Wal-Mart with a Target on its back

Regular readers may remember a guest-post back in July about the Gulf of Mexico oil spill. Tom argued that BP might well be copping a disproportionate amount of blame for the disaster, while lesser partners were getting off lately.  We described this as an instance of diseconomies of scale.

The Wall-Street Journal raised a further example last week (click through from this link for the full version of the article).

The article argues (and some trade union officials admit) that the world’s largest retailer Wal-Mart receives excessive scrutiny for its labour practices (i.e. it’s non-union status, low pays, miserly health benefits etc), while counterpart Target (the US firm, not the Aussie one) get off very lightly, despite having very similar employment conditions.

This manifests as a genuine disadvantage for Wal-Mart as public campaigns against new stores (especially in large cities) restrict expansion.

Meanwhile, Target appears to be deliberately, well, targetting the same neighbourhoods conscious of the lack of scrutiny, the perception of being the ‘lesser of two evils’, and the limited resources of campaigners.

Building such disadvantages into our understanding of competitive advantage, firm growth, and bargaining power seems increasingly important.

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Putting a pretty face on internationalisation

There was a nice piece in yesterday’s paper on the international expansion by Aussie cosmetics wonder Napoleon Perdis.

It is chock full of value chain choices that appear to have made considerable difference to his firm’s success:

1. Building a dedicated distribution facility in Los Angeles (thus cutting out the middle-man and accessing those rents)
2. Tapping into the retail outlets of Target across US (and helping them to go upmarket)
3. Jumping onto parallel value chains in terms of the beauty school, body and bath, skincare and now even health spa and hotel businesses (leveraging strong brand awareness and relatedness)

In an international business sense, the firm doesn’t seem to have been hampered by any particular liability of foreignness. I guess it might be hard for a consumer to work out where the product is from anyway…. Greece? France? Australia? Austria?

Scattergun Target expansion

You may recall my discussion in January of the nifty Wal-Mart expansion graphic at Flowing Data.

Well, they’ve delivered another one. This time it’s fellow US big-box discount retailer Target under the microscope. Click on the pic below for the animated graphic thingie.

The big insight from this new map is that Target did not adopt the oil-slick style growth we saw with Wal-Mart. The expansion here is much more opportunistic, as they jumped back and forth across the nation.

It took the firm considerable time for them to fill in a lot of gaps. It does raise questions about their scope to build sufficient economies of density.

Target is not an international retailer, so this is their entire growth story. For any Australians scratching their head, our Target is a rather ancient logo licensing arrangement (i.e there is no relationship between Wesfarmers and the US firm).

Let’s hope the next firm to get the Flowing Data treatment shows some international expansion.