Very interesting case example that represents a challenge for not only startups but established corporations in this era of nationalism.
For this particular case, I find two points particularly interesting:
1. Although with the abandonment of TPP and its 2.2% tariff, I am not convinced that that in itself is worthwhile for Hubble (or other companies) to invest in manufacturing in the US. Manufacturing in US requires significant upfront capital expenses, as well as a continuous stream of higher wages. Despite the 2.2% tariff increases, it still may not make business sense to shift manufacturing to the states, particularly for a company like Hubble who simply contracts the manufacturing from St. Shine.
2. The fact that Hubble’s manufacturing is in Taiwan, specifically, is particularly interesting. In December 2016, Trump faced a lot of criticism for having a phone call with the Taiwan president, the first known US president correspondence with the Taiwan government since 1979 . Especially with Trump’s recent recognition of “One China”, how supplier relationships with both Taiwan and China will pan out depends greatly on how Trump continues to act towards both the Chinese and Taiwanese government.
 Anne Gearan, “Trump speaks with Taiwanese president, a major break with decades of U.S. policy on China,” Washington Post, December 3, 2016, https://www.washingtonpost.com/world/national-security/trump-spoke-with-taiwanese-president-a-major-break-with-decades-of-us-policy-on-china/2016/12/02/b98d3a22-b8ca-11e6-959c-172c82123976_story.html?utm_term=.f704a36aa670, accessed November 30, 2017
Very interesting to see how Chinese Nationalism impacts non-Chinese businesses that heavily rely on the Chinese markets for revenue.
In the case of Lotte, I found it’s strategy to simply “wait it out” very misinformed–in times of nationalism there is a pride and emotion that builds up in the country. If the foreign company’s reaction is to simply dismiss it and “wait it out”, I can imagine that the Chinese population would find that a bit condescending and further foster it’s commitment to Chinese-based companies. It almost signals to the Chinese population that Lotte thinks their nationalistic pride is simply a fad, ungrounded in actual logic, and something that will pass quickly. Their ad campaign of “So we wait” may very likely have made things worse.
I very much liked the author’s suggestion to change the perception of Lotte as a foreign company to one that is Chinese-based. The idea of a Joint Venture, even if only for the hypermarket business line, would respect its consumers’ choice to support Chinese-founded retailers while changing the perception that Lotte is “foreign”. This is a great way to role model its commitment to the Chinese economy to gain the trust of its Chinese consumers. Another thought is to heavily recruit for Chinese students and talent to work for Lotte, either through heavy subsidization of living in South Korea to work at HQ, or a large amount of job availability to run its Chinese operations. Given that the Chinese market makes up such a large part of its revenue, it would be a worthwhile investment for Lotte.
Blue Apron’s model is certainly interesting–minimize food waste by shipping exact ingredients, but potentially add to climate issues with its intensive packing and transportation methods.
On food waste, I think it is a great idea to ship only what is necessary–I have found that especially living alone, I always buy more groceries than I actually consume and will need to throw many of my perishables out at the end of the week. The idea of only getting what you need not only minimizes waste but creates a consumer reliance on Blue Apron to supply all ingredients. With Blue Apron, consumers will not be incentivized to stock up on anything (since they will send you even packets of salt), and trips to grocery stores for a handful of items will be less worthwhile. For “misfit” veggies that are not physically appealing for grocery store displays, Blue Apron should potentially try to pre-cut/ prepare the items for the meal kits to minimize customer perceptions that the supplies provided in the meal kits are any less fresh than those purchased in grocery stores.
I am, however, concerned at the impact of packaging two-meal portions of ingredients such as spices. There are certainly some items that I think Blue Apron can assume customers have to minimize unnecessary and wasteful packaging. For instance, baking kits that offer the powder to produce cakes will generally assume that the consumer has their own stock of eggs, water and milk to mix with the powder, and does not include that in the product itself. Blue Apron can definitely move more towards this direction to assume that the average consumer will have a pantry of general ingredients, without sacrificing much of its value to the customer.
It’s interesting to think about whether current wineries will need to 1) change their production schedule based on global warming or 2) change their product. In the case of wine, I do believe that wine needs to be exposed to certain temperatures to properly ripen, and that changing in production schedule is likely the first move to adjust to changing temperatures. I wonder if the same grape will respond similarly to weather patterns (i.e., going from cold to warm), even though the timing may be 1-3 months from usual. If so, I do think that we can keep the products in the same regions for the long run.
It’s an even more interesting point to consider that wineries may need to adjust the products themselves, where Bordeaux will need to be grown in areas outside of France that will now have similar climate to historical France. I think this will be hard to sell to the customer, who has long associated the quality and type of wine with the source location. As we learned in the Chateau Margaux case for Marketing, a lot of intrinsic value is placed in exactly what plot of land the grapes are from. Wineries face a difficult hurdle to educate customers on the impact of climate change to their wines, and will need to manage a resistant expectation that wines are as good as their region.
I think it makes a lot of sense that CVS is moving towards digitalization of services–customers nowadays expect fast delivery service to the home more than ever. However, I have two questions:
1. Does CVS’ size and scale protect them from other competitors like Amazon, who have never been in the pharmacy business, from taking market share? In the US, Walmart and CVS make up at least half of the drugstore retailers in every major city . I would imagine with this kind of scale, they are able to negotiate much lower costs for branded drugs and biologics with the manufacturers, and have scale to lower distribution costs. CVS also plays a unique role as a pharmacy benefit management, further locking in customers into its network. Finally, distribution of drugs will also have its own set of regulatory hurdles that Amazon will have to face for the first time. Although Amazon would be able to leverage its distribution market, I am wary of how quickly it can enter the pharmacy world.
2. How would digitalizing the pharmacy affect CVS’ front-store revenues? Currently, I would imagine that customers that come into a CVS store to pick up a prescription will likely also pick up a few retail items in the retail section of the store. By eliminating that foot traffic, or redirecting them to a drive-through where they don’t walk through the front-store, I would imagine that they would see a drop in retail revenues as well. In this environment where brick-and-mortar retail sales are struggling to keep up with e-commerce, that may drive a significant impact to front-store revenues.
 Corey Stern, “CVS and Walgreens are completely dominating the US drugstore industry,” (July 30, 2015), Business Insider, accessed November 30, 2017, https://www.businessinsider.in/CVS-and-Walgreens-are-completely-dominating-the-US-drugstore-industry/articleshow/48274587.cms
Macy’s, as well as may big box stores, faces an interesting challenge with the headwinds of digitalization. On the one hand, it has become easier and easier for people to access, review (and read peers’ reviews) and purchase clothes online, hence the much stronger growth in e-commerce. However, we all grew up in the generation where it was exciting to go to a department store to shop, hang out with friends, and pick out a special garment, especially special-occasion ones such as prom dresses or formal gowns.
Your recommendation to make the experience more social and obviously different from clicking around alone at online at home is a great one.I think that there is an opportunity for Macy’s to tap back into that nostalgic excitement of sifting through and trying on multiple garments to find the right one. (I doubt that wedding boutiques have had as much of a sales decline as normal department stores given that experience factor.) In addition, emphasizing shopping as a social experience similar to getting a meal or drink with a friend will help separate the chore from the experience. The restaurant industry is an interesting analogy since even though everyone can get takeout or cook at home, they are still motivate to go to restaurants since they view it as a social experience and not simply a chore.