How will the internet impact business? · Transcript

WarrenObviously, the Internet is going to have an important impact on retailing. It will have a huge impact on some forms of retailing, change them, and maybe revolutionize them. I think there are some other areas where the impact will be less. But any time we buy into a business, any time we've bought in for some time, we have tried to think of what that business is going to look like in five or ten or fifteen years. And we recognize that the Internet, in many forms of retailing, is likely to pose such a threat that we simply wouldn't want to get into the business. I mean, not that we can measure it perfectly, but there are a number of retailing operations that we think are threatened. And we do not think that's the case in furniture retailing, and we have three very important operations there. We could be wrong. But so forth. So far, that, you know, that would be my judgment that furniture retailing will not be hurt. Now, you might say in jewelry retailing, you know, with millions of things that you can click on to, 10 years from now, you know, who is going to be important in terms of online retailing of jewelry? I would argue that two firms have an enormous advantage going in. I would argue that Tiffany has such an advantage. I don't own any Tiffany, but I would say that because of their name, brand names are going to mean very, very much when you have literally, you know, thousands and thousands of choices. People can't. They have to trust somebody. And I think that Tiffany has a name that people would trust. And I think Borsheims has a name that people would trust. And Borsheim sells jewelry a whole lot cheaper than Tiffany. So I would say that people who are price conscious, but also want a deal with a jeweler that they trust implicitly will find their way to to Borsheims in increasing numbers over the Internet. And I would say that people that like the blue box, you know, are going to find their way to Tiffany's over time and they'll pay more money. If I were to buy into any retailing business, whether I was buying the stock of it or buying the whole business, I would think very hard about what people are going to be trying to do to that business through the Internet. And, you know, it affects real estate that is dedicated to retailing. If you substitute 5% of the retail volume via the Internet where real estate is essentially free, you know, you can have a store in every town in the world through the Internet without having any rental expense. So I would be think, I would give a lot of thought to that if I were owning a lot of retail a rental space.