WEBVTT - Poonam Goyal on Black Friday (Audio) 0:00:00.120 --> 0:00:04.040 This recent wave of relief across the retail side of things, 0:00:04.400 --> 0:00:07.120 it's giving away to a sense of foreboding ahead of 0:00:07.160 --> 0:00:10.799 Black Friday. Is the holiday ship shopping season kicks off 0:00:11.119 --> 0:00:13.680 during these not to discuss well, this is Punam Goyle 0:00:14.000 --> 0:00:16.760 seen us e commerce in retail and Lizza Bloom been 0:00:16.880 --> 0:00:21.439 intelligence now Punham, what's the thinking here? Really? Yeah, I 0:00:21.480 --> 0:00:24.320 think it comes all back down to deals, right. Shoppers 0:00:24.320 --> 0:00:27.040 are awaiting the deals that are about set com. We 0:00:27.040 --> 0:00:30.080 were in stores earlier today and I'll be honest, you know, 0:00:30.080 --> 0:00:32.000 a lot of the story said this is our deal 0:00:32.080 --> 0:00:34.879 for the next five days. So it'll be interesting to 0:00:35.000 --> 0:00:38.479 see what additional deals get added. We know Walmart and 0:00:38.520 --> 0:00:42.000 Target have specific class Black Friday deals in solo Amazon, 0:00:42.440 --> 0:00:45.760 but them all look to have already set for Black Friday. 0:00:46.080 --> 0:00:49.880 Maybe just pentump demand, uh, particularly in an age where 0:00:49.920 --> 0:00:51.880 we've been living through a pandemic and a lot of 0:00:51.920 --> 0:00:54.360 the brick and mortar business has has suffered as a 0:00:54.400 --> 0:00:58.000 consequence e commerce. Sure, not a problem with that, but 0:00:58.080 --> 0:00:59.959 talk to me a little bit about what we learn 0:01:00.000 --> 0:01:03.040 in this week. When best Buy reported the stock was 0:01:03.120 --> 0:01:07.080 up yesterday nearly and then on top of that, it 0:01:07.160 --> 0:01:11.080 was Ambercrobbie and Fitch with a gain in those shares, 0:01:11.120 --> 0:01:13.760 and American Eagle joined in as well with a fifty 0:01:14.319 --> 0:01:17.959 check that eighteen percent move. So these numbers, even before 0:01:18.000 --> 0:01:21.240 we get to the the fourth quarter, the numbers for 0:01:21.360 --> 0:01:24.600 Q three were above estimates. Yeah, I think you're really 0:01:24.640 --> 0:01:27.360 seeing a mixedpatch here. For the retailers that you mentioned, 0:01:27.600 --> 0:01:29.759 it is somewhat kind of demand. If you think about 0:01:29.760 --> 0:01:32.880 where we spent our money over the last few years 0:01:32.959 --> 0:01:35.520 during the pandemic, it wasn't really on apparel. When you 0:01:35.520 --> 0:01:38.000 think of the team retailers, right, if it was apparel, 0:01:38.040 --> 0:01:42.240 you were buying sweatpants and more comfortable clothes, um, yoga pants, etcetera. 0:01:42.440 --> 0:01:45.360 So people are going out more, they're traveling, they're going 0:01:45.360 --> 0:01:48.040 out to eat, they're going to show, they're spending money 0:01:48.080 --> 0:01:50.200 on themselves and as they do that, they want a 0:01:50.320 --> 0:01:54.160 new wardrobe. So that's helping apparel retailers to a large 0:01:54.160 --> 0:01:58.880 extent this year. Well, the thing is how does this 0:01:58.920 --> 0:02:01.480 does this Is this indicative of a bigger picture? Is 0:02:01.480 --> 0:02:04.080 a one off? In your vie Puno, I think it's 0:02:04.080 --> 0:02:06.200 really mixed. You know, we we heard from pg X 0:02:06.240 --> 0:02:08.320 two and they said they had strong apparel sales, but 0:02:08.400 --> 0:02:12.720 their home good division division continues to not do well. Um. 0:02:12.760 --> 0:02:16.400 We also heard from other retailers like Target right where 0:02:16.440 --> 0:02:20.079 inventory was a big issue and markdowns. So I think 0:02:20.080 --> 0:02:23.720 it really goes retailer by retailer. Where there's excess inventory, 0:02:23.960 --> 0:02:27.400 you're going to see more issues. Where inventory is getting 0:02:27.520 --> 0:02:30.720 right size and where they have the right products, they're 0:02:30.760 --> 0:02:34.760 able to sell it because the consumer is spending, they're 0:02:34.800 --> 0:02:38.120 just watching where they spend and how they spend. So 0:02:38.200 --> 0:02:40.560 it's just a little bifurcated right now. So are they 0:02:40.560 --> 0:02:44.000 still working off inventory that was accumulated during the pandemic. 0:02:44.120 --> 0:02:46.239 There was a piece in the South China Morning Post 0:02:46.760 --> 0:02:50.200 indicating that the China there's already a drop in US 0:02:50.320 --> 0:02:53.000 exports to the US, and I'm wondering whether or not 0:02:53.080 --> 0:02:57.320 some of that is because US retailers still have bloated 0:02:57.320 --> 0:03:01.280 inventory that they're beginning or they're still unwinding. Yeah, that's 0:03:01.320 --> 0:03:03.680 definitely part of it. Keep in mind last year at 0:03:03.720 --> 0:03:06.440 this time, we didn't have enough inventory, and as that 0:03:06.560 --> 0:03:10.160 inventory started to trickle in earlier this year, it almost 0:03:10.200 --> 0:03:13.240 all came at the same time. In addition to the 0:03:13.240 --> 0:03:15.679 new orders right that they placed for the spring and 0:03:16.280 --> 0:03:18.800 demand started to pull back a little. So it was 0:03:18.840 --> 0:03:21.560 like the perfect storm for the retailers where they had 0:03:21.600 --> 0:03:23.880 inventory from the prior year from this year and then 0:03:23.919 --> 0:03:26.760 a small pullback and demand all of that together way 0:03:26.760 --> 0:03:29.040 too much inventory. They're still trying to work throughout many 0:03:29.080 --> 0:03:31.760 of them. They did take skeeper mark downs and they 0:03:31.800 --> 0:03:33.960 will continue to do so to make sure that they 0:03:34.080 --> 0:03:36.880 ended the season clean, because that's really important heading into 0:03:37.600 --> 0:03:42.040 after the holidays. What's the kind of balance between let's 0:03:42.040 --> 0:03:47.320 say the luxury end and the mass market end. Luxury 0:03:47.440 --> 0:03:49.240 is still on fire. I mean when you look at 0:03:49.280 --> 0:03:53.960 the really high end retailers, they're doing very variable. Demand 0:03:54.160 --> 0:03:59.400 is high, they're passing along price increases, they're being accepted. 0:04:00.320 --> 0:04:03.360 Luxury doing very well. Mass is a bit of a 0:04:03.400 --> 0:04:06.800 mixed story. Um, it really comes back down to inventory. 0:04:06.920 --> 0:04:10.400 We saw the different Centuriet and Walmart's results just recently, 0:04:10.440 --> 0:04:13.480 where Walmart did better because it was a better inventory position. 0:04:13.480 --> 0:04:15.880 It had taken it smart down, cleared the inventory needed 0:04:15.920 --> 0:04:19.120 to while Target was still working through it. So I 0:04:19.160 --> 0:04:21.880 think there's demand bill benefit from trade down to a 0:04:21.920 --> 0:04:25.080 certain extent, but if the value consumer pulls back in 0:04:25.080 --> 0:04:28.120 a meaningful way, they are at risk and targets more 0:04:28.120 --> 0:04:30.680 discretionary than Walmart. So you know that that kind of 0:04:30.760 --> 0:04:35.120 hurts in a value scheme when consumers are training down well. 0:04:35.160 --> 0:04:37.680 To your point about the outlook, it was curious yesterday 0:04:37.720 --> 0:04:40.280 thehead of the Kansas City fed Esther George, was saying, 0:04:40.320 --> 0:04:42.640 you know that there is still so much ample US 0:04:42.720 --> 0:04:46.600 savings right now, and that's gonna help support household spending. 0:04:46.640 --> 0:04:49.479 I take your point that people are beginning to move 0:04:49.520 --> 0:04:53.159 into areas that they haven't been comfortable occupying, and I'm 0:04:53.160 --> 0:04:57.720 talking about travel and maybe entertainment venues outside of the home, 0:04:58.240 --> 0:05:00.800 And to your point to that people need to be 0:05:01.240 --> 0:05:04.040 clothed to be able to have these experiences in ways 0:05:04.080 --> 0:05:07.640 that they were not closed during the pandemic. So is 0:05:07.680 --> 0:05:09.800 there a point that we should be concerned about in 0:05:09.839 --> 0:05:13.520 the future where savings begin to dwindle and people begin 0:05:13.640 --> 0:05:17.080 to become a little more conservative in their spending. I 0:05:17.160 --> 0:05:19.440 think the savings have already dwindled. If you look at 0:05:19.440 --> 0:05:21.600 the savings rate from where we were two years ago, 0:05:22.120 --> 0:05:24.239 it's more than half of that. It's under four percent 0:05:24.320 --> 0:05:28.240 of savings rate today, and we are seeing the effect 0:05:28.279 --> 0:05:31.360 of that in the value stream right we that's where 0:05:31.360 --> 0:05:34.159 there's been trade down where consumers are pulling back. We 0:05:34.200 --> 0:05:37.000 haven't seen it at luxury, but the value shopper is 0:05:37.040 --> 0:05:40.840 definitely challenged with insulation and tipping into their savings to 0:05:40.960 --> 0:05:44.680 meet their day to day each Yeah, that's it isn't 0:05:44.760 --> 0:05:47.800 and so that's having a profound impact that put them. 0:05:47.839 --> 0:05:49.880 You know, this maybe just off topic a little bit, 0:05:49.920 --> 0:05:54.160 but are you seeing a difference in where these uh 0:05:54.240 --> 0:05:57.159 these items I'm just going to talk basically about apparel clothing, 0:05:58.200 --> 0:06:02.080 was it being made? Is it still elminated by China? 0:06:02.440 --> 0:06:06.760 So there has been a shift in sentiment by retailers, 0:06:06.800 --> 0:06:09.800 and it's not just through the pandemic. Even before the pandemic, 0:06:10.160 --> 0:06:13.159 retailers try to diversify a little out of China, whether 0:06:13.200 --> 0:06:16.279 it was going to Vietnam, Bonglazesi, or even South America, 0:06:16.680 --> 0:06:19.640 and that shift continue to be more aggressive during the 0:06:19.680 --> 0:06:23.400 pandemic when you know China was clearly under lockdown than 0:06:23.440 --> 0:06:27.840 an impacted production. Is China less of a dependence for 0:06:27.920 --> 0:06:30.640 apparel retailers today that it was five years ago? Yes, 0:06:31.120 --> 0:06:33.800 but is enough of less of a dependence that you 0:06:33.839 --> 0:06:36.960 know they can live without China? Absolutely? Not. China is 0:06:37.000 --> 0:06:40.880 still one of the largest producing countries for many apparel retailers, 0:06:40.920 --> 0:06:44.560 including Nike and Adida, and I don't think that they'll 0:06:44.560 --> 0:06:47.760 ever be able to go entirely away from China. Yes, 0:06:47.800 --> 0:06:50.279 they can diversify a little, but China still going to 0:06:50.320 --> 0:06:53.760 be producing garments for us to consume for at least, 0:06:53.800 --> 0:06:56.400 you know, the next few years or south. So much 0:06:56.520 --> 0:07:00.200 money was invested beginning in the nine nineties factories in 0:07:00.320 --> 0:07:04.240 China producing clothing and apparel items. Now we know that 0:07:04.320 --> 0:07:06.760 labor costs are rising on the mainland, and maybe that's 0:07:06.800 --> 0:07:09.080 one of the reasons that we have seen some of 0:07:09.120 --> 0:07:12.600 these companies source elsewhere. Pun I'm Goyle. Thank you so 0:07:12.680 --> 0:07:15.080 much for being with us here on Dabreakcasia.