Interesting analysis, Lee! My thoughts are around Marketing, given that we just discussed the Chateau Margaux case in Marketing class.
I agree with your assessment that their best course of action is to diversify their winemaking locations based on how climate change affects these vineyards differently. However, there are risks. I see a potential lack of consumer believability around the shifting quality of regions for winemaking. As we learned in the Chateau Margaux case, Bordeaux is known for being one of the most premium and prestigious winemaking locations. If, as a result of climate change, Bordeaux is no longer that and there is another region that is superior, that new region would have a lot of work to do to convince consumers. As Oliver said above, winemaking is so rooted in tradition, and little has changed over the years. As a result, consumers will tend to believe what has been, not what is true in reality.
Extremely informative piece! I was unaware of Apple’s struggles and lack of market share in India.
In response to your recommendation that Apple should focus on reducing its cost-to-serve and gaining share in the market in the short-term, I was unsure how Apple could do this without a fundamental change in India’s government policies. It seemed to me that the only way to deliver the product to the consumer was to leverage re-sellers. In this case, the re-seller is added into the supply chain as a middleman, and necessarily adds a markup, increasing the cost to serve. I’m not sure that Apple has any other choice than to start the process of manufacturing in India. I don’t see a case where Apple could convince the Indian government to relax its policies. As NM said above, Apple needs India more than India needs Apple. I do agree with Ryu’s comments that there are risks involved. Changing the supply chain always has inherent risks, but I’m not sure Apple has another choice if they want to be a player in India.
I love that you tied the topic of transparency in with digitalization. Transparency seems to be a megatrend itself, especially in the consumer space. I attended a conference with Google a while back, and they asserted that transparency is something that Millennials especially care about, and it fundamentally affects their shopping behavior.
We see CPG companies acknowledging the importance of transparency in their supply chain many ways. First, we can simply look at product packaging. We see bigger, more prominent ingredient callouts. Taken a step further, fast casual restaurants such as Sweetgreen use transparency in their supply chain as a point of differentiation. For example, Sweetgreen displays the farm name where the lettuce came from that day on the chalkboard for all clients to see.
I think transparency within the supply chain will continue to act as a differentiator for brands, but I also think that it will eventually become a must-have for all. The example that comes to mind is Chipotle’s multiple Ecoli breakouts. They attempted to track several ingredients back to their source to find the cause, but they weren’t able to. If they tracked their ingredients throughout their supply chain, they could have found the source and potentially prevented another outbreak.
Thank you for raising the use of RFID in retail. This is a hot topic in the space, and one that deserves discussion.
The proliferation of the technology has been predicted for many years now. The technology itself is old, and over time is has gotten less expensive. It is expected that more and more retailers will adopt it, just like Uniqlo has. Other retailers such as Macy’s and Zara already have. For example, according to the Wall Street Journal, in a store where taking inventory used to take 40 hours, with RFID only takes about 5.
The application of the technology throughout the supply chain seem to be endless. Tracking inventory, the way Uniqlo has, is the most obvious one. New, more creative applications of the technology have been in the news recently. For example, Rebecca Minkoff has been using the technology to enable mobile self checkout for consumers in-store. Montcler has been using RFID to combat conterfeit items by tagging the real ones. I can also imagine that RFID could track consumer shopping behavior. For example, it could track how many consumers try on a piece of clothing, and of those, how many buy it. The implications of RFID on big data are huge, and to compete with Amazon, it seems retailers will start to move in that direction.
Very interesting and so relevant to our conversation about IKEA! Being a consumer of H&M myself, I actually do associate the brand with sustainability. They were one of the first clothing retailers that I saw promoting a clothes recycling program. I never actually partook in the program, but I do remember taking notice.
Doing some research on the program now, I’m impressed with how robust it is. According to the H&M website, since the program started in 2013, they have collected 55K tons of clothing to be recycled. They have partnered with a third party to sort and recycle the clothes, and they sort them into 3 buckets:
1. Rewear – clothing that can be worn again and sold as second hand clothes.
2. Reuse – old clothes and textiles turned into other products, such as cleaning cloths.
3. Recycle – everything else is turned into textile fibres, and used for things like insulation.
It seems that H&M’s eventual goal is to produce their own clothes from 100% recycled materials. I can envision a cycle in which consumers purchase H&M clothes, wear them, recycle them at H&M stores, and H&M uses these recycled clothes to make new ones.