Life should be a Bigger Deal
Welcome again to our 3 Bells Newsletter. Every week, we share 3 things that mattered.
And ring 3 bells for you.
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Walmart usually opens stores. The world's largest retailer has 11,500 stores in 28 countries. It has an annual revenue of close to half a trillion dollars (10 times Kenya's GDP) and employs 2.2 million employees (more or less the same number that Kenya has in formal employment). It has ruled the roost for decades, with the simplest of strategies: cheaper prices. As I often teach in my programmes, Walmart is a great example of adherence to a single strategy.
But now it's closing stores. The giant corporation announced last week that it plans to shutter 269 stores this year, including all 102 of its small-format Express stores. What's happening?
First, the internet. Walmart is a latecomer to e-commerce, where Amazon is king. Customers like the convenience of buying on their smartphones and tablets, and getting home delivery. Amazon itself plays hard on the low-price strategy. Next, higher minimum wages. Walmart's ability to hold wages down is fading fast. And lastly, more discerning customers. Aspiring customers seem pretty ready to pay a little more for a nicer experience at rivals like Costco.
In short: the world is shifting around Walmart, and like most giants it has been slow to see it. It's still massive, of course, and it will plough billions of dollars into internet retailing and nicer stores. But its basic strategy may have reached its end-point.
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All strategies need revision, no matter how successful. Shifts in technology and consumer behaviour are happening beneath your feet. Don't stop looking at the future. It may contain the ingredients of your downfall.
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The maker of adventure cameras went into meltdown last week. Its stock fell by a quarter on missed revenue estimates, having already declined 72 per cent in 2015. It's now valued at $2 billion, down from a 2014 high of $12 billion.
The reason? It's simple enough. Do you own a GoPro wearable camera? No, I didn't think so. The product is for a small set of adventure seekers who want to film their exploits while surfing, skiing, hang-gliding and the like. That's not most of us. The company is, thus far, a one-trick pony. And those who buy the product don't have a compelling reason to upgrade it every year. It's just hardware, and niche hardware at that. Bizarrely, its CEO was the best-paid executive in the US.
GoPro is counting on a flying camera, to be released this year, to get its mojo back. Again: not unless there's a compelling use-case for a wider market.
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Don't fail the test of uniqueness in strategy. How good is your product, really? How compelling to use, for how many people, and how distinctive from the chasing pack? Momentary uniqueness is easily upturned.
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Will your car become an accessory to your smartphone?
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Ford announced that all its 2017 models will have Apple CarPlay and Android Auto pre-installed. It follows many other auto manufacturers doing the same. No auto company can afford not to do it.
What's happening here? Something very interesting. The smartphone is now so central to so many lives that its user interface is now the way consumers want to interact with things. Mobile operating systems are now extending far beyond the mobile phone. First, they went to the tablet. Next, they reached back into their own parent - the PC (desktop operating systems are increasingly mimicking mobile ones). Then, they entered the TV interface. Recently, they have started making our watches look more and more like mobile screens. And pretty soon every car's display may look just like your mobile screen, allowing your messages, maps, music et al to be accessed just like they are on your phone.
As Ben Thompson pointed out in this prescient piece from 2014, your phone (or its successors) may become the digital hub in your life, with everything else an accessory. That's a lot of power held by Apple and Google.
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I've been beating the drum about the ascendancy of the smartphone for a while now. Are you listening? You may find your industry in the clasp of the mobile operating system very soon.
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