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The San Francisco Chronicle has a story about See's Candy, a company founded in 1921 that now is owned by Berkshire Hathaway, and that has the kind of simple business model that Warren Buffett said he prefers - it "makes and sells premium chocolates. Pure and simple. Case closed."

Except that life no longer is pure and simple.

"Nearly half of See’s 240 stores are located in malls, a format suffering from dwindling traffic and the financial stress of anchor tenants like department stores," the story says. Burt Flickinger, managing director of Strategic Resources Group consulting firm, says that while See’s has a “good business model today, " it is "increasingly becoming a broken one.”

The Chronicle writes that “the rapid rise of online players like Amazon has not directly impacted See’s, since premium chocolate is something people still like to sample in physical stores … but Amazon is hurting See’s in a less obvious way. About 45 percent of See’s locations are in indoor malls, which have been struggling, in large part due to the growing popularity of e-commerce.”

Flickinger tells the paper that “the loss of an anchor department store reduces customer counts at adjacent mall shops by 10 to 15 percent.” And See’s is typical of the kind of adjacent mall shop likely to be affected.
KC's View:
I was absolutely shocked when I read this story to find out that See’s has roughly one-third of the nation’s premium chocolate market share, and almost twice that of Godiva. To be honest, I don’t hang out a lot in premium chocolate shops; maybe I occasionally pick something up for Mrs. Content Guy, but rarely. I cannot even remember ever having been in a See’s store … it always struck me as someplace my Aunt Bessie would go, but not me.

So I have to keep that in mind when trying to comment intelligently on this story. In fact, it probably better that I just accept the wisdom of Burt Flickinger, who is pretty much always right about this stuff. Like pretty much everybody else in America’s malls - with the exception of Starbucks and the Apple Store - the model is broken. In fact, if I were a retailer I wouldn’t even want to be in a mall where there isn’t an Apple Store, or a Starbucks, and maybe an Amazon Books.