Tag Archive: walmart

Why Southwest Customers Wouldn’t Buy a Bentley

July 24th, 2019

After giving 10 speeches on pricing and profits to groups of CEOs, it is certainly top of mind. Yet, it should always be top of mind for executive teams. One unanimous finding from the informal research of executives is that pricing is a strategic topic.  So, we must find time! When is the last time you focused on pricing?

Whether you consider pricing a strategic topic or not, it will directly impact your business. Let’s start with three typical options from a branding point-of-view.

  1. Low price leader – Southwest and Walmart are great examples of this. No one flies Southwest to have a first class experience. Instead, they are accessible to the general public and fun to fly. Their prices have to match their brand, and low prices do NOT equate to lower profits. Southwest has been consistently profitable when the higher priced airlines weren’t!
  2. Luxury brands – Similar to the low price leader, a Bentley or Gucci denotes the luxury image. If you found a low price on a Bentley, you would definitely think it was a lemon. In the B2B world, the same holds true. We work with a high quality lawn and garden equipment and tools supplier.  Their prices have to remain higher than the low cost brands to maintain their image and customer base. Of course, they need to provide more education and value for their customers as it is what they expect.
  3. Customer focused – In this case, the brand is all about the customer.  These companies are known for going the extra mile and providing superior value for their target customers. If it is all about value in the eyes of your customer, don’t you think your price better align to this value? Of course! If not, it is the epitome of the opposite of the brand.

Have you thought about your strategy and whether it relates to your pricing? It is easy to get caught up in competitive pricing situations and start to lower your price.  However, it might be the time to take a step back and see whether what you are doing matches your branding and strategy.

For example, one CEO provided an example of when she was a VP of Sales at a significant company. They had a niche product with unique value and higher prices. The sales teams were starting to see competition and thought they had to reduce pricing slightly to maintain their position.  The CEO said ‘no’. They were the leader and had value their competitors didn’t. It was a really hard process for the sales team to go back and talk value instead of giving in on price but they managed it. Fast forward to the next year. They were successful in maintaining their prices and didn’t lose business. Instead of falling into price war thinking, they talked about value.

What Do We Need to Think About Related to Strategic Pricing?

From an 80/20 perspective:

  • Who is your target customer? Think about your answer. Hopefully, it isn’t anyone willing to pay for your product or service! Yet that is an easy trap to fall into. Instead, take a step back and think about your target customer. What is their profile? How many current customers are target customers?
  • What do your target customers value? Although we tend to spend 80% of our time on 20% of our customers, the key question is whether these are the target customers. Do we know what our target customers value? Don’t think about your customer base and your daily interactions to answer this question. Instead, think only about your target customers. If you don’t know, find out! Being clear on this alone will yield dramatic results.
  • Is your pricing aligned with your target customers and their expectations of value? This is a tricky one. In our experience, 80%+ of our clients have room for improvement when we get to this point. It also changes over time.  If you last put thought into this even a year or two ago, you are acting on old information!

There is vast opportunity to keep pricing top of mind as it relates to your strategy. Why do this? It is a top strategy to ensure customer value (to grow your business) and increase bottom line profits simultaneously. If you are interested in a pricing & profits assessment, contact us.

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Amazon Adds In-Garage Delivery Option

May 20th, 2019

According to Good Morning America, Amazon is adding in-garage delivery options to its already vast array of delivery options – in-home and in-car. I remember when I first started working after college receiving a package was an ordeal! I was lucky if I could go to the post office on a Saturday to get a package or have to take a vacation day just to get the package. How insane that sounds!

Now, we can receive packages in-car (I would have loved that at the time because I could go to the parking lot at work), in-home (hard to imagine but even Walmart has been testing putting groceries away in the refrigerator with in-home delivery) and now in-garage if you don’t want people in your house or if you have pets you worry about. You can control the garage door opener from your phone and see the package being delivered for peace of mind. Talk about convenience!

What Should We Consider and/or What Impacts Could Arise?
Consumer products companies are evaluating all sorts of convenience-related delivery options to ‘win’ the race for shopping convenience. That’s why we also see Amazon tents popping up around the country as Amazon gets into the transportation business and needs last mile facilities. What will be next?

At a minimum, get up-to-speed with the latest strategies in e-commerce and logistics. LMA Consulting was a sponsor at the e-commerce and Logistics Summit recently, featuring keynoters from UPS, Georgia Tech and more. Check out these types of events to at least be aware of what’s happening in the industry and think about what types of piloting you should perform at your company.

Can you work with select customers to determine what type of service would go “over-and-beyond” for them? High-quality products and great brands are no longer enough. You better add top notch service into the mix to succeed!

You’ll find more information on these types of topics on our resilient supply chain series.



Walmart & Costco Moving Towards Farmer-to-Shopping Cart Strategies

May 1st, 2019

 

Walmart & Costco Moving Towards Farmer-to-Shopping Cart Strategies

The squeeze continues. During my Aerospace & Defense speech recently on the Resilient Supply Chain, the concept of vertical integration arose as Boeing and Airbus are expanding and squeezing the middle in a noteworthy fashion. Similarly, according to Journal Star Walmart and Costco are moving to eliminate the middle man by moving towards farmer-to-shopping cart strategies.

Walmart started bottling milk in its new Indiana facility. This move eliminated Dean Foods and their 100 dairy farmers and replaced them with 30 farmers and cooperatives. Walmart is controlling the entire supply chain from farm to shopping cart including transportation, a vertical integration strategy rarely seen to this extent and scale in agriculture. Similarly, Costco established a chicken farm to grow, slaughter and distribute chickens in Nebraska, eliminating suppliers like Tyson Foods and Pilgrim’s Pride. Both of these initiatives could create significant disruption as well as opportunity.

Are you staying comfortable, waiting to be disrupted or taking the proactive approach to create disruption?

What Should We Consider and/or What Impacts Could Arise?

Getting to the top and/or to a comfortable position and riding the wave isn’t a viable strategy if you wish to be around for the long-term. Stay up-to-speed on what is going on with your industry, competitors, customers, suppliers, region and more. Don’t hide your head in the sand. Instead, choose to take the realistic yet optimistic view and turn it into reality.

In addition, start looking at how to build an agile and resilient end-to-end supply chain. There is no telling when your supply chain might be squeezed or something will change. The more agile and resilient you become, the more successful you’ll be! If you’d like some tips for managing disruption, take a look at our resilient supply chain series.



Imports & Exports: Which Companies Dominate and What are the Related Impacts?

June 28th, 2018

 

According to the Journal of Commerce, the U.S. imported double the amount of its exports (measured in TEU). In 2017, imports increased 6% whereas exports increased 1%.  This is quite an accomplishment since China (the top market for U.S. exports) announced an importation ban last year that cut across the various types of the top U.S. export, waste.

 

  

So, who do you think was at the top of the import list?  
Walmart!

The Details
The largest segment of import is retail at 3.5 million TEU.  The next largest segment is foodstuffs at 700,000 TEU.  This is quickly followed by household goods around 645,000 TEU, conglomerate at 606,000 and auto parts and automobiles at 453,000.

On the other hand, the top exporter is America Chung Nam (largest exporter of recycled paper).  Thus, the largest segment in export is recyclables at 1.1 million TEU, followed by agricultural goods at 630,000 TEU, paper and forest products at 521,000 TEU and chemicals at 310,000.  

What is projected this year?  It appears to be shaping up to be the strongest international and domestic demand conditions in at least a half-decade.  It isn’t all rosy though.  There are plenty of concerns about tariffs and a tight trucking market. According to Wolfe Research, shippers expect a 5.2% increase in truckload rates and a 3.4% bump in less-than-truckload rates.  These are the highest expectations in the history of Wolfe’s survey.

What Should We Consider and/or What Impacts Could Arise?
Well, clearly growth and volume are robust (just like in manufacturing).  However, there is plenty of concern about potential disruptors (such as Amazon) and volatility.  Thus, we must stay on top of trends and likely impacts – and focus on agility. Are you able to respond rapidly to changing market conditions or will you be left in the dust?

We can expect freight challenges.  How significant is freight to your bottom line?  For example, when I was a VP of Operations for an absorbent healthcare products manufacturer (adult diapers, hospital underpads), freight was a BIG concern.  Although our product wasn’t heavy, it was definitely bulky. Thus, we focused a lot of attention on how to collaborate with customers and transportation partners on innovative programs. We invested efforts into product and packaging redesign that would reduce the size of the boxes while meeting/ exceeding customer expectations and more.  Aside from cost, tight transportation capacity might translate into late deliveries.

Do you have transportation partners or vendors? Perhaps you better take a more strategic view….

 



What is Walmart Doing?

October 5th, 2017

I sat on a panel of experts for Mobility 21’s annual conference titled “Speed to Delivery: Good’s Movement’s High-Tech Future“, addressing the future of transportation. It was a fascinating meeting and panel discussion due to the amazing amount of technology being discussed – and one of the panelists was the Senior Director of Sustainability for Walmart.

Walmart’s focus on speed and the customer is paramount.

Driving the Future of Transportation.

Walmart has come up in several circles lately. One of our clients supports Walmart’s stores, and so we learned quite a lot about their fulfillment processes, demand planning practices and, of course, their new OTIF (on-time-in-full) metrics. We also discussed Walmart service with a 3PL partner, and how Walmart has been making headlines lately in the e-commerce race. It is worth paying attention. Here are a few of the highlights:

  1. The focus on the customer is paramount.
  2. The use of crowd sourcing is gaining steam with the use of Uber and Lyft to deliver from the store.
  3. Who knew but Walmart is testing deliveries with drones as well!
  4. Walmart associates are making deliveries on their way home which is possible with the software that can align deliveries with routes.
  5. They just announced a partnership with August Home Smart Lock to deliver when the customer isn’t at home – and even put groceries in the refrigerator.

It is always a good idea to stay up-to-speed with what the leaders are doing in the industry. Their ideas are not always the ones to follow but they are ALWAYS ones to ponder for application, impact and down-the-line trends. Who do you follow?

 

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