H&M Stores Buy Into Big Data

The Wall Street Journal: “H&M, like most retailers, relies on a team of designers to figure out what shoppers want to buy. Now, it’s using algorithms to analyze store receipts, returns and loyalty-card data to better align supply and demand, with the goal of reducing markdowns. As a result, some stores have started carrying more fashion and fewer basics such as T-shirts and leggings … H&M’s strategy of using granular data to tailor merchandise in each store to local tastes, rather than take a cookie-cutter approach that groups stores by location or size, is largely untested in the retail industry, consultants say.”

“The H&M store in Stockholm’s swanky residential Östermalm neighborhood hints at how data can help. The store used to focus on basics for men, women and children, with managers assuming that was what local customers wanted. But by analyzing purchases and returns in a more granular way, H&M found most of the store’s customers were women, and fashion-focused items like floral skirts in pastel colors for spring, along with higher-priced items, sold unexpectedly well.”

“With the help of about 200 data scientists, analysts and engineers—internal staff and external contractors—H&M also is using analytics to look back on purchasing patterns for every item in each of its stores. The data pool includes information collected from five billion visits last year to its stores and websites, along with what it buys or scrapes from external sources … The chain uses algorithms to take into account factors such as currency fluctuations and the cost of raw materials, to ensure goods are priced right when they arrive in stores.” Nils Vinge of H&M comments: “The algorithms work around the clock and adjust continuously to the customers’ ever-changing behavior and expectations.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Greek Tragedy: The ‘F’ Word is Feta Cheese

The Wall Street Journal: “U.S. cheese makers are in a sticky situation. They can’t call many of their popular cheeses by their common names anymore when selling them in many markets outside the U.S. The Sartori Co. cheese factory in Plymouth, Wis., has been making Asiago, Parmesan and other popular cheeses according to European recipes for decades and recently began exporting them. Last year, for export versions of those two cheeses, Sartori had to trademark new names, leading to the birth of Sartiago and Sarmesan.”

“The rules are a problem not just for producers trading with Europe, but also for those within the EU. With use of the term feta now restricted to the cheese from Greece, producers in other countries who have been making a similar cheese for decades have had to think up new names. ‘It’s the F-word we can’t say,’ said Theis Brøgger, a representative of Danish co-operative Arla Foods, one of the world’s largest dairy processors. Arla has adopted the name ‘white cheese’ or ‘salad cheese’ in Europe and other places where the rules apply. For consumers who still don’t understand, ‘we make sure that there is a large photo of the cheese on the outside,’ Mr. Brøgger said, adding that sales are growing.”

“Some cheese executives think a better way to get around the EU restrictions is to develop more original U.S. cheese recipes. Developing new local products, cheese makers ‘can pay tribute to the region where the cheese is being made or the town or the soil,’ said Heather Engwall, director of marketing at Emmi Roth” which “makes a bright-orange cheese called Prairie Sunset … Still, it is hard to create new names that relay a cheese’s qualities as efficiently as the established European name. Ms. Engwall said customers often ask, ‘What sort of cheese is it?'”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Are Shoppers ‘Primed’ For Price Hikes?

The Washington Post: “Hard-wired into the DNA of companies of all kinds is a fear of losing customers with even the slightest uptick in prices. Netflix watchers and McDonald’s eaters appeared undeterred by the rise in subscription and menu costs over the past seven months, with both companies reporting strong sales growth in the first quarter … Amazon may be the next big test of whether consumers who are already stretching their pocketbooks will open them even wider.”

“The retail giant announced … that the price of a Prime membership will increase 20 percent, to $119 per year.” Ryan Hamilton, an associate professor of marketing at Emory University’s Goizueta Business School, comments: “In general, people are sensitive to losses, and price increases count as losses psychologically. The broader perspective, though, is that people tend to be willing to pay for what they perceive as value.”

“Brian Wansink, professor and director of the Cornell University Food and Brand Lab, noted that in deciding when to raise prices, companies have to time the rollout carefully. Make the announcement too abruptly and viral anxiety might cause customers to drop off. A safer bet is often to announce weeks ahead of when the change will go into effect. At that point, customers are less likely to fixate on a hit to the wallet that’s still weeks away.” He elaborates: “But if it’s [done] the day it happens, there’s this huge outcry. It can start framing in their minds that they are getting ripped off. The outcry is not going to happen if the soft launch in done months ahead of time.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Foot Locker Opens Up & Goes Local

Quartz: “Foot Locker announced in March that it would close more than 100 US stores this year, and stories attributing the news to a ‘retail apocalypse’ quickly followed. The company’s CEO, Dick Johnson, has some thoughts on those headlines: They totally missed the point … More important, according to Johnson, are the new stores Foot Locker is opening. Yes, there will be fewer of them, but they’ll offer better experiences for shoppers.”

“One thing they’re doing is tailoring stores to specific markets by working with local artists and influencers. They’re also considering services you can’t get online, whether that means putting a barber shop in the back, or having a sneaker cleaner come in once a week so folks can get their shoes freshened up.” Johnson comments: “The real headline wasn’t that we’re closing 100 doors. It’s that we’re opening 40 and they’re going to be really special places for our consumer to come and engage with our brand.”

“It’s true that many brands are closing stores because they’re struggling. But having fewer, better stores can also be a sign of a business planning for the future. To that point, Johnson also emphasized Foot Locker’s preparation for an increasingly digital world. One of the company’s biggest investments, he said, is in ways to analyze and use data.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Barber Shop Museum & ‘Comedy Club’

The New York Times: “Arthur Rubinoff, 43, opened the roll down gate on a storefront along Columbus Avenue in Manhattan … Inside the space was under construction but already Mr. Rubinoff’s signature décor — with all the subtlety of Versailles — could be seen in the six ornate chandeliers being hung on a small ceiling and the elaborate gilded trim along the edges … the museum, at Columbus Avenue, between 73rd and 74th Streets, will double as a shop.”

“Visitors can get a haircut and peruse displays of antique and vintage barber equipment, from chairs and striped poles to towel steamers and straight razors. In addition to the displays, the space will have sets of antique chairs and mirrors that will serve as functioning haircutting stations. Mr. Rubinoff said he plans to use one chair himself, for ‘my special clients,’ and to keep the others free for different guest barbers he will bring in every week or two.” He says: “I want to rotate them through, like a comedy club, to bring in fresh talent from California, Arizona — I have barbers from Moscow. These days, people want to try new hands, new energy.”

“In the museum space, he pointed out where he will put a souvenir counter selling barbershop-themed accessories like cuff links and tie clips of his own design. Speaking of his own design, Mr. Rubinoff pulled out a pair of diamond-encrusted gold scissors he had crafted. Gold scissors and combs will be used for the highest paying clients who opt for the $118 ’21st Century Cut, he said.” He adds: “We’re going to offer them Champagne and black caviar on a cracker. It’s all part of the business plan.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Jif Jaf: Zen & The Art of Oreos

Quartz: “When Oreos came to China in 1996, consumers were nonplussed. The chocolate sandwich cookies … were far too sweet for the Chinese palate. By 2005, Kraft Foods was losing money on every Oreo sold. The company regrouped, introducing a lighter Oreo, a rectangular Oreo, and chocolate-covered wafer sticks. At the Kraft Foods biscuit research lab in Suzhou, food scientists experimented with dozens of other varieties, among them an Oreo that replaced the traditional filling with a glob of gum. (That version never made it to shelves).”

“Kraft spun off Oreo and other snacks brands into a new company, Mondelez International, in 2012, and itself merged with Heinz in 2015. Now, Kraft Heinz is taking the lessons learned from 1990s Oreos to Jif Jaf, a chocolate-sandwich cookie the company is releasing in China. Filling flavors include a traditional chocolate, but also matcha tea, chili, and cheese.”

“Unlike Oreo, each Jif Jaf character has its own personality, part of a brand-development effort led by creative agency Jones Knowles Ritchie (JKR). The matcha character is calm and zen-like, chili is a thrill-seeker, and cheese is a ladies’ man.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

The Caviar Sandwich is Back!

The Wall Street Journal: “The caviar sandwich at the Grand Central Oyster Bar is back … the under-$15 sandwich, a novelty item that served as a kind of low-rent riff on the luxury lifestyle, disappeared from the menu several months ago. The reason? The cost of the bowfin caviar, a cheaper variety of fish eggs used for the sandwich, had suddenly soared. That left the restaurant with two options: Increase the price for the sandwich threefold or nix it from the menu altogether. Given that the whole point of the sandwich was the caviar-on-the-cheap aspect, the Oyster Bar chose the latter.”

“And Oyster Bar executive chef Sandy Ingber figured the situation would remain that way because he wasn’t finding any caviar purveyors cutting deals … The menu item, a fixture for more than 15 years, had never been a huge seller, as a typical day saw up to 10 orders. But those who liked it really seemed to like it, Mr. Ingber said. The appeal went beyond the novelty aspect, he added. The dish, with the caviar served on plain white toast and paired with chopped egg with a dollop of sour cream on the side, is a perfect study in contrasting textures and flavors: salty, creamy and crispy.”

“But Mr. Ingber still needed to find a source for low-cost bowfin caviar. Fortunately, one turned up at a trade show in Boston last month. The product is the same quality, he said, and only a tad more expensive when factoring in shipping. Mr. Ingber was able to reinstate the sandwich to the menu two weeks ago, raising the price by only a dollar to $13.95.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

7-Eleven: When Convenience Is Not Enough

The Wall Street Journal: “For 7-Eleven, Big Gulps and Slurpees are no longer enough. The convenience-store pioneer is falling behind rivals that are gleaning more sales from healthier snacks and freshly cooked meals … The company’s executives said they are working to come up with better foods to sell in their 9,700 North American stores. ‘Simply being open longer than the competitor … is not enough,’ said Raj Kapoor, referring to the stores’ extended hours. Mr. Kapoor, a 23-year veteran of 7-Eleven, is head of fresh food and proprietary beverages.”

“The effort to freshen up 7-Eleven’s business has run into resistance from the chain’s franchisees. Eight out of 10 7-Eleven stores are owned by franchisees, most of whom own fewer than five stores. Many say it is too expensive to maintain new equipment like ovens, and that 7-Eleven needs to pay to remodel their stores if they want them to sell more fresh and hot food. ‘Our stores don’t look like we are in the food business,’ said Hashim Sayed, who sold his store in Chicago back to 7-Eleven this week after 25 years as a franchisee.”

“7-Eleven says it has been addressing the shift in tastes for several years. But competitors have done more to sell fresh—and more profitable—foods, analysts said. Regional convenience chains Wawa Inc. and Sheetz Inc. make custom salads and hot meals at on-site kitchens. Iowa-based Casey’s General Stores Inc. is now one of the largest sellers of pizza in the U.S. CVS Health Corp. has reorganized its drugstores to display healthy food more prominently.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Waiting in Line: There’s No App For That

The Wall Street Journal: “Every day, Mitchell Burton orders and pays for an Italian B.M.T. sandwich on his Subway mobile app, so the sandwich is waiting at the counter. When he arrives, the 32-year-old Baton Rouge, La., parks and recreation worker frequently heads to the back of the line, to avoid seeming rude to less tech-savvy fellow customers. Line skippers sometimes ‘get the stink eye,’ he says, because fellow patrons don’t understand that there’s an app to order ahead.”

“Various ways to skip lines have gained momentum in recent years, as businesses ranging from retailers to movie theaters have come up with ways for customers to avoid a wait, often with mobile apps and ordering kiosks … In theory, order-ahead technology should appeal to everyone.” But: “Some line lovers say technology gets in the way of the personal touch. That’s why Al DiSalvatore sometimes puts his phone down and lines up the old fashioned way at coffee shops in Philadelphia. He likes when the baristas remember his name and order—something that reminds him of his time living in smaller cities.”

“Lining up is part of a gauzy nostalgia for the days before smartphones, which also includes professors banning laptops in class, people stopping at the register to write checks and shoppers skipping shopping online … Erik Fairleigh, 38, who works in communications at Amazon, also has a simple reason for sometimes joining the line. ‘I like to pay in cash,’ he says … Ashleigh Azzaria, a 34-year-old Palo Alto, Calif., event designer, typically chooses to wait in line for coffee at Starbucks, even though she has the mobile app installed and skips the line for bigger orders. ‘It’s my break,’ she says. ‘It’s my time to just kind of decompress, to not be on the phone’.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Hotel Shampoo: Losing its Lather?

The Wall Street Journal: “Those little bottles of shampoo, conditioner and body wash in hotels—icons of travel—are disappearing, replaced by bulk dispensers mounted on shower walls. And some travelers are in a lather … some road warriors say wall-mounted racks look low-class. They’re steamed that removing their prized individual bottles looks like just another in a long string of amenity cuts from hotels, like mouthwash, stationery, sewing kits and pens.” David Lennox, a frequent traveler, comments: “What’s next, getting rid of the packs of coffee and making us scoop out of a can? I think it’s cheap, incredibly cheap.”

“Marriott says its change allows it to offer higher-quality bath products at lower cost and reduce waste … And the landfill waste can be significant, says Liam Brown, who is responsible for Marriott brands like Courtyard, Residence Inn, Fairfield Inn and Springhill Suites in the Americas. Little bottles are never refilled and rarely recycled. The initial 450 properties where Marriott will make the change use 10.3 million little bottles a year, or 113,000 pounds of plastic, he says. When the change reaches 1,500 hotels it means 34.5 million bottles, or 375,000 pounds of plastic a year.”

“Noelle Nicolai, who leads marketing for Wyndham Hotel Group’s upscale brands, likens bath products to bread at restaurants. If it’s mediocre, you forget it. ‘If done right, it can be one of the top drivers of delight and guest satisfaction,’ she says.
Wyndham did extensive research and decided to increase the size of some of its bottles from 30 milliliters to 50 milliliters to encourage guests to take them home. ‘Maintaining that bottle experience…was really important to us,’ Ms. Nicolai says. Wyndham and most other large hotel companies send leftover soap that’s been sanitized and repackaged to a charity called Clean the World for recycling.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail