In the age of online shopping, don’t count out brick-and-mortar stores – Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

Sharmila C. Chatterjee, Senior Lecturer, MIT Sloan School of Management

From USA Today

As the unofficial start to holiday shopping approaches, retail prognosticators are calling for a holly jolly season for e-commerce—and a less merry one for brick-and-mortar stores.

This year, for the first time, American consumers plan to do more of their holiday shopping online than in physical stores, according to PricewaterhouseCoopers. A Deloitte study predicts that customers will spend on average $879 online and $541 in shops.

Based on these forecasts, e-commerce appears in prime position to soon dominate the holiday retail landscape. We can kiss goodbye traditional stores. Right?

Not so fast. Brick-and-mortar stores are making a comeback. By focusing on customer service, integrated business models, and innovative partnerships, many chains — including Target, Kohl’s, Madewell and Best Buy — are likely to post strong holiday sales. Meanwhile, e-commerce may be in for a reckoning. Signs indicate that the lightning fast delivery speeds customers have come to expect from internet vendors, namely Amazon, are not sustainable.

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Viewpoint: holiday shopping was biggest in years, but not every retailer should celebrate – Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From Boston Business Journal 

The numbers are in and it’s official: The 2018 holiday shopping season was one of the strongest in years.

Total US retail sales jumped 5.1 percent this November and December from the previous year, according to data from Mastercard SpendingPulse, which tracks both online and in-store spending. American shoppers spent over $850 billion this season.

Not all retailers are rejoicing, however. While total sales were higher than years past, much of that growth is attributable to the rise of ecommerce. According to Mastercard, online sales rose 19 percent from 2017. Department stores, on the other hand, saw a 1 percent decline in sales from a year ago. This follows two years with growth below 2 percent.

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With better leadership, Sears could’ve been a contender – Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From The Hill

When I arrived in the U.S. for graduate school in the mid-1980s, I asked my host family in a Philadelphia suburb where to shop to outfit my dorm room. They didn’t skip a beat: “Sears,” they said. “It has everything you need.”

To say that I was in awe of Sears would be an understatement. Having grown up in small cities in India that were dominated by mom and pop stores, I’d never seen anything like it. I bought pillows and bed sheets; a hot pot, microwave, a mini fridge; and also rain boots, socks, and a pair of earrings. I remember thinking, “This is the American store of my dreams.”

So last week’s news that Sears filed for bankruptcy struck a personal chord. The company has been under pressure for years: shuttering stores, jettisoning assets and taking on ever more debt. Finally, facing a $134 million payment that it could not afford, Sears capitulated.

The main culprit, according to media coverage, was the rise of online shopping and Amazon. Amazon, of course, has become the familiar villain in these tales — allegedly responsible for the death of many once-dominant American retailers, from Toys “R” Us to Sports Authority to Radio Shack.

But considering e-commerce accounts for only 9 percent of all retail sales, that explanation rings hollow. The truth is, Sears’s bankruptcy is of its own making. Its management, led by Eddie Lampert — Sears’s chairman and its biggest individual creditor and shareholder, made a series of missteps that ultimately crippled the iconic chain.

These include focusing too narrowly on cutting costs at the expense of investing in the in-store experience, spinning off key brands and competing on price.

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Lyft’s subscription plan is a rare stumble as the company takes on Uber – Sharmila C. Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From MarketWatch

It appears that Lyft, the hail-by-smartphone car service that last year earned $1 billion in revenue, wants to be the Netflix of ride-sharing.

Last month, the San Francisco-based company announced it would continue testing its All-Access plan, a monthly subscription service for rides. The service, first made available to a select group of customers in March, charges an upfront monthly price of $200 to secure $15 off 30 rides. The price represents a savings of $250, assuming a customer takes a set of 30 $15 rides per month.

Price discounting in pursuit of market share is nothing new, but it’s a curious move for Lyft, a company that positions itself as a feel-good, socially minded brand. The deep discount not only conflicts with the warm, fuzzy image that Lyft has cultivated, it also endangers its relationship with customers.

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What Blue Apron needs to do to survive the threat of Amazon – Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

MIT Sloan Senior Lecturer Sharmila Chatterjee

From MarketWatch

For a while, it looked as though Blue Apron was destined to become a culinary juggernaut in the American kitchen.

Founded in 2012, the company APRN, +1.89%  carved out a clever business model by mailing perfectly portioned, pre-packaged ingredients and recipe cards to home cooks in need of handholding. It’s not yet profitable, but growth is impressive. Last year, the company had $795.4 million in 2016 by delivering about 8 million meals per month to customers.

Recently, though, there have been challenges. Shares that the company had hoped to sell between $15 and $17 apiece in June were priced at just $10, hurt in part by Amazon’s AMZN, +0.23%   announced acquisition of Whole Foods WFM, -0.02% earlier that month. They now trade for less than $6, pummeled in part by Amazon’s plans to launch its own meal kits.

The twin revelations about Amazon are no doubt unnerving to Blue Apron’s executive leadership team and investors. And yet, they should also see them as encouraging signs. That Amazon sees so much potential in the industry is proof positive that the meal kit represents a new American staple, and not just—pardon the expression—a flash in our collective pots and pans.

True, Amazon is a formidable rival. And yes, the meal kit business is increasingly crowded. (Current contenders include: Plated, HelloFresh, Purple Carrot, and Sun Basket.) But Blue Apron has an opportunity to differentiate itself. To do so, it must focus on the needs, wants, and values of its target audience: mainly millenials.

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