retail news in context, analysis with attitude

I've expressed a certain skepticism about the Instacart personal shopping service business model which prompted MNB reader Joe Elledge to write:

I only partially agree with your view on instacart.  Why would a traditional retailer or anyone else want to buy Instacart? You do not understand the traditional retailer’s view of home delivery – they resist it because it presents a dilemma (or so they think).  In their minds home delivery either:

Promises to increase sales – but at a higher operating cost and lower margin in the case of pick in store and deliver to homes,  OR

It cannibalizes  store sales altogether by fulfilling out of a traditional DC or  “dark store” and delivery to home – thereby sub-optimizing the large capital and operating cost investment in traditional stores.
 
There are two core issues here:

Traditional retailers do not see sales from home delivery as incremental but simply shifting or, worse yet, eliminating opportunities for impulse purchase in-store, and

Traditional retailers are trapped in the mindset that they sell physical products as opposed to being a  service provider – they either do not see the value of the home delivery service or they do not know how to effectively price it.  Essentially – they are “item-price merchants” as opposed to service providers.
 
If instacart succeeds, it will address both these issues.  Instacart is not burdened with the paradigms of a traditional retailer.   It is a service provider – plain and simple.  But even if it succeeds, I do not see a traditional retailer buying it for the reasons I state above – traditional retailers are not in the service business.  But I, like you, do not think Instacart will succeed.  Instacart is an Amazon without the supply chain.   It is a “bolt on” to traditional retailers versus an entirely new model like Amazon.
 
If I were a traditional grocery retailer, I would be very insecure about my competitive position.   Any “shopping” that occurs in a grocery store is a matter of happenstance.   People do not shop for groceries.  They pick and replenish like an order picker in a distribution center.    It is tedious, repetitive, and time consuming work.   Instacart is an alternative.  But Amazon will prove that Instacart does not have a right to be over the long term.    
 
We will see…


Well, I guess we can add this to the long list of things I don't understand.

To be clear, though, I think I've been arguing that Instacart's founders may hope they'll be bought by a retailer … I'm not sure it'll happen.



On another subject, one MNB user wrote:

Some reflections on Uber: I don’t feel sorry for Taxi drivers and their whole whining about those expensive licenses thing. If you look at the history of Taxi licenses those, like most professional licenses, were created by the Taxi industry (and not the state) as a means of limiting competition. They will claim that licenses did – and continue to -- insure a certain level of comfort and safety. Please. The whole reason Uber is the most valued startup in the history of the world is that the cab experience evolved into one of disgust and danger. Taxicabs are quite literally the foulest smelling commercial experience I encounter – even worse than the bathrooms at Yankee Stadium.



And, responding to Michael Sansolo's column from earlier this week, one MNB user wrote:

When you suggest that an iPad with some information can somehow jumpstart our interest in Philharmonic music I shake my head in disbelief. People don’t go because that kind of music sucks--at least according to contemporary tastes. How is telling them when to applaud going to solve that problem? And what kind of potentially successful brand experience must be explained with information on an iPad? But if you’re right about all of this I guess I’ll know where to now find you on a regular basis. Let me know how next season goes!

And the thing with telling people to put iPads and retail stores, why won’t this go away? Never mind all of the cost and theft prevention issues with ANY device that you put in consumers’ hands, it is still unclear what they bring to the table. Yesterday I shopped for dinner at Whole Foods. My list included: chicken, ginger, garlic, Basmati rice, canned beans, canned tomatoes and ice cream. What could an iPad do that would possible help me? I always get Muir Glen tomatoes because they taste good, and I chose my rice based on size of package. Is the magic iPad going to teach me about garlic? Yes, it could allow me to compare the healthfulness of ice creams. It could. But I would be forced to resist the temptation to scream at it just as I would my Dr. I like Ben & Jerry’s. It is a treat. That is all. As I’ve said before, if your retail experience is so bad that, like Philharmonic music, your customer only goes because your son is in the audience, you have far, far bigger problems to solve than merely sticking an iPad in someone’s hand.


On the other hand, you could be open-minded about the possibilities … though I suspect that this isn't likely in view of the whole "philharmonic music sucks" approach…




And, on the subject of GMOs, MNB reader Mike Franklin wrote:

Why are those, trying to alert others to a perverse focus on a food system driven by a chemically intensive monoculture driven by profits, called fanatics…while those creating the chemically intensive monocultures are called scientists?

To be clear, when I referred to certain folks as being fanatics, I was talking about the people who wanted to boycott Ben & Jerry's - which is moving to no-GMO-sourcing - because its parent company, Unilever, supports GMA, which is pro-GMO. Boycotting other Unilever products seems fine to me, but not the company that actually is on your side.
KC's View: