Q: What workforce trends is the industry experiencing?
In the retail industry, the key factor for supply and demand is competition and the availability of substitutes. Retailers are always looking to have some product differentiation in quality or price to put themselves ahead of their competitors. Lately, a workforce trend that has been occuring is a form of differentiation, but not necessarily in the products themselves. Retailers have begun to enter new markets to broaden the services they offer and their product mix.
Two companies that have recently attempted to enter new markets are Wal-Mart and Best Buy. Wal-Mart has been seeking to enter the pharmacy market and their mission is to "become the largest provider of primary health-care services in the nation" (Bustillo). They are seeking partners to open up new clinics and really become a force in the health-care business. This move could really increase Wal-Mart's profits by providing a whole new market to increase and grow in, however, they are far behind where they wanted to be by now in the pharmacy market. Competitors like CVS and Walgreens are still the go-to pharmacy for many consumers, and that poses a problem for Wal-Mart. Along the same lines, Best Buy has recently talked of entering a new market: on demand IT services. This cloud-IT field involves delivering software and computing power over the Internet and other networks. Best Buy recently agreed to pay $167 million for mindShift. Their main competitor at the moment is Dell, who has a partnership with Salesforce.com to deliver cloud services to small and medium sized businesses (Jarzemsky).
Initially, these moves by Wal-Mart and Best Buy seem to be good ideas- why not expand their businesses into new markets with opportunities for growth? However, it is not that simple to just enter a new market and become successful. Both companies entered markets with already extremely successful competitors and are now up against even more competition. If either one of them hopes to be successful in these new markets, they are going to have to come up with something that sets them apart. For example, Wal-Mart may try offering health care services for a lower price than those of CVS and Walgreens. Until they do something to push themselves ahead, they will continue to be beaten out by companies that have been in these markets for years already. People are not going to start going to Wal-Mart for health care services when they have been going to CVS for 10 years, unless there is something special and different about Wal-Mart's health care services.
http://online.wsj.com/article/SB10001424052970204358004577028081422859896.html
http://blogs.wsj.com/deals/2011/11/07/best-buy-jumping-into-crowded-cloud-it-field/
Trends are a big deal in the industry. New markets are a great idea for such companies like wal-mart and best buy that have already established companies and this is a chance for more growth.
ReplyDeleteWhile this is a huge opportunity and a great idea and plan, Jenna is so right that it is a huge risk to actually become successful in that new market.
We shall see soon how these companies actually do with these new ideas and push for themselves to succeed. They are already established businesses but people have to also be aware to go to those stores for things they have never gone there for before.
Jenna points out a great example with Wal-mart and how people will not just start going there after having been to their local pharmacy for so long just because now wal-mart has brought in a pharmacy.
With much advertisement, opening a new market may be a great opportunity and help success.
Jenna,
ReplyDeleteOn the one hand, as you said, this is a challenge for this companies because of their competition, and on the other hand it would have a major impact in the workforce. They will open a lot of job opportunities and at the same time they will have diverse and well prepared workers. For example, pharmacies require well prepared qualified pharmacists. This can have a major cost for this companies, because hiring well prepared employees, requires higher wages and benefits. But certainly, if they find a point of differentiation, they will make their business stronger.
Good post,
Carlos