EP180 - Deloitte's Kasey Lobaugh, Surprising Consumer Changes
Kasey Lobaugh is a Principal and Chief Retail Innovation Officer at Deloitte Consulting LLP, he first appeared on episode 68. You can follow him on twitter at @klobaugh. Kasey and his team publish some of the most useful research in the industry including The New Digital Divide which helps quantify the effect of digital on in-store purchases, and the Deloitte Retail Volatility Index which measures disruption in the retail industry.
Kasey was last on the show for Episode 114, where he introduced "The Great Retail Bifrication." This time, Kasey is back with a new report, "The consumer is changing, but perhaps not how you think. A swirl of economic and marketplace dynamics is influencing consumer behavior."
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Episode 180 of the Jason & Scot show was recorded on Thursday, June 20, 2019.
Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
Automated Transcription of the show
Jason: [0:24] Welcome to the Jason and Scott show this is episode 180 being recorded on Thursday June 20th 2019 I'm your host Jason retailgeek Goldberg I'm here with your co-host Scott Wingo. Scot: [0:39] Hey Jason and welcome back Jason Scott show listeners listeners come with me into the Wayback machine or is Jason prefers the time travel hot tub blue and we are going back to January 2018 when we release episode 114 if you remember that episode as I do very clearly the weight release their epic retail bifurcation report Priestly this report has been a huge game-changer for me because my day job at spiffy I used internally to help everyone on our team understand, convenience oriented consumer evaluative consumer Sherwood partners and then also with potential investors because a lot of them say what is this convenience already consumed you speak of and I I'm going to drop the very large report on them and then day. Don't ask that question again so it's been super helpful to me so that episode is definitely burned in my memory and is that the retail bifurcation report that they put out. [1:45] 18 months ago is on the top of my digital bookshelf has been super helpful now fast-forward back here to June 2019 Deloitte has updated their thinking with a new report titled the consumer is changing but perhaps not how you think so we are really excited to have back on the show Casey lobaugh who spearheaded this new report and was also instrumental in the bifurcation report and Jason is super jealous because Casey has a much cooler title and Jason Casey is the principal with the white and chief retail Innovation officer boom if I'm doing my words right if you don't count and that still three more words that Jason has in his title so congratulations on the title when Casey and welcome back to the show. Kasey: [2:36] Thanks guys it's it's a pleasure to be back. Jason: [2:40] Yeah and let the record show that Casey and I are both paid by the word so his is longer title does accurately reflect his greater well. Kasey: [2:47] And I always like to say is I know that's my title because I'm the one that made it up. Jason: [2:52] I like it, Kasey thrilled to have you back on the show it has been a while and you know the show continues to grow so we have some new listeners can you give us a quick recap about your background in the space and sort of what your role is it delayed. Kasey: [3:11] I sure thank you very much for Slots of it's a pleasure to be back with you guys you know at Deloitte I'm a partner or principle within our retail practice and really I spend you know I've spent the last 22 years with Deloitte. Consulting with retailers the entirety. Unreleased operating the most that time on what I call The Cutting Edge of retail so you know back in 99 I was helping to in a launch are the beginnings of our e-commerce practice which of course later became, a big portion of our business called Deloitte digital. You know continued in retail store thinking about where we go next and spending a lot of time I really like the title of Chief retail Innovation officer for us isn't necessarily. Focused on the. Technologies which a lot of fun times the word Innovations revokes this idea about Technologies but we spent a lot of time thinking about the future of the industry. And what's the drivers and what's driving the industry and so you'll see a lot of the Innovation that I'm strictly focused on has more to do with the consumer the changing Marketplace the changing competitive landscape and think about the dancing, yeah retailers in that contact. Jason: [4:23] That that is awesome and you know so you put this up report when I talk about tonight you published on the Delight website so I'm going to put a link to it in the show notes if you're not on a exercise bike or commuting to work you may want to grab it and download it to have as a reference while we're talking otherwise I just enjoy the conversation and you can you can read the report later at your convenience never run a reminder kcur base in Kansas City. Kasey: [4:53] I am but I like to say what you know I mean Kansas City because that's where my wife and kids live you know frankly I'm serving retailers across the US and and across the globe so I spend very little of my working time. I in Kansas City now I do happen to be in Kansas City today. Jason: [5:10] Nice and there's a rumor that just hold the light thing is a side hustle for you and that your main gig is that you're a bass guitarist in a row. Kasey: [5:18] My hidden secret but probably isn't that that hidden because it just so happens every time I'm on your show I have another show coming up, I've got one next week I'll be playing up in Minneapolis and every time I play it's always related to retail the last times we play at, you're at at at interrupt every year I get to participate in that event we actually started doing a bit of it internally as well with a big practice meeting next weekend in Minneapolis, and some of the Praxis leaders. To get together a band which I did and out into the practice and found a whole collection of musicians and we got ourselves organized and I get to play another show next week so that's my. Secret retail side hustle and you know that I've maintained the last couple years. Scot: [6:04] Yeah I saw that on Facebook isn't the tell listeners the name of your band. Kasey: [6:09] Oh that yeah the band that's playing next week I'll be playing with his the skews. Scot: [6:13] Very retail friendly accept accept other people really like what. Kasey: [6:18] Right right at this is for our retail and consumer products practice so everybody there should get the inside joke. Scot: [6:26] Okay good food so I'm super excited to dig into the reports I've already kind of read it several times but every time I talk to you I was kind of get a different flavor so, what start time at thirty thousand foot headline why did you and your reports and what are the headlines for what you found in your research. Kasey: [6:47] Sure right about the time we were publishing the last report the great retail bifurcation I was proudly releasing it you know people within our practice and our clients were asking me okay what's next. And as I try to take a deep breath and sort of think about that I serve a noodle Don well what did we learn through that report, and how would we think further about that no one of the things I was trying to do is we try and think about what's the market talking about and what's the conventional wisdom, that's floating in the marketplace and is there a reason to challenge. [7:23] And that's really where I started at the time this idea of you know the changing consumer was really. Is really into me it was obvious that was out there in the marketplace has the narratives you know, these articles about you know how today's consumer is now in charge and the consumer is changing or more importantly or more more interesting they might be the millennial not have different the millennial it so we hear things like consumers are shifting from products do experiences or we have to we have to learn to serve the the time starved consumer. You know or the narrative that just comes around your consumers are going to physical locations last personalization is this incredibly important thing to Consumers all of those things are just things are out there in the marketplace that you'll read about okay, let's talk about this change in consumer and that's really what we did we spent about 10 months going deep. Trying to figure out if there was Data either to support or to help us you know, think about those questions maybe in a different way and through that we came up with really fat I'm just fascinated by having the opportunity to do the the study and discover, bet I clean most of those things that I just mentioned within the data just doesn't fit the data doesn't support that those are true. [8:47] And frankly there's other things that are really powerful in the date of that nobody seems to be talking about some sort of the combination of those two things that we decided to you know really spend some time for the shaping the report. I like I like this quote you know that says change the way you look at things and then suddenly the things you look at change. And that's what I feel like we did to this report is for his thought about it and said you know how do we go look at this differently so hopefully it hopefully that makes sense is a TF. Jason: [9:18] No it totally does Enzo a post of ask me any like I've tried to explain like summarize and save some for example a super common thing that you hear. Abundance and the media talking about our how different Millennials behaved in previous cohorts that like. 25 year old Millennials like to do this and this is how they spend their money and you know and that's very different than how gen-xers are boomers did at 25 and. Like maybe a signature example is Millennials are spending more of their budget on entertainment and less on material Goods because they. They index towards experiences over possessions. Example is a common, seeing you here in the market and what your your data found is actually that. More wealthy people tend to spend more money on entertainment and it just so happens that Millennials you know her are a high and then are getting their wealth much later do I sort of have that right that the wealth is dictating the behavior much more than the age cohort. Kasey: [10:32] That's right, take on the first point because that year that said we took that head-on and said so is it true that's why we started with is it true that consumers are spending more on on entertainment or you know things that are more experiential let's call it then then products and so we looked at share of wallet data from the Bureau of Labor Statistics we looked at it over 30 year. And then we started zoomed in and said okay let's start start at 30 and then assuming at 20 but I frankly it doesn't matter which way we looked at it what we found was that relatively speaking. Most categories of spending haven't changed much. With a few exceptions the first of all we talk about entertainment over that. Spending on entertainment went from 5% of the wallet down to 4%. [11:26] The same proved true if we looked at at at Millennials or poor people under 30, because obviously 20-30 years ago they weren't Millennials in that age group of related age group and they spend less of their wallet an entertainment today than they did 20 years ago and even less than they did 30 years ago that was the first shock is like that's not true we're not actually spending more of our wallet on entertainment Millennials aren't spending. Secondarily though there were a couple of categories that were different as well the first one that you know I think people point at which is true is apparel. Terrell is actually dropped pretty substantially in fact has dropped roughly in half in terms of percentage while it being spent on a Tarot. Also gone deep and apparel and what we discover is people are not buying less Apparel in fact apparel sales are growing at a unit-level roughly on par with the growth of retail. [12:23] However the price for unit has dropped substantially over the last 30 years . and I personally would have triggered that the two facts want one you know is that clearly there's deflationary pressure, unnatural prices you know driven by off-price driven by some of the fast fashion introductions that have been on board but also by cultural differences so we're buying less Formal Wear than we once did simply because the entire that many people wear at work I no longer you need to get suit and tie in there for the price points come down. The idea that we're buying less apparel or it isn't true that the idea that we're buying cheaper apparel or spending Less on a feral is true. The idea that we're shifting at the entertainment is not true that leaves open the question okay well where where are we shipping that money to. And it's true for consumers it's even more true for Millennials is that our money is Shifting to non-discretionary expenses. That's because there's been a Skyrock skyrocketing of inflationary pressures on things like health care of course like education which gets more pronounced in the younger consumer things like fuel travel housing excetera so it's really this shift, of our wallet towards non-discretionary versus a shift from let's say stuff to experiences that a lot of people in the media might want to talk. Jason: [13:50] Got it and I want to get some point we'll come back to the apparel point cuz I think that's really interesting but on the more macropoint, there's a bunch of useful information in your in your report but there's a few things that are mildly depressing and in this deal sound like. Like so you know there it is. Condom non-discretionary cost that are that are increasing in share of wallet like healthcare and in housing. And then like arguably You could argue whether education is discretionary or not but regardless, more people are getting educated than ever before in that cost is significantly higher and so that like that's a feels like a a significant contributor to you know Millennials having a significantly lower net worth you know and often more debt than previous cohorts did at that same age. Kasey: [14:48] Yeah that's that's absolutely true I mean since 1997 the percentage of college graduates has increased by 46%. 2 roughly 35% of the population that's what that's up from 24% of the population in 1997 so that's a substantial increase. But this is coming to cost right because student dead you know has risen 160%. Over the past 13 years that's for consumers that are under 30 that the net worth of consumers under 35. Has decreased by $3,890 and that's a 34% decrease from where we were in 1995 that's substantial right that's a substantial decreased you know on network so one of the things that I think gets lost you know is this idea that that millennials. You don't behave differently because they are culturally different. That's what people say but what gets lost is the idea that there are real Financial constraints on the millennial population that an event likely have a relationship to major life choices you know whether or not they're ready to buy a house whether or not they had it there in the financial condition. My house whether or not they're ready to get married whether or not they're ready to have their first child we talked about those things we know of course that the Millennials you know art are doing all those things later. [16:15] But sometimes those are spoken about is if the millennial is just as different animal they showed up on Earth we can't figure them out they behave so completely different right but we don't talk enough about the eat. We talked about the great retail bifurcation is that while yes median incomes are up. Across-the-board median income is up however when you break it out by income groups what you find is dramatically disproportionately. [16:47] Income gains have gone to the top 20%. And frankly the the lower 80% or either just slightly better or or not much better at all than they were 10 years ago sobriety percent of population we've sort of got this this lost you know this lost decade. And when you apply non-discretionary cost Rising on top of that it only gets worse right when you really look at who has more discretionary money to spend today than they did 10 years ago. [17:17] It's generally only the top 20%. So now you later in Millennials a couple of things to know about that is we know that the millennial generation is dramatically more racially diverse. Then he needs generation in history in fact if you if you look closely enough you'll find that the millennial generation is 44%. Is non-white and that's compared to only 25%, for the Baby Boomers that's one of the things that shocked me but you got to layer this in and should have recognized that when we're talking about the top 20% in a growing their income you know those tend to be. Older they tend to be Caucasian you know by and large so we're talking about a more diverse. Younger generation who hasn't participated in the income gains however they taken on student that you know at a rate unit that's never happened before you know in the history of our country and their left in this economic position it doesn't get near the attention doesn't get near the attention if any real attention relative to this idea that the millennial is just a different animal making different choices than, in their father. Scot: [18:32] Call Sue. Disconnect us back to the other report is is the convenience oriented consumer still alive and is that still a thing or no there are no longer there or help us reconcile their students. Kasey: [18:49] Yeah you know that that's a great point that I've been thinking a lot about the first saw in our previous for the great retail bifurcation we did discover that there there is a collection of retailers that appeal to those consumers that where price is incredibly important to them and that relates to the income to the non discretionary that you cannot make situation I just talked about and there's another set of consumers let's call those consumers on the high-end high-income consumer that is free, with their money and their choices to make different decisions than just focusing on price and they're focusing on things like convenience in so without a doubt that bifurcation of the economy still exists and is driven by consumer, economics but I actually hold that up cuz you use the right word sort of thinking about convenience. I'm thinking about you know value let's call it value and convenience because there's another element that's out there another. Conventional wisdom in the marketplace and that is that the future I heard this when the future of retail is all about experience. [19:57] Kind of depends on how you, Define experience do you want to Define it really Bradley which by the way you know I would Define The Human Experience very broadly to include things like a do I have enough money, to pay for lunch in a bunches for my kids this week. But a lot of times in in the in the media and the Press are in the in the conferences will go to experience gets focused more on like the in-store experiential factors okay so the future of retail is experience sometimes gets painted that way but when you really look at what's driving the market today what you find is. Value is driving the market without a doubt we are seeing you no continue, great success of the off-price sector we see continued really strong growth in the dollar store sector but we also see. [20:49] Relatives of convenience for seeing a lot of movement on the convenience front right you know whether it's the rise of the convenience stores, which is one thing that doesn't get talked about very often they're having this great success meeting of the convenience stores are or its delivery or in a click-and-collect are you name it is 4 to get two more candy exact do I look at the market. What's driving the market is value inconvenience but somehow we've gotten ourselves sidetracked with this argument about the future of retail is experiential. By the way I don't I don't disagree that for certain retailers that makes a ton of sense but too often it spoken about as if, you know retail is one giant market place where you know singular Concepts will went out. Jason: [21:35] Yeah I know totally nn. Like obviously a lot of the the future of retail is experience come from vendors that are selling in-store experience. Kasey: [21:48] Yeah you're right here you're right. Jason: [21:49] There's there's probably some some self-interest there right like yeah if you want to go back for just a second though to your apparel point because. I've been watching this for quite a while and it's super interesting. I have a bunch of data that sort of mirrors your conclusion like did the number of items in the consumers closet. Is very consistent overtime but the value of those items is consist is significantly low or today. And and it's like. Some my hypothesis like a lot of the production for apparel has moved like over the last 40 years has moved offshore has gotten dramatically more automated internationally is it, less expensive to make but it it actually in most cases is higher quality and more durable so it's like you have to replace it so I pay, less often than then you you did plenty or thirty years ago and so you know when you look at a lot of the retail segments that are doing well and some of the ones that are struggling ones that sell a lot of apparel / index in the struggling category and and my hypothesis is like this this is the fundamental reason why we wear more casual clothing in the clothing we buy cost less than it used to. Kasey: [23:12] Yeah and I think those I think all those points are dead on I mean I couldn't come up with a chart that charted whether or not there's more naked people that I'm seeing on the street. Jason: [23:22] I don't know if I'm wishing for that or not. Kasey: [23:23] People are still wearing clothes right and it's not like you know people are wearing bell-bottoms or you know whatever we wore in the 90s, so I think your I think your conclusions are are right on I think we've got to look deeper at you know the underlying. That's why I like to look at the underlying economics the underlying changes that are really changing the competitive environment honestly I think the consumer animal anyone in particular is getting blamed for getting the short end of the stick they're getting blamed for way more than they really have control up you no control over, the other thing I'd say is too often I think people speak about things like some of these things just showed up overnight when in fact you know everything we've spoken about so far could be seen in the trends 10 years ago 15 years ago these are not new phenomena that show that showed up in in in in the marketplace you know yesterday but I think that. Oftentimes we speak about it like that's the case you're even the trends around like Millennials get married later you go out go back to Generation X and you would have found that that Trend was apparent than two, we didn't just suddenly show up and what you're talkin about relative to apparel also did not suddenly show up you can track these Trends back 30 years. Jason: [24:45] Yeah and yet no CEO from an apparel company has ever mentioned that for missing their tops. Kasey: [24:50] You're right right right the weather about that. Scot: [24:54] Iceland. Jason: [24:57] Too hot to cold. Scot: [24:58] Two parallel retailers are in in a bad position you know we if you look at it kind of the q1 results mall-based retailers are really struggling, do you think this change in consumer behaviors mean that malls are pretty much just. Kasey: [25:17] Yeah I think the malls are struggling and I have course when you talk about malls there's different kinds of malls and I think there a certain kind of malls you know certainly lifestyle malls have been better than no beer C malls I don't think that malls. Are toast I think there's continued Evolution what's interesting to the consumer fairly appealing to a higher-end consumer is helpful but I think that the mall as we kind of understood it in the 80s and 90s you know is likely, is likely you know finished its productive life that's that's more opinion of mine then it is anything I saw it you know particularly in the day. [26:02] We did have it read it a little interesting data related to Traffic so damn it in are we got this Cancer Center for Consumer insights River Ford Terry B. Terabytes of data that that cover many different kinds of data including credit card transaction of a used to do a lot of our studies we also have location. We have quite a bit of location data related to people's cell phones where they're going how we can look at and understand traffic patterns that's also within our data and when we when we looked at the traffic data part of the question we had was like. Are people going less places that was kind of a question we started with and the answer there was no no actually infect overall but traffic for our measurement was up 6% let's foot traffic not just to retailers by the way we measured it broadly let's call it consumer foot traffic so we looked at convenience us are fuel we looked at restaurants we looked at entertainment, and we found overalls but traffic was up between 17 and 18 6%. [27:06] Not only that but retail for retail foot traffic was up 2% now within that if you dropped grocery out. It was actually down 1% Okay so you bet traditional locations like department store or Mall you know definitely that the traffic was down but another interesting fact that we saw was the concentration there's this amazing concentration for those stores that were losing traffic 90% of the Lost foot-traffic were concentrated in just 16% of the retail stores. And meanwhile 22% of the games and foot traffic are sorry we're concentrating just 22% so that's the vast majority of the games 90% of the games, or concentrated in 22% of the stores track, oh yo largely this idea that people are going less retail you know it isn't true. [28:01] And to wear it with the to the extent that it is true it's very concentrated on a small number of stores and let me expand on that data because I think the traffic data is also interesting this question about our, I think it's a bigger question about where are people going and how is that changing now fasten a I talked earlier about convenience we actually found that convenience trips. We're up 16% year-over-year strips that we would attribute into categories like like entertainment R actually up 8%. So there actually is foot traffic you know it's happening and it's happening in in different places grocery last year you know had had solid traffic convenience stores in particular really solid and trips for fuel. We're really, solid as well there's some really interesting data in there by the way within our Center for Consumer insights were able to slice and dice this data incredibly granular level so for many of our clients were able to dig in today to not only about themselves but their competitors to really understand how particular consumers are changing ribs with slice and dice it by that he cannot make factors at the sugar. Scot: [29:11] It seems like people are going to the mall for the Apple store since Ali then they're getting getting their they're delicious to bison and kind of leaving and not visiting all the other certainly not the apparel stores on their way out. Kasey: [29:22] Where does a lot D in written essays about they're going you know further massage and they're going for their Zumba class I know do people still do Zumba Jason your you do Zumba right. Jason: [29:33] Yeah and like their stock just crashed just from you. Zuma country doesn't work. Scot: [29:43] Goat yoga is the thracian. Kasey: [29:45] Goat yoga hot. Yoga. Scot: [29:48] I go get the other goats have to be hot. Jason: [29:51] My like top-line take away from from your traffic story was was sort of going back to that bifurcation thing that it's almost not useful to look at. Overall homogeneous traffic because there's there's like significant winners and losers in the traffic game. Kasey: [30:10] That's right that's right you really am an across-the-board what what all this tells me is that you know there's one element which I called the diversity of the consumer is skyrocketing, and not just diversity you know a long you know that that's a racial lines but economic lines you know as we look at it we looked alot in Geographic and how Geographic Behavior was different, there's just dramatically more diversity within our consumer base yeah you got it you've got to look at it through that lens you got to be willing to slice and dice you know to get inside the insights, otherwise you're going to deal in these macro topics that don't mean. Jason: [30:51] Yeah I don't want to explore that that diversity of audience more but it just a couple of a sort of wrap up questions on the on the traffic topic, another interesting thing that you you looked at that was super helpful to me because I talked about it a lot and tried to find a good day to set. Is the whole Urban vs rural thing. So you know one of the hypothesis would be like we built all these malls in the sixties when everyone was migrating to the suburbs there's all these Regional malls out in the suburbs that are performing well maybe that's because you know populations are starting to migrate, back from suburbs to Urban City centers but when you look at it you know the sort stop by and government data. It doesn't really support that like like overall people are still migrating from from City Center to suburbs as they get older and more wealthy but if I read your data right like you you broke it down and you discovered that like. It is true that younger audiences are tending to to aggregate in City centres you know maybe for Economic Opportunity. Kasey: [32:05] Yeah that's right so it at the at the headline level you're right we've got the data that says people are still moving to the suburbs and this is again the problem was sort of looking at things at the macro level cuz that would just say okay well nothing's really changed but then we dug deeper and we look specifically at day that population 25 to 34 and what we found was there's a dramatic reversal. [32:28] A behavior that we see there so from 2000 to 2009 you know we saw up a pretty significant shift away from City centers for people of that of that however from 2010 to 2014 we saw a dramatic reversal what we saw was you know was that there's an 18% gross, people moving to city center so without a doubt people are absolutely moving to the end of the Revitalize City centers and this has to be related to this idea about are we buying homes, well we're not buying homes you know what but it's a little chicken in the egg because you know you might argue it's because. [33:10] These consumers are just different they don't want to move to the suburbs and buy homes or you could look at the economic data and say well they actually aren't at a financial position yet to buy a home and move to the suburbs therefore they're paying rent and they're doing so in the in the city centers where you know where there's jobs or should have more educated consumers also the more educated and Workforce consumers there's also a concentration we talked about the only ones really participating in the economic growth are the high-income consumers okay well there's a concentration of where is high-income jobs are located, they tend to be you no more urban you know oriented and certainly you can pick out a few cities or what you could probably, there's a lot of concentration here so there's reason why you have a consumer who has you know this increased debt you know who is in the economically efficient to move to the suburbs is actually moving to the city centers not just for a cultural reason but for economic reason. Jason: [34:13] Yeah for sure the the other thing that's interesting to me about the traffic data because like this this is befuddled me for a while and I still don't think I have it completely explained but in my role I get to. Do a lot of serving of customers and hear a lot of voice of customer and ate a super, consistent thing that consumers tell me and I highlight tell me because like you know I always ice two things consumers tell me with a grain of salt is that we're more time starve than ever before that we have. That we have less time and. Like I believe that they believe that to interesting things in your data number one on average were working less hours than we used to. I have seen another day this as well which sort of makes you wonder how it seems like we should be slightly less time starved if we used to work 40 hours and then we'll work on 33 hours but the other thing is. Like we're time starve so we Supervalu convenience, like we're buying our groceries for more stores we're doing more Church Street trips. Kasey: [35:22] Right right right. Jason: [35:23] Then we used to and you go in a minute if your time starved and you value convenience wouldn't you go to one grocery store and get all your stuff rather than going to six grocery stores. Kasey: [35:33] Yes and I can't I can't argue for the craziness of you know what the work where the data doesn't serve stack up but you are absolutely right here that says yeah wait wait wait we took that answer okay and everybody's fighting for this time serve consumer so tell me about it. Of course what we found was since 1960 there's been a 9% decrease in overall, hours worked per person that's a considerable time. It's also a pretty good chunk and decreased during that same. They're working age population is increased by by 44%. [36:08] And the labor for the labor force participation has increased by 9%. We're actually have. You know more people participating in the workforce you know it's up significant of course during that same time. You know are our labor force you know really had the that you increase the number of women that were participating in the workforce. As a as an economy we're working more, okay but per person were working less we look at it like particularly around discretionary time and there has been a 9 minutes per day increasing discretionary time in the last 10 years, that's over an hour week of additional discretionary time that we have you know to spend so it doesn't really add up that that. You know that people are time starve and have had last time except to the extent that maybe they have more options. The whale said data around you knows the amount of time people are spent you know I'm retail trips. And we've seen you know of course we've seen a decrease in the amount of time being spent shopping obviously you know he timer says that as a major you know playing that as well. Jason: [37:16] Yeah no my hypothesis is that at least part of it is the expectations are higher so what consumers are expecting to get done in a week. Are higher and therefore they feel more time start to get it all done in the same thing like, expectations about quality of the food you serve your family is higher so you know it is no longer acceptable to just go one place and get one quality of food like you have to go multiple places and so it's it's all in in in context to expectation. Kasey: [37:46] Agree with that. I'm not sure I completely agree, you know with this idea the I just the one point you made around quality of food being hired that I actually think that there's cuz I hear this lot from the our grocery clients this idea that the consumer is more health-conscious than ever. And I would lead us to believe that maybe maybe a consumer, it's more health-conscious but I'm not necessarily sure that that all consumers more health-conscious right because we while we've seen an increase in, life expectancy we've actually seen a dramatic increase in the LBC rates for lower-income consumer. So by the way I read an article does this isn't included in our reports that talked about the sheer magnitude of grocery sales that now happened through dollar type store. And so I like when people say they don't shop the center aisle anymore they're only shopping the outside aisle I was trying to go well how does that does that reconcile with sale of groceries, you know dollar stores. Again back to the bifurcation week we can't think I'm going to win these platitudes of the consumer being a singular consumer comes back to the idea that there's traumatic for diversity and we have to dig into that. Jason: [39:11] So let's dive into that I will say it is funny like if you look at Fritos sales. Over over the last 30 years I can consumers are not more help awake but if you look at organic produce sales you would say they are so it's. Kasey: [39:26] Right right right. Jason: [39:27] For your point like it, that it's dangerous looking at averages and is a smart analyst I work with point that to me all the time on average nopales Platt. Doesn't paint a very helpful picture of Nepal. The blank going back to this like the audience is wildly different today than they've been in the past and that you know traditional we had pretty homogeneous groups and pretty report like there's much greater diversity talk to me about like how that plays out like you in the report highlighted that that some of those does groups have disproportionate Economic Opportunity for retail growth in and using some interesting things about a various retailers have done trying to win some of those does diverse group. Kasey: [40:18] Yeah we know we can talk about the consumer and the changing consumer without talking about e-commerce however what what what I didn't want to say what we know in the report was Haiti Commerce is growing, I probably wouldn't I probably wouldn't shock anybody so we sort of tried to do the same thing and dig into that gross you know through you know an ethnicity lands Inn, generational and something jumped out of me that was really shocking I mean it wasn't the more I thought about it and I had to do with. The growth rate of different populations like how fast are those populations coming online and I use I use an example here if I look at. [41:03] By income, so that the consumer who is between 0 and $35,000 per year is actually there their kegger of online spin is 14%. That's pretty significant and then you compare that to the high-income lose only 7%. Of course that's in verse that that's in burst to the share that they already spend online. Another words the low incomes consumer spends less online but the growth of that spending is is no doubling the pace of the high-income consumer. And that's honestly what we found across the board when we looked at at nicity what we found is the lowest penetrated, you know the African-American is is growing at a rate three times that of the highest penetrated coworker which is Asian so they're growing at a 15% tiger Asians growing at 5%, same thing at income and same thing generationally so that the millennial who's. [42:04] Already shopping online more is growing at a much slower rate than the baby baby boomers are who are growing at 11% cater, you know these new populations that are are joining another e-commerce shopping trends and we asked a question about okay well let's look at our credit card data and let's see if we can assess you know who's winning and losing. As it relates to that new population coming on I'm coming online to particular we looked at we tried to compare in a Walmart. An Amazon we asked a question you know who's winning and losing with these various populations. And you made me it's surprising but we found is generally speaking but first of all there they're both winning. However Walmart seems to be out for me okay for all of the co-ords except for and I don't know why this is of the African-American cohort the tins to the chip in favor of a man. Just interesting that these populations are coming online, and we look at where they're going in some ways you might think that they're the kind of willing to and and and you know our shopping list the brands that that appeal to you knows their needs and the things that are most important. Scot: [43:23] We can talk about this for hours but we want to kind of at this point could it a little bit and try to talk about a couple scenarios so and I encourage readers this is not all the topics in the data so so I definitely encourage you to download the report and read more so there's definitely a lot more there than we talked about let's talk about how retailers take this data and make it actionable and I thought of fun framework there would be just a couple scenarios that we know are our kind of you know Persona is a folks that listen to the podcast so so, first scenario is you know I am a senior person at an omni-channel retailer feels like I just got my head around you know some of the trends you talked about 2018 and in here hear you talk about you know all these new trends that are happening. How how should I adjust this report in or what are some examples that you've seen a retailers of doing something in reaction to the. Kasey: [44:25] Yeah okay that's a great question I try and think a lot about that when we're developing the report and first of all week we developed the report in a way that has to be applicable to a broad set of clients we think we do that but we also have the ability through Center of consumer insights to go much deeper and get into in a meter category-specific at a lower level or our clients to set the where absolutely doing that on the backs of the roof. But more importantly I think that's what we were this idea about this growing diversity that's coupled with. You know what the reduction in barriers to entry in our industry so when you take this growing diversity with you know, increase your segments with very unique needs and you couple that with lower barriers to entry meaning we have more competitors for able to very specifically Target those retailers have to start to think about how we compete differently, the problem though that many a large omni-channel retailers might have as we come from a place where we have this giant monolithic value proposition and we like to say it has its really try to appeal to everybody but the reality is that you know. You're one giant value proposition that kind of headset what was the traditional middle-class you know consumer, what we'd actually got to begin to do is think about how this implies we have to compete differently and what I like to say is the market is fragmenting. [45:51] What we got to do this we got to think about how do we allow the fragmenting of our offers. And I just offers like marketing offers I'm thinking about you no offers like. Store formats store locations maybe even brands or products that we carry you know price points the difference between value and convenience and where you employ that and how you employ. In in there certainly are examples in the marketplace of a retailers that are heading down this path of of looking at you no different models that they either have under the same Banner or even different banners that they, yeah they leverage their scale but take advantage of those different. [46:31] You know I take away from all of this that says we got to think differently about how we target consumers because of the fragmentation is the diversity that showing up in the consumer an application back to how we operate. Our operating model and how we think about going after the consumer the second thing that I'd for the Highlight here is that you know the consumer in some ways, isn't changing in an otherwise they are changing but it's not because they're just culturally different necessarily but because they're under a lot of pressures, and so and by the way those pressures as I mentioned have been in the trends there's no secret in the pressures and they've been let you know if we're paying attention to the trends we're in we're digging in the day you'll see that these have been. Their long lives friends are we paying enough attention and thinking about how we evolved what we sell. [47:23] Right or do we Define ourselves by the categories that we Define ourselves. Do we do we think differently about the services that we offer are we evolving ourselves at the rate of the consumers needs, you know are we really thinking about what that Evolution means to us cuz I often times I get this question I got this lot on the great retail bifurcation like what what do you do if you're stuck in the middle. And the answer is don't be stuck in the middle. Jason: [47:48] Get out of the middle. Kasey: [47:49] That right there is no marketing message that changes that it actually means you have to you have to recast. Who you are what you offer and to whom you offer it to. But you know that's that's the evolution of business frankly if you're not going to evolve the marketplace will evolved and we have over a hundred years of proof of it. Jason: [48:10] Great answer, turning our attention to the other side of that that value equation the Brandt the traditional brands that like, you know maybe I'm doing as well selling through those the traditional retailers as they used to an anemone cases, are now starting to evolve a direct-to-consumer strategy is there any take away 4 for the brands in this report is there is there something you think they should fundamentally be thinking about differently. Kasey: [48:43] There is no I I would tell you that there's a there's a phenomenon going on right now I call it the rise of the brand. Now we don't really go deep in Stanton to the report but you can certainly see that that that those in a consumer products companies that have invested heavily in in a brand that's a Lifestyle brand no excetera you'll discover that they end up with a lot more in a pricing power cuz it's kind of it there's two things happening at one time there is the commoditization of retail. [49:17] There's the rise of these Brands occurring at the same time well if you're a retailer that's playing on the commodity side you're actually you know having deteriorating margins, if you're a brand you know and there's good examples to bring up there they're certainly athletic brand but there's a there's a great you know Lifestyle brand out there that deals in in your coolers and and you know outdoor for the products you know warming cups excetera you know that is done a tremendous job for the building this Lifestyle brand around a product or a category product you you never would have thought about right and with that comes the power that allows you to go direct to consumer is your brand is important enough and also comes with a magic thing that I like to call marjon now, not every consumer Products Company out there as a brand that allows them to do that, either you can imagine as you're standing at you know the checkout at the grocery store there's a lot of products that are are trying to be sold to you at check out right and they'll have a brand associated with them but they don't have the Lifestyle brand they don't have the wherewithal that some of those brands that I mentioned you it's interesting just to watch the evolution of the marketplace in the rise of Brands as a counter to the commoditization of retail. [50:33] Some Brands we'll figure that out and figure out how to do that other brands you know frankly either don't have the permission or or maybe aren't the kind of category, that can invest enough to to develop a brand you know in that way. Scot: [50:47] Go to the end of the third type of listener Persona we have is very entrepreneurial online seller you know maybe a year or maybe five years ago their son books and then they were sharing song apparel and now they're looking for that next thing to sell as I listen to you talk about yeah these underserved demographics coming online now that seems like there's going to be a whole set of products there that would be interesting in any anything for the data for kind of that were entrepreneurial kind of set. Kasey: [51:15] Yeah I think that I think the data feeds that you know massively is what we basically says there's this increasing diversity of the consumer and diversity along many different you know, taxis if you will you can think he cannot make diversity we think Geographic diversity we can think about in a different languages just different needs or the ability today of a you know an entrepreneur to start a company be very smart and targeted about who they're going after you know and be able to penetrate and and serve that market in a way that the the mega companies are unable to because they're not that specific. [51:54] Is phenomena and frankly I call that the you know it's death by a thousand paper cuts for medium to large retailers or made a large you know commoditize retailers right great story my daughter is in a 13 she plays basketball and there was a advertisements that came up on her Instagram, for a company that deals specifically in basketball apparel with sweatshirts with these you know crazy basketball sayings on it and know this is found her and she is a niche market that has this incredible Mead and Frank said we couldn't go to you know how we couldn't go to the mall, and walk into a department store and find you know the sweatshirt that has in a basketball smack talk on it but this company found her, and they're able to going to be very targeted about it I think right now they think the time is so right, for companies to be able to do that I think that the research really shows that and the challenge for the bigger retailers is. How do you become that. [52:59] Instead of saying how do I have my big monolithic value proposition that tries to appeal to a big fat middle-class how do I actually allow myself my operating model to fragment. And go after these pockets of opportunity that in and of themselves are small you know that historically you know the big retailer would say my scale wouldn't allow it. How do you do that at scale that's the big question and frankly you don't or maybe maybe that's where. Topic of personalization that the market seems infatuated with for the last 20 years maybe that's where that actually has some applicability. Where is the market largely hasn't figured out where you know the applicability really is you know just applied to the traditional. Jason: [53:46] Yeah I know for sure like I I would argue that both of the the scale that you just described and the Serta innovator's dilemma that we've you and I have talked about on past shows like both make it hard for your sort of the the big incumbents react quickly to new insights like this and so it does seem like there's an opportunity for more entrepreneurial companies to be more agile. Kasey: [54:12] And there's a question if it can you do that at scale is there a way with automation for you to identify pockets of opportunity to you know acts against them and an aggregate you know do that at a large enough scale that makes sense and I don't know what there's there's no example yet that exist out there but, at the end of the day if if the large companies are unable to do this the market will do it. Jason: [54:36] No it is interest I mean there's a micro versions of this we face all the time but like imagine you're a retailer and you're you're you're trying to reach a bigger audience with a a message that will cause them to buy from you like his historical you can buy that audience on television and you could reach a ton of people today we're finding that that gosh you can reach a thousand people on Instagram that will have a way higher likelihood to buy your product. Through some kind of like micro influencer campaign right and like the cost to acquire each of those thousand consumers to be much lower than the cost to acquire them on television, the problem is you can't buy 10 million consumers through you know a thousand consumers at a bite. Kasey: [55:29] Right right right that's a great story but I don't need a thousand consumers I need to know Millions. Jason: [55:34] Exactly yeah so that that's going to be a good challenge will be. So you know historically like these these demographics and age cohorts because. They were originally the only things we knew about the audience's we could buy so when you bought her a radio audience are you bought a television audience age and gender where the two things you knew so marketers to learn how to do you know. I second that the audience based on age and gender. Is that model now Antiquated like should should marketers just be moving away from the whole notion of age cohorts and should we not even try to invent something after Generation Z and should. Instead they be thinking about economic cohorts or behavioral cohorts or something else or what. Kasey: [56:32] The answer to that is yes but I'd actually take it one further because with the you know the kind of analytics that that are now available you know I keep talking about that in our Center for Consumer insights our ability to slice and dice and ask questions and dig deeper and you know on the Fly try and figure out where the pockets of opportunity exists. That's the guy that's the key question where are the pockets of opportunity and how do I identify those and most organizations are not yet good at this most organizations don't either have the data. They don't have the operations and place that allow them to ask the right questions of the data they may not have the right staff on board to help them slice nice but this you know in this market place that do balding with this increased diversity in this increased competition, identifying pockets of opportunity is going to be a competitive Advantage so we shouldn't be buying and thinking segments we should be thinking about. [57:36] How do I go at the data over and over and over again. With different slices you looking for those few nuggets of gold that are in their last 10 months. Doing that in this report and a lot of the questions we asked of the data didn't tell us much and those aren't in the report. And we kept asking questions and digging deeper and saying this is interested what if we asked it this way and that's where we come up with the inside so that's that's the mental model have to ship shift is just how do we think different about, operationalizing the Analytics. Jason: [58:14] No that's that's great advice and that's going to be a great place to leave it because it's happened again we wasted a perfectly good hour of our listeners time so if you have a burning question that we didn't get a chance to ask Casey or you want to discuss anything that we touch down on Today Show feel free to hit us up on Twitter or leave us a note on her Facebook page and what will be thrilled to get back to you as always if you enjoy the show the way you can repay us as by jumping on the iTunes and getting us that five star review. Scot: [58:44] Kasey really appreciate you coming on the show one last question if folks want to kind of follow your thoughts online about all this what's the best way for them to follow you. Kasey: [58:54] Oh sure thing I saw on Twitter and I've actually continue to to your Tweet out different insights from the airport it's at k l o b a u g h. And of course I'm also on LinkedIn at Kasey Lobaugh. Jason: [59:11] And then he directors down if you're driving will get both of them in the show notes and until next time happy commercing.