Episode 30 | The Grocery Industry with Professor David Halliday

In Episode 30 of “Market News with Rodney Lake,” Rodney Lake, Director of the GW Investment Institute, speaks with Professor David Halliday about the complexities of the grocery industry. Halliday explains how the grocery sector operates with razor-thin profit margins, often between 1-3%, and how this drives consolidation within the market. With the industry's top players like Walmart, Costco, and Trader Joe’s utilizing distinct business models, Halliday emphasizes major trends like the rise of private-label products, e-commerce, and merger attempts. Tune in as Professor Halliday sheds light on the strategic shifts grocery chains must make to adapt to evolving market conditions!

Transcript

Rodney Lake
Thank you for joining Market News with Rodney Lake. This is a regular program for the GW Investment Institute where we talk about timely market topics. I'm Rodney Lake, the director of the GW Investment Institute. Let's get started. Welcome back to Market News with Rodney Lake. I'm your host, Rodney Lake. Today, special guest, Professor David Halliday. Professor Halliday, welcome to the show. And thank you for being on here. Could you please introduce yourself for our audience?

David Halliday
Absolutely. Thank you, Rodney. I'm David Halliday. I teach business strategy here. I teach, I don't know, mostly MBA students, but also undergraduates and master's students. In my career, I did a bunch of things. It was a very circuitous route to get here. I was a video editor for years. And as luck would have it, 

Rodney Lake

I didn’t know that.

David Halliday

Yeah, as luck would have it, my last job in video editing, somewhat not coincidental, was for a business news show.

Rodney Lake
Oh, wow.

David Halliday
And that show went bankrupt. This was 2008. Everything was going bankrupt.

Rodney Lake
Yeah.

David Halliday
And my boss gave me a piece of advice. He said, go get your MBA. You're really good at this stuff. And so I did.

Rodney Lake
Wow. Transformative. 

David Halliday

Transformative

Rodney Lake

That was good advice.

David Halliday
It was. And I went to, got my MBA. I worked at a hedge fund that blew up as well in the European debt crisis of 2012. So I found myself in a PhD program. Loved it. And when I graduated, I got a job offer here and accepted instantly. I was very excited to move back to DC.

Rodney Lake
Excellent. And so just a little bit more on the topic of GW School of Business. So why did you choose George Washington? Why? You know, it sounds like you were in the PhD program. Obviously, you're then making choices about where to go. It sounds like there's some connection to DC. Why? GW School of Business.

David Halliday
Well, the answer isn't going to be nearly as interesting as you're hoping for here. I had a job offer from Pepperdine, okay. Which sounds… Yeah, exactly. They offered me an office overlooking the Pacific.

Rodney Lake
That's pretty good.

David Halliday
Yeah. I mean, you know, on any of these bad days here, I think about that one. But at one, they didn't treat me as a career path hire as someone that they would commit to if I committed to them. And GW, from the minute Howard Beales gave me the job offer, it felt like they were offering something to me and I was committing to them. And hopefully we've grown together over the past eight years.

Rodney Lake
Well, I'm delighted that you're here at the School of Business, and I know students give you good ratings. And you're a very popular professor and have achieved awards in that category. So, thank you, Professor Halliday for your service at GW. All right. So now we're going to get into some news here or let's say some business. And so this is market news with Rodney Lake. So we like to talk about business. And one of the areas that you've done quite a bit of research on is the grocery industry. And I think a lot of people, you know, maybe have misconceptions or, you know, they have their ideas and they think that, okay, whatever I experience at whatever the grocery store that they go to is maybe the same everywhere. And probably for some things, it is, but I think there are some things that we can help people better understand about the business of a grocery store, on today's episode. So, you know, first of all, why the grocery industry? Like, why should people be interested in this?

David Halliday
That was my question. Every strategy professor teaches a grocery industry case.

Rodney Lake
Oh. I didn't know that.

David Halliday
Well, at least all the ones I do know do, usually it's an airline in a grocery. 

Rodney Lake

Got it.

David Halliday

And I came in saying, I'm not going to be that strategy professor. The grocery industry and airline industry sound very boring. And yet my two favorite cases today are Trader Joe's and Southwest Airlines. Right. And the more I've studied them, the more I've gotten interested. I mean business, to some extent, at least on the academic side, occasionally feels like a game. We have to understand where does that profit come from? How do these companies reinvent themselves? Where do they invest? And with the grocery industry, it's tangible. It's easy to understand. I'm doing research there. Yeah. If you're listening. I'm making little air quotes right now. Research there every week. I hate shopping, but when I'm there, I'm thinking, I'm trying to figure out this game around me. Right. What about the consumer packaged goods? What about the fresh produce? What about the meat and dairy aisle? And I found that there are a lot of different business models. I only expected there to be one.

Rodney Lake

Right. 

David Halliday
Which is how you introduced this, I'm going to buy milk, I'm going to buy, apples. Right. But there are at least six categories of business models.

Rodney Lake
Which I think would surprise a lot of people.

David Halliday
It surprised me, and I think I literally have a pin mark here because I had five written in. And then I thought about, well, you know, what Whole Foods is doing is just so unique enough. I'll add in six. 

Rodney Lake

Nice.

David Halliday

So we've increased just in the past 20 minutes.

Rodney Lake
It's expanding rapidly.

David Halliday
At this rate. So, we've got Walmart, Costco, Trader Joe's, Aldi's, and then of course we've got the, the, the film Bad Guys, the industry generics like Kroger and Albertsons and all of those have those distinct right business models. So this is great for my students. Students come in. They're hesitant to discuss business fundamentals, but with groceries, if we're talking about milk or eggs, I can get them to talk about cogs, cost of goods sold, and G&A. So selling, general administrative, the overhead cost, and with groceries they're willing to buy in a little bit. They’ll bite. If I mention finance in some other terms they’ll, you know, leave class.

Rodney Lake
Right. Glaze over. Move on. Move on to TikTok. Instagram.

David Halliday
Yes. The volume on the laptops goes up.

Rodney Lake
Well, I think look, one thing I think that's interesting is that this is super topical. Obviously, this was a big part of the last election is inflationary prices experienced at the grocery store, which virtually everybody that shops for food experiences. And so you mentioned some of the major players there, that are in the industry. And I think people would recognize all of those major players. Could you maybe now talk about some of the trends, in the grocery business? I think a lot of people, as you mentioned, probably, you know, their experience of whatever they buy, you know, they don't necessarily think about, well, where is this going that there are five different business models that these people are deploying? And I would say that most people probably don't even understand unless it's really in your face about that. There's a distinction between these business models. So maybe you could maybe talk a little bit about the major players in the models that they have, and then maybe talk about the trends.

David Halliday
Sure. And let me even give you a high level industry look first 

Rodney Lake

Sure. Perfect.

David Halliday

Because the fascinating story we're talking about, market news. Yeah, the news this year is the level of concentration in the industry. Right. So is the inflation demand side or supply side? Are the companies pushing their prices, the inflationary prices, through to the customer or are they able to do that and, you know, increase their overall margin while doing so? And what we find, if we're looking at this from an economics perspective, it's not obvious to me. It does seem that it's a highly concentrated industry that could justify even higher profit margins for the current players, because we're looking at somewhere between a 55 and 80% concentration just for the top four companies. 

Rodney Lake

Wow. 

David Halliday
And I've done my own numbers. I've looked at Statista, I've gone up, you know, bottom up through the industry, but we have a fairly wide range. But either of those 55 or 80 are still are.

Rodney Lake
Very high rates.

David Halliday
Are very concentrated. Not quite tech, but it's it's in the neighborhood.

Rodney Lake
And far more concentrated than it probably was 20 years ago.

David Halliday
Far more in fact, the Herfindahl-Hirschman, 30 years ago is up 500% today.

Rodney Lake
And when, I think anecdotally, people would think about that because a lot of the mom and pops, which is part of the criticism for some of the bigger players, are gone, and at the expense, you know, of the consumer having those options, this concentration. But it seems like also because it, it's a difficult industry, in some in some ways, the profit margins, the net margins tend to be lower, 

David Halliday

very low.

Rodney Lake
It really does drive consolidation.

David Halliday
Yeah.

Rodney Lake
And back to the industry.

David Halliday

Back to the, that’s it, that’s my next line was low margins. I mean we’re looking at 1.3% margins for the industry. It’s razor thin. And yeah, so, 1.3% for Kroger, 1.2% for Albertsons, 2% for Ahold Delhaize, which is a Food Lion, parent company, Aldi only 1.4%, Costco 3%. Rumors have always been there that Trader Joe's has a 5% margin. Something like the golden goose of the grocery industry. Seeing these now 5 might be a bit high

Rodney Lake

Seems high. If they had 3%, they would still be industry leading up there with Costco. 

Rodney Lake

I don’t have any vested interest in saying this, but Trader Joe's is my favorite grocery store.

David Halliday

What's your favorite product?

Rodney Lake

Favorite product. I don’t know. There’s so many good products at Trader Joe’s . The mango bars are probably a big-time favorite.

David Halliday

Everyone has one. If you go back enough, you have one

Rodney Lake

Well, again, thanks. And I think one of the things that people don't necessarily think about is, you know, if they're not connected to it, if they know something about it, they might know this, that the profit margins are quite low. And I think when people think, okay, well, there is these inflationary pressures. Well, these people are not making a lot of money at the net level to begin with. And so trying to pass these things along can be very challenging, because the way that the consumer feels it is if it's a direct pass through and they're maintaining their margins well, they're feeling that price 100% of that price increase. But if the if the grocer decides, hey, we're going to we're going to try to absorb some of this, they just don't have a lot of room to do that.

David Halliday

No, no.

Rodney Lake

Yeah. And so in your view, when you talk about the industry, what what's been the impact recently, you know, for this consequence, you know, do you think it's, you know, it's driven any sort of consumer, and or industry behavior that's different than, than prior to this period? Or do you think that it's pretty much, you know, business as usual? And, you know, everyone's really trying to figure out, you know, how to how to deal with this.

David Halliday

We just talked about Trader Joe's and I think the number one most interesting trend is generics. So store brand products. And Trader Joe's as a company essentially only sells store brand products. So your mango bars are Trader Joe’s.

Rodney Lake

Trader Joe's.

David Halliday

You know, you don't know who makes them, but they're Trader Joe's. 

Rodney Lake

Yes.

David Halliday

To to to you to us at least. We see this with Costco. The reason Costco's margins are 3%, which is, you know, just luxurious by industry standards, is the Kirkland brand. They have their own generic and they're very good at, you know, managing the products, right? Using the Kirkland brand name and, relating that to the Costco product lineup. So the classic, if you think Kirkland, the first thing my students think of is Kirkland vodka is Grey Goose vodka. So you've heard this urban legend, right? 

Rodney Lake

Yes.

David Halliday

Everyone has. Yeah. The it's it's not true. I've looked it up. I've done a taste test, but I've looked it up, and, this is definitely not true, but it's interesting that it's a such a pervasive myth, an urban legend.

Rodney Lake

And maybe they put it out there. I'm not saying that.

David Halliday

Oh, absolutely. Absolutely. I mean, you wouldn't see that if you could get away with it. But it just shows how if you can pull the brand out, you know, brand value of, say, for Doritos might account for 30 to 40% of the product sales, well, 30 to 40% margin versus 3% margin.

Rodney Lake

Very different.

David Halliday

Very different. And so the industry trying to make those two things work, or at least in terms of making generics work, is, I think, the number one trend from the perspective internally of the companies.

Rodney Lake

Which would well, you know, just let me pick up on that. So it would make sense then that some current leaders on the margin side, and we don't necessarily know exactly what Trader Joe's margins are, but it would then make sense with what you just mentioned about the about essentially the private label or the white label, however you describe it, that Trader Joe's and Costco would then be leaders in this because they have developed these brands Kirkland for Costco and Trader Joe's for the for the whole store.

David Halliday

Yep. 

Rodney Lake

So do you think that's the future? Is that a trend that some of these other places, like an Albertson's or a Kroger or a Food Lion, or are they going to have to pick up on this and double down or or there's just not room for them to do that.

David Halliday

They want to, but they can't. It's these are things that need to be built up long term. 

Rodney Lake

Right. 

David Halliday

And, you know, detail by detail over time. And I tell my students, we do Trader Joe's. And I really think this Trader Joe's is in the mind of a consumer, let's say me. They're perhaps three bad products away from me never walking in there again. So I bought a Trader Joe's, frozen spinach the other day. And I know that that like, what they've been selling me, it's it's been fine. It's better than what Safeway sells me and it this time it was worse.

Rodney Lake

Oh wow.

David Halliday

And I was like okay. You know and I keep that running tally. And they're going to have to impress me with the new product

Rodney Lake

The next thing, yeah. 

David Halliday

before I kind of let this one go. They, they, you know, like they, they'll give me my money back. But that's not the point. Like, I need to I need to feed myself, right. Yeah. So doing doing that is very hard. So the companies want to do it. Kroger wants to do it. But ultimately they're not going to succeed.

Rodney Lake

Right. And they certainly don't have the history. For example, as Costco with the Kirkland brand. Right. They have built that up over time. They have built the loyalty into the business model. And it's a very different set up, Costco versus a Kroger, in any case. So maybe let's talk about sort of now, you know, a little bit about e-commerce. And so that, you know, comes up in a variety of different ways. Of course, when people think about Amazon, when people think about Walmart, when people think about now, Costco trying to make some progress into this, you know, grocery seems like a challenging area for e-commerce to be consequential just because you have the low, net margins to begin with. So, you know, you need a ship that obviously needs to be, possibly, excluded and charged direct to the the consumers. And some of the things can be heavy and bulky and maybe it's very challenging to make this work. What do you see as the future for e-commerce for some of these bigger chains?

David Halliday

Well, it's certainly there. It's certainly a future. Costco's partnership with Instacart, about to say Instagram, with Instacart is very interesting. It has worked. That's one of the ways I buy from Costco, for example. But I in thinking, say back to the 90s, the the parody of the 1990s tech boom or internet boom was, was it PetFood.com?

Rodney Lake

Yeah

David Halliday

And which was what you're describing, right. Expensive to ship, low margin, heavy, labor intensive. So all the things that you don't want and that's structural to the industry if you're adding on two, at least two layers of cost, the labor to get the food packed and then the labor to get the food shipped, plus the cost, cost of shipping. And it's so it's not going to be a silver bullet.

Rodney Lake

Yeah. 

David Halliday

For them to improve profitability. And yet they have to do it. It's where demand is. It's it's essentially like a mirror of the industry itself, just in e-commerce form. I don't think that'll change the way it did, say, for DoorDash, where they brought a platform model and pushed everyone around and got huge profit margins, in a tech way. And, by and large, for e-commerce, I don't see too many changes. In fact, one of the interesting things I see is that Amazon hasn't exactly dominated the space. 

Rodney Lake

No.

David Halliday

They haven't picked up that many customers. Amazon Fresh is, only thought to be about a $3 to $5 billion, margin. I actually may be off on that, but it's not a particularly big.

Rodney Lake

And it's certainly part of their greater enterprise. 

David Halliday

Sure.

Rodney Lake

It is not a huge driver at this point. And I think it maybe to pick up on that is that I think a lot of people expected Amazon to be much bigger in the grocery business after the acquisition of Whole Foods. 

David Halliday

Yeah. 

Rodney Lake

And it seems like, I wouldn't say stalled out, but it seems like after the acquisition it had there doesn't seem to be any great synergies that they received from the Whole Foods acquisitions to the greater Amazon Fresh empire. Which maybe makes the point of like, this is a tough business. And it's tough to make inroads. People have preferences, that are, you know, better their own. And I think it says something about the competitive landscape, about the whole business. So I think I want to move on now to competitive landscape. 

David Halliday

Sure.

Rodney Lake

And you mentioned earlier about the consolidation of the business over the last 20 and 30 years. And so you had this potential merger, that didn't work out between Kroger and Albertsons. Could you maybe just talk about, you know, your views on that? And, and certainly that would have further consolidated the business. Regulators disagreed with this, this idea. But maybe talk about the merger and what are your views about this potential merger?

David Halliday

Sure. It's interesting, this merger, which was regressive in almost every way it was to say, hey, will create concentration in the industry, will reduce competition, we’ll simply combine to big box companies that are, eh, not quite mirror images of each other but but pretty close, and it turned out to be the best thing for all the competitors. So Aldi will have started this time period from two years ago at like 6% of market share. By 2028, setting up the plans that they put in place from about 2021 when this, this whole soap opera started to 2028, they will be bigger than Albertsons.

Rodney Lake

Oh, wow.

David Halliday

Yeah. I, I, I can't like, stake my reputation on that. But every every thoughtful analysis seems to suggest that. So this has been huge for alternative for alternative business plans. So Costco has done well out of this. Aldi has done well. I think even Trader Joe's has to some extent, though Trader Joe's has always been more niche and quite a bit smaller than these other companies.

Rodney Lake

So what so from this, you know, and again, you know, it didn't work out. It looks like the time spent between the two trying to put this thing together, was time not well spent. And people are picking up market share. You know, what are the options for these two companies moving forward?

David Halliday

It's it's very limited for both companies. Some of that is in their situation and some of that is self-inflicted. So neither company is set up for innovation. That's self-inflicted. Kroger is big and they have high cash profits so they can afford to do some innovation or invest in CapEx for online delivery or, you know, do something if, let's say, if you order from Costco, it's a, say, a 12 hour delivery window, it's entirely feasible that Kroger could do a two hour delivery window.

Rodney Lake

Ok. 

David Halliday

You know, right. But I'm not saying that that can't happen. But I don't know. Conceptually, it makes sense.

Rodney Lake

You know, if their stores are distribution centers in that way, it's possible.

David Halliday

And they're closer to you. 

Rodney Lake

Right. 

David Halliday

The my Safeway, my Costco is, you know, a solid 25 minutes away. 

Rodney Lake

Right. 

David Halliday

So they they've got to get here. And they could they could do something that's fairly unique with the rapid delivery model. Higher costs but faster service than what you get at Costco. Albertsons, on the other hand, they have high debt. They have high dividend payments. So meaning what little profit they do have ends up going out into dividends. So they have very low retained cash and then poor management of low performing stores. So they've got a essentially a strategy overhang of not managing their company particularly well over the past couple of years. And all of this adds up to not great options moving forward. Options are limited. And I think they've probably taken a passive approach. And my guess from listening to the way their executives whine and whine. I've never seen such a whiny company in the media, listening to interviews with them. I think they want to sell and they could only feasibly sell to a private equity company or Ahold Delhaize.

Rodney Lake

Now, do you think, which is Food Lion,

David Halliday

Yeah. Yep.

Rodney Lake

For for everybody watching and listening. But do you think that another option is that an activist gets involved in this type of situation? Is that would that be a possibility in your mind? 

David Halliday

Sure. Sure. They would really have to upset the management DNA of that company. If there were better management, I would consider buying Albertsons stock. There's nothing inherently wrong with the business that it closed down their poor performing stores. Of course, they need to do all the things that operationally they should be doing right. But it seems like their management culture is very much entrenched in avoiding those responsibilities.

Rodney Lake

Right. Running it the way that it is.

David Halliday

Yeah.

Rodney Lake

Well, so it doesn't sound like they have a lot of great options. And it sounds like Kroger is certainly better positioned, for the post-sort of non-merger between the the two companies. But now let's move on to just, let's say future outlook for the industry. So backing away from, from this, you know, combination, as you mentioned, others picked up market share as a result of these two, probably not being as focus as they would have been otherwise on, you know, their own market share and growing it. But what's the future look like? Do you think that there's going to be further consolidation? What do you think where are the growth what's the growth from the industry. As you mentioned, is is it more of that specialty Trader Joe's, Costco, Kirkland private labels? And you talked a little bit about the difficulty there, but in your mind, you know, what are some of the future trends for these stores and where where can they find growth?

Rodney Lake

It's a big question.

David Halliday

That's a, that part’s a big question. For I do think that these different strategies will proliferate. One of the reasons, say, 30 years ago or 40 years ago, as a kid wandering around my mom at Food Lion, all the stores looked the same because there simply wasn't the ability to scale these companies. And so it it didn't matter whether it was, Food Lion or Safeway. In fact, there was one four blocks from the other in my hometown. There was just simply a management capital question that they couldn't scale. Today, any of these companies can scale. They can raise any amount of money they want to raise. They have the management teams to do it. So I think when customers want a particular thing, in the case of Aldi, that is cheap food at a decent, viable quality. Not cheap food like Dollar General. It's not cheap food at the absolute minimum of quality.

Rodney Lake

Right.

David Halliday

It's cheap food given its relative quality. People want that. Aldi will grow. And we've seen that A;di’s grown very fast in a decade. Costco, Costco is not new, but I do think their annual growth rate is is enormous considering their.

Rodney Lake

Their scale already.

Yeah, their, their. Exactly considering their scale. So they'll, they'll stick with that. And I do think that's a continued negative. No one wants to be at a big box store. If you know what you want and you can predict it, you can deliver it. And so if these stores can do that, if they can predict and deliver and make it seamless, people want that. If not, I think people will gravitate towards the the niche stores, in the long run.

Rodney Lake

So picking up on this then, or to follow rather, what innovations do you think are going to come out of this? Do you think that there's going to be some innovative trends around delivery? Is there going to be some way to aggregate, you know, your shopping cart across all these stores? You know, are there any is there anything out there that you think is particularly interesting that consumers should be paying attention to?

David Halliday

If there is, please tell me about it. Like I said, I'm a I'm an analyst in this space, but I'm a consumer in this space. And I just want a better grocery industry. I think having, you know, I think for companies solving this, we tend to think of logistics in terms of last mile delivery. We really have a last mile labor problem in terms of who's doing the delivery. If companies could solve that and make all of this seamless and, you know, the the pay rate equal and, you know, solve the, just the input hassle from the consumer perspective, they'll be well positioned to succeed here. But that again, that's not a magic bullet there.

Rodney Lake

Right. 

David Halliday

It's, it's simply doing something that they're doing now and doing it better. That's operational effectiveness, not a change in core strategy. So I I don't see so much there. I think more along the lines of what you're thinking of. Yeah, there there probably are some AI applications for on the consumer side, not on the company side to sell to consumers. I think consumers will be hesitant to to take advice from a corporate AI, 

Rodney Lake

Right.

David Halliday

Recommendation engine. But from the consumer side,

Rodney Lake

Let me tell you what to buy, right?

David Halliday

Yeah, yeah. If you have an an overlay bot that can get an order from different place.

Rodney Lake

That’s consumer-focused.

David Halliday

Consumer-focused, and it's yours. On the consumer side. I think that would be a great thing that would massively improve the overall shopping and delivery experience.

Rodney Lake

And you can make it very tailored. So if it's like, hey, I here are all the meals I want to make, you know, this week, you know, suggest all the ingredients and where to get it. And then by the way, when you're done, just order it and have it delivered. 

David Halliday

Right. I don't want to buy fresh cilantro. Can you substitute something for me and not have me go to a third store? You know, or one store? 

Rodney Lake

Exactly.

David Halliday

Get it down. Yeah, that that sounds fantastic.

Rodney Lake

Maybe you should build this.

David Halliday

Rodney. My favorite industry’s the grocery store industry. I’m not prepped to do tech, a tech play here.

Rodney Lake

Well, I think that's, super interesting. And I think, certainly you've given people a lot to think about. We're going to move to, to wrap up the show a little bit here. But before we wrap up, I just want to, you know, wrap up, let's say that the grocery industry, you know, you're a professor in strategy, you know. What advice would you give the audience who's trying to think about this industry or maybe even really any industry from a strategic point of view? What kind of framework should they be using?

David Halliday

Sure. The first thing to do is turn off your consumer brain. It's it's it sounds so simple, but it's very important. You don't like or not like anything. You are there to observe actual shopping behavior. If someone buys it, they like it. There is no editorializing there. So turn off your consumer brain. Put on your analytical brain. Do both quantitative and qualitative analysis. Don't be scared of the numbers. Or if you're a numbers person, don't be scared of the qualitative side. And so on the qualitative side, you are constantly asking “what would happen if the store or product disappeared?” That's called the Disappearance Test, Ghemawat and Rivkin. Would other companies fill the gap easily? That's a proxy for competitive advantage. If if if it would be hard, like, in the case of Trader Joe's would have a harder gap to fill than most of the other stores. They offer a different consumer experience. And, on the quantitative side, financial statements, they're your friend. Dig into them. Learn one one line item at a time on the financial statements. You can make it as complicated as you want, but gross margin, net margin, net income, debt, say, let's get started. Maybe we'll add in cash flow if you're feeling lucky.

Rodney Lake

Nice. Well, I think that's excellent advice. And anything else on the strategic side. You know, I think that's useful to be really thoughtful, instructing people. You have to think objectively. And as an investment analyst, this is certainly what we always try to do with our students. And any time we're talking about investing is you have to do precisely that.

David Halliday

Yep. 

Rodney Lake

It's all about what is the objective view of this business. And I think from the strategic point sounds, that's exactly the same starting point. So that I think that's super helpful. Anything else on the on the strategic side that we should be aware of?

David Halliday

No, I mean, yes, you can take my strategy class. We've got up four four more strategy models.

Rodney Lake

14 weeks. 

David Halliday

14 weeks. I mean, yeah, no, I'll leave that. But I think this idea of disappearance, because we can talk about differentiation and all the things that people know. But but really thinking, okay, if Trader Joe's went away, if Aldi went away, you have a bigger gap than if Safeway went away.

David Halliday

So if Safeway went away, you would drive to, 

Rodney Lake

Giant.

David Halliday

Harris Teeter. Giant. Yeah. Food Lion.

Rodney Lake

Excellent. Well thank you. All right. So now, we always have to have this question, especially for people GW people. What's your favorite “Only at GW” moment?

David Halliday

All right. I hope I've got a good one for you today. About two years ago, I had a guest in my online MBA class. So, guest, his name is Ighosime. He was zooming in from Nigeria where he's an investment banker and he'd worked on deals throughout West Africa. 

Rodney Lake

Very cool.

David Halliday

And the reason I, you know, saw his LinkedIn profile. I mean, this was like a cold intro.

Rodney Lake

Oh, wow.

David Halliday

It was because he had felt a friend in Nigeria had recommended him and he had helped do analysis on and do some funding rounds for Go Zim, Kobo360, Jumia. These are all, you know, big funded, famous by West African standards, tech companies and they're all heavy hitters. And so he he came he talked to class and I asked just, I don't know, the spur of the moment. I was like, oh yeah, you know, Ighosime, I know, I know, we'd gone done an MBA because he also knew a friend through Manchester through their MBA program. But I was like, where did you go to undergraduate? George Washington University. 

Rodney Lake

That is.

David Halliday

Killer killer resume. Cold approach. I'd reached out to him. Now, he probably agreed to talk to me because I was coming for GW.

Rodney Lake

Coming from GW.

David Halliday

But it didn't occur to me. I just said, you know, hey, here's this guy in London, you know, doing investment banking in Nigeria.

Rodney Lake

What a happy coincidence. Stars aligning. The universe speaking for us and keeping our GW community together. So thank you, Professor Halliday for making that happen for your students. And then now, you know, last thing here is just any parting wisdom for our audience? Could be any wrap up from today or any other advice that you would like to share with the audience?

David Halliday

Sure. Like I said earlier, when I started teaching core strategy, I thought grocery stores and airlines were boring and now they are a staple. You know, find me at a cocktail party. I will talk to you for hours and hours about boring companies. But, you know, the more I've taught them, the more interesting they've become. And, you know, I'll expand from, say, when I'm talking about retail, I've expanded to CPG, consumer packaged goods, strategy, I'll come back to retail. I don't know, something about the simplicity, the purity and simplicity of the business there just really calms my brain down. I, I find it interesting, and I want to, you know, figure out kind of the end to this, you know, ongoing business story. So, this will be true for you. Not necessarily because you'll end up liking grocery stores, but you'll end up liking tech or the plumbing industry or

Rodney Lake

Whatever industry appeals to you.

David Halliday

Whatever whatever works. Natural gas, you know, solar panels, it's all out there. All right. Thanks, Rodney.

Rodney Lake

No, thank you. So big thanks, Professor Halliday, for making time for Market News with Rodney Lake. Very much appreciated. We’ll look to have you back. Maybe we'll talk about airlines next time. 

David Halliday

That's fine. 

Rodney Lake

So thank you very much. Time is appreciated. That is a wrap. Thank you for watching this episode of Market News with Rodney Lake. We'll see you back on the next episode.

Rodney Lake

Disclaimer the content shared in the GW Investment Institute Podcast is for informational and educational purposes only, and should not be considered investment advice. The opinions expressed in this podcast are those of the host and guest, and do not necessarily reflect the views of the GW Investment Institute or the George Washington University. Listeners should not act upon the information provided without seeking professional advice from a qualified financial advisor. Investing involves risks including the loss of principal. The GW Investment Institute, the George Washington University, and the podcast hosts do not assume any responsibility for any investment decisions made based on the content of this podcast. Always conduct your own research and consult with a financial advisor before making any investment decisions.