My piece on the Conversation has generated a bit of interest from business reporters. Here’s a piece from the Brisbane Times that resulted from a phone interview. I got to bandy around terms like “disruptive technology” and delve deeper into the scope for bricks and clicks to coexist (for some).
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.
Ooops, I’m a little later this year with my reflections on 2009 as a blogger (last year I managed to do it on New Years Day – oh well, better late than never).
I can tell you that I post exactly 100 times (but 42 of those were in the first 3 months), and that there were just over 14,300 visits to the site. January and December were the two busiest months, with about 2000 visits each. The busiest day was Dec 2 when this post got over 200 clicks.
The most popular posts from 2009 were:
#2 A juicy tale of international expansion (about Boost Juice)
and very strangely, one about toilets at #3 Toto, we’re not in Tokyo anymore…
The aforementioned Dec 2 post Why don’t more producers sell on-line? came in at #4 (and thus has the highest average visitors per day).
#5 confirms a retailing bias with Capabilities do matter (about Zara, Ikea & H&M)
And the post from 2008 asked is there Too much Wii in this Blue Ocean? still attracts loads of readers.
Thank you to all who have visited, commented, argued and critiqued. I relish the engagement and the challenge. Here’s to a great 2010…
I’m back again with some comments about my experiences as a consumer in the home of consumerism – the USA (California specifically).
Firstly, I can (finally) speak with first hand experience about the monster of all retailers – Wal-Mart. I popped into one of the stores on the outskirts of a relatively innocuous mid-size town. It was a pretty underwhelming experience, not overly different to an Aussie Big-W or K-Mart. The merchandise was certainly cheap, but it was also pretty cruddy. I wouldn’t be heading there for much more than some brand name essentials that I might buy in bulk. The vibe was very much indicative of the spartan practices of the firm.
Of course, this is exactly what this firm trades on. Much of the sources of competitive advantage come from cutting the fat out of the customer interface and all other aspects of the value chain (see much more discussion of that here). The latter is not likely to be obvious to the casual visitor.
There is one other aspect worthy of note in both Wal-Mart and numerous other large-scale retailers we’ve encountered. We are frequently served by elderly sales assistants, male and female. This segment of the labour force is rarely employed in such roles in Australia. Presumably turnover amongst them would be much lower than among the usual troops of high school and uni students enduring such employment down our way. This springs from significant differences in industrial relations laws and the like. It would be intriguing to know whether such variation is viewed as a further barrier to these US firms entering Australia.
The news this week is that Wal-Mart are reportedly back in the hunt for a Russian acquisition. They may be locked in a battle with Carrefour (the French world #2) and Metro (Germany, #4) for a controlling stake in a Russian hypermarket chain Lenta.
Currently not a single US retailer from the world’s largest 250 (according to Deloitte’s rankings) operate in Russia. This is despite more than 20 other large international players being there, including Metro, Rewe, Ikea, Inditex, and Boots (and despite the US making up 34.8 percent of the top 250).
It would seem that geographic and institutional differences are much larger between the US and its former cold war rival, than between Europe and Russia, and the US and Europe (and indeed the Middle East, Latin America and Asia for that matter).
It is fascinating that Wal-Mart are willing to take on the Russian challenge ahead of opportunities in the remainder of Western Europe. It would seem their format of big-box retailing has more prospects in emerging markets such as Russia, China and Latin America than the more developed world (as an aside, I wonder what that says about the relative economic development status of mid-West US in the 1970s-80s?) .
It will also be intriguing to see the extent to which Wal-Mart might act as a strong example to the laggard US retailers. Will this be a beach head for more entrants in this sector?
One final comment: Lentra does seem a good candidate for such an acquisition. Their format and growth seem comparable to a young Wal-Mart.
International BS Blog 
