While I agree that there is a fine balance maintaining “luxury” brand equity and mass marketing, I would actually argue that Burberry’s aggressive social media marketing has actually been key in revitalizing the declining brand. High end heritage luxury brands, like Chanel and Hermes, have huge social media (i.e. Instagram) presence – the images and advertisements shown actually contribute to driving the “luxury” image of these brands. These companies, however, have extremely limited digital distribution channels (versus digital marketing) – in my opinion, this is how they maintain their exclusivity.
I think Burberry has been on the decline over the past few years not because it has become “too mass” but because of its product – the high-end customer market has been shifting towards advanced designer brands over the past few years (i.e. Givenchy, Balenciaga, Saint Laurent, Alexander McQueen) and Burberry’s product line has largely been focused on more of a “classic” look. Competitor companies, such as Chanel, have realized the shifting customer trend, and have launched product lines that are more fashion forward, while continuing to drive their “classic” product line. Burberry will need to figure out how optimize its assortment – introducing more fashion-forward products while maintaining its heritage trench coat business – to stay relevant going forward.
Completely agreed with the digital strategy of Net-A-Porter. Retail is no longer an “leisure activity” for today’s customers – it is a “lifestyle” and as such, retail touchpoints should be seamlessly integrated into all aspects of a customer’s life, whether it is through Net-A-Porter’s social network or its magazine scan function.
I do think that within the luxury retail world, however, customers need to interact with a product in person at some point in their purchasing decision cycle. Perhaps Net-A-Porter can partner with other companies to drive innovative, in-person selling strategies – thoughts that come to mind are a) partnering with companies like Microsoft or Apple to do a digital, pop-up shop; b) “shop in shop” partnership with a major retailer (i.e. Nordstrom); etc.
I had never heard of Rubicon before, but I absolutely love what they are doing and think that it is a very ingenious idea. The core of their business model also reminds me of that of Li & Fung’s – by aggregating the buying power of all of their haulers, they are able to get cheaper supplies from their suppliers, which in turn incentivizes more haulers and more companies to utilize their platform.
I wonder how national giants like Waste Management and Republic Services will react to Rubicon – because of their scale, I would not be surprised if they decided to undercut Rubicon in price (and still stay profitable). Besides driving cost savings, Rubicon will potentially need to find additional revenue streams (in addition to just taking a cut of each pickup) in order to stay profitable in the long-term.
Completely agreed with your point above – HMH should not completely shift its strategy to digitizing education. I think the adoption curve is slow not only because administrators are the ones selecting educational products, but also because many hard-copy textbooks used in schools have a long life cycle and the replacement of such books is often over a 5-10 year time span. Furthermore, schools (particularly public schools) have very tight budget constraints, so I would imagine them to be very price sensitive and hesitant to switch to digital (presumably this would mean that iPads / some mobile device would have to be purchased for each student, along with the digital book).
Great read! WeChat is wildly popular in China, and it is not hard to figure out why – it’s basically an “all in one” platform for the end user. That being said, I wonder if WeChat enough safeguards in place to protect user data. Companies like FitBit have come under fire for privacy concerns, and I would imagine WeChat to have even more consumer data points stored in their system. Especially in the Chinese market, where fake products are rampant and credit cards are not widely used, I think that it will be necessary for WeChat (if they have not done so already) to invest in the right safety mechanisms to manage customer information. The platform’s main value proposition is not just its convenience factor but also its trust factor, and if end users do not trust the platform, it will be very hard for WeChat to recover.
I think your article does a great job at highlighting what SBUX can do from from a sourcing perspective. Other things that I think SBUX can do to improve its carbon footprint from a consumer-facing perspective:
– How it operates its stores – perhaps using more solar installations and alternative energy methods
– Packaging of its products – although I know that SBUX’s cups are recyclable, I think there’s more we can do here. I find it somewhat ironic that one of SBUX’s major viral marketing methods in the fall/winter is its signature “red cup,” yet I’m not sure this strategy is aligned with being sustainable when they are encouraging customers to purchase coffee just to take a picture of that one-time-use red cup. Maybe what SBUX can do is heavily promote a reusable “red cup” during the holiday season instead, and incentivize customers to use that cup (i.e. buy 10 cups of coffee with the reusable cup, get one cup of coffee on us).
As you mentioned, tracking and quantifying their carbon emissions is not enough – SBUX will need performance drivers/incentive structures that encourage those across its supply chain to push sustainability forward.
I particularly liked your point about how many of the changes have been largely cosmetic – I couldn’t agree more.
That being said, I keep thinking back to the “root causes” of factors that can be changed to improve upon the sustainability for IHG. Two things come to mind:
1) Consumer awareness / motivation: At the end of the day, the guests staying at the hotels themselves need to be aware of the environmental ramifications of their actions if they leave their lights on. Using key cards that activate the lights in the rooms is not enough. Perhaps one thing IHG can do is really educate and engage the consumer on being more environmentally friendly – thoughts that come to mind are a) educational signage in the rooms on small things they can do to be eco-friendly, and b) offer some sort of “incentive” for customers to behave in an eco-friendly way (i.e. if they do not change their sheets during the duration of their stay, or manage to keep lights off when they’re not in the room, they get some sort of perk, like a 5% off their bill)
2) Employee awareness / motivation: Employees should also be motivated and incentivized to act in a more eco-friendly way. We’ve been learning about the “Balanced Scorecard” in our FRC class – perhaps improving upon sustainability of IHG can be one of the measures in which employees are rated on and held accountable for as part of their performance reviews.
You touched upon a number of great points mentioned above. A couple of thoughts:
1) With these additional investments into alternative purification techniques and eco-friendly packaging, Nestle will undoubtedly incur significant additional costs. If Nestle passes these on to the consumer, I wonder if the consumer will opt to buy from another competitor or just drink tap water altogether, since the water market is fairly elastic. (At least in developed countries with clean water!).
2) I wonder what the long-term viability of the bottled water industry is in general. As you mentioned, Ontario is starting to restrict expansion of bottled water operations – I would not be surprised if others follow suit. Given increasing regulatory restrictions on bottled water companies, a lot of companies are developing innovative water filters (that work in both developed and developing countries) without the need for actual water bottles.
Ultimately, I feel like the bottled water industry itself is somewhat of a contradiction to sustainability. Perhaps Nestle will need to re-evaluate what markets it sees itself operating in for the long haul.
The stats in this article are mindblowing, particularly the fact that 10,000L of water are used in the production process for ONE pair of jeans! I agree with many of the next steps that you outlined above – changes need to be made both internally within the company, from a supply chain perspective, as well as externally, by encouraging a shift in consumer behavior.
Besides decreasing the amount of water used in cotton sourcing (via direct control of its own cotton farms, using recycled materials, etc), I wonder if there are additional changes within the actual production process to cut down on water usage – for example, does Levi’s need to use that much water to treat denim to “achieve the perfect look and feel”? Can Levi’s invest in R&D/developing innovative production machinery that cuts down on water usage/carbon emissions when producing a pair of jeans?
I completely agree with your points above, and I do think that UPS should be actively involved in finding sustainable solutions for its air transport. That being said, I find it difficult to pinpoint who should carry the weight of the cost of investing in sustainable aircraft fuel. UPS can take on higher input costs in the short-run, but given that the e-commerce sales are forecasted to continue on an upwards trend over the next 5+ years, the input costs for UPS will potentially continue to rise. From a business perspective, I’m not sure it makes sense for UPS to continue footing the bill indefinitely – the customer should take on more of the shipping cost. However, this may have serious ramifications on UPS’ overall business volume, as customers seek alternative shipping providers (i.e. FedEx / DHL) or, in Amazon’s case (a company that contributes $1bn to UPS’ business), take on shipping in-house (http://www.wsj.com/articles/amazons-newest-ambitioncompeting-directly-with-ups-and-fedex-1474994758).