WEBVTT - Interview With Dana Telsey: Masters in Business (Audio) 0:00:02.200 --> 0:00:06.800 This is Masters in Business with Barry Ridholts on Boomberg Radio. 0:00:07.840 --> 0:00:11.680 This week. On the podcast, I have Dana Telsey, and 0:00:11.760 --> 0:00:15.800 if you follow retail stocks at all for any period 0:00:15.840 --> 0:00:19.520 of time, you should probably know the name Telsey. She's 0:00:19.560 --> 0:00:23.120 been an analyst UH and a fixture on financial media 0:00:23.239 --> 0:00:28.080 for a long time. She is just full of energy, 0:00:28.280 --> 0:00:31.920 covers a ton of stuff. You may have to slow 0:00:31.960 --> 0:00:34.199 this podcast down because between the two of us, we 0:00:34.200 --> 0:00:38.760 were both speaking so quickly. By coincidence, we both used 0:00:38.760 --> 0:00:41.360 to have our offices in the same building, and I 0:00:41.400 --> 0:00:44.600 was always bumping into her, usually when she was running 0:00:44.600 --> 0:00:46.519 out of the building to catch a plane or or 0:00:46.560 --> 0:00:50.959 something like that. She's pretty much always in motion. I 0:00:51.000 --> 0:00:54.200 find her really fascinating. She covers a lot of retail 0:00:54.440 --> 0:00:57.440 and does it in a way that I don't know 0:00:57.480 --> 0:01:01.440 if other retail analysts spend nearly as much time as 0:01:01.520 --> 0:01:07.040 she and her colleagues do in stores with management, kicking tires, 0:01:07.080 --> 0:01:11.240 looking at looking at malls, looking at at various shopping experiences, 0:01:11.319 --> 0:01:16.200 looking at all these different channels that consumers could go 0:01:16.240 --> 0:01:20.200 out and consume goods. Um She's She's one of the 0:01:20.280 --> 0:01:26.360 most intriguing and highly ranked retail analysts on the street. 0:01:26.920 --> 0:01:31.119 If you are all interested in any of the consumer 0:01:31.160 --> 0:01:34.880 and retailing stocks, and that's everything from Apple and Amazon 0:01:35.120 --> 0:01:39.839 to Lord and Taylor's, Nordstrom, Macy's two things like Starbucks 0:01:40.000 --> 0:01:43.800 or or shake Shack. Her firm is called the Telsey 0:01:43.880 --> 0:01:48.000 Advisory Group or tag get it retail tag Um. They 0:01:48.040 --> 0:01:51.800 really cover everything. They do a pretty substantial job. They're 0:01:51.880 --> 0:01:55.680 highly highly regarded, and I find talking to her about 0:01:55.680 --> 0:01:58.680 retail to be a whirlwinds. She she may be the 0:01:58.720 --> 0:02:01.280 single most knowledgeable part US and I've ever encountered when 0:02:01.320 --> 0:02:07.240 it comes to the world of retail, consumer spending, retail shopping, 0:02:07.280 --> 0:02:09.880 retail sales, and all the companies that exist within it. 0:02:10.000 --> 0:02:13.080 So if you are all interested in that space, I 0:02:13.080 --> 0:02:16.640 think you're gonna find this to be a fascinating conversation. So, 0:02:16.720 --> 0:02:21.720 with no further ado, here is my conversation with Dana Telsey. 0:02:23.880 --> 0:02:28.480 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:02:29.400 --> 0:02:32.640 This week. My special guest is Dana Telsey of the 0:02:32.720 --> 0:02:38.040 Telsey Advisory Group. She is a retail analyst extraordinaire. I've 0:02:38.040 --> 0:02:43.240 been following Dana for forever. She was an analyst, institutional 0:02:43.280 --> 0:02:46.560 investor top rated for thirteen years. You were at bear 0:02:46.560 --> 0:02:48.400 Stearns for a good couple of years right now, it's 0:02:48.440 --> 0:02:51.160 there for twelve years, twelve years, and and we'll talk 0:02:51.160 --> 0:02:54.280 about her timing in her exit was perfect. Dana Telsey, 0:02:54.440 --> 0:02:57.040 Welcome to Bloomberg. Thank you so much, very great to 0:02:57.040 --> 0:02:59.800 be here. Thank you for having me. My pleasure. So 0:03:00.120 --> 0:03:04.840 began with Ron Barron, which was a seventeen billion dollar firm, 0:03:04.960 --> 0:03:08.000 and you really started at the bottom, right You began 0:03:08.080 --> 0:03:11.480 as a secretary. I was Ron's assistant. I was so fortunate. 0:03:11.560 --> 0:03:13.120 I grew up in the city. You lived in the 0:03:13.160 --> 0:03:15.680 same building as my family, and I knew him from 0:03:15.680 --> 0:03:17.919 when he first started the company. So I learned from 0:03:18.080 --> 0:03:20.720 best in class of pro and he taught me how 0:03:20.720 --> 0:03:24.200 to understand stocks, how to understand companies, and also how 0:03:24.200 --> 0:03:28.400 to read management teams. He believes in long term investing, 0:03:28.600 --> 0:03:31.680 he believes in guard value at a reasonable price, and 0:03:31.760 --> 0:03:34.600 he basically believes in the brand of a business kennot grow. 0:03:34.840 --> 0:03:37.040 And that's what I learned from Ron. I was so fortunate. 0:03:37.200 --> 0:03:40.040 So so you start working really at a very junior 0:03:40.080 --> 0:03:43.160 position and eventually you get you go through the c 0:03:43.320 --> 0:03:46.560 f A processes that right NBA process, NBA process. Okay, 0:03:46.760 --> 0:03:48.720 I want at night to business school, so you get 0:03:48.720 --> 0:03:50.440 your m b A. And then how do you then 0:03:50.560 --> 0:03:54.200 morph into a full time analysts? Went to the South 0:03:54.240 --> 0:03:56.680 Side on the brokerage side, and frankly before that, I 0:03:56.760 --> 0:03:59.600 was fortunate to be in a Bye Side investor group 0:03:59.640 --> 0:04:01.720 of some of the best names in the business, like 0:04:01.720 --> 0:04:04.840 Steve Mandel of Lone Pine, where we got to exchange 0:04:04.840 --> 0:04:07.000 ideas on a monthly basis. And then I went to 0:04:07.040 --> 0:04:10.160 the South Side and basically went to C J. Lawrence, 0:04:10.240 --> 0:04:14.560 which was a terrific platform, fantastic people, and I got 0:04:14.600 --> 0:04:18.880 to learn how analysts sell their product and basically that's 0:04:18.880 --> 0:04:21.600 why it's called sell side to the buy side. I 0:04:21.640 --> 0:04:23.640 was there for three years before they got acquired by 0:04:23.680 --> 0:04:26.360 Deutsche Bank, and then was at bear Sterns for twelve years. 0:04:26.440 --> 0:04:28.520 You're a bear Sterns for a long time. How do 0:04:28.600 --> 0:04:33.680 you morph into a retail analyst from really? Did you 0:04:33.720 --> 0:04:36.560 start as a generalist or were you always attracted to retail. 0:04:36.680 --> 0:04:38.839 I've tried everything. When I was at Ron's for a minute, 0:04:38.880 --> 0:04:41.200 he gave me the latitude. I tried being a traitor, 0:04:41.279 --> 0:04:44.240 I tried being a salesperson and what I liked about 0:04:44.279 --> 0:04:47.240 it is I liked being being an expert. I really 0:04:47.279 --> 0:04:51.159 liked the idea of not doing research, talking with companies, 0:04:51.400 --> 0:04:54.720 talking with experts, and understanding and pulling apart the ten 0:04:54.839 --> 0:04:57.360 k's and the ten queues because it all tells a story. 0:04:57.640 --> 0:05:01.880 So I'm about storytelling. So so what makes following retail 0:05:02.480 --> 0:05:06.240 different than other types of UM analysts. There there's a 0:05:06.440 --> 0:05:10.640 very different energy and a very different focus for for 0:05:10.680 --> 0:05:13.640 the people who follow the retailers than the people who 0:05:13.640 --> 0:05:16.600 follow tech refinance or what have you. So keep in mind, yes, 0:05:16.640 --> 0:05:18.400 I worked for Ron Barren, but since I grew up 0:05:18.400 --> 0:05:20.799 in the city, my family had a bookstore on Madison Avenue. 0:05:21.040 --> 0:05:23.640 My grandfather was cash register number one, my mother was 0:05:23.720 --> 0:05:26.400 cash register number two, when I was cash registered number three. 0:05:26.839 --> 0:05:29.800 So being able to understand that retail is detail and 0:05:29.920 --> 0:05:33.479 understand the complexity of the story, that's what makes retail fun. 0:05:33.680 --> 0:05:35.240 You could feel it. You can go in a store, 0:05:35.279 --> 0:05:38.159 you can talk to customers. But today the world's changed 0:05:38.320 --> 0:05:42.240 because online and the Internet has really made things different 0:05:42.240 --> 0:05:44.880 than what it was. But you need physical and digital 0:05:45.120 --> 0:05:47.800 in order to really capture the consumer. We're gonna spend 0:05:47.839 --> 0:05:50.200 some more time talking about online in a little bit. 0:05:50.720 --> 0:05:53.680 But I recall back when you were at bear Stearns, 0:05:54.040 --> 0:05:59.000 you were notorious for doing a lot of of what 0:05:59.000 --> 0:06:01.520 what you call resa, what I would call shopping. But 0:06:01.640 --> 0:06:05.600 you literally, my wife calls it retail therapy. You literally 0:06:05.680 --> 0:06:09.240 during the holidays and during major seasons, you're checking off boxes, 0:06:09.279 --> 0:06:12.800 You're going to thousands and thousands of stores, stores and locations. 0:06:13.240 --> 0:06:16.440 How aggressive are you aggressively? Are you out in the 0:06:16.480 --> 0:06:19.440 actual retail environed constantly? I mean, I believe that you 0:06:19.520 --> 0:06:21.760 can't sit at your desk and know what's happening in 0:06:21.800 --> 0:06:25.839 the field, so essentially everywhere from Chicago and Boston last week, 0:06:25.880 --> 0:06:28.880 the West Coast. I was in London Monday and Tuesday 0:06:28.880 --> 0:06:31.080 of this week. I need to be able to feel 0:06:31.080 --> 0:06:34.920 it myself. What's moving, what's checking, what's left on sale, 0:06:35.200 --> 0:06:38.520 what bags are the consumers carrying, and how is the 0:06:38.520 --> 0:06:41.400 sales staff approaching them. If you don't feel it yourself, 0:06:41.440 --> 0:06:43.240 you're not going to know what a brand is. So 0:06:43.400 --> 0:06:45.839 retail is detail and the pulse of it to me 0:06:46.160 --> 0:06:49.000 is being able to see the shoppers. How much do 0:06:49.080 --> 0:06:53.880 you put yourself at risk for foreign prey to anecdotal evidence, 0:06:53.920 --> 0:06:56.720 we all know Manhattan is in America, It's a very 0:06:56.760 --> 0:07:00.840 different place, and I'm constantly checking myself off as we're 0:07:00.880 --> 0:07:04.280 first coming out of the recession. Looks like things are 0:07:04.320 --> 0:07:06.440 doing pretty well now when the rest of the country 0:07:06.600 --> 0:07:10.560 clearly wasn't wasn't where Manhattan was post bailouts. That's why 0:07:10.560 --> 0:07:12.720 I do those shopping tours around the country, and that's 0:07:12.720 --> 0:07:15.800 why my team and I whether they're in Tennessee, whether 0:07:15.840 --> 0:07:19.200 they're in California, whether they're in Chicago, you can't These 0:07:19.240 --> 0:07:21.760 companies have thousands of stores, so at least you're going 0:07:21.800 --> 0:07:23.600 to get a pulse and you're gonna get a read 0:07:23.840 --> 0:07:27.080 what's working. And frankly, having combined that also on the 0:07:27.120 --> 0:07:30.520 international scope, that helps to seeing what a prime mark 0:07:30.520 --> 0:07:33.200 could mean in the US when prime Mark is based 0:07:33.240 --> 0:07:36.200 in the UK and that's where they're real retail presences 0:07:36.280 --> 0:07:38.680 along with the continent of Europe. I want to know 0:07:39.080 --> 0:07:41.480 what the US has now and what's coming and what 0:07:41.560 --> 0:07:45.160 could be impacting it. I look for change. How important 0:07:45.520 --> 0:07:48.480 are the macro environments? Do you look at things like 0:07:49.080 --> 0:07:53.200 interest rates, inflation, the cost of the dollar. What does 0:07:53.240 --> 0:07:57.440 the macro concerns do to for a retail analyst A lot. 0:07:57.520 --> 0:07:59.640 I mean, look at today it's all about tax reform. 0:07:59.720 --> 0:08:01.920 What that gonna mean? What could it mean? What do 0:08:02.040 --> 0:08:05.720 these border adjusted taxes mean? The macro provides the framework 0:08:05.960 --> 0:08:09.360 and companies need to curate the landscape. So I'm constantly 0:08:09.360 --> 0:08:13.440 looking at it because it gives a gauge. Macro provides 0:08:13.480 --> 0:08:17.040 the framework and the companies need to curate for the landscape. 0:08:17.080 --> 0:08:18.760 So what I mean by that is, well, all of 0:08:18.800 --> 0:08:21.520 a sudden, unemployment is getting lower. Well, then what should 0:08:21.560 --> 0:08:25.400 companies be doing, whether in discretionary goods, in price points, 0:08:25.400 --> 0:08:28.720 in articles that they're selling. Should it be different, should 0:08:28.720 --> 0:08:31.400 it be more luxurious goods or what could be a 0:08:31.440 --> 0:08:34.840 little bit more expensive? Is consumers can afford it. Companies 0:08:34.880 --> 0:08:37.600 today have more data and know more about their customer 0:08:37.640 --> 0:08:42.079 than ever, both from online and from physical. Therefore, balancing 0:08:42.120 --> 0:08:46.400 inventory with what consumers really want is something they're able 0:08:46.440 --> 0:08:48.600 to manage better today than they were in the past. 0:08:48.840 --> 0:08:52.400 Macro helps provide that. I'm Barry Hults. You're listening to 0:08:52.600 --> 0:08:55.680 Masters in Business on Bloomberg Radio. My guest today is 0:08:55.840 --> 0:08:59.600 Dana Telsey. She is best known as a retail analysts. 0:08:59.600 --> 0:09:02.000 You can run is the tels the advisory group and 0:09:02.040 --> 0:09:05.200 spent a dozen years or so at bear Stearns. Let's 0:09:05.200 --> 0:09:09.240 talk a little bit about online retail. Uh this holiday season, 0:09:09.280 --> 0:09:13.520 it seems like like every other year it's Amazon and 0:09:13.600 --> 0:09:16.960 everybody else? Is that still the case? That is still 0:09:17.000 --> 0:09:19.880 the case. It is Amazon and than everyone else. Whether 0:09:19.960 --> 0:09:22.560 you're a physical retailer, people are talking about do you 0:09:22.600 --> 0:09:25.439 sell on Amazon? Where they're a digital retailer, do you 0:09:25.480 --> 0:09:29.040 want to sell on Amazon? And essentially it's new categories 0:09:29.040 --> 0:09:31.480 and new brands that are emerging all of a sudden. 0:09:31.520 --> 0:09:34.840 Businesses like consignment, the real real or threat up or 0:09:34.880 --> 0:09:39.280 trades A. That's what we're hearing emerge. But Amazon has 0:09:39.320 --> 0:09:41.480 not been that strong in apparel. They've been strong in 0:09:41.520 --> 0:09:44.840 other categories because Amazon is more of an item business. 0:09:44.880 --> 0:09:47.520 But you know they'll learn that too. And we think 0:09:47.559 --> 0:09:50.240 Amazon is going to continue to be someone and continue 0:09:50.240 --> 0:09:53.280 to be a business model that needs to be studied carefully. Well. 0:09:53.320 --> 0:09:57.640 They did the Zappos acquisition, which was for shoes and sneakers. 0:09:58.280 --> 0:10:00.360 I think they did that as much to learned that 0:10:00.400 --> 0:10:05.360 business as anything else. But are are apparel different than Look, 0:10:05.400 --> 0:10:07.720 we all buy books and and those of us who 0:10:07.760 --> 0:10:11.280 still buy CDs and DVDs, as well as electronics and 0:10:11.320 --> 0:10:17.160 gadgets on on Amazon. Can you translate the fit and 0:10:17.280 --> 0:10:20.880 feel of a garment from a real store to online 0:10:20.960 --> 0:10:23.000 or is that always going to be a big advantage 0:10:23.040 --> 0:10:25.480 to physical brick and motory. The word always is a 0:10:25.559 --> 0:10:29.200 dangerous word because some always always changes. And what we've 0:10:29.200 --> 0:10:32.240 been seeing is that on Amazon it feels to us 0:10:32.280 --> 0:10:35.319 like the best selling items or some of the replenishment 0:10:35.360 --> 0:10:39.160 items in apparel underwear, for example, seems very strong. Yet 0:10:39.400 --> 0:10:41.640 in other words, you know what you're gonna get, and 0:10:41.679 --> 0:10:45.360 now you're just price shopping to replace the repeatable, replenishable purchase. 0:10:45.640 --> 0:10:49.640 But collection items and designer where that doesn't do as well. 0:10:49.720 --> 0:10:53.000 We're not seeing brands look to adopt Amazon yet because 0:10:53.000 --> 0:10:55.560 they're not putting them in an environment that's unique and 0:10:55.600 --> 0:10:59.040 differentiated for them. That's today. We'll see what happens over 0:10:59.080 --> 0:11:02.000 the next few years if as they scale the business. 0:11:02.200 --> 0:11:05.400 I'm holiday shopping, I'm looking for something fun and funky. 0:11:05.600 --> 0:11:10.440 Bloomberg actually had a best Pajamas to Buy and they 0:11:10.600 --> 0:11:14.720 ranged from fifty bucks to nine hundred dollars, and somewhere 0:11:14.720 --> 0:11:16.360 in the middle of that, a hundred and fifty dollars. 0:11:16.400 --> 0:11:19.600 I found this great set of pajamas. I couldn't find 0:11:19.600 --> 0:11:23.320 it on Amazon. I ordered it from the manufacturer and 0:11:23.320 --> 0:11:25.560 then I went back and I did tweak the search 0:11:25.600 --> 0:11:28.000 a little bit and lo and behold, the right size, 0:11:28.000 --> 0:11:31.840 the right color comes up in that manufacturer, and um, 0:11:31.840 --> 0:11:33.800 and it was fired. I was cheaper on Amazon then 0:11:33.880 --> 0:11:37.480 from the retailer direct. It's it's amazing. And isn't everyone 0:11:37.520 --> 0:11:40.280 an Amazon Prime member? It certainly seems what they've done 0:11:40.280 --> 0:11:42.880 with Prime the synonym for Amazon is the word scale, 0:11:43.280 --> 0:11:46.760 and is they put more categories to basically make you 0:11:46.760 --> 0:11:49.280 want to continue renewing that Prime membership, Like what they're 0:11:49.280 --> 0:11:53.560 doing with media, it's all encompassing. Yes, So Amazon Music, 0:11:53.640 --> 0:11:57.800 Amazon Video. It's amazing and the latest thing I discovered 0:11:57.800 --> 0:11:59.640 on Amazon, And I don't want to just talk about 0:11:59.640 --> 0:12:02.680 Amazon on Over the summer, we bought a TV. It's 0:12:02.720 --> 0:12:05.679 for the basement by the treadmill. And months go by 0:12:05.720 --> 0:12:07.800 and I don't hang it, and finally it's like, all right, 0:12:07.880 --> 0:12:10.680 I gotta get this thing up and I go back 0:12:10.679 --> 0:12:12.439 to the store. I got it, and they want four 0:12:12.800 --> 0:12:14.720 dollars to install it, and I'm like, that's what the 0:12:14.760 --> 0:12:19.040 TV cost? Thanks? I go back to a Google search, 0:12:19.120 --> 0:12:23.080 thinking Angie's List or something, they'll come up. Amazon comes up. 0:12:23.240 --> 0:12:29.000 It's to have a television hung on the wall. It's amazing. 0:12:29.320 --> 0:12:32.080 And then you realize, oh, wait a second. They're just 0:12:32.320 --> 0:12:36.600 a matchmaker between the consumer and the service provider and 0:12:36.640 --> 0:12:38.920 they take their pound of flesh. It cost them nothing 0:12:38.960 --> 0:12:41.120 to do this. It's pretty amazing. I mean, and now 0:12:41.280 --> 0:12:43.720 they're focused on that last mile. They want to be 0:12:43.760 --> 0:12:45.840 able to make sure that you're getting what you need 0:12:45.880 --> 0:12:47.440 when you want it, because they want you to renew 0:12:47.480 --> 0:12:49.960 that prime membership. So so you could do plumbing, you 0:12:50.000 --> 0:12:53.480 could do yard work, you could do contracting, you could 0:12:53.520 --> 0:12:56.640 do there's a whole run of Amazon services that I 0:12:56.720 --> 0:13:01.400 had no idea that they actually provided it. It's quite astonished. 0:13:01.440 --> 0:13:04.840 So so outside of Amazon and Amazon Home Services and 0:13:05.200 --> 0:13:09.000 and all that stuff, who else is doing online? Right? 0:13:09.480 --> 0:13:11.560 I think you're seeing things from the real real I 0:13:11.559 --> 0:13:15.000 think Wayfair is doing interesting things online. I think what 0:13:15.080 --> 0:13:18.880 you've seen from Binobo's, what you've seen from Dollar Shave Club. 0:13:19.240 --> 0:13:22.560 I think there's Revolve Clothing is pretty interesting in terms 0:13:22.559 --> 0:13:25.280 of what they're doing. What are they doing that's kind 0:13:25.280 --> 0:13:27.800 of unique. We've all seen the Dollar Shave Club videos. 0:13:27.800 --> 0:13:30.880 They were great, the company was what wasn't it for 0:13:31.200 --> 0:13:34.200 not in substantial amount of There's a terrific conference called 0:13:34.240 --> 0:13:37.480 shop Talk. It began last year and they basically brought 0:13:37.520 --> 0:13:40.800 physical and digital together, and it's being gonna be held 0:13:40.840 --> 0:13:44.280 this year also on March nineteen, and that's where you 0:13:44.320 --> 0:13:47.520 see some of the newest online retailers and how they're 0:13:47.520 --> 0:13:51.079 growing and how they're becoming physical too, because physical retailers 0:13:51.280 --> 0:13:56.920 need to better embrace digital also. That's that's fascinating amongst 0:13:57.080 --> 0:14:03.840 um outside of Amazon, who else from pure digital not 0:14:04.000 --> 0:14:07.000 having a physical shop? Who else is is catching your eye? 0:14:07.240 --> 0:14:09.360 I think just not having a pure physical shop, but 0:14:09.440 --> 0:14:11.880 just on the on the digital side, I think there's 0:14:11.880 --> 0:14:14.920 a lot of interest in social media things. What Snapchat 0:14:14.960 --> 0:14:18.679 is doing, what pinterest is doing. That's really interesting to me. 0:14:18.840 --> 0:14:23.600 Are they converting their user activity to actual retail sales 0:14:23.680 --> 0:14:26.960 or at least two retail prospects driving traffics seems like it. 0:14:27.160 --> 0:14:28.880 I mean, look at the line that's hell that the 0:14:29.160 --> 0:14:32.000 at the Snapchat pop up shop shop here on sixty 0:14:32.200 --> 0:14:36.000 between Fifth and Madison. Everyone wants those virtual reality glasses. 0:14:36.240 --> 0:14:39.040 Look at Instagram. I've an office filled with people who 0:14:39.120 --> 0:14:42.920 are consumers, people who like to consume, and frankly, they're 0:14:43.000 --> 0:14:47.280 learning about new trends, new retailers, new online sites, all 0:14:47.280 --> 0:14:50.320 through Instagram. A picture is worth more than a thousand words. 0:14:50.640 --> 0:14:54.600 That's interesting. What about the brick and mortar retailers, which 0:14:54.680 --> 0:14:58.680 of the physical stores are actually have a good digital 0:14:59.280 --> 0:15:02.400 um positioning. You've got to give the department stores credit. 0:15:02.720 --> 0:15:06.120 Macy's Nordstrom have done a very good job at integrating 0:15:06.400 --> 0:15:09.720 physical and digital and it's growing fast for them, and 0:15:09.760 --> 0:15:12.880 I think you're seeing other players. Look at Walmart. Walmart 0:15:13.000 --> 0:15:16.720 basically now believes online is central to their strategy. I 0:15:16.800 --> 0:15:18.800 know that if I go to a Lord and Tailor 0:15:19.080 --> 0:15:21.720 or a Macy's and I want something and they either 0:15:22.200 --> 0:15:24.280 don't have the right color, don't have the right size, 0:15:24.960 --> 0:15:28.320 every salesperson will say, oh, we can have that ship 0:15:28.360 --> 0:15:30.160 to you for free. If you want this one in 0:15:30.160 --> 0:15:33.040 this color, we can run it it'll you'll have it 0:15:33.080 --> 0:15:35.720 in a week. No one wants to lose a sale. 0:15:36.040 --> 0:15:38.520 Everyone wants you, the shopper, to think of them as 0:15:38.600 --> 0:15:42.040 in stock all the time and be retail loyal. And 0:15:42.120 --> 0:15:44.920 how do you get loyalty? You get loyalty by service. 0:15:45.000 --> 0:15:47.640 You get loyalty by price and convenience, and that's what 0:15:47.680 --> 0:15:52.200 they're offering. So you mentioned price, what does online due 0:15:52.240 --> 0:15:55.080 to price competition? Are we still seeing the same sort 0:15:55.120 --> 0:15:57.680 of showrooming that was an issue a couple of years ago? 0:15:57.800 --> 0:16:01.080 You are. Price transparency is one of the biggest competitors 0:16:01.120 --> 0:16:03.840 for all of retailers and etailers, and so how do 0:16:03.880 --> 0:16:08.720 you how do you break price transparency exclusive items, more innovation? 0:16:09.360 --> 0:16:12.760 Basically being able to communicate with your customer services the 0:16:12.840 --> 0:16:16.120 killer app these days, and being able to be communicative 0:16:16.240 --> 0:16:19.160 even in store and out of store, I think makes 0:16:19.160 --> 0:16:21.840 you feel part of the club. Service is the killer 0:16:21.880 --> 0:16:24.120 app feels like it? I mean, when you can have 0:16:24.560 --> 0:16:28.120 sales associates, people who chat online with you, if you're 0:16:28.240 --> 0:16:30.720 customized to them. Why do you think you're seeing The 0:16:30.800 --> 0:16:34.800 mobile phone right now is becoming so important to consumers 0:16:35.000 --> 0:16:37.760 because they're using it for everything. It's not only their 0:16:37.760 --> 0:16:40.520 work lives, but it's their personal lives too that helped 0:16:40.680 --> 0:16:44.920 create transactions and complete transactions. I'm barry, what helps You're 0:16:45.000 --> 0:16:48.760 listening to Masters in Business on Bloomberg Radio. My special 0:16:48.760 --> 0:16:52.240 guest today is Dana Telsey of the Telsea Advisory Group. 0:16:52.600 --> 0:16:58.120 She is a top rated institutional investor analyst for thirteen years. 0:16:58.600 --> 0:17:01.080 Spent a lot of time at bear Stern before launching 0:17:01.120 --> 0:17:04.679 her own firm. Let's talk a little bit about the 0:17:04.720 --> 0:17:09.000 retail footprints and whether or not we've we've overbuilt it. It 0:17:08.920 --> 0:17:12.440 It seems that every major town has two malls and 0:17:12.560 --> 0:17:14.760 the old mall is kind of struggling and the new 0:17:14.760 --> 0:17:17.639 mall is all bright and shiny, and you wonder, have 0:17:17.800 --> 0:17:22.120 we built too much retail physical space in America. We've 0:17:22.119 --> 0:17:24.680 had a lot of physical space in America, and yes, 0:17:24.760 --> 0:17:27.600 you have space that isn't as productive as others. And 0:17:27.640 --> 0:17:30.919 that's why you see the differentiation between the A malls 0:17:31.000 --> 0:17:33.200 and the Bees and the C malls. It really is 0:17:33.240 --> 0:17:36.120 about the right malls, and they're all changing right now. 0:17:36.440 --> 0:17:41.280 The occupancy, the the occupancy levels and also the rents. 0:17:41.280 --> 0:17:43.960 And those A malls that's where everyone wants to be 0:17:43.960 --> 0:17:47.920 because you're creating a community of best in class tenants 0:17:48.000 --> 0:17:52.040 that also retailers and restaurants invest in to continue to 0:17:52.040 --> 0:17:55.160 make it better. So I am not a big mall shopper. 0:17:55.200 --> 0:17:56.960 If I could stay out of the malls, I'm I'm 0:17:57.160 --> 0:18:01.399 very happy Camper. But where I live, there's certain specific 0:18:01.520 --> 0:18:04.720 stores you want to go to, like let's go say 0:18:04.760 --> 0:18:09.639 the Bloomingdale Furniture store or um by me. If I 0:18:09.680 --> 0:18:11.320 want to go to the one of the big sporting 0:18:11.320 --> 0:18:14.160 goods stores, they're attached to them all. And not too 0:18:14.200 --> 0:18:18.280 long ago, before the holiday season, I walked through part 0:18:18.320 --> 0:18:21.880 of Roosevelt Field and I didn't recognize it. It's totally 0:18:21.920 --> 0:18:24.479 different than what it used to be. What Simon has 0:18:24.480 --> 0:18:27.119 done in Roosevelt Field, it looks terrific. Look at that 0:18:27.200 --> 0:18:29.760 name and Marcus there. Look at the center court area 0:18:29.760 --> 0:18:33.000 of the of the court is really nice. I was 0:18:33.080 --> 0:18:36.119 shocked it used to be you know, junk this and 0:18:36.600 --> 0:18:40.200 garbage that. It's really good. High end food malls today 0:18:40.400 --> 0:18:43.680 need to be experiential, not just a place for buying things. 0:18:43.840 --> 0:18:46.000 They're offering restaurants. You know what. The new name for 0:18:46.119 --> 0:18:49.359 movie theaters are wine Dyne and Recline because there's a 0:18:49.359 --> 0:18:51.600 new way to go to movie theaters these days. And 0:18:51.640 --> 0:18:54.440 I think that's what you're gonna see. These shopping centers 0:18:54.560 --> 0:18:58.080 or retail real estate become places where consumers spend time 0:18:58.359 --> 0:19:00.600 not only to meet people, not only to buy things, 0:19:00.880 --> 0:19:04.480 but more physical time by offering more services within the center. 0:19:05.080 --> 0:19:08.600 So what does that mean in terms of the cost 0:19:08.640 --> 0:19:14.520 structure of rentals for for retailers? This this looks like 0:19:14.600 --> 0:19:17.679 when Roosevelt is a perfect example. This doesn't look like 0:19:17.720 --> 0:19:21.080 a down and dirty, fast and cheap renovation. It looks 0:19:21.119 --> 0:19:23.240 like they really put some time and effort and money 0:19:23.280 --> 0:19:25.720 into it. What are rents are going to be? What 0:19:25.840 --> 0:19:29.040 our rents gonna be like for retailers? For these A malls, 0:19:29.040 --> 0:19:31.400 rents are going to be high. And the reason retailers 0:19:31.440 --> 0:19:34.919 will pay those types of rents those centers drive the 0:19:34.960 --> 0:19:38.960 most traffic, have the most complementary mix of tenants, and 0:19:39.520 --> 0:19:43.400 are always fully occupied. So we continue to see demand 0:19:43.440 --> 0:19:47.480 for those centers being tremendous. So who is who else 0:19:47.640 --> 0:19:50.000 you mentioned Simon's group? Who else is doing the sort 0:19:50.000 --> 0:19:54.080 of large scale retail Well, look at general growth properties. 0:19:54.280 --> 0:19:56.359 They happen to be doing a very good job. Also, 0:19:56.600 --> 0:19:59.680 what's happening in the Natick mall is very exciting. They've 0:19:59.680 --> 0:20:03.440 had amendous changes in an uplift in their centers too. 0:20:03.920 --> 0:20:07.719 And even with the latest parking technology, the latest parking 0:20:07.720 --> 0:20:09.959 town red light, green light. If you think about what 0:20:10.119 --> 0:20:13.080 consumers today get frustrated about going to a shopping center 0:20:13.280 --> 0:20:16.960 finding a parking spot. For sure, they've made it easy 0:20:16.960 --> 0:20:19.640 with implementation of red light green light. If you see 0:20:19.680 --> 0:20:24.159 red spots occupied, if you see green spots available, really 0:20:24.240 --> 0:20:26.840 and that's making a difference with return business and people. 0:20:26.920 --> 0:20:29.440 Of course makes the ability and when you think about 0:20:29.440 --> 0:20:32.600 what retails are doing buy online, pickup and store, it's 0:20:32.600 --> 0:20:34.680 one of the reasons it makes buy online, pickup and 0:20:34.720 --> 0:20:37.600 store easy. Along with the fact that those consumers who 0:20:37.640 --> 0:20:40.280 do buy online, pickup and store, they typically have an 0:20:40.280 --> 0:20:43.600 attachment rate of coming in and buying nearly thirty more 0:20:43.800 --> 0:20:46.000 because they're picking up the pants, but then maybe they're 0:20:46.040 --> 0:20:50.400 getting socks or shirt or jacket other items. So Professor 0:20:50.440 --> 0:20:53.240 Galloway over at n y U Stern was a previous guest, 0:20:53.320 --> 0:20:58.520 and he talks about physical stores as distributed warehouse chains 0:20:58.600 --> 0:21:02.240 that will have been in a huge advantage that chains 0:21:02.320 --> 0:21:07.480 like Macy's and even Marcus have over Amazon in their 0:21:08.000 --> 0:21:11.920 category groups. They seem to have come to that realization 0:21:12.080 --> 0:21:15.560 somewhat late. Are they making up for that that being 0:21:15.600 --> 0:21:18.520 a little behind the April? What what's the future for there? 0:21:18.600 --> 0:21:21.040 Look like, I think basically we're not going to see 0:21:21.040 --> 0:21:24.520 a country that's overrun by warehouses. And I think companies 0:21:24.520 --> 0:21:27.560 and retailers are using part of their stores as they 0:21:27.600 --> 0:21:31.480 begin to encompass more digital and omni channel initiatives as 0:21:31.680 --> 0:21:34.480 supplying goods, and it could be buy online, pickup and 0:21:34.600 --> 0:21:38.680 store by ship shipped to home from store, either one. 0:21:39.119 --> 0:21:43.359 And frankly, the cost of doing this fulfillment is not cheap. 0:21:43.600 --> 0:21:47.440 So figuring out ways to economize and maybe making retail 0:21:47.520 --> 0:21:51.159 space more productive using some of the space that maybe 0:21:51.160 --> 0:21:54.800 back room space for distribution purposes. Yes, we're seeing that. 0:21:54.880 --> 0:21:56.840 So you just said something that surprised me. You said 0:21:56.840 --> 0:22:00.639 it's not cheap. I ordered a Monster O blower that 0:22:00.680 --> 0:22:04.040 I got with m X points um from Lows and 0:22:04.080 --> 0:22:05.880 it was by online pick up in store. I got 0:22:05.880 --> 0:22:09.200 one bigger than they actually had in the stores. And 0:22:09.240 --> 0:22:12.600 I just assumed, oh, that's a free marginal sale for them. 0:22:12.640 --> 0:22:15.399 But you're implying that there's a cost to them for this. 0:22:15.560 --> 0:22:17.560 You bet, the cost to be able to ship that 0:22:17.680 --> 0:22:20.720 item if you're not fully on stocking, need to ship 0:22:20.760 --> 0:22:23.320