00:00:00
during Co people saved a lot and then
00:00:02
when they started coming out of Co they
00:00:04
had more of that money but then they
00:00:06
started traveling in 2022 and so we
00:00:09
don't know how much savings is still
00:00:11
left you know and making all those
00:00:13
predictions and therefore to accurately
00:00:16
predict what's going to happen with
00:00:18
holiday spending kind of hard to do
00:00:21
welcome to the ripple effect the podcast
00:00:24
that takes you on a journey through the
00:00:25
minds of whon Faculty I'm your host Dan
00:00:28
Looney and in each episode we'll be
00:00:30
diving deep into the inspiration behind
00:00:32
the groundbreaking research that Wharton
00:00:34
professors have conducted and exploring
00:00:37
how their findings resonate with the
00:00:39
world today and always great to talk
00:00:41
retail with Barbara Khan Wharton School
00:00:43
professor of marketing hi Barbara how
00:00:45
are you today I'm good how are you Dan
00:00:48
all right so here we are going towards
00:00:50
uh the end of the year what's your feel
00:00:53
for the Retail Landscape right now cuz
00:00:55
they're certainly a lot at play with the
00:00:57
economy and and the impact on the
00:01:00
consumer and how they're thinking about
00:01:02
spending what are you seeing play out
00:01:03
right now well you know everybody is
00:01:05
always talking about what's going to
00:01:07
happen with holiday shopping because
00:01:09
it's so important to the retailers so
00:01:11
there's always
00:01:12
speculation and there's a couple Trends
00:01:14
we know one we know the promotional
00:01:16
environment has started even earlier
00:01:19
this year um Amazon Prime day at on 1010
00:01:25
accelerated Walmart Target Amazon all of
00:01:28
those doing deep discounts and the
00:01:30
consumer really really price sensitive
00:01:32
so the question is how price sensitive
00:01:34
are they going to be going off into the
00:01:36
future at holiday season um the one
00:01:40
thing that people usually do when they
00:01:42
look at holiday seasons is they look at
00:01:44
Trends so they look at past years and
00:01:47
the problem is the past few years have
00:01:50
been completely unpredictable and so
00:01:52
it's really hard to make a forecast
00:01:54
going forward so if you start with 2020
00:01:57
you know what did holiday season look
00:01:59
like then everybody was buying home you
00:02:02
know because they were stuck in their
00:02:03
house they were buying home stuff and we
00:02:05
saw those numbers go way up a lot of
00:02:08
kind of household decorations homes
00:02:10
that's what we're seeing a lot of
00:02:11
purchases in Christmas time and then
00:02:14
2021 we got out of our houses and you
00:02:17
started to see a lot of purchase of
00:02:20
apparel you know now can't wear a
00:02:22
pajamas anymore so we got to buy new
00:02:24
clothes so that was a lot of what was
00:02:26
happening in 2021 in 2022 which just
00:02:30
last year you saw a lot of people
00:02:32
starting to move their money towards
00:02:34
experiences and to travel and to you
00:02:37
know now I'm out of the house I'm
00:02:38
actually G to go someplace and so you
00:02:40
see a lot of push towards that so what
00:02:43
does that mean for
00:02:44
2023 you know like who knows you're
00:02:48
seeing like these trends that are so
00:02:50
different it's really hard to predict
00:02:52
what people are going to buy this year
00:02:55
so let me go back and and you mentioned
00:02:57
about Amazon with prime day and from a
00:03:00
historical perspective I would assume
00:03:02
and you can you know correct me on this
00:03:05
or or agree with it on it is the fact
00:03:07
that that event has had so much impact
00:03:11
on the mindset I think of retail and
00:03:14
consumers in how we think about when we
00:03:18
shop for the holidays but also just the
00:03:21
the conditioning that's kind of put in
00:03:23
with the consumer yeah you're right
00:03:25
there are two factors there and they
00:03:26
both are not great what one is for one
00:03:29
minut may not be so bad one is make you
00:03:31
think about holiday shopping earlier
00:03:33
that isn't so bad for retailers because
00:03:36
we've got delivery issues supply chain
00:03:38
issues and if you can kind of stretch
00:03:40
the shopping season so it's a little bit
00:03:43
longer it's easier to even out demand
00:03:46
and deal with supply chain kinds of
00:03:48
issues so that's not a terrible thing
00:03:50
but the really bad thing about it is the
00:03:52
focus on discount discount discount for
00:03:55
me personally as a marketing expert I
00:03:57
would say what are you doing you know
00:04:00
like why would you want to do that um
00:04:03
because if you can get people to
00:04:05
reinvest in the brands that they believe
00:04:07
in we have evidence that people love the
00:04:09
brands they love you know and why should
00:04:11
they buy them on discount I remember way
00:04:14
back when in the recession of 2008 2009
00:04:18
luxury was so worried about people not
00:04:20
shopping that they discounted their
00:04:23
prices and it took a really long time
00:04:26
for them to get back into getting people
00:04:29
to buy brand back at full price which is
00:04:31
really what you want them to do so I
00:04:34
think this Amazon Prime day and
00:04:36
everybody following and accelerating
00:04:38
really makes people very deal sensitive
00:04:40
and that's a problem you mentioned about
00:04:43
Brands and so let's touch on that for a
00:04:45
second because there seems to be such a
00:04:48
greater importance by companies on their
00:04:51
brand right now than maybe ever before
00:04:53
and it feels like in many cases a lot of
00:04:56
the issues outside of the company
00:04:58
themselves a lot of the culture issues
00:05:00
some of those elements are factoring
00:05:02
into how much companies focus on their
00:05:05
brand even more today yeah and I you
00:05:07
know I've been saying this for a long
00:05:09
time people have been predicting the end
00:05:11
of you know the death of Brands just
00:05:13
forever and this just not happening
00:05:16
brands are super super important and you
00:05:18
look at uh survey after survey
00:05:21
consulting firms all this other showing
00:05:23
that the brands that people love they
00:05:26
love you know really really strong
00:05:28
Brands continue to do really well and
00:05:30
they kind of fight against this
00:05:32
promotional environment and so you're
00:05:34
seeing some really interesting new
00:05:36
trends in branding that I think are are
00:05:38
worth looking at one of them just
00:05:40
recently Lulu Lemon announced the
00:05:42
collaboration with pelaton which is kind
00:05:45
of an interesting thought Lulu Lemon is
00:05:48
a very strong brand pelaton who knows
00:05:51
you know kind of well whatever I mean
00:05:54
there're people who love pelaton but the
00:05:56
idea of getting these two Brands to work
00:05:59
together that's an interesting idea you
00:06:01
saw like with Target and Ulta that
00:06:04
collaboration was very successful so the
00:06:07
idea of joining Brands together and
00:06:10
creating something new and exciting
00:06:12
through the collaboration that's an
00:06:14
interesting new trend that we're seeing
00:06:16
in branding well and then with that
00:06:18
collaboration
00:06:20
specifically uh it's almost the most
00:06:23
interesting part of it is the fact that
00:06:25
pelaton is kind of a recovery brand I
00:06:28
mean with as much problem as they have
00:06:30
had over the last couple of years uh
00:06:32
they're trying to rebuild their brand
00:06:34
almost from it feels like from the
00:06:36
ground floor but you know these
00:06:38
collaborations are strategic in Wy ways
00:06:40
like what pelaton has is really good
00:06:44
content and that exercise thing and
00:06:46
people who love their instructors and
00:06:48
who still have this really strong
00:06:50
feeling about the pelaton you know what
00:06:52
whoever it is I think there was one
00:06:54
called love Ali love or something like
00:06:56
that that people just love you know that
00:06:58
idea
00:07:00
and so Lulu Lemon which is a very strong
00:07:03
brand and doing super well can give some
00:07:05
sustenance to pelaton to your point but
00:07:08
pelaton has something sexy to offer in
00:07:10
the collaboration you know another
00:07:12
really interesting collaboration with
00:07:14
the Taylor Swift NFL
00:07:16
collaboration unofficial collaboration
00:07:18
but yes exactly but it's the idea of
00:07:21
looking for the sexy in one brand
00:07:24
linking it to something else and then
00:07:26
creating something brand new and
00:07:28
something fun I don't know if Travis
00:07:30
Kelce would say that exactly but we get
00:07:32
the we get the idea so so now here we
00:07:35
are in a time where the economy is
00:07:38
obviously going up and down at this
00:07:40
point and consumers in many cases are
00:07:42
watching how much they spend I think the
00:07:46
impacts of the economy right now become
00:07:48
very interesting for what we're going to
00:07:50
see play out not only through the
00:07:52
holiday season but also to a degree next
00:07:54
year especially if the FED holds rates
00:07:58
higher for longer which has been talked
00:07:59
about so much yeah I mean it's so hard
00:08:02
to predict all these things because
00:08:03
you're kind of seeing things going in
00:08:05
two different directions so in inflation
00:08:08
has been curbed somewhat employment is
00:08:10
still strong there are some indication
00:08:13
that consumer confidence is holding
00:08:15
steady and maybe even Rising a little
00:08:17
bit but on the other hand people are a
00:08:19
wor very worried about the possibility
00:08:21
of recession um the student loan issue
00:08:25
and that really affects a lot of
00:08:26
discretionary income if you're not
00:08:28
forgiven of your student loans and so
00:08:30
there's a lot of question on how people
00:08:33
are going to spend and that's also why
00:08:35
we look at like what happened in the
00:08:37
past for example during coid people
00:08:39
saved a lot and then when they started
00:08:41
coming out of Co they had more of that
00:08:43
money but then they started traveling in
00:08:46
2022 and so we don't know how much
00:08:49
savings is still left you know and
00:08:51
making all those predictions and
00:08:53
therefore to accurately predict what's
00:08:55
going to happen with holiday spending
00:08:58
it's kind of hard to do do there have
00:09:00
been some predictions like MasterCard
00:09:02
came out with a prediction that they
00:09:04
think holiday spending is going to go up
00:09:05
about
00:09:06
3.7% which isn't huge but it's it's
00:09:09
solid um and they're saying you know
00:09:12
you'll see it mostly in um restaurants
00:09:15
Hospitality maybe consumer electronics
00:09:18
um apparel might go up just a little bit
00:09:20
we're not expecting a big growth in
00:09:22
apparel but it should go up a little so
00:09:25
that's been some of the forecasts I've
00:09:28
seen we're joined by Barbara Khan
00:09:30
Wharton marketing Professor uh so then
00:09:33
as you look forward into 2024 what are
00:09:35
some of the areas that you focus on uh
00:09:38
and are watchful for
00:09:41
as as maybe this economy you know starts
00:09:43
to turn a corner at some point next year
00:09:46
you know I think you're seeing like two
00:09:48
Trends which are kind of exactly the
00:09:50
opposite but they're both going forward
00:09:52
one is this brand kind of stuff and this
00:09:55
idea of fun and a lot of experimentation
00:09:57
and branding a lot lot of look um Macy's
00:10:00
just announced they're going to lean
00:10:01
into retail theater you know and this
00:10:05
idea of like new kinds of fun things to
00:10:08
try to get people to be excited and
00:10:10
believe in their brands and invest in
00:10:12
the fun of shopping and the fun of
00:10:14
buying brands at full price on the other
00:10:16
hand we see Incredible strength in shien
00:10:20
in TAMU Walmart's doing well Target
00:10:23
Amazon which we were talking about at
00:10:24
the beginning so we are seeing a lot of
00:10:26
this price sensitivity on one hand and
00:10:29
maybe people are going to be looking for
00:10:30
the deals and looking for a way to
00:10:33
stretch their dollar and on the other
00:10:35
hand the brands that get it right that
00:10:37
hit the pulse that really tickle
00:10:39
people's fancy I think will be rewarded
00:10:42
as well how then does the back and forth
00:10:47
between e-commerce and bricks and mortar
00:10:49
continue to play out do you think you
00:10:51
know I think that's also this new notion
00:10:54
everybody's talking about it's Omni
00:10:55
channel it's really not one or the other
00:10:57
I mean again looking towards the past to
00:11:00
predict for the future during coid
00:11:01
people thought everybody was going to
00:11:03
shop online forever that's clearly not
00:11:05
true as soon as we were allowed out of
00:11:07
the house we were back into the stores
00:11:10
some of the numbers I saw recently is
00:11:12
that over 90% of grocery shopping is
00:11:14
being done in the physical store which
00:11:16
is definitely not what we predicted
00:11:18
during coid when everybody learned how
00:11:20
to shop online um but I think what
00:11:23
you're seeing now is really this back
00:11:25
and forth some things are digital some
00:11:27
things are in the store and it's a
00:11:29
function of where the consumer wants to
00:11:31
be when they want to be I think we're
00:11:34
and we're going to see a lot of growth
00:11:35
in mobile shopping so more and more
00:11:37
shopping being done on the phone if
00:11:39
people make it easier there's a lot of
00:11:41
this idea in gamification and these a
00:11:45
you know even AR and those kinds of
00:11:47
things you know if it was maybe a little
00:11:50
bit overhyped by Facebook or meta but
00:11:53
still a lot of people believe that there
00:11:55
is a lot of excitement in these virtual
00:11:58
environments and a lot of opportunity
00:12:00
for commercial gain in those
00:12:02
environments but it's really not going
00:12:04
to be one or the other I think it's you
00:12:06
know people may still want to go sit on
00:12:08
Santa Claus's lap you know who knows
00:12:10
well you know you mentioned AR but I
00:12:12
think you also have to throw in Ai and
00:12:15
the impact that that may very well have
00:12:17
on retail as we move forward in the next
00:12:19
few years as well it's obviously having
00:12:21
some impact already but that's just
00:12:23
going to multiply in the future isn't it
00:12:25
yeah you know and that's really hard to
00:12:27
to call exactly how that gonna affect
00:12:30
things you know even here in education
00:12:32
trying to understand what the role of
00:12:34
CHA Chi is and all of that and I think
00:12:37
most of my colleagues at least in
00:12:38
education I assume it's true in retail
00:12:40
too you know think well that's here to
00:12:43
stay so we got to think about it as a
00:12:45
tool and how to use it to make the
00:12:47
customer experience better so I think
00:12:49
you'll see a lot of creativity I think
00:12:52
you'll see you know if people trying to
00:12:54
use it in a way that you know maybe
00:12:56
makes the shopping experience more
00:12:57
personalized more enjoyable uh some of
00:13:01
this AI has been shown to to to Really
00:13:03
spur on Innovation so we might see some
00:13:06
really new fun things but as you just
00:13:08
mentioned it really it feels like at the
00:13:11
base it's still that experience for the
00:13:13
consumer and however the business is
00:13:16
going to reach that consumer is going to
00:13:18
be the way that that companies are going
00:13:20
to find that level of success yeah
00:13:23
because a lot of the numbers around
00:13:24
holiday shopping obviously what gets
00:13:26
people into the store the trigger and
00:13:29
always very important what initiates the
00:13:31
purchase process is gifting because it's
00:13:34
holiday season you want to give gifts so
00:13:36
the first thing to kind of think about
00:13:38
is what make for good gifts now
00:13:40
traditional gifts are still you know
00:13:41
buying somebody a sweater still makes
00:13:43
sense even if they have swimmy sweaters
00:13:45
so you'll see some of that but the other
00:13:47
interesting thing about holiday shopping
00:13:50
is people buy one for you and one for me
00:13:53
you know like they buy for themselves
00:13:55
also so now you're looking if you make
00:13:58
the shopping experience more fun and
00:14:00
people want to engage in it for one
00:14:02
reason or another they're more likely
00:14:05
yes to buy more gifts and maybe to buy
00:14:07
more things for themselves as well and
00:14:09
that could help spur on shopping you
00:14:11
know you mentioned about the uh the the
00:14:14
expectations of what holiday sales are
00:14:16
going to be I guess the other side of
00:14:18
that is how much
00:14:19
discounting uh that retailers will do
00:14:22
that that BOGO philosophy we've seen
00:14:24
that play in more and more the last few
00:14:26
years yeah it's a little bit of a of
00:14:29
chicken you know at one hand they're
00:14:31
trying to manage their inventory and
00:14:33
make sure they're not stuck with things
00:14:34
left over because once Christmas hits
00:14:37
everything goes down in value and then
00:14:39
you know you're going to discount so
00:14:41
what you want to try to do is hold your
00:14:43
price as much as you possibly can before
00:14:45
the holiday season is over but on the
00:14:48
other hand you don't want to be left
00:14:49
with all this inventory so you're kind
00:14:51
of moving things along and if you can do
00:14:54
it in a gamification way kind of or like
00:14:57
you're saying buy one get one that kind
00:14:59
of idea is if I buy something then I buy
00:15:03
something kind something else I get
00:15:04
something else for free kind of
00:15:06
mitigates the total promotional
00:15:09
environment and gives you a reason to
00:15:11
buy more so let me Circle back for for
00:15:14
those that don't follow it when you talk
00:15:15
about gamification how is that something
00:15:18
that consumers may end up seeing play
00:15:21
out when they're out and about and
00:15:22
they're doing shopping is it something
00:15:24
that they say well you know it's things
00:15:26
like these ideas of competitions or
00:15:28
buying something to win something or you
00:15:31
know some of these Lottery ideas or some
00:15:33
of these ideas of streaks keep your
00:15:35
streak going some of those kinds of
00:15:37
ideas of gaming the other idea that you
00:15:40
see in gamification now is co-creation
00:15:43
creating your own universe so you're
00:15:45
seeing like some of the shopping being
00:15:47
experiential you're creating something
00:15:50
um the other big Trend you know you were
00:15:52
asking about digitals like digital Goods
00:15:55
you know if you're going to buy like
00:15:57
skins for your avatars or or something
00:16:00
like that you know and there's some
00:16:02
evidence which is kind of shocking to me
00:16:04
but the younger generation value digital
00:16:07
Goods as much as they do physical Goods
00:16:09
in some cases so how all of that works
00:16:12
and what you're purchasing for that
00:16:14
that's kind of an interesting wrinkle
00:16:17
hey Barbara great to talk with you
00:16:18
thanks very much for giving us a few
00:16:20
moments today yeah it was great bud
00:16:22
absolutely Barbara Khan Wharton
00:16:24
marketing Professor joining us here on
00:16:26
the ripple effect thank you for listen
00:16:28
listening to the ripple effect we hope
00:16:30
you found this episode informative and
00:16:31
engaging don't forget to subscribe and
00:16:34
leave us a review so that we can
00:16:36
continue to bring you the best Insight
00:16:38
from the warten school
