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Podcast|May 14, 2020

ECRM Podcast with WSL: How Coronavirus Has Changed the Way Consumers Shop

The coronavirus pandemic has completely changed the way consumers shop. First of all, with a limited number of brick and mortar stores open and people concerned about social distancing, many have turned to ecommerce. On top of this, millions of people are now out of work, and finances are playing a major role in shopping decisions.

These are just two of the topics that ECRM's Joseph Tarnowski discusses with Wendy Liebmann, CEO & Chief Shopper of WSL Strategic Retail, which just fielded some new research on how the pandemic is impacting consumers’ shopping habits.

 

Transcription:

Joe Tarnowski  0:00  
Welcome podcast listeners, Joe Tarnowski with ecrm here, and I have a guest with me today who needs no introduction, but I'm going to introduce her anyway. It's Wendy Liebmann, the chief shopper and CEO of WSL. Strategic Retail. She's also the host of the Future Shop podcast. So make sure you check that out. And today we're going to review some recent data, they just fielded about how the coronavirus pandemic is impacting the way consumers shop. So, Wendy, thank you for joining us. How are you doing? Where you holed up?

Wendy  0:36  
I'm doing very well thank you. I think I'm going through the usual roller coaster that the rest of us are going through, we have jobs we're working, we're very lucky about that. You know, and it just makes you have to make sure you're not listening to too much of the news. Yes, that can really sink you in a big hurry. So I tried not to do too much of that and spend time virtually, with our team who are all being amazing, and really trying to kind of embrace the future, which is what we do. So I am holed up in the woods of New Jersey at the moment, which is I feel like I've deserted New York City. Sorry. Well, you know, that's only for the moment, we'll be back. 

Joe Tarnowski  1:18  
Well, nowadays, that's a really good thing to do is this. I mean, it's just, it's crazy here. There's just so many cases. And I think now New Yorkers are finally understanding the gravity of the situation people are staying in, you know, and so it's really, you know, change the way people are doing everything around here. The only bad thing is I'm seeing a lot of gloves that are just junked on the sidewalk everywhere.

Wendy  1:44  
It's interesting. We we only came out yesterday. And so absolutely, it was that combination of you know, the local area where I live, which is downtown, you know, being very empty, you know, people walking dogs, things like that way apart from each other. But gloves, your right gloves and no gloves everywhere, which is really stunning to me. So anyway, but you're right. I think people in the city have certainly or in the borough's and, and and the state, really starting to understand the seriousness of this, which is a little late excuse my whatever it is my political view, but a little late, but here we go. Let's see what we can do.

Joe Tarnowski  2:24  
It definitely is. So I guess To start off, for people who are not familiar with WSL, can you give a little overview of what you guys do? And then I'll talk a little bit about this research that you just feel?

Wendy  2:37  
Yes. So our focus is all around helping clients anticipate the future, interesting spot to be in, very much focused on building retail strategy grounded in shopper insights. So we spend all our time, as you will know, talking to shoppers, so my title CEO, and chief shopper is not because I shop a lot I do but it's my job. But also because we are continually talking to shoppers in the US and globally about what they're doing, how they live their lives, and how that impacts all the things they do when they whip out their wallet or their phone and buy things. So that work is you know, very timely at the moment. And we've just ramped up and refined the conversations we've been having, with shoppers, as I say around this country, but also with our teams globally and trying to understand what's going on with retail, what are retailers doing? How are they changing broadly around the world, not just in the US?

Joe Tarnowski  3:42  
And it definitely has changed? I mean, you talk a lot about the business of well, now wellness is on the front of everybody's mind these days.

Wendy  3:50  
right. Yeah, it's really interesting you say that. Yeah, because you're right we have in our how America shops research, which is the ongoing work we do in the US. As you know, we've been very passionate about this sort of subject of, of health and wellness for a long time, and studying it in depth for the last half a dozen years. And in that work, the grounding the mindset, which is now being ramped up because of this virus because of this pandemic and contagion. This was already there, you know this consciousness and I think that's the big learning we are already seeing a couple of months in is a lot of the things going to go nuts fundamentally drive the change coming out from the other end, where things are ready established in the shoppers mindset and psyche. So they are just now saying, okay, I was there but now I'm going to you know, adjust ramp it up some turn up the volume, all of those other attitudes.

Joe Tarnowski  4:51  
Yep, yep, definitely without a doubt. So tell us about this research. This is really, really new research that you just did, right? 

Wendy  4:58  
It is indeed, as I said before in our how America shops research, we are continually throughout the year talking to shoppers about issues that are emerging, not only in their, how they shop, but their life. So we talk about things like shopping life, how do people live their life? economic, political, social, technological things that impact their life? And how does that ultimately inform what they buy, where they buy it, and what's important to them. So obviously, what we did, we had been in the field early in the in the year to do some work. But we immediately fielded some new work around the country, talk to just over 1000 shoppers, men and women 18 Plus, at this point, major sort of spenders in the household. And we wanted to just we wanted to, even though it's early in the piece, we felt and we knew things were changing a lot, we felt it was really important now to benchmark how people were feeling. And fortunately, in a lot of the things we had in November, December, asked a lot of these questions not about the pandemic as such, but about economic security, about mindset around health and wellness. So we had a benchmark, at least from November to say, what's happened between November and March. So we fielded this work, that's pretty last weekend. And just so you know, and your listeners know, we're going to be doing this on a two week schedule. Because what we know is this will change fast. But also what we're doing is grounding. What we're hearing now in the context of what we know. And what's interesting about that is we did a report back in. So, you know, now I feel like there's a story in a crisis. You know, you think, wait a minute, this isn't the first crisis we've studied. So we've been doing a how America shops work for over 25 years, excuse me, you know, so I have medical stuff. So there, but part of that is we went back to what I'm going to call the crises in recent times. So what we've been doing to contextualize what's going on now is we went back to our work in 2001. So coming just before and just after September 11. We looked at 2008, the beginning of the of the global economic crisis, and the recession. Coming out of that 2012, I think it was maybe 10. And then, actually, there have been plenty of crises bubbling up in, you know, the last 16 17 18 to learn more political and social, but all of that. So we have started to go back and look at all that and say, Okay, what can we learn from that is totally different. So that's the long And long story of the context. The work we just did was we wanted to understand a few simple things really quickly, we wanted to understand how people were feeling about their finances. How are they feeling about the threat of this virus to their lives? Who was feeling most threatened? If not everyone, which we found it was not everyone so far. And then we wanted to look at who were shoppers feeling like they were they could trust in this? What were the areas that they were spending their money on? And what were any, what were the things they were at least this moment in time, already pining for? Now, it's quite early on that one. But we wanted to, again, as I say, sort of ground where we are today, because two weeks from now, and two weeks from then we will update all of that. So that's the, again, the long And long story of what we did and how we contextualize some of this so we could really look to the future.

Joe Tarnowski  8:59  
Well, it's really cool that you have all of those previous crises that you can benchmark against. So right, that's gonna be interesting. So So take us through some of your findings, you started off mentioning about, you know, the financial security. Right, right. What that means to shoppers.

Wendy  9:15  
Yeah, that's happened pretty quickly. Excuse me, while I'm looking at the report on on line here on my phone, actually, you know, I think the thing that's happened very fast, so is that between November when we did our last benchmarking of this before all this and the economy, the macro economic trends, at least was still very strong. And today, what we've seen is that 37% so nearly four out of 10 of the national population of shoppers are now saying they're pessimistic about the future and their expectations are that things will get worse. Now that is already up eight points. From November. So we begin to see that and I will tell you this that, at that, at this moment, this last couple of this last weekend, the realization of the seriousness of this was actually not were was not as high as we would have anticipated. So it's exactly what you were just saying about New York City. This recognition, all of a sudden, that it's New York, it's Louisiana, you know, Louisiana, or it's, you know, other other other cities and states around the country. So I would say that number that eight point increase in, sorry, I'm getting back to my table, that eight point increase in pessimism is pretty low. I suspect that will increase significantly in the next period of time. The other number we saw was that about a similar number in 2000, no, in in, sorry, in November of 2019 44%, of people felt financially secure, and content, that numbers drop seven points. And of course, it's obvious in the sense of who, because it's, you know, lower income is one area, but the real difference in all of these metrics, both in feeling financially secure and being concerned about the virus, are really heightened with families with kids. Yep. So families with kids are the ones who are most concerned about their financial situation, and also most concerned about the health situation. So I think that's one of the things that popped very quickly, it wasn't older versus younger, necessarily, it wasn't men versus women, it was families with kids who are most concerned, right, you know, at this early point in time about what's going on.

Joe Tarnowski  11:57  
And especially with the you know, they just reported what 3.2 million people are applying for unemployment insurance, right. So and that was just yesterday. So those numbers are going to drop, and, and then with a family with kids, right? I mean, because now you're not just concerned about catching it yourself, right? One is a concern about catching the virus yourself, and not being able to provide if you're working, but then also you don't want to bring it home, that's right for your family to and now that we know that your kids can get a two, right, even though it may not be as much, but they can still get it. So that's going to be a big thing.

Wendy  12:32  
I think the other piece to it all too is of course, it's and I see it in our own team, our own, you know, my own colleagues is that, you know, families with kids, and now under so much pressure, because now the kids are home. If they're if they're fortunate, if both parents are fortunate enough to be working, that was often necessity, but both working. Now you've got parents working at home, you've got kids working kids at home and home schooling of some degree. And then potentially, if you had some help to take care of the kids, that could be gone, you know, don't want them to come into the house. Yeah. 

we've seen that internally with our own team, where they've juggling all that. And you know, you see it, it's the one of our clients said to me yesterday about, he was on a board meeting conference call, and he said, you know, you now an industry board and he said to me, you now get to see the humanity of the people on the board. Why is that? Well, because the kids are screaming, the dogs are barking, you know, the, I don't know, the whatever's going on what's for dinner, you know, I can't you know, all of that. So the pressure of that is really coming to bear, especially on people with families. So if you think about it, there are so many the illness issues, the financial issues, just the lifestyle issues, that are putting tremendous pressure on those really key shoppers, when you think about them, who are the people who need to buy the things most people sell with a lot of regularity. And that's, that's, you know, you can sort of see here on fire emojis coming out when you talk to people with kids at home.

Joe Tarnowski  14:12  
And it's interesting, you mentioned that the whole situation with the kids at home because Sure, we need the essentials, right? We need the toilet paper, we need the hand sanitizer, we need the food. But I think what you know, is also needed are these things that keep the kids occupied, right? You know, hobbies, puzzles, whatever is going to keep them out of your hair, you know, you're home with them for so many hours that I think anything that can help distract them is also going to be needed. 

Wendy  14:42  
Yeah, I've noticed that retailers like Michaels have been sending out you know, click and collect or you know, come and get a crafting you know, box of crafting things come and get a box of school supplies because obviously kids you know, trying to do the school work theoretically and even some of the kids companies talking about you know, how do you help kids, you know, get exercise and not just, you try to keep them away from the computer and games at home. So how do you do that? Now they're home all the time. So it is there's both opportunity but but tremendous challenge in all of that. And I don't get that. I don't get the toilet paper thing, but you'll explain it.

Joe Tarnowski  15:21  
Yeah, I have no clue. 

Wendy  15:23  
I cannot explain that.

Joe Tarnowski  15:26  
So, the homeschoolers, they're the ones that kind of have it, you know, they're prepared for this already, because they've already been doing that.

Wendy  15:33  
Yeah.

Joe Tarnowski  15:36  
I don't know if you have any of them on your panel. But I'd be interested to know what, how they've adjusted compared to everybody who's having their kids home all the time for the first time.

Wendy  15:47  
Yes, well, that's exactly right. And partners and spouses and dogs and cats, and all of that. And that's the other trend, right pets, that we'll talk about that later. Anyway. So that's the first sort of big headline from this work, you know, I will tell you that in the concerns about catching the virus, so again, last weekend, 48% said that we're very worried. But 52% were not so moderately or not worried at all. And, you know, obviously, at that point, older, were more worried than younger, because that was all the media discussion and the, and the medical discussion. But as you noted, you know, now we are understanding that it's, we're probably all going to catch it at some point. Sorry, I don't mean to be the CDC. But the question is how we survive it. Really?

Joe Tarnowski  16:40  
Yeah. And I was a little I'm to blame myself, you know, two weeks ago, I was still going out with friends. I was thinking, you know, what, I eat well, I try to take, you know, I work out every day, you know, I haven't gotten sick in six years. Right? So I'm thinking, Well, you know, what, it's, you know, but now, it's a little different. Two reasons. One, you know, I really don't want to catch it at this point. Because, you know, if I caught it two weeks ago, there's room in hospitals today. But if you catch it now, and it kind of takes effect in five days, what's the hospital situation gonna be like? Yeah, so now I'm extra careful, just because it's a horrible time to get it.

Wendy  17:24  
Right. Right. And also, I think, you know, this, these are the emotional issues that everybody's facing the other pieces. And it's not just you getting it, if you're young and fit and healthy as you are, then the other part is who you infecting, you know, and it's unseen. So we don't know who we're infecting or being infected by. So I think there's that consciousness, it's beginning to emerge with people, much heightened with people with families, because they see the impact with kids rather, and the other but the other is, it's emerging faster and faster. So, you know, we always talk about in a time of chaos, how does shoppers wrest control back? In fact, if you look at our website, and I know you're a great follower, that's been our theme for the last two years, I said, you know, new crisis, right, and the whole crisis? So that's the toilet paper issue, you know, how do I Oh, my God, what can I control? Oh, heavens, you know, I'll buy more toilet paper. But those kinds of things that are really key emotional levers that people are having to deal with in this, this, this roller coaster. The other thing we're seeing which, and you and I've talked about this before, I think, you know, one of the measures that we look at sort of a KPI about retailers is not the typical or not the typical measures, we we often talk about, how do I think, as a shopper, a retailer or even a brand is cares about me. And that's especially true. So we call that caring index. And it's especially true in categories like health. But in general terms, we see that as a really important measure of loyalty of trust all of those things in good times or bad times. And so one of the things that we wanted to do here because we've we continue to do our caring scores for retailers, is we wanted to see who shoppers who Americans felt were caring for them now. And where that was obvious, and it's, it is interesting. We sort of did it in a couple of different buckets. But, you know, the, the, if I look at the general who's caring for me, the highest ratings go to not surprisingly doctors, public service workers, urgent care clinics, neighbors and friends and my employers, because this is a moment when you know, people are really looking to their employers, to support them, help them through this particularly as they've got jobs, but even if they haven't So, and the local pharmacist, so they all sort of come in The 50 percentile up to 60% top, governments fall down into the 40s. Who else? Let me just see if I could read this. Oh, Internet companies down in the 30s. You know, if our Wi Fi isn't working, we really hate them. Right. But then we went to looked at the retailer piece, the retailer segment, and perhaps not surprisingly, the top rated supermarkets and drugstores, supermarkets 48% of people say they, you know, care a lot that my supermarket cares a lot for me. 46% of drugstores say my drugstore cares a lot for me. And another 44% say they you know, they moderately care for me. Mass merchandisers come next about 39%. A website of brick retailers. So walmart.com, you know, fill in the blanks, target.com costco.com 34% and then internet pure play a little, it's about the same number about 33%. So what you start to see is that the physical retailers, and in the categories where people really feel the need to buy the essentials, groceries, health care products are at the top of the list. And that website, the web, shopping online, which obviously has had a huge surge, which we've seen fall down about six to seven points below that. But but certainly are in the running, but still not as high as a physical store, which is interesting. Yeah.

Unknown Speaker  21:43  
And you could see just, you know, the way, especially the grocery stores have really stepped up. Yeah. And they're really I mean, yes, sure there's out of stocks, but they're doing everything they can to replenish them. Yes, I've talked to some our buyers that, you know, they're working 20 hour days, they're, you know, in the stores in the warehouses, even if they're not in the food categories, or the essentials categories, they're pitching in that they got the SR hours, you know, so they've just done amazing, an amazing job of stepping up. So I can definitely see that. It wasn't seeing the e commerce because I know you have done some research on the online shop, I was interesting how the e commerce was a lower score.

Wendy  22:24  
Yeah, and I think it's interesting because think about the two categories that people are now really focused on buying groceries and health care products. And both of those categories have been fairly low. In the adoption in shoppers adopting those categories to buy online, as much as the discussion around Amazon Fresh or Walmart, and grocery. The majority of Americans are still buying those categories health and grocery products in store. So when I'm thinking about the essentials I need today, what we're seeing is shoppers going back to the places they used to buying them and those physical retailers certainly stepping up, as you said, in really significant ways, people appreciating that. But where we are seeing the online piece shift up is the number of people who are obviously buying online, buying those categories online or buying them for the very first time. So people who've never who bought other things online, you know, everything from sort of music, to clothes to kids stuff to furniture, who have never bought everyday essentials online, and now buying them for the first time. And one of the things we know from that is that once that begins, that doesn't go away.

Joe Tarnowski  23:47  
Yep. 

Wendy  23:47  
Yeah, we saw that after the recession. Somebody said to me the other day, one of our retail clients said to me the other day, well, this is different, because, you know, 2008 people weren't shopping online, you know, at all very much. And we went back and said, No, no, no, that's wrong. Actually, people were, this is when, you know, we started to see the really big increase of shopping online. But it was the sort of what I call the second wave. The first wave was, you know, with the growth of the Internet, and people buying books and doing travel and things like that. The second way was 2008, when people started looking for the lowest price, because they were coming in and out of you know, into the depths of the recession. So they started to go online looking for the best price they can get and it was very discount driven. That was the next big lift and we saw categories like beauty and you know, personal care appliances and other categories, pet supplies start to move up. This one here we are, let's say decade 12 years later. And now we're going to see those categories which didn't had not yet moved online in significant ways. Really move up and that is food, groceries, related. We're seeing things like beer, you know, alcohol with just everybody's pleased when, when is the afternoon cocktail? Could it be 1030 in the morning, most of the things, but also healthcare products, OTC is the sort of acute remedies that people, you know, just ran to the store to get because they had a headache or allergies or something. Now, all of a sudden, that's gonna start to move up the ladder online as well. So that's this next big shift. And that is you we can, I can comfortably say that is not going to go away.

Joe Tarnowski  25:29  
So once this is all done, and we're past this, though, shoppers are going to continue online. So it's important for these retailers to make sure that they're continuing to up their game.

Wendy  25:40  
And yes, and I think the big issue to that at the moment is the fact that some of the traditional grocery retailers and the drugstore retailers have actually been not that great at doing online, providing online access. They've all been doing it. But for the most part, because of their convenience, people have not either wanted it or the service level has not been so amazing. So you know, that's been an issue. And so the key here now is how quickly can they ramp that up, because that's all other kettle of fish, right? You know, terms of logistics distribution. So that's a big issue now, and not to disappoint the shopper now, when they really, really need this will be a big issue, because then people will immediately go back to the Amazons of the world, Walmart target.com, who've been investing a lot. But for more the traditional grocery and drugstore retailers, the big, even the big chains, that's been that's not been really something that they invested in to the same degree because they didn't feel they needed to. Now they need to if they want to be part of this next revolution.

Joe Tarnowski  26:59  
Yep, yep. And speaking of the next revolution, now, you know, what can companies do now to kind of address these consumers moving forward? What's the best way to you know, stick through this, but then also prepare for these changes that are going to be happening?

Wendy  27:20  
Yeah, you know, tenuous, sort of soft and gooey emotional thing, which I think is really important. It's a resonance we saw out of 2008 have seen over this last couple of years, one of the one key thing is, are you emotionally connected with them? Which means have I showed them in these really difficult times that I care about them? Because people shoppers have long memories, as you know, and particularly in times of crisis, we care a shoppers about how do you treat your employees? And how do you treat me. And I think one of the things that is really important, and then I mean, you see retailers like Costco, who have always stood out in their, the way they treat their employees with, you know, salaries and health care and other benefits. It's always viewed as the kind of place I want to shop because they're good to their people. And they good to me, it's not just about the prices. So this is a moment where the first thing in it's how am I treating my people? How am I treating my staff? How am I whether I have to lay people off or not, which will happen? But how am I as a partner in crisis in with my own people? And then how am I as a partner in crisis with the people who are expected to spend money with me? And so that's, that's an underpinning of all this. So what I'm really what we're really going to be looking at as we move through this is, what are the caring scores look like? You know, how do they care? We've done a lot of benchmarking of that over time. So we're going to be able to see what the levers are to drive those caring scores. And I will tell you, the opportunity is tremendous, because, as you I think know from discussions with us earlier, one of the things we have seen when we asked more specific questions about how to which retailers show they care about my health and wellness, more, most of the major retailers in this country fell below the 50% 50% top. The top ones were interestingly Costco and Aldi because they were seen as people that delivered on everything from convenience to value to you know, nice people take care of me healthier options, all of those sorts of things. treat their people well treat me well, all of those things. So but the drugstores the big boxes were, you know, mass merchandisers were way down in the 30% . So there is lots of room to improve that. So that's why the thing do you care for me? The other is this whole drive around recognition as to as you started this about being well, and that was something that was increasingly ingrained in this national population, not just you know, those of us who stand on their right foot and pretend to do yoga. That was something that we were seeing growing populations across ages, incomes, ethnicities, gender, talking about as this sort of fundamental desire to be healthier to feel good about myself and my community. And so that's the next big thing in all of this, it is, what am I doing to whether it's healthier options, whether it's less stressful shopping experiences, whether it's easier information, whether it's nicer people, all of those things within the context of what a retailer or a brand can deliver, become really important now, because that's going to be a big priority for shoppers moving forward, how do I take care of my own health and wellness. And we've seen that in categories, you know, we've seen that in everything from, you know, from, as I said, pets, you know, because that's all about health and wellness, the emotional, you know, connection to something, but, but also immune systems. You know, it's vitamins, nutritionals, healthier food, all of those. So that's the, the next big, the next big thing that we can pretty much guarantee is going to continue, it was foundational. This sort of tearing as I think we're going to see this next wave of, first of all, I panicked. Or, first of all, I didn't panic, then I panicked, then I bought up all the toilet paper in the world, and canned whatever, and pasta sauce, and then all of a sudden, I realized things like, and I'm the voice of the shop, but also myself, then all of a sudden you say to yourself, oh my god, When was I lost at the headrail? Sorry, I shouldn't say that. Oh, my heavens, When was I lost at the hairdresser? Ah, what will my hair look like? Hello, my natural, gorgeous red color. Wow, when are the roots going to start showing? And what do I need to do about that? Somebody said to me yesterday, oh, what about waxing, I said we're long pants, don't worry. You know, things like this, where all of a sudden, the the the heightened emotion of the every day and lifesaving slow down slows down a little. And now we start to think about the maybe more amusing, but equally as important things around lifestyle issues. And then I think the other thing we're going to see and we're going to start to see this in the next couple of weeks, once people are really inside, really inside. So the stock up we've seen and the extraordinary sales we're seeing in certain categories, when they start to plateau, because now people have them, and now they're staying in. That will we're going to see that slowed down too. So it's going to be this continuing roller coaster of moments in time where we feel like we have a little control as shoppers and then we realize we don't again, and it's sort of the this is the best of times, it was the best of times it was the worst of times, Charles Dickens. Thank you. But we're going to see that too moving forward. 

Joe Tarnowski  33:19  
Excellent. Well, you know what, I definitely, we definitely should do a follow up to this maybe in two weeks or a month down the road to see how this all plays out? And when is this research going to be published? And where can they find it.

Wendy  33:31  
So they're going to be able to access it through our website, www. w WSL. Strategic retail.com sorry, it's so long. We'll be talking about doing our Future Shop podcast more and more. So they'll access that we're also going to be doing the seems to be bigger webinar and streaming of the research as well. So people will access there, and then we'll be updating it, it'll be sort of a constant flow, more focused on what's the context? What does it mean now? And really, what does it mean for the future? Because that's the work we do you know, and to helping people anticipated in practical ways.

Joe Tarnowski  34:12  
Excellent. Well, we will share that information and keep everybody up to date on it. And I look forward to being able to actually see you again in person in your offices one of these days.

 

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