It’s incredibly interesting how this article ties two trends together. What I’m still curious about is – how is Adidas planning to address its sourcing of raw materials? Will the costs of transportation mean that to keep competitive prices, raw materials will eventually need to be sourced from the same places that they place their SPEEDFACTORIES? I think management should keep this in mind, especially given the high level of investment that needs to into each SPEEDFACTORY.
Interesting article! For me, what jumps out most is the changing purpose of a retail store. From AEO’s point of view, their stores are now serving a different purpose: they’re at once distribution centers as well as dressing rooms via their “Reserve, Try, Buy” program. Given that, I think they can redesign their stores with the same mindset as they designed their distribution centers as you mentioned. Perhaps that means less space for displaying inventory, more space for “experiences”, and larger backrooms to serve as a mini warehouse.
I am very in favor of 3D printed clothing, but perhaps on a more subtle scale. I don’t think the average consumer has enough artistic vision or creativity to design their own clothing, so I’m imagining a world where brands and designers design clothing “templates” that can be tweaked by the consumer. Consumers will be able to choose the item’s color, material, length, loose / tight fit, button / zipper designs, etc. This concept of “tweaking” professional designs has already been rolled out by several major brands. Coach has launched “Coach Create” where customers can control the color and appliques of their purses (not their shape or design), while Fame & Partners sells dresses that have color, length of sleeve, and skirt shapes chosen by the customer. 3D printing will allow these brands to customize even further, while still maintaining control of what exactly consumers can tweak. In this manner, consumers will still be confident that they will have a stylish, well-designed item of clothing but also the satisfaction of having a one-of-a-kind item.
Fame & Partners: https://www.prnewswire.com/news-releases/fame-and-partners-launches-custom-evening-wear-collection-300428637.html
I agree with Oswald that consumer preferences for local, artisanal beer is here to stay. I wonder though, if instead of leading to higher prices, the water shortage will lead to innovate beer brewing techniques that require less water. I’m not familiar with the brewing process, but it sounds like there might be opportunities to refine the process so that less water is used in the sourcing or production process. Thus, I believe this encourages breweries to innovate on their processes, and that breweries who are able to do so most effectively will be most successful. This also points to an opportunity for another company to create this new technology / process and sell to breweries.
I completely agree with Richard Richardson that Tabasco will have the most control over its chilis if it pursues indoor growing facilities. A Jeff Bezos-backed startup called “Plenty” grows produce in 20-foot tall climate-controlled towers with LED lights and thousands of sensors and cameras to collect data, then used in a machine learning model to optimize the plants’ growth. Especially impressive is that plants grown in this technology can achieve 350x greater yield and use 1% of the water used in traditional farming. With a distinctive product like tabasco chilis, such control and optimization would be a big bonus and will allow them to iterate on improving the taste of their product. Given that this is where the future of the industry is headed anyway, I think it will be beneficial for Tabasco to pave the way.
This article was especially interesting to me as a previous (short-lived) Hubble customer. Great job providing a detailed and thorough look at the impact of isolationism on a young start-up.
I have a couple of main reactions:
1. I agree with Isabel in that exploring new markets outside of the U.S. may not be viable, but for different reasons. First: Contact lenses are actually regulated medical devices that require FDA regulation, and the founders have mentioned that they had to navigate through a tricky thicket of rules . As a young, small startup, I don’t think Hubble will have the bandwidth or expertise to manage navigating the potentially more complicated regulations elsewhere. Second: Hubble has developed a network of business relationships with doctors within the U.S. medical community; if it were to expand elsewhere, it would need to start all over in a country likely with completely different dynamics and structure . However, I do see potential in Canada, where they are already planning to enter soon .
2. I fundamentally believe that you need to have a good product before you are ready to expand, and my experience suggests that Hubble still has a long ways to go on improving the customer experience. Their website and customer support are lacking, and I think there’s a risk of prioritizing the wrong issues that may be better to have larger, more mature companies fight for and solve.
3. There may be wiggle room in their pricing. Currently, Hubble contacts cost less than half of competitors which is impressive for sure, but even if they pass the 2.2% tariff onto the consumer, they will still be priced very competitively . That said, there is still risk in relying only on one manufacturer, and in line with the thoughts above, I think they should start scoping out relationships with other manufacturers and creating a proposal for vertical integration.