Too much of a good thing
July 2nd, 2008 at 11:26am Wally Haas
It wasn’t that long ago that almost everyone wanted a Starbucks in their neighborhood. Now that almost everyone does — oops — Starbucks announces that it will close 600 underperforming stores.
It wasn’t that long ago that everyone wanted Krispy Kreme doughnuts but — oops — the company expanded faster than it could handle and has been struggling financially for a couple of years. KK posted its first profit in more than a year in the first quarter.
No matter how good a product, there is a point of diminishing returns. It’s amazing that Walgreens has been able to expand as much as it has without the growing pains other companies have faced.
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1. Jim Phelps | July 2nd, 2008 at 12:22 pm
“It’s amazing that Walgreens has been able to expand as much as it has without the growing pains other companies have faced.”
Not really all that amazing: Walgreen’s has a completely different business model than either KK or Starbucks.
More importantly, Walgreen’s has a completely different aggregate margin due to the diversity of goods sold. This makes up for a lot of errors in product placement, pricing and marketing. Errors that both KK and Starbucks make time and time again, IMHO Marketing/Retail Marketing opinon.
Walgreen’s customer base is also extremely diverse. No longer just for the “graying” set. Local convenience shopping in well lit, well maintained and stocked stores and strong retail locations determined by good market research has been driving Walgreen’s sucessful business model for years.
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