THE OTHER WAY.
THANK YOU, HILLARY.
HILLARY VAUGHN ON LONG ISLAND.
>>> AS RETAILERS EXPAND BLACK
FRIDAY SALES THEY REALLY DON'T
JUST COVER TODAY, THEY COVER THE
WHOLE WEEKEND.
YOU LOOK AT THE CONCEPT OF BLACK
FRIDAY, HOW IMPORTANT IT IS
VERSUS THE NEXT FEW DAYS OR EVEN
THE DAYS LEADING UP TO THE
CHRISTMAS HOLIDAY, BUT IN TERMS
OF CONSUMERS, ARE THEY BEING TOO
CONDITIONED TO EXPECT SOME OF
THESE BIG SALES YOU SEE ON THAT
SIDE AND YOU HEAR HILLARY
TALKING ABOUT THE FORMER SACHS
CHAIRMAN IS WITH US.
GOOD TO HAVE YOU ON.
I KIND OF ALWAYS DO WONDER, EVEN
LOOKING AT AMAZON THIS MORNING,
WALKING INTO WORK, SEEING ALL
THE STORE SIGNS, THIS ECONOMY
IS, THE GUYS ARE SAYING A FEW
MINUTES AGO, AT THE MOMENT IT'S
VERY VERY STRONG.
I KNOW WE HAVE CONCERNS ABOUT
THE FUTURE BUT IT'S SUCH A
STRONG ECONOMY.
WHY DO WE NEED SO MANY BIG SALES
FROM RETAILERS?
>> LOOK, IT IS A STRONG ECONOMY.
THE RETAIL NUMBERS ARE TRACKING
WELL.
THE MASTERCARD SPENDING FORECAST
FOR THE SEASON IS PLUS 5%.
IT LOOKS LIKE IT'S TRACKING TO
THAT.
WE HAD SOME NUMBERS COMING IN
THIS MORNING THAT SAID THE EARLY
READ IS PRETTY GOOD.
SO I'M ENCOURAGED BY WHAT I'M
SEEING.
THE REALITY, THOUGH, IS IT'S NOT
A SHORT SEASON.
IT'S EARLY, IT'S LATE.
I THINK ONE OF THE MOST
INTERESTING THINGS, THIS IS THE
BIGGEST DAY OF THE SEASON, IT'S
NOT JUST BLACK FRIDAY BUT THE
SUNDAY BEFORE CHRISTMAS IS AS
BIG AS BLACK FRIDAY.
THE DISCOUNTS ARE THERE.
THE CONSUMER WHO IS OUT THERE
SHOPPING TODAY IS EXPECTING TO
HAVE A DEAL.
BUT THE RETAILERS KNOW THAT.
THEY ARE BUILDING IT INTO THEIR
MARGIN STRUCTURE.
SO THAT WHAT'S HAPPENING IS THE
CONSUMER IS FEELING THAT THEY'RE
GETTING GOOD VALUE, BUT THE
RETAILERS ARE STILL MAKING THEIR
MARGIN BECAUSE THEY UNDERSTAND
THAT.
I THINK THAT VALUE IS AN
IMPORTANT COMPONENT, BUT SO IS
UNIQUENESS, SO IS EXPERIENCE.
THE CONSUMER IS EXPECTING ALL OF
IT.
THAT'S WHY THEY WANT TO GET IT
NOW, THEY WANT TO GET THE ITEMS
THAT ARE THE BEST VALUE, BUT
THEY ALSO WANT SOMETHING
SPECIAL.
CONNELL: BUT THOSE SALES ARE NOT
DPEN
DEPENDENT ON WHERE THE ECONOMY
IS.
WE ARE IN A GREAT ECONOMY AND
YOU STILL GET THE GREAT SALE
EVEN THOUGH BY MOST MEASURES,
PEOPLE HAVE MONEY TO SPEND.
MOST PEOPLE WHO HAVE A JOB HAVE
ONE.
>> BUT THEY WANT THE INCENTIVE
TO GET OUT THERE.
THE VALUE OF THE DEAL, THEY WANT
TO BEAT THE SYSTEM.
THEY WANT TO GET SOMETHING
NOBODY ELSE IS ABLE TO GET.
THEY WANT TO GET THE BEST DEAL
TO TELL THEIR FRIENDS THEY GOT
IT, EVEN IF THEY COULD AFFORD TO
PAY 10% MORE THAN IT MIGHT HAVE
BEEN.
THIS IS ALL PART OF THE GAME
THAT BOTH THE RETAILERS ARE
PLAYING AND THE CONSUMER AND THE
CONSUMER WANTS TO SAY HEY, I
GOT -- I BEAT THE SYSTEM.
I GOT A REALLY GOOD DEAL BECAUSE
I GOT UP EARLY.
THE REALITY IS IT'S A LITTLE
DIFFERENT THAN IT USED TO BE.
I USED TO GET UP AT 3:00 IN THE
MORNING TO GO CHECK OUT THE
STORES.
NOW I GET UP A LITTLE BIT LATER
BECAUSE SOMETIMES I'M BUYING
ONLINE, SOMETIMES I'M GOING TO
THE STORE.
BUT THE STORES ARE BUSY.
YOU'RE GETTING THE VOLUME AND
ONLINE IS BECOMING AN EVEN MORE
IMPORTANT PART.
IT'S ABOUT 10%, 15% OF THE
VOLUME.
CONNELL: NOT JUST FOR AMAZON BUT
FOR ALL COMPANIES THAT OPERATE
IN THE STORES, THEY HAVE AN
ONLINE COMPONENT TO THEM WHICH
LEADS TO MY NEXT QUESTION, WHICH
ISN'T REALLY A JOKE.
WHY DO PEOPLE GO TO STORES?
I LEGITIMATELY WONDER, WHEN I
SEE SOMEONE OUT IN THE STORE
BEHIND HILLARY.
THEY COULD PICK UP THEIR PHONE
AND DO THE SAME, JUST ABOUT THE
SAME THING, GET ABOUT THE SAME
DEAL.
I COULDN'T EVEN IMAGINE -- I
CAN'T IMAGINE DOING ANY OF MY
HOLIDAY SHOPPING IN AN ACTUAL
STORE.
>> YOU ARE SO WRONG ON THE WHOLE
THING.
CONNELL: NOT WRONG.
IT'S JUST THE WAY -- IT'S NOT
RIGHT OR WRONG.
I'M LEGITIMATELY WONDERING.
>> PEOPLE BUY FOR MANY REASONS.
A GOOD PART OF IT IS THE
EXPERIENCE OF SHOPPING.
ABOUT 80% PLUS OF SHOPPING IS
STILL DONE IN A BRICK AND MORTAR
STORE.
BRICK AND MORTAR ISN'T DYING.
CONNELL: IT'S STRANGE TO ME.
>> THEY WANT TO TOUCH AND FEEL.
THINK ABOUT APPAREL.
APPAREL AT MY OLD COMPANY WAS
DOING 30% OF THE PRODUCT ONLINE
BUT THEY STILL WANT TO TOUCH AND
FEEL AND MEET WITH THE ASSOCIATE
AND EXPERIENCE IT.
I THINK YOUR POINT EARLIER I
THOUGHT WAS FASCINATING WHICH IS
THIS CONVERGENCE OF ONLINE AND
STORES.
SO THE AMAZONS OF THE WORLD ARE
NOW OPENING UP STORES.
THEN YOU HAVE THE BRICK AND
MORTAR GUYS WHO ARE SAYING BUY
ONLINE, PICK UP IN STORE.
WALMART IS MOVING MUCH MORE IN
THE DIRECTION OF BEING OMNI
CHANNEL AND ENCOURAGING THE
ONLINE SHOPPING.
AMAZON IS OPENING UP STORES.
YOU HAVE POPUP STORES WHO ARE
ONLINE, OPENING UP STORES.
THEN YOU HAVE THE BRICK AND
MORTAR PEOPLE, TARGET GROWING
40%, 50%, WALMART GROWING 40%,
50% OF THEIR INTERNET BUSINESS,
AND IT'S THIS CONVERGENCE THAT
IS REALLY WHAT THE CONSUMER IS
VALUING, BECAUSE THEY WANT TO
BUY ANY TIME, ANYWHERE THEY WANT
TO GET PRODUCT.
TO YOUR POINT, SOME OF THEM HATE
GOING INTO A STORE.
OTHERS JUST WANT TO GO INTO A
STORE.
IF GOO
THE GOOD RETAILER IS GOING TO
PROVIDE THAT EXPERIENCE WHEREVER
THEY WANT IT AND WILL GIVE THEM
THE VALUE THEY WANT, SO THAT
QUESTION OF DO THEY NEED TO
PROMOTE, ABSOLUTELY THEY NEED TO
PROMOTE, BUT THEY ARE GOING TO
BUILD IT INTO THE PRICING
STRUCTURE AND THE MARGIN.
CONNELL: THAT SEPARATION BETWEEN
THE TWO IS ALMOST LIKE A FALSE
PREMISE NOW TO SAY ONLINE VERSUS
BRICK AND MORTAR.
IT SEEMS LIKE, ANYWAY.
>> ABSOLUTELY.
ABSOLUTELY RIGHT.
CONNELL: THANK YOU, STEVE.
TRYING TO EXPLAIN TO ME WHAT THE