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The Weekly Consensus

Ideas, observations, and news on the consumer products and retail industries
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The Weekly Consensus – April 22, 2019 (Volume 11, Number 16)

The Big Story
Lyfting the Veil on African E-commerce
Marshall Schleifman

Last month on March 28th, a week after denim stalwart Levi Strauss & Co. completed its initial public offering to return to the stock market after going private in 1985, ridesharing giant Lyft priced its IPO at $72 per share, the top of a revised range that was first quoted as $62 to $68.  On its first day of trading, Lyft’s stock popped as much as 23% before settling up 9% for the day, giving this former unicorn a market capitalization of $22.2 billion.  Lyft’s successful IPO provided an “all clear” signal to market observers, especially the venture capitalists who control other scaled-but-not-yet-profitable tech leaders, that public investors are ready for and receptive to these companies.  In the three weeks since Lyft’s IPO, technology-enabled businesses such as Zoom Video Communications and Pinterest have gone public.  Expected on the horizon are Slack, Postmates, Airbnb, Palantir, Uber and others.

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The Weekly Consensus – April 15, 2019 (Volume 11, Number 15)

The Big Story
Instagram and Snapchat Battle for Consumers
Michael A. O’Hara

On April 4, Snap Inc., operator of Snapchat, launched the Snap Audience Network.  This new service will allow developers of any app looking for advertising revenue to host the same ads displayed on Snapchat.  Snapchat will take a commission on the revenue earned, with the rest going to the app owner.

According to Recode, however, the new Snapchat service comes nearly five years after Facebook launched a similar service.  And while this late entry to app advertising could still be potentially meaningful to Snap – Lifewire estimates that Apple currently offers approximately 2.2 million apps for download and Statista puts the number of apps available in the Google Play Store at approximately 3.0 million – Facebook’s lead over Snap is growing rapidly, thanks to its ownership of Snapchat’s archrival: Instagram.

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The Weekly Consensus – April 8, 2019 (Volume 11, Number 14)

The Big Story
Sears Home & Life: Good, but Enough?
Paul Alexander, CFA

Sears announced last week that it will open three new stores under the banner “Sears Home & Life” this May. After years of largely defensive strategies, such as downsizings, store closures, asset sales, and filing for bankruptcy protection in October, the decision to open new stores represents one of the only proactive, offensive measures that Sears has taken in recent memory. The question is, given the headwinds and failed strategies that have put the company in its difficult current position, what will these new stores look like, and do they have any hope of blazing a new, better future for the company?

Any company facing as many challenges as Sears needs to rethink its playbook if it is to attempt a comeback. The plan for the new Sears stores appears to appreciate that; Home & Life stores will be 10,000 to 15,000 square feet, mere postage stamp-sized boxes compared to the typical legacy Sears stores, which were about 150,000 square feet per unit. Within their smaller footprint, the new stores will focus on some of Sears’s strongest categories, namely tools, appliances, and other hard goods. Other strategic moves will be to focus on Sears’s best private brands, including the expansion of the DieHard automotive brand into lawn/garden and camping equipment, and offering more Kenmore products on Amazon’s Dash reorder platform.

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The Weekly Consensus – April 1, 2019 (Volume 11, Number 13)

The Big Story
A Growing Influence
Maeghan Thompson

Last week, Viral Nation, a leading social media marketing agency, was named “Best Large Influencer Marketing Agency” by the 2019 Influencer Marketing Awards.  With a massive group of influencers across various industries, Viral Nation connects brands with social media content creators.  This form of marketing (and the industry’s associated awards) may have been considered niche only a few years ago, but it has become an integral part of brands’ marketing budgets, and only appears to be getting more important.

There are several marketplaces where brands can link with influencers to create content.   One of these marketplaces, TRIBE, is an Australian influencer marketing startup founded in 2015 that announced last week a U.S. launch and a $7.5M Series A funding round.  TRIBE has its influencers create posts for ongoing campaigns, and then allows brands to pay for only the posts they approve for sharing.  TRIBE has over 50,000 influencers and has worked with over 40 of the top 100 global brands.

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The Weekly Consensus – March 25, 2019 (Volume 11, Number 12)

The Big Story
Hudson Yards: Nice Mall, Or Transforming Retail?

Hudson Yards, billed as the most expensive real estate project in U.S. history at $25 billion, opened this month. Its 28 acres encompass apartments, condominiums, retail stores, restaurants, a cultural center, and a 150-foot art-installation dubbed The Vessel. At seven stories and one-million-square-feet, the shopping center has been promised to transform both Manhattan shopping and the retail experience.

Of the more than 100 shops and 25 cafés and restaurants, most are familiar names: Louis Vuitton, Kate Spade, Cartier, Uniqlo, Banana Republic, H&M, Neiman Marcus, and Shake Shack dot the list. Along with those household brands, Hudson Yards has touted the first brick-and-mortar stores for a number of digitally-native brands. In fact, the presence of those brands has given way to an entire floor within the shopping center and a special name to boot: The Floor of Discovery. According to the Hudson Yards website, “The Floor of Discovery will house a unique collection of first locations from digitally native brands and experiential shopping offerings from modern brands.”

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The Weekly Consensus – March 18, 2019 (Volume 11, Number 11)

The Big Story
Unintended Consequences
Betsy White

Successful retail strategy number one has always been to give consumers what they want, when they want it. That message has only been reinforced with the ubiquity of ecommerce and the evolution of omni-channel strategies at the most successful retailers. The latest twist on this has been the proliferation of business models that have provided consumers with the ability to satisfy their wants, not through ownership, but via a short-term rental model.

Perhaps it’s the gig economy, where many jobs are now done by contractors (who, by definition, are temporary), that is driving more consumers to rent instead of own. It is entirely possible to live your life today without owning a whole bunch of things that consumers have traditionally purchased (or at least rented on a long-term basis), like your home (think Airbnb), your car (Lyft, Uber), your clothes (Rent The Runway, Le Tote), and even your furniture (Fernish). At least until now, it appears that those who have taken advantage of the near-term cash flow benefits of rental programs have also benefited from little upward price movement. But renting-focused consumers may not be able to rely on price stability going forward, as evidenced by the millions and even billions of dollars of losses that public companies like Uber and Lyft report each year.

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The Weekly Consensus – March 11, 2019 (Volume 11, Number 10)

The Big Story
Why Didn’t I See Many Consumer Startups at Shoptalk?
Paul Alexander, CFA

After hearing rave reviews of the event for a couple of years, I was happy last week to attend Shoptalk, the annual retail and ecommerce conference, for the first time. I enjoyed it, and, in many ways, it was exactly what prior attendees had told me to expect: thousands of attendees, keynotes from A-list industry executives, panels with interesting topics and experts, and countless opportunities to network. However, my experience differed from my expectations in one curious way. I was under the impression that Shoptalk was chock-full of startup brands and entrepreneurs. While there were some consumer startups in attendance and speaking on panels (Lively, GREATS, and Cotopaxi were there, to name a few), there weren’t as many of them as I expected. Instead, it seemed that most keynotes and panelists were from industry titans like Walmart, Amazon, and Google. I was not alone in noting this; a report from Forbes said that, to some, “the show felt big branded,” and an Ad Age article commented on the show’s evolution from 2016, when it felt like an “intimate” gathering of startups, to today, when it is an event touting “executives from big names.”

Much of this evolution is likely attributable to Shoptalk’s success. With each year, the event grows, making it more attractive to big-money sponsors and famous speakers. However, maybe other factors were also at play. One panel discussion at Shoptalk, “VC Perspectives on Innovation in Retail,” touched on two dynamics in the startup world that could have affected what I saw. Unfortunately for emerging consumer businesses, both possibilities are a little foreboding.

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The Weekly Consensus – March 4, 2019 (Volume 11, Number 9)

The Big Story
A Good Break-up?
Billy Busko

“The whole is more than the sum of its parts.” – Aristotle

However, Gap disagrees.  The company announced last week that it’s spinning off its value chain Old Navy from the rest of the brand portfolio, creating two publicly traded companies.  The legacy company will retain the Gap brand along with its other brands including Banana Republic, Athleta, Intermix and its newly created e-commerce brand Hill City.

One of the trends in the increasingly active market for corporate transactions has been the growing popularity of spin-offs.  A spin-off involves the separation of a company’s businesses through the creation of typically two (although there could be more) independent publicly-traded companies. As a result, shareholders at the time of the spin-off own shares of two companies rather than one.  Boards of directors, managers and investors believe that certain businesses may command higher valuations if owned and managed separately rather than as part of the same enterprise.  An added benefit is that a spin-off is commonly completed on a tax-free basis to both the originating public company and the shareholders.

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The Weekly Consensus – February 25, 2018 (Volume 11, Number 8)

The Big Story
RetailWire Discussion: Is Walmart just starting to hit its stride?
George Anderson, RetailWire


As many expected, Walmart reported strong fourth quarter results as it continued to strategically use its e-commerce business to drive top line sales online and in stores during the holidays. The retailer, which posted a gain of 43 percent in e-commerce sales during the quarter, saw its same-store sales (excluding gas and including online) improve 4.2 percent in the U.S., a full percentage point ahead of the analyst consensus.

On the company’s earnings call, Walmart CEO Doug McMillon said the retailer had picked up market share in key categories including groceries and toys during the holiday period. He pointed to a strategy of meeting shoppers where and when they want to buy as a big factor in his company’s success. Mr. McMillon, as in the past, said that customers who shop Walmart online and in its physical locations spend about twice as much as those who shop in the chain’s stores alone.

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The Weekly Consensus – February 18, 2019 (Volume 11, Number 7)

The Big Story
The Winners and Losers of Amazon’s Abandoned NYC HQ2
Mark Lenz

The Amazon River can be challenging to travelers, with risks lingering around every bend., Inc. found challenges around every bend while planning its HQ2 in New York City, and last week it decided the risks were too high, and announced it was backing off on its intent to build a second headquarters in Long Island City.

Incidentally, I wrote my last Big Story on Amazon HQ2 the week that the original announcement was made to split the new headquarters between Virginia and New York.   Two of the most powerful politicians in the state, the governor and the mayor of New York City were puffing out their chests upon the announcement.  However, at the same time, there was an undercurrent of dissent citing the cost in dollars and quality of life for current residents.  I asked then “who will be the real winners and who will be the real losers in this Amazon HQ story, and at what cost”?

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