Retail’s Mid-Year Report Card With Ethan Chernofsky Of Placer.ai | Ask An Expert

Foreign.

Welcome to the latest edition of the Omnitalk Retail Ask an Expert series.

I'm your host, Chris Walton.

And I'm Anne Mazinga.

And we are the founders of omnitalk, the fast growing retail media outlet that is all about the companies, the technologies and the people that are coming together to shape the future of retail.

And our next guest likely needs no introduction, but he does need a new title because he just got promoted.

And I'm talking of course about Ethan Chernofsky.

Place your eyes.

Recently crowned Chief Marketing Officer.

Ethan, first of all, congratulations and welcome back to omnitok.

Thanks guys.

It wouldn't be, it wouldn't be a summer kickoff if it wasn't with omnitalk.

I know, right?

I think congratulations.

Thank you.

Honestly, Ethan, I think of all the webinars we do with you each year, the summer one is my favorite because we get to hand out the grades.

You know, I always loved, I always loved report cards as a kid.

Anna slags me off because she's like, yeah, yeah, whatever.

But, but I, and, and Anna, really no idea what you ever are going to share with us.

And so we like all of you watching and listening now, will be reacting in real time.

So I think we should get to it.

And what do you think?

Yes.

But before we do, just a quick reminder to all of you who are following along with us live on LinkedIn right now.

You can ask your questions, you can heckle Ethan about why he gave people the grades that they did.

That he did in the chat session window on the right hand side of your screen at any time.

So with that, Ethan, let's do an overview.

We always do what is Placer and what is it about the data that you collect that makes it such a useful tool in providing insights into the topic at hand today.

Ethan, so having you ask that, I didn't expect that question at all.

So Blazor is a location data company.

Very important.

How do we get the data?

We observe a panel of tens of millions of devices.

We utilize AI and machine learning on top of that data and then to make estimations of visits to retail locations across the country.

And we can see everything from customer journeys to visit trends, true trade areas and a whole lot more.

And I think what makes it so important is the, is the fact that it focuses on the behavioral data.

So I think we're demographics, psychographics, these things are so important.

Sentiment, super important.

But where that aligns with behavior or we're actually doing, I think, you know, we kind of, we overuse this line, but people vote with their feet.

Right?

And so showing that actual behavior and what that means I think is super critical.

And it is a big piece of giving us the insights that drive our perspective.

I will add the caveat as we get into grades is that we grade in, like, a new age school.

School.

Yeah.

Howdy.

Okay, my first question for you.

So do the rest of the schools.

Now, we don't like.

We don't like the boundaries of, like, the traditional, like, awards or grades.

And so.

So.

So get ready.

Are we ready?

As long as not everyone gets a grade gets an A, Ethan, we're good.

So as long as we've got some variation.

Yeah, we have.

We indeed have tears.

Okay, that was that.

We have indeed have tears.

You have good alliteration, it looks like, too.

That was going to be my first question for you.

Are we lawnmower parenting this?

Are we actually handing out report card grades?

But I guess we're a lot more parenting it, so.

All right, Ethan, well, what's the first designation or whatever you want to share with us today?

These would be your traditional A's, but the A's that you expected.

So, like, we're not shocked by this.

At the beginning of the year, they're holding out.

It's like, bravo, Pat on the back.

Keep up the good work.

And so retailers that hit this for us were.

Were like, Sprouts was one of the ones we called out as a retailer to watch at the beginning of the year.

Nothing surprising there.

Clear reason for being.

Trader Joe's as well.

People travel to make that visit.

They understand exactly what gap they fill, and they are actively trying to fill that gap.

They're not overextending themselves.

The moves that they're making are really.

Makes sense.

They're kind of the tangential play over.

I really like this.

I know.

You know, we were.

We had the joy of seeing each other at Shop Talk.

One of the big themes there was this idea of reason for being, and I feel like Sprouts and Trader Joe's really know their reason for being and so do some of the other ones here.

So let's think about Marshalls, TJ Maxx.

Other obviously off price is like, you could kind of throw in fair because they're all doing so well.

And I think another big piece here is they know what they're doing.

They're not trying to reinvent the wheel.

They're trying to build off of their strength.

And I think one of the cool things here is you see retailers that when the stars Align for them.

They take advantage in full.

And so one of the cool things we talked about quite a bit about tjx, Marshalls and others is that when you visit there, you go back more.

So we would look at kind of the cross visitation and essentially when there are new audience that tried out Marshalls or TJ Maxx.

When we saw that suburban shift in the early pandemic period of the bit early, the early part of this decade, we saw that sustain itself.

And that tells us something really powerful about a retailer that it's not just that they do well from time to time, it's just they're set up for consistent success.

Their model, it all, it all kind of works.

I think there are some others that like, you know, Planet Fitness.

Again, nothing, nothing on this slide really shocks the one that we actually put in last.

It was like the last to make an addition here, but it felt like it was necessary was Walmart.

And I'll tell you the kicker for me, where I was like it has to be there was.

We were doing a deep dive into their, into their recent earnings.

And one of our obsessions is the idea of the store as a platform where how do we maximize what we use the four walls for?

And I really think that if you were going to create kind of the textbook of store as a platform, the guiding light is Walmart.

So they talked about huge e commerce lift and that the bulk of that came from buy online pickup in store or kind of store fulfilled delivery.

I love the things that they're doing with Walmart Connect.

I just think there's so many things that they're doing to ask how do we take this base that we've created and then build on it in smart ways.

And so it felt unfair to not have them on this list.

Yeah, that's interesting.

That's interesting.

Especially when you go back to the point of like when you open, like who did you expect to be here at the start of the year?

You know, I think, I think I probably would have put Walmart on that list.

Would you have an.

I think I probably would have.

I definitely would have put Sprouts and Trader Joe's on this list and probably TJX and Marshalls too I think as well like to your point.

So there's really no big surprises here.

They're just continuing to, you know, get the tailwind at their back and continuing to do retail really well successfully, month over month, year over year.

Yeah, Ethan, how about the, you know, when you talk about like coming back, the surprise of you know, people coming back to tjx, people coming back to Trader Joe's.

Are you finding that with Walmart as well?

Like I'd be curious just you know, given their campaigns of the who knew and like trying to get people back into the doors for some of those more surprising moments, has that come into play or is it strictly like just they're nailing fulfillment and omnichannel retail?

It's, it's their Walmart's reach is just so unbelievably massive.

Like it's obviously there's audiences that weren't visiting before, but I think that's their success is so much more centered around getting more out of that huge base that they have as opposed to needing to expand outward.

And that's what I think.

It really kind of sets them apart.

When you think about the value lane in general, the dollar stores, et cetera.

Like Walmart is, it's such a clear leadership position and it feels like they're just figuring out how to do everything they do a little bit better over time, which is kind of low key, more difficult than innovating in like a.

More powerful way, you know what I mean?

Because you have such a huge ship that you're trying to turn and add on to and it's super impressive.

Ethan, I'm curious in your data, you know, the people are surmising that Walmart is gaining share from the upper income households via online, particularly because you always hear the thing like I like interacting with Walmart online because I don't have to go into their store.

I'm curious in your data, are you seeing them grab high income shoppers from the footfall standpoint into their stores from other competitors too?

What's the data telling you at this point?

Do you know, not know?

It's not something we've looked into yet.

It is an interesting thing.

It's definitely something we observed, we looked at a lot in the dollar segment.

We didn't really do it with Walmart, but it would be a really interesting area to analyze.

Okay.

Yeah, got it.

All right, let's move on to the next one.

Ethan.

Okay, so this is holding on to newfound momentum.

This is the kid where you're like, oh my God, great job.

You're like really reaching your potential but stay on it, like don't let it go because in the back of your mind you know that they could totally let it go.

Okay, yeah.

And I think like so the one that really kind of has stood out to a ridiculous extent and it's not retail but It's Chili's, right?

So again, on my, on my bingo card.

The amount of time I've dedicated to researching Chili's in my time at Placer has been almost none.

And it's just, it never rose to that level for me.

Chili's is like the baby back ribs commercial of my youth.

That's changed clearly.

And they, what's amazing, I think about it is that there are really clear lessons that a lot of different retailers, restaurant brands can take from this.

And the first is simplification.

They cut down the menu, they focused on doing fewer things better.

Right.

If they're going back to that conversation about reason for being, they focused on value.

They looked at where they were within their wider segment and they said, we can't compete here.

I can't be Dave and Buster's on the entertainment side, I can't be high end.

That's not going to be me.

But I can be value oriented in a way that others can't.

And one of the really fascinating things I found in the research was that some of these simplification efforts and the success elements, they're leading to better retention of staff, which is improving the experience in store, which is again, goes back to this element of we have these great ideas of how automation is going to make the experience better for the customer.

And that's totally true.

But the thing that really makes the experience better for a customer, especially in the restaurant setting, is how your server treats you, how you're welcome at the door, and by the way, in retail too, how clean is the store, how well set up is it.

Some of these basics get overlooked and we look at kind of the, the more flashy innovation elements and yet these are the things that you want to drive.

And so to see those, the decisions that were taken with the aims that they had and then delivering on those aims I think was really exciting.

And the next one for us is, and I know this is one that's going to be that, that is going to kind of spark for this conversation is those kind of higher end department stores like Nordstrom Andale's seeing this performance, seeing them lean more.

By the way, they've also talked aggressively about or actively about how their E commerce shift has been helping and it's especially been helping with higher end customers.

They feel like maybe their customer base has been a little bit more, less affected by some of the value conversations that have impacted other segments.

We're seeing those visits really pop back again.

This doesn't mean that every sale is happening in a store.

But it means that that engagement is there and there's a lot of excitement for us.

That's a really powerful sign in a department store space that generally has not been, you know, the bearer of the best news in the last few years.

We were just at the Miracle Summit last week, and the CEO of Bloomingdale's was on stage talking about how they were using, how their.

Their marketplaces have actually helped them kind of grab that audience who have found Bloomingdale's first and now is starting to lead to more footfall in the store as well.

Because there, there, it's not just what you assume these larger department stores to be and what they carry in the audience that they serve, but they're actually able to, like, grab that new audience, which we're seeing in the data that you have here.

You know, the department stores are kind of a victim of their own nomenclature to some extent, too, because, like, not all department stores are created equal.

Bloomingdale's and Nordstrom's are very different than.

Than Macy's, and I throw Kohl's into that department store mix, too, for the most part, for lack of a better way to put it, even though there's probably some variation there too.

But, you know, we've long surmised on this, on this program, and I think.

And Ethan, I wrote an article, you know, for you guys, for the anchor for your.

For your website, the Anchor, earlier this year, you know, talking about Bloomingdale's.

And so, you know, relative to Macy's, Bloomingdale still has a, you know, a fighting shot here because of its differentiation, its position, its service in the landscape.

And to your point, Ann, the way it's attacking the marketplace and its online offering also is helping too.

So.

So there's a lot of rose to hoe here for.

For both these brands.

And it's great to see them actually turning around because as hard as we've been on the department stores, you know, and I, you and I especially care about this business.

And so we want to see them do as well as they can.

And so it's great to see that finally coming through and.

And seeing people value the service and the extra touches they get at both those brands.

Yeah, I mean, this goes back also to that conversation we're having about Walmart of, I think, I don't think the department store concept in terms of, hey, I do really good curation.

And then you get to have that experience in one place and there's these different segments within, so you get to have that kind of individualized or focused experience within this wider setting, I don't think that's unappealing.

I just think the execution has.

Has been challenged in a lot of places.

And so when you see people kind of doing the thing that they're supposed to do, well, especially when it's large and you need to kind of innovate and you've been doing it for a long time.

I.

Sometimes it doesn't get enough credit.

And what's next?

Liberation Day, huh?

All right, what does that mean?

We had to throw in.

So this is.

This is things that we weren't going to put this in, but it felt like you can't do a first half recap without looking at Liberation Day a little bit and talking about tariffs.

Right.

And so we.

Okay, that's what we're going for.

All right.

A participation ribbon of this event that took place.

But I think it was like, we have to talk about this if we're looking at Q@H1, because H1 without it feels like missing.

So, again, I play by my own rules, guys.

Yeah.

Oh, we know.

Oh, we know.

Clearly.

Yeah.

My head was going 4th of July, Bastille Day, you know, but we're going.

We're going Liberation Day.

The literal Liberation Day.

But that's cool.

I'm good.

Let's do it.

Let's roll.

I'm all about.

I'm all about tariffs.

So I think that the thing that was interesting here was.

Was.

Was twofold.

So first we saw what we kind of expected to see.

Like, you know, the classic Dennis, you're from.

You're in Minnesota.

The classic Dennis Green Line.

They are who we thought they were.

Right.

And so, like, the situation is what we thought it was.

Economic volatility hits, consumer behavior shifts, and visitation goes to a few categories.

Grocery sees a bump.

Membership club sees a bump.

See a bump.

Discount in dollar.

Sees a bump.

Like, that's where people go.

And that is one of the biggest takeaways of this last five years.

That that period hits.

It hits.

And everyone kind of says, all right, this is where we.

This is.

We're going to trigger this kind of behavior.

Now, the other thing I think was really interesting was that the cycle seemed actually pretty quick, so obviously things got rescinded.

But I think the emphasis here that we've been making a lot in the last few years is.

Is the difference between economic challenges and economic uncertainty.

Right?

So a challenge could mean, like, I don't have dollars in my pocket right now.

I need to spend less.

Uncertainty is.

I don't know what it's going to look like.

And that I think still triggers a lot of the same behaviors or very interesting behaviors.

And so to see the fact that in a lot of cases we saw this dip and then things went kind of back to more or less where they were pre kind of quote unquote liberation day I think is super important because it tells us these cycles are moving faster.

But it's a really important element to emphasize.

I think we have a good sense of how the consumer is operating right now.

When these jolts to the system happen, we have a pretty good idea of what they're going to do.

And until that changes, this is kind of the new part of our new status quo is when a jolt happens we expect this type of behavior.

It's going to be short term, we're going to go back to normal.

But this is what it's going to look like.

Gets me thinking about like how good is your good too?

Like so if you're an electronics, a warehouse club retailer, a discount in dollar store like when these things start to happen, you should be doing better than the industry and your peer, your peer sets.

And that's not always the case, particularly when I think about some of the retailers and you know that make up these categories of business as well.

So that's a good thing for our, our fans and folks at home to be thinking about.

But you should be on it.

Right.

Like I think one of the biggest things here is if I know you.

Should merchandise to it.

Right?

Exactly.

If I know that if this kind of jolt ish thing happens, I'm going to be there.

Even if it's just with my, even if it's just on the E Commerce side.

I want to have a game plan in place that says something like this happens, we're ready to go because it's going to happen.

And it could be it's going to be a random act that you can't predict.

But plugging in the naming of why, of what the cause is, you, you know the behavior that's going to be triggered.

And I think that's super important to be aware of.

Yeah.

And setting up your, your, your whole operation set to be ready to be agile.

You may not know the exact thing that's going to happen.

But being able to quickly respond and have things in place so that you're not starting all over again every time something like this happens.

100%.

What's next Ethan?

Our next one is, it's like it's more than a participation trophy.

It's Like a B for someone who's been getting D's.

Okay, so this is like.

But so it's not like it's not the greatest grade in the world.

Like, I don't want to go insane here.

We can't say we'd be lying to ourselves to be like, oh my God, movie theaters are the next huge thing.

Everybody get back.

This is what everyone's going to be doing all the time.

But it's in a lot better situation than we thought it could be.

And there is a real niche to be filled.

And I think we have a clear sense of what that niche is.

And the question is going to be when we look at players within this space 2, 5, 10 years from now and their success or failure, I think we understand what they would have or would have or would have not leaned into.

So let's kind of clarify what we're saying here.

What we have seen in the movie theater space is when there are blockbusters or big family films, visits surge when there are not, people don't go to the movies.

Right?

It's, it's literally that story and it's that story repeating now over the course of years.

Here's why it's interesting.

If you're running a theater company right now, there are clear places where you should be focusing your strategic thinking.

How do I make it that you spend more when you come?

Because you're not going to come all the time, you're not going to be there weekly.

There's not enough going on.

Maybe you will be in the summer, but it's not going to be all year long.

So how do I increase the basket size, make it a better experience, improve the quality of food so it's something to go to.

And how do I increase the amount of content that checks that kind of blockbuster y box?

Now we talked about this.

This was the.

Do you remember the conversation around who's gonna buy AMC years ago and ended.

But I had always said I hope it's Disney because you want it to be.

I want sports, I want Game of Thrones finale.

I want the big things.

That's what you want to see in these theater settings.

And I want to see the Harry Potter series streamed one movie every single day over an eight day period at like the anniversary of I don't know, I don't know when his birthday is.

I'm not enough of a fan of these things.

But like that's, I don't know.

There's like a Yoda Day, right where everyone loves Star wars and like that's of course on, on National Yoda Day.

Like I want to see like those, those kind of activities.

And I.

But what I think is really interesting here.

And again, we, we really want to focus on areas where we felt like there are implications outside of just who are great.

Like the wider class can get a lesson from this.

And it's.

Some people have a concept that, that is great and will grow and they will be dominant and expanding.

And I'm, you know, I'm, you know, interesting.

We're going to talk about Lululemon, but I'm Lululemon and I'm gonna, I do I nail it now?

I'm gonna expand into men and I'm gonna hopefully nail it and I'm gonna keep on growing and growing and growing.

And there's other segments that are niche.

They.

They don't have endless growth potential.

But that doesn't mean you can't build an incredible business around it or a very strong one.

It's just your growth has to come from other areas.

You can't just expand out locations forever.

There has to be a real focus on understanding what each unit can actually drive and where those limitations might be in this wider context.

So, so basically I put that back.

There's.

There's two big takeaways here.

There's one, you know, the blockbusters are coming in the summer.

You have to cat when the traffic comes.

You want to maximize your basket size.

I mean, this is.

It's funny.

It's funny.

As we sit here and do this, a lot of what we talk about is just core Good Retailing 101.

You want to ma.

You want to maximize the basket size when they're in your store or in your movie theater.

And the second thing is you have to merchandise year round to smooth out your operations and to get people coming in.

So you've got to get creative on that side of things because you're right, Ethan.

I think the thing as I've sat back and listened to you describe that and as I've talked to you about this category of business for the past five, six, seven, eight years, you know, it feels like.

It feels like Hollywood has figured out their business model now where they have to invest in these big blast blockbuster tent poles to get people in to make money.

And that's what the movie theaters are going to, you know, ride or die on.

But that's not going to happen year round particularly.

And so, yeah, the movie theaters, it's on them to merchandise the rest of the year.

Is that right?

I mean, is that sum that up correctly?

Yeah.

I also feel like it's one of these things that when, when you come from the technology side of the, of the house, you see these kind of overdone buzz and hype cycles.

And I think in the end of.

The day, great point.

It's like, I mean we launch this new and exciting blockchain based ticket ordering system and it's like, well, nobody cares if you don't have good movies.

Right.

And you can have the coolest kind of ordering display screen set up in your store, but if you don't have the right products, nobody cares.

No one's going to buy anything.

So I just, I feel like it's so important to focus on the fundamentals and one of the things that really pops when you look at our data and we've done this now several years running.

It's a great point.

It's effective.

It is the core good.

Then the innovation levels unlock the core or the innovation is there to solve a core problem.

It's the kind of the garnish around is very rarely driving these massive returns.

Whereas just the basics.

Is the store clean?

Are the products there that you expected?

Are you on time?

Like again, like one of the things that always pops in my head is like how slow.

And I think it's unfair to say this because everything's hard and I don't want to minimize how difficult it is.

But when you see things happening where you know there's a period of like economic crush, like which retailers you see are just on it, hey, dollar's a little bit tight right now.

Awesome.

We have a sale and which ones are three weeks later and they've just kind of missed the boat.

And so it's that speed and movement that you want to see if like in the areas where you can be agile and then the really focus on core fundamentals and those places where it's just going to be slower to move well.

And I think Ethan, like one of the things that you have here on screen is the Lilo and Stitch release.

And I think that's a really interesting case study to continue to follow this year.

Huge, like you're seeing huge traffic at the movie theaters when this release came out.

But then I think the other important thing is to, to call out is how the, the movie houses and the theaters are starting to coordinate with some of the adjacent businesses that are in those locations that to, to continue to maximize this throughout the year.

So when you do a new lilo stuffy like launch thing, they're doing a Movie theater, showing of the, you know, bring your lilo to the theater and then watch the movie again.

So it's really rethinking.

It sounds like how, how you're going to market with this and how you're going to continue to keep this like evergreen throughout the year.

Is that what you're seeing?

It's, it's bullseye.

Right.

One of the things that's really interesting for us is we're how many years removed from like Barbie now?

It feels like 700, but it's only been like two.

But we are, we still see this Barbie dream House, you know, tour that kind of sets up these pop ups and it drives massive surges and visits.

So also kind of this message of like, if you have, have the, you don't want to call it luck, but if you have done the work and you have landed on something that really resonates, to let it go so easily and be like, well, the movie already launched.

We're done.

Like, it's, it's, it's crazy.

Like you're literally throwing away some of the great work that you've done.

So I, I couldn't agree with that point more.

Yeah.

All right.

Chicken jockey from Minecraft is my kid's favorite phrase right now too.

And that was like, according to this, four months ago now, almost.

So, like, I can't get that out of their head.

So, yes, 100% I agree.

All right, what's next?

I still don't know what Minecraft is.

Like, I had to ask my.

No, you're fine, you're fine.

Don't, don't go there.

The LEGO one.

Is this the one?

It's right.

It's kind of.

This next slide is a great example of Minecraft.

Like these little blocks.

This is, this, like, looks like it could be sponsored by Minecraft.

Ethan.

Okay, awesome.

So I'd like to thank our sponsor, Minecraft.

Just send them an invoice and see what happens.

Unofficial.

Yes.

As the new spokesperson for Minecraft.

Okay, so this is, this is ones that, look, let's be clear.

There's shakier things, but it's, it's not the greatest grade, but there's some reasons behind it and there's feelings of promise.

So let's a few examples here.

Right.

Hobby Lobby was not a retailer we were super excited about, I would say, last year.

I think what's.

It's been interesting is they are popping now.

We think a lot of this is related to the Joanne stores closings.

So we've seen significant, like, not Small growth.

I think it was three of the last five months they've seen plus 10, year over year increases in visits.

Right.

And really significant changes.

And so that's super powerful, really promising.

Again, it wasn't like everything was running incredibly smooth, but now we see this, this significant bump.

I think another one that hits that category for us is.

Is Home Depot.

Home Depot was really interesting because if you break down the weekly data for Home Depot, the monthly data does not look amazing.

Like it's basically down consistently.

But if you break out the weekly data, what you saw is that the week before Liberation Day, that early April period visits pop for Home Depot.

And it's essentially what happened is it's our key period of the year.

It's March, April, May, and all of a sudden we've had the rug pulled out from under us because these are purchases that for at least the consumers, forget the pro audience, they're like, I can delay this by six months.

I'll do this next year.

I'll do this later on.

And so I think there were some positive signs.

I think this would have likely been.

I think we would be in a situation of growth in a normal year.

And so we're.

We.

I think it's important.

It's important to weigh.

Ulta is an interesting one.

Ulta was like just one of these retailers that you.

At a certain point, it was almost boring to look at because you're like, oh, wow, they're growing more.

They're so great at what they do, you know, whatever it is.

And then we saw a couple of months of things dipping and they talked about it in their earnings call of, you know, seeing some concerns of a more cautious customer.

Well, we're seeing that bounce back.

So if we look at weekly visits, I think since the beginning of April, they've had no weeks that visits are down year over year, it's all up and it's growing.

And so there's a lot of positivity there, though.

Maybe not the best start to the year, but certainly a lot of positivity as they're heading into the future.

And the last one, and this is one that we're excited about, is this be smalls element.

Yeah.

Because again, we talked about this and we've talked about this a lot here, but I think it's.

It's so important to emphasize because it is from a physical retail perspective, this is a massive stone.

Like, if how it, how it plays out is going to have major ramifications.

A class is doing really well, according to Green Street 96% occupancy.

B class has 89% occupancy.

What they're listing as B class.

That's really interesting.

Like that's not.

Oh no, the sky is falling.

That's, that's what we were talking about is the waterfall effect.

If a class is so doing really well, there's less space for a lot of these retailers.

Where do they go?

If more of them are going to B class malls, it creates this opportunity to lift those up and this kind of reinvigorate this mall space that has been left for dead by many because even the most optimistic were saying the top tier will do well.

Everyone else is going to fall.

I think this idea that this is now really trick or there are powerful signs that this is in fact trickling down is, is really exciting and important.

And what underlying is driving that?

Why, why, why are we seeing a re.

Enlivening of the BMOs?

Help me understand that better.

I think there's a few reasons and obviously it's not across the board.

There's ones that are really struggling.

The first piece is there's more differentiation when there's less apparel and beauty.

Right.

So it's if in the top tier you only have about 50% apparel and beauty, whereas you had much more.

It's much more experiences.

All of a sudden the, the retailer that didn't have a reason for being in that or was in that mall but now is pushed out.

They're kind of the star of this show that's much smaller and they're a draw in their local area, I think.

So it's a repositioning.

I think the repositioning is important.

It's creating a draw there where you can't do it all in that one place and now you're going to these other areas.

I also think you're seeing a lot of really smart actions with like the mall owners are creating experiences that are not necessarily competing with that top tier regional mall, but are complimentary.

So I'm not saying like we're all going to be the same thing and let's, let's hash it out so you can get that visit.

I'm saying, all right, you're going to be the top tier player in this space, but I'm going to be a really awesome B class and like grab more of that visitation that you're.

Because we're not going to go to the same mall every single week, right?

We're certainly not going to go every single day.

And so this idea that I can grab more If I'm differentiated and I have focus.

And the last bit is being audience focused.

So one of the really interesting conversations we've been having of late is this idea of the urbanization of the suburbs.

So people leave the cities, they come to the suburban areas and now there is this heavy focus in terms on the real estate side of building out experiences that are attractive and urban esque for this audience that was hanging on for dear life to stay in the cities because they wanted those experiences and they're pulling them into the suburban environment.

And it's interesting we just like recently posted this.

But one of my favorite lines, and I'm butchering it, but I'll get the kind of.

The essence is there's no such thing as a suburban or urban retailer anymore.

Everyone can be everything.

It's just, is your audience there?

And do you tailor the experience in those stores to those, to those locations?

I think that's a big piece of what the next 10 years of retail is going to look like, of really settling into that potential and opportunity.

This is so funny that.

I was at my doctor's office yesterday, believe it or not, and the nurse asked me, she's like, what do you do?

I'm like, well, I'm a podcaster.

What do you podcast about?

I podcast about retail.

She's like, oh, what do these could happen with malls?

And I feel, I feel pretty good about my answer because I was like, well, I think malls have a reason to exist.

And you know, what you told me is they're, they're still just rebalancing themselves.

They're rebalancing themselves on what brands they have, they're rebalancing themselves on what experiences they have.

And they're rebalancing themselves in terms of trying to understand what customer they're trying to serve at the end of the day.

And so that's what we're seeing.

And, and so overall it's, it's nice to see some positive momentum in that space too because, you know, as we talked about on the show, many, many years, the malls have been a tough segment.

Yeah, well, and, and I think, yeah, and I think as you start to see some of these larger stores, like a Joanne in a, in a power stress center or something, start to vacate how they break up these spaces, like Ethan saying to be more appropriate for the demographic around that mall or to be more relevant with a food concept or an entertainment concept or something, that's going to draw more traffic, I think that also opens up some opportunity because you don't have those.

Those leases that are being signed for 10 years by one of these tenants anymore.

Yeah.

And you have.

And the creative.

It's just the cost of building is so.

Is so high.

So it's really difficult.

Was really interesting as we were at a major retail real estate conference in May, and there it was fascinating to see how.

It's not that retailers are still.

Obviously, have a ton of power and control in these conversations.

Let's not minimize that in the slightest.

But it's not what it was because they know they need the space, and they know there's not enough good space available.

And so they're now trying to think of, like, well, how do I make do with this piece of property?

That wouldn't be my ideal normally, but everything's taken up and this brand is rising, and I need to be in this area.

And it is a fundamentally different environment than it was seven, eight years ago.

And I think it's really exciting.

Just the power and the role of the physical space.

I think if we were to.

If we Zoom forward to 2030, I think we say, what is one of the biggest takeaways of the 2020s?

It's going to be that physical space isn't any less important.

It's just important in different ways than it was before.

Yeah.

Yeah.

And we don't need as much of it.

I mean, that's the other thing.

Part of this discussion, too, which we haven't talked about, is some of the malls that were competing in this space have died off.

You know, they've gone away.

They're not as relevant anymore.

And that's a factor, too.

Yeah, totally.

Or they repurpose.

They were focused on other things.

Okay.

The last bit is the needs improvement category.

All right, here we go.

Here we go.

The gloves come on.

But.

Yeah, Right.

So these are the ones where we think there's been some challenges.

Right.

And.

Oh, boy, it's gonna be interesting to see how they.

How they.

So.

And all of these are gonna obviously be massive surprises.

No one signed.

Wow.

So the first is like.

I mean, it's a weird one for me, and it breaks my one rule of never bet against Lululemon.

But I think there's some certain challenges.

And like, I.

It's.

It's.

Again, I.

Early on in my placer career, I looked at Lululemon stores, and I said, there's too many stores in too tight of a trade area.

It doesn't seem like it makes sense.

There's gonna be Cannibal.

I would watch out for.

And then I couldn't have been more wrong.

And then you see kind of the dips and you're like, well, maybe I wasn't so wrong.

Maybe there are some challenges in terms of how many locations they actually need and that's why visits are dropping.

Perhaps it's.

Look, there's just only so much of that cycling in and out of those clothes that you need.

It's certainly not the fitness space slowing down.

It's not.

It could be competition, but I do think there is challenges in that space.

Obviously, critically, you're talking about a dominant player.

It's not like they've become undominant.

If you look at Visit share, they are clearly the, the, the top player in that kind of niche.

But it's not as.

It's not as clear sailing as it might have been before.

There is clearly competition that is making it more difficult for Lulu, though, again, we did see that pop at the end of May.

Got it, Got it.

So, so the, the big, the big stark con, the big, big one to call out here, though, Ethan, is, is Target.

I mean, that's a precipitous drop in February.

Any thoughts on that one?

Okay, so I have many thoughts on Target.

I think that clearly there was a negative impact to the more buzzy topics that were impacting.

Whether it was this conversation around dei.

I have no doubt that there is a significant portion of visitors that said, all right, it's not where it's going to go to my visit.

I don't think that's the primary issue of their challenges.

I think from my own personal shopping experience as a huge Target fan, I think we've all had experiences walking to a store that's just messier than it used to be.

We've all had an experience of walking in where it's like, there's not as many people on staff to help you as there used to be.

Right.

And so I think, I think the core things, I think obviously there are those kind of shocks to the system.

There are things that create kind of, kind of challenges.

I feel like it is a.

If I were, I know it's going to shock you.

They're not asking me to be the CEO of Target, but if they were to ask me to be the CEO of Target, I would be like, let's not forget what makes Target so special.

It's something we've talked about so many times.

They are the, maybe the only retailer who's ever proven to consistently understand what the middle cares about.

They care about how they can create this Mix of products that are higher end but I'm willing to buy.

But here it's right next to this value product that I don't want to spend too much on.

And that is kind of a magic mix, I think.

Going back to basics, making sure the stores are effective, making sure that the pricing is right.

I don't think any of these more buzzy topics are as big as the, as the core elements.

And I think you would see a very rapid turnaround if just some of the basics were back in line.

Ethan, I'm curious too.

Do you know, you might not know this too.

This might be similar to the Walmart question and something that you and I could potentially look at from my next article I put together for you guys too.

Do you know, are these traffic patterns consistent by geography or do they skew one way or another?

You know, depending on where you're looking in the United States, you know the answer to that.

I'm just curious.

We did look at this one.

I haven't done an update recently, so I don't want to speak at a turn.

It might be different, but it wasn't anything dramatic.

It wasn't.

Okay, so it's consistent across the board.

Which again leads you into this idea that like there's a lot of things happening and look, there's also important things.

A lot of operational dynamics.

Yeah, exactly.

Like weather has an effect and it's also, it's coming back.

Like, let's be clear, like the visit gaps were larger in February, smaller in March, smaller in April, smaller in May.

Back to school is a very good time to then carry that, that, that turnaround further.

I also think, and it's, it's super important to remind ourselves of this.

It's.

We have a tendency to look at the, the leaders of the space and call out the small weaknesses.

And this is like, I'll pull the sports example, but think of like, oh my God, Giannis is having a rough season.

He's only averaging 25 points a game this year.

It's like, yeah, he's one of them.

Let's, let's not.

And so I do think it's like very often and I this is especially so as someone who is a, a very avid target shopper.

Right.

It's like, look, yeah, you're a little frustrated, but let's not forget all the amazing things are happening, the good things and the positive momentum.

So I think there is clearly needs, there is a fits in this needs improvement category for, for the first half.

But if this is something that Turned around fast.

Would it surprise me in the slightest?

No.

No.

Right?

Yeah.

It's still like a $100 billion retailer.

That's what you're saying.

Like, you know, we don't want to be a hundred billion dollar retailer.

They're so innovative and they've been so far ahead of the curve and their innovation has been smart and it hasn't been this like, overstretching for the most part.

Like, so again, it's like, for me, like, I always throw Best Buy into this category too.

Of like, you think about how many strategic decisions you've seen Best Buy roll out and be like, if I trust somebody to kind of find their way after like a bumpier period, it's these retailers that you see consistently make smart decisions, strategic decisions that have that brand.

And so again, they.

I put them in that same category.

All right.

Others.

Dave and Busters was one that we were seeing amazing things from.

We saw that kind of fade.

I think a lot of that is pricing.

I think a lot of that is this whole experience model is fantastic and it certainly drives attention.

But it.

At what point are you like, well, you know, fine, we can do without the Skeet ball today.

We're going to go, we're going to go to this other restaurant because they're a little bit cheaper.

We're trying to save a few bucks.

Right.

Like, and so I think finding these, these extra layers and, and elements are.

Is going to be really key in that.

And then Wendy's.

I think Wendy's.

A lot of the visit decline has been because of the removal of breakfast.

Right?

They made this play into breakfast.

It did see some visit peaks and some expansion of that play.

They removed it.

We're seeing some, some the decrease in obviously in that segment when you don't have a breakfast offering or the same caliber breakfast offering.

And so this kind of what's their next move in a very competitive space is going to be really interesting.

You know, obviously, you know, chicken players are still like this dominant, ridiculously strong force that you're like, at some point people are gonna not care about that as much.

Stop eating chicken.

But like, but yeah, but like, why have we stopped eating like burgers and sandwiches?

And so it's.

I think there is this.

A lot of folks are kind of grappling with the same question of like, what's our next layer?

What's our next move?

And I think Wendy's fits within that category.

All right, what.

Let's wrap it up.

Ethan, what do we have to close.

To close those Are the grades again, we're looking a Montessori esque, like, grading style of like, I appreciate you.

It was creative doing.

Yeah.

I mean, like, anyone could give an A or a B, but how many people could figure out it needs improvement?

Yeah.

Or a myth blockbuster.

Like, that was, that was a good one too, Ethan.

I like that one.

Right.

Like, I was also the slide tries to be like, really like, ooh, can I, can I, can I get kitschy here?

Yes.

Yeah.

I think, I think overall, I think the interesting thing about this year is it's been, I would say almost retail has performed better than you would expect it to do.

Like, with all of the kind of craziness around it.

Yeah, yeah, yeah.

And I think there's, I do think this and calling out, you know, is a conversation that I think we both had with a, with a mutual friend, Ben Miller, of Shop Talk fame.

I think this idea of reason for being is so important and I can't.

Get it out of my head when.

I look at retail of like, who do you know, what you were there to do?

Because if you know, you're generally making good decisions about where you want to be, what you want your store to look like, what offerings you want to launch, how you want to leverage new innovation, whether a certain innovation is not for you.

All of those decisions are so much easier to make when you have a really good sense of who you are and what you're attempting to deliver.

Yeah, you have a North Star to go after.

You have one direction that people are all going after.

It's not about what your competitors are doing.

It's about what you uniquely offer the market and your customers.

Well, and the other takeaway I take too, Ethan, I think to expand upon that, that I got from you, particularly in this conversation, was it's still about retail 101.

Like, don't get, don't get lost in the shiny penny of the latest tech.

Use the latest tech to improve your positioning on your retail 101.

Like, become a better merchant, become a better operator, but don't focus on the stuff that is just cool for the sake of what's out there.

You've got to be good at the 101 Basics of Retail.

I think that's important.

Something I hadn't thought about.

You know, I, I, I think about this a, a lot and it's, it gets deepened every time because I think every year there's some sort of like, retail topic that nobody can stop talking about.

So whether it was like shrink or obviously like whatever innovation Things, the metaverse, all these kind of things just walk out.

You know, I got caught up in that.

Yep.

But it's easy to get really caught up because it's like, oh, smart carts, vision, or these reasons why.

And in the end, it's like, it's usually not the make or break.

The make or break.

Great retailers are doing the core really, really well.

And when you see them kind of look, Sprouts had a rough go the early part of this decade.

Like, we saw this.

Yeah, they did.

And then, like, look how well they're doing now, again, because of those core reasons.

So I think it gives you a lot of confidence in what is the driving force behind that success.

Yeah.

And there's no technology at play at Sprouts, really, for the most part.

Trader Joe's.

Yeah, Trader Joe's.

Same thing.

It's just basic, good merchandising, smart box optimization, smart growth strategies in terms of where to put those stores.

Yeah.

Products you want, products that you.

You.

And then figuring out which products are we gonna take away from you and then give you back seasonally.

So there's reasons to come back and visit.

Like, yeah, look, you put sea salt on my brownies.

I'm coming into your store.

And that's the thing.

That's all you need, Ethan.

That's all you need.

A little sea salt sprinkle on the.

Look out for Wendy's new sea salsa sprinkle.

Oh, my God.

Well, Ethan, we really appreciate you taking the time to sit down with us today.

It was very, very insightful, as always.

If people want to get in touch with you or they want to learn more about Placer and how they can add insights like these to drive their businesses.

What's the best way for them to get in touch with you?

So if you want to get in touch with me Personally, I'm on LinkedIn.

My name is is Ethan Chernofsky, as it's spelled here.

And then if you.

And if you are interested in Placer more, more broadly, you can reach out to us at IdeaSplacer AI or check out our website.

We have a free version of our premium product.

And come get in touch with us.

Amazing.

That wraps us up.

Thank you so much to all of you who've joined us live today on LinkedIn.

Thank you again to Ethan Chernofsky of Placer AI for sitting down with us.

And as always, on behalf of all of us here at omnitalk, be careful out there.