Late & Great: Allen McKellar

The Wall Street Journal: “Allen McKellar, an African-American college senior in South Carolina, figured his chances were slight in 1940 when he entered in an essay-writing contest in a bid to win an internship at Pepsi-Cola Co … Pepsi chose him as one of 13 interns. After serving in the Army, he returned in 1947 to join a Pepsi marketing team focused on African-Americans at a time when few large companies hired blacks for white-collar jobs.”

“At Pepsi, Mr. McKellar and his colleagues persuaded Duke Ellington and other jazz stars to give shout-outs to the soft drink, according to ‘The Real Pepsi Challenge,’ a 2007 book by Stephanie Capparell, a Wall Street Journal editor. They were treated as celebrities in the black press as they crisscrossed the country to pitch Pepsi by giving interviews and visiting schools, church groups and mom-and-pop groceries.”

“Pepsi already had set itself apart by offering 12 ounces for a nickel, while most rivals sold 6-ounce bottles for the same price. Promising “twice as much,” Pepsi ads appealed to the less affluent. The soft-drink company hoped its willingness to hire African-Americans for prominent roles and to market directly to blacks would give it further advantages over Coca-Cola.” In a 2009 interview, Mr. McKellar commented: “Back in those days, there were one or two things a minority kid could expect to do: You could become a teacher or, if you had the financial resources, a doctor. I became the national sales representative for the black market in America. I have been told this was a precursor for blacks in the corporate world.”

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How Jewelry Rattles The Millennial Market

The Wall Street Journal: “Jewelers are following fashion’s playbook for romancing millennials who are left cold by traditional, museum-like high-end boutiques. Brands are pulling out all the stops, designing products that customers can personalize and flaunting their ethical sourcing and sustainability. They are making online and in-store shopping distinctive and are hosting pop-up shops with limited-edition items.”

“The challenge is twofold: designing pieces that appeal to young shoppers and then persuading them to buy jewelry for themselves any time—and not just as the occasional milestone gift. Many millennials reserve splurging for technology or vacations—not fancy jewelry … When millennials do buy jewelry, they often seek out eclectic pieces from Gucci and other trendy brands. They also favor artisanal jewelry from small or new brands.”

“Diamond giant De Beers added nightclub touches to its sleek new Libert’aime by Forevermark store in Shanghai. The shop, which opened last month, has a scented VIP lounge for big-ticket purchases and a “diamond bar” with jewelry meant to be worn every day. One wall features an enormous detail of a diamond, where browsers can take Instagram-friendly selfies surrounded by gleaming facets. The jewelry in the shop is ‘designed to appeal to the 420 million millennials in China,’ the company said.”

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Kanye Tests Bite-Sized Music

The Wall Street Journal: “Kanye West is betting that good things can come from small packages. The 41-year-old rapper has produced five albums, each with seven tracks, many under three minutes. Released on consecutive Fridays, mostly by his record label, G.O.O.D. Music, and its partner Def Jam Recordings, the minialbums are making waves in a music industry where bigger has increasingly been seen as better … G.O.O.D. Music’s experiment is the latest instance of labels and artists tinkering with release strategies in the streaming age. Streaming is now the most popular way Americans listen to music. As listening habits change, record executives and musicians are trying to figure out how to reach fans and distinguish their releases in an increasingly crowded market.”

“Similar to how Mr. West’s provocative tweets and interviews in recent months helped him break through the clutter of social media ahead of his new releases, his seven-track albums are generating buzz for G.O.O.D. Music, music-industry experts say … It’s too soon to tell if shorter albums will trump longer ones in the streaming world … Bite-sized LPs may go down smoother for music fans inundated each week not just with music, but movies, videogames and social-media.”

“Mr. West hasn’t detailed his strategy, but he hints at the idea of shorter tracks on 4th Dimension, a 2½-minute song on Kids See Ghosts. The track samples Someday, by gospel singer Shirley Ann Lee, which includes the lines ‘you only want 2½ minutes if you can get it…three minutes maximum’ and ‘when it get too many then they can’t remember it and then they lose interest’.”

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ConAgra: Fresh in Frozen

The Wall Street Journal: “Last year, Conagra freshened up of three of its frozen brands: Healthy Choice, Marie Callender’s and Banquet. Healthy Choice, a diet brand launched in 1989, rolled out new microwavable meal bowls with trendy ingredients like edamame, kale and quinoa, and exotic flavors like Cuban pork and Korean beef. Banquet, a value-oriented brand with frozen basics like chicken fingers and meatloaf that typically sell for around $1 each, also got an upgrade, including Buffalo Chicken Mac ‘N Cheese bowls that sell for $2 or more.”

“The results have been clear. Comparable sales for Conagra’s refrigerated and frozen-food segment went from declining sharply last fiscal year to rising for three quarters in a row, reaching 2.6% growth in the quarter ended Feb. 25. Conagra Chief Executive Sean Connolly summed up his approach at a Goldman Sachs conference in May: ‘When you take legacy, well-known brands and bring modern elements into the food and packaging, you will have a winner’.”

“Consumers are shying away from carbohydrates and processed foods, preferring fresh meat and vegetables. But these take more effort to cook and can look less than fresh by the end of the week. For busy, health-conscious families, picking up proteins and vegetables from the freezer aisle makes sense. Perceptions of the health properties of frozen vegetables have also improved after studies showed they can retain nutrients better than vegetables that have sat for days in delivery trucks or grocery shelves.”

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Decibel Diet: Loud Music is Fattening

The New York Times: “Behavioral scientists who ran a series of lab studies and real-life field experiments found participants selected more unhealthful or calorie-laden items like red meat and cake when the ambient music was loud, and were more likely to choose healthful items when softer music was played in the background. The genre of music did not appear to influence the choices, the researchers said: They found the same effects whether the background music was classical; a mix of pop, rock, soul, R&B and alternative music; or heavy metal.”

Dipayan Biswas, a professor of business and of marketing at University of South Florida in Tampa and lead author of the paper, comments: “High-volume music is more exciting and makes you physically more excited, less inhibited and more likely to choose something indulgent. Low music makes us more relaxed and more mindful, and more likely to go for the things that are good for us in the long run.”

“Loud background music in a supermarket similarly nudged customers toward less healthful purchases, compared with softer music … Dr. Biswas, whose earlier research found that patrons are more likely to order healthful items when restaurants are brightly lit and more likely to indulge in dimly lit restaurants, said the findings can help consumers be aware of unconscious factors affecting their choices.”

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Lightbox Jewelry: Lab Diamonds via DeBeers

The Washington Post: “De Beers, the diamond giant that for years has promoted gemstones as pricey and precious, said it will begin selling man-made diamonds that cost about a tenth of the price of a mined gem. The line of pink, blue and white laboratory-grown diamonds, which De Beers will sell under a new brand, Lightbox Jewelry, is designed to persuade shoppers to think of synthetic diamonds as a ‘fun piece of fashion jewelry’ instead of a lifelong investment, executives said. Prices will start at as low as $200 to appeal to a new generation of shoppers.”

“The lower-priced jewelry is as much about changing consumer habits and preferences as it is about economics, industry experts say. Today’s 20- and 30-somethings — bogged down by heavy student debt loads and stagnant wages — have less spending power than their predecessors did, but they have different values, too: A recent study by De Beers found that millennials would rather splurge on overseas holidays, weekend getaways and electronics than on diamonds.”

“Lab-grown diamonds — which are created in hot, pressurized chambers over weeks, instead of a billion years underground — have been growing in popularity as Americans spend less on traditional diamonds. The stones are increasingly marketed to younger shoppers as a cheaper, ethically sourced alternative to mined diamonds. But their chemical makeup is the same (all diamonds are made of just one element: carbon), and experts say they are indistinguishable to the naked eye.”

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PF Chang: An American Bistro in China

The Wall Street Journal: “P.F. Chang’s may be seen as an upscale Chinese-food restaurant in the U.S. But the chain is calling its debut location in China ‘an American bistro’—which is exactly how its early customers there see it. ‘The food looks similar, but you eat the food and you know instantly it’s not Chinese,’ said Zhang Ji, 35, who works in finance … Animation designer Zhang Xue said she came because P.F. Chang’s got a shoutout on ‘The Big Bang Theory,’ the U.S. sit-com popular in China.”

“Like many upscale restaurants in China, the restaurant is in a shopping mall. There is a prominent white P.F. Chang’s sign on the 8th-floor entrance … Inside, the décor looks like a mix of old Shanghai meets American diner, with booths and tables … P.F. Chang’s created 10 new dishes for Shanghai customers, including Dusk ’Til Dawn Honey Chicken and Scallion Pancake, an Asian take on chicken and waffles that puts crispy chicken on top of a buttermilk pancake. The Duck Spring Roll features mozzarella, something a Chinese chef might consider sacrilege.”

“P.F. Chang’s is hardly the first foreign company to try selling a cuisine back to its native land. The Domino’s pizza chain arrived in Italy in 2015 and now has 11 locations there; South Korea’s Paris Baguette has two stores in Paris that sell bread back to the French … Yum Brands Inc., however, hasn’t had much success bringing Taco Bell to Mexico, despite two separate attempts.”

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Ordering Anxiety: The High Stress of Fast Food

The Wall Street Journal: “As menu choices multiply—and multiply and multiply—diners are suffering from option paralysis. Especially troublesome are assembly-line-style chains in “fast casual” restaurants where diners have just seconds to answer rapid-fire questions such as whether they want tahini or aioli sauce on their chicken shawarma, or prefer the turmeric almonds or pickled ginger on their beet falafel bowl.”

“People who get nervous at the counter say they worry about being judged for stumbling through their order, or feel pressured by having customers waiting behind them in line. They fret that their food will come out wrong, or that if they try something new they won’t like it. Others simply buckle under the pressure of too many choices. Sarah Anderson hates it when she gets to a restaurant counter thinking she knows what she wants, only to be asked ‘like 20 questions’ … Restaurant executives know this. They feel it themselves, sometimes.” Scott Gladstone, vice president of strategy at Applebee’s, admits: “I usually end up finding one thing on the menu I like and order it every time, because of the anxiety of the ordering process.”

“So, why do restaurant chains offer so many choices? Tom Ryan, the founder and chief executive of Smashburger, says if he didn’t, he would lose customers who yearn for new experiences.”

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H&M Stores Buy Into Big Data

The Wall Street Journal: “H&M, like most retailers, relies on a team of designers to figure out what shoppers want to buy. Now, it’s using algorithms to analyze store receipts, returns and loyalty-card data to better align supply and demand, with the goal of reducing markdowns. As a result, some stores have started carrying more fashion and fewer basics such as T-shirts and leggings … H&M’s strategy of using granular data to tailor merchandise in each store to local tastes, rather than take a cookie-cutter approach that groups stores by location or size, is largely untested in the retail industry, consultants say.”

“The H&M store in Stockholm’s swanky residential Östermalm neighborhood hints at how data can help. The store used to focus on basics for men, women and children, with managers assuming that was what local customers wanted. But by analyzing purchases and returns in a more granular way, H&M found most of the store’s customers were women, and fashion-focused items like floral skirts in pastel colors for spring, along with higher-priced items, sold unexpectedly well.”

“With the help of about 200 data scientists, analysts and engineers—internal staff and external contractors—H&M also is using analytics to look back on purchasing patterns for every item in each of its stores. The data pool includes information collected from five billion visits last year to its stores and websites, along with what it buys or scrapes from external sources … The chain uses algorithms to take into account factors such as currency fluctuations and the cost of raw materials, to ensure goods are priced right when they arrive in stores.” Nils Vinge of H&M comments: “The algorithms work around the clock and adjust continuously to the customers’ ever-changing behavior and expectations.”

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Are Shoppers ‘Primed’ For Price Hikes?

The Washington Post: “Hard-wired into the DNA of companies of all kinds is a fear of losing customers with even the slightest uptick in prices. Netflix watchers and McDonald’s eaters appeared undeterred by the rise in subscription and menu costs over the past seven months, with both companies reporting strong sales growth in the first quarter … Amazon may be the next big test of whether consumers who are already stretching their pocketbooks will open them even wider.”

“The retail giant announced … that the price of a Prime membership will increase 20 percent, to $119 per year.” Ryan Hamilton, an associate professor of marketing at Emory University’s Goizueta Business School, comments: “In general, people are sensitive to losses, and price increases count as losses psychologically. The broader perspective, though, is that people tend to be willing to pay for what they perceive as value.”

“Brian Wansink, professor and director of the Cornell University Food and Brand Lab, noted that in deciding when to raise prices, companies have to time the rollout carefully. Make the announcement too abruptly and viral anxiety might cause customers to drop off. A safer bet is often to announce weeks ahead of when the change will go into effect. At that point, customers are less likely to fixate on a hit to the wallet that’s still weeks away.” He elaborates: “But if it’s [done] the day it happens, there’s this huge outcry. It can start framing in their minds that they are getting ripped off. The outcry is not going to happen if the soft launch in done months ahead of time.”

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