This week we welcome Ethan Chernofsky, VP of Marketing for Placer.ai, a leading analytics firm that harnesses mobile data from tens of millions of devices, to deliver visibility and insight into offline behavior. We discuss what changes in foot traffic across retail product categories and geographies suggest about the impact of the COVID-19 crisis and what it may all mean for the timing and magnitude of a retail recovery.
This week we welcome Ethan Chernofsky, VP of Marketing for Placer.ai, a leading analytics firm that harnesses mobile data from tens of millions of devices, to deliver visibility and insight into offline behavior. We discuss what changes in foot traffic across retail product categories and geographies suggest about the impact of the COVID-19 crisis and what it may all mean for the timing and magnitude of a retail recovery.
After our discussion we jump into our new weekly segment “Remarkable or Forgettable?” where we give our hot takes on retail headlines, and deem them wow-worthy, best ignored or somewhere in between. This week's highlights include what we can glean from February's monthly sales report, Amazon becoming the US's top apparel retailer, as well as their new push into traditional grocery, Adidas' DTC dreams, and a report that more stores may open in 2021 then will close.
Special Offer! If you would like to see the new edition of Remarkable Retail before April 13, place a pre-order for the hardcover edition from any place books are sold worldwide. Then simply email us the receipt, and we will send you the ebook version right away. Send the email order confirmation to books@sageberryconsulting.com with "Podcast Offer" in the subject line and we will send you the ebook file. Note, this offers expires March 31, 2021.
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption will be released April 13th and is now available for preorder at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks and The Food Professor with Dr. Sylvain Charlebois. You can learn more about Michael here or on LinkedIn.
Michael LeBlanc
Welcome, Remarkable Retail podcast, season two, episode eight. I'm Michael LeBlanc.
Steve Dennis
And I'm Steve Dennis.
Michael LeBlanc
Steve, this kind of a funny question you're located in Texas where the, the stores I hear are all open. But have you visited a retail store lately? As often as the before time? Have your shopping habits change now that you can visit stores?
Steve Dennis
Well, actually, for the most part stores have been open. The big change here was that all establishments can go to 100% capacity and masks are not required. So, that's a whole new dynamic. But I you know, I've been pretty conservative, I've mostly been to grocery stores and places like, Target, I haven't ventured out much. I did make my first trip in about a year to the North Park Mall, which some listeners will know is a large upscale mall out in. well in the city of Dallas. And my observation there was well, first of all, everybody was wearing masks, I'm not sure if the center required that but lots of the retailers did. And, you know, this is not super scientific, but I would say that the traffic looked a little bit light for Saturday. But it certainly was, was nonempty. Lots of, lots of cars in the parking lot. And that's been my general experience. So maybe we should have asked Ethan, who will have on in a moment whether we can get the actual stats for the North Park Mall, which I know they have. But anyway, we didn't i didn't think of doing that when we were talking now.
Michael LeBlanc
That's an interesting idea. And now I'm at the opposite end of the spectrum where I am in Toronto, Canada. The stores and shopping mall have been closed for almost 120 days. So, if you can imagine, and they are just open just recently in the Toronto, Toronto area. 50% capacity for essential is what we you know, food and grocery, and pharma and now 25% for everyone else. And interestingly, the big shopping center near me, Square One has a counter at the top of their website that tells you capacity and it hit 97,98 they had to close the mall on Saturday. They had to shoo everybody away, if you can imagine. So clearly, people want to go back physically, shopping, some of that's pent-up returns behavior. But not all, not all. I think, I think, as you've often said, you know, people didn't get the memo stores still matter.
Steve Dennis
Well, you know, really well, we'll talk to Ethan a bit about this. But I think you know, traffic to grocery stores certainly has been strong and to certain other categories. So, now that obviously that depends a lot on what the particular situation was in your city or state or province or what have you.
Michael LeBlanc
You're not in the restaurants you're gonna get groceries more. right
Steve Dennis
Right, so it's interesting, but I think, you know, really looking forward to this conversation with Ethan Chernofsky, from Placer.ai, where we're going to talk about the state of the art in measuring traffic and what we can do with that information. And I think it's an area that's really gotten much more advanced in the last few years. And I think the store traffic data is really fascinating, in general can really, I think inform a customer insight strategy, I think it's gonna be particularly helpful as we start to see how different sectors different parts of the US and other areas are recovering.
Michael LeBlanc
Yeah, it's interesting, because you start to, how can you transfer lessons learned from different parts of the country, you know, if you're operating nationally, for example, and or if you're not so, you can start to transfer these learnings. And what you said there is really interesting that, how do I take this piece of data and not make it an orphan, amongst other orphans in my data pool, and connect it to other things that allow me to add really understand that customer journey and my customers a little better? Right. That's, it feels like that's what you would be doing, and do, with your clients as you say, listen, it's great data, but you need to connect it to other data, right?
Steve Dennis
Yeah, I mean, I think isolated pieces of data, like if you just look at store traffic, you can certainly glean things like how are certain locations performing relative to other locations within your chain. You can certainly look at, you know, particularly with data like from Placer, where you can see what's going on and in the broader category with competitors, different parts of the country, I think there's a lot of things that basically give you clues as to whether you're underperforming or over performing, and then you can dive into what the root causes of that might be. But I think in general, you need to have an overall customer insight strategy and be pulling on different levers to go after the places that you most need to to improve or have a warning system that maybe something is not quite working the way you expect it to or hope it would.
Michael LeBlanc
Well, right on right on. I was I was really looking forward to this interview with Ethan because I wanted to get this sense of how to take data and AI together with these unusual shopping bat patterns of the COVID era, fewer trips, bigger baskets and how that all affects the algorithm. So you know, without further ado, let's welcome Ethan and jump right into the conversation. Ethan, welcome to the Remarkable Retail podcast. How you doing? I'd say this afternoon, but where you are, it's this evening. So how are you this evening?
Ethan Chernofsky
Hi, I'm doing very well, thank you so much for having me. It's great to be here.
Michael LeBlanc
Well, thanks for joining us. So, Steve and I were chitting and chatting about, you know the beginning of season two and what things we wanted to explore. And certainly, your world kind of came into our, our view in terms of boy, how do we understand what is going on? Who's who's doing the best practice in terms of measurement? But less than what I've kind of got ahead of ourselves? Why don't we start back at the beginning, tell us about yourself, who you are your journey and all about your role at Placer?
Ethan Chernofsky
Sure, so, I am in Ethan Chernofsky. I lead marketing for Placer. Placer is a location, analytics and foot traffic data company. So, if you think about it in the most basic terms, people vote with their feet. And we're showing you how people vote across the United States every day. Very critically, it's all anonymized aggregate data. So we are GDPR and CCPA compliant. Kind of a privacy by design company. And essentially, what we're focused on is, is trying to show what's really happening in the world of retail, offline.
Michael LeBlanc
Now when you say the world of retail, give me a sense for your company's scale and scope you right now, I believe you're sitting in I think you're sitting in Israel. But what's your scale? Do you, do you cover all countries? Like what, give me a sense of that.
Ethan Chernofsky
Sure. So we are a US based company, it just so happens that, you know, our R&D and product team sit here a real focus on data science out of this ecosystem.
Michael LeBlanc
Not unusual there, you're not certainly such a such a nice, a great cluster right of great expertise. For sure,
Ethan Chernofsky
Sure. And especially within the data science side, which has been one of the kind of the core advantages we've been able to bring to the table. But we are a US focused company. So, our data is only for the US at the moment that there are plans for expansion in the future. And when we look at retail, retail, we're looking at anything anywhere in the US. So, because we're using panel data, and then estimations on top of it, we're able to make those predictions with a high degree of accuracy to any location anywhere in the country.
Steve Dennis
So, can you give us a little more detail on kind of how you, how you make the sausage? Because I remember, I think when we first talked about a year and a half ago, I was fascinated by how you went about collecting this data. And I guess in particular, how you can validate it against other, other data points to not only assess the accuracy of it, but what particular insights you can actually provide the clients?
Ethan Chernofsky
Yeah, absolutely. So, it starts with a panel of mobile devices. So we see about 30 million mobile devices throughout the United States. And then kind of as discussed, we have this really amazing data science team that utilizes the latest, you know, algorithmic breakthroughs in machine learning and AI, to make estimations to any location in the country. And I think one of the things that's really important to us is, you know, data is wonderful, but only if it's utilized. So, accessibility has always been a really important piece for us. And we have a tremendous product team that's taken all this data and all these insights and put them into dashboards that allow anyone to easily access information. So you're not getting some massive excel sheet, you're actually getting a tool that you can very quickly, kind of understand what's really happening in the offline world from, you know, major retail chains to a specific location to a shopping center anywhere across the country.
Steve Dennis
I know, we're going to try to dig into a little bit more detail by, by category and so forth. But what would you say, is a great use, use case for how a particular retail client might, might use your data? What actions would they take based on it?
Ethan Chernofsky
Yeah, absolutely. I think one of the things that makes me really excited about our product. And obviously, I'm biased here, but is that it's going to be used across an organization. So, the real estate team is going to be using it to figure out where they want to open up their next location. Or if they're in a right sizing efforts, which location to keep open or close. A strategy and operations team is going to use it for competitive intelligence, to understand different processes that we're trying. So, you have a new format, and you want to see how it's performing compared to other kind of competitors, and either other locations that you have within a specific area. And so this tool is gonna be really valuable for that. From a marketing perspective, how do I measure the value of offline events? How do I kind of show the impact of what I'm doing? You know, we have all this these online data sources, Placer is allowing these correlations to take place in a really effective manner. And so, I think what, what gets us really excited is that it's not a single use case in retail, it's really across a company that allows them, you know, when you're able to see the world and view all of the retail landscape through a single lens, it opens up a lot of capabilities.
Steve Dennis
And is it fair to say that, I mean, in general, you'd have a lot more data for the National retailers, but if you're looking down at a particular shopping center or a mall or whatever, right, it can you can look at the real estate patterns, more broadly not specific to a retailer, right?
Ethan Chernofsky
Yeah, absolutely. So it's the way it kind of works is you, we have POIs in the system that will cover about 80 to 85% of all retail locations. But you know, let's say you want to, you know, slice and dice a certain area. So you have a massive center, and you want to cut in half, you can do that. So there's a tremendous amount of flexibility in terms of what you can geo fence. And therefore, what you can measure.
Michael LeBlanc
When, when I'm thinking about is, you know, as I'm listening, listening to you describe it. I mean, when I talk to retailers, some don't even measure store traffic, right, they measure, measure transactions, because it just, it's just too hard for them to get their heads around. Sometimes it's a franchisee organization, whatever that is. When I think about your data, are there any limitations we should know of? So, you know, for example, when I was speaking with the retailer, and they're saying our store, traffic is down, they had stored counters, but they attributed it to the fact that in the, in the COVID era, people are, are going individually, they're not going with their family, they're not bringing their kids to go, you know, shop for back-to-school supplies. And so, the count looks low. But the reality is the shop is still the same. How do you guys factor those kind of weird variables in? Or do you have a perspective on?
Ethan Chernofsky
Yeah, absolutely. So, I think, yes, there are changes in the market based on a whole variety of factors. And obviously, COVID is an extreme case. But it doesn't make it less important to understand that full funnel. So, imagine you have, you know, revenue data for a specific location. I mean, that's really important. But then you want to understand how the patterns are shifting. So, if people are coming less often, but they're buying more, that's going to change the way you approach each customer and change the way you approach the overall experience. What you attempt to do with your marketing efforts on a location-by-location basis. And even more, what about benchmarking? So, it's wonderful that you know, how your store is performing. But what about your competitor? How well are you doing not just compared to your own numbers, but in context. And I think that's one of the biggest things that we talk about of your data is wonderful. And it's really important, and we're going to help you understand that data better, and we're going to help you utilize it to great effect. But your data, you know, the silly example is, if I tell you I'm the most handsome person in my town, that doesn't mean much if there's only three of us. You know, and so I think it's really context is so critical, and we're able to provide really valuable context.
Michael LeBlanc
Okay, I'm gonna use that, that metaphor once or twice. I was gonna say, you know, anyway, anyway, it's a good, it's a good metaphor,
Steve Dennis
I know where you're going with that.
Michael LeBlanc
I wasn't sure where you're going with that. Let's talk about the before time. So, before we get to talking about COVID, let's talk about, you know, let's call it a historical perspective. What if we, you and I were having this conversation, you know, a year and two months ago, pre COVID, what would we be talking about in terms of trends and things that you were looking at, and things that you were sharing with your clients?
Ethan Chernofsky
So I think, unsurprisingly, a lot of the things that we would have been talking about pre COVID are things that we're talking about, you know, in the midst of COVID, just with a lot more focus on them. So things like the rise of product or direct to consumer companies offline being a really significant trend. This is something we wrote a white paper around in 2019. You know, think about companies like Nike expanding offline, Lululemon, UNTUCKit, Everlane, Warby Parker, and the impact that they're having on the retail landscape, in our opinion, have very positive impact. The change in malls as a really big topic, we were talking about pre-pandemic. How it's being reimagined from those kind of Pier One, Class A malls to is B or C class mall, and what that change would mean for the wider retail landscape. And so interestingly, you know, this terminology of the great accelerator, it's not crazy, and it actually has a lot of validity when you look at the data.
Michael LeBlanc
And you know, it's interesting, I think about the qualitative nature of traffic either before now or after, and I think about curbside, and I think about returns, you know, Kohl's, recently talked about how much taking Amazon returns was driving their store traffic. And we all know that many, many retailers stood up curbside. Now that created a visit to the parking lot, do you understand that? Or does that, do both those things somehow get interpreted in your data? Or is that is that am I asking too much of your AI?
Ethan Chernofsky
It depends. If we try to weed out really short visits, because for most retailers, that visit doesn't mean all that much. Now, to be fair, we do have a shorter visit function for QSR restaurants, for example, because, you know, a three-minute visit for takeaway at a McDonald's means a very different thing than a three minute visit to a Walmart.
Michael LeBlanc
Now you probably had to you've probably had to adjust that algorithm, right? Because people are like, I want to go to the store and get out. There's not a lot of lingering In the COVID era,
Ethan Chernofsky
True, to what extent let's say. So, think about how many retail trips we take that only take two or three minutes. And it's not many. And in fact, what we've seen on the (inaudible) beside in most cases is that it's not as fast as we're making it seem in the larger majority. But yes, I think when you think about what location data misses out on, I think it's much more kind of the peripheral elements. So things like sentiment is not something we could pick on, or as like a social jig, you know, geo data would be able to pick up on that. Online data is obviously a really important piece of the puzzle that we're not going to see. But I think, you know, the more evolved, companies are understanding how to use those datasets together. And, you know, we believe that our data set has obviously core but certainly not seeing everything.
Steve Dennis
So, I have a two part question related to the pandemic times, I guess, as we actually were in COVID. One is, you know, I think this topic has probably been picked over pretty well, in terms of the, you know, the reallocation of spending to essential retailers and home goods and, and things like that. But I'm, first question is, I'm curious whether you saw anything different in your data that perhaps fought with the kind of overall narrative that's been developed? And then secondarily, more recently, are you starting to see any changes in patterns, either in total by category or even in certain geographies?
Ethan Chernofsky
Sure. So, when you think about when we talked about like essential retail early on, obviously, we saw unique strength in grocery and home improvement. So, brands like Home Depot, and Lowe's have put up incredible numbers throughout the pandemic. But there are sectors that, you know, we were really surprised by. And I think one of them was home improvement. The idea that they did well, when they were open, and they were essential retail, that mean, that's a narrative that makes a lot of sense, and something that we expected. But we didn't expect Lowe's to be up 20% in November still, we certainly didn't expect it to continue into 2021. But it's, it's what's been happening. And that's, I think, really exceptional, to the power of these brands to leverage a moment to do something that provides a long-term boost. And when we think about trends that are changing, you know, I'll give an example of Starbucks. There's a lot of brands that are very focused on routine. So, they fit within the way that we operate in quote, unquote, normal times. And that could be a gym that I go to before work. And it could be a Starbucks that I go to grab my coffee at 10 in the morning, or at 6am, on my way in. And, you know on my commute, or convenience stores. And one of the things that we're seeing interestingly, in Starbucks, is we looked at data the week of March 1, so a seven-day period. And we saw that the percentage of visits that happened between six and 9am, is actually moving closer to 2019 levels than at any time before in the pandemic. So, we are seeing this return to normal routines, which is really significant for a lot of brands that have built themselves around, around these routines.
Steve Dennis
Now when, when we talk about, so my second question, I guess was getting more towards maybe things like there was this narrative that or some data, I guess, that suggested that apparel, was making a bit of a resurgence. And that, you know, maybe folks like Kohl's and so forth, we're starting to do better. Is that is that what you're seeing in your data?
Ethan Chernofsky
Yeah, I mean, absolutely. Kohl's was actually we did a piece in early this year. So, I think we put it out like the last week of December. And it was our picks for who was going to outperform this year. And one of them was Kohl's. And I think what we saw was in in early January a lot of brands saw a pretty big pickup, and I think it was this post-holiday, you know, there's returns do we, you know, maybe, you know, you got a gift card for Christmas, you know. And then we saw visits really dive in late January, early February, but a lot of that was because of inclement weather. So severe weather conditions and the Northeast, and the South and the impact that that had on retail. But when we look at mid-February, through early March, there is a very clear recovery trend happening. And if they carry through in the spring, as the weather starts to pick up as hopefully COVID impact starts to dissipate. That's going to bode very well for apparel brands, especially mall-based ones that had been hit especially hard. And I think it could mean very positive things moving forward.
Steve Dennis
Now, is that index to 2019? Or is that over last year because I think that's one of the real, the real challenges, you know, some of them are such a distortion in spending and traffic caused by COVID that the comparison to 2020 might not be such an interesting comparison.
Ethan Chernofsky
I agree with you completely. And what's interesting is, January and February, you're, you're pretty okay, because the retail impact started happening late February, early March in 2020. But that's why I think the early March date is interesting, because we did compare it year over year when there was this kind of mini surge and retailers were like, oh, no, we might be shut down, let me go get in this last shop. And it was doing strong compared to that. What we have been doing moving forward is doing kind of a dual comparison, which is, let's compare 21 to 20. Just even though we know the numbers are going to be exaggerated in many cases, but then let's also compare it to 19, to give us some point of context. And even in January, you know, take a, you know, a Planet Fitness, we looked at their data year over year, and then year over two years. And it's a very different picture. And it does kind of remind you that don't go crazy about the year over year data, remember, the brands you're talking about remember how strong they were pre. And try to really determine did anything fundamental change? Because if nothing did, and they were doing great before, and the situation hasn't shifted something in a fundamental way, they're likely going to do well after?
Steve Dennis
But are you finding that some of your clients are trying to marry your data with a lot of other sources of data? Like, for example, we can, we can police, you know, the US, obviously, there's been quite a lot of stimulus spending, there's now another round of stimulus, you know, certain retailers might be more prone to one-time big-ticket purchases. So, trying to glean how much of this is is like a sustainable, you know, even, even in, you know, kind of post stimulus world and post COVID world. Any of that kind of stuff going on any guidance there?
Ethan Chernofsky
I mean, I think, you know, that, you know, the two parts of your question are kind of, I guess, the impact of the stimulus, and then kind of the utilization of this data with other data sets. And in terms of utilizing it with other data sets, I think, yeah, that's, that's a great way to look at it. You know, there's a lot of things you can glean from location data. There's a lot more things you can glean from location data, location data, when you use it alongside geo social data, or more advanced demographics or online data. And I think understanding the way these things interact is really important. But even you know, we talked about whether, I mean, think how important it is to have that context in mind of, or here's things simpler, you know, I was talking to someone, you know, a week ago, and they were like, you know, February's really down I was like, yeah, it is really down. But there was crazy weather. And also, there's a day less in February 21, then there was a year prior. So, we have to these things might are so easy to forget. But they're really important from providing that full picture in order to understand the data at its best.
Michael LeBlanc
Well, I'm curious about this intersection that we kind of keep coming back to, and I'm going to put it to you as a question. Again, this may be too much to ask. But you know, I look at this intersection of the variant and the vaccines in different places in America getting different levels of vaccination, and at the same time, different perspectives, or different philosophies. Right. So, Texas is more open than New York City, and probably Florida is more open than Texas. And I'm trying to understand if you can see your parse in your data, if consumers are, are normalizing their behavior in some ways, by looking at different regions, and then helping us understand what's going to happen in the back half of the year when things overall become more normalized, and you've got more people vaccinated and more retail opening up. Any sense for what you knows, if you put your, you know, your projected your particular hat on First, what is that? What's it? What do you learn, and
Ethan Chernofsky
I think there's a few pieces. So, the first is, every location operates differently. And even when you break down a state, it operates very, very differently. And we have, you know, a migration analysis tool that looks at kind of population shifts in areas. And it's even that it has very dramatic effects between New York and California, because in California, people move to a different, you know, county, and they're still within California. In from New York City, you move to a different county and you're in New Jersey, or Connecticut and New York is still you're kind of you're orbiting around the city, but it's it's a different state. So, what does that mean? But when you look at from a retail perspective, you know, we do see different regions operating very differently. And so, you know, New York versus Florida versus Texas. And essentially what we see as, as there is a as there is more opening, and the system comes back, the people come back very quickly. The big factor, I think is a state like California. So, there are a lot of retailers who have the bulk of their locations in California and California has lagged far behind other states in terms of retail visits, you know, because of the way the state approached COVID. And I think as California is able to open up more expect to see a lot of retailers see sharp upticks in terms of their business and their in-store revenue as a result.
Michael LeBlanc
I guess as Steve would often say many of these stores didn't get the memo that stores are out of out of favor.
Steve Dennis
Michael, physical retail is dead. I don't know where Ethan gets all this data.
Michael LeBlanc
I think, I think Steve, boring retail is dead actually. Sorry, sorry, Ethan. We're just riffing here back and forth.
Ethan Chernofsky
I mean, I agree. It's not just it's not the boring retail. It's, it's, a limited perspective on retail that's dead. And so if you think of, I, again, I just think is such a fascinating topic. He's direct to consumer companies and product-oriented companies expanding their offline footprint. And I think a big reason why they're doing it is it's, it's a place to sell products. But it also improves their logistics, it improves their, their marketing power, it improves their ability to take in returns, which is a huge cost for an online only retailer. And I think when you start to realize, wow, there's all these other levels, I can hit with a location, you realize it offline, retail is not just about selling the product. And that's the key to recognizing why it's still very strong and likely not becoming weaker, as many expected it to.
Steve Dennis
Yeah, I think I'd certainly agree with that. I think the other thing is, as you probably know, a lot of like, you know, I think your data certainly has shown over the last couple years, you know, an ongoing trend of you know, off price dollar stores doing well, while department stores and mall based retail generally speaking, not doing well. That's not a new phenomenon, right. It's just one that's perhaps accelerated, as we talked about earlier. So, we're coming up on our time, Ethan, I just wondered it. Was there anything else you wanted to add before we wrap it up that we didn't get to that you think's important?
Ethan Chernofsky
I'll riff off what you just said. I mean, I think the department store cases have a really fascinating one. Why is, is it an issue of the format? is an issue of there's too many of them? Are there ways to reinvent the format? Is Target not really kind of just a form of department store that's nailed it. You know, what about like something like neighborhood goods that brings in kind of direct-to-consumer companies within that model? So, I even when I look, when you look at the data for like a Macy's or JC Penney, these are stores that are struggling to bring in people, they're just struggling to bring in people at the levels they were before. And I think that sector, like so many others needs to evolve and improve. But I you know, I feel a lot more bullish about what its long-term potential could be as they start to get more of these things, right.
Steve Dennis
Well, we'll have to bring you back for a department store Fight Club. That's different. Maybe we'll have a retail Fight Club or something.
Michael LeBlanc
Well, location Fight Club, traffic Fight Club,
Steve Dennis
Conversion Fight Club
Michael LeBlanc
Spinning of your dot com Fight Club,
Steve Dennis
Yeah, we would be really in the weeds well, but you know, we can probably get 10 or 12 listeners for that. So that'll, that'll be great. Well, Ethan, thanks. There's a bazillion things we could go into, I'm sure. But really appreciate you coming on and giving us a sense, what you guys are up to, I would encourage people to check out Placer. And we'll, we'll probably get a few links in the show notes if they want to check out some of your reports. But thanks again. I'm hoping to get to Tel Aviv at some point in the not-too-distant future. So, we'll try to catch up here in the States with the vaccine progress you guys have made in Israel.
Ethan Chernofsky
Thanks so much for having me. It was great to be here and look forward to doing the live you know, video podcast when you are doing the tour of Tel Aviv.
Steve Dennis
Sounds good
Michael LeBlanc
And look forward and look forward to Israel letting me in.
Steve Dennis
Your Canadian you'll get in, it's the Americans you got to watch out for.
Michael LeBlanc
Alright, it's time for remarkable or forgettable. Steve? February sales in United States. I look at the numbers and the media what the media chases after. Were the numbers in your mind, remarkable or what did you think?
Steve Dennis
Well, I think the numbers themselves were forgettable. I think the way the media picked up on it was, was remarkable, in that the headlines I saw, at least most of the headlines I saw were all about how February sales changed relative to January, and that they were down. So that was a cause for concern. And I think that's a really weird take. Because in my experience, February is always lower than January. You know, not only is it a shorter month, but January, we've got all this post-holiday activity and so forth. So, I thought that was an interesting take. If you actually look at the year over year numbers, which I think is a better indication. Retail was up overall about 2% if you take out auto and grocery. And that number was way down quite a bit by apparel and accessories, which continued to be challenged, I think for, for obvious reasons. So actually, I thought February was a was a pretty good month, not, not a cause for concern. So interesting take there. But I think you know, certainly we're now getting to this interesting period where comps will be really relative to the COVID times as opposed to last February as a relatively typical month.
Michael LeBlanc
Yeah, it's gonna be a weird season of comps for everybody from working a budget to understanding what the heck's happening, right? Because we're just about to hit you know, March, April, May numbers which are going to look just odd everywhere, right? All right, speaking of odd, Amazon now declared some I don't know who declared them but they're now declared the top apparel retailer in the United States, that could be just tube socks. But what do you think?
Steve Dennis
Well, to your point, I think a lot of that that mix is much more commodity type items and kind of driven by, you know, they didn't provide any, I don't think we saw any real detail on that number. But I think when you think about Amazon apparel, for the most part, it's more sort of commodity basic kinds of items which have done note, there's a part of apparel that's done well, it's been, you know, that sort of stuff, not, not the fashion piece. But you know, it's hard to underestimate Amazon's effect on the whole industry. So, it's a pretty remarkable number, it'll be much more interesting going forward to see whether they actually get any real traction in fashion and the hirad part of the market. So, kind of a TBD on the remarkability of that longer term.
Michael LeBlanc
Alright, let's stick with Amazon, their grocery concept, Amazon Fresh, is expanding. I think they're opening up in Chicago, I believe,
Steve Dennis
Well, a bunch of markets. So they opened the first Amazon Fresh stores last year. And I think this week's news was, this was, that they're going to open another 28. Which, you know, in the scheme of things is not a ton of stores. But I think it suggests that they're pretty committed to going into the mainstream apparel business. So, I think it's pretty remarkable. And I think, you know, the interesting part of the story as they continue to invest behind it, is how it shapes the dynamic of grocery overall. And I think, you know, we're going to continue to see the upping the ante on convenience and price, pressure, and all that kind of stuff. So, possible race to the bottom, but good for consumers.
Michael LeBlanc
Well, I think the story punches above its weight, because it's 28 stores. So, what, I mean is 400 plus Whole Foods stores, which they also own. But I think notionally what they do with those stores is more important than how many stores there are at least in the short term.
Steve Dennis
Yeah
Michael LeBlanc
I think. Let's talk about, speaking of interesting, let's talk about Adidas declaring 50% DTC? Wow. Right.
Steve Dennis
Yeah, I mean, this, I think this is remarkable. It's very much in keeping I mean, to a certain degree, what's not remarkable about it is it's basically a copy of what Nike has been doing, which is to double down on e-commerce, invest maybe not as much behind their own stores, pulling back from wholesale. But I think we've been seeing this trend towards manufacturer vendor, you know, these big brands, really leaning into DTC both to control the brand experience and have a direct relationship with consumers and possibly to improve their margins. So well, one of things they said in their, in the story that I read about it was that they expect 80% of their incremental growth to come from direct to consumer. So when you think about a business that's been very reliant on wholesale for decades, right, this, this is a pretty big shift. But I think it's you know, it's really keeping in a trend we're seeing overall in the market.
Michael LeBlanc
Well, speaking of stores, some news out from our friend, I believe Deborah was talking about more stores opening than closing, which again, I guess a bunch of people aren't getting that memo that stores are dead.
Steve Dennis
Yeah, I mean, I, you know, facts are stubborn things we keep, we keep seeing that physical stores, you know, they just, they just won't die. I think it's pretty remarkable in that it's, it continues to play against this retail apocalypse narrative, which is, you know, I don't think either of either of us, were really subscribing to that. I'm not surprised at one level. But you know, I think part of the issue, I think, with some of the numbers is that I think core sites numbers are really, among the larger chains, not so much smaller chains. I think IHL has better data. That's a broader data set. So, it's a little hard to parse out what's really driving it. But I think thematically, yeah, the idea that that stores are dead, certainly not true. And the idea that many retailers are investing behind physical both because of its role in the overall shopping experience, but also probably being driven or will be driven more by some, some good rent deals as we go ahead.
Michael LeBlanc
Well, yeah, and I see a it also is an indication of the increasing bifurcation because, you know, some, some dollar store discounts are really talking about opening up some big numbers. And when I saw this information, and my first thought was, you know, I think a lot of small indies are really struggling to get their small apparel or relying on tourism. So, I think, I don't know how you grab that whole number. But I think it's a good positive trend, but it may or may not be the entire story in the entire spectrum of retail. But it certainly fights against, as you said, the retail apocalypse narrative. Which is what you and I first met and bonded on I would say when we first, you know, when we first met for, in Toronto, and started talking about it we were aligned from that from pretty much minute one. So, all right, well, listen, that was remarkable or forgettable, another episode. We'll be back next week. Listen, let's bring this episode to a close. We've got, we'll get back next week to more great, more great guests. Who will lend us their insight and tap into their wisdom? But for now, Steve, take us home.
Steve Dennis
Well, if you like what you heard, subscribe on your favorite podcast platform so you can catch up with all our great interviews and insights and new episodes will show up every week. And please take a minute to drop us that elusive five star review I'm Steve Dennis, the expanded and completely revised second edition of my bestselling book, ‘Remarkable Retail: How to Win and Keep Customers in the Age of Disruption’, is out in April. Preorder your copy right now at Amazon, Indigo bookshop.org or just about anywhere else books are sold.
Michael LeBlanc
And I'm Michael LeBlanc, producer and host of the Voice of Retail podcast and you can learn more about me on www.meleblanc.co. Have a safe week everyone and Steve, talk to you again soon.
SUMMARY KEYWORDS
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