WEBVTT - NPD's Cohen: Department Stores Must Change Their Game (Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg eleven to Washington, d C.

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<v Speaker 1>Bloomberg to Boston, Bloomberg twelve hundred to San Francisco, Bloomberg

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<v Speaker 1>nine to the country, Zeroes Exam General one nine and

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<v Speaker 1>around the globe the Bloomberg Radio Los AP and Bloomberg

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<v Speaker 1>Dot Gone. This is taking Stock coming up on taking

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<v Speaker 1>Stock broadcasting live from Elbow Beach, Bermuda, an ocean front

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<v Speaker 1>enclave of classic style and contemporary luxury. We're going to

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<v Speaker 1>talk about retail spending. We've got Marshall Cohen, chief industry

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<v Speaker 1>analysts for the np D Group. Maybe he could explain

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<v Speaker 1>why retail sales were up one point three percent like

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<v Speaker 1>many department store chains showed losses in a Marshall start

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<v Speaker 1>started his career pim folding Ralph Lauren Polo sweaters at

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<v Speaker 1>a Macy's Bloomingdale's on Long Island. Will be interesting to

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<v Speaker 1>see he's watching his industry for so long because he's

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<v Speaker 1>seen these trands, a lot of them developing. And we'll

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<v Speaker 1>have him way ensued. Let's have Charlie Pellett way in

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<v Speaker 1>on the news. Now he's back in Bloembrook World headquarters

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<v Speaker 1>with a business flash all right, Ralph Laurence shares. They

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<v Speaker 1>are down Kathleen now by one and a half percent. Nordstrom,

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<v Speaker 1>though the big retail story today disappointing earnings, IT shares

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<v Speaker 1>plunging thirteen point six percent. PepsiCo is suffering its biggest

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<v Speaker 1>interday decline in more than two months, after Nelson Peltz's

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<v Speaker 1>investment firms sold off IT shares in the beverage and

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<v Speaker 1>snack Giant. PepsiCo shares they're down now by one point

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<v Speaker 1>six percent. We are brought to you by National Realty

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<v Speaker 1>Returns on cash in rented real estate find them at

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<v Speaker 1>n r I A dot net stocks extending lessons losses

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<v Speaker 1>to fall to a one month low. The dollar climbed

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<v Speaker 1>after the biggest gain in US retail sales in a year,

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<v Speaker 1>reignited speculation the Federal Reserve may liff rates as early

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<v Speaker 1>as June. Kevin Karen is market strategist at Stephile Nicholas. Yes,

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<v Speaker 1>the Fed raising interest rates, but it's very lows. The

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<v Speaker 1>cash rates are still a low, and bond great yields

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<v Speaker 1>of where they are, So the last question then becomes, well,

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<v Speaker 1>what do you do with the growth part of the portfolio?

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<v Speaker 1>And our take on it has been to shift the

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<v Speaker 1>portfolio to look more companies that have more consistency in

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<v Speaker 1>the mix and focus more on attaining kind of lower,

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<v Speaker 1>more consistent returns than grabbing for the very high returns.

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<v Speaker 1>SMP five hundred index down seventeen a drop of eight

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<v Speaker 1>tenths of one percent, naz stackdown nineteen, a drop of

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<v Speaker 1>point four percent down, Industrials down one hundred seventy seven

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<v Speaker 1>points a drop of one percent, Gold up to ninety

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<v Speaker 1>beyond the twelve seventy four a gain of point two percent.

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<v Speaker 1>And now let's take a look at the other stories

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<v Speaker 1>making us. Thank you Charlie from the Bloomberg news Room,

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<v Speaker 1>Myrami Inoescentio. This news update is brought to you by

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<v Speaker 1>the jeep Grand Cherokee, the most awarded sub ever. The

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<v Speaker 1>local gepper today, Get to the airport early and prepared

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<v Speaker 1>to wait. That's the message from a Homeland Security Secretary J. Johnson.

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<v Speaker 1>Johnson says he's hiring additional security screeners, but adds that

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<v Speaker 1>will not end the delays at security checkpoints. There will

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<v Speaker 1>be wait times. There will be wait times this summer

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<v Speaker 1>as they moved through aviation security checkpoints, Flyers across the

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<v Speaker 1>country have been facing growing lines, which during peak hours

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<v Speaker 1>have topped ninety minutes at some airports. Presumptive Republican nominee

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<v Speaker 1>Donald Trump says he is sticking to his guns when

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<v Speaker 1>it comes to his hardliner stance on immigration, but speaking

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<v Speaker 1>to ABC News today, Trump denied he's shifting positions for

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<v Speaker 1>the general election. I don't think I toned it down.

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<v Speaker 1>I want to have strong immigration. I want to have

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<v Speaker 1>strong borders. Some people agree with me, and some people doubt,

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<v Speaker 1>but for the most part they agree. We have to

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<v Speaker 1>have strong orders, and we don't have a country. So no,

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<v Speaker 1>I don't think Texas Senator John Cornyn says Republicans must

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<v Speaker 1>unify and rally around Trump if they want to beat

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<v Speaker 1>Hillary Clinton this November. Can't govern without when, and so

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<v Speaker 1>you can't win by being divided. Trump has been meeting

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<v Speaker 1>with both House and Senate leaders trying to find common ground,

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<v Speaker 1>and New York City art auctions aren't raking in the

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<v Speaker 1>money they once did. One point one billion dollars change

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<v Speaker 1>hands during this week's major auctions at Christie's, Sotheby's and Phillips.

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<v Speaker 1>That's down more than fifty from one year ago. Global

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<v Speaker 1>News twenty four hours a day, powered by our journalists

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<v Speaker 1>in more than one fifty news heroes around the world.

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<v Speaker 1>From the Bloomberg Newsroom. I'm Rainy in essentio, Charlie, and

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<v Speaker 1>we thank you and again recapping stocks bouncing along the

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<v Speaker 1>bottom with the SMP five hundred index down eighteen, a

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<v Speaker 1>drop of nine tenths of one percent. I'm Charlie Pellett

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<v Speaker 1>and that's a bloom Bread business flash. The surf music

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<v Speaker 1>boy playing that well because I'm Caffeine is along with

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<v Speaker 1>Pim Fox, and we are continuing our live broadcast here

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<v Speaker 1>from Elbow Beach, Bermuda, an ocean front on claim of

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<v Speaker 1>classic style, contemporary luxury. Just a delightful place to be.

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<v Speaker 1>These entire island at Nation is brimming with beautiful sites

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<v Speaker 1>and wonderful, kind, gracious people, and I certainly want to

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<v Speaker 1>thank all of them that have helped us here at

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<v Speaker 1>Elbow Beach and in our time so far on the island.

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<v Speaker 1>Retail sales people are spending money here that where people

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<v Speaker 1>are spending money at resorts. What about the United States,

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<v Speaker 1>What about department stores? The government's retail sales report look

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<v Speaker 1>pretty darn good today, But for a lot of retailers,

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<v Speaker 1>Nordstrom's j C Penny list gets longer and longer. They're

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<v Speaker 1>cutting earnings forecast, they're cutting their sales forecast. Joining us

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<v Speaker 1>Marshall Cohen he retails US at np D Group. Marshall,

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<v Speaker 1>do you ever check in on places like community to

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<v Speaker 1>see how people are spending money? Actually I do. I

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<v Speaker 1>don't get to be there often enough, but we certainly

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<v Speaker 1>do look at boos spending on resorts and boos spending

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<v Speaker 1>on experiences. And that's actually one of the reasons why

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<v Speaker 1>that middle sector of the market has challenged, because the

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<v Speaker 1>experiential customer, the millennial, is a big part of the

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<v Speaker 1>focus for these guys, but it's also a big part

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<v Speaker 1>of the spend diversion. Marshall wondering if you can help me.

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<v Speaker 1>I looked at the numbers from the government today, an

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<v Speaker 1>increase of one point three. But all week I've been

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<v Speaker 1>mindful of the downturn in the reports from many of

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<v Speaker 1>the major department store chains. You saw it happened to

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<v Speaker 1>northstron You saw what happened to Macy's and Coal's. Can

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<v Speaker 1>you explain this when you look at what's going on.

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<v Speaker 1>It's actually a four part answer online, which is, you know,

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<v Speaker 1>you have to be careful what you wish for you

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<v Speaker 1>might just get it. Well. A lot of these retailers

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<v Speaker 1>have really stepped up and ramped up their offerings online.

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<v Speaker 1>That cannibalizes the activity in the store. Omni channel, which

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<v Speaker 1>is the big piece of what they're all talking about

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<v Speaker 1>as far as how they're going to grow their business

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<v Speaker 1>doesn't really grow business at displaced this and then online

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<v Speaker 1>outside of that retail environment certainly has become a formidable

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<v Speaker 1>competition in some categories. Four Online penetration is eroding the

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<v Speaker 1>market share that these mid level of department stores have had.

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<v Speaker 1>Uh you add in the fact that they've all made

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<v Speaker 1>the play to the millennial consumer, and as we just

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<v Speaker 1>kind of discussed, millennial is all about very limited discretionary

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<v Speaker 1>income spending across a very wide field of product, and

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<v Speaker 1>very experiential, which is what the department store doesn't offer.

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<v Speaker 1>The third piece of the puzzle is value. Right now,

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<v Speaker 1>a lot of the categories that are not getting growth

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<v Speaker 1>are all about price points and lower price points and discounts,

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<v Speaker 1>and an example of that would be the ath leisure movement.

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<v Speaker 1>We all know how the big uh trend for the

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<v Speaker 1>whole season of and now into has been this movement

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<v Speaker 1>towards more athletic inspired product. So imagine what stores are doing.

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<v Speaker 1>They're selling, you know, stretched leggings for forty dollars where

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<v Speaker 1>they used to sell stretched denim for a hundred and

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<v Speaker 1>fifty dollars. They have to sell two and three times

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<v Speaker 1>as much merchandise to make up those lost dollars. Marshall,

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<v Speaker 1>you spend what fifty weeks out of the year on

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<v Speaker 1>the road. You go to three or four different stores

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<v Speaker 1>a week. You're all over the country, You're in and

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<v Speaker 1>out of them. Let's take a look at Nordstrom's. Northstrom's

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<v Speaker 1>has been such a successful department store chain, expanding over

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<v Speaker 1>the entire country. But it's even a big successful chain

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<v Speaker 1>like north Rom's kind of doomed. Have we seen the

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<v Speaker 1>end of retail and department stores as we once knew it? Not?

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<v Speaker 1>If they change with the consumer. The consumer has changed

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<v Speaker 1>at a faster pace than the stores at Nordstrom if

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<v Speaker 1>you look at them and any other traditional retailer are

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<v Speaker 1>steeped in tradition, they still keep doing the same thing

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<v Speaker 1>they've been doing since I was folding sweaters of Bloomingdales

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<v Speaker 1>are absolutely right, I've heard that, um. But it's really

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<v Speaker 1>about recognizing that if they don't change who and what

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<v Speaker 1>they are, they will have a tough time. But they

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<v Speaker 1>really can do better, they can do more. They just

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<v Speaker 1>have to learn how to transition quicker. They don't have

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<v Speaker 1>time to test some of these things and then sit

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<v Speaker 1>there and see because the consumer has already moved on

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<v Speaker 1>to something else. So when you have the leading edge

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<v Speaker 1>when it comes to service, that's a big differentiator than online.

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<v Speaker 1>So the stores do have the ability to not only survive,

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<v Speaker 1>but actually start growing again. Well, Marshall, can you tell

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<v Speaker 1>us who the good, the bad, and the ugly when

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<v Speaker 1>it comes to being able to execute as you describe, Well,

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<v Speaker 1>you have to look at individual performers within certain channels. Uh.

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<v Speaker 1>And it's a nice fancy way of basically saying there's

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<v Speaker 1>going to be one or two leaders in every one

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<v Speaker 1>of the of the different channels of distributions. So when

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<v Speaker 1>you look at somebody like in the mass market a target,

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<v Speaker 1>they're out performing the mark it uh. When everybody else

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<v Speaker 1>in apparel was dropping for the quarter, they actually had growth.

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<v Speaker 1>When you look at somebody like a warehouse club, the

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<v Speaker 1>warehouse club channel, you know they actually for the first time,

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<v Speaker 1>you're starting to show some vulnerability. So there's another one

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<v Speaker 1>that you've got to look at. On the negative side,

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<v Speaker 1>when you look at some of the luxury retailers, they're

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<v Speaker 1>holding their own, but they're up against some softer numbers,

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<v Speaker 1>So we have to be careful that we're not looking

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<v Speaker 1>at them as being the growth of the market when

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<v Speaker 1>they're up against some you know, lower numbers, easier softer

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<v Speaker 1>numbers to kind of anniversary. And then when we look

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<v Speaker 1>at the department store sector, but we have to recognize

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<v Speaker 1>is that we are looking at a channel of distribution

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<v Speaker 1>that must change the game. So we have Marshall Cohen,

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<v Speaker 1>Chief Industry Analysts, the n p D Group based in

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<v Speaker 1>Port Washington, New York. You're listening to Taking Stock on

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<v Speaker 1>Bloomberg Radio. Coming up on a taking Stock, how about

0:11:05.880 --> 0:11:08.720
<v Speaker 1>stepping back from the tough time for retailers this week

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<v Speaker 1>and looking at a three to five year outlook for

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<v Speaker 1>big cap companies that can make you money. That's coming

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<v Speaker 1>up on Bloomberg Radio.