I would like to disagree with the first comment on this article with regard to the argument around whether US-made content has wide appeal in China. While it is true that the top grossing film in China in 2017 was locally produced, it is also true that five of the top ten grossing films in 2017 were produced in the United States (according to IMDb) – one each from Universal Pictures, Walt Disney Studios and Warner Brothers and two from Paramount Pictures. Thus, I would argue that Warner Brothers need not, and in fact should not, cater content to local culture. Instead, it seems that Chinese consumers are specifically seeking out the glitz of Hollywood.
One consideration that I would recommend Warner Brothers take into account when developing future releases is the specific type of US-made movie that Chinese consumers prefer. The author of the article notes that ‘China’s box office is disproportionately skewed toward blockbusters.’ Additionally, all five of the US-made movies mentioned above are action-oriented. Warner Brothers could use this criteria as a guide for content, while avoiding topics that garner government sensitivities, to better position themselves for success in the current environment. I believe this strategy could allow them to reap the rewards of the fast-growing Chinese cinema market while avoiding regulatory road blocks from a content perspective.
If trade issues between the US and China continue to escalate, WB may have to explore alternative production methods, such as co-producing with Chinese movie partners, to ensure that they have access to Chinese consumers. However, even in this scenario, I would advise that WB remain focused on blockbuster action movies as much as possible.
At first glance it seems like Adidas and its biggest competitor, Nike, are pursuing the same strategy. Similar to Adidas’s SPEEDFACTORIES, Nike recently announced the launch of ‘Express Lanes’ that are designed to cut lead time on a specific shoe design down from months to mere weeks. However, despite these major advances, I believe that speed of delivery to market will not be the primary factor that determines growth. Instead, I believe that geographic priorities will be the core difference that impacts future success.
Adidas, a German-based company, has historically dominated the European market. However, at the end of 2016, Kasper Rørsted (CEO) announced the company would invest disproportionately in the United States in order to capture market share. Conversely, Nike, an American-based company, has historically dominated the US market but will look to move business internationally. During Nike Investor Day 2017, Mark Parker (CEO) announced that he anticipates 75% of growth over the coming years will occur outside of the US. These geographic priorities will require each company to locate their SPEEDFACTORIES/Express Lanes accordingly.
By seeking to penetrate new markets, both companies have positioned themselves to be dependent on trade policies. Ultimately, success may depend less on consumer demand and more on who has developed a more resilient / flexible supply chain. I’m looking forward to seeing how this competition plays out!
It is very interesting to me that as traditional retailers, such as Macy’s, are closing their brick-and-mortar locations, ecommerce retailers seem to be moving in the opposite direction. For example, in 2017 Amazon began opening physical book stores across the country (with 13 already opened and 3 more under construction), just 6 years after Borders, one of the biggest bookstores in the country, officially filed for bankruptcy. In 2017 Amazon also shelled out $13.4 billion to purchase Whole Foods, a grocery chain with nearly 500 store locations. Other ecommerce stores – including Bonobos and Warby Parker – are also bringing their businesses offline by pursuing an aggressive real estate strategy.
My instincts would tell me that in the era of immediate gratification it would be impossible to sustain a brick and mortar retail business. However, it seems that traditional retail hasn’t lost its luster just yet. Rather, it seems that the winning combination is to have both a strong digital and physical presence, or what the author describes as ‘omnipresence.’ To this end, I would recommend that Macy’s dedicate significant resources toward building an efficient and reliable ecommerce platform that compliments a network of (fewer) flagship stores across key markets.
The first question posed by the author is the biggest challenge that I see facing Good Eggs. I believe this model works well in San Francisco for two reasons.
First, San Francisco has a generally temperate climate (US Climate Data shows that the average temperature fall between 50 and 70 degrees Fahrenheit) and as a result local farmers are able to produce their crop / product more consistently throughout the year. In other parts of the country where weather swings are more extreme, there may be a degree of seasonality that affects supply. Consumers in these zones may be frustrated to find an item in stock one week but unavailable the next.
Second, consumers in San Francisco are typically more accustomed to shopping at farmers markets. In other geographies, consumers rely much more heavily on national grocery chains and as a result are more comfortable with brand labels than unfamiliar producers. Additionally, the range of products offered at a grocery store is presumably much broader than that offered by Good Eggs, making Good Eggs a supplement rather than a one-stop-shop.
Thus, I anticipate that Good Eggs will again face significant difficulty as it tries to expand because it is inherently a niche service. If I were to advise the company, I would suggest digging deep roots in San Francisco rather than shallow roots across the country.
Could there also be a benefit for existing wineries with respect to climate change? I imagine that as it becomes increasingly more difficult to produce classic varieties there will also be increasingly more demand for the remaining options. As we can see with many luxury goods, instilling a sense of scarcity and exclusivity can be a very compelling marketing tactic that allows companies to not only ensure that their product is sold but also to command a significantly higher price point. Wine connoisseurs already take great pride in discovering and owning rare/unique vintages, and a restricted supply will likely make the competition even more intense. In this scenario, wineries will have to balance the tradeoff between quantity and price in order to ensure they are able to sustain their businesses.
While I agree that McDonald’s efforts to date are more of a publicity stunt than a commitment to sustainability, I would also argue that adding a bean-based burger to the menu would not significantly change consumer purchasing behavior. While McDonald’s might be able to attract more vegetarians, the only way to make a significant impact on the environment would be to convert carnivorous consumers and subsequently produce fewer meat-based burgers. As a vegetarian, I have shared many bean-based burgers with meat-eating friends/family and I can confidently say they would never order it on their own, let alone order it at McDonalds.
Several companies have attempted to bridge this gap – such as Impossible Foods and Beyond Meat – by creating soy and plant-based burgers that are nearly indistinguishable from meat. As such, I believe that McDonald’s could best drive change by partnering with one of these companies or by developing their own version (similar to Chipotle’s introduction of ‘sofritas’) so that consumers don’t have to sacrifice taste.