The Incredible Shrinking Store

The Incredible Shrinking Store

Threatened by online shopping, large retail stores are attempting to change their image and downsize their facilities. Sears, Macy’s, Target, Walmart, etc. are opting for smaller, focused stores with fewer product lines, fewer brands, and contained layouts.

Lower real estate costs are an obvious benefit, but the challenges of meeting customers’ existing expectations and needs for variety are daunting. Sears is experimenting with a combination of reduced product offerings on its premises and access to an expanded inventory via computer kiosks throughout the store.

This post is based on the Boston Globe article,  Can the Rapidly Shrinking Store Save Legacy Retailers?, by A. Bhattarai, December 26, 2017.

Discussion Questions
1. What are the external factors that have led large retailers to downsize their brick-and-mortar stores?

Guidance: Factors include fierce online competition forcing cost reductions, changing markets (demographics, location, and preferences), and new technologies to display products within the store.

2. Many large retailers need to attract customers with a large variety of products and low costs. Are there trade-offs?

Guidance: On one hand, smaller facilities enable legacy retailers to cut costs and be more competitive; on the other, they limit the number of brands and product lines Continue reading

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Shipt and Instacart Deliver The Goods

Shipt and Instacart Deliver The Goods

January 1, 2018

Article Title: The Amazon-Whole Foods Deal Is Turning Out to Be Good for Delivery Startups

Author of Article: Craig Giammona

Date of article: December 12, 2017

Source URL: https://www.bloomberg.com/news/articles/2017-12-12/whole-foods-deal-provides-improbable-boost-to-delivery-startups

This Bloomberg  article looks at two food delivery startup companies: Shipt, Inc. and Instacart, Inc.  With Amazon’s purchase of Whole Foods, the outlooks for these companies and traditional grocery stores looked bleak.  However, to compete against Amazon in the food delivery market, these two startups are partnering with traditional supermarkets to offer same-day delivery.

Shipt is planning to exceed revenues of $1 billion in 2018. Their focus is the Southeast and Midwest, and partners include Kroger, Publix Super Markets and H-E-B Grocery Co.

Instacart has also partnered with Kroger, and with Albertsons.

Both delivery startups have a similar approach.  Their retail partners make specific items available online.  They then send in a personal shopper to select and deliver the items.  Instacart offers a per-delivery fee, or unlimited delivery membership.   Shipt has a $99 annual membership plan with unlimited deliveries.

Discussion Questions
1. Why are retailers partnering with firms like Shipt and Instacart versus developing their own systems?

Guidance Continue reading

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Best Buy’s Holiday Sprint

Best Buy’s Holiday Sprint

December 20, 2017

Article Title: Best Buy’s Distribution Centers Work Around The Clock For Holiday Sprint: Best Buy’s Logistics Will Soon Be Tested By a Crush of Shoppers

Author of Article: Kavita Kumar

Date of article: November 21, 2017

Source URL: http://www.startribune.com/best-buy-s-distribution-centers-work-around-the-clock-for-holiday-sprint/459221513/#1

This article looks at preparations that Best Buy is making to handle the rush of Black Friday and Cyber Monday sales. Best Buy is anticipating a 15% increase in online sales for Thanksgiving Day. Online sales currently represent about 13% of Best Buy sales, with the percentage increasing. Best Buy is also facing added stress to their distribution systems as they compete with Amazon. They are working to match Amazon’s two-day shipping, and in 40 marketplaces are offering same day delivery, again in response to Amazon. They are accomplishing this through three-party delivery firms.

Best Buy is using several tactics to meet this increased demand on distribution centers. The article mentions increased inventory, pre-packaging items for shipment, increasing capacity by operating 24 hours a day versus normal 10-12 hours a day, and the use of software to determine from where the items are shipped.

Discussion Questions
1. Should Best Buy be competing against Amazon by offering 2-day delivery, Continue reading

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