This weekend I was enjoying The Investors Podcast episode 143 which featured a round table discussion on four stock picks. One of these was a stock I own namely BBBY. As I noted before this is a very cheap retail stock and I like the valuation despite the rise of peak Amazon.
During the podcast it was interesting to hear their discussion on BBBY and the ways in which the margin had declined and whilst it was cheap it was potentially a value trap. Preston Pysh was saying how he would just buy all the things BBBY had on Amazon. At this point I paused the podcast and had a chat with my lady about this - and it is something i mentioned in my original note on BBBY:
'I think retailers with things like clothes, home-wares, furniture etc have a greater chance of survival against total 'e-commercialization' due to the tactile nature of their products.'
The way women shop is different from men. These men think like me - I want a specific thing - I go on Amazon and order it - it saves hassle and is usually cheaper than driving to a store. This fails to capture how women shop. Women want to go and browse things, smell them, sense them etc - my partner declared she would never buy a towel or bath accouterments online as she wants to feel them first and check the colour in person.
Funnily enough on resuming the podcast it turns out that everyone's wives do shop there too! If you do not already follow this podcast I highly recommend it to any would-be value investor - it is a great moment in the this episode....
So I retain the view that whilst BBBY is ultimately a 'no moat' business the fact that most of their customer base are women means it is more likely to survive in physical format than an electronics retailer. I still see this as a cyclical downturn in the US economy as much as it is a structural change in retailing.
Disclaimer: I am long NASDAQ:BBBY at present. These are opinions only, not investment advice. If in doubt read my disclaimer.