The darned kids grew up. They grew up and they are taking over and we have no idea what they are doing, or we are trying to adjust so quickly and just can't move fast enough.
That's how I feel about yet another day that looks placid, but there are big changes underneath.
What do I mean by "we" and "they"? There's a group of consumers who simply aren't like any other. They are the millennials, and many of the people who run companies these days just have no idea what millennials are up to or what they think is right or how different, generationally, they really are.
These millennials, frankly, might as well be aliens. Clever, tricky aliens, and they are just not bound by any of the traditional ways that the people in charge think. Oh, and even if you can think like them, it may not matter. You might have so much at your enterprise that you can't pull it off anyway because of structural concerns.
Every time we think some of these old dogs have figured out the new tricks, the dogs get eviscerated as the tricks change again.
Case in point: Macy's (M) . This morning Macy's reported some truly hideous numbers, missing estimates for everything from the earnings to the sales to the comparable store figures, the latter being the key metric we always monitor.
I will let Jeffrey Gennette, the new CEO, tell you from his conference call: "So firstly these are unusual and challenging times for retail, especially for mall-based department stores, and we certainly know that these changes that we're seeing are secular and not cyclical," meaning they aren't going to change with the times or the economy, they are going to continue along these lines, and perhaps accelerate.
Then Gennette goes on, "On the consumer side we see continuing shifts in shopping trends driven by the rapid adoption of technology, and for some of our customer segments a greater emphasis on value and on experience. As for the retail industry overall," he continues, "we've known for some time that the United States is over-retailed compared to other markets, so it's not surprising to see the contraction in retail square footage and it will take some time to tell how the consolidation and the closure of stores, and in some cases entire brands, will impact us."
So let's take these one at a time. The rapid adoption of technology refers to the smartphone and how it empowers millennial shoppers, who don't want to waste time shopping and do a lot of homework before they go to the mall. They pick up their iPhone, they go to Google or Amazon to compare and contrast and they either go right to the store that might be having a sale, or they buy on Amazon if they don't have a car -- many don't, they use Uber.
Sometimes they don't even get off their duffs because they are too busy multitasking, most likely watching Netflix or playing Call of Duty or looking at their Facebook or Instagram page while they order a Domino's pizza and crack open a beer. Or they just bark at Alexa and the box arrives the next day.
Soon they won't even have to search, they will just yell at Alexa to get the best value for an item and she will search and send it the next day. That's deep learning and Nvidia (NVDA) , with its stock up huge today, is going to make that possible in a couple of years.
That's why we like the stocks of Apple (AAPL) , Amazon (AMZN) , Alphabet (GOOGL) , Activision-Blizzard (ATVI) , Constellation Brands (STZ) , Domino's (DPZ) , Netflix (NFLX) and Nvidia so much. You can sub Electronic Arts (EA) and Take Two Interactive (TTWO) for Activision-Blizzard. They are all benefiting from the same trend.
In this world, the bricks-and-mortar store is actually of negative value. The only real reason a retailer wants to be a tenant in this day and age is to be able to sell you not only what you want but also what you didn't set out to get. But if you are ordering and picking up or making a beeline for what you want, then the whole point of a retailer in a mall is lost. That rent's too high. So you can close all the stores you want that aren't making money, as Macy's is doing, and then you will discover that, as more and more kids grow up and become this kind of consumer, the profitable stores will become unprofitable. And so on and so on.
So can Macy's offer the experience Gennette says they want? I don't know, you go to a Macy's and what do you see? A bunch of cheap plastic hangers on racks with a lot of crooked red signs that say "sale." The experience people seek is something that can be memorialized on their Instagram page. You don't want that place on your page. Judging by the lack of growth in the new daily average users at Snap (SNAP) , it would seem they aren't using Snap at Macy's either.
And how about the consolidation and closure? If Macy's were the last man standing, that one-by-one thing. But the fact is that even as we have had 4000 stores close this year already, we have, according to Matthew Boss from JPMorgan, six times as much retail space as we need. The over-storing is totally wrong at a time when the technology reigns supreme, with the only real winners being those that buy the goods that can't be sold from the stores that are closing, meaning places like TJX (TJX) and Burlington (BURL) and Ollie's Bargain Store (OLLI) . They are all going down today, but that's the opportunity.
No traditional retailer like a Macy's can possibly keep up with that headlong change, even if they had time to think about it, as was the case with Macy's, which did see it coming but remained cavalry in the face of the internet's tanks.
What else are the millennials screwing up? Television. I know we have heard endlessly about the cord cutters because they don't want to spend money on that big cable bill. But it is the shout-out to the cord nevers, for example, that we heard on the Walt Disney (DIS) conference call that's really got people going. A cord never is someone who's not looking at traditional advertising. You can only reach that person online. That darned cellphone has supplanted the television, as we heard from Apple CEO Tim Cook when he discussed the phenomenally successful iPhone 7 Plus.
Now understand that there's plenty of winners in this world. Go to your App Store and see them. Crack open your cellphone and you can see them. Open your watch and they come tumbling out.
There are tons of companies that cater to Facebook (FB) -friendly experiences, from Six Flags (SIX) to Marriott (MAR) to Dave & Buster's (PLAY) and Expedia (EXPE) . And there are two mall stores that still work -- Foot Locker (FL) , because people like to try on shoes, and Children's Place (PLCE) , because kids are finicky and grow up fast. (Apple, Alphabet, TJX and Facebook are part of TheStreet's Action Alerts PLUS portfolio.)
But for the most part, this new world's running roughshod over all consumer-oriented entities, and what we have learned is it no longer matters if you see it coming. It runs over you anyway.