Retail/Brand Themes for the 1H 2020
The target audience for retail will continue to be generations Y(Millennials) and Z. They are buying the most in apparel and footwear.
1. The Athletic Space will continue to be important for 2020. The athleisure apparel and non-performance sneakers are used for full lifestyle dressing. The umbrella trend here involves wellness and comfort.
Stock Picks Long
LULU
NKE
LULU: JHA continues to see momentum in the athleisure space and LULU has evolved its assortment to gain more sonsumers, without alienating its core customer or product. LULU is focused on growing its footprint in Europe and Asia, which JHA sees as a positive. (Lululemon is well below peers in terms of overseas sales as a percentage of the total business.) The retailer’s goal is to quadruple sales outside the North American market.
With LULU’s expansion into beauty, intimates and accessories, the brand is becoming a true lifestyle brand. With a focus on men’s as well, that business is growing at a faster rate than women’s.
NKE: NKE continues to gain momentum in the sportswear market across sneakers and apparel. NKE remains to drive growth in DTC channels, international and the women’s market. NKE has an excellent experience in-store and online. They do a great job at localization globally and creating newness across all channels.
2. Off-Price is the new department store. This is where the former department store boomer shops. Off -price is also attracting millennials and gen Z.
Stock Pick Long TJX
3. Mass retailer (TGT) is focused on generations X,Y&Z. Their specialty has been inclusive private label lines and service to customers. Mass retailers are persevering also because of their top level omnichannel capabilities.
Stock Pick Long
TGT
4. Splitting of Stocks into 2 companies a. Gap will be spinning off Old Navy into a new public company during the
1Q of 2020. JHA expecst to see more of this trend in 2020.
Stock Pick Short
GPS
Old Navy is estimated to drive 75% (or more) of Gap Inc.’s profitability. Old Navy has been doing quite poorly during the last few quarters. Therefore, the street is going to see 2 poor stocks GPS and ON in 2020. The company hasn’t executed properly on product, influencers/social media, experience in store and online. The company also lacks in omni-channel capabilities. Post-split, who really is going to want to own GPS?
5. Intimates is an industry focusing on comfort and women buying for themselves, not men.
Stock Pick Short
LB
Victoria’s Secret is not focused on the trends and messaging that are important to consumers today. JHA believes intimates is going through disruption and VS continues to
lose share of the market. With BBW contributing 36.8% of sales and VS 63.2%. LB clearly needs VS to do better. Evolving competitors In the Intimates space are gaining share.
Other dominant market themes JHA expects to emerge in 2020.
6. Environmental & Corporate Social Responsibility (ESG), Sustainability efforts
being key. Millennials and especially generation Z, are not only interested in product, they are very concerned about what the company stands for and their sustainability strategies.
7. Subscription box services – Subscriptions are perfect for the time starved consumer. (Going through websites take time.) A box each month will keep the customer in style without all the leg work.
8. The Shared Economy- The shared economy fits nicely into Gen Z and Millennials’ desire for conservation and sustainability
a. Resale-this is a thriving marketplace. Many retailers are entering this space such as URBN with Vintage. (Vintage is a kinder word for resale.)
b. Rentals-AEO and URBN have both announced a rental service, with the
ability to buy the product. The forerunner is “Rent the Runway”.
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