Customerland
Customerland is a podcast about …. Customers. How to get more of them. How to keep them. What makes them tick. We talk to the experts, the technologies and occasionally, actual people – you know, customers – to find out what they’re all about.So if you’re a CX pro, a loyalty marketer, a brand owner, an agency planner … if you’re a CRM & personalization geek, if you’re a customer service / CSAT / NPS nerd – you finally have a home.
Customerland
What Transaction Data Reveals About Our Economic Future
Consumer spending has weakened across the board in recent weeks, with fast fashion, resale, and off-price retail emerging as relative winners in an otherwise concerning landscape. Michael Gunther, VP and head of insights at Consumer Edge, shares data-driven perspectives on current consumer trends and what they indicate about the broader economic picture.
• Recent transaction data shows spend patterns weakening across industries during the past 4-5 weeks
• Winners in this environment include fast fashion, resale markets, and discount retail—categories typically associated with economic pullbacks
• Corporate earnings calls increasingly mention tariffs and "geopolitical uncertainty" as key concerns
• Unlike pandemic-era pullbacks, there's no pent-up demand waiting to be unleashed as travel and entertainment spending has normalized
• High-income consumers and younger demographics are maintaining relatively stronger spending, though still showing signs of trading down
• Companies successfully targeting these stronger demographic segments (Hollister, Shein, Cartier, MyTheresa) are better positioned to weather the downturn
• Sustainability remains a driver of consumer choices alongside price sensitivity, particularly in the resale market
• Key indicators to watch include transaction data across discretionary categories and grocery price inflation, especially in tariff-impacted categories
First and foremost, we'll be looking at transaction data across key discretionary. That could be an indication that this is really really, you know, a broad based, real pullback.
Speaker 2:Today on Customer Land, michael Gunther, who's VP and head of insights at Consumer Edge, and I'm just going to say, to frame this conversation, it has been a long time in coming We've got I was just reviewing a monstrosity of a string of emails that we've created trying to schedule this, so we finally made it here and, michael, thanks for joining me.
Speaker 1:Really happy to join. So I've been at Consumer Edge for nine and a half years now, so we basically provide data and insights to investors on the public and private side, and also on the retailer and merchant side of the house, essentially giving them insight into competitive intelligence for their space. We provide them with insights into their own customers, be it demographic or behavior-based, and we also provide visibility into potential partnership opportunities. There's a whole host of things you could do with our data, and our team really helps make that data come to life.
Speaker 2:Surprises me, then, that this is our first real connection. We should have been talking years ago.
Speaker 1:Yeah, absolutely.
Speaker 2:So start with something good here. So to set some context that we're not going to use anymore, we had originally planned on going through a report that Michael and his team put together called the State of Global Consumer Report, which was created in Q4 of last year, which is packed with insights, and I would absolutely recommend going through it, just so you can see the kinds of things that are in it. But, as Michael and I were just saying before we hit the record button, there's been some real sea change in the past five or six weeks here that, for all kinds of reasons mostly political but the landscape has shifted just radically here. So with that as a backdrop, there's a lot going on here.
Speaker 1:Yeah, there is, and you know we recently actually were quoted in a couple of publications just going over trends we're seeing in our US transaction data across industries of all types. Especially in the last four or five weeks We've seen spend patterns weaken across the board. Weeks we've seen spend patterns weaken across the board and what might be a little troubling and this started happening toward the end of 24, but it certainly continued into this year is the winners are types of industries that are associated with a pullback, thrift things like that. So in Q4 of last year and continuing into this year, fast fashion did well. Resale has been on the rise and that's accounting for a much bigger portion of overall apparel, accessories and footwear spend and you know the ability to find really nice bright spots outside of that, I think, has dwindled and you're even seeing in some of those areas, even though they're relative winners, you've started to see spend slow down a little bit, even in off-price retail. So it does seem like something might be happening across the consumer landscape.
Speaker 1:It's still early days and we're watching consumer spending with our credit card data. It's still early days and we're watching consumer spending with our credit card data. We're watching pricing in our newly launched receipt consumer purchase data product called BasketView, and we're watching engagement online with our global web traffic and transaction data product called Click. So we're watching this in a lot of different areas. It's really early but you've seen companies' commentary kind of confirm what we're seeing in the data. Even just the last week you had a whole host of companies across industries really taking sort of a cautious note on the year.
Speaker 2:Yeah, it's been an interesting thing just from a narrative standpoint. I think with a little bit of foresight you could have seen some of this stuff in Q4 happening. But listen to the corporate. I just say narrative and I wish there was some sort of narrative index out there. Maybe we can work on that.
Speaker 1:I've seen some things before where there's analysis of conference call transcripts, actually that look at the instance of a particular word. I'm sure that's happening now with the word tariff. I mean, you could see it. I see like these summaries of conference calls and everyone's mentioning tariffs either by name or sort of alluding to geopolitical uncertainty. The interesting thing is, you know whether or not you know it'll be sort of used as a crutch if things are not going well, but you know it's sort of hard to avoid.
Speaker 1:It's in the headlines outside of these conference calls. So everyone knows this is happening, it's real and it's creating, I think, a lot of uncertainty, both on the consumer level Should I make an investment now, should I make this big purchase? And also on the corporate level, about what their strategy should be, what their inventory level should look like, how they're going to adjust to rising prices. And obviously some of the bigger players, like Walmart, are going to try to do what they can to use their heft to negotiate pricing. I saw that headline from them, but it's certainly harder for smaller businesses who don't have that sort of negotiating power.
Speaker 2:So let's go back to the end of last year and you saw indicators that were kind of pointing, maybe lightly, in this general direction. Election happened, or rather the transition happens and certain things start to take place that start to maybe cement an economic view from this country. And you know, I had started off casually, with me just having conversations with colleagues once in a while on this podcast, where people going, yeah, you know, I think we might see a pullback, it could happen, Um, but the overall corporate narrative that I was aware of was overall fairly positive and, and yet I have to say that, you know it, the the public speak seem to tell a slightly different story than the kind of spend reality on a corporate level and um, and I guess that's that's now become real. Now it's like, okay, now it's out in the open, I can talk about it. Um, my take. But that kind of means that companies have a bit more free reign to really do something about it or it's. I think it was so cautious early on. Is that your take too?
Speaker 1:No, I mean, that's a tough question. Look, I mean there was. There was quite a bit of optimism, I think, around certain bright spots that you could see, Like you know, for example, I think around certain bright spots that you could see, Like you know, for example, ahead of, I think, caution throughout the year, way ahead of the election. Black Friday, Cyber Monday turned out, I think, better than expected and we were able to find, you know, lots of bright spots. We saw encouraging signs in personalization in luxury jewelry, indicating maybe people were just saving up for something special as opposed to buying throughout the year. And then the sort of staples of online spending, maybe at Amazon, eBay and then some of the new merchants. They performed well. Also, Discount stores did well too.
Speaker 1:So that started maybe to introduce some nervousness that those names were attracting spend from people that wanted to pull back, and there's been quite a bit of commentary on high-income consumers trading down. But look, if the consumer is pulling back a lot and there's less pockets, there's fewer pockets of strength. It's going to make it harder for companies to really move the needle, but it's going to. It's going to require them to stand out with whatever they're doing, and that's sort of what we were thinking we were seeing with personalization, type names doing. Well, that's a way to give a gift that doesn't look like anyone else's, obviously, but if consumers are really pulling back, it's probably going to be more about pricing and deferral of spend than anything else.
Speaker 2:That opens up another entire portfolio of questions. I've got over here just waiting for you to walk over there.
Speaker 1:Love it.
Speaker 2:That has to do with how consumers respond and how companies who count on brand loyalty or whatever your fix quote unquote is if it's heavy discounting or whatever your hooks are. In the past, consumer pullbacks have meant a lot of those kind of softer tools were found to be fairly ineffective because it turned out to be about value, which for a lot of people just means price.
Speaker 1:Yeah, I think that can probably be combined with loyalty to an extent, because if you have, if I'm a consumer and I'm sort of comfortable, as long as it's reasonably priced with a particular brand that maybe has basics, maybe I'm less likely to take a chance and buy something and spend something on something new that I don't know about. So I think maybe that familiarity might be a lever they can pull in those areas. Um, aside from that, I mean one of the things we've really looked at is how spending, especially in the last year leading up to this weakness, has looked across different demographic groups. So to the extent a company can pivot how it positions its products to groups that are, let's call it, less weak than others highest income groups, actually the youngest groups, have been stronger on a relative basis in apparel accessories but wear luxury. So you know, if they can kind of pivot and focus on those areas and market more to them, those might be ways to sustain a customer base or even gain new customers at the expense of others.
Speaker 1:Same thing, by the way, goes for older consumers. We've obviously seen that group make up a much bigger percentage of the total. They have a lot of spending power. We didn't see them perform particularly well in this space. But if you want groups of people that might be more immune to a pullback like that, these are the sorts of groups that companies can look to, depending on how flexible their strategies are.
Speaker 2:Right, it would be really interesting and I don't know if you're prepared to have this part of the conversation to look at potential parallels between consumer habits during the pandemic versus what's happening now. I mean they're pullbacks, but entirely different psychologies behind them. I mean fear at the underlying, you know, at the most kind of lowest common denominator, but they're fear based on different criteria and drivers. Do you see if you can think back that far, because it now feels like you know a lifetime ago? Do you see parallels? Are there things we can draw from that?
Speaker 1:Hmm, do you see parallels? Are there things we can draw from that? I mean, to your point, it's a completely different piece of psychology, I think, compared to them. What's maybe a little less encouraging now is that post-pandemic there was a ton of pent-up demand for the sorts of things that you couldn't do during the pandemic. Looking at industry-wide spend, it looks like things like travel, things like entertainment, those surges in spend, that recovery seems to have sort of played out. So that piece isn't supporting things anymore. There's a certain degree of fear. But I suppose it's a little bit different Now.
Speaker 2:It's probably just much more about uncertainty.
Speaker 1:So if pent up demand is done and savings are somewhat spent, it's about just waiting to see what happens, especially as it pertains to pricing. I think if there's one thing we all learned from the recent election result and all of the commentary around it, it's that prices at the store matter so much more than a lot of other economic indicators. So if there is a fear that prices are going to go up which we're going to be watching really closely in the coming days to see if it manifests itself at the grocery store, that will likely immediately make people pull back in other areas. So you know, the more talk there is about that, the more cautious people will be.
Speaker 2:Right the power of the narrative. Back to the pandemic idea. There were some. There was all kinds of interesting kind of psychological wrinkles that kind of surfaced in some of the research we did and the research we saw. One of them was that almost immediately spending on vice type habits spiked. Alcohol sales had a nice run I don't believe you can track this, because you track spend but apparently we were having a lot more sex. That's just what the data said.
Speaker 1:We do not have data on that.
Speaker 2:Nor will I ask about it. But you know, let's just talk alcohol for a minute here, because it seemed to have been I can't remember whether it was leading, lagging or just kind of a running effect of the fear of the pandemic. But are you seeing anything in that sector that would indicate that, like hey, this could get bad, I'm going to start drinking again. Also not advocating that.
Speaker 1:That's a good question. I'm going to pull up some data here just to see what we're seeing in this area.
Speaker 1:Yeah, it's interesting that the psychology around that was fascinating, because there was nothing else to do and you know, you think to yourself what's the difference if the whole world is going to crap Like I might as well have a good time. I knew we had a problem. So our daughter, by the way, was born basically when the pandemic started, like right then I knew there was a problem. Maybe it was like a year into it where maybe it wasn't a year, something like that where she had made a comment about saying cheers and I'm like, wow, we must be having wine at every single meal. If she's noticing this now, yeah, exactly, she knows that I like red wine, for example.
Speaker 2:That's always pretty funny. That's an indicator of all kinds of different things, yeah.
Speaker 1:No, so obviously look. I'm looking, for example, at alcohol sales in our data right now and, as you noted, there was a really big increase. Sales have been kind of stable the last couple of quarters. We're not seeing any indication of renewed interest in that. It's not as if someone's going to stay home because of this. It's not the same sort of fear.
Speaker 1:And alcohol is expensive. So we'll obviously be looking to see if there's any sort of trade down between, you know, from more expensive categories to less expensive categories. And that would sort of be analogous to how people are trading down even you know high income, you know trading down to Walmart off price, things like that. Maybe it's the same sort of thing here where people still want to have a drink, unwind, have a good time with their family, but they they're, you know, buying something a little less expensive.
Speaker 2:Right, that'd be. That would be really interesting. As a red wine drinker myself, I I'm interested in that, that trend, just to figure out where I should be going after this. Um, one of the the biggest indicators to me that that I was aware of, of that that this uh economic uncertainty might actually be real it's not just kind of, uh, you know, amorphous fear in the air is, uh, the recent news on the Dow. That really took a hit and, um, you know, I've you talk to people who are kind of I'm just saying lay, people who aren't really into that, and they're like, yeah, it's just a, what does it really mean? And I think I forget who I heard explain this, but the Dow and other indices are compilations of millions of transactions, so it's a really great way of understanding consumer sentiment, or investor sentiment anyway, which is a close parallel.
Speaker 1:Yeah, I mean it's interesting. I come from a more traditional finance background before I entered the alternative data world. Main Street definitely pays the most attention to the Dow. It is 30 companies that are very representative. But the S&P 500 is typically, I think, a much broader view of what's happening in the stock market.
Speaker 1:But yeah, when the Dow S&P maybe less so than NASDAQ because tech doesn't hit in the same way, because it doesn't speak to everyday essentials, when those are making headlines outside of business news, that does get people worried. But again, I do think the pricing piece of it whether or not someone's laid off tends to matter a whole lot more, because then they're feeling it personally rather than just reading headlines. And of course, there's always going to be political polarization where one side is going to interpret data in one way and the other in the other way. But when it comes to what's happening with your own experience at home, there's much less of a gray area there, so that's why those data points are going to be incredibly important for us to watch. Experience at home there's much less of a gray area there, so that's why those data points are going to be incredibly important for us to watch.
Speaker 2:So over the next, say, two to three weeks, four weeks, what are the key indicators you're going to be looking at?
Speaker 1:Yeah, I mean, first and foremost, we'll be looking at transaction data across key discretionary categories you, industries that could be an indication that this is really, really, you know, a broad-based, real pullback. And then, secondarily, you know, using our basket, view consumer purchase data, product, we'll be watching products at the grocery store, at convenience stores, to see what pricing is doing. We're going to be hyper-focused, I think, on some of the areas that are more impacted by tariffs. Some are more impacted by others just in terms of where the tariffs are hitting, but categories that really matter in terms of the total grocery bill, if pricing really does start to take up in those, that is definitely going to be more cause for concern and we'll know if we're seeing it in the data. That means people will be feeling it in their pocketbook.
Speaker 2:I think it was somebody from the Republican I'm just saying operative because I just don't remember what this person's title was but was saying this morning that you know, as they were watching what's happening in the stock market, look, it's just a, it's a one day down, and anybody who's followed the market for any period of time knows that happens, and it happens, you know, typically right around this time of year a couple times. But that what he said, which I thought was really interesting. He said like, look, if this looks the same way in three weeks, we may actually have a problem. Then you've got something that looks like, you know, that's not just a one-day dip or, you know, a week-long dip. You've got something that feels a little bit more sustained and could feel like trouble.
Speaker 1:Right, and those sorts of sustained declines are much more likely to make it into mainstream newspapers. The things that you know, people that are not in finance, are watching closely. So yeah, we'll have to see how it turns out. I mean, certainly there's a ton of headline risk. There's a ton of volatility. You know the volatility within a given day is going to certainly impact, you know, hedge fund managers and other folks in finance. But you know, to an ordinary person outside of those areas those sorts of intraday moves don't matter. But to your point, if you keep seeing large declines in the Dow and S&P over a multi-week period, people will start to wonder is this entire strategy working? Is the economy turning over? If that happens in conjunction with price increases that people are experiencing, then that probably creates a much bigger problem.
Speaker 2:Yeah yeah, it'll be fascinating to watch as an observer. Kind of wish I wasn't part of this one.
Speaker 1:Right. I mean, I think we're all participants in this Right.
Speaker 2:There's no bystanders here. I also wanted to ask you. I saw the announcement and you've mentioned your BasketView product. Can you just explain what that is?
Speaker 1:Yeah, so it's a product that is a blend of physical receipts, convenience store purchases, direct account connectors for something like walmartcom, and also email receipt, basically getting a whole picture of what customers are purchasing. And right now what we're really promoting is this product that focuses on the consumer packaged goods space. But it can really touch anywhere where someone can take a picture of their receipt. So it could be at a department store, it could be at a sporting goods store. But the piece that's here right now is on CPG and that's why we're hyper-focused on the pricing piece. Those sorts of prices, I imagine, will impact the narrative a lot more than prices of apparel, but we're really focused on this piece here. I imagine will impact the narrative a lot more than prices of apparel, but we're really focused on this piece here.
Speaker 2:Do you have a sense of what other sectors you'll be layering in down the road beyond CPG?
Speaker 1:Yeah, I mean there's a ton we're looking at all high interest areas like apparel, electronics, things like that, but certainly more to come. We'll keep everyone posted on that. But a lot of visibility you can get into areas of the consumer economy that aren't necessarily well covered by current consumer data sets.
Speaker 2:Well, that'll be interesting. Certainly pay attention to it. So let's talk brands. Who's winning, who's losing?
Speaker 1:Yeah, so you know, as I mentioned, there are certain areas of the economy, certain demographic groups that have performed better than others better than others. So we're basically taking a look at which brands have increased share in those winning groups as an indicator on who potentially could do well. So, as I mentioned earlier, high-income earners, even though they've started to pull back, are still holding up better in terms of their spending patterns on apparel, accessories and footwear. But certain companies that have done well within their category and have increased share in their category among that group names like Hollister in multi-brand luxury, myteresa and Farfetch, secondhand stores, the resale space that we mentioned, depop and Goodwill and then we also were talking earlier about reliable brands potentially doing well.
Speaker 1:Quince is a brand we've highlighted several times. This is like a luxury basics company. They've grown a lot, they've been on our winners list and they're gaining share among high-income consumers. And then, similarly, in that younger age group, looking at fast fashion, shein is gaining share at the expense of H&M and Zara, and then, even looking at high-end luxury, cartier and Hermes have done well and we think maybe that's due to some of their digital marketing campaigns that attract influencers and things like that. So I think that does speak to the fact that even in a tough environment you get really creative and kind of go to where the customer is Younger consumers depend on influencers you can have some bright spots. As I said, if there's a huge downturn it's going to be hard to have absolute gains, but at least you can hold up a little bit better.
Speaker 2:Yeah, you can find the pockets Having to do with nothing we've discussed so far. Do you keep any data on how consumers are responding to ideas like sustainability and products that kind of lean on sustainability?
Speaker 1:So we can make conclusions based on their spending behavior. And we do think, and we actually put out a resale report a few months ago the fact that resale continues to gain such a big portion of spend relative to the overall apparel, accessories of footwear space, is not just because of pricing, it's also because of sustainability. So I think that will be one indicator to see how much that effort is gaining traction. It's a little complex because the pricing element is important, but we did find that even within resale, the ones that were more focused on sustainability were performing even better than the overall category.
Speaker 2:I think watching that space is an indication of how that trend is evolving that theme sustainability just kind of popped itself into our world about six months ago, and so we're trying to do a decent to good job of tracking it, and so thank you for that.
Speaker 1:Yeah, absolutely.
Speaker 2:Well, michael, it's been a pleasure. I really appreciate this. I'm glad we fought through the scheduling wars and finally made it, and thank you.
Speaker 1:Thank you very much for having me. I really enjoyed our conversation.
