Market Coverage of Disability

When a hungry man faces a feast, where does he start? Abundance, both in terms of types and volume of edibles, can cause some difficult decision making. A quick decision can lead to missing glaring opportunities. Taking one’s sweet time prolongs hunger and risks spoilage. A similar situation exists when one looks at the vast expanse that disability covers in terms of market desires. It isn’t just pills and wheelchairs, people with disabilities drive demand in every sector of the economy, and every firm within those sectors has a material growth opportunity within easy reach.

People with disabilities buy stuff, lots of stuff. This author estimates that annual global disposable income controlled by PWD is in excess of $1 trillion (based on US Census extrapolation). Consumer Goods companies need to pay attention to a market of that size. The big players in this sector are best positioned to access these consumers first. Beauty products, food/beverages, apparel, autos and home goods are included in this sector. Most of these areas are highly competitive with relatively low switching costs between different brands. Reaching out to a market like disability adds to a consumer base from the PWD segment specifically and the broader market in general.

As this market comes online in the next 10 to 20 years, it requires various types of infrastructures to be built. The financial sector has been focusing on the relatively small win in ‘Special Needs’ financial solutions, services like trusts and estates planning, driven mostly by stakeholders(care-takers) of PWD. The real opportunity ahead for firms in the financial sector is to play its historical role as the efficient arbiter of capital as entrepreneurs take positions to serve the PWD market. All industries will have significant capital needs as they strive to satiate business/disability demands. This author sees disability as the next environment/green movement, and financials will play a similar role in sorting winning allocations of capital vs. those destined for bankruptcy court.

Health Care. You may think this obvious, but this is this most mature area of the business/disability space. It is also where the ‘fat & happy’ reside. Government funding, patents, high barriers to entry make the health care sector disability’s equivalent to the domestic auto sector. Mature products and stable margins make this sector a target for unbridled innovation and the gumption of a true value investor, willing to toss out tired, established models, cut costs and extend maturing product cycles. It is the area in the most need of demolition, as poor models need serious turn-around actors to unravel and rebuild.

Let’s take a walk past the storefronts of Main Street, and look at the Services sector. First task…it costs you $200 in Quickcrete to eliminate the single step to your store. Simple, no? All you need is 4 new customers using a stroller, wheelchair or the inanely clumsy to pay off your investment. Oh, did I mention it can be counted against revenue, so it’s really only $150 to open your door to 250mm new customers with alternate ways of getting around the world. This industry can follow the same logic as the Consumer Goods sector by making one time investments to access 1 in 5 consumers and over $1 trillion in annual disposable income. The interface with the client is of prime interest here, and tools like the internet can not only reach out to PWD, but access the broader market as well. Media, travel conduits, hotels and restaurants have significant leverage to capitalize on here, as it does not take a large capital infusion to have significant impact on their top lines. That means that margin expanding activities are well within reach.

Technology, the great equalizer. Whether it’s hardware or software, technology is at the core of productivity gains, disability or no disability. This author can remember testing voice recognition software in the early eighties as it was developed for those of us who cannot write. That same technology is now used by my four-year-old niece as she belts out Hanna Montana into her Nintendo Wii. Productivity gains and their offshoots have direct marketing appeal to the PWD market, their stakeholders and the broader market. That puts tech firms at the head of the pack when it comes to the disability space being at the core of their business.

Industrial Goods, Utilities and Basic Materials have one thing in common, they sell commodities. As Jack Welch, former Chairman of GE likes to say, “Differentiation is a critical component of success”. Gas is gas, whether it’s Chevron or BP. BP is a good example of attempted differentiation by branding itself as the ‘green’ gas firm. The same can apply to the disability market. Texaco has a sign on their gas pumps in Maryland, requesting that PWD honk twice for assistance at their self-serve stations. Guess where this author fills his tanks now? This should be a no brainer for these firms starving for a way to change from a white spot on a white wall.

In this quick trip, one can see how, and where, disability plays a material role in every aspect of the economy. Warren Buffet, the world’s best known value investor, made buying rich opportunity cheap a movement and an art form. It’s called value investing. Even in Mr. Buffett’s wildest dreams he has not seen opportunity like this. Growth hungry firms need to step up to the feast before the table is bare.