Monday, March 5, 2012

Musing on Bank of America vs. JC Penny’s Fair and Square

To state that global economic downturn has taken its fair share of toll on corporate America would be an understatement. However, a few industries have been more impacted than finance and retail. Last year saw the bankruptcy of iconic Kodak and liquidation of ubiquitous Border’s book stores. While retail superstores didn’t see the same impact on their businesses, slowing foot traffic and an assault from online retailers has certainly taken its toll. Retailer Sears began closing many of its stores last year and any of us who have shopped in the remaining ones are bound to find the experience less than satisfactory.

Banks and financial institutions continue to struggle though many have begun to turn a corner after the blood-letting during the downturn. Much of this is at the cost of the average Joe/Jane customer. Just last week, J.P. Morgan created a buzz when it said that “70% of customers with less than $100,000 in deposits will become unprofitable for the bank”  (Bloomberg)

This is really ironic since interest rates are virtually at zero. I wonder how many customers who do happen to have 100K liquid funds would like to park it with a bank for little, no interest just to have the privilege of a “free” checking account?! 

In this market, one customer facing business, that seems to be rewriting its playbook in a more visible way is JC Penny. I had read many articles on transformation at JCP after the new boss from Apple took over last year (Tech Giant's RetailChief Tapped to Remake Venerable Chain). On a weekend shopping trip at the local mall, I was stuck by the simplicity of the idea: fair-and-square pricing also means that the ubiquitous red “Sale” banners hanging all over the store are replaced by tasteful signage. Yes, one can still find the $5 shits tucked away in the a rack, without a large sign pointing to it: a much more pleasant and esthetic shopping experience if you will. And the brilliance of the idea is that it caters to the frugal deal seeking shoppers without putting off those seeking a better shopping ambience.  

Though it is extremely premature to eve speculate on how of JPM or JCP’s move will play out or whether it will slow the consumer shift towards online “deals,”  shopping and banking, it is certainly interesting.  One thing is for sure, banks and retailers that continue to focus on mining for high-net-worth customers at the cost of building a critical mass of loyal customers are going to loose out when the economic tide turns.

Thursday, March 1, 2012

Musing on Globalization of English

I was on a brief business trip to Basel last week and on my way back, I read an interesting article on globalization and English (“Why the French are right to resist global English").  The author builds an argument taking the example of schools in Montreal, Canada wanting to introduce English to a predominantly French speaking environment.
I guess most of the resistance to English is towards preserving linguistic and cultural identity; there is a similar conflict in Europe over adoption of English. I had experienced first-hand the "resistance" to global English during the 6-months that I had spent in Switzerland sometime ago.  Most of Europe is economically connected thanks to being a part of the EU, but individual countries and regions still cling to their languages and distinct cultural identities. They do this while tacitly recognizing that English is the "link language." The younger generation is certainly keen on imbibing English, wanting to be a part of the global and regional economies where English is the lingua franca.  
This is a issue that Indians (and even non-resident Indians) continue to struggle with: being proficient in English while also maintaining one’s cultural identity. Case in point is the identity crisis being faced by politicians and others in my hometown Bangalore. The global hub of offshoring and offshore sourcing that depends on attracting millions of English speaking technologists to work for global clients out of call centers and IT shops. While benefiting from globalization and being a role model for other cities and regions trying to attract offshoring business, policy makers also want to look back on the roots, so much so that they decided on officially renaming the city to Bengaluru. Those trying to desperately hold on to Kannada culture also try to incorporate protectionist measures including restricting screening of movies from other regions in India. (ref)