We’re going live with our Auto Parts Retail research with a Black Book on the changing paradigm in the space – and how we quantify the risks and upside. Initial tickers (more to come)…
ORLY: Best Idea Long. Here’s the quality play, and the world knows that. But numbers are low, and the space is far more defendable than the consensus/market thinks. Key factors that are turning positive that have caused the current slowdown in sales, and it goes beyond Amazon and online competitors.
AAP: Top name on our Long Bench. Actually a more interesting ‘battleground’ name for us. As we go deeper on this one, we’re saving a bullet in the chamber to go Best Idea. Or boot it entirely if the research call changes. Best takeout target in the space. This is one of those ‘sell the puts’ type names.
AZO: #2 on Short Bench. Biggest AMZN risk. Targeting the wrong part of the market. Most under-invested for future growth.
Here’s what I think we have that others don’t.
Consumer Insight – 1mm+ cells of consumer survey data overlapping the following…
- Detailed consumer info on 1,000+ Amazon consumers – everything from FICO score to Age, Income, MSA, etc…
- How those consumers shop – by every sub-sliver of retail. Everything from Auto Parts, Home Improvement, Supercenter Centers, Warehouse clubs to Softgoods, etc…
- Propensity to shop online vs past behavior – by sector
- Cross shopping/brand loyalty (i.e. consumers loyal to brand vs distribution/service).
- The power for us is in doubling that against Market analysis
Market Depth – a lot of it.
- We know what consumer lives in each Region, state, MSA county, city. We know the spending levels on all major types of goods – everything from clothing, dishwashers, sparkplugs/tires/fuzzy dice, and fruit and veg… etc…
- Cross referencing that intel with insight on store location by concept, overlap, and (what we think are) growth plans, we can find the most attractive growth markets in the US, as well as those most at risk.
- In other words, if you want to find out some bizarre query like “find me the Core DIY Auto consumer that lives in a red state, owns an echo dot, subscribes to Spotify, and has an online/Brick&Mortar shopping ratio of better than 1.5x, and likes to dunk Doritos in mayo (kidding), then we can bifurcate who that is… We have more work to do on this, but will show what we’ve got and where we’re headed.
What is vs what should be…
Lastly, we give our best shot at recrafting this industry as it should look based on what we call #retail5.0 – the next megacycle of retail. If every CEO/Strat Planner at retailers and brands are not doing this, they’ll probably end up levered and broken (or obsolete).
My team is not fielding calls on the Auto Retail space today. Aside from the fact that my team is focused of completing the deck, we’re not going to engage with the long/short community before putting our own work out there. Over time it will evolve, change, get deeper and get better. But this is our first shot…and I think its got teeth.
Call Details
Time: Wednesday, January 17th at 10:00am ET
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