A weekly podcast with the latest e-commerce news and events. Episode 313 is a preview of the upcoming 2023 holiday retail season.
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Episode 313 is preview of Holiday 2023 with Rob Garf, Vice President and General Manager, Retail at Salesforce. This is Robs’ fifth time on the show, having previously been on episodes 110, 248, 282, and 299.
It’s happened again. Your Halloween decorations have come down (or at least your pumpkin is not in good shape), you survived Amazon Prime Big Deal Days, and now you’re getting ready to ditch your in-laws and enjoy one of the most exciting retail weeks of the year. Yes, it’s time for Holiday 2023!
This year, we’ve decided to do things a bit different by previewing the holiday in advance of Turkey 5. Rob Garf has kindly joined to walk us through Salesforce’s e-commerce forecast for November and December, and we compare it to all the other forecasts out there (NRF, Deloitte, Bain, US Dept of Commerce). In addition to the top line forecasts, we touch on retail versus e-commerce, changing shape of the holiday, discounting climate, inventory and supply chain impacts, top performing categories, the economy, and the impact of rapidly growing Chinese brands (Temu, Shein, TikTok).
Throughout this episode make liberal use of real-time data from Salesforce Shopping Insights HQ, which tracks how 1.5+ billion consumers are shaping shopping trends. You can see a real-time holiday dashboard, powered by Tableau so you can interact with the data yourself on the Salesforce Holiday Insights page.
Episode 313 of the Jason & Scot show was recorded on Wednesday November 8th, 2023.
Transcript
Jason:
[0:23] Welcome to the Jason and Scot show this is episode 313 being recorded on Wednesday November 8th 2023 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
Scot:
[0:39] Hey Jason and welcome back Jason and Scot show listeners Jason is 3:13 the lucky number I had the 13 is kind of on there so I think we’ll count it.
Jason:
[0:48] It’s a lot of threes.
Scot:
[0:50] Yeah yeah I think it’s a primal have to get one of our research analyst to work on the okay so we are recording this in early November as Jason said so at that critical part of the retail calendar all the plans are laid the discounts are on the table Cyber Monday.
Thanksgiving Black Friday everything’s teed up and everyone’s waiting in anticipation of what holiday is going to bring us this year.
And we know longtime listeners will know that our holiday turkey five coverage with a lot of sprinkling of data is second to none in the industry and this year we’re going to take it up a notch in past years we’ve had our friend of the show Rob Garf VP and GM for retail at Salesforce on after the turkey 5 give us a real-time view of what they saw and for those of you that have been with us very long time this is her Jason’s mom primarily those were episodes 110 249 282 and 299 man that’s quite a track record this year we are going to take it up and have a delicious rub Garf before and after holiday sandwich it’s kind of like that turkey sandwich but we’re going to kind of sample it here before we even even have Thanksgiving.
Rob before I before I go on welcome back for the fifth and I think record time on the show.
Rob:
[2:11] Wow I love it this is I will have to call the Guinness book up and make sure we get this knocked in memory on this is fantastic it’s always good to be here and even better Scott and Jason and first of all thank you for having me on doing a little bit of a preview because as you mention were normally crawling through the data talking about the holiday weekend and seeing where everything lands after the critical time period and it’s fun to take a little bit of a sneak preview and look at what we’re anticipating and what we’re seeing going into as you mentioned one of the most critical times of the year.
Jason:
[2:45] I think you’re exactly right Rob I don’t know why we didn’t think of this sooner I feel like they should have always been part of our holiday tradition.
And I do feel like we’re getting all of the Rob protein with none of the nasty carbs so that’s like a.
Particularly healthy Thanksgiving treat but Rob before we jump into all of the good data remind listeners what the heck it is you do for Salesforce and how you get all this juicy data.
Rob:
[3:13] Yeah that’s awesome let’s by the way the listeners decide you know how.
Advantageous this is after the fact I hope it is and again we’ll do our best so yeah and I’ve been I always thinking about it thinking into this conversation now at Salesforce for over 7 years but I came.
To the CRM Leader by way of demand where and if you remember demandware now Commerce Cloud was the leader and the cloud space and we instrumented the platform early on to get access to everything that flows.
Through our Cloud so you think about all the Taps all the clicks all the swipes.
[3:48] Now we don’t have any access to personally identifiable information but we bubble that up and it becomes really The Benchmark for what’s happening in digital and over the years we’ve included.
Things from marketing and Service as well to look at a more complete buyers Journey.
[4:08] And it’s been really fun each quarter we release our shopping index which is available on salesforce.com built on Tableau and it’s interactive so you can slice and dice it by vertical and by geography and it really helps.
Retailers gauge how they’re doing vis-à-vis their peer set which of course is extremely important anytime of the year but certainly even more important during.
The holiday week now I think there’s one thing that I sometimes forget to say so I want to make sure right cover it now which is.
Our index and by virtue of that our benchmarks are from a outside in perspective so they are a look at the entire industry, not just Salesforce data we’ve modeled this over the last 10 years since its Inception so it’s really intended to look at.
The overall industry and benchmarking how peers are doing rather than speaking to anything that Salesforce is doing so that’s my quick infomercial but hopefully more than anything just a little bit of credibility as to where we get the data, what we do with it and most importantly the conversations were able to have similar to what we’re doing here.
Jason:
[5:19] God so that that sounds perfect.
I do want just a couple clarifying questions before we jump into the actual data because I know we’re going to talk about holiday like what is your official definition of holiday what what dates are you looking at.
Rob:
[5:38] Yeah thanks for asking that’s always an important question so we’ve defined it over the years as the complete November and December so that’s our holiday our peak season look.
And we look at in particular for again the holiday weekend I know you call it cyber five or thirty five, we have cyber week which starts the Tuesday before, American Thanksgiving and works its way through Cyber Monday it’s just something we started from the beginning and 4y like to like, your rear comparisons we’ve kept that intact so in on referencing cyber week or cyber five it’s really looking at those, those seven days now of course the definition by some has been elongated and I hope we’ll get into that in terms of when does the official real demand start but to answer your question straight on Jason it’s for us at Salesforce November December.
Jason:
[6:27] Got it and so for historical purposes you’ve always been located in November December and then you’re predominantly or exclusively focused on digital sales so you’re you’re reporting on what actually happened and forecasting what you think is going to happen in terms of e-commerce sales but unless I had this wrong you guys don’t put a flag in the ground on on what you think is going to happen in brick-and-mortar is that true.
Rob:
[6:50] That is accurate now we do kind of go on the fringes a little bit because the bleeding between online or the blurring I should say between online and offline so we do have, data on buy online pick up at store we do have data on returns as well which is by virtue of, definition multi-channel omni-channel type of process but we don’t put a stake in the ground because we just don’t have the intrinsic data to be able to bubble that up and provide on the actuals.
Jason:
[7:20] Sure and then one other fun fact you reference the shopping index and you always have like the quarterly recap on there but I think.
For sure during holidays and I think you’re going to tell me your round you actually have a real-time dashboard up there so it’s kind of a fun thing during the individual days of cyber week to kind of pop in and see see what’s going on after your family Thanksgiving dinner to see if you’re still going to have a retail job when this is all over.
Rob:
[7:50] Yeah yeah we do exactly so during particularly cyber week each morning the team is getting up super early as you can imagine and work around through the data and we’re updating in real-time the data from the previous day and so for any retailer who is looking for the latest and greatest certainly by I would say 10:00 eastern time at the latest you will get that and see that up there we do have many customers who do use that in there Roundtable boardroom discussions each day to understand how they’re doing it repairing it and more than anything Jason truth be told we need to get it up that early because our boss this guy named Marc benioff is typically texting us saying where’s the data because I want to tweet it so yeah as much of a motivator as anything else.
Scot:
[8:40] Always fun when you get the text from The Seer.
Jason:
[8:44] Slack’s slacks the he sends wax not to.
Scot:
[8:48] A slacks yes sorry I was off I was off brand for a second yeah he Einsteins it to his his Einstein slacks you.
You mentioned one follow-up on that you mentioned American Thanksgiving that prompted me to ask this is largely we’re talking about the u.s. here primarily we’re not going to this is an international I’m sure you can go International but, we’re doing more us right.
Rob:
[9:12] Yeah I’m prepared to do whatever I thought we’d probably borrow a bit more into us but we do have Global numbers but yeah.
Scot:
[9:20] Okay we have time Jason’s obsessed with these Chinese companies I’m sure he’ll ask you some questions so.
Rob:
[9:25] That’s fair that wouldn’t.
Scot:
[9:26] Yeah he gets all his clothes from she in any way.
So before we dive into the topic du jour which is this year’s holiday 2023 maybe recap for listeners kind of that you know.
I know we had you on but the dust has settled and I’m sure you’re going back and looking at it now with holiday 22 what were some of the bullet items that you kind of you you’re thinking about as we go into 23.
Rob:
[9:56] Scot you don’t think the listeners have totally taken This to Memory what we talked about last November 29 come on.
You’re probably right that’s fine yeah I get it not all of us live and breathe this but yeah let’s bring us back and you know actually if I could just for a minute, to put 2022 in context you need to think a little bit about 2021 and let me just spend a minute there and then I’ll fast forward to 22 which is if you remember some of us don’t want to in 2021 it was truly one of the first times that demand, actually got pulled forward in the holiday season and the reason was.
The first mile delivery issues were stuck if you remember so many products were stuck in the port in the US of a Lala.
The containers if they even got to the port or having a difficult time getting off the ship in into the domestic supply chain and people saw a headline after headline when I say people like consumers by or shoppers and they realized if they didn’t buy early in the season.
[11:03] They might not get the product that they actually want because in the past they would just have a waiting game and wait for the last and final deal and so.
Demand got pulled earlier in the season and oh by the way retailers didn’t have to Discount as steep as they normally do so going into 2020 retailers thought.
[11:26] All of a sudden there would be this magical shift to Consumers buying earlier in the year and you know what that just didn’t happen, there was actually a really good point of why that didn’t happen when you look at the first two weeks of November we saw some of the lowest discounting rates that we typically see during the holiday season and because of these lackluster deals.
People really didn’t buy anything they waited and they again went back to their normal buying Behavior.
One other by-product out of that is those that did by early.
[12:04] We saw that they actually return the product during cyber week cyber week last year 2022 at some of the highest.
Return rates during that week of the entire season people were doing their own price adjustments if they bought the product earlier in the year and realize they could have gotten a better price so there’s like.
I don’t know how you calculate a triple or quadruple whammy on the bottom line that retailer saw.
Because they were hoping to chase the deals earlier or wait I should say for the deals into the season and consumers just didn’t bite.
Overall and then I’ll stop talking for a second here is what we saw.
For let’s just take cyber week as an example in the u.s. we saw a nine percent year-over-year growth growth online and globally we saw a 2% growth so us was really buoying up the global number there but a lot of that Sales Online happened right before cyber week and through the Thanksgiving holiday.
Scot:
[13:07] Got it it’s kind of coming back to me I Remember You coining The Phrase discount chicken I remembered that is that right remember.
Rob:
[13:15] Yeah yeah yeah totally and thank you so discount chicken you know for the first time that we saw, retailers won the game of discount chicken last year I’m sorry in 2021 they tried to win again in 2022 but it just didn’t happen consumers are really wise the real patient and now especially as they’re seeing headwinds in their economic future there’s definitely searching out for better and best deals.
Scot:
[13:46] Yeah this this kind of goes back to our data question it just occurred to me as we were talking about this obviously the macroeconomic is different now does that factor into your when you swirl all this together and you guys put together a funk forecast is that is that an input.
Rob:
[14:00] Absolutely yeah for sure and another piece that we look at very closely because it’s driven so much of the growth over the last two years is inflation as well and so when you look at the last two years much of the online and growth is from increased prices not increased demand so people are just not getting as much from their dollar because of those increases we’re starting to see that settle down the last couple quarters which is good news we’re not quite seeing in Europe by the way but here in the US and so we’re hoping, some of the growth will come from We’re anticipating I should say some of the growth this holiday season coming from actual increase demand.
Jason:
[14:41] God so I want to I want to jump in the big reveal but a quick quiz first if you don’t mind so last year us e-commerce growth nine percent G20 21 was also an incredibly abnormal year do you remember what the actual number you guys got for 2021 was.
Rob:
[15:00] For cyber week that’s a.
Jason:
[15:02] No or sorry for holiday if you don’t have it it’s fine.
Rob:
[15:05] Overall holiday for 2021 was nine percent but that’s Global so I’d have to go back to see what it was with the US.
Jason:
[15:13] No problem but so last year in the u.s. nine percent growth which was outlier for because Global growth was quite a bit softer.
And so now here we are getting ready for Holiday 23 and what what do you think’s going to happen when how much stuff we’re going to sell online in November and December of twenty three in the US.
Rob:
[15:35] Yeah, so we’re anticipating here in the US basically flat online growth and anybody I’m talking to is candidly quite okay with that and let me tell you why they’re not overly bullish about significant growth online this year.
For two major factors one is, we actually looked at the kegger over the last couple of years going back to 2019 and if things play out the way we anticipate we’re still looking at for the holiday season compound annual growth of somewhere between 20 and 25% and so we’re really where we are better than where we’ve been in 2019 year-over-year so we’re you know we’ve been looking at these data points for quite some time during the holiday season if we’re going to do 10 to 12 to 13 percent year-over-year growth online we’re feeling really good and we’ve seen the average over the last couple of years come out well over that so there’s a baseline that we’re still needing to consider as we think about growth the second factor is.
[16:50] The store.
And we can’t forget about even though our data doesn’t explicitly account for that what we’ve seen in our data is that people are still going online very, aggressively meaning traffic quarter-over-quarter year-over-year is still really strong however what we’re finding is people are then doing what they’ve naturally done for a long time which is in many cases then go into the store to actually make the purchase and so it doesn’t necessarily tell when you look at flat growth year over year for the holiday season the entire story we’re still feeling really good about it what helps us by the way one more caveat that I’ll put in there and I should have mentioned it’s got just a moment ago when you asked how we get to the numbers one of the key influences, is what does it October look like and particularly prime or we should I was about to say Prime day but the prime big deal days and so what we’ve seen when it first came out a nice halo effect.
And we still see a halo effect certainly during the dog days of summer in July since the Inception of prime day.
What was that 56 years ago but we although we saw bumps in the early part when it.
First was established in October there wasn’t a significant halo effect that happened during Pride a meaning those.
[18:18] Not named Amazon during the October event we saw nice traffic we though saw really low discount rates once again so people were being patient they’re biding their time and so we are seeing some nice add to cart rates as well so we saw people were poking around they were doing their research they were starting to.
Think about what their holiday gifting this look like but they were waiting and so that’s my long way of saying we’re anticipating a fairly moderate holiday but we’re not at all discouraged by what we.
Jason:
[18:54] Totally fair and so and I want to put your forecast in a little bit of context but before I do you kind of open the door on this whole October and shape of holiday thing like hey.
Super useful to have historical consistency so I’m glad you guys report.
The same time period every year right like I’m by no means proposing that everyone should change periods but it is interesting there’s there’s a lot more promotional activity.
Happening in October than was true 10 years ago right and in very specific ways you convoluted 22 years ago, Prime day was cancelled in summer and happened in October and then they move prom date back to Summer but they added this second prime day and put a lot more marketing behind it this year than last year so and every other retailer on the planet.
Counter programs against that that holiday and so there’s been a.
An increasing amount of pressure to pull sales in in October and then on the flip side a lot of people feel like holiday doesn’t really end.
And told mid to late January and there’s a variety of reasons for that but one very particular one heck of a lot of gift cards get sold and gifted during holidays and they get redeemed.
[20:18] Predominantly in January and so I guess I’m just kind of curious I’m not sure you would have necessary data behind this but like it does feel like holiday is flattening out and I know you guys pay particular attention to cyber week which you know is still a huge outlier and obviously we see way more sales on Cyber week than a traditional holiday week but.
As a.
Relation to the total holiday period it does feel like that spike is starting to flatten out a little bit like do you see holiday getting kind of stretched and flattened.
Rob:
[20:53] Yeah I love the question in this I feel like we could look back you know in a year or 25 years and do a whole.
[21:03] I don’t know extensive research project around how, people in mindset and shopping has evolved because it has and of course the pandemic had a big accelerator to that what we’ve seen in our data Jason is there has been a flattening out throughout cyber week meeting the big Spikes have typically been Black Friday and Cyber Monday and those still remain the two largest online days of the entire year but we are seeing a flattening out throughout the entire week but we haven’t seen a lot of the sales, when it’s all said and done pulled into October we do see a little bit of a blip in and around, the big deal days and we actually to your point other retailers have preempted the sales and we saw that in July as well meaning doing sales events the week before and it does draw them up, some traffic but we haven’t seen a large portion being pulled into that time period what I will also say again lackluster discounts played a big role we’re anticipating, comparing big deal days to cyber week cyber week we’ll see about a 40% higher discounting rate.
[22:28] Then what we witnessed just a couple of weeks ago in October you are totally right by the way that.
[22:37] The holiday season does definitely extend through December and into January that’s why most every retailer has there.
You know fiscal year ending in January so they can really reconcile and get out from under what happened in the holiday not just gift cards but all of the returns and exchanges that invariably happen as well but at the end of the day just put a nice little underscore here is in 2020 and 2021 we did see a bit of pulling forward into October a couple of percentage points of sales but we’re forecasting that 25% of all holiday sales will happen again as we Define it the 7-Day is of cyber week.
Jason:
[23:27] Interesting very cool okay so before we dive into some more granular topics I do you want to put the 9% in context and some listeners will be familiar with Nate silver and his poll of polls in the the kind of boring, boring a political forecast but the way more interesting March Madness forecast so I like to fancy myself as the Nate silver of e-commerce and so I do try to watch all of this data and huge caveat, nobody’s data is Apples to Apples right so it’s not really a matter of though this number doesn’t match up to this number.
Everyone has a slightly different definition of what e-commerce means everyone has a slightly different set of dates that they’re looking at and they have different methodologies right so your methodology I feel like you get perfectly accurate data from a slice of the market right like there’s there’s no like.
Human.
[24:30] Are introducing your data because it’s coming right from the systems and that the challenge for you guys is to take your slice and extend that to the the entire world of retail.
The and I feel like you guys do that really well.
So another data source that of course people are sick of me talking about is the US Department of Commerce which are these like surveys that they force retailers to fill out and.
There’s.
Entirely different challenges and flaws in their survey methodology and how they defined e-commerce but just to kind of put things in perspective.
I’m going to talk about they give us both brick-and-mortar and e-commerce data and so I pulled right before a show I pulled their data for the historical averages of November and December and so for the 27 years before covid-19.
November and December sales grew, 3.8 5% per year so that’s brick-and-mortar that’s not related to the number you gave it all so average retail growth in that States of America / the US Department of Commerce in November and December three point eight five percent so and then I remind people the three covid years 20 21 and 22.
[25:45] Were the greatest three years in the history of retail right because we didn’t let anyone spend any money on travel and we mailed 10 trillion dollars to every man woman and child in America, to spend and so via the US Department of Commerce data 2020 Drew 9.2 percent.
[26:04] 20:21 Drew 12.5 percent in 2020 to grew 5.4% so three straight years of, way over the historical average growth right and then using that same methodology they US Department of Commerce reports internet sales I’m way more skeptical of their internet sales because of the methodology in the way they Define it but just to put it in perspective.
[26:32] For the 27 years before covid they have e-commerce growing eleven point two five percent a year and so then 2020 when everyone was locked in the house and not going to retail we had this monster year e-commerce group 35% in November and December from their data and then the following year because there was sort of a rebound and a return into two brick-and-mortar sales e-commerce sales were actually lower than the industry average so 2021 they had sales at 10.5% so a little bit off of the historical average and then last year they were the softest of all they were seven point six eight percent which is the slowest e-commerce growth in Holiday in the last 30 years so that’s just kind of an interesting context right so the orders of magnitude are all right you had nine percent growth last year they had seven point six percent growth they don’t forecast of course and so then I start looking at the forecast and a big forecast that comes out every year we’re all friends of the NRF here and there in RF members the NRF just did their holiday forecast their forecasting brick-and-mortar growing three to four percent so.
[27:45] Pretty much in line with that historical average that’s a deceleration from last year which was 5.4% and they’re forecasting internet sales of 7.9 percent so they’re kind of perfectly splitting the difference between the US Department of Commerce and Salesforce for whatever that’s worth by pretty pretty broad range and so that just kind of passes my quick sanity check Deloitte also does a forecast now deloitte’s forecast is a different time range they consider holiday November to January and they’re forecasting brick-and-mortar 3.5 to four point six percent so a little more optimistic and they’re forecasting e-commerce at ten point three to twelve point eight percent so again a little more optimistic and then Bain did a forecast this year and they have three percent brick-and-mortar so I just wanted to throw that out there that most people are expecting this kind of three to four percent brick-and-mortar growth and this kind of we’ll call it eight to eleven percent e-commerce growth.
Rob:
[28:51] Yeah and I would say given what you just talked about.
Others a bit more bullish on the e-commerce growth than we are but I think directionally both brick and mortar and e-commerce are telling a very similar story which is e-commerce is still alive and kicking but it now has to be looked at in the context of brick and mortar and I think there’s a lot of factors in that that actually will make the reporting moving forward even more difficult it is making it difficult and Jason you and I have talked about this before it’s just the attribution models because it’s not just about last-click anymore especially as people might you know in many cases go online and then go into the store where’s that last click and how is that I’d be factored so everything from.
[29:38] What we had anticipated in seeing around, you know 60% of digital sales now influenced by the physical store because the associate is driving demand through, customer service or client telling or social media or they’re fulfilling Demand with being able to, you know pick pack and ship and online order.
Or what’s happening in digital as well in terms of people buying online and then picking up in or around the store so I think what is super interesting.
In addition to what you said is how these metrics might evolve over time because it will depend a lot on, by retailer who’s getting the credit and I know that’s something that’s been talked about for quite some time but literally how to is it how is it being accounted for and what does that do to how their reporting the numbers.
Jason:
[30:33] Yeah couldn’t agree more and just 11 sort of example to illustrate that 11 kind of category that sold almost no meaningful volume online before the pandemic was grocery right second biggest category of consumer spending but none of it was online before the pandemic now depending on how you count ten to twelve percent of its online and guess what it all gets attributed as store sales right because it all it’s all bananas that are getting delivered from a store and you know so 100% of instacart sales look like store sales to the retailer.
And so it like I agree with you it’s just it’s just getting more and more convoluted.
Rob:
[31:14] Yeah well it’s an interesting point around grocery you know our data showed in 2020 and most of 2021 we saw Triple digit growth year over year because of what you just talked about you just wouldn’t ordinarily or historically by groceries online what drove a lot of that and what I think will drive Behavior moving forward is in 2020 we saw a 40-percent increase of net new.
Digital Shoppers so these are people that hang out online but they wouldn’t click the buy button and so a lot of those people now want to go back into the store but they’re using digital they’re using their phone in particular to really be that connective tissue.
Scot:
[31:55] What’s a continue to peel the onion here you hit on this a little bit but tell us more about what you think is coming up in the 2023 cyber week for example if I recall last year Cyber Monday was the biggest e-commerce Day Ever set, is that did you guys agree with that or what’s a my misremembering.
Rob:
[32:14] Yeah yeah so we actually have seen Black Friday actually.
Bust up to the largest I know that’s kind of hard to how others have looked at it but they’re both really strong and we anticipate that being the case again again though we are seeing a bit of smoothing out of demand throughout the seven days.
[32:36] Particularly on phones and I guess that’s not a big butt when we weren’t traveling we saw the Resurgence of you know iPads and tablets and actual regular computers especially when you get nice groovy one Scott like you did just recently but anyways I am getting distracted here by your awesome new computer but.
What we are now seeing though is I move back to mobile and what we saw also during Thanksgiving a really strong traffic particularly local times between 4:00 and 8:00 if you think about it that’s essentially when people are finishing their Thanksgiving Neil and they need a little break there sitting on their couch and they pull out their phone and so we’re seeing a lot of traffic.
Via Mobile and social as well by the way we are anticipating and we predicted this going back in June that we’re going to see.
Traffic via social be at a 10 times higher rate.
Than traditional marketing so there’s a lot of budget being pushed towards that media and we’re seeing.
[33:49] A lot of success there now they’re still a bit of a gap in terms of conversion rate through that channel but again if you connect the dots mobile.
And social happening over cyber week in particular on Thanksgiving it’s going to be really strong and we’re seeing again retailers lean into that.
Scot:
[34:10] So Black Friday was bigger growth last year or bigger absolute dollars or both.
Rob:
[34:18] For us it was biggest absolute dollars the growth was essentially spot-on for both Cyber Monday and Black Friday.
Scot:
[34:28] Jason and I’m assuming that did other people say it was Cyber Monday or it was at all.
Jason:
[34:32] Yeah they’re they’re different different folks had that different Peak yeah so but.
Scot:
[34:39] Controversy in e-commerce I love it.
Jason:
[34:41] Yeah controversy and they’re getting closer together like they’re worth in the early days.
E-commerce Cyber Monday was a giant Tower and no one had internet access on Black Friday like that that could really is no longer the case.
Scot:
[34:55] Yeah well rip Cyber Monday cool I don’t have any follow-ups Jason’s Europe.
Jason:
[35:03] Awesome so.
I want to jump into one of the other topics you introduced a little earlier so far we’ve been mostly topping up talking about Top Line which is a kind of easy way to think about this and it’s you know it’s a it’s a kind of easy way to get your brain around it, at the end of the day retailers care a lot more about bottom line and a huge impact on holiday bottom of line is how aggressively in deeply folks have to Discount in order to achieve those sales so, are you guys like what do you forecast I don’t know if you have a formal forecast for discounts but what what should people expect from discounting this year versus last year and what what are the trends there.
Rob:
[35:46] Yeah yeah yeah this is good because I missed a point before that I want to make as a relates to Discount and so this will give me a good opportunity to bring that up but still has to go right at that Jason we’re forecasting on average a.
Thirty percent discount rate throughout cyber week and again to put that in perspective it was 20% here in the US during the October event for.
Prime big deal days again we look at the entire industry not just Amazon as a relates to that and so we’re seeing a much more aggressive, discount rate now it’s going to differ obviously by different segments you’re not seeing as high in luxury as an example we do anticipate for tour toys and a consumer electronics which have been a bit of a softer category over the last 12 months again especially because because of the high Baseline they had because of the growth over 2020 2021 but we’re also seeing and this goes back to the pulling forward of demand.
Is more and more retailers are providing.
[36:55] Black Friday deals throughout the course of November and.
What’s different in the past was it was fairly opaque in terms of we’re giving you deals but we’re not really sure those are going to be the best deals right and though we’re seeing now much more transparency there’s one major retailer that I’m sure you can guess who’s doing Black Friday deals throughout the course of November and they are guaranteeing price matches.
If for some reason they do go lower and they are also offering buy now pay later so you can commit to getting the product so you don’t miss out on it but you can then pay over time and so what really came to life for me in this topic was we were doing a round table.
[37:47] In Toronto in June and one of the attendees and she talked about this again at dreamforce in.
September so I feel comfortable talking about it is a digital executive from Desi mm which is a cool health and cosmetics and Beauty brand that also has two other brands one called the ordinary and they have something that they’ve been doing for quite some time calling it, slow vember and their whole point is don’t cause any urgency but rather.
Make it a more relaxed buying experience and their point is throughout the course of all of November we’re going to provide the same exact discount no matter when.
And if you buy it and so we’re seeing that a bit more and more some of it is coming by way of.
[38:38] Early Access or exclusivity but also again extending and providing visibility, part of it is again trying to create that confidence that you’re getting the best and final deal and also by the way you talk about the bottom line Jason.
Is trying to reduce the Deluge of returns that often happen a lot of retailers.
Are changing 88 percent according to our research are changing their returns policies and that’s going to be a.
Big risk and what and how that impacts holiday purchases this year.
Jason:
[39:13] Yeah you know it’s funny there’s so many moving Parts it’s so complicated you think about like what a big impact inflation had on last holiday and you know good news like it seems like inflation is going to be lower this holiday.
Consumer was in a better economic position last year than it seems like they’re getting their sure we’re seeing credit and defaults and things like that start start to creep up so there’s there’s just all these moving Parts but one thing I think a lot of people lose sight of is in the last three years predominately driven by the pandemic every retailer has completely reinvented their supply chain and their demand forecasting and I would argue everybody’s way better at it now and they have way more agile Supply chains and there they’re they’re a lot more accurate with their level of inventory which means.
They’re more confident they’re going to sell through their inventory and that changes their discount strategy like they’re just all these moving parts that make it really hard to compare your over year when you know.
Preview point the last three years sometimes we didn’t have anything to sell and then the next year we had two years worth of stuff to say so.
Rob:
[40:24] I was just talking about that with an executive just earlier today and how retailers have gotten as you said better at demand forecasting.
Better at Inventory management and I joke sometimes although I’m only half joking that supply chain has really come to the front office it’s like really part of the customer experience at this point and has such an opportunity, to either negatively impact our hopefully positively impact.
The customer experience especially when you’re you know trying to find product after the shipping cut off window we’re anticipating once again a huge uptick for those that have the ability for Consumer to buy online and.
Pick it up in and around the store after.
[41:06] The ship and cut off window we’re seeing seven times higher growth rate for those that have that capability because essentially you’re kind of shutting down your online doors if you cannot.
Fulfill those orders after the fact and so but that requires to your point Jason like a lot of tuning.
Around supply chain order management inventory oh and by the way store associates as well we have to.
You know planned for that extra time that they’ll have to take to fulfill that order will have to provide the right incentives and will have to give them the tools as well and I think retailers have gotten better at it.
I don’t think anybody’s fully cracked the code but going back to your bottom line point last year for us the holiday theme was profitability and that doesn’t go away I think people have gotten meaning retailers have gotten better at it but certainly always opportunity so I’m glad you called that out.
Jason:
[42:02] Yeah I like to say profit is cool again.
Rob:
[42:04] Providence cool again yeah.
Jason:
[42:06] The if you take nothing else away from this episode profit is cool.
The the way it’s funny like I joke about this but it’s kind of serious when I started my career the the VP of supply chain probably started his career as a truck driver and and today that VP of supply chain like probably has a PHD in data science um so it’s a that that occupation has dramatically changed the one other follow-up question.
One of the cool things about your data set versus some of these other ones I look at is.
You guys have real-time access to the data so as we record this we’re eight days into November have you seen anything interesting or there any patterns that have stood out it you does it make you more confident in your forecast or in anything that’s interesting for listeners to know.
Rob:
[43:01] Yeah we did look at the first couple days of November and also of course looked at October it’s pretty consistent with what we saw, in Q3 in the US we’re basically flat in terms of growth however traffic is up so traffic is up four percent.
Orders are slightly down what we’ve seen which I think again is a very nice leading indicator is, product view rates have increased by 5% and add to cart month-over-month so September to October plus a little bit of November we’ve seen a slight uptick as well so what that’s telling us is people are interested.
They’re doing their research.
They’re looking for the best deals they’re understanding where the inventory is available and so that they’re ready to make the move when they feel like they’re getting the best and most value.
Scot:
[43:58] Cool so it sounds like if traffic’s up in orders are down a lot of Tire kick in and kind of prepping and watching and making your list and you know could be the start of discount chicken 2.0 will see.
Rob:
[44:10] There you go exactly 2.0 I’m using that Scott I’m grabbing that I hope that’s okay.
Scot:
[44:14] Discount chicken the chickens Strike Back.
Rob:
[44:18] Well and also I mean you talked about kick the tires so I think it’s a good opportunity for a promo for spiffy at this point too so don’t forget to get your gift cards as well right.
Scot:
[44:28] Yeah yeah we will be running some promos thanks.
Jason:
[44:30] And if you do kick your tires Scott can come to your house and replace them for you.
Rob:
[44:34] Exactly.
Scot:
[44:36] And shop for the new shoes online.
Rob:
[44:38] There you go I think there’s a mash up there there’s going to be spiffy and a DDOS coming together for anyways I don’t know we’ll leave that to the markers.
Scot:
[44:48] That’s a good segue into my question in the predictions on category so I remember last year you guys had some interesting data on that does your prediction.
Kind of data science get down into the category slicing of things or that’s going to be more in the rearview.
Rob:
[45:06] Yeah no we certainly look at that we do it obviously based on what we’ve seen historically we’re anticipating for the holiday.
Active apparel active Footwear Health and Beauty being really strong so.
You know we talk about the big number because that gets the headline in terms of essentially flat growth but we had tisza Pate some nice growth in those areas it’s going to be a challenging partly because of comping as a relates to toys and gaming and consumer electronics if you think about that’s just macro trend.
People are looking for Comfort part of it is coming out of covid and maybe not all of us getting back into three piece suits but also when you feel a little bit of economic uncertainty I was listening to some Financial show.
[46:02] While I was traveling over the last couple weeks and somebody put it as kind of the household PL or the household balance sheet you know when you’re looking at that in your making choices you’re taking more control of your finances which is happening people often migrate not only obviously to value, and safety they’re looking at comfort and so there’s something to be said for comfort and shoes and Footwear comfort, in apparel and almost the openness to be a bit more comfortable both in Social and in work situation so what are anticipating like I said active apparel active Footwear Health and Beauty being really strong luxury as well don’t sleep on luxury they’ve been the most resilient category.
In the pandemic and coming out of the pandemic and so that end of the market has held really well we’re seeing a little bit.
Of softness and what I’ll call the aspirational luxury but as a whole that category is looking really strong and we anticipate it looking pretty strong, during the holiday as well.
Scot:
[47:12] Yeah this is old school but I remember a channel advisor going through 08-09 we were always shocked that luxury you know it’s like the world is falling apart around us and people are like oh yeah I’ll get a get a 400 dog and back it’s gone.
That part of the market just doesn’t care that they’re immune to those things I guess.
Rob:
[47:30] They’re pretty resilient.
Yeah I mean one other thing I’ll throw in there just because I’m talking about it more and more with customers as we think about the holiday more as a.
I think Bellwether to what will anticipate next year over the course and this is a global number but over the course of holiday were anticipating 194 billion dollars of online sales being influenced by a.
Sorry are you thought you were going to get through this whole I know should I have not done that I’m sorry because you definitely that’s on your bingo sheet.
Jason:
[48:07] Now I have to check the there’s a I in this episode flag on iTunes.
Rob:
[48:11] Exactly well might get some more traffic that way so who knows but we find that super interesting most of it I want to like temper that.
A lot because people are getting really excited about that headline is most of it will be from predictive a I like product recommendations which we’ve been doing for quite some time we’re starting to see some early adoption of generative AI whether that’s in email marketing with subject lines or body copy for that Saint product detail page with product descriptions or in service super interesting wood Gucci is doing and what they call a Gucci 9 their service center and teeing up responses for their agent to make them more efficient and allow them to scale but also stay on brand and so we’ll see that a bit more but again a vast majority like I said it’s around globally sixteen Seventeen percent of all sales will be influenced by AI this holiday.
Jason:
[49:06] That interesting so Rob we’re almost out of time but I want to throw a super meaty 12 you for for a final question Scott was making fun of me but I am super interested in these Chinese brands that are capturing attention and share in the u.s. right and in particular that’s that’s Tim ooh which is has more traffic than Target more sales than Ed see in the United States Xi’an is the largest apparel reseller in the United States and then to a lesser extent Tick-Tock which has the vast majority of consumers attention in the United States and is now trying to sell stuff to people.
What super interesting is it’s not obvious those guys are all growing at Breakneck Pace much faster than your your nine percent growth number it’s not obvious if or who they’re taking share from so I’m curious of you if you have any POV it kind of seems like there they’re inventing new demand or at the very least they’re taking sure from brick-and-mortar it does not appear they’re taking sure from the Amazons of the world.
Rob:
[50:09] Yeah that’s awesome I’m glad you’re addressing this I’ve just spent a couple weeks.
In Europe I was in four different cities so talking to a lot of luxury Brands talking to a lot of traditional brick and mortars, and this is an area one of the executives put out Tech intermediary and I told him I would steal that and here you go I’m stealing it.
Because I would say those that you just categorized are really wedging themselves in between the demand and the supply and they’re creating a whole new platform where.
It was just an originally with Tik-Tok and others about inspiration and now it’s about purchase and so you know what we’re seeing in Jason you and I have talked about this got 20 degree as well this idea of embedded Commerce or shopping at the edge.
Where the buy button is being pushed up through the funnel on these delivery platforms again these Tech intermediaries I mean if you think about it they’re almost like.
The next generation of the shopping mall the shopping mall is created because of access because the highway here in the states and it created a place for people to hang out for people to get some food for people to shop.
[51:16] People to socialize and because of that hey they could have tenants who that would then pay rent and sell stuff right and it’s not dissimilar to what these Tech into mediators are doing in that they’re monetizing their traffic I think they’re coming after, the brick-and-mortar to a degree they’re all so I wouldn’t say creating more demand but fraying some of the man from.
The brand sites because the brands are showing up there and so I would say there.
[51:52] A little bit creating more demand but more than that they’re kind of defraying the demand we’ve seen is.
A high degree of growth thirty percent over the last couple of years of growth on these third-party intermediaries that we’re talking about and they are taking from other platforms.
Jason:
[52:14] Interesting I don’t know what the real answer is but I do know it’s super interesting and important to pay attention to so I’m glad we brought it up but Rob that is going to have to be where we leave it because we have used up all of our allotted time I’m going to make sure to put a link to the Salesforce holiday dashboard in the show notes and super grateful for you taking at time and I hope you have a great Thanksgiving and we’re looking forward to talking with you right after Cyber Monday.
Rob:
[52:45] Thanks Jason Banks got ya looking for doing a short couple weeks looking forward to talking to you then.
Scot:
[52:50] You robbed remind listeners where they can find your pontification xand and do they just Google the the index to find your daily things or like is there a quick URL that you guys have that.
Rob:
[53:04] Yeah you know to be honest with you the best way to is go to Google and put in shopping index Salesforce and you’ll get to our holiday insights Hub so it not only has the dashboards but has all of the blog’s were writing and all of the up-to-date analysis.
Scot:
[53:20] Cool well thanks we really appreciate you taking time out of your busy schedule to deliver this delicious holiday sandwich for our for Jason I in our listeners.
Jason:
[53:31] All right you guys be well and until next time happy commercing!
