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Shoppers, you’re being watched

Kai Ryssdal Nov 22, 2006

KAI RYSSDAL: You can read reports and crunch the numbers all day long. But sometimes there’s no real alternative to getting out and seeing something for yourself. Retail sales analysts will be doing some of that this weekend. Brad Stephens is a senior analyst at the investment bank Morgan Keegan. He covers the apparel industry for them. Hey Brad.

BRAD STEPHENS: Thanks for having me.

RYSSDAL: You’re not going to be one of those crazy people out there at 5 o’clock on Friday morning are you?

STEPHENS: Not at 5 o’clock. But, you know, at some point over the weekend I suspect I’ll probably be in malls. For probably at least two of the three days this weekend.

RYSSDAL: What are you going to be looking for, though?

STEPHENS: A couple of different things. Number one, trying to get a gage of consumers’ readiness to shop. First of all, are they in the malls? Second of all, are they spending money in their malls? And then, third, even if they’re not spending money, who’s seeing the traffic and, potentially, what kind of items are selling?

RYSSDAL: Are you looking at whether people browse the Donna Karan sweaters versus the Armani sweaters? I mean, are you getting that specific?

STEPHENS: Maybe not that specific. But we’ll definitely . . . You know, if you look at maybe the teen retail space, we want to see, is there more traffic at a company like an American Eagle, or at a company like an Aéropostale, or an Ambercrombie & Fitch, and try to gage what we think over the next month will be the must-have items on the wish list.

RYSSDAL: What can you learn over the weekend and into early next week that you can’t learn from end-of-day retail sales reports and those kinds of things?

STEPHENS: I think, just, you know, where the hot trends are going to be for the season. An example of that would be, one of a teen customer’s favorite pastimes, I think, is going to the mall. And, if that customer’s spending a lot of time, maybe not buying but he or she is making that list and we can see where the traffic is at, and that list will eventually show up in the parents’ hands and hopefully those items under the tree. So, you know, if we see traffic, we don’t necessarily see that in the numbers right away.

RYSSDAL: Let’s talk about your final product for just a second here. If you go out and you see that, say, Banana Republic’s cashmere sweaters aren’t selling quite as well as everybody thought. Is that an indicator for you to go back and write a report that says We oughta think about selling Gap stock — Banana Republic’s parent company — because those cashmere sweaters aren’t selling so well?

STEPHENS: You know, as inventory levels start to build and traffic starts to slow, absolutely. Because they’ll start to hit the panic button and start discounting more aggressively. And when that happens, typically, you know the numbers for the 4th quarter aren’t going to be quite as strong.

RYSSDAL: Brad Stephens is a senior analyst at Morgan Keegan. He’s got a busy weekend ahead of him. Brad, thanks a lot.

STEPHENS: Thank you. Have a good weekend.

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