Monthly Archives: July 2016

“Everyone’s trying to find a way to maintain market share and also extend themselves in a different way that’s maybe not traditional to retail,” said David LaPierre, a vice chairman with the Global Retail Services Team at CBRE.

Source: What the changing tenant list in Times Square says about retail

A 40,000 square foot NFL store? Foot Locker opening a 36,000 store just for basketball shoes and apparel? a 6,000 square foot Hershey store? In the

Nope, just reacting to the evolving consumer.

Make no mistake about it, these stores will likely make any number-crunching CFO pull what ever remaining hairs they have left out ( we have no data to support that stereotype, but we suspect there are few CFO’s out there that wouldn’t want a better hairline.)

These stores aren’t likely to be big revenue-makers for these companies. Rather, they are what we call the “Experience Economy” and are coming about as a result of two thematics we track at Tematica Research: The Connected Society and Content is King (two of the top performers in our recently release Thematic Index)

The Connected Society, with its always-on broadband networks and connected devices, have transformed many the industry, none more than retailing, led by Amazon (AMZN). Why would anyone go to the mall when you can log into Amazon Prime, find what you want in 2 minutes, have it shipped to you maybe the same day if not max 2 days, pay nothing in shipping and handling, and likely get it cheaper?

When do people go out and shop? When they are bored and want to be entertained, which is why you see the American Mall being transformed into entertainment centers. Movie theaters, restaurants, gaming centers — these are the “stores” dominating the malls these days, providing shopping experiences that are just that, experiences. We would place the Apple Store in that category.

What these retailers are doing to creating “content” — not in the traditional sense of a video, book or article — but creating shopping experiences that extend the brand, and lead consumers to make purchases online.

The NBA was actually a leader in this space, going all the way back to the mid 1990’s when it created the Jam Session experience at it’s All-Star game, the Jam-Van which brought the NBA experience to small towns across America (and even the West lawn of the White House) and the NBA Store on Fifth Avenue.

For a sports league, this strategy made sense. But, now it’s being played out by the likes of Hershey, the most basic of consumer products there is, and many other brands.

When we see multiple thematics converging together — like what’s happening in Times Square — we move to the edge of our seat and take notice.

The Content is King thematic — one of the better performers in our Thematic Index — focuses on how the in today’s over-stimulating world, it’s the content providers that are breaking through the noise and building lasting interactions and engagement with users. Yahoo! (YHOO) would be what we call a negative confirmation of the theme — the once upon a time giant of the internet is quickly fading off into the distance with the prospects of being acquired by the old-school telecom giant Verizon and being folded into AOL. It’s downfall? Well, with it’s search business long-ago surpassed by the Google train, the company has floundered for nearly a decade attempting to provide some sort of engagement with users — in other words, trying to find some content users will use and come back for.

But Yahoo has had to curb those ambitions. It last year wrote off $42 million in expenses for developing three video series, including a revival of the popular “Community” show. In January, Yahoo also shut online-video portal Screen after spending more than $100 million to make its own shows, excluding the cost of the employees involved.

Source: Verizon Nears $5 Billion Deal for Yahoo’s Internet Businesses – WSJ

5x revenue buyout? Is this the Internet Bubble again?

In this case, Unilever’s $1 billion (yes, that’s billion with a “B”!) buyout of the Dollar Shave Club has less to do with its e-commerce chops than what it was able to accomplish with its content — develop a loyal following of men purchasing what basically falls under the Health & Beauty sector.

At the end of the day, it has been Dollar Shave Club’s content creation that has attracted millions of views of its edgy advertisements, and in turn subscribers to its monthly razor blade shipping service. So while many would think we would categorize this story under our Fountain of Youth investing thematic, where we are filing it is under Content is King. Yes, in today’s over-stimulating, multi-platform media world, the businesses that are succeeding are those that are focused on creating quality content, and letting the end user access it when and where they want. That same principle is applying more and more to consumer brands and their products.

Unilever paid about five times the revenue that Dollar Shave Club is expected to bring in this year. Much of that premium stems from the value Unilever placed on the razor seller’s brand and customer-relationship skills, he says. E-commerce startups without such a strong brand should expect buyout offers closer to one to two times their annual revenue, he says.

Source: Why Unilever Really Bought Dollar Shave Club – Bloomberg

In yet another example of “Revenge of the Nerds”, the gamers of the world are starting to see a payoff for the thousands of hours spent playing video games. While still rare, the world of eSports is gaining enough momentum that the so-called “real sports” teams are seeing how they can get involved by actually signing “players” to contracts.

From a thematic investing perspective, the clear connection around this is the Connected Society thematic. But where we’ve placed many of the gaming companies are in the Content is King thematic because after all, even though the internet and the ability to connect online with other players is required, these games are taking share of wallet from cable companies, movies, and other entertainment outlets.

Sure, the professional sports leagues and gaming industry have been intertwined for decades. But when professional sports teams are starting to recruit and sign the actual players of the games to professional contracts, then that’s when this kind of development from our perspective moves into the mainstream and becomes an investible idea.

eSports is an umbrella term for competitive video-gaming, an industry that has mushroomed thanks to the spread of high-speed internet and the development of streaming platforms, such as Twitch.tv. . . .

Football clubs are exploring the opportunities of eSports in two ways.

Source: The Economist explains: Why sports teams are recruiting video gamers | The Economist