• The Wall Street Journal has a story about how “global scale won’t always help the world’s biggest food companies resist the pressures squeezing the industry. Giants like Nestlé, Unilever and Danone,” the story says, “owe much of their recent success to rapid growth in developing markets.”
But…”the case for investing in emerging-market consumers now looks less clear-cut. Poorer countries still appear to deliver better growth: Nestlé’s sales rose 4.8% last year in developing countries, compared with just 0.7% in rich countries. But such ‘organic’ numbers, which strip out currency and portfolio changes, mask the impact of depreciating currencies. In dollar terms Nestlé’s sales were flat last year.”
At the same time, “Giant companies by their nature will struggle to respond to the rapid shift in tastes toward fresher, healthier and smaller brands. Corporate bureaucracy, with its inevitable tension between product and geography in the hierarchy, can slow responses to innovative local competitors. Size also makes it harder to transform through deals.”
• The New York Post reports that Lands’ End, which has 159 shops inside Sears stores, plans to close 20 of them by the end of the year, and is planning to expand its standalone fleet of stores by approximately the same number over the coming years.
Sears, of course, used to own Lands’ End until it spun the retailer off.
Two other points about Lands’ End…
First, the company says that online sales remain its foundation: “Online sales rose 19.7 percent in the second quarter, outpacing the overall increase of 11.7 percent, to $299.8 million.”
Second, the Post writes that Lands’ End’s stock market price keeps going up the more that the company distances itself from Sears.
But…”the case for investing in emerging-market consumers now looks less clear-cut. Poorer countries still appear to deliver better growth: Nestlé’s sales rose 4.8% last year in developing countries, compared with just 0.7% in rich countries. But such ‘organic’ numbers, which strip out currency and portfolio changes, mask the impact of depreciating currencies. In dollar terms Nestlé’s sales were flat last year.”
At the same time, “Giant companies by their nature will struggle to respond to the rapid shift in tastes toward fresher, healthier and smaller brands. Corporate bureaucracy, with its inevitable tension between product and geography in the hierarchy, can slow responses to innovative local competitors. Size also makes it harder to transform through deals.”
• The New York Post reports that Lands’ End, which has 159 shops inside Sears stores, plans to close 20 of them by the end of the year, and is planning to expand its standalone fleet of stores by approximately the same number over the coming years.
Sears, of course, used to own Lands’ End until it spun the retailer off.
Two other points about Lands’ End…
First, the company says that online sales remain its foundation: “Online sales rose 19.7 percent in the second quarter, outpacing the overall increase of 11.7 percent, to $299.8 million.”
Second, the Post writes that Lands’ End’s stock market price keeps going up the more that the company distances itself from Sears.
- KC's View:
