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With Several Retailers Set To Report Earnings, Could There Be A New Retail Revolution On The Way? + Lee’s take on HD, M, TGT,BBY, RSH, LTD, SHLD, AXP, V, MA, PSA, EBAY, DIS, JWN, BKS, BGP, AMZN, DKS, ANN, GPS, URBN, AEO, SBUX, DPZ, and WMT.

InvestorsObserver Featured Contributor
Lee M. Allen

Even though most of us don’t live in caves anymore, thanks to Home Depot (HD) a section of our brain is still wired with hunter-gatherer instincts. This is why most of us crave shopping at some level. Sure, some men will say they hate shopping, but watch them go nuts in a Best Buy (BBY), Radio Shack (RSH), or Victoria’s Secret – a division of Limited Brands (LTD).

How much has the retail experience really changed since Sears (SHLD) started sending out catalogs and opened their first retail store back on February 2, 1925 in Chicago? Not much is really different except prices have gone up and you have to search for products actually made in the USA.

But a new retail revolution may be under way and I am just the one to wave the flag…

Read on for Lee’s insights on a potential retail revolution…


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Back when we lived in pre-historic times, we basically wandered around and used whatever we found for food, clothing, and wide-screen television home entertainment.  There was no money, credit cards, Dairy Queen, or 7-Eleven.  If it wasn’t out there in the jungle, desert, or savanna, we just did without it.


Sometimes hard choices need to be made.

Then came the invention of agriculture and we were able to grow some of the stuff we needed. This saved us wandering time, along with the nasty possibility that we might run into some sort of saber-tooth elephant stampede that would cut our hunting-gathering trip short.

Eventually people discovered they could grow more crops and raise more sheep than they really needed, so they would load up the excess in their mini van and take it into town.  They could trade for other things they might need but could not make, grow, or hunt down on their own. Bartering was the first form of commerce. Actually, the second, but this is a family publication so they have asked me not to talk about the actual first form of bartering.


Then money was invented, so we didn’t need to seek out someone to barter with. We could sell our excess goods and just use the gold, silver, or shells to buy what we needed when we found it. This worked all well and good until the invention of credit cards from companies like American Express (AXP), Visa (V), and MasterCard (MA). With this strange, light-weight plastic currency our still-prehistoric brains did not totally grasp how much money we were actually spending. This was a boom for retailers who started to sell more products than ever before while people were left to pay off their card balances for ten or twenty years.

Sure, their credit cards were maxed out, but it was so easy to get more credit cards it didn’t matter. People just kept on spending and accumulating things they probably didn’t need. And this is why self-storage companies like Public Storage (PSA) built facilities all over America to provide a place for people to store all their excess stuff. During the recent and inconvenient economic melt-down, this gave rise to the Saturday Self Storage auction phenomenon. People realized they would never use all the stuff they bought, stopped paying the monthly storage fee, then the facility auctioned off their stored items, most of which you would find for sale on eBay (EBAY) that afternoon.

So what’s next in retail and what company could be uniquely positioned to benefit?

Over the years we saw retail go from two guys trading goat’s ears for sheep’s feet at the village square to people thousands of miles away trying to decide what non-essential item they could display next to the cash register to get you to spend one more dollar in their store. It was on a credit card, so why not buy it?


Was this lawnmower a necessity or
 just future garage sale merchandise?

We even had the emergence of the full-featured full-contact retail experience from companies like Disney (DIS), Macy’s (M), and Nordstrom (JWN). But lately these more swanky stores seem to be on the empty side.  Now that shoppers have hunkered down with a “what do I really need” attitude, these shopping experience folks who sell things we can easily live without are just not the destinations they once were.


It took three weeks and a high-priced outside consultant to figure out why this store had no shoppers.

The dilemma is that retailers like Barnes & Noble (BKS) and Borders (BGP) have been replaced by online discounter Amazon (AMZN).  Sporting goods retailers like Dick’s (DKS) have even been hurt by online retailers with more selection and better prices. Even apparel stores like Ann Taylor (ANN), The Gap (GPS), Urban Outfitters (URBN) and American Eagle (AEO) have been bruised by tight economic times and distracted teen-age customers who spend more of their waking hours on Facebook instead of roaming through shopping malls.

The rage in shopping will certainly rally around the concept of necessities. If you don’t need it, don’t buy it. We have been so desensitized by the fourteen bazillion advertising messages that hit us every minute of every day that not even Madison Avenue Ad Man magic can make us buy much more stuff we don’t need. We already filled up our hundred-square-foot self-storage unit, defaulted on the rent, and watched as the useless stuff was auctioned to bargain hunters wearing Bermuda shorts and Kiss t-shirts.

The only thing we really need is food. This works out pretty good for retailers, since we tend to use up food and need to run back for more. That is, unless it is frozen food. Then it collects in our freezers for years until it turns into frozen blocks of what looks like space debris then your mother-in-law tosses it in the garbage to make room for more frozen foods.

So a retailer that combines food with other things we need and a few things we don’t need but think we need could be the next ultimate shopping destination. This new retailer should have a simple look and feel, be clean, have helpful checkout people, and use only primary colors like red in its logo.

Yes… I’m talking about Target (TGT)!

What other store could you buy groceries, paper goods, tooth paste, a cup of Starbucks (SBUX) coffee, a piece of Domino’s Pizza (DPZ), and everything else you need? Then, on the way out, pick up a Best of Britney Spears CD for ninety-nine cents.  No where I know….

Look out Wal-Mart (WMT)!

If you have found someplace you think could be the next new thing in retail, please email me at LeeAllen@InvestorsObserver.com.  I will be hanging out at the Target until I hear from you.


Is this the Target Dog in retirement?

 

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We can make this 90 day FREE offer because we are confident you will find our service an essential part of your investing toolkit and stay a subscriber for many years to come. Our biggest risk is that we do find people cancel their subscriptions when they move to their own private islands without internet access.