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3 DTC Business Model Trends (RTS #43)

Episode #: 143
3 DTC Business Model Trends (RTS #43)

Guest: Dan McCarthy
Topics: DTC brands, academia

Transcript:

Chris Ressa 0:00
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.

Welcome to retail retold everyone. Today I am joined by Dan McCarthy. Dan is the assistant professor of marketing at Emory University. He’s also the director and co founder of theta. I am super excited for him to be here today. Welcome to the show. Damn. Hey, thanks

Dan McCarthy 0:39
so much for having me, Chris.

Ressa 0:41
Dan, why don’t you tell everybody a little bit more about what you do as a professor and what you do at theta.

McCarthy 0:47
Yeah, so in some ways, very different. But in some ways, they’re exactly the same. I basically focus on predicting what customers will do. And, as a professor, I do that through my academic work. So I have a lot of research on this emerging area of customer based corporate valuation, as I call it, which is basically predicting, when customers will adopt a company, how many purchases they’ll make until they end the relationship, how much they spend, and then using that to inform an understanding of how valuable that company is and how good their unit economics are. So that’s on the one side, I’ve been venturing a bit more into other related problems more around understanding the the impact that certain actions are having on customers behavior, like a causal causal effects. So that’s been an interesting but related area, again, all about customer purchasing, but more about, you know, what impact did certain actions or events have on customers purchase behavior, and then as an entrepreneur, again, the work is pretty much the same thing. It’s just predicting what customers will do, yada yada, yada. But I basically do that work on behalf of private equity firms and companies directly. So any will kind of run the models and, and provide the insights in outputs to to the firm’s that

Ressa 2:08
we’re doing the work for, and those firms are looking to potentially make an investment in some brand company something like that, correct.

McCarthy 2:16
Typically, that’s the context. Yes, it’s actually right now, probably 50% of our business is with private equity. The other 50% is with corporate, but with a corporate, oftentimes, it is the the business development Corporate Development department, or they’re looking to raise funding themselves or pursue strategic alternatives, in which case, it’s still investment. But it’s, it’s that they would be the company being invested in as opposed to the other way around.

Ressa 2:45
Okay, yeah. All right. And how did you? How did you get here? What did how did you become the assistant professor? How did theta come to be? Tell us a little bit about the background and how you ended up where you are today?

McCarthy 2:57
Yeah, it’s really because I can’t I can’t focus on any one thing for too long. So yeah, I started. I graduated from Wharton, and I went to Wall Street. And I was at a value based hedge fund for about six years. So dyed in the wool finance person. And then I made the pivot to a statistics PhD at the Wharton School. But then in the middle of the PhD, I pivoted towards marketing. So I finished my my PhD in statistics, but half my committee were marketing people and half my committee were statistics people. So the way I’ll kind of pitch it is for rationalize, it depends on how you think about it, is I was still doing prediction, but now the only thing I’m predicting is what customers will do. So in some sense, again, it’s it’s still statistics, but it’s just a bit more scoped. The entrepreneurial bend happened in the middle of the PhD. So it was in the second or third year of the PhD that my advisor and I decided to take some of the work that we were doing academically and start doing it for real companies. So So again, that’s kind of the other fork in the road. So yeah, so I think that pretty much covers everything until now.

Ressa 4:15
So how did you end up getting connected with the people who would actually pay you guys to do this work? It’s a

McCarthy 4:22
great question at the start. So it’s Zodiac. Basically, Pete Fader, he was the the person that I co founded Zodiac with. He has been a marketing professor there for 30 years. So yeah, as you can imagine, he just came to, to know a lot of people. And so a lot of our initial clients, they were all kind of inbound driven off of relationships that he had with with people at those companies. So that was certainly really helpful for getting revenue in the door. At a very, very early stage in our lifecycle. I think that that really That really helped kind of set set us on the right trajectory. And then you guys sold that to Nike. That’s right. Yeah. So we said Zodiac we kind of pursued the traditional venture backed. Let’s blow this thing. Let’s burn money the whole way up. And burn we did. Yeah, we grew really, really quickly. We had very good unit economics, by the way, but you know, we just had a lot of overhead expense. And we we had the term sheet for our a round on our desk, and came in with an offer that just based on our fiduciary responsibility to our investors, we couldn’t turn it down. So see, the outcome ended up being great. The company ended up obviously getting folded into Nike. But thankfully, Nike was very flexible with both Pete and myself, given the fact that we are our primary day job is as faculty members. So say I was it was quite a ride. But that was, that was kind of how that particular ride had ended for, at least for us.

Ressa 6:07
Interesting. It’s fascinating that Nike was the brand, you might have thought, like some research shop would have bought you, but an actual consumer product brand bought you.

McCarthy 6:20
Yeah, we were, we wouldn’t have thought that ourselves, we were, we would have thought, if anybody would be like a Salesforce or a Google, you know, we had a software platform that essentially allows us to automatically spit out very highly validated individual level forecasts of customer purchasing. And so if you had a very large number of companies that you serve through, like a Google or a Salesforce, that would be a pretty natural fit. Now, Nike, I think the obviously, as we know, now, they’ve been making this humongous investment in their own direct efforts. So opening up stores and increasing activity through through their own website. So So in retrospect, it makes a lot of sense. But I think it’s also an interesting Sign of the Times as to how things are changing now that Nike 30 years ago would not have given us a second look, you know, that they were primarily selling through the foot lockers of the world. And so they had no idea of oftentimes who their customer was, unless they consider the customer to be the retailer, those intermediaries, but yeah, the world’s changed, you know, they’re getting a significant and very quickly growing proportion of the revenue from activity that is fully trackable. And from their standpoint, given the big investment that they’ve been making into it, they want to see a return on that investment. And so to invest in, in other solutions that can help them understand the value of these customers and what makes them tick. It makes a lot of sense. But yeah, certainly, I felt exactly the same way that you did. So

Ressa 8:05
interesting. Okay. I want to bring us to the next part of the show, we call this clear the air. I got three personal questions for you. Are you ready? I think so. All right. Question one. When is the last time you tried something for the first time?

McCarthy 8:20
You know, I adopted into a totally new restaurant for the first time yesterday.

Ressa 8:24
Okay, so very cool. What type of restaurant

McCarthy 8:28
Italian food because my four year old daughter, she, she had requested Italian food. Very cool. And I was my wife’s on a work trip. On they’re like, Alright, so where can I order delivery from? Right? And there’s like, the usual places where I go to, if we were going in person, but they didn’t deliver. So I needed to change it up. So thankfully, display Center did really quite good. But you again, signed at the time. So the world that we live in today?

Ressa 8:58
Sure. Okay. Question two, what is one thing most people agree with, but you do not?

McCarthy 9:06
I don’t know if if he I don’t know if most people would agree with this, I would think a majority of people would, but improving customer satisfaction, gross customer value, invest in the customer. And you would think especially as a marketing professor, and someone who focuses on customer lifetime value than that, I would think that that is always true. But, but I don’t think that it’s always true, I think that you need to take into account the cost, you know, the cost of improving customer satisfaction, and then it becomes a return on investment calculation. You know, certainly happy customers will probably at least do a bit more but when you kind of weigh that against the expense associated with improving it, then it becomes an empirical question, and it depends on the company and the market structure and the customer and all sorts of other factors. So, so it’s not that simple.

Ressa 10:03
Yes, something Simeon Segal from BMO advisors, he did a, a presentation. He came on the show and he said, we don’t have an oversaturation of stores in America, we have an oversaturation of discounts. And he said, what some retailers need to do instead of closing unprofitable stores is stop selling to unprofitable customers. And so I thought that was interesting. He did a whole thing, what what would happen if certain brands raised price versus close stores? So it was interesting.

McCarthy 10:42
Ya feel exactly the same way. And in fact, your very best customers, they’re not often very price sensitive. So they would be willing to pay a higher price. Will they be satisfied by that? No. But they’ll pay it because what they really care about are other things. It could be the quality of the product, it could be, you know, if you’re a service provider that, that you don’t have downtime, you know, and you’re willing to, to pay a bit more for that as kind of an insurance policy. So, yes, certainly, I think that that’s a great example of an area where customers may not be more satisfied, but the company is going to be a lot more profitable.

Ressa 11:24
Sure. Okay. Last question, what is one skill you don’t possess? But wish you did?

McCarthy 11:29
I wish I was one of those people who could just sleep for four hours a day and be, you know, fastest lightning the next day, but I am not that person.

Ressa 11:38
How many hours of sleep do you need?

McCarthy 11:41
You know, I, I’m one of those optimizer people. So I traditionally need eight. But I’ll finagle all sorts of routines to try and cut it like on specific days. So one day without sleep, and then six days with that sort of thing. But I’ve kind of thrown in the towel. And I think I just stopped. Now I’m just trying to optimize what I can do in the limited hours that I have when I sleep normally. So eight is the number but but I still I still fight it.

Ressa 12:13
with it. It’s hard to control your own sleep when you have when you’ve the last four years, you just had a child and four year old daughter, I have a three and a four year old. So oftentimes you don’t control your own destiny when it comes to sleep.

McCarthy 12:26
You know, you’re along for the ride.

Ressa 12:30
Okay, so let’s move on to the set that we’re going to talk about today. We got three topics we’re gonna we’re gonna get through one is unit economics are all over the map. Two, is the distortion in numbers. And three is where do we go from here? So I’m gonna throw that out there. When you say unit economics are all over the map. What are we talking about Dan?

McCarthy 12:55
Here, basically, that a lot of companies are going to market right now. But they’re, there’s just significant variation in how good their unit economics are. So, yes, I think that there are circumstances and areas where there’s kind of some broader macro factor, and kind of all the companies move up and down in tandem with one another. But I think this is one one area where we see a lot of variation, which creates very interesting investing opportunities. If everyone was the same, then, you know, it wouldn’t really matter very much being surgical and selective and doing hardcore due diligence. But but it’s definitely not the case in the direct to consumer space.

Ressa 13:41
Let’s go back in time, 20 3040 years ago, where unit economics tighter. Were there more close with a similar this unit economics all over the map? Is this. Is this unique to the times?

McCarthy 13:55
I think a little bit. Yeah, I think that for one, the rise of the hyper funded startup has created some of the variation. Yeah, so you have these companies that are have raised 400 $500 million dollars. By the time they go public. And they’re still relatively young at the time they go public. It’s not that, you know, they’ve been around forever. That you’ll have some companies that have amazing, amazingly valuable customers after acquisition. And so the 500 million actually can help them prove out that they can scale, but then you have other companies, you had probably argue a lot more where they take all that money and they funnel it into into marketing that grows sales, but they haven’t really shown the ability to to have greater return on investment through this marketing channels. So you combine that with the fact that, obviously venture capital, strongly emphasize sizes growth, you know that the whole issue of profitability is something that often be okay with kind of saving for later, you know, but if you can show really strong top line growth measures that, at least in the relatively early stages, that’s enough to command you, you know, that very significant markup on the next round. So, yes, I think that that’s been definitely a factor. I think, kind of flipping it around. When you don’t have capital as readily available, it imposes discipline on the company. And so that may lead to a slower rate of growth, but it forces the customer lifetime value to be positive. You know, if a company’s is profitable, then it’s accounting identity, that that must mean that the, that the company also has positive lifetime value in probably pretty good lifetime value.

Ressa 15:57
So I want you to for those who don’t know, when you’re talking about unit economics, we’re talking about the unit economics of a good a product that some brand or DTC company is selling? Correct?

McCarthy 16:09
That’s actually a, it’s a great point, let’s kind of take it back one level, unit economics is kind of the profit or the economics of some unit, and that unit can be an order. But traditionally, as I think about it, the economics are of a customer. So okay, yeah. So at the ordered level, you’ve got the revenue that you’re getting, you know, which is the price that you charge, less, any discounts, and then all the costs associated variable expenses. So the cost of the goods, the direct labor, if you’re shipping it from, from somewhere that all the fulfillment expenses, and then the expected return related expenses and restocking fees, and those would all be baked into the order economics, the the customer economics would be, you’re kind of taking the order economics, and then embedding that within this framework of, I spent this amount of money to acquire the customer. And now I’m getting this stream of orders from him or her until he or she ends their relationship with the company. So so the order economics kind of insert themselves into the customer economics, they can’t really do customer economics. Well, without doing order economics, well, first, but then you need to think about acquisition costs. And then you need to think about customer retention and customer order frequency to kind of work it all in.

Ressa 17:37
Okay. And you mentioned LTV lifetime value. So and what do you mean by that?

McCarthy 17:43
Yes, the customer lifetime value is truly it’s the the value of a customer factoring in all, all expenses and revenues. So the amount that you spent to acquire the customer, relative to the net present value of all the orders that you’re gonna get from that customer, all the profit you can get from those orders. Throw that together, and the number that you get that is customer lifetime value.

Ressa 18:09
If we had a point to one thing that’s making these unit economics all over the map, we would say it is what I think we’d really kind of need to

McCarthy 18:21
Well, yeah, it’s so hard to to boil down, because in some of these names, there’s actually a few. So maybe if you’ll afford me three that. Yeah, one is acquisition cost. One is order frequency. And then one is the variable margin, I think those are kind of the three and they all play into each other. Sure thing, like if you drop price significantly, you’re going to bring in more customers, which is going to lower your CAC. And so they all kind of bop around each other. And so companies will kind of mess around with those three, but they all they’re all kind of revolving around the same, the same. The same thing.

Ressa 19:01
Lastly, you mentioned getting to scale. One of the things that I find this interesting because I think getting to scale is different for every company, what does scale mean? And I think the thing that’s interesting is the to get to a scale that’s like profitable look at Amazon who’s not DTC per se, but ecommerce, right. took them a long time to get to profitable on the retailing of the goods. And there’s still argument on that out there. And, and then I guess, so how big do some of these companies have to get to get to positive order and customer economics when you know, because I think that’s isn’t that the million dollar question like at what scale does this all work? And it seems like to get to that Scale is getting to numbers that are costing companies more than they ever dreamed.

McCarthy 20:05
Yeah, it’s a good question. And I think it kind of raises to hit two levels of profitability. One being like overall contribution, profitability, which is purely variable in a sim, comparing incremental cost to acquire versus the incremental profits you get from that customer. And that can be significantly positive for companies that are losing gobs of money because they have a lot of overhead. And so all the accountants and all of the the headquarters and salaries that you’re paying all those things that don’t really change very much when revenue grows. Those can can really encumber a company that has really good customer economics. So often say customer economics does not mean that the company will be profitable today. But it means that if the company were to scale, as you say that they will be able to scale themselves into profitability. I think the challenge is there are a lot of companies today that they’re growing really quickly. But their customer economics are so bad that they don’t really have a path to profitability, because there’s just not really a whole lot of variable profitability there. You know. And so the example I often give is, if your CLV is negative, then you could have infinite growth, you could acquire every person in the world and still not be profit. Sure. So yes, I kind of kind of distinguish those two. And so it raises these interesting trade offs that when a company is early on in its life, oftentimes the customer economics can actually counter intuitively be the best in the sense that the customers that you’re acquiring. They’re often the diehard loyals, they’re the ones who are willing to join you really early on in your life, and that’s saying something about them. But then also, the companies themselves are probably not, they’re probably acquiring a lot of these customers through word of mouth and organic channels. And so they don’t have to spend up the nose to bring the customers in in the first place. So obviously, when you’re early on in your life, you’re probably over investing in your overhead to be able to scale as the you won’t necessarily be profitable, then. But the economics lets customers will can actually be quite good. And the tricky part, I think, is when you scale, especially if you’re like a retailer, to show that you can scale you need to be profitable in like on Facebook and Google, you know, these really large channels that have really large numbers of people who we circulate through them. And, and those channels are expensive. Yeah. And the people that you’re bringing in, they’re not your diehard loyals anymore, you know, so it’s really it’s like a stress test of the model along those two pretty important dimensions. Yeah, that I think that really can be a litmus test for the ability of a company to to be successful at scale.

Ressa 23:09
Got it? Okay. That’s one, I’m mindful of time here. I’m caught. I’m conscious of time we got started a little late. I want to get to number two, which is this distortion of numbers. What’s what numbers are being distorted then?

McCarthy 23:27
So it’s, it’s the real wild, wild west, before companies go public. But you would think, especially in SEC filings that, that we get a lot better, you know, sure, yeah. If I’m reading through IPO prospectus, that those numbers must be all fairly standardized, right? Wrong. They’re completely different from company to company. And the problem is, while the income statement and the statement of cash flows in the balance sheet, those all you know, those are very standard. But as soon as you move to anything customer related, those are not required disclosures, and there’s no standards for how any of those measures should be defined. And so the companies will take liberties that to put it lightly as to how those measures should be defined. So they’ll have these astronomical totally applicable market figures that no one really believes. But then even things like contribution margin, which you would think would be fairly, you know, easy to easy to stay. Even those will be kind of funky. And then customer lifetime figures again, those will be totally all over the map. So yeah, there’s this really there’s no standards. You know, we really, we’ve been in touch with FASB, the the Financial Accounting Standards Board to try and at least have some informal standards as to how some of these measures should be defined, but I really feel like the SEC on some level is letting investors down. Because you have all these companies coming to market where, you know, they’re kind of flying blind investors don’t really have what they need. And, you know, for someone like us who’s willing to sit down with a 300 page prospectus and read it very carefully, we may come to the right conclusion. But you know, especially in these days, in the Robin Hood era, you have a lot of people who, who won’t be that careful. So. So you really need to kind of help them a little bit more so that they’re armed with the information they need to make informed decisions.

Ressa 25:35
This brings a whole you could spend hours on this topic, right, this number two, we could spend hours on this topic, but we don’t have hours. But a couple of things. A lot of companies put out like supplements that are not right, when they the public companies put out supplements, and those are, how they see the world. Right? Those are their numbers. They’re not necessarily, you know, and they they say they’re not standardized numbers in those supplements, right? They’re just giving more context, in their view around the actual standardized income statement balance sheet. Right. That’s what those are doing. Right. They put together investor decks, they have investor presentation days. And and, and so I don’t know, do you really think that’s that new?

McCarthy 26:22
I don’t know that it’s necessarily a new issue. So much as you know, for one, direct to consumer has become a lot more prevalent. Right. And we really need these sorts of disclosures, specifically for those types of companies as like, as the mix shift is shifting towards that type of company. It just becomes more relevant. Yeah, I think. I think that that’s a big one, especially at IPO time. Yeah. The other issue is, historically IPO investors were mostly institutional investors. But these days now, yeah, now, you know, now it’s, it’s a bit more open to retail investor. Yeah, you’ll see a lot more people participating, those who, who hadn’t before. So the investor base is also you know, shifting a bit to

Ressa 27:12
fair enough that that that is totally true with the, you know, the access between, as you say, the Robin Hood’s of the world and whatnot. Any companies that come to mind recently that if you don’t want to talk about any of that, that’s fine, but that you like, read this prospectus and you’re like, pull your hair back.

McCarthy 27:31
Aspiration financial, was probably the worst one. That wasn’t an IPO prospectus but as you say, it was one of those investor presentations. Okay. And, and I think the investor presentations are kind of next level, because there are no, there isn’t even an SEC looking at. Yeah, yeah, so they’ll just kind of put figures in the presentations, and they won’t even have definitions for them, at least in typically, an IPO prospectus is will have some definitions. So aspiration financial, they they put some truly remarkable things in in the filings about LTV and CAC, that as soon as you start reading the fine print, you’re just I was blown away. Yeah, I literally almost felt sick to my stomach.

Ressa 28:20
Any. Okay. Any DTC brands?

McCarthy 28:27
Direct to consumer? Well, you have companies like peloton that took some pretty aggressive liberties in how they defined customer lifetime. Yeah, so I don’t know if there’s a good solution for it. But they basically had stated this lifetime value calculation that was predicated on an average customer lifetime of something like 13 years. They didn’t say it, but if you actually look at their definition, definition was there in 13 years for any consumer brand. For an average consumer when you know, especially for the subscriptions, which is what they were referring to, there are a whole bunch of people who turn out in the first half years, to have that to have the average lifetime average 18 years means to have a whole bunch of people who are staying with him for like 25 or more years and 25 years that option for on a peloton, I mean, that starts becoming a meaningful proportion of, of the human life. So at some point, human mortality becomes the cause of churn. So it’s the the that the calculation that they that had done was riddled with issues like that. There were many, many more, yeah, happy to kind of go through them, but it’s just kind of an example that even an SEC filing, they could get away with putting something like that in there. Right.

Ressa 29:52
Okay. Fascinating stuff. We’re gonna have to bring you on and go further and deeper, maybe after Christmas or something like that.

McCarthy 30:00
Yeah, there’s a lot of stories like that happy to go for them later.

Ressa 30:06
The third thing is, where do we go from here?

McCarthy 30:10
That I wish I had? I wish I had the answer to that question. But certainly, I think one thing that’s been interesting to see is, we’ve seen, especially over the past couple of weeks, a number of companies come out saying that things are looking good now. But they’re guiding to significant weakness, like over the next year. And it’s, it’s interesting in the sense that things have kind of gotten back to normal. I mean, at least to some degree, when you look at a lot of the foot traffic data, and that a lot of the foot traffic data is becoming more normal. And yet, you know, the the repercussions in terms of customer purchasing. I feel like we haven’t yet seen that. So, yeah, I feel like, whereas on the way down, yeah, as, as COVID was first getting started, that shift was very abrupt. You know, we saw everyone’s purchase behavior change immediately. But I feel like on the other side, I think that it’s, it’s playing out over time, a little bit more, you know, it’s not like, you would expect this light switch to go off, and suddenly everyone’s going, going along their new normal, you know, I think that that’s going to take a little bit more time. And so. So I think it’s a little bit premature right now, for many companies, good or bad to, I think, either declare victory or defeat, based on on what they’re seeing, like on the ground today. I think there is some, there’s some data points there suggesting just some good or bad shifts as we kind of move forward.

Ressa 31:48
But let’s unpack this a little bit, though, Dan, like I’m reading today, I’ll pull up the article I’m reading from retail dive and the headline is Dillards, q3 profits skyrocket more than 500%? Could they responsibly guide to an increase next year? It’s hard. I have. So So I want to go like, of course, they’re going to the you know, I don’t know, I haven’t looked at their numbers. But I haven’t looked at what their earnings. You know what the earnings statement said. But my guess is they’re going to have to guide down right, like it would just be so unprecedented. Right. And to that end, I don’t think that’s a sign that the economy’s weakening or doing bad.

McCarthy 32:28
Like, oh, yeah, it’s not necessarily. I think, also, some of the companies are doing really, really well. But, you know, I think about examples like peloton, you know, their, their guidance has significantly changed. So, even three months ago, the market consensus and I believe their own guidance had pegged the revenue over the next year, something like five and a half billion dollars. And they just said over the last three months, oops, well, you know, based on what we’re seeing, now, we’re going to lower it to four and a half are really 4.4 to 4.8.

Ressa 33:04
That’s a big jump.

McCarthy 33:05
It’s clearly yes, it’s really but you know, I would also say impel time is one specific example. And I think there could be some company specific factors going on with them in particular. But is that broader point that like, what the heck happened in the last three months that led to such a significant change in their their view of how the features can be so? So I’m entirely with you that I think cops are are amazing right now. And even if we were to see kind of a bump down, it may still put a lot of these companies above where they weren’t 2019 You know, but I think there are it’s still just like this big question mark here that

Ressa 33:46
when I look at peloton, right, one of the things I would think this is just so anecdotal, I think one of the challenges they have I think their caps gonna get really tough because the customers that they have to go after now the less of fluid right because their product their price point and you just did you posted something on Planet Fitness recently, right price point, value consumer price point very low, easy entry. And you know, they’re back to I think you said 97% of memberships to pre pandemic. That’s right, right. And so when you look at peloton if they’re going I don’t know if they’re going after the Planet Fitness customer whomever they’re gonna go after next read because most of the fluid it feels like they they have a lot of the fluent and that a fluid is still going to other gyms and using other forms of fitness it’s just you know, it’s a luxury and now they have financing peloton, but to get that other customer you know, financing is one way but I think the cat is going to get tough to get if they’re going to break in and two different different tear.

McCarthy 34:55
Yeah, it’s a really, I think one of the things that’s making it really uncertain for them. And for me, it’s as to where where where we’ll be in the year is you’ve got Planet Fitness, where not only are subscriptions up, even the foot traffic is at 98% of pre pandemic levels. So people are going back to those gyms like they’re actually in the gyms now at plan fitness, but then if you look at Equinox or Equinox, there, it’s something like 66% of pre pandemic levels. And so

Ressa 35:26
I’ll give you my real estate take on that, though. I think it’s a great brand. The real estate take on that is, I think equinoxes. And the locations they are in some urban environments that haven’t fully come back yet from a post COVID world. Where’s Planet Fitness is in more of the suburban world where there’s less restrictions, people coming back and that whole world?

McCarthy 35:48
Yeah, yeah, that I think that that could play a role. But I think the fact that they’re at 66% I think they’re more the comp unit to watch for someone like peloton because they kind of sell at that higher price point. And so if you’re someone at peloton, you may wonder, is that 66? Gonna go to 98 next year for for Equinox or? Or is it going to stay at 66? Now, that’s the sort of thing that could potentially be a big swing factor for a company like them. But it makes it it makes for a lot more uncertainty actually would be less uncertain if if Equinox was at 98. Because then at least you know, they’ve gone back, you know, so whatever we’re seeing today, hopefully should be more reflective of kind of what we would expect, you know, over the next handful of months, but because they’re not quite there yet. Yeah, I think that’s the, the uncertainty is still somewhat high.

Ressa 36:43
I’m glad there at least 98% at Planet Fitness. That’s great. Glad people don’t back to the gym. Anyway. Okay, you know, what to bring us to the last part of the show. I got three quick questions for you. And we’re going to have to bring you on Dan, you got too much to share. And if you’re not following Dan, good follow him on Twitter and LinkedIn, he he’s Daniel McCarthy. He puts out a lot of interesting stuff. That’s how I found him. Most recently, he was on the Scott Galloway podcast. He’s doing a lot of this now. So check him out. Alright. I got three questions for you ready? Let’s go for it. What extinct retailer Do you wish would come back from the dead?

McCarthy 37:25
It’s a tough one. Yeah, I liked some of the product assortment at Pier One imports. All right. There you go.

Ressa 37:33
Question two. What is the last item over $20 You bought in a store?

McCarthy 37:39
That’s a great question. Yeah, it’s been months. Sadly, since I’ve bought something that’s not food related in a store. That’s over $20. So So actually, I don’t know that I’ve got a good answer for that question.

Ressa 37:50
Right now. A lot of people say scotch, but it could be the the

McCarthy 37:56
food item then then yeah, that I could answer that pretty easily. Give me a food it would probably be my restaurant food somewhere.

Ressa 38:06
All right. Question three. If you and I were shopping at Target, and I lost you what I would I find you and

McCarthy 38:13
there’s probably some more elegant answer for this but the real answer is I probably be in the pretzel aisle. Going from my Snyder’s to Hannah for pretzels. So

Ressa 38:21
perfect. I like the honey, honey mustard. Snyder’s if you’ve never had those are good too. Yeah,

McCarthy 38:27
those are those are good too.

Ressa 38:29
Okay. Well listen to him. This was great. Thank you so much. You presented a lot of thought provoking stuff to the listeners. I really appreciate it. Let’s do this again sometime.

McCarthy 38:40
My pleasure. Thanks so much for having me. This was a lot of fun.

Ressa 38:44
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