Speaker 1: This is Masters in Business with Barry Ridholts on Boomberg Radio.
Speaker 1: This week. On the podcast, I have Dana Telsey, and
Speaker 1: if you follow retail stocks at all for any period
Speaker 1: of time, you should probably know the name Telsey. She's
Speaker 1: been an analyst UH and a fixture on financial media
Speaker 1: for a long time. She is just full of energy,
Speaker 1: covers a ton of stuff. You may have to slow
Speaker 1: this podcast down because between the two of us, we
Speaker 1: were both speaking so quickly. By coincidence, we both used
Speaker 1: to have our offices in the same building, and I
Speaker 1: was always bumping into her, usually when she was running
Speaker 1: out of the building to catch a plane or or
Speaker 1: something like that. She's pretty much always in motion. I
Speaker 1: find her really fascinating. She covers a lot of retail
Speaker 1: and does it in a way that I don't know
Speaker 1: if other retail analysts spend nearly as much time as
Speaker 1: she and her colleagues do in stores with management, kicking tires,
Speaker 1: looking at looking at malls, looking at at various shopping experiences,
Speaker 1: looking at all these different channels that consumers could go
Speaker 1: out and consume goods. Um She's She's one of the
Speaker 1: most intriguing and highly ranked retail analysts on the street.
Speaker 1: If you are all interested in any of the consumer
Speaker 1: and retailing stocks, and that's everything from Apple and Amazon
Speaker 1: to Lord and Taylor's, Nordstrom, Macy's two things like Starbucks
Speaker 1: or or shake Shack. Her firm is called the Telsey
Speaker 1: Advisory Group or tag get it retail tag Um. They
Speaker 1: really cover everything. They do a pretty substantial job. They're
Speaker 1: highly highly regarded, and I find talking to her about
Speaker 1: retail to be a whirlwinds. She she may be the
Speaker 1: single most knowledgeable part US and I've ever encountered when
Speaker 1: it comes to the world of retail, consumer spending, retail shopping,
Speaker 1: retail sales, and all the companies that exist within it.
Speaker 1: So if you are all interested in that space, I
Speaker 1: think you're gonna find this to be a fascinating conversation. So,
Speaker 1: with no further ado, here is my conversation with Dana Telsey.
Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
Speaker 1: This week. My special guest is Dana Telsey of the
Speaker 1: Telsey Advisory Group. She is a retail analyst extraordinaire. I've
Speaker 1: been following Dana for forever. She was an analyst, institutional
Speaker 1: investor top rated for thirteen years. You were at bear
Speaker 1: Stearns for a good couple of years right now, it's
Speaker 1: there for twelve years, twelve years, and and we'll talk
Speaker 1: about her timing in her exit was perfect. Dana Telsey,
Speaker 1: Welcome to Bloomberg. Thank you so much, very great to
Speaker 1: be here. Thank you for having me. My pleasure. So
Speaker 1: began with Ron Barron, which was a seventeen billion dollar firm,
Speaker 1: and you really started at the bottom, right You began
Speaker 1: as a secretary. I was Ron's assistant. I was so fortunate.
Speaker 1: I grew up in the city. You lived in the
Speaker 1: same building as my family, and I knew him from
Speaker 1: when he first started the company. So I learned from
Speaker 1: best in class of pro and he taught me how
Speaker 1: to understand stocks, how to understand companies, and also how
Speaker 1: to read management teams. He believes in long term investing,
Speaker 1: he believes in guard value at a reasonable price, and
Speaker 1: he basically believes in the brand of a business kennot grow.
Speaker 1: And that's what I learned from Ron. I was so fortunate.
Speaker 1: So so you start working really at a very junior
Speaker 1: position and eventually you get you go through the c
Speaker 1: f A processes that right NBA process, NBA process. Okay,
Speaker 1: I want at night to business school, so you get
Speaker 1: your m b A. And then how do you then
Speaker 1: morph into a full time analysts? Went to the South
Speaker 1: Side on the brokerage side, and frankly before that, I
Speaker 1: was fortunate to be in a Bye Side investor group
Speaker 1: of some of the best names in the business, like
Speaker 1: Steve Mandel of Lone Pine, where we got to exchange
Speaker 1: ideas on a monthly basis. And then I went to
Speaker 1: the South Side and basically went to C J. Lawrence,
Speaker 1: which was a terrific platform, fantastic people, and I got
Speaker 1: to learn how analysts sell their product and basically that's
Speaker 1: why it's called sell side to the buy side. I
Speaker 1: was there for three years before they got acquired by
Speaker 1: Deutsche Bank, and then was at bear Sterns for twelve years.
Speaker 1: You're a bear Sterns for a long time. How do
Speaker 1: you morph into a retail analyst from really? Did you
Speaker 1: start as a generalist or were you always attracted to retail.
Speaker 1: I've tried everything. When I was at Ron's for a minute,
Speaker 1: he gave me the latitude. I tried being a traitor,
Speaker 1: I tried being a salesperson and what I liked about
Speaker 1: it is I liked being being an expert. I really
Speaker 1: liked the idea of not doing research, talking with companies,
Speaker 1: talking with experts, and understanding and pulling apart the ten
Speaker 1: k's and the ten queues because it all tells a story.
Speaker 1: So I'm about storytelling. So so what makes following retail
Speaker 1: different than other types of UM analysts. There there's a
Speaker 1: very different energy and a very different focus for for
Speaker 1: the people who follow the retailers than the people who
Speaker 1: follow tech refinance or what have you. So keep in mind, yes,
Speaker 1: I worked for Ron Barren, but since I grew up
Speaker 1: in the city, my family had a bookstore on Madison Avenue.
Speaker 1: My grandfather was cash register number one, my mother was
Speaker 1: cash register number two, when I was cash registered number three.
Speaker 1: So being able to understand that retail is detail and
Speaker 1: understand the complexity of the story, that's what makes retail fun.
Speaker 1: You could feel it. You can go in a store,
Speaker 1: you can talk to customers. But today the world's changed
Speaker 1: because online and the Internet has really made things different
Speaker 1: than what it was. But you need physical and digital
Speaker 1: in order to really capture the consumer. We're gonna spend
Speaker 1: some more time talking about online in a little bit.
Speaker 1: But I recall back when you were at bear Stearns,
Speaker 1: you were notorious for doing a lot of of what
Speaker 1: what you call resa, what I would call shopping. But
Speaker 1: you literally, my wife calls it retail therapy. You literally
Speaker 1: during the holidays and during major seasons, you're checking off boxes,
Speaker 1: You're going to thousands and thousands of stores, stores and locations.
Speaker 1: How aggressive are you aggressively? Are you out in the
Speaker 1: actual retail environed constantly? I mean, I believe that you
Speaker 1: can't sit at your desk and know what's happening in
Speaker 1: the field, so essentially everywhere from Chicago and Boston last week,
Speaker 1: the West Coast. I was in London Monday and Tuesday
Speaker 1: of this week. I need to be able to feel
Speaker 1: it myself. What's moving, what's checking, what's left on sale,
Speaker 1: what bags are the consumers carrying, and how is the
Speaker 1: sales staff approaching them. If you don't feel it yourself,
Speaker 1: you're not going to know what a brand is. So
Speaker 1: retail is detail and the pulse of it to me
Speaker 1: is being able to see the shoppers. How much do
Speaker 1: you put yourself at risk for foreign prey to anecdotal evidence,
Speaker 1: we all know Manhattan is in America, It's a very
Speaker 1: different place, and I'm constantly checking myself off as we're
Speaker 1: first coming out of the recession. Looks like things are
Speaker 1: doing pretty well now when the rest of the country
Speaker 1: clearly wasn't wasn't where Manhattan was post bailouts. That's why
Speaker 1: I do those shopping tours around the country, and that's
Speaker 1: why my team and I whether they're in Tennessee, whether
Speaker 1: they're in California, whether they're in Chicago, you can't These
Speaker 1: companies have thousands of stores, so at least you're going
Speaker 1: to get a pulse and you're gonna get a read
Speaker 1: what's working. And frankly, having combined that also on the
Speaker 1: international scope, that helps to seeing what a prime mark
Speaker 1: could mean in the US when prime Mark is based
Speaker 1: in the UK and that's where they're real retail presences
Speaker 1: along with the continent of Europe. I want to know
Speaker 1: what the US has now and what's coming and what
Speaker 1: could be impacting it. I look for change. How important
Speaker 1: are the macro environments? Do you look at things like
Speaker 1: interest rates, inflation, the cost of the dollar. What does
Speaker 1: the macro concerns do to for a retail analyst A lot.
Speaker 1: I mean, look at today it's all about tax reform.
Speaker 1: What that gonna mean? What could it mean? What do
Speaker 1: these border adjusted taxes mean? The macro provides the framework
Speaker 1: and companies need to curate the landscape. So I'm constantly
Speaker 1: looking at it because it gives a gauge. Macro provides
Speaker 1: the framework and the companies need to curate for the landscape.
Speaker 1: So what I mean by that is, well, all of
Speaker 1: a sudden, unemployment is getting lower. Well, then what should
Speaker 1: companies be doing, whether in discretionary goods, in price points,
Speaker 1: in articles that they're selling. Should it be different, should
Speaker 1: it be more luxurious goods or what could be a
Speaker 1: little bit more expensive? Is consumers can afford it. Companies
Speaker 1: today have more data and know more about their customer
Speaker 1: than ever, both from online and from physical. Therefore, balancing
Speaker 1: inventory with what consumers really want is something they're able
Speaker 1: to manage better today than they were in the past.
Speaker 1: Macro helps provide that. I'm Barry Hults. You're listening to
Speaker 1: Masters in Business on Bloomberg Radio. My guest today is
Speaker 1: Dana Telsey. She is best known as a retail analysts.
Speaker 1: You can run is the tels the advisory group and
Speaker 1: spent a dozen years or so at bear Stearns. Let's
Speaker 1: talk a little bit about online retail. Uh this holiday season,
Speaker 1: it seems like like every other year it's Amazon and
Speaker 1: everybody else? Is that still the case? That is still
Speaker 1: the case. It is Amazon and than everyone else. Whether
Speaker 1: you're a physical retailer, people are talking about do you
Speaker 1: sell on Amazon? Where they're a digital retailer, do you
Speaker 1: want to sell on Amazon? And essentially it's new categories
Speaker 1: and new brands that are emerging all of a sudden.
Speaker 1: Businesses like consignment, the real real or threat up or
Speaker 1: trades A. That's what we're hearing emerge. But Amazon has
Speaker 1: not been that strong in apparel. They've been strong in
Speaker 1: other categories because Amazon is more of an item business.
Speaker 1: But you know they'll learn that too. And we think
Speaker 1: Amazon is going to continue to be someone and continue
Speaker 1: to be a business model that needs to be studied carefully. Well.
Speaker 1: They did the Zappos acquisition, which was for shoes and sneakers.
Speaker 1: I think they did that as much to learned that
Speaker 1: business as anything else. But are are apparel different than Look,
Speaker 1: we all buy books and and those of us who
Speaker 1: still buy CDs and DVDs, as well as electronics and
Speaker 1: gadgets on on Amazon. Can you translate the fit and
Speaker 1: feel of a garment from a real store to online
Speaker 1: or is that always going to be a big advantage
Speaker 1: to physical brick and motory. The word always is a
Speaker 1: dangerous word because some always always changes. And what we've
Speaker 1: been seeing is that on Amazon it feels to us
Speaker 1: like the best selling items or some of the replenishment
Speaker 1: items in apparel underwear, for example, seems very strong. Yet
Speaker 1: in other words, you know what you're gonna get, and
Speaker 1: now you're just price shopping to replace the repeatable, replenishable purchase.
Speaker 1: But collection items and designer where that doesn't do as well.
Speaker 1: We're not seeing brands look to adopt Amazon yet because
Speaker 1: they're not putting them in an environment that's unique and
Speaker 1: differentiated for them. That's today. We'll see what happens over
Speaker 1: the next few years if as they scale the business.
Speaker 1: I'm holiday shopping, I'm looking for something fun and funky.
Speaker 1: Bloomberg actually had a best Pajamas to Buy and they
Speaker 1: ranged from fifty bucks to nine hundred dollars, and somewhere
Speaker 1: in the middle of that, a hundred and fifty dollars.
Speaker 1: I found this great set of pajamas. I couldn't find
Speaker 1: it on Amazon. I ordered it from the manufacturer and
Speaker 1: then I went back and I did tweak the search
Speaker 1: a little bit and lo and behold, the right size,
Speaker 1: the right color comes up in that manufacturer, and um,
Speaker 1: and it was fired. I was cheaper on Amazon then
Speaker 1: from the retailer direct. It's it's amazing. And isn't everyone
Speaker 1: an Amazon Prime member? It certainly seems what they've done
Speaker 1: with Prime the synonym for Amazon is the word scale,
Speaker 1: and is they put more categories to basically make you
Speaker 1: want to continue renewing that Prime membership, Like what they're
Speaker 1: doing with media, it's all encompassing. Yes, So Amazon Music,
Speaker 1: Amazon Video. It's amazing and the latest thing I discovered
Speaker 1: on Amazon, And I don't want to just talk about
Speaker 1: Amazon on Over the summer, we bought a TV. It's
Speaker 1: for the basement by the treadmill. And months go by
Speaker 1: and I don't hang it, and finally it's like, all right,
Speaker 1: I gotta get this thing up and I go back
Speaker 1: to the store. I got it, and they want four
Speaker 1: dollars to install it, and I'm like, that's what the
Speaker 1: TV cost? Thanks? I go back to a Google search,
Speaker 1: thinking Angie's List or something, they'll come up. Amazon comes up.
Speaker 1: It's to have a television hung on the wall. It's amazing.
Speaker 1: And then you realize, oh, wait a second. They're just
Speaker 1: a matchmaker between the consumer and the service provider and
Speaker 1: they take their pound of flesh. It cost them nothing
Speaker 1: to do this. It's pretty amazing. I mean, and now
Speaker 1: they're focused on that last mile. They want to be
Speaker 1: able to make sure that you're getting what you need
Speaker 1: when you want it, because they want you to renew
Speaker 1: that prime membership. So so you could do plumbing, you
Speaker 1: could do yard work, you could do contracting, you could
Speaker 1: do there's a whole run of Amazon services that I
Speaker 1: had no idea that they actually provided it. It's quite astonished.
Speaker 1: So so outside of Amazon and Amazon Home Services and
Speaker 1: and all that stuff, who else is doing online? Right?
Speaker 1: I think you're seeing things from the real real I
Speaker 1: think Wayfair is doing interesting things online. I think what
Speaker 1: you've seen from Binobo's, what you've seen from Dollar Shave Club.
Speaker 1: I think there's Revolve Clothing is pretty interesting in terms
Speaker 1: of what they're doing. What are they doing that's kind
Speaker 1: of unique. We've all seen the Dollar Shave Club videos.
Speaker 1: They were great, the company was what wasn't it for
Speaker 1: not in substantial amount of There's a terrific conference called
Speaker 1: shop Talk. It began last year and they basically brought
Speaker 1: physical and digital together, and it's being gonna be held
Speaker 1: this year also on March nineteen, and that's where you
Speaker 1: see some of the newest online retailers and how they're
Speaker 1: growing and how they're becoming physical too, because physical retailers
Speaker 1: need to better embrace digital also. That's that's fascinating amongst
Speaker 1: um outside of Amazon, who else from pure digital not
Speaker 1: having a physical shop? Who else is is catching your eye?
Speaker 1: I think just not having a pure physical shop, but
Speaker 1: just on the on the digital side, I think there's
Speaker 1: a lot of interest in social media things. What Snapchat
Speaker 1: is doing, what pinterest is doing. That's really interesting to me.
Speaker 1: Are they converting their user activity to actual retail sales
Speaker 1: or at least two retail prospects driving traffics seems like it.
Speaker 1: I mean, look at the line that's hell that the
Speaker 1: at the Snapchat pop up shop shop here on sixty
Speaker 1: between Fifth and Madison. Everyone wants those virtual reality glasses.
Speaker 1: Look at Instagram. I've an office filled with people who
Speaker 1: are consumers, people who like to consume, and frankly, they're
Speaker 1: learning about new trends, new retailers, new online sites, all
Speaker 1: through Instagram. A picture is worth more than a thousand words.
Speaker 1: That's interesting. What about the brick and mortar retailers, which
Speaker 1: of the physical stores are actually have a good digital
Speaker 1: um positioning. You've got to give the department stores credit.
Speaker 1: Macy's Nordstrom have done a very good job at integrating
Speaker 1: physical and digital and it's growing fast for them, and
Speaker 1: I think you're seeing other players. Look at Walmart. Walmart
Speaker 1: basically now believes online is central to their strategy. I
Speaker 1: know that if I go to a Lord and Tailor
Speaker 1: or a Macy's and I want something and they either
Speaker 1: don't have the right color, don't have the right size,
Speaker 1: every salesperson will say, oh, we can have that ship
Speaker 1: to you for free. If you want this one in
Speaker 1: this color, we can run it it'll you'll have it
Speaker 1: in a week. No one wants to lose a sale.
Speaker 1: Everyone wants you, the shopper, to think of them as
Speaker 1: in stock all the time and be retail loyal. And
Speaker 1: how do you get loyalty? You get loyalty by service.
Speaker 1: You get loyalty by price and convenience, and that's what
Speaker 1: they're offering. So you mentioned price, what does online due
Speaker 1: to price competition? Are we still seeing the same sort
Speaker 1: of showrooming that was an issue a couple of years ago?
Speaker 1: You are. Price transparency is one of the biggest competitors
Speaker 1: for all of retailers and etailers, and so how do
Speaker 1: you how do you break price transparency exclusive items, more innovation?
Speaker 1: Basically being able to communicate with your customer services the
Speaker 1: killer app these days, and being able to be communicative
Speaker 1: even in store and out of store, I think makes
Speaker 1: you feel part of the club. Service is the killer
Speaker 1: app feels like it? I mean, when you can have
Speaker 1: sales associates, people who chat online with you, if you're
Speaker 1: customized to them. Why do you think you're seeing The
Speaker 1: mobile phone right now is becoming so important to consumers
Speaker 1: because they're using it for everything. It's not only their
Speaker 1: work lives, but it's their personal lives too that helped
Speaker 1: create transactions and complete transactions. I'm barry, what helps You're
Speaker 1: listening to Masters in Business on Bloomberg Radio. My special
Speaker 1: guest today is Dana Telsey of the Telsea Advisory Group.
Speaker 1: She is a top rated institutional investor analyst for thirteen years.
Speaker 1: Spent a lot of time at bear Stern before launching
Speaker 1: her own firm. Let's talk a little bit about the
Speaker 1: retail footprints and whether or not we've we've overbuilt it. It
Speaker 1: It seems that every major town has two malls and
Speaker 1: the old mall is kind of struggling and the new
Speaker 1: mall is all bright and shiny, and you wonder, have
Speaker 1: we built too much retail physical space in America. We've
Speaker 1: had a lot of physical space in America, and yes,
Speaker 1: you have space that isn't as productive as others. And
Speaker 1: that's why you see the differentiation between the A malls
Speaker 1: and the Bees and the C malls. It really is
Speaker 1: about the right malls, and they're all changing right now.
Speaker 1: The occupancy, the the occupancy levels and also the rents.
Speaker 1: And those A malls that's where everyone wants to be
Speaker 1: because you're creating a community of best in class tenants
Speaker 1: that also retailers and restaurants invest in to continue to
Speaker 1: make it better. So I am not a big mall shopper.
Speaker 1: If I could stay out of the malls, I'm I'm
Speaker 1: very happy Camper. But where I live, there's certain specific
Speaker 1: stores you want to go to, like let's go say
Speaker 1: the Bloomingdale Furniture store or um by me. If I
Speaker 1: want to go to the one of the big sporting
Speaker 1: goods stores, they're attached to them all. And not too
Speaker 1: long ago, before the holiday season, I walked through part
Speaker 1: of Roosevelt Field and I didn't recognize it. It's totally
Speaker 1: different than what it used to be. What Simon has
Speaker 1: done in Roosevelt Field, it looks terrific. Look at that
Speaker 1: name and Marcus there. Look at the center court area
Speaker 1: of the of the court is really nice. I was
Speaker 1: shocked it used to be you know, junk this and
Speaker 1: garbage that. It's really good. High end food malls today
Speaker 1: need to be experiential, not just a place for buying things.
Speaker 1: They're offering restaurants. You know what. The new name for
Speaker 1: movie theaters are wine Dyne and Recline because there's a
Speaker 1: new way to go to movie theaters these days. And
Speaker 1: I think that's what you're gonna see. These shopping centers
Speaker 1: or retail real estate become places where consumers spend time
Speaker 1: not only to meet people, not only to buy things,
Speaker 1: but more physical time by offering more services within the center.
Speaker 1: So what does that mean in terms of the cost
Speaker 1: structure of rentals for for retailers? This this looks like
Speaker 1: when Roosevelt is a perfect example. This doesn't look like
Speaker 1: a down and dirty, fast and cheap renovation. It looks
Speaker 1: like they really put some time and effort and money
Speaker 1: into it. What are rents are going to be? What
Speaker 1: our rents gonna be like for retailers? For these A malls,
Speaker 1: rents are going to be high. And the reason retailers
Speaker 1: will pay those types of rents those centers drive the
Speaker 1: most traffic, have the most complementary mix of tenants, and
Speaker 1: are always fully occupied. So we continue to see demand
Speaker 1: for those centers being tremendous. So who is who else
Speaker 1: you mentioned Simon's group? Who else is doing the sort
Speaker 1: of large scale retail Well, look at general growth properties.
Speaker 1: They happen to be doing a very good job. Also,
Speaker 1: what's happening in the Natick mall is very exciting. They've
Speaker 1: had amendous changes in an uplift in their centers too.
Speaker 1: And even with the latest parking technology, the latest parking
Speaker 1: town red light, green light. If you think about what
Speaker 1: consumers today get frustrated about going to a shopping center
Speaker 1: finding a parking spot. For sure, they've made it easy
Speaker 1: with implementation of red light green light. If you see
Speaker 1: red spots occupied, if you see green spots available, really
Speaker 1: and that's making a difference with return business and people.
Speaker 1: Of course makes the ability and when you think about
Speaker 1: what retails are doing buy online, pickup and store, it's
Speaker 1: one of the reasons it makes buy online, pickup and
Speaker 1: store easy. Along with the fact that those consumers who
Speaker 1: do buy online, pickup and store, they typically have an
Speaker 1: attachment rate of coming in and buying nearly thirty more
Speaker 1: because they're picking up the pants, but then maybe they're
Speaker 1: getting socks or shirt or jacket other items. So Professor
Speaker 1: Galloway over at n y U Stern was a previous guest,
Speaker 1: and he talks about physical stores as distributed warehouse chains
Speaker 1: that will have been in a huge advantage that chains
Speaker 1: like Macy's and even Marcus have over Amazon in their
Speaker 1: category groups. They seem to have come to that realization
Speaker 1: somewhat late. Are they making up for that that being
Speaker 1: a little behind the April? What what's the future for there?
Speaker 1: Look like, I think basically we're not going to see
Speaker 1: a country that's overrun by warehouses. And I think companies
Speaker 1: and retailers are using part of their stores as they
Speaker 1: begin to encompass more digital and omni channel initiatives as
Speaker 1: supplying goods, and it could be buy online, pickup and
Speaker 1: store by ship shipped to home from store, either one.
Speaker 1: And frankly, the cost of doing this fulfillment is not cheap.
Speaker 1: So figuring out ways to economize and maybe making retail
Speaker 1: space more productive using some of the space that maybe
Speaker 1: back room space for distribution purposes. Yes, we're seeing that.
Speaker 1: So you just said something that surprised me. You said
Speaker 1: it's not cheap. I ordered a Monster O blower that
Speaker 1: I got with m X points um from Lows and
Speaker 1: it was by online pick up in store. I got
Speaker 1: one bigger than they actually had in the stores. And
Speaker 1: I just assumed, oh, that's a free marginal sale for them.
Speaker 1: But you're implying that there's a cost to them for this.
Speaker 1: You bet, the cost to be able to ship that
Speaker 1: item if you're not fully on stocking, need to ship
Speaker 1: two boxes or three boxes in order to have the
Speaker 1: order fully intact. That doesn't come cheap. And that's why
Speaker 1: what you see is physical stores overall typically are profitable.
Speaker 1: E commerce helps drive sales. The combination of the two,
Speaker 1: that multi channel shopper is your most productive shopper. Quite interesting.
Speaker 1: I'm very results you're listening to Masters in Business on
Speaker 1: Bloomberg Radio. My special guest today is retailing expert Dana Telsey.
Speaker 1: She runs her own shop called Telsey Advisory Group, or
Speaker 1: TAG as it's better known. You may know her from
Speaker 1: her days at bear Stearns. Let's let's talk about both
Speaker 1: physical stores and some specific companies. I have to bring
Speaker 1: up Nike because I had reference to you. I wanted
Speaker 1: to talk about Nike, and that was before we knew
Speaker 1: the earnings were going to be so spectacular. Not too
Speaker 1: long ago, I was in the Beaverton, Oregon employee store
Speaker 1: and I love their campus insane, It makes you want
Speaker 1: to be a runner. And immediately and I picked up
Speaker 1: a whole bunch of dry fit tennis garb, sort of reluctant, like, wow,
Speaker 1: this stuff is really even at employee prices. This is
Speaker 1: really expensive, And now I am a total convert. You
Speaker 1: could play two hours of tennis, sweat till the old
Speaker 1: and you're perfectly comfortable. And I bet you're winning more too.
Speaker 1: I wouldn't go that far. I still stink but that
Speaker 1: it's not apparel, it's technology. That's really a whole new
Speaker 1: material science, isn't it. It's a new material science. You
Speaker 1: gotta check out their new store that opened in Soho.
Speaker 1: It's absolutely awesome. You should speak to Tahiti. She basically
Speaker 1: works in their customization area. And you know what, Nike
Speaker 1: isn't just active anymore. It's urban culture, really, yes, because
Speaker 1: people are wearing activewear not just to play sports on
Speaker 1: the field. They're wearing it out to dinner, They're wearing it,
Speaker 1: shopping on the weekends, you name it. It's really integrated
Speaker 1: with work weekend. And Jim, consumers are mixing and matching
Speaker 1: work weekend and Jim that that's really quite fascinating. So
Speaker 1: let's talk about a couple of other stores. Walmart, Target,
Speaker 1: best Buy, Macy's. All these stores. Not too long ago
Speaker 1: people were questioning whether they would ever make the leap
Speaker 1: to digital, to leap to online, and do it. Well,
Speaker 1: all four of these are greatly improved. Who who really
Speaker 1: seems to understand online? Of that group, Well, it's very
Speaker 1: interesting because look what Walmart did where their quie Jet
Speaker 1: dot com and Doug McMillan, the CEO Walmart now says
Speaker 1: we're any commerce company, so they're looking to move to
Speaker 1: that next. When you think about Macy's, look what they're
Speaker 1: doing with reevaluating the real estate, taking a look at
Speaker 1: categories and really making enhancements. They're they're looking to next.
Speaker 1: Look what best Buy is doing branded shop and shops,
Speaker 1: and you can't forget Nordstrom and all of this, who
Speaker 1: basically have acquired companies in order to better integrate digital
Speaker 1: with online. So I think the department stores have been
Speaker 1: a bit ahead of the game, and now you're seeing
Speaker 1: Walmart really involved and get integrated with online. Let's let's
Speaker 1: talk about a category that I think is just perplexing,
Speaker 1: the teen retailers. You look at Abercrombie and Fish. This
Speaker 1: was what were the eight billion dollars seven billion dollars
Speaker 1: and now barely a billion dollars. How can anybody adequately
Speaker 1: evaluate these companies? When you think about American Eagle, go
Speaker 1: go through the whole list of of teen retailers. There,
Speaker 1: they're impossible to keep up with, and they all seem
Speaker 1: to be on fire one quarter and then that's it.
Speaker 1: It's like the fed is over. How do you stay
Speaker 1: on top of that? Got to be in the stores.
Speaker 1: You gotta be in the stores, but you also have
Speaker 1: to check online. I put out this new product, the
Speaker 1: Weekly Trend Report, that basically looks at online sites last
Speaker 1: week and this week and what's changed and a lot changes.
Speaker 1: It keeps you in the know because it shows you
Speaker 1: the prices, and it shows you what's trending and not trending.
Speaker 1: So how do I stay on top of it? You
Speaker 1: have to watch what Forever twenty one and H and
Speaker 1: M and Azara is doing, and watch what the a's
Speaker 1: are doing. Logo is that's what they are. Logos are
Speaker 1: no longer the comfort factor that they used to be
Speaker 1: because the teens of ten years ago they were into logo.
Speaker 1: The teens of today not into logo. The teens of
Speaker 1: today are into more fashion, more, what patterns are more,
Speaker 1: what is trending and that's active where. So take a
Speaker 1: look at American Eagle lately they put a whole new
Speaker 1: sport window in their store windows and also on online.
Speaker 1: They're going to capture a new trend. And take a
Speaker 1: look what Limited Brands L Brands is doing with Victoria's
Speaker 1: Secret Pink is hot and it drives the most traffic.
Speaker 1: So the teen retailers have gotten more competition incoming from
Speaker 1: the fast fashion read tailors, more competition fast fashion that's
Speaker 1: fashion like Zara, like h and M, like Forever twenty one,
Speaker 1: speed to market in terms of goods and what's trending,
Speaker 1: and then if you don't buy it, then it may
Speaker 1: not be in stock. Really, it's that it's that quick.
Speaker 1: What about some of the luxury retailers out there, I
Speaker 1: don't recall if you still cover Coach and Tiffany, So
Speaker 1: so they had a huge run and the past couple
Speaker 1: of years not so great. What's going on there? And
Speaker 1: I think one of the things that's changed their same thing.
Speaker 1: You need product innovation and product innovation. Take a look
Speaker 1: at what Coach has done. They brought in Stewart Fever's.
Speaker 1: They now have new models and new camp, new marketing
Speaker 1: campaigns that are attracting the millennial consumer. And so they've
Speaker 1: become a reinvigorated brand. And so the handbag space alone
Speaker 1: now smaller bags. So you're not getting the same high
Speaker 1: same a you are, but what are you doing for newness?
Speaker 1: Check out the new Coach flagship store on fifty three
Speaker 1: fifty fourth Street and Fifth Avenue. It's quite the experience,
Speaker 1: so luxury goods. Overall, we had weak tourism in two
Speaker 1: thousand and sixteen in the United States. The strong dollar
Speaker 1: impacted you don't know. With some of these new lower
Speaker 1: tax laws that could be in coming, could help the
Speaker 1: local consumer. And what you're seeing is the Chinese is
Speaker 1: starting to travel again. LVMH's latest results talked about it.
Speaker 1: Tiffany saw some improvement in tourism. You saw Coach talk
Speaker 1: about some improvement in tourism, and even Macy's saw the
Speaker 1: tourism drops less worse than they had been. So fingers
Speaker 1: crossed for a better two thousand and seventeen. So what
Speaker 1: about some of the other you mean, we talked about Nike,
Speaker 1: some of the other athletic brands, Athleta, Athleta, I don't
Speaker 1: know I'm pronouncing that. Yep, that's Party Gap and they
Speaker 1: basically have very good success online. Take a look at
Speaker 1: Audit Das. I mean they just opened a new flagship
Speaker 1: to take a look at that gym stadium. What it
Speaker 1: looks like they got. They have the trend right product
Speaker 1: now and that makes it exciting. And don't leave out
Speaker 1: Kevin Plank from under Armour because under Armour has big
Speaker 1: aspirations and what they did, whether it's buying different apps,
Speaker 1: they're creating an under Armor community. Huh, that's quite fascinating.
Speaker 1: Earlier you mentioned best Buy here. That's another example. In
Speaker 1: OH six it was a sixty stock it plummeted to
Speaker 1: eleven dollars. That's a twenty seven billion to four billion
Speaker 1: dollar drop. And now it's not too far from its
Speaker 1: old time eyes, it's back to dollars. What do you
Speaker 1: make of best Buy and what's driving that recovery? They
Speaker 1: fought back up against Amazon, and they fought back against showrooming.
Speaker 1: Prices are now the same where they match. Customers can
Speaker 1: have the item same day of Best Buys. Online orders
Speaker 1: are picked up at the store. Wait, wait to say
Speaker 1: that again. Online people bypass the whole salesman, retail exit
Speaker 1: order online, show up with a receipt and they bring
Speaker 1: it out to your car, bring it and also maybe
Speaker 1: you want to buy some extra things while you're there.
Speaker 1: That's been very effective for them, along with the fact
Speaker 1: vendors need and want Best Buy to thrive, They need
Speaker 1: that physical presence and location. How important is it for
Speaker 1: vendors that there's a legitimate competitor to Amazon very important.
Speaker 1: You want to be able to have diversification among your
Speaker 1: customer base. It makes pricing rational. So um, what about
Speaker 1: some of the other specialty shoes. Warby Parker seems to
Speaker 1: have come out of out of nowhere, very exciting, and
Speaker 1: then jet dot Com that was pretty quick from startup
Speaker 1: to to total sale. Who else is out there? Who
Speaker 1: else is interesting we might not have heard about. Well,
Speaker 1: that's that real real. On the consignment store, threat up
Speaker 1: trades a all very interesting in terms thread up. What
Speaker 1: is threat up consignment? Something you don't wear, then you
Speaker 1: may want to sell it and be able to buy
Speaker 1: something else. So you're gonna sell it on some of
Speaker 1: these apparel consignment sites. That makes it, That makes it interesting.
Speaker 1: Carbon thirty eight in the act of where that's been
Speaker 1: super interesting also in terms of some of the on
Speaker 1: trend active wear sites that's appealing to. So how many
Speaker 1: of these stores are you going to on a regular basis?
Speaker 1: Are you out of the office every day? I'm in
Speaker 1: stores every weekend. I am out in stores at least
Speaker 1: two to three times a week. Any city I go to,
Speaker 1: I always spend my time going part of the time
Speaker 1: going to malls and going to see a store. So,
Speaker 1: so take me through a day in the life of
Speaker 1: of Dana Telsey. What because I know you're always so
Speaker 1: for people who are listening to Dana and I actually
Speaker 1: used to be in the same building and we were
Speaker 1: constantly bumping into each other, usually as she was running
Speaker 1: out of the building like it was on fire. What's
Speaker 1: a day in the like of Dana Telsea? Like it?
Speaker 1: You know, there is no typical day. And part of
Speaker 1: the reason there's no typical day, it depends who you're
Speaker 1: interacting with and talking with. It starts with what's happening globally,
Speaker 1: what I see macro wise, what's on the news that night,
Speaker 1: going into the office, checking out what the stocks are doing,
Speaker 1: and then whether it's meetings for the day, whether it's
Speaker 1: meeting with companies for the day. I'm learning all day long,
Speaker 1: and I'm a student, and I'm so lucky to be
Speaker 1: able to be a tuned and have the ability to
Speaker 1: speak to some of these business leaders. It's I'm learning
Speaker 1: and knowledge is knowledge is what's great. And then also
Speaker 1: so I have my research hat where basically I'm listening
Speaker 1: to conference calls talking to companies going into stores. We
Speaker 1: have the Telsea Consumer Fund, which is a long short
Speaker 1: consumer hedge fund. It's up around double digits this year
Speaker 1: so far, and so we're in the midst of asset
Speaker 1: raising for that fund, and each day it's something a
Speaker 1: little bit different, but it's always about the people. So
Speaker 1: that's for that's we say, we don't really care about
Speaker 1: predictions and forecast, but tell us about some of the
Speaker 1: trends you see shifting in the coming year. Structural change
Speaker 1: is something that we have in the consumer landscape that
Speaker 1: we've never seen before. Structural change and a man but
Speaker 1: that it's about. That's about online and what's happening with
Speaker 1: companies becoming physical and digital at the same time. That's
Speaker 1: about the mobile phone becoming the new way to communicate.
Speaker 1: That's about data and loyalty pro grams, about how does
Speaker 1: a retailer stay on top. You got to know more
Speaker 1: about your customer and be able to interpret the data
Speaker 1: that you receive. It's about speed and that's a competitive advantage,
Speaker 1: whether it's ordering a product delivered to that customer's home.
Speaker 1: How do you be faster in stock so that customer
Speaker 1: comes to you again and that's what every single brand
Speaker 1: is looking to be. I think brands have value, they
Speaker 1: have meaning because do you want to be part of
Speaker 1: the club. Brands will give you pricing and a pricing umbrella,
Speaker 1: and if you have the innovative product, that's what gives
Speaker 1: you a life cycle. We've been speaking with Dana Telsey.
Speaker 1: She runs the Telsey Advisory Group covering all manners of
Speaker 1: retail stock. If you enjoy this conversation, be sure and
Speaker 1: stick around for the podcast extras. Will we keep the
Speaker 1: tape rolling and continue discussing all things retail. Be sure
Speaker 1: and check out my daily column on Bloomberg View dot com.
Speaker 1: You can follow me on Twitter at Rid Halts. We
Speaker 1: love your comments and feedback. Be sure to write to
Speaker 1: us at m IB podcast at Bloomberg dot net. I'm
Speaker 1: Barry Rehults. You've been listening to Masters in Business on
Speaker 1: Bloomberg Radio. Welcome to the podcast, Dana. Thank you so
Speaker 1: much for doing this. I've been I've been looking forward
Speaker 1: to this UM for a while. There there's so much
Speaker 1: retail stuff I can talk about. UM. We didn't mention
Speaker 1: this in the broadcast portion, but I grew up my
Speaker 1: father owns a chain of of sporting goods stores. They
Speaker 1: had three sneakers and sportswear sweatshirts. I remember when I
Speaker 1: was a kid, the Champion sweatshirts were huge, and he
Speaker 1: used to occasionally bring sneakers home and say, here's a
Speaker 1: new brand, Pony, see how you like. And I was like,
Speaker 1: these are great. If I like them, they would toast.
Speaker 1: He's a fantastic right and right in the tubes. So
Speaker 1: I've been did in the store, which is why I
Speaker 1: went to grad school because I said, I am never
Speaker 1: working retail again. You have to have a certain you
Speaker 1: have to have tolerance and pay and the ability to
Speaker 1: be empathetic with people. I have none of that. So
Speaker 1: are you doing what you're doing? Now? Let me tell
Speaker 1: you it was. It was motivating because people don't realize
Speaker 1: that's a hard job, standing on your feet all day,
Speaker 1: the hours a long folding. I mean, there's a reason
Speaker 1: they like to talk to customers and people are I
Speaker 1: think it's worse today than it was when I was
Speaker 1: a kid, where there was some civil discourse and decor.
Speaker 1: Now I've I've watched people be so rude to sales
Speaker 1: help and so rude to cashiers. I waited tables in
Speaker 1: in college, and so I've always whenever anybody is rude
Speaker 1: to a wait or, it's always, oh, you don't know
Speaker 1: what goes on in the kitchen, do you? You probably
Speaker 1: shouldn't eat what you just ordered because you've been way
Speaker 1: too rude to that guy. But it's a really tough job.
Speaker 1: I think it's tough job, and the good ones hard
Speaker 1: to find. The weight in gold. How do you evaluate
Speaker 1: the retail sales staff of a big you know? Change?
Speaker 1: Can you do that? How much can they control the
Speaker 1: quality of their sales? You can tell if people feel
Speaker 1: they're on a winning team or not or not on
Speaker 1: a winning team, or more hours being allocated to that
Speaker 1: particular store and labor hours in order to make the
Speaker 1: store nicer. Take a look at the way some of
Speaker 1: the stores look in terms of the care that's put
Speaker 1: into them, so you can tell if people care. Just
Speaker 1: like you walk in an office, you can tell what
Speaker 1: the mood is. You can walk into a store and say,
Speaker 1: this is a good staff. Everybody's happy here, you know.
Speaker 1: You can you talk to the sales people, engage them
Speaker 1: in conversation. What what's happening? I need to buy something
Speaker 1: from my mom? What would you suggest what's working having
Speaker 1: fun here? Just talk to people. They're human beings too
Speaker 1: and they want to talk. Also, do you cover any
Speaker 1: of the restaurants or food stores like star does? Yes?
Speaker 1: So Darrington does a great job. So what do you
Speaker 1: think of what's going on um in Starbucks and and
Speaker 1: what else is interesting out there in restaurant world. Restaurant
Speaker 1: world is where you've had the most new concept of crazy,
Speaker 1: said it. And that's because look at all the Instagram
Speaker 1: pictures people take their food? Is that so I do that?
Speaker 1: I don't Instagram. I tweet more than Instagram, but shake
Speaker 1: Shock and Chick fil A and go down the list.
Speaker 1: Is Instagram really driving traffic or Twitter drging traffic I have?
Speaker 1: I just got a Twitter account also, and I'm putting
Speaker 1: pictures up and showing people things, and all of a sudden,
Speaker 1: people listen. They want to see what see what you're showing,
Speaker 1: And yes it does. I think it helps to drive traffic.
Speaker 1: It makes people more brand aware. And I love putting
Speaker 1: putting pictures up on my Twitter account. I mean, all
Speaker 1: of a sudden you have new followers. So, so what
Speaker 1: is going on in food other than the burger wars?
Speaker 1: And what about organic, What about ramen and the whole
Speaker 1: noodle traumas out there? Now, how much of that is
Speaker 1: Manhattan and how much of that is the rest of
Speaker 1: the country. It's going the rest of the country to
Speaker 1: It's definitely the coast first, but then it's going the
Speaker 1: rest of the country. And what about everything that's happening
Speaker 1: with sweet greens and local farm to table is all
Speaker 1: over not Manhattan. I live on the north shore of
Speaker 1: Long Island. Two of our favorite new restaurants are both.
Speaker 1: One is called a Stereo leon as a little place
Speaker 1: in Oyster Bay, and the other place U is called
Speaker 1: I always get this wrong roots Beeds in in Um.
Speaker 1: I want to say, siost to Jericho. The food is delicious.
Speaker 1: It's always crazy fresh. And when you look at the menu,
Speaker 1: you're not just ordering. It's here's this comes from roth
Speaker 1: Camp Farms. This comes from here, this comes from the
Speaker 1: North Fork, all the local one, all the local ales.
Speaker 1: That seems to be a huge, huge tramp and look
Speaker 1: at blue apron and plated. All of a sudden, house
Speaker 1: it's coming to you and you're cooking it. They're giving
Speaker 1: an exact right amount of ingredients and why it's speed.
Speaker 1: It basically makes it faster, and what is it creating
Speaker 1: an experience because all of a sudden you're cooking with
Speaker 1: your friends or whatever it may be. So blue apron
Speaker 1: plated organic ramen. That's the future. Now what does that
Speaker 1: mean to supermarkets? If you don't have to go killing
Speaker 1: out forty five minutes driving to the local supermarket, running
Speaker 1: through the through the various aisles, picking up and then
Speaker 1: first bringing it home to makes it much more competitive.
Speaker 1: But look at the prepared food section of some of
Speaker 1: these supermarkets. Look what Kroger has done with organics. They've
Speaker 1: been able to capture that trend to and make the
Speaker 1: prices competitive for all income level consumers. That that's really interesting. Um,
Speaker 1: do you because still you don't cover whole foods, do you.
Speaker 1: My colleague Joe Feldman, who has worked with me forever,
Speaker 1: he's the superstar of supermarkets and hardlines, discounters and all
Speaker 1: things out of the mall, on all things in the mall.
Speaker 1: He basically he covers the supermarkets and is a huge
Speaker 1: fan of Kroger. Likes Kroger, like likes what they've been doing.
Speaker 1: That that that's really quiet and there's new competition coming
Speaker 1: in All delight Ale from overseas, You've got Walmart obviously
Speaker 1: having a big part of their business being food to
Speaker 1: what what about these new Amazon cashier list supermarkets? What
Speaker 1: is going on with that? That's going to be very interesting.
Speaker 1: That and driverless cars that's like the new world of
Speaker 1: how we're going to consume right now. That's only available
Speaker 1: to employees, but it just goes to show you speed
Speaker 1: technology all wrapped up into one. It's the game changer.
Speaker 1: When can I send my driverless car out to pick
Speaker 1: up my dinner and bring it home and cook it
Speaker 1: for me. Let's wait, let's wait another five years, two
Speaker 1: thousand twenty two, something like that. But but these new supermarkets,
Speaker 1: the cashier list, the driven by not the usual supermarket folks. Um,
Speaker 1: so it's Amazon, You like Kroger, You like what they're doing? Yes,
Speaker 1: we do. Who else is doing interesting things in that space?
Speaker 1: I think some of the privately held supermarkets public is
Speaker 1: doing some interesting things. Wegman's obviously Wegmans is going to
Speaker 1: be opening in the Native Mall in two thousand eighteen.
Speaker 1: So we're seeing some of those private supermarkets also do
Speaker 1: interesting things that that's kind of that's kind of fascinating.
Speaker 1: So we went through a lot of questions. I'm just
Speaker 1: curious if there's anything I missed, What what sectors of
Speaker 1: retail did we not talk at out that you think
Speaker 1: is is kind of interesting. I think the apparel manufacturers
Speaker 1: are interesting. Ralph Lauren, p V H VF Corps. They
Speaker 1: really own their brands who Calvin Klein, Tommy Hill, Fliger
Speaker 1: is what they own. And these companies are global businesses.
Speaker 1: They're now doing more of their own direct to consumer stores,
Speaker 1: and they're looking to enhance their in store shops and
Speaker 1: some of the better department stores. Branded companies that allocators
Speaker 1: of capital and taking brands and making them grow. So
Speaker 1: I think it's something you want to watch. So let's
Speaker 1: go through that list. So at this point, everybody knows
Speaker 1: Ralph Lauren, I would imagine, and there's it's a work
Speaker 1: in progress, the Way Forward plan that the new CEO,
Speaker 1: Stephan Larson put in place. He's executing on the operational enhancements.
Speaker 1: So what what are they doing? Because I think of here,
Speaker 1: this shirt is Ralph Lauren and I don't know who
Speaker 1: the sweater is the guest Lord and Taylor, So I
Speaker 1: think of them as the Polo shirts. I think of
Speaker 1: them as um sweaters and other sort of traditionally preppy things.
Speaker 1: What are they doing to move beyond that? So you're
Speaker 1: going to see in the fall of two thousand seventeen
Speaker 1: some enhancements to their iconic products. So wait, you're you're
Speaker 1: looking at product almost a year in advance. You got
Speaker 1: to you got it's that it takes that'll shift over time.
Speaker 1: I mean, Neil looking to get their lead times down
Speaker 1: from fifteen months to nine months, and that's a work
Speaker 1: in progress right now. And that's why you see some
Speaker 1: of the fast fashion retailers they're super quick. But brands
Speaker 1: like Ralph Lauren who are first now becoming more modernized,
Speaker 1: more up to date. I think you're gonna see the
Speaker 1: product become that way too. So p V eight you
Speaker 1: mentioned was um, Calvin and Tommy not Tommy Bahama. Tommy
Speaker 1: Tommy Bahammas Oxford Industries and who else does Oxford Industries have?
Speaker 1: Lily Pulitzer that's been so popular, that's the pink and greens,
Speaker 1: and the other one that's like that in a privately
Speaker 1: held way, vineyard vines. Everyone is a fan of vineyard
Speaker 1: vines these days. So these are all these names we're
Speaker 1: talking about out they've been around a couple of years,
Speaker 1: are all well known. Who how do you identify or what?
Speaker 1: Tell me about your process to look for Hey, this
Speaker 1: is an interesting company, there are some legs here. How
Speaker 1: do you how do you sift through all that options
Speaker 1: to find the diamond in the rough? So a couple
Speaker 1: of different ways. I look at what's trending online. I
Speaker 1: look at Instagram. I look at bloggers. Bloggers are your
Speaker 1: new celebrities in terms of what they're endorsing or what
Speaker 1: their wat Totally, that's how you be able to pick
Speaker 1: up on trends and so yes, able to see what's trending,
Speaker 1: what's working. So I watched the bloggers, I watched who's
Speaker 1: who's watching them and who their followers are, what the
Speaker 1: Instagram leads are that I look in the stores and
Speaker 1: I see what's happening talking to salespeople. You can look
Speaker 1: online all you want and you can see what's trending,
Speaker 1: but really it's not the same. You've got to marry
Speaker 1: that with going into the stores. Also, So this we've
Speaker 1: been reading about this so called old social media influencers
Speaker 1: is that And I've also been reading about how those
Speaker 1: metrics can be gamed is that a real important thing
Speaker 1: to driving a specific product sales house It is, it's
Speaker 1: become part of that. I mean, look at the fashion
Speaker 1: shows now where all of a sudden it's brought, it's
Speaker 1: brought to your living room. And these fashion bloggers if
Speaker 1: they're wearing things, if all of a sudden, the right celebrities.
Speaker 1: Look at Selina Gomez and their Kardashians and Kendall Jenner,
Speaker 1: they make a real difference in being able to attract
Speaker 1: millennials because everyone wants to be part of a club
Speaker 1: that they want to be like them, and that's what
Speaker 1: happens that that's astonishing. So we we've talked about online,
Speaker 1: we've talked about physical stores, we've talked about brands. Um.
Speaker 1: The one company I haven't asked you about is Apple. Um.
Speaker 1: The Apple stores to this day, even though their their
Speaker 1: sales numbers seem to have their growth rate is slowed down.
Speaker 1: Every time I go to an Apple store, they're still
Speaker 1: jam packed. What what's going on with that? Look at
Speaker 1: the ecosystem that they created, Look at all the Apple
Speaker 1: users that they have, so you have either have to
Speaker 1: go to the genius bar, you're upgrading, and people seem
Speaker 1: to be upgrading faster, and yet what you're gonna see
Speaker 1: is the Apple stores themselves. They're reinventing themselves. Take a
Speaker 1: look at the newest store downtown at Westfield's Oculus. Pretty
Speaker 1: cool in terms of what they put together there, and
Speaker 1: it's basically collaborative engagement sales associates and the customers and
Speaker 1: looking to sell them more of the Apple products. Who
Speaker 1: else is competitive in terms of driving their own retail
Speaker 1: sales through their own stores. Apples seem to have created
Speaker 1: a niche that didn't exist previously, at least not for
Speaker 1: technology stores. You know what else? Cosmetic stores? Look at
Speaker 1: Sephora absolutely packed, Look at Alta absolutely packed off price.
Speaker 1: Look at t j X Ross stores and Burlington. People
Speaker 1: like the treasure hunt atmosphere. It's two time consuming, but
Speaker 1: a lot of people they love spending their time that way.
Speaker 1: If you or if you have, if you have the
Speaker 1: time for it in the interest, sure you can certainly
Speaker 1: find great deals. Take a look at their checkoutlines. They've
Speaker 1: got the time. I would I would guess what else
Speaker 1: is is striking you as interesting and different these days?
Speaker 1: What's really capturing your attention? I think the things that
Speaker 1: are capturing my attention is companies overall that are updating
Speaker 1: and enhancing their brands. What are they doing with the
Speaker 1: investment in technology in terms of data, How are they
Speaker 1: enhancing speed? How are you incorporating that's so called experience
Speaker 1: or collaborative engagement. Food matters and being able to create
Speaker 1: an event that marries the whether it's food, whether it's
Speaker 1: an activity, that's what's that's what interesting. It's not just
Speaker 1: about selling an item, it's selling the experience. So let's
Speaker 1: talk about the technology side of this a little bit.
Speaker 1: And I don't mean Apple or Amazon. I mean the
Speaker 1: traditional retailers. What are they doing to take advantage of
Speaker 1: the fact that everyone walks around with the supercomputer in
Speaker 1: their pocket? How are they using that loyalty programs? A
Speaker 1: lot of retailers today are enhancing and updating their loyalty
Speaker 1: programs so that they know the preferences of those consumers.
Speaker 1: That's what technology allows them to do today. It used
Speaker 1: to be just around ten of CAPEX spending was spent
Speaker 1: on technology. Now for some retailers it could be up
Speaker 1: Is there anything competitive with the UH with the Starbucks app?
Speaker 1: I know that when I come into the city as
Speaker 1: soon as I'm above ground. The first thing I do
Speaker 1: is order breakfast and a cup of falls. Pretty easy,
Speaker 1: isn't it. And and by the time there's a Starbucks
Speaker 1: on the ground floor of my building, by the time
Speaker 1: I walk the three blocks to the building that are
Speaker 1: they walk intore like here, they're handing it to you.
Speaker 1: There's no interaction with a cash register. It's the easiest
Speaker 1: thing in the world. And I always look at the
Speaker 1: people online and wonder how come they haven't figured out
Speaker 1: the app is so awesome. I think people need to
Speaker 1: know more about it, And I agree with you, But
Speaker 1: think about the other cultural changes there? What about Uber?
Speaker 1: What about left Those are the other things too, So
Speaker 1: so what does Uber do for retailers because I recall
Speaker 1: hearing at one point in time people wanted to use
Speaker 1: Uber as a delivery service, for physical delivery service or
Speaker 1: take them to the mall or now look at people
Speaker 1: when they're going out at night to have dinner and
Speaker 1: if they're having something to drink, they don't need to
Speaker 1: drive themselves. So there's a service. We were just talking
Speaker 1: about this yesterday over dinner. There there's two interesting services
Speaker 1: that are both local. I don't know if they're national.
Speaker 1: One is called Via, which isn't It's sort of like
Speaker 1: a group uber and it's just going north south on
Speaker 1: the main thoroughfares in Manhattan and East West and you
Speaker 1: get in, it's five bucks and they take you to
Speaker 1: wherever you're going and then you get out, and it's
Speaker 1: basically a group uber. And the other I'm trying to
Speaker 1: remember you used it. I haven't, but people for sure,
Speaker 1: especially if you're coming from Penn Station and you have
Speaker 1: to go go Cross Down or or anything like that.
Speaker 1: The other one I heard about is kind of fascinating.
Speaker 1: You're out on a Friday night and I don't know
Speaker 1: if this is in Manhattan, but I know it's definitely
Speaker 1: on Long Island. You you order a driver, and what
Speaker 1: I mean by that is a car will show up,
Speaker 1: someone will come out. They will get in your car
Speaker 1: and drive you home, followed by the other car who
Speaker 1: then picks them up and takes them wherever they want
Speaker 1: to go. I heard of. That's very smart. No do
Speaker 1: we know worrying about driving under the influence. It's hey,
Speaker 1: we could go out, we don't need to. Very smart.
Speaker 1: And it's that's actual legitimate business. That's amazing, isn't it.
Speaker 1: I think there's all new services and businesses that are
Speaker 1: being created. Look at look at Postmates for example, no Postmates.
Speaker 1: Let's say you want a let's say you want a
Speaker 1: channel lipstick you're going out or whatever it is, which
Speaker 1: whatever cosmetics you want, but you don't have time to
Speaker 1: go to an either st wars. You can basically order
Speaker 1: it and they'll deliver to you physically to you, not
Speaker 1: through the mail. It's messenger to you. And look at
Speaker 1: like netaport Netaporte. They're getting goods to you within an
Speaker 1: hour or two hours. That's that's really high end stuff though,
Speaker 1: isn't it? Is that going to work its way down
Speaker 1: to the to us pleabs. It's working in urban areas
Speaker 1: there's a density, so it's a combination of income density
Speaker 1: and delivery is relatively easy. You're not covering a lot
Speaker 1: of a lot of square footage. So I know I
Speaker 1: only have you for a finite amount of time before
Speaker 1: before you have to go on with your day. Let
Speaker 1: let me go to some of my favorite questions that
Speaker 1: I asked all of my guests. Um, we started talking
Speaker 1: about your background with Ron Barron, So you went from
Speaker 1: Ron Barron to C. J. Lawrence to Bear is that exactly?
Speaker 1: And so you were at was c J. Lawrence where
Speaker 1: they acquired or they were acquired by Deutsche Bank exactly?
Speaker 1: All right? So how long were you therefore? I was
Speaker 1: at Barren Capital for seven years, I was at c J.
Speaker 1: Lawrence for three years, and I was at bear Stearns
Speaker 1: for twelve years. And if memory serves, I don't want
Speaker 1: to embarrass you or anything, but you left Bear pretty
Speaker 1: well timed, if if I got that right, I left
Speaker 1: to know six before it went away in two thousand eight,
Speaker 1: and I hope you managed to liquidate some of your stock.
Speaker 1: I was fortunate to be fortunate enough to be able
Speaker 1: to start TAG. TAG had been in the in the
Speaker 1: planning for a couple of years, and now we're gonna
Speaker 1: be celebrating our eleventh birthday. So we really haven't talked
Speaker 1: at all about you as a woman working on Wall Street.
Speaker 1: Bear Stearns had a reputation as a kind of rough
Speaker 1: and tumbled place, But you don't strike me as a shrinking,
Speaker 1: violent or anything like that. And I've asked this to
Speaker 1: all the women I've interviewed. What's it like being a
Speaker 1: woman in an environment that sometimes is just overwrought with
Speaker 1: with male stupidity. I think, prove your capability and show
Speaker 1: that you're capable, that you're able, that you can drive
Speaker 1: market share, can drive business and it works. The capability
Speaker 1: is what I'm all about. Being able to show that
Speaker 1: you have the ability, that you're recognized by clients, and
Speaker 1: that you do just as good work, if not better
Speaker 1: than others. So I believe in the ability of people.
Speaker 1: So it's a true meritocracy. That's what I believe in.
Speaker 1: Show what you can do that that works. Tell us
Speaker 1: a little bit about some of your early mentors. Obviously
Speaker 1: Ron Barren, John Barron, who taught me about everything that
Speaker 1: I've known. I mean, SIGs A Gallis at Jennison is
Speaker 1: just someone I look up to every day and in
Speaker 1: terms of what he's doing. I mean, I've watched Mario
Speaker 1: Gabelly for years and watched his success in creating value
Speaker 1: and how he thinks about value companies. So it's so
Speaker 1: many of these money managers who have been so influential
Speaker 1: in and what I do. Bill Miller at leg Mason,
Speaker 1: I mean, he was one of the first investors I
Speaker 1: met on the South Side, and his his ability to
Speaker 1: glean insights was trumendous. Both Goobelly and Miller have been
Speaker 1: guests on the show. They're fascinating, fascinating guys. Miller said
Speaker 1: something that I thought was so astute. I mean, Belly
Speaker 1: said a million things that and and he was really fascinating.
Speaker 1: Miller said, you know the problem with active management is
Speaker 1: an active management. It's that most of the active managers
Speaker 1: are closet indexers. And I've never quite heard it put
Speaker 1: the way he did. He said, if you're gonna be
Speaker 1: if you're gonna be a high cost active manager, you
Speaker 1: have to be different from the index. But if you're
Speaker 1: gonna be a closet indexer and be high cost, of course,
Speaker 1: of course investors are gonna leave you. What's what's the point.
Speaker 1: He's really quite a fascinating guy. I didn't realize you, uh,
Speaker 1: you had you had known him? Um who Let's talk
Speaker 1: about other investors. Who else influenced your approach to thinking
Speaker 1: about research, thinking about the product you create for for
Speaker 1: the by side investor. I think in terms of the
Speaker 1: product that we create for the by side investor, you
Speaker 1: have to be able to answer all from types of questions.
Speaker 1: You look at investors who are growth investors, You look
Speaker 1: at GARP investors, you look at deep value investors. So
Speaker 1: you have to be able to answer those questions. And
Speaker 1: basically what I learned about look at Steve Mandel. Steve
Speaker 1: Mandel of Lone Pine. I was in his group years
Speaker 1: ago when I was on the buy side, and he
Speaker 1: taught me how to understand brands, and he taught me
Speaker 1: about the three hundred and sixty degree loop of the
Speaker 1: productivity cycle, something that's pretty creative. Explained that what is
Speaker 1: the three sixty degree loop of the productivity cycle. It's basically,
Speaker 1: how do you manage inventory, the velocity which it sells,
Speaker 1: the margin with a marginal which you earn, and the
Speaker 1: turner of the inventory to help drive earnings growth. And
Speaker 1: so that's consistent and that takes place, so that that
Speaker 1: that makes some sense um any other investors really changed
Speaker 1: the way you think about about retail. I think in
Speaker 1: terms of thinking about retail, I think it's a host
Speaker 1: of investors. There isn't and frankly it's company executives. To
Speaker 1: Less Wexner, for example, of L Brands, I learned something
Speaker 1: new from him every time because to me, he's the
Speaker 1: dean of retail and he sees into the future, and
Speaker 1: he always makes his brand younger and younger. That's how
Speaker 1: he stays relevant. So I think that's something that's to
Speaker 1: be gleaned and watched carefully. Michael Gould, former CEO Bloomingdale's
Speaker 1: Michael glued Gould. Complete engagement with the customer, engagement with
Speaker 1: his staff, that's what makes the experience and what he
Speaker 1: created so special. I did a show, um, I think
Speaker 1: it was Stephanie Rule early one morning and I had
Speaker 1: never met Gould before, and I have no idea who
Speaker 1: this gentleman is sitting next to me. And we started
Speaker 1: this conversation about retail. And during the break, I turned
Speaker 1: to Stephanie, go, this guy's great. Who is he? And
Speaker 1: I believe the comment was idiot, that's the head of Bloomingdale's.
Speaker 1: Although it's Stephanie. So it was a little sold. Michael
Speaker 1: Gould's belief in people, his training and mentorship, best in class.
Speaker 1: He was really really the one time I met him,
Speaker 1: he very much. Uh, he he very much stayed with me.
Speaker 1: Let's talk a little bit about books. It's always a
Speaker 1: favorite subject here. What are some of your favorite books?
Speaker 1: And I don't care if it's fiction, non fiction, investing
Speaker 1: related or not. What do you like to read. I
Speaker 1: love to read all the periodicals. I'm a huge Barons reader,
Speaker 1: Wall Street Journal, Business Week reader. I do Financial Times,
Speaker 1: and then I read what's relevant to my industry, Women's Where, Daily,
Speaker 1: Business of Fashion. I like staying current because I don't
Speaker 1: believe you can look back. I'm all about looking forward.
Speaker 1: So the list you just named, that's forty hours a
Speaker 1: week worth of reading easily. You're you're plowing through all
Speaker 1: those periodicals. That's so I get to the office five
Speaker 1: in the morning. Got to be able to know what's happening.
Speaker 1: Women's Where Delhi is still very relevant. Yes it is.
Speaker 1: It's relevant to the industry. It gives you a pulse.
Speaker 1: Business of Fashion is relevant to w gs N is
Speaker 1: very relevant. What is Business of Fashion? Basically takes key
Speaker 1: topics in the consumer world and talk about how different
Speaker 1: companies are integrated, are being integrated literally business effects. I
Speaker 1: don't even know such a thing existed. That's that's fascinating.
Speaker 1: And the last one you mentioned, the other one right
Speaker 1: after that, w gs N interesting. W was a big
Speaker 1: magazine for a long and it still is. It's not
Speaker 1: Women's Where. It's not the same as women's wear daily,
Speaker 1: but it still is and there isn't any of those
Speaker 1: fashion magazines. I don't read too because I want to
Speaker 1: pick up on the trends. So you'll so if you're
Speaker 1: thumbing through a Glamour or a a Red Book or whatever,
Speaker 1: you're actually seeing things that you might not see elsewhere.
Speaker 1: And I'll go back to merchants, say, wait, I now
Speaker 1: saw six dark maroon boots. Is dark maroon the trend
Speaker 1: that I should be noticing Because I'm a believer in patterns.
Speaker 1: If you both put together patterns, patterns can become reality
Speaker 1: of what consumers adopt. And I'm all out there trying
Speaker 1: to understand what they're adopting now, what they're not adopting now,
Speaker 1: and what the future could be. So if enough people
Speaker 1: are advertising and enough people are seeing it, enough people
Speaker 1: are buying it, that that becomes a full blown trend.
Speaker 1: And marrying that with the quantitative, what could that mean
Speaker 1: to sales? What could that mean to margins? Which companies
Speaker 1: doesn't benefit? That's the story of retail analysis. So you've
Speaker 1: been covering retail for over time years, Um, what's changed
Speaker 1: since you joined the industry? What is different about covering
Speaker 1: retail stocks? Today than than when you started. Everything, everything
Speaker 1: and everything in terms of how fast goods are produced,
Speaker 1: how you learn about goods, emailing, blogging, instagramming, what what's changes?
Speaker 1: Physical stores they're smaller. What's changed? Some of them smaller
Speaker 1: in terms of size, And there's definitely more destinations spending.
Speaker 1: What about online? And what about the global reach? So
Speaker 1: everything's changed about retailing and what it is today. I
Speaker 1: know it won't be in ten years, but I'm going
Speaker 1: to be there to watch every path of it. Because remember,
Speaker 1: I've got a grandmother who's a hundred and two years old.
Speaker 1: God bless you. So so you have good genes and
Speaker 1: you're going to be doing this for a long time.
Speaker 1: Not a job, it's my life. I wake up in
Speaker 1: the morning. That's really impressive. Thank you. Um that that's
Speaker 1: some really good genes. Well, we'll take some blood from
Speaker 1: you on the way out to run a we'll run
Speaker 1: a little genetic study. UM. So we just you talked
Speaker 1: about all the things that have changed, and then the
Speaker 1: other big thing is going to be I believe in
Speaker 1: this theory of ization, personalization, theory ofation. So how a
Speaker 1: company is gonna be different? Because now if you know
Speaker 1: more about the customer, there's personalization, there is localization out there,
Speaker 1: there is customization out there, and regionalization. So now businesses
Speaker 1: that were big become smaller to the blending of mobile
Speaker 1: and technology are very influential to consumer spending and they're
Speaker 1: only going to become more so. And what that could
Speaker 1: give you opportunity, give sales opportunity, and it gives margin opportunity. Hello,
Speaker 1: earnings growth. So you just answered my next question. What
Speaker 1: that was past? What what's few? Um? So let me
Speaker 1: shift gears. This is a question that always comes from
Speaker 1: a certain email or what do you do outside of
Speaker 1: the office to stay physically fit? What do you do
Speaker 1: to stay mentally acute? And what do you just do
Speaker 1: to relax or for enjoyment when you're not shopping. So basically,
Speaker 1: by the way, I shouldn't say that, because I don't
Speaker 1: mean it in a denigrating way, but I know they're
Speaker 1: gonna be some when you're out doing My wife and
Speaker 1: I call joking. We call it economic research. When you're
Speaker 1: out doing research. When you're out in retail stores, I
Speaker 1: don't mean shopping in a I hope that doesn't come
Speaker 1: because because you know what I mean, when you're out
Speaker 1: looking at stores when you're kicking tires. Effectively you're out
Speaker 1: in store shopping. When you're not doing that, I'm doing
Speaker 1: that all the time by walking, traveling, swimming or all
Speaker 1: the things. Going to restaurants. I want to see culture
Speaker 1: and be able to see how that in great c
Speaker 1: into retail. And what do you do to relax if
Speaker 1: you want to just kick back. That's the walking part,
Speaker 1: I mean, that's what it is. I mean, that's being
Speaker 1: outside and seeing the sky because we're always in offices
Speaker 1: all the time, and seeing what's new, and typing like up,
Speaker 1: here's the trend, here's a trend. You gotta because you're
Speaker 1: not gonna remember things right away, so I love typing
Speaker 1: and just writing it down. That's really that's really interesting. Um,
Speaker 1: all right, My last two questions, these are my favorite questions.
Speaker 1: If a millennial were to come to you or someone
Speaker 1: just starting their career and say, I'm interested in becoming
Speaker 1: a retail analyst, what sort of advice would you give them.
Speaker 1: I'd say, find a category, find a topic that you
Speaker 1: love that you want to be an expert at. Think
Speaker 1: about it. I was fortunate Ron Baron gave me the
Speaker 1: opportunity I tried trading, I tried being a salesperson, and
Speaker 1: I found I loved the ten k's, the ten queues
Speaker 1: and understanding companies. Find out something that you love that
Speaker 1: you want to spend all the time at to become
Speaker 1: an expert. Being an expert gives you the ability to
Speaker 1: have answers or be able to be valued and to
Speaker 1: have insight. And that's what you have to find. Find
Speaker 1: a mentor who you can learn from. That's quite interesting.
Speaker 1: And my final question before we get thrown out of here, Um,
Speaker 1: what is it that you know about covering retail today
Speaker 1: that you wish you knew when you started those years ago?
Speaker 1: What pitfalls companies can get into and how they can
Speaker 1: emerge from them. So give us a couple of examples
Speaker 1: that that's a that's a fascinating thing because very often
Speaker 1: we fall in love with these companies and the next
Speaker 1: thing we know, they stumble, and hey, how did that happen?
Speaker 1: And and how do they turn themselves around? So, look,
Speaker 1: you have companies like a coach. It's stumbled that became overdistributed.
Speaker 1: Now it's become less distributed. They reinvigorate when you say
Speaker 1: over distributed. They were somewhat of a limited in too
Speaker 1: many department store and then then they were once they're everywhere,
Speaker 1: they lose a little PRIs and also managing their stores
Speaker 1: more carefully, investing in marketing. Look at all brands. What's
Speaker 1: happening now. L Brand's got rid of is getting rid
Speaker 1: of swimwear. They're reducing the level of promotions to come
Speaker 1: out a healthier brand and attract younger, younger consumers. So
Speaker 1: you have to evaluate when a brand stumbles, is there
Speaker 1: a way back or is there just not a way back?
Speaker 1: When you look at for example, today, you just had
Speaker 1: the apparel company UM Limited Brands, which is the old
Speaker 1: apparel Sour. It's not part of Limited UM. You just
Speaker 1: had that file for chapter eleven didn't come back. Why
Speaker 1: they didn't provide differentiation When you think of other companies,
Speaker 1: providing differentiation is what allows you to survive. That's the key.
Speaker 1: We have been speaking with Dana Telsey of the Telsey
Speaker 1: Advisory Group. If you enjoy this conversation, be sure and
Speaker 1: look up an inch or down on the inch on
Speaker 1: Apple iTunes and you can see any of the other
Speaker 1: hundred and ten or so such prior conversations. We love
Speaker 1: your comments and feedback, be sure and email us at
Speaker 1: m IB podcast at Bloomberg dot net. If people want
Speaker 1: to find your work. I forgot to ask you this before.
Speaker 1: It's donel me Detaelsey at Telsea Group group dot com
Speaker 1: and the website is Telsea Group dot com. Easy enough.
Speaker 1: We've been speaking with Dana Telsey. I would be remiss
Speaker 1: if I did not forget. If I'm going to say
Speaker 1: that again, I would be remiss if I did not
Speaker 1: thank Taylor Riggs are Booker and Michael Batnick, the head
Speaker 1: of research, who helped prepare all of these questions. I'm
Speaker 1: Barry Ridolts. You've been listening to Masters in Business on
Speaker 1: Bloomberg Radio.