I tell you, when you want to talk retail, there is no better voice to chat with than Dana Telsey. She's a Chief Research Officer and CEO of Telsey Advisory Group. Just an outstanding firm. She created really focusing on the consumer and on all things retail. She's built a great team there. It's a great success story for a lot of these boutique research firms. I just hold up Dana's firm is one of the best out there. Dana, thanks
so much for joining us here. You know there's a lot to talk about, but you know, having read your research over the years, I know I got to focus on a few key seasons. One of them is back to school. Yes, I know it's not even May, but back to school is probably the next big season for retailers. And we've got inflation out there, We've got an uncertain economic environment. How should I be thinking about back to school? How are the retailers prepared?
I think the retailer. First of all, thank you so much for having me, and thank you so much for your kind words. I always very much enjoy partnering with you in Bloomberg. I would say, when I think about this season coming up for back to school and what's happening. It's filled with uncertainty. The one thing we know is that retailers are cleaning out their inventory, so they're going to be lean on goods, which is encouraging. The uncertainty with the top line, given the levels of consumer demand
is where there definitely is caution. You're seeing the end of snap benefits, the lower tax refunds by a double digit amount, the volatility the stock market with the bank failures that are out there, and that's leading to that uncertainty where even the luxury goods companies have seen a moderation and growth still positive, but a moderation. And thinking about back to school, I think we're going to focus on the essentials. I think we're going to focus on
it off price. I think we're still going to have the discounters being able to win for back to school.
That's exactly what I wanted to ask about because I noticed a bifurcation in for example, the auto industry. Right if you want something that's high end or high dollar, you're going to have to wait if you can get it at all, Whereas if you want something that's affordable. Although in cars right now that's kind of a silly term to use, but you can get it. So demand is outstripping supply on the higher end. But in terms of you know, those who don't earn as much, they're
able to still get you know, what they need. Is that Is that true in terms of a sort of a cross retail.
Yes, you can get what you need. And we're no longer seeing what you saw in twenty twenty one and a bit of twenty two. Price increases are no longer are no longer happening out there. And the real question mark is what is the direction of consumer demand? And given what all companies have guided to many have guided to improvement in the back half of twenty three, is that really going to happen given the uncertainty of the macro.
Hey, Dana, you know, having read your research over the years, you know you've been so up out front on the theme of right sizing the industry for the number of stores. And we've seen really our the last day Gate, plus so many of the department stores in particulars you know, closed stores to try to right size the inventory's more and more shopping goes online. Are we there yet? Is the industry kind of right sized itself?
It has right size to a great degree. I can tell you that these bed Bath and Beyond locations that are becoming available, I think there's arm wrestling going on
by the retailers in order to capture those boxes. The locations that they have, the adjacencies that they have, and the fact that there's a lack of new development, and whether it's the dollar stores, the off price retailers, some of the department stores, and other constituencies, whether it's arts and crafts retailers are home, those Bed Bath and Beyond locations will be gobbled up fast.
Are you looking at other big box stores that could be headed the same way. I'm not sure how it is across the country, but when I go into the best Buy near me, it looks an awful lot like bed Bath and Beyond in terms of hardly anyone's there to help me. The shelves aren't stocked. I don't even know if the lights are on in the entire store. So can they pull through.
Given the fact that the offering of brands that they have it best Buy, and keep in mind, brands are part of the key at best Buy? What change would that Bath and Beyond they eliminated brands and one to more private label. I think the halo of brands is a differentiator for Best Buy.
Hey, Dana, the pandemic impacted so many people in so many different ways and so many different businesses, and you know, certainly retail is right at the top of the list. How we shop and things like that. How do you put that into perspective? How is shopping the consumer behavior, retailer's response to that behavior. How's that changed over the last several years.
I think one of the things that happened is the three elements that we're all talking about. Pre COVID, Amazon's going to take over retail didn't happen. You're going to have store so many retail stores need to close they did close. And you have bankruptcies. We had ninety six consumer bankruptcies during the pandemic. You're fast forward and here we are today. You have a cleaner landscape than you've
had in the past. You have an appreciation both by the consumer, the retailers, and the landlords of just how important that physical experience is. And I think, if anything, stores are being invested in for multiple functionalities in terms of being able to service with buy online pickup service,
with omni channel and service with experience. I think we're coming here, coming out of this with a new appreciation for the store in all categories, and investment in them is not only a nice to have, it's a must have to win and gain market share.
How does the labor force look to you, Dana, because I know that going into or coming out of the holiday season, rather a lot of companies were slow to let go of seasonal workers, whereas in the past they would have just dropped them post Christmas. They were worried this year, at least to the start, about being able to get enough people, so they didn't do that. How does it look now?
I think overall what we're hearing about labor, retailers will try to keep their full timers. They'll add on when they need to add on, but they're still being very cautious in terms of labor force in order to be able to meet demand and the expense pressures. The labor cost increases and the wage price increases, that is not going away, that is sticking, and retail is a mindful of what the expense expense allocation is into the store. But I agree with you, service everywhere needs to be improved.
Daniel, are you one of the top retail analysts on the street. What's your top call right here?
I think the top call right now overall that we have out there. I think we're going to win with off Price this year in twenty twenty three. I think they're going to be the differentiator.
So what are some of the names in that category.
You look at TJX, you look at Burlington, you look at Ross stores, and I think also on the lower income side, I'm watching what City Trends does very carefully interesting.
Interesting. Is there anything else we should be watching out for? Any hot products, any hot brands that have caught your eye lately?
I mean, I always think there's new neis out there. What you have going on with Hoka Onrun and on Running is very exciting, given the newness that that they offer.
My mom just brought her second pair of Hokahs and she's seventy three. It's a shoe.
Oh, it's nearing a billion in sales. It has great cushioning. And when you look on the streets, watch what's on people's feet.
Good stuff.
That's that's primary research.
Katie Greifeld also she's like, oh, it's not about fashion. Apparently, it's just it's good for your joints. Okay, they're more cushioning. I don't know if it's all right.
Dana, thanks so much for joining us. Really appreciate getting having you, bet Dana. Dana Telsey is a Chief Research Officer and CEO of Tells the Advisory Group. She's one of the top analysts on Wall Street flat out. And I'll tell you what. Some of the best analysts on Wall Street research anals over the last thirty year came from a firm that no longer exists called CJ Lawrence. Some of the top analysts, and she did a stint
at CJ Lawrence. So it does not surprise me at all, Dana Telsey, this is Bloomberg