retail news in context, analysis with attitude

Regarding the FaceBook acquisition of WhatsApp, one MNB user wrote:

I first got exposed to WhatsApp in my travels to Africa, where it is used extensively, even more than BBM, which is saying a lot since Blackberry is dominant and growing in Africa. Given my frugal nature, WhatsApp is a natural for me. I introduced it to my Son (by showing him the benefit of free texting, important since he has a pre-paid mobile plan). He liked it until he realized I could tell when he had read my messages to him (and he hadn’t followed-up). Then, he shamelessly announced that he preferred the old technology that didn’t disclose “received / read” details. Can you imagine such treasonous behavior?

Seriously, what’s exciting in our economy is the disruption of old businesses with completely new businesses.  I’m fascinated by yesterday’s $19 billion Facebook/WhatsApp transaction as it is 5-years old,  55-people business.  Profitable and adding + 1 million new customer/day by not focusing on advertising revenue.  Could be only the second business to ever directly serve 1-billion customers after Facebook.  WhatsApp disrupted the phone carriers texting business with unlimited international texting for $1/year.

Other disruptions coming are equally as exciting:

• Netflix challenges HBO.  YouTube challenges Netflix.  A new wireless technology called pCELL might disrupt the entire cell phone industry including Verizon and AT&T.

• It’s likely some form of BitCoin will disrupt the Visa/MasterCard transaction duopoly.  Don’t know if the bank conglomerates can survive without the 3% transaction revenue (unless they lay off thousands of employees).

• Back to Facebook … the WhatsApp ($19b) and recent Instagram ($1B) purchases suggest that Facebook is out of innovations and has to buy the next-big-thing.  For all the smart people at Facebook, it takes a (now very rich) immigrant on Food Stamps to build WhatsApp.

• Google lost to Facebook on a bidding war.  Google+ doesn’t  do much for me, but figuring out how to get cable TV costs down keeps me interested in Google.

• Elon Musk is one of the most interesting business people out there with SpaceX, Tesla, and Solar City.

• Walmart grinding out the next 2-3% gain; let’s not discount how hard this is for a $475B company that realizes smaller stores are its future.

• Google/eBay made newspapers smaller, less significant (in US, less so in other places in world).  Pandora, Spotify, XM and iTunes significantly downsized the AM/FM business.

• Dwolla and international players like M-Pesa are faster / cheaper mobile money alternatives to MoneyGram.

• Online bill paying gutted the Post Office of its cash cow: first class mail delivery.

• Cell phone cameras forever changed Kodak & Polaroid.

• Document storage – from file folders to cloud storage.

More is needed and will come … in health care, finance, and every logistics channel you can imagine. To me, it’s exciting. For my Parents, they think things were better back in the 70’s & 80’s. They say this as they call me on Skype from their mobile phone, with XM playing in the background. To which I reply “so, you’re telling me that things were better back when things were worse? And, that this phone call is not occurring on a 4 family party line (which is what we had growing up in Kansas) at a cost more expensive than Skype?  Really Dad?"

We really need some disruption in tort reform / legal system, one of the single biggest cost impacts in health care reform that no one is talking about. This will be hard since most lobbyists and those in Congress are lawyers. A lawyer once told me that US is the second most litigious country in the world which might be a good indication as to where my Son should focus his energy (instead of deleting WhatsApp).

Isn’t business disruption wonderful?  Unless you’re a vendor grinding out 2-3% comp growth at Walmart; though for some that’s job security. Since Wal-Mart is most likely a vendor's most profitable customer, they can’t afford to replace Wal-Mart either.

On another subject, one MNB user wrote:

In response to your Friday Morning Eye-Opener about the employee sharing pictures of messy JC Penney displays, I have had what seems to be the exact opposite experience than the general public when it comes to the changes at JC Penney. South Burlington, Vermont’s store used to look like every other tired downtrodden department store. Hard to navigate, didn’t have options that I or my teenage son wanted, coupons galore (I’m not a clipper, just give me the real price don’t mark it up just to put it on sale)….we hadn’t been to Penney’s in years. Once the changes were made, we ventured back in. We encountered space to walk around the displays and racks, clear and fair pricing, friendly (and happy!) and knowledgeable staff, and plenty of items that both my son and I wanted to buy. Needless to say, we’ve been back several times. Perhaps too many employees are taking pictures of the mess when they should instead be cleaning it up? Ron Johnson was steering that boat in my direction and had differentiated Penney’s (in a good way) from the Kohls and Sears in the area that feel more like rummage sales. Now I’m curious where they’re steering next?

From another:

It seems to me that the JCPenney employee submitting photos to the Huffington Post, is part of the problem. That person is obviously in the stores on a daily basis.  What were they doing to correct the situations they observed?   Seems to me, their time could have been better spent coming up with solutions to these problems, rather than taking photos and submitting them to the Huffington Post and ultimately tearing down the hand that has fed him/her for the last 17 years.   Sounds like the work of a disgruntled employee to me with an ax to grind, for sure.

We have several revamped JCPenney stores in the Twin Cities and they are impressive.  It's beyond me to understand the cheap shots being taken at JCPenney.

And another:

Like you, I am uncertain that this is not something different than as portrayed.  I have to ask if it is after a busy day?  Is it staged?  Is it factual?

I was in a JC Penney store this week and saw that it was the exact opposite of the story.  The store I was in was in magnificent shape and would rival its high end counterparts.

And still another:

The pix of Penny's do remind me of those of some  of the current Sears stores being circulated.    Sears began its downward spiral many years ago and it is now considered a dinosaur.   IMO.   Late husband used to work part time for Sears after he retired.   He quit when the management changed ( in the early 2000's) and mentioned that the atmosphere was quite low once the commissions  were taken away from various sales people.

And another:

If the employee had time to go around and take pictures of problems he had the time to start work on solving the problems…out of stocks are probably out of his control, but he could have easily straightened out the merchandise displays. Once again easy to blame others rather than take personal action.
KC's View: