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Wardrobe Malfunction

Summary

Having not felt compelled to write a blog for a month (we value your time), I find myself writing a third (and last) in a week. This time I’d like to thank a fellow Daily Shot reader for pointing out the erosion in Gap’s US market share in apparel sales from 2003 to 2014. Abercrombie and Fitch has been disrupted too but to a much lesser extent. It highlights the fragile business around brand loyalty but also where barriers to entry are relatively low.

Having not felt compelled to write a blog for a month (we value your time), I find myself writing a third (and last) in a week.  This time I’d like to thank a fellow Daily Shot reader for pointing out the erosion in Gap’s US market share in apparel sales from 2003 to 2014.  Abercrombie and Fitch has been disrupted too but to a much lesser extent.  It highlights the fragile business around brand loyalty but also where barriers to entry are relatively low.
It also reminds us of brands that ten years ago where household names and leading brands in their field where barriers to entry were higher.  Nokia and Blackberry are two that spring to mind but where are they now?
We feel it is key that people we invest with really understand the external threats to their business from innovation and disruptors.  Those that don’t aren’t likely to feature in our portfolios.  It helps that our managers favour high conviction, index agnostic, thematic investing and can avoid being drawn into holding companies that are part of a market index but may not be around or as relevant in years to come.
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