Since consumers account for 70 percent of the economy, changes in how we spend are the make-or-break factor for most companies. With that in mind, I used my Quicken files to see where the Burns family is spending more (and less) money. Don't think of what follows as stock tips because there are a zillion reasons Burns family spending may be different from what others do. But if your checkbook and credit card statements contain a similar message you may have the nugget of an investment idea. Here's what I found:
Until recently Albertson's (ticker: ABS) got most of our dollars for food at home. Their supermarkets are large, well stocked, well priced, and have good produce sections. As the primary food shopper and cook in the Burns household, I regularly chose Albertsons over other markets in the Dallas area.
No more. Albertson's management reduced staffing at its check-out stations, turning their stores into Hotel Californias. As the Don Henley lyrics say, "You can check- out anytime you like but you can never leave." Albertson's decided to save payroll dollars by wasting their customers' time. So I now shop at Whole Foods (ticker: WFMI) where the produce is even better and the check-out lines are short. There's a reason some call it "Whole Paycheck" but time is (also) money.
Similarly, my gasoline purchases have gravitated toward Exxon Mobil (ticker: XOM) as I have found that more of their gas stations keep their pay-at-the-pump printers supplied with paper. Consequence: I get a receipt at the pump. This eliminates the need to go in the station and stand in line with lottery ticket buyers.
Among retailers Target (ticker: TGT) looms large for general household purchases. Nordstrom (ticker: JWN) looms large for clothing. We seldom exercise it but the Nordstrom guarantee of satisfaction or return the merchandise is the best loyalty builder going. Wal-Mart may be the most successful (and threatening) retailer in the world but it gets virtually none of our business simply because we find their interiors confusing.
For most of my first 15 years in Dallas I was a loyal American Airlines customer, flying Southwest (ticker: LUV) only on short flights inside Texas. Over the last 5 years, however, I've felt that American (ticker: AMR) has been working hard to lose me as a customer. They did this by making it difficult to use Aadvantage Miles and making non-stop flights scarce. As a consequence, I now think of Southwest Airlines first. Significantly, $10,000 invested in LUV 20 years ago would now be $171,000. The same investment in AMR would now be worth $7,648, according to Morningstar Principia.
Before the world-wide-web my book purchasing was scattered over book stores big and small. Today, Amazon (ticker: AMZN) gets most of my book business. Similarly, my wife just made her first purchases on eBay (ticker: EBAY). Once an omnivorous Dallas clothing shopper, she has started buying on the web. We're also spending more money on FedEx (ticker: FDX) and UPS (ticker: UPS) as web shopping displaces mall shopping.
The last two cars we've purchased have been Toyotas, a 2003 and 2004 Prius. We sold the 2004 so that someone who drives more than we do can reap the better mileage. Our last American car purchase was a 1997 Jeep Grand Cherokee, which we still have. That doesn't auger well for GM, Ford, or Daimler Chrysler. It shows up in the relative value of the stocks. Toyota (ticker: TM) was recently worth more than General Motors (ticker: GM), Ford (ticker: F), and Daimler Chrysler (ticker: DCX) combined.
One indication that these observations are shared by many is that Albertsons, AMR, GM, and Ford were among the 20 NYSE stocks with the highest short positions in mid March.
Is there a connecting theme in these shifts?
You bet. The companies that capture our dollars are the companies that conspicuously respect our time. Increasingly, companies must not only compete on price and quality, they must also recognize that all of us--- regardless of age or income--- are pressed for time.
(Full disclosure: The bulk of my money is invested in index funds but I am a direct shareholder in Exxon Mobil and several other oil companies.)
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