Pirch, Lululemon, Cabela’s, Burberry, Apple: What Do They Have in Common?

Addictive-BrandsThese brands are not retailers.  They are neurologically addictive experiences, co-created by the brand and their dopamine-addicted consumers.  And not so incidentally, the experiences happen to take place in physical buildings. And oh, yes, because the customers are addicts, they buy tons of the brand’s stuff and they can’t get back to those experiences fast enough for their next fix.  By the way, for those of you who don’t know what dopamine is, it’s a chemical in the brain that gets released every time we have an elevated experience. It provides feelings of euphoria, self-satisfaction, wellbeing, and can lead to addiction.

The dopamine-releasing brands headlining this report (and there are others) are such because the experience they have developed requires that the customer participate in creating or shaping the that experience to satisfy their own personal desire at the moment they engage with the brand. [Read more…]

Rent the Runway: Fashion Meets the Sharing Economy

rent-the-runway

Over the years, whenever I purchased a “party dress” — meaning an expensive dress for a specific occasion, mostly black tie — I always thought, why can’t I just rent the dress, wear it, and be done with it, instead of spending so much money on something that, while gorgeous, might be out of style or not look so great when the time comes to wear it again? Two Harvard Business School classmates, Jennifer Hyman and Jennifer Fleiss, had the same thought, but went so far as to turn it into an actual business. The first Jennifer, Hymen, was struck with the idea after her younger sister showed off a $1,600 Marchesa dress she couldn’t afford but bought anyway to wear to a wedding. What’s a girl to do when every event is photographed and appears on Facebook? Wear the same outfit twice? Not anymore is the answer the two Jennifers provided when they launched Rent the Runway in 2009 with $1.5 million of venture funding from Bain Capital Ventures. [Read more…]

Checking the Pulse of the American Shopper

pulseFrom a retail perspective, it’s hard to find numbers or analysis of the past year without also finding the word “cautious” in close proximity. Holiday spending for 2014: Cautious. Consumer attitude from recent gasoline price drops: Cautious. Outlook for 2015…. You get the picture.

Given the depth of the financial crisis in 2008 and the habits of the post-crisis consumer, this attitude can hardly be blamed. For retailers, however, the state of the American consumer might better be described as “tempered.”

It describes a cohort that has been tried, toughened and come through stronger. That’s what MasterCard Global Insights research shows. Our most recent work on the attitude toward credit and debit spending — arguably a leading indicator for retailers — captures a more nuanced portrait of how Americans are feeling about the economy and their own pocket five years into the recovery. In short: The post-crisis consumer has learned some tough lessons and come through with a tempered but tactical attitude toward credit and debit usage, disposable income, and saving for the future. [Read more…]

Let’s Get Physical

letsgetphysicalThe Real Reason E-Commerce Merchants are Opening Stores

When asked why he robs banks, the notorious Willy Sutton answered: “Because that’s where the money is.”

Several high-profile e-commerce merchants are venturing into the world of brick-and- mortar for the same reason. Bonobos, Trunk Club, Nasty Gal, Warby Parker, Rent the Runway and Birchbox are just a few of the big e-names opening stores. Though they tout them as an invaluable way to showcase their brands and engage with consumers, it turns out these shops might also be an unavoidable route to reaching their financial potential.

Late in the Aughts, when most of these companies came into being, venture capital was plentiful for tech businesses, which is how they were positioned. But today, pure-play e-commerce is so last decade. [Read more…]

Retail’s Darkest Secret: The Knowledge Deficiency Gap

Store format redux from retail’s emerging trends in 2015 has proven that retailers are marching ever forward in this disruptive industry landscape. Big format stores are investing in smaller format editions, department stores are dabbling in specialty and online e-tailers are dipping their toes into the sea of physical stores.

However, despite all of the market research, strategic development, capital investment and operational execution of newly designed stores, retailers must not overlook brick-and-mortar retail’s darkest secret — and perhaps largest problem in general — “the knowledge deficiency gap” of associates. Customers are coming through the door armed with an arsenal of researched information on products and pricing. The hidden truth is often the customers know more about the brand, products and policies than the associates in the stores. [Read more…]

How Consumers Pocket The Change In Global Oil Prices

pocketoilchangeProbably the biggest global economic story since the collapse of the credit-based global economy in 2008 is the implosion of petroleum prices, which has had a direct, if lagging effect on retail sales in the U.S.

As of this writing, the price of a barrel of crude oil has recently gone below $45. The global economic situation is volatile enough to potentially reverse this trend, however, for the moment the  benefit remains with the consumer. Thus it’s worth taking a look at the economic and spending behavior that follows oil price declines because it has implications for business and industry across the country. [Read more…]

Internet of Things (IoT)

IoTA Connected Life

If you think the tsunami of new technologies, more spectacular one day after another, are now within your grasp of understanding, and soon to be mastered in implementation, do not pat yourself on the back and take a breather. The proverbial light at the end of the tunnel is a far bigger and faster tech train than the many you are just beginning to feel comfortable with. And it’s coming right at you. Yes, your business will soon ratchet up to another level of innovative opportunities and complex challenges.

We are hearing or reading the words IoT or the “Internet of Things” more frequently. It is the next technology mega-trend. And there are some early manifestations of it, from fitness bracelets to watches, connected refrigerators and automobiles, to thermostats and industrial equipment. But it’s still in the nibbling-around-the-edges phase. However, as breakthroughs in reducing the cost of sensors, processing power and increasing bandwidth continue, it will accelerate the ability to connect with more things, faster and cheaper. [Read more…]

Overfranchising: When Category-Killers Just Can’t Stop Cannibalizing

overfranchisingMaybe you’re Maybelline.

And maybe, because you’re Maybelline, you produce one of the most beloved mascaras of all time. Yes, Great Lash is one for the ages, a perennial box-office champ for the last 44 years. In this era of here-today, gone-tomorrow product launches, that preppy pink and green tube of makeup magic is in a class by itself.

In the prestige arena, Lancôme has enjoyed a similarly mammoth success story. Though its Définicils High Definition Mascara is 20 years younger than Great Lash, urban legend has it that one is sold – somewhere, globally, from Boston to Beijing — every three minutes.

Clearly, these two brands have carved-out massive slices of the brutally competitive mascara pie, proffering products women the world over genuinely adore. [Read more…]

Stampede to Organics Awakens Sleeping Giants

wholefoodsWhole Foods has succeeded beyond all expectations, but, strangely, that’s not all good for Whole Foods.

Whole Foods was founded 35 years ago in Texas based on the premise that there had to be a safer way to produce food than the mass-manufactured and over-processed approach. (Deep background: Whole Foods was originally named Saferway, a poke at supermarket chain Safeway.)

The Whole Foods concept was to leave conventionally manufactured food behind wherever possible in favor of natural and organic food, and to put a heavy emphasis on fresh. The concept also was that consumers would warm to the idea and pay a premium for such products. Development came slowly to Whole Foods because at the time, there was little consumer buy-in for such an idea. [Read more…]

Ghost Malls: Creative Destruction

ghostmallsIn the horror story of the declining fortunes of the American shopping center, the central character is the “Ghost Mall” – abandoned, forlorn, and lifeless — but looming, casting a post-apocalyptic pall over the American Dream. The website, DeadMalls.com, provides ample evidence that ghost malls are real and that they appear to be a growing insidious blight across America. The eerie photos show boarded-up entrances, broken glass, empty storefronts and hulking monolithic edifices surrounded by desolate unkempt parking lots. Hollywood even used a ghost mall to symbolize menace and hopelessness in last year’s psychological thriller “Gone Girl.”

Frightened yet? Well don’t be. In a country with an astounding 23 square feet of shopping mall space for every man, woman and child – representing almost 70% of the world’s supply — it should come as no surprise that some obsolescence and creative destruction is inevitable…even desirable. [Read more…]

Soar Wars

Look up in the sky! It’s a bird…it’s a plane. No, it’s those Louboutins you ordered.

That might not be too far from reality given the frenzy over drones and their potential in retail.

We have the fertile mind and tongue-in-cheek attitude of Amazon’s Jeff Bezos to thank for that. Since he unveiled Amazon’s flying fantasies on CBS 60 Minutes last year, there are stories almost daily about their commercial use. Bezos is not alone. DLH is already doing drone deliveries in Germany, and FedEx and Google are working on it here in the U.S.

In Japan, which is always serious about technology, the Yamaha Motor Company is developing drone technology and the government has formed a panel to encourage private companies to come up with ideas on how and where they can be used in “drone zones.” [Read more…]

The Case of the Missing $32 Billion

Missin-32billionMultilevel/Pyramid Marketing Schemes Lure Unsuspecting Consumers through FTC Loophole

Don’t look now, but dozens of companies, starting with Amway back in 1979, and more recently Herbalife, the supplements company being challenged as operating a pyramid scheme by activist investor Bill Ackman, have been diverting billions in sales every year away from traditional retailers across the health, beauty and general merchandise industries.

Multilevel marketing, or MLM, is a simple model that enriches those who start it at the expense of those who join later. The premise is simple, and there are few barriers to entry. A multilevel marketer pulls together a line of products, puts a brand name on it, and develops an enticing sales spiel which has, as its primary attraction, the ability, for those who make a bulk investment in these products, to profit from commissions earned when friends, neighbors, and family members become distributors, make a similar bulk investment, and recruit other friends or family members to do the same. They all will get a commission on those and all subsequent purchases that those friends and their recruits make. Everyone back up the line to the original seller gets part of the commission as well. The process creates an exponential geometric growth pattern which, in theory, would eventually encompass all potential prospects and leave later entrants no one to recruit. [Read more…]