Amazon Holdouts: Not ‘Prime’ Customers

The Wall Street Journal: “Seventeen percent of U.S. primary household shoppers … say they never shop on Amazon … While the percentage has steadily declined over the past five years, roughly 22 million American households didn’t use the retailer this year. Those Amazon holdouts tend to be older than U.S. shoppers overall, with an average age of 57 versus 49, respectively … and they tend to earn less—$45,700 in annual income, compared with $62,800 among all shoppers. They are less likely to have or live with children.”

“For some it was their income or living situation, for others it was simply their preference or convictions … Lack of access to web-enabled devices, or living in places where it is difficult to receive packages, are key reasons people avoid e-commerce … Seanna Tucker, a 26-year-old content strategist in St. Louis, said she had never been a big Amazon shopper, but decided to avoid it on principle a couple of years ago after a dispute between Amazon and publishers over book pricing.”

“In recent years, both Amazon and its competitors, like Wal-Mart Stores Inc., have worked to bring more shoppers online and boost sales with membership programs, like Amazon Prime, which provides perks like video streaming and free, fast shipping for an annual fee of $99 … Meg Hoehn, a mother of two and teacher in Minneapolis, said she and her husband used to have a student membership to Amazon Prime but decided against renewing it, in part to become more financially responsible.” She explains: “We bought a ton of stuff on there … It was too convenient and too easy. We spend less money because we don’t have Prime anymore.”

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Amazon vs. Fraud: Not Responsible for Fake Goods

Slate: “How much responsibility do companies like Amazon, which are not only retailers but marketplaces for other sellers, have to ensure that the goods on their platforms are the real thing? The answer: Not as much as you probably think.”

“When it comes to its marketplace, the courts usually consider Amazon a facilitator, a platform for consumers to connect with merchants, not unlike how Uber views itself as a platform connecting riders with drivers. Amazon’s legal responsibilities include removing fraudulent listings when they are brought to their attention. As a result, chasing down frauds became a time-consuming and all-but-Sisyphean task for many legitimate sellers and copyright and trademark holders. Proving the fraud was on them, not Amazon.”

“Bringing further insult to legitimate manufacturers: Many fake items are poorly made and fall apart quickly. They cost less because they’re made more cheaply. And because many buyers don’t realize they’ve been the victims of a counterfeiting scam, they blame the company and sometimes post bad reviews online. Fraudsters don’t only cost the copyright-holder sales of the product; they also harm future sales by eroding trust in brands.”

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Beltway Plaza: The Future of Malls?

The Washington Post: “At Beltway Plaza, Spanish rings out from every aisle and the food court is populated by not Taco Bells, but various immigrant cuisines … Mostly, Beltway Plaza has found a niche as a large — and faintly 1980s — urban souk, hawking the necessities, and the oddities, of immigrant life … In a retail landscape that is increasingly bleak, could this be this the future of malls? … It’s the quintessential American mall, once flush with people, now scraping along as national retailers shudder.”

“Local real estate magnate Sidney J. Brown opened Beltway Plaza as an open-air discount mall in 1963 in Greenbelt, one of only three garden-filled towns in America developed for low-income families in the late 1930s under the New Deal … Greenbelt, envisioned as city filled with smartly manicured greenscape, eventually came to look more like a thicket of concrete and strip malls. But the mall, with its awfully affordable S. Klein Department store, a two-screen movie theater and a pizza parlor, was a hit.”

“At Jo-Ann Fabric, the sewing aisle, a beacon of immigrant industriousness, was humming … We trek to Import Cottage, where you can purchase brazen replica Louis Vuitton suitcases, large laundry bags emblazoned with ‘Charm of Africa’ and untarnished Indian costume jewelry … A stroll across the mall’s dated white-tiled corridors takes you past a cookie place that is not Mrs. Fields and a restaurant that is not Panda Express but Jodeem African Cuisine, offering the Ni­ger­ian specialties ogbono soup and fufu. There’s an El Taco Rico, about as large as a broom closet and just as dark.”

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Times Square: Crossroads of Experiential Retail?

The Wall Street Journal: “Times Square’s flashy retail scene is known for its hordes of tourists drawn to Broadway shows, mass-market shopping options and kitsch. But asking rents have been coming down this year as more shopping moves online. That has prompted landlords to seek out more ‘experiential retail,’ such as food and entertainment venues, and more interactive elements in stores.”

“At 20 Times Square, a hotel and retail project at Seventh Avenue and West 47th Street developed by Witkoff and its partners, customers will be greeted by a 40,000-square-foot interactive football exhibit and theater from a venture comprising the National Football League, the NFL Players Association and Cirque du Soleil. Kushner, meanwhile, has signed leases at its retail condominium at a former New York Times building on West 43rd Street to bring an 11,970-square-foot food hall curated by chef Todd English; a 60,000-square-foot interactive exhibit from National Geographic called ENCOUNTER: Ocean Odyssey; and a 49,000-square-foot miniature world called Gulliver’s Gate.”

“Operators of these experiential businesses tend to generate more sales than conventional retailers do … Landlords are seeking a specific mix of tenants to cultivate their properties as destinations not just for tourists. Growing numbers of office workers and residents populating areas near Times Square are seeking out food, cosmetics and affordable fashion.”

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Nestlé & The Scientific ‘Garden of Eden’

Quartz: “This is where Peter Brabeck-Letmathe, the outgoing chairman of the world’s large food company, has staked his flag, casting Nestlé—with its $88.8 billion in annual revenue—not as the purveyor of natural foods or conveniently-available snacks, but as the vessel to deliver a new, scientifically engineered Garden of Eden … Brabeck-Letmathe has forged into new territory, carving out a ‘nutrition, health, and wellness’ industry.”

“In Brabeck-Latmathe’s future, people will undergo health testing during varying stages of life to learn more about the genetic material of the microbes—the bacteria, fungi, protozoa, and viruses—living inside their bodies. Each time, the tests would analyze genetics, caloric levels, predisposed illnesses, and more. Such information would allow Nestlé to create products that essentially act as medicine to alleviate known health issues … Nestlé isn’t looking to enter the prescription drug business, but through these partnerships and acquisitions it plans to apply its new scientific knowledge to food products—something that could one day include a frozen pizza that’s healthy and prevents Alzheimer’s disease.”

“As the company incorporates its know-how into hardware, it will further develop its food products, sweeping out more sugars, salts and preservatives, replacing them with micronutrients and potentially with phytonutrients—plant-derived compounds hypothesized to be responsible for much of the disease prevention provided by plants. In theory, if a watch or implant tells you that you need more magnesium in your diet, consumers will be able to go to the grocery store and find products—made by Nestlé—to deliver that nutrient.”

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Food Trends: Buddha Bowls & Ugly Fruit

The New York Times: “Each December, lists of culinary forecasts pour forth from public relations companies trying to elevate their profiles, food companies looking to sell more food and professional associations hoping to guide chefs as they try to translate the zeitgeist into menu items. Social media wonks have jumped into the pool, too, eager to show off their powerful search analytics.”

“Meals in a bowl are … driven by … yoga, Gwyneth Paltrow, the gluten-free movement, a new appetite for Asian street food and the demand for grab-and-go convenience … It doesn’t hurt that food in bowls can be visually attractive, perfect for an Instagram feed. At Pinterest, which is used by 150 million people a month, Buddha bowls filled with simple vegan or vegetarian ingredients are among the top items that users post. The name evokes the mindfulness with which a monk holds a bowl of food.”

“Lynn Dornblaser, the director of innovation and insight for Mintel, has been trend-spotting for 30 years … The most important development on her list, she said, is the idea that healthful food and drinks are not luxuries … pointing to the growing sales of imperfect fruits and vegetables, often marketed as ‘ugly produce.’ She comments: “People who earn less than $50,000 a year are not buying gourmet olive oil or having Blue Apron delivered. But they’ve got a need for quality products just like everyone else does.”

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GNC Addresses Its Prices Crisis

The Wall Street Journal: “In October, the acting chief executive of GNC Holdings Inc. made a confession: The big vitamin retailer had ‘a badly broken business model.’ Its prices were too confusing and constantly undercut by online competitors. Sales were plunging. Behind the scenes, executives had decided the only way to fix things was to start over. So on Wednesday, GNC will close its 4,400 U.S. stores to overhaul its pricing system, which featured as many as four different prices on some labels.”

“When the stores reopen the next day, labels for GNC’s protein powders, herbal remedies and nutritional supplements will feature just one price. There will still be discounts, but about half of the company’s products will start at lower prices than before, while a quarter of the prices will be higher … While heavy promotions, especially during the holiday period, have become a sophisticated calculus, the nature of setting retail prices has become more complex. Online stores can set algorithms to change prices by the hour and nearly every shopper is armed with a smartphone, making the market transparent.”

“At GNC, executives gathered input from outside consultants, ran tests in 10 markets and had to get the support of outside vendors as well as its franchise owners. The company eliminated gaps between web and store prices, moved to end a discount-card program and determined new prices by comparing products it carried against similar ones at competitors.”

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Late & Great: Jens Risom

The New York Times: “Jens Risom, the Danish furniture maestro who helped bring midcentury modern design to the United States through his work with Knoll Studio, died on Dec. 9 at his home in New Canaan, Conn. He was 100. Defined by sharp Scandinavian lines and fused with the rustic aura of Shakerism and American arts and crafts, the armless, affordable chair that became Mr. Risom’s signature in 1942 was one of the first mass-produced modernist furniture pieces introduced in the United States and not Europe.”

“Materials were hard to come by during the war, so Mr. Risom designed a chair with simple wooden legs and for upholstery used nothing other than surplus parachute straps. The surprise was that Mr. Risom’s creation — one of 15 pieces he designed for Knoll’s debut collection, and perhaps too humble to ever be described as a masterpiece — was almost comfortable enough to sleep in.”

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“What resonates about it is that it’s not fancy,” said Wendy Goodman of New York magazine. “To Ms. Goodman … there was a certain logic to the way Mr. Risom went to the United States and helped remind people there about the beauty of its unfussy design history.” She observes: “Maybe it takes someone coming here to do that, because he romanticized the freedom and the openness of America, and that’s what’s so wonderful about his furniture.”

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McDonalds & The Founder’s Mentality

The Wall Street Journal: “A study out earlier this year from Bain & Company … shows that over the past 15 years founder-led companies delivered shareholder returns that are three times higher than those of other S&P 500 companies. Such performance can sometimes continue long after a founder leaves … Great founders imbue their companies with three measurable traits that make up what we dubbed “the founder’s mentality.”

“The first is insurgency: The founding team declares war on its industry on behalf of underserved customers.” McDonalds founder Ray Kroc, in The Founder, “a new film starring Michael Keaton … announces in the film that the McDonald brothers’ fast-service approach is akin to revolution … The second trait is an obsession with how customers are treated—an attention to detail that borders on compulsive. In his autobiography, Kroc discusses not only burger patties, but even how high they could be stacked and the amount of wax on the paper slips between them.”

“Third, these companies are steeped in an owner’s mind-set … Kroc was able to create an army of mini-founders by perfecting the franchise model … Bain’s research found that the best companies—the top 20% of performers, founder-led or not—exhibit the three traits … four or five times as often as the bottom performers. The bad news: Only about 7% of companies, founder-led or not, manage to maintain these traits as they grow to scale. Yet those that do create more than 50% of the net value in the stock market in any given year.”

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Logophobia: When The Croc Bites Back

The Wall Street Journal: “A branding backlash has some people working hard to remove logos and names from their clothes and accessories. Blogs and online discussion forums offer tips on scratching off the Ray-Ban logo from lenses, peeling away the Ralph Lauren emblem from new pairs of leather shoes and using a felt-tip marker to hide the Under Armour symbol on sports gear … For embroidered logos, some brand-phobics use a seam ripper—a small tool for unpicking stitches—but the method is time consuming. Each thread has to be pulled out carefully to keep the underlying fabric pristine.”

“Research shows that mid-tier brands often have the loudest logos because their buyers want to signal wealth. Seasoned luxury shoppers may prefer more subtle branding … Discerning shoppers who can identify a Brooks Brothers shirt from the six-pleat shirring at the cuffs or an Alden loafer from its distinctive stitching are ‘part of your tribe,’ said Jerrod Swanton, age 37, of Springfield, Ohio.”

“Jeff Taxdahl, owner of Thread Logic, a custom logo embroidery company … has a warning for logo tamperers. ‘Unless you’re fairly skilled at it, you would destroy the shirt … and once you get the threads out, the outline of the image may still exist due to the needle holes’ … That is a risk some shoppers are willing to take. “I don’t want to be seen in their stores, let alone wear the moose” says Ian Connel, Abercrombie & Fitch shopper. “He turned the shirt inside out and painstakingly removed each thread. ‘It has a few small holes,’ he said, ‘but it’s still better than having the logo’.”

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