How progressives can pressure Trump on 3 key issues – Paul Osterman

MIT Sloan Prof. Paul Osterman

MIT Sloan Prof. Paul Osterman

From CNBC

There is little doubt that the Trump Administration aims to undermine, defund, and repeal much of the progressive agenda. However, progressives have one crucial move they can play to avoid four years of devastating policymaking: using Trump’s own voters against him.

Donald Trump’s Electoral College victory was in no small part due to the support of voters who suffered immensely during the Great Recession and who have still not recovered. Two thirds of all voters thought that their personal financial situation was the same or worse than four years ago and in Wisconsin, where Trump achieved an unexpected victory, the majority of voters believed that the economy was the top issue, despite official indicators of an improving job market.

Trump now faces a paradox. Many of the core elements of his agenda—loosening financial regulation, gutting health care reform, bashing immigrants, attacking unions, undermining the Fair Labor Standards Act—will actually damage the struggling workers and families he pledged to protect. Many of these people voted for Trump in hopes he’d fulfill that promise –even as his policies would do the opposite. So while the Trump Administration may be driven by its ideology to follow through on these proposals, its ultimate success depends on support from voters who would suffer under them.

Read More »

The best retailers combine bricks and clicks — Richard Schmalensee

MIT Sloan Professor Richard Schmalensee

MIT Sloan Professor Richard Schmalensee

From Harvard Business Review

Retail profits are plummeting. Stores are closing. Malls are emptying. The depressing stories just keep coming. Reading the Macy’s, Nordstrom, and Target earnings announcements is about as uplifting as a tour of an intensive care unit. The Internet is apparently taking down yet another industry. Brick and mortar stores seem to be going the way of the yellow pages. Sure enough, the Census Bureau just released data showing that online retail sales surged 15.2 percent between the first quarter of 2015 and the first quarter of 2016.

But before you dump all of your retail stocks, there are more facts you should consider. Looking only at that 15.2 percent “surge” would be misleading. It was an increase was on a small base of 6.9 percent. Even when a tiny number grows by a large percentage terms, it is often still tiny.

More than 20 years after the internet was opened to commerce, the Census Bureau tells us that brick and mortar sales accounted for 92.3 percent of retail sales in the first quarter of 2016. Their data show that only 0.8 percent of retail sales shifted from offline to online between the beginning of 2015 and 2016.

So, despite all the talk about drone deliveries to your doorstep, all the retail execs expressing angst over consumers going online, and even a Presidential candidate exclaiming that Amazon has a “huge antitrust problem,” the Census data suggest that physical retail is thriving. Of course, the shuttered stores, depressed execs, and tanking stocks suggest otherwise. What’s the real story?

Read More »

The store as a showroom: having your cake and eating it too – Elaine Chen

MIT Sloan Senior Lecturer Elaine Chen

MIT Sloan Senior Lecturer Elaine Chen

From The Huffington Post

In 2005, I was shopping for an acoustic piano. Back then, piano shopping worked like this: Go to a showroom. Play every instrument. Pick one, and negotiate a price. Have it shipped to your house. Everyone understood that a piano store does not maintain much inventory on site.

Apparel shopping was completely different. Shoppers went to the store, tried things on, then paid and left with their purchase in a shopping bag.

The changing face of apparel retail

Fast forward to 2016. Piano shopping is still much the same, but apparel shopping has changed. While store sales still account for a majority of retail revenues, online sales for apparel has been growing explosively.

Nielsen found that in 2015, almost half of U.S. shoppers (41%) had bought clothes online in the last six months, and roughly 12% had made a mobile apparel purchase. Citing Morgan Stanley, Business Insider reported that Amazon has a 7% share of the apparel retail market, and will comprise a 19% of the market share by 2020. Another article cites a Cowen & Co. report which predicted that Amazon will overtake Macy’s by 2017.

Read More »

Brick-and-mortar retailers should nix deep discounts to make most of jittery shopping season–Sharmila C. Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From The Conversation

Brick-and-mortar retailers have been on a bit of a roller coaster ride this holiday season as early expectations of strong consumer spending were weighed down by the uncertainty prompted by the election.

That’s on top of the usual jitters about the slow demise of Black Friday and more consumer cash gravitating to online retail.

That has made projections about this year’s holiday shopping season more of a guessing game than usual, but one aspect has now become clear: The rush by retailers to deeply discount merchandise will likely not prove to be beneficial to these retailers in the long term.

My research in “business to business” marketing suggests that instead of enacting ever-steeper price cuts that erode margins, both major retailers like Macy’s and small mom-and-pop stores would be much better off leveraging their physical presence as a source of strength rather than weakness by focusing on the personal touch that only they can provide.

Read More »

Election rage shows why America needs a new social contract to ensure the economy works for all — Thomas Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From The Conversation

The recent U.S. election exposed two major intersecting fault lines in America that, if left unchecked, could soon produce an era of social and economic upheaval unlike any in our history.

First, it revealed deep divisions across racial, ethnic and gender lines that led to a surge in hate crimes last year, particularly against Muslims. Addressing this will require a sustained effort to heal these growing divisions and will be very difficult to resolve without strong leadership and a renewed willingness to listen to each other’s concerns.

Second, it gave voice to the deep-seated frustrations and anger of those who feel left behind by economic forces and fear their children will experience a lower standard of living than they did.

Read More »