Why does one group of retailers outperform the S&P 500 by 23% over the last 22 months, while a second group lags behind, beating the S&P by only 9% during a period of rapid escalation of retail stock prices? Jeff Bailey of Y-charts says that the critical difference is that the former group has relatively low exposure to Amazon. Jeff quotes work by William Blair & Co. analysts. Now that it has been positively quantified, what do you do if you are a retailer with a substantial overlap with what Amazon sells?
Thursday, May 16, 2013
That would be 289.77 billion dollars, 1500 suppliers and 84 launches in 2011! These are the estimates from a cool info-graphic produced by the Florida Institute of Technology on the subject of Space Supply Chain. Interestingly, it also notes that “logistician” employment is projected to grow by 26% and that is a full 14% faster than the average for all occupations from 2010 to 2020.
Tuesday, May 14, 2013
It is amazing how businesses forget the very basics, like who their customers are. But DEE GILL on Y-Charts makes that case for J.C. Penney and it is rather convincing. In 2010, J.C. Penney fired their longtime CEO Myron Ullman to bring in Ron Johnson, then the head of Apple's retailing operations. Ron Johnson did what had made him successful at Apple: Crisper ads, bright stores, and fresh merchandise. But after a short 17 months on the job J.C. Penney board decided to fire Ron. Reason: Lack of results, retail sales were down by 25 percent and the stock had lost half of its value. What went wrong?
Thursday, March 28, 2013
The Home Depot started in 1979 with their first store in Atlanta. Within seven years in 1986, it hit the $1 billion-mark in sales which grew to $20 billion in 1997. During this span of 12 years, it had an average annual growth in sales of 119% that made them the fastest expanding home renovation retailer. The brand was built on low-prices and the trade-specialists in the stores to support the DIY audience who needed help in finishing their home improvement projects. Then the founders left and the new CEO focused on profitability above all else - almost running the company into the ground before the board decided to replace him. Now Wal-Mart’s laser sharp focus on costs is raising similar questions: Have they gone too far?
Monday, February 25, 2013
Amazon’s corporate mission says it for the most part: “We seek to be Earth’s most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators.” Three out of their four constituencies are non-consumer. Unlike other retailers, Amazon has been investing very heavily in the back-end logistics and fulfillment technology (Kiva Systems, warehouses totaling almost 50 million sqft) in addition to their intense focus on enterprise technologies (AWS, Amazon Web Services now hosting SAP) and consumer devices (Kindle) and technology (IVONA). But almost everybody thinks of Amazon as a retailer and keeps comparing them to other retailers. Is that fair?
Monday, February 18, 2013
So how exactly do you become the number 1 innovative company of the year while manufacturing something as dull and drab as shoes? Simple: By making them not dull or drab. Shoe manufacturers are not what you would be looking for in the top innovator’s list, but Nike is there – at the very top of the most innovative companies of 2013 by Fast Company. Their secret: Continuously reinventing themselves and their business model through disruptive thinking, says Austin Carr, the author of the source article.
Thursday, January 10, 2013
Innovation evokes passionate reactions. The term has been so overused and abused that it has become tired and a little lack-luster. However, it still remains what we are all after, because true innovation enriches life and brings prosperity to all involved! Innovation has been used to describe everything from ground-breaking research that truly advances the humanity’s understanding of the world around us (space shuttles, GPS, internet) to everyday incremental improvements in design that would be too obvious to a critical eye. No worries, I am not about to get into another definition of what innovation is or how to promote it in your organization, but I simply want to bring you a real-life story from Apple and Corning to help you make up your own minds about innovation.
Tuesday, January 8, 2013
Retail is big business in America. It amounts to almost a third of the national GDP. Within retailing though, e-commerce is the fastest growing segment. Data from US Census Bureau shows that e-commerce sales being equal to 5.2% of total retail sales in the latest reported quarter Q3 of 2012 (see chart below for more numbers). This figure has grown from 0.6% in 1999. So who is leading the e-commerce revolution in the US?
Thursday, December 6, 2012
Wednesday, December 5, 2012
The pendulum on far-shoring for manufacturing may have just swung back. Many factors including higher gas prices, rising labor costs in China, shrinking product life-cycles, innovation premium, environmental-awareness, social branding needs and even political environment have contributed over the last few years to reverse a trend that seemed irreversible. Smaller, nimble, pioneering companies started the reverse trend during the last few years and it may finally become a tide with the likes of GEs joining the fray.
Friday, October 19, 2012
All of us are familiar with the concept of similar businesses clustered together in the same geographic area. Of course, the silicon valley comes to mind being the most visible and famous! But there are other lesser known clusters that exhibit the same phenomena: Digital Media City (DMC), a 135 acre complex, outside Seoul’s central business district in the Sangam-dong district in Korea, and SEEPZ (Santacruz Electronics Export Processing Zone) in Mumbai, India are some other examples. Automobile industry around Detroit, steel mills in Indiana, and apparel in North Carolina have all been examples of similar clustering phenomena before the changing business conditions moved them elsewhere.
Friday, October 5, 2012
If Winter comes, can Spring be far behind? Fall is here, can the holidays be far behind? And with the holidays comes the annual rite of predicting what might the retail sales bring. After all, holidays are big business: $586.1 billion to be precise, expected in 2012. This is the number predicted by NRF after their annual ritual forecast of holiday sales, “Tempered by political and fiscal uncertainties but supported by signs of improvement in consumer confidence, holiday sales this year will increase 4.1 percent to $586.1 billion. NRF’s 2012 holiday forecast is higher than the 10-year average holiday sales increase of 3.5 percent.”
Monday, September 10, 2012
Checkout is so much an integral part of retailing. In the world of big box retailing, in fact, checkout may be the only time a customer directly relates to someone representing the retailer. So why are retailers trying so hard to get rid of their only opportunity to connect with their customers?
Because checkout costs them a pretty penny.
As per a Reuters story Wal-Mart says it can save $12 million a year for every second it can cut from the average checkout time at the Wal-Mart chain in the United States. Supermarkets typically have slim margins and profitability and therefore are likely to seek any advantage to reduce on labor that can account for 8-10% or more of sales.
Wednesday, August 22, 2012
When retailers think of customer experience, supply chains are generally not the top of mind. It is all about the glossy catalogs, slick web-sites, product images, interactive product experience, videos and all the other technology, media, and communication glitz bundled together and thrown on the consumer to make the sale! But what happens after the sale is secured? Is customer experience truly limited to slick product presentations and glitzy web-sites? Or is there more to it beyond the glitz, glitter, and glamor?
We believe that great products and presentation is simply a good start for a great customer experience. A truly compelling customer experience goes deeper, substantially deeper and is only enabled when the underlying supply chains can keep the fulfillment promises made and meet the customer expectations of time, quality, and service.
Monday, July 30, 2012
According to the U.S. Commerce Department, retail e-commerce sales accounted for 4.9% of all retail sales in the second quarter of 2012, up from 4.6% at this time last year. In fact, e-commerce has consistently grown from less than a percent to almost 5% of the total retail sales during the last two decades, often growing two to three times the rate of growth for conventional retail. Omni-channel retailing is here to stay. That part is concluded! Therefore, if you are a retailer and wish to stay around longer, welcome to the new world of omni-channel retailing. Hopefully, you have been working on building your omni-channel capabilities for some time, because it ain’t going to be easy or quick for that matter!
Friday, July 13, 2012
Thursday, June 21, 2012
The results are out!
Warehouse Education and Resources Council (WERC) has presented their annual report for 2012 on DC metrics at their conference in Atlanta. The report is based on a survey where the respondents represent a broad range of industries and warehousing needs. What is in? On-time shipments, average warehouse capacity used, and order picking accuracy are the top three metrics. What is out? Annual workforce turnover, line-fill rate, and percent of damage-free supplier orders fell to the bottom of the list.
Read more at Supply Chain Digest. Or get your copy at WERC.
Wednesday, June 6, 2012
Friday, June 1, 2012
You may have spent a fortune in establishing good processes and implementing technology solutions to automate and enable them. So, now do you have an effective supply chain? How do you know when you do? What is an effective supply chain anyway? Is it the ability to quickly react to volatile demand? Is it the ability
to maintain the highest inventory turnover in the industry? Does it mean
having the lowest days of accounts receivable? What about accounts payable?
Shortest cash-to-cash cycle? Highest ROA? Agility? Lean manufacturing?
Optimal product mix? Highest resource utilization?