Retailers Are Dead Wrong on Taylor Swift ‘Funflation’
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| By Jon Markman |
Taylor Swift is killing it. The pop music sensation is extending her brand beyond music to movies and fun experiences.
Retailers call this “funflation,” and they worry consumers will curtail spending on the stuff they buy. Some are even blaming Swift for their poor results.
Taylor Swift transcends boundaries in ways few artists can.
Her concerts routinely sell out in minutes. Her fans, who call themselves Swifties, often pay over $1,000 per ticket for live shows and then stream themselves endlessly on TikTok wearing elaborate costumes and officially licensed Swiftie gear.
Swift’s Eras Tour started in March in Glendale, Arizona. Forbes notes that ticket and merchandising sales from the 53-stop tour should bring in a well over $1 billion in revenues, a record.
“Taylor Swift: The Eras Tour” was filmed in August during four sold-out nights at SoFi Stadium in Inglewood, California. AMC Entertainment (AMC) announced in August that advance ticket sales at its theaters for the movie reached $26 million. And after its debut this weekend, studio executives and AMC officials estimate the film earned $97 million.
The appeal of Swift is fun experiences over materialism. That last part worries bad retailers.
They have been struggling since 2020, when the pandemic trapped billions of consumers in their homes. It was easy then to sell smartphone upgrades, flat screen TVs and audio systems. Bad retailers fear that era has permanently come to an end.
Best Buy (BBY) CEO Corie Barry was at Fortune’s Most Powerful Women Summit last week, and her message was glum.
Barry says that consumers are not skimping when it comes to paying up for fun experiences. They are buying costumes, arranging parties and renting hotels. They are making concerts and movie-going into a full-on event.
Global live music sales reached $25.3 billion so far in 2023, according to Bank of America (BAC) analysts — up from only $9.2 billion in 2021.
And the summer blockbusters, “Barbie” and “Oppenheimer” spawned costume parties, while grabbing nearly $25 billion in ticket sales.
Leaders of the bad retailers blame this transition to fun experiences for their woes. It’s not that.
Apple (AAPL) stores are still busy. The same is true for Lululemon Athletica (LULU) and Costco Wholesale (COST). Even Nike (NKE) is having a rebirth as consumers reacquaint themselves with iconic swoosh shoes and apparel.
Barry reported in July that Q2 financials fell across the board, year over year.
Revenues tumbled 7.2% to $9.5 billion. Profits slipped 10.4% to only $274 million.
Most disturbingly, net cash declined to $59 million, down a staggering 69.3%.
Best Buy is not failing because of Taylor Swift or funflation. The company is stagnating. Leadership is not moving with the times or embracing new forms of marketing … like influencers.
The company will report quarterly results Nov. 21. Investors should get out while they can, ahead of that date.
All the best,
Jon D. Markman
P.S. I always take a deep look at a company’s financials and recent performance before I make any recommendation. That’s why I was excited to hear about an upgrade to the Weiss Ratings system that my colleagues recently made. To hear about it — and how it can greatly improve your investment performance — click here.
