Corporate News

(Portland)

Fast fashion has come to dominate the lower end of the clothing business. The approach was pioneered by companies like Zara and H&M and involves following social media and bringing new products to market in a matter of a few weeks rather than months. Well that makeover is starting to arrive to sportswear labels as well. Nike and Adidas both currently have the problem that it takes 12-18 months to produce a new model of shoe. However, new technologies mean this time will be cut to just a couple of months, with prototypes taking just a few hours. This means the companies will no longer have to guess what footwear trends will be many months ahead.


FINSUM: On the surface this seems like it will be a good innovation, and from a cost standpoint we are sure it will be. However, in our view Nike and Adidas are the major trendsetters of shoe fashion, so how can they ever get ahead of it?

(Seattle)

A lot of the headlines concerning ecommerce and retail go towards covering the battles going on in the middle and luxury end of the spectrum. However, one of the big fights going in is for the low end of the market. Amazon and Walmart are fighting each other to get the low end of the market, a segment of the population which accounts for a significant portion of both their sales. Walmart relies strongly on customers who are on food stamps (they produce $13 bn of revenue for the company), and Amazon just cut its price for Prime for that exact group. The low-income group, or those earning under $50,000 per household, are already Amazon’s fastest growing segment for Prime, and the price cut is seen as a direct assault on Walmart.


FINSUM: Amazon is trying to steal Walmart’s lunch, but the latter has been ramping up its online efforts. It also has the advantage that several factors (such as a lack of credit cards or internet access or safe delivery spots) keep these customers coming to stores instead of shopping online.

 

(Detroit)

General Motors has been on the upswing for years, riding the wave of SUV sales growth on the back of falling oil prices. However, GM seems to have hit a rough patch, losing ground to rivals during a time when the whole industry looks to slow. The company’s sales have weakened and it has fallen behind Ford in total sales just as the crucial summer selling season begins. It is also planning staff cuts amid the slowdown. Rather than continuing high production even in the face of waning demand—as it did in the past—it will instead curtail output.


FINSUM: At least they will not be overproducing and then having to make huge discounts. However, laying off 4,000 is no small development. We are still long-term bullish on GM given its relatively cheap share price and its potential in the electric and self-driving car markets.

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