Latest / Bloomberg Intelligence / BI Weekend: US Antitrust, AI in Retail, Restaurant Sales

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BI Weekend: US Antitrust, AI in Retail, Restaurant Sales · Bloomberg Intelligence

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Speaker 1: Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, YouTube,
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Speaker 2: On today's Bloomberg Intelligence Show, we dig inside the big
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Speaker 3: Each and every week, we provide in depth research and
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Speaker 3: hundred and thirty industries are analysts cover worldwide.
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Speaker 2: Today, we'll look at why impulse purchases may still favor
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Speaker 2: in person engagement even as retailers ramp up AI investment.
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Speaker 3: Plus a look at why restaurant sales may increase in
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Speaker 3: twenty twenty six despite economic headwinds.
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Speaker 2: But first we moved to research Bloomberg Intelligence recently put
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Speaker 2: out on the US anti trust landscape in twenty twenty six.
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Speaker 3: According to BI, big businesses in the US are likely
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Speaker 3: to face uneven anti trust enforcement in the first quarter, and.
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Speaker 2: On the M and A front, most deals likely have
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Speaker 2: a path to clearance, even those that raise concerns for more.
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Speaker 3: Guest hosts Alexandra Simonova and I were joined by Jennifer Ree,
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Speaker 3: Bloomberg Intelligence senior litigation analysts. We began by asking jen
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Speaker 3: if there's an active anti trust monitoring happening now as
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Speaker 3: the Trump administration wants to see deals being made.
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Speaker 5: We are really seeing very little activity from the Department
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Speaker 5: of Justice, a little bit more from the Federal Trade Commission,
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Speaker 5: but even in their case, it's been pretty restrained. And
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Speaker 5: it seems that both authorities are really willing to work
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Speaker 5: with the companies if they think that there's a problem
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Speaker 5: with the deal, to work out some kind of settlement.
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Speaker 5: And that's what didn't exist during the Biden administration and
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Speaker 5: why deal making with so steinmy at that time, and
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Speaker 5: I think most companies see if we can come up
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Speaker 5: if we have a problem. A lot of deals don't.
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Speaker 5: But if we do, and we can come up with
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Speaker 5: a solution, we can probably get it cleared.
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Speaker 6: Jen, you mentioned muted activity from the regulators, but are
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Speaker 6: there any industries that they're targeting right now more than others.
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Speaker 5: Well, it looks like it. It's interesting that we see
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Speaker 5: Boston Scientific as a deal because of the few challenges
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Speaker 5: that have been brought to deals by the FTC. They've
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Speaker 5: been in the healthcare space, one in the housing area
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Speaker 5: of construction adhesives, which is a recent case they filed,
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Speaker 5: but two in the healthcare space. And it doesn't surprise
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Speaker 5: me really because these are very sensitive sectors, consumer facing sectors,
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Speaker 5: and that does align with essentially a populist agenda which
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Speaker 5: they talked about in the beginning when they took on
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Speaker 5: their positions. And so I think we'll probably see if
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Speaker 5: we see continued activity in those areas or other very
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Speaker 5: sensitive consumer areas.
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Speaker 6: Jen, the past couple of years saw a lot of
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Speaker 6: high profile antitrust cases, specifically within big tech. We had
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Speaker 6: rulings against Google and Meta. What kind of precedent have
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Speaker 6: they set for big tech regue in twenty twenty six.
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Speaker 5: Well, what they're showing is that it's going to be very,
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Speaker 5: very difficult for US and anti trust agencies to actually
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Speaker 5: tame what they view as monopolistic conduct. I mean, they
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Speaker 5: did win technically against Google with respect and monopolizing search,
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Speaker 5: but the remedy was fairly weak. They didn't get what
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Speaker 5: they were looking for. Look at what Google's doing now
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Speaker 5: with AI with Apple, which is exactly what the plaintiffs
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Speaker 5: were trying to avoid, you know, dominance in AI after
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Speaker 5: dominance in search. So the difficulty they have is even
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Speaker 5: where they win on liability, they have a really tough
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Speaker 5: time with remedies. Most US federal judges are going to
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Speaker 5: be very cautious when it comes to meddling in business
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Speaker 5: and the way a sector may develop, especially in technology,
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Speaker 5: because it's so rapidly changing and nobody knows where it's going.
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Speaker 5: So when you have these cautious judges, you're just not
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Speaker 5: going to get the drastic remedies that are probably the
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Speaker 5: remedies that are needed to really do something about the
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Speaker 5: market positions of some of these companies. Seeing that, it's
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Speaker 5: going to be difficult. But what we haven't seen as
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Speaker 5: much of a let up on the cases that were
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Speaker 5: inherited from the Biden administration. This DOJ and FTC are
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Speaker 5: continuing to go after these cases in court. They're continuing
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Speaker 5: to pursue what you might think of as a drastic remedy,
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Speaker 5: a structural remedy. The next test will be Live Nation.
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Speaker 3: Okay, so we'll watch for that. Then it's a bit
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Speaker 3: of leftover from the previous administration. We talk about regulators,
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Speaker 3: and that's usually how the antitrust enforcement shows up, or
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Speaker 3: any kind of pushback from government authorities. But there's also
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Speaker 3: the role of President Trump as well, and he's made
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Speaker 3: clear that because he has some firm opinions about certain
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Speaker 3: companies and certain sectors, that he's going to be what
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Speaker 3: he says, personally involved in some of them.
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Speaker 7: That's right.
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Speaker 3: Is there a playbook for this? I mean, how do
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Speaker 3: regulators work in concert with a mercurial president?
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Speaker 5: You know, there really isn't a playbook. This is somewhat unprecedented.
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Speaker 5: Now there are many that would argue that this kind
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Speaker 5: of started during the Biden administration, but we have authorities
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Speaker 5: at the Federal Trade Commission and Department of Justice that
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Speaker 5: are very much trying to align what they're doing in
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Speaker 5: the anti trust space with the policy priorities of this administration,
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Speaker 5: I think, much more so than in the past. And
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Speaker 5: they just don't look like they'd be willing to buck
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Speaker 5: the White House if the White House has some feel
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Speaker 5: or some something, you know, an issue with the deal.
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Speaker 5: Right So we're seeing a lot of alignment, and we're
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Speaker 5: also seeing a lot of reamptive alignment needs preemptive alignment.
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Speaker 5: And we're seeing a lot of lobbying which we hadn't
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Speaker 5: seen before too in the overruling of the Anti Trust
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Speaker 5: Division by senior officials who are talking to lobbyists. And
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Speaker 5: so there is a lot of concern right now in
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Speaker 5: the anti trust community about the rule of lobbying really
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Speaker 5: prevailing over the rule of law when it comes to
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Speaker 5: merger enforcement.
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Speaker 3: And this is stuff that we see after the fact,
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Speaker 3: you know, after an announcement has made, as opposed to
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Speaker 3: during it.
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Speaker 8: That's right.
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Speaker 5: We see reports and of course I'm not privy to
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Speaker 5: what's going on behind closed doors, but there has been
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Speaker 5: a lot of news reporting and a former senior FTC
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Speaker 5: official who reach simply left, who has spoken out about
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Speaker 5: some of the activities related to the Hewlett Packard Juniper deal. Now,
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Speaker 5: most recently, we have a deal between two huge real
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Speaker 5: estate brokerages, Compass and anywhere that was cleared very quickly
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Speaker 5: without even a deep investigation by the Federal Trade Commission
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Speaker 5: upside the Department of Justice. That surprised a lot of people.
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Speaker 5: I think it even surprised the companies that have projected
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Speaker 5: to close much later this year. And apparently that was
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Speaker 5: also because lobbyist had stepped in.
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Speaker 2: Our thanks to Jennifer Ree Bloomberg Intelligence Senior litigation Analyst.
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Speaker 2: We move now to a conversation about artificial intelligence. The
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Speaker 2: branding agency Motto recently put out a report about artificial intelligence.
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Speaker 3: It says that while AI makes content faster and cheaper,
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Speaker 3: many companies are discovering a paradox. The more they produce,
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Speaker 3: the less they stand out for more.
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Speaker 2: Guest host John Tucker and Alexander Somonova were joined by
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Speaker 2: Sonny Bunnell, co founder and CEO of Motto.
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Speaker 3: They began by asking Sonny to explain what happens at
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Speaker 3: the intersection of AI and branding.
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Speaker 9: Well, I think that like AI is changing what it
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Speaker 9: means to create, particularly in the lane landscape of brand
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Speaker 9: which is my world and the world that I work
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Speaker 9: in primarily. And we're told that this is progress, right,
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Speaker 9: and in many ways it is. But the real question
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Speaker 9: isn't really whether AI can make more. We're entering into
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Speaker 9: what we call it modo kind of a meaning deficit,
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Speaker 9: where it's whether you can actually make meaning with your
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Speaker 9: brand in order to stand out in a sea of
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Speaker 9: sameness with volumes of content being produced every day, because
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Speaker 9: more content doesn't necessarily guarantee value. AI is going to
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Speaker 9: accelerate brand creation in a way we haven't seen before,
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Speaker 9: but it will also flood the market with sameness. And
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Speaker 9: so the intersection of those two things means there's an
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Speaker 9: opportunity for brands to stand out, to have a meaningful difference,
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Speaker 9: and really protect the point of view and the vision
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Speaker 9: of their brands.
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Speaker 6: Sonny. From a consumer perspective, what might a consumer notice
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Speaker 6: about a company that's used AI and their branding versus
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Speaker 6: a company that hasn't.
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Speaker 9: Well, I think AI slop is a real thing. You know,
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Speaker 9: we're also seeing a world in which we can't even
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Speaker 9: tell if it's real or fake. And to a trained eye, though,
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Speaker 9: particularly in the world of branding, you're able to pick
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Speaker 9: out when there has been a usage of AI, to
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Speaker 9: the point of it's not as advanced as I think
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Speaker 9: it could be particularly in things like image creation, logos,
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Speaker 9: you know, prototypes, even things like article generation. You see
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Speaker 9: a lot of this where people are using the same prompts,
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Speaker 9: they're using the same outputs, and what that ultimately does
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Speaker 9: is just create this kind of sameness across the industry
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Speaker 9: where you know, to a trained eye, especially if you've
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Speaker 9: been in branding for a long time. And I also
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Speaker 9: think to consumers, they begin to sort of identify whether
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Speaker 9: or not that that is something that is authentic or
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Speaker 9: something that's been manufactured.
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Speaker 6: To your point, I feel like sometimes when I'm reading
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Speaker 6: things online, I can distinguish whether it was written by
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Speaker 6: AI or by a person. What is the remedy to that?
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Speaker 9: Well, I think the biggest mistake is letting AI kind
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Speaker 9: of average you. Out right leaders are using it to
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Speaker 9: sound polished and professional, and they erase the very thing
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Speaker 9: that actually builds trust, which is personality, imperfection, specificity, right
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Speaker 9: point of view. AI can produce language, but it can't
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Speaker 9: always produce belief, and so there's a huge opportunity to
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Speaker 9: make sure that if you're using AI or that you're
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Speaker 9: tapping into those tools which are incredibly powerful and they
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Speaker 9: do amplify your ability to do things more efficiently. But
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Speaker 9: you have to be careful that you're not actually like
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Speaker 9: overruling or overwriting your own point of view and your
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Speaker 9: own perspective and your own intelligence and originality in favor
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Speaker 9: of those tools in a way that diminishes own your
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Speaker 9: own tone of voice, or your own personality.
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Speaker 10: Okay, so give me an example, how how do I
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Speaker 10: stand out in the c of AI.
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Speaker 9: Well, I think you've I've got to think about number
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Speaker 9: one point of view, thinking about originality. Right, So I
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Speaker 9: talked about when abundance goes up, differentiation goes down. So
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Speaker 9: if we're in a world where everybody can use the
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Speaker 9: same prompts and use the same tools and produce some
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Speaker 9: similar assets, there's opportunities for let's say, a brand to
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Speaker 9: really distinguish their point of view and distinguish their voice.
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Speaker 9: And where does that typically come from. Well, every business
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Speaker 9: on the planet is made up of a unique footprint,
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Speaker 9: a unique culture, a unique group of people. And when
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Speaker 9: you have more creative power than ever before, we also can,
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Speaker 9: on the flip side of that, have less meaning and
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Speaker 9: creative meaning than ever before. So when you're trying to
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Speaker 9: bring relevance out into your organization, or say like your
10:47
Speaker 9: own maybe your own personal brand. You're looking for opportunities
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Speaker 9: to use AI as a sparring partner, but not a
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Speaker 9: replacement for your own thoughts and ideas and how you
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Speaker 9: see the world, and whether that's content you're putting out,
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Speaker 9: whether that's brand work that you're putting out, or brand
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Speaker 9: systems that you're putting out, brand identity and messaging. Any
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Speaker 9: way that you can use to sort of have your
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Speaker 9: own clarity and point of view is what's going to
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Speaker 9: help you distinguish yourself in the market because customers are
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Speaker 9: going to They're now beginning to understand that. It's like
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Speaker 9: if you've ever seen that show is It Cake? They
11:23
Speaker 9: know the difference. And so I think you're going to
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Speaker 9: see more people driving to companies and organizations that are authentic,
11:30
Speaker 9: that do in some cases like misspelled word or have
11:33
Speaker 9: a typo.
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Speaker 2: Our Thanks to Sonny Bunnell, co founder and CEO of Motto.
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Speaker 3: Coming up, we'll look at some of the biggest worries
11:40
Speaker 3: for CEOs in twenty twenty six.
11:41
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Speaker 2: in depth research and data on two thousand companies and
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Speaker 3: I'm Scarlett Foo and.
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Speaker 2: I'm Paul Sweeney, and this is Bloomberg.
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Speaker 1: This is Bloomberg's Intelligence with Scarlet Foo and Paul Sweeney
12:03
Speaker 1: on Bloomberg Radio.
12:05
Speaker 2: To move next to research, Bloomberg Intelligence recently put out
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Speaker 2: on retailers. According to BI, even as retailers ramp up
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Speaker 2: AI investment impulse purchases are still favoring in person engagement
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Speaker 2: for more.
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Speaker 3: Guest hosts Alexandra Simonova and I were joined by Lindsay Dutch,
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Speaker 3: our Consumer Hardlines senior analysts. We began by asking Lindsay
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Speaker 3: about how retailers are currently implementing AI.
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Speaker 11: Retailers are mostly using AI to improve employee productivity, move
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Speaker 11: employees up the value chain, improve affla, rational efficiency, and
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Speaker 11: on the customer side, we're mostly seeing it in terms
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Speaker 11: of like a customer service chatbot, maybe some personalization when
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Speaker 11: you look at your email ads. But there's you know,
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Speaker 11: new levels that are coming that will really you know,
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Speaker 11: amp up. You know AI's place in that retail shopping journey.
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Speaker 11: But as you mentioned, I think you know that spur
12:55
Speaker 11: of the moment. That's spontaneity, when you find something that
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Speaker 11: you love and you have to buy it, you know,
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Speaker 11: big piece of the shopping and retail world, and that
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Speaker 11: really still you need some human element in that process.
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Speaker 6: Lindsay, we talk often about the death of brick and
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Speaker 6: mortar stores. People aren't going into physical stores as much
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Speaker 6: as they are shopping online. Do you think that I
13:17
Speaker 6: can reignite the excitement for going into a store and
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Speaker 6: experiencing the technology.
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Speaker 11: So I actually think we're already seeing a return to
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Speaker 11: brick and mortar, you know, coming out of the pandemic.
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Speaker 11: You know, people realize how important it is to have
13:31
Speaker 11: an in person experience. More recently, you know, I've heard comments,
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Speaker 11: you know, I follow best Buy. You know they have
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Speaker 11: talked about that gen Z and younger shoppers are showing
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Speaker 11: a much stronger preference to shop in the store, to
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Speaker 11: talk to their geek squad, you know, you know, to
13:47
Speaker 11: get advice, to browse things in person. We also see
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Speaker 11: that from an alta beauty as well. So I do
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Speaker 11: think e commerce penetration will continue to rise as a whole.
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Speaker 11: I think these new technologies will continue to support more
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Speaker 11: shopping online. But I do think there is a personal
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Speaker 11: element that will remain, and you know, we see strong
14:08
Speaker 11: brick and mortar demand on the retail real estate side
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Speaker 11: and that is expected to continue for some time.
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Speaker 3: Having said all that, how does AI enhance the ability
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Speaker 3: for stores to be able to reach out to consumers
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Speaker 3: so that they're there and have the right recommendations when
14:27
Speaker 3: consumers are in the mood to make impulse purchases.
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Speaker 11: Yeah, so right now, I think the best consumer facing
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Speaker 11: use of AI is really increasing discovery exactly what you're saying,
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Speaker 11: So being able to serve up product online when a
14:44
Speaker 11: customer is looking for it. And you know, this new
14:46
Speaker 11: tool that Google co developed with Walmart and others, Universal
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Speaker 11: Commerce Protocol, is going to do just that. So you
14:55
Speaker 11: can pop into this tool, which is powered by Gemini,
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Speaker 11: and you can say I'm looking looking for a navy
15:01
Speaker 11: booblazer that I don't want to have dry cleaned, and
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Speaker 11: it will serve up you know, the product from the brand.
15:09
Speaker 11: You can transact right there, so it's all seamless. Something
15:13
Speaker 11: like that, you know, is a great tool to bring
15:17
Speaker 11: product directly to the person and close the gap between
15:20
Speaker 11: looking for something that you want, finding it, and transacting it.
15:24
Speaker 11: And we see a lot of technology, you know coming
15:27
Speaker 11: to the fore that that's going to allow that to happen.
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Speaker 6: Lindsay, AI and new technology can be really complicated for
15:34
Speaker 6: consumers to navigate. What are companies doing to help guide
15:37
Speaker 6: shoppers through maximizing the experience they get with AI?
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Speaker 11: Yeah, that's a tough one. I mean I think that
15:45
Speaker 11: you know, people in generally are using more tools like Gemini,
15:49
Speaker 11: you know, for all sorts of things chat kept that
15:53
Speaker 11: will you increase that comfort level. And we have seen
15:56
Speaker 11: over time, you know, I also cover home furnishings. You know,
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Speaker 11: in the beginning, when people were starting to transact online,
16:02
Speaker 11: like no one wanted to buy a couch or a
16:05
Speaker 11: big product like that that you would typically want to
16:07
Speaker 11: sit on and feel. And you know that over time,
16:11
Speaker 11: you know, retailers have figured out how to showcase their
16:15
Speaker 11: product in a digital way that makes comfortable customers more
16:19
Speaker 11: comfortable transacting on a big ticket item like that that
16:23
Speaker 11: you would normally really want to see in person. And
16:25
Speaker 11: I think the same thing would be true for these
16:28
Speaker 11: other new technologies. It will take time, you know, adoption
16:32
Speaker 11: will rise, it will rise slowly, and that's why I
16:35
Speaker 11: think it's a real balance you have to be, you know,
16:38
Speaker 11: in that tech world, but you also have to be
16:39
Speaker 11: in person.
16:41
Speaker 2: Thanks to Lindsay Dutch, Bloomberg Intelligence Consumer hardline senior alist,
16:44
Speaker 2: we move next to research Bloomberg Intelligence recently put out
16:47
Speaker 2: on restaurants.
16:48
Speaker 3: According to bi US, restaurant same store sales look to
16:51
Speaker 3: accelerate in the first quarter due to cheaper gas prices
16:54
Speaker 3: and relief from new tax rules.
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Speaker 2: For more on this, guest host John Tucker and Alexander
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Speaker 2: Semonova were joined by Michael Haylen, Bloomberg Intelligence senior restaurant
17:02
Speaker 2: and food service analysts.
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Speaker 3: They asked mine call it's a breakdown Beid's most recent research.
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Speaker 7: We think sales are set to improve here in twenty
17:11
Speaker 7: twenty six, especially in the first half. You know, oil
17:14
Speaker 7: guestling prices are down, you know, thirteen ish percent versus
17:20
Speaker 7: one queue of last year. We're lapping you know, bad weather,
17:25
Speaker 7: cold weather, snow, and a really bad flu season from
17:29
Speaker 7: a year ago. And then we have tax relief, which
17:31
Speaker 7: which historically really helps restaurants spending, and you know, and
17:37
Speaker 7: then we have a couple of things on the upside.
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Speaker 7: I mean, this administration is looking into, you know, potentially
17:43
Speaker 7: credit card reform, and I don't know if they're done
17:46
Speaker 7: with the tax reform, and we could see more interest
17:49
Speaker 7: rate cuts. So all of those things we think are
17:51
Speaker 7: going to feed into better consumer sentiment. And we saw
17:55
Speaker 7: that in some of the economic data last month, and
17:58
Speaker 7: we think it spells, you know, a much better year
18:02
Speaker 7: for restaurants spending.
18:03
Speaker 10: We're talking about Daniel Blues restaurants or Mickey D's.
18:07
Speaker 7: Well, you know, we think McDonald's, you know, a lot
18:10
Speaker 7: of these chains we cover are going to benefit, but
18:12
Speaker 7: we think, you know, McDonald's in Taco Bell in our
18:14
Speaker 7: most recent note or two that we pointed to because
18:18
Speaker 7: low income consumer are going to benefit from the tax reform.
18:21
Speaker 7: They're they're the segment of the consumer that have kind
18:26
Speaker 7: of pulled back from restaurants in the last couple of
18:28
Speaker 7: years and so giving them a boost with with tax reform.
18:32
Speaker 7: They're the ones that you know are most sensitive to
18:35
Speaker 7: gasoline prices, so the cheaper gas is going to help
18:37
Speaker 7: them the most. These things are all pointing to, you know,
18:41
Speaker 7: better results at fast food chains like McDonald's and Taco Bell.
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Speaker 6: Are there any specific chains that you think will be
18:49
Speaker 6: bigger beneficiaries than others?
18:52
Speaker 7: Well, outside of those two, you know, cav and Wingstop
18:55
Speaker 7: are a couple of the names that we think can
18:56
Speaker 7: have big bounce back years.
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Speaker 12: You know.
18:59
Speaker 7: Kava, you know, in a vacuum, it had a very
19:02
Speaker 7: good year, right, but they didn't hit lofty targets that
19:05
Speaker 7: they had set, and earning slowed off of a very
19:08
Speaker 7: strong twenty twenty four and so we think they're set
19:12
Speaker 7: up really nicely to see an acceleration here in same
19:15
Speaker 7: store sales and kind of the same thing in Wingstop.
19:17
Speaker 7: Both of them were victims in twenty twenty five of
19:21
Speaker 7: incredible twenty twenty four success, and now that they have
19:25
Speaker 7: much more reasonable same store sales comps to lap, you know,
19:30
Speaker 7: we think we could see a big boost there.
19:33
Speaker 12: You know.
19:33
Speaker 7: Wingstop, one of the big things that they have going
19:35
Speaker 7: on is a new smart kitchens that are going to massively,
19:38
Speaker 7: massively help the operations improve spa service and get people
19:43
Speaker 7: their wings hotter and faster.
19:45
Speaker 10: Oh okay, what are you talking about the intersection of
19:48
Speaker 10: AI and chicken wings?
19:51
Speaker 7: Yeah, I mean, you know restaurant business Listen, the restaurant
19:55
Speaker 7: business man has been historically underinvested in technology, you know,
20:01
Speaker 7: and they've been quickly.
20:03
Speaker 10: Stolen and a deep fryer. What technology.
20:08
Speaker 7: Yeah, Well, listen, when you go and sit down in
20:10
Speaker 7: a restaurant and you have five people ordering five different things, right,
20:16
Speaker 7: you don't start them all at the same time. Right,
20:18
Speaker 7: Like your sushi is going to be done a lot,
20:21
Speaker 7: maybe faster or slower than my chicken karaaki, right. And
20:25
Speaker 7: so technology is being used in the kitchen to let
20:28
Speaker 7: the cooks know when to fire each meal so that
20:31
Speaker 7: everything comes out at the exact same time hot. Right.
20:35
Speaker 7: So there's definitely a lot of uses for artificial intelligence
20:39
Speaker 7: and small kitchens in this industry.
20:40
Speaker 2: Our thanks to Michael Halen, Bloomberg Intelligence Senior Restaurant and
20:43
Speaker 2: food service analyst.
20:44
Speaker 3: We move next to a recent survey from the Conference
20:47
Speaker 3: Board and organization that helps leaders navigate the biggest issues
20:50
Speaker 3: impacting business.
20:51
Speaker 2: The Conference Board surveyed nearly eight hundred CEOs about their
20:54
Speaker 2: biggest worries heading into twenty twenty six. According to the survey,
20:57
Speaker 2: CEOs in the USA, uncertainty is their biggest economic worry,
21:01
Speaker 2: while global CEOs say that it's outright recession.
21:04
Speaker 3: Guest hosts Alexandra Simonova and I were joined by Dana Peterson,
21:07
Speaker 3: Chief econmiss at the conference board. We began by asking
21:10
Speaker 3: Dana to explain why it feels like global CEOs are
21:13
Speaker 3: a little bit more pessimistic than ones in the US.
21:16
Speaker 8: Well, I think the case is that in the US
21:18
Speaker 8: we've been calling for a recession repeatedly every year, it
21:21
Speaker 8: just hasn't happened. And even still with the pressures of
21:26
Speaker 8: tariffs flowing through and companies kind of sitting on the
21:30
Speaker 8: sidelines when it comes to hiring, that that maybe that's
21:34
Speaker 8: just less so important. But still in all, companies don't
21:39
Speaker 8: know what the regulatory environment's going to look like. Every
21:42
Speaker 8: day there is a new announcement about an initiative. Oftentimes
21:45
Speaker 8: these initiatives are aimed at increasing affordability for consumers, but
21:50
Speaker 8: it can have, you know, just really rattle entire industries.
21:54
Speaker 8: And so I think those are the types of things
21:55
Speaker 8: that companies are continuing to expect. But they're they are
22:01
Speaker 8: still concerned about making profits, and they are curing themselves
22:05
Speaker 8: up and preparing ways to do.
22:08
Speaker 3: That absolutely, and that is their mandate, that is their job,
22:12
Speaker 3: that is their fiduciary duty. How does AI play into that?
22:15
Speaker 3: According to your survey.
22:18
Speaker 8: Sure, AI is both a foe and a friend. So
22:21
Speaker 8: the faux aspect is many of them believe that AI
22:24
Speaker 8: is going to be disruptive. So disruption can be positive
22:27
Speaker 8: or negative. But in this content, in this context, they
22:31
Speaker 8: said AI is going to be very disruptive, It's going
22:34
Speaker 8: to upset our business models, all these things, but they
22:37
Speaker 8: also are looking to adjust their business models to incorporate AI,
22:43
Speaker 8: incorporating AI in terms of maximizing supply chains and they
22:47
Speaker 8: but also AI and marketing and investing in AI to
22:52
Speaker 8: make increased productivity of workers and their operations. And most
22:56
Speaker 8: importantly and interestingly, CEOs are looking to invest in their
23:00
Speaker 8: people to make sure that the people are ready for
23:02
Speaker 8: the next digital age, which is clearly.
23:05
Speaker 6: AI and data amid this big change that AI is bringing.
23:09
Speaker 6: I see in her survey that they talk about how
23:11
Speaker 6: they're also placing greater emphasis on mental health and gender equality.
23:16
Speaker 6: What are some of the actions that they're taking there.
23:19
Speaker 8: Sure, we asked about human capital challenges and also priority,
23:25
Speaker 8: So the challenge was I can't remember the biggest challenge.
23:29
Speaker 8: I think it was about AI and kind of getting
23:32
Speaker 8: your people ready for that, but well being was really
23:35
Speaker 8: low in the list. But however, when we asked about
23:38
Speaker 8: what are some of the social issues you want to
23:42
Speaker 8: delve into in order to support your brand and profits,
23:46
Speaker 8: and it was mental health. And I think that mental
23:49
Speaker 8: health is certainly under the umbrella of employee well being.
23:52
Speaker 8: Employee well being, we all know that, but how do
23:55
Speaker 8: you pick something specific? And I think for a lot
23:57
Speaker 8: of companies, they're realizing that social, geopolitical, financial issues are
24:03
Speaker 8: weighing on not only their customers but also their workers,
24:06
Speaker 8: and so they want to ensure that the people aspect
24:09
Speaker 8: that people are feeling good, such that those very son
24:13
Speaker 8: people who are in the grocery store challenged by expensive
24:17
Speaker 8: food prices don't bring that to work, and if they
24:19
Speaker 8: do bring it to work, that the company can be
24:22
Speaker 8: instrumental in helping them to sort through all these challenges
24:26
Speaker 8: and navigate through.
24:27
Speaker 2: Our thanks to Data. Peterson, chief economist at the conference board.
24:31
Speaker 3: Coming up, we discussed what comes next in the luxury
24:33
Speaker 3: space following the bankruptcy of Sex Global Enterprises.
24:36
Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in
24:39
Speaker 2: depth research and data on two thousand companies and one
24:41
Speaker 2: hundred and thirty industries.
24:42
Speaker 3: You can access Bloomberg Intelligence through Bigo on the terminal.
24:45
Speaker 3: I'm Scarlett Foe and I'm.
24:46
Speaker 2: Paul Sweeney and this is Bloomberg.
24:56
Speaker 1: This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney
25:01
Speaker 1: on Bloomberg Radio.
25:03
Speaker 3: Let's turn out to the luxury space. Recently, the luxury
25:06
Speaker 3: retailer SAX Global Enterprises filed for Chapter eleven bankruptcy protection
25:09
Speaker 3: due to mounting losses.
25:11
Speaker 2: The company flag turnaround efforts, and substantial merger related debt.
25:14
Speaker 2: That move came just over a year after investors handed
25:17
Speaker 2: Sex billions of dollars in new debt to help fund
25:19
Speaker 2: its acquisition of luxury retailer Neiman Marcus.
25:22
Speaker 3: Guest host Alexandra Semonova and I were joined by Ranya
25:24
Speaker 3: set Home, managing partner at set Home Law Group. We
25:27
Speaker 3: began by asking Rania to explain what bankruptcy means for
25:30
Speaker 3: SAX shoppers and the brands that work with it.
25:32
Speaker 13: A lot of the brands that worked with it are
25:35
Speaker 13: no longer working with it, which also, you know, precipitated.
25:38
Speaker 13: It's decline. It is sad, as you were saying, and
25:42
Speaker 13: I'm sure it's humbling. So it started, I would say
25:46
Speaker 13: at least a year and a half ago. I started
25:48
Speaker 13: hearing from smaller brands, some of whose only footprint in
25:52
Speaker 13: the United States is with Saxoth Avenue and Nemon Marcus Group,
25:56
Speaker 13: which is owned by the same company. They were not
26:00
Speaker 13: paying for consigned goods, although the goods were selling, So
26:04
Speaker 13: this was the start of the end really, And if
26:08
Speaker 13: you've tried to go shopping recently in sexwith Avenue, you
26:10
Speaker 13: will notice a shift in the products that are available
26:14
Speaker 13: to you. And this is one of the reasons for consumers.
26:19
Speaker 13: You know, it's it's tough to say. When there's a
26:22
Speaker 13: bankruptcy estate they do not have to honor any kind
26:25
Speaker 13: of credit or rewards program, but I understand in this
26:30
Speaker 13: instance they will be honoring it. The issue becomes for you,
26:36
Speaker 13: is there something there that you want to purchase? And
26:38
Speaker 13: how are you feeling about the brand in general? Something
26:41
Speaker 13: that I think Sacks did poorly was communicate and you know,
26:44
Speaker 13: going back to the brands, what's going to happen to them,
26:47
Speaker 13: it's you know, it's too late, you know, for them
26:50
Speaker 13: to do anything. But on a going forward basis, if
26:53
Speaker 13: you are a brand and you're consigning your goods, there
26:56
Speaker 13: are a few things that you need to look out for.
26:58
Speaker 13: The first thing is your contract provision. It should state
27:02
Speaker 13: in this agreement that you own your merchandise until it
27:05
Speaker 13: is sold. That's the very first thing. And then once
27:09
Speaker 13: that provision is there, there's something called a UCC filing.
27:12
Speaker 13: You should file a lean because this will give you
27:16
Speaker 13: an interest in the merchandise and you're no longer an
27:19
Speaker 13: unsecured creditor for purposes of bankruptcy, so you may actually
27:24
Speaker 13: get something.
27:25
Speaker 3: So there's legal recourse for the vendors of sacks, many
27:29
Speaker 3: of which we're not getting paid regularly in the last
27:32
Speaker 3: couple of months. How does SAX go about repairing its relationship,
27:36
Speaker 3: not just with customers, but with these brands, the brands
27:39
Speaker 3: that relies on in order to bring customers through the doors.
27:41
Speaker 13: Yeah, I think you know, people really discount the efficacy
27:45
Speaker 13: of good communication. But you know, as an attorney, I
27:49
Speaker 13: can tell you that as of paramount importance. In fact,
27:51
Speaker 13: usually when there's a breakdown in relationship, it's because of communication.
27:56
Speaker 13: So the first thing that SAX needs to do, in
27:58
Speaker 13: my mind, is tell everyone on why this happened and
28:01
Speaker 13: what steps they're taking to remedy it, because we don't
28:04
Speaker 13: want them to be repeat offenders five years from now.
28:07
Speaker 13: We don't want to be sitting in the studio talking
28:08
Speaker 13: about the other bankruptcy that they're undergoing. So it's important
28:13
Speaker 13: to figure out the why when it's such a drastic
28:17
Speaker 13: step that you have to take, and tell everyone, tell
28:20
Speaker 13: your vendors what you're doing to and help build trust.
28:23
Speaker 6: Again, Rania. When you get this type of bankruptcy filing,
28:27
Speaker 6: what does Sex owe its investors and creditors?
28:31
Speaker 13: Well, I don't know what the numbers are. However, the
28:35
Speaker 13: bankruptcy Code ranks people by importance secured versus unsecured, and
28:40
Speaker 13: you know, the landlord is certainly a secured creditor to
28:43
Speaker 13: the extent that they owe them money, they will be
28:46
Speaker 13: paid first. Any kind of loan they'll be paid, you know,
28:50
Speaker 13: amongst one of the first as well. So it's too early.
28:53
Speaker 13: I don't have the list yet.
28:55
Speaker 6: You were talking about some of the MNA debt. And
28:58
Speaker 6: this bankruptcy, of course comes a year after investors handed
29:01
Speaker 6: Sacks billions of dollars for its acquisition of Neiman Marcus,
29:05
Speaker 6: which was also struggling. What kind of risk was it
29:08
Speaker 6: putting investors through by acquiring Neiman Marcus.
29:12
Speaker 13: I'm not sure that that marriage was off to a
29:15
Speaker 13: good start. From the beginning. You know, we as shoppers,
29:18
Speaker 13: I can speak for women, or at least for myself.
29:21
Speaker 13: We shop at a whole host of different places, and
29:25
Speaker 13: you could have one customer shop in multiple stores for
29:29
Speaker 13: different types of items. But in general, it's safe to
29:33
Speaker 13: say that the Marcus Group shopper is not the same
29:36
Speaker 13: as the Saxith Avenue shopper, who's not the same as
29:40
Speaker 13: Bloomingdale's or Macy's shopper. So I think that marriage was
29:45
Speaker 13: rocky to begin with, and it was a hefty price
29:48
Speaker 13: that was paid. I'm hoping, as a consumer and for
29:52
Speaker 13: everyone's sake, that someone else buys name and Marcus Group,
29:57
Speaker 13: or perhaps they can buy themselves back. We do see
29:59
Speaker 13: that's sometimes where you purchase yourself back from your acquirer.
30:03
Speaker 1: Yeah.
30:03
Speaker 6: I just went across the street to Sas off fifth
30:06
Speaker 6: thinking that I could get a nice deal on something,
30:09
Speaker 6: and they just yeah, I got rid of everything. What
30:12
Speaker 6: is next for sax here? Do you think it makes
30:14
Speaker 6: it out of this?
30:15
Speaker 13: I think sax does make it out of this. But
30:17
Speaker 13: I'm an optimist by nature, just so everyone listening knows that.
30:22
Speaker 13: But I do think they're going to have to contract
30:25
Speaker 13: in order to grow so this is the time to
30:28
Speaker 13: be extremely self aware, extremely scrutinous, and determine which stores
30:34
Speaker 13: are going to provide you with the most relevance to
30:38
Speaker 13: your customers and which ones can you stock well and
30:42
Speaker 13: have pre eminent customer service, and then close the others.
30:46
Speaker 13: You can always reopen stores. It's not a good idea
30:51
Speaker 13: to just have a huge footprint that's lackluster.
30:56
Speaker 2: Our thanks to Ronnie set Home, managing partner at set
30:58
Speaker 2: Home Law Group. We move next to the business of sports,
31:01
Speaker 2: where universities have been under pressure to find new ways
31:04
Speaker 2: to raise revenue after federal settlement over student athletes name, image,
31:08
Speaker 2: and likeness rights.
31:09
Speaker 3: Bloomberg Higher Education finance reporter Janet Lauren and I were
31:12
Speaker 3: joined by the UCLA Athletic Director, Martin Jarmond. We discussed
31:16
Speaker 3: relationships with student athletes, investing, and how UCLA is leading
31:20
Speaker 3: through such a tough time in the history of college sports.
31:23
Speaker 3: We began the conversation by asking Martin to talk about
31:26
Speaker 3: money in college sports and reflect on what's changed.
31:29
Speaker 4: A lot has changed in our business over the last
31:32
Speaker 4: I'd say even two years, but obviously with the house
31:35
Speaker 4: settlement that start at July first, and sharing revenue with
31:38
Speaker 4: athletes to the two and twenty point five million. That's
31:41
Speaker 4: been a significant change, but that's not it's a rather
31:45
Speaker 4: soft cap, meaning that there's still nil and third party
31:49
Speaker 4: agreements that go above and beyond that, so you're spending
31:51
Speaker 4: even more when it comes to your sports. But it's
31:55
Speaker 4: a great era for our student athletes. They're benefiting tremendously.
31:59
Speaker 4: But it also creates pressure from a business standpoint to
32:02
Speaker 4: provide the resources necessary to compete. We all want to compete.
32:05
Speaker 4: There's only one winner, but you know that's the time
32:09
Speaker 4: that we're in.
32:10
Speaker 8: And do you end up.
32:11
Speaker 3: Having to put more resources into the sports that generate
32:14
Speaker 3: the most revenue and taking revenue taking funding out of
32:17
Speaker 3: sports that you know may not make as much money.
32:20
Speaker 4: It's not a zero sum game. You do have to
32:22
Speaker 4: invest in those sports that bring in more resources. For example,
32:26
Speaker 4: obviously football is a significant driver to the revenue for
32:29
Speaker 4: an athletic department. At UCLA. We've made a significant commitment
32:33
Speaker 4: and investment in our football program with hiring a new
32:35
Speaker 4: football coach, coach Bob Chesney. We're very excited about him.
32:40
Speaker 4: The university is aligned from the leadership top down. Chancellor
32:44
Speaker 4: Frank understands the importance of athletics and bringing community together.
32:48
Speaker 4: But it takes a commitment. It takes an investment and
32:50
Speaker 4: alignment and all those factors and having the right leader
32:53
Speaker 4: to be successful. And so that's something that we're proud
32:56
Speaker 4: of and that we're investing. We're all in Martin.
32:59
Speaker 3: What is the pries you the most over this academic year,
33:01
Speaker 3: over this era of change?
33:03
Speaker 4: Oh, you know, just a sophistication now of our student
33:08
Speaker 4: athletes when it comes to nil and what they have
33:12
Speaker 4: to do. You know, they have to manage a lot
33:14
Speaker 4: more than when I was a college athlete, just from
33:17
Speaker 4: a practice standpoint, deals that they're making. Two years ago,
33:22
Speaker 4: for example, a lot of our athletes, especially in football
33:25
Speaker 4: and basketball, didn't have agents. Now I'd say probably eighty
33:28
Speaker 4: to ninety percent have agents, and so they're working, they're
33:32
Speaker 4: negotiating what their clients are doing. So the relationship with
33:36
Speaker 4: student athletes has changed. It's more of a business relationship.
33:40
Speaker 4: We're still in the business of developing student athletes educationally, holistically, socially,
33:46
Speaker 4: but there's also a business relationship aspect to it to
33:49
Speaker 4: where that really wasn't present before. So you have to
33:53
Speaker 4: adjust and adapt to that, and some of it is
33:55
Speaker 4: you have to work with your student athletes as far
33:57
Speaker 4: as how you market the program and how you bring
33:59
Speaker 4: third party dollars to the program.
34:02
Speaker 12: Do you think that revenue share agreements may have an
34:04
Speaker 12: impact on the transfer portal? Maybe they'll want to stay
34:07
Speaker 12: longer because of this.
34:09
Speaker 4: Yeah, that space is evolving. I do, I do. I
34:12
Speaker 4: do think we're getting closer to these agreements being stronger
34:15
Speaker 4: as far as having a commitment both ways, I think
34:18
Speaker 4: you're seeing some challenges now. Anytime you have a new system,
34:21
Speaker 4: there's some growing pains, and that's what college football and
34:24
Speaker 4: college athletics is going through, significant growing pains. But it's
34:27
Speaker 4: still more popular than ever. It's still a lot of
34:29
Speaker 4: people that are watching in tune with college football. But
34:33
Speaker 4: we're going through those growing pains of contracts and what
34:37
Speaker 4: that looks like. So I do think and I do
34:40
Speaker 4: hope that contracts become stronger to where there's more of
34:43
Speaker 4: a commitment both on the university but also the student
34:46
Speaker 4: athletes side, because you want that. We want our student
34:49
Speaker 4: athletes to stay where they are to help graduate. You know,
34:53
Speaker 4: if you move around three and four times, it's harder
34:55
Speaker 4: to graduate, and that's our goal, that's our primary goal
34:58
Speaker 4: is to educate and develop and hopefully they graduate to
35:01
Speaker 4: set them up for forty years after.
35:03
Speaker 3: I mean, the big picture is that universities are under
35:05
Speaker 3: pressure to find new ways to raise revenue after NIL
35:08
Speaker 3: open the door for these student athletes to be paid
35:11
Speaker 3: by the schools. How involved are you in the revenue
35:14
Speaker 3: generating effort and how what can UCLA, as a member
35:18
Speaker 3: of the Big Ten do that other schools can't. What's
35:20
Speaker 3: your distinction?
35:21
Speaker 4: Well, I'm very involved. I spend a lot more time
35:24
Speaker 4: with donors and now corporate sponsors to talk about opportunities
35:27
Speaker 4: of ways to bring in new revenue.
35:29
Speaker 3: Like half your time, sixty percent of your.
35:31
Speaker 4: Time, I would say it's probably seventy five percent of
35:33
Speaker 4: my time now and it wasn't like that before. But
35:36
Speaker 4: if I'm not meeting with donors or having opportunities to
35:40
Speaker 4: talk to companies about how they can invest in our
35:42
Speaker 4: student athletes or partner with them, that just takes a
35:45
Speaker 4: significant amount of time. And what it takes away from, unfortunately,
35:49
Speaker 4: is that time that you could get to know your
35:50
Speaker 4: student athletes better. There was a time where where you
35:53
Speaker 4: could spend more time at practice or spend more time
35:55
Speaker 4: one on one with student athletes, and now the business
35:58
Speaker 4: demands trying to find more ways to generate revenue and opportunities,
36:03
Speaker 4: and so the Big Ten Conference gives us a great platform.
36:06
Speaker 4: I think it's the best conference in the country financially
36:08
Speaker 4: is one of the strongest, if not the strongest. But
36:10
Speaker 4: it gives us a way to represent our student athletes
36:13
Speaker 4: from an nil perspective nationally and globally. That's in the
36:17
Speaker 4: Big Ten.
36:18
Speaker 12: So there are immense pressures. Again, we talked about that
36:22
Speaker 12: four percent increase next year. What are some unusual things
36:26
Speaker 12: that you're thinking about. Ohio State has tours now, they
36:30
Speaker 12: have golf off the top of the stadium logos. Talk
36:33
Speaker 12: a little bit about ways you're thinking about revenue.
36:36
Speaker 4: You're looking at your facilities and seeing how can we
36:39
Speaker 4: make them more three sixty five opportunities for usage. So
36:42
Speaker 4: Pauly Pavilion, our basketball arena, we're looking at having concerts,
36:45
Speaker 4: We're looking at changing some of the spaces, making maybe
36:48
Speaker 4: a court side room to generate revenue and provide a
36:50
Speaker 4: better experience for our students and our fans.
36:53
Speaker 2: Our thanks to Yusuleay Athletic Director Martin Jarmott and Janet
36:57
Speaker 2: Lauren Bloomberg Higher Education Finance Reporter. This week's edition of
37:00
Speaker 2: Bloomberg Intelligence on Bloomberg Radio, providing in depth research and
37:03
Speaker 2: data on two thousand companies and one hundred and thirty industries.
37:06
Speaker 3: And remember you can access Bloomberg Intelligence via b I
37:09
Speaker 3: go on the terminal. I'm Scarlett Foo and.
37:11
Speaker 10: I'm Paul Sweeney.
37:12
Speaker 2: Stay with us. Today's top stories and global business headlines
37:14
Speaker 2: are coming up right now