![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/div>\n\tJeff Clark<\/p>\n
\tTraditional retail is not dead.<\/p>\n
\tOh sure, Amazon has changed the way consumers shop. The online behemoth has crushed its brick-and-mortar competitors. It has depressed profit margins in every product category in which it operates. It’s the main reason the retail sector is underperforming the S&P 500 by 20% so far this year. And Amazon gets much of the credit for the bankruptcy risk in stocks like Sears (SHLD) and JCPenney (JCP).<\/p>\n
\tBut Amazon can’t kill everything.<\/p>\n
\tPrice and convenience are not the only two factors that affect consumer behavior. If they were, then nobody would ever go to a Major League Baseball game. It is more convenient, and certainly cheaper, to watch our favorite teams on the television in our living room.<\/p>\n
\tNobody would ever go to a concert. We could download the same “product” from iTunes at a fraction of the price.<\/p>\n
\tThere’s more to these events than just price and convenience. It’s about the experience.<\/p>\n
\tAnd, for a very large portion of the population, shopping is about the “experience” as well. Granted… there’s not much to experience by running to the local drugstore to pick up dental floss, deodorant, and toilet paper. So, at least in my household, we do buy a lot of that stuff online.<\/p>\n
\tBut for the more important purchases – like clothes, sporting goods, appliances, power tools, and a whole bunch of other stuff – we go to the mall.<\/p>\n
\tFor my wife and kids, shopping for “back to school” clothes isn’t a chore. It’s an event. It’s a chance for them to hang out together. They look forward to it. And, it just wouldn’t be the same if done on a desktop computer at home.<\/p>\n
\tSame thing with Christmas shopping, or buying birthday presents. The price and convenience of online shopping just doesn’t match up to the experience of doing it “live.”<\/p>\n
\tFor that reason, there will always be malls. There will always be department stores.<\/p>\n
\tAs more mall operators and more brick-and-mortar retailers work on improving the experience for customers, the consumer shopping pendulum will swing back the other way. And retail stocks – beaten down to historically low valuations on the perceived threat that Amazon will put them all out of business – will start to come back to life.<\/p>\n
\tInvestors who start sifting through the retail dustbin right now are likely to be rewarded over the coming months as the Christmas shopping season turns out better than expected, and over the coming years as the rumors of the death of retail turn out to be greatly exaggerated.<\/p>\n
\tBest regards and good trading,<\/p>\n