Finding Opportunity in Disruptive Change

Finding Opportunity in Disruptive Change: Retailing and Its Supply Chain

As thematic investors, we look for phenomena that are transforming cash flows and profitability across multiple industries. Then we seek to identify companies that will benefit, are investable through public equities with ample liquidity, and likely to pay off within three to five years. Here we discuss one of these phenomena—how the next generation of automation is impacting the retail industry.

We’re in the early stages of a revolution in retailing that is creating compelling new investment opportunities. See our latest research and what it means for investors:

Research Highlights:

  • More than 20 major U.S. retail chains declared bankruptcy in 2017, with more stores closing than in either of the recession years of 2001 and 2008. Yet, retail sales are booming, the economy is strong and unemployment is at a low of approximately 4%.
  • E-commerce is taking an ever increasing share of the $3 trillion in U.S. retail spending. E-commerce already accounts for more than 13% of retail spending and should more than double over the next ten years.
  • New store formats: The increased cost advantages that e-tailing, automated warehouses and last-mile fulfillment have provided to e-commerce are putting some traditional retailers out of business and reducing new store construction. To cut costs, retailers are reducing or eliminating in-store inventory. Over the next few years, we expect retailers to reduce inventory by nearly $200 billion, or up to 30%.


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