You are cordially invited to the Investor Symposium hosted by Matson Money.
When: Thursday, July 31, 2014 – Saturday, August 2, 2014
Where: Horseshoe Casino & Conference Center
1000 Broadway, Cincinnati, OH USA
Speakers Include:
Arthur B. Laffer, PhD: Chief economic advisor to Ronald Reagan
Terrance Odean, PhD: Professor at Cal-Berkley, expert in the field of investor behavior
Lyman Ott, PhD: Expert in the field of statistics, providing validity to Free Market Portfolio Theory
Concert featuring country singer (and former leader of Hootie & The Blow Fish) Darius Rucker
Seating is limited. RSVP by emailing reservations@matsonandcuprill.com. Admission is free to all Matson & Cuprill clients and their guests.
In The Headlines
Coming to a Store Near You – Virtual Reality
Retailers everywhere are grappling with the problem of how they can get shoppers to turn off their computers and step back into the store. Lowe’s thinks it may have found the answer: Give them something they cannot get online. The second-largest home improvement store announced on Wednesday that it will transform the in-store experience by building a 30 x 30 foot virtual reality room called a Holoroom enabling customers to view a 3-D representation of their renovation projects before they start any work.
The proprietary technology, developed in partnership with SciFutures, a technology firm, starts by letting shoppers design their ideal room on one of the store’s iPads. Customers first enter the dimensions of the space they want to renovate. Next, they select the features they are considering for their home, including flooring and countertop options. Once the selections are made, the customer enters the Holoroom, which projects a realistic 3-D rendering of what their future room would look like.
If the customer is satisfied, they will be handed a list of their selected items, which can be purchased in-store or online. If, say, the tiling does not match the faucets, they can swap out different aspects of the design to get the look they want. And if they are still not sure, they can get a printed copy of the design.
“Many homeowners are overwhelmed by defining and articulating their vision for a home improvement project and may never even start a project for that reason,” said Kyle Nel, executive director of Lowe’s Innovation Labs. “The Holoroom removes a significant barrier for customers in helping them visualize how a finished project will look in their homes.”
The Holoroom will debut later this year in two of the company’s Toronto stores. The initial launch will be limited to bathroom remodeling, but over the next 12 to 18 months, Lowe’s plans to add new categories and rooms such as kitchen, living, and outdoor spaces. The retailer has not yet set any plans for a U.S. launch. The Holoroom’s creation stems from Lowe’s Innovation Labs, an initiative developed by the company to harness existing technologies, as well as work with start-ups, universities, and other companies to create the store of the future.
Lowe’s is not the only retailer looking to revamp its in-store experience to boost engagement and customer loyalty. A multitude of other brands are tackling the issue with a myriad of approaches. Urban Outfitters, for example, is opening a series of store concepts that include third-party offerings, such as a coffee shop, hair salon, and rooftop bar to keep shoppers in its stores longer. LVMH-owned Sephora, on the other hand, is taking a more tech-savvy approach by testing augmented reality mirrors, through which customers can virtually try on different makeup palettes. And Macy’s and other stores have begun experimenting with in-store GPS technologies to help shoppers navigate once they are inside. “I think [in-store technology] absolutely will be the norm,” said Joanne Podell, a vice chairman at commercial real estate firm Cushman & Wakefield. “Any retailer today that does not look at using technology to engage the customer experience is making a mistake,” Podell continued.
New technologies are one way Lowe’s is looking to capitalize on the recovering housing market, which helped the retailer post a comparable-store sales gain of 0.9% in the most recent quarter, despite an extended winter that delayed consumer purchases for the critical spring selling season. Still, the retailer is lagging behind the performance of major competitor Home Depot, which posted stronger sales growth in the most recent quarter despite a more difficult comparison from the prior year period.
Chief Customer Officer Michael Jones says Home Depot’s main focus moving forward will include catering to its professional home-improvement shoppers and enhancing the customer experience. “Everyone realizes that change is happening at an increasingly fast pace and that fast pace is becoming increasingly harder to predict. The only way you can really effect change is by being the change.”
Calculating the Odds – Munich Re Insures the World Cup
With the run-up to the World Cup in Brazil marked by protests, construction delays, and crime, perhaps nobody felt more relief at the problem-free opening match than Munich Re underwriting manager Andrew Duxbury.
His insurance company has written policies covering $400 million in potential losses at this year’s World Cup. While they are not out of the woods yet, Duxbury is feeling confident. The noise around such events, he explains, is always generated in the immediate run-up to their start. While not wanting to underestimate or minimize the significant issues that Brazil faces, he sees the pre-tournament protests as part of a regular cycle.
Similar fears, Duxbury notes, marked the days before the Olympic Games in Sochi and London, and the last World Cup in South Africa. In every case, there were no major disruptions. “Did we get an event? Yes, we did. Did the athletes love it? Yes. Did the TV come in? Were we watching it? Yes, yes, yes,” he says. “And I expect to see that here as well.”
Munich Re is one of about a half-dozen major insurance backstops for FIFA (the Fédération Internationale de Football Association), media rights holders, sponsors, and anybody else with a large financial stake in the World Cup. Along with competitors such as Swiss Re and Hannover Re, it sets the market for as much as $2 billion in insurance covering the event. If matches are cancelled, delayed, or interrupted by weather, violence, stadium failures, or anything that falls “outside the control” of the insured, Munich Re helps cover the initial investment. This means the company needs expertise in everything from meteorology and crowd control to political climates and stadium construction.
In the seven years since Brazil was named host for 2014, Duxbury has led a team of roughly a dozen Munich Re employees in assessing the universe of potential risks. According to Duxbury, the project is part modern data collection and part old-fashioned underwriting. He notes. “You know that there is an X percent chance of two inches of rain only one day in July at that venue. Would two inches cancel the game?”
This means looking at drainage plans, past cancellations, and event protocols. Even then, you never know for sure. There could be a volcanic explosion in Iceland, an event that occurred in 2010 that Duxbury remembers playing havoc across Europe during the last World Cup tournament. “Either the stars couldn’t get there, security couldn’t get there, or the audience couldn’t get there,” he says. “I could honestly not have imagined that a volcano in Iceland could have impacted Europe for that length of time and shut our airports down.”
For all Brazil’s struggles since the financial crisis, the 2014 World Cup is a relatively safe proposition for Munich Re. Unlike the Olympics, which are centered in a single city, the global soccer tournament is spread throughout the country. This dissipates risk because there is no concentrated target and allowances can be made for a catastrophe at any single venue. “I have sleepless nights about London, two years later,” says Duxbury, “a much more difficult risk proposition because you’ve got so many more moving parts, so much of a bigger organization in terms of athletes, different disciplines—all wedged into one of the world’s bigger cities—and therefore notoriously difficult to tie down and make completely watertight and secure.”
There will no doubt be protests, crime, planning failures, and problems from now until the World Cup final match on July 13. For Munich Re, those are minor irritants. Duxbury’s concern is large-scale disaster. “I’m imagining I’d be turning on the television from my living room in the evening in the UK going, ‘Okay, now we have a real problem.’ I think I’ll know immediately.”
Sources:
1. http://cnb.cx/1jl9wFc – CNBC
2. http://buswk.co/1lxtK2J – BusinessWeek
The Good News Is . . .
• Priceline has agreed to buy OpenTable, the largest restaurant bookings business, for $2.6 billion in cash ($103 per share). The company is looking to consolidate the businesses of reserving seats for planes and for restaurants. It is the biggest deal yet by Priceline, which has turned to acquisitions to bolster its stable of online brands. Over its 16 years, OpenTable has integrated its software into restaurant systems, essentially managing their inventory of seats and letting them keep track of repeat customers. That business has grown to encompass more than 15 million diners each month at 31,000 restaurants.
• Salesforce.com, Inc., the leading provider of Customer Relationship Management (CRM) software, reported earnings of $0.11 per share, an increase of 9.9% over year-ago earnings of $0.10. The firm’s earnings topped the consensus estimate of analysts by $0.01. The company reported that revenues rose 37.4% to $1.2 billion. Management attributed the company’s performance to strong growth in its CRM subscriptions and professional services segments.
• The U.S. Department of Commerce announced today that the total value of distributor trade sales and manufacturer shipments for April, adjusted for seasonal differences, rose to $1,337.4 billion, up 0.7% from March 2014 and up 5.4% from April 2013. The business inventories/sales ratio based on seasonally adjusted data at the end of April was 1.29, compared with the April 2013 ratio of 1.30.
Sources:
1. http://nyti.ms/1izRjU9 – NY Times Dealbook
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://bit.ly/1knckFs – Salesforce.com,, Inc.
4. http://1.usa.gov/1qSssjn – US Dept. of Commerce
Planning Tips
Tips for Taking Financial Care of Aging Parents
Many older adults are now sharing the cost of a parent’s care. According to a 2012 Pew Research Center survey, about one in five middle-aged adults have provided financial support to a parent age 65 or older. The best way to manage a potential impact to your budget if you take on the financial care of a parent is to anticipate and plan for it. Below are tips to help you plan for such a contingency.
Learn about tax deductions and credits – If you are caring for a parent or have moved a parent into your home, you may be able to claim them as a dependent on your tax return. If you pay for their medical expenses, you may be able to claim credits on your return. Consult a tax advisor to see if you are eligible.
Find out if your parent qualifies for assistance – You can lower expenses through senior programs, like utility companies that offer breaks on energy bills, or free transportation services for the elderly to medical appointments. For example, Lifeline is a government program that offers discounted land lines to low-income residents. A geriatric care manager (www.caremanager.org) can help you find local resources for seniors. A certified senior move manager (www.nasmm.org) can handle the logistics if a senior wants to downsize. Many churches and synagogues have programs to find companionship for the elderly, or help caregivers. An elder care attorney (www.naela.org) can design a financial plan to take advantage of government assistance and handle estate planning.
Assess the finances and pool resources – Take an inventory of resources available to you today and in the future and compare these to the costs of medical care and housing. Get a list of your parent’s assets, how they are titled, account numbers, and where they are located. Take a look at income, Social Security checks, assets, real estate, and expenses. Sit down with a financial advisor, so you and your parent can review it together. Make a budget and decide where you need to tighten up, whether you eat out less or shop less frequently. Enlist siblings who cannot help financially to assist you with paperwork or putting in time packing or sitting with your parent.
Look into long-term care insurance – You may be dealing with your own retirement, kids who want to go to college, and your parents’ problems, and there are only so many dollars to go around. Some of these things, like long-term care, can be insured against. It is expensive, but the odds that one of your parents is going to need long-term care are quite high. This is a good place to share the risk through insurance policies.
Set up a power of attorney – Set up a power of attorney so you can care for an incapacitated parent, handle their finances, cash their Social Security checks, and sell their house if that is necessary to pay for their care. If you have power of attorney, you do not have to go to court and have your parent deemed incompetent in order to handle these functions. Care under a power of attorney is more dignified, less expensive, and more efficient than a guardianship imposed by the state.
Sources:
1. http://bit.ly/1jsW2at – Assisted Living Today
2. http://bit.ly/1kEtRVu – AgingCare.com
3. http://hrld.us/1bxtwR9 – Miami Healrd
4. http://bit.ly/1pyZUhi – Kiplinger
5. http://bit.ly/1ous0e5 – 360 Degrees of Financial Literacy
6. http://bit.ly/1nI6NK8 – HomeCare.com
