Mike Ashley and HMV
Firstly, it seems that Mike Ashley is in serious talks to buy HMV out of administration, having launched a formal offer last week.
If everything goes his way, he could bag himself a bargain as it will be going for a fire sale price. The interesting thing here is that if he buys HMV and then goes on to purchase Debenhams as well, he is going to be left with quite an impressive portfolio of prime location real estate across the UK as well as some well-known brands and related infrastructure.
The businesses themselves aren’t looking too clever at the moment, BUT I would argue that over time he will be able to cherry-pick the best locations, the best bits of each business and then either remain as a landlord for the rest or sell it off for a faster return.
I think the main question here would be does he have the patience and the money to be able to make the most of these businesses before they just curl up and die?
Problems in the e-scooter industry
The second thing I wanted to talk about today was the current state of e-scooters. The CEO of Segway-Ninebot, the company that supplies 50-60% of the shared scooter market with scooters, said at the recent Consumer Electronics Show that the business model for many of today’s e-scooter start-ups are unsustainable.
Industry consensus says that it takes three months for each scooter to become profitable while the current average life of a scooter is actually something between 30 and 60 days due to a combination of vandalism, theft and general wear-and-tear – so you can see where the problems lie as the scooters either have to last longer AND/OR they have to become more profitable more quickly.
Some companies, such as Skip, customise their scooters to extend their lives but other major problems with the e-scooter industry include low barriers to entry because of the unit costs, low brand loyalty as the experience is difficult to differentiate for customers and increased amounts of regulation restricting further expansion.
I’m personally not a fan of e-scooters or e-bikes because I think that they are too difficult to maintain, the overall costs are huge and I am sceptical about their much-touted environmental credentials if you include the fact that a lot of their scooters get dumped.
Nice idea, but I think that successful and profitable execution for the long term remain limiting factors.
