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Shelf Talk: Costco stats, Target tech, a personal story + 2 more blurbs
Some of what I've been reading since I was last in touch, plus a remembrance at the end.
“On first impression, Costco makes no sense.
“It is a place where you can buy, in the course of one trip, a 27-pound bucket of mac and cheese, a patio table, a wedding dress, a casket, a handle of gin, a tank of gas, a passport photo, a sheepskin rug, a chicken coop, prescription medications, life insurance, a $1.50 hotdog, and a $250,000 diamond ring.
“Items sit on wooden pallets in dark, unmarked aisles. Brand selection is limited. And you pay a $60 annual membership fee just to get in the door.”
How Costco gained a cult following -- by breaking every rule of retail (The Hustle)
Did you say $250K ring? One actually sold for even more -- over $400K -- materially affecting Costco's revenue in Q1. (CNBC)
Costco sells $7B in apparel, more than Old Navy, Neiman Marcus, or Ralph Lauren, and growing at 9% annually for the past four years. (FastCo)
Morning Brew (subscription link) has a new retail newsletter. They highlighted Costco recently, including the stat that Costco does 95% of its business in its stores (i.e., not online). (Retail Brew)
Target’s in-store registers went down for several hours in its 1,850 stores last month. (WaPo)
CEO Brian Cornell apologized to shoppers and said there was no impact to earnings as a result of the outage but Target’s stock. (CNBC)
But Kantar's Bryan Gildenberg suggested that it cost Target $50M in lost revenue. (Fortune)
Longer term, Target has continually struggled with technology. It had a data breach affecting 40 million shoppers in 2013. (WaPo)
Less visible as a tech issue was Target’s death in Canada. Target bought and converted 124 former Zellers stores in 2013. There were problems from the start, largely operational, with teams having a hard time getting the right products to the right stores. Empty shelves were a common issue.
About two years later, the venture collapsed and filed for creditor protection, with capital and operating losses in the billions and nearly 18,000 people out of work. This fascinating (long) article cites its SAP implementation as a central factor in Target Canada’s downfall. (Canadian Business)
Claims of price fixing in the $65B chicken industry (and related private suits) have been around for years, but now the Justice Department is investigating whether several large chicken processors, including Tyson, Pilgrim’s Pride, and Sanderson, have been colluding. One plaintiff claimed that companies destroyed flocks to limit supply and shared unusually detailed data on production and financials with a data provider, Agri Stats. From 2008 to 2016, production costs dropped while prices rose 50 percent, contrary to trends for beef and pork. (NYT)
LaCroix is being sued by a former employee who claims that the company was going to falsely claim that its cans did not have BPA liners before they actually made the switch. This is never the right move. Unless perhaps you’re a politician. (Business Insider)
Unrelated: Personal remembrance from Scott
Probably most people who know me today don’t know that I was a fervent political campaigner in high school and college. I was inspired to action by Ross Perot, who died a couple of weeks ago. You may have no interest in this, and you’re at the end of this email, so feel free to skip this. But if you’re interested in a personal story, read on.
As a high school sophomore, I heard about Perot from my dad. I was interested enough to track down and order the transcript of his March 1992 speech at the National Press Club so I could learn more. Talking about the nation’s problems, he asked, “Okay, who's at fault? First thing you've got to do in our country is blame somebody, right? Well, go home tonight and look in the mirror… You and I are at fault, because we own this country, and there is the problem in a nutshell. We've abdicated our ownership responsibilities.” This was enough to get me to volunteer for his campaign, even though I couldn't vote for two more years.
Most people think of him for being a footnote in American history, a personality lampooned on SNL, and (falsely) for causing a sitting president to lose reelection.
But I got to know him. Though we only spent in total perhaps a handful of hours together over the 8 years I was involved with his campaigns and business, it was hard to ignore the stories that people in his circle told, and that was the Perot I knew and admired.
Yes, when his employees were taken hostage in Iran, he assembled a private army to successfully break them out of prison -- and even showed up personally join the mission. This story has been told, in epic form via a novel-like book and TV miniseries starring Burt Lancaster. They don’t know that Perot continued to employ the Iranian fixer from the prison raid for decades afterward at his company. I used to eat lunch with him in the cafeteria.
They also don’t know about the acts of kindness he spread. I can’t even begin to recount the stories, and the Dallas Morning News was chock full of them in the week that Perot died. Here’s some that I know.
Internally, at Perot Systems, we had a “shadow” healthcare plan. If an associate or a family member had a serious illness, Perot would arrange for an expert specialist to provide advice and care. (It probably helped that Perot donated hundreds of millions to medical research.) Perot called one co-worker's father-in-law's hospital room after getting word of an illness.
Externally, he did extraordinary things for veterans and their families. Just as EDS was going public, Perot arranged to send 98 children of Vietnam POWs and their mothers to Paris to picket the North Vietnamese embassy for their fathers to be returned home.
Later, Perot lobbied for Congress to provide more funding to treat vets with Gulf War Syndrome. (He gave Bernie Sanders a sword to thank him for his support.) And when that wasn’t enough, he personally funded care and assistance for some vets who needed it. Former Gov. Rick Perry wrote about one of these stories after Perot’s death.
And for me, he somehow noticed the work I did on his campaign as a college student. He left a message on the answering machine in my college apartment, which I was initially sure was a joke from one of my friends. When I returned the call, Perot asked me to work at his company when I graduated. It was hard to say no, and it got me experience in business I never would have had otherwise.
One of my campaign colleagues said, “Ross lit candles. If your flame was out, he would light it for you. And he lit thousands of candles during his life.” There aren’t truer words.
Perot didn’t need to do any of these extra things. He still would have been a giant. But he did, and the world will not be as good without him. We sorely need more people like him today.
RIP Ross Perot, 1930-2019
With best regards,