♪ caroline: from bloomberg world headquarters in new york, i'm caroline hyde, we are focused on retail, nike reporting revenue the missed estimates. we look at issues with the supply chain that also help companies are looking for new ways to reach customers. are we seeing more and more ai

to provide a unique shopping experience? romaine: nike tapped into this. it's latest earnings report is for the fiscal fourth-quarter, -- fiscal fourth-quarter, missing wall street estimates, earnings at one dollar 16 per share, but the forecast seems to be tied to the idea of what is going on with their supply chain . this isn't a demand story. people want to buy this, the question is can you get hit here and at a reasonable cost? taylor: the big drop in inventory is typically a good thing given big demand nike has come about replenishing that is not happening as quickly as once was. let's discuss this with bloomberg intelligence. give us your first take on what you make of these numbers? >> it is all about inventory. demand is clearly very high.

we saw the north america and india revenue missed and that is due to not having enough inventory, because demand here has been strong over the quarter, and all year really. we think the inventory that is in transit, that is the key question. how much inventory is in transit? and is it enough to meet demand? because we see supply chain hiccups whether through transportation or shutdowns in vietnam, where nike manufactures over 40% of goods. caroline: and has to ship them from there. and costs are rising. they didn't make an issue of labor shortages, for them it is print cost and how is it an ongoing concern even if they are able to manufacture in vietnam, getting it there and have -- getting inherent having a supplier.

>> container rates are at a record high, close to $8,000 per 40-foot container, the highest ever. freight costs are not coming down at least through the holidays, and they will pay the higher cost because they need to have inventory in stores. the question is, can they get containers to at the added inventory here in time? romaine: a lot of people are focused on short-term issues. later, we will focus on how these companies are finding new ways to sell to the consumer. nike has done a pretty good job with regards shifting more to the direct to consumer model or some sort of hybrid approach, the idea you don't need the middleman as much as they used too, is that model working? >> absolutely. nike said they want half of their sales at some point in time to be digital, which is

huge because nike has $40 billion in annual sales. we think nike is absolutely moving forward to capture that digital audience, direct consumer shifting. their stores will be more experiential, but they will play with the customer experience they have through the app etc. to get digital gains that they need. taylor: you are not seeing the really cool visuals that we have, wearing the nike shoes, the first human to break the two-hour marathon wearing the nike shoes. that is the visual for everyone who is watching. talk to us more about diversification of the supply chain as we talk about china and vietnam. where do you see the future of the company as you think about diversification?

>> diversification started happening a few years ago when nike and other brands were diversifying out of china. they branched out more into vietnam, bangladesh and indonesia. they have been doing this for quite some time. but vietnam is a hub for footwear and i don't see them being able to easily move manufacturing out of vietnam, because footwear making is a very skilled trade, unlike apparel, which can be more easily replicated outside. caroline: poonam goyal, always so quick off the mark when it comes to these earnings. thank you. we now want to look at the future of fashion and how you by your speakers thomas didier. thomas didierwe speak with -- we speak thomas didier with thomas didier -- we speak with thomas did next next

♪ caroline: we were talking about nike and how it is focused on digital. the future of retail has become more digital, and we are looking at one company bringing fashion and tack together, making it easier to visualize what something may look like on you without going to the store. romaine: ibio most everything online and this is a feature cropping up on a lot of websites per you can try on sunglasses, clothes, shoes, all without leaving your home. you get a relatively realistic idea of what it is going to look like on you, and it takes us work out of saying, should i buy this jacket or this paragraph is? taylor: the photos look really

cool and it takes out guesswork. romaine: one of the companies behind this is atomic digital design. thomas didier joins us. thomas, this is fantastic technology i am starting to see be adopted by a lot of retailers. the technology behind it, how is this possible, in laymen's terms? thomas: thanks for having me. it is pretty new. [indiscernible] it is a new experience, and they were looking for new ways to market their product or service. the technology behind it is like tiktok or a web platform and we use technology from 3d design

and technology pieces where you can bring all this together and create this reality where you can play with product, almost like if you were in a shopping mall. taylor: who is most likely to come to you to ask for this technology? the retailer with a brick and mortar store who needs this as an add-on? thomas: it depends. sometimes it comes from this platform i just mentioned. it could be direct from the brand, especially with the crazy year with the covid crisis. but most of the brands like clothes, they are looking for something magical to re-create the connection with the audience in the clients. and they came to us with this

idea of reestablishing the relationship and they are like that we want to create this experience in store, and it is the magic of reality. caroline: what is the point of you can visualize yourself in an outfit? i understand that would help in a purchasing decision as to whether would look good on me, but how about fit? how far can a igo? -- how far can ai go? thomas: with the body tracking, the technology to try on garments is not that good. it is getting better, but it is not that good. like makeup or shoes, it is really close to the real object

that you can wear in the store. i think in the future, especially with the body, tracking, it is getting crazy because it is really close to reality. we are almost there. romaine: how much faster does this get us to full adoption of e-commerce? when you look at e-commerce numbers for certain segments like clothing, the percentage of folks who do it is still relatively low. there is still a lot of fear among certain people. is this what gets us there or do we need to get somewhere else before we get fuller adoption? thomas: it is a matter of time. everything accelerates in a crisis, there was no other option. there is a way for a wider adoption, but the brands that are more innovative and always

on the edge show the other brands. the path. and we work -- show the other brands the path. and we work with a lot of brands. we saw the metrics from the web and social platform and the use is getting higher and higher every day. millions of people experience -- people experiment with ai and they can try on shoes and sunglasses and with the new technology, we saw a lot coming into the market, coming into mass production. taylor: on the output side, some of the leaders in the space,

snapchat, how are some of those companies helping to drive innovation, given snapchat was one of the leaders when you think about face. thomas: sculpturethomas: -- think about face sculpture. thomas: if you want to immerse yourself in the product, you need this technology to be high-quality. snap as one of the best technologies in the market at this point and the experiences that we create with them brands around the world, it is like the picture you showed for. it caroline: is getting really close to reality caroline: -- caroline: is this always going

to be gen z? at what point do we get our parents involved? thomas: gen z are an early adapter of the technology. if you talk about a number it is $140 billion of spending power. in years to come, gen z will be an amazing factor for this product online. and you mentioned carrots, -- parents, the web ai experience, on a social platform you can reach billions worldwide. taylor: cool stuff, thomas didier of atomic digital design,

we appreciate you coming on and joining us. stock x ceo scott cutler talks about direct to consumer, e-commerce and where we get the next cool sneakers. this is bloomberg. ♪

♪ romaine: we are having a great show focused on the future of retail and the resale market, it has skyrocketed. a lot of items dominating the market, especially sneakers. caroline: the secondary market and your favorite, justin

bieber's favorite. it is a 430%. this blows my mind. taylor: i have seen more of those around. i think they are making a comeback. caroline: old school reebok hightops. people are collecting. you talk about non-fungible tokens and people wanting to collect things and people are really seeing resale value in sneakers. romaine: the manufacturers are kind of fomenting this, they understand the nature of coming up with limited-edition releases and that creates a secondary market. or if you wanted, you have to pay up. . caroline: through the teeth. scott cutler is all about trading these kinds -- stockx is all about trading

these sneakers and has seen big gains in 2021. scott cutler joins us, what is it, one million lifetime sellers in the past year? scott: first of all, you talked about the shift happening among this generation of consumers, millennials, jenn z, driving a new asset classes things to collect or trade or consume. that is really driving interest in this category. we have seen a real surge among this type of consumer for these types of products. the brands themselves are creating interest, as you highlighted, creating interesting partnerships and collaborations with old styles and new styles and artist than celebrities, all designed to gain attention from this set of consumers. romaine: i'm concerned about the staying power of this. a lot of people had said this is

going to come to an end, years ago. they are still saying it. there is an ecosystem out there with regards to your platform and similar platforms. they seem to be sustainable because not only the business model may have staying power, but just the way we consume right now, it is so much different as a culture at least here in the united states, than what was 10 years ago. scott: the wave we consume in the platforms in which we consume these things are changing dramatically. one thing that speaks to the staying power of platforms like ours is, we aren't dependent on any one brand or style or trend. we should always reflect current style or culture. one thing we are never going to bet against is the fact that brands spend billions of dollars releasing great product, leveraging models with scarcity to drive attraction for that great product, so you have to be

short on the entire industry of consumers and brands to think that there is a loss of staying power. what is exciting in this space and the current culture is that wrens are essentially seeing the opportunity coming -- the brands are essentially seeing the opportunities coming, and where the opportunities are. you have to have a relationship with the consumer to attract that share of their wallet. taylor: i am going to be that person caroline lives, she has a count down clock on her desk, 93 days. unfortunately for supply chains, you need to start shopping for christmas yesterday. what are we buying? scott: this holiday season is going to be a record holiday season. on our cyber weakened last year, 10 million visitors came to our platform, shopping and lots of

different categories. we are known for our presence in sneakers, but for us, new items were in collectibles and electronics and gaming and trading cards. i think what you are going to see this year, certainly the continued impact of the pandemic, continued impact of supply chain disruption is going to mean that scarcity in excess is going to be at a premium. that positions us well to the record -- -- positions us well for a record-breaking holiday season. caroline: you have trading cards and all sorts of things levitating on rotating on the screen next to you, what you are going to find on stockx. our companies pushing back on this, the company's set up amid this and people spending hours in line to scoop up all of it to then be able to resell, do

companies ever find that frustrating? that you can't get it to people who want it at a moment that it goes to a secondary market where prices are jacked up, or do they not mind it? scott: the majority of transactions that happen on stockx are not on the shelf of any retailer. you get access to that long tail catalog, product that might have been released five or 10 years ago. when the consumer sees something they are inspired by, they might see the silhouette that was released last year and want access to it. but i think also, brands are leveraging scarcity to drive demand. and that might be into the brick and mortar store, it might be direct to the website, but they are leveraging these models to drive scarcity in brand. if you get one of these on the

drop, you feel really great. and the brands are supportive of this. stockx should just reflect what is happening in terms of the pricing of the product. in fact, pricing on stockx largely reflects supply and demand on everyone of these products. romaine: scott cutler, of stockx . breaking news on the chip shortage, the white house weighing in on invoking a defense law, the defense production act get that the white house has threatened to invoke. it has given chipmakers and suppliers and customers 45 days to update the white house on supply chain constraints. there has been a lot to frustration by the white house with regards to the ship shortage -- chip shortage. caroline: ed is not compulsory.

-- it's is not compulsory -- it's not compulsory. was it $200 million worth of car sales? ♪

♪ >> from the heart of where innovation, money and power collide, in silicon valley and beyond, this "bloomberg technology," is -- this is "bloomberg technology," with emily chang. ♪