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during Co people saved a lot and then when they started coming out of Co they had more of that money but then they
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started traveling in 2022 and so we don't know how much savings is still left you know and making all those
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predictions and therefore to accurately predict what's going to happen with holiday spending kind of hard to do
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welcome to the ripple effect the podcast that takes you on a journey through the
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minds of whon Faculty I'm your host Dan Looney and in each episode we'll be
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diving deep into the inspiration behind the groundbreaking research that Wharton
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professors have conducted and exploring how their findings resonate with the world today and always great to talk
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retail with Barbara Khan Wharton School professor of marketing hi Barbara how are you today I'm good how are you Dan
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all right so here we are going towards uh the end of the year what's your feel
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for the Retail Landscape right now cuz they're certainly a lot at play with the
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economy and and the impact on the consumer and how they're thinking about spending what are you seeing play out
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right now well you know everybody is always talking about what's going to happen with holiday shopping because
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it's so important to the retailers so there's always speculation and there's a couple Trends
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we know one we know the promotional environment has started even earlier this year um Amazon Prime day at on 1010
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accelerated Walmart Target Amazon all of those doing deep discounts and the consumer really really price sensitive
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so the question is how price sensitive are they going to be going off into the future at holiday season um the one
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thing that people usually do when they look at holiday seasons is they look at Trends so they look at past years and
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the problem is the past few years have been completely unpredictable and so it's really hard to make a forecast
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going forward so if you start with 2020 you know what did holiday season look like then everybody was buying home you
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know because they were stuck in their house they were buying home stuff and we saw those numbers go way up a lot of
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kind of household decorations homes that's what we're seeing a lot of purchases in Christmas time and then
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2021 we got out of our houses and you started to see a lot of purchase of apparel you know now can't wear a
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pajamas anymore so we got to buy new clothes so that was a lot of what was happening in 2021 in 2022 which just
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last year you saw a lot of people starting to move their money towards experiences and to travel and to you
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know now I'm out of the house I'm actually G to go someplace and so you see a lot of push towards that so what
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does that mean for 2023 you know like who knows you're seeing like these trends that are so
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different it's really hard to predict what people are going to buy this year
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so let me go back and and you mentioned about Amazon with prime day and from a historical perspective I would assume
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and you can you know correct me on this or or agree with it on it is the fact that that event has had so much impact
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on the mindset I think of retail and consumers in how we think about when we shop for the holidays but also just the
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the conditioning that's kind of put in with the consumer yeah you're right
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there are two factors there and they both are not great what one is for one minut may not be so bad one is make you
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think about holiday shopping earlier that isn't so bad for retailers because
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we've got delivery issues supply chain issues and if you can kind of stretch
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the shopping season so it's a little bit longer it's easier to even out demand
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and deal with supply chain kinds of issues so that's not a terrible thing but the really bad thing about it is the
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focus on discount discount discount for me personally as a marketing expert I would say what are you doing you know
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like why would you want to do that um because if you can get people to reinvest in the brands that they believe
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in we have evidence that people love the brands they love you know and why should
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they buy them on discount I remember way back when in the recession of 2008 2009
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luxury was so worried about people not shopping that they discounted their prices and it took a really long time
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for them to get back into getting people to buy brand back at full price which is
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really what you want them to do so I think this Amazon Prime day and everybody following and accelerating
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really makes people very deal sensitive and that's a problem you mentioned about
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Brands and so let's touch on that for a second because there seems to be such a
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greater importance by companies on their brand right now than maybe ever before and it feels like in many cases a lot of
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the issues outside of the company themselves a lot of the culture issues some of those elements are factoring
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into how much companies focus on their brand even more today yeah and I you know I've been saying this for a long
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time people have been predicting the end of you know the death of Brands just forever and this just not happening
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brands are super super important and you look at uh survey after survey consulting firms all this other showing
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that the brands that people love they love you know really really strong Brands continue to do really well and
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they kind of fight against this promotional environment and so you're seeing some really interesting new
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trends in branding that I think are are worth looking at one of them just recently Lulu Lemon announced the
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collaboration with pelaton which is kind of an interesting thought Lulu Lemon is
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a very strong brand pelaton who knows you know kind of well whatever I mean there're people who love pelaton but the
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idea of getting these two Brands to work together that's an interesting idea you
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saw like with Target and Ulta that collaboration was very successful so the idea of joining Brands together and
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creating something new and exciting through the collaboration that's an interesting new trend that we're seeing
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in branding well and then with that collaboration specifically uh it's almost the most
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interesting part of it is the fact that pelaton is kind of a recovery brand I mean with as much problem as they have
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had over the last couple of years uh they're trying to rebuild their brand almost from it feels like from the
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ground floor but you know these collaborations are strategic in Wy ways like what pelaton has is really good
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content and that exercise thing and people who love their instructors and who still have this really strong
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feeling about the pelaton you know what whoever it is I think there was one called love Ali love or something like
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that that people just love you know that idea and so Lulu Lemon which is a very strong
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brand and doing super well can give some sustenance to pelaton to your point but
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pelaton has something sexy to offer in the collaboration you know another really interesting collaboration with
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the Taylor Swift NFL collaboration unofficial collaboration but yes exactly but it's the idea of
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looking for the sexy in one brand linking it to something else and then creating something brand new and
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something fun I don't know if Travis Kelce would say that exactly but we get
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the we get the idea so so now here we are in a time where the economy is obviously going up and down at this
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point and consumers in many cases are watching how much they spend I think the impacts of the economy right now become
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very interesting for what we're going to see play out not only through the holiday season but also to a degree next
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year especially if the FED holds rates higher for longer which has been talked about so much yeah I mean it's so hard
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to predict all these things because you're kind of seeing things going in two different directions so in inflation
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has been curbed somewhat employment is still strong there are some indication that consumer confidence is holding
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steady and maybe even Rising a little bit but on the other hand people are a wor very worried about the possibility
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of recession um the student loan issue and that really affects a lot of discretionary income if you're not
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forgiven of your student loans and so there's a lot of question on how people
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are going to spend and that's also why we look at like what happened in the past for example during coid people
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saved a lot and then when they started coming out of Co they had more of that money but then they started traveling in
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2022 and so we don't know how much savings is still left you know and making all those predictions and
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therefore to accurately predict what's going to happen with holiday spending
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it's kind of hard to do do there have been some predictions like MasterCard came out with a prediction that they
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think holiday spending is going to go up about 3.7% which isn't huge but it's it's
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solid um and they're saying you know you'll see it mostly in um restaurants
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Hospitality maybe consumer electronics um apparel might go up just a little bit we're not expecting a big growth in
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apparel but it should go up a little so that's been some of the forecasts I've
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seen we're joined by Barbara Khan Wharton marketing Professor uh so then as you look forward into 2024 what are
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some of the areas that you focus on uh and are watchful for as as maybe this economy you know starts
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to turn a corner at some point next year you know I think you're seeing like two
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Trends which are kind of exactly the opposite but they're both going forward
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one is this brand kind of stuff and this idea of fun and a lot of experimentation
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and branding a lot lot of look um Macy's just announced they're going to lean
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into retail theater you know and this idea of like new kinds of fun things to try to get people to be excited and
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believe in their brands and invest in the fun of shopping and the fun of buying brands at full price on the other
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hand we see Incredible strength in shien in TAMU Walmart's doing well Target
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Amazon which we were talking about at the beginning so we are seeing a lot of this price sensitivity on one hand and
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maybe people are going to be looking for the deals and looking for a way to stretch their dollar and on the other
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hand the brands that get it right that hit the pulse that really tickle people's fancy I think will be rewarded
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as well how then does the back and forth between e-commerce and bricks and mortar
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continue to play out do you think you know I think that's also this new notion
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everybody's talking about it's Omni channel it's really not one or the other
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I mean again looking towards the past to predict for the future during coid people thought everybody was going to
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shop online forever that's clearly not true as soon as we were allowed out of
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the house we were back into the stores some of the numbers I saw recently is that over 90% of grocery shopping is
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being done in the physical store which is definitely not what we predicted during coid when everybody learned how
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to shop online um but I think what you're seeing now is really this back and forth some things are digital some
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things are in the store and it's a function of where the consumer wants to be when they want to be I think we're
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and we're going to see a lot of growth in mobile shopping so more and more shopping being done on the phone if
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people make it easier there's a lot of this idea in gamification and these a
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you know even AR and those kinds of things you know if it was maybe a little bit overhyped by Facebook or meta but
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still a lot of people believe that there is a lot of excitement in these virtual
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environments and a lot of opportunity for commercial gain in those environments but it's really not going
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to be one or the other I think it's you know people may still want to go sit on
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Santa Claus's lap you know who knows well you know you mentioned AR but I think you also have to throw in Ai and
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the impact that that may very well have on retail as we move forward in the next
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few years as well it's obviously having some impact already but that's just
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going to multiply in the future isn't it yeah you know and that's really hard to
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to call exactly how that gonna affect things you know even here in education trying to understand what the role of
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CHA Chi is and all of that and I think most of my colleagues at least in education I assume it's true in retail
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too you know think well that's here to stay so we got to think about it as a
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tool and how to use it to make the customer experience better so I think you'll see a lot of creativity I think
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you'll see you know if people trying to use it in a way that you know maybe makes the shopping experience more
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personalized more enjoyable uh some of this AI has been shown to to to Really spur on Innovation so we might see some
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really new fun things but as you just mentioned it really it feels like at the base it's still that experience for the
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consumer and however the business is going to reach that consumer is going to be the way that that companies are going
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to find that level of success yeah because a lot of the numbers around holiday shopping obviously what gets
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people into the store the trigger and always very important what initiates the purchase process is gifting because it's
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holiday season you want to give gifts so the first thing to kind of think about is what make for good gifts now
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traditional gifts are still you know buying somebody a sweater still makes sense even if they have swimmy sweaters
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so you'll see some of that but the other interesting thing about holiday shopping
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is people buy one for you and one for me you know like they buy for themselves also so now you're looking if you make
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the shopping experience more fun and people want to engage in it for one reason or another they're more likely
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yes to buy more gifts and maybe to buy more things for themselves as well and that could help spur on shopping you
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know you mentioned about the uh the the expectations of what holiday sales are going to be I guess the other side of
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that is how much discounting uh that retailers will do that that BOGO philosophy we've seen
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that play in more and more the last few years yeah it's a little bit of a of
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chicken you know at one hand they're trying to manage their inventory and make sure they're not stuck with things
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left over because once Christmas hits everything goes down in value and then you know you're going to discount so
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what you want to try to do is hold your price as much as you possibly can before
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the holiday season is over but on the other hand you don't want to be left with all this inventory so you're kind
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of moving things along and if you can do it in a gamification way kind of or like
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you're saying buy one get one that kind of idea is if I buy something then I buy
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something kind something else I get something else for free kind of mitigates the total promotional
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environment and gives you a reason to buy more so let me Circle back for for those that don't follow it when you talk
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about gamification how is that something that consumers may end up seeing play out when they're out and about and
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they're doing shopping is it something that they say well you know it's things
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like these ideas of competitions or buying something to win something or you know some of these Lottery ideas or some
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of these ideas of streaks keep your streak going some of those kinds of ideas of gaming the other idea that you
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see in gamification now is co-creation creating your own universe so you're seeing like some of the shopping being
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experiential you're creating something um the other big Trend you know you were
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asking about digitals like digital Goods you know if you're going to buy like
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skins for your avatars or or something like that you know and there's some evidence which is kind of shocking to me
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but the younger generation value digital Goods as much as they do physical Goods
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in some cases so how all of that works and what you're purchasing for that that's kind of an interesting wrinkle
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hey Barbara great to talk with you thanks very much for giving us a few moments today yeah it was great bud
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absolutely Barbara Khan Wharton marketing Professor joining us here on the ripple effect thank you for listen
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listening to the ripple effect we hope you found this episode informative and engaging don't forget to subscribe and
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