"[Montgomery Ward] came out of bankruptcy and decided on a niche between a department store and a discount store, but there is no marketplace there" -- Retail consultant George Whalin to USA TodayReturn to top
New Software + Snow = SNAFUs
Angry travelers abounded this snowy holiday, but perhaps nowhere more than at Spirit Airlines. The Fort Lauderdale carrier, with 85 flights a day to 14 cities, is one of the handful of airlines to win slots in the New York and Chicago markets in recent deregulation.
But slots don't mean service. Spirit passengers in Florida, Michigan, and New York caused near-riots on New Year's weekend due to 39 flight cancellations and dozens of delays. On Jan. 2, police had to surround a planeload of irate passengers at LaGuardia. Local authorities were so concerned they considered yanking Spirit's landing rights. "They had passengers stranded for days because they lacked enough pilots to fly the planes or crew to load baggage," says the New York & New Jersey Port Authority's Steven Coleman.
But the FAA says Spirit's safety record is solid. And Spirit blamed bad weather and a new software system. "Maybe we goofed," says apologetic COO Mark Kahan. And then some.By Joan Oleck; Edited by Sheridan PrassoReturn to top
It can already fit 32 747s, seven Yankee Stadiums, or 67 Washington Monuments. But it's getting even bigger. Bloomington, Minn., just passed a milestone approval for an addition to the Mall of America that will more than double its space. To come: two anchor stores, hundreds more boutiques, 1,650 hotel rooms, 300 condos, an 11-story office tower, a spa and fitness center, and a 5,000-seat performing arts arena with a dome bigger than the current Mall's rotunda. The price: $1 billion, or nearly twice what the Mall cost to build back in 1989-92.
In this kind of retailing environment? After all, most stores had a pretty lackluster Christmas. But planners say new spaces will generate new enthusiasm--and new sales--after revenues grew just 1% in 2000, to $860 million. "This is going to happen no matter what," says Bill Griffith, the Mall of America Co.'s lawyer, who adds that a recession would only slow completion to 10 years from the current plan of three to five.
When complete, the new complex will steal the title of largest mall in the world--now kept up north in Edmonton.By Laurie Freeman; Edited by Sheridan PrassoReturn to top
Is Pepsi Messing with Success?
You'd think they'd have learned from Snapple--Quaker Oats' fiasco that's become a case study in how not to take over a beverage company. On Jan. 4, PepsiCo will complete its $370 million acquisition of South Beach Beverage, makers of herb-enhanced, lizard-emblazoned SoBe drinks. Since the Norwalk (Conn.) juice-maker did such a great job selling to the Pepsi Generation, Pepsi had promised SoBe near-complete autonomy. Pepsi even said it wanted to learn from SoBe's success.
So what's one of Pepsi's first moves? Putting in its own people. BUSINESS WEEK has learned that Pepsi will put two of its execs in charge of sales and marketing. Still, SoBe co-founder John Bello will stay as CEO for three more years. "I'll still be the Lizard King, the catalyst for change and creativity," he says. At least Pepsi's people come from its alternative units: Starbucks iced coffee and Aquafina water.
Industry watchers are keeping close tabs: Pepsi itself takes over Quaker to get Gatorade this year. But Quaker no longer owns Snapple, having driven it to near-ruin by messing with the company chemistry. SoBe just hopes Pepsi has that lesson in hand.By Gerry Khermouch; Edited by Sheridan PrassoReturn to top