Yes Minister Christmas Special Sketch: “Christmas at the Ministry”

Yes Minister Christmas Special Sketch: Christmas at the Ministry

A two-minute Christmas-themed television sketch, featuring Paul Eddington as the Rt Hon. Jim Hacker, Nigel Hawthorne as Sir Humphrey Appleby, and Derek Fowlds as Bernard Woolley, was broadcasted on BBC One as part of a Christmas special named The Funny Side of Christmas.

Sir Humphrey has a special end-of-year message for the Minister, delivered in what is even by his standards an especially circumlocutory style. His message is transcribed here:

Jim Hacker: Are there more, Bernard?

Bernard Woolley: Before you go home for the holiday, Minister, Sir Humphrey has something to say to you.

'Yes Minister The Complete Collection' by Paul Eddington Nigel Hawthorne (ISBN B00008DP4B) Sir Humphrey: Oh thank you, Bernard. Minister, just one thing. I wonder if I might crave your momentary indulgence in order to discharge a by no means disagreeable obligation which has, over the years, become more or less established practice within government circles as we approach the terminal period of the year, calendar, of course, not financial, in fact, not to put too fine a point on it, Week Fifty-One, and submit to you, with all appropriate deference, for your consideration at a convenient juncture, a sincere and sanguine expectation, indeed confidence, indeed one might go so far as to say hope, that the aforementioned period may be, at the end of the day, when all relevant factors have been taken into consideration, susceptible of being deemed to be such as to merit a final verdict of having been by no means unsatisfactory in its overall outcome and, in the final analysis, to give grounds for being judged, on mature reflection, to have been conducive to generating a degree of gratification which will be seen in retrospect to have been significantly higher than the general average.

Jim Hacker: What’s he talking about?

Bernard Woolley: Well, Minister, I think Sir Humphrey just wanted to crave your momentary indulgence in order to discharge a by no means disagreeable obligation…

'The Complete Yes Minister' by Jonathan Lynn,? Antony Jay (ISBN 0563206659) Jim Hacker: Alright, alright, Bernard! Hum…but Humphrey…

Sir Humphrey: At the end of the day, Minister, all due things being considered…

Jim Hacker: Hum…don’t, don’t, just forget the…

Sir Humphrey: Yes, Minister?

Jim Hacker: Are you saying “Happy Christmas”?

Sir Humphrey: Yes, Minister!

25 Great Quotes On Thinking New Ideas

  • If at first the idea is not absurd, then there is no hope for it.
    Albert Einstein (1879–1955), German-born Physicist & Philosopher, Author of Out of My Later Years
  • Every time you meet somebody, you’re looking for a better and newer and bigger idea. You are open to ideas from anywhere.
    –Jack Welch (b. 1935), American Business Executive & Author of Jack: Straight From The Gut and Winning
  • 'Stop Playing Safe' by Margie Warrell (ISBN 1118505581) The man with a new idea is a crank until the idea succeeds.
    –Mark Twain (1835–1910), American Author & Humorist, Author of Adventures of Huckleberry Finn
  • The rewards in business go to the man who does something with an idea.
    –William Benton (1900–73), American Publisher, Businessman, Politician
  • Try this for a week: Each morning, spring out of bed at the first hint of light and focus first on the new and wondrous things that are just waiting to reveal themselves that day. Let curiosity well up inside of you. Let your mind open up to new ideas. Forget that you already know everything.
    –Donna Kinni (b. 1961), American Author
  • The creative person wants to be a know-it-all. He wants to know about all kinds of things: ancient history, nineteenth-century mathematics, current manufacturing techniques, flower arranging, and hog futures. Because he never knows when these ideas might come together to form a new idea. It may happen six minutes later or six months or six years down the road. But he has faith that it will happen.
    –Carl Ally (1924–99), American Advertising Executive
  • When it comes to organizational imagination, everyone is a point of light, inwardly afire with excellent ideas for making our companies work smarter, faster, leaner, and better. But as business leaders, we too seldom tap into our most valuable resource—the brain trust of our employees—to discover new pathways of progress and profits.
    –Charles Decker (1961–2012), American Publisher
  • Inventors and men of genius have almost always been regarded as fools at the beginning (and very often at the end) of their careers.
    –Feodor Dostoyevsky (1821–81), Russian novelist, Author of Crime and Punishment
  • Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.
    –John Steinbeck (1902–68), American Novelist and author of Of Mice and Men
  • 'Crossing the Chasm' by Geoffrey A. Moore (ISBN 0062292986) Keep on the lookout for novel ideas that others have used successfully. Your idea has to be original only in its adaptation to the problem you’re working on.
    –Thomas Edison (1847–1931), American Inventor
  • No idea is so antiquated that it was not once modern. No idea is so modern that it will not someday be antiquated.
    –Ellen Glasgow (1873–1945), American Novelist, Author of In This Our Life
  • To stay ahead, you must have your next idea waiting in the wings.
    –Rosabeth Moss Kanter (b. 1942), American Academic, Author of Challenge of Organizational Change
  • Brainpower is now the greatest commodity we can contribute to the world. Democracy was never intended to be a breeding place for mediocrity. We must engage in the business of stimulating brainpower lest we fail in producing leaders of consequence. In a period of speed, space and hemispheric spasms we dare not treat new thoughts as if they were unwelcome relatives.
    –Dean F. Berkley (1925–2009), American Academic
  • If you do not express your own original ideas, if you do not listen to your own being, you will have betrayed yourself. Also, you will have betrayed your community in failing to make your contribution.
    –Rollo May (1909–94), American Psychologist
  • New ideas come from differences. They come from having different perspectives and juxtaposing different theories.
    –Nicholas Negroponte (b. 1943), Greek-American Architect
  • Invention is the process by which a new idea is discovered or created. In contrast, innovation occurs when a new idea is adopted.
    –Everett Rogers (1931–2004), American Sociologist
  • The best way to have a good idea is to have a lot of ideas.
    –Linus Pauling (1901–94), American Scientist
  • Ideas are a capital that bears interest only in the hands of talent.
    –Antoine de Rivarol (1753–1801), French Journalist
  • The power of an idea can be measured by the degree of resistance it attracts.
    –David Yoho (b. 1946), American Business Consultant
  • An idea is salvation by imagination.
    –Frank Lloyd Wright (1869–1959), American Architect and author of The Natural House
  • '13 Things Mentally Strong People Don't Do' by Amy Morin (ISBN 0062358308) Daring ideas are like chessmen moved forward. They may be beaten, but they may start a winning game.
    –Johann Wolfgang von Goethe (1749–1832), German Poet & Statesman, Author of Maxims and Reflections
  • If you can dream it, you can do it.
    –Walt Disney (1901–66), American Entrepreneur & Entertainer
  • There is no prosperity, trade, art, city, or great material wealth of any kind, but if you trace it home, you will find it rooted in a thought of some individual man.
    –Ralph Waldo Emerson (1803–82), American Philosopher and Essayist, Author of Self-Reliance
  • A great idea is usually original to more than one discoverer. Great ideas come when the world needs them. Great ideas surround the world’s ignorance and press for admission.
    –Elizabeth Stuart Phelps (1844-1911), American Author of A Singular Life and other books
  • I’d climb into the car as it went down the assembly line and introduce myself. Then I’d ask for ideas.
    –John Risk, American Automotive Engineer

The Fantastic Ornate Building of Saint Philomena’s Church, Mysore

Fantastic Ornate Building of Saint Philomena's Church, Mysore

Though Mysore has been a stronghold of traditional Hinduism from time immemorial, it has been famous for the harmonious coexistence of other religions also. This is testified to by many churches and mosques, which have been serving the cause of religion of their followers without any hindrance. Saint Philomena’s Church on the Ashoka Road (and practically at the entrance of Mysore coming from Bangalore) is a testimony for the religious tolerance of the people of Mysore.

Attractive colonnades of Saint Philomena's Church, Mysore There was a church known as Saint Joseph’s church built in 1840 and it was reconstructed and was renamed as Saint Joseph and Saint Philomena’s cathedral. It is said that Sri Thamboo Chetty, the then Dewan of Mysore in one of his visits had brought a piece of bone and drapery of the famous religious savant from Magnano in France from Peter Pisani, Apostolic Delegate of the East Indies and he wanted to consecrate them in a suitable church for this purpose.

The cathedral was designed by French architects and its foundation was laid by the then Maharaja Krishnaraja Wadeyar II in 1933. This church is modelled on Saint Patrick’s Cathedral in New York and the Gothic Church at Cologne in Germany.

Unique Architectural Style with Some Greek Features

The most attractive part of this edifice is the two tall imposing pointed towers at the facade itself. The two towers rise to a height of 165 ft. The elegance of this structure is enhanced by miniature pointed towers at different points, adding further height to the cathedral.

The vertically fashioned tall windows at regular intervals add a great charm. The pointed triangular gothic motifs at different places is another attraction.

Crypt with statue of Saint Philomena in Mysore

The church has a crypt in which is a statue of Saint Philomena in a catacomb-like cell. A piece of her bone is preserved at the center of a beautiful shield. There is also a piece of her drapery. Hence, this is important to Roman Catholics.

The interior of the cathedral is decorated with attractive colonnades and glass paintings made in France. Particularly noteworthy are the paintings of crucification of Christ and John baptizing Christ. The annual Saint Philomena’s feast is held in this cathedral. Large numbers of Roman Catholic devotees visit this sacred cathedral.

Unique Architectural Style with Some Greek Features of Saint Philomena's Church, Mysore

Hundreds of tourists of all religions to Mysore visit this cathedral daily to see the lofty and beautiful, tall and imposing towers and the architecture of a rare type not generally seen in many areas of this country.

The Romantic Rome at Nighttime

The Romantic Rome at Nighttime

During the day, Rome is a very busy modern city of two and a half million people and people are going about their business—they are crowding onto the buses, they are trying to hail a taxi, there speeding like heck through traffic—and it really can be very exhausting.

When the sun goes down, the entire character changes and it’s not just for tourists but for the people there and this is what they live for in Rome. To be able to come out and socialize and everything becomes more relaxed and people’s attitude changes. For them, the and evening is not “I’m going to rush here to this concert” and “I’m going to rush there to get dinner” and “I’m going to grab something to go” the way many Americans would do—instead it’s settling down into this easy rhythm of life and seeing what’s going to happen next.

Think about to the traditional Roman siesta. People will take their large meal in the afternoon and maybe even sit down and take a little nap or watch a little TV for 20 minutes or something—all in order to recharge their batteries so that they can come out at night and that’s when they really live and that’s what tourist should also do. Take a little break from your sightseeing in the heat of the mid-afternoon, take your little siesta, and gear up for the wonder of Roman nighttime.

Archaeologist Rome Romantic Rome by Night

Archaeologist’s Rome by Day and the Romantic Rome by Night

Get ready for the transformation of Roman grandiosity to Italian intimacy. What makes an intimate Rome easier is the way the city is lit at night. It was a deliberate choice on the part of the city administration not to have this neon glare that sort of flattens everything and makes everything look the same, but to have these very soft orange lights that are supposed to imitate the light of a torches in the past. So when you stroll through the city at night you can’t see everything together from afar. You have to discover it closely as you get to it. All this affords a gradual intimate look that you’ll really love and also makes you imagine the city in the evening.

There is an interesting distinction—there’s the grand Rome and then there’s the intimate Rome. By day it really is the grand Rome with icons such as the great Roman monuments, the Coliseum, and Pantheon. But really that the night-time Rome is the small, medieval lanes the people walk through. By day it’s the archaeologist’s Rome and by night is the romantic Rome.

The Aperitivo Culture - Romantic Rome at Nighttime

The Aperitivo Culture

Even if you’re not a type of person that likes a cocktail before dinner, have a drink on a piece of expensive real estate, enjoy the little munchies surrounded by local people doing exactly that. If you’re in the mood to splurge, join in a rooftop bar at a hotel downtown, or just have an aperitivo on one of the squares. Then have dinner, skip dessert, take an after-dinner stroll with gelato.

A wonderful Roman night is all about the pace of things. Romans don’t try to fit in like dinner and a show … it just kind of dinner. You linger over each course because the meal becomes the evening’s entertainment itself and the Romans love to dress up to go out to meet their friends, sit at a little cafe or restaurant with rickety tables and traffic roaring past them. It’s that little slice of intimacy where they can then get into that pace of life and that rhythm of life where each course becomes a new magical thing. Don’t be a traveler who wants to keep it moving.

Charming Medieval Roman Neighborhood Trastevere

Trastevere—a Charming Medieval Roman Neighborhood with an Intense Character

You got that that local pride; there was a time when they would never cross the river on the other side of the Tiber River. In fact, literally Trastevere means “the other side of the river”—the district’s name derives from the Latin words “Trans Tiberim” beyond the Tiber River.

This is that other side of Rome—the intimate side of Rome—the Rome of the narrow lanes of the red pastel colors, buildings with green ivy hanging down with the people’s laundry hanging overhead, lanes pop into tiny little squares that feature little cafes, restaurants, pizzerias where you can sit down and enjoy your meal. The food is great, the aperitifs are great, but it really is presenting you the theater of the people. Don’t let that pass by. Hang out in these squares and you’re paying your cover charge for a great celebration of life.

Nighttime Romantic Walks - Romantic Rome at Nighttime

Nighttime Romantic Walks in Roman

For a great walk, start from St Peter’s Square because in the evening is lit up splendidly and I would just walk towards the river where the Castel Sant’Angelo, a Fortress where the Popes used to escape to in the past. It’s also a little beautifully lit monument cross the river Tiber, where you can cross the bridge of the Angels which is decorated with his beautiful Bernini statues. Walk along the Via dei Coronari and it does give us that back street village that is very romantic and end up at the beautiful square Piazza Navona.

Castel Sant’Angelo was originally a tomb for Emperor Hadrian. That was the original structure and then it took on other uses as time went on and in the medieval times because it was so tall and so monumental, it was used as a castle and as a prison. This tomb for Emperor Hadrian is across from the river Tiber because Ancient Roman laws established that the dead had to be buried outside the city.

it’s a wonderful place to go up at sunset. A great way to kick off your evening you go up there and you look across and you have this incredible view of Michelangelo’s Dome and all of the other domes of the city. You watch the sun turn orange and you watch the pigeons as they start flying by and this is where you begin to see night descend on the Eternal City.

What’s great about Rome at night is that on the one hand you’re walking down a little alley way or a little narrow street and then torch lit or seemingly torch lit with this new lighting and on all of a sudden you pop out and there’s a floodlit monument … there’s the pantheon … and all that then surprise element and you’re getting that mix of this very romantic and dark that this then punctuated with a blaze of light and glory from ancient monument and you can have a kind of a quiet street and suddenly you step into a floodlit square with three grand fountains and artists and street musicians and outdoor cafes in the evening.

Via del Corso Spanish Steps - Romantic Rome at Nighttime

Via del Corso, the Fountains, and the Spanish Steps in Rome

The main drag, the Via del Corso is shutdown, with police on horses monitoring the activities. It says a lot about the way in which an urban setting can be experienced … the Romans hate crowds as much as anybody else but they also don’t like deserted places. The passeggiata can feel that you’re part of a community … part of something bigger than just yourself.

Go to the Spanish Steps because that’s where all of Rome will be descending for nightfall and you will see the things that are typical of Rome at night. Witness the flood lights, see Bernini’s fountain down at the base, with people sitting on the on the steps, and if you wanted to you could climb up to the top where you can get a great view out over all of Rome so you can really feel like you are in one place but you’re taking part of the entire city.

Fall in Love with Nighttime Rome

During the day it can be an overwhelming city by day where everyone’s in a hurry and traffic generally competes with some of the greatest city views anywhere, but after dark that’s when Rome becomes a true spectacle.

Saints Augustine and Saint Thomas Aquinas Vilified Women in Their Writings

You can find other disparaging remarks about women throughout the history of philosophy. Consider what seminal Catholic thinkers like Saint Augustine and Saint Thomas Aquinas had to say about women:

  • “Woman is defective and misbegotten, for the active force in the male seed tends to the production of a perfect likeness in the masculine sex; while the production of woman comes from defect in the active force or from some material indisposition…”
    Source: St. Thomas Aquinas, Summa Theologica, q. 92 a. 1
  • “Good order would have been wanting in the human family if some were not governed by others wiser than themselves. So by such a kind of subjection woman is naturally subject to man, because in man the discretion of reason predominates.”
    Source: St. Thomas Aquinas, Summa Theologica, q.92 a.1 reply 2
  • “I don’t see what sort of help woman was created to provide man with, if one excludes the purpose of procreation. If woman was not given to man for help in bearing children, for what help could she be? To till the earth together? If help were needed for that, man would have been a better help for man. The same goes for comfort in solitude. How much more pleasure is it for life and conversation when two friends live together than when a man and a woman cohabitate?”
    Source: St. Augustine, Genesi Ad Litteram, 9, 5-9

Warren Buffett on Time Management: “All You Need Is … Time”

Warren Buffett on Time Management: Warren Buffett once said on time management, “The rich invest in time; the poor invest in money.”

Buffett is currently the fourth richest men in the world. He can buy practically anything he wants to, and more than nearly everyone else could ever dream of.

Nevertheless there’s one thing that even Warren Buffett cannot buy, and that is time.

Here’s a brief transcript from a Charlie Rose interview:

Warren Buffett: I mean I can buy anything I want basically, but I can’t buy time.

Charlie Rose: And so to have time is the most precious thing you can have?

Warren Buffett: Yes, I better be careful with it. There is no way I will be able to buy more time.

Warren Buffett's Interview with Charlie Rose (Time Management) Charlie Rose: And living in Omaha makes that easy?

Warren Buffett: That makes it a lot easier. I, for 50 whatever, well for 54 years I spent five minutes going each way now. Just imagine that was a half an hour each way. You know. I know the words to a lot more songs and that’s about it.

Charlie Rose: It adds up. Doesn’t it?

Warren Buffett: It really adds up. Now if you’re doing an hour a day difference coming and going that’s two and a half percent of the person’s work week. That means 40 years you’re talking about a year.

An undisciplined mind will find every reason to do what should not be done and every excuse not to do what should be done. Warren Buffett once said, “The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.”

Ira Glass Time Management Technique

This American Life‘s Ira Glass talks with Lifehacker about how he works. When asked what his best time-saving shortcut or life hack was, he responded:

I’ve got nothing. Reading other people’s answers to this question on your website today made me realize I live my life like an ape. I eat the same breakfast and lunch everyday, both at my desk. I employ no time-saving tricks at all.

Though come to think of it, I guess my biggest life hack—and this is the very first time I’ve attempted to use the phrase “life hack” in a sentence—is that my wife and I decided to live just a few blocks from where I work. We did this because of our dog. Since I spend at least an hour every night walking the dog, I didn’t want to spend another 60 or 90 minutes a day commuting. I don’t have the time. Like lots of people, I work long hours.

FedEx’s ZapMail Service: Failure to Foresee

Innovation is Not Without Risk

How Federal Express's Zapmail System Works

One of the defining characteristics of great leaders is their knack for seeing into the future.

Innovation is not without risk. There are plenty examples of failures at companies. However, on the other side of the coin, if you’re too cautious and too late—all you have is a dinosaur business. Navigating that fine line between risk and innovation is very important.

FedEx's Zapmail System Case in Point: ZapMail Service was a system that used fax machines at FedEx offices to transmit documents for clients in different cities. After being introduced in 1983, when FedEx was known as Federal Express, the service was soon eclipsed by the rise of fax machines priced cheaply enough that most offices could purchase their own. In addition, ZapMail was based on satellite technology, which needed the space shuttle to work effectively. However, the space shuttle blew up, dealing a body blow to FedEx’s plans. FedEx folded ZapMail in 1986, taking a costly write-off.

No Innovation Without Experimentation

Commenting about FedEx’s ability to integrating new acquisitions into its fold after its purchase of Paul Orfalea’s Kinko’s franchise, journalist Michael Copeland commented in the Autumn-2006 issue of Booz & Company’s Strategy & Leadership magazine:

As with other acquisitions, Fred Smith saw something in Flying Tigers and American Freightways that others didn’t because his point of focus lay far beyond theirs. Mr. Smith doesn’t always get it right when he looks into the future. His expensive and ultimately failed experiment in ZapMail, a dedicated fax network that couldn’t compete in the early 1980s with the new, inexpensive consumer fax machines, is proof. “A guy like Fred Smith doesn’t build a company like FedEx without taking some risks and making some mistakes,” says Mr. Hatfield, the Morgan Keegan analyst, “but clearly the successes far outweigh the failures.”

Federal Express's Zapmail System There can be no innovation without experimentation, and there can be no experimentation without the risk failure. In addition, taking risk goes against the grain of many companies’ cultures. In the corporate world, there are powerful incentives for people to play it safe. However, leaders must work particularly hard to offset these forces and give their teams the consent to fail and the assurance to make their case and go out on a limb. Leaders must not only promote experimentation, but also encourage people to terminate faster on projects that are not working without fear of reprisal. That is to repeat the cliche “fail, but fail as fast as possible” and take the lessons learned to the next experiment.

Charlie Munger in Praise of Multidisciplinary Thinking

A multidisciplinary approach involves drawing appropriately from multiple disciplines to redefine problems outside of normal boundaries and reach solutions based on a new understanding of complex situations.

'Charlie Munger The Complete Investor' by Tren Griffin (ISBN 023117098X) From ‘Charlie Munger: The Complete Investor’ by Tren Griffin

No one can know everything, but you can work to understand the big important models in each discipline at a basic level so they can collectively add value in a decision-making process. Simply put, Munger believes that people who think very broadly and understand many different models from many different disciplines make better decisions and are therefore better investors.

Multidisciplinary thinking offers a schema or a philosophical template within which thinkers can find an intellectual connectedness to decompartmentalize their approach and face the new intellectual horizons with a broader perspective. Single disciplines are too narrow a perspective regarding many phenomena.

Human thought, as it has evolved in detached disciplines, and the physical systems within which we live exhibit a level of complexity across and within systems that makes it impossible to understand the important phenomena that are affecting humans today from the perspective of any single incomplete system of thought. Thus interconnected systems and high levels of complexity yield a situation in which multidisciplinary tactics to understanding and problem solving produce the real growth industry in the next generation of scholarly thought.

Disciplines develop their own internal ways of looking at the phenomena that interest them. Become broadly knowledgeable about any particular phenomenon as possible before constructing theories and asserting truth assertions. Problems arise from the lack of a viewpoint from which one can understand the relationship between various disciplines.

'Conceptual Foundations for Multidisciplinary Thinking' by Stephen Kline (ISBN 0804724091) In ‘Conceptual Foundations for Multidisciplinary Thinking’, Stanford’s Prof. Stephen Jay Kline expounds the necessity of multidisciplinary discourse:

Multidisciplinary discourse is more than just important. We can have a complete intellectual system, one that covers all the necessary territory, only if we add multidisciplinary discourse to the knowledge within the disciplines. This is true not only in principle but also for strong pragmatic reasons. This will assure the safety of our more global ideas.

Producing and applying knowledge no longer work within strict disciplinary boundaries. New dimensions of intricacy, scale, and uncertainty in technical problems put them beyond the reach of one-thought disciplines. Advances with the most impact are born at the frontiers of more than one engineering discipline.

Multidisciplinarity refers more to the internalization of knowledge. This happens when abstract associations are developed using an outlook in one discipline to transform a perspective in another or research techniques developed in one elaborate a theoretic framework in another.

To get the most out of their R&D workforce, many organizations seek persons who comprehend a range of science and engineering principles and procedures to guarantee that work will be advanced even if a specific expert were not always available.

Is Costco threatened by Amazon?

Is Costco Wholesale threatened by Amazon?

The North American retail landscape appears entirely different today than it did even ten years ago. The method that consumers make purchasing decisions has radically changed: they stand in stores, using their smartphones to match prices and product reviews; family and friends instantaneously chip in on shopping choices via social media; and when they’re ready to buy, an ever-growing list of online retailers deliver products directly to them, occasionally on the same day.

Brick-and-mortar retailers such as Costco simply focus on selling items that Amazon can’t beat them on. Some products do not lend themselves to package delivery since they are too big, heavy, cheap, fragile, or reliant on fitting properly. Likewise, lawn chairs, boots, thumbtacks, bags of cement, frozen shrimp, and thousands of other items are difficult to move via ecommerce channels.

Paradoxically, Costco is not one of the many companies that accuse Amazon for uninspiring growth or stagnation. Amazon can easily take bites out of the edges of Costco’s market share, and that’s all it takes to flatten out comparable sales, an important metric in the retailing industry.

Costco is remarkable at staying in stock on the goods it sells, but when it comes to general merchandise, you have to mostly grab what they have. Want Fancy Feast cat food? They’ve got it, but only in one specific flavor combination packet. If your cats don’t like it, so it goes. However, you can get precisely the flavors you want from Amazon, without waiting in lines.

Then there’s items like deodorants. While I’m happy to buy in quantity, I was unsure if Costco sells the brand I like. I ordered a four-pack from Amazon and it was here when I got home. Same with shaving cream. Women won’t find “Edge” shaving cream to have anything like a feminine smell. I bought it once. That was that: another item, gone to Amazon.

Costco established the warehouse club retail model, which depends on customer-friendly average markups on branded products (in the low double digits, compared to the high teens at WalMart and the mid-20s at most grocery stores), high throughput, bargaining power, a no-frills shopping environment, and supply-chain effectiveness.

Costco-Amazon Competitive Analysis

I still like Costco, and I’ll definitely continue re-upping my membership. The treasure hunt can be fun and the moveable feast is great. But quantity purchases of exactly the household items I want aren’t available often enough. It sells one kind of almond butter, two kinds of detergent. These are items that have forever left my Costco basket, and have actually caused a reduction in trips, as well.

Costco has lots of options left available to it. It rarely advertises. It can change that. It has been a real laggard in omnichannel retailing…any relationship between items on the website and items in stores is purely coincidental (or opportunistic). I think the company has to change that. There are some items that have to be touched and seen, even if the sale consummates on-line.

The company’s business model remains sound, but the assortment on certain items and sundries might have to broaden. No one wants to go on a treasure hunt for deodorant. That’s a seriously risky proposition.

In May 2016, UBS analyst Michael Lasser and team argued after Costco’s quarterly results that the quarter was so good that it “refutes the bear case that centers on the potential that Costco is losing customers to Amazon.com”:

We think this provides evidence that refutes the bear case that centers on the potential that Costco is losing customers to Amazon. Further, Costco’s op. margin was in line w. our expectations showing how well it’s managing in this tough environment. A lower than expected tax rate added ~$0.01 to EPS. While Costco’s sales slowed in 3Q, we think the deceleration was largely due to the pending transition of its credit card. We believe its sales will pick back up once the transition occurs on June 20. This provides a visible NT catalyst. Plus, there’s a secondary catalyst next year when Costco is likely to raise its membership fees. We think buying shares ahead of these catalysts is a prudent move.

Grocery One of Coscto's Advantages in comparison to Amazon

In July 2016, UBS analyst Michael Lasser and team explained why shares of Costco Wholesale soared after the company reported same-store sales for June:

While there was no mention of a disruption from the credit card transition, we believe it had some impact. So, the result would have been even better without this effect. Further, it’s probably too early for the shift to Visa (V) to have that much of a benefit. The gains should build in the coming months, driving an acceleration in Costco’s US comp. Even so, the company still generated a 3% increase in its global traffic. This type of performance warrants a premium valuation, in our view.

With the credit card switch in effect, spend/member is likely to pick up as private-label credit-card customers take advantage of the new card’s more attractive reward structure (2% cash back at Costco vs. 1% prior). Also, we think Costco’s reliance on grocery & gas sales (~2/3 of total sales) helps insulate it from Amazon.com (AMZN). These factors support our forecast of 4% core US comp growth in July, which would match its highest growth rate since Nov ’15.

Costco has long been known for giving higher wages and presenting more liberal benefits than its competitors —and producing superior sales per square foot, too. The benefits of the good old days are unreasonable because of rising costs and an aging population. Lifespan job tenure is obsolete and most people embrace workforce mobility. Yet in a consumption-based economy, workers must be able to afford more than the basics, and they deserve a certain measure of security.

Citing a recent report from Cowen’s Internet analyst John Blackledge, Cowen analyst Oliver Chen wrote that Amazon Prime members are expanding their shopping well beyond books, clothing and movies. Data shows that 22% of those Amazon Prime members shopping on the web site 3.5 times each month buy groceries on the web site.

As detailed in the Ahead of the Curve: Amazon Dominates “Prime” Time 50-page report by Cowen’s Internet Analyst John Blackledge), AMZN’s aggressive growth of Prime is both impressive and has wide ranging competitive implications given broad HHI, permeation across media and appeal among young consumers. How can bricks-and-mortar retail compete?

  • The key competitive weapon remains transformation towards a consumer-led supply chain which integrates physical stores to drive convenience—Buy online pick up in store, return in store, ship from store, and car pickup along store need to be utilized across chains;
  • proprietary relationships with vendors and vertical integration such as owning factories and direct sourcing capabilities;
  • frequency of store traffic based on inventory turns and product assortment;
  • emotional, brand-lead lifestyle contact;
  • categories which are not easily replicated online (jewelry, physical fitness); and
  • fashion & curation leadership.

Citi Costco Credit Card Citi’s new Costco Anyway card is significantly more appealing than Amex’s TrueEarnings Costco card. Costco’s management has stated that the terms Citi offered were too compelling for Costco to stay with Amex; to protect/ insure continued customer service levels in transition to Citi, there are significant and specific requirements associated with the portfolio.

Amazon.com Prime Compared to Costco Membership

Morgan Stanley’s Simeon Gutman and team conducted a survey and suggest five reasons that Costco Wholesale should remain Amazon.com-proof:

  • Amazon.com (AMZN) and Costco Are Not Mutually Exclusive. Of the 23% who are Costco members (628 respondents), 45% (285 respondents) are Amazon Prime members as well, which suggests the two retailers fulfill different consumer needs. Of the 33% surveyed who are Prime members (893 respondents), 32% (285 respondents) are also Costco members…
  • Grocery One of Coscto’s Advantages. 12.5%/11% of Costco members call out increased spending on packaged/fresh grocery, well ahead of the 5%/2% of Prime members….
  • Only 8% of People Shopping at Both Costco and Amazon Plan to Shift Dollars Away from Costco. Of the 14% (285 respondents) who shop at both, only a net 8% (32 respondents) plan to shift shopping away from Costco towards Amazon. This represents just 1% of total consumers surveyed.
  • Sticky Members with Higher Spend…with Amazon Scoring Higher on Multiple Qualitative Factors. 94%/95% of surveyed Prime/Costco members intend to renew their memberships, which speaks to high loyalty and low churn. Further, 49%/26% of Prime/Costco members indicated shopping more frequently over the past 12 months and 85% of surveyed members attributed “Retailer I Trust” to Amazon and Costco. It is also notable that Amazon scored materially higher than Costco in perceived prices, selection, convenience, quality of checkout and ease of navigation…which will be important to monitor going forward as these advantages could tilt Costco members’ toward Amazon over time.
  • Costco Members Younger than Perceived. The average Costco member is 49 years old vs. 44.5 for the average Amazon Prime member. This four-year gap seems insignificant, in our view, and is counter to the bear case that Costco does not resonate with millennials…

Implications: The survey results should be a positive step in alleviating the greatest investment debate for Costco, that the club model/Costco is at risk from Amazon.

Given that membership fees represent about 70% of Costco’s operating profit and renewal rates stand at about 90% in the U.S. and Canada, Costco’s long-term revenue and profit growth could stagnate. There is little room for additional household penetration because Costco by this time has around 80 million members; historic sales and earnings growth predictions may not be maintainable. Also, new club openings in current markets could cause cannibalization of sales from older locations. Not to mention of challenges in acquiring appropriate real estate choices for 140,000-square-foot warehouse clubs in urban regions.

Costco’s Winning Business Model Strategy

Costco Logo: Costco's Winning Business Model Strategy

Costco has built a devoted foundation of customers with low prices and workers with high wages. The discount warehouse services industry is highly competitive. There are several warehouse operators across the United States and Canada that offer similar merchandise quality, selection, and price.

At the end of financial year 2015, Costco managed 480 membership warehouse clubs in the United States, 89 in Canada, 36 in Mexico, 27 in the United Kingdom, 23 in Japan, 11 in Taiwan, 12 in Korea, 7 in Australia, and one in Spain. Base and executive memberships cost $55 and $110 per year, respectively. The company operates 557 warehouse stores, 406 of which are situated in 40 U.S. States and Puerto Rico. The rest are in Canada, Mexico, Japan, Taiwan, Korea, and the United Kingdom.

The internet has made it immeasurably easier for shoppers to chase for the latest deal—and a lot more demanding for brick-and- mortar retailers to command customer loyalty. However, Costco has managed to resist the tendency—with only 3% of its retail sales occurring from e-commerce. In reality, it outclasses other retailers when it comes to dependably increasing sales from its millions of loyal shoppers.

At the warehouse stores, forklifts relocate pallets into racks such that the first time an item is actually touched is when the consumer contacts into the shelf to collect the item and places it into their shopping cart.

Costco's Sustainable Competitive Advantage

Costco’s Sustainable Competitive Advantage

Costco’s objective has been to increase sales while cutting long-term costs (by trimming freight expenses, scaling its merchandise, negotiating prices with vendors, and reducing packaging) with the intention that it can pass those savings down to members. Costco has said that its “rule of thumb is to give 80% to 90% back to the customer.” Those efforts have paid off, with memberships reaching an all-time peak of 81 million members in 2015.

Shiny steel caskets exhibited amongst the stacks of snow tires and pallets of heavy applesauce, rose-scented toilet tissue, mentholated shaving cream, and mild-flavored salsa. However, in time, people may grow familiarized to the sight. By including these special deal items to the cart, the total spend at the cash register expands. This behavior diverges severely with the type of consumer who has the self-control to fill up on everyday consumables at everyday low prices. The latter type of consumer does win in the end even if the cost of the membership is factored into the equation. As one (rather demonstrative) instance, when reviewing the 1999 Kroger-Fred Meyer merger, the FTC vindicated this definition by asserting,

Supermarkets compete primarily with other supermarkets that provide one-stop shopping for food and grocery products. Supermarkets primarily base their food and grocery prices on the prices of food and grocery products sold at nearby supermarkets. Supermarkets do not regularly price-check food and grocery products sold at other types of stores and do not significantly change their food and grocery prices in response to prices at other types of stores. Most consumers shopping for food and grocery products at supermarkets are not likely to shop elsewhere in response to a small price increase by supermarkets.

What Makes Costco Successful

What Makes Costco Successful

Renewals of Costco’s $55 annual memberships stand at a remarkable 91%—a record high. On the word of financial analysts, the low price of memberships and a stable return of loyal members is what sets Costco apart from big box and department store retailers which persist to fight for market-share gains in a altering landscape of increased competition from online retailers led by Amazon. Costco’s ability to dependably drive increases in traffic is a key differentiator.

Everything at Costco is continually being evaluated for productivity. Costco manages a mix of distribution facilities to accomplish the overall objective of operating with an efficient supply chain. The company lately substituted the form of their milk cartons to get rid of the empty space at the top. They can fill thinner jugs all the way to the top, so they can get more gallons onto the same amount of space on a freight truck. The loss-leader abilities of Costco’s business model ought to endure to drive market share advances over the long term. However, it is possible that incumbent grocers could react to Costco, Sam’s Club, or Walmart Supercenter entry along one or more of these non-price dimensions, in which case their prices could continue unaffected or rise.

Costco’s philosophy is to provide its members with quality goods at the most competitive prices. It does not concentrate its efforts on maximizing prices in the short term, but instead focuses to maintain a perception among its members of “pricing authority,” or constantly providing the most competitive prices. This question is actually quite complex in that it has multiple answers that boil down to individual consumer behavior. The reality is that Costco has perfected a purchasing strategy known as the “treasure hunt” which means that there are always new items and tempting deals that extemporaneously come and go. The consumer who walks every aisle knows what I mean by this because they are subconsciously on the treasure hunt.

During the next 10 years, warehouse openings should move the number of primary cardholders to 65 million–75 million, up from 45 million in the most current fiscal year. In spite of having warehouses that spanned three acres, and piles of merchandise stacked to the ceiling, Costco carried only 4,000 carefully chosen products at a time. Three-quarters of the items were such “basic” products as batteries, laundry detergent, and instant noodles. Then there were the “high-end” name-brand products, which might be stocked at Costco one day and then gone the next.

Costco Employees Happier with Wages and Benefits

Costco Employees Happier with Wages and Benefits

While Walmart and Target just recently began increasing take-home pay for their employees, Costco has been an industry trendsetter for years. With starting hourly pay at about $11.50 and a company average of $22 per hour, Costco’s compensation costs beat the competition. Costco has asserted that paying employees well can be more advantageous eventually by keeping turnover low and capitalizing on employee efficiency. Actually, turnover stands at about 10% compared with the industry average of 55%. For employees who have been there more than one year turnover drops to just 6%. Employees rarely leave: The company turnover rate is 5% among employees who have been there over a year, and less than 1% among the executive ranks. Costco management has asserted that loyal employees bring about better customer service.

Costco purchases the majority of their merchandise promptly from manufacturers and routes it through a network of cross-docking facilities, which act as merchant consolidation points to move goods in full truckload volumes to the stores. Sam’s Club carries about 4900 items and Costco around 4000; by comparison, the normal grocery store carries approximately 50,000 and the average Walmart about 100,000. Furthermore, the shopping experience at warehouse clubs is unusual—members pay a fee for access to goods stacked high and sold in wholesale quantities in low-amenity environments. Warehouse clubs are very spartan in their accommodations. They do not bag consumers’ purchases, and a club employee checks all shoppers’ carts and receipts on exit.

Secret to Costco's Success Lies in Supply Chain Efficiency

The Secret to Costco’s Success Lies in Supply Chain Efficiency

Big-box retailers Costco, Sam’s Club, BJ’s Wholesale, and Walmart, along with full-service and fast food restaurants, are significant contributors to the nation’s obesity outbreak. Costco continues to productively increase its businesses, on account of its low prices and robust customer loyalty. Its ability to provide quality products, at a reasonable price, should appeal to most consumers in North America and around the world. While competition in the market remains ferocious, Costco’s leadership is taking the right steps to guide the company into the future. Over the years, Costco added departments, growing further than the traditional discount warehouse offerings. A large majority of the stores featured a drugstore, an optical-dispensing center, one-hour photo services, a food court, and the ever admired and low-priced hot-dog stands. More than half-offered hearing-aid centers and a handful were equipped with print shops and copy centers. More generally, not all big-box chains are created equal. The big-box retail literature has fixated almost exclusively on Walmart, examining its effects on a wide range of outcomes, including prices, labor market consequences, small business activity, time use, obesity, and social and cultural pointers.

Using city-level panel grocery price data matched with an exclusive data set on Walmart and warehouse club locations, customers find that Costco entry is associated with higher grocery prices at obligatory retailers and that the effect is sturdiest in cities with small populations and high grocery store densities. The competitive response need not be to reduce prices; conversely, as segmented-market models with a mix of brand-loyal and price-sensitive consumers have shown that in some cases incumbents can increase prices in response to a low-cost entrant.

The lesson to be learned from Costco for every manufacturer, distributor, or retailer, regardless of industry, is to figure out how to eliminate the fingerprints within the respective supply chain and within internal processes.