Gavin Baker+ Your Authors @GavinSBaker Husband, Becky Painter. CIO, Atreides Management. Former PM, Fidelity OTC fund. No investment advice, views all my own. Jan. 11, 2020 2 min read + Your Authors

1) GME and MIK are the only category dominant physical retailers I can think of that have not benefited from e-commerce forcing many/most of their weaker physical retail competitors into bankruptcy. "Haves" vs. "have-nots."

i.e. BBY up 60%, GME down 64% and MIK down 50%.

2) The dynamic of rapid share gains within their physical retail category offsetting overall physical retail share loss to e-commerce has given other category dominant physical retailers the breathing room to invest in e-commerce/BOPIS and services where appropriate.

3) This has created huge divergences within retail. In some ways all that has mattered was being the #1 physical retailer with the best real estate.

E-commerce has really magnified differentials in real estate quality.

4) LOW is the only #2 player I can think of that is doing well.

Most other physical retailers that are #1 in their categories are now *taking* ecommerce share with ecommerce growth rates over 30%.

Interested to see if 1 day shipping offsets BOPIS and reverses this trend.

5) The reality that an offline presence helps lower online CAC also helps the best physical retailers.

New DTC brands control their online distribution by only selling via their own website/app but are willing to sell offline within the best physical retailers.

6) Should also note that GME has faced much, much stronger industry headwinds than other physical retailers given shift to digital in addition to e-commerce.

But still think they should've done better given PC gaming, eSports, desire for coaching/community from gamers, etc.

7) Perhaps I am defining categories too narrowly and GME has suffered from this dynamic vs. BBY, but I *believe* GME has higher share than BBY within videogaming.

Curious if anyone knows the answer here?

8) Out of date but suspect GME being late to embrace PC gaming, late to focus on services, late to rationalize the store fleet and late to e-commerce/BOPIS explains much of this.

Can't be late to everything that has mattered for successful retailers over the last 2-3 years.

9) i.e. GME only began selling PC peripherals in Q3, services/esports focus seemed to begin in early 2019 (there are now two startup YSLs for esports - natural mkt for GME), should've been much more aggressive/earlier to rationalize stores and new website only launched in Q3.

10) New consoles have discs vs. being digital only (a death sentence for GME). New GME management team doing most of the right things but might be too late. Interested to see what happens next.

Amazing that the stock went down 64% with the share count shrinking by over 30%.

11) Unfamiliar with MIK and what has gone wrong there. No shift to digital! PE ownership has not been kind to retailers in general.

But the recent A.C. Moore bankruptcy is emblematic of the dynamic where weaker players going bankrupt benefits the stronger players.

12) Biased, but I love @KoyfinCharts. Absolute best replacement for Google Finance.

While away from Bloomberg, I searched far and wide for lower cost alternatives.

@KoyfinCharts was the overwhelming winner. And it's free vs. runner-up Marketsmith at $1500/yr.

14) Nice to be back on Bloomberg, which is great. But I still find myself using @KoyfinCharts regularly.

Note that I skipped the #13 out of superstition. "I'm not superstitious but I am a little stitious."

You can follow @GavinSBaker.


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