WEBVTT - National Tree CEO Chris Butler Talks Christmas Tree Shopping

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Christmas trees.

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<v Speaker 2>Have you go?

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<v Speaker 1>No, of course not. I buy my Christmas tree honor

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<v Speaker 1>about my birthday, which is early one. Yes, but we've gone.

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<v Speaker 1>I've gone both ways over the years. Because my kids

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<v Speaker 1>were younger, they had some allergies, we would go for

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<v Speaker 1>several years we went to fake tree. I'm kind of indifferent.

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<v Speaker 3>Yeah, we got a bit of both. Do we got

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<v Speaker 3>like we get one real one for the smell and

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<v Speaker 3>one fake one for the downstairs.

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<v Speaker 4>Right five? So let's how you do it?

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<v Speaker 1>All right? It all works out. People have their their

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<v Speaker 1>play there. Chris Butler joints US National Tree Company CEO

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<v Speaker 1>joining us here, I believe from Cranford, New Jersey, which

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<v Speaker 1>is a cool little town there. So Chris talk to

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<v Speaker 1>us about kind of Christmas decorations. What are people doing

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<v Speaker 1>these days? What's different today versus I don't know, ten years,

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<v Speaker 1>fifteen years ago. It seems like people are going nuts

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<v Speaker 1>for Christmas decorations.

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<v Speaker 4>They are going nuts.

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<v Speaker 2>Yeah, and I like what both of you guys you

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<v Speaker 2>switch between the artificial and the reel. We're big fans

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<v Speaker 2>of real as well as artificial. Obviously, eighty percent of

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<v Speaker 2>US consumers by artificial trees, and so you know, the

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<v Speaker 2>reel is definitely the minority. But again, obviously we're big

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<v Speaker 2>fans of trees in general, but you know it's the

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<v Speaker 2>the pre lit now, So trees come pre lit. Obviously,

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<v Speaker 2>there's no mess, they're a lot cheaper, the materials are

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<v Speaker 2>a lot better, there's a lot of functionality with the

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<v Speaker 2>lights that you can get today, and so so that's

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<v Speaker 2>really what we're seeing. And there's a lot of extra

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<v Speaker 2>wreaths and garlands and things being bored as well. And

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<v Speaker 2>I think with the Instagram generation, the show me generation,

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<v Speaker 2>people are really now decorating to kind of show their

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<v Speaker 2>friends and show their followers just how beautiful our homes

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<v Speaker 2>can be. And so you know, as you said, Carolyn,

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<v Speaker 2>they have a lot of trees in a lot of

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<v Speaker 2>different rooms and so you know, maybe the kids have

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<v Speaker 2>a tree now, the kitchen has a small tree putting

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<v Speaker 2>the mantlepiece with garlands and small trees. So you know,

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<v Speaker 2>we're seeing a lot of incremental decorating with a lot

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<v Speaker 2>of different items and in terms of getting back.

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<v Speaker 4>To that swell thing.

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<v Speaker 2>So you're right, the main reason people buy a real

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<v Speaker 2>tree is for that real Christmas smell. We bought a

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<v Speaker 2>company called Sensicles a few years ago and they are

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<v Speaker 2>a scented ornament which smells just like Christmas. So if

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<v Speaker 2>you hang your scentered ornament on an artificial tree, you

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<v Speaker 2>get that real tree.

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<v Speaker 3>That real tree smell as well and noalergies. I'm looking

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<v Speaker 3>at accord on to your website. First thing, holiday magic begins.

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<v Speaker 3>Enter a week, win a gift card, Blackout Friday blowout

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<v Speaker 3>deals up to eighty percent off. How much are you

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<v Speaker 3>having to think about discounting how much amid perhaps fear

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<v Speaker 3>of some that where you're getting your supplies from the

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<v Speaker 3>costs might have to go up in the future.

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<v Speaker 4>Yeah, that's a great question.

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<v Speaker 2>So look, Black Friday through Cyber Monday this year obviously

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<v Speaker 2>is one week later, so the holiday season is a

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<v Speaker 2>week later. So I think every retail ourselves included, are

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<v Speaker 2>really discounting to make sure that we can take it

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<v Speaker 2>kind of capture those sales that we might have missed

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<v Speaker 2>otherwise given the week's delay in terms of the tariffs. Look,

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<v Speaker 2>you know, we've been on a diversification kind of trend

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<v Speaker 2>over the last few years now anyway, trying to diversify

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<v Speaker 2>ourselves out of just one source of manufacturing, which which

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<v Speaker 2>would be China. You know, I think if the tariffs

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<v Speaker 2>go through, who knows what the tariffs will be or

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<v Speaker 2>when they will go into effect, but you know, from

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<v Speaker 2>our standpoint, obviously it's impactful, and so we're trying to

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<v Speaker 2>diversify a manufacturing base between now and you know, now

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<v Speaker 2>in kind of twenty twenty six. You know, the promotional

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<v Speaker 2>things we're doing right now really aren't in answer to that.

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<v Speaker 2>It's really more just to kind of capture those sales

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<v Speaker 2>for this season. But if you are a consumer and

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<v Speaker 2>you're looking for a tree and you're thinking of buying

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<v Speaker 2>a tree or other holiday de corps, this year is

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<v Speaker 2>a great time to buy it, because if those tariffs

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<v Speaker 2>go into effect, prices will definitely go up.

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<v Speaker 4>In the next year or so.

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<v Speaker 3>Can you give us a breakdown of sort of how

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<v Speaker 3>much your supply chain is dependent on China?

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<v Speaker 2>Yeah, it's very large today, so I can't give you

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<v Speaker 2>the exact numbers, but it's very large. But we are

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<v Speaker 2>diversifying out. We've been on this diversification journey for a

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<v Speaker 2>few years now, and so you know, probably by the

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<v Speaker 2>end of twenty twenty six, we could be completely out

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<v Speaker 2>of China, which you know is a significant change.

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<v Speaker 1>So anything particularly the hot cellar this year, Chris.

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<v Speaker 4>Yeah, you know, so it's funny.

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<v Speaker 2>So my wife loves the sparkly trees, the snowy trees.

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<v Speaker 4>And many consumers love those things. But you know what we.

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<v Speaker 2>See year after year after year is that green triangle,

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<v Speaker 2>you know, the kind of the staid, good drink green triangle,

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<v Speaker 2>solid materials, great lights, multi multi function lights. So you know,

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<v Speaker 2>it's not a trend driven it's not a trend driven industry.

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<v Speaker 2>I will say this year disco is back. So who

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<v Speaker 2>doesn't love a bit of disco with their Christmas trees?

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<v Speaker 2>So disco is back. Definitely seeing some sales on some

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<v Speaker 2>of our kind of disco themed items. But again it

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<v Speaker 2>is you know, people still do prefer that traditional green

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<v Speaker 2>tree with either the white lights, clear lights, the multicolor

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<v Speaker 2>or again we have the dual color functionality. So that's

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<v Speaker 2>what we see every year.

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<v Speaker 1>Are you white lights, Caroline? Are you a different colored?

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<v Speaker 3>I think one of ours has multicolored, but I think

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<v Speaker 3>in general I'm a boring person. I like a white

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<v Speaker 3>light with only red and gold vibes going on. And

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<v Speaker 3>then our thing is we collect Christmas decorations from any

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<v Speaker 3>city that we go, so and then you have to

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<v Speaker 3>remind yourself where the hell you've got some of these

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<v Speaker 3>random items. But I'm really interested in not just about

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<v Speaker 3>the idea of what color lights or what you're whether

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<v Speaker 3>you're doing sparkly or disco. But you must be talking, Chris,

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<v Speaker 3>to people in your industry that are doing the real

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<v Speaker 3>tree situation too. How much you're going to have help

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<v Speaker 3>this year by the fact that we're here in the Northeast,

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<v Speaker 3>we've had terrible lack of water, We've had droughts, and

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<v Speaker 3>the local Christmas free tree farms next to me have

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<v Speaker 3>been struggling.

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<v Speaker 2>Yeah, you know, it's a great question. Eighty percent of

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<v Speaker 2>like I said, eighty percent of consumers already by artificial

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<v Speaker 2>trees versus twenty percent of consumers buying the real trees.

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<v Speaker 2>So it's a small market already. And yeah, unfortunately with

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<v Speaker 2>you know, with some climate change or with some just

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<v Speaker 2>weather in general is definitely hurting. Look Oregon a few

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<v Speaker 2>years ago got hit. You know, there's some fungus issues

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<v Speaker 2>in the Carolinas. So it's it's a tough business to

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<v Speaker 2>be in making the kind of doing those real trees

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<v Speaker 2>and look, we're here to pick up the pieces when

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<v Speaker 2>when you know, they falter with some of their supply chain.

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<v Speaker 1>Chris, is there any regionality in your business? Do people

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<v Speaker 1>in the South, I don't know, spend more on their

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<v Speaker 1>decorations per capita than the Midwest or anything like that

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<v Speaker 1>as a pretty standard across the board.

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<v Speaker 4>It's pretty standard.

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<v Speaker 2>You know, we do see the coastal towns going more

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<v Speaker 2>for kind of Christmas by the Sea type themes. But typically,

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<v Speaker 2>you know, our sales are driven by population centers, so,

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<v Speaker 2>you know, very good sales in the Northeast, obviously California, Texas, Florida.

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<v Speaker 2>It's really population driven. We don't necessarily see big regional

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<v Speaker 2>differences in our sales. Anyway we sell, you know, most

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<v Speaker 2>of our sales are online, so we sell through Amazon, Wayfair.

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<v Speaker 4>Home depot based, et cetera.

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<v Speaker 2>And so we really see sales driven by, you know,

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<v Speaker 2>by where people live.

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<v Speaker 1>Hey, Chris, thanks so much for joining us. Really appreciate it.

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<v Speaker 1>Chris Butler, National Tree Company CEO,