The Fuel of the Future...The Big Deal about Big Data...E-Commerce’s Radical Impact

Insights on markets, industries and the global economy [Goldman Sachs] [BRIEFINGS] June 20, 2016 What if I Told You... Lithium is the New Gasoline Lithium will help fuel the cars of the future: its abundance, light weight and relatively high energy density make it ideal for use in the batteries of electrified vehicles. With adoption of these vehicles expected to accelerate over the next decade -- Goldman Sachs Research estimates that they will comprise more than 20% of new vehicle sales by 2025, up from less than 3% today -- demand for lithium could skyrocket. Bob Koort, head of Industrials and Materials research, explains how all that investment will help spur the development of even better batteries down the road. This is the fifth video in our series, "What if I Told You..." about the emerging trends poised to fundamentally change how we live and work. [Watch] previous installments, on blockchain, space exploration and more. [Watch video] SHARE: [twitter] [facebook] [LinkedIn] [email] The Big Deal about Big Data There's a lot of talk about the "big data revolution," but Armen Avanessians, chief investment officer of Goldman Sachs Asset Management's Quantitative Investment Strategies team, thinks about big data as an evolution, rather than a revolution. "Using data to make decisions is at the core of human intelligence," he notes. What's changed are the tools being used to make sense of all that information. Machine learning algorithms, behind everything from search engines to taxi services, function as a skilled analyst might, just at greater scale and speed. In the world of finance, they can help investors "look for connections across every company in the universe." But all this powerful software is still just a tool. Says Avanessians in the latest episode of our podcast, Exchanges at Goldman Sachs: "A human with a computer program will beat any computer program out there." [Listen to podcast] [Subscribe on iTunes] SHARE: [twitter] [facebook] [LinkedIn] [email] Briefly... on E-Commerce's Radical Impact on Retail Following the release of Goldman Sachs Research's new global e-commerce forecast and its 7th annual dotCommerce Day conference, we caught up with online and retail analysts Heath Terry, Lindsay Drucker Mann and Matt Fassler to discuss where e-commerce will (and won't) take off next. Heath, you're now projecting that we'll see 22 percent growth in e-commerce globally this year. Beyond the most obvious drivers such as increased internet use in emerging markets, what else will growth hinge on? Heath Terry: Well, one factor that's somewhat counterintuitive but a huge driver nonetheless is the degree to which brick and mortar retailers close stores and reduce square footage and inventories. As these cutbacks happen, consumers are forced to shift more of their purchases online -- which then further increases the need for traditional retailers to close stores, reduce square footage and cut inventories. We're starting to see this trend run through previously unaffected categories like apparel and grocery, so the physical retail footprint could change in a way it hasn't up to this point. So Lindsay, what's making these categories take off now? Lindsay Drucker Mann: For apparel, we're in the sweet spot of the technology adoption curve. The online shift among early e-commerce users -- like Millennials -- is still accelerating, which should set the stage for broader adoption in the next year or two. Advances in online shopping technology and order fulfillment will also be important boosters. And that is true of other sectors beyond apparel, right? Heath Terry: Right. Quick and cheap online order fulfillment is becoming increasingly important for high-frequency, fragmented categories like consumer packaged goods, as well as apparel. We think it's going to be a key differentiator for companies that do it well, and a big driver of e-commerce growth generally. Matt, you've identified an "omnichallenge" for brick and mortar retailers pursuing online strategies. Can you explain the problems you're seeing? Matt Fassler: Sure. For most traditional retailers, investing in online business ends up diluting their returns. In many cases, these retailers would be better off sticking to in-store sales, because taking their businesses online essentially demands more capacity and investment to drive the same amount of sales, unless e-commerce is expanding their reach. But they don't have that option. For most of our covered companies, we've found little evidence that e-commerce is growing their customer base. So if they can't fight fire with fire, these retailers will have to find other ways to deal with the e-commerce threat. "You Aren't Supposed to Be an Expert on Your First Day": Advice from Former Goldman Sachs Interns To welcome our latest class of interns, we asked current employees (themselves former Goldman Sachs interns) how to make the most of the experience. Their answers touch on essential focus areas for new joiners at any company: making connections, being curious and showing a willingness to take on challenging assignments. "Have an open mind and ask lots of questions," says one Investment Management team member. "Treat every day as training." [Read more] [Meet the intern class of 2016] SHARE: [twitter] [facebook] [LinkedIn] [email] Goldman Sachs Media Highlights New York Times - June 18 [Goldman Sachs expands consumer offerings] New York Times - June 15 [Alison Mass discusses the emergence of a new class of deal-maker] CNBC - June 20 [LinkedIn ranks Goldman Sachs among America's most attractive employers] Forbes - June 15 [Warren Buffett on empowering women in business] Glass Hammer - June 13 [Julie Silverman interviewed on her career and the importance of authenticity in the workplace] [Subscribe] The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. Goldman Sachs believes the data in this newsletter is accurate, but does not verify its accuracy independently and does not warrant or guarantee that it is accurate or complete. 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