Category Archives: Retail

Best Buy Experience? Still Not At Best Buy But …

… if you were one of the lucky ones, at least this time you got a few free iPads to give to people in need instead of getting nothing or unexpected free porn (as some people did earlier this year, as chronicled in Best Buy Experience? Not at Best Buy! Part I) or, in some cases, getting completely ignored (as chronicled in Best Buy Experience? Not at Best Buy! Part II).

As chronicled by Mark Rush over on Evan Schuman’s StorefrontBacktalk next year, now Best Buy has an iPad Dilemma. Apparently they shipped at least five iPads to at least two customers who had only ordered one. (See a recent article on iTechPost titled “best buy ships out free ipads accident discounts iphone 5 holiday season 2012” for example.) But at least this time they owned up to the error right away and instead of insisting that the customer ordered five and needs to pay for five, or pay the return and handling fees to return four, they decided to take advantage of the holiday season and find a little holiday spirit. They told the customers to “keep the additional iPads and give them to people in need” and get some valuable good press that they desperately need, ignoring the fact that the U.S. Federal Trade Commission Q&A stated that federal law required that the consumer could keep the extra iPads and not pay for them, referencing laws intended to punish retailers from shipping items to people who didn’t buy them in an attempt to extort them for payment later.

Now, as noted in the article, Best Buy could probably have gotten the issue to court noting that the customer did order one item, but I would have to think in this case that, given the nature and value of the item ordered, the court would reasonably conclude that an end consumer didn’t want more than one and the company should have appropriate checks and balances in place to appropriately manage such valuable inventory. Thus, it is likely this is a case Best Buy wouldn’t win.

My conclusion? They weren’t being generous and simply making the right decision to circumvent the PR nightmare that would have inevitably resulted had they handled it any other way and they still need to fix their systems. I could be wrong, but Amazon does a lot more shipping and seems to make considerably fewer screw-ups, or at least deals with them better as I haven’t seen nearly as many articles about Amazon screwing up compared to Best Buy in the past year.

Walmart is Supposed to have been the Retail Leader since at least 2002

… when it was listed for the first time as America’s largest corporation on the Fortune 500 list, and it’s only now understanding that if you want a sustainability initiative to take hold, you have to focus on the people and give them the right incentives.

As per this recent piece over on Bloomberg which notes that “Wal-Mart’s Green Performance Reviews Could Change Retail for Good”, Walmart’s efforts to green its supply chain are about to get much more effective because sustainability will now play a role in its merchants’ performance reviews, which help determine pay raises and potential for future promotion.

If you really want to be green, you have to put your money where your mouth is and pay for it. You have to give buyers incentive to consider sustainability, suppliers incentive to be sustainable, and everyone incentive to encourage sustainability. And, as SI has written many times, while their might be some up front costs to switch to sustainable sources, over time, sustainability will generate double-digit ROI any way you look at it.

True Cost Reduction Doesn’t Increase Risk

While reading a recent article over on the Inbound Logistics site on Serving up the Perfect Meal, I came across the following quote from a general manager for C.H. Robinson that worried me:

“One thing all restaurants are doing is managing labor farther up the supply chain, and pushing inventory levels back to suppliers to manage, thereby controlling costs, keeping inventory fresh, and allowing menu planning variability.”

Can you see why? While managing labour considerations further up the supply chain is a great idea, as it forces you to have good supply chain visibility, and keeping inventory fresh will give you an edge in the food service industry, pushing inventory levels back to suppliers to manage is a disaster waiting to happen unless:

  • they are at least as competent as you in inventory management,
  • they have deep insight into your expected demand requirements over time (at least six months into the future), and
  • they have a basic understanding of the market volatility and the ability to handle unplanned demand surges.

If any one of these assumptions are false, at some point in time, your supplier is going to be out of inventory when you need it most, and you’re either going to have to spot-buy elsewhere, at considerably higher prices, or, even worse, go out of stock and have to slash profitable menu items for the duration of the shortage.

You should only let your supplier manage your inventory if you have deep visibility into the supply chain and collaborate with them to make sure they have all of the data they need to predict your needs as well as you can. And you need this visibility, given that quality, safety, and traceability are critical to a food service provider’s supply chain, especially given the recent introduction of the Food Safety Modernization Act.

Sears’ Deadly Sins

By now, everyone knows the story of K-Mart, and its bankruptcy that was well chronicled in Marcia Layton Turner’s book on Kmart’s Ten Deadly Sins: How Incompetence Tainted an American Icon, which was summarized in a recent article by Vivek Sehgal on why Business Strategy Should Design and Determine Supply Chains over on the Supply Chain Management Review this spring.

But not everyone knows that Sears, part of the Sears Holding Company, may not have learned the lessons K-Mart failed to learn and may be going down the same path, at least North of the Border. Consider the following sins in particular:

  • Brand Management
  • Underestimating Walmart
  • Ignoring Store Appearance
  • Supply Chain Disonnect
  • Repeating the Same Mistakes

Let’s take them one by one. It hasn’t made a top 100 brand list in 3 years, since it made the virtue 100 in 2009, and 24/7 Wall St (.com) predicted it would vanish this year. It’s still around, but it’s not a household name. In fact, the only good rankings it is getting are for its mobile site, but we all know how limited mobile sales still are, and one has to wonder how long it is going to fare well in the online world now that you can get most of its products through Amazon Supply. There was a time when Sears was a household name, and would always be in the top 50 brands. Not anymore, although Lands End was recently recognized, but Lands End is not Sears. Just an apparel line.

Like every other big average consumer retailer, Sears underestimated, and North of the Border, continues to underestimate Walmart in my estimation. In the Great White North, Walmart is expanding like mad while Sears is barely holding the few locations it has in many places. While many of you are likely aware that Target is about to expand rapidly into Canada through its acquisition of the leasehold interests of over 125 stores from Zellers Inc., what many of you do not know is that many of the remaining stores that are (in the process of) being closed are being scooped up by Walmart. the doctor can’t remember the last time a Sears location opened in his province.

While Sears store appearance generally isn’t that bad, it generally isn’t that good. While Walmart stores are kept new, clean, and shiny, some of the Sears stores the doctor has been in lately are starting to look run-down, dusty, and drab. And many of the displays, which may have been attractive in the 80’s and 90’s, are looking dated. What’s going to happen when Target bursts onto the scene?

And the Supply Chain Disconnect is still there. Consider the fact, as reported in the SCMR article, that in 2010, four years after the merger, only 4 distribution centres out of 39 were shared between Sears and Kmart, while others continue to serve Sears or Kmart stores exclusively. Walmart is going to eat Sears alive!

Sears is repeating the same mistakes that Kmart made, and focussing in the wrong areas. Brands (like Lands End) are not going to save it. A good mobile site is not going to save it. The only thing that is going to save it is a renewed focus on supply chain (to get its operational costs in line with Walmart’s) and a focus on brand rebuilding. It has to be a household name again. Otherwise, it may not make it’s 200th anniversary, which is a mere 8 years away! I hope I’m wrong, but we’re in an age where billion dollar enterprises can go bankrupt almost overnight.

Walmart Changed the World 50 Years Ago, But Did It Change For The Better?

I certainly agree with this recent Time Business article on 10 Ways Walmart Changed the World since the first Walmart store was opened in Rogers, Arkansas on July 2, 1962 (four thousand, four hundred stores ago). But I’m not sure all of the changes created by the world’s largest private employer are for the best.

Let’s start with this nice and succinct quote from the article:

Walmart’s relentless drive for efficiency has bankrupted companies, put downward pressure on wages and upset a retail culture that some believe was less efficient but more personal and aesthetically pleasing.

It may be the story of American capitalism at its finest, but is that the story it wants to bring to the rest of the world as it continues its rapid (or is that rampant) international expansion?

Now, while everyday low prices, supplier partnership, data driven management, supply chain connectivity, focus on decentralized management, and sustainability are good things; and while better selection is neither good nor bad in and of itself; the suburban sprawl it generates is bad for the environment, the relentless drive for efficiency is an accelerating factor in the outsourcing of American jobs and stagnant wages for North American employees is making us poor, and the creation of an overconsumptive (& disposable) culture will make it almost impossible for true sustainability to creep into our culture.

From a simplistic perspective, 6 changes for the better compared to 3 for the worse would appear to be a balance in Walmart’s favour, but it’s not how many good deeds and how many bad deeds, it’s the extent of the damage of the bad deeds that matters. And the extent is pretty bad when we look at things from a modern perspective.

First of all, as the article notes:

The selection that Americans began to demand required bigger stores that could only be built on the outskirts of small towns or in the suburbs of large cities.

Thanks largely to Walmart, we began to sprawl so much that your average big American city is now sprawling into the next big American city. That’s why we have Mega-Regions where it’s hard to determine where one city ends and the next begins. This is about as un-green as you can get. There’s a reason that San Francisco, Vancouver, and New York are the greenest cities in North America. (See Metropolis.) Why? For starters, the bigger the city, the more gas we have to use to get around because public transportation covers less and less. Plus, we need more resources to distribute power, water, communications, and everything else we need to live.

In the last 10 years, the US economy has last over 4 million blue-collar jobs, mainly as a result of manufacturing job losses, which is largely due to outsourcing. Outsourcing accelerated by Walmart in its pursuit of the lowest possible cost.

But this doesn’t pale in comparison to the creation of the overconsumptive and disposable culture it has created. Thanks to Walmart, we not only want to buy more, because some products have become so cheap, relatively speaking, that we don’t even think about buying them. And, more importantly, because some products have become so cheap, we don’t even think about repairing them when they break, even if they repairable. As a result, we now generate more waste per capita then one would have ever thought possible even a few decades ago. Without Walmart, something else might have come along, but the reality is that Walmart came along and Walmart did the damage.

Any differing opinions?