If I were simply to assess what the optimal way to deliver on Wall Mart’s customer promise i.e. providing inexpensive consumables mostly skewed towards groceries in rural areas I would say that a high degree of e-commerce makes a lot of sense. It seems safe to assume that the vast majority of the Wall Mart customers don’t go to Wall Mart to experience their stores live (which might more be the case of more upscale grocery stores such as Whole Foods) but rather to get a good ‘value for money’ shopping experience – an experience that is equally accessible online. This brings me to another question that is worth noting in this context: how fast will grocery/food mature as a pure e-commerce business? The maturity of different e-commerce products heavily relies on cost and time effective distribution techniques (i.e. it will probably take a while before we see Starbucks deliver coffee to our homes?).
Since I believe distribution technology will quickly be improved – be it through drones that reach homes in rural areas or other creative solutions for me it all comes down to the long-term perspective of what is the optimal, from a customer perspective, way of accessing groceries? In my opinion the answer to that question is pure e-commerce with home delivery shipping.
In essence I agree with you that boosting their omni-channel initiatives is a good short-term measure given their current position to differentiate to Amazon. Moreover, in the short to medium perspective I do think the store foot print will give Wall Mart a competitive advantage especially in rural areas/places to which it takes Amazon longer time to deliver (evidence of Amazon recognizing the benefits of omni-channel can be deducted from their acquisition of Whole Foods for instance – as has been mentioned in previous comments). But given my assumption that pure online shopping will prevail also in this industry I do think they need to heavily invest in their e-commerce platform and refrain themselves from expanding their physical store print/even reduce their current network to prepare for the next phase.
This is a very interesting article that highlights a question that is applicable to almost every piece of the retail industry. In my opinion it is hard to make the argument that incumbents have an advantage over players such as Amazon since they have a legacy network of outlets that challenge their cost-effectiveness compared to Amazon.
Interesting read that highlights the difficulties that Inditex and other fast fashion retailers face in the era of ultra-fast fashion – especially the fact that Inditex and other incumbents compete with pure online players who don’t have to carry the costs of a vast retail network. On the positive side for Inditex is its scale which surely offsets some of these added costs.
I agree with you that their experience in this market and especially their access to capital can help them stay competitive. More than anything I believe that they could leverage their size/capital to acquire some of these ultra-fast fashion players to increase their pure-play online share of business.
And to make an attempt to answer your last question: I do think Primark strategy seems to lead to what I like to call a “Kodak moment” (not the happy smiling one unfortunately but the one entailing an incumbent company that is reluctant to adopt new technology as is scared of what the consequences will be to its current competitive advantage). We all know how that story finishes – not with a happy smile for the Kodak folks unfortunately. In my opinion, Inditex should “take the hit” and focus on the online channel by improving it for its current offering but also by launching and acquiring pure online ultra-fashion players.
Thank you for an interesting read. I do agree with you that their efforts to increase sustainability in their business is important from the three perspectives that you mention. I am not so worried about the fact that customers, due to the nature of the product, can’t market their sustainable choice to others. On a side note, I do think there are other ways that they can communicate that they have purchased an “eco-friendly underwear” by for instance communicating this on social media (e.g. joining VS “sustainability lingerie club” or something similar…). But, more importantly I do think that the value of this strategy lies more within the perception of the customer – in my opinion millennials see this as a hygiene factor and increasingly demand that the brand cares about more than profits.
As discussed during our class on IKEA, there are many contradictions between the efforts large companies make to reduce their negative environmental impact while maximizing sales and profits. Personally, I do believe that the companies are motivated mostly by the latter. But, I do believe that in order to achieve high profits in today’s environment and in order to stay relevant to their younger segment companies need to make sustainability a key part of their strategy. Therefore, I fully agree with your suggested recommendation and I actually think it’s worth taking the hit in the short term as I believe that sustainability will be a hygiene factor to gain basic customer good will in the mid-term perspective.
As to one of the other megatrends and the effects that digitization can have on sustainability I do think it’s a trend that facilities sustainability efforts. For instance, digitization of the supply chain through for instance RFID tracking increases transparency and enables retailers to monitor materials and supplies through the SC. Benefits of RFID tied to sustainability also include reduced waste by better inventory management and faster identification of defected materials.
Your idea is creative and interesting. Personally, I don’t see why the movie studios should give AMC the rights to become the PVOD provider. Let’s suppose that AMC would earn similar margins on the PVOD business as other potential PVOD providers such as Netflix could offer (hence lets level the field for AMC vis-à-vis other competitors to disregard from a relevant problem that Erin mentions in her comment) – what makes AMC a good provider of this business? And what would be the reaction of other movie theaters that have not been granted this opportunity? If I understand the proposal correctly, these theater chains would be left with a shorter release window (hence severely hurt by the PVOD model) but not gain anything from the fact that AMC provides PVOD in addition to movie theaters. I find it’s more likely that movie studios will chose a “neutral” provider instead of AMC.
In a previous job assignment I had the chance to work with a large movie theater chain and its management. It gave me the opportunity to evaluate how consumers approach movie consumption and my conclusions are similar to what other commenters have mentioned: the reason people go to the cinema is highly correlated to the experience and social aspect. The cinema “died” with the introduction and commercialization of the TV in 1950s and has been on a relatively stable admission level since the 1990s. There are many other value creation opportunities for AMC such as increased ticket prices through better technology offerings e.g. 3D movies, increased concession sales etc.