They're not the same, writes Seth Godin, in fact, they couldn't be much more different.
http://sethgodin.typepad.com/seths_blog/2014/04/search-vs-discovery.html
Retailers
need to help customers to DISCOVER things they didn't know they wanted,
not just SEARCH for things they already knew they wanted.
Just
as librarians (and knowledge management websites) need to help readers
to discover books and other reading material they didn't know they
wanted. And not just tell them (as Google and Amazon do) the books that everyone else has already read.
Foundations of Business Organizations and Management, viewed from economic, ethical, social, and systems-thinking perspectives.
Showing posts with label retail. Show all posts
Showing posts with label retail. Show all posts
Tuesday, April 22, 2014
Tuesday, July 17, 2007
Asda versus Bloomsbury
extract from POSIWID blog
Following my earlier post on Lost Profits, a row has blown up between Asda (part of Wal-Mart) and Bloomsbury (publisher of some obscure children's book).
Potter publisher halts Asda order, BBC News July 17th 2007
The facts are (not surprisingly) disputed. But there is a suggestion that Asda has failed to pay in full for previous Harry Potter books. I don't know what has happened in this case, but supermarkets often apply retrospective discounts to their suppliers - paying less than the agreed price.
Supermarkets typically defend their price-cutting stance, and their aggression towards suppliers, by claiming that they represent the interests of consumers. In this case, Asda is claiming that the Harry Potter book is too expensive for children. Obviously Asda wants to make sure the children have some pocket money left for sweets as well.
... for the rest of this post, read Wal-de-Mart and the Profit Eaters
analysis
The Harry Potter phenomenon raises some interesting questions about the business model of media companies, which relies on large profits from a few blockbusters to cover the large risk of publishing unknown products. Emerging retail models, which seek to cream off the excess profits, represent a serious challenge to this traditional media model.Similar analysis is prompted by Prince's recent decision to allow his latest album to be distributed in a newspaper, rather than through traditional channels. (Discussed in my post Lost Profits and by Fake Steve Jobs.)
Friday, January 06, 2006
Walmart and Snapper
In a couple of recent posts, I have talked about the dominance of large retail chains. (Tesco and 3G, Tesco and Walmart).
There is a fascinating story in the January 2006 issue of Fast Company (Issue 106, January 2006) about a company that decided to stop selling a high-quality product (lawnmowers that last a lifetime) through a pile-em-high-n-sell-em-cheap store. There is also a summary on Chandler Howell's blog.
Note that the story doesn't just have an economic angle (short-term loss against longer-term economic survival) but also an ethical angle (quality versus throw-away culture) and a social angle (loyalty and trust across network of independent dealers). Note also the system side-effects - sales through the independent dealers rose to compensate for the lost Walmart sales - which were influenced at least as much by social factors as by economic factors.
However, the reason this story is remarkable is that it represents an exception. Few manufacturers are able or willing to say No to Walmart (or Tesco or any of their competitors). The boot is usually on the other foot.
There is a fascinating story in the January 2006 issue of Fast Company (Issue 106, January 2006) about a company that decided to stop selling a high-quality product (lawnmowers that last a lifetime) through a pile-em-high-n-sell-em-cheap store. There is also a summary on Chandler Howell's blog.
Note that the story doesn't just have an economic angle (short-term loss against longer-term economic survival) but also an ethical angle (quality versus throw-away culture) and a social angle (loyalty and trust across network of independent dealers). Note also the system side-effects - sales through the independent dealers rose to compensate for the lost Walmart sales - which were influenced at least as much by social factors as by economic factors.
However, the reason this story is remarkable is that it represents an exception. Few manufacturers are able or willing to say No to Walmart (or Tesco or any of their competitors). The boot is usually on the other foot.
Tuesday, November 01, 2005
Tesco and 3G
Even though I'm picking up Martin Geddes again, I don't think any apology is needed, because he does have a habit of raising some interesting questions about business, creating good opportunities for systems thinking.
In his latest blog posting Divergence at Tesco, he notes that Tesco is reducing the range of mobile phones on offer in his local store, and has no 3G phones at all. He interprets this as a sign of a weak market for mobile phones in general and 3G in particular. (Obviously there are some other possible interpretations. And we certainly cannot predict the collapse of an industry from a single observation in a single store.)
Martin rates Tesco's strategic nous above that of the mobile phone industry ("Tesco, as one of the world’s most astute and profitable retailers, generally gets these things right.") But in the grocery market, if the major supermarkets decide not to stock your product, you're dead. This makes Tesco's anticipation of low market demand self-fulfilling, at least to some extent. And Tesco is accustomed to dealing with manufacturers that will do anything for shelf-space, including humiliating discounts. (In this context, viability entails being nice to Tesco at all costs.) Clearly the phone manufacturers are not that desperate. Yet.
Martin has had doubts about the viability of the phone market for a long time before he made this observation in Tesco. So this observation simply corroborates his previous hypothesis, and we don't need to challenge his reasoning in this particular case. But this small observation raises a more general question: what can retail shelf-space tell us about the viability of an industry? And if we wanted to use this as a rough metric, what other information would we need to cross-check it against?
In his latest blog posting Divergence at Tesco, he notes that Tesco is reducing the range of mobile phones on offer in his local store, and has no 3G phones at all. He interprets this as a sign of a weak market for mobile phones in general and 3G in particular. (Obviously there are some other possible interpretations. And we certainly cannot predict the collapse of an industry from a single observation in a single store.)
Martin rates Tesco's strategic nous above that of the mobile phone industry ("Tesco, as one of the world’s most astute and profitable retailers, generally gets these things right.") But in the grocery market, if the major supermarkets decide not to stock your product, you're dead. This makes Tesco's anticipation of low market demand self-fulfilling, at least to some extent. And Tesco is accustomed to dealing with manufacturers that will do anything for shelf-space, including humiliating discounts. (In this context, viability entails being nice to Tesco at all costs.) Clearly the phone manufacturers are not that desperate. Yet.
Martin has had doubts about the viability of the phone market for a long time before he made this observation in Tesco. So this observation simply corroborates his previous hypothesis, and we don't need to challenge his reasoning in this particular case. But this small observation raises a more general question: what can retail shelf-space tell us about the viability of an industry? And if we wanted to use this as a rough metric, what other information would we need to cross-check it against?
Wednesday, October 12, 2005
Heated Opinion
In some industries, economic questions of payment and cross-subsidy arouse strong passionate arguments, while in other industries these same questions arouse very little interest.
For example, Martin Geddes contrasts telecom with retail.
There is another possible explanation in historical terms. Telecoms used to be huge state monopolies, retail used to be hundreds of thousands of tiny independent stores. This is why the public and the regulators pay closer attention to telecom than to retail. (A long delay between cause and effect is easily explained in systems terms.)
And we don't have to choose between these explanations, since they don't actually contradict one another - so they may both contribute to the observed difference. (Multiple explanation is common in social systems.)
So what aspects of business does a society choose to regulate? This is an extremely interesting and complex question, with economic, ethical, social and political threads.
For example, Martin Geddes contrasts telecom with retail.
Telecom isn’t the only industry with distribution bottlenecks, significant market power, and cross-subsidy between the stages of production. Just look at how baked beans are positioned in supermarket shelves. Manufacturers in the UK pay the supermarkets to buy prime positions. Yet telecom incites such great passion in intelligent people. Baked beans don’t. What’s going on?Martin explains this difference in political terms. Telecoms (along with media and internet) are implicated in democracy and participation, whereas baked beans aren't.
There is another possible explanation in historical terms. Telecoms used to be huge state monopolies, retail used to be hundreds of thousands of tiny independent stores. This is why the public and the regulators pay closer attention to telecom than to retail. (A long delay between cause and effect is easily explained in systems terms.)
And we don't have to choose between these explanations, since they don't actually contradict one another - so they may both contribute to the observed difference. (Multiple explanation is common in social systems.)
So what aspects of business does a society choose to regulate? This is an extremely interesting and complex question, with economic, ethical, social and political threads.
Wednesday, September 21, 2005
Tesco and Walmart
Even Tesco boss Sir Terry Leahy admits that there are some fair questions about Tesco market dominance.
But surely if there is one person in the whole world who has a bit of a cheek asking these questions, it is Lee Scott, who is the boss of Walmart. Walmart is still the world's biggest retailer, is the dominant retailer in the US, and owns Asda in the UK.
However, before we write off Scott as a total hypocrite, here are some reason why he feels things are unfair.
1. Tesco has a much higher market share in the UK than Walmart has in the US. And yet Walmart seems to attract a much higher level of hostile criticism and campaigning. (Just try an Internet search if you don't believe me.)
2. Walmart/Asda was prevented from buying Safeway because this would have resulted in a 29% market share. Tesco now has a 30% market share. (Not surprisingly these figures are disputed.) Why do the UK regulators permit the latter when they wouldn't permit the former? (There are of course several ways of answering this question.)
What is the purpose of this kind of regulation? One way of thinking about it is as an attempt to exert some form of ethical and social influence over economic market forces. And it is the complex interaction between ethical, social and economic forces that makes this kind of situation so interesting.
[source: Guardian, July 21 2005]
But surely if there is one person in the whole world who has a bit of a cheek asking these questions, it is Lee Scott, who is the boss of Walmart. Walmart is still the world's biggest retailer, is the dominant retailer in the US, and owns Asda in the UK.
However, before we write off Scott as a total hypocrite, here are some reason why he feels things are unfair.
1. Tesco has a much higher market share in the UK than Walmart has in the US. And yet Walmart seems to attract a much higher level of hostile criticism and campaigning. (Just try an Internet search if you don't believe me.)
2. Walmart/Asda was prevented from buying Safeway because this would have resulted in a 29% market share. Tesco now has a 30% market share. (Not surprisingly these figures are disputed.) Why do the UK regulators permit the latter when they wouldn't permit the former? (There are of course several ways of answering this question.)
What is the purpose of this kind of regulation? One way of thinking about it is as an attempt to exert some form of ethical and social influence over economic market forces. And it is the complex interaction between ethical, social and economic forces that makes this kind of situation so interesting.
Tuesday, August 03, 2004
Marks and Spencer
Marks and Spencer is one of the best-known companies in the UK, and combines a strong corporate identity (including management values and style) with serious questions about corporate viability.
The recent take-over approach by retailer Philip Green represents a powerful challenge to the management team and its recent attempts to balance the conflicting demands of identity and viability.
Green's proposition can be distilled down to this message: Allow me to impose my retail and management style, and watch me deliver higher and more sustainable profits.
The directors of Marks and Spencer have rejected this proposition, claiming that they can restore the fortunes of the company without the wholesale destruction of M&S values that Green was feared to be planning. Green has withdrawn, unwilling or unable to fund a higher offer. No doubt the large shareholders and affected banks have had private words with both sides, but the small shareholder has been left (as usual) without a voice.
The stakes are raised. M&S management now has to deliver results for the shareholders that are significantly better than accepting the Green offer, and this means they are going to have to take bold risks. Meanwhile Green's other companies are going to be competing hard. And it's all going to be played out in public, with frequent comments in the business press. Over the next year or so, we have a great opportunity to watch how the identity and viability of a large company develops or unravels.
The recent take-over approach by retailer Philip Green represents a powerful challenge to the management team and its recent attempts to balance the conflicting demands of identity and viability.
Green's proposition can be distilled down to this message: Allow me to impose my retail and management style, and watch me deliver higher and more sustainable profits.
The directors of Marks and Spencer have rejected this proposition, claiming that they can restore the fortunes of the company without the wholesale destruction of M&S values that Green was feared to be planning. Green has withdrawn, unwilling or unable to fund a higher offer. No doubt the large shareholders and affected banks have had private words with both sides, but the small shareholder has been left (as usual) without a voice.
The stakes are raised. M&S management now has to deliver results for the shareholders that are significantly better than accepting the Green offer, and this means they are going to have to take bold risks. Meanwhile Green's other companies are going to be competing hard. And it's all going to be played out in public, with frequent comments in the business press. Over the next year or so, we have a great opportunity to watch how the identity and viability of a large company develops or unravels.
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