Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's turn out to the world of retail.
Speaker 3: If you look at consumer discretionary stocks, they climbed about
Speaker 3: thirty percent last year, and our next guest expects a
Speaker 3: continued recovery in this discretionary spending, assuming no additional tariffs
Speaker 3: are implemented. However, she does go on to say that
Speaker 3: the likelihood is quite high that.
Speaker 2: New tarffs will be implemented.
Speaker 3: I'm pleased to welcome back Dana Telsey, founder and CEO
Speaker 3: at Telsey Advisory Group, who joins us.
Speaker 2: Now, Dana, did you see evidence.
Speaker 3: Of retailers or brands convincing consumers that perhaps tariffs were
Speaker 3: coming in it was time to buy a lot of
Speaker 3: their big purchases now before those tariffs raise prices.
Speaker 4: Haven't seen that. But what we did see is more
Speaker 4: promotions this holiday season than last year. Was definitely a
Speaker 4: tick up. The holiday season started earlier when best By
Speaker 4: advertises holiday in September. The compressed season with five fewer
Speaker 4: days between Thanksgiving and Christmas, makes a real difference and
Speaker 4: created sense of urgency, which is leaded so far to
Speaker 4: Visa and MasterCard giving better than expectation numbers. On the season.
Speaker 4: Four point eight percent at Visa, three point eight percent
Speaker 4: at MasterCard, all bigger than the three to three and
Speaker 4: a half cent gains they're originally expected.
Speaker 1: I'm sorry that kind of just followed on the promotions
Speaker 1: because one thing I noticed, at least for the companies
Speaker 1: that I buy from, I thought there were a lot
Speaker 1: of stealth promotions, like if you just went to the website,
Speaker 1: you wouldn't see the discounts. Even some of the emails
Speaker 1: they sent really didn't make mention of it. But when
Speaker 1: you kind of dove deeper, there was always like some
Speaker 1: little easter egg where if you manage on hatchet, you
Speaker 1: would get, you know, on that extra twenty percent on
Speaker 1: top of the Game of five whatever discount. Yeah, it was,
Speaker 1: and I thought that was kind of creative because I
Speaker 1: guess that you have to make a little more effort
Speaker 1: to get the discount.
Speaker 4: Ye keep in mind, loyalty members, they got an extra discount.
Speaker 4: It was twenty to thirty percent, not like it was
Speaker 4: years ago when you had forty to sixty percent off.
Speaker 4: So yes, it is more promotional than last year, but
Speaker 4: certainly managed and well within the expectations what retailers are
Speaker 4: looking for. In terms of their margins.
Speaker 3: But I guess to the idea that they really do
Speaker 3: want people to go into the stories because once you get.
Speaker 2: Them into the stores, they may spend more.
Speaker 3: And we were talking earlier about how gift cards are
Speaker 3: always a popular gift, if not a very creative one,
Speaker 3: and retailers love it because when people actually go and
Speaker 3: redeem the gift cards, that's where the spending happens.
Speaker 2: Exactly. This is the month.
Speaker 4: January is the month when everyone redeems their gift cards.
Speaker 4: Typically when they go in to redeem them, and that's
Speaker 4: when it's counted as a sale in retailer's books. But
Speaker 4: typically they can spend twenty percent more. So that uptick
Speaker 4: that you're going to get, it's a benefit to traffic
Speaker 4: and it's a benefit to sales. And let's not forget
Speaker 4: February's coming. Valentine's Day is coming. That's the next holiday.
Speaker 2: Where chocolate is pricing.
Speaker 4: Now it is pricey, you're exactly right, but people are
Speaker 4: still going to buy chocolate for Valentine's Day.
Speaker 3: They are.
Speaker 2: I am curious.
Speaker 1: This is going to get a little bit more into
Speaker 1: the economic conditions because we're heading into a year where
Speaker 1: there is some uncertainty about the health of the consumer
Speaker 1: and their ability to spend. And I want to specifically
Speaker 1: start off with this idea as to whether people are
Speaker 1: trading down because there's been so much anecdotal evidence at
Speaker 1: high income earners are now trading down to slightly like
Speaker 1: a Walmart and folks that would normally shop at Walmart
Speaker 1: are looking for something even cheaper. Are you seeing that
Speaker 1: play out?
Speaker 4: One hundred percent? We've seen that in many different areas.
Speaker 4: Look where Doug McMillan, the CEO of Walmart, talked about
Speaker 4: where his biggest growth is coming from from some of
Speaker 4: their band of hire income consumers. Look at aspirational consumers.
Speaker 4: They're no longer spending on some of the luxury goods
Speaker 4: that they spent in the past. It's trickled down the
Speaker 4: benefit of the traffic of off pricers where they have
Speaker 4: very good brands and off pricers, but it's at a
Speaker 4: value price. They're getting the traffic and they're getting the sales.
Speaker 4: So we've seen the conversion of some hire income consumers
Speaker 4: to essentials and to value pricing.
Speaker 1: We're just about I don't know what I said a
Speaker 1: couple of weeks or so away from the inauguration of
Speaker 1: President Trump, who's promised to impose additional tariffs as well
Speaker 1: as some new tariffs. There's a lot of concern this
Speaker 1: could have an outsize effect on the retail industry. Are
Speaker 1: they prepared for this?
Speaker 2: Are they already preparing for this?
Speaker 4: I think they've been prepared for it. The diversification of
Speaker 4: sourcing of goods away from China has been definitely top
Speaker 4: of mind. The footwear retailers have the most exposure of China,
Speaker 4: Others like the Abercrombie some some apparel retailers have already
Speaker 4: gotten their exposure to China down to single digits from
Speaker 4: what had been double digits. It's a concern because we
Speaker 4: know what the consumer doesn't like is price increases, so
Speaker 4: it only makes value matter. And that's why we lean
Speaker 4: defensive in retailers that offer value, like the discounters and
Speaker 4: like the off pricers, or strong brands offering newness and innovation.
Speaker 4: Hello Birkenstock where Germany and Portugal where they make their goods.
Speaker 4: Or you take a look at others, you look at
Speaker 4: Abercrombie when there's newness and innovation too.
Speaker 3: How many pairs of Berkeley thirty pairs at this point
Speaker 3: of berkanstock Excell, you're past the average of three point
Speaker 3: six with the average American three point six. I blew
Speaker 3: past that long ago. Buy those Kloto shoes too, Yes,
Speaker 3: I do that as well. So terms are a big
Speaker 3: question mark here. We don't know when they're going to
Speaker 3: coming or in what form. But another big question mark
Speaker 3: is a possibility of strikes at the ports once again,
Speaker 3: we know that talk. They're supposed to resume next week.
Speaker 3: What does inventory look like for retailers? I mean, we
Speaker 3: knew the last time around, they kind of got ahead
Speaker 3: of it. But are they ready for another potential strike.
Speaker 4: A lot of them have been moving where they bring
Speaker 4: in their goods from, some of them using air. I
Speaker 4: think they're ready because one of our teams for twenty
Speaker 4: twenty five is while it's about social service supply chain,
Speaker 4: it's about surprise. We know this strike has been on
Speaker 4: the docket for a while, and so they're prepared for it.
Speaker 4: Luckily it would be happening after Christmas, not before Christmas.
Speaker 4: Goods are in, but retailers are having to pay more
Speaker 4: to circumvent where those goods arrive.
Speaker 1: Dana always a great conversation looking forward to see how
Speaker 1: IT twenty twenty five plays out in the retail space. Dantel,
Speaker 1: the founder and CEO at Telsey Advisory Group,