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.
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)!