210: An Economic and Inventory Financing Overview with Wells Fargo

Written by Rob Stott

April 2, 2024

You can’t have a conversation about the retail industry without talking about the current status of the economy or where it’s heading. We did just that with Velicia Sutton, managing director and general manager for Wells Fargo. In addition, Velicia dives into the world of inventory financing and shares how independent retailers can leverage this available benefit to free up cash to focus on other areas of their business.


Rob Stott: All right, we are back on the Independent Thinking Podcast. Excited to be sitting down with Velicia Sutton, managing director and general manager for Wells Fargo. Appreciate you taking the time, being over here. I got that right, everything good?

Velicia Sutton: You did.

Rob Stott: All right, perfect.

Velicia Sutton: That was perfect. I know it’s a mouthful.

Rob Stott: Yeah, right.

Velicia Sutton: Thank you for having me. Looking forward to it, this is fun.

Rob Stott: Absolutely. Well, like I said, appreciate you doing it. We’re going to jump right in.

Velicia Sutton: Sure.

Rob Stott: Start with you.

Velicia Sutton: Yes.

Rob Stott: Tell us about you. Tell us about Velicia, who you are, your background and path to your role at Wells Fargo.

Velicia Sutton: I’ve been in financial services for about 20 years, originally from Washington, DC area. I’ve worked in various aspects of financial services, from investment management, to a brief stint in retail financing, to inventory financing.

Rob Stott: That’s awesome.

Velicia Sutton: Which I’ve spent the majority of my time now in inventory financing. I realized that I needed purpose in what I do. Even though this is a job and a career, it helps me to have purpose underlying that. I really found purpose in the independent dealer channel.

Rob Stott: That’s awesome to hear that. I got to ask a follow-up, because you mentioned the District.

Velicia Sutton: Yes.

Rob Stott: What part of it?

Velicia Sutton: Maryland.

Rob Stott: Okay.

Velicia Sutton: I’m on the Maryland side. I’m about halfway between Annapolis and Washington, DC.

Rob Stott: Oh, perfect.

Velicia Sutton: Yeah.

Rob Stott: That’d be the 3:00 on the beltway, right?

Velicia Sutton: Yes. You know it very well.

Rob Stott: I do. I spent a little time in Springfield, Alexandria.

Velicia Sutton: Yes.

Rob Stott: For a few years after college, so I know that DMV very well.

Velicia Sutton: Yes, exactly. And the traffic, it’s just horrendous.

Rob Stott: I think that’s why I’m back in Philly now.

Velicia Sutton: Yes, makes sense.

Rob Stott: I’m going to be honest.

Velicia Sutton: It makes sense.

Rob Stott: That’s awesome. I got to ask, I know I’ve seen a lot of your team around, talking to members, having sessions. We’re going to jump right into the deep end.

Velicia Sutton: Okay.

Rob Stott: The economy.

Velicia Sutton: Yes.

Rob Stott: Give us that update.

Velicia Sutton: I know.

Rob Stott: What are you guys seeing, what are you tracking, how’s it looking?

Velicia Sutton: So interesting, because I’ve heard different terms used at this point, from cautiously optimistic, to guarded to optimism, to we’re saying on our side storm clouds with some brightening coming. There’s so many different ways that it’s been described at this point.

Obviously there’s reason to have some uncertainty right now, but at the same time there are bright spots. Consumer spending, the labor market, those things continue to be really resilient and give us optimism as well, as we turn the corner.

Rob Stott: Yeah.

Velicia Sutton: We’re all wondering what is the Fed going to do?

Rob Stott: Right.

Velicia Sutton: When are they going to lower rates? Which Wells Fargo is predicting that it should be some time in Q2.

Rob Stott: Yeah.

Velicia Sutton: I think when that happens, we’ll start to see a lot of improvement.

Rob Stott: Yeah. Everyone’s been waiting for it, right?

Velicia Sutton: Exactly.

Rob Stott: There’s been a lot of talk about it, but once it actually happens, I think things start to turn.

Velicia Sutton: Right. I think the consumers, there will be a little less uncertainty. They’ll have a little bit more comfort as well.

Rob Stott: Yeah.

Velicia Sutton: But we also are saying, if you look at households, they’re relatively healthy still. Wells Fargo is seeing that, if you look at this time versus 2008, debt is up.

Rob Stott: Right.

Velicia Sutton: Up about 36%. But income is up 85%.

Rob Stott: Oh, wow.

Velicia Sutton: If you look at that-

Rob Stott: It’s missing it.

Velicia Sutton: Right, exactly. The households are not that levered.

Rob Stott: Right.

Velicia Sutton: There’s some concern with rising credit card delinquencies, and some loans and delinquencies there, but overall the households are still relatively strong.

Rob Stott: Well, that’s the thing. It felt like a lot of waiting for something to happen.

Velicia Sutton: Wait and see, wait and see, yeah.

Rob Stott: But the data points and the consumer, frankly, has just continued to surprise people.

Velicia Sutton: Right.

Rob Stott: It’s kicking that can further down the road, hopefully off a ledge at some point.

Velicia Sutton: Right, exactly. I think we’re all ready to turn the corner.

Rob Stott: Just calling it, we don’t have to worry about that can. Exactly.

Velicia Sutton: And not continue to wait, yeah.

Rob Stott: Well, given all that, I know I’m excited to dive into this now with you and learn a little bit more about it.

Velicia Sutton: Yeah.

Rob Stott: The inventory financing side.

Velicia Sutton: Yes.

Rob Stott: Given all you just told us about the economy and what you’re seeing, what role can inventory financing play for an independent retailer?

Velicia Sutton: Yeah. No, it’s a great question. I think it’s more critical than ever. A little different when there wasn’t as much product availability, product was flying off the shelf as soon as you can get it. But now that things have slowed some and consumers are more purchasing for replacement, it’s so critical that dealers lean into terms. Take the time so that, ideally still, your turn is matching the terms that were given. But that becomes so much more important, in terms of managing cashflow, optimizing cashflow, and making sure that the dealer remains healthy during this time, too.

Rob Stott: No, that’s awesome. What would you call, for those that aren’t familiar with it … I hope everyone is, first of all.

Velicia Sutton: Yes. If not, come see us.

Rob Stott: Right. If they’re not, then come talk to you.

Velicia Sutton: Right.

Rob Stott: Biggest benefit to the retailer of inventory financing, what would you identify that as?

Velicia Sutton: It’s that cashflow piece for sure. Most of our programs are subsidized by the manufacturers, and there’s a reason they’re doing that.

Rob Stott: Right.

Velicia Sutton: They want the dealers to be healthy, they want to help them maximize cashflow. But the other component too is that it then helps them manage their inventory and stock the right products.

Rob Stott: Yeah.

Velicia Sutton: In this market, again, where consumers are coming in to replace something a lot of times that has broken, you need to have on hand what they need, what they want. The inventory financing can help you do that.

Rob Stott: Right. In other words, they don’t have to have their finances locked up with this product-

Velicia Sutton: Correct.

Rob Stott: That they’re trying to pay for.

Velicia Sutton: Correct.

Rob Stott: They can maybe use those dollars in marketing, or on their website, other areas of the business.

Velicia Sutton: Right. You can sit it in a bank account. You can invest it in other places, exactly.

Rob Stott: No, that’s awesome.

Velicia Sutton: Exactly.

Rob Stott: How about a benefit that’s not talked about enough?

Velicia Sutton: I would say the other thing that comes with working with us as well, is again there really is this trifecta of the group, and the manufacturers, and us that are so invested in the retailer. We’ll partner a lot of times, to talk about programming, to talk about show specials, to talk about things like that, that can benefit the retailer.

Rob Stott: Yeah.

Velicia Sutton: We’re in this together.

Rob Stott: Yeah.

Velicia Sutton: That’s one of the parts I love and enjoy about doing it as well, is that we can come to the table together collectively, and try to figure out solutions.

Rob Stott: I know we’ll dive into that a little bit deeper in a minute, because I think that’s critically under, maybe not utilized because I am sure they are talking with you, but something that’s not talked about enough. It’s unique.

Velicia Sutton: Absolutely. Absolutely. I think a lot of times, they’re like, “This is my lender,” and you maybe feel like you want your lender to know certain things, your manufacturer to know other things. But when we work together, it usually results in a great outcome for the retailers.

Rob Stott: Any myths out there about inventory financing?

Velicia Sutton: Interesting question. I would say yes, and this probably mirrors what our sister company on the retail finance side would say. I think there’s a lot of retailers, and I talk to some here, that think you have to be cash strapped, or it’s a cash strapped retailer that’s using inventory financing.

Rob Stott: Okay.

Velicia Sutton: That’s not the case.

Rob Stott: Right.

Velicia Sutton: It’s the smart retailer who says, “Why not put my cash to better use? Why not use someone else’s cash in the interim so that I can do other things,” all the things you mentioned, “with my money.” It’s not just the dealer that needs it, it’s the smart dealer who knows how to-

Rob Stott: They’re thinking ahead.

Velicia Sutton: Optimize. Exactly.

Rob Stott: They’re thinking ahead, strategizing a little bit.

Velicia Sutton: Exactly.

Rob Stott: And have the best interests of their business in mind.

Velicia Sutton: Right, absolutely.

Rob Stott: We’re just every day myth buthers. Ah, man.

Velicia Sutton: Myth buster.

Rob Stott: Tongue twister, right?

Velicia Sutton: I know.

Rob Stott: I didn’t think it was going to happen. Myth busters over here.

Velicia Sutton: Right. That’s a hard one.

Rob Stott: Right. I want to go back to that point you mentioned because being that partner to the retailer-

Velicia Sutton: Yes.

Rob Stott: I have to imagine that you guys have access to a ton, based on what orders are looking like, and the trends maybe down to product category. I can’t even begin to imagine the breadth of intel that you guys are able to leverage on behalf of the retailer. Talk about it. Is that something that they do and a benefit to them?

Velicia Sutton: Absolutely. We have a ton of data available and insights that, again, we will share because we’re interested in making sure that this channel in particular thrives.

Rob Stott: Yeah.

Velicia Sutton: We have an online tool called Comms that the dealers can access reporting, in addition to make payments, manage their inventory through that tool. We leverage that. We also host quarterly economic updates that we would ask everyone to take advantage of. We have our economists that are speaking on CNN and other channels, that come down and speak with our customer base. You have the opportunity to ask them questions.

Rob Stott: It’s fantastic. I sat in on a couple of those.

Velicia Sutton: Yes.

Rob Stott: They are truly enlightening.

Velicia Sutton: Well, thank you. Thank you.

Rob Stott: A great opportunity to get that economic … The things we talked about at the top, right?

Velicia Sutton: Exactly.

Rob Stott: Dive into all of that.

Velicia Sutton: There’s so much uncertainty.

Rob Stott: Yeah.

Velicia Sutton: This is the time to have those questions answered, or as things change, because things have been so nimble, to keep up on the pulse of things and what’s coming around the corner.

Rob Stott: It might be the journalistic background in me, but the numbers that get presented during that, there’s a lot of data.

Velicia Sutton: Yes.

Rob Stott: It might be overwhelming to some.

Velicia Sutton: Absolutely.

Rob Stott: Maybe it’s not for everyone to sit in. But if you have any data nerds on your team as an independent retailer, economy nerds … Let’s be real, we’re all economy nerds right here.

Velicia Sutton: I was going to say, I majored in economics, so that’s a little bit of me, too.

Rob Stott: It’s true. To be able to dive into all that and see those numbers, you guys get deep with that data.

Velicia Sutton: Absolutely.

Rob Stott: It’s housing start … All sorts of stuff.

Velicia Sutton: All the things that drive this space. I think they do such a great job of, to your point, catering to the academic who has that interest, but then also making sure that-

Rob Stott: It’s simple enough.

Velicia Sutton: If that’s not your thing, that you can still understand and have takeaways to help run your business.

Rob Stott: It’s fantastic.

Velicia Sutton: Yeah.

Rob Stott: Wrap up, question on PrimeTime. What excites you about being here? What are you guys doing here? What’s going on at the booth in your area? I’ll be over there in a little bit to dive in deeper. For those not here that are missing out-

Velicia Sutton: I know, you are missing out.

Rob Stott: You’re missing out.

Velicia Sutton: You are missing out, for sure.

Rob Stott: What happens over at the Wells Fargo booth and what are you guys doing? What excites you about this week?

Velicia Sutton: This is my favorite part. I mentioned purpose at the start of it. Speaking to retailers, hearing about their stories, their journeys, and a lot of them that we’ve been a part of for 30, 40 years. That’s amazing.

Rob Stott: Yeah.

Velicia Sutton: But then, we also get to go to market with our other sister division, so retail finance, merchant services, so we really try to make sure we’re providing solutions. Whether you need one of those two, or all three, those are available. We’re just here to help. Whether it’s answering questions, whether it’s insights that we’re seeing, any of that, we’re available to come, meet our team, host of resources. We like to have a little bit of fun at the same time, while we’re over there. It’s just really great to reconnect.

Rob Stott: Yeah.

Velicia Sutton: We get up every day for the customers. This, again, just gives us that opportunity to remind us of that purpose of what we’re doing every day.

Rob Stott: It’s awesome. Mic drop moment. Don’t drop that mic, though.

Velicia Sutton: Right.

Rob Stott: No. That’s a fantastic spot to end on, so I really appreciate you taking the time.

Velicia Sutton: Well, thank you. This was fun.

Rob Stott: Fantastic.

Velicia Sutton: No, I appreciate it.

Rob Stott: Look forward to getting this out there. Our members, learning a lot.

Velicia Sutton: Yeah.

Rob Stott: If you don’t know anything about inventory financing, we know some people.

Velicia Sutton: Come see us.

Rob Stott: Go see them.

Velicia Sutton: Exactly.

Rob Stott: No, we appreciate it. Enjoy the rest of the show.

Velicia Sutton: Thanks. You, too.

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