Quote of the Day: Jim Farley

“When we ask people around the world what they think of Ford, they say Mustang. Mustang means freedom. It means taking a road trip in a convertible down the West Coast. That’s what people all over the world imagine America to be. Why would we ever give that up?” – Jim Farley, president of global markets, Ford Motor Co., quoted in The New York Times.

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Retail Math: Ladder of Causation

The Wall Street Journal: “Suppose, for example, that a drugstore decides to entrust its pricing to a machine learning program that we’ll call Charlie. The program reviews the store’s records and sees that past variations of the price of toothpaste haven’t correlated with changes in sales volume. So Charlie recommends raising the price to generate more revenue. A month later, the sales of toothpaste have dropped—along with dental floss, cookies and other items. Where did Charlie go wrong?”

“Charlie didn’t understand that the previous (human) manager varied prices only when the competition did. When Charlie unilaterally raised the price, dentally price-conscious customers took their business elsewhere. The example shows that historical data alone tells us nothing about causes—and that the direction of causation is crucial.”

“Machine-learning systems have made astounding progress at analyzing data patterns, but that is the low-hanging fruit of artificial intelligence. To reach the higher fruit, AI needs a ladder, which we call the Ladder of Causation … To reach the higher rungs, in place of ever-more data, machines need a model of the underlying causal factors—essentially, a mathematics of cause and effect.”

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The Truck Surf Hotel: Waves on Wheels

Fast Company: “The Truck Surf Hotel is exactly what it sounds like: a hotel. For surfers. On a specially designed, expandable truck … When it’s not in motion, the vehicle uses hydraulics to extend its interiors beyond the truck bed with moving walls, increasing the available interior space … every individual or couple–up to a maximum of 10 people–has their own private double room with a key card, a comfortable bed, air conditioning, and wireless internet.”

“On the truck’s first floor there’s a common area where the owners serve a breakfast buffet every morning. The rooms are on the top floor and each of them has wide glass windows that give each room plenty of natural light and views. The toilet and the shower are common for all guests. The two-floor hotel on wheels travels to the best surfing spots in Portugal and Morocco. “

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Slow Tickets: Swift ‘Reputation’ for Empty Seats

The Wall Street Journal: “The biggest pop star’s current concert tour isn’t a sellout. And that’s a good thing, according to some in the concert industry. Taylor Swift’s ‘Reputation’ tour, which kicked off last week in Glendale, Ariz., is a test case in squeezing out scalpers and capturing more profits from ticket sales. The strategy … is to use aggressive pricing to limit the ability of scalpers to purchase tickets and later sell them at higher prices. In addition, a program from Ticketmaster is aimed at giving passionate fans earlier access to tickets at discounted prices.”

“One downside to the plan: empty seats at some of the roughly 36 stadiums on Ms. Swift’s 53-date tour. However, even if those seats remain unsold, the ‘Reputation’ tour already has grossed more on its North American leg than Ms. Swift’s previous tour in 2015 … For decades, artists and their teams have claimed ‘sold out’ shows as a badge of honor showing the high demand for their music. The new approach is raising questions in the music industry about whether an end is nearing for the days of instant sellouts.”

“The best seats—some with added VIP perks—cost $800 to $1,500 at face value for a given show, with those immediately behind them at $250 each. Spots in the back of the house go for about $50.”

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Lord & Taylor’s New ‘Flagship’: Walmart.com

The New York Times: “Lord & Taylor is teaming up with Walmart to create an online store on Walmart.com that will offer about 125 fashion brands, including Tommy Bahama, La La Anthony, H Halston and Effy. Billed by both companies as a ‘premium’ shopping destination, the new online store reflects Lord & Taylor’s desire to reach a wider audience and Walmart’s hope to attract a different type of customer.”

“For Walmart, the partnership is the latest attempt to reach a more urbane shopper. As part of that effort, Walmart has made a string of acquisitions over the past year, purchasing the clothing sites Bonobos and Modcloth and starting its own bedding and mattress line, sold exclusively online.”

“The Lord & Taylor online store on Walmart.com is expected to open in the coming weeks. Lord & Taylor will be responsible for shipping the clothing to customer’s homes. It will continue to sell the same brands in its stores and on its own website at the same prices as it does on Walmart.com … Lord & Taylor executives referred to their site on the Walmart website as a new kind of ‘flagship’ store.”

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Stadium Goods: Getting Kicks From Luxury

The New York Times</strong>: “To walk into the 3,000-square-foot Stadium Goods store in SoHo is to be confronted by rows and rows of pristine, shrink-wrapped athletic footwear. Look closely and you might be a little stunned by the price tags. On a recent afternoon, for instance, a pair of white Nike Jordan 1’s by the fashion designer Virgil Abloh (Off-White, Louis Vuitton) originally priced at $190, was selling for $2,750 … Nearby was a rare pair of Adidas PW Human Race NMD TR, designed by the musician Pharrell Williams. Price tag: $12,350.”

“Sneaker fanatics have been around for decades, with swaps and buys largely happening on eBay or as personal transactions. But it’s only in the last few years that the reseller market has accelerated and gone sharply upscale. John McPheters, who co-founded Stadium Goods with Jed Stiller, says the shift has been driven by ‘men who are now learning from childhood how to treat fashion as a sport — the way that women have always treated fashion’.”

“The partners believe the future of sneaker retail will be a hybrid model combining traditional channels and aftermarket selling. ‘We’re a microcosm of what’s hot,’ Mr. Stiller said, noting that in the sneaker world what’s trending is not necessarily the newest item. ‘Where a lot of retailers are dependent on what brands are releasing at the moment, we’re not. Ninety-five percent of our stock are styles that are no longer on the market’.”

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PF Chang: An American Bistro in China

The Wall Street Journal: “P.F. Chang’s may be seen as an upscale Chinese-food restaurant in the U.S. But the chain is calling its debut location in China ‘an American bistro’—which is exactly how its early customers there see it. ‘The food looks similar, but you eat the food and you know instantly it’s not Chinese,’ said Zhang Ji, 35, who works in finance … Animation designer Zhang Xue said she came because P.F. Chang’s got a shoutout on ‘The Big Bang Theory,’ the U.S. sit-com popular in China.”

“Like many upscale restaurants in China, the restaurant is in a shopping mall. There is a prominent white P.F. Chang’s sign on the 8th-floor entrance … Inside, the décor looks like a mix of old Shanghai meets American diner, with booths and tables … P.F. Chang’s created 10 new dishes for Shanghai customers, including Dusk ’Til Dawn Honey Chicken and Scallion Pancake, an Asian take on chicken and waffles that puts crispy chicken on top of a buttermilk pancake. The Duck Spring Roll features mozzarella, something a Chinese chef might consider sacrilege.”

“P.F. Chang’s is hardly the first foreign company to try selling a cuisine back to its native land. The Domino’s pizza chain arrived in Italy in 2015 and now has 11 locations there; South Korea’s Paris Baguette has two stores in Paris that sell bread back to the French … Yum Brands Inc., however, hasn’t had much success bringing Taco Bell to Mexico, despite two separate attempts.”

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Chik-fil-A ‘Secret Sauce’: Community

Business Insider: “Chick-fil-A’s recent dominance of the fast-food industry can be tied to one behind-the-scenes secret … It’s less expensive to open a Chick-fil-A than it is to open a location of almost any other chain. Chick-fil-A charges franchisees only $10,000 to open a new restaurant. However, unlike other franchises, it prohibits franchisees from opening multiple locations.” Industry expert John Hamburger says this franchise model puts “somebody in the store that was close to the customer. They’re dealing with the customer, they’re in the community. They’re active in the community. And that’s what Chick-fil-A does.”

“Chick-fil-A franchise owners are involved in hiring and firing employees. The company also encourages franchisees to get personally involved in the community through various local organizations. According to Hamburger, that allows Chick-fil-A to get a leg up on the competition in terms of quality and customer service.”

“Hamburger says chains such as Applebee’s are already seeing the negative impact of losing their community connections. The chain, which went to a 100%-franchised model in recent years, closed 99 stores in 2017 amid sinking sales … Chick-fil-A’s success as a rapidly expanding private company could help convince more public companies to follow in its footsteps.”

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Ohm: The Mantra of Deli

The New York Times: “You could spend your life walking past the Ohm Deli Corporation in Williamsburg, Brooklyn, and not pay it any mind. It’s just a deli. Maybe it has the brand of salsa you like. So do three other places in the neighborhood. Or you could step inside and find a man named Rick Patel, who has owned and run Ohm for 25 years, and a group of regulars who come for a social cohesion sometimes lost in the swirl of change in the neighborhood.”

“Ramsay de Give moved to Williamsburg 10 years ago and made the deli a part of his daily circuit: greeting Mr. Patel, getting to know some of the regulars, scoring a carton of eggs when he needed it … At the right time of day, he could count on seeing a crowd gathered around the television, yelling at the Lotto numbers. Of such scenes are neighborhoods built.”

“Four or five years ago he started hanging out in the deli on New Year’s Eve, and encountered ‘an intense sense of community I’ve never seen before,’ he said … New, fancier shops and restaurants popped up or changed hands almost weekly, but Ohm did not change … If anything, Mr. de Give said, it just got firmer in its character. ‘I wanted to capture the tedium of being open from 7 a.m. to midnight, 365 days a year,’ he said.”

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