התמלול המלא של Aligning Consumer and Consumer Products Company Orbits

Steve Katz  00:16 Hi, everybody, and thanks for listening in on our Hilco Global Smarter Perspective podcasts. I'm your host, Steve Katz. We're glad you could tune in. Today, we're going to be discussing how the rapid change that's taking place in the consumer product industry, along with current economic challenges is creating a bit of a ripple effect that is shaping American shoppers and most likely will shape them for years to come. Joining us today for that discussion is returning guests. Robert Gorin, Managing Director and Consumer Products Practice Leader at Getzler Henrich. Rob, welcome back to the podcast.   Rob Gorin  00:49 Steve, it's great to be here. Thanks for having me.   Steve Katz  00:51 Well, we're glad to have you back. And let's just jump right into because I know you have a lot to talk about. We've got a current inflation rate around 3.35%, as of December at least, which is placing a lot of pressure on consumers. How would you explain the first wave of the behavior change that we might expect to be developing as a result of that?   Rob Gorin  01:13 You know, Steve, I think it's a great question, particularly in these crazy times, you know, between the high inflation rates, the continued threats of a recession that may or may not happen, geopolitical conflicts and the persistent supply chain issue that just won't go away. If businesses haven't felt any reverberations to their bottom line, they likely will. These market stressors, are going to have a significant impact on shoppers. Right, both today, I think, and in the future, and consumer product companies need to prepare for, for what kind of this weaves so that they can follow their customers today and going forward. Kind of in a first wave, I think consumers are going to buy less. You know, current surveys show that 65% of of consumers have managed their expenses in the recent past by increasing their credit card usage and by diving into their savings. That's not sustainable. Right? And couple that pandemic era programs being depleted, and student loans restarting, less savings being available, consumer buying power starts to wane, right? Shoppers will have less disposable income, and they're going to have to cut back in likely non essential areas. Right? And further, customers have shown recently, that brand loyalty is also less of a link at the moment, right? A linkage. If you look at again, current surveys, 74% of consumers have said they're trading down to less expensive options. So customers shoppers are looking for cheaper alternatives. But kind of what's interesting here is even as they are saying they want bargains and their store brands instead of the expensive name brand, they still expect the same or higher value for their dollar. So it's a different measuring stick than they used in the past, right? And to that end, negative experiences, such as poor customer service, or shipping delays, or anything that might upset or draw the customer are going to be more heavily factored in to how those customers make their decisions in the future where they decide to buy.   Steve Katz  03:22 Alright, so those are all great points. I think we've all witnessed to some degree more and more of these store brands, or more visibility for the store brands and even some news stories recently about people, you know, looking for those brands to as a way to bring down their costs all across retail, including groceries. So great points. So we've got those factors playing into what's happening, what what are we likely to see next from buyers consumers?   Rob Gorin  03:47 Right. So now we're going to start to see consumers will shift some of their spending from goods to services. That, you know, customers are getting much more comfortable owning less, because things are so readily available, and they can get them so quickly. And you have companies like Spotify, that have taught customers that the subscription base or paid to view, pay to use access is very, very vital. So I don't need to hold as much today as I might have in the past I don't need to have as much in my home, right. And then you layer on top of that consumer products will become, are becoming, will become even more commoditized as we see advancement and further advancement in online shopping, AI enabled automation. It allows buyers to really make selections based on other intangible benefits, the biggest being convenience. Right? And so what we see again, right 72% of consumers say they're buying at least some of their groceries online. That's a perfect example of this. That didn't exist. Right? It was it was almost non existent now it's very, very major player and a very major way to buy your products. On top of that, shoppers are going to start to resist the big ticket purchases. Highest interest rates are impacting those customers and we see that 60% of customers believe that it's much harder to get a loan or mortgage today than it was a year ago. Right? And that's, that's their feeling that in their pocketbook, and how does that impact them? Major purchases. Homes, cars, appliances they've all bought. And here's, here's a real interesting example of how that manifests. Right? So, whereas not too long ago, people were all in on remodeling their kitchen. Today, instead of redoing the kitchen. we'll just we'll just replace the broken fridge. Right? Or instead of replacing the fridge, maybe spend a few $100 and fix it, rather than getting a brand new one. Those are big shifts from from particularly from the recent.   Steve Katz  05:54 Yes. So all again, really interesting stuff. We, you know, we were chatting before the podcast, you talked a little bit about something you referred to as a as a current misalignment that you and and the team at Getzler have found that now exists between customer feedback, meaning what customers are telling retailers via surveys and other input mechanisms, and what their actual demonstrated behavior is. Can you maybe I'd like a