Book: Retail Disruptors: The Spectacular Rise and Impact of the Hard Discounters

For the past two months, I lost interest in picking up a book for some reason. Nonetheless, the streak ended today as I finished this book.

The book offers a detailed and insightful view on hard discounters which usually act as disruptors in a local retail market. The book defines hard discounters as follows:

Hard-discount retailers offer basic goods and daily necessities at the lowest possible prices, while maintaining high-quality standards. A hard-discounter store differs from discount supermarkets or hypermarkets like Asda, Kaufland, or Walmart. Hard-discount stores are typically about 8,000-15,000 square feet, less than one-tenth the size of a Walmart Supercenter, with probably lower staffing levels.

To reduce costs, hard discounters often display items on shipping pallets and in the boxes in which they arrive. The store is minimally decorated and offers a limited assortment of consumer packaged goods and perishables – typically less than 2,000 stock-keeping units (SKUs). In contrast, the average US supermarket carried 40,000 to 50,000 SKUs in 2017, while a Walmart Supercenter sells over 100,000 grocery and non-grocery items.

Here is what I learned from it

Beware of potential threats in the market. The book told stories of retailers around the world that paid the price for under-estimating hard discounters. They dismissed the arrival of hard discounters at first and when they realized the threat was real, it was already too late to stop the hard discounters.

Benefits of offering a limited assortment of SKUs. I am usually overwhelmed by a plethora of choices at restaurants or supermarkets. As the book says, to shoppers who are under time pressure or who intend to buy rather than browse, a better shopping experience is to be offered streamlined options or a limited range of choices. Plus, retailers who sell a limited assortment, especially private labels, can negotiate a better economic deal with suppliers due to economies of scale. A better deal will help the margin of hard discounters. Additionally, a limited assortment of goods means smaller stores – lower rent, saved costs on logistics and staff.

Go-to-market strategy. Hard discounters tend to enter a new country through a specific market first. Get the foot in, the logistics and operations in and then expand. Also, each go-to-market strategy varies from one country to another due to a host of factors such as household income per capita, economic growth, shopping preferences. Blindly adapting a blanket strategy to different markets may lead to failures.

The book offers a comprehensive view on different aspects of hard discounters and retail in general. It confirmed my belief that a competing strategy can be made up of so many factors that are intertwined together, including to not limited to:

  • The size of assortments
  • Whether a retailer carries more private labels or national labels
  • How man perishable items a retailer carries
  • Whether it has a good brand name
  • Whether it has economies of scale
  • Whether the shopping preferences of local shoppers are a good fit
  • How much a retailer spends on marketing, promotions and discounts; and for how long it can sustain the effort.
  • A retailer’s culture

After penetrating a market, whether a retailer can survive the competition depends on the retailer’s ability to carve out a niche in the market where it can be competitive, using a combination of the above factors or more.

A few notable stats

  • Private labels account for somewhere between 70-90% of hard discounters’ assortment
  • In 2017, middle-class shoppers in the UK account for 60% of shoppers at Aldi and Lidl
  • In Germany, hard discounters accounted for three out of every ten euros spent on grocery purchases or 60 billion euros in 2017
  • Aldi entered Australia in 2001, and by 2017, had cost conventional retailers like Woolworths and Coles AU $16 billion in lost annual revenues
  • Trader Joe’s offers around 3,500 different items, Lidl between 1,500 and 2,000 while Aldi carries between 1,200 and 1,400 products
  • In Germany, Lidle was the largest advertiser among grocery retailers in 2017 (almost 280 million euros) and the sixth-largest advertiser in the country ahead of McDonald’s, Daimler, Unilever and Samsung
  • Trader Joe’s sales per square foot is $1,633, twice that of Aldi and Lidl, four times that of a Walmart supercenter and 8 times that of Dollar General
  • In Australia, 26% of Aldi shoppers were from high-income families in 2006. The figure shot up to 50% in 2014
  • For the average US grocery retailer, a loss of 1% in sales leads to a loss of 17% in operating profit

Book: Daring to Drive: A Saudi Woman’s Awakening

This book is an honest account of the life of the author, a Saudi activist – Manal Al-Sharif. The first chapters of the book tell the story of how she was thrown in jail for driving in Saudi Arabia. The following sections detail her life from childhood up to the time of her imprisonment. The last legs of the books are about her release from detention and life as an activist. I was a little bit impatient to read about her growing up as I wanted to know how she would fare after her incarceration. Nonetheless, it was mind-blowing to read about the horrifying treatments of women in Saudi Arabia through Manal’s struggle through education, marriage, career and life. Kudos to the author for being honest about her time as an extremist and how she transitioned from that period of her time to being a leading voice for gender equality and other causes in the country.

Some interesting details and quotes from the book:

The system says that no one can be arrested for a minor crime between the hours of sunset and sunrise

In Saudi society, a woman needs her official guardian (usually her father or husband) or a mahram – a close male family relative whom she cannot marry, such as a father, brother, uncle or even a son – to accompany her on any official business.

Even a woman in labor will not be admitted into a hospital without her guardian or at least a mahram. Police cannot enter a home during a robbery, and firefighters are forbidden from entering a home during a fire or medical emergency if a woman is inside but does not have a mahram present.

In my world, physical activity – running, jumping, climbing – was forbidden to girls because we might lose our virginity. The only games we were permitted to play involved nothing more than singing songs and holding hands.

At that time, there were no personal computers for typing my story, no home printers to print it. Since all the riyals I’d saved from my pocket money during the year went to buy books, I didn’t have the money for a new notebook, so I started tearing out the empty pages from the notebooks I had used at school the previous year. I carefully cut out the subject and date line at the top of each page. I drafted each chapter in pencil until I was satisfied and then carefully wrote over the words in blue pen. And because I loved drawing, I began to create cartoons of the people and events in my story. My greatest moment of pride was when I set down my pen after writing “The End”.

While the traditional niqab left a slit for the eyes, we were now supposed to lower our head scarves to block out this opening entirely. It was hard to get used to it on my journey to and from school. The full face covering made me almost blind, and I stumbled every day on the steps of our building. One time when I fell, our neighbors’ sons watched and laughed.

As teenagers, we also heard extensive preaching on the requirement to obey one’s husband. This, we were informed, would serve as one way that a woman could guarantee her entry to paradise. Preachers stressed the necessity of women gaining their husbands’ permission for everything, whether visiting family, cutting their hair or even performing voluntary religious fasting. They emphasized the need for women’s complete subordination to their husband in all facets of life. As one Saudi sheikh said during a lecture, “If your husband has an injury filled with pus, and you lick this pus from his wound, this is still less than what he can rightfully expect”

A young man could talk on the phone with a girl for months without even knowing what she looked like.

I couldn’t believe this was happening in Saudi Arabia. If a girl in Mecca was found to be conducting a romantic relationship – even if it consisted only of phone calls and messages – she would face severe beatings from the men in her family, not to mention very likely risk a lifelong confinement inside her home

And he said the words “You are divorced”. Under Islamic law, uttering those words is all that is required for a man to divorce his wife

In 2007, when I got divorced, the policy was for children to reside largely with the mother until they turned seven. At age seven, a girl would then be taken to her father’s house to live. A boy, however, would be asked if he wished to remain with his mother; the choice was his. Once he became a teenager, that boy would often become his mother’s male guardian. He would have the final say over whether she could work or go out, or must stay in. If a woman remarries, she immediately loses all custody of her children….A man, however, can remarry at will or even take a second wife, with no impact on his claim to his children.

The rain begins with a single drop

Book: The Kite Runner

This is my second book by Khaled Hosseini after the wonderful A Thousand Splendid Suns and it didn’t disappoint. The Kite Runner is an account of the life of Amir, the son of a merchant in Kabul Afghanistan. The book covers his life from Afghanistan to America and back to his hometown after a few decades to deal with his unresolved matters from the past. Saying more than that will be equal to the act of spoiling and disservice to the book and future readers, so I stop here. But the book is another gut-wrenching and moving work by Khaled Hosseini.

Tired of business and self-help books, I had decided to pick up novels to stir things up. Well, after the two emotionally charging novels by Hosseini, I think I am ready to go back to the mundane books for now.

“I wondered if that was how forgiveness budded; not with the fanfare of epiphany, but with pain gathering its things, packing up, and slipping away unannounced in the middle of the night.” 

“There is only one sin, only one. And that is theft. Every other sin is a variation of theft. When you kill a man, you steal a life… you steal his wife’s right to a husband, rob his children of a father. When you tell a lie, you steal someone’s right to the truth. When you cheat, you steal the right to fairness… there is no act more wretched than stealing.” 

“And that’s the thing about people who mean everything they say. They think everyone else does too.” 

“For you, a thousand times over”

Book: A thousand splendid suns

The book is a captivating and breathtaking story with the violent events in Afghanistan from the 1970s to 2000s in the background. The two main stories surround two female characters: Mariam and Laila. The author walks us through the injustice that the two protagonists had to suffer. The first 25% of the book was about Mariam, followed by the section on Laila and later their life together, which accounts for half of the book.

As a Vietnamese, I almost have to apply for a visa to every country that I want to travel to. It means a great deal of paperwork, time and money involved. Sometimes, it frustrates the hell out of me as I look with envy to many of my friends from the US, Canada and EU whose nationalities allow them to travel almost everywhere the very next day with little trouble. However, I felt tremendously grateful for the life I have whenever I read books on North Korea or books like this one. They really make me look at things from a perspective. Somewhere around the world, the life I am leading is a luxury to many and something I should cherish.

It’s horrifying and unthinkable to know that women in some countries in the world are treated so badly, in the way that the two characters were in the book. For all the scientific advancements we have had, we still have much on this front to solve. I hope that one day, women everywhere will be liberated and given as much freedom as men are and have always been.

If you are looking for a great page-turner, I highly recommend this. Below are a few beautiful passages I appreciate a great deal

“And the past held only this wisdom: that love was a damaging mistake, and its accomplice, hope, a treacherous illusion. And whenever those twin poisonous flowers began to sprout in the parched land of that field, Mariam uprooted them. She uprooted them and ditched them before they took hold.”

“Miriam wished for so much in those final moments. Yet as she closed her eyes, it was not regret any longer but a sensation of abundant peace that washed over her. She thought of her entry into this world, the harami child of a lowly villager, an unintended thing, a pitiable, regrettable accident. A weed. And yet she was leaving the world as a woman who had loved and been loved back. She was leaving it as a friend, a companion, a guardian. A mother. A person of consequence at last. No. It was not so bad, Miriam thought, that she should die this way. Not so bad. This was a legitimate end to a life of illegitimate belongings.

“She would never leave her mark on Mammy’s heart the way her brothers had, because Mammy’s heart was like a pallid beach where Laila’s footprints would forever wash away beneath the waves of sorrow that swelled and crashed, swelled and crashed. ”

“Marriage can wait. Education cannot…Because a society has no chance of success if its women are uneducated, Laila. No chance.” 

She sat on the chair instead, hands limp in her lap, eyes staring at nothing, and let her mind fly on. She let it fly on until it found the place, the good and safe place, where the barley fields were green, where the water ran clear and the cottonwood seeds danced by the thousands in the air; where Babi was reading a book beneath an acacia and Tariq was napping with his hands laced across his chest, and where she could dip her feet in the stream and dream good dreams beneath the watchful gaze of gods of ancient, sun-bleached rock.”

Book: The Alice Network

Looking for a good book to read, I came across a list prepared on the gothamgal website. A fan of stories with the two World Wars as a theme since you can be entertained and learn some historical lessons at the same time, I picked out this book and it didn’t disappoint

The book is a two parter. It starts with a quest by an American teenager named Charlotte St Claire, to find her lost cousin in France after World War II while being pregnant. Her limited leads, fate and audacity to defy her mother in order to find out the truth led her to meet Eve Gartner, a retired British spy with a score to settle from her eventful past. As the journey to help Charlotte locate her lost cousin progressed, it turned from a search mission to a vengeance one.

If you are a fan of feminism and looking for a good, not too intense, story taking place in the background of post World War II, you may want to give it a try.

We are not flowers to be plucked and shielded, Captain. We are flowers who flourish in evil.

Book: Monetizing Innovation: How Smart Companies Design the Product Around the Price

If you are interested in business strategies and how companies price their products or services, I highly recommend this book. Its thesis can be summarized into: Product the price, don’t price the product. The authors argued that businesses have a better chance at a successful product/service launch if the businesses do meticulous market research beforehand, figure out the willingness to pay from the end users, find out what they want and how much they are willing to pay for the desired features, and finally build the offerings around the price points. A few notable examples that should be studied by business students include:

  • How Porsche could sell 100,000 of their new cars while Fiat Chrysler could only sell 25,000 of theirs
  • How Michelin switched from selling tires to selling kilometers traveled on their premium tires
  • How P&G rose to capture the majority of market share in the razor category in India
  • How DealShield protected billions of dollars in vehicle purchases and earned Manheim millions in revenue and profit

On Compromise Effect

For example, imagine you are in a wine store and want to buy a bottle. You find three options: a $10 bottle, a $25 bottle and a $40 bottle. Which you would you pick? When asked this question, most people would pick the $25…By introducing the $25 wine, you just made the decision process much easier for everyone. They’ll choose the middle option. This strategy is very common in both B2B and B2C companies

On Anchoring Tactics

Another illustration of anchoring is the Economist magazine’s A/B pricing experiment. The experiment divided people into two groups, A and B. The A group was given two choices: $59 for an online only subscription and $125 for a print and online combination. The B group was offered three choices: $59 for online only, $125 for print only and $125 for the print/online bundle. The $125 print-only option was an anchor. Some 84% chose the print/online bundle in group B versus only 32% who chose that bundle in group A.

On Price Conveys Quality

In a 2008 study, Ariely and his colleagues gave two sets of participants the same pill, telling them it was a painkiller (it was a placebo). Informed that the price was $2.5 a pill, 85% of the participants in the first group said the pill reduced their pain. Told the painkiller’s price was discounted to 10 cents, only 61% of the second group believed the pill reduced their pain.

On Apple Watch

At first, it was available only through Apple’s website and the cheapest version was priced at $349, not very cheap. However, Apple’s launch largely drew negative reactions. One stock analyst noted that a components supplier for the watch had produced fewer units than projected, hinting at underwhelming sales. His comment appeared in a July 31 Wall Street Journal headline that sniped, “Glimmers Emerge on Apple Watch Sales and They’re Not Pretty”

All of this was not what Apple wanted to hear. Yet despite the negative press, despite the warnings of purportedly in-the-know investment analysts and reviewers and the rumors of lagging sales, Apple did not drop its price. It held firm.

Based on International Data Corporation and investment analyst estimates of Apple Watch sales from April through September 2015 (the second half of Apple’s most recently completed fiscal year), Apple sold an estimated 8 million watches. Assuming most sold for the entry price of $349, that would make it a $2.8 billion product in its first six months of life.

Book: How the Internet Happened

If you are interested in technology, the intersection of business strategy and technology and the history of the Internet, this book is for you.

It is a succinct chronicle of how Web 1.0 (connecting computers all over the world) and Web 2.0 (connecting all people) happened. Accounts of some of the most iconic and important technology companies in the world were told without lengthy anecdotal details. The author walks you through how Netscape, Yahoo, Google, eBay, Paypal, iPhone and Facebook, to name a few, came into beings and shaped the personal computing. It’s fascinating to read about the bubble in 2001. The fact that companies could raise tons of money regardless of the lack of business models and revenue, let alone profit, is surreal.

Arguably, the biggest point that I get out of this book, in addition to nice history lessons, is that success greatly stems from serendipities. Without an enabling technology, infrastructure or business environment, we wouldn’t have had the household technology names that we do today. For instance, without Netscape developing the Navigator and SSL, who knows whether we would have had different browsers, online payments and arguably the Internet? Without the existence of broadband connection, it’s likely we wouldn’t have had Web 2.0.

Timing is everything. Being early is equal to being wrong, as many companies which went out of business for being ahead of their times could attest. If you doubt the role of luck in success, read this book.

After this book, I can’t wait to read a similar one on the rise of cloud computing and everything that it enables.

Book: Black Swan

I’d give this book two stars. The book has some interesting insights, but it is unnecessarily long with a lot of anecdotes, name-dropping and less-known examples. Basically, the idea could have been wrapped up in 20-50 pages. Plus, the flow could have been much easier to follow.

In short, Black Swan talks about the great impact of the outliers, unpredictable events that happen in our life. For instance, if a person somehow were involved in a car accident through no fault of his or her own, the person’s life would be turned upside down. As Black Swans are not predictable, the author urged us not to use the past to predict the future. Yet, it seems that we are prone to doing exactly that, using data from the past to predict the future. I believed he claimed that we humans were victims of asymmetry in understanding random events. He also claimed that there were no experts in a lot of fields.

The thesis of the book seems obvious, but we don’t always have it in mind. As human beings, we love to predict the future and know what is going to happen years from now. I am always astonished by the popularity of fortune-telling. It amazes me how those fortune tellers could see the future. It simply seems impossible to me. Even if they could, why would they agree to earn modest income from that profession? Wouldn’t it be much more lucrative to gamble or pick stocks?

Regarding business, who could have predicted in 2000 that Yahoo would be what it is today? Or Nokia, one of the biggest brands in the world in 2005, would be a shell of its former self today? Or Kodak and more recently Facebook? I agree with him that life is too uncertain to predict. We are terrible at it, yet that’s what we keep doing.

Also, I agree with him that being alive is already extraordinary. I always feel lucky enough to be born without any disabilities or sickness. There is no telling what could happen to a child in a mother’s womb. One DNA misplaced could mean a lot of consequences for the child. In an infinite universe, we are living on a speck of dust millions of years old that has gone through a lot of revolutions and unpredictable events. If we are alive, we are already Black Swans.

Book: Bad Blood

This book – Bad Blood – is an exhaustingly reported account of how Theranos lied and deceived hundreds of people, from employees and investors to the patients. The lies not only cost investors millions of dollars, but also put the patients at potential threats.

I was shocked and amazed by the lack of due diligence some companies showed in doing business with Theranos. Despite all the warning signs and delays, they kept going full force ahead with Elizabeth Theranos. Even more amazing was the list of high profile and experienced individuals such as Rupert Murdoch, Henry Kissinger, Jim Mattis, just to name a few, who bought into the lies and deception by Theranos.

I was really angry when reading about an employee taking his own life because of stress from work and another who had several years of his life, a family relationship and hundreds of thousands of dollars wasted by Theranos. In the end, I felt glad and relieved that the fraud of Theranos was put to an end.

I am highly appreciative of this kind of reporting by the author. Theranos resorted to aggressive intimidation and legal bullying to bury every threat that might expose the company in public. Yet, the author was dogged and exhaustive in his reporting. I am glad his editor and Murdoch, who had a financial interest in Theranos at the time and owned the parent company of Wall Street Journal, let the author follow the lead to the very end. In the times of relentless attacks to the press (some is justified, to be fair), this kind of reporting is much needed.

There has been a lot of pushback regarding the impact from regulations on business. Admittedly, there is certainly a lot of unnecessary red tape. However, if you read the book, without regulations, Theranos would have done a much bigger damage. Too many regulations is obviously bad and so is too fewer regulations. Don’t take the extreme. Seek for reasonable regulations.

Final thought is that don’t be evil. Theranos resorted to Non-Disclosure Agreements, top notch lawyers, surveillance, bullying and intimidation to keep quiet those who wished to reveal information on it. Nonetheless, the truth finally came out. In this age and day, access to information is frictionless and so is scrutiny. If you do something bad, it’s just a matter of time when it is revealed.

Easy read. The first half of the book may be a little bit dull, but stick with it. Around 50-60% of the book, the author switched to his investigation of Theranos. It is then more dramatic. If you are looking for a book to read and have no other prioritized books, take this one.

Book: The courage to be disliked

I spent some time thinking about what I should write first in 2019. Instead of some predictions, I decided to write a bit about the book that influenced me greatly in 2018 – The courage to be disliked. I am reading it for the second time and believe that by writing about it here, it will stick longer in my memory and can be beneficial in 2019 for those who happen to read this post. Here we go.

Avoid the victim mentality

According to the author and Alfred Adler, the psychologist and philosopher, even though we can’t change what happened in the past, our past should not dictate our happiness and future or should not be an excuse for our unhappiness. In layman’s terms, we should not have the victim mentality regarding our past or what we were born with. For instance, even if you are born in a poor family or short, it should not be the source of your unhappiness or you shouldn’t use it to say that causes your failures in life.

Adlerian psychology is a psychology of courage. Your unhappiness cannot be blamed on your past or your environment. And it isn’t that you lack competence. You just lack courage. One might say you are lacking in the courage to be happy.

One tries to get rid of one’s feeling of inferiority and keep moving forward. One’s never satisfied with one’s present situation – even if it’s just a single step, one wants to make progress. One wants to be happier. There is absolutely nothing wrong with the state of this kind of feeling of inferiority. There are; however, people who lose the courage to take a single step forward, who cannot accept the fact that the situation can be changed by making realistic efforts. People who, before even doing anything, simply give up and say things like “I’m not good enough anyway” or “Even if I tried, I wouldn’t stand a chance”.

Anger

You did not fly into a rage and then start shouting. It is solely that you got angry so that you could shout. In other words, in order to fulfill the goal of shouting, you created the emotion of anger.

In a word, anger is a tool that can be taken out as needed. It can be put away the moment the phone rings, and pulled out again after one hangs up. The mother isn’t yelling in anger she cannot control. She is simply using the anger to overpower her daughter with a loud voice and thereby assert her opinions.

Love yourself

“I’m sure that no one would want to get involved with a guy as warped as me”. I am sure you understand this already. Why do you dislike yourself? Why do you focus only on your shortcomings, and why have you decided to not start liking yourself? It’s because you are overly afraid of being disliked by other people and getting hurt in your interpersonal relationships.

A healthy feeling of inferiority is not something that comes from comparing oneself to others; it comes from one’s comparison with one’s ideal self.

Avoid the fabricated superiority complex

One makes a show of being on good terms with a powerful person. By doing that, one lets it be known that one is special. Behaviors like misrepresenting one’s work experience or excessive allegiance to particular brands of clothing are forms of giving authority and probably also have aspects of the superiority complex. In each case, it isn’t that the “I” is actually superior or special. It is only that one is making the “I” look superior by linking it to authority. In short, it’s a fabricated feeling of superiority.

There’s the kind of person who likes to boast about his achievements. Someone who clings to his past glory and is always recounting memories of the time when his light shone brightest. Those who go so far as to boast about things out loud actually have no confidence in themselves. As Adler clearly indicates, “The one who boasts does so only out of a feeling of inferiority”…those who make themselves look bigger on borrowed power are essentially living according to other people’s value systems – they are living other people’s lives.

Separation of tasks

All you can do with regard to your own life is choose the best path that you believe in. On the other hand, what kind of judgment do other people pass on that choice? That is the task of other people, and is not a matter you can do anything about.

You are worried about other people looking at you. You are worried about being judged by other people. That’s why you are constantly craving recognition from others. Now, why are you worried about other people looking at you, anyway? Adlerian psychology has an easy answer. You haven’t done the separation of tasks yet. You assume that even things that should be other people’s tasks are your own. Remember the words of the grandmother: “You’re the only one who’s worried how you look”. What other people think when they see your face – that is the task of other people and is not something you have any control over.

Those are the main lessons I picked up from the first half of the book. They really hit home with me and changed my perspective in 2018. Of course, there are many more lessons and nuances, but the above stood out for me. Others might do for you. If you find them helpful, give the book a try. You’ll likely find more interesting insights from the book which will be helpful to your growth in 2019 and beyond.