Welcome to the end of the week and another edition of Happy Hour! Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.
Fall and Rise of Retail
Don’t confuse this with a retail is dying piece. It’s not and never will. Those stuck under a rock the past decade have missed the transformation of retail – that article paints a telling tale of the shift from offline to online shopping. It’s safe to say offline retail has peaked. Outlet malls and department stores are being replaced by warehouses and delivery centers.
There are many reasons why. Faster, more efficient shipping is one. What used to take a week is now delivered in a day or two. A few years from now we’ll have same day delivery. Then it will be inside of an hour or two.
Simple convenience is another. What I can buy online in 15 minutes would normally take an hour or more offline.
Our shopping habits have evolved. Just think back to what you bought online ten years ago compared to what you’re willing to buy now. Things we had to try on or try out first were bought in stores. Those mall only items like cloths and shoes are bought online now. That evolved to big-ticket items like furniture, appliances, and electronics. Up next is food and groceries, something I’ve done for several years now.
Yet, I’ve never seen retail as a great investment. It’s a tough business with high competition, low margins, and it’s too fickle. I can only think of two exceptions – a retailer in the initial growth phase or a turnaround. Who wouldn’t want to own Wal-Mart shares when it had only 100 stores? The second, who doesn’t likes a good comeback story. Find a retailer on the brink of extinction, then rises from the ashes, and you’ll make some good money.
The hard part is picking which retailer will be next. Given the choice, I’d rather own a company that makes products, instead of one that only sells stuff. Of course, if online sales continue down the current path, the delivery businesses stand to gain the most.
Last Call
- How to Become a Better Investor
- Is Investing Hazardous To Your Health?
- Seeking to Defend Against Rising Bond Yields? Pick Your Poison Carefully
- Why We Buy in a Marked-Up Market
- Why Stopping the Next Financial Crash is an Impossible Dream
