1
00:00:02,520 --> 00:00:07,000
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,800 --> 00:00:09,440
Speaker 2: Let's turn out to the world of retail.

3
00:00:09,560 --> 00:00:12,680
Speaker 3: If you look at consumer discretionary stocks, they climbed about

4
00:00:12,680 --> 00:00:16,079
Speaker 3: thirty percent last year, and our next guest expects a

5
00:00:16,120 --> 00:00:20,560
Speaker 3: continued recovery in this discretionary spending, assuming no additional tariffs

6
00:00:20,560 --> 00:00:22,799
Speaker 3: are implemented. However, she does go on to say that

7
00:00:22,840 --> 00:00:24,919
Speaker 3: the likelihood is quite high that.

8
00:00:24,880 --> 00:00:26,320
Speaker 2: New tarffs will be implemented.

9
00:00:26,360 --> 00:00:29,000
Speaker 3: I'm pleased to welcome back Dana Telsey, founder and CEO

10
00:00:29,080 --> 00:00:31,080
Speaker 3: at Telsey Advisory Group, who joins us.

11
00:00:31,080 --> 00:00:33,800
Speaker 2: Now, Dana, did you see evidence.

12
00:00:33,440 --> 00:00:37,960
Speaker 3: Of retailers or brands convincing consumers that perhaps tariffs were

13
00:00:37,960 --> 00:00:39,320
Speaker 3: coming in it was time to buy a lot of

14
00:00:39,320 --> 00:00:42,839
Speaker 3: their big purchases now before those tariffs raise prices.

15
00:00:43,240 --> 00:00:45,560
Speaker 4: Haven't seen that. But what we did see is more

16
00:00:45,560 --> 00:00:48,800
Speaker 4: promotions this holiday season than last year. Was definitely a

17
00:00:48,840 --> 00:00:52,040
Speaker 4: tick up. The holiday season started earlier when best By

18
00:00:52,120 --> 00:00:56,080
Speaker 4: advertises holiday in September. The compressed season with five fewer

19
00:00:56,160 --> 00:00:59,560
Speaker 4: days between Thanksgiving and Christmas, makes a real difference and

20
00:00:59,600 --> 00:01:02,880
Speaker 4: created sense of urgency, which is leaded so far to

21
00:01:03,360 --> 00:01:07,080
Speaker 4: Visa and MasterCard giving better than expectation numbers. On the season.

22
00:01:07,440 --> 00:01:10,000
Speaker 4: Four point eight percent at Visa, three point eight percent

23
00:01:10,040 --> 00:01:12,720
Speaker 4: at MasterCard, all bigger than the three to three and

24
00:01:12,760 --> 00:01:15,520
Speaker 4: a half cent gains they're originally expected.

25
00:01:15,600 --> 00:01:17,400
Speaker 1: I'm sorry that kind of just followed on the promotions

26
00:01:17,400 --> 00:01:19,360
Speaker 1: because one thing I noticed, at least for the companies

27
00:01:19,360 --> 00:01:21,399
Speaker 1: that I buy from, I thought there were a lot

28
00:01:21,400 --> 00:01:23,960
Speaker 1: of stealth promotions, like if you just went to the website,

29
00:01:23,959 --> 00:01:26,240
Speaker 1: you wouldn't see the discounts. Even some of the emails

30
00:01:26,240 --> 00:01:28,319
Speaker 1: they sent really didn't make mention of it. But when

31
00:01:28,319 --> 00:01:30,399
Speaker 1: you kind of dove deeper, there was always like some

32
00:01:30,440 --> 00:01:32,640
Speaker 1: little easter egg where if you manage on hatchet, you

33
00:01:32,640 --> 00:01:34,440
Speaker 1: would get, you know, on that extra twenty percent on

34
00:01:34,480 --> 00:01:36,520
Speaker 1: top of the Game of five whatever discount. Yeah, it was,

35
00:01:36,600 --> 00:01:38,280
Speaker 1: and I thought that was kind of creative because I

36
00:01:38,280 --> 00:01:39,840
Speaker 1: guess that you have to make a little more effort

37
00:01:39,880 --> 00:01:40,560
Speaker 1: to get the discount.

38
00:01:40,640 --> 00:01:43,880
Speaker 4: Ye keep in mind, loyalty members, they got an extra discount.

39
00:01:44,120 --> 00:01:46,480
Speaker 4: It was twenty to thirty percent, not like it was

40
00:01:46,560 --> 00:01:48,880
Speaker 4: years ago when you had forty to sixty percent off.

41
00:01:49,160 --> 00:01:51,920
Speaker 4: So yes, it is more promotional than last year, but

42
00:01:52,040 --> 00:01:55,880
Speaker 4: certainly managed and well within the expectations what retailers are

43
00:01:55,880 --> 00:01:57,360
Speaker 4: looking for. In terms of their margins.

44
00:01:57,440 --> 00:01:59,200
Speaker 3: But I guess to the idea that they really do

45
00:01:59,240 --> 00:02:01,639
Speaker 3: want people to go into the stories because once you get.

46
00:02:01,480 --> 00:02:03,440
Speaker 2: Them into the stores, they may spend more.

47
00:02:03,480 --> 00:02:05,760
Speaker 3: And we were talking earlier about how gift cards are

48
00:02:05,800 --> 00:02:08,880
Speaker 3: always a popular gift, if not a very creative one,

49
00:02:09,000 --> 00:02:11,040
Speaker 3: and retailers love it because when people actually go and

50
00:02:11,080 --> 00:02:13,359
Speaker 3: redeem the gift cards, that's where the spending happens.

51
00:02:13,480 --> 00:02:14,880
Speaker 2: Exactly. This is the month.

52
00:02:15,080 --> 00:02:17,720
Speaker 4: January is the month when everyone redeems their gift cards.

53
00:02:17,880 --> 00:02:19,919
Speaker 4: Typically when they go in to redeem them, and that's

54
00:02:19,919 --> 00:02:23,000
Speaker 4: when it's counted as a sale in retailer's books. But

55
00:02:23,080 --> 00:02:26,200
Speaker 4: typically they can spend twenty percent more. So that uptick

56
00:02:26,280 --> 00:02:28,600
Speaker 4: that you're going to get, it's a benefit to traffic

57
00:02:28,680 --> 00:02:31,640
Speaker 4: and it's a benefit to sales. And let's not forget

58
00:02:31,960 --> 00:02:36,320
Speaker 4: February's coming. Valentine's Day is coming. That's the next holiday.

59
00:02:36,080 --> 00:02:37,160
Speaker 2: Where chocolate is pricing.

60
00:02:37,240 --> 00:02:39,920
Speaker 4: Now it is pricey, you're exactly right, but people are

61
00:02:39,919 --> 00:02:41,799
Speaker 4: still going to buy chocolate for Valentine's Day.

62
00:02:41,960 --> 00:02:42,280
Speaker 3: They are.

63
00:02:42,639 --> 00:02:43,360
Speaker 2: I am curious.

64
00:02:43,919 --> 00:02:45,440
Speaker 1: This is going to get a little bit more into

65
00:02:45,480 --> 00:02:48,680
Speaker 1: the economic conditions because we're heading into a year where

66
00:02:48,680 --> 00:02:51,480
Speaker 1: there is some uncertainty about the health of the consumer

67
00:02:51,680 --> 00:02:53,680
Speaker 1: and their ability to spend. And I want to specifically

68
00:02:53,760 --> 00:02:57,079
Speaker 1: start off with this idea as to whether people are

69
00:02:57,080 --> 00:02:59,359
Speaker 1: trading down because there's been so much anecdotal evidence at

70
00:02:59,480 --> 00:03:02,760
Speaker 1: high income earners are now trading down to slightly like

71
00:03:02,760 --> 00:03:04,959
Speaker 1: a Walmart and folks that would normally shop at Walmart

72
00:03:05,040 --> 00:03:06,960
Speaker 1: are looking for something even cheaper. Are you seeing that

73
00:03:07,000 --> 00:03:07,440
Speaker 1: play out?

74
00:03:07,480 --> 00:03:10,160
Speaker 4: One hundred percent? We've seen that in many different areas.

75
00:03:10,320 --> 00:03:13,120
Speaker 4: Look where Doug McMillan, the CEO of Walmart, talked about

76
00:03:13,120 --> 00:03:15,920
Speaker 4: where his biggest growth is coming from from some of

77
00:03:15,960 --> 00:03:19,960
Speaker 4: their band of hire income consumers. Look at aspirational consumers.

78
00:03:20,000 --> 00:03:22,760
Speaker 4: They're no longer spending on some of the luxury goods

79
00:03:22,760 --> 00:03:25,560
Speaker 4: that they spent in the past. It's trickled down the

80
00:03:25,639 --> 00:03:28,280
Speaker 4: benefit of the traffic of off pricers where they have

81
00:03:28,360 --> 00:03:30,679
Speaker 4: very good brands and off pricers, but it's at a

82
00:03:30,760 --> 00:03:34,040
Speaker 4: value price. They're getting the traffic and they're getting the sales.

83
00:03:34,200 --> 00:03:37,440
Speaker 4: So we've seen the conversion of some hire income consumers

84
00:03:37,760 --> 00:03:39,560
Speaker 4: to essentials and to value pricing.

85
00:03:40,400 --> 00:03:42,560
Speaker 1: We're just about I don't know what I said a

86
00:03:42,640 --> 00:03:44,800
Speaker 1: couple of weeks or so away from the inauguration of

87
00:03:44,960 --> 00:03:48,320
Speaker 1: President Trump, who's promised to impose additional tariffs as well

88
00:03:48,360 --> 00:03:50,560
Speaker 1: as some new tariffs. There's a lot of concern this

89
00:03:50,640 --> 00:03:53,800
Speaker 1: could have an outsize effect on the retail industry. Are

90
00:03:53,800 --> 00:03:54,560
Speaker 1: they prepared for this?

91
00:03:54,640 --> 00:03:56,200
Speaker 2: Are they already preparing for this?

92
00:03:56,680 --> 00:03:59,200
Speaker 4: I think they've been prepared for it. The diversification of

93
00:03:59,280 --> 00:04:02,520
Speaker 4: sourcing of goods away from China has been definitely top

94
00:04:02,560 --> 00:04:06,080
Speaker 4: of mind. The footwear retailers have the most exposure of China,

95
00:04:06,440 --> 00:04:10,120
Speaker 4: Others like the Abercrombie some some apparel retailers have already

96
00:04:10,120 --> 00:04:13,400
Speaker 4: gotten their exposure to China down to single digits from

97
00:04:13,400 --> 00:04:16,159
Speaker 4: what had been double digits. It's a concern because we

98
00:04:16,200 --> 00:04:19,599
Speaker 4: know what the consumer doesn't like is price increases, so

99
00:04:19,640 --> 00:04:22,640
Speaker 4: it only makes value matter. And that's why we lean

100
00:04:22,720 --> 00:04:26,240
Speaker 4: defensive in retailers that offer value, like the discounters and

101
00:04:26,400 --> 00:04:30,200
Speaker 4: like the off pricers, or strong brands offering newness and innovation.

102
00:04:30,560 --> 00:04:34,440
Speaker 4: Hello Birkenstock where Germany and Portugal where they make their goods.

103
00:04:34,720 --> 00:04:36,320
Speaker 4: Or you take a look at others, you look at

104
00:04:36,360 --> 00:04:38,560
Speaker 4: Abercrombie when there's newness and innovation too.

105
00:04:38,800 --> 00:04:41,200
Speaker 3: How many pairs of Berkeley thirty pairs at this point

106
00:04:41,240 --> 00:04:44,080
Speaker 3: of berkanstock Excell, you're past the average of three point

107
00:04:44,240 --> 00:04:46,760
Speaker 3: six with the average American three point six. I blew

108
00:04:46,800 --> 00:04:49,840
Speaker 3: past that long ago. Buy those Kloto shoes too, Yes,

109
00:04:49,880 --> 00:04:51,760
Speaker 3: I do that as well. So terms are a big

110
00:04:51,800 --> 00:04:53,479
Speaker 3: question mark here. We don't know when they're going to

111
00:04:53,520 --> 00:04:55,880
Speaker 3: coming or in what form. But another big question mark

112
00:04:55,920 --> 00:04:59,119
Speaker 3: is a possibility of strikes at the ports once again,

113
00:04:59,360 --> 00:05:01,440
Speaker 3: we know that talk. They're supposed to resume next week.

114
00:05:01,640 --> 00:05:04,120
Speaker 3: What does inventory look like for retailers? I mean, we

115
00:05:04,200 --> 00:05:06,320
Speaker 3: knew the last time around, they kind of got ahead

116
00:05:06,320 --> 00:05:09,440
Speaker 3: of it. But are they ready for another potential strike.

117
00:05:09,800 --> 00:05:12,000
Speaker 4: A lot of them have been moving where they bring

118
00:05:12,040 --> 00:05:14,800
Speaker 4: in their goods from, some of them using air. I

119
00:05:14,839 --> 00:05:17,520
Speaker 4: think they're ready because one of our teams for twenty

120
00:05:17,560 --> 00:05:21,240
Speaker 4: twenty five is while it's about social service supply chain,

121
00:05:21,320 --> 00:05:24,279
Speaker 4: it's about surprise. We know this strike has been on

122
00:05:24,360 --> 00:05:27,600
Speaker 4: the docket for a while, and so they're prepared for it.

123
00:05:27,960 --> 00:05:31,560
Speaker 4: Luckily it would be happening after Christmas, not before Christmas.

124
00:05:32,000 --> 00:05:35,159
Speaker 4: Goods are in, but retailers are having to pay more

125
00:05:35,480 --> 00:05:37,720
Speaker 4: to circumvent where those goods arrive.

126
00:05:38,160 --> 00:05:41,240
Speaker 1: Dana always a great conversation looking forward to see how

127
00:05:41,240 --> 00:05:44,080
Speaker 1: IT twenty twenty five plays out in the retail space. Dantel,

128
00:05:44,600 --> 00:05:47,240
Speaker 1: the founder and CEO at Telsey Advisory Group,