Dana Telsey on Retailers Entering Multiple Categories (Audio)

is Bill Maloney, Good afternoon, Charlie. That's right in new US averages are under pressure today, with down currently down forty four points, SUP drop seven in, NAZAC declines twenty. The small cap six hundred is down four points. In the U S ten yield at one point five percent. Seven out of tennes s B sectors are lower, led by losses and energy, financials and healthcare defensive groups, Consumer

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with Pim's Box and Kathleen Hays on Bloomberg Radio. Detail on retail, Yes, discounting, heavy discounting and declining foot traffic at two major retailers, though the shares moving in opposite to action. Shares of Ralph Lauren higher right now by nine and a quarter percent, Michael Core's down two and three quarters of a percent. Here to explain all of this is Dana Telsea, chief executive of Telsey Advisory Group. Dana,

thanks very much for being with me. Thank you very much for having me all right, can you explain what is going on with retailing? Because Michael Cores has said they're cutting back sales to department stores and Ralph Lauren is closing I believe about ten of their retail shops. Why are they doing this? I think overall everyone is looking to figure out ways to enhance sales, drive margins, and minimize their exposure to promotions, friends and family events.

Everyone's thinking about their brand and how to maintain and enhance the health of their brands. But isn't that what they always do? I mean, is there any difference now than trying to enhance your brand five years ago? It is a difference, I think. Right now, we've just seen so many retailers working working to be able to appeal to the consumer. Prices, the vocabulary that many consumers know when goods are full price versus marked down. Retailers want to be able to sell goods at full price, not

marked down. We've seen a lot of department stores and brands, frankly, in the desire to have sell through and drive traffic there. They've been doing it with markdowns and promotions. And so now what's gonna what's going to change, lower inventory levels, personal personalization and customization or products, and being able to

differentiate between department store distribution and your own store distribution. Now, as part of that effort enclosing stores, is that an admission that they all expanded much too quickly or did they meet the market demand at the time, and now they're just right the ship. Different times call for different business strategies, And certainly what was happening five and ten years ago and even fifteen years ago was totally different today.

The advent of what we're having with smart phones being able to make purchases or seeing something on Instagram or basically the instantaneous feedback reaction and ability to purchase goods is very different from having to go to a store. It used to be the customer needed to go to the store to make a purchase. Now the store is coming to the customer. So at the time the way companies grew was opening stores, it was square footage growth,

but same store sales gave you total sales increase. Now it's all about total sales and do it when the customer wants where the customer wants. All right, So, Dana, let's say someone from Michael Core's were to call you and talk about their new two hundred and twenty one stores and the acquisition of their China business, would you send them back and say, do a rethink on that.

I think they've done a rethink on it already. I think they're one of the ones who have basically said they're not really seeing the opportunity to expand stores much more. They've reached their penetration that they would like. We've seen come Pani's acquired their foreign distributors or licensed partners in order to be able to enhance the brand and the

brand image, and that's what Cores is doing. I think the focus for Cores these days is all about continuing to offer newness in the product as a way to regain a faster rate of sales growth. Now, Coach just yesterday said it's going to pull out of two hundred and fifty department stores. What does that mean for the future of companies such as Macy's and Coals they report results tomorrow, Yes, it's going to be the department store a week at the end of the week with North

trom Macy's, Coals and J. C. Penny's coming up. What we're seeing many of the department stores doing is searching for what are the new categories that they should sell, what should be private label, what should be exclusive. Maybe you look at what you're seeing at Macy's. We're testing some in store best buy shops. Look at what you're seeing at Nordstrom in the Grove in Los Angeles testing selling a Tesla, or look at J. C. Penny putting

in appliances. What what changed the landscape was the fact that in the eighties and the nineties, as more women entered the workforce, a carol became front and center of these department stores. Now, with active being a category that women wear to work and we're on the weekends, there needs to be other category extensions that are being offered. And there you go. You have different categories now being

offered and sold in department stores. Do you see also a change in merchandizing, because one of the areas that was mentioned in the Michael Corp's report was slow down in wristwatch sales and also lower average tickets as the shoppers were all looking to buy smaller handbags. The smaller handbag trend has been going on for a while. That's not something new. Certainly we've been seeing the watch category being challenged. The Swiss watch export data that comes out

on a monthly basis certainly shows that. And the increase in the number of wearables and brands that are doing wearables is first to come in the back half of this year. So I think, if anything, we're seeing some of the brands extend into multiple category ras, whether it's apparel, whether it's foot where, whether it's handbags, or even whether

it's jewelry. And that's why you're seeing companies like Coach, like Cores being talking about the potential for acquisitions, strong balance sheets and ways to continue to help to drive additional EPs and margin enhancement. Thank you very much. Dana Telsey is the chief executive and the founder of Telsey Advisory Group. Giving us detail on retail shares of Ralph Lauren there higher right now by more than nine percent, Michael Core's stock down two and a half percent. This

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