Gyms at Malls: From Pariah to Savior

The Wall Street Journal: “Retailers have closed hundreds of stores across the country amid increasing competition from online shopping, leaving mall owners to grapple with declining foot traffic and rising vacancies. At the same time, fitness centers have boomed and diversified, and a proliferation of smaller, boutique gyms that draw higher-end customers have created more attractive tenants that are easier to accommodate. The result is that health clubs that were once pariahs at malls are helping transform them into hubs of living, working and playing.”

“Many of the new tenants at shopping centers are gyms and specialty fitness studios that in some cases are barely bigger than a Starbucks store. But owners of regional malls also are welcoming sprawling, full-service health clubs as anchor tenants, sometimes replacing the stores that once excluded them … Gyms fit into a broader push by mall owners to reinvent themselves as centers of entertainment at a time when so much of apparel sales have moved online. Landlords are adding restaurants, ice-skating rinks, pools and other recreational options to boost sagging foot traffic.”

“Owners of grocery-anchored shopping centers see fitness as a way to fend off competition from Amazon … Christa Pelc says she often jumps on an elliptical machine at Anytime Fitness in Hoffman Estates, Ill., then picks up dinner ingredients at Mariano’s, a natural-foods grocery store next door … A SoulCycle studio is scheduled to open early next year at Westfield’s UTC outdoor mall in San Diego. It will nestle beside two restaurants that serve organic and locally sourced foods, and a short walk from several cosmetics stores—also hot-sellers.” David Ruddick of Westfield comments: “We’re thinking of this as an ecosystem. It’s not just a workout.”

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‘Unboxing’ is the Holiday’s Hottest ‘Toy’

The Wall Street Journal: “Taking a cue from the YouTube phenomenon known as unboxing—viral videos in which people theatrically unpack hot new products— companies are churning out tiny charms, stickers and golf-ball-size critters, all tucked away inside layers of plastic. The mystery objects have become one of the hottest categories of toys this season.”

“Unboxing videos, also big with technology and fashion reviewers, have become a key way children learn about new toys, and their popularity has grown exponentially in recent years. A recent search for “toy unboxing” on YouTube, a unit of Alphabet Inc.’s Google, brought up more than 12 million results.”

“Australia-based Moose Toys, maker of the popular Shopkins grocery-store figurines, launched its Pikmi Pops in September. The toy, a plastic lollipop-shaped container, hides ‘mystery items’ such as stickers, lanyards and charms … Each of Spin Master Corp.’s Hatchimals Surprise, released in October, holds plush twin critters in a single egg that cracks open after being cuddled.”

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Social Media Buzz: Not Always Accurate

The New York Times: “On average, 19 percent of a brand’s sales — or between $7 trillion and $10 trillion in annual consumer spending in the United States — are driven by social conversations, both online and offline, according to a new study conducted by Engagement Labs, a Canadian company that analyzes conversations around brands. The study, which looked at 170 brands, found that companies often wrongly saw social media as an accurate and sufficient guide for tracking consumer sentiment. Often, though, that social conversation might be much different from what people are saying in private conversations with friends and family, the study said.”

Co-author Brad Fay comments: “The danger is you can make some pretty big mistakes if you assume the conversations happening online are also happening offline. Very often, they’re heading in different directions.”

“The most negative and most outrageous comments often get the most traction on social media. And sometimes, people post comments about a topic just to get a reaction or to reflect an ‘image’ or appear ‘cool’ to their social media followers, when their actual views may be the opposite.”

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Shopper Mobs: The Dark Side of ‘Black Friday’

The New York Times: “What turns ordinary shoppers into dangerous mobs? Social scientists and psychologists are trying to find out. Sharron Lennon, a professor in the merchandising program at Indiana University, became interested in studying consumer misbehavior after seeing news reports a few years back about fights breaking out at her local mall … Dr. Lennon speculates that feelings of unfairness drove many of these shoppers to behave the way they did. Shopping and the retail-consumer relationship, she said, is expected to be an equitable exchange of a good for payment. Any violation of the exchange can evoke strong feelings of inequality.”

“When a store failed to properly stock advertised ‘doorbusters,’ when sale prices weren’t honored, such as being denied an early bird discount at checkout even though they were in line before the sale expired, or when they failed to obtain an advertised item or failed to receive the discounts they anticipated, Black Friday shoppers were most likely to misbehave. In a follow-up study, Dr. Lennon … found that those who felt other customers were being ‘unpleasant’ were more likely to feel the store was being unfair — and were more likely to become uncivil themselves.”

“Perceptions of scarcity are also a driving factor in consumer misbehavior, said Bridget Nichols, an associate professor of marketing and sports business at Northern Kentucky University. When consumers feel a product is scarce, they value it more. And Black Friday is designed to offer limited amounts of products for a limited amount of time, thus heightening the sense of urgency, she said … Sharing the Black Friday ritual with friends and family can create a similar sense of tribal bonding, Dr. Nichols said, and reinforce bad behavior.”

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Real-Time Retail: Fanatics Seizes Micro-Moments

The New York Times: Micro-moments “happen all the time in sports: A player reaches a milestone, has a breakout performance or is traded to a new team. Apparel companies have traditionally been poorly positioned to meet the accompanying fan demand as it surges. Fanatics … a sports merchandise company … is changing that and, in the process, carving out a lucrative niche in a fiercely competitive online-retail industry largely dominated by Amazon.”

“The company is similar to fast-fashion retailers like H&M, Uniqlo and Zara, integrating design and manufacturing with distribution to fulfill orders within hours. After the Chicago Cubs won the World Series last year, Fanatics used Uber to deliver championship gear to some fans within minutes … As a result, Fanatics has more than doubled its revenue in just a few years.”

“Among the micro-moments that highlighted the new need for speed was Jeremy Lin’s emergence as a sudden star for the New York Knicks in 2012 amid the so-called Linsanity phenomenon.” Fanatics chairman Michael Rubin comments: “When Linsanity happened, within 12 hours to 24 hours, there were no jerseys to get. So you had this huge demand, and there’s no jerseys available. Then you order them like crazy, and by the time they get in, the moment’s over.”

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What The Nutella?

The Washington Post: “Nutella confirmed on its Twitter feed that the recipe ‘underwent a fine-tuning’ after Germany’s Hamburg Consumer Protection Center said on Facebook that it appeared the recipe had changed. That set off both panic and anger on social media in a symphony of languages — English, German and Italian chief among them … Ferrero, the Italian company that makes Nutella, Tic Tacs and Ferrero Rocher chocolates, insisted that ‘the quality . . . and all other aspects of Nutella remain the same,’ in a statement obtained by the BBC.”

“The changes are to its milk and sugar content. The new recipe has 8.7 percent powdered skim milk, instead of 7.5 percent. It also contains 56.3 percent sugar, instead of the previous 55.9 percent, the Hamburg Consumer Protection Center said, according to Deutsche Welle.”

“The outcry is slightly ironic when considering the candy’s history. Nutella was created by an altered recipe for a chocolate spread. It was invented by Italian chef Pietro Ferrero after World War II out of necessity, according to the BBC. Cocoa was hard to come by in postwar Italy. In an attempt to make a chocolate paste without much chocolate, he decided to stretch a little bit of cocoa a long way with hazelnuts. He shaped this into a loaf he called ‘Giandujot,’ after a carnival character … Years later, Ferrero’s son Michele would tweak the recipe and rename it ‘Nutella,’ and it became a worldwide sensation.”

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Virtual Eateries Put the ‘App’ in Appetizer

The Wall Street Journal: “Tucked inside industrial parks, commissary kitchens and refitted basements in cities like New York, Chicago and San Jose, these restaurants have no dining room, no wait staff, no takeout window and no signage … Many don’t take orders over the phone and are accessible only through online services like Grubhub, DoorDash or Postmates. Virtual restaurants, with their low overhead, are allowing restaurateurs to shift away from the capital-intensive model that kills 60% of new restaurants in their first five years toward something decidedly more techy.”

“Virtual restaurants tap into a larger trend: Americans’ increasing aversion to cooking for themselves. For the first time ever in 2016, Americans spent more at eating and drinking establishments than on groceries, according to U.S. Census data. The food-delivery market is a small slice of that sector: It is only $30 billion in 2017, but Morgan Stanley estimates it could balloon to $220 billion within a few years.”

“The fundamental challenge that all these players are trying to solve is that prepared food remains one of the least-scalable businesses in our economy: Production has proved resistant to automation, the materials themselves are highly perishable and swiftly changing consumer tastes can destroy momentum. A typical internet startup can go from 3,000 customers to 3 million customers just by spending more on Amazon Web Services. No restaurant can do the same.”

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V8 & Mr Peanut: Iconic Brands No More?

YouGov BrandIndex: “Two of the most well-known legacy supermarket products — V8 Vegetable Juice and Planters Peanuts — show significant declines in multiple consumer perception metrics over the long-term … From 2013 through the present, both of these brands have suffered their own distinct issues, and one big shared one: millennials.”

“Both V8 and Planters Peanuts are seeing their levels steadily eroding over the past four years, almost entirely brought down by millennials. 94% of all consumers were aware of V8 in January 2013, slipping down to its current 85%. Planters took a steeper drop of 17 percentage points, dropping from 95% down to 78% over the same time period … Millennials change the picture entirely, especially for Planters Peanuts: V8 is down 14 percentage points (from 86% awareness to 72%) with the younger crowd, and Planters Peanuts sees a 32 percentage point fall (from 83% awareness to 51%).”

“V8’s Value and Quality perception with overall consumers has also been falling steadily since 2013. Except in this case, instead of millennials, adults 50 and over dominate the growing negative numbers behind these two metrics, perhaps having been priced out of purchasing the vegetable juice. Consequently, Purchase Consideration by boomers of V8 has declined as well: the juice went from 43% of adults 50 and over considering buying V8 the next time they were purchasing a beverage to 33% now.”

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Fake Meat: Growing Bloody Fast

Business Insider: “Fake meat is a fast-rising food category that could change the way we eat. It replaces animal products with alternatives made from plants that look and taste like meat, with the goal of reducing the global dependence on animal agriculture.”

“The substitute meat market is expected to grow 8.4% annually over the next three years, reaching $5.2 billion globally by 2020, according to Allied Market Research … Companies that produce fake meat and seafood, ranging from ‘bloody’ burgers to sushi made from tomatoes, have targeted college campuses as testing grounds for their creations … In October, startup Impossible Foods announced it will expand distribution of its vegan burger, which sizzles on the grill and bleeds juices like real beef, to universities and company cafes.”

“Impossible Foods opened its first large-scale production facility in September, which will allow it to produce at least four million meatless burgers a month by year’s end … New Wave Foods, which manufactures an algae-based shrimp alternative, and Ocean Hugger Foods, which is working on plant-based seafood — including a raw tuna substitute made from tomatoes — have also set their sights on food-service companies as a path for distribution.”

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Gucci Cracks The Millennial Code

The Wall Street Journal: “Classic brands often blame millennials for sales downturns, but the younger generation is giving Gucci a sensational boost. This could assure the luxury goods maker years of growth, or leave it grumbling like everyone else about that fickle group … Gucci’s success comes from a new look under creative director Alessandro Michele … It draws eclectically on a wide range of colors, patterns and periods, often in the same garment. It could hardly be further removed from the classic, business-friendly vibe favored by previous top designer Frida Giannini.”

“Millennial luxury consumers value experimentation and self-expression more than their seniors … Mr. Michele seems to have hit on a brand identity that reflects this spirit. Gucci has done a good job getting the word out: The brand is very active on the digital media millennials grew up with. Last year Gucci moved to top place in research company L2’s Digital IQ index, replacing longtime leader Burberry.”

“Resonating with the consumers of the future is something many brands aspire to. There is just one snag: As big consumer groups have discovered, experimental consumers make more fickle consumers.”

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