>> BACK TO THE BUSINESS OF
BUYING A
HOLIDAY EDITION.
>> THAT DOESN'T NORMALLY A BIG
SHADOW IS A SHORTENED HOLIDAY
RETAIL SEASON, WHICH MEANS AN
EARLIER START TO THOSE HOLIDAY
DEALS. RETAIL GIANT ARE PUSHING
CONSUMERS TO FIND THE
DEALS INSTA OR HOW OR TARGET
BEST BUY AND WALMART ARE ALL
GEARING UP FOR THE HOLIDAY RUSH
JOINING US NOW IS
CHARLES O'SHEA MODI'S RETAIL
ANALYST AT EDWARD HERDSMEN IS
THE FOUNDER AND PRESIDENT OVER
ITS SOURCING JOURNAL GREAT TO
HAVE BOTH THE GUYS HERE CHARLES
LET'S START WITH YOU
ON THIS. WE KNOW THE EXPERIENCE
IS SO IMPORTANT TO A LOT OF
THESE RETAILERS HOW ARE THEY
DOING THAT FOR THE HOLIDAY
SEASON IN ORDER TO GET THOSE
CUSTOMERS BACK IN
THE STORE.
>> WELL THESE WHAT AGAIN A MAN
IS TO PROMOTE OBVIOUSLY I MEAN
I GO INTO A STORE IF IT'S HALF
OFF ITS 20 OFF MAYBE I WON'T GO
IN
THE STORE. THE OTHER THING I
THINK'S IMPORTANT AS YOU KNOW
WHEN YOU SEE THE BIG FLAGSHIP
STORE GORE'S THOSE WINDOWS ARE
MARKETING TOOLS AND THAT'S A
WAY TO PULL
PEOPLE IN EVEN IN A MALL YOU
CAN DO THAT ONE NOTICE PLACE
CAN BE HELPFUL.
BUT I THINK YOU JUST GOT TO
STICK TO YOUR KNITTING YOU'VE
GOT A PRICE. WELL THE STORMS
HAVE TO BE CLEAN FRESH. THEY
CAN'T LOOK LIKE. YOU KNOW
MOSCOW
1980 RED THEY'VE GOT TO BE
CLEAN. THE GOT TO GIVE THE
CONSUMER REASON A COMEBACK
PEOPLE MAKE A BIG COMMITMENT TO
GO TO YOUR STORE IT REALLY
COULD DO IT ON THE COUCH TO GO
TO SOMEBODY ELSE A STORE SO
WHEN THEY COME THEY'VE GOT TO
BE HAPPY TO GOT TO BE
PLEASANTLY SURPRISED AT
A MINIMUM.
>> AND I HEARD SOMETHING THAT'S
KIND OF DIFFICULT TO FORECAST
AS DEMAND FOR A LOT OF THINGS
TOYS FOR EXAMPLE, LOT
OF IMPORTANT MOVIE FRANCHISE IS
COMING UP FROZEN 2 STARS AND
CETERA BUCK US THROUGH WHAT
RETAILERS ARE WHAT DECISIONS
THEY'RE MAKING
TERMS OF INVENTORY AND HOW THEY
ARE KIND OF PLANNING FOR THAT A
MAN.
>> WELL I THINK WITH WITH THE
INCREASED TARIFFS HAPPENING IN
SEPTEMBER A LOT OF IN A LOT OF
RETAILERS AND BRANDS TOOK
INCREASE INVENTORY POSITIONS A
LITTLE BIT EARLIER THIS YEAR.
AND I THINK THAT'S CAUSING A
LITTLE BIT OF CONCERN. THE
BLOATED INVENTORY LEVELS AS ONE
OF THE REASONS WE'RE SEEING
REALLY AGGRESSIVE PROMOTIONS
EARLIER ON. SPEAKING TO THE
FACTORIES AND SOME OF YOU KNOW
FURTHER DOWN THE SUPPLY CHAIN
WE'RE HEARING THAT K'WAUN
ORDERS ARE
GETTING CUT WHICH IS AN
INDICATION THAT THESE GOODS ARE
NOT BEING SOLD THROUGH SO I
THINK WE'RE GOING TO SEE EVEN
MORE AGGRESSIVE PROMOTIONS,
HAPPENING. YOU KNOW
THANKSGIVING TO TO THE END OF
THE YEAR.
>> SEEMS LIKE IT'S GOOD FOR THE
CONSUMER THAT RIGHT, BUT IT
DOES IS TO THE DETRIMENT OF THE
BOTTOM LINE FOR THESE COMPANIES
OH ABSOLUTELY I MEAN.
>> THE RETAILERS RIGHT NOW ARE
SAYING THEY DON'T HAVE TO RAISE
PRICES ARE ABLE TO KEEP MARGINS
CONSISTENT. BUT THAT'S NOT
REALLY TRUE. THE TARIFFS ARE IN
IMPACTING MARGIN. THEY'RE
TRYING TO MITIGATE SOME OF THAT
RISK BY FINDING
ALTERNATIVE COUNTRIES PUTTING
SOME OF THE PRESSURE ON THE
SUPPLIERS THEY CAN ONLY DO THAT
FOR SO LONG ULTIMATELY THE
CONSUMERS WILL
FEEL THAT FOR THE SHORT TERM
THOUGH BECAUSE INVENTORY LEVELS
ARE SO HIGH BY THE CONSUMERS
WILL GET
THE BENEFIT BECAUSE THEY HAVE
TO PROMOTE IN ORDER TO MOVE
THE GOODS.
>> CHARLES LET'S GO TO SOME OF
THESE TRENDS WE'RE SEEING A LOT
OF RETAILERS DO
THERE'S THIS ACRONYM BO PACE
THAT A LOT OF PEOPLE ARE USING
THEM BY NOW PICK
UP IN THE IS THAT ONE OF THE
BIG TRENDS IS GOING TO GET A
LOT OF PEOPLE TO ACTUALLY GET
FOOT TRAFFIC INTO A LOT OF THE
STORES THAT'S BEEN OUT THERE
FOR
A WHILE.
>> RIGHT. I MEAN I WAS TRYING
TO REMEMBER WHAT I DID MY FIRST
BUY ONLINE PICK UP IN STORE AND
WE MIGHT BE GOING BACK
15 YEARS WHICH IS A LONG TIME
FOR THIS TO
BE AROUND. AND I THINK I
YESTERDAY FOR THE GUYS I COVER
YOU'RE TALKING 40% PLUS THE
ORDERS ARE PICKED UP IN A
STORE. SO THE STORE STILL
MATTER WHAT WE SAW LAST HOLIDAY
WE'RE BREAKING MORE COPS UP ON
LINE VELOCITY JUST HOMAN ALONG
FOR A LOT OF THE BIGGER GUYS
SO. YEAH, YOU WANT TO GET THE
CONSUMER IN YOUR STORE ONCE YOU
GET HIM IN THE STORY PICK UP AN
ALREADY GOT TO YOU GOT
TO SELL. THEY MAY AGAIN THEY
MADE THAT COMMITMENT TO COME TO
THE STORE TO PICK UP THE ITEM.
GET US TO BUY
SOMETHING THIS
YOU KNOW THAT AND THAT THAT
ATTACHMENT IS SOMETHING THAT
WE'RE GOING TO PAY A LOT OF
ATTENTION
BUT FOR MOST OF THE US IF YOU
WANT TO GET SOMETHING SAME DAY
YOU'VE GOT TO GO TO THE STORE
AND GET IT.
AND THAT'S WHY AGAIN ANOTHER
COMPELLING ADVANTAGE OF BRICK
AND MORTAR HAS A REPAIR PLAN
LINE. RETAILER LIKE AMAZON FOR
INSTANCE.
>> WE DID SEE A SAME STORE
SALES BEAT EXPECTATIONS FOR A
LOT OF RETAILERS IN THIS LATEST
EARNINGS REPORT, BEST BUY
SPECIFIC WHAT ROLE DO THE
SPECIALTY STORES REALLY
PLAY WHEN IT COMES TO DRIVING
CONSUMERS BACK INTO THE STORE
BECAUSE MAYBE FOR ELECTRONICS
RIGHT, ESPECIALLY THE HIGHER
PRICE MONTHS YOU STILL DO WANT
TO GO INTO THE STORE AND SEE IT
RIGHT AND WE'RE GOING TO TAKE
THIS ONE.
>> WELL, I MEAN I CAN ONLY
REALLY SPEAK SPECIFICALLY TO
THE TO THE SOFT THAT IN
CLOTHING
AND IN AND IN FOOTWEAR RIGHT
NOW YOU KNOW THAT THE REAL
WINNERS THAT THAT I'M SEEING
HAPPENS TO BE THE ZARA PH AN
END SO YOU GOT THE FAST FASHION
PLAYERS, THE DISCOUNTERS WHICH
ARE THE ROSS THE TJ AND THE
BURLINGTON'S AND IN SOME OF THE
ATHLETIC BUT BRANDS WHETHER
IT'S A LITTLE TOO. THE NIKKEI
IN
THE ADIDAS ALL THOSE OTHER BIG
BOX RETAILERS WEATHER IS THE
MACY'S THE PENNIES THE CALLS.
I SEE THEM STRUGGLING. YES, THE
TARGETING AND WALMART ARE DOING
FAIRLY WELL AH BUT ANYONE IN
THE MIDDLE CALLED TO GET CALL
IT,
YOU KNOW
THE.
>> MAY SEE MORE DEALS THAN A
CREW RIGHT THERE'S A LOT OF
PROBLEMS ARE.
>> WHAT IS IT ABOUT A TARGET
AND WAL-MART THAT MAKES HIM
DIFFERENT FROM THOSE OTHER
DEPARTMENTS OR IS THAT MAYBE
AREN'T DOING AS WELL.
>> WE WERE JUST TALKING ABOUT
THIS YOU KNOW BACK STAGE THAT
YOU THEY HAVE FOOD IN THE STORE
WHICH IS A GREAT CATALYST TO
BRING PEOPLE BACK OVER AND
OVER AGAIN, VERY LOW MARGIN
BUSINESS SO NOT NECESSARILY
WHERE THEY'RE MAKING THEIR
MONEY. BUT WHERE IN THE STORE
CAN CONVERT INTO OTHER PRODUCTS
THAT SOMETHING THAT CALLS
DOESN'T HAVE. SO THAT'S A BIG
DIFFERENTIATOR THEIR THEIR
ABILITY TO BE AGGRESSIVE ON
PRICE BECAUSE THEY'RE THE
VOLUME THAT THAT THEY'RE
PURCHASING IT'S VERY HARD TO
COMPETE WITH HIM THERE AND HE
ALSO THEY'RE IN THERE.
EVERYWHERE YOU GO IS A WALMART
AND TARGET SO
THEY HAVE TO HAVE LOCATION, YOU
KNOW THE THERE AT ALL THE RIGHT
PLACES THEY HAVE THE RIGHT REAL
ESTATE SO A LOT OF THING
WORKING IN THEIR FAVOR RIGHT
NOW.
>> CHARLES LET'S TALK TOYS HERE
FOR A WHILE BECAUSE OBVIOUSLY
THE LANDSCAPE CHANGE WHEN TOYS
R US NO LONGER WAS THAT
WAS IT RELIABLE OPTION AMAZON
OBVIOUSLY TRY TO FILL THE VOID
THERE BUT TARGETS PARTNERSHIP
WITH TOYS R US ADDS A NEW LAYER
TO ALL OF THIS
HOW DO YOU FEEL LIKE THAT'S
GOING TO IMPACT TARGET EVEN
TOYS ARRESTS IN THE
HOLIDAY SEASON.
>> A TARGET REALLY MADE A PUSH
LAST YEAR YEAR BEFORE BUT MORE
SO LAST YEAR WHERE THEY DOUBLED
DOWN.
THEY ALMOST DOUBLE THE SQUARE
FOOTAGE AND THE LINEAR FEET IN
THE STORES. THEY COLLABORATE
WITH THE MANUFACTURER TO COME
TO SOME EXCLUSIVE STUFF WHICH
IS WHAT TOYS WAS REALLY GOOD AT
YEARS AGO. AND THEN THEY KEPT
RELOADING DURING THE HOLIDAY.
THIS WILL BE MY MY 17 3 KING
HOLIDAY AT MOODY'S AND I'VE
NEVER SEEN TARGET NOR WALMART
RELOADING TOYS AS LATE IN THE
SEASON AS THEY DID. IN THE PAST
THEY WOULD LOAD UP
EARLY PROMOTE EARLY AND
THEN THE 22TH 2322TH DECEMBER
THEY'RE OUT AND TOYS R US WOULD
STEP IN PRICES TO BE A LITTLE
HIGHER THEY GET SOME
MORE MARGIN. LAST YEAR I WAS IN
A TARGETS FOR LATE ON
THE 23TH. THEY RUN BY 2 MORE
TOWARDS TO PUT ON THE SHELVES
FOR CHRISTMAS EVE. SO THAT
DYNAMIC IS CONTINUING
TO EVOLVE. I THINK THE 3 BIG
TOY RETAILERS. OBVIOUSLY
AMAZON. WALMART TARGET.
WALMART AND TARGET HAVE THE
IN-STORE EXPERIENCE. NO ONE HAS
THE IN-STORE EXPERIENCE A TOYS
R US HAD. YOU KNOW THE
DEDICATION AND ALL THAT KIND OF
STUFF BUT. THE VOID HAS
BEEN FILLED. AND IT'S BEEN
FILLED BY THOSE 3 BIG GUYS I
THINK YOU'LL SEE YOU KNOW
THERE'S BEEN PRESSURE ON THE
VENDORS BECAUSE NOW YOU'RE
DEALING WITH 3 LARGE RETAILERS
THAT DON'T NECESSARILY HAVE TO
MAKE MONEY SELLING
TOYS RIGHT SO THEY CAN USE IN
THE DRIVE TRAFFIC ET CETERA,
BUT I THINK THAT
THIS HOLIDAY I WOULD FOCUS ON
TARGETS FOR BUSINESS AHEAD OF