The New Retail Thread

1) That valuation strikes me as very low. Considering some recent online acquisitions, just their IP alone (assuming they own it) should put them up several hundred million. Sounds to me like Zipcar believed they were quickly running out of cash, which isn't hard to believe in such a capital-intensive line of business. It just strikes me as odd - and bodes ill for the future of innovation - that a non-product like Instagram could be valued at multiples beyond a tangible game changer like Zipcar.

I was surprised at how low they were valued too. But Zipcar is public so the valuation is pretty transparent. They were bought at something like a 40% premium over there stock price. Maybe they have a huge amount of debt that Avis is assuming?

2) Zipcar and traditional rentals have very different business models and a different basis in consumer demand.

I think the main synergy the new company is shooting for is a leveling of demand. Avis is big with business travelers renting on week days. Zipcar rents to individual consumers and I'd imagine they're busiest on weekends. So you can address both those markets with the same fleet of vehicles.
 
^ I think you're right. There could be some great strides in fleet optimization that result in lower prices for consumers on traditional peak times (like you said, weekends for zipcar, big convention for avis). Hopefully now you can opt to pick up a zipcar nearby for a longer trip get a unlimited miles pricing structure. If you have to bang out a couple hundred miles in a couple days, Zipcar is way more expensive than a traditional rental car. So hopefully it becomes even more convenient, and I may never have to buy a car!
 
I was surprised at how low they were valued too. But Zipcar is public so the valuation is pretty transparent. They were bought at something like a 40% premium over there stock price. Maybe they have a huge amount of debt that Avis is assuming?

Not sure. They were trading in the $12s - just about the recent purchase price - as recently as July, and only hit their slump when they lowered their FY12 guidance in August to say they were going to be barely profitable in FY12. My guess is that discussions with Avis have been going on for months now, and the target purchase price was always set around 12 and not at a certain target premium. Well before August the company likely came to the conclusion that they were not going to be able to scale profitably.

My general point is how sad it is that the market rewards companies that can scale just by slapping down a few more servers without even having a proven revenue model, but not companies that must take on hard assets to grow even with clear demand. You'd think by the valuation that Zipcar was a pulp and paper manufacturer.
 
^ I think you're right. There could be some great strides in fleet optimization that result in lower prices for consumers on traditional peak times (like you said, weekends for zipcar, big convention for avis). Hopefully now you can opt to pick up a zipcar nearby for a longer trip get a unlimited miles pricing structure. If you have to bang out a couple hundred miles in a couple days, Zipcar is way more expensive than a traditional rental car. So hopefully it becomes even more convenient, and I may never have to buy a car!

It'll never happen without fully integrating the two reservation systems. When that happens, it'll be the Avis way or the highway for the existing Zipcar management team.

I've always thought Zipcar's biggest short-coming was not finding the sweet spot between longer short-term reservations (by Zipcar) that a traditional rental agency might not do as well (due to limited vehicle offerings, cost for insurance and gas that Zipcar "covers", or pick-up location). They could never figure out how to make it "fair" for other members. It was a load-balancing challenge, in essence.

Unfortunately, this is the beginning of the end for Zipcar.
 
I really have nothing to add but will comment anyway.

We use Zipcar almost exclusively for transportation. When we take long trips, we compare Zipcar to Avis. (Avis has a branch at Back Bay / South End subway station, about five blocks from our apartment.)

At Christmas, the cost for a three day rental using Zipcar was ~$280, which included gas and insurance. Avis was about the same. Usually, Avis would be less but demand must have been higher or something. Zipcar has higher rates on weekends versus weekdays, I believe, but the rates are consistent otherwise, which is nice when planning a trip. I assume Avis changes its prices weekly if not daily?

When gas prices skyrocketed the past couple of years, I feared Zipcar would have to raise its prices but they've stayed around $10-$13 per hour since then.

Their profit margins must be low (which I think the articles above mention) which would annoy investors, but there's really no way to economize - the cars (by design) are all over the place, requiring a fleet of workers to clean and maintain the vehicles. Including gas is, of course, also a major factor in whether or not they make money. They include 180 miles per day and the vast majority of users probably go a fraction of that. We went 480 back and forth to NY State in three days so were below that, but I've gone above it before.

Each person found a different reason to use Zipcar; for me it was all about convenience - there were eight or so cars within half a mile of home, another 20 or so spread around downtown.

I would pay a bit more to continue to use it if they keep them located where they are (or, hope against hope, add more locations). I can only assume they're going to reduce locations (get rid of the bad spots) and raise rates. Anything less than $20 per hour would probably work for me, but I'm sure others would freak out.
 
Pinkberry will be opening in South Station in 2 weeks, according to Pinkberry's Facebook post.
 
RE: Zipcar

Immediate reaction: Oh fuck no

More nuanced reaction, essentially this

2) Zipcar and traditional rentals have very different business models and a different basis in consumer demand. The best result would be Avis keeping the acquisition entirely at arms' length. If the Avis dinosaur swallows Zipcar whole, then... essentially... goodbye to Zipcar. And, if Avis is looking to integrate Zipcar's core technology into its traditional Avis/Budget rental business, then I believe the result will be a net increase in prices for consumers, along with a flexibility that most traditional rental consumers won't want or need.


However: Have you folks heard of car2go?

It revolutionized car sharing. When it comes to Boston, zipcar is in deep shit. I think maybe the owners realize this.
 
However: Have you folks heard of car2go?

It revolutionized car sharing. When it comes to Boston, zipcar is in deep shit. I think maybe the owners realize this.

Isn't the point of Car2Go that you leave the car in street parking? How would that work in Boston where there isn't an abundance of street parking and most of it is either metered or requires a resident sticker?
 
Isn't the point of Car2Go that you leave the car in street parking? How would that work in Boston where there isn't an abundance of street parking and most of it is either metered or requires a resident sticker?

How it works is that the cars have stickers (approved by the city obviously) that let them park anywhere parking is legal, for free. Resident area, meters, etc.

Works in DC which uses a very similar permit process that Boston does.

Also, in downtown areas, where street-parking is rare, they do what zipcar does and buy spaces in garages.
 
Macy's in Belmont Center, originally a Filene's that opened in 1941, is closing in March. Clearance sales start this Monday.

Macy's is closing four other stores, all in downtown areas: Houston, Honolulu, Pasadena CA, and St. Paul MN.

I hope this doesn't portend the eventual end of downtown Macy's stores in Boston, Philadelphia, and Chicago.
 
I hope this doesn't portend the eventual end of downtown Macy's stores in Boston, Philadelphia, and Chicago.

Not at all. It's amazing that shitty Belmont store even stayed alive as long as it did. It's closing because it doesn't satisfy the current demand.

What's likely happening in Houston and Honolulu is that they are consolidating. Houston has upwards of 8 Macy*s within easy reach of downtown. Honolulu is a slightly different case, but from what I've seen, downtown Honolulu isn't quite as bustling one might expect. The shores are much more popular because of the beaches and hotels and that market is served by the Ala Moana Center which for many companies that operate in the US, is their #1 sales volume location (this is the case with ANF).

Related: Lord's Department Store, complete with lunch counter is closing in Medfield - http://www.boston.com/businessupdat...field-close/DSSnIemNKFx30AquLUf3IK/story.html
 
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Not sure if anyone else has driven Zipcar in the last few days, but I think the earliest sign that Avis owns them now became clear to me yesterday.

I rented a Zipcar from the Prudential garage yesterday for a couple hours and noticed the gas was only at a quarter tank. At the end of my trip, I had 30 minutes to spare so I drove to the Shell gas station on Columbus & Mass Ave. When I went to prepay for the gasoline using the provided gas card, the machine told me to call card provider (twice).

I called the Zipcar hotline to find out why the card wasn't taking and they said just to use the next gas station; if the card doesn't work there, then pay out of pocket and they'll reimburse me. So I drive around the block to the Gulf station at Tremont & Northampton St. and had the same exact problem. I walked up to the cashier and he told me, "In the last couple days I've had at least a half dozen Zipcar drivers whose gas cards aren't working. It has something to do with the Avis takeover." So I was forced to pay $20 out of pocket.

At the moment I use zipcar 3-4 times per month for work, but if they all of a sudden stopped including gas in the reservations then I'm not sure how much longer I can keep using them.
 
I hope they build out its pregnant belly to street level. A collection of random kiosks in the plaza would be better than what's there now, but I kinda want to see the superfluous plaza gone altogether.
 
Newbie question: Was the First National Bank of Boston building built that way to skirt height / size restrictions?
 
^ Yes JohnAKeith...I recall when this building was built and if I'm correct......the "amenity" of the plaza along with increased floor area overall and height restrictions led to the bulge. I remember everyone being entranced by the design, because it was so "forward" looking for Boston at the time, along with the sheathing. Lot's of eloquent waxing in the Globe. It was an early "new Boston" design and predated the brutalist formerly Shawmut Bank building on Franklin (which has sprouted lots of new windows, but no tenants). The latter forsook the plaza concept for a block-sized base capped with the tower. I never really liked either building for different reasons, mostly the destruction of the smaller-scale structures that humanized the streets. I too hope they fill in the plaza (except for the back garden which is pretty) with lots of retail!
 

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