In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche
This could indicate that traditional banking might no longer be a viable business because of the alternatives available. Things could soon get worse because PayPal is about to get spun off from eBay Inc. (NASDAQ: EBAY) and transformed into an independent financial services company that will compete directly with banks.
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The major reason Jack Ma will stay away from mass retail in the U.S. is that the cost of entering in the market could simply be too high. The revenue from a large-scale U.S. retail operation might not justify the cost of setting up such a venture.
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It looks as if the purveyors of digital wallets are going to have to do a lot of old fashioned marketing if they want to get the public to accept their products. That might give Current C an advantage in the digital wallet wars because some of the companies behind it, such as Kroger, are very good at marketing.
Read MoreGoogle (NASDAQ: GOOG) has been experimenting with Google Express, a delivery service that picks up orders from stores and takes them to customers, for some time. Google Express even offers a same-day delivery service in some U.S. cities, including San Francisco. Big name retailers participating in Google Express include Target (NYSE: TGT), Walgreens (NASDAQ: WBA), Whole Foods (NASDAQ: WFM), Costco (NASDAQ: COST), Staples (NASDAQ: SPLS), PetSmart (NASDAQ: PETM), REI, and Barnes & Noble (NYSE: BKS).
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A very dark horse contender for an eBay acquisition would be Berkshire Hathaway (NYSE: BERK.B). Uncle Warren is famously technology adverse, but eBay does meet some of his criteria: it’s a good company with a strong brand that’s well respected on Main Street but undervalued by the market. It also has a business model that generates a lot of float and cash—two of Buffett’s favorite things.
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The retail environment has changed dramatically because of the value shopper. Those investors that realize it and invest accordingly will profit.
Read MoreBasically, any company that offers high-quality merchandise or a high level of convenience at a good price is poised to profit in this economy. People want to save as much money as possible, but they don’t want to think of themselves as “poor”; income inequality, which makes people conscious of poverty, drives this trend.
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Costco, on the other hand, can use the float from its memberships for almost anything it wants to. That’s good news for investors because Costco generated $768 million in membership fee revenue in the fourth quarter of 2014, according to The Wall Street Journal. Costco’s float is growing too – its membership fee revenue grew by 7% during the fourth quarter.
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What is the correlation between online retail’s growth and grocers’ growing revenues? The answer is a rather simple one: the grocery store is the one large retail outlet that most people still have to visit on a regular basis.
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Walmart and Target certainly have their work cut out for them if they want to maintain their positions in the retail market. Safeway will have even more work to do if it wants to become a credible rival to Kroger.
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