Consumer Sentiment No Longer Predicts Spending

Welcome And What NRF Does

Hello and welcome to Indicators, where we turn the latest data into insights you can use. I'm your host, Mike Chung. Here with me today is Mark Matthews, Chief Economist and Executive Director of the National Retail Federation. Mark, welcome to the program. Mike, thank you so much for having me. Absolutely. So maybe to kick things off, tell us a little bit about your organization and your role.

Sure. So uh I work with the National Retail Federation. Uh we are an association in Washington, D.C. representing the uh retail industry. And I am uh chief economist and lead our research team. I've been there for about 10 years. Uh built the built a research team uh and it's been a really exciting time.

Oh, that's terrific. And a lot of our uh listeners are in automotive aftermarket. Tell us a little bit about the size and scope of retail in the United States.

Yeah, it's it's big. Uh, you know, and uh depending on how you measure, measure it, uh probably about uh seven to eight trillion dollars in sales. Uh so uh uh huge impact. Uh you know, uh definitely uh one of the largest industries out there. Uh if you measure it in terms of employment, uh the the total employment impact, uh we are the largest industry in the U.S. So uh major impact and lots of different areas, right? Uh you mentioned auto, uh, you know, we cover everything from online to uh you know uh big uh department stores and everything in between. Sure.

How Big US Retail Really Is

And when you say eight to ten billion dollars, that's probably what, or eight to ten trillion dollars, excuse me. That's what ten percent of GDP, give or take?

Yeah, I mean, uh so uh when you measure by GDP, we're about uh six to six and a half percent uh because uh GDP is measured on a value-added basis, uh, and retailers don't make a huge margin. That margin is what determines your your GDP impact. So uh retailers actually, you know, by virtue of them working to keep prices low, uh are to some extent minimizing their overall impact on GDP. Uh so the retail multiplier, as we refer to it in economics, is is actually lower. Uh the multiplier in manufacturing, uh, the reason that people care a lot about manufacturing, for example, is that the multiplier is very high because you're taking unfinished products and turning them into finished products. Whereas with retailers, we're taking uh finished products and making them available to the customer.

Right. Thanks for that distinction. And when we think retail, small, medium, large businesses, in-person, e-commerce, as you alluded to, and across all types of product categories. So I bet it's a very fascinating place where you work.

Yeah, absolutely. Uh so again, and I'm gonna say this multiple times, depending on how you measure it, because there are so many different ways to measure things. Uh, there are about one uh one million establishments or storefronts in the US. But if you include what are called non-employer establishments, uh people who run their business but don't employ anybody, uh, that jumps to about four million. Uh and and that's things like Etsy shops, right? If someone owns an Etsy shop, they're a retailer, they don't have uh any employees, so they go down as a non-employer establishment. Uh so uh yeah, pretty, pretty big uh depending on how you measure it. Aaron Powell Sure.

And when we think about consumers, I think we can spend a little bit of time talking about consumers, sentiment tracking, indicators that you and your team watch, because certainly as we read the news, we see consumer confidence, consumer spend, inflation, disposable income. Maybe to start this

Tracking Consumer Health In Real Time

discussion, tell us a little bit about some of the things that you and your team watch to monitor and understand consumer health.

Yeah, you know, all of that. Uh we like to say that there's nobody who's closer to the consumer than uh than retail. And, you know, as a representative of the retail industry, you know, we are uh paying, as you said, very, very close attention to what's going on. So, you know, we're looking at broader trends in the industry. How are things changing? Uh, you know, what technologies are are coming on stream to change all these things. But at the most fundamental, uh, these are retailers that are trying to appeal to consumers. Uh so everything they they do is through a consumer lens. And I think one of the challenges today of being a retailer is uh, you know, if you go to our big show in New York, uh, you know, we get 40 to 50,000 people there every year. And I'm just amazed every year when I walk through the aisles and aisles of all the different technologies. How do you choose between all these different technologies? And most of them are geared towards enhancing the customer experience. And retailers right now are faced with a challenge like a lot of industries are where do you place your bets, right? You've had limited capital to invest in. Uh you've got AI, everyone feels like they need to invest in AI. But how about all the other things that you need to invest in to make your store more appealing? Because the one thing about retail is it's incredibly competitive. So uh, you know, how do you differentiate yourself? Uh, one on price, but you know, a second important way of distinguishing yourself is on experience. Uh so creating that seamless experience if if somebody's online or in-store enhancing that experience. Uh, you know, we have uh sporting goods stores who have, you know, uh invested huge amounts of money in making that experience interactive. So uh, you know, if you're gonna gonna buy a golf club or a baseball bat, you can actually go there and take swings with uh with them. So all these different things, all these different ways of uh interacting with the consumer and understanding the consumer is incredibly important to retail. And for us to uh work on behalf of retail, we really need to understand the consumer. So we spend a lot of time, you know, uh polling consumers, asking them questions, uh trying to understand what they're thinking, what they're feeling. Uh you mentioned sentiment, uh, you know, very, very important. But the one really interesting thing we've seen uh over the past few years is sentiment is not really correlated to spend anymore. Uh, we've seen this massive shift away. You you used to be able to look at sentiment and and highly correlate it to spend no longer. Uh that relationship was broken uh during the pandemic.

Interesting. Before we dive into that, you said something um interesting, and I just kind of want to clarify. When you talked about NRF's show, it sounds to me like that's almost a business-to-business opportunity where providers are coming in and sharing the technologies that they're investing in so that they can better sell to their consumers. Am I hearing that correctly?

Yeah, yeah, great, great question because it it serves many different functions, right? Uh it serves as an event for uh our uh industry and our members to get together and to meet and to talk about the things that matter to them. There's a lot of content. Uh, so we have people on stage uh representing the industry uh or people who really understand the industry talking about the things that really matter. Uh so you know, AI has been a very hot topic. Uh, you know, what uh what's going on in AI and how do you how do you stay ahead of all that? Uh so there's that uh content piece, uh there's the uh convening piece, but then we also have uh you know an entire floor of the Javits, uh actually two floors, uh devoted to uh people who are you know displaying their wear, so to speak, uh vendors uh who are out there exhibiting their products, exhibiting their businesses, and sharing some of their innovations with uh all the retailers who are filing through the building, oftentimes you know, in search of you know what's the next big thing that I need to invest in to make sure that I can stay competitive.

AI Search And Store Automation Bets

So for the retailers to stay competitive, can you just give us a couple of examples of some of the kind of newer technologies that are emerging so that retailers can do exactly that?

Yeah, yeah, like I said, uh AI is uh is at the top of everyone's list, right? Because if you think about it, uh we've gone from you know a place where, especially for online sales, that you need to needed to invest in AdWords, right? Uh because Google search was was everything. Uh that is shifting to AI search now. Uh so it's no longer a question of just being investing in in ad words. You need to make sure that uh you are actually represented in the AI because more and more people are using AI to not just purchase things, but to shape their purchasing journey. Uh when we talk to consumers, uh, and these aren't huge numbers yet, but they're growing rapidly. Uh people go into AI and they will say, you know, I am uh you know, I'm I'm shopping for the holidays, uh, I've got X number of family members, uh, you know, this is my budget. Help me figure it out. Sure. Uh so we're seeing more and more of that, and retailers retailers need to respond to that. So you know that's uh that that's really important. Uh but you know, just uh, you know, things like uh, you know, oftentimes in the past, uh, you know, you've had to rely on salespeople to walk up and down the aisles and make sure that the the pricing labels are changed or there's enough stock. Uh, you know, if things aren't properly uh in the right spot, you know, they're not correlated with the price. Uh nowadays you can have robots going up and down the aisles and doing all that. And the great thing there is, you know, people are always worried that robots are gonna take people's jobs. Uh, we haven't seen that effect at all, right? We we've seen lots of automation come online. For example, uh uh you know, people going to self-checkout, right? Everyone thought, well, that's gonna kill all the cashier jobs, and you know, you're gonna have fewer people working. Uh, what we found is we have just as many people working in the stores, but allows them to do other things, right? Uh retailers really understand that experience is really, really important to the consumer. So what you're probably not gonna do if you have self-checkout there is reduce your staff. You're gonna give them other responsibilities to make sure that that customer journey uh really, really works for the consumer and it's seamless and it and it feels good. And the interesting thing, I think, is that what we've seen with self-checkout is that people actually choose self-checkout. Um I'm actually one of those. Uh I actually want, yeah, I want to, I want to do that myself for some reason. I don't know what what it is, but I just want to, I wanna, I want to be in charge of that experience, right? Uh so again, it's like uh retailers have to figure all this out. You know, they have so many different areas to invest in. And, you know, oftentimes when you are investing in some of these things, you are eschewing investment in in other areas and hoping that you're making the right bets. But yeah, there's lots of different technologies that uh that retailers are looking at. But at the end, you know, what we said at the very beginning is this is all about appealing to the consumer. Uh so this is all driven through the lens of the consumer. And you are right or wrong based on how the consumer reacts to it, right? With self-checkout, it's worked out great. Uh, you know, people seem to really enjoy it, but we've had things that haven't worked, right? Uh everyone was talking about uh, you know, uh mirrors that uh you know you could go in and you could uh try stuff on without really trying things on. Uh and all these technologies, they're they're you know, all the hot stuff from five years ago, probably seven of the top ten haven't really worked out, right? So uh again, the challenge for a retailer is figuring out how to how to place your bets across all these different things that you can uh invest in.

Yeah, thanks for sharing that. There's just so much there. And just to briefly highlight some of that is what I heard is you've got technology and uh investment, software, and then behind that's going to be the infrastructure to process all that data, perhaps characterize, put personas on your customers, help you as a company keep track of your consumers, think about what they are purchasing on, what their in-store experience has been like, and then the physical, the technology you highlighted, whether it's a robot, a scanner, and how is the consumer interacting

Data Trust And Digital Shelf Labels

with that?

So really fascinating. Sorry, just quickly, the the thing is that a lot of this technology scares the consumer, right? The consumer doesn't want their data floating around and in the ether. They're worried about that, they're worried that they don't trust big businesses. And one of the the things that we're seeing is that as US businesses are trying to shift towards electronic shelf labels, and think about it, right? One of the frustrations for me as a consumer when I go into the store is making sure that everything is properly labeled, right? Uh and that prices are up to date. It's a headache for the retailer to have to have associates going around and changing prices on these little paper things that can fall out uh or can be wrong. Uh, Europe is way ahead of us on this front. Uh, you know, Scandinavia, for example, uh, you know, so many stores in Europe now have digital shelf labels. Uh this is actually problematic in the US because we see people uh on the political side of things saying uh not trusting the the process. Uh and you usually think of Europe as being much more protectionist when it comes to the consumer, but again, they're ahead of us here because we have uh certain states that are saying uh we don't want digital shelf labels because we're afraid that uh the the retailers are going to change the prices uh uh between when I walk in the store and and when I uh pick the thing up and when I get to get to checkout. Uh but the real reality of the matter is that you know this is important, these are important investments to make everything better for the consumer and more efficient for the retail business. So one of the challenges we face with technology oftentimes is people are afraid of these changes. Uh and that can really slow down the adoption process.

That makes perfect sense. And um, not to um, you know, I think about gasoline prices, right? I think the rule is you can change them once a day. And I I do remember some debate on is there going to be dynamic pricing in a grocery store because Ticketmaster, airline tickets, there's a bit of fatigue and frustration there. So it'll be interesting to see the policy follow the um the policy follow the technology accordingly. So yeah, thanks for sharing that,

Why Sentiment Split From Spending

Mark. Um earlier you talked about the disconnect, if you will, or the the the break in correlation between sentiment and spend. Let's let's talk about that a little bit. Can you expand on that?

Yeah, so if we uh if we go back pre-pandemic, uh there was a decent correlation between sentiment and spend. And what we saw during the pandemic and and up till now, uh the last five to six years, is that sentiment has remained really, really soft and spending has been really, really high. Uh you know, especially if we if we think about retail sales and we think about you know the period 20 uh 21, 2022, we had record retail sales. Uh let me give you a little bit of context. So historically over the last 10 to 15 years, uh average retail sales growth is about 3.6% per year. In 2021, we were over 7% in 2020. And this was dollars-based, right? Uh uh yeah, this is yeah, it's a total total nominal spend. Uh so the growth was uh 7% in 2021, uh 14% in 2022. So uh more than three times a normal year. And at the same time, sentiment was incredibly low. Uh, we saw people uh really not feeling comfortable about the future, the economy, and all that. And we continue to see that today, right? Uh through that you know, 9% inflation that we had, sentiment was incredibly low. Uh through the the period of the last couple of years, uh sentiment, uh depending on which measure you look at, uh, but the University of Michigan's uh sentiment index is one of the most commonly followed. Uh, you know, in the last six months, we've had readings that are the lowest in the history of that index. And at the same time, uh retail sales and consumer expenditures have been growing about 5% this year, so well above norm. So for some reason, the consumer feels a lot worse than the economy is reflecting uh and their ability to spend. So they've been spending through some of this uh this angst that they feel. Uh, you know, I've heard it referred to as griping and swiping. Uh that's exactly what we see in the economy. Uh consumers don't feel great, but they continue to spend. Uh the the U.S. savings rate uh historically has been about uh 8.4%. Uh it's 3% right now. So people aren't saving, they are spending. And, you know, I guess you could say that, you know, that shows some of the challenges in the economy uh because they aren't able to save uh as much. I would flip that on its head and say you don't do that unless you're feeling relatively positive. Uh and one of the things that we've seen is for the last three or four years, uh, wages have grown above the rate of inflation. And uh, you know, people still had some of that pandemic savings left over. So we've been able to uh continue to spend despite the fact that our sentiment is low. Now, one final point I realize I'm rambling on and on here. No, no, this is great. Yeah, is that uh there was a study done by Brookings Institute uh a couple of years ago that showed that you know they they basically looked at uh media coverage of economic news. And what they found is in the last few years, the negative sentiment uh for economic news is four to five times as high as it was in the preceding years. So the media is taking a similar piece of economic news and putting a much, much more negative slant on it. Now, I'm not blaming the media for all of this, but I think it's reflective of the fact that I see the economic data and it's not nearly as bad as the sentiment is. And so people are are really they're they're feeling it, they're they're feeling it in their psyche, but they're not experiencing it in their pocketbook. And what drives the spending is what's in that pocketbook or or that wallet and not what we're feeling.

Thinking about inflation, thinking about necessities versus semi-discretionary and discretionary goods. That's one thing we can kind of I'd be interested in your in your uh commentary on. As well as I think you wrote about um spending by um income decile. And um, if you're good with it, I'd love to share the link in the comment section to the article you had written recently. But um, you know, two potentially big topics, but can you talk about that a little bit in terms of say the income by decile, specific demographic groups, whether by income or otherwise?

The K Shaped Spending Economy

Yeah, and you know, a lot of your listeners will have heard about this as the K-shape economy, uh, and probably have seen some of the controversy as to whether it's a K or you know, maybe it's a C, or you know, as uh Secretary Bessant said, maybe it's an E. I've heard uh the uh the X shape uh mentioned. So people are throwing uh alpha alphabet letters at uh at the shape of our consumer spending. Uh I and I'm gonna say I believe, but really uh this is based on data. Uh, you know, I believe in the K. Uh I think we've been seeing a K shape, and I should probably define that, right? Because uh you can look at the same set of data, and depending on your start point and your end point, uh you might see a different shape, right? So uh defining the K as uh higher incomes, growing their spending faster than lower incomes, right? So lower incomes are are seeing their spending uh power diminish and their overall spend as a share of total spend diminish. And that's a really important point, right? We're talking about a share of total spend. So it doesn't necessarily mean that lower incomes are are you know really, really in bad shape when it comes to total spending. It's just that higher incomes are spending a larger percent of the of the total pie. So uh there has been there have been some research done on this. Uh and uh again, there's a lot of contention around this because not everybody agrees with it. Uh, but the uh the research showed that uh if you go back to 1990, uh the top uh 10% of spenders spent about 30 37% of total share of spending. Today, that's 50%. So the top 10% spend 50%. And we see this mirrored in our data when we when we look at uh you know credit card data and transactions. The top 10% of spenders make an inordinate impact on total spend. So you can actually have a scenario where the bottom 80% of spenders are flat to negative, but because the top 20% are positive uh and and relatively strongly positive, that moves the entire sector into the positive, right? So when we look at things on the aggregate, it looks hunky dory. You know, we see growth, we're all happy, but under Understanding that that growth is driven by a higher share of spending amongst the higher incomes. And that is like masking some of the weakness in the lower numbers.

That's fascinating. A couple of thoughts come to mind there is the spending effect, like you said, of the wealthier, the more affluent, and sort of this trend towards experiences, spending more on perhaps some of the more discretionary things. And then the second thought that comes to mind is back in high school reading The Great Gatsby, I remember this quote in the beginning of the book that said, the rich get richer, the poor have children, right? And I can see where that sort of sentiment can lead to some of the angst and sort of um just distress that consumers have and polarization of society. I mean, I know that's a lot, but and I might have interrupted you somewhere along the way now.

So what you bring up is is incredibly relevant when we look at the consumer and we look at spending, right? Because

Goods Get Cheaper While Services Grow

the way that we spend has changed over time, right? So if you go back to uh if you go back 50 years, for example, uh we spent more on goods than we did on services. Today, we spend almost 70% of our total expenditure on services and only 30% on goods. So we have shifted the way that we spend. Um it's interesting. Uh if you uh if you go back to the the the 1950s, uh spending on goods uh and I should refer I'll refer to it as soft goods, uh so things that uh that are perishable, right? Not uh not durable goods, uh, but you know, apparel and food and stuff like that. In in the 1950s, spending on that accounted for 35% of our uh share of wallet, our total spent spending. That has dropped to uh almost single digits now. Uh so only about 10% of our total spend is on those categories. Uh so in many ways, uh goods have receded to a much smaller share of our total spending. Uh you know, if you go back 30 years, goods uh and I need to make sure that I get these numbers right. Uh I believe a basket of goods 30 years ago uh today costs you about 1.28 times what it did 30 years ago. But our income, the median income has increased 2.6 times. So good, we can buy more goods uh without actually having to uh to to spend that share of our uh our wallet. And we're spending more of that on services. And one of the things that really interests me is you know, people talk about how appliances don't last, right? Or, you know, I used to, you know, I'd buy this uh 20 years ago and uh you know it would it would last a lifetime, or you bought something bought a fridge in the 50s and it lasted a lifetime, and now the obsolescence period is 10 years. What's interesting is that because prices have dropped so dramatically, especially for durable goods, which are things like uh, you know, refrigerators or or cars or things like that, the prices have dropped so much that you are actually almost better off uh if you are replacing it every 10 years than you know, if if 50 years ago you bought something that was gonna last for life because prices are so much lower, but you're also getting a much more, and I'm not gonna say better product. Uh you're gonna you're getting a product that does so much more, right? Back then you had a little fridge that had uh a fridge section and a freezer section, and that was it. Nowadays you're getting a much, much larger fridge with an ice maker, water on the front, uh compartments all over the place. So the technology has advanced dramatically. It's much more efficient, uh energy efficient as well. So while people are right to complain that things don't last as long, uh, you're actually almost getting a better deal in this environment because you're getting, in many ways, a better product that doesn't cost as much. So you can replace it every every 10 years and stay up with technology. That's that's my personal take on things, I should say. There hasn't been a lot of academic research I think done on this subject. But when I look at the data, these are the things that jump off the page at me.

Yeah, thanks for sharing that. And I and as you talked about the progression of services occupying that much more of a our share of wallet, I think about things like cell phone service, streaming service, could be car share. And I wonder things like that could perhaps be seen as essential. And for consumers who might be struggling with you mentioned wage growth getting um eclipsed recently by um in general inflation, and then the sort of societal pressure, if you will, like I have to have these things in order to survive. That might be adding to the general malaise, if you will, from a sentiment standpoint.

Yeah, I think there's definitely uh definitely a sense that uh we are in a over consumption mode,

Trading Down And Cutting What’s Easy

uh, that we are consuming a lot and and not saving enough. Um and yeah, I I I you know it's it's a great point you make, uh, and one I haven't thought a whole lot about connecting sentiment to uh to to all this band. But there's definitely, especially amongst younger generations, a sense that I need, you know, we are we we don't live you know within our own four walls anymore. Our life is broadcast to to everybody. And uh there is this feeling that you know when you have that hot product, uh that everybody has to have it and everybody needs to show it. And uh I do think that puts uh even more pressure uh on on consumption than the than we would have seen. And it is challenging, like you said, uh if your income isn't isn't growing faster, uh, you know, you you have to make choices, right? Uh the great thing about you know being in the top 20% of spenders, the the ones that are growing spending is they have fewer choices to make. Uh once you move down that uh income decile group, you know, you're constantly making choices. If I want this, I can't spend on that.

Uh oh, it's like the substitutionary in terms of choices, like exactly giving up something for something else.

Yeah. Exactly. So what we see, you know, I talked about psyche not impacting total spending. What psyche is impacting is the way we spend, right? So we're spending just as much or more because spending is growing, but we are feeling tight. We are feeling because probably inflation, we're feeling like we have to be careful how we spend. So we're spending a lot, but we're also economizing as we spend by trading down. Uh so instead of buying things off the top shelf, we are buying things off the middle or our bottom shelf. Instead of shopping at mid-priced retailers, we are shifting our spend to lower price retailers. Uh so I think where you're winning in retail today is if you can convince the consumer that you're offering the best price, because most consumers out there are very, very concerned about price because inflation is in the news everywhere. So even though economically speaking, we're not in terrible shape and uh you know, spending-wise, things look great, that sentiment is driving a fundamental shift in how we spend our hard-earned dollars.

You know, you bring up a great point with the trading down. That's something we see in the automotive aftermarket. If prices continue to go up, are people going from I guess best to better, better to good, to a value line product, to a private label product? Are they perhaps delaying maintenance? Are they doing it themselves? Um, can you speak to that for other um industries or product groups?

Yeah, you know, I I think uh we we definitely see consumers making those those hard choices and determining how they apportion their share. And, you know, we often see it across sectors uh as well. So when gas prices started rising and and people were feeling a little bit of a pinch, uh, what did they do? Well, they cut the things that are easiest to cut, right? So the first things that drop off are things like, okay, I'm not gonna go out and eat, you know, I'm not gonna have that uh meal out this week. Or, you know, I have five streaming services, I'm gonna cut one of them. Because the reality of the matter is that uh higher gas prices probably only mean about you know a $20 a week impact on the average consumer. So the question is, where do I make that $20 savings? And oftentimes it's in areas where it's quite easy to uh to pull back. So I think that uh that conscious decision making about what do I need uh and and do I need the best or you know, can I survive with a mid-level product is something that consumers are are doing all the time. But it's not just the product itself, it's where they buy buy the product, right? Because uh there is a belief that they're gonna be able to get that cheaper. And one of the things, when I was talking to you about inflation and and goods, uh, you know, apparel is another area where we've seen you know dramatic, dramatic drops in how much things cost, right? Uh, you know, you can go into a discount apparel retailer and buy a shirt for for $5 now. Uh yes, it becomes disposable. And, you know, no, maybe that's not a good thing for the environment or for the people who are making those products, but it but at the same time, uh, what that's allowing these people to do is spend less in this area, which allows them to do more in other areas. So when it comes to those things, and you know, you talked about some service areas, uh, you know, the big areas of spend in the services side of the economy is uh home, rent, uh, education, healthcare, all those things we we care a lot about. And the prices have increased dramatically over time. So consumers are having to make those choices at a very macro level. Uh, you know, my healthcare costs more, my insurance costs more, I need to make savings elsewhere. So it happens at that macro level, all the way down to the micro level. When I'm in the store, how am I shopping? What am I choosing? Uh am I choosing, you know, the rice off the bottom shelf or am I choosing the imported rice from uh from Japan? You know, it's uh all these difficult choices that we have to make as consumers.

I appreciate the uh commentary there. So we talked a little bit about sentiment, we talked about

Reading Data Without Forcing A Story

income. Um how do you advise other retail analysts, whether in retail or uh analysts across other sectors, to in in terms of interpreting data like sentiment and income? Like what other how do you perhaps uh advise advise on uh getting the whole picture, if you will?

Sure. Yeah, I I think the the challenge that we live in now is that data is ubiquitous. It's it's everywhere. Everyone has their own data set, and there's almost too much data to go in without a point of view, right? Because you you just can't analyze it all all of it. So what I often tell people is have a perspective, you know, go in there looking, and I do this all the time with our uh our uh survey data. You know, I will go in with a point of view based on things that I'm seeing elsewhere and say, does this data that I'm looking at now uh support the things that I think? And in some cases it does, and that's great. Uh, in some cases it doesn't, and it's confounding. But that means that you need to dig deeper or you need to reassess your uh your hypotheses. Uh, because I I think the one thing that you can't do is go in there and force the data to uh to tell you the story that uh that you wanted to tell you, right? Right. I think there's uh saying about torturing the data, right? Uh you really have to allow the data to tell you the story. Um, you know, one of the more interesting things that uh I noticed when we did our uh uh so every every event, every celebration, every major event, uh we track spending uh for Mother's Day, for Father's Day, for Valentine's Day, for back to school. And the Father's Day data, um I saw that you know there are some increases that were you know a little bit surprising. And I looked a little bit closer. One of the areas that had really grown was gifting your uh father personal care products. Uh and I was looking across the data and noticed that uh you know it had been taking share from those historical things that we used to give dad, like gardening tools or uh, you know, uh uh a saw or a hammer or a drill and all that stuff. That has been falling away, and people have been spending more on giving their uh their father's personal care products. Uh, you know, maybe because all those years spent hammering things, uh, we need a little bit of hand cream to uh to get rid of all the calluses. Massage gun. Exactly. Exactly. Uh, but that is reflected, you know, when you go into a store, uh, as an older male myself, you know, I if I think about these stores 30 years ago, we didn't have our own personal care aisle, right? Uh there were limited options. And nowadays you go into a store, you know, there's a whole men's section for personal care. So, you know, I saw that in the data, and it made me think, you know, is that supported by what I see everywhere? And it is, you know, we are, you know, we as men are, you know, maybe getting a little bit more comfortable pampering ourselves, and our family members and loved ones recognize that and are supporting that habit by going out there and getting us the things that we can pamper ourselves with rather than the things that we need to uh nail and hammer with and uh and get all frustrated over. But yeah, so that you know, I think it it's really important when you look at the data to go in with a hypothesis uh and a point of view, but also keep an open mind because uh, you know, it may not tell you what you're expecting, or it may tell you something uh that that you're not expecting to uh to see.

Oh, that's fascinating. And I guess like we're getting towards the end of the conversation here. I feel like we can go for hours. So we might think about doing a round

Loyalty Cards And The New Data Flood

two in the near future if you're game for it. Um thank you. Um thinking about data, retail data, consumer data, and perhaps the future of data. Um, what kind of limitations, what kind of guardrail should we be thinking about when we're looking at data? And perhaps what could the future of data be, whether retail or otherwise? I know that's a lot in one question, but yeah, I love your perspectives.

Yeah, you know, it it uh it's it's really an important subject because uh, as I said before, data is ubiquitous. Uh everyone has their own data sets. Uh yeah, I do think that you know, retailers and other industries are starting to take it more seriously and recognize the the amount of data that they have out there uh that helps them understand the consumer better, right? Uh this all goes back to uh so I lived in the UK for 17 years, uh, and uh there was a company called Dun Humbe, uh, who basically were one of the first businesses to get out there and analyze data. And they worked with a UK uh grocery retailer called Tesco. And Tesco said, uh, let's just give Dun Humbey all our data and see what happens. Dun Humbey came back and showed them some information that they gather on the consumer. And the chairman of uh Tesco uh famously said, uh, you guys have told me more about the consumer in in a couple months with our data than uh than I've learned my entire life working in retail. So, and then Tesco's use of data via their loyalty card allowed them to grow from, I think, the third largest UK grocery to the largest grocer in Europe uh using data-driven insights. So it really is important for businesses to understand that uh there is an opportunity to ingest huge amounts of data that allow us to be more competitive and understand how consumers are behaving. And it's not just the traditional data that we think about, right? There are vendors who take satellite pictures of parking lots to tell you how much traffic is going out. You know, there are people who are traffic uh tracking foot traffic, uh, there's uh credit card data, there's there's just so many different sorts of data. And I think what's challenging for everybody, uh, and this goes back to what I was talking about with retailers earlier, figuring out when in this with this this plethora of of uh you know technology out there, how you place your bets, it's the same in the world of data, right? There are so many data streams out there. How do you figure out which ones matter? How do you figure out which ones you need to be buying because none of this data is free uh in order for you to get that 360 perspective on your consumer and how they're behaving, uh, because that can help you figure out why I'm losing market share in this part of the country and who am I losing that market share to, and what do I need to do to fix it? Really, really important business uh decisions that can be helped by that data, but you have to make those hard decisions as a person who works in insights to figure out what data I need to figure out what data is out there and then figure out how to ingest it all and then generate those insights.

You you made me think about telematics data. I know there are data providers that um, based on your phone and geolocation, they can figure out did you are you what's what's your point of origin? Are you going to the store from your home, from your office? Did you go to the local competitor? So let's just say McDonald's and Burger King, because they tend to be somewhat co-located, right? So did you go to McDonald's first and then to Burger King, or how much time did you spend here? And what time of day, what day of the week, things like that. So like you're saying, there's just so much and being able to ask those, ask the right questions and then sort of um, like you said, have a hypothesis, but test use the data to test that hypothesis, if I'm getting it correctly.

Exactly. And it's not just uh, you know, traditional businesses that you know, the the the the city of Las Vegas can can use this data to understand where their best customers are coming from and when they're coming, uh, right. So uh that determines where I'm advertising, right? Uh so if I see that uh you know people flying out of Boston into Las Vegas, and then that person check into uh a hotel and spend a lot of money uh on tourism in in Las Vegas, I know that you know I need to start targeting that area of the country more with ads. So it helps us be much more, much smarter about the way we deploy our resources. Uh it helps us be much smarter about who we're advertising to, uh, you know, what what what we're saying. So all this data matters not just to you know the the the big businesses out there, but anyone who generates revenue, they need to understand who their consumer is. And oftentimes uh you know you may not have the data yourself, but somebody else does and they're willing to sell it to you.

That's fascinating. And I think this has been such a great discussion, as I think, and I think as we wrap up, is there anything you'd like to just kind of share to kind of close us out or kind of embellish upon anything we've already talked about, Mark?

Uh yeah, no, I I think uh this has been an absolutely fascinating conversation. Uh really enjoyed uh talking to you about it. Uh and yeah, I mean, I'm very happy to to join you on another conversation if you'll have me, and uh we can dig into uh some of these uh some of these things uh a little bit more deeply.

Yeah, because I think like when I think about the topics we sort of bounced around with each other, AI could be another one in some of

Life In The UK And Closing

the applications there. So um love that. And I get just like a fun personal question, if you don't mind, as we wrap up. Sure. You mentioned 17 years in the UK. Um tell us about your experience there. Did you see the food scene blossom? Because I know like in the past the UK wasn't really known for food so much, but now it's become more of a, I don't know, culinary destination, if that's the right word. But maybe just tell us a little bit about some of the great foods you experienced there or any other parts of life that you'd be like.

Absolutely. Uh yeah, so uh I was taken out there by uh by the company, I was working for NASDAQ at the time, uh, and they uh they had a European operation. They asked me to to go out there and uh and help build up their uh their European business. And uh yeah, when I got there, uh and this was uh 1996, the UK had a pretty moribund reputation for food. Uh everyone just assumed that uh that all they did was throw everything into a pot and boil it. Uh and and to some case, I I I did I did visit at some restaurants where that was that was true. Uh I also I I think within the first week I was there, I went to a Chinese restaurant and I asked for uh uh they didn't have a menu, and I said, could you just make me some beef and broccoli? And they're like, What? They didn't do beef and broccoli. And I'm like, so how about some Sichuan chicken? And they're like, uh, what's that? So uh I learned very hard in that first week that you know we have very different culinary standards, uh, and what you know uh what is ubiquitous here in the US was absolutely not there. But over the course of those 17 years, uh, you know, the food scene did change dramatically. Uh and now the uh the UK is you know one of the top countries in terms of the Michelin stars. Uh the high end of fine dining uh is is astounding. It's incredibly good. Uh the low end is still uh still uh pretty low, uh pretty broad range. But I grew up in India. I lived in uh uh New Delhi for eight years when I was a kid, uh, and the Indian food scene in uh in the UK is uh one of the one of the best in the world. Uh some of those uh some of those uh dish Indian dishes, uh chicken tika masala, for example, that everybody knows was that were actually invented in the UK and and not in India. So they've had a dramatic impact on Indian cuisine. It's the number one cuisine in in the UK. So I I enjoyed it. Uh it was uh it was a really good time from a uh from all lots of different expect uh perspectives. But uh yeah, the food, uh the food uh at times is amazing.

Uh well thanks for sharing that. What a what a remarkable story. And um again, Mark, thanks for joining us for the program and to all our guests and listeners. Thank you for joining us for this edition. We look forward to your comments. We hope you subscribe and like this and share it with your friends and colleagues. And until the next time, we uh hope you have a great day. Thanks for tuning in to another episode of Auto Care on Air. Make sure to subscribe to our podcast so that you never miss an episode. Don't forget to leave us a rating and review. It helps others discover our show. AutoCare On Air is proud to be a production of the Autocare Association, dedicated to advancing the autocare industry and supporting professionals like you. To learn more about the association and its initiatives, visit autocare.org.