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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Slow & Low: How Netflix Raises Prices

Quartz: “When Netflix raised rates this month, it increased the price of its most popular plan in the US by $1 and its premium package by $2. The hike hit new signups first and is still rolling out to existing users—a strategy Netflix uses to give people time to adjust. The company, shrewdly, did not touch the basic plan—its cheapest offering at $7.99 a month—so that folks on tighter budgets could still afford the service … The key, for Netflix’s management, was learning to raise prices without spooking subscribers—by doing so in small and infrequent doses.”

“Netflix has been careful not to raise rates too quickly in markets where it’s still building out its library and launching originals geared toward local audiences. It needs to become a service its customers can’t live without, before they rethink its value … Some analysts expect and welcome another modest price lift in the US next year to cover the rising cost of Netflix’s content. An extra dollar here and there, if Netflix continues to add new ‘must-watch’ series and movies all the time, shouldn’t dent its base too badly.”

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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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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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