Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
Speaker 1: along with essential market moving news. Kind the Bloomberg Markets
Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
Speaker 1: and on Bloomberg dot Com. Our next guest has the
Speaker 1: philosophy when everything else is closing, Let's open up. It
Speaker 1: is the president and CEO of Crispy Cream Donuts at
Speaker 1: Mike tatters Field. And I say that because he's coming
Speaker 1: to us from the first ever global flagships shop in
Speaker 1: Times Square, and Mike, thanks for joining. I have to
Speaker 1: tell you a story. I walked to work these days
Speaker 1: and I turned a corner the other day and I
Speaker 1: literally stopped in my tracks. And I think you know why.
Speaker 1: I It was because for the first time I saw
Speaker 1: the storefront and I did not realize that Krispy Kream
Speaker 1: was coming to Time Square, and it literally made me stop.
Speaker 1: It was the best thing that I had seen in
Speaker 1: a long time. There's something about donuts, and particularly Krispy
Speaker 1: Cream Donuts that just puts in a good mood. Yeah. Oh,
Speaker 1: it's amazing. I'm in the shop right now. I'm looking
Speaker 1: at our world's largest hot light, which is just you
Speaker 1: know about Christie Kreme when the hot lights on the
Speaker 1: donuts are hot, right. So it's probably the coolest shop
Speaker 1: on the shop I've ever been into. Uh. And the
Speaker 1: team has just done an incredible job. Paul, if you
Speaker 1: don't mind, I'll just set it up a little bit more.
Speaker 1: It's in the Old Colony Building, which is a very
Speaker 1: very famous landmark building in New York and housed you know,
Speaker 1: musicians and groups of songwriters for decades, and it then
Speaker 1: it became other things, but now it's Krispy Kreme. Mike
Speaker 1: talked us about why you would be opening a flagship
Speaker 1: store in Times Square at a time when I don't
Speaker 1: know when tourists are returning, We don't know when Broadway
Speaker 1: is going to reopen. Yeah. Well, we've been working on
Speaker 1: this for three years. We're in for New York for
Speaker 1: the long term. Uh. This location is and you know,
Speaker 1: the only thing that we've done during the pen mimic
Speaker 1: is a little bit of a delay from May when
Speaker 1: we were originally supposed to open up till September. We
Speaker 1: did open up four more shops in New York at
Speaker 1: the time, and we learned a lot about the safety
Speaker 1: procedures that needed to happen in the pandemic. That's where
Speaker 1: I spent a lot of my time and making sure
Speaker 1: all Christy Creamers are safe. But at the end of
Speaker 1: the day, we're gonna be We're ready now. We've understood
Speaker 1: how the operating platform is, particularly in New York City,
Speaker 1: and we see the potential of UH starting to open
Speaker 1: up now and it's not just for you know, the
Speaker 1: retail experience is unbelievable. You know, you've got the world
Speaker 1: uh largest waterfall glazer, right, You've got some really interesting things.
Speaker 1: There's two production lines going, there's one production lined. Um,
Speaker 1: we have a side door where you can actually get
Speaker 1: your donuts on the streets. I'm h So that's pretty
Speaker 1: interesting for folks that might not want to walk indoors
Speaker 1: if you think about in today's world. But it's also
Speaker 1: one of our responsibilities. That's how you continue to evolve
Speaker 1: your business model. And Chrismy Kreen starts with a hot light.
Speaker 1: It can deliver to a fresh shop, that can deliver
Speaker 1: to a wholesale shop date fresh don its daily and
Speaker 1: then they can continue with a potential another channel that
Speaker 1: we just launched um Um in Walmart, which is an
Speaker 1: extended shelf line, and we opened up that plant in
Speaker 1: Iowa in April and May and launched in Walmart last
Speaker 1: week or three weeks ago. And can't keep up the
Speaker 1: Domand now we're a global brand, so you know the
Speaker 1: flagship you know for New York City, that is a
Speaker 1: global site for the rest of the how everybody and
Speaker 1: Chrispy Kreeen looks at it. So we you know, we
Speaker 1: believe in New York we're really comfortable and we think
Speaker 1: operating is how you're gonna learn a lot of new
Speaker 1: ways of uh actually going to market and what consumers
Speaker 1: are actually asking for all the time, whether that be
Speaker 1: delivery or access right. We just did a new deal
Speaker 1: with Doyne Reed for example. So Mike, just overall, how
Speaker 1: has your business been impacted by the pandemic and what
Speaker 1: changes they've been forced to make. Yeah, So, so you know,
Speaker 1: clearly in February when we fell a pandemic coming, I
Speaker 1: spend a lot of time in my shop. A lot
Speaker 1: of that would be to be safe oriented. Could we operate?
Speaker 1: We needed to see if there was a consumer demand
Speaker 1: since there was such a crevable product and there was
Speaker 1: you know, and it was the pretty evident to us
Speaker 1: early on that our customers wanted us and we could
Speaker 1: operate under this environment even when our doors were closed
Speaker 1: were masked if we could operate our drives, and you know,
Speaker 1: we shifted our marketing plans to be much more in
Speaker 1: the act of joy was reserved the community. Examples of us,
Speaker 1: the hospitals or the health care. I'm a business for
Speaker 1: anybody in the health care. If you showed a badge,
Speaker 1: you get donuts for free on money as many as
Speaker 1: you wanted. Let's gives you an example. We did neighbors
Speaker 1: when you were constrained for another idea where you could
Speaker 1: drop off an extra dozen that you got for free
Speaker 1: if you bought a dozen and dropped it up in
Speaker 1: your neighbor's states. And we started to do ideas like
Speaker 1: that which really really generated and I'm connected with our guest.
Speaker 1: I'll tell you the US businesses. That's where we're really
Speaker 1: relevant right now in this conversation. As we did active
Speaker 1: joys what we call them, and we complimented that with
Speaker 1: really great donut innovation. Our top line in the US
Speaker 1: has been up double digits since the pandemic continues. Our
Speaker 1: bottom line is also up double digits. So when we're
Speaker 1: talking about how are you still expanding what we have,
Speaker 1: we've been able to do this in an environment that's
Speaker 1: very challenging. Mike, thanks so much for joining us. We
Speaker 1: really appreciate it. Mike tatters Field, president CEO of Krispy
Speaker 1: Krispy Cream Donuts, calling in from their flagship store, which
Speaker 1: they are just opening in Times Square, New York. So
Speaker 1: it's nice to see Vanni somebody making a you know,
Speaker 1: a retail commitment in the heart of New York City
Speaker 1: during this pandemic. Absolutely, and it really does stand out
Speaker 1: of me, I guess, particularly at a time when there
Speaker 1: weren't too many tours around, but it has you know,
Speaker 1: the byde Green and read and again, it is nice
Speaker 1: to see somebody, you know, trying to make something good
Speaker 1: out of a bad situation. And definitely it's interesting to
Speaker 1: hear might talk about the finances, you know, kind of
Speaker 1: top and bottom line up pretty strongly. So I guess
Speaker 1: it's a it's a little bit of a comfort food.
Speaker 1: It's similar to maybe what we're seeing in you know,
Speaker 1: pizza that the pizza shops have seen sales up pretty dramatically,
Speaker 1: both local pizza shops and the national chain, so everybody's adapting,
Speaker 1: including their diet. Political election season is kicking into high gear.
Speaker 1: We have the Democratic National Convention taking place this week.
Speaker 1: Virtually they get the latest on this upcoming election season.
Speaker 1: We walk up Wendy Schiller, Professor of Political science and
Speaker 1: Public Policy at Brown University. Professor Schiller, thanks so much
Speaker 1: for joining us. I love to get your thoughts on
Speaker 1: the first virtual convention that we've experienced in this country. Uh,
Speaker 1: what are your takeaways? You know, I think I veer
Speaker 1: between being someone who's older and it is sort of
Speaker 1: used to these sort of big party type, you know,
Speaker 1: celebratory conventions with lots of long speeches and thinking about
Speaker 1: you know, the digital age, and also thinking about voters
Speaker 1: between the ages of basically eighteen and thirty five, and
Speaker 1: that voting rate is typically about of all registered voters.
Speaker 1: You know, the Democrats have to get that up, but
Speaker 1: in general that block has to vote more. Um So
Speaker 1: when you think about communications to that block of voters,
Speaker 1: digital is actually really appropriate. Digital makes sense. This is
Speaker 1: the way, even as a teacher, this is the way
Speaker 1: students learn and so it's a pretty it's it's an experiment,
Speaker 1: and there are some glitches, but I think it's a
Speaker 1: smart move. There's been an effort to put on a
Speaker 1: show of unity at the Democratic National Convention this year, Wendy.
Speaker 1: I mean, obviously there always is, but in particular this year,
Speaker 1: as opposed to talking about some of the scandals or
Speaker 1: maybe the the US mail service for example, is that
Speaker 1: the right strategy. Well, you know, Vonnie, you're pointing out
Speaker 1: something really important. And I thought there was maybe a
Speaker 1: too subtle a shift from Night one to night too,
Speaker 1: but Night one was clearly. The two most important voting
Speaker 1: blocks for Joe Biden are certainly African American voters. We
Speaker 1: know that the turnout was anywhere from fifty eight to
Speaker 1: six in well below eight. That Joe Biden can't win
Speaker 1: unless that turnout gets basically above. The second group, of course,
Speaker 1: they're the Bernie voters, the Bernie supporters who sat out Steen.
Speaker 1: Bernie Sanders was enthusiastic. He popped right through that screen
Speaker 1: and he was much much stronger for Joe Biden than
Speaker 1: he was Hillary Clinton. These are the two groups of
Speaker 1: voters that if Joe Biden can get to turn out
Speaker 1: he can be much more competitive in the Midwest. Probably
Speaker 1: flipped one or two of those states, uh, and then
Speaker 1: maybe win. So that was really smart on night one.
Speaker 1: Night two was a little bit flatter. It seemed like
Speaker 1: they were a little confused about what the message was,
Speaker 1: but they honed in in the second hour for older voters.
Speaker 1: Maybe a mistake, but certainly on the economy and healthcare,
Speaker 1: in particular healthcare. So Vanni, I think that's the question mark.
Speaker 1: Can they really come out of the convention with a
Speaker 1: very simplified campaign team. It cannot be just anti Trump
Speaker 1: because the levels will doesn't four Trump are greater than
Speaker 1: the level of these thousand four Biden and people are
Speaker 1: more likely to vote for somebody than against. They need
Speaker 1: to have a platform, and the platform has to be healthcare,
Speaker 1: the economy, and COVID. So we'll see if they can
Speaker 1: hone in on that message and the remaining two nights.
Speaker 1: In terms of the COVID, COVID pandemic, President Trump, the administration,
Speaker 1: the strategy, I'm not sure if it's just ignoring the
Speaker 1: pandemic but certainly underplaying it. Is that still a winning
Speaker 1: strategy for him and for his base? I think that's
Speaker 1: the big question mark. I think people are exhausted from
Speaker 1: the hardships of COVID, not just unemployment and UM and
Speaker 1: sort of the economy, but also just the way we
Speaker 1: live our lives and all and now with children at
Speaker 1: home because of delayed school and then of course college students.
Speaker 1: We know that fewer than people go to college, but
Speaker 1: still a chunk of people, and those students are now
Speaker 1: home with their parents as opposed to UM at school.
Speaker 1: So a lot of people are feeling COVID in all
Speaker 1: sorts of ways every day. And so that's the question
Speaker 1: mark for Trump. Is that feeling a good feeling the
Speaker 1: next couple of months, No, it's not. Is it a
Speaker 1: feeling that will never end? Yes? So that's a big question,
Speaker 1: more particularly amongst suburban voters and independence you know, have
Speaker 1: you done enough? And why are we in this position,
Speaker 1: you know, so much longer after the beginning of the pandemic,
Speaker 1: and what is there an end in sight? So Trump
Speaker 1: will emphasize vaccines, He'll emphasize that he's working on it,
Speaker 1: which they have been working on it, and clearly he'll
Speaker 1: try to ride a campaign of optimism that things will
Speaker 1: get better. He's done it. Once before on the economy.
Speaker 1: He'll do it again. Wendy, what happens with the US
Speaker 1: Postal Service? Well, this is fascinating, and I think this
Speaker 1: is a misread by the Republicans of their own voting base.
Speaker 1: We know in the last twenty years presidential cycles, senior
Speaker 1: citizens of people over the age of ten Republicans between
Speaker 1: eight and twelve points towards Republicans got Democrats, and the
Speaker 1: largest percentage people who vote by mail or seniors people
Speaker 1: over the age of sixty five. So the Republicans underestimated
Speaker 1: the extent to which they were cutting off the notes
Speaker 1: despite their face. Right, you you mass with the post office.
Speaker 1: Older people like their mail, they like hard copy, like
Speaker 1: to know where their post office boxes, and you take
Speaker 1: it away and they get angry. So I think that's
Speaker 1: what happened. There was a backlash. The second important thing
Speaker 1: is that so many people will vote by mail, that
Speaker 1: members of Congress, state legislators, governors, they all want to
Speaker 1: know if they got elected on election night. They don't
Speaker 1: want to wait, they don't want there to be delays,
Speaker 1: they don't want any hassles, so they want to know.
Speaker 1: So they want those ballots returned as badly, I think
Speaker 1: as Joe Biden wants the ballots returned. So let's just
Speaker 1: go real quickly, Professor to polling. I I, for one,
Speaker 1: after Brexit and after the election, I have no our
Speaker 1: very little faith in polling. Yet polling seems to be
Speaker 1: very strongly in the favor of former Vice president and Biden.
Speaker 1: How should we think about the polling here going into
Speaker 1: this selection. I always think of polling as consistency, you know,
Speaker 1: so are you looking at a consistent edge that doesn't
Speaker 1: seem to shake among particular groups of voters? And in
Speaker 1: that case I just mentioned senior So for the first
Speaker 1: time in twenty years, Biden is tied essentially um in
Speaker 1: some polls with Trump among people over the age of
Speaker 1: sixty five of those people vote. So that's the number
Speaker 1: I'm watching really closely. And that's a number I'm trusting
Speaker 1: because it's been pretty accurate for a very long time.
Speaker 1: So if that number holes and Biden can keep that advantage,
Speaker 1: you're looking at a much tighter contest in Florida and
Speaker 1: Arizona than anybody expects. As far as in Michigan, Ohio, Pennsylvania, Wisconsin. Polls,
Speaker 1: I don't believe them at all because they were wrong
Speaker 1: last time. And even though the Poulters tell us they
Speaker 1: fixed it, I don't think they have fixed it. And
Speaker 1: I think it's better for the Democrats honestly, strategically, if
Speaker 1: Joe Biden is either tied or a little bit behind Trump,
Speaker 1: Republicans vote, they get out the door. They're very reliable
Speaker 1: Democrats as we've seen fall off and they don't always vote.
Speaker 1: So if there is a lead for Biden, I think
Speaker 1: that's that situation going into the election for um, for
Speaker 1: the Democrats. But this is a different dynamic um, you know,
Speaker 1: male and voting changes everything. When they thank you. Wendy Schiller,
Speaker 1: Chair of Political Science at Brown University, always loves speaking
Speaker 1: with you. It is time now for Bloomberg Opinion, a
Speaker 1: very fascinating opinion piece out today talking about vaccine supply chains.
Speaker 1: We're going to need to talk a lot about them
Speaker 1: and plan for a vaccine supply chain. Let's bring in
Speaker 1: one of the people who wrote about it now, Professor
Speaker 1: of economics at the Marcadis Center, Sorry, professor of economics,
Speaker 1: Let's start again. Scott Duke Commoners is Associate Professor of
Speaker 1: Business Administration at Harvard Business School. Cambridge, Massachusetts. You had
Speaker 1: been going to be joined by your colleague. That's why
Speaker 1: I was getting that mixed up. Talk to us about
Speaker 1: the supply chains. Capitalism should be able to solve these
Speaker 1: problems very readily, very quickly, and yet we saw with
Speaker 1: the likes of PPE that it didn't watch it give
Speaker 1: us confidence that for supply chains capitalism will work well. So,
Speaker 1: first of all, there's a question of what you need
Speaker 1: for capitalism to actually make supply chains work. Um. And
Speaker 1: the problem is we you know, as with PPE and
Speaker 1: and now to some degree also with vaccines, we're asking
Speaker 1: to contradictory things of companies at the same time, right,
Speaker 1: we're asking for substantial investment and scaling up of their
Speaker 1: their production processes and technologies, which again remember takes time normally, right,
Speaker 1: you know, it's not possible to just immediately, you know,
Speaker 1: double all the number of factories you have. But at
Speaker 1: the same time, remember we're doing that in an environment
Speaker 1: where we want the companies to be providing goods at
Speaker 1: low prices. Right, we wanted the price of PPE to
Speaker 1: to stay down. And similarly, you know, both for you know,
Speaker 1: you know, for political and social reasons. Uh, you know,
Speaker 1: companies that are investing in these vaccine production processes are
Speaker 1: also promising sort of lower prices, selling more at cost
Speaker 1: and so or closer to it cost. And so when
Speaker 1: we do that, there's not as much of an incentive
Speaker 1: for them to you know, build up capacity because the
Speaker 1: market sort of isn't giving that signal that you need,
Speaker 1: you know, the additional price to to subsidize the addition
Speaker 1: or pay for the additional cost. All right, let's go there, professor,
Speaker 1: because I am very confused about the whole pricing aspect
Speaker 1: of this vaccine is and and and you say that's
Speaker 1: important because it goes to incentives for you know, ensuring
Speaker 1: that production in the supply chain. Is there. What is
Speaker 1: your sense of kind of how this likely will play
Speaker 1: out in terms of pricing this thing, Well, it's it's
Speaker 1: hard to know in the long run, but at least
Speaker 1: at the moment um, companies are many of the companies,
Speaker 1: including a number of the leading vaccine producers, Johnson and Johnson,
Speaker 1: Zenica a Fighter, have been announcing commitments that their plan
Speaker 1: is to sell vaccines at or just barely a book
Speaker 1: sort of not trying to profit over the you know,
Speaker 1: over the initial distribution um you know, at least for
Speaker 1: the duration of the pandemic. So where do you see
Speaker 1: the most fragilities in the system. So there are many
Speaker 1: Um of the problem is the vaccine supply chains have
Speaker 1: many different links, um and there are sort of there's
Speaker 1: a lot of links at the you know, sort of
Speaker 1: in the middle, you know, sort of when we're that
Speaker 1: we're that we're thinking about very actively. So um there's
Speaker 1: been a big investment, for example, in producing the types
Speaker 1: of glass vials that we use to actually just contribute
Speaker 1: vaccine doses. Right, you think when you're you know, in syringes. Also,
Speaker 1: you know, when someone you know sticks a vaccine in
Speaker 1: your arm, they pull it out of you know, a
Speaker 1: sanitary glass vile using a syringe. And those we need,
Speaker 1: you know, sort of roughly in proportion to the number
Speaker 1: of people who are receiving the vaccines. Of course, you
Speaker 1: need a lot of individual glass vials and syringes, even
Speaker 1: if you can put a few doses per vile um.
Speaker 1: Those we've actually seen a lot of scale up already,
Speaker 1: you know, sort of it's very salient. We've had problems
Speaker 1: within the past. Sort of nobody wants vaccines to not
Speaker 1: be distributed because of lack of glass and syringes. UM.
Speaker 1: But at the top of the chain there are still
Speaker 1: real challenges. So vaccine production processes are very complicated, UM,
Speaker 1: and they rely often on uh, you know, sort of
Speaker 1: very rare error. Uh, you know, molecules and inputs. UM.
Speaker 1: So you know, for example, there's a there's a molecule
Speaker 1: called L A L that's used to detect toxins that
Speaker 1: are sort of released in the vaccine production process, and
Speaker 1: you have to you have to not have those toxins.
Speaker 1: You have to test every vaccine and also the vitals
Speaker 1: and their stoppers and so forth to make sure that
Speaker 1: you didn't pick up any of these toxins. UM. And this,
Speaker 1: you know, the only natural source of L A L
Speaker 1: comes from horseshoe crabs, and pharmaceutical industry already uh you know,
Speaker 1: harvests about half a million crabs and it's in their blood.
Speaker 1: So you basically, you know, draw blood from horseshoe crabs
Speaker 1: and then release them back into the ocean. UM. Yeah,
Speaker 1: I know, right, there's no offense to thee no exactly,
Speaker 1: and they're doing they're doing an incredible service. Right. Could
Speaker 1: you imagine if like your blood had a molecule that
Speaker 1: was needed to save lives. Um and Uh, you know,
Speaker 1: but horseshoe crab populations you know, of course, you know,
Speaker 1: fluctuate across years. And if you have to suddenly draw
Speaker 1: a lotton or horseshoe crab blood, that means harvesting many
Speaker 1: more crabs and and you know it affects ecosystems as well. Uh. Similarly,
Speaker 1: there's a there's a key component that's used in some
Speaker 1: vaccines to help stimulate the body's immune response that comes
Speaker 1: out of sharp liver oil. It's called squaling. And both
Speaker 1: L A L and squaling. You know, there are um
Speaker 1: ways of synthesizing them, but this hasn't been done at scale.
Speaker 1: They're relatively new um um and and sort of you know,
Speaker 1: recently approved, and so we have to like really figure out,
Speaker 1: you know, how do you produce these at the scale
Speaker 1: that we're gonna need. Now you put all of these
Speaker 1: things together, do you think the supply chain will be
Speaker 1: ready for some level of mental production call it first
Speaker 1: half of one. Uh, The answer is it will be
Speaker 1: if we invest very heavily. Right. Um, you know this
Speaker 1: is this is a real case for public investment in
Speaker 1: supply chain and supply chain integration. We have to invest
Speaker 1: in lots of different chains for different types of vaccines
Speaker 1: at once. Right, So there are a bunch of different
Speaker 1: vaccine platforms that are all being sort of pursued simultaneously
Speaker 1: because we don't know which vaccines are gonna work first. Uh.
Speaker 1: And we need to be scaling all of that now, right,
Speaker 1: we have to be ready to distribute. That is that
Speaker 1: the World Health Organization or who coordinates all of that?
Speaker 1: A great question? So some amount of this is being
Speaker 1: coordinated by the World Health Organization jointly with SEPPI, the
Speaker 1: Coalition for Epidemic Preparedness Innovations and GABBY, which is a
Speaker 1: you know, a vaccine alliance for um, you know, distributing
Speaker 1: vaccines to lower income and developing countries. UM. You know.
Speaker 1: There there is sort of like an international collaboration effort
Speaker 1: going on. UM that's you know, both responsible for the
Speaker 1: sort of coordinating and investment in a lot of different
Speaker 1: vaccine portfolio sorry, vaccine candidates sort of like a diversified
Speaker 1: portfolio to raise the probability we have one that works,
Speaker 1: and also sort of investing in that capacity to make
Speaker 1: sure that we can she produced them. Uh, I should say,
Speaker 1: though the US hasn't joined in on these collaborative agreements yet.
Speaker 1: Still a lot of countries have, but but not the
Speaker 1: US as yet. I mean, does there somebody out there
Speaker 1: actually collecting horseshoe crabs? We're out of time, but I'm
Speaker 1: just so curious about this. They are. There are people
Speaker 1: out there collecting horseshoe crabs. There are people out there
Speaker 1: building bioreactors or trying to figure out how you can
Speaker 1: repurpose them from other applications. Um, and uh, you know,
Speaker 1: lots of people are working really hard on this in
Speaker 1: hopes of getting the vaccines ready to be distributed on time. Yeah,
Speaker 1: I mean, gosh, fascinating. I didn't the horseshoe crabs that.
Speaker 1: That's a new one for me. Hopefully, uh we shoulder
Speaker 1: into the little Creature Hall of Fame or something. I mean,
Speaker 1: if the Scott Do Commoners, thank you so much for
Speaker 1: joining as Scott's an associate professor of Business Administration at
Speaker 1: the Harvard but the Business School maybe perhaps sometime a
Speaker 1: one time or sometime horseshoe crab corral or catcher, but
Speaker 1: we learned something new that a the supply chain logistics
Speaker 1: of getting a vaccines produced distributed is just mind boggling
Speaker 1: in its complexity, but as a professor Kamon has said,
Speaker 1: lots of smart people working on it. Well, this has
Speaker 1: been the week for the retail eLearning to get a
Speaker 1: real sense of where the consumer is. And as we
Speaker 1: saw from a lot of the numbers Walmart and Target today,
Speaker 1: the consumer and the most recent quarter was pretty pretty
Speaker 1: good shape, spending money, a lot of that p p
Speaker 1: P money. But the real focus and the four is
Speaker 1: the forecast going forward, and we had some divergent views
Speaker 1: on that. To kind of break it all down, we
Speaker 1: welcome Bert Flickinger, Managing director, Strategic Resource Group, and Bert,
Speaker 1: I want to go to the forecast. I want to
Speaker 1: compare Walmart, which said, boy, the lack of p p
Speaker 1: P and the upcoming quarters is going to really be
Speaker 1: a headwind for our business, whereas our good friends at
Speaker 1: Target today said, no, that's not so much. We're looking
Speaker 1: pretty good in July and into August. How do you
Speaker 1: think this is going to play out for a lot
Speaker 1: of these retailers, Oh, Walmart, to your point, is being conservative,
Speaker 1: and Target, Walmart and Lowe's are are all hitting on
Speaker 1: all cylinders. They're investing in advertising, they're investing in inventory.
Speaker 1: They're interesting in people to take care of the customer,
Speaker 1: keep the shelves stock, and they're investing in societal good
Speaker 1: with Target and Walmart and Pj's and Amazon World Leader
Speaker 1: and Solar and from our surveys, UH leading in renewables
Speaker 1: shifts a lot of shoppers from non environmentally responsible retailers
Speaker 1: to the environmentally responsible retailers. So, all being conservative, Walmart
Speaker 1: stock is going to be two hundred dollars by the
Speaker 1: end of the fiscal year in January, and Low stock
Speaker 1: is going to be over two hundred dollars at the
Speaker 1: same time, and Target is going to be close to
Speaker 1: two hundred by the same time, all with conservative guidance,
Speaker 1: that's pretty amazing. Target in particular, is you know, talking
Speaker 1: of a great game today, but are you saying that
Speaker 1: this will last, that this will last even if there
Speaker 1: isn't an immediate you round usness even without stimulus. Fannie
Speaker 1: um Our Strategic Resource Group research shows that um less
Speaker 1: than fifty percent of food spending pre COVID was away
Speaker 1: from home, and now nearly nine percent of food spending
Speaker 1: is at home. So as people are learning at home,
Speaker 1: working at home, living at home, and realizing that food
Speaker 1: Target and Walmart, UH cost cents on the dollar versus
Speaker 1: going to Burger King or Dairy Queen or someplace else. Um,
Speaker 1: people are even without the stimulus, are using the tremendous
Speaker 1: savings they're they're getting on food and tremendous savings by living, working,
Speaker 1: educating at home. And that's creating a retail requiem and
Speaker 1: a renaissance for Target, Target, Walmart, and Lowe's for the
Speaker 1: foreseeable future. All right, Target, Walmart, Lowe's. How about this
Speaker 1: small retailer? Will there be any small retailers left? Mom
Speaker 1: and pop retailers main street? I mean, is this trend?
Speaker 1: Where's this going to lead us? Uh? Paul full disclosure.
Speaker 1: Our our family co founded I G A and and
Speaker 1: Red and White worldwide and and the independent small food
Speaker 1: retailers will continue to do well nationally and internationally. Restaurants,
Speaker 1: as you and Vanni have reported well, will struggle. And
Speaker 1: the home improvement small retailers do it do it best.
Speaker 1: Hardware ACE hardware will do well. And UH. What's really
Speaker 1: creating a renaissance for retail too is the landlords are
Speaker 1: being much more constructive in terms of helping the better
Speaker 1: small business retailers open in prime locations and city centers
Speaker 1: and urban areas, and in our work with International Council
Speaker 1: Shopping Centers where recommending that food focus retailers take on
Speaker 1: abandoned sears and department store sites, as Costco is doing
Speaker 1: in Naperville, Illinois, b J's is doing in Long Island,
Speaker 1: uh Targets doing in Manocello. And even though internet sales
Speaker 1: have doubled for a lot of these retailers, bricks and
Speaker 1: mortars over and there's a real renaissance even for the
Speaker 1: department stores focusing on home and table top, and that
Speaker 1: carries over to the small businesses too. What happens if
Speaker 1: you decide to not pay a rent? Who? Who? Who
Speaker 1: gets you know, rent reliefs at this point? Birds, I mean,
Speaker 1: is it the landlords that will have to take the
Speaker 1: the his or is it the retailers? And you know,
Speaker 1: we're literally just talking to a Crispy Cream ceo they're
Speaker 1: opening in Towns Square. You know that these rents were
Speaker 1: you know, something like five million dollars a month for
Speaker 1: those types of buildings before the pandemic. Who knows what
Speaker 1: they are now, but surely rent has to be a
Speaker 1: big factor in all of this Vanni. It's it's like
Speaker 1: the Chinese character, which is the same for dangerous it
Speaker 1: is for opportunity. And that's what we're seeing is by
Speaker 1: not paying rent, landlords can can replace the non rent
Speaker 1: payers UH with better retailers. The other side that's really
Speaker 1: gone unreported is many of the retailers, even if they're
Speaker 1: paying UH their bills to suppliers, they're not paying on time.
Speaker 1: They're not paying in full. So Walmart, Target and Lows
Speaker 1: pay their all their bills on net in full in
Speaker 1: twenty to thirty days, where the department stores have been
Speaker 1: paying instead of thirty days out days. So for a
Speaker 1: branded supplier, UH, they're shifting to who's paying, and the
Speaker 1: landlords are shifting to who's paying, and that's changing the
Speaker 1: balance to power and retail quite so. The other thing
Speaker 1: that's changing the balance of power and retail that's been
Speaker 1: unreported is there's been pervasive price gouging by many of
Speaker 1: the brands apply, especially the serial Miller's charging twice is
Speaker 1: more UH per equivalent pound for sereal than people charge
Speaker 1: for many cases UM sizes of steak, So Target, Walmart,
Speaker 1: Lows with great private label portfolios will shift people from
Speaker 1: brands and also from a supply chain and logistics standpoint,
Speaker 1: in addition to financial standpoint, raised consumers standards of living
Speaker 1: so they'll have more to spend online with those retailers.
Speaker 1: With Mike Common running running lows dot com very well
Speaker 1: in his counterparts at Walmart and Target too, and at
Speaker 1: the same time shopping within within the four walls. And
Speaker 1: it's leadership to Vonnie and Paul. You have the dynamic
Speaker 1: team of at low of Marvin and Sharon Ellison doing
Speaker 1: more for societal good than anyone. They've committed fifty five
Speaker 1: million to minority and small business owners to Paul's point,
Speaker 1: over a hundred million to COVID and doing societal good
Speaker 1: is really paying off with Lowe's same store comparison sales
Speaker 1: being UH ten ten percent high, higher than um Home
Speaker 1: Depot and doing societal good for I think. I think
Speaker 1: most companies in this day and age need to be
Speaker 1: doing something at the very least, and if not a
Speaker 1: lot of Birds thank you. It's always such a pleasure
Speaker 1: to seek to you know, what a person to say
Speaker 1: to you about retail. He's been in it for so long.
Speaker 1: Birds looking to his managing director UH Strategic Resource Group
Speaker 1: joining us there. Thanks for listening to Bloomberg Markets podcast.
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
Speaker 1: or whatever a podcast platform you prefer. I'm Bonnie Quinn,
Speaker 1: I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney.
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
Speaker 1: can always catch us worldwide at Bloomberg Radio m