Kristen Gall, President of Rakuten Rewards, joined Closing Bell to discuss how retailers are attracting consumers in the face of sky-high inflation.

Closing Bell

Consumers Seek out Rewards, Discounts as Inflation Drives up Prices

the earnings parade continues this week, including some retail earnings, which will give us a sense of consumer sentiment in the face of sky high inflation and supply chain issues both of which are causing huge price jumps joining us now to discuss is Kristen Gull, President of rocketing rewards, a shopping platform that offers consumers deals and rewards from retailers. Now, Kristen inflation is at a four decade high and data shows people are spending more on experiences versus goods. So what are you seeing in terms of consumer sentiment? I think the interesting thing is I expected a lot weaker consumer sentiment in Q1 than we actually saw. And there is this component of what we've been calling revenge shopping for a long time, which is people still haven't gotten the covid bug out of their systems yet in terms of they're spending, they want to go out, they want to do things, they want to buy the things that are important to them. And what we saw in Q1 is demand didn't wane to the extent that we thought that it would, what we did see is that retailers increasingly struggled with their margins because of a bit of a mismatch, because of supply chain issues with the inventory that they had versus the inventory that customers were demanding. So what are retailers doing in terms of rewards to try to lure customers back to them while those same customers are dealing with inflation you're seeing a lot of retailers launch loyalty programs, lululemon just announced a huge new loyalty program, push in order to start rewarding customers for frequency, rewarding them for doing things that these retailers need them to do. Like go back in stores. I think the interesting thing is is it used to be that retailers would offer discounts. It used to be that that was the carrot that they used to get people back in stores or to get people to do what they needed to do. And in this environment we're actually seeing an increasingly slower discounting arena which if they can't afford this so that they could offer before because they're being squeezed so much from our transportation as thick chain context. Now when it comes to inflation, when consumers are up against the wall, what they start doing is becoming more thrifty and your company offers rewards for folks shopping. So are you seeing a demand in your company of folks taking advantage of these little I guess rewards or this little payback from shopping? Absolute. Our month over month growth in users has been fantastic. We have a 30% increase in the month of February of people downloading our app. So typically what we see is that in economic downturns or times that are tough for our platform is one of the places that wins because we have rewards across the board everywhere from marketplaces all the way up into the highest luxury retailers. So as people get a little bit more squeezed deals, discounts and savings become more important to them. And that's absolutely something that we've seen on racket on now when it comes to consumers. Again, perhaps not just taking the rewards, but taking consideration of how their purchases are bought. And I'm talking Buy Now Pay later, Are you seeing an increase in that? Absolutely. And Buy Now Pay Later has actually been a really important strategy for retailers over the past year. What it means is that people who could not afford to make the purchases that they wanted to make now have the ability to pay with those things over time. That opens up things like luxury to customers who wouldn't have been able to play in that arena before. What we've seen in luxury is that we're seeing double digit increases in the luxury space right now, luxury is like a freight train, there may be weakness in other places, but it's certainly not happening at the high end. And I do think Buy Now Pay Later has been a really important tool for those specific luxury retailers to capture a wider audience that they weren't able to speak to before. Now, as you know, mobile is the name of the game for the most part, especially in this day and age, especially with covid restrictions and everything else. So what companies do you think are doing excellent work when it comes to the mobile process from consumer to their goods. I think if you look at, you know, companies that are on the cutting edge of mobile, I think Nike is doing a beautiful job. I think buy now pay later companies like Larga are doing a fantastic job where they're really looking at customers digital first, you know, and at Rocket, and that's something that's important to us to where we're really looking at the way that our customers interact with our mobile environment, whether that be an app or mobile website to make sure that the flow is seamless and that it's really frictionless and easy. There are so many retailers focused on this now and often times actually where you see discounting happening is they're trying to drive people to those mobile experiences because that's where a lot of the company's investment is going at this point. All right, Kristen Gold, president of Rakuten, rewards Kristin, thank you so much for your expertise and your wisdom and congratulations on the surge of new users.