Call it the “year of simplification.” As shoppers prepare for the holiday season, they’re planning celebrations that will look and feel noticeably different than years past, according to Barbara Connors, vice president of strategy and acceleration at 84.51⁰, The Kroger Company’s retail data science, insights and media company.
Instead of packed holiday parties or trips to far-flung destinations, this holiday season is all about spending time at home and creating memories with loved ones, Connors says on this week’s episode of Retail Gets Real.
“When we look at the top activities that people say they are spending less on this year than last year, we see things come to the top like spending money on entertainment and eating out at restaurants,” she says.
“The things that people say that they’re doing more of this year, all center around the home — gatherings, watching family movies, or watching holiday movies and decorating. We see sort of reconnecting at home and in more simple ways than we had in the past.”
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Customers are also reconnecting through food, Connors says. When 84.51⁰ asked customers what they would be serving at the holiday table this year, “Family recipes were the top things that people are planning to make,” she says. “Harkening back to tradition and connecting again with the people that we love and our history through food is really present this year.”
The other big theme around this holiday season is concern about inflation. “Today, seven out of 10 shoppers say that they are extremely concerned with inflation,” she says. “It is a top concern for customers, which means it is a top priority for retailers and brands to react to and respond to and ensure that we are meeting customers’ needs.”
Cost concerns are shaping how and where customers cut back and save, Connors says. While some are buying smaller package sizes to save absolute dollar amounts, others are stocking up on products to save on the per-package amount. Still others are buying less frequently to stretch out their purchase cycle or switching between categories; for example, moving from fresh-cut deli meat to pre-packaged.
“Each customer has a distinct set of priorities and a distinct set of constraints,” she says. “While overwhelmingly we see that people are looking for ways to save, the way they can do that is quite varied.”
Listen to the full podcast to hear more from Connors on 84.51⁰ holiday shopping research, why the in-store shopping experience is still critical during the holidays, and the one purchasing category that customers will not cut back or trade down on.
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Episode transcript, edited for clarity
Bill Thorne: Welcome to Retail Gets Real, where we hear from retail's most fascinating leaders about the industry that impacts everyone everywhere, every day. I'm Bill Thorne from the National Retail Federation, and on today's episode we're talking to Barbara Connors, vice president of strategy and acceleration for Kroger's 84.51°, a data science and insights company, about how consumers are shopping this holiday season, how inflation is impacting how and what they buy particularly in grocery, and what trends retailers should watch in the coming year. Barbara, it's been a long time getting here, but welcome to Retail Gets Real. <laugh>
Barbara Connors: Thank you so much for having me. <laugh>
Bill Thorne: Let's start at the beginning, which is always a good place to start. What is 84.51° and exactly what is it that you do there?
Barbara Connors: <laugh> As you said, 84.51° is a retail data science, insights and media company for The Kroger Company. We leverage Kroger's data asset, which is the largest transaction-based grocery data asset in the U.S., and apply cutting-edge data science on top of it so that we can embed customer insights across retail processes for Kroger across merchandising, supply chain and marketing. We also use that as the foundation for our commercial businesses that we engage CPGs and agencies with, which is of course our insights business, our loyalty marketing business and our retail media business, which is Kroger Precision Marketing.
Bill Thorne: Wow.
Barbara Connors: You also asked what I do there.
Bill Thorne: Yes.
Barbara Connors: <laugh> So I—
Bill Thorne: You must do a lot because that was a lot <laugh>.
Barbara Connors: <laugh> I lead strategy and acceleration. Within that, I lead several different teams. For our insights business, I lead our long-range planning, our commercial solutions group, and then also our industry engagement, thought leadership and marketing. Then for the totality of our commercial businesses, I also lead what we call our merchandising all-profit collaboration team, which is essentially a liaison group that sits between Kroger merchandising and our three commercial businesses, that ensures that we are really maximizing the opportunity for our commercial businesses and engagement with CPGs, to then align to Kroger’s biggest strategies and big bets so that we're really maximizing ROI and value for both sides.
Bill Thorne: I think you can shorten that up by just saying you do everything. I mean that sounds like everything. I mean, that's a lot.
Barbara Connors: But it's really fun. Yeah.
Bill Thorne: <laugh> Better be. So with all this that you're doing, all of this knowledge, how did you get here? How did you get to 84.51°? How did your background come into play to where you are today?
Barbara Connors: I started at Dunnhumby USA in 2008 after graduating from the University of Georgia with my master's in marketing research.
Bill Thorne: What?! Georgia!
Barbara Connors: Did you go there?
Bill Thorne: I did commit to Georgia, yes!
Barbara: No way!
Bill Thorne: A bulldog. Wow. This is going to—
Barbara Connors: Oh, we are a bulldog household.
Bill Thorne: Trust me, anybody, everybody here knows, I mean, this office is covered in dog. That's absolutely fantastic. Well, go dogs.
Barbara Connors: I had the great privilege of going to the University of Georgia for my undergrad and then also for my master's. The beauty of the master's program that I went to is that it really blended statistics and marketing. Through that I just have a love for numbers in math, but also telling a story with it and —
Bill Thorne: mm-hmm. <affirmative>
Barbara Connors: — being able to use data and science to apply it to things that you can understand and interact with in your day-to-day life. So when I found, at the time DunnhumbyUSA, it was a perfect marriage for me where I thought, OK, we can all relate to the grocery industry, and it's a way that you can apply all these learnings into something that is tangible for you. So, I have spent the last 14 years at Dunnhumby, and then of course moved over to 84.51° when Kroger acquired us in 2015. Through that time, I've had a lot of different roles across teams and industries even. I've played in consulting roles across both merchandising and CPG or vendor within our home improvement space. So, we worked with Home Depot and then I also was on our Macy's business, then moved over to Kroger in the grocery space to learn the bread and butter of our business. And it is through several different moves there, that was primarily on the insight side of our business. I then found myself leading our brand media solutions, and that led us into the inception of what is now our retail media business with Kroger Precision Marketing. The last several years, I came back to insights and led our commercial insights team, and then I just moved into this role, actually, in the last few months. So, it feels like a full circle for me because I'm able to tap into a lot of the different experiences I've had across both the CPG and merchandising side, and the insights and activation arms. So really brings it together.
Bill Thorne: You know it is really interesting in retail right now. Everything you read, everything is data-driven. It's always been that way to some degree. I mean, you can't be a successful retailer unless you're constantly looking at your merchandise and how consumers are responding to certain things. But today it's just, it really drives. As a matter of fact, Bezos once said, ‘I am not a retailer. I am a technologist.’ I was like, that's kind of weird. Then I read not too long ago that a CEO of a major retailer said, ‘You know what? You can't be a good retailer unless you're a good technologist.’ And so much of the technology is there to help them better understand the consumer, what's going on in the consumer's mind, what's happening globally, not only locally, and putting that all together to make it a better experience. So it's that time of year, Barbara. We're going to talk a little bit about the holiday shopper. At the National Retail Federation, we're seeing shoppers come out in record numbers, just as they have since this past holiday weekend, Black Friday —
Barbara Connors: Mm-hmm. <affirmative>
Bill Thorne: — Saturday, Sunday, Cyber Monday, and it was pretty astounding, over 190 million shoppers during that time period. Set the scene for us from your perspective. What's the headline so far as we head toward the end of the year?
Barbara Connors: Yeah, I think there are really two big themes that we see dominating the holiday season this year. First is inflation, which we all talk a lot about, and the other is reconnection. You can't have a podcast or any conversation today without talking about inflation. It is a top concern for customers, which means it is a top priority for retailers and brands to react to, respond to, and ensure that we are meeting customers' needs. Today, seven in 10 shoppers say that they are extremely concerned with inflation. 85% believe that we will enter our recession. Half of customers are telling us that they believe we're already in one. So during a time of year where we're already historically characterized with consumer spending, it is a time when prices are even more top of mind for our customers. And it is very true as you think about grocery spending as well. When we ask customers, ‘When you think about holiday shopping, groceries in particular, what are the attributes that are most important to you?’
55% tell us that price is the most important attribute compared to only 17% that say brand. Prices are just really top of mind for customers, and we know that inflation is driving a lot of that concern. The other theme around reconnection is, I'd say, twofold. The first is, and you've seen this in the numbers around the Thanksgiving holiday already, is that there's a reemergence from Covid and the last two holiday seasons when people perhaps weren't celebrating with extended family or friends in a way that they wanted to. This is the year where we're coming back. Covid concern is at the lowest that it's been since we started tracking at the beginning of 2020. We even see that 27% of customers say they plan to have more gatherings and in larger gatherings than they had in the last year.
We also see, and you see this come through in the sales, that people are reconnecting through food. One of the things we saw over the last two years is people started cooking more at home, first because we had to and now because we found that we like it, it's a source of comfort, it's a stress reliever. We like to reconnect with our families again at the dinner table. When we ask customers, ‘Hey, when you think about your holiday dishes, where are you going to source your dishes on the table?’ Family recipes was actually the top way that people are planning to make their main dishes, their sides and their desserts and appetizers, actually tied for family recipes and online searches. So even harkening back to tradition and connecting again with the people that we love and our history through food is really present this year.
The other sort of coin to the theme around reconnection is almost in response to both the stresses of Covid and these stresses that have come from inflation is that we're seeing that this reconnection is also coming with a sense of simplification this season. When we look at the top activities that people say they're spending less on this year than last year, we see things come to the top, like spending money on entertainment and eating out at restaurants, and the things that people say that they're doing more of this year, all center around the home. So it is gatherings, watching holiday movies, comes to the top, and then decorating. We see reconnecting, but also reconnecting at home and in more simpler ways than we had in the past.
Bill Thorne: It is amazing the reconnecting. Well, I think part of it, what we saw this past holiday weekend with Black Friday, which was the largest shopping day, is people just wanting to get back to it.
Barbara Connors: mm-hmm. <affirmative>
Bill Thorne: I left Savannah, which is where I'm from, and I had Thanksgiving dinner with my family. Got in the car the next morning, five o'clock in the morning, to drive back to Florida where I was. I was absolutely stunned, at 5:15 in the morning outside of a major retailer, there was not a parking spot to be had. And that's at 5:15 in the morning. Along my drive, which was five hours to South Florida, every exit that had an outlet store or a major retail presence, the exit ramp was blocked for at least a half a mile, a mile or more of cars trying to get in. I called my boss who was doing a lot of media during that time, and I said, ‘It's back, and it's back in a big, big way.’ I think a lot of it was just people wanted to get back in the stores. They just wanted to see other people. They wanted—
Barbara Connors: Yeah.
Bill Thorne: They actually had a new appreciation for Christmas decorations that back in the day, you just walk in, you get the shirt and you leave. Now it was kind of walking, looking at the stores, looking at the displays, looking at the decorations, and I really think that people value that, we are social human beings, and it really manifested itself this past holiday weekend with people going out massively to the stores. And I love the reconnection thing. For me, I hadn't had a holiday meal with my family in some time, so it was really nice to go back, and to your point, there was a big discussion about the oyster dressing at my table because somebody came up with a new recipe.
Barbara Connors: Uh oh.
Bill Thorne: And somebody had the old recipe. <laugh>
Barbara Connors: They both made it?
Bill Thorne: Both made, and there was a little competition going on there.
Barbara Connors: Which one won?
Bill Thorne: They're both winners, Barbara. <laugh> They were both absolutely fantastic.
Barbara Connors: <laugh> Good answer for whoever is listening.
Bill Thorne: <laugh> That's more for my mother than it is about anybody else. So now we've talked a lot about the hybrid shopper, and during the pandemic, people became more comfortable with online shopping and even in grocery. Let me just say, people that have been listening to Retail Gets Real over the years know that for me, during the pandemic, that was a big thing for me, ordering food from my local grocery store online, and I had to let go because I couldn't go to the store. I actually enjoyed it, it was convenient, and I continue to this day. Basically for staples, but I will, if I'm crunched for time, I'll say, ‘Well, these are the things that I need’ and either have it delivered or go and do curbside. So has that evolved? I mean, post-pandemic. We're still dealing with issues, but how has that evolved? Is it continuing to evolve? Are you seeing it still?
Barbara Connors: Yeah, as more shoppers try different methods of getting their groceries, we see that hybrid shopping continues. What we consider hybrid shopping to mean is someone that goes in store and they use pickup or delivery or ship. As we think about ecommerce, it is no longer a shopper that only uses ecommerce and there are customers that only go in-store. People are using both, it is fluid and they're using both or one or the other based on a specific use case or need they have that day or their specific items that they're comfortable buying online or prefer to buy online and will buy in store. It is really critical that retailers and brands have an experience that they're delivering in both places that taps into the unique benefits that they can each provide and also maximize the opportunity to capitalize on a shopping trip regardless of where it emerges.
You mentioned this just a minute ago, but one of the really fun things around the holidays is that the in-store experience can become pretty joyful. Even among omnichannel shoppers we find that, and they tell us that, one of the reasons they go into stores is because it is an immersive experience, you see all the displays, you can smell food and it just feels festive. The in-store experience has an opportunity to create a lot of fun into shopping during the holiday season. We also find when we look at the actual shopping data that even what we consider to be digital champs, these are customers that are all in on e-com, annually 85% of their trips are now online versus in-store. During the holiday season, it's a 50/50 split.
Bill Thorne: Oh, wow.
Barbara Connors: Because customers like to shop in-store. We also have found that for those small trips, so one to three items, you need something you left off your list or you forgot something, or there's just a quick need. Overwhelmingly, people go in-store for those small trips than going online. The in-store shopping experience is really critical during the holidays, not just for customers who don't use ecommerce, but also for those customers that are hybrid shoppers as well. On the flip, you talked about convenience of ecommerce. It certainly provides a new or a different form of convenience. In a time of year where people are time-crunched anyways and stress is high, that is a benefit that is in demand.
Bill Thorne: Yeah.
Barbara Connors: It also, as we think about the blending of merchandising and marketing, has the opportunity to create education and inspiration and deliver content in a way that we don't really get in-store. One of the ways that brands and retailers can tap into that is by providing recipes and quick tips and trips that you can really think about a way that delivers on a need for customers based on what's going on today. So, tips and tricks for how to feed a family of 10 for $50 hits on value. Also, recipe content, I mentioned that customers are going online for appetizers and drinks. Creating recipe content gives it with your adding an extra bit of value for customers even as they're going online to really deliver on convenience. I think one of the beauties of a hybrid shopping world that we're in now is that you have the opportunity to tap into different levers in-store and online so that wherever our customer is going, you have something unique that you can offer to them that adds a little extra value to their shopping experience.
Bill Thorne: Yeah. I never thought of myself, that you could identify me as a shopper, but you just did. That is exactly who I am and I didn't know that I was that, so it's good to know I belong to a cohort.
Barbara Connors: In addition to being part of the Bulldog nation.
Bill Thorne: Correct. Both. Very proud. But you know, the interesting thing is, you go to the convenience side. The other day I was like, I don't have any Coke. I don't have any bottled water. I don’t have this mix. I don't have any Whole Earth sweetener, blah, blah, blah. I had all these things in my brain that I knew I needed, but I just didn't have time to go. I was like, ‘Hey, dummy, just go online, order it and they'll deliver it to you.’ Back in the day, that's all you thought about. But, I do enjoy the store experience. I do go and, you know, I'll go down the cheese aisle, I'll be like, ‘Oh, there's a horseradish cheese. I'd like to give that a try.’ I like both, and I'm grateful to have both opportunities because one saves a lot of time and one brings a lot of pleasure.
Barbara Connors: Mm-hmm. <affirmative>. You touched on the other piece, which is discovery.
Bill Thorne: Yeah.
Barbara Connors: It's easier, still, to discover new items, flavors and brands as you're walking down the in-store aisle.
Bill Thorne: Yeah. So, let's go to inflation, or back to inflation. It is on the top of everybody's mind. I think that what we learned from the last recession and coming out of that is it was a savvy shopper.
Barbara Connors: Mm-hmm. <affirmative>
Bill Thorne: People shopped one way before and now they're shopping a totally different way. It's not that they go back. I mean, it’s kind of like, ‘This is my mindset. My children have seen me shop this way, and they're beginning to shop that way. This is how we're going to shop.’ Here we are, and to your point, there are those that consider ourselves already in a recession, those that are expecting, a high number, expecting to be into a recession. How are they changing their shopping habits from how they changed them before?
Barbara Connors: One of the things that we have found is that there are many ways to save money.
Bill Thorne: Mm-hmm. <affirmative>.
Barbara Connors: Each customer has a distinct set of priorities and a distinct set of constraints. While overwhelmingly we see that people are looking for ways to save, the way they can do that is quite varied. Even as you think about packaging, some customers are buying smaller package sizes because they have a fixed constraint and they're saving money by absolute dollar amount. We have other customers, more likely to be higher income, that are stocking up. They're saving on the per-package amount by spending more per item. At a high level, we see that customers are looking for more sales deals and coupons more often. But then even beyond that, there are creative ways that customers are looking to stretch their dollars. In some categories, we saw this with produce, customers are just buying it less frequently, so they're stretching the purchase cycle that they have. For some customers, they are switching between categories. So maybe moving from deli meat to packaged meat, as an example. So again, the same item, but in a different way that is cheaper or can last longer in our kitchen. But some of the consistent trends that are really coming to the top are one, sales — deals and coupons is just the number one action that customers are taking. The other is that we are seeing more frequent trips and smaller basket sizes.
Bill Thorne: Yeah.
Barbara Connors: The trip itself is getting smaller across the board. Then we're also seeing more engagement with our brands and store brands, where the customers are looking to save money by getting the same product but looking for it in a cheaper way.
Bill Thorne: Yeah. Is there any data that's really surprising you this year? I mean, it's really standing out.
Barbara Connors: Yeah. One of the things, so we track sentiment and behavior and can compare what customers are seeing and what they say versus what we actually see. Within this space around increasing prices, it's not a one-for-one. The top categories that customers are saying that they notice prices getting higher are not the categories that we're seeing the strongest pullback.
Bill Thorne: Mm-hmm.
Barbara Connors: Those categories are like dairy, deli, meat and produce. What that tells us is that at least today, these at a high level of categories that customers are not willing to compromise on out of their budget, but they are willing to trade and switch brands within things like personal care or beauty.
Bill Thorne: Right.
Barbara Connors: One of the areas that customers are not ever willing to trade down or cut back on is pet food. We see that show up loud and clear. Even though more than half of customers are saying they're seeing prices go up, they're going to keep buying what they buy.
Bill Thorne: You know, it's interesting you said the pet food thing, the first thing that came to my mind was toothpaste. <laugh> My brand of toothpaste. Don't ever think I'm going to change cause I'm not. <laugh> But pet food makes sense. I mean, you don't want to mix it up too much.
Barbara Connors: Nope.
Bill Thorne: All right, what excites you most about the future of retail, Barbara?
Barbara Connors: Hmm. I'd say what excites me most, probably two things. One is as we think about the evolution of ecommerce and migration into the non-mutual world, that opens the door for a lot of innovation. And opportunities for us to leverage technology and leverage insights to deliver on customer needs in new ways and create new experiences and bring the shopping experience to life in different ways. I think that we are at the very early stages of really living in an omnichannel world, and we have a lot of innovation opportunities ahead of us. The second piece, it sort of brings that together. It's just we're also at a time where things are converging and we are breaking down a lot of silos that exist for us in the retail industry, but don't matter at all to the end shopper. Things like the difference between traditional merchandising and digital merchandising, merchandising and marketing, or the difference between consumer and shopper. These are all constructs and ways that we've set up teams and disciplines that as we move into the space, we really have an opportunity to bring together and break down so that we can focus on just meeting the needs of people as they're looking to do their grocery shopping.
Bill Thorne: All right. Last question. Best piece of career advice — besides getting a really fine education at a fine university and pursuing that even further with an MBA, what is your best piece of advice?
Barbara Connors: Three things. Be open to new opportunities, surround yourself with other people who are passionate about what they do, and make the most out of your present experience by learning from others, helping others, and creating an impact where you are.
Bill Thorne: Amen. Barbara Connors, my today's favorite Bulldog, it's been a real pleasure talking with you. Thank you for joining us on Retail Gets Real.
Barbara Connors: You so much for having me.
Bill Thorne: And thank all of you for listening to another episode of Retail Gets Real. You can find more about this episode and information on other episodes at retailgetsreal.com. I'm Bill Thorne. I am a proud Georgia Bulldog. This is Retail Gets Real. Thanks for listening.