The world is changing “big time” with the trend towards online retailing
This question comes from Drew Estes in Atlanta, Georgia.
And he asks, “Is Fruit of the Loom experiencing difficulties related to the distribution channel shift towards online and the troubles in the brick and mortar retail world? If so, do you believe the difficulties are short term in nature?”
And, then, Drew goes on to add, “I’m hoping millennials haven’t bucked the underwear trend, too.”
Yeah. Well, he may know more about that than I do.
The answer is essentially no, so far. But anybody that doesn’t think that online isn’t changing retail in a big way, and that anybody who thinks they’re totally insulated from it is correct…
I mean, the world is changing big time. And like I say, at Fruit of the Loom, I don’t… it really hasn’t changed. And at our furniture operation, which is setting a record so far again this year for the shareholder’s weekend. You know, I mentioned it in the report, but I think we did $45 million in one week.
And our furniture operations… it’s hard to see any effect from online, outside of our own online operations. It had really good same-store gains.
You can take, you know, whether it’s the Nebraska Furniture Mart, but RC Willey, whether it’s in Sacramento, or Reno, or Boise, or Salt Lake City, or Jordan’s, which, in Boston, has done very well on a same-store basis.
So, we don’t really see it, but there were a lot of things we didn’t see 10 years ago that then materialized.
One thing you may find interesting is that the Furniture Mart here in Omaha, which is an extraordinary operation… the online has grown very substantially.
And I may be wrong on this, but I think it’s getting up to… I’d like to check this with the Blumkins before I say it, but I think it’s getting pretty close to 10 percent or so of volume. But it’s a very significant percentage of those people still go and pick the product up at the Furniture Mart.
So apparently, they… it’s the time spent entering the store or maybe at check-out lines or whatever it may be. I’m surprised that it gets to be that percentage.
But the one thing about it is we keep looking at the figures and trying to figure out what they’re telling us.
So far, I would not say that it’s affected Fruit of the Loom in a significant manner. I would not say it’s affected the furniture operation in a significant manner. But I have no illusions that 10 years is going to look… from now… is going to look anything like today.
If you think about it, you know, if you go back a hundred years to the great department stores, what did they offer? They offered incredible selection.
You know, if you had a big department store in Omaha, you had the thousand bridal dresses.
And if you lived in a small town around, the local guy had two or something of the sort.
So the department store was the big, exciting experience of variety and decent prices and convenient transportation, because people took the street cars to get there.
And, then, along came the shopping center. And they took what was vertical before. And they made it horizontal. And they changed it into multiple ownerships.
But they still kept incredible variety, and assortments, and convenience of going to one place, and accessible transportation because, now, the car was the method. And now you go to… and, you know, and then, we went for the discount stores and all of that.
But now you’ve got the internet. And you’ve got the ultimate, in terms of assortments. And you’ve got people that are coming in at low prices. And the transportation is taken care of entirely, so the evolution that has taken place…
The department store is online now, basically, except much expanded in assortment, much more convenient, and lower prices.
So the world has evolved, and it’s going to keep evolving. But the speed has increased dramatically.
And what will happen with… the brands are going to be tested in a variety of ways that… and they have to make decisions as to whether they try to do an online themselves, or work through an Amazon, or whether they try to hang onto the old methods of distribution while embracing new ones.
There’s a lot of questions in retail and in branding that are very interesting to watch. And you’ll get some surprises in the next 10 years, I can promise you that.
It’s… it would be certainly… be unpleasant if we were in the department store business. Just think of what we avoided, Warren.
Yeah, we got very lucky, actually, because we were in the department store business, and our business was so lousy that we recognized it. If it had been a little bit better, we would’ve hung on.
And we owe a tremendous gratitude to Sandy Gottesman, our director who’s here in the front row, because he got us out of the business when Charlie and I, and Sandy, were partners in that.
And something we paid six dollars a share for, I think it’s worth about $100,000 a share now, because we got out of the business.
And if it had been a somewhat better business, you know, it might be worth 10 or $12 a share now. So, sometimes you get lucky.
We don’t miss it either, do we, Charlie? Hochschild Kohn.
No. We don’t miss it.
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