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Millenials present huge consumer challenge, says value veteran

Millenials present huge consumer challenge, says value veteran

Millenials mark the smartest consumer that companies have ever encountered and industries are having to shape up to please these new, highly-educated buyers.

That is the view of Tom Digenan, who is head of US intrinsic value equity and runs several funds at UBS including the UBS US Opportunity fund.

Speaking to Citywire Selector, Digenan said, as technology becomes easier to access, the consumer is becoming more aware of how to bag a bargain.

‘The millennial has access to a lot of information. We talk to banks who tell us that millennials still want to come into a physical branch, but they only want to come in once,’ he said.

‘When they get there the banks better know what they’re talking about, because if they don’t know what products the guy across the street is offering the millennial will; because they’ve got the access to comparative information.’

Digenan said the rise in vast pools of available information has led to the world becoming hyper-competitive.

New areas of growth

He pointed to online retailer come grocer Amazon who have recently launched its own food delivery service in bid to rival Ocado and other UK retailers. Digenan said its far reach means it can deliver anything you want and offer strong service as well.

‘If you own a business and you think, ‘well how can Amazon do this’? If you can figure out a way that Amazon can do it then your business is not going to be here 10-15 years from now, unless you change your business and adapt.’

‘The world has changed in the last 25 years, part of sustainable investments is having a moat, which, for the most part, is technology and this digs away at that moat every day.’

Digenan said Amazon looks attractive as it has a tangible moat and generates revenue, and has gained positive market share.

Digenan added retailers must see over half of retail industry growth is going to one company and retailers must surely be asking 'what’s wrong with the US consumer?'

‘When people ask me ‘what’s wrong with the US consumer’, I tell them that it’s a consumer who are intelligent, a consumer that is at a $17 million plus on auto sales and a consumer where home sales keep going up month after month.’

The UBS (Lux) Eq S – US Opportunity fund returned 22.1% in US dollar terms over the three years to the end of May 2016. This compares to a 36.95 rise by the S&P 500 TR over the same timeframe.

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