Threat to listed companies in exposed sectors
In markets for which sharing businesses started earlier and have achieved greater scale, the impact on established incumbents is already becoming clear as it is set to redefine growth rates and profitability over the coming decade. For sectors such as hotels and transport, growth expectations used in valuations have already dropped.
But more sectors may be at risk. Where no major players have yet emerged due to a lower penetration or slower behavioural change, the effects are less obvious. However, we expect that sharing models will appear in a much wider range of markets than has been seen to date, with commensurate impacts on incumbent industries.
Through examining large categories of spending on consumer durable goods with low utilisation rates (and for which physical sharing is straightforward), we have identified markets we think are likely to face disruption, including travel equipment and sports goods, luxury jewellery and accessories, apparel and footwear.
While there is no single solution, it is clear that incumbent companies in exposed industries will need to plan for significant changes.
The experience of lodging or transport (through Airbnb or Uber) demonstrates the speed with which change can unfold; and the inability of incumbents to adapt after that trend has become established. Sharing businesses are typically based on a kernel of innovation that allows them to undermine the economics of traditional peers.
Airbnb uses the scale of an online marketplace to allow homeowners to generate a positive return on property, albeit lower (often) than hotel groups would demand for the same investment, and eliminates redundant administrative and service overheads its users do not require.
Uber similarly leverages an online market place, combined with advances in navigation technologies, to bring together self-employed drivers and passengers. Had incumbents recognised those business model opportunities, they might have more easily stemmed their growth by adapting their own strategies.