November 30, 2023 • 11 mins
This week's special bonus episode dives into the into Black Friday, consumer spending, and the state of the economy. Our guest, Joel Beal, CEO of Alloy.ai and economist, provides a unique perspective on the early numbers and what they mean for the larger economy. We delve into:
- The preliminary numbers that are emerging post-Black Friday, attempting to decode consumer behavior and market trends
- The possibility of deflation
- How sales are breaking down in terms of in-store vs. ecommerce
Tune in to this episode of Shelf Life, and get a comprehensive understanding of current economic trends, their impact on consumer spending, and their potential implications for the future.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
From Alloy AI.
This is Shelf Life.
Today we have a special bonusepisode.
(00:21):
I'm speaking with my colleagueand co-host, Joel Beal, CEO and
co-founder of Alloy AI, arecovering economist, about
Black Friday and the state ofthe economy and consumer
spending going into the holidays.
Speaker 2 (00:36):
Joel welcome to Shelf Life.
Thanks, logan, hope you had agreat Thanksgiving.
Speaker 1 (00:41):
I did, I did.
It's fun to do our secondspecial episode here.
I'll ask some hard-hittingquestions for you.
Speaker 2 (00:48):
Yeah, and I think as we go and talk about Black
Friday, it should be noted thatyou've got a new microphone that
I think we've got a BlackFriday deal on, so that's right.
Speaker 1 (00:58):
Yeah, I didn't get to the stores but Franklin did, so
this showed up in the mail.
Hopefully it sounds a littlebit better.
I understand you got your BlackFriday shopping done or your
holiday shopping done.
Speaker 2 (01:10):
You know I did.
I did pretty well this year.
I wouldn't say it's the norm,but I got most of my holiday
shopping done.
So I've been looking at thedata as it started to trickle in
.
It's the Monday after, it's themiddle of Cyber Monday and I'm
sure more will come.
But I can add my own personalanecdotes to that, I guess,
about how I chose to shop.
Speaker 1 (01:31):
So did you finish the pie that night and head out to
Walmart, Target, Costco Thursdaynight, or what was your Black
Friday experience?
Speaker 2 (01:40):
Well, I did eat the pie, that's true, but no, I
think I was like an increasingnumber of consumers who were
purchasing online.
So most of my personal shoppingwas online, although I did go
into some stores over theweekend.
I like to browse, but I justfound for me it was a little
(02:00):
easier to find exactly what Iwanted online.
Speaker 1 (02:03):
Well fascinating microcosm of what's going on out
there.
You know it's interesting.
I think we've got a lot of ourcustomers who follow this time
really close, and so we do aswell, and so it's a really,
really big moment for CPGs andreally trying to make sense of
what is going on in the economyand with kind of brand
manufacturing generally.
(02:24):
It seems like there have beensigns of the economy cooling.
Retailers like Target and HomeDepot have seen earnings fall
and consumer sentiment has beenlow.
But what are you seeing in thenumbers, kind of as Black Friday
information has come out, andwhat's your take from what you
can see so far?
Speaker 2 (02:44):
Yeah.
So it's pretty limited, I wouldsay.
So everything feels verypreliminary to the companies
that can kind of jump the gunand you know the payments
companies, some of the onlineyou know kind of marketplaces
that are starting to report out.
So generally I think the trendsare that sales are up.
(03:05):
I'm going to caveat that a bitand we'll get back there but
sales are up.
Online is doing better thanin-store, but both are up to
some degree.
So the numbers we're seeing are, you know, I think, averaging
out around 8% online and call ita percent or two in-store.
Now I say, why do we caveatthat?
Well, when people report,they're usually reporting in
(03:27):
dollars and we have to remember,while inflation has come down,
we're still looking at 4% coreinflation year every year.
So I think, and I think we'rekind of seeing this in general,
what we're hearing from even ourown customers is this is a
Black Friday.
That's probably a little moreflat-ish than up, but if you
(03:47):
look at the numbers, yes, from adollar standpoint, we're up.
Speaker 1 (03:50):
Well, and can you unpack that sort of more
macroeconomic trend forlisteners here?
I know we were talking earlierabout the Walmart CEO and
potentially even deflationarypressure into the future, but
yeah, we'd love to unpack that alittle bit more.
Speaker 2 (04:06):
Yeah, I always love talking about inflation
Everybody's favorite topic.
So one thing that's verynotable is inflation is coming
down.
That's a very positive thing.
It's been the stress, I think,on all of us and certainly
consumers.
Everything is getting moreexpensive and we're seeing in
the data that that inflation isdecreasing.
And inflation can be cut in alot of different ways.
(04:26):
Usually it's quoted as a yearover year number, so literally
how much essentially, has thedollar gone down in value?
Or has a basket of goods reallygone up in value over the
course of a year?
And you generally want toexclude certain things from it.
You don't like to includethings like gasoline because
they tend to be very variable.
(04:47):
So often people look atsomething called core inflation
and right now that's up 4% yearover year.
That's the measure.
I think the thing that can beconfusing is we hear well,
inflation is going down, butit's not actually going down.
There is normally a couplepercent of inflation.
Usually the Federal Reservewants that to be 2% to 3% maybe,
(05:09):
and so it just means that therate of change of that has
decreased.
We're not seeing that 8%increase here over year.
Now we're seeing 4%, but thedollar's still being stretched
less far than it used to be.
Now, the thing that'sinteresting is, I think
everybody wants there to bedeflationally.
(05:29):
So that's what you have in yourmind.
You want to go to the store andyou want things to be more the
prices they used to be.
That doesn't usually happen,although, as you commented and
we were chatting before westarted recording Walmart just
10 days ago or so, doug McMilland their CEO came out and said
we actually expect we're goingto see some deflation.
(05:49):
So we're going to see somegeneral merchandise items where
the prices actually start todrop, which I'm sure people
would love, but I don't thinksomething we should probably
expect more broadly.
Speaker 1 (05:59):
Joel, today you were talking a little bit about the
range that we're seeing from aperformance perspective for
Black Friday.
We'd love to unpack that alittle bit.
We've seen some very highestimates.
We've seen some maybe not sohigh estimates, and I know you
sort of talked about what you'reseeing.
But could you unpack a littlebit more your assessment of how
Black Friday went generally?
Speaker 2 (06:18):
Yeah.
So it seems like it's beensolid, I think is the right way
to define it.
If I step back a couple ofmonths, talking to our own
customers, which are allconsumer brands but of all sorts
of different verticals, I thinkeverybody came into the
holidays with some trepidation.
It was what is it going to belike?
(06:39):
Again, consumer sentiment hasbeen negative.
People have had, I think,resilient years, but they
haven't been great In certaincategories.
These two months make or breakyour year.
I don't think the averageconsumer realizes if you're
selling toys or incertineriesand electronics, this is your
(07:01):
year.
It's made in a very shortwindow.
So I think a lot of concern andI think what we're seeing is
kind of what the economy's beenlike.
It feels like the last year.
It's not a blockbuster.
We're not seeing numbers thatfeel wildly successful, if you
will, but the bottom isn'tfalling out.
(07:23):
The consumer is resilient.
I mean to me it aligns withthese polls that I see, when
they ask people about how theyfeel about the economy and
they'll say how do you feelpersonally about your own
financial situation and how doyou feel about the economy in
general?
And people tend to be much morepessimistic about the economy
(07:44):
in general, they expecteverything's bad but they're
like no, myself I'm doing OK andI think that's what we're
seeing.
And I was also looking at whatare the categories that are
doing well.
It's highly discretionary stuff.
It's electronics, it's jewelry,it's apparel.
People still have money tospend.
It's not like again, foodprices have moderated, so I
(08:09):
think it's solid.
It'll be interesting as moredata comes in.
The other thing that I foundinteresting in the data and
again, lots of different sources.
Everybody's got their own wayof measuring, so none of these
are probably going to be totallyaccurate.
Bye, we mentioned how e-commerceis doing quite well, which is
to be expected.
In-store was up a modest amount.
(08:31):
When you look at foot traffic.
Foot traffic at least thecouple of datasets I'm seeing is
up more than in-store sales.
I find that to be aninteresting dynamic.
Again, I can just maybe speakof my own anecdotes where it's
nice to be able to go out.
(08:51):
It's an experience.
You go to the mall, at least anice one, the ones that haven't
died and the nice ones are stilldoing well.
There was a lot of foot trafficwhen I was there.
People were out, but I thinkthere's a lot of browsing, a lot
of exploring, a lot of doingresearch, and then people go
home and they order it.
Maybe they want to get that.
Okay, I found one, but itwasn't the exact one I want, so
(09:12):
I'm going to get a differentversion or a different color or
size or whatever it is.
That's something that I thinkis interesting, and I'm curious
if that will play out as we getmore data.
Speaker 1 (09:22):
Absolutely.
I think we had seen a reallystriking difference between that
e-commerce year over year andthat brick and mortar year over
year is a decent spread, that alot more of the growth for Black
Friday is coming frome-commerce.
I think one of the other thingsthat I noticed is we've had
this trend for several years nowof these big box retailers
(09:42):
bringing those operating hoursearlier and earlier into
Thanksgiving and earlier in theday on Thanksgiving and Black
Friday deals starting then.
This year that trend actuallywent the opposite direction.
I've noticed that Walmart wasclosed all of Thanksgiving and
Target was closed and Costco wasclosed.
Even Walgreens had mostlocations closed on Thanksgiving
(10:06):
, which I think is aninteresting trend to be going
back the other way and probablydidn't expect it to ever go back
, but it did, which I think ispretty fascinating.
Speaker 2 (10:15):
I agree with you and that's interesting.
We were looking at that listand the vast majority of
retailers are closed onThanksgiving and I agree that's
a reverse and probably justspeaks to how people really want
to behave.
You don't want to rush out thedoor after you eat your turkey
to get in line.
When it's cold it's nicer.
(10:36):
You spend time with family orfriends.
You can start browsing online.
You can go shopping on Fridayor Saturday and enjoy the
experience.
I think it's good for consumers.
It's good for workers.
It's kind of terrible thatpeople were being expected to
work during the holidays and itprobably is being reflected a
bit in the data here.
Speaker 1 (10:55):
Well, thanks, joel, really great getting your
insight.
Always good chatting.
It's a pleasure.
As always, logan, you've beenlistening to Joel Beal, ceo of
Alloy AI.
That's all for this week.
See you next time on Shellfly.
From Alloy AI.
This is Shelf Life.
Today we have a special bonusepisode.
(00:21):
I'm speaking with my colleagueand co-host, Joel Beal, CEO and
co-founder of Alloy AI, arecovering economist, about
Black Friday and the state ofthe economy and consumer
spending going into the holidays.
Speaker 2 (00:36):
Joel welcome to Shelf Life.
Thanks, logan, hope you had agreat Thanksgiving.
Speaker 1 (00:41):
I did, I did.
It's fun to do our secondspecial episode here.
I'll ask some hard-hittingquestions for you.
Speaker 2 (00:48):
Yeah, and I think as we go and talk about Black
Friday, it should be noted thatyou've got a new microphone that
I think we've got a BlackFriday deal on, so that's right.
Speaker 1 (00:58):
Yeah, I didn't get to the stores but Franklin did, so
this showed up in the mail.
Hopefully it sounds a littlebit better.
I understand you got your BlackFriday shopping done or your
holiday shopping done.
Speaker 2 (01:10):
You know I did.
I did pretty well this year.
I wouldn't say it's the norm,but I got most of my holiday
shopping done.
So I've been looking at thedata as it started to trickle in
.
It's the Monday after, it's themiddle of Cyber Monday and I'm
sure more will come.
But I can add my own personalanecdotes to that, I guess,
about how I chose to shop.
Speaker 1 (01:31):
So did you finish the pie that night and head out to
Walmart, Target, Costco Thursdaynight, or what was your Black
Friday experience?
Speaker 2 (01:40):
Well, I did eat the pie, that's true, but no, I
think I was like an increasingnumber of consumers who were
purchasing online.
So most of my personal shoppingwas online, although I did go
into some stores over theweekend.
I like to browse, but I justfound for me it was a little
(02:00):
easier to find exactly what Iwanted online.
Speaker 1 (02:03):
Well fascinating microcosm of what's going on out
there.
You know it's interesting.
I think we've got a lot of ourcustomers who follow this time
really close, and so we do aswell, and so it's a really,
really big moment for CPGs andreally trying to make sense of
what is going on in the economyand with kind of brand
manufacturing generally.
(02:24):
It seems like there have beensigns of the economy cooling.
Retailers like Target and HomeDepot have seen earnings fall
and consumer sentiment has beenlow.
But what are you seeing in thenumbers, kind of as Black Friday
information has come out, andwhat's your take from what you
can see so far?
Speaker 2 (02:44):
Yeah.
So it's pretty limited, I wouldsay.
So everything feels verypreliminary to the companies
that can kind of jump the gunand you know the payments
companies, some of the onlineyou know kind of marketplaces
that are starting to report out.
So generally I think the trendsare that sales are up.
(03:05):
I'm going to caveat that a bitand we'll get back there but
sales are up.
Online is doing better thanin-store, but both are up to
some degree.
So the numbers we're seeing are, you know, I think, averaging
out around 8% online and call ita percent or two in-store.
Now I say, why do we caveatthat?
Well, when people report,they're usually reporting in
(03:27):
dollars and we have to remember,while inflation has come down,
we're still looking at 4% coreinflation year every year.
So I think, and I think we'rekind of seeing this in general,
what we're hearing from even ourown customers is this is a
Black Friday.
That's probably a little moreflat-ish than up, but if you
(03:47):
look at the numbers, yes, from adollar standpoint, we're up.
Speaker 1 (03:50):
Well, and can you unpack that sort of more
macroeconomic trend forlisteners here?
I know we were talking earlierabout the Walmart CEO and
potentially even deflationarypressure into the future, but
yeah, we'd love to unpack that alittle bit more.
Speaker 2 (04:06):
Yeah, I always love talking about inflation
Everybody's favorite topic.
So one thing that's verynotable is inflation is coming
down.
That's a very positive thing.
It's been the stress, I think,on all of us and certainly
consumers.
Everything is getting moreexpensive and we're seeing in
the data that that inflation isdecreasing.
And inflation can be cut in alot of different ways.
(04:26):
Usually it's quoted as a yearover year number, so literally
how much essentially, has thedollar gone down in value?
Or has a basket of goods reallygone up in value over the
course of a year?
And you generally want toexclude certain things from it.
You don't like to includethings like gasoline because
they tend to be very variable.
(04:47):
So often people look atsomething called core inflation
and right now that's up 4% yearover year.
That's the measure.
I think the thing that can beconfusing is we hear well,
inflation is going down, butit's not actually going down.
There is normally a couplepercent of inflation.
Usually the Federal Reservewants that to be 2% to 3% maybe,
(05:09):
and so it just means that therate of change of that has
decreased.
We're not seeing that 8%increase here over year.
Now we're seeing 4%, but thedollar's still being stretched
less far than it used to be.
Now, the thing that'sinteresting is, I think
everybody wants there to bedeflationally.
(05:29):
So that's what you have in yourmind.
You want to go to the store andyou want things to be more the
prices they used to be.
That doesn't usually happen,although, as you commented and
we were chatting before westarted recording Walmart just
10 days ago or so, doug McMilland their CEO came out and said
we actually expect we're goingto see some deflation.
(05:49):
So we're going to see somegeneral merchandise items where
the prices actually start todrop, which I'm sure people
would love, but I don't thinksomething we should probably
expect more broadly.
Speaker 1 (05:59):
Joel, today you were talking a little bit about the
range that we're seeing from aperformance perspective for
Black Friday.
We'd love to unpack that alittle bit.
We've seen some very highestimates.
We've seen some maybe not sohigh estimates, and I know you
sort of talked about what you'reseeing.
But could you unpack a littlebit more your assessment of how
Black Friday went generally?
Speaker 2 (06:18):
Yeah.
So it seems like it's beensolid, I think is the right way
to define it.
If I step back a couple ofmonths, talking to our own
customers, which are allconsumer brands but of all sorts
of different verticals, I thinkeverybody came into the
holidays with some trepidation.
It was what is it going to belike?
(06:39):
Again, consumer sentiment hasbeen negative.
People have had, I think,resilient years, but they
haven't been great In certaincategories.
These two months make or breakyour year.
I don't think the averageconsumer realizes if you're
selling toys or incertineriesand electronics, this is your
(07:01):
year.
It's made in a very shortwindow.
So I think a lot of concern andI think what we're seeing is
kind of what the economy's beenlike.
It feels like the last year.
It's not a blockbuster.
We're not seeing numbers thatfeel wildly successful, if you
will, but the bottom isn'tfalling out.
(07:23):
The consumer is resilient.
I mean to me it aligns withthese polls that I see, when
they ask people about how theyfeel about the economy and
they'll say how do you feelpersonally about your own
financial situation and how doyou feel about the economy in
general?
And people tend to be much morepessimistic about the economy
(07:44):
in general, they expecteverything's bad but they're
like no, myself I'm doing OK andI think that's what we're
seeing.
And I was also looking at whatare the categories that are
doing well.
It's highly discretionary stuff.
It's electronics, it's jewelry,it's apparel.
People still have money tospend.
It's not like again, foodprices have moderated, so I
(08:09):
think it's solid.
It'll be interesting as moredata comes in.
The other thing that I foundinteresting in the data and
again, lots of different sources.
Everybody's got their own wayof measuring, so none of these
are probably going to be totallyaccurate.
Bye, we mentioned how e-commerceis doing quite well, which is
to be expected.
In-store was up a modest amount.
(08:31):
When you look at foot traffic.
Foot traffic at least thecouple of datasets I'm seeing is
up more than in-store sales.
I find that to be aninteresting dynamic.
Again, I can just maybe speakof my own anecdotes where it's
nice to be able to go out.
(08:51):
It's an experience.
You go to the mall, at least anice one, the ones that haven't
died and the nice ones are stilldoing well.
There was a lot of foot trafficwhen I was there.
People were out, but I thinkthere's a lot of browsing, a lot
of exploring, a lot of doingresearch, and then people go
home and they order it.
Maybe they want to get that.
Okay, I found one, but itwasn't the exact one I want, so
(09:12):
I'm going to get a differentversion or a different color or
size or whatever it is.
That's something that I thinkis interesting, and I'm curious
if that will play out as we getmore data.
Speaker 1 (09:22):
Absolutely.
I think we had seen a reallystriking difference between that
e-commerce year over year andthat brick and mortar year over
year is a decent spread, that alot more of the growth for Black
Friday is coming frome-commerce.
I think one of the other thingsthat I noticed is we've had
this trend for several years nowof these big box retailers
(09:42):
bringing those operating hoursearlier and earlier into
Thanksgiving and earlier in theday on Thanksgiving and Black
Friday deals starting then.
This year that trend actuallywent the opposite direction.
I've noticed that Walmart wasclosed all of Thanksgiving and
Target was closed and Costco wasclosed.
Even Walgreens had mostlocations closed on Thanksgiving
(10:06):
, which I think is aninteresting trend to be going
back the other way and probablydidn't expect it to ever go back
, but it did, which I think ispretty fascinating.
Speaker 2 (10:15):
I agree with you and that's interesting.
We were looking at that listand the vast majority of
retailers are closed onThanksgiving and I agree that's
a reverse and probably justspeaks to how people really want
to behave.
You don't want to rush out thedoor after you eat your turkey
to get in line.
When it's cold it's nicer.
(10:36):
You spend time with family orfriends.
You can start browsing online.
You can go shopping on Fridayor Saturday and enjoy the
experience.
I think it's good for consumers.
It's good for workers.
It's kind of terrible thatpeople were being expected to
work during the holidays and itprobably is being reflected a
bit in the data here.
Speaker 1 (10:55):
Well, thanks, joel, really great getting your
insight.
Always good chatting.
It's a pleasure.
As always, logan, you've beenlistening to Joel Beal, ceo of
Alloy AI.
That's all for this week.
See you next time on Shellfly.
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