As an long-time Patagonia loyalist, I agree with your perspective and would further assert that Patagonia is the original poster child of this joint-ethical / business mission. The founder, Yvon Chouinard, is an absolute legend in sporting and conservation, their products simultaneously evoke a strong association with both quality and environmental values, and to this day I’m still confused how one converts used water bottles into a super comfortable fleece!
My constant question about this business model is how one assesses the trade-offs of growth and conservation. Were it more focused on expansion, presumably the business could have grown far beyond its estimated $600 million revenue through store growth, category expansion, or sub-brands. Conversely, Patagonia could have gone totally non-profit (vs. 1% of revenues) and focused almost exclusively on conservation. The brand and its value are linked intrinsically to this dual-mission so one cannot shift too far to an extreme end of the spectrum, but would be interested to learn how management evaluates the balance between these goals, and see how (or if) this changes once Chouinard is no longer at the helm.
Thanks for writing this piece, really enjoyed learning about this incredibly successful low-cost model. They’re obviously doing a lot with product costs and vendor negotiations to drive lower prices, but as we’ve seen in a few cases this Fall, distribution is incredibly important for grocery chains so would be interested to learn about how they have managed to build out their logistics network to reach the ~4,500 current stores. Are they contracting with third party providers or do they maintain in-house?
The difference in SKUs between Bim and traditional convenience or grocery stores is remarkable. Are they carrying well-known brands (just less of them) or just carrying a mix of private label and lesser-known brands? Ultimately, I think brand still matters, so would be interested to see what happens as many of the major CPG brands make a stronger push into these countries.
Pretty amazing what they’ve done, would love to see the payback period on these stores. Think this business is also an example of altruistic capitalism, as positive externalities abound from being able to, as you mention, make high-quality and inexpensive food readily available to a large portion of the population.
Enjoyed reading about this company which has clearly carved out a niche within the discount channel. You mention sourcing as a key value driver in the operating model, so I’m wondering how they are able to source products at 20-25% discounts to Wal-Mart? Presumably it is similar to a dollar store model (i.e. sourcing a lot of close-out merchandise from other retailers), in which case, do you think the ability to do so is sustainable were the company to grow store count by 4x to the 950 opportunities you mention above?
It looks like growth has been driven almost entirely by new store openings, do you get a sense of who Ollie’s is taking share from when they enter a new market? It appears the mix of consumables is far below Wal-Mart or dollar stores so may be some of the players that “Baker’s Dozen” mentions above. Given the product mix, don’t think this business translates to e-comm so will be important to understand who the loyal customer is (age, location, demographics, income, etc.) to frame the Amazon threat.