Are you losing customer loyalty or competing increasingly on price? Perhaps it’s time to redesign your business model to solve a higher-level problem. I call this strategy “moving up the food chain.” Let’s look at two recent examples in the news. Target is adding solution-focused advice and services for college students to help them answer the stressful yet fun-filled question, “How will I decorate my dorm room?” Like other chains, Target has the products college students need; it even built brands to address small-space needs with on-trend products. Its new additions will reinforce Target’s value promise – enjoy your shopping experience and feel confident about your purchases. A newly produced YouTube series “will provide tips and tricks that college students can use while designing their own dorm or off-campus spaces. YouTube stars Todrick Hall, Mikey Bolts, Tiffany Garcia and Ann Le will each…
Three business model lessons that Walmart forgot
Love Wal-Mart Stores, Inc. or hate it, you have to admire the consistent business model strategy its leaders followed to emerge as the world’s #1 retailer. They dramatically improved distribution productivity – in fact, supply chain as a revered specialty arrived with Walmart, as did a measurable bump-up in US productivity due to Walmart’s efficiency. They then leveraged growing power over its suppliers to fulfill Walmart’s compelling value promise – “everyday lowest price.” It took decades for competitors to figure out how to stop the Fortune 500 company’s march. Did leadership hubris then lead to Walmart Stores, Inc.’s weak post-recession performance? Walmart stores open at least one year lost .75% revenue each quarter over the past year while Target, Costco and Family Dollar saw same-store revenue climb. Walmart’s decline is about more than post-recession consumers shopping-up. The American consumer is still highly price-sensitive,…