Why do Apple and Zara make Roger Montgomery’s A1 grade?
Roger Montgomery talks to Ross Greenwood about the current performance of the retail sector. While answering listeners questions, Roger also shares his opinions on the success behind retail giants Apple and Zara. Listen to podcast.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Manny
:
Well my view is that the malls would not necessary be empty of the MYER and DJ type stores instead there would be a lot less number of stores/branches of each type. Many people will still like to have a place to go out and try out (and touch and feel) what they are buying.
The issue at the moment is that all these stores (Myer, DJ, HVN etc) have too many stores. That will not be profitable anymore as more and more people go online. I think these businesses realise this and have already started spending a lot of Capex building/improving there online presence/offerings. In the medium term we will start seeing the CEO’s report reduction in OPEX (hence increase in profitability) by announcing closure of many stores. This process will take many years but at some stage I cannot see them as being profitable if they don’t reduce their store numbers by at least 50% (maybe over next 5-7 years). I don’t think you need a discretionary spend store in every nook and corner.
So bricks and mortar stores do have a place but a lot less in number to stay profitable and at the same time they need to increase their online profitability.
Just my 2 cents worth
Roger Montgomery
:
Thanks Manny. One day, someday, the Aussie dollar will go down (perhaps it goes to $US1.40 first) and when it does, the tide will come back in.
Dave P
:
A very interesting podcast. The retailers’ point of view was a good insight….I would have happily been able to sit through another hour of that talkback.
Anyway, as a flip-side to the idea of malls being emptied of Myer, DJs etc, and filled with service businesses, could I offer a suggestion: try Googling “Dead Malls”. The statistics coming out of the US for the indoor-type of mall are quite grim. Retailers are leaving the format, and the space is not being backfilled at all in a commercial sense. Walking through a mall that is dying is quite a depressing (and sometimes frightening) experience. To try and make it attractive to other users, the mall owners would need to work miracles in terms of planning an marketing. Unfortunately, this coincides with the owners struggling for day to day survival (or having thrown in the towel and moved for bankruptcy).
Chris
:
Interesting question there about will these shops and particularly those in Malls end up as sort of display centres whilst the actual purchasing is done on line?
It sort of fits with the swing away from manufacturing towards services. Retailing is a service, but the face to face sort is an industrial age model, whereas perhaps the display centre & web model is more post industrial? You can’t at present sell perishable foods or freshly cooked hot meals on line to many people (and a lot of going to a restaurant is the service and other location specific features), and there are a bunch of other services like massage, dentistry etc which can’t be done online. But the simple exchange of goods for money is very amenable to online delivery.
So the idea that the malls etc will empty of the Myer and DJ type stores is quite possible, but you’d expect to see them filling with restaurants, dentist, masseurs, doctors, lawyers etc. I think that is occurring as time goes by.
Roger Montgomery
:
Useful insights Chris. Thank you.