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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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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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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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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Is DIY DOA for Millennials?

The Wall Street Journal: The Millennial “generation, with its over-scheduled childhoods, tech-dependent lifestyles and delayed adulthood, is radically different from previous ones. They’re so different, in fact, that companies are developing new products, overhauling marketing at companies such as Scotts, Home Depot Inc., Procter & Gamble Co. , Williams-Sonoma Inc.’s West Elm and the Sherwin-Williams Co. are hosting classes and online tutorials to teach such basic skills as how to mow the lawn, use a tape measure, mop a floor, hammer a nail and pick a paint color. and launching educational programs—all with the goal of luring the archetypal 26-year-old.”

“J.C. Penney Co. says the group is willing to hire others for projects. The retailer has pushed into home services, including furnace and air-conditioning repair, water-treatment systems and bathroom renovations, and expanded its window-covering installation … Home-furnishings retailer West Elm offers service packages, which start at $129, to provide plumbing and electrical work, painting, installing a television and hanging wall art and mirrors.”

“Home Depot executives want to establish stores as an education center so young adults can learn household maintenance for themselves. Snagging a new homeowner’s first purchases, says Ted Decker, Home Depot executive vice president of merchandising, helps drive return trips and represents potentially ‘thousands and thousands of dollars’ in lifetime sales … In June the company introduced a series of online workshops, including videos on how to use a tape measure and how to hide cords, that were so basic some executives worried they were condescending.”

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Do Smartphones Make Us Stupid?

Nicolas Carr: “Imagine combining a mailbox, a newspaper, a TV, a radio, a photo album, a public library and a boisterous party attended by everyone you know, and then compressing them all into a single, small, radiant object. That is what a smartphone represents to us. No wonder we can’t take our minds off it.”

“A quarter-century ago, when we first started going online, we took it on faith that the web would make us smarter: More information would breed sharper thinking. We now know it isn’t that simple. The way a media device is designed and used exerts at least as much influence over our minds as does the information that the device unlocks.”

“Now that our phones have made it so easy to gather information online, our brains are likely offloading even more of the work of remembering to technology. If the only thing at stake were memories of trivial facts, that might not matter. But, as the pioneering psychologist and philosopher William James said in an 1892 lecture, ‘the art of remembering is the art of thinking’ … No matter how much information swirls around us, the less well-stocked our memory, the less we have to think with.”

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Lidl Effect: So Far, Not Much

The Wall Street Journal: “Since opening its first U.S. store in June, Lidl, the German grocery giant, hasn’t exactly upset the American grocery cart … When Lidl’s first nine U.S. stores opened June 15 in Virginia and the Carolinas, they lured customers away from other grocers, according to an analysis by inMarket, a location-based data firm. But Lidl hasn’t been able to sustain that level of traffic, and grocers including Kroger Co. and Wal-Mart have recovered much of their lost market share, according to inMarket.”

“The timing of Lidl’s U.S. arrival wasn’t ideal. It opened its first stores the day before Amazon.com Inc. surprised the industry by announcing it would buy Whole Foods Market. Supermarkets responded, slashing prices to keep up with growing competition on many fronts while investing in online ordering and delivery. Lidl doesn’t currently have an online grocery-shopping operation in the U.S.”

“Missteps in store location and merchandise have hurt Lidl’s U.S. rollout, consumer analysts say … Other analysts said Lidl stores give prominent display to items that seem geared toward Europeans, whether it is $39.99 cycling shoes or $15.99 badminton sets. Some stores’ produce sections have run low on conventional items while stocking big organic offerings, and in some stores emphasis on wine hasn’t squared with local tastes focused on beer.”

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Walmart Shoppers & Drive-Thru Culture

The New York Times: “A personal shopper is something you might expect at Bergdorf Goodman or a boutique on Madison Avenue. Not at the Walmart on Route 42 in Turnersville, N.J. But that’s where you will find Joann Joseph and a team of Walmart workers each day, filling up shopping carts with boxes of Honeycomb cereal, Cheez-Its and salted peanuts. The customers select their groceries online, and then the shoppers pick the items off the store shelves and deliver them to people when they arrive in the parking lot. Customers never have to step inside the store.”

“Walmart, which is one of the largest food retailers in the United States, sees grocery pickup as a way to marry its e-commerce business with its gigantic network of stores — a goal that has eluded many other retailers. The company started ramping up the service two years ago, and it is now available in about 1,000 of Walmart’s 4,699 stores across the country … Walmart is betting big on the millions of Americans in suburban and rural areas who drive everywhere. The company is trying to make ordering groceries online and then picking them up in your car as seamless as a fast-food drive-through.”

“Walmart is also showering grocery pickup customers with perks — Easter eggs hidden in grocery bags, a “beauty box” for moms at Mother’s Day, dog biscuits and discounts for recruiting new customers. It’s unclear how the company will be able maintain this kind of dedicated service if a store is inundated with pickup orders, which in many stores are free of charge and require an order of $30 or more. Walmart said it had hired thousands of workers to staff the new service across its many stores.”

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