Melissa Schwartz's Profile
I was interested in your point that Birchbox should use analytics to drive customers to their retail channel – I think of the relationship inversely. Given their brick-and-mortar current/future footprint and lack of expertise in the space (despite attempts to beef up their staff in this arena), their core competency is in the online channel. As of last year, half of their revenues and 70% of total traffic came from the mobile channel alone  which is significantly higher than industry averages. I view the stores as marketing vehicles, used to build awareness and drive traffic to the site, but I do think that a customer who shops across online, mobile, and in-store will be more valuable long-term.
Another way that Birchbox can provide differentiation is through monetizing or sharing the data with their vendor community. From customer customization patterns to conversion rates to full-size products, Birchbox has visibility to information that their partners don’t. In the beauty space, it is very difficult for brands to find out competitive information from traditional retailers, so Birchbox has the opportunity to use this information to drive value. But, like you mentioned with the customization aspect, this is a complementary strategy to what I hope they would discover is their competitive edge.
I certainly agree that the inventory challenge within these large footprint, large format department stores needs to be addressed in an efficient manner before they lose out to more nimble companies (like Zara). Nordstrom is far from alone in the omnichannel debacle: I worked at Macy’s right as they moved to “Single-View-Inventory,” which essentially addressed the issue that the consumer should be able to purchase what he/she wants despite the origin of the purchase. For example, if a customer is shopping in her local store, she should be able to purchase a size “X” jeans if they have the inventory through e-commerce (even if it isnt on-site). In size-intensive businesses like footwear or denim, an omnichannel approach is necessary for companies to be able to deliver the product offering without having to carry the burden +100s of SKUs!
That being said, is a streamlined inventory approach enough to address the slow decline of the department store model? I think more needs to be tested before we can write off brick-and-mortar: having touch-points with consumers across all channels increases their average spend. While product-less concept stores are new to the market, “Buy Online, Pick Up in Store (BOPS),” loyalty programs, in-store events, exclusive designer partnerships and a shift to experiential shopping (digital fitting rooms, mobile point-of-sale) are all initiatives being tested to enhance the customer experience and drive omnichannel strategies. At the end of the day, there is a bit of storytelling and merchandising that department stores are responsible for, and focusing on fulfillment is only going to fix part of the problem.
In your essay you mentioned the interesting supply/demand relationship in the tea market, which made me think of the bullwhip effect we discussed during the Beer Game and Barilla case. Essentially, the ability to fulfill demand in the tea market became the bottleneck of the value chain due to the restrictions enforced on suppliers. I am not sure that the only way to resolve this inefficiency is through safety stock, especially when I think of inventory holding costs and the long-term ability to react to changing marketplace trends.
If Lipton recently created regulations regarding tea sourcing, I wonder what or if they did anything on their end to educate their suppliers and help their partners transition to a more complex approach. Though “natural and organic” are some of the major purchasing drivers in today’s tea market , to what extent did Lipton take it too far? Are +100 sub-rules and 3-day audit checks necessary for a product that has less than a $10 price point? And do customers even understand the difference between these nuances?
I am interested to see how Lipton will continue to evolve their approach towards sustainability, especially in an industry that has been shifting towards smaller and more authentic niche brands.
 “Tea-Based Beverages’ Growth Potential and Sustainable Sourcing,” Natural Products Insider (with information from Euromonitor International), October 2017, https://www.naturalproductsinsider.com/articles/2017/10/tea-based-beverages-growth-potential-and-sustainable-sourcing.aspx
I think it is great (and news to me!) that The Body Shop, a company whose mission is built on ethical practices, is taking significant steps in empowering their supplier base through education and financing.
As Hortense mentioned, the recent acquisition by Natura will add both the scale and the framework to strengthen The Body Shop’s value proposition. L’Oreal was the parent company for only ~10 years and has competing philosophies for some of their core brands (animal testing, for example), so Natura is a better cultural fit. My worries are three-fold: 1) Can these sustainable practices be maintained with growth in mind, 2) Is this really a competitive advantage for the Body Shop or is it becoming the industry standard?, and 3) Do customers even care?
The beauty marketplace’s shift towards sustainable practices is evidenced by the emergence of “natural brands” like Lush and Aveda  and the standardization of these practices by bigger parent companies. Just a few weeks ago, Groupe Clarins, Coty, Groupe Rocher and L’Oreal banded together to create the Responsible Beauty Initiative, which focuses on “ethical, social and environmental performance and progress throughout the beauty supply chain” .
On the consumer end, there is a tipping point when it comes to willingness-to-pay. The “ethical consumption gap,” diagnosed by social scientists, acknowledges that customers are more vocal than action-oriented in their interest towards sustainable brands . That being said, as more established companies start to take this approach and put the marketing spend behind it, I wonder how The Body Shop will fare.
 “The Body Shop Got Ethical Consumption Wrong,” Bloomberg, February 2017, https://www.bloomberg.com/view/articles/2017-02-08/the-body-shop-got-ethical-consumption-wrong
 “Four Beauty Giants Launch Sustainable Procurement Initiative”, Women’s Wear Daily, November 2017, http://wwd.com/beauty-industry-news/beauty-features/four-beauty-giants-launch-sustainable-procurement-initiative-11050079/
In theory, re-shoring sounds like the most effective way to combat new restrictions on supply sourcing. However, an increase from 41% to 44% of parts sourced domestically over a two-year time frame does not seem significant – additional investment is warranted. If JLR wants to weather the Brexit storm, they need to weigh paying tariffs for using established auto markets versus increasing their domestic capabilities via new facilities/plants for the long-term. It is important to consider how they want to be positioned for other world-wide trends (think: Trump and potential trade implications), above and beyond Brexit.
In addition to higher tariffs and diminishing value of the pound, something else to consider is inventory control . Can JLR be proactive in their production approach by securing long-term contracts with suppliers or “stealing” domestic producers from competition, thereby locking in the market? Potentially they can also have a better understanding of future forecasts, such that they can pre-produce inventory before these effects fully take place.
 “How Companies Should Prepare for Brexit”, Bain & Company, April 2017, http://www.bain.com/publications/articles/how-companies-should-prepare-for-brexit-wsj.aspx
I can see how Brexit can create massive strains on Amazon’s UK plans, but perhaps this situation can create a competitive advantage for the company?
Barriers to entry/grow are quite significant for Amazon’s competitive set given Amazon’s investment in the UK market, which includes doubling both the capacity for R&D and the total number of full-time employees . Given Amazon’s brand name/reputation for customer-centricity coupled with overall market conditions, I would imagine that sourcing talent may not be as much of an issue as the costs associated with doing so. Additionally, in this tough economy with heavily impacted FX rates, British consumers will become more price sensitive. Amazon is a leader in delivering low-cost goods, especially in a market where competitors will also have to face the same complications across their value chain.
I do agree that this will be expensive for Amazon, which will be reflected in rising costs for sourcing/procurement, distribution and labor. I wonder if Amazon will be able to shift these costs across their entire portfolio such that the British end-user can continue to pay similar prices. Perhaps they consider limiting the number of SKUs per category to focus on the margin-rich items going forward.
 “Why Amazon Isn’t Fazed by Brexit”, Reuters, July 2017, http://fortune.com/2017/07/25/amazon-uk-jobs-brexit/