Coresight Research Founder and CEO Deborah Weinswig joins Yahoo Finance to evaluate the sales growth found in the retail sector during the current inflationary period, bottlenecking supply chain delays, and upcoming holiday season estimates.

Video Transcript

AKIKO FUJITA: Let's take a deeper dive into the numbers. We've got Deborah Weinswig, Coresight Research founder and CEO. Deborah, it's good to talk to you today. I want to get to that comment Emily just mentioned about a potential pull forward that we saw within this report because, you know, we've sort of been looking for signs of any kind of pullback coming from the price increases. We certainly didn't get it from this, but is this kind of the peak before we see a bit of a drop-off?

DEBORAH WEINSWIG: I think the bigger challenge we're going to have is product availability. And so we're already seeing challenges in the supply chain. I do feel that the consumer has been incredibly well educated on this topic, right? Supply chain, which used to be, like, very much in the background and not something that was often talked about, is really kind of front and center here. So I think they're aware. I think they're kind of getting out and getting out early. And I think that the price increases have been well communicated. So, at this point, I don't think we're seeing the sticker shock just yet.

JARED BLIKRE: Nevertheless, I'm looking over some of the notes that you sent earlier, some great notes here. When you break it down and do two-year comps, some of these category increases are just incredible. Sporting goods, hobby and musical instrument and bookstores up 39%, building material, garden supply retailers up 30%, furniture, home furnishing stores, 25%-- the list goes on. So at what point do consumers get a little sticker shock here?

DEBORAH WEINSWIG: I will tell you, somebody who's followed the retail industry for quite some time, the numbers exceeded even our bullish estimates. And I do think that right now-- I mean, this is going to be-- I just want to-- this is a long duration in terms of some of the supply chain challenges. I do feel that the consumer is kind of starting to understand that more and more.

And at least for now, in the near term, we're finding that it's really interesting, actually. Retailers are pushing forward price increases in kind of categories where it is kind of somewhat inelastic. When it's more elastic, we're finding that they're holding the price. I mean, it's impacting their margins. But overall, what we've heard is that this fourth quarter [INAUDIBLE] at least to date, almost every retailer we've talked to, the best gross margin quarter they've ever seen on record.

AKIKO FUJITA: So it sounds like not being able to get the product to the shelves, the supply chain backup, that's a bigger risk right now than consumers not necessarily shelling out money, even going into the holiday season.

DEBORAH WEINSWIG: You know, I'm quite concerned that we are going-- and we're already seeing it, right? And I think that it's only going to become more challenging. I mean, retailers who are larger, some of the ones you mentioned earlier, right, they're able to afford, whether it's planes, trains, automobiles, right, that whole thing.

But, you know, the smaller retailers who aren't, you know, let's just say, as adept or can't afford to do that, I think they're the ones who are struggling a bit here. And of course, we started to see this move as much as possible near shoring, on shoring in terms of kind of manufacturing capabilities. But it's kind of too little too late. And I just don't think any of us thought that we'd see the-- truly, like, the pile-up of ships and just the delays at this level. And I think everyone felt it was greatly exaggerated, but I don't think it was exaggerated enough.

JARED BLIKRE: And just big picture here, so the consumer has money to spend, maybe even to burn. Companies have pricing power, gross margins. As you said, maybe that's some kind of record there. What pours a little-- what rains on the parade here? Is it the Fed acting a little bit too aggressively with interest rates, something else on the horizon?

DEBORAH WEINSWIG: I mean, I think that, you know, the morning we wake up and see that headline, I think that would definitely give everyone a bit of a pause. But I think that right now, the only thing that kind of hold back the holiday season is just, once again, kind of product availability at this point and the ability to restock. But I do think that from a kind of broader macro perspective, you know, interest rates are certainly kind of top of everyone's mind. When you think about some of the categories, like furniture and home furnishings, kind of anything related to kind of around the home, in the home, I think those have been some of the categories that have just been kind of nonstop.

AKIKO FUJITA: Deborah Weinswig, Coresight Research founder and CEO, good to talk to you today. Appreciate the time.