The Beigie Awards: All about inventory
WAILIN WONG, BYLINE: Hey, everyone, Wailin here. You may remember late last year when we invited our friends over at Planet Money to a family-feud style competition. We each made the case for an indicator of 2022 and then invited you, the listeners, to pick a winner. Well, the votes are in - nearly 600 of them; thank you so much for participating - and you rated your interest in interest rates as the indicator of 2022. So congratulations to...
SARAH GONZALEZ, BYLINE: I won?
WONG: ...Sarah Gonzalez.
GONZALEZ: Yes. Feels so good. Feels so good. Feels like people were trying to take it away from me.
WONG: Oh, right. OK. So we do have to put a tiny asterisk on this because when we put out the Twitter poll for indicator of the year, we actually didn't put interest rates as one of the choices. We put down inflation, which is, of course, related, but not exactly what your indicator was.
GONZALEZ: But you know what? Even if you took half of my votes away, I still win.
WONG: I think that's true because...
GONZALEZ: Yes, it is true (laughter).
WONG: ...You got the most write-in votes, too. It wasn't just Twitter - which you could see the count on Twitter - but you also got the most write-in votes, like, people who emailed in.
GONZALEZ: Wow. This feels so good.
WONG: All right. That is a wrap on indicators of the year. Thank you to Sarah and thank you to all of our listeners who wrote in. We read all of your responses, and we really appreciate you. Now, here is our show.
SYLVIE DOUGLIS, BYLINE: NPR.
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ROBERT SMITH, HOST:
Today is Fed Day. Fed day.
DARIAN WOODS, HOST:
That's right. It's Fed Day. Fed president Jerome Powell got on stage and announced a small increase in interest rates. Kind of what everyone was expecting. But I don't know, Robert, isn't every day Fed Day these days?
SMITH: It is true because so much depends on the Federal Reserve that markets not only watch interest rate increases on days like this one, they are constantly trying to watch for other signals.
WOODS: Right, like, are there signals flashing red or are there blue skies ahead?
SMITH: And, of course, here at THE INDICATOR, we watch for another certain color - beige, the calming color of sand, the color of my endless supply of cotton pants and the color of the Summary of Commentary on Current Economic Conditions.
WOODS: Commonly known as the Beige Book.
SMITH: The Beige Book, published by the Fed, has all these stories about what's happening in the economy right now. And it might not be broadcast live on CNBC, but it does have its own red carpet.
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SMITH: It's the Beigie Awards, our salute to the art and science of telling stories about the economy. I'm Robert Smith.
WOODS: And I'm Darian Woods. Today on the show, we will give the award to the best anecdote in this obscure document known as the Beige Book. Will any of them spot a tiny trend today that will make the headlines tomorrow?
SMITH: It's green lights go after the break.
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SMITH: Here's how this goes. There are 12 regional divisions of the Federal Reserve. Each one peers into their local economy and brings back little stories of what they see, and we tell you the best ones and give out the awards.
WOODS: The Beige Book, this time, has yet again a lot of mixed messages about the economy. And our first runner-up illustrates how hard it is to predict what's going to happen this year. This is the section from the Philadelphia Fed.
SMITH: I will read it. Quote, "A low-cost retailer reported that falling gas prices had driven stronger sales in December." But a high-end retailer exclaimed that, quote, "December is not happening."
WOODS: Did they use that voice, Robert?
SMITH: No, I'm embellishing a little bit. But this sentiment is all over the Beige Book. Some stores are hopping. Some stores are not happening. And there's a lot of wait and see about whether the economy will slip into recession.
WOODS: That uncertainty plays into our winning entry in the Beige Book. The envelope, please. And the Beigie goes to one of our favorites and two-time past winner, the Atlanta Fed.
SMITH: Accepting the Beigie is Reginald Chever, vice president and regional executive of the Atlanta Fed. We spoke to him on January 20.
REGINALD CHEVER: Oh, my God, Robert, we are extremely excited to accept this award.
WOODS: The Atlanta Fed won for a little entry on inventory - you know, all the stuff that businesses have stored in warehouses and basements.
SMITH: Quote, "Some firms reported plans to right-size inventory levels, reverting back to just-in-time inventory management compared to the pandemic era - just-in-case inventory approaches."
WOODS: Right. So let's break this down. For decades, people have been talking about just-in-time inventory. Why spend a lot of money on parts that are just going to sit in a warehouse?
SMITH: Yeah. So if you're building a car, the car seats may arrive in the morning. You bolt them in in the afternoon. And then by the evening, you're rolling the car off the line. And that way, you don't have to store all those seats and all your other parts anywhere, and it saves you money.
CHEVER: No, absolutely. And I think that's a great example. You know, one of the things I think about is pre-pandemic, that there was just higher certainty and predictability about what supply inputs would be available.
WOODS: And then the pandemic comes, supply chain disruptions emerge and businesses switch from just-in-time to just-in-case. Stores ordered all the clothes, toys, Christmas ornaments, you name it, just in case.
SMITH: That's why we saw so many clearance sales this holiday season. Everyone had too much inventory. Even Fed officials, like Reginald, got some deals.
CHEVER: I did take advantage of a few of the holiday discounts that were provided by some of my favorite retailers.
SMITH: What'd you get? Nice clothes?
CHEVER: I did. I picked up a few shirts, some fashion sneakers to kind of upgrade my professional attire out in the field.
WOODS: But, of course, supply chains are moving a lot better now.
CHEVER: And what we've started to hear more recently, towards the latter part of the year, is that there's more predictability that a lot of businesses are starting to experience. So rather than having their approach of, you know, I'm going to order everything I need just in case there's more hiccups that may happen, we're starting to hear that there's a higher likelihood that businesses will be moving back to that just-in-time strategy.
SMITH: So that's interesting. But what does it look like from the perspective of a local business? We called up a clothing store in the Atlanta Fed district. I think it's fair to say that nothing in this store will fit Reginald.
ANDREA HALL: My name is Andrea Hall. I own Wee Bee Baby Boutique in a suburb of Atlanta.
SMITH: Wee Bee Baby Boutique.
HALL: That's right.
SMITH: You did that just because it sounds funny, right?
HALL: (Laughter) Yeah. Just a cute little name - timeless classic.
SMITH: Wee Bee Baby stocks all of the hip baby gear you might need, from toys and spoons to those kind of strollers that are engineered like SUVs to roll over anything. And Andrea has to constantly think about how much of all this stuff to order in advance.
HALL: Absolutely. It's an investment. It's a risk. It's a can-I-predict-the-future conversation with myself every day.
SMITH: How much money is sitting on the shelves or sitting in the back room, essentially.
HALL: That's right. And it's basically a sunk cost until you can get that inventory off your floor.
WOODS: Andrea says the hardest part about inventory has been predicting seasonal items, like Valentine's Day or Easter Bunny-type stuff.
SMITH: Yeah, she says that she doesn't know whether she should get rid of it after the holiday or maybe save it till next year and no one will notice. And she agrees with the Atlanta Fed that supply chains seem to be more predictable these days. So rather than stock up the entire store for next fall, Andrea is holding back a little bit to see what's going to be really hot and even waiting until the customer comes into the store.
HALL: So I'll place an immediate order or I'll place a, quote-unquote, "dropship order" that will ship directly to our customers. It's kind of a win-win because customers feel like, oh, I've got my - I've got my baby place. If I know I need something, I can reach out and they can get it for me. And then for me, I don't have to physically hold that much inventory.
WOODS: By the way, the new, hot toy this season is called Toniebox. And this looks a lot like, well, a brightly colored radio.
SMITH: Yeah, it's for parents who don't want to give a lot of screen time to their kids. And so it basically just tells audio stories.
WOODS: I mean, I assume a certain economics show that the kids all love?
HALL: For now it's got Disney characters and kids characters. But you never know, it could grow with them all the way up to podcasts.
SMITH: We can only hope.
WOODS: I just want to say congratulations again to the team at the Atlanta Fed who wrote the Beigie Award-winning entry. And that includes Sarah Arteaga, who helped gather the information for the entry, and our guest today, Vice President Reginald Chever.
SMITH: Are you wearing your new shoes right now?
CHEVER: No, I'm not. Not currently at the moment.
SMITH: I hear that, like, wearing new sneakers is now acceptable on the awards circuit.
CHEVER: Yes, it is. It is. I actually caught the Golden Globes and saw quite a few folks in their sneakers.
WOODS: This episode was produced by Brittany Cronin. It was engineered by Katherine Silva. It was fact-checked by Sierra Juarez. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.
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