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Archive for the ‘Industry Change’ Category

In this blog I have often written about companies that are struggling to adjust to their changing industry environments.  In this post I wanted to share a couple of ideas on how to tackle a changing industry environment, from a company I recently read about in Fortune magazine: Levenger.

Levenger has traditionally sold products geared towards reading and writing such as desk lamps, pens and notebooks, in addition to being a micro book publisher.  In recent years the rise of tablet computers and other technologies have begun to transform the reading industry beyond recognition.  Cofounder Lori Leveen describes the company’s approach to tackling change head on:

“You can either take things as a challenge or crawl away… We put on our boxing gloves.”

Levenger are addressing their changing market environment by pursuing the following ideas:

Figure out how your products can become like candles:

A long time ago electric light bulbs made candles obsolete.  However, people continue to purchase candles because they like the product.  Levenger consider their changing industry as an opportunity to reinvent the future for pens and notebooks.

Find ways to stay relevant as people transition:

As people are increasingly switching from books to electronic devices, Levenger are continually looking for ways to adapt current products and introduce new ones to meet changing consumer needs.  For example, Levenger recognized that people want to prop up their iPads and in response to this they began stocking a range of products that served this purpose.  The picture on the left is an example of one of their products which is a miniaturized pillow designed to prop up an iPad.  This Thai created product evokes social entrepreneurism as part of its sales are donated to support literacy efforts in Thai villages.  Levenger is also open to listening to consumer ideas of how their products can be improved, as this tweet demonstrates:

Recognize the challenge faced:

Levenger cofounders Lori and Steve Leveen recognize that today’s children are growing up with technology:

“If we don’t get it right in the next 10 years, we may miss the opportunity.”

The company certainly faces an uphill climb, but in recognizing and tackling the challenge there is hope that Levenger can adapt and thrive in years to come.

What do you think of Levenger’s ideas for tackling their changing industry environment?  Please share your thoughts in the comments section below.

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Virtuo at last year's Las Vegas exhibition

Earlier this month I wrote a post on Megabus, a long distance bus service that had experienced success in the declining transportation industry by rethinking the product and business model. In this post I am going to write about a company called TouchTunes, who have achieved similar success by recreating the old school jukebox.

TouchTunes has created a touch screen broadband connected machine called the Virtuo, which revives the jukebox. The Virtuo was described by a vending machine distributor as being “like an iPad on steroids”.  The machine has more than 20 times the song choice of traditional jukeboxes. In addition it has enhanced search capabilities even enabling customers to search for a song using part of a lyric.

The Virtuo’s operating system OpenStage facilitates the integration of social network sites. The latest Virtuo machines revealed last month contain PhotoBooth (enabling people to take pictures at the jukebox, which they can share on Facebook) and a karaoke service.

There is also a Virtuo app, which can be downloaded to enable customers to make their song requests on their phone without getting up from their seat. Some customers have even been known to queue up their song to time it with their arrival. This video sums up some of Virtuo’s capabilities:

Virtuo machines sell for $5495 and their average weekly income is $320 (almost three times the jukebox industry average of $113 in 2010). Songs typically cost $0.50 and double in price for karaoke.

Over the past 15 years the number of jukebox machines in the U.S. has declined by 40%. Helping to turn around the jukebox industry’s decline, TouchTunes expect to increase their number of machines from 52,000 to 60,000 by the end of the year. If you would like to see and try Virtuo, you can search for your nearest location on the TouchTunes website.

So what do you think? Will TouchTunes revive the jukebox? Share your thoughts in the comments section below. 

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Earlier this month, one time successful big-box retail store Best Buy posted a $1.7 billion quarterly loss and announced the closure of 50 stores nationwide. Following the news Best Buy’s CEO Brian Dunn resigned due to what the company referred to as “an unspecified personal conduct issue.” This news made many question if Best Buy has a future as a 21st century retailer.

Here are 5 reasons why Best buy is stuck at a crossroad:

1. Changing business environment: Best Buy’s business has stagnated due to changing macro-economic forces, accompanied by a shift in consumer preferences.

2. Not enough choice: Shoppers today can typically find more choices online from Amazon and other online retailers than they can find at Best Buy. Frequently the online retailers have lower prices too.

3. Jack-of-all-trades, master of none: When it comes to tech products Best Buy essentially offers a little of everything. Given this strategy, the store’s sales representatives struggle to gain specialized knowledge on products sold. If you want to buy a cell phone it is likely that you could get your questions answered in more detail from a cell phone provider’s store sales representatives than you could at Best Buy.

4. The rise of mobile technology is transforming comparison-shopping: Years ago shoppers would go from store to store comparing prices. Giving their size the big-box stores typically won. Today people can compare prices far faster and easier online at any time in any place.

5. Failure to adapt fast enough: Best Buy has made changes to react to the environment such as acquiring online music subscription service Napster in 2008 (later sold in 2011) and online movie subscription company Cinema Now in 2010. However, such changes have not been fast or successful enough to guarantee the company’s continued success. As a result Best Buy is still somewhat dependent on products that have since been digitized such as CDs and DVDs.

Another area where Best Buy has failed to adapt is their store layout of checkouts and security guards at the door. Such a layout is outdated and un-customer friendly. By contrast at Apple’s retail stores, customers can check out wherever they are in the store and can test new products if a wait is necessary.

So what do you think? How can Best Buy avoid the fate of other big-box retailers such as Borders, Linens ‘n Things and Circuit City? Share your thoughts in the comments section below.

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With gas prices continuing to increase, it’s hard to imagine being able to travel hundreds of miles on any form of transportation for just $1.50. Yet such a concept is the reality for customers of megabus.com in the east coast, southeast and mid west regions of the U.S.

I first came across Megabus about 8 years ago as a college student studying at the University of Edinburgh. Back then I would take Megabus to Glasgow for shopping trips for £1 each way. Typically with booking fees this worked out as the equivalent of just under $5 for what was approximately a 100 mile round trip. The company’s double-decker buses had plenty of space and while I found the train to be more efficient time-wise for long distance trips to London, the Megabus ticket price for advance travel was hard to beat.

In recent years Megabus owned by the British Stagecoach group has entered the U.S. and Canadian markets offering fares as low as $1 one way plus a $0.50 booking fee. The buses are clean and a lot more appealing in an attempt to readdress the seedy image many Americans have of bus travel. Each bus has wi-fi, power outlets at each seat, flat screen TVs showing movies, panoramic windows and it’s a green way to travel.

Megabus’ business model works by using a yield management model to incrementally increase ticket prices as the departure date nears. This business is reliant on numbers and like Southwest the people booking last-minute pay more, to offset the customers with discounted tickets. In addition Megabus has extremely low overhead. All bookings are made online eliminating ticket agent staffing. Furthermore, Megabus does not have its own terminals, picking up passengers on city streets.

Megabus rethought bus transportation in order to achieve success in a mature industry. Last year Bloomberg Businessweek did a feature on the company entitled “The Megabus Effect” stating that bus travel is now the fastest growing way to travel in the U.S. The article also stated that Megabus had 2010 revenues of approximately $100 million and is continuing to grow.

What do you think? Share your thoughts in the comments section below.

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Nike’s new lightweight running shoe the Flyknit exemplifies a new cost efficient manufacturing process, which could shake up the shoe industry.

The process

The Flyknit is made by computer-controlled technology, which knits the upper part of the shoe ready to attach to the sole. This process which Nike call “micro-level precision engineering” eliminates the labor-intensive process of workers assembling numerous machine cut pieces. The technology also enables detailed design aesthetic and fit adjustments to be easily made. In addition the process is more efficient, cutting production time and enhancing profitability. It’s also sustainable with wasted materials weighing in at 1/100th of a pound (about as much as a sheet of paper).

What this means…

The labor-intensive nature of shoe making previously led to the process being outsourced to countries with cheap labor. By eliminating or significantly reducing the labor-intensive part of the process, the shoes will no longer have to be made in countries with cheap labor. As Nike president Charlie Denson acknowledged in this week’s Bloomberg Business Week:

“This is a complete game-changer, the process cuts costs so much that eventually we could make these shoes anywhere in the world.”

Thus if this process lives up to expectations Nike could do some of their shoe manufacturing here in the U.S. Though operating and labor costs would be higher here relative to Nike’s factories in China, Indonesia and Vietnam, shipping costs would be lower. Another benefit, which would help offset costs, is faster market response time allowing greater flexibility to changes in demand in the american market.

In the long run this flexible technology could result in customers being able to purchase shoes customized to fit their feet through use of a foot scanner. What I liked about this technology is that further down the line it should also offer customers the ability to design their own shoe down to a single thread.

All in all I think it will be interesting to see if this new technology lives up to its expectations.

But what do you think? Share your thoughts in the comments section below.

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