Joel Beal: 1:28
Well, Logan, happy belated Easter. Hope you had a good time. Did you guys do anything special?
Logan Ensign: 1:35
We did. You know I've got the three young kids and live near grandma, so we do lots of egg dyeing and too many presents. Lots of candy Kids. I think we're on a sugar rush the whole weekend. How about you?
Joel Beal: 1:48
Yeah, similar. So like you, for those who don't know, I have two young kids. I have twin boys. So we also went and visited grandma and they had a little Easter egg hunt and one of them is sick today. So imagine that I think maybe a little too much sugar. Yesterday they were pretty wired and one of them sick today. So imagine that I think maybe a little too much sugar. Yesterday they were pretty wired and one woke up this morning and decided he couldn't make it to school. So the weekend is extended for him.
Logan Ensign: 2:14
There you go, there you go. Well, it was an especially early Easter this year. I don't know if that caught you guys off guard. I think we had to do a little bit more last minute shopping and it was a lot colder than we typically have for Easter here.
Joel Beal: 2:28
Yes, easter was early this year, I guess, coming on March 31st. So it's kind of one of those rare years where Easter is a March rather than an April holiday, definitely feels condensed, feels like there's been a lot of holidays, there's been a lot of spending money buying things on that front and, similar to you I know you're in California, I'm in the mountains in Utah. Here it was snowing, so it definitely did not feel particularly spring-like. So let's talk about the timing of Easter and what that does mean for brands, retailers that are selling during this period. So, logan, any thoughts that you have there?
Logan Ensign: 3:10
Well, I know we were talking earlier about sort of the industry forecast that Easter spending would be down year over year somewhere between 5%, 7%, 8%. And it's the Monday after, so we're not quite sure what the results looked like. And I think a lot of what was attributed to kind of that year over year decline is not because of broader economic trends but just a much tighter Easter season and Easter buying window. So I think initially we were a little surprised as we looked at sort of retail spend trends that there would be such a sort of pessimistic forecast. But I think given the context of a much more narrow buying season, it made sense. So you know we'll see as the results come in over the next few days. But I know a lot of retailers and suppliers were sort of bracing for not as positive a season as they've had over the last few years.
Joel Beal: 4:04
Yeah, yeah, that's definitely. I think we both had that same question. If you look at just broader retail sales, they're certainly. I think we're still recovering from that massive COVID spike, so things have really leveled off. And I know as we talk to our customers, people out in the market, some categories are definitely quite soft, others are still doing okay, but overall in aggregate, retail sales are flattish right now it seems like, or maybe even trending slightly up.
Joel Beal: 4:36
So it was kind of surprising to see that Easter forecast being so low. So I'm with you, I'm curious to see the numbers. I think everybody's trying to keep that pulse on the economy right now. How are things doing? Feels like more cautious optimism to me than maybe last year, but it's still cautious, to say the least. So let's talk a little bit about just holidays in general or major kind of retail purchasing. You know kind of seasonality and I'd be curious to hear from you, as you have spent a lot of time in this space. I mean, what do you see from an Easter versus? You know kind of the main? You know holidays, christmas time, et cetera, the Halloweens, the Valentine's Day. I mean, what patterns do you see across these kind of generally relatively short windows events?
Logan Ensign: 5:33
No, I love kind of looking at retail data around these holiday periods and then connecting it back to just the consumer behavior that we expect. And so it's pretty interesting to see like, oh okay, why is that trend happening? Okay, that makes some sense. And I think one segment where all these holidays are relevant typically is in confections. Right, so often Halloween, christmas, easter, valentine's, mother's Day, father's Day, candy often will play a role. So you can kind of see pretty clearly in those seasonal buying patterns what that typically looks like and what to expect. And you know, easter is an interesting one because a lot of that buying typically happens fairly close to the event, right. So you have a fairly narrow buying window for Easter candy. People aren't buying Easter candy, you know, weeks and weeks in advance.
Logan Ensign: 6:26
And this year, you know retail was just getting out of the Valentine's sort of seasonal lanes that they have and moving into Easter, and so that buying window is narrow. When you look at like a Christmas season and you see kind of those buying patterns, it's a much more extended buying period. Right, a lot of people start to buy, you know, christmas themed, holiday themed confections right after Thanksgiving and that buying sort of smooths it out a little bit where you can actually get replenished in time as you sell and you have a bit of more extended window. But I always find it interesting we were working with a finance executive at a chocolate company and you know he would always joke about, well, the tightest buying window there is, chocolate company, and you know he would always joke about, well, the tightest buying window there is uh, it's valentine's day and mother's day that they see so much of their, you know, product moving the day of or the day before uh, which I always thought was was kind of funny to see those buying patterns, just a really severe spike.
Joel Beal: 7:22
Um, those rush to the grocery store and other areas to buy buy those chocolates yeah, straight, straight up and straight down, because the holiday hits and that stuff is put on clearance and they have to get it off the shelf and, as you mentioned, really between Halloween and even beyond today and Easter, we just have the succession of candy purchasing holidays right, one after another versus, you know, the summer when you really don't, and I think you see that in the seasonal patterns and I'm with you, it's fascinating kind of that, that particular market in confectionery. It's also interesting, as you're talking of that kind of lengthened purchasing period from really kind of Halloween through Thanksgiving and then Christmas, and I guess we all complain, or many people complain, about how early the Christmas kind of holiday season starts. But I guess the retailers and the brands know something that everybody else doesn't about smoothing that over. It also is making me think you know we were just chatting about the weather, right, and I guess you know when you have these very short buying windows, things like that probably can really affect it, right. All you need is bad weather and you screw up an event where you only have kind of a week, versus in the holidays where you have many, many weeks of purchasing and you know if something happens, that kind of disrupts that. You have other weeks that can make up for it versus yeah. Once Easter's passed, nobody's buying Easter egg dyeing kits again.
Logan Ensign: 8:57
No, I think so, and you can appreciate also substitution effects for given products, right? So of course we all want to buy the Easter themed, the snowflake themed confections, but with these bigger buying windows ahead of time, you're going to substitute for the everyday product as well. So I think that this sort of compounds, with these very tight windows of I think it puts more pressure on brands to make sure they're executing at the store level, to make sure that they've inventoried sufficiently to meet that demand. But also, if you over inventory with those types of products, the value plummets right Today nobody's buying the Easter bunny shaped chocolate, right? Or they have to be marked down massively. So you know, I feel for a lot of our customers and the suppliers because you really have to hit that target for these tight buying windows on, you know, execution, so much of the volume moves right now. But also you can make some big costly mistakes, either being out of stock or or overstock.
Logan Ensign: 9:57
I was telling you earlier, joel, my, my sister, who's 26, right, so she's not super young, but there is a candy that she goes crazy for the sweet tart jelly beans. And the night before Easter, that Saturday, she came home. We didn't have any at the house. She wanted them and she drove 30 minutes to our Target Walmart, walgreens and Dollar General, genuine, looking at everything and could not find it, and so it's a tricky season to get right, and and the inventory balancing I think is is a fascinating thing.
Joel Beal: 10:32
Well, let me ask you what may be a simple question but you talked about, you know, let's use the example of those jelly beans. If they have a, it has a very short window to sell that before they have to mark it down, even though it's the same jelly bean and I guess that kind of opportunity that every brand has to decide of. Do I want to create kind of a special SKU, particularly for this event? Where is that special SKU going to drive enough incremental sales that it's worth doing? Special SKU going to drive enough incremental sales that it's worth doing, whereas after the fact I'm going to have to mark that down because I've got to unload it and you know it's. I wonder the calculus that goes on for a lot of these brands when it's really obvious that that makes sense, you know, and clearly, considering it's so common in confectionery, they must have the data to show that that is worth it. But I wonder, you know, in other areas if it becomes a little bit more of a toss up.
Logan Ensign: 11:33
Yeah, well, I've run into a couple brands that actually strategically underproduce that seasonal holiday product because of that substitution effect and recognizing, hey, if we run out of stock of that product before the seasonal sort of end window, that's a better dynamic because, but I think you really have to evaluate how substitutable is the product. Right, when you've got the Be Mine hearts, that's probably not super substitutable. Right, that's really geared towards Valentine's Day and if you're out of stock there there's not a natural substitute, Whereas maybe you look at a premium chocolate bar that is seasonally branded versus not, you may be not a natural substitute, Whereas maybe you look at a premium chocolate bar that is, you know, seasonally branded versus not, you may be more inclined to substitute. So, again, I just think all these sorts of buying windows create really interesting uh compressed, uh high stakes sort of dynamics that I always find fascinating to follow. And, um, I think to your point, there's a lot of conversation that happens around product strategy, inventorying, pricing, to kind of be successful through the holidays.
Joel Beal: 12:36
Yeah, well, it was interesting to me I was looking before this at just data around what the biggest kind of consumer spending events are, and this is based on the NRF, the national retail federation, their data. So number one is that back to school period, which actually they show is a little bit bigger than the winter holidays, which was a little surprising to me. They're very close, but, but those are the top two. Then you hit mother's day and father's day, so those, and then you get into valentine's day, easter, graduation it's quite high there, um and then halloween, which I thought was lower than expected, and then you get independence day and super bowl.
Joel Beal: 13:17
So I guess we're we're getting close. Well, we're gonna, you know, be coming up on, I guess, mother's day, father's day period. Here are the the next uh, big events and, as you said, and uh, we won't provide any social commentary here, but apparently that Mother's Day buying window man, it's time to step it up is short, so plan in advance, I think, is not the way that the average man is, so you can differentiate yourself there. There you go.
Logan Ensign: 13:46
There you go. Well, and I found it fascinating this this Easter, you know we think high confections, but there are other you know, verticals, that that that sell high volumes around Easter and so, depending on the supplier, different parts of the year and different holidays are's a little bit more broad in terms of the impact, but there are particular holidays that are hugely impactful for certain brands that you may not think about. I think Valentine's is a good example. Easter is a great example where it depends on the supplier and sort of the vertical how big of an impact it has.
Joel Beal: 14:27
Yeah, and as you talk about that, I mean I know we work with a lot of companies where that back to school I was mentioning how big it is and just massive, you know driver for certain certain brands. Right, People want to make sure their kids are ready to go back to school and do their best. So I can understand that as a parent, but, again, pretty surprising to me to look at the numbers of just how, how significant that is.
Joel Beal: 14:51
Again, pretty surprising to me to look at the numbers of just how significant that is. So I guess we all get to save our money during the summer. That seems to be the period that's the most quiet when it talks about kind of big consumer spending events.
Logan Ensign: 15:01
Although I think all that seasonal chocolate through the holidays.
Joel Beal: 15:05
Although I guess that's why they start creating things like Prime Day to try to make sure that that we have new made up made up periods to spend more. So retailers pretty good at this stuff. Well, logan, it's been a good chat. Again, we'll be on the lookout for how the data comes in. But you know, overall feels like you know, economies doing okay, ish. So it will be be interesting in the coming months if we kind of continue on that, I think kind of steady but slow upward trajectory right, absolutely yeah.
Logan Ensign: 15:39
I think that would be one perspective from myself is if Easter's a little bit light, we don't get to control what part of the calendar year it pops up in. And probably the biggest contributor to maybe a slightly down Easter is going to not be so economic but much more, much more timing. And so, yeah, I think that things are stabilizing and feeling generally optimistic, despite maybe the returns not being fantastic for Easter.