WEBVTT - Walgreens and CVS Try to Fix America’s Flailing Pharmacies 0:00:00.600 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week Inside, from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.319 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.840 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:26.120 and Tim Stenebeck from Bloomberg Radio. 0:00:27.280 --> 0:00:29.920 Okachonally. I don't know about you, but I do everything 0:00:29.960 --> 0:00:32.560 I can to avoid going to the pharmacy. The products 0:00:32.560 --> 0:00:35.559 are expensive, they're locked up, the line to pick up 0:00:35.600 --> 0:00:39.000 medications is long. Sometimes the pharmacy has even closed when 0:00:39.040 --> 0:00:40.479 I try to go, and overall I just find it 0:00:40.520 --> 0:00:43.440 an experience I want to avoid. Well, it turns out 0:00:43.760 --> 0:00:46.360 I'm not the only one. As Feoni Rutherford writes in 0:00:46.400 --> 0:00:49.800 the new issue of Bloomberg BusinessWeek, pharmacy profit margins are 0:00:49.800 --> 0:00:53.280 falling at the biggest chains, which includes CBS and Walgreens 0:00:53.680 --> 0:00:56.520 write a declared bankruptcy just a few months ago, and 0:00:56.560 --> 0:00:59.640 a key problem for drugstores is the front of the store, 0:00:59.720 --> 0:01:02.880 where competition and inflation are making it harder to turn 0:01:02.960 --> 0:01:06.639 a profit. Jim Ellis is at Bloomberg BusinessWeek Assistant Managing editor, 0:01:06.880 --> 0:01:08.920 and he edited Fiona's story, which is featured in the 0:01:08.920 --> 0:01:11.280 new issue of BusinessWeek magazine. It's available on newsstands, on 0:01:11.280 --> 0:01:14.280 the Bloomberg terminal and at bloomberg dot com slash At BusinessWeek, 0:01:14.480 --> 0:01:17.959 Jim joins us from New Jersey. So, Jim, you go 0:01:18.000 --> 0:01:21.080 to the pharmacy, everything's locked up, The line is long. 0:01:22.680 --> 0:01:24.720 It turns out you can get a lot of this 0:01:24.720 --> 0:01:28.120 stuff for cheaper when you order it from some of 0:01:28.120 --> 0:01:30.319 the biggest retailers online. 0:01:30.560 --> 0:01:34.560 That's become the big problems, so many of it. That's 0:01:34.600 --> 0:01:36.640 become a big problem for the drug store change simply 0:01:36.680 --> 0:01:40.760 because once upon a time people thought, oh, well, you know, 0:01:40.760 --> 0:01:44.279 I'm going to go and buy a lot of things 0:01:44.319 --> 0:01:47.200 as I walk through the store to the back to 0:01:47.640 --> 0:01:51.720 the pharmacy, and the business model for the pharmacies had 0:01:51.800 --> 0:01:55.000 been you put that, you know, the pharmacy in the 0:01:55.040 --> 0:01:57.640 back of the store. It makes people go through run 0:01:57.680 --> 0:02:01.280 the gauntlet through all the candy, school supplies, things like that, 0:02:01.480 --> 0:02:03.720 and they pick these things up, which is showed at 0:02:03.720 --> 0:02:06.320 a higher price than you get at other retailers, and 0:02:06.400 --> 0:02:09.639 then they'll also buy the drugs. That's been thrown sort 0:02:09.639 --> 0:02:12.600 of apart now because people have discovered that you can 0:02:12.680 --> 0:02:16.560 go to a Walmart, you can go to even Amazon's 0:02:16.600 --> 0:02:20.720 pharmacy business, you can find drugs other places. And so therefore, 0:02:21.080 --> 0:02:24.040 not only are the drug stores losing that business that 0:02:24.200 --> 0:02:27.840 comes from people picking up prescriptions, they're also losing the 0:02:27.880 --> 0:02:32.639 business of people buying basically overpriced retail items within their stores, 0:02:32.880 --> 0:02:34.560 and that's wrecking their financial model. 0:02:35.720 --> 0:02:37.760 If wrecking the financial model, and you could see that 0:02:37.800 --> 0:02:41.040 some people have already kind of thrown in a towel 0:02:41.200 --> 0:02:45.240 when it comes to that struggling financial model. Tim is 0:02:45.240 --> 0:02:46.400 waving his hand. 0:02:47.480 --> 0:02:49.519 Unless you need, unless you need talent on in the 0:02:49.560 --> 0:02:52.839 middle of the night for a crying toddler, like it's 0:02:52.880 --> 0:02:55.840 hard to find a reason Shanalie to step inside one 0:02:55.880 --> 0:02:56.800 of these I don't know. 0:02:56.880 --> 0:02:59.120 I live in New York City, so I like to 0:02:59.120 --> 0:03:00.600 step inside of it the rec and I don't is 0:03:00.600 --> 0:03:02.600 because my dog barks on the line a lot, so 0:03:02.639 --> 0:03:05.959 I don't like to take them in there. But Jim, 0:03:06.120 --> 0:03:07.600 what are the fixes here? 0:03:08.600 --> 0:03:11.160 Well, the fix the first fix is that they've got 0:03:11.240 --> 0:03:14.120 to come up with some way to make actually going 0:03:14.200 --> 0:03:17.399 to a pharmacy not such a hassle for a lot 0:03:17.440 --> 0:03:20.840 of customers. One of the things, particularly since COVID is 0:03:20.880 --> 0:03:23.560 a lot of people don't like the notion that, you know, 0:03:23.680 --> 0:03:27.880 they're understaffed many of the pharmacies because they've had shortages 0:03:28.080 --> 0:03:31.200 of pharmacists because it's been so difficult to work in 0:03:31.240 --> 0:03:34.440 a pharmacy since COVID. You know, a lot of people 0:03:34.880 --> 0:03:37.760 are confronted with lines, they're confronted with weights that they 0:03:37.800 --> 0:03:40.480 don't want to have, and it's sort of chaotic at 0:03:40.520 --> 0:03:44.080 the same time within a pharmacy, simply because the pharmacist 0:03:44.120 --> 0:03:47.240 now is not only preparing your drugs. They may be 0:03:47.320 --> 0:03:50.760 giving vaccinations, they may be doing health screenings. There's a 0:03:50.760 --> 0:03:53.480 lot of things depending on your state, that pharmacists are 0:03:53.520 --> 0:03:56.520 allowed to do now that they weren't allowed to do before, 0:03:56.880 --> 0:03:59.960 and that's more work with fewerformacists, and so it's become 0:04:00.360 --> 0:04:03.280 a less you know, it's not like going to the 0:04:03.320 --> 0:04:05.800 doctor where you sit up and talk to your pharmacist, 0:04:05.920 --> 0:04:08.800 and you know, nowadays that sort of jump in wait 0:04:08.840 --> 0:04:11.480 in line, wait, wait, wait, then finally you can get 0:04:11.480 --> 0:04:14.240 out and then have to walk back through that gauntlet 0:04:14.320 --> 0:04:16.880 of things you don't want to buy because they're overpriced. 0:04:17.040 --> 0:04:20.400 So what they're trying to do is to figure out 0:04:20.440 --> 0:04:23.600 a way to get the pharmacy, you know, back up 0:04:23.600 --> 0:04:26.640 to the front of the store. Now that's like, that's 0:04:26.760 --> 0:04:28.840 heresy for a lot, you know, for people who work 0:04:28.880 --> 0:04:32.920 in this business for decades. But right now that's something 0:04:33.000 --> 0:04:36.640 that Walgreens is experimenting with, is you know, put in 0:04:36.720 --> 0:04:39.200 pharmacies at the front so you can come in and 0:04:39.240 --> 0:04:41.719 one of the things that people don't like about going 0:04:41.760 --> 0:04:44.600 to the pharmacy, which is waiting, a lot of that 0:04:44.640 --> 0:04:47.840 goes away simply because you come in and instead of 0:04:47.880 --> 0:04:51.800 waiting in line, you're using kiosks to put in your 0:04:51.839 --> 0:04:54.800 information and then you just so you can if you want, 0:04:54.920 --> 0:04:57.279 go back and wait in your car and they text 0:04:57.360 --> 0:05:00.159 you when your order is ready. You can shop the 0:05:00.160 --> 0:05:02.880 store if you choose to, but more importantly, you can 0:05:02.920 --> 0:05:04.960 go other places. You can walk around or just sit 0:05:05.040 --> 0:05:08.520 in your care and be more comfortable. That's very different. 0:05:08.800 --> 0:05:11.919 It also is a pretty big gamble simply because a 0:05:11.960 --> 0:05:14.880 lot of the business model counts on that mixture of 0:05:14.960 --> 0:05:19.479 both pharmacy revenue and that sort of high margin business 0:05:19.480 --> 0:05:22.440 of retail that they sell within a drug store. 0:05:22.800 --> 0:05:25.640 Jim, it's so hard to see to hear you say 0:05:25.640 --> 0:05:29.200 this and see how it competes with the upstarts that 0:05:29.240 --> 0:05:30.719 I think have taken over in a lot of the 0:05:30.760 --> 0:05:33.440 bigger cities. Look, they're not available everywhere in the US 0:05:33.480 --> 0:05:36.960 at this point, but the fact that there are apps 0:05:37.440 --> 0:05:40.240 that you can give a phone number to your doctor 0:05:40.279 --> 0:05:42.640 when you're at the doctor's office getting a prescription written, 0:05:43.360 --> 0:05:45.760 and then something pops up on the app and asks 0:05:46.040 --> 0:05:48.599 what time do you want this drug delivered today? Like 0:05:48.680 --> 0:05:50.880 that is just so much easier than this process. 0:05:51.040 --> 0:05:54.320 I mean, the convenience is something that you know that 0:05:55.120 --> 0:05:58.159 brick and mortar retailers, like a drug chain, you know, 0:05:58.160 --> 0:06:01.240 a drug store chain, they just have to deal with that. 0:06:01.279 --> 0:06:06.640 They are making deliveries available, depends on the market, but 0:06:06.839 --> 0:06:10.400 often the deliveries that they offer are not quite as 0:06:10.560 --> 0:06:14.480 good as some of these online only pharmacies. For example, 0:06:14.520 --> 0:06:17.560 in New York, you can get deliveries at you know, 0:06:17.680 --> 0:06:21.240 sort of CVS's, but often it's through a third party 0:06:21.279 --> 0:06:25.240 delivery service, and some people don't like that. And some 0:06:25.279 --> 0:06:27.280 people also get confused when they think of it as 0:06:27.279 --> 0:06:29.599 sort of, you know, should I be getting my drugs 0:06:29.600 --> 0:06:32.840 delivered by the same person that brings my pizza. 0:06:33.440 --> 0:06:36.560 It's not necessarily the same person, but hey, I order 0:06:36.600 --> 0:06:37.880 Peaza on Friday, so why. 0:06:37.680 --> 0:06:41.560 Not well, doesn't jim to that end. What are the 0:06:41.680 --> 0:06:42.479 risks here? 0:06:44.279 --> 0:06:49.360 Well, one big risk is that when you change a habit, 0:06:49.480 --> 0:06:52.120 when you try to change a habit that consumers have 0:06:52.240 --> 0:06:57.120 had for sixty seventy eighty years, you know that that 0:06:57.360 --> 0:07:00.800 will confuse them. That also can make them think, well, 0:07:00.920 --> 0:07:04.320 you know I've done this this way before. Well maybe 0:07:04.320 --> 0:07:06.000 if I'm going to have to do something different, maybe 0:07:06.000 --> 0:07:09.040 I will try something different. Maybe I'll try an online pharmacy. 0:07:09.320 --> 0:07:12.520 Maybe I will try some other place, you know, maybe 0:07:12.560 --> 0:07:16.160 I'll get my pharmacy needs done at a Walmart. Walmart's 0:07:16.160 --> 0:07:19.800 in very aggressive at expanding pharmacies in all of its 0:07:19.840 --> 0:07:25.320 major stores, and you know, they don't have the same potentially, 0:07:25.360 --> 0:07:28.200 they don't have the same hours that some drug store 0:07:28.280 --> 0:07:33.160 chains do. But especially since the since the pandemic, a 0:07:33.200 --> 0:07:36.560 lot of the hours that twenty four hour pharmacies had 0:07:36.760 --> 0:07:40.000 have been cut back. So that actually is something that 0:07:40.400 --> 0:07:44.360 now other types of retailers like a Walmart can compete on. 0:07:44.720 --> 0:07:46.960 It used to be you could say, oh, my local 0:07:47.000 --> 0:07:50.160 CBS or my local right Aid is open twenty four hours. 0:07:50.160 --> 0:07:51.520 If I get sick in the middle of that, I 0:07:51.520 --> 0:07:55.680 can go there. I can't do that at my Walmart. Well, nowadays, 0:07:55.720 --> 0:07:58.960 a lot of pharmacies are actually, you know, closed after 0:07:59.040 --> 0:08:01.800 six pm on the weeks. A lot of pharmacies are 0:08:01.840 --> 0:08:04.320 not open at night, and so therefore it's not that 0:08:04.520 --> 0:08:08.920 different from an opening standpoint than you could do at 0:08:08.960 --> 0:08:10.160 a big box store. 0:08:10.960 --> 0:08:14.680 Jim Ellis really appreciate you joining us. Bloomberg BusinessWeek Assistant 0:08:14.720 --> 0:08:17.680 Managing Editor. He's the editor on Fiona Ruthaford's story, which 0:08:17.720 --> 0:08:20.560 is available the new issue of BusinessWeek magazine. It's on newstands, 0:08:20.560 --> 0:08:23.560 on the Bloomberg Terminal and at Bloomberg dot com slash 0:08:23.600 --> 0:08:24.440 of BusinessWeek. 0:08:25.120 --> 0:08:28.680 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:28.720 --> 0:08:31.960 Live weekday afternoons from two to five pm Eastern. Listen 0:08:31.960 --> 0:08:35.360 on Applecarplay and and Broun Auto with a Bloomberg Business app, 0:08:35.480 --> 0:08:38.800 or watch us Live on YouTube. 0:08:40.000 --> 0:08:42.120 Well, we just spoke to our Real Economy team reporter 0:08:42.200 --> 0:08:45.400 Mark Niquette, about how different parts of the economy are 0:08:45.400 --> 0:08:48.880 informing voters, specifically how inflation under the Biden administration is 0:08:48.920 --> 0:08:51.559 overshadowing what has been the best time to find work 0:08:51.679 --> 0:08:54.760 in generations on inflation. We did get a bit of 0:08:54.760 --> 0:08:57.560 good news this week with the latest CPI figures. Core 0:08:57.640 --> 0:09:00.800 CPI snapped a streak of three above forecast readings, and 0:09:00.800 --> 0:09:03.160 the year over year measure cooled to the slowest pace 0:09:03.480 --> 0:09:06.520 in three years. So that's the data. But how are 0:09:06.520 --> 0:09:10.240 things playing out on the ground for customers, for businesses, 0:09:10.280 --> 0:09:13.720 for retailers. We have back with us for answers Katie Thomas, 0:09:13.800 --> 0:09:16.480 lead at the Carney Consumer Institute. The company looks at 0:09:16.520 --> 0:09:19.000 consumer behavior data and insights to give businesses an idea 0:09:19.000 --> 0:09:21.760 about how to engage customers. Katie joins us once again 0:09:22.040 --> 0:09:25.800 from Pittsburgh. So, Katie, in your most recent batch of research, 0:09:26.520 --> 0:09:29.280 what are you finding that customers are noticing when it 0:09:29.320 --> 0:09:32.560 comes to inflation. Are they noticing that it's easing, because, 0:09:32.559 --> 0:09:36.080 as we just discussed, that easing doesn't seem to be 0:09:36.120 --> 0:09:37.960 hitting voters and the polling just yet. 0:09:39.600 --> 0:09:43.560 Yeah, while they do comment. Your consumers are commenting about 0:09:43.600 --> 0:09:47.319 noticing price increases in certain key areas such as food 0:09:47.360 --> 0:09:50.000 and gas. That being said, I think we're still seeing 0:09:50.000 --> 0:09:52.320 a bit of a struggle to connect that directly to 0:09:52.360 --> 0:09:54.880 how they feel about the economy, and so we are 0:09:54.920 --> 0:09:57.920 seeing consumers just increasingly be cautious. I think that's what 0:09:57.960 --> 0:10:00.680 you saw in the retail sales numbers this week, which 0:10:00.760 --> 0:10:03.160 is I'm not overly concerned. I don't think we're doom 0:10:03.240 --> 0:10:05.440 and gloom, but we're seeing that slow down that we've 0:10:05.440 --> 0:10:08.920 been in anticipating that consumers have finally reached a point 0:10:09.120 --> 0:10:12.079 where they're perhaps really having to prioritize or pick and 0:10:12.160 --> 0:10:15.880 choose how they're spending. And one of the major numbers 0:10:15.880 --> 0:10:19.360 that I'm watching though, is personal job security. So you know, 0:10:19.600 --> 0:10:23.520 unemployment numbers are one measure, but it's really consumer spend 0:10:23.600 --> 0:10:27.360 is informed by how somebody individually feels about their job 0:10:27.440 --> 0:10:30.120 situation and how safe they are to either keep their 0:10:30.200 --> 0:10:32.160 job or find a new job if they need to. 0:10:32.559 --> 0:10:35.120 You know, it's interesting too, you know, when you're an investor, 0:10:35.280 --> 0:10:38.240 investors talk a lot about inflation slowing, inflation slowing, but 0:10:38.280 --> 0:10:44.160 really it's the pace of increases slowing and constant. Hunter 0:10:44.240 --> 0:10:46.640 over at Micropolicy Perspectives and made a great point this 0:10:46.679 --> 0:10:49.480 week that for many Americans, the price is just so 0:10:49.559 --> 0:10:55.040 much higher than it was years ago for many products, services, housing. 0:10:55.840 --> 0:10:59.240 How do you view that disconnect this idea that still 0:10:59.440 --> 0:11:03.160 people are living under the weight of these preennily higher prices. Really, 0:11:03.280 --> 0:11:07.120 even if inflation is slowing at the rate it's increasing. 0:11:08.120 --> 0:11:09.920 Right, I mean, I think you're seeing a couple of 0:11:09.960 --> 0:11:12.920 different factors feed in here. So some of the unfortunate 0:11:12.920 --> 0:11:16.480 news about consumers is you're seeing savings on a decline. 0:11:16.480 --> 0:11:19.200 So it's been there was some recovery after the high 0:11:19.200 --> 0:11:22.240 savings during the pandemic in early twenty twenty three. Now 0:11:22.240 --> 0:11:24.959 you're seeing that number a steady decline while seeing credit 0:11:25.000 --> 0:11:28.720 card delinquencies also tick up. So in some cases, unfortunately, 0:11:29.200 --> 0:11:32.000 folks probably are not you know, they're probably spending a 0:11:32.040 --> 0:11:35.200 little bit beyond their means, you know, beyond that, it's 0:11:35.280 --> 0:11:39.280 just about consumers really evaluating their discretionary spend and how 0:11:39.320 --> 0:11:43.320 they categorize spend themselves. So where are they prioritizing, where 0:11:43.360 --> 0:11:46.280 are they making trade offs? And how can they continue 0:11:46.400 --> 0:11:49.480 to kind of navigate this complicated environment. 0:11:50.360 --> 0:11:52.720 What about when it comes to what many would argue 0:11:52.840 --> 0:11:56.360 has historically been discretionary spending. I'm thinking of, Katie, something 0:11:56.400 --> 0:12:01.080 like travel, which you know, historically, if people don't have 0:12:01.120 --> 0:12:03.920 the money to travel, at least if they don't need 0:12:04.000 --> 0:12:05.920 to travel, they're not going to spend the money to 0:12:05.960 --> 0:12:08.400 do that. What are you learning sort of like the 0:12:08.400 --> 0:12:09.800 new normal when it comes to travel. 0:12:10.880 --> 0:12:12.760 Yeah, you know, I think we all have a bias 0:12:12.800 --> 0:12:15.520 to sometimes stick with the way we've defined things in 0:12:15.559 --> 0:12:20.160 the past consumer discretionary spend, consumer staples, and some version 0:12:20.200 --> 0:12:23.440 of needs versus wants. But we hear from consumers is 0:12:23.440 --> 0:12:26.199 that they tend to define things a little bit differently 0:12:26.520 --> 0:12:29.319 and they're able to really prioritize how they want to spend. 0:12:29.360 --> 0:12:32.319 Travel is a great example. So when we talk to consumers, 0:12:32.360 --> 0:12:35.560 twenty six percent of consumers told us they consider their 0:12:35.600 --> 0:12:38.520 annual vacation to be a must have spend and in 0:12:38.600 --> 0:12:41.199 order to enable that, that's actually where we're seeing men 0:12:41.320 --> 0:12:44.319 pull back in other areas. So perhaps it's food and 0:12:44.360 --> 0:12:46.840 they're willing to again make trade offs or even cut 0:12:46.880 --> 0:12:51.120 certain things from their typical grocery shop to really allow 0:12:51.240 --> 0:12:54.040 for that. Whereas certain items like food that feel like 0:12:54.080 --> 0:12:56.640 a staple. A lot of times there's things that they 0:12:56.720 --> 0:12:59.000 again can give up. Maybe it don't buy as many 0:12:59.000 --> 0:13:01.800 snacks this week, maybe I go out to restaurants one 0:13:01.880 --> 0:13:04.199 less a week. And so I really think sometimes it's 0:13:04.280 --> 0:13:07.880 about seeing that bigger picture of how a consumer understands 0:13:07.960 --> 0:13:11.599 just how discretionary versus must have something. 0:13:11.320 --> 0:13:13.920 Is I think we also have to differentiate types of 0:13:14.000 --> 0:13:16.800 consumers here, because you kind of hinted earlier about this 0:13:16.840 --> 0:13:20.320 idea that's some consumers are feeling stressed, and we saw 0:13:20.400 --> 0:13:23.960 retail earnings this week, we see more retail earnings next week, 0:13:24.200 --> 0:13:28.400 and you see upper to middle class customers trading downstill, 0:13:28.760 --> 0:13:32.600 so buying cheaper goods instead of more expensive ones. A 0:13:32.600 --> 0:13:36.280 lot of commentary around how lower end consumers are feeling stretched. 0:13:36.960 --> 0:13:40.120 Where are the biggest discrepancies as you see it, who 0:13:40.240 --> 0:13:43.320 is feeling the most pressure and will that pressure start 0:13:43.400 --> 0:13:45.280 to widen among more groups? 0:13:46.960 --> 0:13:49.680 Yeah, I think this is another area where we try 0:13:49.720 --> 0:13:51.760 to take a too pronged approach at it. So what 0:13:51.920 --> 0:13:56.200 is is the you know, obvious more traditional demographic income split, 0:13:56.280 --> 0:13:58.719 so looking at you know, high, medium, low income. But 0:13:58.800 --> 0:14:01.640 another question we asks is if they feel like they're 0:14:01.679 --> 0:14:04.679 living within their means or paycheck to paycheck. And what 0:14:04.720 --> 0:14:07.680 we found is folks that feel like they're living within 0:14:07.720 --> 0:14:11.160 their means, regardless of what income category they're in, are 0:14:11.440 --> 0:14:14.760 there's more commonality there and with the people that are 0:14:14.840 --> 0:14:17.720 living paycheck to paycheck. So I know, for instance, we 0:14:17.720 --> 0:14:20.320 saw Walmart's earnings release, I actually caught your segment on 0:14:20.360 --> 0:14:23.120 it yesterday, and I think the high income shoppers there 0:14:23.200 --> 0:14:25.120 is a great example of people. 0:14:25.480 --> 0:14:27.680 I think some of the stigma maybe even. 0:14:27.520 --> 0:14:30.640 Around shopping certain stores has just slowly gone away, and 0:14:30.920 --> 0:14:34.440 as we've had these continually tightening wallets, people simply want 0:14:34.440 --> 0:14:36.600 to know they're getting the best bang for their buck 0:14:36.680 --> 0:14:37.400 on the basics. 0:14:37.480 --> 0:14:39.480 Yeah, it look well. I was just going to say 0:14:39.480 --> 0:14:42.400 it's because we were talking about this in the newsroom 0:14:42.480 --> 0:14:44.800 yesterday after those numbers came out, and there were folks 0:14:44.800 --> 0:14:47.240 around my desk just talking about how the way that 0:14:47.320 --> 0:14:50.680 Walmart's in store offering has changed, especially when it comes 0:14:50.720 --> 0:14:53.600 to groceries in recent years. Just shows that it's really 0:14:53.640 --> 0:14:56.240 trying to go after so many different types of consumers 0:14:56.280 --> 0:14:56.640 right now. 0:14:58.040 --> 0:14:59.800 Absolutely you see it with some of their new Private 0:14:59.840 --> 0:15:03.400 Life launches, but they've also done more partnerships with direct 0:15:03.400 --> 0:15:04.960 to consumer brands over the years. 0:15:05.040 --> 0:15:06.000 They're not the only. 0:15:05.840 --> 0:15:08.680 Big box retailer doing it, but they are known for 0:15:08.960 --> 0:15:11.200 being willing to test and learn, but also if something 0:15:11.240 --> 0:15:13.280 doesn't work out, they kind of cut their losses and 0:15:13.320 --> 0:15:15.560 move on from it. So I think that you're seeing 0:15:15.600 --> 0:15:19.080 all these different types of retailers really try to adapt 0:15:19.080 --> 0:15:21.200 to the consumer and take all the data that they 0:15:21.280 --> 0:15:24.000 have and give the best experience possible. And I think 0:15:24.040 --> 0:15:27.920 even they're realizing certain things that perhaps we traditionally attributed 0:15:28.000 --> 0:15:32.480 to standard demographics, like income, that's not really the case. 0:15:32.840 --> 0:15:35.080 You know, everybody likes to get a deal, everyone likes 0:15:35.120 --> 0:15:37.400 the best bang for their buck, and so moving away 0:15:37.440 --> 0:15:40.240 from some of those preconceived notions has enabled a lot 0:15:40.280 --> 0:15:43.200 of success for retailers that understand their value proposition. 0:15:43.600 --> 0:15:45.800 Hey, before we let you go, Katie, I want to 0:15:46.320 --> 0:15:48.200 just get an idea of what's coming up next at 0:15:48.200 --> 0:15:51.160 the Carney Consumer Institute. I know you have a report 0:15:51.200 --> 0:15:53.440 coming out next week about innovation and it kind of 0:15:53.440 --> 0:15:57.960 shows the delta between how consumers see innovation versus how 0:15:57.960 --> 0:16:01.720 brands internally see innovation. Little bit about what to expect there. 0:16:02.880 --> 0:16:05.480 Yeah, well, oh well, you know, we all know innovation 0:16:05.600 --> 0:16:07.920 is actually like pretty ambiguous as it is. It can 0:16:07.960 --> 0:16:10.800 be described to be anything from like a simple line 0:16:10.840 --> 0:16:16.000 extension to some you know, massively disruptive category or technological advancement. 0:16:16.720 --> 0:16:19.000 But in reality, lately, what we hear a lot of 0:16:19.120 --> 0:16:24.280 is like consumers are increasingly demanding more specialized, more niche products. 0:16:24.320 --> 0:16:26.320 And when we found when we went to consumers, is 0:16:26.360 --> 0:16:29.560 that's not the case. So almost ninety percent of consumers 0:16:29.560 --> 0:16:32.640 told us there's either enough products in most categories or 0:16:32.680 --> 0:16:36.160 too many in some categories. So it's really about, i think, 0:16:36.200 --> 0:16:39.080 repositioning inflation to make sure we're doing it in the 0:16:39.160 --> 0:16:42.560 right way and not proliferating for innovation's sake, by just 0:16:42.640 --> 0:16:46.360 deepening some of those consumer feedback loops and really understanding 0:16:46.640 --> 0:16:49.920 when we want better when we do just want new 0:16:50.360 --> 0:16:53.640 or more options, and kind of really trying to delineate, 0:16:53.760 --> 0:16:55.920 you know, what's going to be most successful at any 0:16:55.920 --> 0:16:56.400 given time. 0:16:56.680 --> 0:16:59.040 Katie certainly look forward to seeing that report. Thank you 0:16:59.080 --> 0:17:02.120 as always for joining us us on Bloomberg Business Week. 0:17:03.680 --> 0:17:08.880 Mark a journal. How about you let me drive? 0:17:09.119 --> 0:17:14.440 Oh no, no, no, no, all right, please, I'll do travel. 0:17:15.640 --> 0:17:16.400 I want to drive. 0:17:18.640 --> 0:17:19.560 It's a good question. 0:17:23.320 --> 0:17:27.080 This is the drive to the clothes thing. Well by 0:17:27.119 --> 0:17:29.760 around on Bloomberg Radio. 0:17:31.760 --> 0:17:33.959 It is Bloomberg a Business Week, and believe it or not, 0:17:34.119 --> 0:17:35.640 we are only wow. 0:17:35.720 --> 0:17:37.280 Look at that is that right? 0:17:37.359 --> 0:17:38.440 Eighteen minutes from the close? 0:17:38.480 --> 0:17:38.720 Here? 0:17:39.320 --> 0:17:41.560 It's time fly when you have fun. 0:17:41.720 --> 0:17:43.600 Time does fly when you're having fun. 0:17:43.880 --> 0:17:45.640 Well, let's see what our drive to the closes, guest 0:17:45.680 --> 0:17:48.760 has to say about everything that happened over the last week. 0:17:48.840 --> 0:17:51.679 Danadoria is co chief investment Officer at Investment. It's a 0:17:51.680 --> 0:17:55.560 provider of technology to banks and rias, think wealth management 0:17:55.640 --> 0:17:59.520 software and consulting services to financial advisors. Dana joins us 0:17:59.520 --> 0:18:03.600 from Sylvania this afternoon. Dana, good to have you with us. 0:18:04.480 --> 0:18:06.200 I want to talk a little bit about the CPI 0:18:06.320 --> 0:18:09.720 report that we got earlier this week. Once again, I've 0:18:09.720 --> 0:18:11.960 said it many times before and I'll say it many 0:18:11.960 --> 0:18:16.200 times again, It's not the Fed's preferred method, preferred measure 0:18:16.240 --> 0:18:19.560 of inflation, but we still saw a pretty big market 0:18:19.560 --> 0:18:21.920 reaction to it. What did you make of that. 0:18:24.119 --> 0:18:26.560 I make of it that it's an overreaction. Thank you 0:18:26.600 --> 0:18:27.199 for having me. 0:18:28.119 --> 0:18:31.320 Yeah, No, Look, I think the market has you know, 0:18:31.480 --> 0:18:35.720 kind of overshot most of these reports that have come out, 0:18:35.840 --> 0:18:39.560 and you know, assuming right that the reaction is really 0:18:40.280 --> 0:18:43.159 confined to that report, you know, I mean, look, we 0:18:43.200 --> 0:18:45.639 started the year at the expectation of six rate cuts. 0:18:45.880 --> 0:18:48.480 We're living in this world of bad news is good news. 0:18:48.520 --> 0:18:51.800 So you know the fact that not only do. 0:18:51.840 --> 0:18:55.000 We see some indicators in growth kind of you know, 0:18:56.040 --> 0:18:58.480 maybe plateauing a bit and a little bit more muted, 0:18:58.840 --> 0:19:02.200 something like having inflation come in you know, this report 0:19:02.240 --> 0:19:08.000 inflation and particularly core inflation coming in better, right, not fantastic, 0:19:08.160 --> 0:19:10.240 I don't think, you know, in line with what would 0:19:10.359 --> 0:19:13.760 rationalize rate cuts, but enough that the market can latch 0:19:13.800 --> 0:19:16.160 onto it and say, look, maybe it's two, it's not 0:19:16.240 --> 0:19:16.680 just one. 0:19:16.800 --> 0:19:18.640 Maybe it's September, it's not November. 0:19:19.480 --> 0:19:22.359 So you were kind of talking here about this idea 0:19:22.600 --> 0:19:25.040 of bad news as good news, and I want to 0:19:25.040 --> 0:19:26.600 ask you a question that I don't think we ask 0:19:26.680 --> 0:19:30.000 people enough, which is when bad news starts to hit 0:19:30.040 --> 0:19:32.280 the table a little more. Yes, in the early terms, 0:19:32.280 --> 0:19:34.840 we have seen the market really react well to it 0:19:34.960 --> 0:19:37.920 because of the idea of rate cuts. But how much 0:19:37.960 --> 0:19:40.359 of that is already priced in? When will bad news 0:19:40.480 --> 0:19:44.320 just start to feel like bad news? 0:19:43.760 --> 0:19:45.560 It's such a good question. 0:19:46.119 --> 0:19:48.880 I do think that we've had a pretty poor scenario 0:19:49.000 --> 0:19:51.199 price in, particularly for areas of the market that we 0:19:51.280 --> 0:19:53.159 don't talk about as much, like small caps. 0:19:53.160 --> 0:19:57.080 So obviously we have a market. You know, there's more than. 0:19:57.040 --> 0:19:59.160 Enough discussion around the fact that we have a very 0:19:59.160 --> 0:20:03.280 concentrated mark get you know, dominated by the top several stocks, 0:20:03.280 --> 0:20:05.920 and you can you know, cut that line Barbie like, 0:20:06.040 --> 0:20:08.680 but when you look at something like small caps, which 0:20:08.720 --> 0:20:11.840 are you know, more interest rates sensitive, they are needing. 0:20:11.600 --> 0:20:14.320 To go back to capital markets more frequently. 0:20:14.760 --> 0:20:17.919 We have corporate debt rolling over this year, and it 0:20:18.000 --> 0:20:21.320 really does matter to those corporate teams, you know, how 0:20:21.400 --> 0:20:25.240 quickly that rate cut proms. So it's understandable that there's 0:20:25.320 --> 0:20:28.280 a higher beta at interest rates there. But I think 0:20:28.320 --> 0:20:30.440 that you know, you've seen those areas of the market 0:20:30.480 --> 0:20:34.760 certainly struggle with respect to you know, the larger and 0:20:35.080 --> 0:20:36.760 this is the larger stocks, and this has been going 0:20:36.760 --> 0:20:39.240 on for a while, so I do think there's sort 0:20:39.280 --> 0:20:43.240 of a pretty negative outlook priced into that already. And 0:20:43.400 --> 0:20:45.840 that's one of the reasons that you know, any sign 0:20:46.040 --> 0:20:47.760 that there might be another rate cut or that it 0:20:47.840 --> 0:20:52.480 might come faster can have a nice bump, a nice 0:20:52.520 --> 0:20:54.080 impact on stocks. 0:20:53.680 --> 0:20:56.600