[September 24, 2013]

Consumer Confidence Down, Online Spending up - Michael Zimmerman's Hedge Fund Sees Mcommerce as Future of Retailing

Consumer confidence is down but, contrarily, spending in some key areas is up. According to the Michigan Index, U.S. consumer confidence for August slid from a six-year high. Additionally, The Bloomberg (News - Alert) Consumer Comfort Index plummeted four straight weeks to its lowest level since April.

"The economy, employment, wages, and retail sales continue to stagger along. Retailers and consumers are resilient but not overly optimistic about the broader economy," said NRF President Matthew Shay, but "positive retail sales growth continues month-after-month."

This is confirmed by August Nonstore retailers' sales figures, the measure of money spent on internet shopping, showing an increase of 0.5% seasonally-adjusted month-to-month and an increase of 8.8% unadjusted year-over-year.

This is proof that low consumer confidence doesn't equate to weak consumer spending. Michael Zimmerman, CEO of Prentice Capital Management feels today's consumer is stretched thin. The job market and wages are stagnant, interest rates and prices edging higher, record numbers of Americans on food stamps and the crunch of higher taxes - all factors that Zimmerman believes mean online shopping growth will accelerate as consumers turn to their mobile devices seeking ways tomaintain lifestyle choices at lower cost.

August retail sales showed that total retail sales increased 0.2% adjusted month-to-month and increased 4.7% adjusted year-over-year.

The data suggests that consumers remain cautious with their pocketbooks and purchases. This month's weaker overall retail sales will continue to put pressure on policymakers, who are dealing with tapering, and retailers, who will need to focus on price and better engagement strategies to entice consumer spending.

Zimmerman has recently commented that US consumer retail growth will likely continue to perform well in the year ahead. His pattern of investing as revealed through Prentice Capital's disclosures has shown the Zimmerman hedge fund favors stocks with strong brands and well conceived mobile and online commerce strategies.

"Given the evidence, we seem to be entering the start of a persistent mobile age," Scott Galloway, a professor of marketing at NYU Stern and creator of L2, noted in a statement. "Brands ignore this shift at their own peril."

Companies like Amazon and Starbucks have actively sought ways to communicate and connect more effectively with customers, creating mobile apps that provide immediate discounts and useful features to consumers. Starbucks allows customers to pay directly from their Smartphone in store, while Amazon gives consumers the ability to scan barcodes at bricks and mortar retailers, quickly displaying online discounts for the same and similar products.

As consumers evolve companies must follow suit, engaging their customer base with new and innovative methods. An estimated 33% of Smartphone users check for product reviews, coupons and discounts prior to making a purchase, often while instore - a trend fuelled by Social media. Intelligent use of Social media and Smartphone data allows forward thinking companies to analyze customer behavior and quickly address needs and concerns, adapting as necessary.

2013 could become a breakthrough year for mobile shopping, especially if smartphone prices continue to plummet and strong consumer uptake of the devices continues.

About Prentice Capital Management
Prentice Capital Management LP focuses on private and public equity investments in the U.S. consumer and retail sectors.

About HedgeUp
HedgeUp online publication focuses on middle market hedge funds and the managers behind them worldwide.

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