Rishi Taparia - Issue #83
This week we look at Office Depot calling in the muscle, the surging amount of credit card debt in the US, JPMorgan’s entry in to POS financing (sort of), China’s plans for the largest energy grid in the world, The Godfather at 50 and more. Enjoy!
Commerce
Office Depot partners with Alibaba to focus on small to medium-sized businesses’ needs
Someone at Office Depot has been reading their Dylan Thomas because they sure aren’t going gentle into that good night. The retailer signed a major commercial agreement with Alibaba in an effort to combat Amazon’s dominant online presence. Office Depot customers now get the chance to tap into Alibaba’s supplier network (which is over 150,000 deep), while Alibaba gets the chance to cross promote to Office Depot over 10 million customers and almost 2,000 sales agents. For Office Depot the deal means relevancy (at least in the short term) and for Alibaba it’s a foothold into the US SMB market. How long before Alibaba gets what they need out of the deal and cuts Office Depot out remains to be seen.
Inside IKEA’s Strategy to Stay Relevant as Consumers Change
Ikea has built itself into a premier global brand thanks to a terrific product strategy and well executed international expansion strategy. Ikea has also doubled down on their efforts to support their customer base, buying Taskrabbit in 2017, and in December it acquired 49% of Traemand, which installs IKEA kitchens in North America. Now one of the furniture giant’s immediate challenges: What to do with its planned city-center stores, intended to help lessen the travel time for city dwelling customers. Showrooms are being considered, “where, for example, a bed can be ordered in the morning, delivered to the home and assembled by evening.”
Retail apocalypse: 4,810 closures in first three months of 2019
The concept of store closures are nothing new, but numbers always help put things into perspective. There have been almost 5,000 store closures that have taken place in 2019, with companies ranging from JCPenney and Gap to discount chain Family Dollar shutting doors. The other side of that coin, however, is the more than 2,254 store openings so far this year from retailers such as Ulta Beauty, Indochino and Ross Stores. Maybe all is not lost for retail after all.
FinTech
U.S. Credit Card Debt Closed 2018 at a Record $870 Billion
480 million credit cards in circulation. U.S. credit card debt at $870 billion (the largest amount ever) as of the end of 2018. Credit card debt balances up $26 billion from the prior quarter. Overall debt at $13.5 trillion with credit cards as the fourth largest portion of consumer debt in the U.S. after mortgage, student loan and auto debt. 37 million credit card accounts with a 90+ days delinquent mark. When the crash happens - and it will happen - it’s not going to be pretty.
Philadelphia Is First U.S. City to Ban Cashless Stores
The battle for a cashless world just got regulated. Philadelphia regulators banned cashless stores this week, as the debate between retail innovation and lawmakers trying to protect all citizens’ rages on. With legislation being pushed in New York and New Jersey (likely only the beginning), this move proves cold hard cash is surprisingly resilient and likely here to stay. Even in places like the UK where only about 30% of transactions are done with cash and coin (where that number is expected to drop to 10% over the next 15 years), making sure the transition to digital works for all is a challenge no one on either side of the debate wants to take head on.
JPMorgan Chase Enters A Hot Fintech Space: Point-Of-Sale (POS) Financing
Banks and credit unions have largely left point-of-sale financing space as fintech startups like Affirm capture share. No more. JPM is getting into the space, but in a slightly different way than others. Instead of going about integrating with POS players and cutting deals in order to acquire new customers, Chase is letting existing customer “select from past purchases of more than $500 and finance them over a longer period with monthly fees, rather than interest-based repayments. The bank is also upping its game in the consumer lending space via ‘My Chase Loan’, which will enable card customers to borrow against credit lines to fund larger value items.” About time. Banks have the customer, banks have the data and banks have the funds literally sitting in the account. Why not give customers more flexibility?
Technology
China’s Ambitious Plan to Build the World’s Biggest Supergrid
China is fundamentally rewriting the book on global infrastructure development. Its “New Silk Road” initiative calls upwards of $8 trillion in infrastructure lending from Beijing to other countries in an effort to kindle a “new era of globalization.” China is also focused on its own infrastructure, with plans to build a supergrid with a major focus on renewables, aiming to lead the world in renewables consumption over the next 5 years. 89,000km of ultra high voltage lines should help do just that.
The sheer scale of the new line and the advanced grid technology that’s been developed to support it dwarf anything going on in pretty much any other country. And yet, here in China, it’s just one of 22 such ultrahigh-voltage megaprojects that grid operators have built over the past decade….The result of all this effort is an emerging nationwide supergrid that will interconnect China’s six regional grids and rectify the huge geographic mismatch between where China produces its cleanest power (in the north and west) and where power is consumed (in the densely populated east). By using higher voltages of direct current, which flows through conductors more uniformly than does alternating current, the new transmission lines dramatically reduce the amount of power that’s lost along the way.
Airbnb Is Paying $400 Million For HotelTonight, Half in Pre-IPO Stock
So how much is Airbnb shelling out to acquire HotelTonight? The deal price was a little more than $400 million, with about half in cash and half in stock, which comes in at slightly less than the latest valuation of the last minute booking hotel company. A good deal for AirBnB (and probably HotelTonight considering the stock component), the company is certainly cementing itself as the one stop shop for all things travel experience ahead of the coming IPO.
‘Alexa, Can You Be Empathetic, All-Knowing and Funny?’
Rohit Prasad, head scientist of Amazon’s Alexa, on the quest for omnipresent, human-sounding AI assistants. The four vectors that virtual assistants need to get better on: competency, context awareness, context and proactive task completion.
Random Tidbits
Viral Video of Man Dancing to Post Malone's "Wow"
There is clearly no such thing as “too old”. Check this out.
Dance like no one is watching. Or 8 million people are watching.
“The Godfather” turns 50
The Godfather is one of the (if not the) greatest movies of all time. The book by Mario Puzo (the basis for the film) turns 50 years old this week. A quick read on what the movie got right—and wrong—about the mafia.
The Rise of the WeWorking Class
The lede alone makes this a must read.
IMAGINE YOU TRAINED an artificial intelligence on a comprehensive stock-photo set of every boutique-hotel lobby from Palm Springs to Stockholm to Milan, then connected it to a five-story 3-D printer fully furnished with pendant-dome lamps, waxy leaves and old-school hip-hop lyrics. The output would be a WeWork.
Quote I’m thinking about: “Creativity takes courage.” - Henry Matisse