Is Starbucks Ubiquity Hurting Its Sales?

Quartz: A Montreal-based investment bank says Starbucks “has saturated the American market so much that it’s now losing sales competing with itself.”

“On average, for every one Starbucks location in the US, there are now about four others within a one-mile radius to compete against … Over all in 2017, more than 62% of Starbucks now compete with at least one other Starbucks coffeeshop … the number of Starbucks alternatives within a mile of a Starbucks location in the company’s busiest regions have increased from three to five since 2012.”

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Brands Go Local To Beat Amazon

The Wall Street Journal: “As Amazon.com Inc.tightens its grip on retail sales, a growing number of brands are pushing back by championing local retailers. Some manufacturers are enforcing minimum advertised prices to make it harder for online sellers to undercut local merchants, while others give local stores first dibs on new products or funnel customers from their own websites to local outlets.” For example: “Luxottica Group SpA last year launched a minimum advertised pricing program that restricts the price at which its Ray-Ban and Oakley sunglasses can be advertised … The average discount on Ray-Ban sunglasses on Amazon has shrunk to about 3% as of this month from 37% in April 2016, according to Luxottica.”

“Free stroller tuneups are one way UPPAbaby, a Hingham, Mass.-based maker of baby strollers and car seats, draws customers back to local retailers carrying its products after they buy one of its strollers, which cost up to $900 … Running gear maker Brooks is testing a new app that uses an iPad connected to a treadmill to help local retailers determine which Brooks shoe best suits a runner’s biomechanics … Orb has a program designed to encourage local retailers to try out new products without worrying they might be saddled with excess inventory. At the end of each quarter, local stores can donate slow-selling items to a favorite charity. Orb then replaces the donated goods with new items selected by the retailer at no extra charge.”

“Arc’teryx salespeople use e-commerce sales data to help merchants determine which styles of clothing, shoes and backpacks are best sellers in their local market … If Simms Fishing Products had its way, the company’s waders and other fishing gear would never show up on Amazon’s website. The Bozeman, Mont., company doesn’t sell directly to Amazon, and its dealer policy specifically prohibits sales on third-party platforms … Simms employees visit local independent retailers and use computer-assisted design software to create customized Simms shops within each store.”

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Walmart ‘Academy’ Trains Workers

The New York Times: “Walmart has spent $2.7 billion on training and raising wages for 1.2 million of its store workers over the past two years — an investment that reflects the pressures the company faces in the retail industry. Fighting Amazon for sales, Walmart is trying to make its stores more pleasant places to shop. That requires a well-trained work force with a sense of purpose and self-worth, qualities that can be difficult to nurture in lower-wage workers.”

“Working in classrooms set up in 150 Walmarts around the country, employees learn how to calculate profit and loss statements and how to run their department like a small business. Managers are also taught to get to know their employees and understand their home life … The company says its training programs are intended to help employees advance into higher-paying jobs at Walmart or in other industries.”

“Walmart has been working with the National Retail Federation, a trade association, to help devise standards for a certificate that retail workers could earn for gaining certain interpersonal skills like how to deal with angry customers. The hope is that certificate holders will have an easier time finding a job or getting promoted.”

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Impossible Burgers: Food is not an App

The New York Times: “One of the chief selling points of the Impossible Burger, a much ballyhooed plant-based burger patty, is its resemblance to meat, right down to the taste and beeflike ‘blood’ …. Now, its secret sauce — soy leghemoglobin, a substance found in nature in the roots of soybean plants that the company makes in its laboratory — has raised regulatory questions. Impossible Foods wants the Food and Drug Administration to confirm that the ingredient is safe to eat. But the agency has expressed concern that it has never been consumed by humans and may be an allergen.”

“Impossible Foods can still sell its burger despite the F.D.A. findings, which did not conclude that soy leghemoglobin was unsafe. The company plans to resubmit its petition to the agency.” Rachel Konrad, a spokeswoman for Impossible Foods, states: “The Impossible Burger is safe. A key ingredient of the Impossible Burger — heme — is an ancient molecule found in every living organism.”

“Impossible Foods is finding out what happens when a fast-moving venture capital business runs headlong into the staid world of government regulation. Investors like Bill Gates and Khosla Ventures have poured money into a variety of so-called alt meat companies. Silicon Valley has noble goals, applying technological solutions to address major issues like climate change, farm animal welfare and food security. But food is not an app. It is far more heavily regulated by governments and much more heavily freighted with cultural and emotional baggage.”

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Makeup Alert: The Danger is not Cosmetic

Jane E. Brody: “When you wash your hair, clean or moisturize your skin, polish your nails, or put on makeup, deodorant or sunscreen, do you ever think about whether the product you’re using may do more harm than good? Maybe you should. Thanks to a lack of federal regulations, the watchword for consumers of cosmetics and personal care products should be caveat emptor: Let the buyer beware.”

“A current case is a classic example … When in 2013 the agency received 127 reports of adverse effects from a single line of hair-care products called WEN, it discovered that the manufacturer, Chaz Dean, Inc., had been sitting on more than 21,000 complaints of hair loss and scalp damage associated with the products’ use. A class-action lawsuit filed by more than 200 women against the company and its infomercial producer Guthy-Renker was settled last year for $26.3 million. Yet the company claims that WEN hair care products are ‘totally safe’ and continues to sell them.”

“Unlike drugs, cosmetics can be sold based solely on manufacturers’ tests (or no tests at all) and claims for effectiveness and safety. Even the ingredients don’t have to be filed with the government. (Only color additives require premarket approval.).” Former FDA Chief Dr. Robert M. Califf comments: “It’s not known how much of these chemicals is absorbed through the skin and what effect they may have over a lifetime of use. The right studies of health effects have not been done.”

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Amazon’s Buzz: A Drone Beehive?

Business Insider: “Amazon is heavily investing in drones, and one day hopes to use the unmanned aerial vehicles (UAVs) to revolutionise deliveries. Right now, it’s all still early stages — but public patent filings can offer us tantalising glimpses of what Amazon’s engineers are thinking about and experimenting as they develop the tech. For example, a key problem facing any drone deliveries is batteries and maintenance. When your drones are in the shop getting fixed, they’re not helping you make any money — so how do you keep them charged and in the air for as long as possible?”

“Amazon is exploring the idea of building special facilities that can store, repair, and deploy drones, and pre-emptively moving products and drones to areas of anticipated demand (based on seasonal trends, say, or a special event in the area) before launching them … the patent — and others like it — offers us a window into the kind of problems Amazon’s employees are grappling with, and how they might ultimately hope to solve them.”

“For example, Amazon has previously filed for a patent for a beehive-like tower for storing its fleets of drones — or as it calls it, a ‘multi-level fulfillment center for unmanned aerial vehicles’ … Amazon is also thinking about using its drones to scan your house while carrying out deliveries in order to try and sell you more stuff. If it spots one of your trees is dying, it might recommend some fertiliser to you with an advert on its website, for example.”

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Amazon’s Secret: 19 Phantom Brands

Quartz: “Amazon is selling products across a wide array of categories, using a host of brands that do not exist outside the confines of amazon.com and do not make it clear that they are Amazon-made products. Trawling through over 800 trademarks that Amazon has either been awarded or applied for through the US Patent and Trademark Office (USPTO), Quartz identified 19 brands that are owned by Amazon and sell products or have product pages on amazon.com.”

The Amazon brands include: Arabella (Lingerie); Beauty Bar (Cosmetics); Denali (Tools); Franklin & Freeman (Men’s shoes); Happy Belly (Fresh food); James & Erin (Women’s clothing); Lark & Ro (Women’s clothing); Mae (Underwear); Mama Bear (Baby products); Myhabit (Consumer goods); North Eleven(Women’s clothing); NuPro (Tech accessories); Pike Street (Linen); Scout + Ro (Kid’s clothing); Single Cow Burger (Frozen food); Small Parts (Spare parts); Smart is Beautiful (Clothing); Strathwood (Furniture).

“The only indication that any of these other brands might have an affiliation with Amazon is the fact that their company pages … say that their products are ‘exclusively for Prime members.’ It’s not clear that they’re exclusive because they are Amazon products, rather than products from companies that have struck deals with Amazon … It’s possible Amazon has other brands on its site that it hasn’t yet trademarked.”

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Tesla Tries ‘Genius Bar’ on Wheels

Quartz: “Customers may love their Teslas—but servicing them is a cumbersome chore. Almost 30% of those polled said they could not get a service appointment within 10 days, and 22% said their problem wasn’t resolved on their first visit. Seventeen percent said they had to go back three times or more to resolve their issues. It’s something Tesla will need to address as it ramps up production of its Model 3, its first mass-market car.”

“Tesla will need a Genius Bar equivalent if sales projections prove accurate. While electric cars are still a small sliver of the US car market, they’re growing. Tesla reportedly has a backlog of reservations for the Model 3 that is near 500,000. The company will have to … ensure that it has enough routine customer support, and hold the hands of tens of thousands of newbies. It’s imperative because unlike an MP3 player, a working car, for most drivers, is a daily necessity.”

“Of course Tesla’s support network may not look like a Genius Bar at all.” JB Straubel, Tesla’s chief technology officer, explains: “We’re deploying a mobile service strategy to take 80% of the cars and fix them where it’s convenient to the customer. Not at our location, at their location. Make it invisible to them.”

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Retrocycles: How Indian Throttles Harley

The New York Times: Harley-Davidson “now faces perhaps its most trying challenge in decades. Polaris, an established American company with manufacturing know-how and a revered motorcycle brand in Indian, is quickly making big strides … Indian’s sales grew 17 percent in the second quarter of this year, while Harley’s sales shrank nearly 7 percent. Overall sales for large-displacement bikes, the kind that Harley specializes in, shrank 9 percent in the second quarter of this year.”

“The rebirth started well, with attractive bikes earning positive reviews from enthusiast publications … All Indian motorcycles are built in Spirit Lake, Iowa. While its bikes like the Scout and the just-released Scout Bobber are aimed at younger buyers, most models revel in heritage, with styling and names that hark back to the company’s prewar glory days. They represent, as Karl Brauer of Kelley Blue Book, an auto research firm, put it, ‘a cool theme married to a modern chassis’ and particularly appeal to buyers with a ‘what have you done for me lately’ outlook on brand loyalty.”

“Inevitably, Indian’s retro approach makes the brand a head-to-head competitor for Harley-Davidson, offering bikes in the touring, cruiser and midsize classes as well as the popular bagger category, or bikes carrying saddlebags but not the full windscreen and gear of a long-distance touring machine … To be sure, there is little chance that Indian will run Harley-Davidson out of business anytime soon. Harley’s sales last year, some 260,000 motorcycles worldwide, generated revenue of $6 billion.”

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Cut-Throat: Lidl vs. Walmart, Kroger & Aldi

Axios: The German discount grocer Lidl made its United States debut this June, opening 20 stores in the Carolinas and Virginia just weeks after its compatriot Aldi announced its own expansion plans in the U.S. earlier this year … Lidl entered the market aggressively, with prices in its Winston Salem, NC, store that were 9.1% lower than the local Walmart, according to a study conducted in June by Jefferies analyst Christopher Mandeville. Given those results and Lidl’s ‘enjoyable’ shopping experience, he says Lidl could be ‘highly disruptive’ to incumbents like Walmart.”

“But the tide may be shifting, as it appears Walmart has cut the price differential to just 2%, according to a survey by Oppenheimer that looked at prices roughly a month after Jefferies visited the same locations … Oppenheimer analysts Rupesh Parikh and Erica Eiler write, ‘pricing appears dynamic and cut-throat’ at the Walmart and Lidl locations they visited in Winston Salem. ‘During our visit in the afternoon at Walmart, [a gallon of] milk was priced at $2.08. When we went back in the evening, milk dropped to $1.95. Lidl had its own deals, with a carton of eggs on offer for just 52 cents’.”

“Parikh and Eiler think that Kroger (rather than Walmart) is more threatened by German upstarts. Aldi has been in the U.S. longer than Lidl, and has big plans to become the third-largest grocer in America. But Parikh and Eiler were unimpressed, calling Lidl ‘a bigger and nicer Aldi,’ which had ‘wider aisles, enhanced lighting, and a bit more upscale feel,’ they write … No doubt the grocery shoppers of Winston Salem and other markets are enjoying the ongoing price war.”

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