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Long term future of retail
Posted on 5/19/17 at 3:17 pm
Posted on 5/19/17 at 3:17 pm
It's been well documented how many bankruptcies there have been already this year in the retail space. Malls are dying, millennials prefer to spend money on experiences vs possessions, etc.
Outside of the online behemoths like Amazon, Walmart, Alibaba, and maybe the home improvement stores like HD and Lowes, what's everyone's take on the future of retail? Sears, JCP, etc. seem to be dying a slow death. For the life of me, I don't know how Best Buy stays in business.
Are we seeing a long-term change or a temporary blip and the retailers will figure this out.
Should some of the money that we used to invest in retail instead go more heavily into tech stocks? I remember a few years ago, older investors and dividend cultists bemoaning Amazon and FB's P/E.
Well they were clearly wrong. Just wondering in today's world if FB, SNAP, TripAdvisor, etc. type stocks are the future - things that are centered on social media and experiences/travel. I don't know the answer, which is why I'm putting it out there.
Also, even with some nice runups, you have to think Cyber Security will continue to be one of the more dominant issues of the next 20 years.
Outside of the online behemoths like Amazon, Walmart, Alibaba, and maybe the home improvement stores like HD and Lowes, what's everyone's take on the future of retail? Sears, JCP, etc. seem to be dying a slow death. For the life of me, I don't know how Best Buy stays in business.
Are we seeing a long-term change or a temporary blip and the retailers will figure this out.
Should some of the money that we used to invest in retail instead go more heavily into tech stocks? I remember a few years ago, older investors and dividend cultists bemoaning Amazon and FB's P/E.
Well they were clearly wrong. Just wondering in today's world if FB, SNAP, TripAdvisor, etc. type stocks are the future - things that are centered on social media and experiences/travel. I don't know the answer, which is why I'm putting it out there.
Also, even with some nice runups, you have to think Cyber Security will continue to be one of the more dominant issues of the next 20 years.
Posted on 5/19/17 at 3:47 pm to ghost2most
If you want to invest in retail you have to look at the businesses that can't be replicated well online.
Home Depot, Lowes, Costco, Ross, and TJ Maxx.
For the rest I believe the bloodbath in retail will continue.
I am sure New businesses will pop up that will offer something different than online. But who knows what that will be.
Home Depot, Lowes, Costco, Ross, and TJ Maxx.
For the rest I believe the bloodbath in retail will continue.
I am sure New businesses will pop up that will offer something different than online. But who knows what that will be.
This post was edited on 5/19/17 at 3:47 pm
Posted on 5/19/17 at 4:10 pm to UltimaParadox
Like above, some retail doesn't fit the online sales/delivery model. The others will adapt or die. I saw JC Penny is trying to get into hotels.
As far as retail stocks, I agree with Cramer on Wal Mart. Bought some today.
As far as retail stocks, I agree with Cramer on Wal Mart. Bought some today.
This post was edited on 5/19/17 at 6:06 pm
Posted on 5/19/17 at 4:17 pm to ghost2most
I mean department stores are done, they just don't serve a purpose anymore.
Retail won't go away, luxury is obviously the best bet as it's more experience than any other type.
I think digitizations of media really killed electronic stores. It was the milk and eggs of electronic retail, that's what got them in the door.
It will be interesting how retail evolves.
Retail won't go away, luxury is obviously the best bet as it's more experience than any other type.
I think digitizations of media really killed electronic stores. It was the milk and eggs of electronic retail, that's what got them in the door.
It will be interesting how retail evolves.
Posted on 5/19/17 at 4:50 pm to barry
Agree with the comments so far. The Marshalls by me is insanely packed anytime I go. Women love that place.
What keeps a place like Barnes & Noble open? Old people who still pay twice as much for books? People who like to read in the Starbucks?
I'm fascinated by disruptive technologies trends. The oil industry obviously didn't forecast the impact shale and electric cars would have, the media companies weren't prepared for streaming, and the auto manufacturers are all fighting a losing battle, imo, vs Tesla and Uber/Google, etc.
Retail just seems to vulnerable. One of the reasons people still shopped for clothes in the store was to try it on. Virtual reality could probably even kill that.
What keeps a place like Barnes & Noble open? Old people who still pay twice as much for books? People who like to read in the Starbucks?
I'm fascinated by disruptive technologies trends. The oil industry obviously didn't forecast the impact shale and electric cars would have, the media companies weren't prepared for streaming, and the auto manufacturers are all fighting a losing battle, imo, vs Tesla and Uber/Google, etc.
Retail just seems to vulnerable. One of the reasons people still shopped for clothes in the store was to try it on. Virtual reality could probably even kill that.
Posted on 5/19/17 at 5:47 pm to ghost2most
quote:
What keeps a place like Barnes & Noble open?
Physical book sales are actually rising.
Posted on 5/19/17 at 6:05 pm to barry
Yeah but why go to a store to buy a book?
Posted on 5/19/17 at 6:06 pm to barry
Yep, I've got a Kindle (incoming anecdotal evidence alert!) that I absolutely love but I have also started buying physical books again.
Posted on 5/19/17 at 6:51 pm to barry
It's all about where people spend their disposable income. Restaurants,travel,cars,homes,home goods, retail items etc etc.
The biggest question is what will people be spending their money on the next few years and where will they be doing it
The biggest question is what will people be spending their money on the next few years and where will they be doing it
Posted on 5/19/17 at 10:26 pm to ghost2most
Not sure why you got downvoted. Its a very interesting topic. My question is how will money be made off the slow deaths of all these big box retailers. Somebody's going to see opportunity in it that others don't.
Posted on 5/20/17 at 9:37 am to PetroBabich
It's trending down but that trend is not going to end the industry like say movie rentals.
There are still tons of stuff I prefer trying out/ trying on or actually feeling or testing out before buying. Shoes for example, and I know many people buy shoes online and I have also. But in general, you are best off trying them on. I've bought a pair online, they didn't fit so I ordered a different size and the 2nd size was still not right so I sent them back and went into a store. Something's are faster to actually go to a store. Clothes can be like that. I've bought electronics off Amazon, new egg, etc. too. But I still go into somewhere like Best Buy for at least 25% of my purchases. The other thing Best Buy offers is installation, online still has a hard time with that and there is still a large portion of society that can't hook up a tv themselves.
Some electronics are like that too. Best Buy I've been there plenty of times when I could of shopped online, but it's easier to go into the store and come home with a product I'm happy with than maybe save 5%, wait 2 days for shipping, and then hopefully be satisfied.
For business especially, buying in person can often times be well worth the time and expense to have exactly what you need immediately.
There are still tons of stuff I prefer trying out/ trying on or actually feeling or testing out before buying. Shoes for example, and I know many people buy shoes online and I have also. But in general, you are best off trying them on. I've bought a pair online, they didn't fit so I ordered a different size and the 2nd size was still not right so I sent them back and went into a store. Something's are faster to actually go to a store. Clothes can be like that. I've bought electronics off Amazon, new egg, etc. too. But I still go into somewhere like Best Buy for at least 25% of my purchases. The other thing Best Buy offers is installation, online still has a hard time with that and there is still a large portion of society that can't hook up a tv themselves.
Some electronics are like that too. Best Buy I've been there plenty of times when I could of shopped online, but it's easier to go into the store and come home with a product I'm happy with than maybe save 5%, wait 2 days for shipping, and then hopefully be satisfied.
For business especially, buying in person can often times be well worth the time and expense to have exactly what you need immediately.
This post was edited on 5/20/17 at 9:40 am
Posted on 5/20/17 at 10:34 am to ghost2most
quote:
Yeah but why go to a store to buy a book?
Why not?
Posted on 5/20/17 at 11:13 am to UltimaParadox
quote:
If you want to invest in retail you have to look at the businesses that can't be replicated well online.
Home Depot, Lowes, Costco, Ross, and TJ Maxx.
For the rest I believe the bloodbath in retail will continue.
I agree with this.
This is a very long-term trend that started decades ago with companies like K-Mart, Sears, & JC Penney, but the hope for investors was that they could continue on for a good while as cash cows at the mature end of the industry life cycle.
But the problem goes beyond that and extends to the large amount of store space per capita in the U.S., as referenced by The Atlantic ( LINK):
Supposedly (and I'm not sure how big of a factor this really is) some of the recent stress might have to do with the timing of 10-year loans in CRE ( LINK):
quote:
Part of the problem in the current cycle are CMBS that were originated before the Financial Crisis in 2006 and 2007 and that are backed by ten-year loans that are now coming due. Fitch calls it “the wall of maturing loans.” $205 billion of these maturing CMBS are rated by Fitch. Now the loans need to be refinanced. And that may be tough.
Some articles you will read in the financial media will say "It's not just Amazon!", but neglect to tell you that online sales are a much bigger deal than just Amazon.
Generally speaking, U.S. retailers will need to move to a model with fewer brick-and-mortar square footage that is more strategically used in combination with online sales. As many have noted, Home Depot & Lowes are good examples of businesses where physical presence is a necessity. For others, finding the right physical-to-online mix used in combination with each other will be difficult, and square footage will likely continue to drop.
Posted on 5/20/17 at 11:58 am to ghost2most
quote:
I'm fascinated by disruptive technologies trends. The oil industry obviously didn't forecast the impact shale and electric cars would have, the media companies weren't prepared for streaming, and the auto manufacturers are all fighting a losing battle, imo, vs Tesla and Uber/Google, etc.
Retail just seems to vulnerable.
I have been thinking about this a lot lately.
What is going to happen when all of these bubbles burst?
You have major industries where most would agree the future is bleak. Where are those jobs going to go? What is going to happen to these people?
There are only so many jobs within Tesla/Google/Amazon/Apple... what is the ripple effect going to look like with all of these lost jobs / abandoned real estate / lost income?
I think in general we need to be "rooting" for retail companies and others to be successful, it just benefits everyone. I don't think it is healthy for our country (the average person specifically) to have huge Amazon types ruling everything.
This post was edited on 5/20/17 at 12:00 pm
Posted on 5/20/17 at 1:12 pm to hiltacular
quote:
You have major industries where most would agree the future is bleak. Where are those jobs going to go? What is going to happen to these people?
As shown above, the USA is literally the only country in the world with close to the amount of big box stores we have. The worse big box stores are here, the closer to the rest of the world we become.
People always say, where is everyone going to work? The next thing we know, the next decade averages more work hours than before. There's not very many professionals that have work hours in the 30s.
One thing people want to pay retail pricing for is customer service and specialization. Americans for fat and lazy, instead of working for ourselves to start something too many wanted to go to corporate or big box America to jump on a band wagon.
This post was edited on 5/20/17 at 1:13 pm
Posted on 5/20/17 at 3:06 pm to hiltacular
quote:
What is going to happen when all of these bubbles burst?
You have major industries where most would agree the future is bleak. Where are those jobs going to go? What is going to happen to these people?
There are only so many jobs within Tesla/Google/Amazon/Apple... what is the ripple effect going to look like with all of these lost jobs / abandoned real estate / lost income?
I think in general we need to be "rooting" for retail companies and others to be successful, it just benefits everyone. I don't think it is healthy for our country (the average person specifically) to have huge Amazon types ruling everything.
Who knows. But Amazon is my go to place for everything I need for my doomsday bunker complex.
Posted on 5/21/17 at 1:17 am to ghost2most
Some of these stores that you think of as retail though, really aren't retail. Wal-mart for instance isn't retail. It's a wholesale operation. That's why they have the same TV best buy has for 50 dollar less. The difference is, no one at walmart knows anything about the products, and they are impossible to find to pull off the shelf and pissed off when they're asked to do it. Best buy pays more for customer service. I agree that most the generic clothing type stores are on their way out. A lot of these stores were built decades ago, and the neighborhoods just don't support them anymore. If you gave me a 500 dollar gift card to JCP, Sears, Kohls, or a lot of them places that sold cheap clothes and told me to go buy me 500 worth of clothes, I wouldn't even mess with it. I've got to a point where I buy everything I can online that's practical for delivery, if it's something I can wait on. I've ended up with some clothes I didn't end up liking, but that could have been misjudged in the store too.
I've bought some real cool clothes and shoes off ebay. I think most of us by human nature would rather shop from home than going in to the store, b/c it's much more time consuming.
What I would invest in when you get a chance is home based virtual call center b/c they support a lot of these big online businesses like Amazon. I went to work for one in January just too make a few bucks in my downtime of flipping used cars. 4 months later I'm pulling 600$ per week on 30-35 hours working when I want to work from my bedroom couch.
I've bought some real cool clothes and shoes off ebay. I think most of us by human nature would rather shop from home than going in to the store, b/c it's much more time consuming.
What I would invest in when you get a chance is home based virtual call center b/c they support a lot of these big online businesses like Amazon. I went to work for one in January just too make a few bucks in my downtime of flipping used cars. 4 months later I'm pulling 600$ per week on 30-35 hours working when I want to work from my bedroom couch.
Posted on 5/21/17 at 8:29 am to carguymatt
Well women dominate the clothes market, we are an afterthought for any of these stores... women especially need to try on clothes before buying.
Posted on 5/21/17 at 9:52 am to hiltacular
quote:
Well women dominate the clothes market, we are an afterthought for any of these stores... women especially need to try on clothes before buying
100% agree, but trying to invest in women's clothes trends seems like an impossible task.
Unless it's like TJ Maxx where the inventory turns over quickly. Or something like Ulta where it is a required purchase for most women.
Posted on 5/21/17 at 11:39 am to ghost2most
The only thing I predict is the end of branding.
Most people will wake up to the idea that paying extra for under armour or Nike for example is not smart when you get the same quality from Amazon or Costco? for half of the cost
And why anyone would invest in the name branding in 2017 is mind blowing to me. But I have been saying that since under armour was selling for 40 per share
Most people will wake up to the idea that paying extra for under armour or Nike for example is not smart when you get the same quality from Amazon or Costco? for half of the cost
And why anyone would invest in the name branding in 2017 is mind blowing to me. But I have been saying that since under armour was selling for 40 per share
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