer. Tell me what you need to do, and I'll make it for you.”

But that's not really the conversation customers want to have. They want to know how they can best win in retail, and they come into those experts to help them craft the proposition, and when you think about our industry, as it's getting more and more technology fused, you have to rely on people that understand the different disciplines in terms of manufacturing. So it's not just cutting wood or bending metal or using plastic. It's a combination of all of the above, including tech, including data, including how you can learn and optimize your offering as you move forward. So there's just so much built into that, and Outform was very eager to play in that area.

Yeah, I've certainly through the years seen no end of companies who manufacture things. They've invented something and they're very proud of their features and specs surrounding that thing, but they go in selling that thing as opposed to, as you were describing, talking about the objective and selling a solution and providing a solution and you can see how the industry has evolved that way and how more and more, particularly large clients who are saying, I don't want to cherry pick all the components that I need for this thing. I want a partner who's going to help me hold my hand through this whole thing and execute it and, be cohesive as opposed to, ending up with a lot of finger pointing when there's a problem.

Ariel Haroush: Exactly, and if you think about it, every customer has different types of challenges. When you look at the likes of Google, and they need to educate the customers about what Google Home is all about. That's one type of challenge, and when you look at Estee Lauder trying to maximize the shelf efficiencies, that's a different type of challenge.

You also many times find yourself depending on where you actually have been deployed, the mindset of the shopper from a Home Depot to a Best Buy is completely different. When you're in Home Depot, you want to know how easy it is and how much time it'll take to install. When you're in Best Buy, you want to know the technical specs and the mindset really shifts between the retailers that you're in. So the emphasis on how you maximize the conversion is different. There's just so many opportunities. Of engaging and I'm not even going and discussing the Gen Z behavior and shift in behavior that's really challenging a lot of retailers and a lot of brands, because if you think about it, the type of consumers that we have, the call it the shoppers of tomorrow, they're so different in mindset.

I always like to give the examples that I have five kids by the way, my oldest one is 16 and we're driving in Miami and he said, “Hey, dad, can you change the song?” And I'm looking at him and say, it's the radio. You can change it, and he's giving me this weird look. He said, what do you mean by changing the song? I said, you can't do this on radio. He said I don't get it. So what if you don't like the song? I said, you wait, and he said, if you don't like the next one, I said, you wait. I said, dad, it makes no sense, and he's right because he's using Spotify. It makes no sense.

You got to get him a rotary dial telephone.

Ariel Haroush: Amen. Amen. So we are talking about a different type of shoppers and those shoppers, if you look at the attention span generally of Gen Z compared to millennials, compared to baby boomers. I just see my kids, I would say that their attention span is on the length of a TikTok story.

They're instantly getting bored, and man, it's a science. How do you get them not to flip this TikTok story or the Instagram story? And you're trying to make sense of it and to understand what actually captured their attention, and if you're in a retail environment, that's not different than your TikTok story moments, right? You have so many offerings, and you need to make sure that the shopper is actually giving attention so you can tell your story so you can potentially convert. This is what we're dealing with, and we have to be super efficient in the way we are crafting the proposition to our clients.

So who are your typical customers or Outform’s typical customers? I'm guessing it's much more brands than retailers themselves.

Ariel Haroush: It's a combination of both actually. We're working with many brands. We've been super active for the past 20 years dealing with the brands because in essence, they need to deploy whatever they do and not only one retailer, but multiple retailers, and we need to do it on a global basis. So the challenge around it, it's quite enormous, and we've been excelling in that landscape, but we also have a lot of retailers coming to us.

We realize that we as well need to change, and if we're not going to change, we're going to end up like the Sears and the other retailers that went under, so what do we need to do? And you can start seeing a shift in the way retailers are operating. They used to be super passive, by the way. They’d say, “We shouldn't worry. The brand will figure that out.” But the brand also realized that they can get sales online. So the retailers now need to start asking, “Am I just a showroom type of a facility? No, I need to add more value.”

So how do you do that and what's the proposition for the shoppers? So everyone is challenged around what's the future of retail.

Yeah, that's interesting because I've heard endlessly for years and had some experience myself that retailers are interested in the digital stuff and experiential and everything else, but they want the brands to put it in and they want the brands to pay for it.

As Chris Riegel for Stratacash says, “They're like T Rex's, very large, but very short arms.”

Ariel Haroush: You're right, but there is a shift here because if you look at Best Buy as an example, they're realizing that a big component of the revenue is coming right now from what you refer to as retail media, which is an online terminology. If you want to get good placement on the Best Buy website, you're paying for it, and there is a big revenue contribution to their bottom line coming from that. So everyone understands that retail media is on a meteoric rise.

Now, the retailers are looking at it, so if I can generate this amount of income from my website, wait a minute, I have all this fleet of stores that can generate revenue for me and that's an opportunity that I don't necessarily want to give away to the brands. So we started to see a tremendous amount of conversations happening around how we can utilize our stores as a component of the retail media. So you're going to see a shift in terms of how retail is starting to look into it and say, there is an opportunity and untapped opportunity that we want to materialize on.

Are a lot of retailers over excited about retail media because they see the big numbers, but that they maybe don't understand that 99% of that dollar figure is going to mobile and online and not a hell of a lot of it goes into in store display.

Ariel Haroush: The online numbers are staggering, right? I think by 2027, it's going to be as big as social media. So it's just huge. Now people ask: will the retail media in real life will be the next big thing? Now it's really a matter of eyeballs and a matter of conversion. Because all you're really getting when you are putting it online, you're getting X amount of eyeballs that are able to be converted and the percentage of conversion is actually a lead to sales and that's why it's such a hype right now.

But if you get X amount of millions of people passing through your store and brands are competing in your stores on conversion, they are willing to be the one spending money on getting those eyeballs. You basically just got yourself a new revenue stream. Now one should ask whether the traditional retailer just being transactional is the future, because in essence, we are living in a place. It used to be called Omnichannel, right? Omnichannel, for the listeners here, I’ll use the analogyof a highway. Think about the highway with different lanes and every lane represents the different side of the Omnichannel. But we all drive today and we are crossing lanes all the time. So in essence, Omnichannel is no longer the right way of phrasing it, I call it more of a unified commerce because you can walk in the store, but you are with your phone, so you are constantly connected and you can compare prices on your phone in the store, and you can make a decision to click the button on your phone And it's gonna wait for you on your doorstep.

So what is an Omnichannel anymore? It's more unified commerce and in a world of unified commerce It doesn't matter where the purchase actually happens. So yes, you have your stores because you need to have a presence. It's almost like a business card of your brand. But in essence, the metrics of how much I'm selling in the store should not be the most applicable way of doing your KPIs if you get a halo effect that happening outside of the store, it doesn't matter. It's a unified conference.

So where are you at with the company now with Outform? Because you started this new entity that I want to talk about called Future Stores.

When we chatted, oh God, back in the spring or something like that, you had mentioned that this thing was coming and that you were continuing to be the CEO of Outform, but maybe perhaps winding that down.

Ariel Haroush: No, Outform is my true love. It's a company I founded. I enjoy every moment of it because every day is a new day. But when I see what's the future of retail and when I'm asking myself, and this is something I've always been extremely passionate about, one of the things that I've seen time and time again, that many times we work with the brands and we're doing something, it doesn't really get the big bang that we all hope for, and I ask myself why.

If you want to do, for example, a pop up, and let's say you want to do a pop up because you want to tell the story, and you have a product to launch. By the time you're designing the pop up, you need to design it, you need to engineer it, you need to prototype it, you need to spend three to four months and then you need to find a location that you can actually host, but the landlords are not waiting for you. So securing a location six months in advance is super difficult. So many times we do all this effort and we end up compromising and we find ourselves in a shopping mall, and there's so much work, sweat and tears built into that, that when you're actually launching it, you don't get the big bang that you expect.

And to me, that was always a missed opportunity, and every investment was one off, and if you do something which is very analog driven and things change, context change, the market change, competitive landscape change, you're not unable to react. So to me, I felt there must be a better solution, and when I look at the high street, it doesn't matter where you go, whether you're in 5th Avenue, Oxford streets, Champs-Élysées, Ginza in Tokyo, in essence, you're seeing the same old brands time and time again, and you've seen Zara in one location, you've seen them probably in every location, so nothing really drives you to step inside, which is a real shame.

I ask, given everything we spoke about that TikTok story mentality, I said, what if the high street can be as dynamic as our social feed and I had this vision of creating a space that can be almost like the sphere in Vegas for retail, that is fully immersive and brands can come in without the worrying of engineering and prototyping and manufacturing and finding the spot, they actually know the size and they get the best location ever because it's one of those high street flagship locations and everything is digitized and everything is immersive and they get the big bang for their investment. I said, wow, that's actually something if you're going back to the Marty moment, flying to the future, that's the moment for me where the billboard becomes a shark, where you notice something and you can not miss it.

That's really the thesis behind Future Stores. Those futures stores are set on prime locations. We're talking about the best of the best. Oxford Street, 5th Avenue, where brands can do global activations in multi-cities at the same time without all the hustle and bustle of creating specific, tailor-made, manufacturing, analog driven for a specific site and when content can change from the weekend to the workdays, from the morning to the evening, when it's fully immersive, and we are launching it on October 30th. so this is about 30 days from today. Our first client will be a massive CE brand, and oh my God, people will see it in the media for sure, I'm telling you it's mind boggling. Just the storytelling, the possibilities. someone that's seen it said I feel like it's the iPhone for retail because there's just so many options,

So if I'm a massive CE brand, and I book future stores, what am I getting and what are the parameters? Do I have to book for a month? Can I book it for a day? Is it staffed for me or do I have to bring in staff? How does all that work?

Ariel Haroush: You can book it in slots of a week to two weeks to four weeks. We don't want the brand to come in and take it for six months because that's going against kind of the thesis of a high street is constantly being dynamic and we don't think the shoppers would care if it's not changing all the time.

You get everything basically. It's a full retail operation that you don't have to invest in the time in, because all the walls and the ceiling and everything, all the tech components are already built up. All you need to do is explain your content and we can help you with that as well, and you have the back of the house. So what do you basically need is basically your decision. If you need security at the door because people are going to queue outside, we can provide your security guard at the fee. But the rest is everything is okay. It's ready for usage.

So the huge project plan with the endless Gantt charts and everything else you would have to do, if you were leasing the space on your own and staffing it and designing it in the whole nine yards, that's covered off.

A CE brand can just say, I want this for two weeks. Is it available in this time window? There's obviously some planning they still have to do, but 90% of it is gone.

Ariel Haroush: Exactly. You're really getting a turnkey solution and the beauty about it is that you can say, “Hey, I know I'm going to launch a product in late March and I need to be in an extra X amount of cities. Can I book it now?” Knowing that it's going to wait for you and knowing that you have the possibility to use your own content for it is just, I think it's the future. Now, this is my thesis, of course, but time will tell.

I wrote about this the other day and I said it's about two blocks away from Outernet London and very reminiscent of that, but there's some very big differences as well that's mostly about public art and so on, but it's the same kind of experience, right?

Where you walk in, you've got LED on the walls, you've got LED on the ceiling, and everywhere else.

Ariel Haroush: Yeah, and Outernet, good friends of mine, they did phenomenally well. Frankly speaking, it's becoming the number one destination in London and well deserved by the way, because it's people just coming in and getting inspired and I love that.

I love the people getting inspired just by walking in the street, and they do amazing content, but yes, it's a different proposition because they are more of a public arts media component. We are all about future retail, while they provide a sense of awareness, we are providing the awareness piece, but also the consideration and the conversion. So there is an ROI component to it that is very clearly measured. We spoke about retail media, in essence, it is retail media in the real world because we're enabling you as a brand to get all the eyeballs, but you convert the eyeballs to people getting into the store experiencing the product with also the option to buy

What is technically in there? Is it fine pitch LED on the walls and ceiling?

Ariel Haroush: That's correct I mean we have the highest resolution of LEDs anywhere installed in London. So if you compare it to Outernet, the density of our pixel rate is much, much more advanced. That's a given because we started way later than they did, so they had to commit to a technology that is probably three years old. We have amazing brightness. You're not going to be able to see the pixels, it's just as much of a high resolution, millions of pixels around the stores, which is super impressive to see.

I think on October 30th, when we launch, people will really grasp the magnitude of it.

Who is behind this?

Ariel Haroush: Myself and two other partners that I have, but I'm the driving force behind the concept.

So you have an extremely vested interest in making this work.

Ariel Haroush: Yeah, absolutely, and it's weird to say it because I am a businessman and obviously the financial world is a metric, but my reasoning for doing that was not for financial gain. I'm really passionate about where I can take this industry forward, and there's just so many possibilities. I'm 50 years old this year, so I took three weeks in India and I was trying to look for my Zen and one of the random meetings that I had in India, I met this very nice lady from the Richmond group and she was doing a one year tour. She wanted to retire and she said, you know what, I'm just going to go on my own, we had dinner and she asked me, “Ariel, tell me about your business” and I decided to speak about Future Stores versus Outform, which is a much more mature business, and she said, “okay, I get it, it sounds exciting, but what's your gain? Do you really want to just make money?”

And it really poked me in an interesting way, and I said, why do you ask that in the sense that the way you asked it. She said, no, I'm just trying to understand. I said there is a motive that I'm trying to do that I'm not describing to many people, but, given how you frame it, I want to describe it to you and she said,well, go ahead.

I said, one of the things that I'm really passionate about is, I'm not going to use a big statement, but democratizing the high streets, if you think about it, it's something that I'm really passionate about and you ask why. Because frankly speaking, if you think about the high street is kept to the typical candidates that you can already list down without me even need to say it. It's those big brands that you see everywhere and they occupy all the time the high street and it's not like we're not going to engage with them, on the contrary we will, but I want to be in a position that I hold at least 25% of the time of future stores into new brands, innovative brands, brands that are not necessarily going to get the time of the day to be on the high street, but they are the up and coming brands. So we are talking right now with a couple of brands that I'm super excited about that people are going to learn about.

There are celebrity launches. There are other people that really have amazing stories to tell in the high street, and they just don't get the visibility to be on the high street. So that's another motivation that I have outside of just the financial aspiration that this concept has, and this concept, should it be successful? It will scale to a variety of different locations across the globe.

London, obviously it's an advanced build or probably ready to go, but other cities you mentioned like Champs-Élysées, Tokyo, are these ones in the pipeline or are these ideas of what could happen?

Ariel Haroush: Tokyo is what could happen. But obviously, if you think about where would be the most relevant cities to start with, it's not a secret that New York, London and Paris are going to be the top three at least from my lens. Asia is a bit far away at this stage. We still need to prove the business model. But yes, we have active engagement in the other cities that I mentioned, and we are just vetting the final sites as we speak.

This is the sort of thing that is very clever and everything else without question, but it's also something that a commercial property developer could look at and go, “Yeah, I'm going to build that too and I'll give it a different name and I'll tweak it just enough to make it mine.”

How do you deal with that?

Ariel Haroush: I'll say good luck with that. The level of complexity in storytelling and working in collaboration, I would never even dream to do that if it wasn't for my experience in Outform.

I have so much experience in Outform, doing it for 20 years. I understand what it takes and how to tell stories in retail. Landlords want to be landlords, and many of them are already approaching. I said, why don't we partner? And that makes sense in order to scale it faster. But yeah, you need a certain level of expertise to know what you're doing. This is not just a typical media play. It's much more than that.

This is not just slapping up, some fine pitch LED and renting a high profile space.

Ariel Haroush: No, there is so much more built into that, because you need to think about it in a retail operation mindset, you need to think about it in a media mindset, you need to think about it from a storytelling perspective, and you really need to maximize what we call the funnel.

Because if you think about the marketing funnel, it's built in such a way that you spend money on awareness and that's usually going out of home media or TV or whatever, then you spend money on consideration, which is experiential, pop ups, you name it, and then you have the conversion piece, which mostly kept to retail stores. And last but not least, the royalty component. That's the marketing funnel. We are, in essence, trying to flatten the funnel so you get your awareness, consideration and conversion all in one location, but there is also a huge component that I don't think people understand the value of it, but they will, which is the amplification.

If you look at Outernet as an example, for every campaign that they're running, they have tens of millions of views of people who have never even been to Outernet, and if you look at every single thing that the Sphere did in Vegas, they have hundreds of millions of shares of something. People have never even been to Vegas, but they know about the Sphere. This has an additional impact Future Stores will be able to deliver.

If you ask me, Ariel, people tried before. Why would that be any difference? Scale and also inmindset, because when I moved to the States, someone said to me, go big or go home. And I asked, what do you mean by that? And he said, if you're not putting everything in, then it's just not good. That's what we're trying to do. You cannot compromise the location. You cannot say, let me bring this huge brand for a store that looks like a mobile store. They just are not going to do it.

So if you want to get people to take you seriously, you have to go all in and that's what we've done here. So we're talking about a huge investment that we're putting into the high street. Probably if you think about London outside of the Outernet, it's probably the biggest investment ever done in a retail store, and that's what we're going after, we're going after something that is quite impactful and if it's going to deliver the amount of eyeballs that we think it would, then people will notice it, and if people will notice it, then brands will start to see the value in it.

I'm looking forward to seeing it at some point. I'm kicking myself now. I traveled through London to get to ISE in Barcelona, but I just did an overnight booking.

Ariel Haroush: Oh my God. I'll be very happy to host you there. I'm going there every now and then. It's still in a kind of a installation mode, but all the screens are up, we're now doing the testing. It's a site. The ceilings are super high, so you get the full immersion and without telling who is the first client, all I can say is that, once you see the first execution, it's mind boggling. It's really above and beyond what I ever imagined it to be. So I'm super pumped and excited about where this is going to go.

October 30th, right?

Ariel Haroush: Yep.

All right. Thank you, Ariel. I think you're onto something.

Ariel Haroush: I hope so. Thank you for taking the time.