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Analyzing Retail Trends and Market Reactions: Insights from the Latest Podcast

In this engaging podcast episode, Motley Fool analyst Bill Mann and host Ricky Mulvey dive into:

• Shopping trends from the recent holiday weekend and precautions retailers should consider.
• The political climate in South Korea and its implications for local businesses.
• The reasons behind Wall Street’s positive response to a streamlined AT&T.

In the second part, cybersecurity expert Dave Hatter joins Ricky to shed light on how big tech collects personal data and how individuals can better secure their information.

For complete access to all of The Motley Fool’s podcasts, visit our podcast center. If you’re new to investing, be sure to check out our beginner’s guide to stock investment. A full transcript follows the video.

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This discussion was recorded on Dec. 03, 2024.

Ricky Mulvey: In the world of investing, fortunes can change rapidly. You’re tuned into Motley Fool Money. I’m Ricky Mulvey, alongside Bill Mann. Bill, it’s a pleasure to have you here.

Bill Mann: Great to be here, Ricky. How’s everything going?

Ricky Mulvey: Things are good! With Black Friday and Cyber Monday just wrapping up, I’m curious—did you take advantage of any deals?

Bill Mann: The Mann family definitely participated in the shopping frenzy, though I don’t personally observe Black Friday or Cyber Monday. I’m sure I benefited from some deals!

Ricky Mulvey: Sounds like a win! I did a bit of shopping myself, snagging jeans from American Eagle. They had a countdown for a sale—then surprise, they extended the sale for another day. It’s making me skeptical about retailers’ countdowns.

Bill Mann: It’s interesting how countdowns can create urgency. We almost missed out on ordering our holiday cards from Shutterfly because of that pressure. It highlights how tricky these sales can be.

Ricky Mulvey: Agreed! I think there should be regulations on those countdown sales to ensure they’re genuine.

Bill Mann: When you’re mayor of Earth, let us know how that turns out! [laughs]

Ricky Mulvey: [laughs] Now, let’s analyze some of the Black Friday numbers. Shopify reported $11.5 billion in sales over Black Friday and Cyber Monday, a 24% increase from the previous year. Adobe noted that spending online also rose about 10%. However, Sensormatic Solutions found that in-store shopper traffic declined by 8% compared to last year. What’s your take on these figures?

Bill Mann: An acronym like “BFCM” for Black Friday-Cyber Monday is amusing, but the rise in online sales reflects changing shopping habits. As people find in-store shopping increasingly inconvenient, it’s likely that some market share has shifted from physical stores to online platforms.

Ricky Mulvey: As a Shopify investor, I appreciate their focus on maximizing their online experience. Their message to critics is quite bold.

Bill Mann: Indeed, Shopify’s impressive 24% growth is significant, but it’s essential to understand this gain may come at a cost to traditional retailers.

Ricky Mulvey: Speaking of traditional stores, have there been any retailers catching your eye this holiday season with their online sales strategies?

Bill Mann: Definitely! Walmart stands out. They’ve made significant strides in their online presence since acquiring jet.com, effectively integrating online and in-store shopping.

Ricky Mulvey: However, some retailers seem to be creating their own Bed Bath & Beyond problem, potentially training customers to shop only when steep discounts are available. It’s an intriguing dynamic to watch this season.

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Consumer Discounts: Dangerous Trends for Retail Giants?

As retailers like Forever 21 and Brand Forever 21 offer steep discounts between 50% and 70%, one must wonder how sustainable such practices are. In contrast, H&M is only offering a modest 30% discount, resulting in fewer customers flocking to their stores. While hefty discounts may generate a temporary sales spike, could they lead to serious long-term issues for these brands?

Bill Mann: It seems more like a pre-liquidation than a typical sale. We’ve seen this scenario unfold before; recall when Ron Johnson took over JCPenney. He had an admirable reputation from his time with Apple stores but made drastic changes when he arrived.

Ricky Mulvey: I remember the buzz around it, but the details are fuzzy.

Bill Mann: After Johnson took charge, JCPenney’s shares soared initially. He then decided to reduce discounting significantly. This move backfired; loyal customers had been conditioned to wait for coupons. When they disappeared, shoppers just stopped visiting the store—if you consider not shopping to be a behavior change.

Ricky Mulvey: This aligns with the lessons from Peter Lynch. During the holiday season, we advise investors to analyze the discounting strategies of the brands they support. If discounts seem excessive, it could indicate potential long-term issues. But now, let’s shift gears to an unexpected story coming out of South Korea. President Yoon Suk Yeol has declared martial law amid rising tensions, claiming it is to safeguard freedom and constitutional order and to eliminate support for North Korea. Interestingly, just as I was reviewing this, 190 lawmakers unanimously moved to repeal the martial law act. Bill, what’s the background here?

Bill Mann: It’s an unusual and swift development. To give context, the Anglo-Zanzibar War lasted only 40 minutes, and this situation may come close in its brevity. Ultimately, this crisis is less about North Korea and more about President Yoon’s struggles with mounting protests and accusations of corruption. A journalism professor from UMass, Oh Seok Jong, has documented these events, which have largely flown under the radar due to current global pressures. It appears we are witnessing a desperate leader trying to cling to power amidst intense unpopularity.

Ricky Mulvey: Before discussing the potential impacts on businesses, it’s crucial to understand what martial law entails. Historically, such declarations have been rare but significant in U.S. history. For our listeners unfamiliar with the concept, what does declaring martial law mean for a country?

Bill Mann: It effectively replaces civilian authority with military governance. This has been a recurring theme in South Korea’s history. Under martial law, military figures gain broad, unchecked power to enforce laws, bypassing the parliamentary process.

Ricky Mulvey: Considering the situation, which companies should we keep an eye on, particularly as this turmoil unfolds? Are firms like Samsung and Coupang to watch, especially since both have shown declines today?

Bill Mann: Observing the South Korean won, which dropped around 2%, we see that company stocks like Coupang decreased approximately 6%, all measured in U.S. dollar terms. While Coupang’s performance has been decent recently, uncertainty surrounding the political situation impacts investor sentiment. Declaring martial law usually implies restrictions on freedoms and public activities, which can create unease in the market, but it shouldn’t drastically affect businesses directly, even those operating solely in South Korea like Coupang.

Ricky Mulvey: Now, let’s look at a less chaotic topic that surfaced on The Morning Show. The focus was on Intel and its shifting standing in the market, which is often framed as a “champ-to-chump” narrative. This trend occurs in investing, where dominant companies maintain their success while others begin to decline. For instance, despite competition from Amazon, Walmart keeps thriving. Bill, when do you notice a strong company starting to falter?

Bill Mann: I had a fascinating dialogue with NYU professor Aswath De Motrin last February regarding company life cycles. Many companies, like GE and GM, once managed to navigate downturns and emerge intact, unlike others like Nokia and Yahoo, who have faded into irrelevance. The key question now is whether Intel is following this downward path. They are grappling with substantial challenges, and restructuring efforts under new CEO Pat Gelsinger are underway. Gelsinger stepped in to restore Intel’s legacy in manufacturing, but the company has faced numerous hurdles since he began his tenure three years ago.

Ricky Mulvey: Sometimes, restructuring can yield positive results, as seen with General Electric. Initially thought to weaken the company, GE’s spin-offs have led to a remarkable 90% surge in value year over year, with more than 200% growth over five years. Observing company life cycles reveals they don’t always correlate with human patterns.

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Tackling the ‘Chump of the Week’ Phenomenon in Business

Bill Mann: Well done.

Ricky Mulvey: Companies often become the “chump of the week,” facing public scrutiny and loss of trust. But interestingly, some turn things around. Let’s explore a few examples. Remember the CrowdStrike outage earlier this year? Many thought that it would lead to a mass exodus to other cybersecurity providers. Yet, Palo Alto hasn’t suffered as much. What about Netflix? A few years back, it lost subscribers and everyone questioned its growth. Charles Schwab faced a similar crisis after the downfall of Silicon Valley Bank, with fears that rising interest rates would push clients away. Consider Google Alphabet, which lagged in artificial intelligence, seemingly losing its edge to Microsoft. Finally, Meta was criticized for overspending on the metaverse, leading some to believe its future was bleak. Yet all these companies have rebounded. On the other hand, there are companies like Boeing that are still struggling. What do the successful ones share?

Bill Mann: They all have strong management teams. Innovative companies don’t just throw in the towel when things go wrong; they adapt and redefine their purpose. Take GE, for example. The company refocused after shedding multiple underperforming divisions. Their management played a crucial role in this transformation, prompting a return to innovation and sustainability.

Ricky Mulvey: Now, let’s discuss AT&T. Under John Stankey’s leadership, this company seems to be finding its focus. Good reporting from Bill Cohen at Puck reveals that AT&T overpaid for cable assets but later divested them successfully. The company aims to grow through fiber internet and 5G while moving away from DirecTV. AT&T plans to return $40 billion to shareholders, which includes high dividends as interest rates drop. This is a notable turnaround story. As an investor, how do you view AT&T’s management team amid its past mistakes and recovery?

Bill Mann: There’s a group called Stern Stewart that focuses on economic value added. They help businesses identify which assets truly add value. I admire AT&T’s recent strategic moves, as pointed out by Bill Cohen. The company has approached asset management rationally, discarding those that no longer serve its interests.

Ricky Mulvey: Bill Mann, you certainly are not a “chump of the week.” Thank you for sharing your insights here on Motley Fool Money.

Bill Mann: Thank you, Ricky.

Ricky Mulvey: Tomorrow, we will return with your usual segment featuring Allison and Bro. Today, however, we continue Part 2 of my conversation with cybersecurity consultant Dave Hatter from Intrust IT, discussing big data and how personal information is shared with major tech companies.

As we approach the year’s end, I want to highlight a podcast that could enhance your understanding of charitable giving. “Giving Done Right” aims to inspire and offer practical advice on impactful philanthropy. Choosing to give can be complex and deeply personal. This podcast helps you navigate your options, ensuring you maximize your contributions, be it a few hundred dollars or millions. Find “Giving Done Right” wherever you listen to podcasts. Personally, I often find myself feeling skeptical about the big data landscape.

Dave Hatter: I understand.

Ricky Mulvey: Currently, there are AI image search tools that can recognize a person from just a photo. This might raise concerns, especially after experiences with TSA screenings that quickly identify individuals. While I prefer the TSA’s methods, I’m less comfortable with private companies having such access. What can people do to safeguard their data, given its possible exposure without their knowledge?

Dave Hatter: That’s an important and complex question. However, there are steps individuals can take. First, be mindful about the apps you download and the data you share. Not every app needs full access to your personal information. For example, I’ve turned off location services on my Apple phone unless absolutely necessary.

While I use Bisons as my cellphone carrier—requiring connection to their system for functionality—it’s wise to manage your data. Being aware of various permissions and the extent of data collection can help in protecting your privacy. Consider checking out the Apple App Store’s privacy tracking labels, which indicate how your data might be used by apps.

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Understanding Data Privacy: Insights on Self-Driving Cars and Consumer Awareness

When you use an app, it’s essential to know what information the company collects from you. Recently, privacy labels similar to nutrition labels have been introduced, helping users understand the data being collected by software vendors. For instance, TikTok is notorious for gathering a significant amount of data from your phone. As a user, if you are comfortable with this level of data collection, that’s your choice. However, many people, including myself, prefer to limit the number of apps on their devices. One effective way to manage your digital footprint is by selecting vendors who prioritize user privacy. Apple is often seen as a more privacy-friendly option, though their policies can change. Personally, I would never install an app from China that collects personal data like TikTok does. It’s crucial to consider what information you share and understand its implications.

Ricky Mulvey: There are various data projects that pique my interest, one being self-driving cars. Tesla has mentioned its mission to gather extensive driving data to improve its technology. They require millions of hours of driving experience to effectively train their models, approaching it like a game to ensure safety. Are there any data initiatives you find exciting?

Dave Hatter: I carry a sense of cautious optimism regarding the current state of technology. Many concepts are still in their early stages, and I believe consumers will eventually realize that “free” services often come with hidden costs. Personally, I would prefer to pay for services rather than give up my data. Although I’m not against technology, I have concerns about how it has been implemented. Issues like privacy washing and uninformed consent are problematic and will hopefully get better over time. You mentioned self-driving cars, but I have reservations about them.

Ricky Mulvey: I’m curious to hear your thoughts.

Dave Hatter: As someone with a substantial background in software engineering, I have encountered numerous bugs over my career. None were intentional; errors just happen. Therefore, I am hesitant to rely solely on software controlling my vehicle, especially at high speeds. While I understand the potential of self-driving technology, I feel it’s still immature. Hacking presents a real threat; for example, a significant recall by Chrysler occurred in 2015 when hackers demonstrated control over vehicles. The notion of being in a vehicle controlled by software and vulnerable to cyberattacks is concerning. That said, the prospects for drone delivery powered by AI and robotics do excite me. However, I remain skeptical about relying heavily on data collected in ways that are opaque or unpredictable. Although I’m hopeful for future advancements, my current outlook is cautious.

Ricky Mulvey: While I appreciate your concerns, consider this: Tesla reports one accident per 7 million miles driven using their autopilot; the national average is under 1 million. Isn’t that a strong indicator of safety in their system?

Dave Hatter: It’s true that they process vast amounts of data for improved outcomes, but those systems still run on software capable of malfunctioning. Bugs and errors can lead to unexpected consequences. There’s a compelling article from The Atlantic titled “The Coming Software Apocalypse,” which highlights issues within our heavily software-dependent society. While I see Tesla as a front-runner in this field, other vehicles’ performances, like those of Waymo in San Francisco, have raised questions in my mind. These cars struggle in certain scenarios, indicating that there are significant hurdles yet to overcome.

Ricky Mulvey: It’s always interesting to engage in such conversations. Thank you for sharing your perspective, Dave. I believe discussions that challenge our perspectives are valuable.

Dave Hatter: Thanks for having me, Ricky. Always a pleasure to share insights. I look forward to observing how this technology develops.

As a final note, individuals featured on this program might have interests in the stocks they discuss. The Motley Fool may have official recommendations for or against specific stocks based solely on this content. Personal finance content follows The Motley Fool’s editorial standards and is not influenced by advertisers. I’m Ricky Mulvey, and we’ll be back with more insights tomorrow.

Disclaimer: The views here are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.