Great post! It’s interesting to see how Operator connects potential customers with products via personalized recommendations. It makes sense that Operator is targeting customers outside the U.S., as many retailers in the U.S. have store personnel that can assist customers with purchases or online-chat features on their websites (thereby eliminating the need to use Operator.) Store associates in the U.S. provide recommendations and exceptional service after being incentivized with the additional salary they can make on commissions.
While risky, I think that China is a strategic focus for Operator, given that the purchasing power of the middle class is growing, and that customers in the country are seeking American brands and products (as evidenced by the growing popularity of Alibaba’s Tmall). Additionally, the use of the mobile platform is very strategic, as this is how most Chinese consumers are making purchases. In my opinion, the ability to help overcome the language barrier is Operator’s greatest advantage, and the company should look to this as their point of differentiation. While you mentioned that taxes and the logistics of shipping might present problems for Operator in China, I think the potential benefits of focusing on this market would outweigh the potential risks.
As I read this blog post, I found myself weighing the pros and cons of Panera’s eCommerce platform. While there are certainly arguments for both sides, I ultimately think there might be too much risk going with this new strategy. In addition to being expensive to install, I think the digital transition poses risks to the perception of Panera. Panera is a restaurant known for the friendly staff and customer service. By taking away this human element, Panera starts to resemble a fast-food restaurant and less of a fast-casual restaurant. Panera’s point of differentiation is that it feels more upscale than a McDonalds or a Burger King. By placing orders at machines, the experience feels more transactional and less personal.
While this method of ordering would potentially help reduce wait times, I think there are other superior alternatives that Panera could look to (e.g. hiring more staff, cross-training staff, or even simplifying order options/preparation). When customers enter a Panera, I don’t think they will mind waiting a few minutes, as this is part of the experience; they don’t expect to get their food within 30 seconds as they might at a fast food chain. Ultimately, I think kiosks pose a direct threat to the “Panera warmth” that has kept customers loyal to the brand.
Great post, Natalie! As an avid user of Foursquare, I was intrigued to read about how the company has evolved over time, how the company makes money, and what the company could look like in the future.
With the proliferation of other location-based online services, I’ve noticed that fewer and fewer of those in my network are using the app. As technology advances, competitors are offering superior alternatives, and I worry about Foursquare’s ability to grow/retain its users in the future. I think Foursquare is in a precarious position not only due to the growing number of competitors, but also because the numerous changes that the company has undergone have frustrated users. For example, I think the recent split into Foursquare and Swarm alienated and confused existing members, as users didn’t understand why the company split its functionality in two. Furthermore, Foursquare offered many discounts to users when they checked-in to locations (e.g. 10% of the dinner bill) in the past, but the company has recently veered away from these offerings.
I agree with you that to remain profitable, Foursquare needs to think about how it wants to differentiate itself. However, I think Foursquare should be careful when communicating further changes, so as not to isolate or confuse its existing user base, as I feel it has in the past.
This blog post surprised me, as I would have assumed that the hospitality industry required a more personal, human touch. I wonder whether the desire for digital experiences differs across different tiers of hotels within the industry (e.g. are the most upscale hotels expected to require a certain level of personalization/service vs. automation/technology? Is customer satisfaction related to digital experiences consistent across all ages of hotel guests — Will older customers, who have become accustomed to a more personal experience, be comfortable with the shift? Will younger customers, who seek innovation and new experiences, prefer and actively seek digitized hotels?)
Your blog post made me recall a CBS News report I watched about a year ago about a hotel in Japan that was staffed entirely by robots. This is an extreme example of how technology has replaced the human element of personalized care, but I think it demonstrates the changing expectations of customers. In addition, an interesting benefit to shifting from “people service” to automation is that hotels have the potential to save on labor costs. In the example of the Sawada hotel in Japan, labor costs were reduced by 70%!
Hilton is not likely to be cutting staff as drastically, but it’s quite probable that the reduction of staff is a likely side effect of the shift your blog post discusses. For example, if customers want to check-in/out via their mobile devices, there may not be a need for many people at the hotel’s front desk 24/7.
Coming from a retail background (working most recently in the Juniors Division), I constantly heard about the importance of focusing on the Millennial customer. This segment will have tremendous spending power; it’s been estimated that they will be spending $200 billion by 2017 in the US alone. In fact, millennials are predicted to be the largest spending generation in history by 2035. Retailers recognize the importance of capturing the Millennial customer now. The logic is that these young customers will continue to spend with the brand over time (and will have ultimately developed a loyalty for the brand when they are older and have increased salaries to purchase even more!)
In terms of capturing the Millennial market share– Burberry is strategic in its use of digital media, as this generates buzz for the brand and its products. It gets people sharing the product with those in their network, and ultimately leads to increased sales. Burberry’s interactive, digitally transformed, store experience also veers from the traditional brick-and-mortar experience that Millennials likely perceive to be outdated and boring.
I wanted to share an interesting article with you that provides further insights as to why Millennials are the future of the luxury retail industry. The article related to your blog post as it discussed how Millennials are gradually preferring experiences to material objects. Shopping at Burberry seems to provide an exceptional experience via the integration of technology into the store (e.g. with the RFID videos and live-streaming mirrors).
The article concludes with a short paragraph that I think relates to your blog post well:
“The luxury brands that will capture the minds of Millennials will have authentic, original content. They will not be afraid to play in the digital space and appeal to independent thinkers in new and interesting ways. They will be the arbiters of cool and make unexpected connections. If Millennials are the future, luxury brands need to rise to the challenge, and embrace them.”
Reading this article, I couldn’t help but think how far we have come from the days of paper maps and Mapquest.com. Through the community of users you described, Waze is always up-to-date on the latest traffic patterns and road obstacle, creating predictability and optimized routes for drivers. All of this information is essentially free to WAZE, thereby allowing for a very profitable business model. The costs to the business are seemingly minimal (and on top of this, they make additional revenues via methods such as advertising).
You mentioned several of the potential challenges ahead. The idea that WAZE helps drivers to know the location of police cars is a controversial one; I would be curious as to whether this will continue to be the case or whether there may be regulations about this in the future. I would be nervous that WAZE could prevent reckless drivers from being caught, as these drivers would be able to alter their driving around the presence of cops. While it is interesting that WAZE and the government work together and can mutually benefit from eachothers’ information, the ability to detect police officers seems to represent a conflict of interests.
In terms of additional threats to WAZE, I’m curious about the threat competition poses. I would be curious to learn more about if Google’s major competitors are coming up with innovations in this area. As far as I know, WAZE is the leader in this area, but I’m curious as to whether this will hold true in the future.
Lindsey- I think you did a great job at highlighting the impact that this will have on real people— with 10M people dependent on this industry to make a living, the implications are huge! With these people out of work, the effect would be enormous on the West African economy.
The CocoaLink initiative you mentioned fascinated me— educating farmers via improved communication is such a creative solution to this problem. This initiative requires farmers to have a baseline understanding of the best practices, so I wondered whether Hershey has invested in a more educational element. While communication is a great step, I feel that Hershey could take a more direct approach to teaching farmers best practices vs. having them figure it out on their own together. Is this educational component a part of the Learn to Grow program you mentioned? If so, I think this should be the focus of Hershey’s efforts.
I wondered whether you thought Hershey’s targets to reduce greenhouse gases and water usage by 2025 were attainable. Are they on track? What might stand in their way?
Danny – What I found most interesting about your blog post were the numerous and varying ways in which Southwest has attempted to combat climate change. Before reading this post, I had assumed that planes’ gas usage was the only lever that could be adjusted to make a difference; I didn’t realize that there were many other levers such as adjusting the materials of the manuals and focusing on recycling items consumed in flight. I found an interesting article I wanted to share with you that goes into depth about how the interior of the plane has been remodeled to be more environmentally friendly—everything from the seat parts to the life vest pouch to the carpets have been thought out! http://www.environmentalleader.com/2012/03/29/southwest-airlines-weight-loss-program/
Your proposal to explore how the plane is powered is an interesting one. I think you are very realistic when you allude to this being too expensive to invest in alone, but I question whether/how a partnership with other companies would be formed without a significant financial contribution from Southwest. Given that Southwest (and many other players in the airline industry) have had struggles as of late, I wonder if this will be a priority for Southwest, or if they will need to prioritize spending on other areas with their limited budgets.
Your alternative proposals are very creative but I question their ease of implementation. I think it may be challenging to get customers to bring less baggage by incentivizing them with coupons towards future flights—after all, many passengers need to bring items on many of these trips, so will likely forego this alternative. This would also have major financial implications for Southwest; Southwest already prides itself on being one of the cheapest airlines in the industry. I would imagine it would be hesitant to offer more coupons given its existing low prices (Can they stretch their margins any further? I’m not sure.) It’s interesting that you chose this positive incentive vs. an increase in baggage fees to discourage baggage. I agree with you that this a superior alternative, as an increase in baggage fees would likely lead to customers switching airlines—a risk Southwest cannot afford.
Petey S- I think you brought up an excellent point about how Walmart’s brand positioning and customer promise (every-day low pricing) are in jeopardy with the risks posed by climate change. The company is probably hesitant to increase prices despite rising costs, so climate change could cause a direct hit to Walmart’s margin. As you mentioned, grocery is an enormous portion of Walmart’s business; while other competitors would be impacted by cost increases caused by climate change, Walmart would be particularly at risk given grocery’s high penetration to its total business.
Having worked in the grocery industry, I know that this category has been a focal area for retailers. Grocery gets the customer visiting and making repeat/regular shopping trips, thereby driving customer loyalties. Keeping the freshest quality and the lowest prices will be important to remain an industry leader in the grocery business. Unfortunately, climate change poses a direct threat to this goal.
I think it’s interesting to compare retailers against other retailers in their sustainability efforts, but I don’t know if it’s fair to compare Walmart (a behemoth!) to places like Whole Foods and Kohls. Yes, Walmart has fallen behind Whole Foods and Kohls in its efforts to convert to renewable power. However, Whole Foods and Kohls only operate 462 and 1162 stores respectively, as compared to Walmart’s 6273 stores. Furthermore, the average Whole foods is 38,000 square feet, the average Kohls is 90,000 square feet, and the average Walmart store is 104,000 square feet. I think Walmart deserves a bit of leeway in terms of its current progress, as I would anticipate it would be logistically easier for smaller retailers to convert to renewable power.
@GLempres – I admire Kering for introducing an EP&L to hold themselves accountable for making sustainable business decisions, but agree with you that the mere action of doing this may not be the solution. Logging and publicizing this information is just the first step; I think it will require more than this to save the cashmere industry. In terms of other actions, I wondered whether Kering might consider getting its customers (who are often high profile or come from elite backgrounds) to help in its cause. Customers who can afford luxury products might be able to provide monetary support and/or public backing to help generate awareness of this cause.
You mentioned the negative impacts to Kering in terms of higher costs due to a lower supply of cashmere, but I think the ramifications to the people who work in this industry cannot be overlooked. Small-scale producers of these materials, who are often rural and poor, will be unable to continue the jobs that support them. Additionally, the goats at risk provide meat and milk that are critical to the herding population. While Kering seems to feel that it is imperative to fix this issue from a monetary standpoint, I believe it’s important to consider the impact these goats have on the larger community.
@Soup- I used to work in this industry, so I found your post incredibly relevant. I helped source and buy the tomatoes for Target stores across the country for 2 years. I saw firsthand how water scarcity impacted our tomato supply and pricing; a bad drought/dry season could make or break your sales! Since I only worked for one retailer, I never realized the significance this had across the industry – $9.6B far exceeds what I had expected. What was interesting about working with tomatoes is that tomatoes are a produce staple; the customer expects them to always be available at her store at a low price. Even though it could be due to weather fluctuations, it was unacceptable to have empty shelves or to charge the customer more than she expected to pay (so we couldn’t just increase our retail prices if our costs went up; it was often a direct hit to our margin).
After we repeatedly faced these types of issues, we eventually moved to a hot house tomato program. Growing these tomatoes via greenhouse and taking control of the climate in this indoor environment, we could grow tomatoes year-round. The quality of the produce was also improved, and we saved hundreds of thousands of dollars in markdowns.
I thought it was interesting that you proposed sensor networks and autonomous robots to make green houses self-sufficient. When I worked with the farmers who supplied Target, I found that there was not that much innovation in the industry. Farmers tended to have done things the way it had always been done in the past; they’d been taught a way of doing things and it was hard to bring in expensive advanced technologies to these rural locations. For this reason, I’m a bit skeptical that sensor networks and autonomous robots are going to be widely used any time soon, but it would be interesting to see what the industry looks like in the future, and if these practices become mainstream.
KZ2018, I was fascinated by your blog post because of the paradox it presented. The notion that climate change could benefit Coca-Cola – by making people thirstier for the product – is something that I had never thought about. While global warming is something Coca-Cola would not publicly try to capitalize on (given that it has established a reputation for being a well-respected company that gives back and cares about the planet), this idea is an interesting one.
You mentioned that you were surprised there haven’t been more efforts towards desalination and acknowledged that it would be expensive, but I wanted to share with you just how expensive this alternative would be. To desalinate 1000 gallons of water, it would cost TCCC $2.50-$5.00. With Coca-Cola’s net profit margins hovering around 17%, the company would need to look into how much this would hurt its margins (or if they needed to increase selling prices to maintain current margins with this increased cost).
In addition to the water shortages you mentioned, I know that the variability in weather caused by droughts and floods has had a negative impact on TCCC’s supply of sugar cane and sugar beets. I’m curious as to whether these shortages will ultimately impact prices charged to consumers, and if TCCC anticipates corresponding changes in demand/margin/revenues.