Paula Vich Serra
Imran, thank you for the article, it was a very interesting read. To address your last question, I believe the movement cannot come from the companies alone (or from the governments / NGOs / consumers in isolation). There has to be a joint movement where all the forces agree to work towards a common and standardized direction.
An interesting article published by BCG indicates that “The landscape for change is bold and ambitious, going well beyond what individual players have accomplished thus far and can accomplish going forward. The main challenge to achieve this ambition is not individual commitment and actions but leadership, collaboration, and innovation.”
The article calls on the regulator as the amplifier voice (with the ability to pass laws that reinforce sustainability targets and incentivize change), points out the consumer has the power to tip the scales (through education, information, and incentives, consumers can gradually change their fashion consumption habits to reduce their own footprint) and draws on the need for collaboration and innovation on an unprecedented scale (e.g., establishing unified standard for recycling).
Jim Holden, thank you very much for your article, it was a very interesting read. Being an international student myself (and being aware of the characteristics of my home culture), I would like to discuss the drawbacks of making HBS a more international university.
Although I believe that the leaders of the future need to develop a global perspective, I am also of the opinion that disproportionately increasing the amount of international students at HBS can have a significant impact on the financial viability of the organization. According to HBS’ annual report, the School received more than $161 million in new gifts and pledges during the year, which is 20% of total HBS’ revenue and 1.3x the amount of money the university collects from MBA students. The annual report acknowledges the importance of such gifts and donations coming from more than 12,800 donors (approximately 27 percent of the School’s MBA alumni).
Having a quick look at other statistics, I have learnt that the US is the country whose citizens, by far, make the most donations as a % of GDP (1.44% vs. 0.5% in the UK, 0.37% in India or 0.03% in China). This leads me to believe that if the university disproportionately increases the amount of international students, who come from cultures were philanthropy is not as engrained as in the US, the amount of money available to invest in the program coming from alumni would probably be restricted.
I am not saying HBS should not embrace and foster internationalization, I am just trying to raise a potential challenge the institution might face if that’s the focus going forward.
Source: Charities Aid Foundation, HBS annual report
Aportland, thank you for the article, it was a very interesting read. Although I completely agree that Sephora must shift their operations towards a comprehensive focus on sustainability, I would like to offer my view on the idea of charging a wholesale premium or discontinuing partnerships that do not support their sustainability mission.
Having worked for a similar company than Sephora, I learnt that this type of retailers are in high need for traffic driving brands that attract consumers to the stores. Without traffic, sales don’t exist and revenue targets are not met. For example, a traffic driving perfume would be Chanel number 5, the worlds’ most famous and best selling perfume for more than two decades.
In that respect, although I am a strong advocate of doing business in a sustainable way, I would recommend Sephora launches the sustainable policies you suggested in a restricted way and with partners that are not key for the business in the short term (even if we are not aware of it, a lot of beauty brands are owned by the same parent company, giving more power to the supplier vs. Sephora). A reasonable way to do it would be by launching pilots in certain geographies and with certain brands so that the company can test the true impact in its bottom line.
I believe that the approach Sephora should take is continue growing its private label brand under sustainable conditions so that it both secures higher margins and ensures full control of the supply chain.
Eric, thank you very much for your article, it was a very interesting read. I would like to offer a different perspective and point out that Brexit will not only impact local teams in the UK, but other football teams outside the UK can also suffer the consequences of it. For those of you who are not familiar, La Liga (Spanish league) rules stipulate that clubs have no more than three non-EU players in their squad. Britain’s withdrawal from the EU would re-classify UK players in the Spanish League as non- EU players.
Let me use Real Madrid as an example: before Brexit, in 2016, Real Madrid’s non-EU players were James Rodriguez, Casemiro and Danilo. Britain’s withdrawal from the EU would re-classify Gareth Bale as a Non-EU player, and this would have pushed Real Madrid’s number over the La Liga quota in 2016. This meant one of those four players would have had to be sold to avoid breaching league rules.
Fortunately for the football team, Brexit is taking time to be official and the summer after the voting took place Real Madrid sold Danilo, and James was given on loan. As a result, if no other non-EU player signs for Real Madrid, Brexit will no longer be a problem for the team.
Some could argue that one of these two movements already factored in Brexit…
Brandless writer, thank you for your article, it was a very interesting read. Given that I had never heard about them before, the first thing I did before publicly expressing my opinion is going to the Brandless website to gain a first hand insight of what “a brand with no name” means. And I loved the idea (I actually placed an order that will hopefully arrive soon!). Reflecting on the business model, though, I see some strategic challenges that the company will need to address going forward to ensure consumers like me buy at brandless.com more than once.
In an era where Amazon has become the “everything store”, with enormous cross and up selling opportunities, I believe it is increasingly difficult to succeed as a single “brand” whose products are only available for purchase on its own website. Industry reports indicate that consumers increasingly value simplicity on the purchase process and therefore are keen on using platforms that aggregate a relevant product array. Given this scenario, I believe that the long term growth of brandless.com might be tied to the Amazons of the world.
If my hypothesis is correct, the following question emerges: how do companies differentiate themselves on Amazon? And brand is inevitably the answer. In an online world where price comparison is so evident, brands become increasingly important. Even if Brandless claims its products are cheap as it gets rid of the “brand tax”, price could be easily match via scale. As a result, as paradoxical as it might sound, I believe that Brandless future growth can only come via brand differentiation.
FD, thank you for the article, it was a very interesting read. I would like to offer my perspective on the question you posed at the end. I firmly believe that a company like Ferrero has the responsibility to be at the forefront of the sustainability debate and lead discussions around topics such as the use of palm oil or GMOs. In fact, I actually believe it’s in their own best interest to do so. We live in an era of increased transparency: we, as consumers, are better informed and concerned about the impact the products we purchase have on the environment, and we publicly talk about it. NGOs are closely scrutinizing businesses all day long and they publicly talk about it. Governments are constantly examining the impact of the private sector in their own countries and they publicly talk about it. In our day and age, the dialogue around sustainability is inevitable. Therefore, I don’t think that by avoiding the sustainability debate is Ferrero hedging against the risk of a negative impact on its reputation. In fact, I believe it’s the opposite.
In a different space, both H&M and IKEA (as we discussed in class) are examples of winning companies that are leading these discussions in a successful way (i.e., without negatively impacting its reputation).
On the one hand, by leading this dialogue they are positioning themselves as a worldwide reference in the industry – positive and free PR as some people like to put it. On the other hand, they are also sending the message that “we are all in this together”, therefore, shifting the traditional confrontation between private companies and NGOs to a collaborative approach.
All in all, in order effectively lead the sustainability dialogue from the private space I believe it’s a matter of 1) engaging the right stakeholders and partners with a long term and holistic approach (such H&M’s partnership with WWF) and 2) ensuring some accomplishments are achieved every year so that consumers and other stakeholders acknowledge the relevance, commitment and tangible impact the company has in helping move the conversation forward.
Megan, thank you for the article, it was a very interesting read. I would like to pick on the questions you brought up at the end and offer a different perspective. As Imran suggested, I also still believe it is extremely difficult to replicate Zara’s wining supply chain strategy. However, we should not underestimate the power of smaller pure online players in the market that are already disrupting traditional fast fashion retailers: they are not replicating Inditex’s model, they are actually making it faster.
Quartz recently published a report through Goldman Sachs which states that “British fashion retailers ASOS and Boohoo are able to conceive, design, produce, and have clothing ready for shoppers on the sales floor quicker than Zara and H&M, and the two millennial-focused, social-media savvy brands are enjoying the rewards.” And we can easily spot these rewards in the evolution of their stock prices in the last year: while H&M and Inditex’s share price has declined by 29% and 9% respectively, Asos and Boohoo’s share price has increased by 15% and 51% respectively.
The same report by Goldman Sachs charts the correlation between supply-chain lead times and like-for-like (LFL) sales growth, and the results show just how much speed matters (https://qzprod.files.wordpress.com/2017/04/colorcorrected-46.jpeg?quality=80&strip=all&w=640) .
How will traditional fast fashion retailers, that once disrupted the fashion industry, respond to the disruption they are now facing from a totally different set of pure online players?
Sources: Google finance, Quartz Media