2022 RECAP & LOOKING AHEAD
- 2022 Trends: Chasing Precision with ‘Science’
- Record IPOs Email Promotions, Unsustainable Growth
- Investing to Improve our Processes
- Inflections: Select Winners and Losers
- Goals for 2023
Our promotional ensemble identified the biggest outliers of the period from several weeks before Black Friday through Cyber Week for our investor partners.
Standouts with previously unseen promotions, largest risers in discount campaigns, or those with robust organic demand that were able to reduce email volumes include:
AEO, COUR, CROX, CURV, GME, HIBB, LOVE, PVH, NKE, RH, SCVL, SONO, TPX, TSCO, URBN, VFC
Our email intelligence systems have been capturing tracking and classifying emails from leading brand for nearly 7 years providing the most robust, quantitative insight into email promotional activity. i
The quickest and cheapest method for management to respond to demand inflections is to adjust its cadence and intensity of email discounts.
AMERICAN EAGLE OUTFITTERS (AEO) Both total promotional email volume and significant discounts nearly 30% lower than a year ago.
GAMESTOP (GME) Meteoric rise in BF related promotional activity with “$50 off x box” and “up to 60% off video games”.
HELLO FRESH (HLFF) Total promotional email volumes up nearly 300% driven by “$180 off Thanksgiving” and “get up to 70% off” discounts.
LOVESAC (LOVE) Steeper than year ago and higher volume significant discounts driven by “35% off Bundles”.
NIKE (NKE) Sequential and YoY declines in steep and significant discounts
VF CORP (VFC) Both North Face and Vans saw sharp rises in all categories of email promotions. Total inbox volumes, significant discounts, steep discounts and storewide promotions all rose to record highs.
contact us for to see the entire Holiday Promotional Outlier List
Random Walk Email Intelligence has never identified more unusual promotional activity than over the past 30 days. In June alone our systems have captured nearly 100 never seen before campaigns as consumer preferences shift.
HOME FURNISHING PROMOTIONS ACCELERATE TO NEW HIGHS
BIG, LOVE, W, WSM
In home furnishings our data indicates COVID pulled forward, not just several quarters but year’s worth of demand. Now, with the backyard, garage space and wallets maxed out, consumers are shifting away from creating the perfect Instagram worthy at-home backyard oasis.
Random Walk Email Intelligence indicates record growth the discount campaigns in Q2 from Pottery Barn.
DEMAND FOR CASUAL ‘AT HOME’ FOOTWEAR FADING?
CROX, FL, SCVL
During COVID, Americans gobbled up footwear for the outdoors or comfort around the house casual footwear retailers benefitted and throttled back promotions. However, this summer with consumers more spartan due to gas prices and $20 hamburgers they don’t appear to need so many sandals.
Crocs and Crocs retailers such as Foot Locker and Shoe Carnival have been blasting an all-time high volume of Croc’s specific discounts.
GET OUTDOORS ON THE ROAD MEETS $6 GAS
CWH, WGO, YETI
Without COVID checks, a free pass from work, and with $6 gas it appears road trip RV, van and mega SUV trips could be stalling. Our email intelligence has tracked growth in promotional volumes for outdoor camping accessory related businesses such as Camping World, Winnebago, and Yeti.
Into summer camping season Camping World has blasted out an all-time high volume of significant and steep discounts.
Our data visualizations allow quick identification of outliers within a specific sector. Find out which brands are losing organic demand and responding with increased “push” discounting campaigns to their leads
Download the pdfhttps://ranwalk.com
> Email Intelligence successfully detected the collapse of one of the biggest FOMO driven manias in US history: “crypto trading”.
> Random Walk ensemble alerted investor partners to sharp deceleration in orders, new account “welcome” confirmations, as well as a higher deletion rate for new product offerings.
> Wall Street bankers and analysts, motivated to sell the management “narrative”, extrapolate unsustainable growth rates into the future, but RW data can help uncover inflections
In 2020 and into 2021 our data indicated strong, but likely transient growth in new “Welcome to Coinbase” email confirmations. This unsustainable growth was driven by a ‘Black Swan’ mosaic of factors: bored locked down Americans, unprecedented Uncle Sam stimulus checks, and social media FOMO pictures of teens in pajamas getting rich trading Crypto Kitties.
After lockdowns and free money ended in late 2021 our ensemble uncovered slowing in new customer confirmation emails, and we added COIN to our slowing list.
‘GENIUS’ SUPER BOWL QR AD GENERATES CLICKS NOT CUSTOMERS
Above: Super Bowl Ad fails to generate customers, but drove worthless clicks due to its nebulous nature
Several additional data driven trends revealed themselves earlier this year. The inability for a $14 million Super Bowl ad to attract new customers was apparent as our data detected no spike in new accounts. While the media focused on worthless “clicks” our data showed a lack of actual new customers. Management hubris led to equivocating marketing a crypto-trading platform with proven consumers products such as alcohol/beer, quick service restaurants, auto, apparel etc.
EMAILS PROMOTING SUBSCRIPTION, NFT PRODUCTS DELETED
In March, our email intelligence indicated very high delete rates for new products marketed with email promotions such as Coinbase One, and Coinbase NFTs. With gas at $6 a gallon and $25 hamburgers and rising rates, consumers had lost interest, as they prioritized getting to work and feeding their families over possessing digital unicorn.
BITCOIN SPIKES, TRADING VOLUMES DON’T
The lack of interest in trading “cryptos” despite a spike in bitcoin after Putin invaded Ukraine showed in our data and confirmed the slowing trend.
AS BROADER EQUITY MARKETS CORRECT, CUSTOMER GROWTH ENDS
Once the high growth equity tech bubble began to collapse and consumers saw their 529 plans, 401ks, and brokerage accounts decline, they quickly shifted their preferences away from crypto trading.
Download the full Coinbase PDF here
With more than 6 years of historical data tracking email promotional activity from nearly 300 consumer brands we are excited to launch our first data product!
This fall select clients can access structured weekly data for this first time.
Investors will be able to quantify and help answer the following:
Robust 5 year returns with no correlations to the major averages
Superior Performance from 2017-2021
Walking Earnings Signals, performance is as follows for entering a trade on the day before the earnings event and exiting on the earnings event date. In practice, the signal would be available shortly after the end of the fiscal quarter and an investor would have a few weeks between the end of the quarter and the earnings announcement date to build this position
Promotional Activity Predicts Share Performance
In this study we’ve illustrated a use case in which a company’s promotional activity data can be used to successfully predict how that company’s stock will move at its next earnings announcement. With strong standalone performance, this study demonstrates that the promotional data can be a valuable input into the decision making process of both discretionary and systematic investors who wish to adjust positions, confirm positions, or discover new trading opportunities heading into earnings events.
Discretionary investors may also wish to use this data to identify inflection points (both positive and negative) in consumer stocks for opportunistic strategies or use this data to identify downside risk for existing positions. Systematic investors may wish to derive ranks with monthly or weekly frequency based on these inputs to drive a long/short decile portfolio.
contact us to inquire about adding the promotional ensemble as a data feed
Why Credit Card Data Fails
Big data in investing is here and we are a part of it. However, some institutional investors are getting confused as to the end zone.
There are several expensive credit card transaction products that correlate well with coincident revenues some of the time. With Wall Street investors trained to drool at regressions, error bands and correlations, the allure that these products can do the decision making is appealing. While often accurate in predicting some component of revenues, this “data” approach has herded investors into a series of grossly inaccurate conclusions on consumer stocks in 2017.
To be specific, the largest big-data transaction vendors led investors right to slaughter in a wide range of mall based retailers this spring. Ironically, the data generally projected somewhat accurate revenues in names including JC Penny (JCP), Macy’s (M), Foot Locker (FL), Michael Kors (KORS), Vitamin Shoppe(VSI) and several others. In summary, the transactional data indicated results were to be inline, an expensive and grossly wrong conclusion.
Why did this expensive credit card data fail miserably? Look how tight those error bands are! The transactional data provided no context into organic demand of these products. Credit card receipts did not factor in the desperation among retailers engaged in their steepest discounting in history. Share prices collapsed and investors overly focused on transactional data were left with a classic Pyrrhic victory, attempting to take solace with the mantra of “but we were right on revenues”.
Other times, the transactional data is correct most of the time when its business as usual, then misses the largest move because something unusual has occurred the sample did not detect. So investors are correct, when there is no money to be made, and wrong right when a business is about to be dramatically revalued due to a massive inflection in demand. Vitamin Shoppe (VSI) comes to mind in this scenario. The Random Walk ensemble captured the 50% plus collapse in business as customers migrated to Amazon and stopped by placebo pills altogether. Through a combination of click stream data, review volumes, email responses our more robust, less precise approach generated alpha for our clients.
In terms of risk reward, compounding the problem is the herding mechanism related to this mass consumption transactional data. Every highly transactional, well resourced hedge fund is viewing the identical data sets, yielding the same conclusion. This now incorrect herd exacerbates the share price collapse as panicked analysts- now uncommitted shareholders all attempt to rush through a tiny exit door at once.
In contrast, our more robust and diverse data ensemble can be less precise for coincident revenues, but more ACCURATE in predicting changes in consumer behavior that ultimately influence share price. Our view is that new customer acquisition volumes, organic demand for products and repeat customer frequency drive share price. These are the metrics we focus on predicting because the relate future growth. We don’t want to predict the present or past.