Speaker 1: This recent wave of relief across the retail side of things,
Speaker 1: it's giving away to a sense of foreboding ahead of
Speaker 1: Black Friday. Is the holiday ship shopping season kicks off
Speaker 1: during these not to discuss well, this is Punam Goyle
Speaker 1: seen us e commerce in retail and Lizza Bloom been
Speaker 1: intelligence now Punham, what's the thinking here? Really? Yeah, I
Speaker 1: think it comes all back down to deals, right. Shoppers
Speaker 1: are awaiting the deals that are about set com. We
Speaker 1: were in stores earlier today and I'll be honest, you know,
Speaker 1: a lot of the story said this is our deal
Speaker 1: for the next five days. So it'll be interesting to
Speaker 1: see what additional deals get added. We know Walmart and
Speaker 1: Target have specific class Black Friday deals in solo Amazon,
Speaker 1: but them all look to have already set for Black Friday.
Speaker 1: Maybe just pentump demand, uh, particularly in an age where
Speaker 1: we've been living through a pandemic and a lot of
Speaker 1: the brick and mortar business has has suffered as a
Speaker 1: consequence e commerce. Sure, not a problem with that, but
Speaker 1: talk to me a little bit about what we learn
Speaker 1: in this week. When best Buy reported the stock was
Speaker 1: up yesterday nearly and then on top of that, it
Speaker 1: was Ambercrobbie and Fitch with a gain in those shares,
Speaker 1: and American Eagle joined in as well with a fifty
Speaker 1: check that eighteen percent move. So these numbers, even before
Speaker 1: we get to the the fourth quarter, the numbers for
Speaker 1: Q three were above estimates. Yeah, I think you're really
Speaker 1: seeing a mixedpatch here. For the retailers that you mentioned,
Speaker 1: it is somewhat kind of demand. If you think about
Speaker 1: where we spent our money over the last few years
Speaker 1: during the pandemic, it wasn't really on apparel. When you
Speaker 1: think of the team retailers, right, if it was apparel,
Speaker 1: you were buying sweatpants and more comfortable clothes, um, yoga pants, etcetera.
Speaker 1: So people are going out more, they're traveling, they're going
Speaker 1: out to eat, they're going to show, they're spending money
Speaker 1: on themselves and as they do that, they want a
Speaker 1: new wardrobe. So that's helping apparel retailers to a large
Speaker 1: extent this year. Well, the thing is how does this
Speaker 1: does this Is this indicative of a bigger picture? Is
Speaker 1: a one off? In your vie Puno, I think it's
Speaker 1: really mixed. You know, we we heard from pg X
Speaker 1: two and they said they had strong apparel sales, but
Speaker 1: their home good division division continues to not do well. Um.
Speaker 1: We also heard from other retailers like Target right where
Speaker 1: inventory was a big issue and markdowns. So I think
Speaker 1: it really goes retailer by retailer. Where there's excess inventory,
Speaker 1: you're going to see more issues. Where inventory is getting
Speaker 1: right size and where they have the right products, they're
Speaker 1: able to sell it because the consumer is spending, they're
Speaker 1: just watching where they spend and how they spend. So
Speaker 1: it's just a little bifurcated right now. So are they
Speaker 1: still working off inventory that was accumulated during the pandemic.
Speaker 1: There was a piece in the South China Morning Post
Speaker 1: indicating that the China there's already a drop in US
Speaker 1: exports to the US, and I'm wondering whether or not
Speaker 1: some of that is because US retailers still have bloated
Speaker 1: inventory that they're beginning or they're still unwinding. Yeah, that's
Speaker 1: definitely part of it. Keep in mind last year at
Speaker 1: this time, we didn't have enough inventory, and as that
Speaker 1: inventory started to trickle in earlier this year, it almost
Speaker 1: all came at the same time. In addition to the
Speaker 1: new orders right that they placed for the spring and
Speaker 1: demand started to pull back a little. So it was
Speaker 1: like the perfect storm for the retailers where they had
Speaker 1: inventory from the prior year from this year and then
Speaker 1: a small pullback and demand all of that together way
Speaker 1: too much inventory. They're still trying to work throughout many
Speaker 1: of them. They did take skeeper mark downs and they
Speaker 1: will continue to do so to make sure that they
Speaker 1: ended the season clean, because that's really important heading into
Speaker 1: after the holidays. What's the kind of balance between let's
Speaker 1: say the luxury end and the mass market end. Luxury
Speaker 1: is still on fire. I mean when you look at
Speaker 1: the really high end retailers, they're doing very variable. Demand
Speaker 1: is high, they're passing along price increases, they're being accepted.
Speaker 1: Luxury doing very well. Mass is a bit of a
Speaker 1: mixed story. Um, it really comes back down to inventory.
Speaker 1: We saw the different Centuriet and Walmart's results just recently,
Speaker 1: where Walmart did better because it was a better inventory position.
Speaker 1: It had taken it smart down, cleared the inventory needed
Speaker 1: to while Target was still working through it. So I
Speaker 1: think there's demand bill benefit from trade down to a
Speaker 1: certain extent, but if the value consumer pulls back in
Speaker 1: a meaningful way, they are at risk and targets more
Speaker 1: discretionary than Walmart. So you know that that kind of
Speaker 1: hurts in a value scheme when consumers are training down well.
Speaker 1: To your point about the outlook, it was curious yesterday
Speaker 1: thehead of the Kansas City fed Esther George, was saying,
Speaker 1: you know that there is still so much ample US
Speaker 1: savings right now, and that's gonna help support household spending.
Speaker 1: I take your point that people are beginning to move
Speaker 1: into areas that they haven't been comfortable occupying, and I'm
Speaker 1: talking about travel and maybe entertainment venues outside of the home,
Speaker 1: And to your point to that people need to be
Speaker 1: clothed to be able to have these experiences in ways
Speaker 1: that they were not closed during the pandemic. So is
Speaker 1: there a point that we should be concerned about in
Speaker 1: the future where savings begin to dwindle and people begin
Speaker 1: to become a little more conservative in their spending. I
Speaker 1: think the savings have already dwindled. If you look at
Speaker 1: the savings rate from where we were two years ago,
Speaker 1: it's more than half of that. It's under four percent
Speaker 1: of savings rate today, and we are seeing the effect
Speaker 1: of that in the value stream right we that's where
Speaker 1: there's been trade down where consumers are pulling back. We
Speaker 1: haven't seen it at luxury, but the value shopper is
Speaker 1: definitely challenged with insulation and tipping into their savings to
Speaker 1: meet their day to day each Yeah, that's it isn't
Speaker 1: and so that's having a profound impact that put them.
Speaker 1: You know, this maybe just off topic a little bit,
Speaker 1: but are you seeing a difference in where these uh
Speaker 1: these items I'm just going to talk basically about apparel clothing,
Speaker 1: was it being made? Is it still elminated by China?
Speaker 1: So there has been a shift in sentiment by retailers,
Speaker 1: and it's not just through the pandemic. Even before the pandemic,
Speaker 1: retailers try to diversify a little out of China, whether
Speaker 1: it was going to Vietnam, Bonglazesi, or even South America,
Speaker 1: and that shift continue to be more aggressive during the
Speaker 1: pandemic when you know China was clearly under lockdown than
Speaker 1: an impacted production. Is China less of a dependence for
Speaker 1: apparel retailers today that it was five years ago? Yes,
Speaker 1: but is enough of less of a dependence that you
Speaker 1: know they can live without China? Absolutely? Not. China is
Speaker 1: still one of the largest producing countries for many apparel retailers,
Speaker 1: including Nike and Adida, and I don't think that they'll
Speaker 1: ever be able to go entirely away from China. Yes,
Speaker 1: they can diversify a little, but China still going to
Speaker 1: be producing garments for us to consume for at least,
Speaker 1: you know, the next few years or south. So much
Speaker 1: money was invested beginning in the nine nineties factories in
Speaker 1: China producing clothing and apparel items. Now we know that
Speaker 1: labor costs are rising on the mainland, and maybe that's
Speaker 1: one of the reasons that we have seen some of
Speaker 1: these companies source elsewhere. Pun I'm Goyle. Thank you so
Speaker 1: much for being with us here on Dabreakcasia.