The Drop: Fashion, Media & Millennials

The New York Times: Kylie Jenner “is part of a growing cohort of both individuals and brands that have embraced the sales strategy known as the ‘drop.’ It works like this: A seller controls the release of exclusive new items outside the traditional fashion cycle, cleverly marketing the impending arrival of the product to build demand. Pioneered almost two decades ago by the American skate wear brand Supreme, which took its cues from the Japanese street wear scene, the trend has gained particular momentum in recent years thanks to its adoption by some in the booming limited-edition sneaker industry: Kanye West’s Yeezy line with Adidas, for example, and Nike’s Air Jordans.”

Avery Booker, the chief executive of Enflux, comments: “They are excited not just by a product’s rarity, but also by what credibility owning that product can give them within their social media communities, as well as its possible resale value.”

“The flourishing secondary markets, fueled by online resellers and prompted by the growing clout of drop culture, has been one of the most significant changes to the retail landscape in recent years. Mere hours after the latest Kylie Lip Kit, Supreme sneaker or H&M/Alexander Wang piece has sold out on official distribution channels, these items are often available elsewhere on the internet, though with one or more zeros added to the price … The overwhelming majority of drop customers, whatever the product, are younger than 30.”


Mall Shopping: Cool as School?

The Wall Street Journal: “Move over restaurants and movie theaters. Mall landlords are turning to education providers to fix their tenant mix. The goal: to add tenants that can engage people in creative ways or teach new things in a casual environment. This will keep customers coming back on a regular basis, the thinking goes.”

“Cookware retailer Sur La Table, which has more than 100 stores across the country, now offers cooking classes such as pizza making and knife skills, while home-goods retailer Williams-Sonoma offers cooking and junior chef classes. Both are being courted by shopping center landlords, analysts said. In areas where outdoors enthusiasts abound, stores that sell hunting and camping gear also offer classes on firearms safety and emergency survival.”

“Likewise, merchants offering cooking, performing arts, crafts classes and lessons in rock climbing are gaining traction in enclosed malls and open air centers around the US … Crayola Experience, launched in 2013, offers live shows on how crayons are made in the factory, and rotating shows on the science behind color and Crayola products, such as Silly Putty … Crayola’s executives like malls that are easily accessible with road and highway access and offer ample parking and safety.”


Children’s Museums: Nightclubs for Grown-Ups

The Wall Street Journal: “Across the country, children’s museums and family-oriented exhibits open for ticketed, adults-only special events that allow grown-ups to clamber up three-story climbing structures, sit atop bulldozers and spell out words on giant light walls—often while enjoying a cocktail. Museum administrators say it serves as an extra revenue stream, and a way to reach an audience of younger adults, many of whom don’t have children but are potential future family guests and philanthropic donors.”

“Thinkery, the children’s museum in Austin, Texas, hosted its sold-out adult holiday party, coined JingleBooze, earlier in December. With giant red and white candies hanging from the ceiling and walls covered in wrapping paper, about 650 guests paid between $17 and $40 to get in. They sipped Whiskey A Ho Ho Ho cocktails, decorated gingerbread houses and hugged puppies provided by the Austin Humane Society.”

“One of its most popular events this year was The Science of Sex, pegged to Valentine’s Day. The multilevel tunnels and slides of its outdoor playscape were reimagined as the female reproductive system. Another event, Transformations, included instruction on the aging of cheese, information about the history of Austin and a drag show. Among Ms. Barnett’s favorite guest responses, she says, was a woman who happily pointed to the stage featuring men in gowns and heavy makeup and said, ‘My 4-year-old was standing there yesterday’.”


Roobox: The Amazon of Meal Delivery

The Wall Street Journal: “Just as Amazon figured out how to mail extra-large TVs to customers within a day, meal-delivery services are racing to get your favorite burrito—previously available only at that downtown taquería several gridlocked miles away—to your home within 30 minutes. Inc., Uber Technologies Inc., GrubHub Inc. and Postmates, as well as scores of smaller competitors, have all jumped into the business.”

“Deliveroo has so far set up one brick-and-mortar kitchen and seven shipping-container sites across the mostly residential areas of Battersea and Dulwich in south London. Chefs from some of the city’s restaurants cook up meals in the new spaces, called RooBoxes, turning them into mini-distribution hubs for Deliveroo’s fleet of moped- and bike-riding delivery contractors.”

“Rohan Pradhan, Deliveroo’s director of special projects, said the company crunched data to figure out which neighborhoods had demand but not enough supply, and to identify restaurants most likely to succeed in those areas … The RooBox concept still has kinks. Deliveroo is trying to cheer up chefs accustomed to a dining room’s bustle by adding a break room with a Playstation.”


Berlin Bookstores: Retail Beyond the ‘Amazone’

Deutsche Welle: “Visitors to Hundt, Hammer, Stein bookstore in Berlin’s central Mitte district are greeted by signs reading ‘you are leaving the Amazone’ and ‘leave your algorithm, browse offline,’ before descending stairs into a cozy book basement that features a finely curated selection of both German and English literature. Owner Kurt von Hammerstein says with some glee that the big chains that decimated indie booksellers in the 1990s are now struggling to compete with Amazon on mass market titles, forcing them to shut down outlets across Germany. This has left fertile ground for the innovative indie bookseller.”

“Opened in 2004, Hundt, Hammer, Stein is one of the oldest stores in its street, and survives in large part through customer loyalty, but also political awareness. Hammerstein says that ‘a very high critical mass” of concerned Berliners refuse to support sellers like Amazon that are perceived to underpay workers while dodging taxes’.”

“This loyalty should extend to authors, notes Maria-Christina Piwowarski, the manager of Ocelot, a vast book emporium cum cafe and reading lounge that opened in 2012. In February this year she wrote an infamous online ‘rant,’ as she calls it, about authors who link their works to Amazon rather than the bookstores who actually promote them. She also opined that by offering ‘personal recommendations’ and ‘direct conversations with customers,’ that authentic booksellers should not view Amazon’s ‘uninspired algorithms’ as true competition.”


Super Consumers: Learning From Big Brand Fans

The Economist: “Only a tenth of customers are super-consumers but they account for 30-70% of sales, an even greater share of profits and almost 100% of ‘customer insights,’ says a new book, Super-Consumers, written by Eddie Yoon of the Cambridge Group … These people are not defined simply by the amount of stuff they buy (though they tend to be heavy users), but by their attitude to the product … they regard the things that they consume as answers to powerful emotional needs.”

“Super-consumers exist in every imaginable consumer category, from the glamorous to the staggeringly mundane. There are people who wax lyrical about the serial numbers inside toilet rolls or who worship at the altar of Kraft’s Velveeta processed cheese, which they call ‘liquid gold.’ Often, Mr Yoon points out, companies treat super-consumers as weird obsessives to be dismissed or ignored. That is a mistake, for they can, when treated well, propel growth. As well as buying large quantities themselves, they infect their social circle with enthusiasm.”

“High-passion fans … can also reveal interesting patterns in consumer markets: Generac, a producer of standby generators, discovered that people who buy lots of their generators are also more likely to be enthusiastic consumers of fridges (they often have several stocked up with food), multivitamins and life insurance. These are customers, in other words, who wish to be prepared for all eventualities … Even super-consumers who are fixated on old or existing products … can provide companies with lots of valuable advice and insights on stuff that makes money. Analysing big data is all very well. But nothing beats hanging out with your biggest fans.”


Kits: The New Packaged Goods

The Wall Street Journal: “Tyson Foods Inc., Campbell Soup Co. and Hershey Co. are working with online couriers to challenge meal-kit companies that ship parcels of ingredients and recipes to consumers looking for an easier way to cook stir-fry or enchiladas at home. These purveyors of packaged foods and commodity meats also hope to stem a consumer shift away from packaged foods that is benefiting startups such as Blue Apron and HelloFresh, which source some ingredients directly from farmers.”

“The Chicago maker of Chef Boyardee in June joined with Ahold USA’s online retailer Peapod to sell kits for Buffalo chicken quinoa and zucchini noodle primavera. Both incorporate products such as Hunt’s canned tomatoes that ConAgra normally sells at grocery stores … Hershey, with startup Chef’d, in September launched dessert kits on Facebook Live … Tyson Foods launched kits through Amazon Fresh in September, working its chicken and beef into tacos, stews and roasts … Campbell’s is also using Peapod to deliver kits to make meals like chicken pot pie out of its cream of chicken soup and Swanson vegetable broth.”

“Whole Foods in October began to stock $20 Purple Carrot vegan meal kits, previously available only by home delivery. Mark Bittman, a food writer and Purple Carrot part owner, said he isn’t convinced yet that consumers will make a permanent habit of meal-kit cooking, no matter the company. ‘I’ve been predicting cooking would make a comeback for 30 years and I’ve been wrong for 30 years,’ he said.”


Hooked App: The New Meaning of ‘Text’ Books

The Washington Post: “OK, it’s not exactly Dickens. But how about a great story delivered to you by text message? That’s the idea hatched by Prerna Gupta and Parag Chordia. The two entrepreneurs launched their company, Telepathic, a year ago with an application called Hooked … It’s recently become the top grossing book app for iOS in the United States and is now competing with Amazon’s Kindle and Audible apps to be the number one free book app in the U.S. Apple store too.”

“It works like this. You pick a book from one of the many available genres … You start receiving a number of texts with the story until you’re completely hooked. And then the app will pause for half an hour. You then get so impatient that you want to get the paid version ($2.99 a week, $7.99 a month, $39.99 a year) to avoid these annoying delays … People do get hooked. The two founders did extensive testing with 15,000 people and found that a typical person only completed reading 35 percent of the books on a mobile-optimized website. But the people who received those same books via text messages became so attached to the story that 85 percent of them completed the book.”

“There are about 200 writers who create stories specifically for the app, and the criteria is specific. They must be addictive and cut to the chase – not too much character development, complex imagery and flowery language.”


The Undoing Project: Exploring ‘Natural Stupidity’

The New York Times: The Undoing Project, by Michael Lewis (also author of Moneyball), is “a story about two unconventional thinkers who saw the world differently from everyone around them. Their peculiar area of research — how humans make decisions, often irrationally — has had profound implications for an array of fields, like professional sports, the military, medicine, politics, finance and public health.” It is the story of “two Israeli psychologists, Amos Tversky and Daniel Kahneman, whose discoveries challenged long-held beliefs about human nature and the way the mind works.”

Their work “helped explain why a simple algorithm is often better than the most experienced doctors at diagnosing stomach cancer, why so many financial experts failed to foresee the implosion of the housing market, and why professional basketball teams make costly errors when picking players — in short, why people’s instincts are often so wildly wrong … In 2002, Mr. Kahneman won the Nobel in economic science … for demonstrating how people make decisions when faced with risks and uncertainty. (When asked if their work had any application to artificial intelligence, Mr. Tversky, who died in 1996, countered that they were more interested in exploring ‘natural stupidity.’)”

“Their research demonstrating how people behave in fundamentally irrational ways when making decisions, relying on their gut rather than available data, gave rise to the field of behavioral economics. That discipline attracted Paul DePodesta, a Harvard student, who later went into sports management and helped upend professional baseball … It wasn’t until Mr. Lewis read a 2003 review of Moneyball in The New Republic, which mentioned the connection between Mr. Kahneman’s and Mr. Tversky’s research and the data revolution in baseball, that he realized the extent to which their work had shaped the book.”


Marlboro Black: A Hit With Millennial Smokers

The Wall Street Journal: “In the five years since Marlboro Black was introduced, it has done a lot to help Philip Morris USA with its millennial problem. About 85% of young adults don’t smoke. Many who do smoke don’t like Marlboro … But Black has breathed life into Marlboro. Since grabbing more than 1% of U.S. cigarette market share in its first year, the brand has helped Marlboro reach an all-time high of 44.1% market share … And it has helped boost Marlboro’s market share among 18- to 25-year-old smokers by 3 percentage points to 46% in 2014 from 2011.”

“Marketing representatives have pushed the brand by handing out coupons for $1 packs of cigarettes at places like Atlanta’s popular underground dance club MJQ Concourse and the Graveyard Tavern, a neighborhood bar. The company also sought to bolster the brand’s urban credibility with digital shorts about graffiti artists, lowrider cars and Chicago city photographers … Jerry Weger, who manages the tobacco business across Sheetz Inc.’s 500 convenience stores, said Marlboro’s “manly man thing wasn’t that appealing” to the younger generation, but the black packaging gave the brand an upscale image that has allowed it to accumulate an estimated 6% to 8% market share at Sheetz stores.”

“Price was key to the brand’s success. Nicole Cichon, a veterinary student at Michigan State University, said she first started buying the brand because a pack cost $5.25, about $1.50 less than the Marlboro Reds she used to smoke. The 24-year old grew to prefer the brand’s less-harsh flavor and its modern marketing.”