Salesforce GM of Retail: Inflation is real in holiday shopping but ‘consumers are happy' anyway
Robert Garf, Salesforce VP and GM of Retail, joins Yahoo Finance Live to discuss holiday shopping amid supply chain and inflation concerns.
Video Transcript
ALEXIS CHRISTOFOROUS: And kicking off the holiday season, a new report out by Salesforce shows consumers are focused on early holiday shopping as those supply chain constraints continue. To discuss more on this, we have Vice President and GM of retail at Salesforce, Rob Garf, and Yahoo Finance's Dani Romero. Rob, good to have you with us again. So just tell us-- walk us through some of the biggest takeaways from this report.
ROB GARF: Yeah, absolutely. Here at Salesforce, we looked at the data in our shopping index over the first two weeks of the holiday shopping season. And what we saw is actually a 19% year over year growth for digital for the first two weeks. We actually had predicted 10% growth for the entire holiday season. So that tells us that consumers have read the headlines about potential issues with product availability. And they're shopping early. We're also seeing, by the way, an about 10% increase in average selling price. So that indicates the inflationary concerns are coming to bear. But there's still a splurge. Consumers are happy. They're feeling good and positive. And they're shopping early.
DANI ROMERO: Yeah, and Rob, to that point, you know, we're seeing inflation across everything. And so are consumers is more inclined to paying those big ticket items? Or are they a little bit more cautious when it comes to spending this holiday?
ROB GARF: Yeah, that's a good question. You're right. You know, what we saw in our research for the second half of the year, retailers, manufacturers are going to absorb about a $223 billion incremental cost of goods sold. They're going to absorb much of that, as I mentioned. But they are going to pass some of that along to the consumers. But there is this sense of positivity. And consumers are buying. In fact, what we saw over the first couple of weeks so far this holiday season, furniture is up 44%. And think about it. That's a really big baseline they're working off of because we've all bought something for our home offices over the last year and a half.
ALEXIS CHRISTOFOROUS: I'm curious--
DANI ROMERO: And Rob, do you expect--
ALEXIS CHRISTOFOROUS: Oh, go ahead. Sorry.
DANI ROMERO: Oh. No worries. I was just going to ask, do you expect a big turnout for Black Friday or even Cyber Monday? I mean, which one-- do you see more so on Black Friday than Cyber Monday? What do you think?
ROB GARF: Yeah, you know, we've seen over the course of the last couple of years, a smoothing out demand across all of what we call cyber week. So for digital, in particular, we'll see spikes on Black Friday. We'll see spikes on Cyber Monday. What we're also going to see, according to research that we just commissioned of 16,000 consumers worldwide, about 2/3 of them say they will go into the store again, right? So it's really a balance of the digital shopping and the store shopping and really being able to blend that together, creating a seamless experience. I think what you'll see is the rising tides are going to really impact and rise all ships, both online and digital, this holiday season.
ALEXIS CHRISTOFOROUS: So Rob, tell me about this strategy. I know some people like to wait till very close to the holiday in order to get those deep discounts. But I guess my question is, with all the inflationary pressures that retailers and manufacturers are dealing with, are those deep discounts going to be there?
ROB GARF: Yeah, my message to consumers, first of all, is don't wait, buy now. Over the first two weeks, again, of the holiday, from November 1 to November 15, we saw a 16% decrease in discount rates. And again, we're typically seeing an increase at this time of year. I've been calling it this case of discount chicken, where retailers going into the holiday season have this great thought-out holiday calendar. And after the first week, they rip it up and they call audibles, and they discount and they chase the margin.
And really, what I think we're going to see this year-- and I haven't said this in decades of following this space-- is consumers might not win the game of discount chicken this year. Buy early, buy often. Especially with product availability issues, it might not be available. That perfect gift might not be available throughout cyber week and beyond.
DANI ROMERO: And Rob, what are consumers especially looking for this holiday season? Is it the big brands? Is it Apple? Is it the electronics? What are you seeing?
ROB GARF: We're always going to see consumer electronics, toys, gaming, right? But what we see is more experiential categories, right? We're going from this last year and a half of needs, and we're shifting to wants. So if we think about experiential categories like entertainment, if you think about outdoors and travel or even luxury, so think watches, think footwear, think handbag, think going out and whether you're working in your garden or you're climbing a mountain or going somewhere that you've waited to go to over the last year and a half. Really think about experiential categories as being the winner this holiday season.
ALEXIS CHRISTOFOROUS: All right, did you finish your holiday shopping yet, Rob? Are you in the middle of it? Where do you stand?
ROB GARF: We're pretty darn close, I have to tell you, because, again, we want to make sure those products are actually available. We've all heard the headlines of the backlog of the shipping vessels within the Port of LA. And it's not going to get better this holiday season.
ALEXIS CHRISTOFOROUS: Yeah, unfortunately, we're still going to have to wait. All right, Rob Garff, great advice there. He is the VP and GM of retail at Salesforce. Thanks.
