Caroline Hornok's Profile
I’m not convinced that this will make the solar energy market shrink. It instead may shift the demand to First Solar whose different technology you cited is cheaper in the US. Also, the growing demand in the US would cause newer entrants/SunPower to produce in the US to compete with First Solar. While this policy seems to hurt SunPower in the short-term, I don’t think solar energy itself is at risk, nor the loss of jobs of solar energy installers. It definitely makes sense for them to ask for a grace period to adapt to this shift. They should either diversify their country base to mitigate impact of policy changes or diversify the product base to lower operational costs. Apart from their declining gross margin % in the past few years which is troubling, the future of SunPower (and other solar companies) is bright.
As an aside, happy to see we’ve got 29% more mathematicians in the world.
I very much agree with Megan. I think the investment in Beyond Meat is driven much more by the growing sales of meat alternatives driven by consumer tastes than an altruistic view of the environment. Tyson, like many other large consumer food companies, are heavily invested in products that are stagnant in demand and are seeking new pockets of growth. While I don’t see traditional meats going away any time soon, as the US is a developed country in terms of food consumption, the likely area of high growth is only meat alternatives. Additionally, I think it will take much more than a small acquisition to transform Tyson’s business in the long-run as it accounts for such a small portion of the portfolio. If anything, it will help Tyson learn about alternative meats first hand, but will doubtful transform their supply chain. On the positive side, as consumers become more conscious of the environmental impact of their behavior, their demand, I do believe, will flow back to corporations. The unfortunate thing is that may be too late after the impact has been made.
Joe, love the article and topic. It feels overall that Kroger is late to the game on the digitization of grocery. However, I think this may be the case for Kroger and most retailers because of the high capital required to be a retail-tech company that is unavailable to the Krogers and Aholds of the world. It makes me question if Kroger can ever transition to be like Amazon if they don’t have the capital to invest heavily in grocery delivery. While I think optimizing the in-store experience with data is critical, it’s not enough to not to survive against the supply chain disruption of grocery delivery.
The additional reason I’m skeptical of traditional retailers gaining benefits of digitization quickly is due to their manufacturers. For instance, in assortment, as Kroger uses data to decide which skus to delete, manufacturers will severely lobby to maintain their skus by dropping the price, giving trade, and in-store promotion. Too, as Kroger seeks custom experiences that most likely fit my needs, manufacturers will pay to make sure they are part of that custom experience even if they are not the best fit. The short is, I think retailers can still be bought and efficiency using data is a long road.
I agree with John that the NPV of investing in global expansion is more than likely positive with a long road to achieve it. I think Box’s choice to share data centers with others makes a ton of sense. I think you could see the rise of a third party willing to own these data centers and lease them to AWS, Box, Microsoft, etc. if these policies continue. I think partnerships to absorb costs together is the best short-term solution in a world of continued regulations.
I think per the essay’s point that smaller companies may evade detection, Microsoft can promise the governments greater transparency, security, quality, and other forms of protection to their country vs. just passing on costs to consumers as Tigran suggests. As there will be many fragmented competitors, passing on cost becomes less feasible to stay competitive.
One of the most interesting implications of this to me is the customization ability Adidas will have with this new manufacturing speed. As the trend of custom and tailored grows, Adidas could become the leader in this market if they can scale this capability up quickly.
I understand the concern about jobs being fewer than maybe expected or other manufacturing entrants into a community, but I don’t think the government will every be opposed to manufacturing innovation that overall adds value to the industry, particularly Adidas, a German company. While people may be disappointed, I don’t think there will be opposition in such a way that hurts Adidas or inhibits them.
I came across Brandless back in the spring and was immediately intrigued. I have two thoughts:
1) They associate the expense of the current distribution network of Walmart, etc. with the “Brand Tax.” I think branded companies can pursue this model pretty easily but haven’t transitioned because such a large part of their customer base is Walmart and the like. These large retailers would be none too thrilled if a company does go direct to their consumers and by-pass them. It can work if a company starts e-commerce only vs. transitioning. Point being I feel like it has less to do with being “branded” and more to transitioning models.
2) I think the pricing strategy is unsustainable based on their product mix/quality aspiration. I went on their website when I first discovered them and found some of their products well under-priced and some well over-priced. I think the low margin products will cause them to migrate to a different mix while the over-priced products won’t sell. Overall, I think it’s a simplicity play that doesn’t add value for their target consumer. This channel is very unlike the dollar store channel customer who is budget focused and looking for a smaller overall basket price. I’d advise they drop it, but keep their overall “fair-priced” focus.