Talking Shop with Suzanne Kapner

Guest: Suzanne Kapner
Topics: The Wall Street Journal, supply chain

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. Today I am joined by Suzanne Kavner. Suzanne is a journalist covering retail for The Wall Street Journal. Super excited to have her on the show today. She’s written some fascinating articles over the past few months and years in the retail category, and yeah, I’m excited to be here. Welcome, Suzanne.

Suzanne Kapner 0:46
Thanks for having me.

Ressa 0:47
So Suzanne, why don’t you tell everybody a little bit about who you are, what you do and a little bit of your story.

Kapner 0:54
Or, well, I’ve been a journalist now for more than 30 years, I say with a cringe because I’m dating myself. But the last 10 of that has been with the Wall Street Journal mostly covering retailing, which is you know, near and dear to my heart. Both as a consumer and a journalist. I love shopping. I love being in stores I love talking to people in the industry never gets old, there’s been so many changes happening that I just find it fascinating.

Ressa 1:23
So since you built the Wall Street Journal, has it always been retail?

Kapner 1:27
Well, I started out covering finance, I was reading about Citigroup initially, but then there, the retailing slot opened up and I raised my hand pretty quickly because I knew that’s what I wanted to do. Got it. So

Ressa 1:42
a lot of your articles lately have had either some veracity to it on social media and getting a lot of headlines. Yeah, I’m just curious, overall. What’s your take on what’s happening in retail today? There’s a lot of different things. I know, it’s a big question. You could take it from any angle, but I’m curious.

Kapner 2:06
Man, it’s the best of times. And the worst of times, it’s great because consumer demand is so strong. But retailers are facing unprecedented challenges with supply with labor or with obviously, the pandemic. And so you’ve got these, you know, two opposing forces, demand is surging, but supply is constrained. And, you know, it’s made for a very difficult environment for a lot of companies. But at the same time, they’re also posting pretty good numbers because demand is so strong.

Ressa 2:35
Okay. It’s a great take. I want to stop right there. I want to go to this section called Clear the air and we’ll talk more about retail the second a clear there so everyone can get to know Suzanne a little bit more. I got three challenging questions for you ready? Okay. Question one. When’s the last time you did something for the first time?

Kapner 2:56
Well, that would have to predate the pandemic. It was the December 2019. I went on a safari.

Ressa 3:05
Oh, wow. Very cool. What was the favorite thing you saw?

Kapner 3:09
Leopards and lions, you know, hard to be sitting, you know, a few feet from from a leopard or a lion in the bush is pretty, pretty special.

Ressa 3:19
Okay. Question two. What is one skill you don’t possess, but wish you did.

Kapner 3:26
I wish I could make my own clothes. I, I was actually a fashion design major in my freshman year in college, and I had to make a suit. And I cannot tell you how hard that was. It was like maybe the hardest thing I’ve ever done in my life. And I very quickly transferred out of there into the journalism program, but but I really wish that I had those skills. Because you know, sometimes I know I’m searching for something I want to wear and I can’t find it. And gosh, wouldn’t it be great if I could just make it myself?

Ressa 3:54
No one’s ever said that one. That’s really interesting. Okay, question. Three. Last question. What is one thing most people agree with, but you do not?

Kapner 4:08
Well, I don’t know if most people agree, but um, I think that the whole M and F T craze is kind of like the beanie babies of our time. And that, you know, maybe a couple years from now, we might be looking back and it may be a passing things. I mean, I think it makes sense for some brands, but you’re just seeing like everybody jumped on that bandwagon and I’m not so sure. All right.

Ressa 4:32
Well, unfortunately, I own a few of NF T’s. So we’ll see how it goes. But I, I think I think for certain brands, yeah, it’s been a pretty big craze that everyone’s jumped in on it. So

Kapner 4:51
we will see.

Ressa 4:56
So, before we get into retail, I’m curious This, how has the pandemic changed how you do your job as a journalist, any big changes for you that have happened since, you know, this new world order word?

Kapner 5:15
Yeah, obviously, having fewer in person meetings, which is definitely a disadvantage, you know, not being able to be out there and go into events and meeting people firsthand, not being able to travel as much, you know, trying to interview people with a mask on not not fun at all. But those are sort of the big ones. The rest of it, you know, whether you’re sitting in your office at a desk or sitting at home in a desk, it’s kind of, you know, the same things you

Ressa 5:45
did you do, pre pandemic, were you doing a lot of in person interviews?

Kapner 5:53
Well, you know, as a journalist, you always want to meet face to face with your sources you get, it’s just a much richer experience. And, you know, going to stores and talking to shoppers in stores is can be very helpful. And I find now if I try to do that, and I’m wearing a mask, you know, nobody wants to talk to you, they want to get in and out. And it’s just much, much harder to do that.

Ressa 6:13
Yeah. That I’m trying to envision if I was like, in the store, and I was running and grabbing something and someone wanted to like, talk to me about my experience in the store or something in this environment, I I can see how that would be a challenge for sure. Going back to retailing, what

Kapner 6:36
right now

Ressa 6:37
is most interesting to you, in the world of retail.

Kapner 6:45
I’m very interested in how the price increases we’re seeing is going to play out over the longer term. And when do we get to that point that it starts to crave demand? I mean, so far, I don’t think we’re seeing that, you know, people are continuing to buy even as prices are up on everything from you know, Starbucks coffee to Chanel handbags, but I mean, at some point, you’re gonna hit a limit. And no, I’m just fascinated by how retailers are navigating these price increases, you know, not, you know, where there’s price elasticity where there isn’t, and, you know, it’s just like a whole new set of challenges that they’re facing there. Yeah. I think,

Ressa 7:30
retailers, you know, there was this race to the bottom for a long time in pricing. And I think retailers needed a little bit of inflation. To get back into, you know, what, what was interesting was, while the supply chain was a challenge, retailers were able to hold pricing, because they didn’t have to discount because there was only so many of it. And I’m sure we’ll one day we’ll get back to deals, deals, deals and more deals. But the more that retailers can hold pricing, the better their margins are going to be. And the better, you know, the more successful they will be. So it’s, it’s one I’m really interested in as well. So how long do you think this pricing lasts?

Kapner 8:27
Well, I think that a lot of it depends on the supply chain. And when the supply chain normalizes, you know, the big test is going to be our retailer is going to go back to their old habits of over buying and discounting, you know, a lot of the companies that I talked to say they’re not going to do that, but I think it will be very difficult. You know, once somebody breaks price, other people tend to follow and it becomes this downward spiral. So I think it’s going to be very hard for them not to go back to those bad habits.

Ressa 8:57
Yes, if Bob’s selling it for $5, it’s hard for me and let’s do something so special and sell the same thing for $7. So okay, so you’ve you’ve written a lot of articles over the past year, and one that you wrote, was the E commerce needs real store locations now more than ever. So that one’s a little near and dear to my heart because I’m in physical real estate. So and I’ve been talking in public about the E commerce and physical retail for a while now. So I’d love to hear your take for whoever’s hasn’t read it. It’s a fascinating article. Check it out. So tell me about that piece of your mind.

Kapner 9:51
I think retailers develop this new appreciation for what stores can do during the pandemic and you know, they they used to evaluate Then just on the sales done in that box, but you know, stores are so much more valuable than that they today serve as distribution hubs, they can, you know, are places for customers to buy, you know, to pick up online orders to return online orders. And it’s a great marketing vehicle. You know, it’s like a giant billboard that’s out there on the street. Today, when the cost of customer acquisitions online is going up, up up, you know, in some ways, a physical store is a cheaper way to market. And that’s what a lot of brands have told me. Yeah.

Ressa 10:33
You know, it’s funny. Michael prisoner was on like Jim Cramer. And he and he and Jim Cramer is like, why are you open in 2018? Why are you opening physical stores? And he says on there, one of his famous quotes is, he’s the CEO of Everlane, what online only retailers actually profitable. And he goes, virtually none of that. That’s the dirty little secret. And so, one of the things I often say, is, people are talking about the physical store as an experience distribution. And one of the things I say is, how about, it’s a place where you can profit, we saw Warby Parker going public and for direct listing, and they’re saying they have 30% for while EBIT on all their stores, which is, you know, really impressive. And, and the online is really tough for them, because their customer acquisition costs is like 40%, or something really high. So I think there’s a, I think it’s really interesting. And I think we’re going to see more ecommerce brands, open stores, and what we’re seeing in our businesses, this surge of traditional retailers continuing to open more stores and reinvent their existing stores, which is exciting to see.

Kapner 11:54
I think what drove a lot of the store closings we saw in the past few years is, you know, it was it was the problem was with the brand, not so much with having a physical store. If your brand is not working, the stores aren’t going to be working. And so it was really alive for older and tired, more tired brands that needed kind of a reboot that were closing most of the stores. And you see a lot of you know, when you look at who’s opening store today? Well, it’s like the dollar change, but they’re doing very well. There are one of the direct to consumer brands, which are in growth mode. So you have to sort of distinguish between, you know, the retailers that are working and those that are struggling. Yeah.

Ressa 12:36
What a good point, it was really the brand, and not the fact that they had a physical location. It was really was the brand working or relevant anymore. I think that’s a really good distinction you make there

Kapner 12:51
that we don’t hear enough about. Okay. For one of the older retailers, you know, they also had stories that were no longer in the right places anymore, right. You know, so demographics changed communities change. So I mean, that was, I think also part of the ShakeOut. But we’ve come to a point where this last year for the first time in three years, we had more stores open and close on a net basis. So it seems like you agree.

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Ressa 14:23
So something else that’s been fruity. A hot issue and the that you talked about recently, was this splitting off of E commerce. And that that’s I don’t know that that’s getting a lot of buzz right now. And you’re in the you’re in the conversation about what’s going on here with, you know, retailer spinning off there. Physical and their e commerce. You know, and you’ve written some stuff on that. So why don’t you give everyone your take on that?

Kapner 15:09
Well, the are there two schools of thought the pro side the reason to do it is that it brings focus to your company rather than being as they say and and company I have to invest in E commerce and physical stores, you could just be focused on digital. And and there may be some value to that. But if you read the the LinkedIn post, when I posted the story to LinkedIn and got it did get a big response, and most of the comments seem to favor the other side of the debate, which is don’t do it because it creates complexity, it creates barriers, it will slow you down, make things harder, at a time when you need to be as agile as possible. This, this kind of split off structure is going to make you slower. So that seems to be the side that the industry has fallen on. My job is not to have an opinion, but to you know, just report so

Ressa 16:11
so I should Sure. So I think that it’s fascinating. And I think when you look at some of these companies, and one of the another reason they’re thinking about it is one side of the coin is typically getting valued so much more. And so, you know, take some chips off the table and reinvest them. One of the things in the ICSC has done some research on this, that and the retailer’s tell us, that seems to be. To me, just the penultimate is when a store opens in a market, the online sales net market increase for that retailer, when the store closes in the market, the online sales in that market decrease? And then when you’re talking about the stuff you were talking about, like customer acquisition costs, and all these things, it would seem to me that the answer should be how do we make this one and not an end? But just a holistic, harmonized retail is what Steve Dennis calls it, holistic channel, so that we could get it to work together. But listen, it is complex, as you say. And I think that it is complex, as you say, and I’m not behind the scenes, but it definitely when you keep hearing about omni channel, Omni channel and all the positives to the Omni, and you’re seeing all these digitally native brands actually open up stores. It on the surface, it could seem counterintuitive.

Kapner 17:59
It definitely seems counterintuitive, but what you know, people like Mark metrics Sachs has told me is that, you know, these, these structure omni channel that, you know, it’s a very nice word, but in reality, you still have the silos inside businesses, just because they’re not physically split into two different companies doesn’t mean that they’re really operating seamlessly and and so there is a little bit of that happening where yes, the industry has been trying to move to a more seamless model, but in reality, on the ground, it’s not always that seamless.

Ressa 18:37
Fair enough. Anyone who’s worked in an organization of any size can probably relate to that fact. So fair enough, that makes a lot of sense. So the last few weeks you’ve written a lot of stuff on Omni cron, and its impacts and over the holiday and I guess what is your been your take on Omni cron and you know, the impacts that on holiday and where it’s at today, as it relates to retail? Not medically?

Kapner 19:14
Well, because it does seem like it’s taken a bite out of retail sales. late in the season, you’re the season got off to a very strong start. Things go down in December and we had a few retailers now just this week, lemon and Abercrombie and Fitch come out and say that, you know the Omicron and the supply chain challenges did cause their sales to come in at the lower end of the range. We’re gonna get the Commerce Department numbers on Friday, so we’ll have a fuller picture, but it does seem like there has been an impact on both the supply chain but also you know, staffing stores like Macy’s or reducing hours because they just don’t have the staff to make people are out sick. So so there definitely does seem to have been.

Ressa 20:04
You mentioned one that everyone talks about, but I wonder what you’re hearing on the staffing right now. Because if you go shopping and you go to restaurants, you definitely see unusual hours and some unique things happening as retailers are trying to navigate the waters of staffing. What are you hearing on the ground as it relates to you know, hiring and staffing?

Kapner 20:29
It’s, it’s a, it’s a challenge, you know, across industries and retailers, you know, heading into this pandemic had been reducing sales staff on the floor, that was one way they were cutting costs, so they were already cutting back. And now, you know, if you’ve been in a store lately, you can, it’s very hard sometimes to find sales help, not only because they can’t hire because you have a lot of people who are out sick now with with the variant. So you know that they’re raising, obviously, raising wages, doing things like providing college and high school assistance for tuition, they’re trying to get creative in how to retain people. But let’s be honest, an hourly job on a retail floor right now is not the maybe the most desired position. And it’s a great job market for people looking to change careers to move up. So retailers are having a

Ressa 21:24
hard time, you did an interview on how the pandemic helped fixed retail.

Kapner 21:33
So this goes back to a little bit of what we were just talking about with the supply chain. And it’s a counterintuitive idea. But the fact that there’s all these supply chain problems that have led to product shortages, that cleared out a lot of the excess supplies sitting on these retail shelves, I mean, for years, retailers were buying too much. And then they they couldn’t sell at all. So they had to discount to move the goods out of their stores. And it just became a self fulfilling prophecy, the cycle where consumers then got trained to only buy when there was a sale. And in a strange way, the pandemic helped them get out of that harmful cycle. And you know, with less inventory, they could charge either higher prices or have fewer promotions. And it’s helped their bottom line. You know, a lot of retail execs have been talking about how this like, sort of a strange silver lining in the pandemic.

Ressa 22:29
It just to me, it’s fascinating. I remember sitting in March of 2020. And being like, Man, this could be a tough go of it. This could be really tough go of it. And not long after the switch flipped and retail went hockey stick and just soared and which I would have never predicted I’m happy it did that but never predicted it. Or are you surprised by given everything

Kapner 23:00
from the pandemic?

Ressa 23:04
How and all that was talked about with buying habits shape changing to online, how many people have actually gone back out to the stores?

Kapner 23:17
You know, I was with you initially when the pandemic hit, I thought, wow, this is going to just the industry was already struggling. And I thought this is just going to wipe out a lot of players. And in fact, a lot of companies did go into bankruptcy. But but so I was surprised at how strong things can came back. But I think after being cooped up at home for a year, people just wanted to get out and you know, they still weren’t going on vacation or going you know, to the theater. So going to a store was a form of entertainment and it was something new was something they hadn’t done in a while so it was refreshing and more traffic is still below pre pandemic levels that many chains but but it’s a way to get out of the house today, which you know, we can all very

Ressa 24:03
well listen, you’ve been great. Thank you so much. You dropped some great gems, and I really appreciate you flipping the script and being the interviewee instead of the interviewer here. I really appreciate that. Thank you so much for doing this.

Kapner 24:22
My pleasure. Thank

Ressa 24:22
you for how long to take us to the last part of the show. We call it retail wisdom. I’ve got three questions for you. And I’m very very interested to your answers here.

Kapner 24:36
You ready? All right question one

Ressa 24:39
what extinct retailer Do you wish would come back from the dead

Kapner 24:46
I really miss Lomond and I they’re technically not extinct. They’re I think they still exist online but you know they’re not what it was. And I you know, I was a longtime moment shopper. I’m a bargain shopper and you know I love TJ Maxx explain that, you know, low mins has a special place in my heart.

Ressa 25:03
No it well,

Kapner 25:04
okay. Question two.

Ressa 25:07
What’s the last item over $20 You bought in a store

Kapner 25:12
I bought a pair of expensive jeans and I had to go to the store for them because I was ordering online, you know, the gene styles have changed. If you’ve been keeping up with what’s going on out there, then you is out wider leg is in and it’s like a whole new silhouette. And it can really throw you off and you try to order these jeans online and nothing fits right? So I went to a local, my local Bloomingdale’s and sat with a salesperson who kept bringing me scenes throwing them in the dressing room till I found a pair that fit. So that was my my purchase.

Ressa 25:43
Was the sales associate helpful. Was it good to be like with a sales associate and not a chatbot?

Kapner 25:50
It was really good. And you know, the store wasn’t crowded. So I had her, you know, she could really help me and spend time with me. And it was just like a great experience. I haven’t had a good experience like that in the store in a long time. So

Ressa 26:04
last question. Suzanne, if you and I were shopping at Target, and I lost you would I would I find you and

Kapner 26:16
I’d have to say these days maybe like the aisle with the COVID test, right? Because sadly, pre pandemic it probably would have been makeup but the times have changed.

Ressa 26:26
Okay. Okay. Well, good luck. They’re hard to get that hard to get. Well, listen, Suzanne, this has been great. If there’s anything I can ever do to help you. Any insights, I’m talking to retailers all the time, and we’re doing things on the real estate side. So anything I can do to help you got any questions, feel free to reach out. I really appreciate it.

Kapner 26:53
Thank you. Thanks so much.

Ressa 26:56
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