The Jason & Scot Show - E-Commerce And Retail News

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: July, 2019
Jul 29, 2019

EP181 -'Think Like Amazon' Author John Rossman 

John Rossman is a former Amazon executive who helped launched and scale the Amazon Marketplace, and he’s the author of “Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader“.

In this wide ranging interview we cover some of the 50 ideas from the book about how Amazon operates, as well as how the ideas can apply to other businesses, and what businesses that are competing with Amazon should know.

You can read more from John on his blog “The Amazon Blog“.

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 181 of the Jason & Scot show was recorded on Thursday, July 25th, 2019.

Automated Transcription of the show


[0:24] Welcome to the Jason and Scott show this is episode 181 being recorded on Thursday July 25th 2019 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.

[0:39] Hey Jason and welcome back Jason Scott show listeners Jason I am super excited I’m tingly all over tonight we have on the show
author of think like Amazon John Rossman that was published this year,
and as you and the other listeners know I have started my first consumer-oriented company,
and I’ve made it a court in and of what we’re doing to try to follow as many Amazon principles as as possible stuff like day one customer first there’s a million of them,
to beat the teams Etc and what I have found is this information is exceedingly hard to come at you have to kind of meet all these X Amazon Indians and pick it out of them and I’ve actually
unable to on the DL get a copy of some of the management principle guidelines I can’t say where I got them from,
so this book is really a welcome addition to my library I’ve actually made everyone in our management team read it and it’s actually the Bible her operations at 9
so we’re real excited.

[1:46] Hey thanks for having me.

[1:48] Yesterday I feel like we could probably go I know I could go like 3 hours on this so we’re going to try to stuff it all in one hour so I’ll turn it over to Jason and he’ll kick us off.

[1:58] Scot and that’s a quick you know warning for listeners that if if you’re exercising while listening to show you probably want to turn down the intensity just like this could be a long one.
John first of all that’s a lot of pressure is spiffy fails it sounds like it’s going to be your fault.

[2:15] It’s all in the implementation so it’s okay.

[2:18] Smart well said so regular listeners that the show will know we always like to start by getting a little bit of background about our guest and sort of how you you came to your your current current role can you talk to us a little bit about your background.

[2:33] Yeah so I was fortunate enough to play a senior role at Amazon I got to launch the marketplace business in 2002 and then I ran the D Enterprise Services business,
and when I left Amazon late 2005 started working with my clients on digital strategy and Leadership and culture,
I started to see the impact of all the principles and mechanisms and things we did Amazon get results and it was actually.

[3:04] Several years after that that I had a client of mine at the gates foundation’s at John you really out of caption this up and write a book and.
I did that and this book think like Amazon 50 and a half ideas to become a Gentle Leader you know one of the things I I like to point out the people as it really isn’t about Amazon
it’s about you and what you can take from a company like Amazon and put into your
approaches your habits your culture and I love hearing Scott talk about that you know you’re using it as an executive team and.
Worst-case even if you don’t take the ideas just talking about them as a team will help you be more thoughtful and deliberate about your what you do believe in and so these are,
authentic Amazon moves and strategies of use them with my clients since I’ve left Amazon Alexa 2005 and they really do you know you got to use the right ones at the right time but they were they really can help making it.

[4:04] Nice and you really had to pay your dues because I’m imagining that when you left in 2005 you told people that you were doing something based on that’s how you did it at Amazon that wasn’t necessarily the instant credibility that it probably is today.

[4:18] You’re absolutely right like that credibility to some degree came a number of years later but I think you know from me the craft is always been.
Really understanding the situation what the challenges and then prescribing little things to do and if you can lead people to it or says
heading him over the head you’re always more successful as an adviser and so it’s really been like
making them into little chunks and sliding them in and leading people there with good questions like that’s that’s kind of the art of being a good.

[4:55] Interesting and one of the questions I have for you so so you left in 2005 the book If I have this right just got published this year right 20.

[5:04] Maybe that’s right.

[5:06] But reading through the book there’s a bunch of principles in it that my senses are,
relatively current at Amazon and so that I’m curious is that because,
these principles of an evergreen Inn and Jeff and Tina implemented them in the very beginning and they still carry through today or have you done some work to sort of State current on that on the Amazon Prime.

[5:28] Some of both so
I was at Amazon from early 2000 to the late 2005 is a really interesting from Amazon because we were getting clear that we were really two types of companies we’re both platform company that built tools others with used and,
we were a retailer and we’re building Marketplace business but I am always testing my understanding kind of current,
techniques and approaches with my friends and in former colleagues at our am at Amazon or just left.
And although the company has changed a thousand times since I was there
how they approach their work is unbelievably consistent since I was there and I think that’s really one of the secrets of how Amazon has scaled is
is how they approach their work how they work together how they hold people accountable what they believe in what they prioritize how they make decisions how they use metrics,
that is consistent across the entire organization and that lets them scale scale as they are.

[6:37] Brickell to their limited time we can’t go all over all 15 1/2 principles so we thought we would pick a couple out that we’re are quick oats favorites and then
so that this can be kind of one segment that we go through, and then
there’s there’s a bunch of questions that we get a lot as we talked to various retailers and other folks that are kind of trying to live this Amazon lifestyle,
it’ll come up and then talk about the implications for the industry and then finally you know how do people take the knowledge that you’ve captured Sawan the book and apply it to their business and I know it can be hard to fit all those and try to cut it into,
into some some chunks there,
one of my favorite ones is kind of spend a lot of time working with Amazon eBay Google Etc and I’ll pick on eBay a little bit and then have a,
interacted with him in five years this way but back in the day in the John Donahoe Meg
what world you good eBay and everyone was working on Powerpoints and like all day and do it simply you know the lowest level people would work on a PowerPoint no passing their boss they would pass it up,
1 appleside what in the
the Meg Whitman presentation and they just seem to be spending all their time on PowerPoint and then I learned very quickly that Amazon is actually outline outline PowerPoint in the way they run meetings is very unique give us a rundown of that,
what was your reaction when your first confronted with it.

[8:02] Yeah so you know the general principle or approach is that you know all important ideas all root cause analysis all
big projects and proposals are written out there’s there’s a kind of six-page version of a 6-page narrative and there’s a couple of other tools to go along with it.
Writing out ideas in in full paragraphs full sentences for specific audience to,
for specific objective has a few different benefits first of all it forces the the author or the people that are offering the document,
to get to Clarity and clarity as relief both Simplicity as well as completeness of thought in.
Get there with PowerPoint that writing things out horses that team to make sure that they are actually,
not talking past each other and we ran our green on whatever the important aspects are that you need to convey to your audience management meetings instead of.
Having somebody presented actually start with 15 to 20 minutes of silence or leaders are half.
Put the phone away but the computer way and actually read and digest we use the word grok a lot of the Amazon which music deeply in.

[9:19] Then conversation ensues from there in it and it forces everybody to 2.
Have a better deeper understanding of what’s being discussed in the in the implications of it,
and then the last benefit is it’s much easier to forward onto others that need to,
be connected with a conversation but weren’t part of the meeting right and one of the great limitations of power point is that most of the time you still need to have somebody,
along it to actually explain it and where is a narrative should be a standalone documents so it is what I consider a championship discipline even if you’re only writing things out for yourself,
forcing bully written ideas.
Through all of the non-obvious situations issues risks things that can go wrong how to explain it better to still think that through so much better and as a team.
I really consider it one of the go slow to go fast moves which is if you spend more time up front.
Defining what the mission of the project of the program is you’ll be able to make it smaller because you can have better,
refinement of what your hypotheses are what you want to test and get down to just the bare metal Essentials of what the project is and you know that’s the whole minimally viable product in agile mindset.
And then you can proceed with it on scale because everybody better understand what it is that were proposing.

[10:49] Call Sue a couple of kind of
questions I get when I talk about this with other folks and I’ve never been in one exams on meeting so I don’t know the answer so I’m excited to hear your answer is it awkward sitting in the meeting reading and in the first shift.

[11:05] What would certainly different right and so it’s not that the norm of what you expect.
You know when everybody understands like you know this is what we’re doing then then and you practice that you need to practice it both as individuals and as a team.
You’ll start to see the impact that it has so yeah it does seem awkward because it is not,
warm but it’s it’s a powerful approaching,
I work with clients on this like I don’t I don’t go for a we have to adopt this across the board but for important programs important changes important strategies.
Completely changes the level of comprehension and thoughtful discussion.

[11:52] Closer than I’ve also heard from a lot of my my Amazon and friends that Jeff Jeff Hostess regular quarterly business reviews and they’re in their help in this format and then every noise has a just already have a good story from blazing.

[12:07] Oh sure you know in the qbrs tend to be more about you know the business results so they tend to be more metrics-driven
the narratives are more about it young What’s called the op-1 process the operating plan one process where you’re talking about like what we might do in the future and rationalizing your plan in your resources.
Yeah one of the the great stories I have is memories I have is that in,
early 2003 we had launched the apparel category on the marketplace platform for Holiday 2002.
And we were just working on getting Sporting Goods out out but we were having an s team meeting just ask Migos John.
How many Merchants have relaunched sense the holiday and I started to explain that we essentially had none that we could launch any any any stopping goes the answer to that question and so I say six,
but and then he just he just stands up and he just talks about that that’s the most pathetic answer ever and that I had allowed,
kind of a hard that you see things in the business account hard things in the business and got it. But it really was just a message to me and everyone.
Although my job was director of merchant integration she wanted me to.

[13:35] Like I ran the entire Marketplace this is so if there were bottlenecks or slow down or or other functions in Amazon routes out of Amazon,
we’re slowing us down in launching.
Don’t pay attention to my job title like work the entire system take accountability for the entire end and process from.

[14:05] I’m not sure great moment is exactly how I check her I walk.

[14:09] Do you know those are those are Priceless so right and you’re one of the things I took away from that is like.
Answering direct questions directly is a really.
Subtle but important skill in working with senior people and ever since then you know and I thought I was a partner in a big consulting firm and work with life consultants in Psych the,
answering a question directly and then if somebody wants more explanation they will ask you to double click into it and everything right with.

[14:46] Yep when when Jeff does single you out do co-workers tend to have some empathy.

[14:53] I think everybody just understands the the kind of game and that it’s technically not about you it’s about just,
making sure that the entire organization isn’t becoming complacent or paying attention detailers young really living up to the values of the Enterprise and stuff so I don’t,
I never took it you know to personally and I I don’t.

[15:18] So
side note you know I work for a big big agency so anyway we’ll use a half a lot of and these days our clients want Amazon expertise so I have a lot of X amazonians on my team and.
Inferno you’re with this principle I was super excited that I’d hire all these excellent amazonians and that be really thoughtful Drake,
writers of narratives and it hasn’t really work out that way what I mostly get are people that do really bad PowerPoint because they’ve had this repressed desire to make slot.

[15:53] In in and so is as you say that and think about that what are you what are you going to take from that is it is it because it it doesn’t work or you know what I think.
Does take an immense amount of effort and I think people can wear out on it.
You’re in the right place for the right and I have found a powerful but yeah I’d be interested in what like what you what do you think away from that fact they stop servation.

[16:25] Yeah it was mostly joking but I do I mean in seriousness I I do think the answer is somewhere in-between I utterly convinced that The Narrative Approach and along with that the press release which is kind of the,
Visualize that outcome is beginning the process I feel like that is a an excellent thoughtful way to approach particular types of meetings like that that op1,
meeting that you’re describing.

[16:55] And you know what I did sometimes do with our clients is.
Team will write the narrative but then we end up turning it into PowerPoint cuz that’s just what management is used to and everything.
Our ability to succinctly communicate is so much better because we’ve hashed through writing out the narrative so I’ve done all sorts of had a hybrid versions of this.

[17:20] For sure and I guess I would say like I think it actually is a value in a very well-crafted well delivered,
presentation it’s it’s to solve an entirely different problem like it’s not that facilitate a meeting.

[17:38] Orchard Orchard deeply explain sometimes you know what can be a fairly complex idea in a consistent scale of a way right.

[17:47] Yep and that’s so yeah so it sometimes to evangelize something like after those decisions have been made or to communicate to a very broad audience or things like that you know Visual Communications.
Can can be quite affected by feel like they’re both good,
good tools for the right problems and I think there’s an awful lot of misuse of both of those tools and when their misuse their does that.

[18:13] Switch to some degree I would caveat all of these ideas which is the need to be used with wisdom right to the right the right idea the right approach for the right circumstance,
it is contextualizing to what’s going to work in your organization and so they can’t use LINE leaks,
and so I would I would kind of take this discussion about narratives and how to use them appropriately in caveat all of these.

[18:42] Yeah so I’m moving on to the next idea we wanted to talk about this is one that that comes up a lot is the two Pizza team approach so I can actually what you described it and and a little about.

[18:57] So so a two Pizza team is a specific type of team at Amazon that owns a service or core capability right so this could be.
The type of service that that you see on the website to be like the promotion service or the image service but it can also be a core,
back-office function like the inventory received process or the item forecasting process right,
it is a capability that you truly need to be great.
Two Pizza team is a small team ideally a team no larger than 10 the ideal to actually team of 1.
Owns the service in entirety and and that team owns the the.
Product definition product management engineering operations of that service in their goal is to drive adoption of that capability book inside of Amazon and,
xtro Amazon Amazon.
Lego blocks the service oriented organization concept,
and it’s a two Pizza team that owns a core capability and is expected to operate it at a world-class level.
When we forward over long.

[20:23] Got to end that metaphor is no more people than could be fed by two pizzas.

[20:27] That’s it yet so it’s a team no bigger than 10 which is.
Ashley went to pieces can see it is a cross-functional team often times it’s got a heavy kind of software engineering bent butt.
Sometimes a lot of you know business participation could have legal participation in it but it but it says it is a 8.
Ideally a fairly independent operating.

[20:53] And I am that is a key component of it right is that it’s they’ve relatively constrained their dependencies outside of that team so that I almost make it a sin to sort of like object-oriented programming where.

[21:07] That’s right into its instead of a service-oriented architecture you have a service-oriented organization to compliment a Target this is all about.

[21:21] Lacon Scott Scott and I actually tried to implement to Pizza teams for the podcast and we found that the pizzas would only feeds Scott and I so we had to stick with it to me.

[21:29] Well that’s the ideal two Pizza team small small independent team.

[21:32] Let’s call the Dream Team one question I have on that is this team of 10 people there cross-functional
do you use kind of like the old school language of a matrix organization so is is the I’ll pick on the.
Made it seem as like a lawyer or a finance person,
is that person like reporting to the team lead there or are they essentially over in the corporate legal admin structure and they’re just kind of like sitting on the team and then how do they.
The problem with the Matrix organization is you have two bosses and very quickly get your trays to get misaligned on this how how does how does the two Pizza thing working in those situations.

[22:16] Yes so you can have a mix of both so the pure two Pizza team is only dedicated to that service in that mission in in that capability sometimes,
that could have a fully dedicated illegal or maybe business development person.
Finance is always Matrix in because the the goal of mine answered Amazon is actually very strategic it really is meant to be an independent party both supporting and validating,
the opinions and decisions and financial analysis that goes long until you so you want to have a degree of Independence there.
I think when is the the ideas that goes along with,
the support teams is support teams and it actually idea number 12 in the book which is called gets yes Finance Tax legal in HR teams that matter and you know so many expert at most organizations,
what’s a really good at is pointing out all the reasons why you can’t.

[23:28] Finance teams at Amazon are more oriented and their mandate is really help you get to yes.
And in that might sound like a subtle.
I might should move but it makes all the difference when when they feel and act like an owner in an owner to helping this New Concept.
Business partner gets yes so most of the time.
Key functions like tax legal Finance are Matrix in the organization but the mindset is they they are a business partner.

[24:07] So then you know when you when you have all these things like the finance teams helping me get to yes disagree and commit and all that when do you ever say no to something and then Sue says.

[24:20] Will when when when the when the data and when the customer experience you know what kind of justifies saying to Noah,
apart strategy it’s is saying no and I think Amazon is a very disciplined job,
thoroughly thinking through something but then say no right sometimes that simply constraint that’s right we only have the resources the capability to do,
these two things we have five things in front of us we have to rationalize which ones we do or what order.

[24:54] Compromises saying No in fact I think in some ways it helps you.
Be much more deliberate about what you’re saying no to and what you’re saying yes to and then when you say yes to something.
Everybody’s on board with that and we aren’t having a bunch of leakage or kind of Shadow projects going on where you know we didn’t really say no to it so kind of try to sneak it in like that is not in general that the Approach at Amazon like,
very clear that’s a big part of you know that I reference it that the op-1 process is bringing forward all these near as all these ideas all the things we could do.
Then ruthlessly selecting the select you that we can afford to do,
Extremely well both in their operation but in releasing new capabilities they do it much faster much better than most large organizations.

[25:57] Yeah yeah one of the ways I’ve heard Jeff describe it that that I thought was pretty interesting was any talk about traditional Enterprises and like any one single senior stakeholder can kill an idea and.
Idea just you know dies on the vine right there and he talked about wanting Amazon. Almost be more like.
The Venture Capital Community where you know you can pitch the idea to a lot of senior stakeholders and you just need to get one sponsor to say yes.
Now that allows you to try to get that initial funding and and be able to take a project far enough to know to learn whether it’s going to work or not.

[26:33] And I think one of the powers of this approach is the ability to think big but you got a bet small right until how to how then with a big big concept like yep we don’t fully understand we don’t know if it’s going to work we call that thing of that.
Maybe not everybody is bought into it but together we go hey whoever the decision-maker is they’re saying yes we wholeheartedly by Intuit,
but then how do we proceed on it with as little.
Risk and as much learning as possible Right End and we’ll talk about this unit have a sale fast mentality in really what we mean by that type of failure is the scientific.
Disciplined testing process right that’s the type of failure were talking about his learning not true failure like failure of execution,
and so having that disappoint us having a big Vision but then making the project a small as possible test learn to adjust,
do we proceed we not proceed how do we just next step we do that like that is the complete agile Manifesto.

[27:36] Cool suits moving on idea for and in this kind of permeate solid Amazon and it’s in in multiple ideas but kind of customer Obsession starting with a customer working backwards do your time frame there,
what’s an example you saw that it really kind of a Illustrated.

[27:57] Yeah so I mean in Scott this is a business you probably know if a lot better than I do actually at this point which is the marketplace so when we were launching the marketplace business.
We’re launching it in the fall of 2002 we’re launching in the apparel category,
we we were you know we were nobody in this category right and so we were pursuing several big meaningful Brands and what most brands wanted was for us to pass the customer.
Cards to them and they would process the credit card instead of Amazon processing the order of the charges in this just passing forward the the order confirmation commitments on to the client.
And we felt like it was essential to the customer.
Experience with customer trust that Amazon be the only party that actually had,
the confidential in a payment information that we didn’t pass up forward we had to make some really tough decisions we passed on several really important brands in our in our parallon.

[29:10] Me like when you’re willing to walk away from from dollars in order to stick your.
Your example to me where where our understanding of our brand and customer Trust,
really letters into what I think was a really pivotal moment and I think I think over a long. Of time one of the essential strategies for why the marketplaces were.

[29:37] Yeah one of the other nursing case study is Amazon had not if they had to acquire them but they acquired Zappos because Zappos was even more obsessed around the customer than Amazon with the ugliest shoes the the
unlimited returns 365 than all that but is there a point where you can take it too far since this is one thing the.

[29:58] Sure absolutely,
it’s the first of 14 leadership principles is just one of 14 right and so again it comes back to the scene of these concepts with wisdom.
You can over index on any one of them at any point it’s it’s kind of like metrics right you always have to have a balanced scorecard with the same thing with how we approach things and so.
Customer obsession is really what good is.
Amazon and gives others the permission to do really weird things and to understand by customer extremely well that doesn’t mean.
You don’t have to be extremely mindful of the financial implications or the operating consideration or other aspect approaches are,
when you’re using them a couple of them.
One time and where they’re pulling on each other and that Force forces you into a completely new inside her observation not over-indexing on anyone.
I need you to bad places if that’s the only tool you use.

[31:17] Is Amazon giving any guidelines for bounce in the principles.

[31:21] You know that’s a great question I haven’t seen any,
I think actually one of the principles kind of lens itself to this macro perspective which is principle number for which is leaders are right a lot right in that that kind of says like basically you have to have extremely good
judgement which of these things use of right time in the right notes.

[31:47] Cool it another question I have this is one that’s been frustrating to get information on is I’ve heard several people say that every cuss word Amazon has this this kind of metric I’ve heard it called sugar and
you know there’s when the customer service rep on the other line is talking to Jason he has like sugar level 2 million cuz he gets like 10 packages a day so so they that gives them a fair amount of flexibility in,
replacing a device or something like that but you know there is a customer that can have a very low or even like a negative sugar rating and then the customers this customer service reps know to kind of
this is kind of a perennial return abuser or you know someone or whatever the algorithm is is looking at is is not a not a
premium customer and then the customer service rep has a different set of of kind of the cat box at customer in more tightly.

[32:42] I haven’t heard of the of it being called the the sugar metric or the sugar index that’s a great concept. I’m going to check in with some Amazon people but no doubt Amazon has.
Customer segmentation and they do different things for different customer segments I think I’m.
You know what I talked to your Prime customer you know and everything right Amazon when I go to return a package,
you know the commitment they make is when it’s received at the Fulfillment center are they expected the issue the credit in my packages at UPS the credit is restored to me right and so they obviously like you know this actually helps,
promotes John,
pinemoor instead of my lesson so we are going to accelerate the returns processing in and refunding his funds to him and everything right.

[33:43] Yeah that makes sense I want a pivot just lately there’s.
Often when we talk about these these principles with with folks date they have some Percy reason why that principal won’t work outside of Amazon or in their particular case.
Common objections over and over again so it’s one of the principles you have in the book I think it’s been swell 43 is the,
the bar raiser program and we’ve been lucky enough to have a couple buy razors on the show.
When we talk about you know that your net net Amazon has a super rigorous hiring.
Other clients are other readers are are fearful that having that rigorous of a program like don’t you eventually like make it impossible for,
are you to be able to recruit and be able to hire new people and don’t you with this dichotomy where you have people with tenure and seniority,
yeah and then you have like the most rigorous we hired down at people came later.

[34:45] Yeah you intend you know that kind of consideration is is is very real and.
This mystery I tell in that particular idea is really if I reflect back on my career.
The biggest mistakes I’ve made have been when I’m hiring in a hurry right I’ve got a job at project,
I’ve got a candidate that fits the bill but maybe,
that person like they they don’t have either the right you know kind of organizational alignment maybe there’s a limitations like I think they could do this type of project,
rest with your organization but still you move on it because you’re hiring in a hurry and so the bar raiser program one of the benefits of our radio program
party from Over the hiring team in the hiring manager is they don’t have that sense of urgency that often times the hiring.
They don’t become as compromisers.

[35:51] Typically as the hiring team does it say whether you and then in this is kind of how I wrap up the idea you know however you go about it Amazon however you do it,
think about how do you avoid,
hiring in a hurry and end your worst types of iron to stage with her hiring for short-term results versus a long-term career
because those are often times The Hardest Mistakes the most expensive mistakes that you live with in the business for a long. Time and that’s really the spirit
of the bar raiser program at Amazon which is which is hiring not just for the job of today but for the jobs of tomorrow and T.

[36:37] Yeah yeah there’s a professor at Warden that Adam grant that does a lot of research and inserted organizational management and he has a thing,
as important as it is to have the right team members on your bus it’s even more important to avoid getting the wrong team members on your bus.

[36:55] Yeah I agree you know one of the things you know that I always think about culture and everything is everybody thinks that culture is.
Is this attribute or this Essence that attracts and keeps.
T-Pain keeps Talent one of the aspects of culture is should also repel the wrong type of talent right and we don’t think about that.
It’s fine if.
The person is qualified that isn’t the right environment for it’s not our job to make a place the right situation for everybody right and I think that that’s something that Amazon is is is very.
I would take him out of his is like it’s not for everybody Amazon is not the right place for for every great capable person it’s that it’s a type of environment for people who align with how they see the world and how they see leadership.
And and that’s I think Jean for teams as they sometimes get mistaken then you know we should be a great place for anybody and that’s not true.

[37:59] Yeah no for sure that’s a difficult self-realization to make sometimes though I wanted to talk about another one I hear a lot of the rule 18,
in your book is about the advantages of a platform and like you know there’s there’s a lot of,
reasons that the department can be a huge Advantage but when you talk about that with a lot of other retailers like the the challenges they they lack vision and Imagination around.
What their permission to be a platform it’s because it’s probably not prime for example or am I not be a Marketplace so like you know. Do you believe that every retail entity has a an opportunity in a.

[38:46] I don’t and so you know what I outlined in the chapter and in this is the type of topic I’ve I’ve worked with lots of teams on is,
it’s not everybody strategy to be a platform company but.
The exercise every team can do and help make themselves better is ask yourself.
What are my core capabilities how would I make those independent self-service feature-rich cost competitive highly available capabilities that people outside my organization could use,
what would it take to do that,
and whether it’s the right strategy to proceed on them or not you will still come up with great ideas to improve and operate an architect better today even if not.
Platform companies in right thing so in no way I’ll go back again like it no way am I prescribed.
Any or all of these ideas are the right things it for anybody but but you do have to ask yourself.
You know if I’m not a platform what am I and how would I make myself good enough.
And that’s actually the lesson that I’m trying to give in.

[40:05] Awesome so hopefully that gives listeners a flavor of the ideas and I think we hit on may be 5 to 10 in there so so really less than 10% of the ground cover and soap hope that it was straight valuable,
the concepts are in the book we want to move over to the what does it mean kind of area so so I’ve actually I do kind of an Amazon stump speech and then
one of the first questions always get is
what’s Hebrew realize that you should count gmv in the marketplace and not revenue and therefore Amazon’s twice as big as people think that it is all that good stuff,
use it when the first questions I get is,
oh crap I see all roadkill is Amazon essentially Unstoppable what’s your answer that there must be a big part of your Consulting.

[40:54] It’s a it’s a big question I think especially with in retail I think that that that it is chunky question but the answer is is what a lack of imagination if that’s the,
if that’s the the the conclusion anybody comes from I think the,
anytime you you are passionate about your customer and you’re thinking about how you can serve some unique knees there’s there’s opportunities to the innovate and I don’t think Amazon has the lock on any of that.
You know Amazon is now the kind of the from a retail standpoint it’s just the Ubiquiti.
A provider.
With so many people want if they want uniqueness and they want service and I want experience and they want personalization all of those things don’t necessarily align with who Amazon is as as a
as a retailer in so I think that there’s a kind of examples of brands that are winning out there sometimes on the Amazon,
off the Amazon artworks that I mean.
How to compete with Amazon Alexa.

[42:07] Yes and I I mean I think there was a irrita when everyone was asking themselves if Woolworths was Unstoppable or Sears was Unstoppable at Walmart was on.

[42:16] Exactly yeah.

[42:19] I just had a pretty funny quote once like no no Empire successfully predicts its own demise.
But I sure would like my Empire to out with me.
What is a good girl you know when I’m curious about and I know this happened sort of after your 10 year there but you’ve obviously been fine and pussy.
Whole Foods acquisition and I spent a lot of time in the the grocery space and obviously that.
That that acquisition really caused a lot of people that sort of you know rethink their digital strategies and sit up and take notice but you know now that it’s it’s several years past their you know there’s a lot of.
Diverging opinions about how Amazon’s doing in grocery and and or what the future holds what do you have a POV on Amazon and grocery.

[43:14] Will a I think I have some opinions both on on Amazon and Retail Store presents as well as like what.
Any leader from any industry kind of takes on that so you know that’s the first thing I’d say is I think Whole Foods just an experiment for Amazon refriend.
Just by itself but then you start thinking about you know the roughly what is it 480 Whole Food stores that there are in the u.s.
What that point of presence starts meaning for Amazon and its customers in being to either you know shop pick up in store,
drop off,
other types of of categories that can leverage that physical sort presents like Pharmacy or something like that and so I think it it just needs into the flywheel and gives Amazon,
starting base for experimentation in in truly how to better serve their customer not just in grocery but in other capabilities also kind of the capabilities of presence of Whole Foods
with an active acquisition like tilt and you can start kind of connecting the dots forward. Underwear Amazon to go but the underlying.

[44:39] Any reader any industry can take from this is,
often times the strategies that have been successful for the past of the strategies that limit us going forward when I was it in fun we were so proud and committed that we were just,
Ecommerce retailer that that was such an inherent and natural Advantage business model we could never SeaWorld,
want physical store presents Amazon was obviously willing even well before the Whole Foods acquisition,
rethinking challenge their own strategy the one of the the ideas in the book is I get 21 which is called Never Say Never,
don’t let past positions create a trapped in the end of the lesson learned that is be very careful
about letting your past strategies especially those that made you successful.

[45:32] What do you think of I’ll ask you to pontificate obit either you mentioned pillpack that’s kind of a little little signal that Amazon’s interested in the pharmacy to get their health care partnership.
Honestly kind of poking around travel Services fintech some people even think they’re going to go after the Facebook
crypto kind of things do you do you have a prediction on Castle the next big verticals Amazon speed going to.

[46:01] Will a n i don’t think any of this is going to be a groundbreaking news but I think.
The area of logistics continues to me and will always be a big.
Category of innovation and scale for Amazon it’s a whether it’s back all Logistics last-mile Logistics.
All sorts of different nations in the past month the things I’ve heard that are interesting relative to,
essentially last-mile Logistics capability so I’ve heard a lot about delivery to garage I’ve heard a lot about delivery to trunk,
Kohl’s in Amazon announced a partnership that allow a customer return any Amazon order without packaging to a Kohl’s store to have it returned they continue to do.
My chain and Logistics in those are often times services that other people can leverage I think that would just 6 is going to continue to be at that has been for the past 25 years.
That for Amazon Healthcare is going to be there.

[47:15] Lots of different strategies right come from you know that you talked about the partnership with JP Morgan Chase Berkshire Hathaway it’s called haven.
That’s going to serve that I think it’s about 1.3 million employees at those three companies.
No employer no no patient no doctor is happy with the status quo and I think it really is going to take some external heavyweights like.

[47:44] Chat Tech create examples of how change can happen in Amazon’s going to,
employ their they’re pretty predictable play book of,
free better transparency give customers more Choice make it more real time and and and truly serve the inherent needs of the customer so maybe just a little bit more on preventive,
I’m a Specs than just reactive of.
What a great Playbook to apply in the healthcare so I think that’s going to be a big a big one end and when I’m really interested in and again no big great shock is just internationally how will the Amazon.
Retail visits descale while given all the success that Amazon has had in North America.
Figuring things out on on an international basis and I think that there’s so much more growth
and and healthy competition in all the international markets I think it’s going to be really interesting to see how Amazon creates.
Market specific.
Appropriate you know experiences and businesses that really fit markets in and start to mirror the type of success the Amazon.

[49:08] That doesn’t even touch you know what AWS will do and what the devices businesses will do and what the content businesses will do in call crazy in.

[49:24] Yeah I know it’s it’s good it’s going to be super interesting to watch I feel like one of the the challenges they have a new categories is as they get so much bigger.
Like they they really only can make bets that are going to have a meaningful payoff until like in some ways that feels like the biggest constraint on and what vehicles they go after his they’re just they’re just some particles that are just eventually intrinsically.
Too small to be a new bed for Amazon.

[49:50] Yeah I agree with you but I can point out things like you know just was always interested in having the world.
Biggest catalog items whether they were really selling or not so I don’t know if you remember but you know Amazon has this category called small scientific.
And instruments are you at we call this quits when I was at Amazon and it was like about beakers and we’ll scientific tools and and things like that,
like she just always side as a competitive asset remote to have an authoritative catalog on is he could every item in the world and so I don’t think.
I think they they need they need both things that are big and can move.
Place really long really small bats and see how those things are those things materialize overtime.

[50:50] Yeah I know know for sure that it is funny I get a little bit of a sense that.
Yeah they’re all these principles in Amazon that are practice all the time but like the one third of wrinkled and some of these principles are like if Jeff has conviction about something.
Like you know he only push it through regardless of the the normal Amazon process is that.

[51:14] Which which is really the prerogative of of management and the types of insights that you wish you saw from Senior Management in other companies which is instead of,
Venus consensus-driven leader and filtering what everybody’s saying like well I guess where we all think this is a good idea so let’s do it,
instead of your own point of view and have an insight about where the market is going where your customers are going and whether anybody agrees with you or not,
going for it and I’ve got to work with with a leaders who have that type of internal conviction in sight and they’re always willing.
To the challenge have encouraged ultimate points of view they don’t want they want to try to avoid confirmation bias.

[52:01] The end of the day when they believe in something they believe in something and and and they are going to commit the organization for doing something about it.
Typically not always typically at Amazon those things tend to be in a fairly bite-size in terms of.
Commitment levels and so they can really allow it to.
Time-in to figure it out like I think the Amazon go store is a good example of that where you know my guess is nobody on the finance team was saying this was a good idea but,
Justin some other leaders probably like you know this is a really interesting customer experience let’s do it and they kept it pretty small sense and they are obviously still figuring some things out about that business but you know they’re going to stick with it you’re not going to see them,
shut that down I don’t think any time quickly you mean.

[52:53] That not in fact I think there’s some rumors that we might see a new permeation permutation in the near future.

[52:59] What’s what’s the rumor.

[53:01] Well so there’s a wind the go team was first launched they actually took a 10,000 square-foot lease in Seattle in the neighborhood,
and and what we’ve now have heard is that the original go concept was intended to be old grocery store with a butcher.

[53:18] Has been there’s been some reporting that Amazon’s going to watch it a new grocery brand and I and I also believe that.
They’re going to take.
Right aspects of the Amazon go and adopt it overtime into Whole Foods right and so yeah I do think they are going to be experimenting with some different.
Store formats and some different categories in grocery is a really important category for them over over the long. Of time so they are.

[53:50] Grocery is one of those ones that that has scale and it has so much wallet share that have your you know you really trying to be customer Centric and you’re not.

[53:59] Amazon gloves everyday transactions right and so they they they they and they are willing,
Lou’s on that type of category business because they understand the customer lifetime value of a customer right and I think that’s
back till like one of the things we can take from the Amazon and it’s really about customer lifetime value versus versus trying to optimize on it on an item or order economics,
Amazon is the most item in order economic aware organization I’ve ever been around but they are clear that they are trying to,
demise for the customer lifetime value in so that lets them invest,
on one item I’m category on one order because they’re trying to win the customer.

[54:48] For sure a fun antidote on that that store I guess they took a lease eight years ago when they thought they were going to open a grocery store
and at some point during the go development they pivoted to the convenience store model which are much smaller so that store that that that real estate has sat empty and apparently of the Neighbors in that neighborhood her
I’ve been somewhat peeved because that was,
I’ll be there in a grocery store in Southern and excited that it appears to be an active construction site again and so that you know that’s what everyone’s waiting there,
see them peel the paper off as Windows and see what’s behind that store yeah.
But yeah I do start a video on on some of the other categories longtime westerns the show will know Scott you know has been beating the drum for a long time then,
that would just accept something that Amazon probably product sizes and weaponizes and I would just know in that regard that this week,
or maybe last week FedEx.
In their in their attempt a date they wisted Amazon as a competitor for the first time which is,
and a funny because every every year prior to this day been denying an Amazon compete with them in any way.

[55:58] And I think I think of you the other thing to be you know mine’s love in this isn’t over a short. Of time that I think.
Personalization on-demand manufacturing 3D printing.
All of those capabilities across retail categories is something the Amazons very interested in it so if you read some of their patents you can see some of the the areas of Interest they have in on.

[56:26] So that’s a perfect Segway for people that have listened to the whole whole show will get to the the big money question now so,
Amazon issues a press release tomorrow in announces that they’re coming into your space so maybe you are retailer in Australia and you know what Amazon expanded there or maybe maybe your FedEx or maybe you’re a chain of pharmacies or something
like what what is your advice John to someone that let you know it’s suddenly being confronted by the juggernaut.

[56:55] Well if you’re if you’re waiting until that moment then.
You’ve limited your options right and so the best advice is as if right act as if that is actually happened what would you do if Amazon.
I didn’t have that announcement or or the threat came those things before they actually happen to act as if,
you really limited you’ve really limited your options but yes that is the case and you know it.
Like you know double down on who’s your customer.
Obsessing about their experience how to you know Drive Out Cycles on and Brew cost lower quality and then,
how do you serve your password to existing customers in broader and deeper moments right like you know the best the best defense is a good offense he got to go on the offense in this moment.

[57:53] Cool one of the attorneys we talked a lot about on the show is the retail contradiction retail is is really struggling brands are going to Rex either either kind of,
larger brands have been around for a while or there’s this new kind of brand that’s being born this the digital native vertical brand
there’s bonobos war of your kind of examples and now I have a slight I show that there’s like eight thousand of these in every category would you think that,
that strategy puts risk to Amazon that you have all these brands are going direct to Consumer the do you need an aggregator like Amazon.

[58:29] I think like most things at it’s it’s some of all of that I think that it’s an opportunity for Amazon because Amazon is the.
Great aggregator of,
customers customer trust not everybody wants everybody wants a hundred Brands but you don’t want your credit card at a hundred different places and everything is I think your presence.
Opportunity for Amazon it also is a beacon for Amazon his you know what sort of new capabilities are customers hungry for it so they can predict that I also think it,
it is you know back to the lake what a great opportunity what a great time this is because you can’t innovate you can
you know do all these things and you can trial and you can scale so much as a cheaper than you used to be able to do and so I think it it you know a traditional retail is struggling,
retail I think is going through an amazing,
I’m first but anytime like young us with destructions about right there’s there’s new winners and there’s no loser and I think that’s definitely what you’re saying.

[59:38] Awesome suit final question so obviously I strongly recommend people ever go out and get the book it is also on Audible so if you prefer that you’re obviously listening to this podcast if you prefer to listen to the book it’s on Audible,
did you do the reading or was that a.

[59:54] I read I read the introduction and then actually is somebody who’s who read my other books read the rest of the day.

[1:00:00] Yeah I thought this the one time I actually did the Dachshund Rican kind of like to read on Kindle and typed out of a sudden it was
it’s cool to be able to kind of digested more rapidly that way so strongly recommend that but if if folks want to find you online do you are you
regular pontificator on with the tweets are you around lead in what’s the best way.

[1:00:21] Play I am on LinkedIn John Rossman or my my blog my website is Rossman and I.
I get so many great questions every week whether it’s people at Amazon interviewing Amazon even with Amazon whatever it is and and I love,
I asked you having people ask me like they wouldn’t you mean by this or you don’t give me an example and so there’s always stuff.

[1:00:46] Greatly really appreciate you taking time out of your busy schedule to answer our burning questions from the book.

[1:00:52] Well thank you very much for the.

[1:00:54] Yeah thanks very much for being on the show John and Provost honors if we didn’t get to a question that was burning in your mind or you have a question
encourage you to continue the dialogue on Twitter or a Facebook page as always if this was the episode that that you know is really going to add value in your day job we’d love it if you jump on iTunes and give us that five star review
we’ve been watching and waiting we see your mass hovering over it and this will give her a time to do it and you know we’ll look forward to reading all those reviews so until next time.
Happy commercing.

Jul 4, 2019

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."

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

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


[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.

[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.

[2:36] Thanks guys it's it's a pleasure to be back.

[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.

[2:47] And I always like to say is I know that's my title because I'm the one that made it up.

[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.

[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.

[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.

[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.

[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.

[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.

[6:04] Yeah I saw that on Facebook isn't the tell listeners the name of your band.

[6:09] Oh that yeah the band that's playing next week I'll be playing with his the skews.

[6:13] Very retail friendly accept accept other people really like what.

[6:18] Right right at this is for our retail and consumer products practice so everybody there should get the inside joke.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[21:48] Yeah you're right here you're right.

[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.

[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.

[23:22] I don't know if I'm wishing for that or not.

[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.

[24:45] Yeah and yet no CEO from an apparel company has ever mentioned that for missing their tops.

[24:50] You're right right right the weather about that.

[24:54] Iceland.

[24:57] Too hot to cold.

[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.

[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.

[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.

[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.

[29:33] Yeah and like their stock just crashed just from you.
Zuma country doesn't work.

[29:43] Goat yoga is the thracian.

[29:45] Goat yoga hot. Yoga.

[29:48] I go get the other goats have to be hot.

[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.

[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.

[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.

[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%
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.

[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.

[35:22] Right right right.

[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.

[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.

[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.

[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.

[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.

[39:26] Right right right.

[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.

[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.

[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.

[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.

[47:48] Get out of the middle.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[55:29] Right right right that's a great story but I don't need a thousand consumers I need to know Millions.

[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.

[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.

[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.

[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.

[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.

[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.