KKR Releases Publication on New Investment Landscape Surrounding “The New Consumer”
“The Great Recession, technological disruption, demographics and the rise of the services sector have led to the rapid growth of a rentership and sharing economy, which has long-term implications for growth and investing. Consumers now own fewer assets and allocate more of their income to experiences over things. This shift has also led to a reduction in many traditional forms of investment in favor of the software needed to support consumer demand… Nonetheless, while these shifts may create challenges, they also create opportunity,”
In her analysis of the impact of this new consumer, Roberts offers the following views on four primary areas investors should focus on:
- In conjunction with a shift in demographics, this longer-term shift in consumption may lead to even slower growth in spending on goods, as well as some softness in discretionary services spending in favor of increased spending on healthcare and contributions to savings.
- Sharing and rentership models are likely here to stay, and will continue to disrupt traditional business models given the benefits they provide to consumers as well as workers. However, be cautious about investing in sharing economy models that do not directly address the evolving needs of workers.
- The large consumer sector is diverse; therefore, be sure to disaggregate macro trends to understand how different cohorts behave. If business success relies upon demand fueled by renters, the business model may face more challenges than anticipated in a downturn.
- Finally, the impact of the new asset light consumer and the increased sharing economy penetration creates less demand for the same quantity of assets, resulting in slowing growth in capex.
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KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about
The views expressed in the report and summarized herein are the personal views of
Kristi Huller or Cara Major