Groupon Inc (NASDAQ:GRPN) Is Capitalizing On Millennial Trends for Growth
Groupon Inc (NASDAQ:GRPN) stock price has rallied by over 55% since July 31st when the company signed a partnership deal with GrubHub Inc (NYSE: GRUB). The company’s third quarter results indicated a decline in overall revenues, but also highlighted an increase in overall profitability, which attests to the management’s overall competence.
Groupon’s stock price has rallied higher in the second half of 2017.
The company shifted its overall focus to local experiences that attract millennials.
The management team has streamlined operations, thus, reducing costs and increasing profits.
The company’s recent stock price rally can be directly attributed to the management’s efficiency in cutting operating costs, while at the same time making strategic decisions that have a positive impact on the company’s stock price. Some of the notable management decisions include the GrubHub partnership as well as the execution of the share repurchase program, both of which have boosted the company’s share price.
Groupon’s management team has made a significant shift in its core business focus away from providing coupons for goods to focusing on local markets. This strategic change in direction is aligned with emerging trends focused on millennials who prefer to have unique experiences as opposed to owning goods.
For example, most millennials are avid users of social media platforms such as Facebook, Inc. (NASDAQ: FB) Instagram and Facebook platform where they post photos of their daily experiences. This trend is replicated across most social media platforms including Snap Inc (NYSE: SNAP) Snapchat platform where users want to have the best photos and videos showcasing their experiences.
Millennials and Generation Z are preoccupied with having the best local experiences, which ties in with Groupon’s change in strategy, which focuses on partnerships with local business such as restaurants, gyms and local attractions among others. Current trends indicate that millennials are going to be the generation with the highest spending power in the near future, hence, businesses that serve them are likely to witness massive expansion.
The company also implemented measures to automate most of its core operations while streamlining other critical functions, which has resulted in lower operating costs. The company’s new strategy is also paying off as the revenues derived from the goods market is decreasing, while its local markets strategy is gaining traction at a fast rate.
Groupon is well positioned to capitalize on the millennials obsession with having the best experiences to post on their social profiles, which bodes well for the company’s future.
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