Brands Go Local To Beat Amazon

The Wall Street Journal: “As Amazon.com Inc.tightens its grip on retail sales, a growing number of brands are pushing back by championing local retailers. Some manufacturers are enforcing minimum advertised prices to make it harder for online sellers to undercut local merchants, while others give local stores first dibs on new products or funnel customers from their own websites to local outlets.” For example: “Luxottica Group SpA last year launched a minimum advertised pricing program that restricts the price at which its Ray-Ban and Oakley sunglasses can be advertised … The average discount on Ray-Ban sunglasses on Amazon has shrunk to about 3% as of this month from 37% in April 2016, according to Luxottica.”

“Free stroller tuneups are one way UPPAbaby, a Hingham, Mass.-based maker of baby strollers and car seats, draws customers back to local retailers carrying its products after they buy one of its strollers, which cost up to $900 … Running gear maker Brooks is testing a new app that uses an iPad connected to a treadmill to help local retailers determine which Brooks shoe best suits a runner’s biomechanics … Orb has a program designed to encourage local retailers to try out new products without worrying they might be saddled with excess inventory. At the end of each quarter, local stores can donate slow-selling items to a favorite charity. Orb then replaces the donated goods with new items selected by the retailer at no extra charge.”

“Arc’teryx salespeople use e-commerce sales data to help merchants determine which styles of clothing, shoes and backpacks are best sellers in their local market … If Simms Fishing Products had its way, the company’s waders and other fishing gear would never show up on Amazon’s website. The Bozeman, Mont., company doesn’t sell directly to Amazon, and its dealer policy specifically prohibits sales on third-party platforms … Simms employees visit local independent retailers and use computer-assisted design software to create customized Simms shops within each store.”

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Slow Dollars: Key to Local Grocery Success

Anne Kadet: “It’s a mystery. Local markets clearly are losing business to national outfits such as Whole Foods Market , Trader Joe’s and Target. So why don’t they up their game? To my surprise, Enrico Palazio, who co-owns the Montague Street Key Food with his uncle, says he doesn’t view Trader Joe’s as competition. It doesn’t have a deli, butcher or even a respectable detergent section. ‘This is one-stop shopping,’ he says of his store. The real competition, he notes, is FreshDirect.”

“Mr. Palazio “spent a lot of money on last year’s renovation, aiming to outdo FreshDirect by making his store a pleasant place to shop. His markups reflect that investment, he says, but his prices are still lower than FreshDirect. Because his 10,000 square-foot Key Food is too small to carry products at every price point, Mr. Palazio caters to neighborhood preferences. He doesn’t sell the cheapest ice cream brand, for example, but he does stock McConnell’s Fine Ice Cream.”

“To handle more customers, Mr. Palazio says, he’d have to cram the store with more cashiers, baggers and stock clerks. The busy, hectic atmosphere wouldn’t appeal to his clientele, he believes. Burt Flickinger, managing director of retail consultancy Strategic Resource Group, says this strategy is typical of many local supermarkets. ‘It’s the slow dollar versus the fast nickel,’ he says.”

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Technology Cannot Hug a Customer

The New York Times: “Technology, some hotels are finding, has its limits. ‘Technology cannot hug a repeat guest,’ said George Aquino, the vice president and managing director of AHC+Hospitality … That is the reason his company, which manages several hotels, has been running a training program for some of its managers and other staff members to improve their hospitality skills, connect with local business leaders and learn more about local tourist offerings.”

“Similar programs are sprouting in other cities, involving not just hotels but also restaurants and even cities themselves, which see the personal touch as giving them a competitive edge. For business travelers, in particular, talking to someone knowledgeable about a city can lead to a good restaurant. And it can also help expand business leads.”

“A consulting program based in Tucson, Certified Tourism Ambassadors, trains hospitality workers. Mickey Schaefer, the chief executive and founder, said she had developed the idea in 2006 while working for the American Academy of Family Physicians to plan its conventions. Hospitality workers sometimes did not know their own cities, leading to bad experiences, she said … The program, she said, ‘is more than just helping the customer. It is helping them find the richness of whatever they are interested in.’ She added that the program also instills civic pride.”

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Nike Hears Adidas’ Footsteps

The Wall Street Journal: “With the retail sector in flux, Nike Inc. is looking for new ways to sell sneakers and shirts, but some industry watchers worry that the company’s efforts to broaden its reach could damage its cultural cachet … Frequent online releases of coveted Jordan shoes could make them less rare and not as much in demand anymore, some industry watchers say. By making certain shoes available only through Nike channels or big chains such as Foot Locker, the company is diminishing the mom-and-pop shops that have served as community stewards of cool.”

“Matt Halfhill, founder of sneaker-news site Nice Kicks, which chronicles new releases across major shoe brands … said he has been involved in sneaker culture since the 1990s, believes the push toward direct sales actually hurts Nike’s connection with consumers.” He comments: “It’s a great way to sell commoditized shoes, but most boutiques even discourage you from buying on the phone. They only sell shoes in stores to customers, where you see everyone in line waiting for shoes talking to each other,” he said.”

Meanwhile: “Adidas’s resurgence includes new ‘franchises’—such as the NMD and Kanye West’s Yeezy line—that have gained a youthful following and made inroads on Nike’s cultural dominance. Nick Santora, a former sneaker-store owner and editor of online sneaker magazine Classic Kicks, said Adidas is more on point with youth culture of late.” He comments: “Kanye, for some people, for certain kids, that brand is now acceptable. Nike was always ‘sports, sports, sports,’ but if you’re over 11 years old right now, musicians are where it’s at.”

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Kronkiwongi: How Lego Fans Fandom

Fast Company: “In a presentation at the Cannes Lions Festival of Creativity on Sunday, Lego’s senior global director of social media and video Lars Silberbauer, broke down how the brand built and approaches that strategy … The two pillars of the brand’s social strategy are based on two core human social needs: the need to play and build together, and the pride of creation … By facilitating, supporting, and promoting the efforts of its fans, Lego amplifies their passion to a global audience, further fanning the flames of fandom everywhere it goes.”

“Silberbauer outlined three examples of how they do this. The first is through a competition called First Lego League, a Lego robotics competition that’s not run by the brand at all, in which up to 70,000 kids worldwide against each other in building Lego robots that can solve challenges. Second was the crowdsourcing platform Lego Ideas, where the brand invites people to propose and build new Lego sets. Like a branded version of Kickstarter, aspiring Lego designers have to get 10,000 supporters for their projects in order to be considered.”

“The third example was the Kronkiwongi Project.” Silberbauer explains: “The insight behind it is that 98% of us were creative geniuses at age three, but the challenge is that only 2% of us retain that level of creativity. With this project, we wanted to reveal and celebrate, not that we get less creative, but the amazing openness and creativity that kids have. So we asked kids from all over the world to tell us what a Kronkiwongi is and to build one for us.”

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Google Eyes: Watch While You Shop

The Washington Post: “Google executives say they are using complex, patent-pending mathematical formulas to protect the privacy of consumers when they match a Google user with a shopper who makes a purchase in a brick-and-mortar store. The mathematical formulas convert people’s names and other personal information into anonymous strings of numbers.”

“The formulas make it impossible for Google to know the identity of the real-world shoppers, and for the retailers to know the identities of Google’s users, Google executives said. The companies know only that a match has been made. In addition, Google does not get a detailed description of the individual transactions, just the amount spent.”

“Google would not say how merchants had obtained consent from consumers to pass along their credit card information. In the past, both Google and Facebook have obtained purchase data for a more limited set of consumers who participate in loyalty programs. Consumers that participate in loyalty programs are more heavily tracked by retailers, and often give consent to share their data with third parties as a condition of signing up. (Not all consumers may realize they have given such consent, according to the digital privacy advocacy group Electronic Frontier Foundation).”

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Vegas Shuffle: Invasion of the Drink Bots

The Wall Street Journal: “As Las Vegas has transformed into one of the world’s most-visited tourist destinations, casino operators are re-examining the perks that historically lured gamblers. Over the past year, casinos have started charging for parking at resorts on the Strip … Now operators have started scrutinizing complimentary drinks, introducing new technology at bars that track how much someone has gambled—and rewards them accordingly with alcohol.”

“It’s a shift from decades of more-informal interplay between bartenders and gamblers … On a recent night at a bar inside the Paris Las Vegas casino, Jamie Balazs and her father were getting used to the new drink-monitoring system. They had just been instructed on how much they needed to put into the machine to allow booze to flow. A bartender told her to push the “max bet” button four times, she said. She said she understood the desire to weed out freeloaders who aren’t gambling but found the instructions off-putting.”

“Her father, Jim Fletcher, was in town with a group to celebrate his 70th birthday. As a top-tier member in Caesars Entertainment Corp.’s rewards program, he felt the new system was ‘insulting’ … Bartender James Tanner said the system has made his job easier because he can avoid awkward debates with customers who were lingering at machines but not really playing.”

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Match & Miles: Fidelity vs. Loyalty

The Wall Street Journal: “Travelers fell in love with an offer of 150 points from British Airways for every dollar spent by U.S. customers on new subscriptions to Match.com. U.S. members of the BA loyalty program could also get 130 Avios points, as they’re called, per dollar with eHarmony. A $215 annual Match subscription earned 32,250 points, enough to make hearts flutter among mileage fanatics.”

“But the attraction was so strong that the dating services quickly called it off after a couple of days in early March, canceling new subscriptions, refunding fees paid and pulling back points awarded. Match.com says it ordered up the quickie divorce because an affiliated promoter launched the come-on without authorization. eHarmony says the relationship soured when some married travelers signed up and others created multiple profiles, violating terms and conditions.”

“Frequent flier Dylan Schiemann didn’t sign up because he figured there was a line he shouldn’t cross with his wife.” He explains: “It seemed like a good offer, but I decided pretty quickly not to go with it. No matter how open you are, you just don’t go on a dating site if you’re married.”

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Cereal Killer: ‘Product 19’ Flakes Out

Slate: “When you hear the name Product 19, you’ll either flash on an experimental invention from some corporate R&D department, or, if you’re one of its fans, you might think of the health cereal, rare in the aisles of American supermarkets yet loved all the same … While most people these days seemed to barely know of its existence, Product 19 died—a slow, oaty, fade to black, leaving devoted fans desperate.”

“For nearly 50 years, it was simply an answer to a business problem, first released in 1967 as Kellogg’s answer to General Mills’ Total, which had hit the market six years prior … Kellogg’s needed something to compete with this healthy new blockbuster, so they began attempting to develop a vitamin cereal of their own, eventually settling on Product 19 … The cereal was made up of flakes made from a combination of lightly sweetened corn, wheat, oats, and rice, and promoted itself as providing the full daily amounts of multivitamins and iron … The original box was so covered in charts and blocks of text, it truly looked more like some experimental substance than a breakfast cereal.”

“Product 19 never gained the household name recognition of competitors like Total, or even Special K, but the cereal did manage to hold on to a devoted fan base … But as sales of Product 19 began to slump, it began slowly disappearing from stores … Facebook groups like ‘Bring Back Kellogg’s Product 19’ began popping up around the same time … Then it stopped. Without much action on social media in the two years since Product 19 went into decline, Kellogg’s released a statement officially declaring that Product 19 had been discontinued.”

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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.”

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