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Jake D. C.

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19
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2021-04-13
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2021-04-13
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  1. “Making sure that whatever products are used or consumed are being traced in a way that the retailer understands where they're coming from and is able to sort of control it a bit. So I think that this topic is of enormous focus. And you should expect a combination of investors along with boards that are seeing where their consumer is to continue to focus on it.”

    2021-04-13 · Goldman Sachs Exchanges · Whenever, Wherever: Seamless Commerce is the Future of Retail · IDENTIFIED FROM THE TRANSCRIPT

  2. “Look, I think well captured by Jen. I think the two things I'd add number one, it's a board level focus that have evolved over the last 10 or 15 years. Boards are paying enormous amount of attention to sustainability, the impact on climate, and importantly, whether or not their company is well positioned. Some of that comes from because it's the right thing to do as consumers want of it, and some of it is because there's an enormous amount of ESG capital that has been raised and the markets have spoken and the markets are saying, hey, large public corporate in the retail space, if you want us to participate in your equity story through us investing, we'd like to see metrics, we'd like to sort of see progress along sustainability goals that you have outlined. And so we think the retail community is going to need and is being quite thoughtful on this, especially on this area of creating sort of a closed loop sustainability system, you know, meaning”

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  3. “Look, most retailers and brands today understand the link between doing good and bottom line impact. 80% of retailers believe that company actions matter to consumers and 64% believe those actions affect purchase decisions. And so companies are aware of these facts. They're evolving their business models to address it. A great example is the fashion industry. They're responsible for a large biodiversity impacts across the value chain, including generating up to 10% of global carbon emissions.”

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  4. “Potentially to enable their experience with e commerce perspective. I think we're going to see some of that. What's a little bit less clear is traditional brick and mortar retailers buying so-called D2C companies. I think that's been sort of a mixed bag to date so far, mainly because the companies tend to be quite different in the approach and tend to be quite different in terms of the cultural aspects of each of those companies.”

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  5. “Proper e-commerce in a website. They built out a proper back office. They have tried to create their stores into distribution centers if necessary. So billions of dollars have been spent by retailers to sort of catch up to the Amazon impact over the last 10 years on strategic activity. Look, there's been some parties who have done a lot, like Walmart obviously made a huge investment in Flipkart in India. That's an example of looking at the distribution channel in an emerging market and saying that's the right way to go. And I think where you're going to see retailers probably spend more dollars on the M&A side maybe around last mile as technologies emerge that are going to be helpful for their own distribution as their distribution becomes much more, as we talked about earlier, seamless oriented. How can they do that? So Instacart became a huge company on its own by helping retailers do that. Are there other things out there that retailers will invest in or purchase?”

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  6. “The customer data topic is going to get increased scrutiny. I think there's a lot of literature on this already over the last few quarters, and the focus on big technology and where they are with owning customer data is of enormous importance to the government. And for retailers, there's been an evolution, right? In traditional brick and mortar, the retailer used to get point of sale data, which would help them understand what was bought, which store, help them manage inventory. and the evolution today is that big technology including big retailers obviously have far more information that is potentially helpful as they think about marketing and chasing new customers but to your observation jake it is likely to get more scrutiny but overall your broader question on technology and retail the impact of strategic activity we think it's going to continue at a starting point retailers have focused largely on building out their own technology capabilities that's the first point right they have built”

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  7. “Well, to your point about malls evolving, my 12 year old son had read about the indoor wave pool at American Dream Mall. He's very excited to check that out one of these days. Not to mention the indoor skiing.”

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  8. “Events allowing shoppers to make virtual appointments with sales associates and stylists. Really malls and stores need to evolve to give customers a fun destination reason to come into shop on one hand or a super convenient way to shop on the other. And I think, Michelle, talking about Target and Walmart are great examples of that. They've been two retail behemoths investing very heavily in this in terms of buy online, pickup and store or using their stores today to be e-commerce fulfillment centers. I think the other thing that retailers are doing to evolve from a brick and mortar standpoint, Jake, is really thinking about personalization. It's been interesting to me. There was a McKinsey study recently that said that 100% of top quartile retailers cited omnichannel personalization as a top five priority, but only 15% of retailers have actually implemented personalization across channels.”

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  9. “I think it's a great question, Jake. I'm not surprised that that conversation you had to have with your kids. And I would, you know, echo and underscore a lot of what Vishal said. The reduction in retail square footage is not new news, right? Last year retail chains closed about 8,700 stores in the US after shuttering 9,800 in 2019. So you're talking close to 19,000 stores being closed. And when you talk about balls, their external estimates out there that say a quarter of the country's malls will close by 2023. So I fully agree with Fashal. It's not going away entirely. It's going to be a reduced store footprint. And this kind of omnichannel all in one experience is going to be something that all retailers and brands will need to address. What they're doing is evolving to be more experiential or more convenient. So you've got retailers adding things like virtual fitting rooms, hosting live stream shopping.”

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  10. “Jen referenced earlier e commerce has been on a tear for multiple years now. It's been rapid growth, call it 15 to 20 percent year over year. And 2020 saw unprecedented volumes in terms of consumers being able to buy from vendors directly. And U.S. retail sales are huge, right? It's like over $4 trillion. And so there's a lot of dollars to go around between direct and consumer concepts and brick and mortar retailers. Now, when you think about e-commerce growth,”

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  11. “Stimulus added on top of the 600 put in consumers' pockets in December that coupled with a high savings rate through last year means that consumers have a big checkbook to still spend this year. And so despite the pivot from stay-at-home to reopening names, you're still seeing relative strength across the board.”

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  12. “Not surprisingly, right, the stay at home last year, whether it was anything related to home, home improvement, sporting goods, sports equipment at home fitness, food delivery, cleaning, center of store, grocery all took off last year. And you saw real dampening in terms of restaurants, travel and leisure, branded apparel and accessories when people other than athleisure, you know, where to work and where for special occasions, all of that dropped off dramatically. Now what you're seeing is really a one-two punch that those sectors that had really been the reopening businesses and had taken a pause last year are starting to dramatically recover as people are seeing the reopening cadence happening. But you're still seeing strength in the stay-at-home categories. And I think that's really being driven by the incredible consumer stimulus that's been put into the economy by the government when you think about the 1400.”

    2021-04-13 · Goldman Sachs Exchanges · Whenever, Wherever: Seamless Commerce is the Future of Retail · IDENTIFIED FROM THE TRANSCRIPT

  13. “And how all of those debt and equity options are available to our clients. I think the other thing that's happened as a result of that, Jake, is just an incredible growth in M&A because CEOs are much more confident in the recovery at this point and can think about funding M&A. You've got M&A volumes that are up 100% year over year, which is incredible when you think about a year ago, we were just starting the pandemic. I think the other thing we'd be remiss to not mention, but has dramatically impacted the sectors that Vishal and I cover is the growth in the SPAC market. The SPAC market has been close to 20% of global M&A volumes. And in our sector that tends to be more small in mid-cap transactions, it's been almost half of US M&A between one to five billion dollars. And so again, you're seeing just this incredible attractiveness and appetite from investors to invest in this sector.”

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  14. “It's amazing to me again just a change in 12 months where a year ago it was advising our clients whether they were drawing down entirely on their revolvers, they were issuing new credit facilities and new revolvers purely to have liquidity on their balance sheets and they were unsure about how deep the trough would be. And now literally within 12 months, you've got still incredibly low borrowing cost. You've got debt markets and equity markets that have been extremely attractive across the board. And I think you've seen a complete shift towards really tapping those markets for opportunistic and offensive purposes. Here we sit in April and in the last three months in our sector, we've seen IPOs of PETCO, Poshmark, DocMartens, DoorDash, Airbnb, Threadup, just to name a few within the larger consumer retail sector. It really shows the attraction of the equity market.”

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  15. “So, Jen, at the onset of the pandemic, we saw a lot of companies that you cover accessing the capital markets to raise debt. In many cases, just for their own survival and to get through it. But not long after that, we saw a pretty big shift in the capital markets towards growth and innovation. Talk about advising your clients through those valleys and peaks, as it were.”

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  16. “Through consumers wanting newness all the time. But look, there's real challenges still for new entrants, right? The cost of customer acquisition is really high. And for that to be beneficial for that new entrant over time, it requires a lot of scale. And I think that gets to a little bit of why there's been some resiliency with a lot of traditional retailers because they actually have that scale.”

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  17. “Direct to consumer metrics that have now permeated to more traditional brick and mortar retailers as well. So if you're a new entrant, it's easier than ever to put up an online storefront. So e-commerce enablement companies like Shopify, they help create a storefront, they manage the payment, they manage back office. I mean, frankly, the fact that Shopify is one of the most successful technology companies in the world is a proxy for how new entrants are benefiting from this new environment. And so I think the idea and the proliferation of new brands selling directly to the consumer has clearly been a Trend that isn't going away and is going to be accelerated.”

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  18. “Look, consumer first is the right word, Jake. I mean, historically, traditional retailers and Wall Street analysts have been focused on a metric called same-store sales. So what is the change in performance over an individual period for a store network? And today, while same-store sales are still really important for most of our retail clients, as Jen mentioned, consumers are more nimble in their shopping patterns. Some go to the store, some buy on their mobile device, some of a subscription. Nearly everyone has all of these things. So look, new metrics have been introduced, average order value, average customer spend. A year, customer retention rates. These were all historically just, quote,”

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  19. “A tremendously interesting time, so I think it's a great time to be talking about all of this. Look, not surprisingly, the retail sector has continued to massively evolve over the last 12 months. E-commerce volumes grew as much in the first quarter of 2020 as they did in the prior 10 years, which is just incredible for us. So when we think about that critical inflection point, Jake, that you asked about the turning point means that retailers can really start thinking now more offensively versus defensively, which is where they were a year ago. What we're seeing is that leading retailers are embracing this opportunity to win new customers by leveraging lessons they learned from the last year and investing in strategies to serve customers well wherever and whenever they want to shop. You have customers who are expecting a seamless omnichannel experience overall. Their journey evolves. It may start online. It may stop in the store. It may ultimately end again online.”

    2021-04-13 · Goldman Sachs Exchanges · Whenever, Wherever: Seamless Commerce is the Future of Retail · IDENTIFIED FROM THE TRANSCRIPT