Shelley E. Kohan (00:02.304)
Hello everyone. Welcome to our weekly podcast. I’m Shelly Cohan and I’m very excited to welcome back Stephanie Sagelski. She’s Vice President Public Relations and Industry Education of ICSC. Welcome.

Stephanie Cegielski (00:16.056)
Thank you, it’s good to be back.

Shelley E. Kohan (00:18.728)
It’s so fun having you and one of the things I love about you is you always have data. You have lots of data to share. So today we’re gonna actually do two things. One is ICSC and McKinsey just came out with a new report about shopping in the age of AI. So we’re gonna take a little bit of dive into what that actually means, especially for retailers, brands, tenants even.

and then also we’re gonna talk about the ICSC great event that just happened in Las Vegas. I think it’s your biggest event of the year, right?

Stephanie Cegielski (00:50.113)
It is our biggest event of the year.

Shelley E. Kohan (00:52.96)
So that’s great. So we’ll end with kind of talking what you saw there, what some of the key takeaways are. So let’s jump right in. Tell us a little bit about this report that recently came out. I think you surveyed over 3,000 US consumers and it’s all about, you know, the shopping behaviors and AI. So tell us a little bit about the report in general.

Stephanie Cegielski (01:16.056)
Sure. So we partnered with McKinsey on this. we did. We went out to 3,000 consumers to get a sense of what they’re looking for, what how their behaviors have shifted, and what that means in the next like five years. Cause in this day and age we know that 10 years is a lifetime from now is when you talk about technology. So really the next five years, and what we found was really two overarching themes. One

being that they want consumers want convenience, they want it to be as seamless as possible. And AI is here to stay. They are using it to do all kinds of things when they’re looking at at shopping.

Shelley E. Kohan (01:56.904)
It’s really interesting and I I’m gonna take a guess here. I did read the report, so I’m not really guessing guessing, but when you’re like doing these surveys with consumers, I mean, are they really thinking about AI the way we think about AI or are they just talking in terms of, you know, I want things more convenient, I want things easier.

Stephanie Cegielski (02:16.718)
Well, it’s it’s a tricky question because a you know AI is a pretty broad category. It’s everything from those underlying platforms for accounting to, you know, the Claude or the Chat GPT platforms that we use as consumers. But you know, it’s I think they are. I mean, and I was thinking about this morning just from my own perspective. you know, they’re using it to consumers are using it to to do research and that that becomes a convenience thing. So I I know recently this is a weird example, but we bought

An automatic feeder for our cat because she wakes us up too early in the morning. And I went to a Claude or a Chat GPT and I said, give me the top five automatic feeders. And I that’s where my research started. So instead of going to Google and trying to read a bunch of articles, that’s where consumers are going. And so, you know, we’ll get into this, but retailers need to be cognizant of that because it’s that it’s going out and scraping data.

to then give back to the consumer and so you know having those reviews and whatnot handy for the the AI chatbots to use is gonna become more and more important.

Shelley E. Kohan (03:24.214)
Yeah, and I love your example. Well, first of all, I wish AI existed when I had my Himalayan cat who used to sit on my face like at 5 a.m. every morning. But we didn’t have automatic feeders and AI to help me with that problem. So I’m glad you’re getting the benefit of this. But what you described is exactly correct because it’s these routine things that consumers are doing, trend this you know, looking for the searching feature. But then that has a ripple effect because if you put in like

Stephanie Cegielski (03:28.801)
Okay.

Shelley E. Kohan (03:54.12)
like what’s the best number one automated cat feeder, you know, the attributions that are put in by retailers might be completely different than, you know, you searching for it yourself, right?

Stephanie Cegielski (04:06.638)
Absolutely. So I mean that’s it’s a twofold issue. From the consumer side it’s it’s you know, buyer beware, right? So you’re that’s a starting point for you. Go out and do more research.

even ask different platforms, ask the question in a different fashion. But yeah, also, I mean, retailers need to be mindful that both the negative and the positive can easily crop up. And so whether it’s you know the manufacturer or the retailer, and really understanding how that works and how these models are are constantly learning and they are and and they know a lot about me now that and and the way I ask questions and do things. And so they’re anticipating it. It’s it’s it’s scary, but it’s also

very fascinating. and to be able to just sort of understand what my needs are and it they’ll ask you the question back like would you like me to give you the top five under sixty dollars? And so all of that type of of data is really valuable to both the consumer and important to the retailer.

Shelley E. Kohan (05:08.19)
It’s interesting. So consumers, they don’t know this because they’re just doing it, but consumers are actually becoming excellent vibe coders, right? So they’re not thinking about it, but the more they use the tool, the more they’re using this for search features. And I think McKinsey estimated that the agentic commerce is gonna be one trillion dollars by 2030 in the US market.

Stephanie Cegielski (05:17.026)
But y exactly.

Stephanie Cegielski (05:32.225)
Yeah, and think about that. I mean, it’s you know, we we’re talking about a a four trillion dollar retail industry and this is four years away. This is going to be and it’s moving that quickly. So we used to be able to sit there and say, it’s it’s t like I said, ten years from now, it’s not. It is it’s happening quickly, and partly because more and more people are using these these language models, and so they’re learning very quickly. And it it’s almost frightening how quickly they’re learning.

Shelley E. Kohan (05:59.286)
Yeah, it’s gonna be even harder to keep up with consumers at the pace that agentic commerce can do that. Cause they’re it’s just like you said, it’s learning millions and trillions of, you know, all of these requests and searches. So let’s talk a little bit about convenience versus discovery. So retailers kind of have a different vibe about them. Some are very focused on convenience, some are discovery. And part of the findings of the report is retailers have to pick a lane and stick to it. They have to own it. So tell us about that.

Stephanie Cegielski (06:29.922)
Well, they do, and listen, it’s it’s I it’s not a new

Problem. It’s just different behavior. So you need to be true to who your brand is and who your consumer is. So you can’t necessarily be that one size fits all. There are some retailers I’m going to want to go to just for the discovery aspect of it. And I still think that’s very true. You know, we talk a lot with inflation, but retail sales are still strong, but we’re seeing all consumers shifting to kind of the lower price points, the Dollar Generals, the Walmarts of the world. and the TJ Maxx and Marshalls. You know, they used to they

Always been at a lower price point, but part of their their attraction was the new items that come in twice a week. And so it’s that discovery mode. but there also is a convenience. I’m still going to, I’m not gonna necessarily use TJ Maxx or Marshall’s for convenience, but I might use Walmart or Target for convenience, and so you want to just be true to who your consumer is. You know, the tricky part right now is the it’s a it’s a broad economic.

swath of consumers out there who are being very mindful of their dollars.

Shelley E. Kohan (07:37.554)
think when you talk about this idea of being convenience focused or discovery focused, if if you take that and you put that into the physical world.

This becomes very, I mean, you really have to be very focused on this. So when we talk about convenience-led stores, you have to make sure things are in stock, right? There’s replenishment that’s happening. The layouts have to be quick and easy and intuitive, right? These retailers are gonna compete really on speed, location, things that really

kind of lead into this convenience strategy. Whereas discovery, you have to really think through the experience, the shopper journey, immersive environments, personalized service, customization, storytelling. I mean that’s completely two different areas to focus on for retailers. Do you think it’s reasonable that retailers can really define a lane and stick to it?

Stephanie Cegielski (08:34.144)
Again, I think you need to here’s here’s where the the technology is going to be incredibly beneficial for retailers, in that there is a lot of data out there that will make it easy for them to to use these these AI tools and models to take that data and understand their consumer better, better than they have been before, and it in a much quicker pace than they were able to before. because the the data comes back to you much faster. So I think that’s important, but it’s also from a consumer perspective, yes.

I will, if there’s something I need and I’m running short on time, I’ll pull up that retailer’s app, see if it’s in stock, and it will tell me the exact aisle and like if I’m going to Lowe’s, it’ll tell me the bin that it’s in. And I can walk up to A or you know, aisle 32, bin A, and it’s right there. And that’s incredibly important to consumers. And so you you know, convenience isn’t just

Click and collect anymore or convenient parking spaces. It’s being able to tell that consumer exactly where it is. And yes, that there’s two of them in stock. So I know that if I only need one, great. If I need four, okay, I’ve got to figure out an alternative. And so, yeah, I mean, retailers have to figure out how it works for their particular brand.

Shelley E. Kohan (09:51.766)
I know that a lot of retailers, I know Ace Hardware, for example, does this a lot is they actually have technology that the associates use in the store to help with that shopper journey, just like you said, because understanding that shelf and bid number now is that’s like

That’s like the minimum that customers are expecting. They know it’s in the store because they’ve already checked it. They want to get in, they want to go to the aisle, they want to go to the bin, they want to pick it out. So a lot of retailers are investing in actually associate technology that helps them kind of find stock within a store, which I think is great. And the if you think about the infrastructure required behind the scenes to make sure that product is in, I think you said aisle 37 bin A.

Stephanie Cegielski (10:12.494)
Yeah yeah.

Shelley E. Kohan (10:40.372)
That’s a lot that has to go into that.

Stephanie Cegielski (10:42.624)
It’s a lot. It’s not the old days in the nineties when I worked in retail and we would do inventory twice a year late at night and scan each thing. I mean, it is a very real-time experience, which is great. And again, here’s another another place where, you know, on the back end for a retailer, having a tool to analyze all the data is important because now they’re not able to just say, Okay, this store sells a lot of towels. It’s this store sells

black towels far more than they sell white towels. So we want to make sure that there’s a better selection of black towels at that store than white towels. So it goes all the way down to that, which helps the associates better serve the customer and be able to take the time to help them in a different way than having to say just run to the back to to see if it’s in stock.

Shelley E. Kohan (11:33.394)
Exactly. And so the other question I have is on the flip side, when you talk about discovery and this great experience, how are we making sure that great experience actually is converting into sales?

Stephanie Cegielski (11:48.835)
Well again, know your customer. So if you are, you know, and it’s th this is a always a tricky one because like I look at there are some brands that are definitely going to only appeal to Gen X, but there are brands like I’ll use Anthropology, who they they actually appeal to me as a Gen Xer and to my Gen Z daughter. and they’ve done this very

you know, smart way of merchandising and making it the experience and it it flows easily through the store. It’s not necessarily just an Instagrammable moment. It is how you get the how you navigate them through the store. So maybe it’s it’s additional like tableware items because as as the adults parent, I’m gonna be looking for that more than I’m gonna be looking for the mini dress. And so having that sort of discovery and and unique curation of goods

is part of that experience. Now for the younger generations, yes, they’re always gonna be looking for the Instagrammable or TikTok moment. and and that’s good too. And so but again that goes back to who who are you trying to appeal to?

Shelley E. Kohan (12:54.678)
It’s interesting because I also think that

That experiential retail. So consumers may go into a mall or they may go into a lifestyle center or a physical location. And it evokes this emotion out of them. They may not buy that day, but it does, I believe, create loyalty, repeat shopping. They may go home and then buy something online because of the experience. So I think the experience, while maybe you can’t measure it on that exact shopping trip, there’s the ancillary.

Sales that come from it after the customer leaves, or the repeat purchasing that occurs because they keep coming back to that same environment that they love.

Stephanie Cegielski (13:36.079)
Absolutely. And I’m notorious for when I’m I’m apparel shopping to go into a store and I’m not sure what I want in that moment, but I’ll take pictures of the items. And I may go back then online and see if if I really do want it. Or I might do that because that day, you know, it’s not on sale, but there’s, you know, Memorial Day weekend is coming up, and I can guarantee there’s gonna be a sale, and so I’ll go back to it. So yeah, they are really capturing both in the physical and the digital space and

you know, listen, the sale is the sale at this point. It used to you know, ten years ago we were all concerned about that e commerce versus in person and now it’s just the bottom line is is the happy customer.

Shelley E. Kohan (14:18.678)
So let’s talk a little bit about the now we have to talk about the layout and not just the store layout, but again, going back to malls and lifestyle centers, and we’ll just call it the the layout of the shopping experience. So now you have, you know, the technology has to align with that focused strategy that retailers and the malls will have. So how does that all lead into a great experience for shoppers?

Stephanie Cegielski (14:46.478)
So I think it’s it does start with that convenience. I know, you know, I sit there and think about having to run errands and and I’ve had a busy day or whatnot. I really don’t want to have to navigate a parking lot necessarily. So it starts at the moment that car enters the parking lot. And it’s, you know, it’s it’s fine. It’s I’ll I’ll I’ll make the walk, but it’s that’s part of what I’m considering as a consumer. And so, you know, just figuring out how to make that first experience good and then being able to

get me in the store and if I am looking for something specific, making sure that you know I know I can find it easily on the app. Now maybe I need to get a bunch of things and so the exact location of one item doesn’t matter, but the fact that I can go and look it up or I I’m I even for me, like I we just moved a few months ago and so I’m in a brand new grocery store. I several times I don’t know where certain items are anymore, and I’ve gone to the app and it’s it’s told me exactly where to find it, and I can go back and find it, and that’s

That’s makes for a great customer experience and it’s convenience. So convenience doesn’t have to mean a fast in and out, but it means getting me to what I need. And I also might just happen to walk by something else that’s on display and be like, no, I need that too. So yes, the merchandising of it and making sure that the consumer can find what they need easily when they need to is incredibly important.

Shelley E. Kohan (16:06.45)
A really interesting example because in that experience, so I let’s use Wegmans. Wegmans, I love going to Wegmans. To me, that’s an experience because I don’t know what I’m gonna find, right? But you’re right, when I’m in the store and I need that one thing, I want to be able to get it, find it. If I you know passed it, where can I go back and pick it up? So it’s almost as if some locations have to have both built into their technology, right?

Stephanie Cegielski (16:14.158)
That’s an experience.

Stephanie Cegielski (16:33.058)
You do. And I mean you bring up a good point though, ’cause even I think Whole Foods is a little bit like the Wegmans where there’s a lot of Whole Foods stores that you don’t go to just to just to get your your natural foods, you go because it is an experience. when I’m going to my local publics, it’s I don’t need an experience. I just need to get my grocery shopping done. So I do. I want it to be as easy and seamless as possible. But what’s fascinating to me as I’ll look at I again we moved, so I went from being where I didn’t have a Sam’s Club, I had a Costco, to now I have a

a Sam’s Club and not a Costco. So Sam’s Club is new to me. Well I walked into Sam’s Club and immediately found out that I didn’t have to go through the checkout lane. I could scan each of my items through the app throughout my shopping journey and then go to leave. I walk through this structure that is almost similar to a medical a metal detector but bigger. And it has read everything in my cart and my app and I’ve paid and it will flag the associate

If say I have a bottle of wine, they need to check my ID, or if something doesn’t seem to sit right, maybe forgotten a scan. So it’s it’s incredibly nice for me because now I’m not waiting in a long checkout line, but you know, they’re making a great customer experience, and that there isn’t even an associate necessarily involved. So there is this like strange balance going on, but they’re able to focus that customer experience to me and those associates to where those associates need to be.

Shelley E. Kohan (18:00.95)
That’s amazing. So when you talk about like where should retailers and brands be investing in technology, where’s the big ROI on capital allocation today?

Stephanie Cegielski (18:12.664)
So I think that depends because I think that you know there is a there is a back-end effort or experience that that businesses and brands need to think about. So that can be anything from investing in the technology to you know make expense report reporting easier. We we have an AI component to our expense reports now, which is great. It reads my receipts, I have to do very little, but that’s created an efficiency within our business.

Which is nice because then those dollars, those energies can be focused elsewhere to look at maybe where else capital expenditures can happen. So is that, you know, we’re saving money back of house, but now, you know, we can invest in a different store format or even a target who you know is putting in a lot of dollars to revamp their stores and focus that to create that better customer experience. So it’s hard to say where you should do it.

I think you kinda have to look across your entire business and and see where you can and then figure out from there where additionally those efficiencies can come to meet the consumer.

Shelley E. Kohan (19:22.902)
But yeah, you’re probably you have to really understand your consumer and what’s important to them for sure. Okay, so let’s talk about ICSC, your big event in Vegas. Tell me, tell me how was the event and what were some of the big key takeaways?

Stephanie Cegielski (19:37.023)
It was, I will say this year, and I’ve been doing this for 10 years now, this is probably the best year yet. it was great. I mean, it’s listen, every every year I’m very fortunate to be able to say that you know, there was it was very positive and there was a lot of buzz. You know, we hear a lot of negative economic information but consumers are still spending. We are in this great position right now where there’s a severe shortage of available retail space, which is a great problem to have.

retailers are clamoring for those spaces. So the overall sentiment was great for us on the ICSC side. We added our ICSC plus Prop Tech, which is property technology. So we had an entire day of content around just what technology is doing in the space. And then we have dedicated space on the show floor for vendors to come in and demonstrate that new technology.

And so that was really great. And then we also added our Women in CRE event this year, which was really just content driven toward women in the industry. And it was incredibly well received. It was a risky year for us because we added two completely new large tracks to an already large event of 25,000 people. And it was every room was standing room only and packed. And it just everybody felt great. and so from our perspective.

It was wonderful. and from you know, just the the feeling on the show floor was it was busy and people were happy. And so it’s great. We’ll bring we’re gonna continue to do a bunch of things around women and CRE as we think that that’s an incredibly important lane to be in right now. And we’ll bring our prop tech event back again next year. and I mean we had you know, there was over, I think twelve hundred one on one meetings between potential buyers and and

technology owners, which was just incredible. So like that says to me that this technology piece is incredibly important to that business strategy and how they’re looking at it. And it’s important to say, you know, it’s not just the AI, it’s it’s all technology. It’s I have a very small airport that I travel in and out of regularly, and one of my favorite features about my airport is in my parking garage.

Stephanie Cegielski (22:01.772)
With these sensors over the top that tell me red or green and tell me exactly where there’s an open parking space. So I’m not driving around. I love it. I love it. It’s accurate. And the only time it screws up is if a motorcycle pulls too far in and it thinks it’s an open space. But you know, so it’s it’s technology round things like that too, that are really making it more con more friendly for the consumer to start that journey.

Shelley E. Kohan (22:28.426)
That’s amazing. So for anyone that didn’t get to go, do you have like one or two big headline news pieces that you’d like to share?

Stephanie Cegielski (22:37.682)
Just that, you know, again, the the I I actually moderated a panel with some CEOs and COOs of some of the big players and they are all really pleased with where the industry is right now and what’s to come. you know, it’s it’s the look is, you know, we are looking at every single property in our portfolio to see how we can improve it. And improvement doesn’t just mean, you know, paint and new flooring, it can mean

Do we need to redevelop an area for mixed use? What is mixed use? It’s not just residential. It is healthcare. It is all these different things that consumers need. And they’re very excited about it. I think they’re they’re just really excited that, you know, this isn’t the retail of the 90s where it was all apparel. It is everything for everyone. And that’s what’s driving people to continue to go to these properties.

Shelley E. Kohan (23:37.974)
That’s excellent. Well, so our listeners can get the McKinsey report on the ICSC website, correct? If they go to the ICE, it’s right there, prominent. So our listeners can see that. And do you have a save the date for next year’s ICSC yet?

Stephanie Cegielski (23:44.621)
That’s correct.

Stephanie Cegielski (23:53.74)
I I too, that email came out and I don’t it’s like I I think it’s May twenty fourth to twenty-sixth next year. I actually think it’s a little bit later in the month. We always try to bump it the week before Memorial Day because then everybody gets to just roll into the Memorial Day weekend and have a long weekend. It’s and it’s great for us as team members because it’s it’s a very busy few days and we’re all usually exhausted by the time it’s over.

Shelley E. Kohan (24:17.91)
Well Stephanie, thank you so much. I know you just came off of it and this is hot off the press, so I’m very excited about this. and thank you for making time for me. I really appreciate it, and I know our listeners loved hearing from you.

Stephanie Cegielski (24:29.058)
Thank you as always.