Logan Ensign: 0:36
Joel welcome to Shelf Life. Thanks, logan, hope you had a great Thanksgiving.
Joel Beal: 0:41
I did, I did. It's fun to do our second special episode here. I'll ask some hard-hitting questions for you.
Yeah, and I think as we go and talk about Black Friday, it should be noted that you've got a new microphone that I think we've got a Black Friday deal on, so that's right.
Yeah, I didn't get to the stores but Franklin did, so this showed up in the mail. Hopefully it sounds a little bit better. I understand you got your Black Friday shopping done or your holiday shopping done.
You know I did. I did pretty well this year. I wouldn't say it's the norm, but I got most of my holiday shopping done. So I've been looking at the data as it started to trickle in. It's the Monday after, it's the middle of Cyber Monday and I'm sure more will come. But I can add my own personal anecdotes to that, I guess, about how I chose to shop.
So did you finish the pie that night and head out to Walmart, Target, Costco Thursday night, or what was your Black Friday experience?
Well, I did eat the pie, that's true, but no, I think I was like an increasing number of consumers who were purchasing online. So most of my personal shopping was online, although I did go into some stores over the weekend. I like to browse, but I just found for me it was a little easier to find exactly what I wanted online.
Well fascinating microcosm of what's going on out there. You know it's interesting. I think we've got a lot of our customers who follow this time really close, and so we do as well, and so it's a really, really big moment for CPGs and really trying to make sense of what is going on in the economy and with kind of brand manufacturing generally. It seems like there have been signs of the economy cooling. Retailers like Target and Home Depot have seen earnings fall and consumer sentiment has been low. But what are you seeing in the numbers, kind of as Black Friday information has come out, and what's your take from what you can see so far?
Yeah. So it's pretty limited, I would say. So everything feels very preliminary to the companies that can kind of jump the gun and you know the payments companies, some of the online you know kind of marketplaces that are starting to report out. So generally I think the trends are that sales are up. I'm going to caveat that a bit and we'll get back there but sales are up. Online is doing better than in-store, but both are up to some degree. So the numbers we're seeing are, you know, I think, averaging out around 8% online and call it a percent or two in-store. Now I say, why do we caveat that? Well, when people report, they're usually reporting in dollars and we have to remember, while inflation has come down, we're still looking at 4% core inflation year every year. So I think, and I think we're kind of seeing this in general, what we're hearing from even our own customers is this is a Black Friday. That's probably a little more flat-ish than up, but if you look at the numbers, yes, from a dollar standpoint, we're up.
Well, and can you unpack that sort of more macroeconomic trend for listeners here? I know we were talking earlier about the Walmart CEO and potentially even deflationary pressure into the future, but yeah, we'd love to unpack that a little bit more.
Yeah, I always love talking about inflation Everybody's favorite topic. So one thing that's very notable is inflation is coming down. That's a very positive thing. It's been the stress, I think, on all of us and certainly consumers. Everything is getting more expensive and we're seeing in the data that that inflation is decreasing. And inflation can be cut in a lot of different ways. Usually it's quoted as a year over year number, so literally how much essentially, has the dollar gone down in value? Or has a basket of goods really gone up in value over the course of a year? And you generally want to exclude certain things from it. You don't like to include things like gasoline because they tend to be very variable. So often people look at something called core inflation and right now that's up 4% year over year. That's the measure. I think the thing that can be confusing is we hear well, inflation is going down, but it's not actually going down. There is normally a couple percent of inflation. Usually the Federal Reserve wants that to be 2% to 3% maybe, and so it just means that the rate of change of that has decreased. We're not seeing that 8% increase here over year. Now we're seeing 4%, but the dollar's still being stretched less far than it used to be. Now, the thing that's interesting is, I think everybody wants there to be deflationally. So that's what you have in your mind. You want to go to the store and you want things to be more the prices they used to be. That doesn't usually happen, although, as you commented and we were chatting before we started recording Walmart just 10 days ago or so, doug McMill and their CEO came out and said we actually expect we're going to see some deflation. So we're going to see some general merchandise items where the prices actually start to drop, which I'm sure people would love, but I don't think something we should probably expect more broadly.
Joel, today you were talking a little bit about the range that we're seeing from a performance perspective for Black Friday. We'd love to unpack that a little bit. We've seen some very high estimates. We've seen some maybe not so high estimates, and I know you sort of talked about what you're seeing. But could you unpack a little bit more your assessment of how Black Friday went generally?
Yeah. So it seems like it's been solid, I think is the right way to define it. If I step back a couple of months, talking to our own customers, which are all consumer brands but of all sorts of different verticals, I think everybody came into the holidays with some trepidation. It was what is it going to be like? Again, consumer sentiment has been negative. People have had, I think, resilient years, but they haven't been great In certain categories. These two months make or break your year. I don't think the average consumer realizes if you're selling toys or incertineries and electronics, this is your year. It's made in a very short window. So I think a lot of concern and I think what we're seeing is kind of what the economy's been like. It feels like the last year. It's not a blockbuster. We're not seeing numbers that feel wildly successful, if you will, but the bottom isn't falling out. The consumer is resilient. I mean to me it aligns with these polls that I see, when they ask people about how they feel about the economy and they'll say how do you feel personally about your own financial situation and how do you feel about the economy in general? And people tend to be much more pessimistic about the economy in general, they expect everything's bad but they're like no, myself I'm doing OK and I think that's what we're seeing. And I was also looking at what are the categories that are doing well. It's highly discretionary stuff. It's electronics, it's jewelry, it's apparel. People still have money to spend. It's not like again, food prices have moderated, so I think it's solid. It'll be interesting as more data comes in. The other thing that I found interesting in the data and again, lots of different sources. Everybody's got their own way of measuring, so none of these are probably going to be totally accurate. Bye, we mentioned how e-commerce is doing quite well, which is to be expected. In-store was up a modest amount. When you look at foot traffic. Foot traffic at least the couple of datasets I'm seeing is up more than in-store sales. I find that to be an interesting dynamic. Again, I can just maybe speak of my own anecdotes where it's nice to be able to go out. It's an experience. You go to the mall, at least a nice one, the ones that haven't died and the nice ones are still doing well. There was a lot of foot traffic when I was there. People were out, but I think there's a lot of browsing, a lot of exploring, a lot of doing research, and then people go home and they order it. Maybe they want to get that. Okay, I found one, but it wasn't the exact one I want, so I'm going to get a different version or a different color or size or whatever it is. That's something that I think is interesting, and I'm curious if that will play out as we get more data.
Absolutely. I think we had seen a really striking difference between that e-commerce year over year and that brick and mortar year over year is a decent spread, that a lot more of the growth for Black Friday is coming from e-commerce. I think one of the other things that I noticed is we've had this trend for several years now of these big box retailers bringing those operating hours earlier and earlier into Thanksgiving and earlier in the day on Thanksgiving and Black Friday deals starting then. This year that trend actually went the opposite direction. I've noticed that Walmart was closed all of Thanksgiving and Target was closed and Costco was closed. Even Walgreens had most locations closed on Thanksgiving, which I think is an interesting trend to be going back the other way and probably didn't expect it to ever go back, but it did, which I think is pretty fascinating.
I agree with you and that's interesting. We were looking at that list and the vast majority of retailers are closed on Thanksgiving and I agree that's a reverse and probably just speaks to how people really want to behave. You don't want to rush out the door after you eat your turkey to get in line. When it's cold it's nicer. You spend time with family or friends. You can start browsing online. You can go shopping on Friday or Saturday and enjoy the experience. I think it's good for consumers. It's good for workers. It's kind of terrible that people were being expected to work during the holidays and it probably is being reflected a bit in the data here.
Well, thanks, joel, really great getting your insight. Always good chatting. It's a pleasure. As always, logan, you've been listening to Joel Beal, ceo of Alloy AI. That's all for this week. See you next time on Shellfly.