Cyber Monday: The Rich Continue to Eat the Poor

Tickers in this article: SBUX DG AAPL UA LULU RL
NEW YORK ( TheStreet) -- Through the early part of 2011, I was high on high-end retail. The bet, on stocks such as Ralph Lauren (RL) paid off.

While I have cooled slightly on luxury names, I still love them long term (and long time).

Certainly the bubble I live in informs this sentiment.

Stroll top shopping streets in Southern California. You'll see plenty of people out buying stuff. Expensive stuff. And eating meals. In Manhattan, restaurants overflow, even on Tuesday nights. There's hustle and bustle, which translates into feet on the street and money being spent, but it's generally a regional/local phenomenon.

I'm still fleshing out the theory I introduced in The Death and Life of Great American Retailers . This notion that shopping has become an online and urban sport.

Convenience and the built environment drive what is a not-so-new reality, but it's also the idea of inequality in society.

For example, it is fascinating to look at Los Angeles. Sociologists such as Mike Davis have been for years. People who live in close proximity to one another experience the place in profoundly different ways.

When you go to the grocery store you're probably interacting with a checkout clerk who, if he or she even lives in your neighborhood, views and uses it so much differently than you do. It's even more likely that this hourly worker doesn't live where you reside, especially if it's a relatively affluent place.

The guy who I see almost daily at Starbucks (SBUX) in Santa Monica bikes in from Compton. Santa Monica and Compton -- polar opposite places, man. But you don't even need to take it to such an extreme.

It's safe to assume a large chunk of TheStreet's readership gets what I'm saying. Based on the data I see, we have a relatively affluent audience, highly concentrated in the nation's major metropolitan areas.

So, maybe you live in this bubble and you can make sense of the intersecting ideas of urban vibrancy, regional/local prosperity and inequality. From there, you're looking at retail stocks. Where do you invest?

In light of the gimmicks that are Black Friday and Cyber Monday, I have thought a lot about this -- both on the aforementioned higher, more abstract or philosophical level, but also from practical standpoints.

Some thoughts, keeping in mind my style. I like to take readers through my thought process, which is always a work in progress. I reread what I write and assess the feedback I receive obsessively. So I am always evolving and, more importantly, open to evolution of thought.

  • Cyber Monday sales/promotional emails : I get tons of them. And I still am. Today, for instance, several companies have emailed to tell me that "Cyber Monday" deals or savings continue. But, it's Tuesday. Gimmicks quickly lose their meaning and spell desperation when you hump them beyond their usefulness.
  • All deals, all of the time : I outfit myself these days, by and large, at two places: Kenneth Cole and ExOfficio. Kenneth Cole sends me multiple emails a day with sales that I apparently "can't miss." ExOfficio drops me a line, at most, three to four times a week. Sure, it's based on anecdote, but if Kenneth Cole was still public, I would shun the stock. However, I would love to see an ExOfficio IPO with Lululemon (LULU) -inspired retail stores.
  • Buy exclusive premium brands : Apple (AAPL) might be the best example, but it's not the only example. It doesn't do "real" sales on Black Friday. It does nothing for Cyber Monday. And it doesn't apologize for a $329, 7.9-inch tablet. iPad mini, like the rest of Apple's slate, speaks for itself.
  • Who else? : Under Armour (UA) emails me once a day. For the last week, including Black Friday and Cyber Monday, it sent me slight variations on the same email each day. Something relatively uninspiring like 25% off of a hoodie or something. I love that. Makes me want to buy the stock. Under Armour does not sell on price; like Apple, it sells on quality and cool. Like LULU, it's part of its core market's lifestyle. Intimately.
  • Aspiration: But, at the same time, Apple, LULU and UA are not completely out of reach. You don't have to be rich to own one or more of their products. They might represent splurges for some, but they're aspirational. If you're in retail today, there might not be a better word for people to use when they describe you. People want what you're selling and they save to get their hands on them. You have their discretionary spending.
  • The low-end : As a unit, Mitt Romney's 47% has some real power. I know Jim Cramer and Stephanie Link own Dollar General (DG) in their Action Alerts Plus Portfolio . The stock's recent addition to the S&P 500 should help drive volume buying, but, as a business, Cramer and Link like it because the majority of items DG sells are not discretionary. In other words, people on tight budgets need toilet paper and other "consumables," so they'll buy them repeatedly.
  • Takeaway: You can win on the both the low- and high-end. The high-end cats, when the dust settles, will buy Apple, LULU and UA products no matter what happens macroeconomically. People at all points along the spectrum will aspire to them with varying levels of reliability.

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