This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Daily Dose: Ugly Drawbacks to the Big Shift Online

Stocks in this article: LNKD FB AAPL

This article originally appeared on RealMoney.com on Sept. 4, 2014 at 10:58 a.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.

Most everyone invested in the market these days -- or tasked with covering it -- seems infatuated by the power that social media and mobile could have on a company's financial results. Oddly, many of these same folks have inadequate LinkedIn  (LNKD) profiles and are not on Twitter  (TWTR) , and they never utilize Facebook  (FB)  properly, failing to tap in to the global conversation around a given issue or subject. It's so sad.

In any case, while mobile buying, mobile browsing and mobile interaction are proving to be beneficiaries to countless publicly-traded companies, keep in mind there are ugly drawbacks to this trend.

The first one is hacking, and this is a subject I touched upon in-depth in an interview for The Street with Symantec (SYMC) chief operating officer Stephen Gillett. Without the advance in mobile and online technologies, companies wouldn't be scrambling to lay the infrastructure while trying to reap all of the benefits right now. I believe retailers, banks and many other types of companies remain ill-equipped to defend private information of patrons simply because of execs are hungry for profit today. As a result, they are not laying the proper technological foundation to prevent breaches that ultimately destroy shareholder value.

STOCKS TO BUY: TheStreet Quant Ratings and Dave Peltier's Stocks Under $10 has identified a handful of stocks that can potentially TRIPLE in the next 12 months. See them FREE today... Click Here NOW.

Here is a telling comment from that interview with Gillett -- and this is an executive who has seen it all, having worked at Starbucks (SBUX)  and Best Buy  (BBY) in very prominent tech positions.

"As retailers converge in the digital, as they converge in the omnichannel experience, as they try to offer the latest and compete with each other for that attention to the customer in whatever channel they are coming in on, they are increasingly using more and more technology that either they are not proficient in, or they need third-parties. I think that risk is increasing. Some are doing it very well, some of them need some help, but the customer is demanding that the retailer engage with them in these new channels and experiences. That brings many of them into unchartered territory."

Another downside to advancing mobile technology -- which will only be magnified amid whatever piece of plastic Apple  (AAPL) unveils Sept. 9 -- lies in the mega shifts in how people consume goods and services, and the attendant stress being put on companies as they operate their huge physical assets. Companies, such as retailers, have been unable to reduce their fixed costs quickly enough to address weak sales at physical stores. This is something that has been displayed in traffic counts.

For example, check out the persistently negative traffic, seen on the chart below, at Target (TGT) (in yellow) and Wal-Mart  (WMT) (in white).

Macy's M was asked about poor store traffic at the Goldman Sachs Retailing Conference yesterday, and the company didn't necessarily have an answer as to how they might solve the problem. The company could only do a few things in response to this problem: It might roll out its buy-online, pick-up-in-store initiatives (called "click and collect" by those in the industry); it could begin to lay the foundation for same-day delivery; and it could open new branded shops with key partners.

These maneuvers would help to boost average transaction value -- but it's likely a few more stores will close in the years ahead in order for the company to run efficiently in a mall setting starved for physical customers.

Home Depot Hacking

As I said last year, when news surfaced of the Target security breach, more retailers are bound to get caught up in the wave of dirty deeds being orchestrated by faceless cybercriminals. While a part of me is surprised that Home Depot  (HD) has been swept into the fray, given its strong management team, overall this is to be expected. This company, like others, is moving very quickly to integrate mobile and online with its physical store network. Things are bound to be overlooked, and the executives can't be totally to blame, as this concept of "omnichannel" retailing is a new one that changes daily.

I talked with Home Depot execs last week, shortly after its earnings report, and I remain impressed by what the company is doing online. Look for dedicated in-store pickup zones for online orders to crop up shortly. Further, via a few new distribution facilities, I think the company is poised to greatly improve its merchandise delivery times. That could alleviate shipping-cost pressures -- which is an industry problem, and truck driver shortages don't help matters.

Today only: Get FREE access to all of TheStreet's subscription services. That's an annual value of $5,000! Click Here NOW for immediate FREE access.

At the time of publication, Sozzi had no positions in the stocks mentioned.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs