The end of the decade allows for
reflection on what’s changed
by David Krause, Marquette University's AIM Program Director
In the @MarquetteAIM program over the
past five years we’ve been studying technological disruptions and their impact
on a variety of industries. We've focused primarily on the amazing breakthroughs in hardware and software. However, probably the greatest changes we’ve witnessed have
been in the area of consumer behavior and how e-commerce has transformed how consumers buy products today.
Recently we studied Kylie Jenner's sale of half of her firm to Cody to see how just much things are changing in the world of retail. And the results were quite shocking..
As was
pointed out in recent Wall Street Journal articles and stories in Seeking Alpha
– the traditional world of beauty products has been radically altered by social
media. For example the once powerful direct seller of cosmetics, Avon Products (NYSE:AVP), is today losing money and has seen its stock price drop
from $40 in 2008 to about $5 today. Let’s face it, millennials and Gen Z
consumers do not want direct selling agents of beauty products showing up where they live – they want to buy
what they need online.
 |
| Avon Products |
The AIM
students examined the recent deal struck between 23 year-old Kylie Jenner
(founder or Kylie Cosmetics) and Cody – which had a valuation greater than $1B!
In 2010, Kylie was not even a teenager a decade ago and today she is the planet’s youngest
self-made billionaire.
The collapse of direct selling (Avon) and brick-and-mortar
stores (JC Penney) has been driven by a fundamental shift in how consumer products are marketed and sold
to young adults. Out with the old – Avon Products – and its history dating back
to the 1800s of the direct selling of beauty products; and in with the new - Instagram-powered retailers like Kylie Cosmetics – with less than 20 employees!
In the AIM program in the spring of 2020 we will
continue to look at the impact of social media and its power in direct branding
and marketing. Understanding the changes taking place – especially with how consumers
buy goods and services online today – impacted by high profile influencers with
hundreds of millions of social media followers - is essential.
Maybe investment
research needs to move away from the traditional approaches of evaluating existing
business models and focus more on the future of retail. Kylie Jenner’s breakthrough
in beauty products isn’t likely to be an exception, it might become the new
normal. I get it -its time to recognize the new world order. Traditional retail is going to die in the next decade and e-commerce will continue to flourish (especially with 5G just around the corner)!
