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'People are grumpy' amid pandemic, 2020 election fallout, inflation, vaccines debate: Columbia Business School professor

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Columbia Business School Professor of Retail Studies Mark Cohen breaks down consumer and brand behavior on Black Friday and the ways in which factors like inflation and supply chain shortages are reflected in shopping patterns.

Video transcript

- And we are going to stay on retail and Black Friday. It is one of the biggest day for retailers and one they've been counting on. They're expected to turn out in droves, even as COVID fears re-surge across the country. And here to discuss the outlook for the retail season is Mark Cohen, Columbia professor of Retail Studies. Thank you so much for joining us on this Black Friday. What are you expecting to see for Thanksgiving sales? Because there's been contradictory reports about how much people are tempted to sort of go into stores today and buy. There's been a start earlier than normal. But are they actually going in and buying and finding what they're looking for?

MARK COHEN: I think it's unfortunate that we're all focused on today as a marker for the season. In point of fact, this is really not the most important element of the holiday season. It's really the quarter, which we won't see the end of until the end of January. Clearly, many people began shopping early. They were told to, or asked to, or it's been strongly suggested that they shop early. And I certainly have been suggesting that, and that they shop online, so as to avoid the vagaries of crowds, the possibility of being close in contact with folks who haven't been vaccinated, and also being unable to buy what they're looking for because shelves might not be as full as they have been in the past.

MARK COHEN: So I believe shopping started in October, really. And October sales results were very positive, generally speaking. I think we'll have to wait until the end of January to see how the tale of the tape turns out. I would expect that crowds will be substantial today, but nothing like what they have been historically because customers have alternatives.

MARK COHEN: And when all is said and done, it's going to be a very, very exciting quarter from a volume point of view. I think a lot of folks are going to be engaging in some form of revenge shopping because they've really been unable to do that for the last year and a half, almost two years. And many folks have been able to, more or less, save up for this kind of a holiday season because they haven't been traveling or entertaining and dressing up, that sort of thing. So they're going to come out in droves. Whether they do it online or physically, we'll have to wait and see.

- Well Mark, I can tell you by visiting some stores it feels like that started even before Thanksgiving, just given the crowds that I saw in stores. But, last week, we got a slew of retail earnings that seem to suggest this divide that we're seeing play out with retailers who have the cushion to be able to stock up on inventory, especially because of the shipping delays, the supply chain disruptions we're seeing. And then you had names like Gap who basically said, "look, we we mismanaged this and we're going to try to make things up in Q4." Who do you think is best positioned right now to meet the kind of demand that we're seeing? And who do you think could end up on the losing end?

MARK COHEN: I think that the strong retailers pre-COVID have been prevailing during this crisis and will come out of this holiday season in great shape. I think that the weak sisters in the industry, and Gap is one of them, will struggle. And it isn't just that they had difficulty getting inventory on their shelves. They've been struggling, more or less, consistently for several years now. This crisis is a Darwinian event in this industry and in many other industries. The strong get stronger. The weak fall by the wayside. Shame on Gap for not having worked harder to open up their supply lines. Although in sympathy for them, a lot of their merchandise is sourced in Vietnam, which was shut down for several months just recently.

MARK COHEN: Somehow Nike prevailed. They are in the same boat. Were not sure why, but at the end of the day, Gap didn't have a lot of forward momentum going into this fall, going into this crisis, and it's anybody's guess what kind of shape they'll be in on the other side. I doubt they're going to recover. The news that they revealed was pretty grim. On the flip side, Target, Walmart, Costco all seem to be completely excited about the prospects. They believe they are fully staffed and they're ready for business, and I'm sure their results will show that when this is all over.

- And stores like Nordstrom as well, taking a beating over supply issues as well. So I wonder. I want to ask you. How conscious are shoppers this holiday season, given the inflationary environment? Are they buying just what they need? Are they spending more? What are they doing?

MARK COHEN: We've been terribly spoiled for well over a decade with essentially zero inflation, with the exception of episodic spikes in gasoline costs. In fact, inflation is a constant presence in our midst, but it's been very gradual. It's been very manageable. It's almost been invisible. And, suddenly, as we try to come out of COVID, we're shocked that prices at the pump have spiked, and prices seems to have risen in the grocery store, and discounting seems to have become muted. It's understandable that's all taking place. We're behaving like spoiled children.

MARK COHEN: Now, it's anybody's guess whether this inflationary performance is truly going to be transitory as the Fed would suggest. I don't believe that. Or it's going to linger, but it's certainly not likely to become a runaway train as it was in the 1980s. I can't imagine that occurring. So people are grumpy because things are more expensive. People are grumpy because they are upset that their neighbor isn't vaccinated and is playing with their kids. There are people who are grumpy because they think Trump was really elected. We're a grumpy society at the moment as we try to shrug off what we've been living with for the last two years. And it's a struggle.

- And I have a feeling, Mark, that people are going to get grumpier with the crowds at the malls, but we'll see. We'll see how things play out there. Mark Cohen, Columbia professor of Retail Studies. Good to have you on this Black Friday. Appreciate your time.

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