Reading posts on the South-East Asia Earthquake and Tsunami Blog, I've been struck by the tremendous vitality of both existing and spontaneous relief organizations in India. In Newsweek, Fareed Zakaria looks at the broader trend of newly flourishing civil society in India. His conclusion:
China is following the East Asian model, with a strong government promoting and regulating capitalist growth. Historically, this has been the most effective way out of poverty. But India might well be forging a new path, of necessity, with society making up for the deficiencies of the state. Actually, this is not entirely new. In some ways India's messy development resembles that of another large, energetic, chaotic country where society has tended to loom larger than the state--the United States of America. It is a parallel to keep in mind.
Posted by Virginia Postrel on January 11, 2005 • Comments
The number one company on Fortune's new "best companies to work for" list is Wegmans Food Markets, which exemplifies the savvy use of aesthetics to create consumer value--and major profits--in a market where the alternative is intense price competition. Paradoxically, one of the major drivers behind today's aesthetic imperative is the power of Wal-Mart, a company not exacty known for its aesthetic edge. You may not be able to beat them on price, but you can surely beat them on experience, and, as the holiday shopping season indicates, consumers don't just care about price. They care about value. Here's an excerpt from Fortune's cover story.
Privately held Wegmans—which had 2004 sales of $3.4 billion from 67 stores in New York, Pennsylvania, New Jersey, and Virginia—has long been a step ahead. Its former flagship store in Rochester, opened in 1930 by brothers John and Walter Wegman, featured cafe-style seating for 300. Walter's brilliant and pugnacious son Robert, who became president in 1950, added a slew of employee-friendly benefits such as profit-sharing and fully funded medical coverage. When asked recently why he did this, 86-year-old Robert leans forward and replies bluntly, "I was no different from them."
Robert is chairman now; his son Danny, a sartorially challenged Harvard grad who came back to Rochester to cut meat for Wegmans, took the reins in 1976. Early on, Danny was keenly aware of the threat posed by nontraditional grocery outlets like club stores and discounters. (His 1969 senior thesis ended with these prophetic words: "The mass merchandiser is the most serious outside competitor to ever face the food industry.")
In 2003 those nontraditional grocers had 31.3% of the grocery market, and industry guru Bill Bishop projects that number will grow to 39.7% by 2008. That's because consumers think traditional grocers don't offer anything special; 84% believe all of them are alike, one survey has found. Most grocers responded to the competition by slashing prices, wreaking havoc on already razor-thin margins. From February 1999 through November 2004, the four largest U.S. grocery chains (Albertson's, Kroger, Safeway, and Ahold USA) posted shareholder returns ranging from -49% to -78%. Winn-Dixie Stores was booted out of the S&P 500 in December for its horrendous performance.
You don't see such problems at Wegmans. While it has no publicly traded stock, its operating margins are about 7.5% (the company will not disclose net margins), double what the big four grocers earn and higher even than hot natural-foods purveyor Whole Foods. Its sales per square foot are 50% higher than the $9.29 industry average, FORTUNE estimates, thanks to a massive prepared-foods department featuring dishes that rival those of any top restaurant. (Wegmans asked famed Manhattan chef David Bouley for input.)
Each of the newer Wegmans stores is 130,000 square feet—three times the size of a typical supermarket. That means it can offer true one-stop-shopping for every taste. And unlike Whole Foods, which disdains products containing pesticides, preservatives, and other unhealthy stuff, Wegmans stocks both organic gourmet fare and Cocoa Puffs, at competitive prices. That vast selection helps explain why in places like Rochester, Syracuse, and Buffalo, the zeal for Wegmans often borders on kooky obsession. In 2004 the company received nearly 7,000 letters from around the country, about half of them from people pleading with Wegmans to come to their town. Ann Unruh, 52, an insurance manager in Sparks, Md., who has never set foot in a Wegmans, is so excited about a store opening in her area later this year that she plans to take the day off work to be there. She says there will be no need to visit Whole Foods anymore: "I will just shop at Wegmans."
Each Wegmans store boasts a prodigious, pulchritudinous produce section, bountiful baked goods fresh from the oven, and a deftly displayed collection of some 500 cheeses. You'll also find a bookstore, child play centers, a dry cleaner, video rentals, a photo lab, international newspapers, a florist, a wine shop, a pharmacy, even an $850 espresso maker. "Going there is not just shopping, it's an event," says consultant Christopher Hoyt. In an annual survey of manufacturers conducted by consultancy Cannondale Associates, Wegmans bests all other retailers—even Wal-Mart and Target—in merchandising savvy. "Nobody does a better job," says Jeff Metzger, publisher of Food Trade News.
Posted by Virginia Postrel on January 11, 2005 • Comments
Import quotas don't just raise prices for consumers. They make planning complicated for businesses that need imported goods as inputs--even, it turns out, when the quotas are about to end. Furniture Today (I love trade magazines) reports on the end-of-the-year mess created by protectionists concerned that textile importers might jump the gun on the end of quotas:
Here at home, 2004 brought us politicians shamelessly plucking the broken heartstrings of unemployed textile workers. It would have made sense for politicians to help the industry get ready for this day – it was 10 years coming, after all – but the horse was out the barn before the election year began. If they could feel shame, they'd be feeling it now.
There are still issues with China, certainly, and no one can blame the domestic textile industry for trying to get some relief from the government. But we certainly cannot blame China for a directive issued Dec. 13 from the Committee for the Implementation of Textile Agreements calling for U.S. Customs to hold fabrics that entered U.S. ports near the end of the year in excess of quotas.
In years past, fabric that was over quota near the end of a year was counted against the next year's quota. But since the quota is now gone, the committee felt that some importers might deliberately ship goods in excess of quotas limits, expecting that the goods would be released on Jan. 1.
This decision has created trouble and expense for some upholstery fabric importers. Their goods, ordered in good faith in October from mills that held valid quotas, were declared to exceed quota limits when they arrived in December. Obeying the directive from CITA, Customs put the goods into bonded warehouses where they will stay until Feb. 1. At that time, they will be released in 5% per month increments of the amount over the base quota.
Textile lobby groups such as the American Manufacturing Trade Action Council applauded the decision. "It was the very least the government could do," said a spokesman, adding that that the embargo "should be a lesson to people about the risks of doing business with overseas companies."
A spokesperson at the United States Assn. of Importers of Textiles and Apparel countered that the action was action "pointless, without merit and just plain mean."
Since most imported textiles are apparel, a lot of upholstery fabric suppliers felt confident in late December that the embargo would not impact their business, stating that they typically have some goods held at the end of the year, which then are released on Jan. 1. Some of these companies were surprised to learn when they arrived back at work after the holiday last week that the goods had not been released on Jan. 1 but will be held till Feb. 1 and then trickled out incrementally over a period of months.
Here's a Reuters background article on the end of textile quotas. The NYT and WSJ have covered the story repeatedly, but they're hard to link to. One of the points made by Bill Lewis in The Power of Productivity, which I wrote about here, is that India's restrictions on the size of apparel factories have made the industry much less efficient than China's.
Posted by Virginia Postrel on January 11, 2005 • Comments
The incomparable Manolo's Shoe Blog comments. For the full effect, check out this post as well.
Posted by Virginia Postrel on January 10, 2005 • Comments
The hardback edition of The Substance of Style costs $15.72 and takes a long time to ship (currently listed as "ships within 1 to 2 months"). The paperback edition costs $10.46 and ships in 24 hours. (The paperback also includes some additional material, though you can't tell that from the Amazon page.) Yet the hardback is consistently ranked much lower on Amazon than the paperback, though they generally move up and down together. Why? The best I can guess is that you can go to the bookstore and buy the paperback, while the hardback is harder to find.
Posted by Virginia Postrel on January 10, 2005 • Comments
It never rains in Southern California. It pours. Slide show of scary photos here.
Posted by Virginia Postrel on January 10, 2005 • Comments
For as long as I can remember, Tom McClintock has been the one true budget hawk in California state government. He's a politico, but he's first and foremost a policy wonk, which means that implementing policy is more important than personally holding office. The SacBee's Dan Weintraub says Governator's State of the State speech is channeling McClintock, Arnold's erstwhile (rather friendly) opponent:
For the next year, McClintock watched from the Senate as Schwarzenegger learned the ropes in the Capitol, compromised with Democrats, avoided confrontation and, in the end, made little progress on the fundamental problems that bedeviled the state. The senator offered muted criticism when appropriate, support where he could.
Then, Wednesday night, suddenly everything changed. It was if the flashy governor were channeling his straight-laced colleague. Schwarzenegger's speech sounded almost as if McClintock had written it.
"Maybe I should have copyrighted some of my ideas," McClintock said with a laugh when I asked him later about the resemblance.
McClintock, some might remember, was one of only a handful of lawmakers to vote against a pension bill in 1999 that boosted state retirement benefits and paved the way for a wave of local pension increases that have threatened the financial solvency of some cities and counties. Three years later, McClintock was the only legislator to vote against a lavish new contract for the state's correctional officers, or prison guards. And all along he warned that the state's spending growth could not be sustained.
Now Schwarzenegger was saying that pension bloat, the guards union and other ills McClintock has spotlighted over the years were the heart of the state's problems. And with no apparent bitterness, McClintock endorsed the Schwarzenegger agenda.
Read the whole column here. The Weintraub column archive is here.
Posted by Virginia Postrel on January 10, 2005 • Comments
Grant McCracken posts some thoughts.
Posted by Virginia Postrel on January 10, 2005 • Comments
The porn industry, long a high-tech pioneer, may decide which of two competing DVD technologies becomes the standard. The article linked above prompted a long, intermittently amusing Slashdot threat.
Posted by Virginia Postrel on January 10, 2005 • Comments
USA Today notes a trend toward more family time and less work among Gens X and Y, terming them the "family first generation." As with all things familial, the trend is attributed to a morally positive change in attitude. (Work=bad, Family=good.)
The article isn't about waitress moms, of course. It focuses on what we used to call yuppies, before they moved to the suburbs. Among the professionals profiled, I suspect that economics, not some sort of moral conversion, explains most of the trend. If you're a highly skilled, highly educated professional, you can make quite a good living these days without working terribly long hours or putting your work first. (You can, of course, make more if you work obsessively. But even the most rationalistic economist believes people maximize utility, not income.) And, contrary to widespread belief in places like LA, Washington, and New York, in most of the United States, a family can live a comfortable middle-class life on middle-class pay, in many cases on a single salary. You won't have every luxury, but you'll have more than your parents.
Back in the pre-Slate days, Mickey Kaus took another angle on the same general trend--baby boomers who don't really have to work that hard to live.
Posted by Virginia Postrel on January 05, 2005 • Comments