Channel Mastery - Ep. 193: 2022: The Year of The Great Weirdness with Kristin Carpenter

Verde Brand Communications

leading through a challenging business climate, headwinds from inflation, supply-chain woes, softening consumer sentiment, and global political unrest

featuring

Kristin Carpenter is the founder of Verde Brand Communications and the host of the Channel Mastery podcast. She earned her stripes in the $873 billion outdoor recreation industries through a decade-long career as a journalist. In 2001, she pivoted from reporting on stories to helping brands create their own stories in the launch of Verde Brand Communications, award-winning brand communications, PR, and digital marketing agency. In 2018, Verde launched the Channel Mastery podcast to help outdoor recreation brand leaders modernize their businesses to be exceptional to today’s connected shoppers.

show highlights

In this solo-cast episode of the Channel Mastery podcast, Kristin brings resources and a call to action to leaders of outdoor recreation brands to boldly adopt and execute new approaches, minimizing risk along the way. The year 2022 is proving to be one of the most unique to date in terms of leading through a challenging business climate, considering headwinds from inflation, supply-chain woes, softening consumer sentiment, and global political unrest, all underscored by one of the most divisive times in history. This episode of the Channel Mastery podcast declares 2022 to be: The Year of The Great Weirdness.

In this episode, Kristin reflects on how our “best-laid plans” continue to elude even the most disciplined of teams and shares tips on adopting new approaches with quick execution to further growth and traction. This episode also covers the outdoor rec consumer’s resemblance to luxury consumers, a Q3 view on consumer ‘buying vs. spending,’ and hand-selected resources, including an ‘ode to evolving the legacy supply chain’ by Doug Stephens, the “Retail Prophet,” and Euromonitor International's take on the luxury consumer, and more.

Kristin:
Welcome everyone to episode 193 of the Channel Mastery podcast, my name is Kristin Carpenter, and I’m your host and the founder of Verde Brand Communications. Thank you so much for joining me here today. I also want to thank Verde for being the founding sponsor of Channel Mastery, check us out at Verdepr.com.
I also want to thank Life Time Inc. and the 2023 Sea Otter Classic executive summit for being our presenting sponsor of a new season of the Channel Mastery podcast…
Earlier this year in April, Verde and Life Time launched the inaugural Sea Otter Classic Summit just before Sea Otter Classic, the kick-off to the camping and cycling seasons.
Through diligent research, we knew our executive guests wanted to look up and out for the first time since the onset of the pandemic -- we were dedicated to enabling them to do just that through the Summit. We’re also dedicated to enabling you to do just that every week through this podcast.
It’s such an important time to look up and out -
You’re leading through a “unique” time filled with both challenge and opportunity. You also know WELL that what got you to where they are today won’t be what gets you to the expansive future you know is possible as an outdoor rec brand.
And I feel confident saying that back in April, we knew this year would be a year like no other. However, I don’t think any of us realized just how unique this year would turn out to be.
The best laid plans… right?
2022 has proven that having the ability to change course, commit to a move and de-risk it as you’re moving are the new tablestakes for winning in business.
Everyone is living their own version of this - Whether you’re running the operation, leading demand planning or sales, or marketing. … We’re all living a proverb: The best laid plans….
I’m a past-journalist and present day NERD, I wanted to share the backstory of that proverb “The Best Laid Plans…”from Wiktionary:
It’s an expression used to signify the futility of making detailed plans when the ability to fully or even partially execute them is uncertain. from Wiktionary:
That sums up 2022 to date and I’m just going to do this for all of us – I’m calling 2022 as The Year of The Great Weirdness.
The best laid plan is about rearview mirror blueprints. We all have a tendency to build forward from what we’ve known to work in the past – but that doesn’t work anymore in our businesses.
And that’s what todays show is about: leading your business with ongoing consideration of and rapid execution of new approaches.
It’s about looking up and out and operating a business on decisions based on moving targets.
August’s economic review from the National Retail Federation sums up where we all are pretty well:
Like sailing, projections require constant adjustment to changing winds and hazards, and the economy is clearly navigating challenging headwinds that leave us far from a safe port. The economy is complex, the data is imperfect, and we cannot account for all of the interactions, particularly in economic growth, inflation and monetary policy.
This, my friends, is the Great Weirdness.
The report underscored where we’re at as we head into September 2022… Economic growth is at a pivot point.
The economy contracted at an annual rate of 1.6 percent in the first quarter, followed by 0.9 percent in the second quarter of 2022.
These back-to-back contractions have heightened fear of a recession, but while the economy has lost momentum heading into the second half of the year, economic data is not consistent with a typical recession.
And that’s weird.
The driver of the U.S. economy is the consumer and spending has been fueled by the stronger-than-ever labor market. Spending has slowed but has not been stopped by inflation.
The NRF’s calculations showed retail sales were up 7 percent year-over-year for the first six months of the year. This despite softening consumer demand and sentiment.
Clearly, demand has slowed, but the slowdown is entirely a result of towering inflation. NRF reports.
While many articles published in August have reported that inflation has peaked in the USA, inflation forecasts continue to be highly uncertain, and supply constraints will factor into the second half of the year.
More on the supply chain in a few minutes.
Before we go there, let’s talk about de-risking how we serve our consumers by reconsidering what it means today to buy versus to shop.
Scott Buelter, in episode 191 of the Channel Mastery podcast, said that the vast amount of data Ascent 360, his company, parses through monthly for its clientele, sees with certainty that the outdoor recreation shopper leans more toward traits of a luxury consumer.
Luxury goods are doing pretty well and the luxury consumer is still spending.
Ecommerce Times reported July 13:
Inflation may be forcing many Americans to reduce their discretionary spending, but shopping still appears to be strong among the luxury set, according to a survey released in mid July by Saks Luxury Pulse.
Higher-income consumers continue to spend on luxury, including health, wellness and fitness products, according to Saks.
Euromonitor International’s mirrored this with its latest Luxury Goods data that projects a 6-percent growth in luxury over 2021.
That’s impressive considering the weird backdrop consumers live in today.
I always put this out there: Our businesses are experiencing turbulence because our consumer is living with all of the weirdness, and as we saw through COVID, the consumer is quite adept at solving for what they want today. Very adept.
It’s important to consider what buying versus shopping means as we look at how our consumer is solving for solutions in the weirdness of TODAY.
Simply put, historically Buying = need based and Shopping = want based
On this topic, I was inspired by a podcast by Steve Dennis, a former and future guest on Channel Mastery and the author of Remarkable Retail
I’ve included the link to his book and his podcast in the show notes.
Dennis points out the obvious, that shopping and buying have changed in recent years thanks to the ‘endless aisle’ that search panes and marketplaces bring…
More important to our show here today?
Shopping and buying continue to change today and in the past few months with economic forces and consumer sentiment changing amidst the WEIRDNESS backdrop of war, belief polarization, inflation and potential recession with the consumer.
Yes, buying is still about ‘completing a task’ - convenience, easy access and speed, and price. Brand preference? Not so much. Buyers are in a non emotional state.
And Shopping is still about effectiveness over efficiency.
With the weirdness, our high consideration shopper is more committed to investing more time to get the right outcome.
What we MUST prioritize to our high consideration consumers is that meeting of an emotional need; it’s discovery driven instead of search driven. It’s heart over head.
Our high consideration consumer is not parting with cash as quickly, that’s for sure. Our consumer is in a longer consideration window for our high consideration products.
Think about that and prioritize that As outdoor recreation leaders – our very futures depends on growing our relationship with our SHOPPERS.
And as we continue to deal with the big challenges in our brands today – including inventory glut and the fire under our collective asses to MOVE product –consider that fragile relationship we have with our prized consumers.
Do you think they want to engage and go deeper with a brand that’s always on sale?
Or would they rather discover and go deeper with a brand that mirrors their values and tells a story?
What’s more valuable to you as you continue to pay more and more for new consumers?
The most successful brand is the brand that supports a belief the consumer has in their head about themselves. Think of it like this – our high consideration consumer says to themselves: People like us buy stuff like this.
That’s belonging to a brand. That’s emotional connection and that’s where we need to invest and protect our brands as all forms of promotion kick off through the next few crucial months of retail sales, and for 2023.
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And on the topic of feeling compelled to move product…
I would be remiss to not mention the supply chain problems in a show meant to provoke thinking about new approaches in our businesses.
I will go so far to say that problems with the legacy supply chain are the biggest alligator next to our collective boats today.
I found an incredibly insightful and thought provoking blog post written by Doug Stephens about a month ago..
He’s known as the Retail Prophet, I’m sure many of you are familiar with Stephens. His blog post I’m referring to is titled, “The Future of Retail in the New Era of Risk” and the link to it is in the notes for this episode at verdepr.com under the podcast tab.
Stephens boldly states that for most companies today, “supply chain planning remains largely a finger-to-the-wind exercise.”
He goes on to say that “Most use some combination of volume, velocity, and visibility to project supply and demand.
Many still rely on fairly rudimentary data sets – stock on-hand, sales velocity, order lead-time, and in-transit order quantity. Sprinkle in some accounting for seasonality and you’ve got inventory management 101.”
It’s a system, he says, that was feasible when the planet was less interconnected, and change moved more slowly.
It’s a rear-view mirror legacy system – let’s face it. It’s not viable any longer due to an increasingly intertwined and fast-moving global landscape.
Consider weather patterns, industry sales projections, macro-economic indicators, geopolitical issues, transportation costs and environmental performance optimization – consider ALL of this weirdness and how inextirpable it is to CONSUMER TRENDS.
These are new and dynamic data points and pioneering companies that outperform competitors in both revenue growth and margin expansion are now using AI and machine learning into their planning systems, as well as regionalized redundancies.
I highly recommend reading this article….
He also traces the problems back to retails’ legacy performance indicator – PRICE – as the cornerstone of competitiveness. I have to argue that’s also the cornerstone of brand competitiveness in so many cases.
Business leaders must, Stephens says, once and for all appreciate that the singular pursuit of low cost comes with an extraordinary number of risks. Risks that make businesses far less competitive.
Most companies today are accounting only for the front-end advantage that low cost might afford them. What they’re failing to properly consider are the back-end costs that accompany it.
The most relevant example I want to share from his post? The massive orders and long lead times implicit in most globalized supply chains are making responding to fluctuations in demand impossible.
This is all driven by the Great Weirdness:
economic turmoil
civil unrest
climate-driven events
The pandemic, and the next pandemic
His point? Change today moves at light speed compared to only a few decades ago. In short, we’ve crossed over into an era where disruption is so frequent and fast-moving, that we must completely rethink and rebuild our legacy supply chains.
Perhaps most important, Stephens argues that we must redefine our concept of “cost” for the tumultuous age of Weirdness we’re operating in and through.
The best laid plans – they’re built from the rear-view mirror and I am challenging ALL of us to look up and out, look ahead to the future.
I really like the way he summed it up as “blindly working to reduce unit cost.”
He views this competitive advantage of the past.
And the expansive future will be all about Eliminating risk.
The only way to get there is to operate with discipline to consider new approaches and act quickly to implement them – that’s the pathway to not only de-risking decisions but to eliminating risk going forward.
I’m so glad you’re on this journey with us, please consider us to be your peer community of executive leaders committed to harnessing the opportunity that ALL of the challenges and weirdness we continue to face brings to us every day!
Looking forward to seeing you right here next week on the Channel Mastery podcast – thanks for joining us today!

show sponsors

The Channel Mastery podcast is presented by Verde Brand Communications and Life Time, Inc., owner of the Sea Otter Classic and producer of the Sea Otter Classic Summit outdoor recreation executive gathering, taking place April 18-20, 2023, in Monterey, Calif.