episode 99: Richard Kestenbaum, Triangle Capital

“People are looking for identity, association, and ultimately meaning in the things they buy. Active outdoor sports is very well-suited for people to find meaning in. That is why the passion of a business is so relevant, because people identify with it.”

– Richard Kestenbaum

EPISODE PREVIEW:

In July 2019, a report [link is below] came out that squarely pointed the finger at private equity and Wall Street for the loss of 600,000 retail jobs and 1.3 million jobs overall during great retail correction (that we’re still in, btw). Many analysts agreed with the report. My guest today, Richard Kestenbaum, does not.

Richard is in mergers and acquisitions, and is a fan and professional follower of active outdoor markets. He is the perfect person to walk us through today’s investment landscape and how that may or may not be in influencing the health of retail. He sees the bigger retail picture, and can tie it right back to our specialty markets.

In this episode, we dig down into the cause of why start-ups are able to scratch away at legacy retailers grip on sales, and why legacy brands seem to be the ones going bankrupt more frequently. Richard analyzes this specifically through the lens of private equity and through the competitive advantages of specialty.

But what if your business is looking for funding? Is there still money for capital investment? You betcha. But it’s time for new metrics to capture the new retail reality, which in large part will be a measurement of how well a brand is meeting customer expectations.

GUEST PROFILES:

Richard Kestenbaum

Richard Kestenbaum is a founding partner of Triangle Capital, a company that does mergers, and acquisitions and raises capital for companies in fashion, retail, apparel, accessories and consumer products. He’s also a well read and well respected Forbes.com contributor.

 

Richard has been in investment banking for three decades and has deep experience advising clients in merchandising businesses in the apparel, retail and consumer sectors. He’s the author of three books on finance and computer programming, and is a former Adjunct Assistant Professor of International Business at the graduate program of the Stern School of Business at NY University.

TOPICS COVERED:

New metrics for retail success, evolution of retail, retail correction, private equity and the retail correction, legacy retailers success, last mile, buy online pick up instore, Amazon as competition, heat maps for retail, the competitive advantage of specialty markets, new generation of investors in specialty

SELECT QUOTES:

“I don’t agree about the causality: The causal relationship that’s implied by the structure of private equity, and the loss of those retail jobs.”

“What we are seeing now is that legacy retail is such a questionable business, that even the biggest, greatest, highest level companies in the industry, haven’t been unable to raise meaningful amounts of capital, or find acquirers.”

“We need different metrics to decide what a store does. …We’re getting into a very complex area in a complex time, and it’s not clear how now to measure the effectiveness of a retail store.” 

“People are looking for identity, association, and ultimately meaning in the things they buy. Active outdoor sports is very well-suited for people to find meaning in. That is why the passion of a business is so relevant, because people identify with it.” 

“Amazon is fantastic and they’re almost impossible to beat. But buying tee shirts from Fruit of the Loom is not the same as buying an occasion dress from Oscar de La Renta.”

“Where specialty will suffer is if it tries to commoditize its product. If it loses focus on the customer experience in the store, and the relationship with the customer. So training, knowledge, critically important for specialty to continue to be important.”

“There’s one more thing that’s a challenge we tend not to talk about when we talk about knowledge and guidance. And that is wages.”

 “We will continue to see lots of capital available, but only for the right opportunities. Investors want growth and gross margin.”

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