Category: Business

Chasing Markets

Business, Marketing / Advertising, Travels

I’m not going to argue with the genius of Juan Trippe, the late head of Pan Am (as discussed in last night’s homework assignment).  But the problem with genius is that it can overstretch itself, which is what happened to Trippe, and that had dire consequences for Pan Am.

But first, it’s time for yet another one of Kim’s Supermarket Stories (and I promise it has relevance).

I once worked for a chain which prided itself on the quality of its product — not only the merchandise, but the service of its customers.  The Produce Department (Fruit & Veg to non-Murkin Readers) was as good as any “street market” or “farmer’s market”, for the simple reason that the store merchandisers tossed out a tremendous amount of any produce items which they judged sub-standard or even close to going “off” before they ever set it out on the shelves, in the bins, fridges or displays.  The result was that you could pick any item off the display stand, and had no need to check it because you just knew that it had passed a stringent quality test.  And the same was true of every department:  (on-site) bakery, meat department, deli and so on.  As a result, our average basket cost a little more than our competitors’, but then again, our typical shopper belonged to a higher income bracket:  the kind who value quality over price and expect the best.  Our average household, therefore, usually consisted of a high-earning husband/wife with teenage kids, who lived in the upper-middle class suburbs where (surprise surprise) 95% of our stores were located.

I was at the time the senior marketing manager for the chain — ran the loyalty program, worked with the Advertising department, worked with Purchasing on product selection and so on.

Then we had a huge management change:  new CEO, new COO and new CFO.  When I went to the first “welcome” meeting, the new CEO announced, without any fanfare, that our chain would henceforth be aiming for the lower segment of customers:  younger moms with small kids, more “efnic” shoppers, and so on.  After the meeting, I managed to get a one-on-one with the new CEO, and blew up at him.

  • Had he discussed this with Purchasing? (because we’d have to start buying larger pack sizes, cheaper — perhaps lower-quality — products, which meant new shelf set design, and so on)
  • Were all new stores going to be located in more down-market areas? (because our existing stores were not convenient to those areas)
  • How were we going to compete with the multitude of competitive chains who had already staked out the “Every Day Low Price” (EDLP) position in the marketplace? (and we didn’t have the numbers to compete with the large existing chains, anyway)
  • Had anyone looked at how this new strategy was going to affect our gross profits?  (in our end of the market we had hardly any competition, ergo  we could afford our higher prices for the quality)
  • And why the fuck had I not been consulted on any of this? (because I had all the answers to the above questions).

To his credit, the new CEO didn’t fire me on the spot.  But his lofty answer was that the board of directors had decided that we needed to “grow the business”, and as we had the upper end of the market more or less to ourselves, we needed to expand our customer base.

Which brings us back to Juan Trippe and Pan Am.

It’s clear that Pan Am had a quality product, and their clientele were not people who, let’s say, were at the bottom of the market.  Their service was unparalleled, not only in the airline industry but anywhere, and it showed in all aspects of their business:  hiring, training, equipment and cuisine.

Then Juan Trippe decided to “grow the business”, and open Pan Am up to the lower end of the market via mass-market people carriers like the Boeing 747.

I had always wondered why Pan Am ever, or could ever, have gone out of business.  The YouTube video gave me all the answers.  To be blunt, Pan Am went from “You can’t beat the experience… Pan Am!” to “We’re just another airline;  check out our low prices.”

Their demise was as predictable as that of the above supermarket chain:  both went out of business only a few years after making that calamitous decision to chase a new market.

Side note:  I resigned a month after my meeting with the CEO.

Now, had I been Juan Trippe and wanted to “expand the market”, I would have done a couple things differently.

  1. Had the 747 jumbos built, but not flown them under the Pan Am logo, to include ground staff, cabin staff and maybe even pilots.
  2. Named the new budget airline “Dream Trippe” or something similar, and not have the 747s have first- or business class — basically, the economy-class seating (and service) would run from nose to tail.
  3. Kept the 707s going until the new sub-200-seat generation of airliners became available (e.g. the long-haul Airbus 220-300 or the “short” Boeing 757-100).  Then turned them into first-/business class-only aircraft, using the traditional Pan Am staff and pilots, and maintaining the both the higher prices and the clientele who preferred the luxury service levels.
  4. Shared the existing Pan Am slots at airports between the two airlines.

That’s the basic idea of the thing, but you get my drift.  It might not have worked and Pan Am might still not have made it.  But they failed anyway, so how much worse could the outcome have been?

But at least they wouldn’t have screwed up their Pan Am brand, which was priceless.  And the actual blowing up of the Pan Am brand was the entire responsibility of its founder.

Clueless

Business, Marxists, Politics

I know that politicians are completely ignorant about everything not political or legal — and even then, they’re not especially bright — but Elizabethan ignorance on everything can only be truly appreciated by acknowledging her academic credentials.  [/snark]

Even by her own heritage of ignorance, however, Elizabeth Warren’s latest broadside against Big Grocery must rank among her greatest cock-ups.

“What happens when only a handful of giant grocery store chains like Kroger dominate an industry? They can force high food prices onto Americans while raking in record profits.” Warren claimed that “a handful of giant chains” had replaced the wide selection of smaller stores that used to dot the American landscape, and she called for the use of the government’s antitrust power to “break up these giant corporations.”

Ah yes… let’s blame an industry for price gouging — an industry that traditionally runs on 0.75% net profit margins.

Remember, by the way, that while I know a few things about some things, and almost nothing about a whole lot more, when it comes to the supermarket business, I know everything about it.  That’s not a brag, nor even an exaggeration;  it’s what comes from close to a third of a century of experience in and around the industry.

So hear me now when I saw that Reason Magazine’s Joe Lancaster has it exactly right:

In actuality, for much of the last year, grocery stores have seen enormous boosts in revenue, but not increased profitability, for the simple reason that everything has been costing more:  not just products, but transportation, employee compensation, and all the extra logistical steps needed to adapt to shopping during a pandemic.  Couple that with persistent inflation—which Warren also recently blamed on “price gouging”—and it is no wonder that things seem a bit out of balance.

She is clueless, a fraud and incompetent.  All she has is Marxist dialectic by which to formulate her idiotic positions on every topic under the sun — dialectic which when translated into policy has boasted a record of 100% failure — and the sooner the citizens of Massachusetts vote this moron out of office, the better the country will become.

Righteous Firing

Business, Snowflakes

Read this story and tell me she didn’t have it coming:

Stylist Lisa Thompson was collared by salon owner Luke Daniels after she turned up to work looking ‘untidy’ with unwashed, scraped back hair and no make-up and wearing leggings, a bobbly long black cardigan and flip flops.  The company owner handed her £100 to buy herself nice clothes and offered her a free treatment worth £150 to ‘enhance the appearance of her hair’.

But that’s not all, he wrote.  Follow the link for the full story.  Judge got it right.

I think I’m going to start a new department dedicated to all these asswipes who think they’ve been hard done by, when in fact they earned everything that came their way.

Cautionary Tale

Business

A week or so ago, I talked about the Great Resignation.  Now the excellent City Journal  has this to say about that:

Younger workers opting to work less or to put in only the minimum effort may pay a future price in terms of stagnation or downward mobility. Workers receive the most pay raises in their twenties and thirties. This is also when people acquire the skills and contacts that pay off for the rest of their careers. One’s early years are not an ideal time to stay away from work, even considering the challenges that today’s younger workers face. Some jobs are certainly harder than others—especially when you’re learning skills and occupy a low rung in the workplace hierarchy. But opting out early only makes it more likely that work won’t get better later on.

All true.

Good Development

Business

As a retiree, I don’t have a dog in this fight anymore, but back in the day I might have, and my kids certainly do.

Around the world, millions of people are rethinking how they work and live—and how to better balance the two.
The Great Resignation has U.S. workers quitting their jobs in record numbers—more than 24 million did so from April to September this year—and many are staying out of the labor force. Germany, Japan, and other wealthy nations are seeing shades of the same trend.
The pandemic has taken a toll, with surveys showing an increase in feelings of burnout and a deterioration in mental health in many nations.
But the pressure has been building in developed countries for decades. Incomes have stagnated, job security has become precarious, and the costs of housing and education have soared, leaving fewer young people able to build a financially stable life.
Although the Great Resignation is a phenomenon among those who are younger than 40, it’s also reverberating across the economy and forcing a broader conversation about work. Millennials (born between 1980 and the late 1990s) and Generation Z (the demographic cohort after them) tend to marry, buy houses, and have children later than their forebears—if at all.

Let me tell you a story about my Son&Heir.  For the past dozen years he’s been working in the restaurant business, first as a waiter, then as assistant manager, and finally as the Kitchen, Food & Beverage Director at their busiest restaurant.

He was also getting burned out.  One time I met him for lunch, and I was appalled at what I saw:  the normal laid-back, witty kid I once knew was now a nervous wreck:  pale, skinny, with shaking hands and a thousand-yard stare.

I told him to quit and find another job, and he said that he couldn’t:  the company was too dependent on him and his coworkers to keep the place afloat — no bonuses for doing so, of course.  When I told him how bad he looked, and how worried I was about him, he simply said:

“I know.  I’m tempted to quit and go and work as a bartender for a year or so, just to catch my breath and regain a little sanity.”

I nearly fell over.  But as he put it, bartending would mean less money, but shorter hours and no stress.

I didn’t want him to do that, but considering that the Son&Heir looked like he was doing speed (don’t worry, he wasn’t), I agreed, but told him to wait until after Christmas.

I needn’t have worried.  Unbeknown to me, he’d already put out feelers — he just didn’t want to tell anyone until he’d actually got a new job to avoid the stress involved in that — and as it turned out, he ended up getting a really good job with a Great Big Financial Institution thanks to someone who used to shoot with him on the US Olympic development team.

Now he’s a different guy.  The old Son&Heir is back:  relaxed, charming and witty, the excellent company he always was.  Thanksgiving Dinner was great fun, and a solo dinner with just him equally so.  He works regular hours during the week, and never over weekends.  For more money.  And he doesn’t know what to do with all his spare time.  He’s also had to slow down his hell-for-leather approach to work and adjust it to corporate time.

But that’s not my point to the story, good news though it is.

What’s important is that like the people mentioned in the article. he would have been just fine with a lesser-paying job — and if that’s true of the S&H, one of the most dedicated workers a boss could wish to have, then companies are going to have to get their shit together or face serious staff shortages, permanently.

And I don’t care.  Back in the day, a company could work you really hard for decent-but-not-great pay, because the trade-off was job security.  The minute the accountants got involved, and company loyalty became worthless (because long-term employees cost more in benefits to keep, you see), there was no way that companies could keep on overworking staff without it ending in this Great Resignation.  The game, as the saying goes, was no longer worth the candle, especially as the companies were making record profits and the bosses thereof a lot more money than in the past..

Here’s an example of what I’m talking about:

Guess what, Boss?  Those days might be coming to an end soon.

Quelle Surprise

Business, Marxists, Politics

I wonder what made people hate the idea of this cow being the Comptroller of the Currency so much?  Oh yeah:

Saule Omarova’s stated supported proposals would cause banks to cease being depository institutions for individual accounts, reassigning these checking and savings “demand deposit accounts” directly to the Federal Reserve. That proved too radical an agenda for Democrat and Republican senators to take a risk on  [I should fucking well hope so — K]; particularly given that the head of the OCC does, indeed, have the power to facilitate such changes as part of their tenure.
Omarova also raised eyebrows with her support for the concept of a National Investment Authority (NIA) that would have the power to direct private capital investment in the US from a central planning entity.

This steely-eyed Stalinist bitch (a graduate of Moscow State University — yes!) would have, at a stroke, completely demolished the entire concept of private property — yes, money earned is actually property, just not as far as Communists are concerned — and made the almighty Federal Government the controller of our personal finances.  And ditto for private investment — centrally controlled by government and not by companies, shareholders and individuals.

Of course, “President” Braindead called this opposition a “personal attack”, when in fact it was simply sharp opposition to her little plan to destroy the economy of the United States.

I need to stop now before I say something terrible.