Anita, love this post on RTR! As an avid user of RTR, I have always been curious to understand how the company is able to manage their complex supply-chain process given that inventory management is their greatest asset and biggest risk. The value proposition of RTR is deeply correlated with their ability to get the right products in the hands of the consumer at exactly the right time. Without the assurance that consumers will receive quality items of clothing at the time they plan to wear them, they will immediately lose credibility and trust. Quality control is crucial in this business model so I loved hearing about their intricate process of spotting and cleaning stains. This process, although extremely human capital intensive, is critical in maintaining RTR’s customer base. However, given that the company still isn’t profitable, RTR will need to carefully consider how they grow their business model without sacrificing their customer promise.
Similar to pperonto above, I am an avid SoulCycle rider and thus very curious to see how Peloton plans to take market share in a very saturated market of boutique fitness. Catherine’s post makes a compelling argument in terms how the concept is unique in comparison to SoulCycle or FlyWheel – it is accessible in-home, seemingly affordable (once you move past the $2K sunk cost of the bike), and a more technologically advanced rider experience. However, what concerns me about Peloton is that the target demographic isn’t differentiated enough to convert the extremely loyal customers from SoulCycle or FlyWheel over to Peloton’s model. The same people who are willing to pay for $32 for a spin class, are the same consumers who would likely be able to afford the $2K investment in a Peloton bike. As Catherine mentioned, without lowering the upfront cost of the bike, I am concerned that Peloton won’t be able to grow its customer base quick enough to be profitable.
Eric, even since we discussed Nike in MKT earlier in the term, I was hoping someone would bring it up in a TOM context! I think it is a fascinating case study of a company that is truly at the forefront of the retail industry in terms of design, innovation, customer experience, marketing, and now, technology. Their new digital products and enhanced retail/e-commerce experience doesn’t surprise me given Nike’s target customer: the athlete. Athletes are all about performance and improvement, so they naturally would expect the products in their life to keep up with them and help them achieve their goals. The pressure is on for Nike to retain these customers and maintain their status as a revolutionary retailer so I was particularly interested in your suggestions around smart clothing. I recently saw an article about Nike’s self-lacing shoes which demonstrates how they plan to move beyond devices and further integrate technology into their apparel and shoes. I am curious to see how Nike continues down the path of smart clothing and how users react to this new strategy.
When I think of Macy’s, I definitely don’t think of a technologically savvy company so I was very interested to read your post about the initiatives they have put in place to optimize their e-commerce platform and customer experience. From your post, it appears as though Macy’s is taking all the right steps in order to build out their digital capabilities – in particular, I was impressed by their early adoption of the RFID inventory management system and their partnership with IBM Watson for “Macy’s On Call.” However, are these initiatives enough to keep the company afloat in the near term? Technology investments are notoriously difficult monetize and have long payback periods so my question is how will Macy’s balance their obligations to shareholders to maximize profits in the short-term? I admire Macy’s focus on the long-term growth prospect of the company, but with activist investors knocking at the door, are they going to be able to implement and invest in these initiatives to the degree they will need to in order for them to be successful ? Furthermore, as SHK pointed out, Macy’s in the process of closing 100 stores which frees up capital that could be re-invested into their technology initiatives. It will be interesting to see if Macy’s chooses to double-down on their digital platform, as they scale back on their retail footprint.
Nancy, thanks for this interesting post on the Yellow Pages. The print industry has taken a significant hit in the digital age and many companies are struggling to adapt their business models to today’s information age. This downward trend in sales and circulation can be seen in books, magazines, and newspapers. I admire YP’s proactive response to the changing industry landscape, especially their focus on acquisitions to fund their growth which I believe may be the reason they are still around today. However, they still need to focus on organic growth internally. My only concern with your suggestion about keeping the print business, is the risk that YP’s print books will be profitable enough not just to keep the company afloat but to also fund growth in their digital and advertising segments. In order to stay relevant, YP will need to invest significant time and capital into expanding their digital platform which I’m not sure the print business will be able to support completely. I will be very interested to see if YP is still around in five years and in particular, if they still are printing their age-old directories!
Lynn, I loved seeing you push Nike to move beyond what is expected of them and to challenge them to be change agents across the retail industry. As you noted, Nike is doing a lot of things right but as you alluded to, not all of these actions were purely altruistic in motive. For many years, Nike received a tremendous amount of bad press for their unsafe working conditions in their factories in Asia . I’m not saying these sustainability initiatives didn’t come from a good place; however, we can’t separate the fact that Nike had a serious brand image problem that needed fixing and a commitment to combating climate change was definitely a step in the right direction. Regardless, as you pointed out, Nike is now in a prominent position to demand serious change across the industry. I would love to see them push this in their advertising and marketing spend even more as you also suggested.
Nancy, I was fascinated to see the innovative approach Hershey’s has taken to solve the issues they are facing as a result of climate change. They have employed a variety of initiatives to help them achieve their 100% certified sustainable sources by 2020 goal. It was great to hear how they put their money where their mouth is a provide financial incentives to farmers to change their practices by purchasing certified cocoa beans at a premium. This is a way to enact long term change in the industry while also meeting their sustainability goals. Clearly this methodology is working as they are already sourcing cocoa beans from 50% certified sustainable sources as you noted in your post. However, in your suggestions for what else they could be doing, your third bullet in particular has a lot of merit in my opinion. As a market leader and one of the most widely recognized brands in the world, Hershey’s not only has an opportunity but an obligation to set the sustainability bar high. By increasing awareness of the issue and of their practices, they can force their peers to do the same in order to remain competitive.
Ryan, I’m so glad you wrote on one of my all-time favorites things – chocolate! Any company that is in the commodity industry is deeply impacted by the changing ecosystem as a result of climate change. Mars is no exception. I was so interested to hear how Mars has taken a bottom’s up approach to the issue and targeted the problem at the source. I loved hearing how they were educating the farmers which emphasized their commitment to the long-term sustainability of this industry, not just a short term fix to the problem at hand. Furthermore, I was very interested to hear how they are investing in R&D to produce more productive, drought-resistant crops. You wouldn’t think of a candy company as a scientific research firm but as you noted, they aren’t mutually exclusive anymore in today’s world. Companies need to become more innovative in the face of an ever changing ecosystem and I was fascinated to read about Mars’ approach.
As many of my peers have noted, prior to reading your post, I would have never associated sustainability with the luxury retail space! I was very surprised to hear about the variety of initiatives that LVMH has put in place to combat climate change – both from an economic and an ecological standpoint. One thing that troubles me about their argument however, is that unlike most other retail companies, LVMH is in a position to pass on many of the potential supply chain costs of climate change onto their end consumer. What’s to stop LVMH from increasing their prices to cover the uptake in cost of raw materials? Given this is the luxury segment of the retail industry, the high cost and exclusively of the item is almost part of the appeal. How can LVMH be held accountable for these potential supply chain impacts instead of passing along these consequences to the end consumer? My main concern is that LVMH is using this sustainability push as a marketing ploy instead of trying to make the industry more accountable for how they procure, produce, and sell their products. Overall, a very interesting industry to take a look at through the lens of sustainability and climate change!
Yarden, the beauty industry has a long way to go when it comes to sustainability but I was so glad to hear about how L’Oreal has taken a strong position on the issue. As a market leader in the industry, it is imperative that they set a standard and require their peers to match it. You alluded to this point at the end, but I would love to see L’Oreal advertise their efforts more as a way to make the entire beauty industry more accountable. As a consumer of their products, I had no idea that they had put in place these initiatives which is surprising with the amount of advertising spend they have. L’Oreal has taken a much needed first step but as you mentioned, but there is more they can be doing to effect broader change across the beauty industry.