Yahoo Finance’s Alexis Christoforous and Deborah Weinswig, Coresight Research Founder & CEO, discuss retail outlook leading up to the holiday season.
ALEXIS CHRISTOFOROUS: Despite encouraging news from both Pfizer and Moderna on the vaccine front, investors are focused on fresh lockdowns across the country as new cases of coronavirus continue to surge. And that new wave of infections is already having an economic impact. Fresh data today show that retail sales rose 3/10 of a percent in October. That was well below the 1.6% gain we saw in September.
Joining me now to talk all things retail is Deborah Weinswig. She is founder and CEO of Coresight Research. Deborah, thanks for being with us.
So, if you look at this report, sales dipped in some key categories. Grocery down. Bar and restaurant receipts decline. Both sporting goods and clothing, off more than 4%. What does this tell you about what we’re buying, or maybe what we’re not buying right now?
DEBORAH WEINSWIG: Yeah, I mean, I think we’ve continued to see areas of anything, once again, kind of digitally first– right– where we saw sales up almost 30%. And that, you know, if we look at what Walmart reported today, very similar, anything that’s these digitally native companies. In terms of what is selling, if we look at, across the board, I mean, it’s some things that we wouldn’t have expected. Jewelry has been very strong. We continue to see luxury very strong.
But when it comes to more of the basics, I mean, our feeling is that in some ways the home sector– not home improvement, but home furnishings– missed out on a bit of an opportunity here. We continue to see improvement sales climb, but sales of home-related items not as strong as we would have expected.
ALEXIS CHRISTOFOROUS: What– what are you seeing now in the early days of holiday shopping? Because we know there’s not just sort of one Black Friday this year. The sales are going on throughout the season, and retailers are starting those sales earlier and earlier. Are you seeing that consumers– maybe they didn’t spend as much in October because they were saving up looking ahead to the holidays?
DEBORAH WEINSWIG: I think that that’s always the case, right, this idea that we’re going to have deep discounts– 60, 70, and 80. And you know, the consumer is kind of saving a bit for that. First of all, because of a lack of inventory right now, we don’t expect those really deep discounts like we’ve seen in the past. So the consumer might be disappointed.
But at the same time, one of the really interesting changes we’re seeing, of course, is this move from– kind of continue to move from food away from home to food at home. Just some numbers to throw out at you. For this holiday season, Thanksgiving and Christmas, if you think about it, typically about $260 billion is spent in the restaurant sector. Since there’s about 100% markup, you’re talking about $130 billion coming into the grocery sector.
We’ve worked out some of those datas with One Plus, but it’s really pretty incredible.
ALEXIS CHRISTOFOROUS: It really, really is. When you look at some of the big winners here– Home Depot yesterday reporting higher revenue and earnings. We’re going to hear from Target and from Lowe’s. But also we’re going to hear from Macy’s. Do you think that results are still going to be depressed for the big department stores?
DEBORAH WEINSWIG: So if you look at the numbers, what Walmart reported today, comps up 640 basis points– 570 basis points of that was e-commerce. If you as a retailer don’t have a great experience for the consumer– and whether it’s on-time delivery, communication, but also just a seamless experience– I do fear that some of these department stores may be kind of left behind a bit.
ALEXIS CHRISTOFOROUS: Do you think that we’re going to start– just switching over to groceries for a moment– do you think we’re going to start to see the panic buying and the hoarding that we saw back in March during the pandemic?
DEBORAH WEINSWIG: So something I never would have thought would have come out of my mouth. Not only do I think we’ll continue to see– although, you know, supply chains and whatnot are in much better shape. But even, you know, panic buying around holiday gifts. Right, because consumers are aware, if they’re in a physical store or they’re looking for something and it’s kind of selling out while they’re online– which is happening– there are concerns right now about not having kind of enough gifts to give.
And someone we spoke to yesterday said that even for Thanksgiving, they got a note in the mail that said that their turkeys might not be available, but that the retailer would compensate them with a $35 coupon. You know, it’s unprecedented, in terms of supply chain, but I think that you’re very much on to something where we will see the stock up. But it’s not just food. It’ll be gifts as well.
ALEXIS CHRISTOFOROUS: And I’ll tell you what– it’s also barbells. I went and tried to buy some hand weights the other day at Dick’s. And they told me they didn’t have any, and they didn’t know when they were getting them.
Deborah Weinswig, founder and CEO of Coresight Research, thanks so much for being with us.
DEBORAH WEINSWIG: Thank you so much.