How Customer Insights Drive Smarter Market Segmentation

Priscilla McKinney: Hello and welcome to Ponderings from the Perch, the Little Bird Marketing Company podcast. I'm Priscilla McKinney. I am the mama bird and CEO here. I'm with you as always. This is just my show where I bring some good friends along and boy, I met a great friend this year, Scott Sabin. I'm so excited to have him on the show today.

He is a consumer and shoppers insight strategist. You might know of the company he works for. He works for Walgreens. But he is a leader in analytics and he has a category management background as well. You're gonna see us weave through all kinds of experience that he has, but his experience specifically with client and supplier organizations goes across food, bev, retail industries, but as of now he really focuses on making sure that consumer needs are at the heart of everything that the company does.

So Scott Sabin, welcome to the show.

Scott Sabin: Thank you so much for having me, Priscilla. Great to chat with you.

Priscilla McKinney: Yeah, great to chat with you, but you know you and I had a lot of fun chatting at an industry event and it was better because we had wine in our hands.

Scott Sabin: That's right. It was a great time. Great to get together with some industry leaders and connect.

Priscilla McKinney: Yeah, for sure. For sure. Well, we're going to now make you give up all of your expertise here for this show. So if you've been curious about what has been going on at Walgreens and also what someone with this kind of experience has in mind and is capable of doing, then you need to listen here. Scott's going to give you some really great insights.

So let's start with a little bit of your background because you have CPG and retail pharmacy in your background. And I'm kind of curious, how is it having that dual perspective? How has it shaped the way you actually approach insights now?

Scott Sabin: It's been a very fascinating journey for me. So I definitely started on the vendor side. I worked for the Nielsen company. I was there at that's kind of being exposed to a lot of change when they were first owned by VNU. And then they were sold to a private equity firm and was there working on site across the beverage alcohol industry.

So I worked with Beam Suntory, I worked with Constellation, Trilado and then my last stint there was with Molson Coors. I was working on them, they were Miller Coors, but now Molson Coors, and was on site there every day starting in Milwaukee and then Chicago and really got to learn intricacies of their business by the type of questions they asked and the different stakeholders I worked alongside and then ultimately got hired to be a part of their insights team and that's where I made the jump.

So it was about five years at Nielsen vendor side and then I started a 10-year journey on the manufacturer side where I did a bevy of different things. I did shopper insights, I did consumer insights, I did some category management. So I had the analytical expertise at Nielsen where I was really consulting and really providing some solutions, and then working in-house really getting to get directly at the problems that each of these organizations are facing.

So I got to work across beverage alcohol, candy, and pasta and sauce at Barilla and all different unique opportunities, multinational companies with a bevy of different objectives and priorities. And then I would say a destination dream company of mine, being a Chicago native, has always been Walgreens. And I joined the company five years ago.

Priscilla McKinney: I love that.

Scott Sabin: A retailer was very different than what I had experienced, and especially a retail pharmacy is very unique. And I joined Walgreens at a fascinating period of time as I've learned the retail industry ebbs and flows and adjusts to very different climates. And we've seen a lot since 2021, and I'm just coming up on five years there.

Priscilla McKinney: Wow. Well, we're going to dive into how much has changed since 2021. And I think we all remember 2020. So, you know, let's just put a pin in that one for right now. But I got to say Molson Coors, that must've been a very cool job.

Scott Sabin: Please. It was, it was a great company and it was an exciting time because they had just moved to Chicago. So you have offices in Golden, Colorado and you have Milwaukee, and you have those two companies using together. You definitely had more folks making the move from Milwaukee than from Colorado, but you had some legacy Coors folks as well.

And then at that time it was a joint venture between SAB Miller and Molson Coors. So it was fascinating getting a taste of these, you know, some international brands that we were selling and distributing, and then just learning really, really deeply about the three-tier system and the DSD distribution model and just how you work together with distributors to get your products and your promotions executed. And then you have the on-premise versus off-premise.

And then lastly, really strong ever-changing regulations by state and by channel as to what you can sell. So you might be able to sell beer anywhere in one state, and in another state you can be less restrictive when it comes to things like wine. So it just really varies, and since I've worked there that's changed a ton. So I cannot really speak to, I used to know what the strictest states were and the most open ones were, and that's just really pivoted quite a bit.

Priscilla McKinney: Yeah. Yeah. What it does provide you though, with an interesting background now as you focus on what you're doing at Walgreens, I just think that it has to be colored by all of that experience to see the big picture of, you know, all of these different channels. So let's talk specifically about Walgreens.

So love having it be a dream job for you and coming home to Chicago, but Walgreens has been through a significant transformation over the last few years. So what does it look like from your point of view? I mean, this is Ponderings from the Perch, but you can have your own perch, Scott. I'm going to give you one.

What does it look like for when you have a major brand that really had to reinvent itself in real time? And we're going to talk about that. But then I want to hear, what do you think that meant for you as an insights professional?

Scott Sabin: Sure. So I think Walgreens' mantra from the moment I got there to where we are now has remained consistent. It's always been about the patient getting their prescriptions, getting their vaccination, and the customer coming in and us really being able to cater an assortment of goods to fill their needs. So I think that has remained the same.

Now, when I joined the company, it was Walgreens Boots Alliance. It was a publicly traded organization. And around that 2020, 2021 timeframe, there were a bunch of other companies that were acquired by Walgreens, and they really were moving deeply into being more of a healthcare solution for different customers.

And really what we've seen over time is as things have evolved and changed in this post-COVID world that we've gotten out of, we've really honed back to our fundamentals as being a retail pharmacy. And that's really where our focus is. I think one of the learnings is you really can't be great at so many different things. You really do need to think back to your roots and think about how to solve problems for the most amount of patients and customers.

And I think that's what we've been able to harken back to and to really refocus on. And it's just been very clear the whole time I've been there that the drug channel has a specific role that it plays in customers' lives. While I was there, we saw Rite Aid shut its doors. So that's obviously changed the dynamics within the drug channel.

But really in terms of getting prescriptions and getting the goods we sell, we have a tremendous amount of competitors that can meet some of those needs. So it's really not just our folks up in Woonsocket, Rhode Island that we necessarily are thinking about day in and day out. There's other retailers that really we compete with. And really when it comes to the customer share of wallet that we need to think about, coming up with the right pricing, the right promotions, the right assortments, the right merchandising, the right end caps, just the right thing to meet their needs when they are making a trip to Walgreens.

Priscilla McKinney: Yeah. Yeah. And you know, for healthcare we've had an interesting transition again with some online channels getting bigger and bigger with healthcare. So I'm sure it's something that it just seems like it's ever changing. So you must be like a little bit challenged day to day.

So in that private equity transition too with Walgreens, it's really comforting to hear, look, we stayed true to what our core was. We needed to provide patients with the prescriptions that they needed when they needed them. The convenience is kind of the added Walgreens flair, but look, if you can't deliver this one thing, which is what I'm coming here for, then we start having a problem. So I can imagine like that focus really helping stabilize things through a lot of transition.

But tell me, let's back up just a little bit because you guys were right at the middle of that COVID thing where, yeah, we had a lot of people who had to get vaccines. So I can imagine how hectic it was. But then coming out of COVID the consumer started this kind of "I only live once" mentality. So tell me how you saw that come out in insights and how that mindset shift has changed the way retailers need to think about pulling people in and winning that trip.

Scott Sabin: Yes. So first and foremost, the other thing that I would say about Walgreens, because I've really given this a lot of thought while I've been with the organization, like what's that trip all about? And obviously we have a ton of data that we can understand it, but what it really, I think, comes down to, if you have an acute illness, you need first aid treatment, you have something that you need urgently, or you just don't feel well.

It might not be urgent, but you're looking for a solution. I think we're entrusted by those customers that we are going to have the right items in stock, and that we can meet that need where you can grab a liquid or a pill to bring back if you're dealing with a sore throat, you're dealing with allergies, you're about to go on a trip, you're on the road, wherever the case is. I think that is like the primary thing.

And there's other missions that people are coming in for, a party, or they're coming in for just other urgent needs that arise that may not be acute. But that's where I think we really play a strong role. It's always been the case. It's really fundamental to who we are, but that's really where we're strong.

I think in COVID, we really met patients' needs as they needed vaccinations and they were making those appointments and they were getting in, and the pharmacists were trying to do everything they could to make sure people could get back to their way of life and to keep everyone safe. Right after COVID was the launch of the COVID tests, the at-home testing, which is a category that has continued to evolve. And we were definitely at the forefront of that, and that worked directly in that space as well.

In making sure we're understanding the demand and that we have the right amount in stock, and that we're thinking about as it's evolved. Now there's, I believe, three or four in one different tests. You can get influenza A, influenza B, COVID. I believe there's one that has RSV in it as well. And it's just evolved so much over time.

So that's been really interesting. So the "only live once" mentality really came from, people were cooped up in their homes for, in some cases over a year, you saw a lot of people doing a lot of home decorating, renovating their home. This is the place that they spend their time. They want it to be great. And then you saw a situation where people were restricted in terms of travel.

I mean, travel was something that was taken away from virtually everybody for over a year. And then you started to ease back into it and people were doing road trips and all different types of things. So I think the retail industry has been challenged by that mentality, that you only have a certain amount of disposable income, and that customers are being very choiceful about the things that they're putting in their basket and that they're spending their money on.

They would much rather have these experiences, knowing that this was taken away from them at some point, and renovate their house and do things to enjoy the place that they are spending their time every day, than really adding a bunch of things into their basket at a bevy of different retailers. And obviously the inflation, which has really picked up from 2020, late 2021, early 2022, and really hasn't, it's slowed down to a degree but it hasn't really disappeared, is affecting people, and you continue to hear about people being strained financially.

And a lot of it comes down to, some people are strained, but some people are strained when it comes to making purchases because they're using their funds in ways that are more enjoyable to them. And maybe they're strained when it comes to the regular weekly grocery trip where they just don't want to spend as much, because they want to use their funds for other things that give them more joy and pleasure.

Priscilla McKinney: Yeah, so as an insights professional, how do you tackle that kind of change or that shift in the consumer mind state? You know, can you think of some different studies or some different approaches you took, or was there something that surprised you about how you could serve those people?

Scott Sabin: I think you just have to continue to learn more and more about your customer. So who you currently have, who you've had before, the customer that you have a void that you currently don't have within your box. We definitely also have people that get prescriptions that don't regularly shop the store.

So there's a lot of data and there's a lot of opportunity that's out there. And we definitely want to see customers find solutions when they're within our four walls that they don't have to go to a bunch of different places looking for it, that we can meet the needs based on the brands and the different items that we have and the value that we can exhibit to them while they're on that trip.

So I would say the amount of opportunity is really mammoth, it's ever growing. And you add in this new omnichannel world we live in now, because you also have to remember in COVID, a lot of people, especially as you think about like that baby boomer generation that would always want to go in stores, they want to pick their own bananas, they don't want someone else doing it for them.

Well, guess what? They were introduced to third party platforms and they were introduced to ordering from some traditional brick and mortars online source because they didn't want to go in stores. So we also have to compete with that and meet them in our online space as well.

Priscilla McKinney: Yeah. Yeah, for sure. That changed the way people thought they would never ever ever shop. And then voila, this is the way we're shopping now. You know, I have to say when I'm in Walgreens, I just hear some insights, here's some consumer feedback. I am always amazed. I'm walking through the aisles and I'm thinking, who has to inventory this store?

Like how do you have like the kind of Post-it I need? And the SD drive that I forgot at home from my trip, and the kind of bottle of water I want, and you have my sugar-free candies that I have, and I just think, what? Who is the poor person who has to like think about this entire inventory but on a smaller footprint? I mean I get it when I'm at Costco or something, but I mean it's just it's amazing to me what stuff is in there. But you're right.

Scott Sabin: Yeah, I mean, you have around 180 to 190 categories within the store. And you really have to look at each of them individually, analyze the data, and really ensure that you have the right offering. And it's a cycle that, just like any other retailer, that we go through on an annual basis, and there definitely is data and analytics to help drive those decisions.

And ensure that you're not taking away something that customers are incredibly loyal to, that has a strong velocity that is moving at a decent rate and people like that item and it's important to them, and you're not removing that from the shelf just to secure space for something else that maybe doesn't warrant it. So there is definitely a big thought process and a lot of analytics behind it.

Priscilla McKinney: Yeah. Yeah. Well, I'm going to put you on the spot a little bit about impulse buying, because I have to say that when I go into Walgreens, I went in for one thing or two things, but why, why did I end up with eight or nine things? So number one, good merchandising, so bravo.

But how much of Walgreens, and not a specific number, but how much thought do you give as the insights professional there about the impulse nature of shopping at Walgreens? You do have to come in for a script, but while I'm here, I'll get this, this, and this.

Scott Sabin: I mean, the path to purchase has to make sense, the way that the store is laid out, what you have near the pharmacy, you wanna be mindful of that. And then as you think about like the front end and the register and what's positioned there, what's near the photo area. I mean, it definitely, and you think about like different times of year where things, I mean, Easter is a period of time or any of the core candy celebration type holidays, that's what the customer is coming in for.

And we know that, you know, for example, once Valentine's Day ends, you know Easter is going to get ramped up. And I always think it's fascinating when you see sales of Easter goods right away. And I always think to myself, if it's a candy or something like that, that's not really for celebrating, that's somebody who's got into the spirit and wants to indulge early on, which you should. Like you should be excited about the Cadbury eggs and some of the other items that don't come in that are more limited time offerings.

But yeah, whether it's cough, cold or allergy season, or whether it's one of the Christmas, Halloween, Valentine's, the Easter, you really need to meet the customer where their mindset is, and they might not be coming in for that situation. But if you can save them a trip somewhere else, or you have the perfect stocking stuffer arranged in a position in the store where they can easily grab that and convert, I mean, that's really our ultimate goal is to be a true solution for our customers.

Priscilla McKinney: Yeah, well you get a lot of conversion out of me, I'm just saying Scott. Yeah, sure, why not, I'm here. Let's go back to something you talked about kind of in COVID, that a lot of people got introduced to some additional channels. And the truth is that retailers, grocers, drugstores, nobody is exempt from it right now.

Everyone is feeling headwinds of, you know, proliferation of channels. And so what do you think separates the brands that are navigating this well from the ones that are struggling? Do you have any insight on that?

Scott Sabin: So I think the brands that are able to overcome this are really great at really communicating their value proposition and are really putting effort into innovation and really showing, you know, ingredients are key. We hear about protein, you can get protein foam in your Starbucks drink now, which is obviously a unique phenomenon.

And I think at some point you have to realize what is just kind of a fad and what is a trend, and the brands that are sort of leaning into those type of things and realizing, you know what, no, there's GLP-1s out there, there is the need for protein, it's being scientifically proven. And just really not just continuing to do what you've always produced, but really showing the clear benefit that your brand can provide, whether it's ingredients, whether it's the type of packaging that you're doing.

We know that this Generation Z, the younger generation, seems to really care quite a bit about what these companies stand for, and that's the generation that's going to be buying products for many, many years. So you might as well sort of grab them at this early stage. And I think it's important for brands to really be attentive to their customer, and not just profit goals, or not just what you've decided within your four walls that you want to achieve. You really need to be listening deep and hard to what the customer and consumer wants.

Priscilla McKinney: Yeah, that comes back to what you said earlier, I actually wrote it down. It says you constantly have to learn more and more about your customer. I was like, yeah, directly from Scott. So well, let's talk a little bit more personally, because this is my podcast and my friends get to come on this podcast.

But it's been really fun getting to know a little bit more about your trajectory and your experience, but you've kind of done it all. You know, you've worked in custom research, you've done analytics, you've done category management, you've done retail, you've done alcohol, you know, I can kind of go through the whole thing. I guess I'm curious two things. Where do you see insights functions changing? But also is there something you would love to dig into next? Like, oh my gosh, yeah, I've done this, but you know what I really love to do is what?

Scott Sabin: So in terms of insights functions, I do think ideally your strategists at the end of the day that you're really advising, providing the right information, really thinking about how it can be leveraged. And at the end of the day, an insights person that's really succeeding is just helping to make smart business decisions.

Sometimes those business decisions are playing defense. Like we actually shouldn't do this, this is a bad decision, let's not do it. Or if it's something we have to do when we promise, let's try it out in a subset of stores or locations and let's see how it performs and measure it properly before we introduce it further. If it's something that, you know, there are R&Ds created and there's a lot of internal support behind it.

So that's in terms of like the analytical rigor, that's where I hope insights continues to play a really strong role. In terms of myself, where I see myself going, I mean, I'm just really a curious person who's really interested in data and solving business problems in terms of areas that I haven't touched yet that are fascinating.

I would say the food service industry is definitely interesting. I do think about things that have longer purchase cycles being interesting, not necessarily saying that I'm hoping to work on dishwashers or laundry machines, but it does, it's a more expensive purchase that you don't make as frequently. So I sort of think that is a fascinating space as well. And then obviously like the tech sector is exploding, and when you think about CX and the different customer experiences.

So yeah, I mean, I have a bevy of different things that I'm exposed to when you think about like different ads and different products that, you know, I'm always pontificating about this decision process and how customers are really deciding what to do. And it's, yeah, the industry itself continues to amaze me how it's advancing and interesting to follow.

Priscilla McKinney: Yeah, for sure. Just like when we were at that dinner where we got to really chat, it is so interesting to hear from different people what they're thinking, what they see in industry, how they see our roles changing. But to me, it's always great to come back to what you and I talked about that night, was just like the curiosity you have for the consumer and for the changing consumer, and really figuring out how brands can meet those needs.

I just loved that conversation, I thought it was so on point, because it doesn't matter what technology comes in, what it is we're selling, it's still that consumer that's at the heart of it all. So obviously what was going on at Walgreens and the focus there did seep into Scott Sabin.

Scott Sabin: Yeah, I mean, there's no doubt about it. And when it comes to the area that I'm in, in shopping, I mean, people are making decisions at a split second. And if you were to ask them a minute and a half later, why did you make that decision, in some cases they might not be able to fully articulate it.

I mean it might be the person that was with them, it might be, like I said, the merchandising, it might be on the very bottom of their to-do list that they really hadn't thought about it. And wow, I mean, I constantly forget things on my to-do list and have to make a trip back. So if that can be something for me and I don't have to be more efficient, that's the way to have to solve that problem.

Priscilla McKinney: I love, love it, Scott Sabin. Obviously you've heard from him, he's super approachable, find him on LinkedIn. It's Scott S-C-O-T-T Sabin, S-A-B-I-N, very easy to find him. Scott, thanks for being on my show.

Scott Sabin: Thanks for having me, great to chat with you Priscilla.

Priscilla McKinney: From all the peeps here at Little Bird Marketing, have a great day and happy marketing.