caroline: from bloomberg world headquarters in new york, i'm caroline hyde. katie: romaine bostick is off today. caroline: we caught up with ceo -- a ceo saying their company is facing headwinds. stores sort of key items, including women's apparel. retailers' most important

season, black friday, cyber monday. it was quite the tumble in today's session. some of the numbers eroding about 1/5 of their value. taylor: you really think about the haves and the have-nots. who is seeing demand? demand isn't the problem. who is able to control the inventory and getting this stuff into the store? we are taking a look at a few companies i want to mention. nordstrom was down about 29% on the day. gap, having one of the worst lunges ever -- plunges ever. supply chain issues, not a fourth quarter problem, but a full year, 2022 problem. demand is not the problem. we want to figure out all the companies being affected by the supply chain. fuller explains. >> we have a good sense of which companies run robust technology

to their supply chains and which ones don't, and it's showing up in earnings, where the companies that have the inventory, because they have a resilient set of networks and technology, are doing much better than those that haven't made those investments. caroline: a man who knows a thing or two about the world of e-commerce, retail, celebrities, you name it, jamie salter. they own the likes of forever 21 and nordica. taking on new investment, new equity. i want to talk to you about supply chain, just an extraordinary time for retailers such as yourself. how do you manage it? >> i think the gentleman that was just on said it really wisely, which is you have to manage your supply chain. we saw supply chain as something that we had to tackle roughly 12

months ago, so we were bringing inventory in four to six weeks earlier than we really needed the inventory. yes, we could still use more inventory in our stores right now, but we are still at 27 -- 17% to 20% higher in most of our retail chains across the brands currently. katie: i'm curious what trends you see across channels and within actual products. >> i mean, there's no doubt about it. activewear is incredibly hot. outside of -- athletic footwear is really strong. but we are seeing, even brooks brothers, major come back earlier in the year, we were concerned about tailored clothing. we are seeing people are really dressing up and coming back and buying a lot of tailored

clothing. we're extremely happy with what's going on in the marketplace. taylor: it's not a new theme, meeting the consumer where they are. if they are online, you meet them online. if they want to come in stores, you meet them in stores. lately, we have been hearing, if you can't get it online in time, people are going into the stores, even if the stores have lower inventory. what shifts are you seeing? >> we are seeing an incredible demand at any mall-based stores right now, surging much greater than we thought. e-commerce is definitely holding its own, and in some cases, we are beating our projections on the e-commerce side. but we are really blown away on what's going on at retail. the malls are very crowded. there not as many people, necessarily, going into the stores, but when they are going in, they are buying, and they

are buying a lot more than they have traditionally bought in the past. it's way up from where it was last year. caroline: is that this sort of growth that attracted the new investors? i believe your conversations all started when you were making acquisitions yourself, buying into reebok, and they wanted to get in on that deal. they've taken a stake in authentic brands group. what you present to them to continue that growth story -- what do you present to them to continue that growth story? >> i can honestly tell you that what happened with them coming into abg, we've had an incredibly robust year in 2020 and now in 2021. we took, sort of, the approach that, if the world was going to end, we were going to have lots of problems, but so when everyone else -- so would everyone else.

we became aggressive on acquiring assets. the actual outcome of that has been incredible. sales are way up, year-over-year. prophets are way up year-over-year -- profits are way up year-over-year. we feel like we are just getting started. the consolidation has just happened not in america but globally -- not just in america, but globally. bigger companies getting bigger. smaller companies getting smaller. technology is an important part of our success story. it is an important part of everyone's success story. that omnichannel experience is something we continue to invest in. we don't care if someone buys something online or in store. a lot of people are going to the stores and seeing what they want to buy, and then they go home and order it online. the stores are becoming big showrooms.

they are needed. i think that's why you are seeing some of these robust e-commerce companies starting to open up stores. i don't think the mall is dead. i actually think the mall is alive and well, and i think that physical retail and physical shopping is here to stay, and people are enjoying actually getting out. whether it's going into a mall or a restaurant, i think that the mall owners, especially simon properties, have done a really good job at changing what the mall looks like, bringing in the higher end restaurants, bringing in more experiential things. you don't just go to the mall to shop. you go to the mall to eat and have other experiences. katie: it's been a busy month for authentic brands. earlier in november, you partnered with universal music group. what's the vision there? >> our whole plot was, we

understand marilyn monroe, muhammad ali, shaquille o'neal, so we have all of these great, alive celebrities, and some celebrities that are not with us anymore, but what we've learned is, there is more than just doing music deals. there's a lot of merge -- merch deals, advertising deals. we approached them years ago and said, we would like to get in business with you. we are going to be very active in going after what i -- after celebrities, like rolling stones, grateful dead, people like that, where we can buy part of their name, image, and likeness. we say, in our world, everything else non-music, to expand on it and grow that business. universal music group is the biggest and best in the world, and they have a great roster of

relationships, so we feel very confident in that approach. we'll announced something in the new year that we are working on right now. caroline: would that happen to involve nft's in any way? >> i mean, we just started with nft's with "sports illustrated." nft's and the music industry are for sure here to stay. you are going to see a switch with nft's. there will be more artists getting involved. a musician and the artist will coordinate together. i don't know that it's just going to be necessarily the music side. i think there's going to be a lot of collabs and mashups. caroline: jamie salter, at mixing point of all these things -- at the mixing point of all

these things. coming up, taking a closer look at holiday spending trends. and the latest research shows more consumers will be using by now, pay later plans -- buy now, pay later plans. james: this is bloomberg. ♪

taylor: today, we are focused on all things retail. had a black friday, cardify has -- ahead of black friday, cardify shows a specific type of consumer is set to spend more on the holidays this year. is it buy now, pay later? or is it buy more? caroline: the buy now, pay later

shopper is even more aggressive. the interesting thing is whether it's more demographics or the way -- the freedom with which to be able to have that broken across certain payment schedules. they are more bullish and wanting to spend. taylor: let's get more insight with derrick fung, the cfo of cardify, who has been tracking all this data. what are the trends you are seeing this season? >> good to be back. very exciting demographic. millennials and gen z consumers love this concept of right now, pay later -- of buy now, pay later. i would love it to be buy now, pay never. it's a never -- novel concept that there is no interest. it's not revolving. there is no credit score check you need to do. consumers love it because they are often in debt from school. before, they could only use the

bnpl on some of the higher ticket purchases, like pelotons. bnpl has allowed consumers to buy a lot more. a firm did a major partnership with american airlines, so you can split your bnpl payments across travel. soon, you will be able to split your payments around coffee, groceries. with all this talk around inflation, it's a very relevant time for bnpl to pay -- play a major role in consumer shopping. katie: it's really interesting, this demographic shift. are there any baby boomers, gen x using by now, pipe -- buy now, pay later? >> it's very skewed. when you do a bnpl payment, they link into your date -- bank account and scrape your data to determine how worthy you are to get a bnpl payment.

younger consumers are very open to linking their bank account, and older consumers are more nervous when it comes to things like privacy and data. it is skewed towards users who use the product earlier and 50% want to use it for holiday shopping. there's a 10% base of the consumers we surveyed who planned to do all of their shopping with buy now, pay later. caroline: you mentioned the firm. they've always tried to commit to the fact that this is about educating the user, the fact we are not going to see people overspending. but when you are talking of inflation, talking of wanting to spend more, can they really afford it? are you redistributing the payments? >> based on our data, they can. they often hold that money in their checking's and savings account. we see that for purchases like pelotons, which are pretty pricey. we think the consumers' pent-up

demand comes from things like wages. with inflation, that means increased wages. last time i was on the show, we talked about robinhood, and there is something to be said. we are in the hottest bull market. it is continuing. then there is crypto. there is talk about supply chain. blockchain. caroline: has the gen z/millennial been making money this year? have they been putting it into crypto to have more money to spend? >> for sure. saving rates are up. with more financial literacy, like robin hood going forward, and consumers getting educated in a transparent way, it's still early days. taylor: we are coming off the last conversation with a supply chain expert and an owner of some of the portfolio brands of some of the clothing lines. they said the consumers may not be shopping is often, but when they do, they are going all out,

spending more. do you see that when we shop? we are spending more, but maybe doing it less frequently. >> we definitely see that. a lot of that is driven through buy now, pay later as well. retailers have to prove the average basket size is higher. we see it's about 15% higher when they use a bnpl payment. the big area of focus is experiential. last year's data was about home furnishing, furniture, platforms like that did well. when we looked at this year, it was all about travel and beauty. sephora just did their 20% off sale, and we compared last year's data to this year's, and it's even better. consumers are getting ready to go out again. they are looking travel. they want to look good. now they are able to split up their payments and not pay interest. that will continue to drive

holiday shopping. we are expecting to see one of the biggest black friday/cyber mondays ever. katie: we were joking about by now -- buy now, pay never, but i'm sure some people do that. what is the default rate? >> it's a great question. through our survey, about 10% of consumers have defaulted before. buy now, pay later is not like a credit card where it's revolving. if you are not paying, that interest is compounding. there's is no interest, but it's not revolving. even if you are defaulting, you are still able to pay that back. all the bnpl companies have to do is stop lending to you. we think the trend will continue. the risk to the consumer and industry is not as high as people may think. taylor: no concerns of people coming in overleveraged. >> these purchases are cap. -- capped. a peloton is $1000. if the bnpl wants to stop

lending, they can. taylor: coming up, we will be sticking with this retail theme. the flip side of the story, retail theft. what is being done to curb it? we will discuss that next. this is bloomberg. ♪

caroline: today, our focus is on retail. as the industry deals with supply chain woes and higher prices, they are now seeing a rise in shoplifting. some states are starting to beef up their antitheft measures. extraordinary announcement coming from best buy, that shocked a lot of people, very headline grabbing. how real is it from the bottom line perspective, from a sheer amount of revenue? >> we are still trying to figure

that out, to some extent. best buy did cite that in reporting disappointing gross margins yesterday, saying that, in part, that was due to a rise in organized retail theft hitting their stores. dave said especially in northern california, but they are seeing it -- they have said especially in northern california, but they are seeing it all across the country. anecdotally, we've been seeing growing numbers of reports about large numbers of people coming together to smash into stores, steel things really quickly -- steal things really quickly, and make off with them. it is starting to hit the bottom line, at least if you listen to best buy on it. katie: it's interesting. you said group speak -- of -- groups of people coming together. it is still very organized. it is not a bigger issue, -- is that a bigger issue than a

one-off here or there? >> retailers allow for shrinkage, which is ordinary loss of goods through normal theft, which there is some of, and other things like damage, and that sort of thing. but this seems to be an entirely different order of magnitude. recently, there was a group of 80 people smashing into a nordstrom in california. we've seen similar reports from walgreens in san francisco, which was actually closed -- which has actually closed some of its stores there because of the threat of crime and break-ins. it does seem to be something that's of growing concern to retailers. it seems to be costing them a fair amount of money. katie: you mentioned nordstrom,

walgreens have dealt with issues such as this. is it fair to say best buy is the only retailer that we've seen this affect the bottom line so far? >> i think it's the only one that, at least in this cycle, has really called it out as a major contributor to disappointing numbers. it is definitely something that other retailers are aware of and taking whatever steps they can to counter. best buy is the main one that has cited it as a real contributor to some disappointing numbers. taylor: john edwards, really appreciate your time, bringing us a lot of insight into the struggles at some retailers. that's not the only headwind. when we think about, gosh, i have five or six nieces and nephews, and they all want certain trucks. legos, if you are caroline's kids.

we have a great story on the terminal that highlights not just, oh, supply chains, but gives you specific insight into what is happening. it used to cost -- tonka. the mighty dump truck, it used to cost about $2 to ship from china to the u.s. that is now $12, half of the sticker price. talk about margin erosion. caroline: they are setting up these war rooms, one in hong kong, one in florida, basically shiftwork. you are having to ensure -- managing each and every part of it, making sure you are on the right ship. looking for new and innovative ways. this is why gap is paying so much more for airfreight, because it is too pricey to put it on a ship right now. katie: this is a $37 billion industry, the toy industry. these are some of the highest

prices for toys we have seen in modern history. caroline: we wonder how much it becomes part of the core. taylor: final thoughts? katie: "bloomberg technology" is up next. taylor: with caroline. this is bloomberg. ♪

>> from the heart of where innovation, money, and our collide -- power collide, in silicon valley and beyond, this is "bloomberg technology," with emily chang. caroline: i'm caroline hyde, in the for emily chang. this is "bloomberg technology." coming up in the next hour, supply chain pain. retailer struggling to keep supply up with demand. amazon.