Wendy L. 00:09

Hello everyone. I'm Wendy Liebmann, CEO and Chief Shopper at WSL Strategic Retail, and this is Future Shop. This is where I talk to innovators, disruptors and iconoclasts about the future of retail. Before we begin today's episode, I just wanted you to know that we have all turned 100. Well, not quite. This is our 100th episode, which is very exciting. A couple of years ago, when Maryann Javier, our VP of Creative Services, said to me, you need to do a podcast. I was like, what are you nuts? And she said, no, you need to be. This is the way to tell our story. I had one consideration. I said, I only want to talk to people that I want to talk to. The focus really was all about people from lots of different disciplines and how they see the future of retail.

Wendy L. 00:53

It's extraordinary the people we've spoken to, or I've spoken to everybody from Kevin Host at Walmart, who talked about healthcare in the community, and Colleen Lindholz, who's the president of Kroger Health, talking about food as medicine, to Dr. Somi Javaid, who has led the revolution around women's health and wellness and menopause. So we saw all of that going on, so much going on in the healthcare front. We've talked to beauty companies, beauty retailers, Jo Horgan, who who's created the iconic MECCA in Australia and New Zealand, recognized around the world for creating amazing beauty experience. We've talked to many other retailers, whether it's CVS and talking about everything from retail media, right retail media the topic of the moment. We've had people like Dawn Clark, who is now leading the reinvention of retail at Starbucks. We've talked to innovators around private equity. We've talked to students from FIT Masters Program in Cosmetics and Fragrance Marketing and how they think about the future of retail as it impacts beauty. We've had Norm DeGreve, who is the global CMO of General Motors, who formerly was at CVS Health and talked about a lot about retail fast and slow, and what he learned from drugstores to take to the automotive business. And my regular partner in crime, in all things tech. Justin Honaman, from Amazon Web Service, comes on regularly to talk about innovation in all forms of technology, from AI to agentic AI, and how that evolution and revolution is changing retail. So it seems only appropriate today on our 100th episode that we talk about the future of shopping through the lens of all our latest how America shops work, and to have our newest colleague join us, rich Kaminsky, who is our new director of research and insights. Welcome, Rich.

Rich K 08:49

Thanks for having me excited to be on

Wendy L. 03:38

But before I Rich and I begin as always. Don't forget, please subscribe to this podcast. It really makes a difference for us to know our KPIs and know that you're behind the scenes. So anywhere you get your podcast, just click Subscribe. Doesn't cost you anything. You know the drill. Just click here anyway. Now onto my episode and discussion.

Wendy L. 08:53

I feel like we should do that thing where the balls, the balloons, the confetti, come up 100th episode and welcome Rich. We could do that too. Anyway, it's great. It's great to have you. Rich has a wonderfully interesting background coming from Y Pulse, where he focused a lot on the next generation, Gen Z and millennials. He'll tell us a bit about that. And really, he's had an immersion of fire, where we said, we have a new study. Okay, Rich, jump right in, and he did. But first of all, Rich, tell everybody your background, where you came from, what you're passionate about, and how you ended up with us.

Rich K 09:27

Yeah. I have a background, really, from academia, going back very far. So started doing research qualitatively while I was doing my BA did an MA was potentially going to do a PhD in sociology, and then kind of just decided that I didn't want to do that and go be an adjunct professor and live off of food stamps and in the back of my car and everything. So got into market research and did a lot of qualitative work throughout a variety of industries, so retail, CPG, but also media and entertainment. And made my way to Y Pulse, where, like, like you said, I did a lot of work with Gen Z and millennials and Gen Alpha, kind of that growing versioning group. Y Pulse did a lot of syndicated work. We did a lot of custom work, qualitative, quantitative, keeping up with what was going on and kind of the pulse of youth today. And then joined WSL really recently, to kind of get a little bit more focused and a little bit more of the consulting lens, so not just the data itself, but then actually helping move that. Helping build strategy and helping people take, kind of those pulses and kind of turn it into action and really live it and build and pivot and change businesses today.

Wendy L. 10:51

Today, we have just published our latest how America shop study, called How America Shops® in Chaos, which will probably resonate with many of you, because your heads are spinning as we live through what seems like a moment in time, but actually we know, because we've been doing this for a long time, that actually this is a continual roiling of the waters that began probably 20 years ago, particularly for those Gen Z and millennials that Rich is so deeply engaged in probably since September 11, we have lived in times of chaos. And those moments, whether they have been these now called Black Swan events like September 11, like the global financial crisis in 2007-8 coming through, the Covid, inflation, all the chaos that that we now live in. It feels like this is a moment, but actually it is two generations of life, and it is really a fascinating subject. When we think about how people have learned to deal with that, even though they are feeling quite pessimistic about the world. as Rich and I were working on this study, what was really clear to us was, how do we calibrate this within the context of that time and generations of shoppers who know nothing else, and how do you use it as you think about moving forward so so Rich? what struck you about as you work through our findings on this study. What stood out to to you?

Rich K 12:55

Yeah, I think what stood out to me initially is that it made total sense, right? There was all the news about the tariffs, there was all the news about rising prices and how that was going to change and what people were going to do about it. So it just makes sense to that kind of drive the pulse, and that kind of drive what we're looking for and what we're trying to understand, and trying to understand how people are already rethinking their shopping habits. Let's go out there. Let's see what they're paying attention to. Let's see if what changes, if any they're already making. Let's see kind of, their view on the world, and their view and their place in the world. And then I think what the perspective that WSL has is that it really has that long term perspective. And I think you said it exactly right. We have those Black Swan events, those once in a lifetime events. You know, there's the joke that millennials and Gen Z have had more than enough once in a lifetime events, for a lifetime, right? You know, between 9/11 between the ups and downs of the.com crash, and then the housing market crash, and then coming back from Covid, and kind of the inflation and shrink inflation and all these other things there really is not just tariffs. It's not just this one and done event. It really is a big picture, long term event, and that's just a kind of that's just the economy, that's not even talking about the social impact of Covid. That's not talking about the massive changes that we're seeing in technology, about social media and social shopping and the rise of influencers and, you know, AI, and all these other technologies that are exploding, which are just as important Black Swan events as like the economy in and of itself. So I think that is really what kind of brought it into perspective coming in was first that picture of this makes total sense. I want to understand what's going on. And then as we started digging into it, and started working through the data and talking about it, seeing, Oh, this is just one more event in what has been a lifetime, events over the past 20 years.

Wendy L. 15:02

Yeah. And I think one, one thing about that that's interesting is, I also think it's the value of longevity, is we have people running companies who have been running companies a certain way for a long time, running brands, running retail organizations, while we have this whole shopper base, and I'm not only talking about younger shoppers, but a whole shopper base who have already made accommodations in all of this. So it's almost like you've got to be careful you're not talking two different languages here, because you've got the leaders here, but the but the influences, not just influence influences, but the people have the power with of the purse, on a really, on a different kind of mission. And I think the other thing that's really interesting to me about this work is, you know, one of the benchmark measures that Rich and I've been working on everybody, and previous to Rich with, you know, the rest of our research team, is we see these issues, these numbers like pessimism, pessimism about my financial future, continuing to grow. I mean, in this research, it was up to 43% of the total national population of people that we interviewed saying they were pessimistic about their financial future. That's up from, I think, was like, it's up like. 16 points from 2018 so we could look at that and say, well, there's more bad news. But in conjunction with that, people have had all this time to adapt to what they do about it. So it's not just, oh my god, I'm pessimistic. Now it's I'm pessimistic, but I have lots of tools. And whether, as Rich said, whether it's technology now, whether it's all the places people shop and still do, whether it's all the places that people go for information that they didn't have 10 years ago, 15 years ago, even 20 all of those things have given them shop as tools to accommodate this chaos in ways that couldn't have happened even 10 years ago. So I think that's the other piece to it. You've got to look beyond the obvious of, oh my heavens, I'm concerned to I'm concerned, but I'm taking control of my life. So I think for me too, that was the other thing Rich that coming into this and looking at it through your eyes, particularly with the next generation of shoppers, was the other thing that really struck me and all of that. So one of the other things we looked at was, how do we think about the generations of people, and is there another way, not just by age or income or kids in the house or whatever ethnicity, that we should be thinking about these times so our clients can manage for the future. And you came up with a spectrum of where shoppers fit within this moment, this moment at least, and how that's how we that could guide us for the future? Yeah.

Rich K 18:14

So we asked a question, pretty straightforward, just kind of asking people about their experiences, their economic situations, and gave them an option that most you know, select the one that most accurately describes your household situation. And we found that they roughly distributed in a way that made sense, almost like a wave. Was the metaphor we came up with, we found that there was an audience, about 38% that we called drowning. These were people who said that they were okay before this economic situation, but now they can barely pay the bills, or they were able to. They were barely able to pay the bills before this, and now they're really cutting back on essentials. And then we found another 44% that we called treading water. They are okay now, but they're spending cautiously. They can see the wave coming for them. It just hasn't hit them yet, and they're not sure exactly what it's going to maybe they'll get lucky and it'll break, maybe they won't, but they're really not sure, and they're really kind of worried about it. And then we saw 17% which we described as safely afloat. They say they're okay for now. Haven't changed their spending habits. Who knows what will happen in the future, but they feel secure and safe enough that they kind of are just floating along, safely afloat above kind of everyone else, yeah, yeah. And their yachts was kind of the picture that we had for it, whereas everyone else is drowning or in a rickety boat or on a life raft, kind of getting by.

Wendy L. 19:45

So yeah, and I think for all of us to think about that again, remember what we are saying is this, in many ways, the overarching story is not new news. Again, 10 years. Pick a number, 10 years, 20 years, whoever you are, we've been living through this. So what, what makes this important and also interesting is that when we think about who those people are, whether they're drowning or they're, you know, holding on to the life raft, a lot of younger people, because, again, remember, they're the ones we also saw right Rich who are more worried about either losing their job, or somebody in their family losing their job, losing their health care, or their family losing health care, so they over index in terms of those kind of big concerns, and how they think about adapting to the chaos is really important, and How what they expect from us, if they're drowning or on their life raft, or even off on the yacht, that's really important to understand, because they're expecting us to help them, us, being the CPG industries and retail, to help them manage the situation now, or they'll go somewhere else.

Rich K 21:01

And then what we also saw, too was that it's not as necessarily as simple as just saying, breaking it down by simple demographics, right? It's not as simple as just saying, younger generations are struggling more, but they're going to get more established. Lower income are struggling more, but hopefully they'll get more structure, and they'll get more stability in their career. They'll have a higher income, and then they'll get more established. You know, we were seeing Gen Z and millennials stuck in kind of that drowning, and also a little bit in that treading water. We saw people with income up to $100,000 a year saying that they were drowning, or saying that they're treading water. Are which, you know, kind of traditionally, they that's a pretty high income. They're going above median. You would hope that they would be floating safely, but not necessarily. So. There is a lot of these overlapping concerns and these overlapping feelings going on that maybe just don't align with traditional demographic details in a way that they used to in the past.

Wendy L. 22:04

One of the other interesting things that we saw, and I think many of you know this, because it's another benchmark measure that we've looked at forever, is we asked people, where have they purchased something in the last 30 days? And we and they delineate whether they've been in a mass merchant like Walmart, whether they've been in a CVS, whether they've been at Amazon, where they've been at Dollar Stores, etc, etc. And over the last seven or eight years, those numbers actually more than 10 years, really, those numbers have doubled. The number of places people say they bought something in the last decade have gone, as I recall, from about eight and a bit every three months to now. You know, nearly 13 places in a three month period. And so the other tool people have is they have so many places they can go, including some of the newest retailers that basically didn't exist 20 years ago, at least in this country, the Aldis of the world, the Lidls of the world. You know, some of the off price retailers that we all see, like the TJ Max’es and Ross Stores, Marshall stores, all of those have been around, but in certain categories, they are really important now for things like personal care, beauty care, and so at an Aldi or a Lidl, you know, more of the private brand curated. Yes, it's focused on price, but yes, it's also easy to get to. It's in my neighborhood, all of those things. So we've seen all of that come into play here, as, of course, all the digital and you alluded to some of the social shopping aspects of this Rich. So talk a little bit about that. And you know, the Amazons of the world, and the shifts between channels or between retailers.

Rich K 24:13

So what we're seeing happen now is, you know, compared to about two years ago, like you mentioned, we're floating around 13 outlets, on average, that people are going in the past three months. So what we're not seeing, and one of the ideas that we had, and one of the things that we were thinking about was, are we going to see a drastic shift? Are we going to see people know, here are the 20 different places I have to go, and these are the places that I go to to optimize and stretch every dollar. Or is it going to be, hey, you know, I don't got time to drive around. I'm going to just start cutting this in half, and I'm going to start optimizing for my time, and I'm going to start going to five places that I like, that I trust that, I know I can get what I need, and I can get in and out. And we didn't see that. We saw people kind of stay. We did see but what we did see is we did see shifts. So like you alluded to, we saw moves to deep discount, grocery kind of explode. We saw moves to clothing specialty explode. Pet specialty exploded. But things like department stores went down, drug stores went down. Live Streaming went down. So we saw that shoppers were willing to kind of move money around. They were willing to try new to to lean on things differently, even if they weren't necessarily wholesale cutting things out of their lives. They knew where work works for them. They knew who they know who has their trust. They know who they can rely on, and they're kind of navigating and working within those spaces currently, going back to what we also saw, which is some of these indications that there's a psychological approach to this. There's so much chaos. There's so much going on. They don't want to worry about, how do I cut down from the 13 places that I like and that I know and that I trust? They don't want to start cutting down and getting rid of these places that they feel comfortable navigating and going to what they will do like I said is, okay, I got to make this dollar stretch a little bit more, I'll be and I'm going to little go to the leadle instead of maybe going to Trader Joe's, to make it last a little bit longer. That doesn't mean I'm getting rid of Trader Joe's, because maybe they have, you know, the ice cream that I love. And I'm going to go there and make sure the little treat that I have, which we saw, you know, about half, still think it's important to treat themselves, so maybe Trader Joe's just becomes the place you go to for your little treat, rather than the place that you go to to buy groceries every day. But so that's kind of how we're seeing the shifts move nowadays.

Wendy L. 26:47

That too is kind of a wave in its own way. But I do think what's interesting about that too is we also saw, I mean, Rich will yell at me because it's not good research terms, but in some sense, what I would call retail shrinking. Now, by that, I mean that people aren't changing the number of places they go and buy things, as Rich said, so clearly. But when you think about the places that are really dominating now, and it won't be a surprise to everybody, but it's Walmart. Yeah. It's the clubs like Costco and Sam's. It's Amazon. Of course, maybe it's, you know, what else is on that list, the Aldis, as we said, of the world, the Aldi leaders. And when you think about those retailers, they're still going and buying from other places. As Rich said, I want a little treat. I'm at Whole Foods. I want, you know, those kind of things. And I'm at CVS, to get my prescriptions, whatever. But what we started to see is this consolidation, and you are all living this. You now know that most of your business, if you're in the CPG space, at least, maybe not so much fashion, but if you're in the CPG space, at least, most of your business is coming in those places. Well, think about the impact of club and the Aldis, Lidl of this world, curated selection, fewer SKUs, own brand. Now, if I'm thinking about where I'm going to grow my business, I've got Walmart and Amazon, and then I've got these places where either they don't sell my brand or they sell it in, you know, limited offer, moving through occasional, all of those sorts of things. So that changes the dynamic as well. And then within all of those places, obviously we have the Omni everything, right? Doesn't matter, everything anywhere, all at once, whatever the movie was called. So the complexity of this, of I'm ordering online, click and there, or I'm going into my store and immersing myself for a minute changes the way we all have to think about our brands. And as Rich said, which is really important, and we saw that through this new work, is that retailers win here. And as Rich said, we looked at the psychological factors, real psychological factors that impact people in chaos. They want to stay where they trust. They don't want to move around a lot. They want information and transparency. They want to be feel secure about where they are in retail. Some of these retailers that we're talking about are retailers who've stood them stood the test of time, stood them through Covid, stood them outstanding. Them through price, good prices, good auctions, digital as well as physical stores. And so that's the other piece to this. We have to now think about our marketing and the way we think about our brands within the context of this, just make me feel secure. Do I feel like I'm in control? Do I trust you? And retailers win in this? So think about that when you're developing marketing tools or sizing or pricing, I think that's the other piece that says, assume they don't want to move from where you you're selling today, or where they're buying today, and then you have. to figure out, okay, well, how do we get them to do more there? How do we get them to buy more when they're in that place? The other thing I think Rich you and I talked about was low prices are like, doesn't matter. I mean, of course it matters. People know where to get low prices, right?

Rich K 30:15

Yeah, people know they're smart, they're savvy, they know how to shop. They know where to go to get low prices. And so it's a combination of making the most of it, but also balancing what matters to them. And that's one of the things that was, one of the big surprises for me, that took a long time for us to kind of noodle on and think about a lot, was that when we looked at all the different categories that we were looking at the strategies, there was no silver bullet. Their strategies for how people were adapting to categories, were different. And then that got even more complicated. When we started pulling in different generations in different regions and different households and different income levels. There was all sorts of craziness to it, and what we would frequently see is that people didn't want to change. You know, when they were buying beauty items, they didn't want to change what they were buying. When they were buying their body wash, when they were buying their baby personal care, they were saying that like I hadn't, I haven't changed how I'm buying things. And then sometimes they were say, well, I'll just buy whatever's on sale. I'll make this last I'll get every last drop, I'll get every last squeeze out of it. So they know where to find these things. And the reason that we would see so many things not change was because we also started realizing that people were making choices on what was worth not changing what was worth spending a little bit extra on what was worth not spending what wasn't worth it anymore. What were they willing to make that sacrifice on and that extra cognitive load of trying to navigate how to find the cheapest price for every little thing that I have and maximize every little value that I have, kind of just wasn't worth it at a certain point, it became too much. It became easier to just go somewhere that is a retailer that they trust to kind of have good prices for them across the board, and then navigate it once they're in this store.

Wendy L. 32:04

Yeah, yeah. I think, I think that's a really interesting point about everything that we've seen here, which, again, validated, in the end, validated the fact that people have all these tools. And places and information. And as a result of that, they can pull the different levels as they need to. And to Rich's point, before they're doing some other things, they're making lists, lists, either of what they want, so they're managing their spending, or lists, so they're managing their time, but they're also willing to having done all that, they still want little treats. So then the question is, two, one, are you on the list? Two, and, I mean, on the are you on the list? And secondly, could you be a treat? And how does, how do shoppers people perceive the value of the treat? Is it an experience? Is it a product? Is it a moment in time? Is it a piece of cheesecake? Thank you very much. That's mine. And also, to Rich’s point, what are the things that people are not willing to give up? We did some. We asked a series of questions about how people were thinking about their spending from everything from and one of the top ones was, most people said, I'm cooking at home more. And you might say, if you're in the personal care business, what do I care about people cooking at home more? Well, maybe they won't, you know, wash their hair as much or something, because they're not going out, maybe they're not putting on their lipstick, but then you have to do the dot if they're eating at home more. Is that better for my grocery retailers, whether it's digital or physical, and what does that mean for places where people might have gotten dressed up to go out more often? So thinking about the implications of the traffic, the traffic patterns the unit sold, how do you connect with some of these? We also saw people write about my passion, hair services, beauty services, where people were doing more or less of that, what they're willing to give up. And so part of it is the literal. Here's what it means. But the other part, which you know we all do, those of you who listen regularly, is we think about the context, not just this category in this place, at this retailer, but how shoppers are thinking more broadly about what we call their shopping life, and how that impacts the way they spend on your category, your store, your experiences. So a lot of that in this report, which is, which is really, I think, critical for everybody to think about so Rich, if there's one big aha here that our audience should be thinking about as we move into 2027 is there a big something that they should keep their eyes on?

Rich K 34:56

Yeah, I think the big aha is that there, I kind of alluded to it early that there is not a silver bullet. There's not something as quick and as easy as make this one change, and you have everything solved, right? It's not as simple as they're moving to store brands, boom. That's how the shopping habits have changed. Everything is kind of changing. What you need to figure out instead is realize that shoppers are just kind of doing the best they can to get by. And that psychological, that emotional aspect, is really what's driving them. They're trying to figure out what works best for them and their families. They're maintaining some sense of control and normalcy. So brands and retailers need to really kind of figure out strategies to get them the products they want, while hitting those emotional aspects as well, and sometimes that means helping them maximize product value by giving them different sizes. Sometimes, whether that's a bigger size or a smaller size, sometimes that's working to give coupons. People are couponing now all the time. People are looking waiting for their brand to go on sale all the time, so they can maximize that with while still having that sense of normalcy and control, to have your peanut butter or your makeup on your shelf and have it not go away, because there's an emotional aspect to that. There's something deep to that. So that would be, my advice, is that there's not some simple one size fits all for everyone, but what brands and retailers need to do is think about that emotional aspect, that sense of normalcy, that sense of control, and that sense of deeper connection that they build with their shoppers, and find ways to lean on that and help reinforce that while connecting with their shoppers.

Wendy L. 36:37

Yeah, I think that's really wise. And one last thing for all of those of you, because this is also the pitch. You know, you can actually buy this research. If you aren't, some of you are already subscribers. But for those of you who are not, click here sort of but the other piece to that is we built out a psychological framework. And you might all say, what does that do for us? But really, it's and Rich was quite prescriptive in it, in terms of, here are the six factors that really define how people deal with chaos in their broader world, and examples of how shoppers are dealing with that that comes out, or how it's reflected in shoppers behavior already, and it becomes quite a prescriptive approach to how you need to think about the way you accept. Your goods and services at what places as you as you move forward for 2026, 2027 and to tell you the truth beyond because, you know, while Gen Z and the millennials and even Gen A have seen enough Black Swans in their brief lives already, most of us all have learned to accommodate those and keep putting other tools in our pocket that we need, other levers in our pocket. So we built this framework out that I think you'll find really helpful. And I think the fundamental piece that we asked ourselves through all of this was, what's worth it now, when we talk about value, what's important to people now, as Rich says, it's not a one size fits all, it's not lowest prices, and so that's really important for you to understand. And of course, all the answers are in the new How America Shops® in Chaos study, right? Rich

Rich K 38:18

that's got everything you need.

Wendy L. 38:20

That's right, just call him. Just call him anyway. Well, it's lovely to have you here. Rich is now working on a new piece around the benchmarking, social shopping, and he's a bit of a, I don't think he's, he's an iconoclast in that. So, you know, we always like iconoclast. So there's some interesting learning in there, and then thinking separately about work around the implications of AI and what that really means, not just in the functional kind of things, but how that changes everything from pricing transparency to many other issues. So all of those things are to come as Rich finds his role, which he's done, very quickly and has an impact on particularly what next generations of shoppers will want, and when we ask about, how does America shop? So thank you Rich. Good to have you on future shop. See you in the future. Cheers for now. You.