Navigating consumer trends in a recessionary climate
Europe may flirt with recession, but consumer spending remains high in certain parts of the retail market, says Jack Neele of Robeco’s Consumer Trends Equities fund.
The Robeco Consumer Trends Equities fund invests on a long-term basis concentrating on three main themes: digital spending, emerging markets growth and strong brand names.
Jack Neele (pictured with Richard Speetjens) has managed the fund from the company’s hub in Rotterdam since 2007. Previously, he was responsible for the Robeco IT Equities fund and he admits some sectors covered by the consumer fund such as automobiles were new to him.
Yet it is clear that the experience gained from running an IT-focused fund is invaluable today.
Although the consumer fund invests thematically and no longer has a sectoral focus (just one of the changes Neele has brought to the fund since he took over its management), the IT sector is undeniably important for the fund.
Digital spending is one of the few areas where Neele believes consumer spending will continue to grow. The consumer shift to digital is a long-lasting trend with many promising factors, he explains.
For example, the take-up of gadgets such as tablet computers, smartphones and e-readers has been fast. It did not take users long to get used to the concept behind them. What’s more, these products are being updated and improved at an ever-accelerating pace, with products such as iPads and iPods launching new versions in a matter of months, not years.
Neele calls this surge of consumer interest in digital products as “a secular shift in developed markets”, particularly as it is coupled with a boost in online spending. People in developed markets are increasingly comfortable with purchasing books, apparel and even groceries online, he explains, because the online prices are often cheaper than those offered on the high street.
Neele is therefore on the prowl for companies with a strong online brand. Some are more obvious than others, such as retailer Amazon, although this company is already well-known. Other companies Neele is interested in but not ready to commit to include UK online supermarket Ocado, which is experiencing growing pains as it suffers capacity constraints at the weekend when many customers want to place orders, he says.
According to Neele, companies with strong online brands, a capacity for growth and set to profit from the consumer shift to digital products include fashion outlets Yoox (which sells designer clothes from such labels as Armani and Prada) and Asos.