Black Friday Special

Summary

Bloomberg Intelligence Podcast – “Black Friday Special”

Release Date: November 28, 2025
Hosts: Scarlet Fu, Paul Sweeney, Vonnie Quinn
Notable Guests: Jeff Chang (Vest Financial), Julie Borenstein (Daydream), Andrea Varnado (Consumer/Retail Expert), Ryan Peterson (Flexport)

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Episode Overview

This Black Friday edition harnesses the deep expertise of Bloomberg Intelligence, analyzing 2025’s market performance, the ongoing AI revolution, shifts in retail and consumer habits, and the tangled realities of supply chains and tariffs. With solid market data and insider views from technology, fashion retail, and logistics leaders, the hosts and guests explore how AI is reshaping holiday shopping and investing, why selective consumer behavior is the new normal, and what’s really happening behind the scenes in global supply chains.

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Key Discussion Points & Insights

1. 2025 Market Performance & The AI Investment Boom

• Market Context:
  • S&P 500 is up 15% YTD; NASDAQ up 20%.
  • “Solid performance. I don’t care where you are, who you are.” — Paul Sweeney [02:03]
• AI as Driver & Source of Volatility:
  • Jeff Chang claims AI will “remain the biggest driver of growth, and the greatest source of volatility.” [02:22]
  • Sectors like data centers and cloud computing are seeing the most activity.
• AI Bubble or Structural Shift?
  • “This is not a bubble like crypto; it’s a generational, structural shift… AI will diffuse into Main Street, from logistics to enterprise software, healthcare, and defense.” — Jeff Chang [04:49]
  • Selectivity matters: core infrastructure plays (Nvidia, Microsoft, Alphabet) will likely see the most sustainable returns.
• Earnings vs. Investment:
  • While hundreds of billions are invested, realized earnings are lower now—mirroring “the fiber-optic/Internet story, where payoff came later.” [05:37]

Notable Quote

“History doesn’t repeat itself, but it does rhyme. What you’re seeing is a fiber-optic/Internet type situation. We’re fundamentally changing how we do business.”
— Jeff Chang [05:52]

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2. How to Invest in the Next AI Winners

• Is Nvidia Still the Play?
  • Nvidia retains dominance as “the bellwether of AI hardware,” but competition is intensifying (Google, Microsoft, custom chips). [03:10]
• Private Markets May Hold the Next Facebook or Netflix:
  • “The real Facebooks and Netflixes of the AI revolution are probably still in startup mode; your next wave of winners is actually in venture and early-stage private markets.” — Jeff Chang [08:20]
• Public investors need to temper expectations for moonshot returns from small-cap public plays.

Notable Quote

“The Facebooks in AI of tomorrow are going to be in venture—early-stage or mid-stage startups really able to innovate, move fast, and break things.”
— Jeff Chang [08:20]

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3. AI Reshaping Holiday Shopping

• AI-Powered Personal Shopping Agents:
  • Julie Borenstein (Daydream) describes a future where, “the goal is to be a personal stylist in your pocket… you describe what you’re looking for in any way you want, and AI helps you find it.” [12:43]
• Customer Behavior:
  • Harris Poll: 42% of holiday shoppers now use AI tools for shopping [13:11]
  • Gen Z adoption is especially high with image-based search and instant product matching. [15:00]
• Prompting is Key:
  • “The truth is that consumers are just learning how to prompt.” — Julie Borenstein [14:27]
  • Creativity in prompts (“I want a revenge dress in the Saltburn”) leads to diverse, personalized results.
• Privacy Concerns:
  • The system only processes images/screenshots when the user initiates a search. [15:54]
• Monetization:
  • Daydream emphasizes unbiased matching (“not whoever pays most appears first”) unlike some ad-driven models. [16:54]
• AI Shopping Competition:
  • OpenAI and Amazon are rolling out shopping bots, but Borenstein argues Daydream’s fashion focus offers a more nuanced experience. [17:29]
• Trends in Consumer Spending:
  • “Bigger than last year, but probably not by a huge amount.” [18:10]
  • Cyber Week deals spark ‘save now, buy later’ consumer strategies.
• Fundraising Environment:
  • “It’s a very AI-focused fundraising environment—if you’re not doing something with AI, it has to be unique.” [18:58]
  • Investors believe AI will shape the future; you need an authentic AI advantage or a strong “moat.” [19:40]

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4. State of the Consumer (Retail Expert Analysis)

• Consumer Sentiment:
  • “Retailers are actually quite optimistic… but consumers are absorbing the ripple effects of shutdowns, a cold housing market, and layoffs.” — Andrea Varnado [21:41]
  • Spending continues, but more selectively.
• Spending Reallocation:
  • Consumers seek “intelligent value”: utility, longevity, function.
  • Shoppers consolidate purchases with fewer retailers; loyalty programs and stress-reducing products/services gain traction. [22:31]
• Inventory/Supply Chain:
  • Robust shelf availability due to companies pulling inventory forward in anticipation of tariffs. [23:44]
• Inflation’s Effect:
  • “A toy that was $20 before the pandemic is now $40…” Inflation is pervasive, impacting commodities, groceries, and toys. [24:40]
  • Result: more trade-downs, shift to generics, exploration of cheaper alternatives.
• Promotional Strategies:
  • Selective sitewide deals are rare; “you will get deals, but they will be very selective.” [25:27]
  • Bundling and higher ticket values are key, as “share of wallet, not just traffic, is the real battle.” [27:31]
• Trendy Categories:
  • Fragrances, functional tech, and luxury items—chosen for longevity, personal value, and, occasionally, resale potential. [26:39]

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5. Supply Chain and Tariffs — The Global Logistics Landscape

• Ongoing Uncertainty:
  • “People are getting used to operating in a lot of uncertainty… brands are figuring out how to be agile.” — Ryan Peterson [32:05]
  • Big SCOTUS tariff refund case looms. 37% of duties passed to consumers; 9% to suppliers; rest absorbed by companies. [32:05]
• Tariff Impact:
  • Companies must decide: pass the costs along or eat them. Those who can pass costs tend to be stronger businesses. [33:13]
• Canal Disruptions:
  • Suez Canal: “Container volumes still down 75% since Houthis attacked” [34:11]
  • Panama Canal: Widening project led to more frequent water shortages; solution likely requires multi-billion-dollar investment. [35:02]
• Inventory Strategies:
  • Retailers are “front-loading” inventories due to tariff uncertainties. High odds of stockouts on hits and leftover surpluses. Expect more deals in Q1 2026. [36:03]
• Shipping & M&A:
  • Industry consolidation continues; fewer major ocean carriers remain, but forced M&A is less likely now due to stronger balance sheets. [37:35]
• Railroad Mergers:
  • Interest in “transcontinental railroads,” but concentration raises oligopoly/monopoly concerns. [38:42]
• Shipping Cost Impacts:
  • Cargo/container pricing steady across product types, but tariffs and category-specific rules introduce major variability. [39:57]

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Notable Quotes & Memorable Moments

AI Investing:

“Selectivity matters where you’re actually going to be in AI… The Facebooks in AI of tomorrow are going to be in venture—early-stage or mid-stage startups.”
— Jeff Chang (Vest Financial) [08:20]

Retail Innovation:

“The goal is to be a personal stylist in your pocket… you have the ability instantly to pull up results closest to that product.”
— Julie Borenstein (Daydream) [12:43, 15:00]

Consumer Sentiment:

“The customer isn’t stepping back, they’re really reprioritizing and doing a purposeful reallocation.”
— Andrea Varnado (Retail Expert) [22:31]

Supply Chain Reality:

“We’re not back to normalcy. Suez volumes are still down 75%. You have to be very agile in this environment.”
— Ryan Peterson (Flexport) [34:11]

Fundraising and AI:

“It is a very AI-focused fundraising environment… if you’re not doing something with AI, it needs to be a very unique proposition.”
— Julie Borenstein (Daydream) [18:58]

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Timestamps for Key Segments

• Markets & AI Investing:
  02:01–09:25 — Jeff Chang interview (Vest Financial)

• Holiday Shopping Innovations & AI in Retail:
  12:27–20:52 — Julie Borenstein interview (Daydream)

• Consumer Spending Trends:
  21:19–28:37 — Andrea Varnado interview (Consumer/Retail Expert)

• Supply Chain, Tariffs & Global Logistics:
  31:27–40:34 — Ryan Peterson interview (Flexport)

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Episode Takeaways

• AI is both a driver and a source of volatility for markets and retail alike; true structural change is underway, not just a speculative bubble.
• Retailers embrace AI to personalize shopping, but prompt learning and privacy are evolving challenges.
• Consumers remain willing to spend in 2025, but they do so more selectively, searching for value, bundled offers, and loyalty-driven purchases, shaped by years of inflation and economic crosscurrents.
• Ongoing tariff and supply chain disruptions amplify the need for inventory and pricing agility, with global events far from “normal.”
• Across investing and entrepreneurship, an authentic AI story is required to access capital in today’s marketplace.

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For listeners seeking actionable insights:
This episode delivers a comprehensive snapshot of how technology, consumer psychology, and geopolitics are redefining Black Friday, investing, and retail in 2025.

Transcript

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[Paul Sweeney (Bloomberg Host)]

YouTube on this Friday after Thanksgiving, Jeff Chang joins us. He's a president of Vest Financial. You know, it's great, Jeff, to have you here. I'm looking at the S&P 500 year to date up 15%. I've got the NASDAQ up 20%. Boy, that is solid performance. I don't care where you are, who you are. What do you do for 2026, do you.

[Jeff Chang (President of Vest Financial)]

Think? Yeah, great to be here. You know, I still think the biggest driver of growth is going to be AI. It's also what's interesting enough is also going to be the greatest source of volatility. I mean, you can even see today with the CME and data centers, like this is really going to be what's going to be driving the market overall into the next year. I think also, you know, on a larger basis, you're kind of weighing between kind of the macro factors, cooling, inflation, but also, you know, earnings catching up to valuations. What we've seen today, you know, with multiples being on the higher end of the.

[Vonnie Quinn (Bloomberg Host)]

Spectrum. Yeah. So this trade, I mean, it's definitely changing. There's rotation involved. Right. I mean, do you still stick with the Nvidia's or do you start looking at some of the other companies like the Alphabets now that are very involved with our.

[Jeff Chang (President of Vest Financial)]

TPUs? Yeah, I think there's definitely growing competition, but I think when you look at Nvidia, it's still the bellwether for AI hardware, you know, from there, because when you look at AI, the foundational parts of it, you're looking at, you know, compute data centers, networking and cloud and cooling is in that as well. And but I think when you look at Nvidia, it sits very kind of right in the center as far as fast foundational parts of AI. Given that, you know, one thing is, is that they've also, if you look at the numbers and forward guidance, has been pretty strong. I do think where you start to see a little bit of volatility is the idea that competition is coming in. And so if you start to look at, you know, the likes of Microsoft really planting the flag and cloud and then like you said, Google and Alphabet coming in into the chip space as well. So we can see some volatility there. But mostly the dominance of Nvidia we'll see is going to be pretty strong in.

[Paul Sweeney (Bloomberg Host)]

2026. Vonnie. I think I'm over a lifetime trying to call the top of a bubble. You know, I just never possibly.

[Vonnie Quinn (Bloomberg Host)]

Want to even try doing.

[Paul Sweeney (Bloomberg Host)]

That. I was selling stock boy cranking out IPOs March of 2000 with a vengeance and no idea, like five minutes later it was over. So how do you, and how do investors in general, Jeff, do you think, how do you think about a bubble? And are we in a bubble? Are we at the top of the bubble? How do you think about.

[Jeff Chang (President of Vest Financial)]

That? I don't think as far as like you've probably seen recently the news of Softbank and the likes of Peter Thiel selling their positions in Nvidia. I actually don't think that's an indication of people getting out due to a bubble. I.

[Ryan Peterson (Founder and CEO of Flexport)]

Think.

[Jeff Chang (President of Vest Financial)]

Sure. Are the, Are the stocks in hyperscalers expensive? Yeah, you can make an argument for that. But when you're thinking about AI and the idea that it Might be a bubble. This is very different than something like, you know, if you were to look at crypto, I would say that this is a structural shift. Now selectivity matters where you're actually going to be in AI. But I think what we're seeing is a generational shift as far as, you know, because it's going to diffuse into Main street as far as anywhere from logistics to enterprise software. You know, health care, defense is going to go everywhere there. I think where you're seeing a lot of people misunderstanding is, and we've seen this story play out before is the idea that, okay, we've seen a huge amount of investment into AI, you know, hundreds of billions of dollars. Whereas in the actual earnings you're talking to 20, you know, 25, 30 billion in actual earnings. But this is where you start to, if you pull back the curtain a little bit, keep in mind earnings is based off of accounting depreciation which tends to front load your expenses and it doesn't account for the earnings potential over the long term. We've seen this play out before. If you look at going back like fiber optics, there are billions of dollars on front end investment but we hadn't seen the trillions of dollars of earnings potential that came out in many years afterwards. So you know, like they always say, you know, history doesn't repeat itself but it does rhyme. I think what you're seeing here is kind of a fiber optic Internet type situation. We're really fundamentally changing, you know, how we do business going.

[Vonnie Quinn (Bloomberg Host)]

Forward. So you say the foundation of long term AI is sound but where do the revenues come from and what are you projecting out in terms of revenue for these companies that are spending a fortune on.

[Jeff Chang (President of Vest Financial)]

AI? Yeah, so it, like I said, like selectivity matters. So if you're talking about, you know, the Microsoft Metals matters, the Googles and videos, the world, those, they are going to touch every part of AI. Whether or not, whether or not the earnings are going to be generated from industrials, whether, you know, industrial automation, whether it's going to be generated from health care, they're going to be at the center. Given that the core foundation being cloud compute data centers and networking. So that's really where, if you're looking as a long term investor who, where the earnings are more sustainably and more higher probability of actually realization is being at kind of that center. I think where you start to get a little bit dicey is, is you know, trading on the hike, going for these types of moonshot type trades where you're looking at small cap Stocks and maybe in small robotics or so on and so forth. That's where you start to get a little bit of dicey as far will we see that earnings realization to justify the.

[Paul Sweeney (Bloomberg Host)]

Valuations. You know, Vonnie, I remember the beginning of this whole AI discussion maybe three years ago. Gene Munster from Deepwater Asset Management to me is one of the best technology analysts on Wall Street. He said, hey, think about a continuum of what's important. Let's put electricity like from 0 to 100 electricity he puts at 95. The Internet he puts at 70. I, he put it like 90 right there. I mean that. So every time I think about, geez, maybe we're kind of in a.

[Vonnie Quinn (Bloomberg Host)]

Ball. Listen to him.

[Paul Sweeney (Bloomberg Host)]

Paul. I know he, he was so right. So Jeff, where do we go from here? What's the next way to play it? If I've played out my Nvidia trade, maybe I've played out my Microsoft, Microsoft trade on AI. What's the next leg do you think for this whole investment.

[Jeff Chang (President of Vest Financial)]

Thesis? Yeah, so this is very similar to let's say in 1999 and 2000 and the tech boom, that a lot of these publicly traded companies, people were kind of bets here and there. I actually believe if you then really kind of fast forward the tape, you'll notice that the real winners, the companies that really wanted kind of the Internet boom, the Facebooks of the world, the Netflix is of the world, the Airbnb of the world, they weren't around, they were in startup mode. So I think a lot of folks that are trying to play the trade, a lot of the Facebook's in AI of tomorrow are going to be in venture. They're going to be an early stage or middle stage startups that are really being able to innovate, move fast, kind of break things, kind of mentality. I think like, like I said, the next wave, it's not publicly traded, especially in the AI space. I think like I said, the foundational parts like you know, the hyperscalers and the Nvidia's of the world are publicly traded. But I think a lot of the, the next wave of software and usage cases across all industries are actually in private markets right.

[Vonnie Quinn (Bloomberg Host)]

Now. All right, well Jeff, we have to leave it there, but thank you so much for joining us today and I know you're in Las Vegas, so if you're putting, put it on black today. That is Best Financial president and co founder Jeff.

[Paul Sweeney (Bloomberg Host)]

Chang. Stay with us. More from Bloomberg Intelligence coming up after.

[Baillie Gifford Representative]

This. What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Baillie Gifford Actual Investors Find out.

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[Vonnie Quinn (Bloomberg Host)]

On YouTube. So let's bring in our next guest to talk a little shopping. We have Julie Borenstein. She is the CEO of Daydream, which is an agent for fashion retail in particular. Julie, thank you so much for joining. First, just explain a little bit what a fashion agent for retail can do for me when I.

[Julie Borenstein (CEO of Daydream)]

Go online. Yes. Well, ultimately, the goal is to be a personal stylist in your pocket. Today, what we do is we allow you to let us know what you're looking for using whatever you want to say. You have a Christmas party with your office in a bar in New York City, and we can help you find what you're looking for. We make it easier to shop, and we also allow you to post a picture, and then we can help you find something that looks.

[Paul Sweeney (Bloomberg Host)]

Like that. So I don't know where to go here, Julie, but 42% of shoppers say they're using AI tools for holiday shopping. That's according to a Harris Poll for MasterCard. Are retailers, are they ready.

[Andrea Varnado (Consumer Brands and Retail Expert)]

For that?

[Paul Sweeney (Bloomberg Host)]

Do they. Are they trying to take advantage of that? How are they.

[Julie Borenstein (CEO of Daydream)]

Performing here? It's early days for the retailers, but they are starting to learn how to both appear through some of these, you know, different chat surfaces. And they are also trying to figure out how to use AI to make the customer experience better on their sites. Some of them are doing interesting things. Gap, H and M. They're also participating with us, Daydream. So because we're sort of the first AI shopping platform, they can partner with us. And their show up as customers are explaining what it is that they're looking for in a whole.

[Vonnie Quinn (Bloomberg Host)]

New way. Julie, we always hear when it comes to AI that it's all about the prompt, Right? So what are customers doing and how should we.

[Julie Borenstein (CEO of Daydream)]

Prompt better? It's a great question. I mean, we see prompts that are everything from I'm going to a wedding and I want to wear a pink dress but not look like a cupcake, to I'm going to a wedding and I want to wear a revenge dress in the Saltburn. So we have lots of.

[Vonnie Quinn (Bloomberg Host)]

Different kinds. I want to see what the hallucinations are for.

[Julie Borenstein (CEO of Daydream)]

Those answers. Yeah, exactly what the cupcake dress looks like. People are very creative. And the truth is that every, you know, consumers are just learning how to prompt. And so part of what we do is also give them ideas so that if they're starting to look and then once they get used to it, people will write very long things with Very descriptive details of what they're.

[Paul Sweeney (Bloomberg Host)]

Looking for. I've seen some technology use some apps on the iPhone, take a screenshot of something and then it brings you right into a shopping environment. Talk to us about where that is right now, where.

[Julie Borenstein (CEO of Daydream)]

That'S going. Yeah, that's going to just get better and better. I think the idea of being able to screenshot something on the new iOS allows you to instantly. You don't even have to open an app, bring up results from any of the apps that you have already downloaded. So if you have Daydream downloaded on your phone and you screenshot anything from Instagram or as you're walking around and you see someone wearing something you like, you have the ability instantly to pull up the results that are closest to that product. And if that product still exists, you can get that exact product. So it's pretty cool and it's a pretty quick way. And what we're seeing is younger generation Gen Z is very higher use case for that. They're just used to being able to snap anything and then be able to find what they're.

[Vonnie Quinn (Bloomberg Host)]

Looking for. So if I screenshot something, it sends a whole load of information into the background of my phone, is that right? That sounds a little dangerous to me. It means I should probably stop.

[Julie Borenstein (CEO of Daydream)]

Screenshotting things. No, it's, it's really if you choose to then use the search mechanism for it. So in general, screenshots are not, you know, you're not, nothing's happening with them until you decide to do something with that screenshot. So, you know, if you're looking for a product, it's.

[Paul Sweeney (Bloomberg Host)]

Pretty safe. So. All right, how about this warm but not bulky coat under $300. Where is the AI thingamajig going to.

[Julie Borenstein (CEO of Daydream)]

Take me? Well, on Daydream, it's going to take you to a set of results that match that kind of query and then you'll see lots of results from around the web and we will. Once you find what you're looking for, you link out to the brand or the retailer that sells that product. So similar to the way Google works, we're basically sort of a search and discovery platform that then helps you find the retailer to.

[Paul Sweeney (Bloomberg Host)]

Buy from. All right, well, in the world of search, it's search optimization type thing is that, is there a similar type of thing here in the world.

[Julie Borenstein (CEO of Daydream)]

Of AI? So it can depend on what the business model is. In our case, we are totally focused on finding you the best product product for you that matches both the query and your personal preferences. As we learn about you. And so it's not an issue of whatever, you know, whoever pays the most gets the way to show you what their product is. But in some cases, you know, there's an ad based model. Ours.

[Vonnie Quinn (Bloomberg Host)]

Is not. Julie OpenAI and Amazon both made headlines this week with shopping launches. How are their products different to yours? Are they compatible to use together or how are you dealing with.

[Julie Borenstein (CEO of Daydream)]

That competition? We're really excited about it. I think in general shopping, you know, this is the first season where AI is really going to improve the shopping experience and it's only going to get better. I think the fact that they're both doing this is very validating to us. They're separate, but ours is totally focused on fashion. And so if you go to either of those platforms, you'll find that they were kind of generally across all categories, but a little bit less focused on a single category. And so shopping and fashion is so nuanced that, you know, daydream is better.

[Paul Sweeney (Bloomberg Host)]

For that. So, Julie, what are your clients telling you here about this holiday shopping season? What's the level of optimism? Because there are a lot of economic crosscurrents.

[Julie Borenstein (CEO of Daydream)]

Out there. Yeah, that really are. I think that this year is going to be bigger than last year, but probably not by a huge amount. What we're seeing is that a lot of. There's a lot of excitement for all of the sales that are going on this week for Cyber Week. And so what we have is a daydream broadcast on. It's a broadcast channel on Instagram where you can actually see all the brands and all of the offers that they're giving you. What we know is that a lot of people are saving the things that they want to buy and coming back today to go see if they're.

[Vonnie Quinn (Bloomberg Host)]

On sale. You have a lot of experience raising money and bringing companies to market and so on. You sold your previous company to Pinterest, actually, and you've been on the boards of, you know, sweetgreen, Redfin, Weight Watchers. So much experience. What is the environment like now for consumer companies and.

[Julie Borenstein (CEO of Daydream)]

Raising money? It's interesting. It's a very strange environment because the role of AI has kind of thrown everything off. And so I think everybody who has an interesting angle with AI is definitely able to get conversations going. I think that if you're not doing something with AI right now, it needs to be a very unique proposition. It is a very AI focused fundraising environment. Doesn't mean that there aren't other ideas that are great and out there. But certainly the fact is that I can help pretty much every aspect of building a business right now. And so you want to be able to show how you have an advantage leveraging AI that other people don't have. So you have to figure out what your.

[Vonnie Quinn (Bloomberg Host)]

Moat is. Julie is partially the reason it's such an AI type of fundraising environment. Because all these, you know, dollar donors are invested in.

[Julie Borenstein (CEO of Daydream)]

AI themselves. No, I think it's more because everyone believes it's going to shape the future. And it's still early, so it's hard to know exactly how. But if you're not actually taking advantage of it, it seems like a really missed opportunity because it will change the way everyone does work from the way employees want work to the way products are made to the way supply chains run to the way consumers.

[Paul Sweeney (Bloomberg Host)]

Experience AI. So what's the next step here for AI, do you think, Julie? Is there another.

[Julie Borenstein (CEO of Daydream)]

Natural progression? I think that there will be a lot of evolutions in the models. I also think we'll see start to see over the next year or two a lot more consumer experiences changing. So we haven't seen a lot of that yet other than going directly to some of these new chat bots. But if you think about all the things you do in your day to day life, things will get a little bit smoother and smarter as a result of AI. And there will be new businesses that come along like Daydream that just make shopping, for example, easier, smoother and.

[Paul Sweeney (Bloomberg Host)]

More personal. All right, great stuff. Thank you so much. We really appreciate it, Julie. Julie Borenstein, she's the founder and CEO at Daydream. And stay with us. More from Bloomberg Intelligence coming up.

[Bloomberg Intelligence Podcast Announcer]

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[Paul Sweeney (Bloomberg Host)]

On YouTube. Now for more on the state of the consumer on this Black Friday is Andrea Varnado, a seasoned business leader and board director in consumer brands and and retail. Andrea, thanks so much for joining us here. What's the mood of of retailers here going into this holiday shopping season? There certainly are a lot of economic crosswinds.

[Andrea Varnado (Consumer Brands and Retail Expert)]

Out there. The retailer is actually quite optimistic, especially compared to where they were last year. At the beginning of this year, we thought tariffs and tax cuts would drive consumer behavior. And while tariffs still remain a big concern, consumers are also absorbing something much more subtle, the ripple effects of a shutdown, fewer government services, a cold housing market and large company layoffs. So frankly, the the economy feels contradictory, but spending is holding. As we've just seen In Q the Q3 earnings reports, they are holding. Households are more cautious, but customers are still spending in a really.

[Vonnie Quinn (Bloomberg Host)]

Selective way. What are they buying? Andrea Deloitte is seeing a lower average spend for the Black Friday Cyber Monday. But you know, these statistics sometimes can be misleading in the sense that people will continue to spe or they've already.

[Andrea Varnado (Consumer Brands and Retail Expert)]

Started spending. That's such a great question because when we talk about the contradiction of seeing spending, the customers being more selective, I like to define it as the customer isn't stepping back, they're really reprioritizing and they're doing a purposeful reallocation. So when you think about what they're spending on, there are kind of three big shifts that are happening. One, customers are moving towards intelligent value. They're looking for things that have function, meaning utility, longevity. So they can feel like they're really getting a return on their investment to their consolidating purchases. And so one of the interesting things we've seen is some in some of these cubic earnings reports is where some of the values are going down. We are seeing higher ticket prices and higher order values on top of lower order numbers. And so this means customers are consolidating purchases. They're sticking with fewer retailers. They're leaning heavily into loyalty programs and also convenience. And then finally, customers are shopping to reduce stress. They're choosing products and services that save time, that simplify life and.

[Paul Sweeney (Bloomberg Host)]

Add comfort. How about availability, inventory? If I'm going to go out and get my kid the GI Joe with the kung fu grip, is it going to be in.

[Andrea Varnado (Consumer Brands and Retail Expert)]

The stores? It will be. That's one of the really interesting things that happened this year with tariffs. A lot of companies pulled their inventory forward. So where they were planning on a shorter cycle, as usual, they actually said let's pull inventory for the next year so we can get goods into stores and online. So yes, hopefully your kids toy will be there in store. And if not, I can tell you, with the improvement in AI and technology, they are surely going to offer you something that they think is just.

[Vonnie Quinn (Bloomberg Host)]

As compatible. I was speaking to the CEO of a toy company just on Wednesday, I guess, and he was saying that a toy that was maybe $20 before the pandemic is now $40 for various reasons. So there was a pandemic, right? The supply chain snafus and then inflation thanks to that, and then inflation from, you know, fiscal spending and so on. And now we're right up to almost double what it was before. Are we seeing that? Are we seeing that kind of inflation across.

[Andrea Varnado (Consumer Brands and Retail Expert)]

The board? Yes, we are. And it's happening in more categories than others. So you're mentioning toys, disposables, groceries. We are seeing that inflation across. And to your point, it has to do with general inflation. It has to do with tariffs because while companies have absorbed some of the tariff costs, many of them have actually passed it right on to consumers. And so this is why consumers are being much more selective about where they purchase. And related to that, they're starting to trade down or explore alternative options. If it's a commodity item, they might actually say, let me go explore this other brand that might be a little bit cheaper or buy the generic version of that to help capture some of that.

[Paul Sweeney (Bloomberg Host)]

Value back. What's the promotional environment out there these days, Andrea? Am I going to get deals when I go to the store, assuming I actually do.

[Andrea Varnado (Consumer Brands and Retail Expert)]

Go shopping? You will get deals. They will be very selective deals. So as retailers and businesses are looking at their inventory, they want to be much more precise about what they're promoting. So they're going to be focused on where do they have a lot of inventory, what can they replace fast or what's going discontinued, where are you going to get that value? And even in some areas, they are going to price promote on items where they know you will add on. So you won't find full deals across the board. You won't see 50% off site wide as much as you used to. But what you will see is on specific categories they are certainly discounting, but at the same time they will be promoting those discounts because they know this is the holiday season, they know customers are focused on value, so they're still going to put those select deals right in front of you. So it feels like the same velocity as it did in.

[Vonnie Quinn (Bloomberg Host)]

Previous years. What's popular when it comes to fashion and retail and department store retail in that sense? Kohl's, for example, reporting the other day. And their strategy under the previous CEO who was ousted was to focus on fragrances and petites. And that strategy seems to be working even for the incoming CEO who's now been made permanent. But it struck me as odd that suddenly fragrances are.

[Andrea Varnado (Consumer Brands and Retail Expert)]

Very popular. They are. And fragrances have to do with that longevity and value. Customers want something that they know they can use over time. And so what you'll see is right now you'll see purchases in what I call functional tech. So if you need a new laptop, if you need a tv, things that you need that that will have a long term value to you. Also fragrances and wellness, something where you feel like you'll get your return, it will last over a period of time as well as you will feel good about yourself. And then finally there are other areas in beauty and in luxury in of these retailers, especially those that have multibrand portfolios, we have seen their luxury brands, whether it's home furnishings or apparel, actually outperform. And that still goes to the value which you don't often see value in luxury. But what happens is customers think, okay, at least if nothing else, I have longevity and I have.

[Paul Sweeney (Bloomberg Host)]

Resale value. Hey Andrew, you say that share of wallet is the real battle this season, not just traffic. What do you mean.

[Andrea Varnado (Consumer Brands and Retail Expert)]

By that? Well, what we're seeing is that with these average order values going up, what customers want is they want to go to a one stop shop. And so where retailers are competing is they're adding services, they're adding shipping, they're making sure their inventory and logistics are there so that you can add more to your purchase in one stop. One of the big opportunities that I'm seeing is bundling. We've often heard about bundling when it comes to travel and dining. But when it comes to bundling, if you were able to talk about a gift set or add the pants with the shirt or combine a whole set of items, customers always see that as an opportunity. And so you see that retailers are using that to increase their ticket values.

[Vonnie Quinn (Bloomberg Host)]

Right now. Yeah, I love all the words associated with the bundling. And a haul. Yeah, I'm going to unbox my haul today. I love getting hauls but I never, I never seem to be able to afford them. Andrea, thank you so much for joining us today. A fun conversation there and a serious conversation too with Andrea Vornado. Much appreciated consumer brands and.

[Paul Sweeney (Bloomberg Host)]

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[Vonnie Quinn (Bloomberg Host)]

On on YouTube. Let's talk something that maybe isn't going to be so calm though in the coming weeks. Tariffs taking their toll on consumers and companies alike. Our next guest says tariffs are now one of the biggest variables in retail margins. Joining us to discuss is Ryan Peterson, founder and CEO of Flex Sport, a leader in global supply chain technology. Ryan, thank you so much for joining. I would have thought that things would have calmed down a little bit. We have at least some Kind of certainty, albeit we're waiting for a SCOTUS decision, but we have some kind of certainty over tariffs at the moment. What are supply chains like? Is there still chaos out there or are we getting to some kind of ability to.

[Ryan Peterson (Founder and CEO of Flexport)]

See the future? Somewhere in between, I think. I think people are getting more used to the fact that you have to operate in a lot of uncertainty and brands are figuring out how to be agile about it and a lot of different strategies where they can do that. But there's still a lot of. You mentioned SCOTUS that that big core case is coming. People are hoping and praying for a refund. And it's actually, there's a lot of variables here. You have to figure out how much of the duties, how much of the tariffs do you want to pass through to your customer? Goldman Sachs reporting about 37% of the duties are getting passed through with 9% getting forced on the supplier and the balance is just hitting earnings for these companies. So there's that. And then even just calculating the duties is harder than ever before. The nature of the stacking tariffs, where there's all these different tariffs, they just keep getting layered on each other. We've seen more traffic to our tariff simulator on our website than to.

[Paul Sweeney (Bloomberg Host)]

The overall website. So it's interesting, Ryan, do we think that companies are going to try to push more of those costs through going forward as opposed to absorbing them into their P.

[Ryan Peterson (Founder and CEO of Flexport)]

And L statement? You only have two choices kind of. I mean, you can renegotiate things with your factory. That's not something you're going to always try to do. And then you have two choices. It's do you pass it through and. Or do you eat the costs and the good businesses will pass it through? I think that's one of the hallmarks of a good business, is your ability to pass through price increases. But a lot of companies can't. So it may not even be a choice as much as you'd like to. The moment you raise your prices, you start to lose demand. So, so longer term, you have some more options around moving supply chains. But it's become so difficult because you know, it's not just, hey, exit China, move your factory somewhere else. Tariffs on India are just about the same as China and they might pop up anywhere in the world with the way things.

[Vonnie Quinn (Bloomberg Host)]

Have been going. Ryan, are we done with all the avoiding certain areas? Because, you know, there's drought in one canal and there's war and potentially in another canal and there's, you know, terrorism in another part of the, the globe or you know, are we back to everyone.

[Ryan Peterson (Founder and CEO of Flexport)]

Can ship everywhere? No, we're definitely not back to normalcy there. And the suit, the container volumes going through the Suez Canal are still down about 75% since the Houthi started to cut that channel off at the end of a couple of years ago. And I actually just last week created a poly market on this. Now you can bet on anything. You can now bet on whether when traffic will return to normal through the Suez Canal. It's not very, it's pretty thinly traded right now. We'll see if we get some more signal out of that. But there are some rumors that will start to come back to life next year and ships will return, but for now they're going all the way around Africa and polymarket has me at 37% to return in Q1. I think that's free money. I'm taking that won't happen.

[Vonnie Quinn (Bloomberg Host)]

Side of that. We're ignoring that part of the conversation. What about.

[Ryan Peterson (Founder and CEO of Flexport)]

The Panama Canal? Well, Panama has been this ongoing thing ever since they re engineered it. So they widened the Canal back in 2015. And you know the Panama Canal runs on fresh water. So if you widen the canal, more fresh water flows out of the canal into the ocean than when it was narrower. And so ever since they've done that with the same amount of rain, you've now had these periodic moments where there's just not enough water to operate the canal. Canal we're currently in a normal period, but couple two years ago it was really bad. They could only operate about two thirds capacity on that. That's going to keep coming back unless they spend tens of billions of dollars re engineering the water flows in the canal, which I don't, I don't think they're going to be.

[Paul Sweeney (Bloomberg Host)]

Able to do. That's on my bucket list to go through the Panama Canal.

[Vonnie Quinn (Bloomberg Host)]

It really is. It's your containership. Wisely then, Paul, because you're not getting on.

[Paul Sweeney (Bloomberg Host)]

All of them. I know, exactly. But I'm ready to do that. Talk to us about inventory levels, Ryan. I mean are retailers, are they stocking their usual amount of retail inventory or are they going a little bit light or what.

[Ryan Peterson (Founder and CEO of Flexport)]

Are they doing? No, in fact, you could argue they're going the opposite. They're going heavy on this year because, because not so much because of the uncertainty of demand, although that always exists, but because of the tariffs. So everybody front loaded. You know, these reciprocal tariffs on rest of world ended August 29th. And you had a, a while a couple of months to know that that was coming. And so everybody brought all their inventory in early. And what it's going to look like is you can never really predict what's going to be a hit product and what's not. And so you're going to have, you're going to have stock outs on certain hit products because it's now much harder to replenish. You're paying higher duties. And so you're going to have stock outs on some of the hit products. And then I suspect you're going to have quite a bit of overhead of products that didn't move. And you'll probably see some good deals coming in the beginning of next year. I mean, we may see some right now with Black Friday, but usually these things play out into the Q1 period once the.

[Paul Sweeney (Bloomberg Host)]

Holidays are over. All right, Vonnie, here's the book recommendation of the day for you about the Panama Canal, the Path between the seas. David McCullough, phenomenal book.

[Vonnie Quinn (Bloomberg Host)]

About the history of the Panama and a great writer. I will definitely read that. I'm on my 22nd book of the year, which I guess is good, but could be better. So, Ryan, you know, in terms of shipping companies and M and A, there was plenty of speculation that Zim, for example, was going to get bought out or whatever. That happened a couple of times this year. And some of these shipping companies have been really having a hard time of it, trying to deal with all of this uncertainty. Do you have any forecast for us and what we might see maybe next year in terms of M and.

[Ryan Peterson (Founder and CEO of Flexport)]

A and consolidation? No, I don't really know. We'll see. And, you know, we see a few of the big companies executing that strategy. DSV is the biggest freight forwarder in the world. They've been the most acquisitive. But they just bought DB Schenker and that deal is closed. And that is a lot to digest. They're going to be, you know, basically doubles their number of offices around the world, almost doubles their volumes. So the main acquirer is probably off the table for the next couple of years as they chew on that one. And we'll see. There's, you know, there's been a lot of consolidation. When I started flexport, there were 23 ocean carriers. Major ones were down to 11. And I don't know, there may be some mergers, but they've all, in the past that was done out of financial weakness where they were all kind of struggling. Well, they've all put a lot of money on their balance sheet over the last few years. When the rates were going crazy. So there's not going to be a lot of the forced M and A that we saw that drove that consolidation. We'll see that maybe there's some interesting.

[Paul Sweeney (Bloomberg Host)]

Strategic opportunities industries. Well we do have a little console or pending consolidation in the railroad industry. Norfolk Southern and Union Pacific. Do you think shippers want a.

[Ryan Peterson (Founder and CEO of Flexport)]

Transcontinental railroad? Ryan? Probably, but I don't think they just want one. You get monopoly power. So they like to see more than one. And that's the challenge. We've only got four railroads in the U.S. and if you merge the two and you got two on the west and two on the east, so you could end up in a position where you've got two end to end railroads crossing the country. I mean it makes a lot of sense. It's sort of silly to transfer to a different railroad just because you're crossing the country. But. But you will see probably who knows how it play out if the efficiencies are passed through to the to the brands, to the people that are shipping cargo or not. Or does it get absorbed in sort.

[Vonnie Quinn (Bloomberg Host)]

Of oligopoly pricing? Ryan when it comes to the different modes of transportation supports trains, you know, rail shipping and even at one point people were flying their cargoes right for a huge premier who are facing the highest premier. What or is it is it the same for everybody.

[Ryan Peterson (Founder and CEO of Flexport)]

Across the board? Not sure. I just said the.

[Vonnie Quinn (Bloomberg Host)]

Question in terms of what if you're booking travel for your inventory, it does it matter if you're a toy retailer or if you are, you know, a clothing retailer or if you ship furniture, is it the same price or does it depend on weight? And how does that all work? Do you bid on it? Is.

[Ryan Peterson (Founder and CEO of Flexport)]

It an auction? Your pricing will be about the same no matter what you're shipping these days. That's the beauty of the container. Nobody cares what's inside of it as long as it doesn't catch on fire or anything. But, but the tariffs will be quite different based on the different based on the value of the goods and what's being shipped. And so there you see big category shifts where certain products are just really hard hit and others are totally total damped. And the other factor here is if shipping prices go way up like a container of furniture only holds about 8 couches thing. So a high.

[Paul Sweeney (Bloomberg Host)]

Shipping price there. All right, hits the pretty hard roughly there. Ryan thanks so much for joining us. Ryan Peterson, founder and.

[Bloomberg Intelligence Podcast Announcer]

CEO of Flexport. This is the Bloomberg Intelligence podcast available on Apple, Spotify and anywhere else you get your podcasts listen live each weekday 10am to noon eastern on bloomberg.com the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on.

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