Featured Image
Trends

Quick Connect - Sears Bankruptcy, China Tariffs Impact on Retail, NRF Holiday Sales Projections

by Peter Edlund

Peter Edlund and John Ostrowski discuss Sears' Chapter 11 bankruptcy and possible liquidation, China Tariff and its impact on Retail, and the latest NRF Holiday sales projections. Read the transcription below:

Webinar - Compete in an OmniChannel World By Optimizing Dropship Best PracticesIntroduction - Liquidating Sears, Trade Wars with China, and 2018 Retailer Holiday Projections

Peter - Welcome to today's Connected Show. On this quick connect new segment, we're going to talk about three items. We're going to talk a little bit about Sears. Obviously, Sears has been in the news for the last couple of days, the impending event, the one that we've all been sort of waiting for for the last several years. You can sort of see it. The writings on the wall, whether it's liquidation or bankruptcy, so we'll have some comments about that. The second thing I want to talk about obviously is the trade war between the United States and China, obviously the imposed tariffs on Chinese manufactured goods into the U.S. potentially has an impact in the U.S., consumers and the retailers having to pass that cost onto us. And the third thing is National Retail Federation is forecasting or predicting 2018 holiday season sales increase between 4.3% and 4.8%. It'll have a little discussion about that, but before we get going, I'd like to actually invite a special guest of mine. One of my colleagues, John Ostrovsky. John comes from the world of retail, spent many, many years working with retailers and direct to consumer initiatives and has a lot of experience and thoughts around this industry. So without further ado, let me invite John to come on in. Hey John, welcome to the Connected Show in this quick connect new segment.

John - Peter, thanks for having me.

Sears - Bankruptcy or Liquidation?

[01:10] Peter - Well, we got three hot topics that I mentioned earlier. Let's start with the first one on Sears. You know, even as of this morning, there were sort of talking about what was happening with Sears. You know, this has been an ongoing sort of saga for the last couple three years with Eddie Lambert making moves to try to save the company, but it looks like we're coming down to an end here. Bankruptcy or liquidation. What do you think it's gonna be?

John - Certainly, it seems like it's been liquidation over the last, you know, couple of years. They've sold off a number of properties in leasing those properties back they got, they got rid of the Craftsman brand and sold Stanley Black and Decker about a year ago. And so really, I mean if you look at it, they really don't have a whole lot left from a liquidation standpoint. Uh, the Kenmore brand, I think it's still out there, but I mean 15 years ago that brand was worth, you know, $2,000,000,000 today it's probably worth $400 or $500 million. So they've saw a real decrease in those assets as well.

Peter - I think this is where they were trying to sell off Craftsman at 400 million and the pension fund who has say in this, was not happy about that, meaning that they thought it was valued at more, you know, I think there's limited choices here obviously, and I think he's actually done everything you could possibly do to try to get his money out as well as trying to save the company. But unfortunately it doesn't seem like it's worked.

Will China tariff impact this year's holiday shopping season?

[02:32] Peter - On the second topic, obviously there's more pressure on retail. We've already got pressure around sort of ecommerce and what large ecommerce platforms are sort of pressuring retail, but now you've got the Chinese tariff situation where they actually increasing goods, cost of goods by 10 percent, which ultimately will most likely be trickled down into the consumer market. But you know, we've got Christmas coming up. Do you think the tariffs that were imposed in late September, will effect any of the consumer or the sales, if you will, for the upcoming holidays.

John - I think in terms of this year, it will probably not have much or any effect on the consumer, but I think going into 2019 or maybe the latter part of the Q1 of 2019, we'll probably start to see the effects in terms of higher prices to the consumer.

National Retail Federation Projects Holiday Sales Growth Between 4.3% and 4.8%

[03:24] Peter - You know, when it comes to consumers and sort of the forecast for spending, we like to spend money and holiday season's coming up and National Retail Federation is predicting, you know, 4.3% to 4.8% increase in revenue for retailers over last year. You know, I know we've gotten to a really, at least from the Economist's perspective, indicated we've got a healthy economy, we've got a little bit of a tax break that occurred last year that, that sort of funneling into this year, is that what's going to make it or are there more things to this in terms of seeing an increase in sales over last year?

John - Well, with unemployment down to such a low level. And the economy hitting on all cylinders going into the holiday season, I certainly expect to see a, a strong, strong holiday, but I would also like to think that it has something, some of that, a positive effect has nothing to do with the infrastructure and the different tools and technologies the retailers have put in place over the last few years and hopefully there'll be seeing a little bit of a lift from some of those initiatives.

Peter - So you're talking about direct-to-consumer type technology and things to enable the retailer to be more efficient and drive more revenue, is that correct?

John - Yeah, certainly the direct-to-consumer aspect of it could play a big factor for the retailers that have made that investment to this point.

Peter - Yeah. Well, I think we'll be talking more about that, I got a funny feeling as we go forward here. It's the first time you've been on the connected show and I hope to have you back again to talk more details. Can you tell me a little bit about some of the things you'd like to chat about in the future?

John - Oh, we'd love to spend a session on just direct-to-consumer. I mean, that's, that's having a major, major positive impact on the retailers that have implemented that today. Maybe that could be a topic for you.

Peter - Yeah, let's do that. Let's plan on doing that. We'll do that in a couple of weeks. I think it will be a good idea. In the meantime, I want to thank you again for joining me all the way from Tennessee and next time we get a chance to talk will be coming up at RVCF, that'll be in actually less than 24 hours. I most likely will be seeing you in San Diego, so until then we'll talk soon. Okay.

John -Thank you very much.

Peter - You're welcome, John. Well again, thank you everybody for joining us on today's quick connect news segment. Look forward to more of these events that will occur over the next several weeks and stay connected.

GET STARTED

CONNECT WITH AN EXPERT TODAY

Evaluate and optimize your supply chain based on your specific business needs.
GET CONNECTED

Latest Webinar