October 7, 2020

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Google Says Goodbye to G Suite, Hello to Workspace

Workspace to Highlight New Tiers and Features

Business users of Google products may soon notice a new name on their Google Drive. Google (GOOGL) announced it will rebrand its G Suite apps for business as Google Workspace in an effort to compete with Microsoft’s (MSFT) Office 365.

The new name will come with new pricing tiers. Currently, businesses can choose between a version of G Suite that bills monthly at either $6 or $12 per user. Now, Google is introducing a Business Plus plan for $18 per user per month. This new tier will come with enhanced security features for enterprise customers.

The rebrand will also include new features and more colorful logos for many apps. Google recently made it possible to start a video meeting with Meet from inside Gmail. Now, Workspace users will be able to create new Google Docs without leaving their Google Chats. It’ll also be possible to “tag” a coworker in a Google Doc—when you mouse over a colleague’s name in a document, their contact card will appear.

Pinning Competitive Hopes in the Cloud

While Google’s free consumer products are already widely used, the tech giant seeks to give its cloud business a boost by generating more business from schools, companies, and organizations that typically use Microsoft products. In the coronavirus era, when Google has seen reduced advertising on its platforms, that diversification would be a welcome revenue stream.

Microsoft currently controls the market for business emailing and word processing software. In fact, the research group Gartner (IT) said Microsoft owned 87.6% of this customer base in 2019, while Google only had 11.5%. Google’s market share went up one percent from 2018, but the Workspace rebrand indicates the company is aiming for even more growth.

Zooming out, Alphabet, Google’s parent company, started including earnings from cloud services in quarterly reports for the first time in February. At $3 billion, Google’s cloud revenue was up 43% compared to the same time last year. The tech company is hoping the latest refresh will help cloud sales surge in 2020 and beyond.

A Long History of Branding for New Business

This isn’t the first time Google is using a rebrand as a pitch for new business customers. Six years ago, Google Enterprise became Google for Work. In 2016, many Google for Work products became Google Cloud. That same year, Google Apps became G Suite, which will now become Workplace.

Since the start of the pandemic, Google has seen a boost in its remote work users. In March, Google hit a milestone of 6 million companies on G Suite. Now, with new leadership including a cloud executive from Oracle (ORCL) and a Workspace leader from Microsoft Office, Google is angling to capitalize on this success, take pressure off its advertising revenue, and get another lift from business customers.

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Uniqlo Aims to Expand During the Pandemic

The Japanese Retailer Plans for Growth in Asia

With international stay-at-home orders, reduced travel, and widespread restaurant closures, the COVID-19 pandemic has hit the fashion industry hard. That is, it has clobbered retailers of going-out clothes. For reasonably-priced, casual, comfortable clothiers, however, the pandemic could be a turning point. Uniqlo, the Japanese clothing brand owned by Fast Retailing Co (FRCOY), will focus on building new stores in Asia and growing online sales to gain an advantage over competitors.

While retail rivals like Zara, owned by Inditex SA (ITX), and H&M (HMB) have announced store closures this year, Uniqlo plans to triple its number of physical stores in China. Currently, Fast Retailing runs around 800 stores in China. Eventually, it hopes to open 3,000. Ultimately, Fast Retailing’s CEO, Tadashi Yanai said the company hopes “to become the world’s No. 1 apparel brand.” The ticket to that title might be the Asian market. Already, Fast Retailing took in $21 billion in 2019, putting Uniqlo in third place behind H&M and Zara.

Uniqlo generates around 90% of its sales from around Asia, where shoppers are more quickly returning to stores after the pandemic shutdown. Zara and H&M, however, are both based in Europe and get more than 75% of their sales from Europe and the United States, where many shoppers are still staying home.

‘The Ultimate Mask’ in the Works

While Uniqlo is known for comfortable, high-quality, and reasonably priced basics that play well in the WFH era, customers often turn to Zara and H&M for reasonably priced clothes to wear out and about. Now, Uniqlo may be able to count masks among its pandemic hits.

Early on in the pandemic, Uniqlo launched a washable “AIRism” face mask in Japanese stores. The mask was advertised as having three layers, UV protection, and increased comfort compared to other masks. When the mask was released in June, Uniqlo’s website crashed and Japanese shoppers faced long lines—a rare sight during the pandemic. In September, the AIRism mask became available in the United States.

CEO Tadashi Yanai said designers are now working on something even more breathable and attractive. It could be “the ultimate mask.”

Uniqlo Staying Out of US-China Rift

Despite plans to open more stores in Asia, Uniqlo faces a potential challenge in the international market. The Japanese retailer could find itself stuck between the United States and China as tensions between the two countries intensify.

If conflict arises between the United States and China, Fast Retailing plans to remain neutral. Should either country ask for Japanese support, Yanai said the company will refuse to take sides. He hopes the leaders of his country will do the same. Investors will watch for the release of Fast Retailing’s quarterly earnings on October 15, when it may be possible to see if Uniqlo’s strategy is paying off.

CVS and Walgreens Could Get a Shot of Confidence

Flu Shot Campaigns May Boost Pharmacy Earnings

It may seem counterintuitive during a global health crisis when the headlines are full of pharmaceutical treatment news, but pharmacies themselves are struggling with depressed stock prices. Pharmacy giant Walgreens’ (WBA) stock has fallen by almost 38% so far in 2020 and competitor CVS Health’s (CVS) stock is down by 21%. However, flu shot promotions may just be the cure.

In an effort to boost sales, stocks, and foot traffic, both Walgreens and CVS are heavily promoting flu shots. According to the CDC, a record 200 million flu shots will be distributed this year. That’s 13% more shots given than during the 2019 flu season. For pharmacies administering flu shots, the extra numbers could translate into increased foot traffic. Customers who might have otherwise received their flu shots at work may head to one of CVS’ or Walgreens’ combined 20,000 American locations for a vaccine now that they’re working from home.

Customers Skip Discretionary Spending

Like many businesses during the pandemic, pharmacies have seen fewer customers in the past several months. For CVS and Walgreens, two companies that partly depend on sales of glasses, cosmetic products, and household goods, in addition to medications, less foot traffic translates to much smaller profit margins. In Q2 of this year, CVS announced non-prescription sales fell by 4.5%.

In an unfortunate pandemic twist, many people are also skipping routine doctor checkups. This means medical conditions are going undiagnosed, and fewer individuals are starting new prescriptions. For pharmacies, this is a challenge. Analysts at Mizuho Securities (MFG) estimate new prescriptions make up about 25% of total prescriptions at retail pharmacies like CVS and Walgreens.

Looking Ahead to COVID-19 Therapies

The increase in flu shot traffic may only last until the beginning of 2021, but if a COVID-19 vaccine follows, the boost may last longer. It’s likely the federal government will loop in retail pharmacies to distribute a COVID-19 vaccine, and many Americans may opt to get an approved vaccine.

Eventually, retail pharmacies may also benefit from the development of at-home COVID-19 tests and other virus-related products that could raise sales and reassure investors.

Not-So-Breaking News

  • Despite inching higher earlier in the day, major US benchmarks fell on Tuesday after President Donald Trump said he’s postponing stimulus negotiations with Democrats until after the election. If the White House sticks to that timeline, the deployment of trillions of dollars to American households and businesses will be significantly delayed. Wall Street reacted negatively to the news with roughly an hour left in the trading session, sending large-cap indexes lower.
  • In an effort to avoid layoffs and furloughs through 2021, Southwest Airlines (LUV) asked union workers to agree to pay cuts. The company would reverse the pay cuts if legislators passed a payroll relief package. Meanwhile, 32,000 employees are already furloughed at competitors American Airlines (AAL) and United Airlines (UAL).
  • Cole Haan (CLHN) announced a new line of sneakers, branded by and featuring Slack (WORK), the workplace messaging company. The shoes were “designed with the Slack crew, over Slack.” Yes, the sneakers are branded with a small Slack logo and feature soles in Slack’s primary colors.
  • Shares of both Logitech (LOGI) and Sonos (SONO) fell yesterday after Bloomberg reported that Apple pulled third-party audio products from its online stores and plans to remove them in retail outlets as well. The Cupertino company is reportedly working on new products including Apple-branded over-ear headphones and a smaller HomePod, which could be announced before the end of the year.
  • Instagram (FB) released a slew of new features to celebrate its 10th birthday yesterday. Users can now customize the Instagram icon on their home screen and view a “map” of their past Stories. The birthday update also includes new features for National Bullying Prevention Month.
  • Whether you’re looking to spruce up your home for your own purposes or stage it for selling, here are some easy home improvement projects for beginners. Read more at SoFi Learn.

Financial Planner Tip of the Day

When budgeting for a remodel, it can be helpful to have a dedicated fund for renovation expenses. This can help you streamline your savings approach and portion of the appropriate amount of money so you’re prepared.

Brian Walsh, CFP® at SoFi

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