Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer, regular listeners would know that I like data. For businesses, data can tell them so much about their customers, about demand, about marketing, about the future. And data on retail spending is particularly fascinating, because it gives an insight into a large chunk of the economy. Paul Hines is the managing director for Asia Pacific at IRI, the world's biggest, the world's largest big data company. Paul, welcome back to Fear and Greed.

Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer, regular listeners would know that I like data. For businesses, data can tell them so much about their customers, about demand, about marketing, about the future. And data on retail spending is particularly fascinating, because it gives an insight into a large chunk of the economy. Paul Hines is the managing director for Asia Pacific at IRI, the world's biggest, the world's largest big data company. Paul, welcome back to Fear and Greed.

Lovely to be here. Thank you.

Lovely to be here. Thank you.

You do a lot of work with clients in the FMCG space, the fast moving consumer goods space. You must get a lot of information and a lot of data about that. What are they doing? How are they reacting to inflation, to interest rate rises, that type of thing?

You do a lot of work with clients in the FMCG space, the fast moving consumer goods space. You must get a lot of information and a lot of data about that. What are they doing? How are they reacting to inflation, to interest rate rises, that type of thing?

So what you are seeing is inflation being the number one topic across all our clients, and really it's this battle between prices. And unfortunately prices as every consumer sees are going up and making sure that those prices reflect value though, in terms of the quality of the product, availability of the product as well. And also what new products are being provided to consumers as well. So really it's a big focus on price at the moment and a constant negotiation, I would say, between retailers and manufacturers about putting through price rises and then justifying those and sharing I guess, the cost of that price as well.

So what you are seeing is inflation being the number one topic across all our clients, and really it's this battle between prices. And unfortunately prices as every consumer sees are going up and making sure that those prices reflect value though, in terms of the quality of the product, availability of the product as well. And also what new products are being provided to consumers as well. So really it's a big focus on price at the moment and a constant negotiation, I would say, between retailers and manufacturers about putting through price rises and then justifying those and sharing I guess, the cost of that price as well.

And is this happening across the board or is there certain segments of the market where behavior is a little different?

And is this happening across the board or is there certain segments of the market where behavior is a little different?

It's pretty much happening across the board. You are seeing different influences on this. So cost of raw materials for manufacturers, cost to get product to store, and then onto the consumer. There's still a shortage of logistical challenges. So shortage of drivers, for example, still a shortage of trucks and vans available at any time, and even shortage of staffs in store. We're still seeing people following the guidelines and doing what the right thing is, but if you feel ill, we are all conditioned in the last two years not to go to our place of work. So you are seeing a number of challenges around the industry that are impacting price and costs, not just raw materials, but just the logistical challenges of getting product to the shelf.

It's pretty much happening across the board. You are seeing different influences on this. So cost of raw materials for manufacturers, cost to get product to store, and then onto the consumer. There's still a shortage of logistical challenges. So shortage of drivers, for example, still a shortage of trucks and vans available at any time, and even shortage of staffs in store. We're still seeing people following the guidelines and doing what the right thing is, but if you feel ill, we are all conditioned in the last two years not to go to our place of work. So you are seeing a number of challenges around the industry that are impacting price and costs, not just raw materials, but just the logistical challenges of getting product to the shelf.

Okay. So how does this manifest itself in data? So what you are telling me, I trust you Paul, I think you're a very honorable person, but this is your take on the back of what IRI does, the world's largest big data company. I'm just interested in how it goes from that little bit of data in a company, through to what you've told me now, how does that all work?

Okay. So how does this manifest itself in data? So what you are telling me, I trust you Paul, I think you're a very honorable person, but this is your take on the back of what IRI does, the world's largest big data company. I'm just interested in how it goes from that little bit of data in a company, through to what you've told me now, how does that all work?

Yeah, really interesting. So we do our level best to look at all sources of data, so not just our own. We have a consumer panel of 13, 500 Australian households, and we measure their shopping behavior. We ask them questions on how they feel, what they're worried about, what they're looking for in terms of products and services every week, every month. So we have a really good read, if you like, of what's driving the Australian purchasing behavior, but also mindset. And then we have lots of other data sources around sales data from pretty much every retailer in the country. And we also have access to customer and basket level data, anonymized via loyalty schemes like Flybuys for example, and also from Priceline as well. So we have a number of data assets that we can access, but then we also look at all of the economic data externally that the government provides, other research company think tanks as well. So then it's really connecting the dots to try and understand, well, okay, what does that actually mean in reality and practicality for our clients? And obviously, one of the things we do is we go and talk to all our clients all the time and understand what their concerns are and what they're experiencing and try and join that together with the data that we have to make some hopefully, smart decisions and inferences for our clients.

Yeah, really interesting. So we do our level best to look at all sources of data, so not just our own. We have a consumer panel of 13, 500 Australian households, and we measure their shopping behavior. We ask them questions on how they feel, what they're worried about, what they're looking for in terms of products and services every week, every month. So we have a really good read, if you like, of what's driving the Australian purchasing behavior, but also mindset. And then we have lots of other data sources around sales data from pretty much every retailer in the country. And we also have access to customer and basket level data, anonymized via loyalty schemes like Flybuys for example, and also from Priceline as well. So we have a number of data assets that we can access, but then we also look at all of the economic data externally that the government provides, other research company think tanks as well. So then it's really connecting the dots to try and understand, well, okay, what does that actually mean in reality and practicality for our clients? And obviously, one of the things we do is we go and talk to all our clients all the time and understand what their concerns are and what they're experiencing and try and join that together with the data that we have to make some hopefully, smart decisions and inferences for our clients.

So if I'm a retailer and I'm a sizable retailer and I use IRI, I'm hoping to get from them, from you, some forecasts of what consumers will be thinking about doing in six months, 12 months, two years, that sort of thing?

So if I'm a retailer and I'm a sizable retailer and I use IRI, I'm hoping to get from them, from you, some forecasts of what consumers will be thinking about doing in six months, 12 months, two years, that sort of thing?

Yep, yep. Correct, we do our best to do that.

Yep, yep. Correct, we do our best to do that.

Yeah, okay, okay. So with that in mind, what are the big changes then in the last six months or so? I mean, we saw the boom in online shopping, during the pandemic, are things back to normal or are customers forever altered?

Yeah, okay, okay. So with that in mind, what are the big changes then in the last six months or so? I mean, we saw the boom in online shopping, during the pandemic, are things back to normal or are customers forever altered?

Oh, really good question. So for online shopping, we saw sales double in a year, but what we believe has happened is that you got twice as much switching, purchasing, use of online services, particularly last year and the year before due to COVID. Whereas now what's happening, is sales and normalizing again, in some cases they've actually reduced in online sales and people are switching back to physical channel, in store as well. And we've seen some pure play retailers actually go backwards this year in terms of their sales via their online channel. So unfortunately COVID was a little bit like a time of war. It's stimulated real increase in adoption of new services and new channels, sometimes by necessity. But we're seeing online sales normalize and actually go a little bit backwards now versus physical bricks and mortar sales. And some of that's driven by the consumer need for more freedom to go out and physically visit shops as opposed to staying at home. Now we've got that freedom back versus this time last year, people want to go out and look and feel and have that customer experience of being able to touch a product before they buy.

Oh, really good question. So for online shopping, we saw sales double in a year, but what we believe has happened is that you got twice as much switching, purchasing, use of online services, particularly last year and the year before due to COVID. Whereas now what's happening, is sales and normalizing again, in some cases they've actually reduced in online sales and people are switching back to physical channel, in store as well. And we've seen some pure play retailers actually go backwards this year in terms of their sales via their online channel. So unfortunately COVID was a little bit like a time of war. It's stimulated real increase in adoption of new services and new channels, sometimes by necessity. But we're seeing online sales normalize and actually go a little bit backwards now versus physical bricks and mortar sales. And some of that's driven by the consumer need for more freedom to go out and physically visit shops as opposed to staying at home. Now we've got that freedom back versus this time last year, people want to go out and look and feel and have that customer experience of being able to touch a product before they buy.

Okay. And you get good data from bricks and mortar shops as well?

Okay. And you get good data from bricks and mortar shops as well?

Oh, absolutely. So for the last 30 years, I would say, as a business globally, we've collected point of sale data.

Oh, absolutely. So for the last 30 years, I would say, as a business globally, we've collected point of sale data.

Right.

Right.

So all of the right sales data, you get through the till when you do your shopping and we've been analyzing that for decades. So we've got all of that back data as well, so we're really good at being able to understand the trends within categories and products over time. And we've also got basket and customer level data anonymized via loyalty programs, like I mentioned, like Flybuys as well. So we can see total sales within a category for anybody. And then we can, well, what products do we buy in our basket? What do we take home every time we go to the shops?

So all of the right sales data, you get through the till when you do your shopping and we've been analyzing that for decades. So we've got all of that back data as well, so we're really good at being able to understand the trends within categories and products over time. And we've also got basket and customer level data anonymized via loyalty programs, like I mentioned, like Flybuys as well. So we can see total sales within a category for anybody. And then we can, well, what products do we buy in our basket? What do we take home every time we go to the shops?

Stay with me, Paul, we'll be back in a minute. My guest this morning is Paul Hines, managing director for Asia Pacific at data company IRI. So I'll get off fast moving consumer goods shortly, but if we think about that area just for now, what are the big changes now compared to five years ago, 10 years ago? Is it about basket sizes? Is it about how people shop? I'm just wondering what the big trends are in that area, right now?

Stay with me, Paul, we'll be back in a minute. My guest this morning is Paul Hines, managing director for Asia Pacific at data company IRI. So I'll get off fast moving consumer goods shortly, but if we think about that area just for now, what are the big changes now compared to five years ago, 10 years ago? Is it about basket sizes? Is it about how people shop? I'm just wondering what the big trends are in that area, right now?

Yeah, so again, Australia's bucked some trends. If you look at other countries globally, we have seen spend that continues to rise, it is slowing down. Some of that is because obviously, due to inflation, prices have gone up. So we're actually seeing basket levels reduced now. There's less products, less units in a basket, but the value of spend is increasing every time we go to the shops effectively. So we're starting to see people buy less products. We're also seeing a switch from grocery shopping to out of home. So we are back actually to pre- COVID, so December 2019 levels of spending cafes and restaurants. So we're starting to spend less in supermarkets and more ongoing out for meals, grabbing our coffees. And I think Steven Kane was quoted in August at one of the general meetings for Kohls of saying, " Every time someone buys a coffee or eats out, that's less that they're going to spend in a supermarket." So even though there's a big concern about inflation and household budgets, as Australians, we're actually enjoying our freedom this year. We're going out and spending more on hotels, on cafes and restaurants than we have done for over two years.

Yeah, so again, Australia's bucked some trends. If you look at other countries globally, we have seen spend that continues to rise, it is slowing down. Some of that is because obviously, due to inflation, prices have gone up. So we're actually seeing basket levels reduced now. There's less products, less units in a basket, but the value of spend is increasing every time we go to the shops effectively. So we're starting to see people buy less products. We're also seeing a switch from grocery shopping to out of home. So we are back actually to pre- COVID, so December 2019 levels of spending cafes and restaurants. So we're starting to spend less in supermarkets and more ongoing out for meals, grabbing our coffees. And I think Steven Kane was quoted in August at one of the general meetings for Kohls of saying, " Every time someone buys a coffee or eats out, that's less that they're going to spend in a supermarket." So even though there's a big concern about inflation and household budgets, as Australians, we're actually enjoying our freedom this year. We're going out and spending more on hotels, on cafes and restaurants than we have done for over two years.

Okay. So we've been talking about retailing broadly here. What other sectors are introducing data more so now than ever before?

Okay. So we've been talking about retailing broadly here. What other sectors are introducing data more so now than ever before?

So I think traditionally financial services, banks have always been high users of data. And unfortunately, as inflation interest rates go up, they're going to be really watching with great detail how consumers spend and what they can afford. And that will drift into things like mortgage offers, credit card offers, how we use our income and how we use credit. So expect to see the banks really trying hard to predict the risk that they're going to take in. I think every sector of retail, everybody who engages with consumers is collecting data. One of the things that I noticed particularly about Australia, I'm three years in now, is that every business big or small, tends to have an app. So whether it's Chargrill Charlies that's collecting your order, they understand what their most popular products are and what their price point is versus a massive Australian or global retailer as well. So I think everybody is trying to use data in some way or fashion. Usually you need to have an app, you need to have a website, you need to be able to join up your in- store experience, so it's a real omnichannel relationship that you have with the consumer. So you are connecting the dots for them. I think the ones that will struggle will be the ones that are trying to make the consumer do the work for them in terms of, " I'm going to give you all the information and expect a relevant offer or promotion in a timely fashion. I'm going to go hunting for that." As opposed to those that serve up a really relevant and timely offer to the consumer. So all they've got to do is make the purchase decision in effect. If you make it too difficult for the consumer and too many clicks or too much time, then you'll lose them.

So I think traditionally financial services, banks have always been high users of data. And unfortunately, as inflation interest rates go up, they're going to be really watching with great detail how consumers spend and what they can afford. And that will drift into things like mortgage offers, credit card offers, how we use our income and how we use credit. So expect to see the banks really trying hard to predict the risk that they're going to take in. I think every sector of retail, everybody who engages with consumers is collecting data. One of the things that I noticed particularly about Australia, I'm three years in now, is that every business big or small, tends to have an app. So whether it's Chargrill Charlies that's collecting your order, they understand what their most popular products are and what their price point is versus a massive Australian or global retailer as well. So I think everybody is trying to use data in some way or fashion. Usually you need to have an app, you need to have a website, you need to be able to join up your in- store experience, so it's a real omnichannel relationship that you have with the consumer. So you are connecting the dots for them. I think the ones that will struggle will be the ones that are trying to make the consumer do the work for them in terms of, " I'm going to give you all the information and expect a relevant offer or promotion in a timely fashion. I'm going to go hunting for that." As opposed to those that serve up a really relevant and timely offer to the consumer. So all they've got to do is make the purchase decision in effect. If you make it too difficult for the consumer and too many clicks or too much time, then you'll lose them.

So I mean, it's about giving the power to the consumer in a sense. If you can listen to the consumer, give them what they want, you have a much bigger chance than if you're making the consumer work sort of thing.

So I mean, it's about giving the power to the consumer in a sense. If you can listen to the consumer, give them what they want, you have a much bigger chance than if you're making the consumer work sort of thing.

Yeah. And I think that's always been the foundation of good retailing, but I think now with technology that's available and consumers expectations that you know me, you know what I buy, I share my data with you, so therefore you should be really offering me relevant and timely offers. If you make that hard, then I think you are going to struggle especially next year.

Yeah. And I think that's always been the foundation of good retailing, but I think now with technology that's available and consumers expectations that you know me, you know what I buy, I share my data with you, so therefore you should be really offering me relevant and timely offers. If you make that hard, then I think you are going to struggle especially next year.

Okay. Paul, one final question. You said that you've been into it three years in Australia, is that right?

Okay. Paul, one final question. You said that you've been into it three years in Australia, is that right?

Yep, correct.

Yep, correct.

Where does Australia sit compared to other countries in terms of how they use data well or poorly?

Where does Australia sit compared to other countries in terms of how they use data well or poorly?

So I think in terms of IRI and what I see, I've worked across Europe previously. Australia is up there with the best of every other country. There's certainly no lag or difference in terms of a sophistication or use of data and insight. There's some great Australian companies out there from a technology perspective that are using it. So I think Australia stacks up really well versus any other market in terms of its usage of data and insight. And like I said, I think Australia was one of the first countries, if not the first, to adapt things like contactless payment, the usage of apps. There's great technology adoption by Australian consumers and I think that's reflected again in what I do around how that generates data and insight to then make your business decisions.

So I think in terms of IRI and what I see, I've worked across Europe previously. Australia is up there with the best of every other country. There's certainly no lag or difference in terms of a sophistication or use of data and insight. There's some great Australian companies out there from a technology perspective that are using it. So I think Australia stacks up really well versus any other market in terms of its usage of data and insight. And like I said, I think Australia was one of the first countries, if not the first, to adapt things like contactless payment, the usage of apps. There's great technology adoption by Australian consumers and I think that's reflected again in what I do around how that generates data and insight to then make your business decisions.

Paul, thank you for talking to Fear and Greed.

Paul, thank you for talking to Fear and Greed.

Thank you very much.

Thank you very much.

That was Paul Hines, managing director for Asia Pacific at Data Company IRI. This is the Fear and Greed Daily Interview. Join us every morning for the full episode of Fear and Greed, Australia's most popular business podcast. I'm Sean Aylmer, enjoy your day.

That was Paul Hines, managing director for Asia Pacific at Data Company IRI. This is the Fear and Greed Daily Interview. Join us every morning for the full episode of Fear and Greed, Australia's most popular business podcast. I'm Sean Aylmer, enjoy your day.