Consumers will not ‘walk out empty-handed’ this holiday season: NRF CEO

Matt Shay, National Retail Federation CEO, joins Yahoo Finance to discuss consumer shopping expectations and behavior this holiday shopping season.

Video transcript

SEANA SMITH: Black Friday is just two days away. So you know what that means. We are officially kicking off the holiday shopping season. So here to discuss what to expect, we want to bring in Matt Shay. He's the CEO of the National Retail Federation. Matt, it's good to see you. The consumer looks very strong. We've seen the recent retail sales reports. People I know are eager and willing to spend. What does this tell us just about how strong potentially this upcoming holiday season is going to be?

MATT SHAY: Well, first of all, thanks for having me. It's great to be with you. And this is an exciting week for retail. And our members and retailers have been getting ready for this all year long, even more than just the past year, throughout the pandemic. I think we know a couple of things. We know, number one, that consumers are in a very strong and healthy position. Lots of ways to measure that, but one of the big ones is the amount of pent-up savings that's on the sidelines, about $4 trillion in household savings, much lower levels of household debt. Incomes are rising, $5 trillion in stimulus, fiscal stimulus, in the economy, the very accommodative financial monetary policies.

So, on that side of the ledger, we're in very good shape. I think on the supply side, we're actually in better shape than lots of people think. And if you consider for a moment going back two years ago, 2019, which was a very healthy year for the retail industry for our economy, in that year, we imported 20 million of those 20-foot containers that you see at the ports of LA and Long Beach. This year, we're going to import 26 million. So we've increased those imports by 30%.

And while there's been a lot of worry and complaining about the supply chain, the truth is the supply chain has held up very, very well, considering we've got, on a two-year basis, sort of 20% growth. And the supply chain is built for sort of annual growth of about 3%. So we think it's going to be a very strong holiday season. The Black Friday Thanksgiving weekend used to be the kickoff. Now we're sort of midway through the game.

ADAM SHAPIRO: I want to get to what you just said about the supply chain. And as I do that, I'm going to throw out some data you've shared with us. The top toys for boys this year are LEGO cars and trucks-- for my generation, it would have been Matchbox-- Hot Wheels-- OK, there you go-- Playstation video games, Nerf, Paw Patrol, remote control cars, Xbox, and Pokemon. Then, for the girls, Barbie dolls, LOL Dolls, LEGO, Apple products and smartphones, American Girl baby dolls, apparel accessories, Frozen, Disney Princess, beauty products, and Nintendo Switch.

You just said that the supply chain hasn't really been as big an issue. As Mark Zandi said, those of us in media have our hair on fire when we talk about inflation and supply chain. Is everyone getting the stuff they want to get for their kids? I mean, every year, there's-- the hot things run out. I'm thinking Cabbage Patch dolls a billion years ago. But basically, is everybody being able to get what they want?

MATT SHAY: Well, I think what you're going to see happen is consumers will walk out with a gift. And I use walk out in quotation marks. Maybe it's online. Maybe it's in stores, although millions more Americans are going to go into stores this year than did last year, just because the health environment is so much better than a year ago. But consumers are in such a good place, and retailers have so many options available for them that even if you don't get your first choice, you're not going to walk out empty-handed. You will find, if you don't find that particular brand you want, you'll find a comparable item in that same category, or maybe you'll even change categories.

So I think many retailers have been ahead of this, have pulled inventory forward, took really dramatic steps working with their suppliers, with their transport specialists, their shippers, the container companies, and got things into the US in advance. And so, if you listen to the public comments that have been made in the last couple of weeks by the CEOs of Walmart and Target and Lowe's and Best Buy and Macy's, they say they have higher inventory levels this year than a year ago. And they feel like they're in very good shape.

That's not true for every retailer. That's not true in every segment or category of retail. But in the aggregate, I think we're in good shape. And I would just-- last point on that, we're running 14% ahead of last year through the 10 months ended October 31. So consumers are really spending, and retailers are meeting their needs, because last year turned out to be a very good year. This year is even better than that by a pretty wide margin.

KARINA MITCHELL: So it seems like a lot of this is pent-up demand. People are just ready to go out and shop, because I will tell you, I needed to get a pair of shoes for a wedding, couldn't get one to save my life. I tried so hard. And finally, I did walk out of the store with something. It wasn't what I wanted, speaking to your point. But I wanted to ask you. So, how has consumer shopping habits changed this year? Are people more conscientious in an inflationary environment? Are they actually buying more, or are they spending more? What are they doing?

MATT SHAY: Well, we know that the pandemic really pulled forward, really accelerated some existing trends. And the biggest, I guess, the headline trend is that consumers like the flexibility of shopping in a seamless way across channels when they interact with a particular retailer or a particular brand. So they may want to be in the store, in a physical location. They may want to do it online from home. They may want to do the mobile experience with their handheld device. They may want to order it online and pick it up at the store or order it at the store and have it shipped home.

So I think the big change in consumer behavior is the increased demand or the heightened expectations about a true seamless experience across all channels, whether those are in-store, in-person, online, remote, mobile, however you characterize it. That's the headline. I think inside of that, we're seeing changed behaviors when it comes to payments, relatedly when it comes to expectations about fulfillment.

And then engagement. All of the strategies that retailers had to apply over the last year and a half during the pandemic to keep those communities engaged, because you couldn't get people in a physical location in the way that we used to because we had to meter the number of people, or there were stores that were closed, or there were lockdowns and a lot of variability in those physical interactions. So creating communities, creating online, emphasizing social, using new media to reach consumers, I think those are all evolved behaviors that are going to be pretty sticky, even as the economy continues to recover, and we move into the next phase of post-pandemic economy. Many of those behaviors are going to stick around.

SEANA SMITH: Matt Shay, CEO of National Retail Federation, thanks so much.