1 00:00:00,120 --> 00:00:04,040 Speaker 1: This recent wave of relief across the retail side of things, 2 00:00:04,400 --> 00:00:07,120 Speaker 1: it's giving away to a sense of foreboding ahead of 3 00:00:07,160 --> 00:00:10,799 Speaker 1: Black Friday. Is the holiday ship shopping season kicks off 4 00:00:11,119 --> 00:00:13,680 Speaker 1: during these not to discuss well, this is Punam Goyle 5 00:00:14,000 --> 00:00:16,760 Speaker 1: seen us e commerce in retail and Lizza Bloom been 6 00:00:16,880 --> 00:00:21,439 Speaker 1: intelligence now Punham, what's the thinking here? Really? Yeah, I 7 00:00:21,480 --> 00:00:24,320 Speaker 1: think it comes all back down to deals, right. Shoppers 8 00:00:24,320 --> 00:00:27,040 Speaker 1: are awaiting the deals that are about set com. We 9 00:00:27,040 --> 00:00:30,080 Speaker 1: were in stores earlier today and I'll be honest, you know, 10 00:00:30,080 --> 00:00:32,000 Speaker 1: a lot of the story said this is our deal 11 00:00:32,080 --> 00:00:34,879 Speaker 1: for the next five days. So it'll be interesting to 12 00:00:35,000 --> 00:00:38,479 Speaker 1: see what additional deals get added. We know Walmart and 13 00:00:38,520 --> 00:00:42,000 Speaker 1: Target have specific class Black Friday deals in solo Amazon, 14 00:00:42,440 --> 00:00:45,760 Speaker 1: but them all look to have already set for Black Friday. 15 00:00:46,080 --> 00:00:49,880 Speaker 1: Maybe just pentump demand, uh, particularly in an age where 16 00:00:49,920 --> 00:00:51,880 Speaker 1: we've been living through a pandemic and a lot of 17 00:00:51,920 --> 00:00:54,360 Speaker 1: the brick and mortar business has has suffered as a 18 00:00:54,400 --> 00:00:58,000 Speaker 1: consequence e commerce. Sure, not a problem with that, but 19 00:00:58,080 --> 00:00:59,959 Speaker 1: talk to me a little bit about what we learn 20 00:01:00,000 --> 00:01:03,040 Speaker 1: in this week. When best Buy reported the stock was 21 00:01:03,120 --> 00:01:07,080 Speaker 1: up yesterday nearly and then on top of that, it 22 00:01:07,160 --> 00:01:11,080 Speaker 1: was Ambercrobbie and Fitch with a gain in those shares, 23 00:01:11,120 --> 00:01:13,760 Speaker 1: and American Eagle joined in as well with a fifty 24 00:01:14,319 --> 00:01:17,959 Speaker 1: check that eighteen percent move. So these numbers, even before 25 00:01:18,000 --> 00:01:21,240 Speaker 1: we get to the the fourth quarter, the numbers for 26 00:01:21,360 --> 00:01:24,600 Speaker 1: Q three were above estimates. Yeah, I think you're really 27 00:01:24,640 --> 00:01:27,360 Speaker 1: seeing a mixedpatch here. For the retailers that you mentioned, 28 00:01:27,600 --> 00:01:29,759 Speaker 1: it is somewhat kind of demand. If you think about 29 00:01:29,760 --> 00:01:32,880 Speaker 1: where we spent our money over the last few years 30 00:01:32,959 --> 00:01:35,520 Speaker 1: during the pandemic, it wasn't really on apparel. When you 31 00:01:35,520 --> 00:01:38,000 Speaker 1: think of the team retailers, right, if it was apparel, 32 00:01:38,040 --> 00:01:42,240 Speaker 1: you were buying sweatpants and more comfortable clothes, um, yoga pants, etcetera. 33 00:01:42,440 --> 00:01:45,360 Speaker 1: So people are going out more, they're traveling, they're going 34 00:01:45,360 --> 00:01:48,040 Speaker 1: out to eat, they're going to show, they're spending money 35 00:01:48,080 --> 00:01:50,200 Speaker 1: on themselves and as they do that, they want a 36 00:01:50,320 --> 00:01:54,160 Speaker 1: new wardrobe. So that's helping apparel retailers to a large 37 00:01:54,160 --> 00:01:58,880 Speaker 1: extent this year. Well, the thing is how does this 38 00:01:58,920 --> 00:02:01,480 Speaker 1: does this Is this indicative of a bigger picture? Is 39 00:02:01,480 --> 00:02:04,080 Speaker 1: a one off? In your vie Puno, I think it's 40 00:02:04,080 --> 00:02:06,200 Speaker 1: really mixed. You know, we we heard from pg X 41 00:02:06,240 --> 00:02:08,320 Speaker 1: two and they said they had strong apparel sales, but 42 00:02:08,400 --> 00:02:12,720 Speaker 1: their home good division division continues to not do well. Um. 43 00:02:12,760 --> 00:02:16,400 Speaker 1: We also heard from other retailers like Target right where 44 00:02:16,440 --> 00:02:20,079 Speaker 1: inventory was a big issue and markdowns. So I think 45 00:02:20,080 --> 00:02:23,720 Speaker 1: it really goes retailer by retailer. Where there's excess inventory, 46 00:02:23,960 --> 00:02:27,400 Speaker 1: you're going to see more issues. Where inventory is getting 47 00:02:27,520 --> 00:02:30,720 Speaker 1: right size and where they have the right products, they're 48 00:02:30,760 --> 00:02:34,760 Speaker 1: able to sell it because the consumer is spending, they're 49 00:02:34,800 --> 00:02:38,120 Speaker 1: just watching where they spend and how they spend. So 50 00:02:38,200 --> 00:02:40,560 Speaker 1: it's just a little bifurcated right now. So are they 51 00:02:40,560 --> 00:02:44,000 Speaker 1: still working off inventory that was accumulated during the pandemic. 52 00:02:44,120 --> 00:02:46,239 Speaker 1: There was a piece in the South China Morning Post 53 00:02:46,760 --> 00:02:50,200 Speaker 1: indicating that the China there's already a drop in US 54 00:02:50,320 --> 00:02:53,000 Speaker 1: exports to the US, and I'm wondering whether or not 55 00:02:53,080 --> 00:02:57,320 Speaker 1: some of that is because US retailers still have bloated 56 00:02:57,320 --> 00:03:01,280 Speaker 1: inventory that they're beginning or they're still unwinding. Yeah, that's 57 00:03:01,320 --> 00:03:03,680 Speaker 1: definitely part of it. Keep in mind last year at 58 00:03:03,720 --> 00:03:06,440 Speaker 1: this time, we didn't have enough inventory, and as that 59 00:03:06,560 --> 00:03:10,160 Speaker 1: inventory started to trickle in earlier this year, it almost 60 00:03:10,200 --> 00:03:13,240 Speaker 1: all came at the same time. In addition to the 61 00:03:13,240 --> 00:03:15,679 Speaker 1: new orders right that they placed for the spring and 62 00:03:16,280 --> 00:03:18,800 Speaker 1: demand started to pull back a little. So it was 63 00:03:18,840 --> 00:03:21,560 Speaker 1: like the perfect storm for the retailers where they had 64 00:03:21,600 --> 00:03:23,880 Speaker 1: inventory from the prior year from this year and then 65 00:03:23,919 --> 00:03:26,760 Speaker 1: a small pullback and demand all of that together way 66 00:03:26,760 --> 00:03:29,040 Speaker 1: too much inventory. They're still trying to work throughout many 67 00:03:29,080 --> 00:03:31,760 Speaker 1: of them. They did take skeeper mark downs and they 68 00:03:31,800 --> 00:03:33,960 Speaker 1: will continue to do so to make sure that they 69 00:03:34,080 --> 00:03:36,880 Speaker 1: ended the season clean, because that's really important heading into 70 00:03:37,600 --> 00:03:42,040 Speaker 1: after the holidays. What's the kind of balance between let's 71 00:03:42,040 --> 00:03:47,320 Speaker 1: say the luxury end and the mass market end. Luxury 72 00:03:47,440 --> 00:03:49,240 Speaker 1: is still on fire. I mean when you look at 73 00:03:49,280 --> 00:03:53,960 Speaker 1: the really high end retailers, they're doing very variable. Demand 74 00:03:54,160 --> 00:03:59,400 Speaker 1: is high, they're passing along price increases, they're being accepted. 75 00:04:00,320 --> 00:04:03,360 Speaker 1: Luxury doing very well. Mass is a bit of a 76 00:04:03,400 --> 00:04:06,800 Speaker 1: mixed story. Um, it really comes back down to inventory. 77 00:04:06,920 --> 00:04:10,400 Speaker 1: We saw the different Centuriet and Walmart's results just recently, 78 00:04:10,440 --> 00:04:13,480 Speaker 1: where Walmart did better because it was a better inventory position. 79 00:04:13,480 --> 00:04:15,880 Speaker 1: It had taken it smart down, cleared the inventory needed 80 00:04:15,920 --> 00:04:19,120 Speaker 1: to while Target was still working through it. So I 81 00:04:19,160 --> 00:04:21,880 Speaker 1: think there's demand bill benefit from trade down to a 82 00:04:21,920 --> 00:04:25,080 Speaker 1: certain extent, but if the value consumer pulls back in 83 00:04:25,080 --> 00:04:28,120 Speaker 1: a meaningful way, they are at risk and targets more 84 00:04:28,120 --> 00:04:30,680 Speaker 1: discretionary than Walmart. So you know that that kind of 85 00:04:30,760 --> 00:04:35,120 Speaker 1: hurts in a value scheme when consumers are training down well. 86 00:04:35,160 --> 00:04:37,680 Speaker 1: To your point about the outlook, it was curious yesterday 87 00:04:37,720 --> 00:04:40,280 Speaker 1: thehead of the Kansas City fed Esther George, was saying, 88 00:04:40,320 --> 00:04:42,640 Speaker 1: you know that there is still so much ample US 89 00:04:42,720 --> 00:04:46,600 Speaker 1: savings right now, and that's gonna help support household spending. 90 00:04:46,640 --> 00:04:49,479 Speaker 1: I take your point that people are beginning to move 91 00:04:49,520 --> 00:04:53,159 Speaker 1: into areas that they haven't been comfortable occupying, and I'm 92 00:04:53,160 --> 00:04:57,720 Speaker 1: talking about travel and maybe entertainment venues outside of the home, 93 00:04:58,240 --> 00:05:00,800 Speaker 1: And to your point to that people need to be 94 00:05:01,240 --> 00:05:04,040 Speaker 1: clothed to be able to have these experiences in ways 95 00:05:04,080 --> 00:05:07,640 Speaker 1: that they were not closed during the pandemic. So is 96 00:05:07,680 --> 00:05:09,800 Speaker 1: there a point that we should be concerned about in 97 00:05:09,839 --> 00:05:13,520 Speaker 1: the future where savings begin to dwindle and people begin 98 00:05:13,640 --> 00:05:17,080 Speaker 1: to become a little more conservative in their spending. I 99 00:05:17,160 --> 00:05:19,440 Speaker 1: think the savings have already dwindled. If you look at 100 00:05:19,440 --> 00:05:21,600 Speaker 1: the savings rate from where we were two years ago, 101 00:05:22,120 --> 00:05:24,239 Speaker 1: it's more than half of that. It's under four percent 102 00:05:24,320 --> 00:05:28,240 Speaker 1: of savings rate today, and we are seeing the effect 103 00:05:28,279 --> 00:05:31,360 Speaker 1: of that in the value stream right we that's where 104 00:05:31,360 --> 00:05:34,159 Speaker 1: there's been trade down where consumers are pulling back. We 105 00:05:34,200 --> 00:05:37,000 Speaker 1: haven't seen it at luxury, but the value shopper is 106 00:05:37,040 --> 00:05:40,840 Speaker 1: definitely challenged with insulation and tipping into their savings to 107 00:05:40,960 --> 00:05:44,680 Speaker 1: meet their day to day each Yeah, that's it isn't 108 00:05:44,760 --> 00:05:47,800 Speaker 1: and so that's having a profound impact that put them. 109 00:05:47,839 --> 00:05:49,880 Speaker 1: You know, this maybe just off topic a little bit, 110 00:05:49,920 --> 00:05:54,160 Speaker 1: but are you seeing a difference in where these uh 111 00:05:54,240 --> 00:05:57,159 Speaker 1: these items I'm just going to talk basically about apparel clothing, 112 00:05:58,200 --> 00:06:02,080 Speaker 1: was it being made? Is it still elminated by China? 113 00:06:02,440 --> 00:06:06,760 Speaker 1: So there has been a shift in sentiment by retailers, 114 00:06:06,800 --> 00:06:09,800 Speaker 1: and it's not just through the pandemic. Even before the pandemic, 115 00:06:10,160 --> 00:06:13,159 Speaker 1: retailers try to diversify a little out of China, whether 116 00:06:13,200 --> 00:06:16,279 Speaker 1: it was going to Vietnam, Bonglazesi, or even South America, 117 00:06:16,680 --> 00:06:19,640 Speaker 1: and that shift continue to be more aggressive during the 118 00:06:19,680 --> 00:06:23,400 Speaker 1: pandemic when you know China was clearly under lockdown than 119 00:06:23,440 --> 00:06:27,840 Speaker 1: an impacted production. Is China less of a dependence for 120 00:06:27,920 --> 00:06:30,640 Speaker 1: apparel retailers today that it was five years ago? Yes, 121 00:06:31,120 --> 00:06:33,800 Speaker 1: but is enough of less of a dependence that you 122 00:06:33,839 --> 00:06:36,960 Speaker 1: know they can live without China? Absolutely? Not. China is 123 00:06:37,000 --> 00:06:40,880 Speaker 1: still one of the largest producing countries for many apparel retailers, 124 00:06:40,920 --> 00:06:44,560 Speaker 1: including Nike and Adida, and I don't think that they'll 125 00:06:44,560 --> 00:06:47,760 Speaker 1: ever be able to go entirely away from China. Yes, 126 00:06:47,800 --> 00:06:50,279 Speaker 1: they can diversify a little, but China still going to 127 00:06:50,320 --> 00:06:53,760 Speaker 1: be producing garments for us to consume for at least, 128 00:06:53,800 --> 00:06:56,400 Speaker 1: you know, the next few years or south. So much 129 00:06:56,520 --> 00:07:00,200 Speaker 1: money was invested beginning in the nine nineties factories in 130 00:07:00,320 --> 00:07:04,240 Speaker 1: China producing clothing and apparel items. Now we know that 131 00:07:04,320 --> 00:07:06,760 Speaker 1: labor costs are rising on the mainland, and maybe that's 132 00:07:06,800 --> 00:07:09,080 Speaker 1: one of the reasons that we have seen some of 133 00:07:09,120 --> 00:07:12,600 Speaker 1: these companies source elsewhere. Pun I'm Goyle. Thank you so 134 00:07:12,680 --> 00:07:15,080 Speaker 1: much for being with us here on Dabreakcasia.