Terminal C: This Restaurant is Classified

The Wall Street Journal: “You’re a top-dollar flier. Would you fly an airline more if it secreted you into a speakeasy-like restaurant hidden in a back corner of the airport—and handed you the bill? United Airlines is betting you might. United and airport concessionaire OTG Experience have opened an invitation-only restaurant inside Newark Liberty International. To pump up the air of exclusivity, there are no signs for Classified: It’s behind an unmarked blue door in the back of another restaurant in Terminal C.”

“Classified can entice premium passengers to fly out of Newark rather than Kennedy or LaGuardia, says Praveen Sharma, United’s vice president of loyalty, merchandising and digital channels … The airline won’t say how it decides which customers get invitations. It’s not all about frequent-flier status or fare paid. Long layovers may increase your chances. CEOs and celebrities get invites. United officials can walk-in VIPs or even angry customers left stranded by flight problems … Try as it might to be swank, Classified remains an airport restaurant. The knives are plastic, per TSA regulations … Comments are mixed on frequent-flier forums like FlyerTalk. Some road warriors like it. Others find the food overpriced and the seemingly random invitations annoying.”

“United isn’t the only U.S. airline trying to make downtime at the airport more memorable. American now has Flagship First white-tablecloth restaurants open only to people who buy first-class tickets for international or New York-Los Angeles and New York-San Francisco flights.” Kurt Stache, American’s senior vice president for marketing, loyalty and sales, comments: “It’s for that small, small percentage of customers that generates a disproportionate amount of revenue.”

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Supreme Luxury: Scarcity is the Best Strategy

The Wall Street Journal: “Supreme, an underground streetwear brand with 11 stores and a cult following, is now worth more than teen retailer Abercrombie & Fitch Co., which has about 900 stores around the globe … Founded in 1994, the seller of skateboarding T-shirts, hats and sweatshirts has tapped into the zeitgeist of teens seeking hard-to-get looks. Unlike traditional retail chains, which aim to sell as much as possible, the label has relied on product scarcity and word-of-mouth referrals to generate hype around its name.”

“Supreme sells merchandise from other apparel brands, but the most coveted items are those with the Supreme logo. A limited number are released throughout the year, and fans frequently check blogs and Facebook groups to learn about the latest offering … Online, the items sell out promptly, appearing later on eBay and other reselling platforms at much higher prices.”

“Supreme’s popularity has surged as ’90s streetwear styles have made a comeback. It ranked as the fourth-most preferred website among upper-income male respondents, after Amazon, Nike and eBay, based on a recent Piper Jaffray survey of 6,100 teens.
With so few locations, the brand’s shop in New York City has become a tourist attraction. On a recent Sunday, families with teens and twenty somethings wrapped around three streets to wait for a chance to enter the store.” A fan comments: “Waiting is part of the experience.”

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Rent the Runway Moves Downscale

The Wall Street Journal: Rent the Runway “is introducing a new subscription priced at $89 a month, 35% less than the $139 monthly subscription plan the company launched last year. The new, lower-priced plan limits customers to four items a month and excludes some high-end designers. Jennifer Hyman, chief executive and co-founder of Rent the Runway, said the new plan is aimed at price-sensitive shoppers, not the affluent professionals who make up most of the company’s existing subscribers.”

“Under the new model, customers can rent up to four pieces a month, including dresses, coats or handbags, from labels such as Tory Burch, Vince and Diane von Furstenberg. The items arrive dry-cleaned and in a garment bag with a prepaid postage label; the customer must return them by the end of a month to obtain four more items … With the new price tier, Rent the Runway is hoping to compete with fast-fashion and discount retailers like T.J. Maxx , Zara and H&M , which have bucked many of the problems dragging down traditional clothing chains by luring shoppers with low prices and constantly changing merchandise.”

However: “‘Getting people to change their behavior is difficult,’ said David Bell, a marketing professor at University of Pennsylvania’s Wharton School. Most consumers don’t do the math to determine whether renting or buying is a better deal, he said; others may be turned off by the thought of putting on a previously worn dress.”

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Does Apple Hack Its Own Products?

Axios: “Every time Apple releases its newest iPhone or OS, there are significant spikes in searches for terms like ‘iPhone not working,’ ‘iPhone slow,’ and ‘iPhone problems,’ according to data from Google Trends.This has led to a conspiracy theory that has been revived almost every year, claiming that Apple intentionally slows down old phones to entice iPhone users to upgrade to their newest, often more expensive product. But the phenomenon can also be explained by a few other reasons.”

For example: “Older models have to work harder to run everything the newest, superior OS provides, and therefore consume more energy and battery life.” Also: Patrick Moorhead, an analyst for Moor Insights Strategy comments: “One very important thing to consider is that at the same time of an OS upgrade, application developers upgrade their applications. Therefore at the same time the new OS is indexing for Spotlight, it is updating applications, which temporarily would slow down the phone.”

And: “Most iPhone users are quick to update to the newest OS, and tend to be critical of every included change. This critical mindset might cause some to feel like like their phone is working slower than before at first … Nothing has been ‘proven’ here, but there are many logical explanations for why iPhones might not run quite as smoothly after an OS update that don’t include Apple maliciously hacking their own products.”

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Late & Great: Arthur Cinader

The New York Times: The late Arthur Cinader “decided to start J. Crew in the early 1980s while running the Popular Merchandise Company, a business, founded by his father in Rye, N.Y., that used a catalog to sell affordable clothing and home furnishings directly to consumers … The new venture took the word “crew” from the water sport and affixed a J in front because it was thought to be graphically appealing … Mr. Cinader empowered his daughter, Emily Scott, to conceive of the company’s aesthetic and oversee the design of its apparel while he focused on the financial side of the business and on marketing through the J. Crew catalog.”

“J. Crew opened its first store at the South Street Seaport in Manhattan, followed by stores in San Francisco, Chestnut Hill, Mass., and other places. The segue proved successful, and by the mid-’90s the company had several dozen stores collectively generating revenue in excess of $500 per square foot … The success of the company owed much to Mr. Cinader and Ms. Scott’s scrupulous focus on their target demographic: affluent, high-achieving people who wanted to signal a certain pedigree with their fashion choices, but not one so stuffy that they would think twice before associating with it.”

“Articles in the business press over the years have described J. Crew’s niche as one notch below Ralph Lauren and one notch above retailers like Gap or the Limited. While the company’s first catalog featured photographs from the Weld Boathouse at Harvard, J. Crew marketed itself to the man or woman who might have attended any college or university and simply wanted to evoke a hint of the Ivy League.”

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Klatch: The $55 Cup of Coffee

The Wall Street Journal: “Earlier this year, Extraction Lab, a coffee shop in Brooklyn, N.Y., that is connected to Alpha Dominche, a manufacturer of brewing equipment, began selling an $18 cup of coffee. It is made using a $13,900 Alpha machine that controls every aspect, from water temperature to timing. The brew is a Panamanian-sourced variety, called Gesha, sometimes spelled Geisha, once described by Don Holly, a veteran of the gourmet-coffee industry, as seeing ‘the face of God in a cup’.”

“In Southern California, $55 is what it will cost to get a special cup at Klatch Coffee, which plans to roll out a particularly prized version next month, dubbed Esmeralda Geisha 601. The ‘601’ refers to the price per pound that the coffee sold for at auction … The store is set to offer it at ticketed events. But for those who can’t attend, Klatch will ship the coffee out—for the same $55—in 15-gram packages of pre-roasted beans, good for making one cup. A souvenir mug will come with mail orders.”

“Some Starbucks enthusiasts have created their own price-be-damned drink by ordering extra shots of espresso and bringing their own oversize vessel … William E. Lewis Jr., a political consultant in Fort Lauderdale, Fla., said he once paid $148.99 for a Starbucks Flat White coffee with 170 extra shots. Mr. Lewis said he didn’t consume it all at once, saying that much caffeine in one sitting might be deadly. Instead, he packed it to go and enjoyed it over a couple of days. ‘It’s all about the hunt. It’s all about doing it’.”

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Free Meals in Coach Make a Comeback

The New York Times: “It seemed to be extinct. The airlines stopped offering it on domestic flights more than a decade ago, along with other amenities that once made air travel an adventure rather than an endurance test. And yet it has reappeared in recent months: a free meal in coach. Continuing their emergence from hard economic times, some airlines have begun adding complimentary breakfast, lunch or dinner on some of their flights in the United States.”

For example: “Delta’s snacks have gotten an overhaul, moving on from ’40 years of unbranded peanuts and pretzels,’ said Lisa Bauer, Delta’s vice president for onboard service, to a variety that includes sweet, salty, healthy and gluten-free choices that will be rotated every six months … The company tried to replicate what the customers would naturally choose for themselves “if they weren’t at 35,000 feet,” Ms. Bauer said. And that includes local and seasonal foods.”

“Ms. Bauer said a free meal alone might not change a customer’s mind. But she said she hoped that given a package of amenities and service, a customer faced with two flights might choose the one run by Delta, even if it costs a little more.”

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Surge Pricing: The Customer is ‘The Boss’

The New York Times: “When Bruce Springsteen decided to do a run of shows at a Broadway theater with fewer than a thousand seats, he appeared to reject the laws of economics — or at least what would seem to be in his financial best interest. He limited ticket prices to between $75 and $850 and has been allocating them through a lottery that includes identity verification. His goal was to prevent scalping. Yet not everyone who sought tickets got them at those prices. The tickets that have leaked onto the open market on StubHub ranged in one recent search from $1,200 to $9,999.”

“Fans don’t want to think their favorite artist is gouging. And the entire concert experience may be better if raucous superfans are in the front rows, rather than whoever is able to pay four figures for a ticket. The goal is to create an experience that makes everyone leave with a warm glow, their fandom of that artist that much deeper. If artists did raise prices sharply, there’s a risk they would need to discount prices later to fill up the arena. Research shows that when people find out they overpaid for something, they buy less in the future.”

“That might be a lesson for the other industries where variable pricing could make a lot of sense … What the successful examples of variable pricing have in common is that they treat customers’ desire for fairness not as some irrational rejection of economic logic to be scoffed at, but something fundamental, hard-wired into their view of the world. It is a reality that has to be respected and understood, whether you’re setting the price for a highway toll, a kilowatt of power on a hot day, or a generator after a hurricane … one view of the Springsteen approach is that it is economically irrational. But another is that it is part of a long-term relationship between a performer and his fans.”

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Broadway Bargains: There’s An App For That

The Wall Street Journal: “A veteran Broadway producer is instituting what he believes is an industry first: A best-price guarantee on show tickets. Ken Davenport, lead producer of the revival of ‘Once on This Island,’ … says the guarantee will ensure that ticket-buyers won’t have to scour the web for deals through theater sites advertising discounts. Instead, they can go to the show’s website.”

“While Mr. Davenport says the idea is to make pricing fairer and more transparent, he also allows that he stands to benefit from the guarantee. If theatergoers come to see the show as the best source for a discount, he says he doesn’t have to spend as much time and money marketing various other deals. Moreover, when theatergoers go to discount sites in search of cheaper seats, they often learn about deals for other Broadway productions, Mr. Davenport says. In turn, that could lead them to buy tickets for a different show.”

“But while Mr. Davenport’s strategy may resonate with theatergoers tired of the bargain hunting, not everyone thinks it will pay off. Larry Compeau, a Clarkson University professor who specializes in consumer psychology, says Americans have become accustomed to the hunt. He notes failed experiments by prominent retailers and manufacturers to simplify pricing and do away with discounts. “The general American consumer values the deal,” he said. Others say Mr. Davenport could be sacrificing revenue from ticket-buyers who don’t necessarily worry about deals.”

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Columbus: The Silicon Valley of Retail?

The New York Times: “A combination of demographics, geography and luck turned Columbus into the nation’s consumer laboratory. This Rust Belt city has historically been a microcosm of the national population’s age and ethnicity, ranking fourth among metropolitan areas in its resemblance to the United States over all, according to data compiled by WalletHub.”

“Ohio State University’s 65,000 students mean young shoppers are always on hand. Columbus is within a day’s drive of nearly half of the United States population, making it a convenient hub for distribution. The city’s relatively small size and contained media market make it affordable for companies to run advertising campaigns and measure their effectiveness. And its relatively low profile allows brands to try something and fail — without the scrutiny they would draw in New York or Los Angeles.”

“Perhaps most important, a robust network of retailers and service providers — from big brands like Abercrombie & Fitch to small design firms that focus on store layouts — has taken root in Columbus. Today there are more fashion designers in Columbus than in any other American city besides New York and Los Angeles.”

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