In this episode:
Wendy Liebmann talks with Paco Underhill, founder of Envirosell, author of Why We Buy, What Women Want, and his newly published How We Eat, about the changing world of food and drink, and the impact on grocery retail in the US.
- The social, political, economic, and technological developments impacting food consumption and food retail
- That increasingly knowledgeable and digitally engaged shoppers are on a mission to become happier and healthier, and are now demanding accountability from brands and retailers
- That cutting edge grocery retail left the US 40 years ago, and that innovation is coming from Brazil, Mexico, China, and other areas around the world
- How technology is enabling retail to get smaller, more local, more diverse
- How Aldi, Lidl and Trader Joe’s have built extraordinary levels of shopper trust with their curated, easy to shop concepts
- The digital home and digital kitchen, and how they are transforming the way we buy and the future impact of the hybrid world between the physical and digital shopping
Don’t miss upcoming episodes, stay up-to-date by visiting the WSL Shopper Insights Library, or our Podcast page.
Hello, everyone. I’m Wendy Liebmann, the CEO and chief shopper at WSL Strategic Retail, and this is Future Shop. This is where I talk to innovators and disruptors about the future of retail. Today, I have just one of those in my mind’s eye, I’m joined by Paco Underhill. He is the founder of Envirosell, the global research and consulting company that has worked across the globe for over three decades studying “Why We Buy”, actually the name of his first ground breaking book as it happens. The last time Paco joined me here several months ago, we talked about the need for retailers to wake up, not use the pandemic as an excuse and get a move on to innovate. Today, we’re actually going to talk about his brand new book, hot off the presses called “How We Eat. The Brave New World of Food and Drink”. Paco. Welcome. I’m so delighted to have you back. And congratulations.
Thank you, Wendy, I am always happy to be in your company. And I’m sorry, it’s not in real life. It’s a virtual but still
getting closer right? Soon soon. It’s always struck me that in our combined work, both WSL and Envirosell, we continuously study the social, political, economic, and technological issues impacting retail around the world. And we do it through the lens of shoppers, as you have always done and as much so much you’ve taught me. And you said in the early part of your new book, that food plays into all of those battles, all of those areas. And you also talked about we are at this moment, this inflection point, at the best of times, and the worst of times, thank you, Charles Dickens. So I’m wondering, what is this inflection point? And with your macro view of the world of food and food retail, and restaurants and everything to do with food, why now why did you decide to write this book at this moment?
When do you because everybody eats and drinks, okay. And having reached age 70 I and having stepped back as CEO of Envirosell, I wanted to write a positive book about how I might be able to change people’s prescriptions in the sense of how they understand the food chain, how they understand the supply chain, and how through that change in their prescription, they can be healthier themselves, and help us get to a healthier planet. And I think that value is something that I was very careful, I think to build into almost every chapter of that book,
it is quite an uplifting book. And I use quite in a positive way in the sense that you’re addressing really critical issues that we face around the world in terms of the price of food and the culture of food, the influences of food. And it always has, however, your humor and your thinking and your encouragement. So to me, You succeeded in what you set out to do. I haven’t thought about it in that context, because there are so many huge issues around food and health and affordability and many other aspects, right?
So Wendy, do you know that I took my own advice. And over the course of writing this book, I lost 25 pounds, my blood sugar was down, my pulse rate is down. My doctors couldn’t be happier that I’ve, I’m now in that 94th percentile of my age, okay. And if I can do it, the rest of the world can do it too.
It’s interesting you say that because several months ago, I had Colleen Lindholz on this program. And she is the president of Kroger, their health division. And she is passionate about food as medicine. And that’s such an important platform for her. So how do you see that as we look at the businesses we do business with when they think about food and the role of food in the world.
Okay, I’m going to go back to the start of your comment there where somebody believes food is medicine. Wendy? I think the world of healing divides into witches and wizards, okay? Wizards tend to be guys and they tend to treat illness with drugs or potions, whereas women are the witches and hopefully they are treating with knowledge and behavior changes and I passionately believe in witches. I believe in witches. The degree to which we understand both what is the immediate issue and what is the consequence of the things that we consume, and how we consume and that by just being a little more careful, or little more knowledgeable, it isn’t about spending more money. It’s not even about spending more time, it may even be about spending less time. But it is a way to get happier and healthier.
So what did you learn in writing this book that you didn’t know beforehand, when it came to thinking about food as health, food as wellness, food is time saving
Part of what I found very encouraging. Wendy is going to the farmers markets, and talking to the farmers. And that if you think of it, one of the things about the 1950s is that they told us that the family farm was dead. And part of what I have found is that courtesy of technology where technology in the 20th century, let us get bigger, technology in the 21st century is actually letting us get smaller, and that you can go up to the Hudson Valley and find a small family farm where they have greenhouses, they have solar panels to generate power. And they found ways to go direct to the consumer without going through a wholesaler. It is a viable business that throws off a modest six figures. And I think that’s very encouraging that the meeting of technology and local is something that we are just exploring now, are we just putting the constituent pieces together,
I was reading an article in The New York Times last week about a actually a black farmer, a black cattle rancher who was struggling, he’d had his own farm and had been in his family for many years in Texas, he saw the benefits of what you’re talking about. And yet he was struggling because of the cost of doing business, the cost of production, and then the amount of money he was getting in order to sell competitively to various and sundry big retailers. How do you put those two together at this time?
Well, part of what we are looking at is, first of all, for that small family farmer to find at least some way to get directly to the consumer, rather than to sell to wholesaler, okay, and whether it’s, I set the stand up at the end of my driveway, whether it’s some form of seasonal plan, but that is very, very helpful. On the other hand, Wendy, if you go to a Japanese supermarket, and you go to the produce section, they’ll often have pictures of the farmer, and pictures of the land, that what you’re buying was grown on, meaning that they recognize that getting local here is something that resonates, we have up here in Connecticut, an Indian farmers market, which is probably one of the most sophisticated little supermarkets I’ve ever seen, because it isn’t meant for, it’s meant for an up market Indian population. And they have found that they can grow Indian vegetables and fruits in the greenhouses of Connecticut, and you walk in that produce section. And I’ll bet a typical American would recognize less than half of what’s there. These are some of the things that are just going on here is that the nature of us as consumers, do you know that the typical American of the 1970s ate less than 25 things over the course of a year, less than 25 things. Whereas the French Farmer of the late 19th century ate more than 70 things. And that was again based on season based on storage issues. But one of the things that I find exciting now is that the concept of the Korean taco. I was in the East Village a couple of weeks ago, and there was a Korean corndog store, this sort of melding of our shrinking, shrinking world. And the fact that Go-Chu-Jang, that sweet, Turkish hot sauce just goes well with just about everything.
So you’re can tell in your voice, but also looking at you your excitement about this, how do you translate this across a country of this size? And how do we think about that when we walk down these supermarket aisles, which many of us do, or click on to Amazon or Fresh Direct or whatever? How do we think about integrating or re assessing the way we eat within the context of localization and diversity? How do we think about that moving forward?
Well, some of it is just a matter of knowledge. I mean, one of the things for example, that the book talks about is slotting fees that what gets on what shelf has nothing to do with you and has everything to do with what the manufacturer is willing to pay the merchant for. So that the idea, for example of looking up or looking down, I think is one very important thing for a consumer to understand. Second is, if I walk into my Stop & Shop here in Madison, Connecticut, do you know where the freshest blueberries are? In the freezer section, because they were picked, and they were frozen within a day or two. Whereas those blueberries that are sitting in the produce section came from Peru, and have been on the road for at least a week, if not 10 days, from the time that they were picked to the time that I might chew on them as I take them home. This kind of just understanding of how something works, is one of the ways I think we can get smarter. I’m also adamant that it is time for a consumer revolution. And for us to demand some accountability. And the degree to which, for example, what is the line of demarcation between sugary cereal and candy? And if a cereal has more than a certain percentage of sugar in it, should it really be on the cereal aisle? Or should it be on the candy aisle? I think we could go through a supermarket as consumers tomorrow, and be able to ask for things that would be completely fair. And we’d be better off for it. And I think the supermarket industry has to start listening better.
I noticed, you know in some of our recent How America Shops® research that we’re hearing this sort of call from consumers or shoppers, to say, you know, it’s not enough for you to just put more and more on the shelf, I want to know where it comes from, how it got here. I also want to know if you’re fair to your employees, I want to know where it’s going after I’m finished with it or if I don’t buy it. And so those demands that you’re raising there are things that we are already hearing in quite significant numbers.
Well, when did this part of what the impact of screens are, and that if you think of it, the retail strategy of the 20, 20th century doesn’t work anymore. And just as we connect with each other over our phones over social media, that there’s a certain knowledge base out there that is confronting the world of big business and going, “Why do you call it a cranberry juice cocktail, if there’s less than 5% Cranberry juice in it? Shouldn’t that be against the law”
and even if it isn’t against the law, now the shopper the buyer is aware, buyer beware, if it’s important to them to read the labels to do their homework before they come. We had a conversation recently internally in our office about so many of the new flavored whether it was sparkling waters or flavored drinks that actually had an alcohol content to them. And if you weren’t careful, they were in the fridge you open the door little kids in the you know opens the door, take something which you then discover actually has a fairly high alcohol content, the hard soft drinks, if you will. So I think much of what you’re saying they really does fall on the shopper to pay attention.
I think also just in that in that will drink here that the finally somebody is designing a canned beverage with the female consumer in mind. And that hard seltzer, the original target market was you know, working women in their 20s. And it is one of the hot little categories. Now, I have to be very careful in my house with teenagers in it, that it stays on a different shelf.
So when I think about that, the other thing that just struck me when we were talking about this is now we’re into the weeds in the category. But you know this ability to think about choice, a lot of choice and not so much choice, you know, scarcity, food deserts on the one hand, and on the other. We’ve got your walk along these supermarket aisles and you’ve got so much choice in terms of whether it’s flavored water, whether it’s yogurt, all of these categories, olive oil in my supermarket, there’s more olive oil and you can shake a stick at, that sort of issue when you think about the supermarket of the future, how we eat needs to inform our lives. How do you think about that in terms of that amount of choice?
Okay, Wendy, if you think of the hottest grocery chains in Europe, Aldi, Lidl, and Trader Joe’s which have shrunk their format. The buyer has learned to trust the store to curate its selection. There are people that won’t move to a house that isn’t within 10 miles of a Trader Joe’s, I think that virtually every big box chain that I have worked globally, is looking to shrink its format that with better supply chain management issues, I don’t have to put the inventory on the shelf. And therefore, the store can shrink by 30 to 40% and still stocked the same number of basic SKUs. But Wendy, let’s remember something else is that once we reach age 40, roughly 80% of our weekly purchases aren’t the same thing. We’ve decided on the kind of dog food, the kind of laundry soap, the fact that I like the peel carrots rather than the raw. I mean, all of these things are such that that dynamic of how do we go and pick out the things that we want to pick out, and yet have the rest of it ready to go in the back of our cars. And by the same token too is that we live in a world that was designed in the 1950s, where packages screamed at us from the shelf. And yet both you and I know as shopper researchers that there are people who have walked down an aisle and they’re not looking for a box that screams at them. They’re looking for what they’re looking for. And if we’ve made the decision, couldn’t we get it in another form? Couldn’t we get it in a more ecological pack? Can we take one use plastic or even one use cardboard and do something else with it? I was really thrilled to talk to a British package designer who said that he could now make a box out of birdseed, and that you would finish whatever it was in the box and you take it outside and you’d feed it to the sparrows outside. That’s a different type of not recycling but repurposing.
I think about that, too, in the context of I know ASDA in the UK we looked at as they’ve been testing a much more aggressively sustainable store format, with many refill options, everything from, you know, liquid detergent, to cereal, to soda to all of those things, on the one hand lack of necessity to have all this packaging that we spent our lives unpacking or creating. And that has an impact on the shelf as well, right? What will our shelves look like not just the slotting fees, but what will our shelves look like?
Wendy, if you have decided that you know Tide Ultra is your laundry soap, wouldn’t it be nice if rather than get it in that plastic thing that screams at you from the shelf, it came in a recyclable plastic bag that you could fit into a container in your laundry room, and that you could buy it by prescription at a 30% discount, because it didn’t have to have the packaging didn’t have to get to market the same way it did, because you’ve made your commitment to it.
So hold that thought. Before I continue my chat with Paco. Just a reminder, as always, you can access our shopper and retail research and examples of retail innovation from around the world on our website WSLstrategicretail.com. You can sign up for our latest trend reports on food innovation, health and wellness, shifting shopper landscape, and many other things. So click on. Join us. Now let’s get back to my conversation with Paco. So in that vein, your point of about supermarkets being designed and packaging being designed pretty much in the 50s and 60s, and it’s the way we still live with it today. If you envision if you close your eyes and walk down, I don’t even know if it’s a real aisle or a virtual aisle or something. What does this look like?
Wendy, let’s understand something that the cutting edge of grocery left North America 40 years ago, and I don’t have to close my eyes. I can go to Mexico City, I can go to Bogota. I can go to Shanghai and I can see the future right there. This is one of the ironies about American food culture is that you can ask a Kroger executive when was the last time you saw the new Soriano’s store in Mexico City, which is where they figured out ways of adjusting labor costs by making shelving transportable by forklift trucks. So you can literally go in pick up a shelf, move it a team restocks it, it goes back on the shelf. I mean, these are all things that people are doing in other parts of the world. You go to a supermarket in Stockholm, you know you pick up a cart, you pick up a scanner, you put your kid in the cart, you put your bags in the cart, and that as you scan things going through the store, it not only scans the item, it gets the price but it also gets the weight because as you’re about to start shopping, you have moved your cart on a scale. And therefore, when it comes time to check out, you put the cart on a scale, if it tallies up correctly here, in terms of the weight, what you started with and what you’re finishing with, you’re free to leave. I mean, this isn’t brand new. And yet, I can talk to some of my Walmart colleagues who have never seen that before I was at a Pander asuka that we worked on in Brazil. And they threw away the 90 degree angle. It wasn’t as if they laid out the store to look good in terms of boxes on paper. But with a 45-degree angle, it was 30% less product. But the consumers perception was that the store was even better stocked than the 90-degree angles. I mean, these are things that are we have examples of across the planet, you
started this off talking about this very positive message in the book. And I think that’s what’s so encouraging about it. And I think to myself here, as I watched in my local weekend supermarket, now owned by a big national chain, and they are being asked to remerchandise the entire store, right, because they didn’t have enough of the flavored waters. And they had too many of the olive oils. And I looked at and I thought this is all manual labor. And I thought, Oh my heavens, this feels like we are in the dark ages of food and food accessibility and of creating a wonderful food experience for people. What is it that is not enabling us in this country to create a modern grocery environment?
We’ve seen in other parts of the world, there are merchant empires, or retail groceries that have opened up stores whose purpose is to educate and to in trance. And it’s not something that you’re going to visit every other day. But it is something that maybe you visit four times a year. And some of what you get there is you know, how do I peel a butternut squash? How do I use a slow cooker in a different way than I’m used to? Because part of what we’re wrestling with is that we as food consumers here are picking up so much of that knowledge ad hoc. Does anybody still have cooking classes at your local high school? The answer is no. They don’t exist anymore. Where do we pick up that knowledge?
When you talk in the book and you have a fascinating conversation with two influencers? Is that where we’ve transformed to we’ve gone from my home economics class, it’s sitting at my mother’s knee and stirring the cake mix. And is that what’s happened we found our chefs, we found our chefs digitally we now can engage with very well known people or people who look like us who are just handy at making some great cake.
Well, I’m part of what is fun is that you can go to from LinkedIn, to Facebook to Instagram. And there are little foodie segments in there, which are often short. They’re often designed to be entertaining. I wonder, is anybody looking at a cookbook anymore?
Well, I think they do. But I think sometimes it’s online. Sometimes it’s just to look just like a picture book. You look at all these beautiful recipes and beautifully styled meals, right?
Well, I think that cookbook is sort of gotten more recreational is what I’d call it so that it is more than romance literature. It is escapist here.
Well speaking of that, because I think about the role of food, and the marketplace and the communities around which food and memories and occasions were built. I think about during the pandemic, the relationship I had with my local grocer was extraordinary, because that was the one place I went, I couldn’t get things online. So I went to my local grocer. And that’s where I had a relationship. And that relationship has stayed. As I’ve talked to the woman in the flower department or the man in the fish department. How do we balance that within the context of these hundreds of 1000s of supermarkets and grocery stores that we have?
Well, I mean, you’re talking about the Brooklyn market in our neighborhood, which is an urban supermarket. There are a number of things that sort of separate it from your classic Kroger. But let’s remember that the grocery store that most of us experience was invented in the 1930s. And it was invented as a way of on the one hand saving labour costs, because it was about being self served. And the irony being here is that the design of that super supermarket in the 1930s hasn’t changed much. It’s now 90 years later.
I would say that for a lot of retail actually the drugstore, the department store, that retail at large certainly in this country feels like I just arrived here 40 years ago.
Well, I have a line that I use, which is that historically retailers about birth, life, death and compost. And one of the problems that we have had, as retail has gotten bigger is that the distance between the front door and the decision maker has gotten more and more. One of the mantras that I am using with merchant empires is that at least one weekend a month, every senior executive needs to spend one weekend a month on the floor of the store, doing something and whether it’s being there helping somebody restock, whether it’s looking, running a register, but that’s about thinking standing up.
The other thing I think he brought up Aldi and Lidl and Trader Joe’s and I look at in this country in many countries, you know, the way that sort of stealth like amazing, gross, and the extraordinary ability, they have had to continue to refine their offer, improve their mix in terms of organic food, fresh food, little surprises, messaging, those small formats are extraordinary. And in some ways, they’ve redefined the space of grocery.
And part of what they’ve done is to generate a level of loyalty from the customer that you just don’t find at a Kroger, Walmart, you know, Stop & Shop. Some of it, I think, is also that the store manager has some discretion, and that the role of the buyer, the manager in terms of being able to do the tuning, to be able to say that if you have an Aldi in El Paso, and you have an Aldi in Austin, they may be both in the great state of Texas. But there are some very predictable differences about who was walking in the door and what’s their knowledge base. I also think that Aldi and Lidl and Trader Joe’s have tapped into that, I would say educated high school English teacher, and that is somebody who has a modest income, but it’s coming in with a certain degree of knowledge from you know, Two Buck Chuck to why I’d ever I’m part of what we’ve discovered, is that I can live very, very well and not have to spend the same kind of money that I was spending. One of the things that makes an enormous amount of sense, is recognizing that with the digital home, and the digital kitchen, that we are on the cusp of having our own personal shopper in our own home. And this isn’t Alexa turn on the Beatles. This is your kitchen going, Wendy, we have only a day supply of milk, and the laundry in the laundry soap is getting down, can I place an order. And I think that this combination of the digital home, and the fact that people are multitasking, and that there are things that I want to pick out. And they’re things I’m perfectly happy when somebody else does. And that hybrid world between the physical and digital space should be exciting. You walk into a super supermarket now, and 40% of people have the phone in their hands. We also know that the number of clueless shoppers has gone up during the pandemic. And that is because mom is at home working. She’s often increasingly the dominant bread earner. She’s taking care of the kids. And she sent her husband off to the store. And the stores are talking about clueless guys here who are often asking clueless questions or on their phones going, what’s the difference between blah, blah, blah, blah, blah. I think this is one of the realities here is that retail is a reflection of the changes in us. And that what made a good store in 1950, much less 2010. And what makes a good environment today are a reflection of the evolution of us. And we can’t see that bricks and mortar can’t see the phone as a hostile. They have to see it as how can I make it work for me better?
Yeah, and I think what’s interesting about that, too, is that knowledge whether even for people who may be able to afford more may be able to afford to go to Whole Foods, saying if I’m smart enough, I don’t need to go there. I can feel very comfortable walking into an Aldi walking into a Trader Joe’s I don’t want to spend the amount of time it’s faster to shop. I trust them. There’s always a little surprise and why do I have to spend the money if I don’t need to spend the money?
You know, Wendy, one of the things for retail veterans like us is that we can look at the late 1980s, early 1990s when Walmart, Target won victories because nobody was ashamed to be caught in the parking lot that it was seen. Not as “Oh, I’m uncompromising, but I’m smart.” I’m saving not only mad saving time, but I’m money. But it’s also the explosive growth of the house brands that have gone from, you know, being in that white box where there’s a certain shame pushing it up. To many of us, it is anything that Costco makes in the Kirkland brand, that’s the one that I’m buying here. And I’m assured of quality, I’m assured price and, you know, screw you for the rest of the world
You just brought to mind I’m thinking also about the role of food within helping communities I think about the chefs who are becoming very engaged socially, people like Jose Andreas and his World Food Kitchen, I think about Rene Redzepi out of Noma from Copenhagen and all the work he’s done around this mad organization that is created. And I had Anne Fink who runs food service for PepsiCo on the program a few weeks ago. And she talked about even the work Pepsi is doing around what they call DigIn supporting black owned restaurants around the country, not only through the pandemic, but as we move out, and I think about food as an agent for social change.
I think so too. I think of my nephew, who would age five, when you asked him what do you want to eat on your birthday, and he would say sushi. Some of it is exposure, some of its whatever. But you know, just we, as a consuming culture, are at this crossroads. And I think one of the things which is also interesting is looking at a younger generation of consumers who aren’t living the same way that we did at the same age, if you think of the difference between Leave It to Beaver, and Friends, and the number of people in their 20s, for example, who are sharing a kitchen, it isn’t my kitchen it’s a kitchen that I share with other people that there are four of us living in this apartment. And you know, there are some things that we share. And there’s some things that are mine. And there’s some things that are Susan’s here, you know, those are all things that contribute to our decision making process and talking about, you know, life stage issues.
And certainly the configuration of households. As we’ve moved into, through, hopefully out of this pandemic, the single person households, which have now transformed into kids back in the house, elderly people, other people are taking care of, I see the numbers in our latest How America Shops® research about the number of people who are now not only taking care of but shopping for others on a regular basis that came as a result of the pandemic. So that household configuration, as we think about it is much transformed, as well as we move through these economic and social times.
Wendy, according to the last census in 2020, less than 25% of American household had a mother, father and dependent children. I think part of what we’re looking at is that shift in terms of how we live, if I think of houses in the suburbs, all of them, all of them, 97% of them are designed for a nuclear family. And yet, how do I fit three generations under one roof? What does it mean to have a house that might have two master bedroom suites, not just one, or a bedroom, where there was a door directly from the outside. So if you came home late, and you brought someone with you, you didn’t have to parade them through the living room,
oh, your life, you’ve got teenage girls. The other part of that that I think about as you talk about this inflection point is we also have an ethnic diversity in this country. This extraordinary exciting diversity of people around the country, where multi generational families living in one home is not necessarily antithetical. So all of a sudden, you’ve got layers and layers of influence, particularly when it comes to food and coming together, and everyday occasions and special occasions. So that’s the other thing that to me is incredibly encouraging if we see it.
Yeah, I mean, when that concept of people, multiple generations living under one roof,
I think food is this place. This is an opportunity for us to make real change in many aspects of our lives.
I am trying to be a evangelical here in terms of that. Yes, it is time for us to pay better attention. There’s a positive result that we can feel both personally and in our surroundings.
I can’t thank you enough for coming back for sharing some of the insights from the book and coming so early in the piece. It is a terrific read it is it’s a joyful read. So that’s the other thing that’s encouraging with all the social issues that we have to deal with when it comes to affordable eating around the world. Thank you again, anytime next book, come back in between soon. Anytime. Thank you Thank you, dear Paco.
Thank you chere Wendy.
So here’s the thing Paco paints both a hopeful and challenging view to the future of food and food retail in his book, How We Eat. I commend you all to pick up a copy. It’s not only an easy read, but it’s quite inspirational. You know what stands out in the conversation we’ve had just now is that it is clearly time for us all to consider what food retailing needs to look like, the opportunities and the urgency, a shopper values needs and demands have changed. The disruption is already emerging in our aisles and in our categories. We just need to listen, watch and respond really fast. The future is clearly with us the food future. It’s with us pay attention. See you there next time.