THE CEO’s BLOG


What Happens When Everyone Has Everything? Part Two.

With the national conventions next month, who is going to win?

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So where is the growth going to come from in the near future? And let’s talk about growth in dollars and not units. Ralph Lauren and it’s department store customers are having a difficult time selling clothing at full price. A blazer for $1000 is now $300 and the beneficiaries are the likes of TJ Maxx and Burlington Coat. Without innovation (and apparel has lacked this as of late), why pay full price?

Growth is going to come from consumers spending money on what they can’t do at home. Consumers are bored, unhappy and unfulfilled. They really hate both Clinton and Trump. But they love going to movies and watching Super Hero’s and animation. While food spending is now 6% of household budget, consumers would rather go out to eat than eat at home. Witness the explosion of fast-food franchises and strip center operators building as fast as they can to accommodate this growth. No longer do you see nail salons, dry cleaners and other services take space. Now you see entire strip centers devoted to food.

Travel is the other growth area. Witness the societal transformation that both Uber and Airbnb have brought. Consumers now travel anywhere they want without the need for travel agents, hotels, rental car companies and taxi cabs. Uber and Airbnb have amassed more than $100 billion in combined valuation without owning a single car or hotel and not needing employees to drive cars or clean rooms (but get this, Uber did $1.2B in revenue last year and actually lost $1.7B due to entry costs into new markets). The APP society has figured out how to use spare assets without ownership. Hint: How about an APP for private jet travel? Just think of all the jets waiting for passengers. . .

Destination travel is booming. MGM Resorts just announced the redo of its Monte Carlo resort and reopening over the next two years two resorts. Wynn wants to tear down the golf course and build a third resort built with a lake theme. Hamilton the play just exceeded $1 billion in revenue and the best tickets are now $875 each. But wait, tickets are sold out until next year even at these prices. Concert attendance is at an all-time high. Try getting a ticket to a sporting event that is worthwhile.

Eating out, travel, entertainment: Everything outside the home. Good thing for us in the beauty business. Ulta can’t open stores fast enough and its revenue is up double-digits. Women want to look their best when they leave the home. It’s a great time to be a destination resort with full-service spa. Both guest visits and prices are near all-time highs. Want a career? Massage therapists are hot especially with licensing requirements in all states. The top spas are now offering healthy café options, meditation areas, and salt relaxation rooms. If you think about it, luxury spas embrace all three trends (eating out, travel and entertainment).

When it comes to beauty products, what can consumers look forward to that they don’t yet have? I’m thinking they involve these two words: Organic and natural. In fact I’m betting on it as TNG gets ready to launch an entire array of organic and natural products next month. Stay tuned.

Happy Wednesday!

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