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Holiday shopping: 'Our expectations are really high,' Placer.ai CMO says

In this article:
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Placer.ai CMO Ethan Chernofsky joins Yahoo Finance Live to discuss the holiday shopping season, how the data analytics company measures consumer trends, and Best Buy leading the way this year.

Video Transcript

- So we want to stay on retail earnings. It is a big week, obviously, for the sector leading into Black Friday. Let's bring in our market guest Ethan Chernofsky, Placer.ai CMO for a deeper dive into retail. Thank you so much for being here today, Ethan. So look, these companies both did incredibly well during the pandemic, right. And these numbers are really good. They delivered strong beats, yet the stock is lower. Why is that? Why is that happening? Because how long can we expect to see rebound growth continue to deliver these you know really huge numbers that they have been giving us?

ETHAN CHERNOFSKY: So I think what we saw during the summer season that was so interesting was this unique combination of pent up demand, this wider retail reopening, and an excuse to shop in the back to school season. And as we head into the holidays, we're seeing that same phenomenon, this pent up demand for a holiday season that we missed a year prior. And interestingly, these are brands that we expect to have a really strong season upcoming, and part of the reason is the creativity they show.

You think about what Best Buy has proven throughout the pandemic period, it's that they have a lot of cards to play in order to deal with the unique obstacles presented to them, and that's appointment shopping in the early stages of the recovery. It's leveraging accessibility of products as a unique element to drive urgency in this coming holiday season. So these are retailers that we expect to have a really strong performance in terms of their brick and mortar retail.

- And so what does the outlook look like to you for the coming quarter and then moving forward as well for the retail sector?

ETHAN CHERNOFSKY: So our expectations are really high. There is a feeling that, again, we're seeing a similar combination of factors that we saw heading into that summer season that was so successful, this pent up demand, the idea that we didn't get to have that holiday retail season last year, we didn't necessarily have the opportunity to spend that time with our family, and maybe we have that again.

So there is this sense that people might try to do it up even more than normal. And so I think all of those elements combined for the potential for an extremely strong holiday retail season.

- All right, so when we talk about these holiday beats, let's take a look at some of the trends that you've been sharing with us. And I'm opening up a file right now, but retail leaders weekly visits compared to 2019, the weeks of October up through the first week of November, Target was the big winner, but everybody, Target, Walmart, Best Buy were all up. Is that sustainable throughout the holiday season?

ETHAN CHERNOFSKY: Yeah, I think absolutely. The big question mark is going to come around Black Friday. So we're expecting a lot of these retailers to outperform throughout early November, again in that early December period, and probably heading into Christmas as well. The question that's going to come up is, can Black Friday sustain that traditional strength that's seen relative to the rest of the retail season.

Now very critically, that doesn't mean Black Friday won't be very, very significant. It won't provide a really huge spike in traffic to these locations. The question is just, are we going to see an expanded retail season where there's less of an emphasis on just that specific day.

- Well, and even digging into that a little bit because we've seen these Black Friday deals, for example, they started really, really early this year, and I feel like every single year they start a few days earlier. How important is this Black Friday event, this weekend here, for retailers? Or has it become more of a six- to seven-week type of holiday?

ETHAN CHERNOFSKY: So it's definitely become more of a six- to seven-week type of holiday, and that will likely only continue moving into the years to come. With that said, though, there is still a really significant jump on Black Friday. Will it meet the heights that it had in 2019 or 2018 on that specific day? Not necessarily.

Does that mean the overall retail season is going to be worse? Absolutely not because of exactly what you mentioned. So many retailers from Target to Walmart to many others are looking to extend that season, to drive strength much earlier, and that's especially critical this year when there are these supply chain concerns. And brands want to make sure that they can deliver the product on time even if it isn't necessarily in store on the day you go to visit.

- Yeah, Victoria's Secret had a big issue with some of their supply chain issues, saying half of their inventory may not make it in time. But I was joking with my colleagues earlier, Ethan, that I actually forgot there was a Black Friday because I'm so used to now sort of over the course of last year having deals and bargains thrown at us every couple of weeks. So every other week was like a Black Friday to me.

So what are retailers doing this season to incentivize people to come into stores? And then also want to ask you what's going on in the mall sector. Are we seeing a revival there? Because even before the pandemic, that area was not doing that well, right?

ETHAN CHERNOFSKY: Yeah, I mean, absolutely. It's two fantastic questions. In the first point, I think retailers are finding interesting ways to drive urgency and excitement around that day, and it's everything from Best Buy emphasizing product accessibility to brands emphasizing the fact that this is the chance to get all those things you want and make sure that they're there in time for the holidays.

When we think about malls, it's actually a really interesting kind of next question because it speaks to what is that draw to go out during this period. And it's the experience that we miss. We're seeing things like mall Santas drive a lot of attention not because they are this fundamental game changer but because we miss tradition a year where we had lost it prior.

And malls have an added advantage in the sense that families are looking for a full day out, and it's not just about the shopping. The shopping is clearly a very important piece, but there's more to it. So if I go to the mall, there's a place for me to grab a lunch. Maybe I take in a movie in the afternoon, and it's this wider experience that can provide a lot of value, and when we look at top tier malls, what we're seeing is a really strong recovery largely as a result of two factors.

One, this pent up demand and the fact that we weren't able to visit malls for such an extended period. But two, some really smart decisions by mall owners in recent years to shift away they looked at tenant mix and to make a more exciting overall experience for the consumer.

- All right, well, Ethan Chernofsky, let me tell you that I will be working all through Thanksgiving, so no time to make it into the stores. Maybe I'll do some surfing because I haven't even started my holiday shopping, but Ethan Chernofsky, Placer.ai CMO. Thank you so much for your time.