Consumers are spending like they have money because they do, says Jan Kniffen

2025-12-29_12-33 • 4m 11s
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Welcome back. Our next guest says tariffs reshuffled winners and losers in retail, but they didn't stop consumers from spending this holiday season. Even as post-holiday returns are now rolling in, joining us now to break down how the sector performed this year and what lies
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ahead in 2026, Jen Niffen, CEO of J Rogers Niffen WWE. Jen, thank you for being here. Happy holidays to you. Um, so we've got this retail environment now where consumers are spending more than expected during the holiday season. GDP is doing very well, yet sentiment is still
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pretty low. Um, how should retailers respond in that environment where people are spending, the economy is growing, but they're not necessarily feeling good about where things are.
Jan Kniffen (CEO) 00:46.360
As I've said for a long time, the only thing consumer sentiment tells us is it's really bad out there for your incumbent politician. It doesn't tell you much about what they're going to do on spending. Spending is really a direct function of do you have a job? Will you keep your
Jan Kniffen (CEO) 00:59.840
job? job, if you lost your job, could you get one making just as much or more and are your wages rising? And all of those things are pretty good right now. Yes, unemployment's a little worse. Wages aren't growing quite as much, but they are outpacing inflation. So right now the
Jan Kniffen (CEO) 01:14.120
consumer is spending like they have money. Why? Because they do. And it's also important to remember, yes, we're seeing really strong spending in the upper decile. We're seeing really strong spending in the upper half of the upper decile. We're not seeing strong spending in the
Jan Kniffen (CEO) 01:29.520
lowest Destile of the economy or even the lowest quintile. So those people are struggling, but the rest of the economy is spending and it's showing up in retail sales. We're probably going to see a 4% to 5% holiday spend when we tally up tally up the numbers. I've been using
Jan Kniffen (CEO) 01:47.080
4.5%. But even if it's 4%, it's going to be a very strong number and it's going to be a good gross merchants and it's not going to be in an extended expense structure either. So we're going to see good earnings coming out of this holiday.
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Okay, cuz we started the year, you know, talking about tariffs and the impact that would have on prices, on supplies, and none of that really came to fruition. I see you have data here that the price increases on tariff discretionary goods for the holiday season running about
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3%, which is half the high end of what many expected around tariffs. So, if retailers are still maintaining their margins and that price increase is somewhat palatable for the consumer, why why was there such a disconnect.
Jan Kniffen (CEO) 02:32.600
Well, I think there was a lot of, you know, everybody had their hair on fire when they were first announced because nobody really knew what they were going to be, how high it was going to be, what the pass through really had to be. And a lot of people were thinking we would be
Jan Kniffen (CEO) 02:44.120
passing through somewhere north of 6% and it turned out that we did all the things you knew the retailers would do. We found better supply chain ideas. We went through and we changed the configuration a little bit on some of the goods. We stocked some different components. we
Jan Kniffen (CEO) 03:00.360
substituted, and they're only hoping to pass through about 3%. We'll see some more come through this spring, and then it'll kind of flatten out for the back half of the year in 2026. But this spring, the consumer is also going to have a tsunami of tax refunds. And that's going
Jan Kniffen (CEO) 03:16.160
to help their spending even if they're looking at a 3% inflation component on imported goods this spring, too. So all in all, it didn't put much inflation into the economy, as we know, inflation is probably running about 2.7 right now. That's not great. It's not 2% but it's sure
Jan Kniffen (CEO) 03:32.400
not 9% and it's not anything near what people thought the tariffs might add. So we we turned out to handle that really, really well if you're a big well-capitalized retailer. On the other hand, there are small retailers that are going broke and losing market share and laying
Jan Kniffen (CEO) 03:48.680
people off. So it's not painless, but it's not been so bad if you're a large well-capitalized established well-known retailer, i.e. Walmart.
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Right. The number for bankruptcies are up, but a lot of the larger companies have largely been unscathed, maybe aside from some department stores there. Jan, thank you very much for your time this morning. Appreciate it.