Post #47: No stopping shopping - Heptagon Capital – Production

If you are not aware that ‘Black Friday’ is in two days’ time, then you may have been living on a different planet. Your author’s inbox (and he imagines many of…

Post #47: No stopping shopping

If you are not aware that ‘Black Friday’ is in two days’ time, then you may have been living on a different planet. Your author’s inbox (and he imagines many of his readers’ too) has been deluged with emails advertising shopping deals for the last few weeks. Adverts on the high street also abound. The day after Thanksgiving (the last Thursday in November) has been widely regarded as the start of America’s Christmas shopping season since at least 1952 with the term ‘black’ referring to when retailers’ profits for the year turned positive (and so moved out of the red).

The event is now also marked in many other countries too, while China recently had its equivalent (‘Singles’ Day – held on 11 November), which has become the highest-grossing retail event in the world. Alibaba, the country’s largest retailer, reported that it had generated revenues of $38.4bn in the course of 24 hours on 11 November, up 24.6% relative to a year prior. The vast majority of this shopping activity occurred online. Jumping back to the US, and e-commerce sales are set to exceed $600bn in 2019, double the amount of five years ago, per the Commerce Department.

As consumers, we all clearly benefit from the flexibility of online shopping. However, spare a thought for the complexity of the supply chain that lies behind this remarkably modern phenomenon. We found it fascinating to read the latest White Paper published by Prologis Research (an internal department of the world’s largest owner of industrial real estate). Looking beyond the somewhat prosaic title, “the evolution of the modern supply chain and implications for logistics real estate performance,” and the conclusion is clear: supply chains need to evolve. 

More retail is occurring online and consumers’ expectations (especially in terms of order fulfilment) are rising. What this means for retailers is that they need to get closer to their customers. Prologis highlights a particular scarcity of ‘last touch’ distribution facilities, which are crucial, especially in dense urban locations. Supply constraints combined with growing demand trends create an attractive set-up in our view. This poses challenges for many retailers (and delivery companies), even if most consumers do stand to benefit.


The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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