Late & Great: Arthur Cinader

The New York Times: The late Arthur Cinader “decided to start J. Crew in the early 1980s while running the Popular Merchandise Company, a business, founded by his father in Rye, N.Y., that used a catalog to sell affordable clothing and home furnishings directly to consumers … The new venture took the word “crew” from the water sport and affixed a J in front because it was thought to be graphically appealing … Mr. Cinader empowered his daughter, Emily Scott, to conceive of the company’s aesthetic and oversee the design of its apparel while he focused on the financial side of the business and on marketing through the J. Crew catalog.”

“J. Crew opened its first store at the South Street Seaport in Manhattan, followed by stores in San Francisco, Chestnut Hill, Mass., and other places. The segue proved successful, and by the mid-’90s the company had several dozen stores collectively generating revenue in excess of $500 per square foot … The success of the company owed much to Mr. Cinader and Ms. Scott’s scrupulous focus on their target demographic: affluent, high-achieving people who wanted to signal a certain pedigree with their fashion choices, but not one so stuffy that they would think twice before associating with it.”

“Articles in the business press over the years have described J. Crew’s niche as one notch below Ralph Lauren and one notch above retailers like Gap or the Limited. While the company’s first catalog featured photographs from the Weld Boathouse at Harvard, J. Crew marketed itself to the man or woman who might have attended any college or university and simply wanted to evoke a hint of the Ivy League.”

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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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Amazon: A Bad ‘Hood For Luxury Brands?

The Wall Street Journal: “Amazon is courting companies across the retail spectrum, but one sector is still mostly holding out: the world’s club of luxury brands. Swatch and others in the luxury industry say Amazon’s online marketplace undermines the strict control they say is key to maintaining a sense of exclusivity—and keeping prices high. While some makers of luxury products have decided to join Amazon, many of the industry’s biggest players—including Swatch, Gucci owner Kering, luxury-watch maker Cie. Financière Richemont SA and LVMH Moët Hennessy Louis Vuitton SE —are staying away for now.”

“The absence of high-end products has hampered Amazon’s push to be a force in the fashion industry, despite years of working to expand the merchandise it sells officially though its website. Adding luxury goods would help Amazon boost margins and build loyalty among customers of Amazon Prime, its premium service favored by higher-income shoppers that offers faster delivery and other perks, according to former executives familiar with the company’s shopper base.”

“One of the biggest worries for these luxury companies: The difficulty of segregating their product listings from the rest of the goods sold through the site. That means a $5,000 suit from luxury Italian menswear company Brioni, a subsidiary of Kering, can appear next to a $200 suit from Kenneth Cole.” Jean Cailliau, executive adviser at Paris-based investment bank Bryan, Garnier & Co., comments: “That contradicts the essence of luxury selling and shopping, where the product is the product also because of its environment.”

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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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CVS & The Prescription Experience

Fast Company: “With the profusion of online pharmacies, CVS realized that to give people a reason to come in, it had to design a better service. A new pill bottle system is just one piece of a larger service-design challenge … hinged upon understanding the user end-to-end, rather than one transaction at a time.”

“CVS realized that one lever it had for creating more customer loyalty was the prescription itself—and how often those prescriptions go wrong. About a third of recurring prescriptions never get filled; of those that do, about one third are forgotten after the first couple refills. CVS’s bet is that a better service can improve those figures, and, in doing so, make patients not only more healthy but better customers as well.”

“The new prescription labels are just a start for a number of things CVS has on its roadmap, including ways to bundle together medications meant to be taken at the same time and an in-home delivery service. But perhaps their most user-friendly aspiration is to redesign the role of pharmacists. Today, they typically spend most of their time counting pills … CVS is working to have better service procedures, in which the pharmacists become a front-line in talking to patients—for example, by giving every patient taking five drugs or more an automatic consultation, which includes talking them through the new prescription schedule.”

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Starbucks Shutters Digital Store

The New York Times: “As customers increasingly shift their retail shopping toward e-commerce, Starbucks is bucking the trend: It shuttered its online store … Maggie Jantzen, a company spokeswoman, said that the decision to shut down the online store was part of a push to ‘simplify’ Starbucks’ sales channels … The company’s chief executive, Kevin Johnson, spoke on Starbucks’ most recent earnings call about a ‘seismic shift’ in retailing. To survive, he said, merchants need to create unique and immersive in-store experiences.”

Starbucks chairman Howard Schultz told investors last April: “Every retailer that is going to win in this new environment must become an experiential destination. Your product and services, for the most part, cannot be available online and cannot be available on Amazon.”

“Starbucks said it would continue to sell branded products like coffee through grocery stores and some online sites managed by its sales partners. But it broke the hearts of some fans by ending retail sales of a cult-favorite product line: flavored syrups. The mixes used to concoct drinks like the Pumpkin Spice Latte are generally not for sale in the company’s stores, but Starbucks stocked them on its website … On eBay, a jug of Starbucks pumpkin spice syrup could be had on Sunday for $100.”

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Disney Brings Its ‘World’ To Retail

The New York Times: “Quietly, like a mouse on tiptoe, Disney overhauled its retail store at the Northridge Fashion Center mall in late July. Out went the twisty Pixie Path aisles, the ornate displays, the green walls and the color-changing fiberglass trees. In came a movie-theater-size screen, a simplified floor plan, white walls and more items for fashion-conscious adults … the Disney Store here was a prototype, and the company has been monitoring sales and consumer feedback as it prepares to revamp its 340-store chain.”

“The redesign makes Disney’s stores a bit more like Disney’s theme parks. For instance, daily parades at Disneyland in California and Walt Disney World in Florida will be streamed live to those colossal video screens. During the parades, store personnel will put out mats for shoppers to sit on and roll out souvenir carts stocked with cotton candy and light-up Mickey Mouse ears. The screens could easily be used to stream other events, such as red carpet arrivals for Disney movie premieres. That kind of programming could bolster foot traffic, and thus sales — while also turning the stores into a more potent promotional platform for Disney’s films, television shows and theme parks.”

“As it attempts a new mall strategy, Disney is also remaking its e-commerce operation. ShopDisney.com is replacing DisneyStore.com. The new site will have a less cluttered look and a vastly expanded assortment of designer merchandise aimed at adults (Mickey-themed Ethan Allen furniture and a $350 Siwy denim jacket with Minnie embellishments will be on offer). The site will also stock more items that previously were available only in stores inside Disney theme parks.”

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Cake Ladies: Inside The Box Thinking

The New York Times: “Elsewhere, the American appetite for packaged baking mixes is waning, according to the market research firm Mintel, as consumers move away from packaged foods with artificial ingredients and buy more from in-store bakeries and specialty pastry shops. Yet in the small, mostly indigenous communities that dot rural Alaska, box cake is a stalwart staple, the star of every community dessert table and a potent fund-raising tool.”

“The offerings in village stores often resemble those in the mini-marts or bodegas of America’s urban food deserts, at two and three times the price. Food journeys in via jet, small plane and barge. Milk and eggs spoil fast. Produce gets roughed up. Among the Hostess doughnuts, Spam and soda, cake mix is one of the few items on shelves everywhere that require actual cooking. As a result, tricking out mixes has become a cottage industry, and many villages have a ‘cake lady’ with her signature twist. Some bake as a hobby, while others do a brisk business selling cakes in places where getting to a bakery requires a plane ticket.”

“In America’s northernmost town, Utqiagvik (formerly known as Barrow), the baker Mary Patkotak is an expert at gaming cake economics. She uses Betty Crocker triple chocolate fudge mix for her famous cherry-chocolate cake. In the village store, it costs $4.59 a box. On Amazon, where Ms. Patkotak orders it, it’s $1.29. Alaska’s many weather delays mean the mix never shows up on time, but she doesn’t care because it qualifies her for partial refunds on her annual Prime membership.
‘I can’t remember the last time I paid the Amazon Prime fee,’ she said.”

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Retail Apocalypse: Fact or Fiction?

USA Today: “In 2017, U.S. retailers have opened, or plan to open, 1,326 more locations than they will be closing, according to IHL Group’s Debunking the Retail Apocalypse report, which was sponsored by several companies. When you add in restaurants, the increase jumps to 4,080 new openings in 2017 with another 5,050 planned in 2018. Or, to look at it another way, between chain stores and restaurants, 10,123 will close in 2017, but 14,239 will open.”

“To compile the study, IHL looked at over 1,800 retailers and restaurant chains with more than 50 U.S. locations across 10 retail vertical segments. It found that for every chain with a net closing of stores, 2.7 brick-and-mortar retailers would be posting a net gain in locations. The research firm also noted that if you add in retail chains smaller than 50 locations (including restaurants) the number of new openings in 2017 climbs to over 10,000.”

“It’s not a retail apocalypse, but how Americans shop is changing. The ease of online shopping means physical retailers need to be about more than the ability to put goods immediately into consumers’ hands. That does not mean that brick-and-mortar retail is dead or dying, it’s simply shaking out the winners and losers.”

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