Luxury Retail Is Bleak on Bleeker Street

The New York Times: “How Bleecker went from quintessential Greenwich Village street, with shops like Condomania and Rebel Rebel Records, to a destination for Black Card-wielding 1-percenters, to its current iteration as a luxury blightscape is a classic New York story. It involves a visionary businessman, a hit HBO show, an Afghan immigrant, a star architect, European tourists, aggressive landlords and, above all, the relentless commercial churn of Manhattan.”

“In 1996, Magnolia Bakery opened at 401 Bleecker … It was just another local business, like the bodega operated by Turks or the Greek diner Manatus. But on July 9, 2000, Magnolia was featured on ‘Sex and the City’ … The 30 seconds of Carrie Bradshaw and her friend Miranda eating cupcakes outside the bakery were all it took to turn the street … The Magnolia crowd in part convinced Robert Duffy, then the president and vice chairman of Marc Jacobs, that the company should open a store nearby … the arrival of the first Marc Jacobs store, with its trendsetting clothes and clientele of fashion editors and celebrities like Sofia Coppola, was the tipping point.”

“And then? Blowback. While quirky independent stores couldn’t afford the new Bleecker, it became apparent over time that neither could the corporate brands that had remade the street. An open secret among retailers had it that Bleecker Street was a fancy Potemkin village, empty of customers. Celebrities shopped there because they wouldn’t be bothered … The original Marc Jacobs store on Bleecker that started the boom” is now empty, “its windows blacked out … Marjorie Reitman, who has lived in the Village for 43 years …has an idea for that space and the other empty stores that dot Bleecker Street like missing teeth in a very expensive mouth.” Her thought: “They should all be pot shops. Seriously. I’m not kidding. I can’t imagine what else could go in and pay the rent.”

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$13 Burgers Slows Demand for Fast Food

The Wall Street Journal “As the number of outlets serving ‘better’ burgers—featuring nontraditional toppings and artisan buns—has skyrocketed over the past decade, so has the average burger tab, turning some customers off … Lunch traffic to quick-serve hamburger restaurants fell 5% last year—the biggest year-over-year decline that market-research firm NPD Group Inc. has recorded … The average lunch burger check—including fries and a beverage—has risen 22% since the financial crisis to $5.83, with a 4% increase last year alone, according to NPD.”

“With so much competition and only so many ways to differentiate a burger, upstarts have been coming out with evermore gourmet ingredients, such as Wagyu beef, roasted garlic aioli and truffled arugula, which have raised the bar for burgers overall—and their price tag …they can beef up profits by charging extra for additional toppings … A basic hamburger at (Fatburger) starts at $5.94, but after adding bacon and chili, it is $8.14. With fries and a drink, the combo totals $13.37.”

McDonald’s recently adopted a back-to-basics approach after years of chasing health-minded customers with products such as salads, sandwich wraps and fruit smoothies. It had neglected its burgers and recently found that only one in five millennials had ever tried its signature Big Mac … The burger giant has been trying to improve the quality of its burgers by adjusting temperatures and cook times to deliver hotter, fresher burgers. Next year, it plans to make its Quarter Pounders with fresh, instead of frozen, beef. It is also in the process of rolling out higher-end, customizable burgers from a ‘Signature Crafted’ menu to compete with the ‘better’ burger places, but at a much lower price.”

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The Stitch Fix Secret: Make Shopping Easy

The New York Times: Stitch Fix is a mail-order clothing service that offers customers little choice in what garments they receive, and shies away from discounts for brand name dresses, pants and accessories. Despite a business model that seems to defy conventional wisdom, Stitch Fix continues to grow … To the company’s founder, Katrina Lake, success comes down to delivering what consumers want: making it easier to shop … In her view, what was important was helping customers find clothing they liked without taking lengthy shopping trips and returning dozens of items.”

“At the company’s warehouse, Eric Colson, formerly a top data scientist at Netflix, spoke to the role that data science — once the province of high-tech giants — plays in nearly every aspect of the Stitch Fix business. Mr. Colson excitedly illustrated on whiteboards how the company’s systems can narrow down a broad range of women’s pants to a relative few that each individual customer is statistically likely to keep … Algorithms have even cut the number of steps needed for workers to pick out clothes for individual clients.”

“Yet the question remains whether customers who are initially thrilled by receiving a customized box of clothing will remain customers for months or even years … Stitch Fix executives declined to share their retention statistics, but claim that they are above industry averages.”

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Whole Foods: Now Just Another Big Box?

The Wall Street Journal: “Whole Foods Market Inc. wants to cut prices without sacrificing the local products that define its healthy image … Some smaller suppliers and industry consultants say the shift to a more centralized distribution structure and other changes risk compromising Whole Foods’ ability to keep stocked with the latest foodie trends and hot local brands.”

“Many of the changes are being spearheaded by Don Clark, a former Target Corp. executive … The data analytics, centralized purchasing and strict shelf management he brought from Target could save money that Whole Foods can use to lower its relatively high prices … Whole Foods has long divided its 462 stores into 11 regions, each with distinct product offerings like local maple syrup and gourmet pickles. A quarter of Whole Foods shoppers that visited the chain in the past month did so for items they couldn’t find elsewhere, according to a survey by Kantar Retail.”

“Whole Foods co-founder and Chief Executive John Mackey said … his new strategy strikes a balance between the remaining autonomy of regional executives and an easier process for national brands to pitch their products just once at Whole Foods’ Austin, Texas, headquarters. That streamlining will lead to lower prices, he said … But smaller brands and people who work with them say they have less incentive to put up with a more impersonal Whole Foods … And some big brands say Whole Foods’ regionalized approach made it tough to negotiate a nationwide strategy for their brands.”

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Neiman Markups: Out of Fashion

The Wall Street Journal: “Once upon a time, all Neiman needed to do to lift profits was raise prices. That model has since fallen out of fashion … competition from startups like Farfetch.com and Matchesfashion.com are forcing more discounts. Over a recent 24 hours, Farfetch’s prices averaged 2% lower and Matchesfashion’s 15% lower than Neimanmarcus.com’s prices on 32 identical items, according to price-tracking firm Market Track LLC.”

“While brands still exert control, particularly over the newest and most popular items, it is harder for them to police prices that change rapidly across websites and fluctuate with shifting exchange rates, industry executives said … The explosion of discount chains, led by T.J. Maxx , that sell designer brands at cut-rate prices also made consumers rethink the need to pay full price. To compete, high-end department stores rushed in with their own off-price chains—Neiman’s Last Call, Saks Off 5th and Nordstrom Rack.”

“Neiman’s Chief Executive Karen Katz … championed a line of specialty stores called Cusp, which Neiman opened a decade ago, that feature lower-priced clothing and accessories. Neiman stores also have added relatively less expensive goods, such as $700 Prada handbags … Ms. Katz reduced snob appeal by allowing Neiman shoppers to use Visa and Mastercard … Neiman has invested heavily in e-commerce … Not all the moves have worked. After building six Cusp stores, Neiman closed two and stopped development of the chain in 2012.”

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Collective Resorts Pops-Up 5-Star Hotels

Fast Company: “With a motto of stay tonight, gone tomorrow, alternative hoteliers are investing in mobile, collapsible accommodations … Some companies are setting up camp in areas low in hotel room inventory, like music festivals, while others are pitching tents in pristine countrysides, turning temporary hotels into a new type of guest experience—emphasis on the experience … Collective Retreats “has opened five-star retreats in the mountains of Montana, the vineyards of Sonoma, and the ranch lands of Colorado, with four more planned to open by year’s end in picturesque places where permanent hotels are not permitted.”

“Guests stay in spacious tents with electricity that are outfitted with 1,500 thread-count sheets, chandeliers, and WiFi. Each tent features a full en-suite bathroom with hot showers. Chef tableside dining is included at each locally sourced gourmet meal. Before bed, you can roast bourbon-infused organic marshmallows … Peter Mack developed Collective Retreats in response to what he calls the ‘vanilla-zation’ and ‘McDonalds-zation’ of the hotel industry.”

Tents “are a relatively inexpensive investment (at least compared to the cost of constructing a traditional brick-and-mortar inn). This leaves more money to spend on decor, food, and recreation. And because the tents are collapsible, the company has the flexibility to add or subtract accommodations on demand … Collective Retreats charges between $500-$700 a night during the spring and summer high season and $400 during shoulder season. The Yellowstone and Vail locations opened in March and already have waiting lists.”

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Luxury of Silence: Cheapo Cars Mask Muffles

Wired: “In your cheapo car … blowing wind, humming tires, high-revving engines, and a hundred random vibrations conspire to make conversation a chore, exhaust the driver, and strain audio systems cranked up to mask the racket. That’s because the standard silencers—sound-absorbing insulation, pricey engineering, aerodynamic tricks, and sheer weight (heavier cars tend to be quieter)—are hard to move down market.”

“But in recent years, automakers catering to the road-going hoi polloi have found new ways to lower the volume, particularly for hybrid and electric vehicles that don’t have the benefit of an engine to mask other vehicle noises. The result: Economy cars now carry things like side mirrors that maneuver airflow away from your windows, suspensions that dial out road noise, expanding tape that plugs gaps, and frames to maneuver sound away from the car’s occupants—all developed with the help of mannequins with mics in their ears and giant spherical cameras that can ‘see’ sound.”

“It’s a perk you can neither see nor hear, but one you’ll appreciate, no matter how much you paid for your car.”

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Delta & Alessia & Why Coach Class Sucks

Wired: “Delta’s clever new wine glass belongs to an extensive new line of dishes, cutlery, glassware, ceramics, and other serviceware designed in collaboration with Alessi. The collection, which is gorgeous, will appear in the airline’s premium cabins beginning April 1. That’s great news if you can afford it. But even if you can’t, Alessi’s brilliant designs say a lot about the state of the airline industry—including why your experience at the back of the plane kind of sucks.”

“Why invest in a fancy new line of serviceware that most of your customers will never use?Simple: Airlines make more money off the premium cabins than the cheap seats. The business of flying is the difference between Revenue per Available Seat Mile—RASM—and Cost per Available Seat Mile, or CASM.” Aviation analyst Richard Aboulafia explains: “RASM in the front, CASM in the back. Basically, if your CASM is higher than your RASM you lose. Vice versa, you survive. You can even make money.”

In other words: “You maximize RASM on the seats at the front of the plane, so the blankets in first class feel like blankets; cut CASM in economy, where the blankets feel like something you peeled off a dryer’s lint screen.”

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JetBlue’s ‘Mint’ Does Not Cost One

The Wall Street Journal: “A lie-flat bed on a long flight used to be the ultimate perk, something fliers would pay up for. Now it’s a discount luxury.A new kind of business class has been pioneered by JetBlue’s Mint cabin on transcontinental routes … The affordable upgrade has been so popular, formerly all-coach JetBlue is now flying Mint seats from Boston and New York to the Caribbean as well as Los Angeles and San Francisco. It’s also announced expansion to San Diego, Seattle, Las Vegas and Fort Lauderdale.”

“This is not aviation’s version of a knockoff handbag. With Mint, the prices are lower but the recline remains fully flat, the pillows and duvets still soft. Service may lack some frills, but the airline still offers amenity kits with eyeshades and lemon towelettes … What’s most prized among savvy fliers are the Mint suites. On each side of the A321, JetBlue puts two seats in a row, then a row behind with just a single seat on each side. When seats fold down, the legs of the single passenger are tucked between the two passengers in front. The single passenger has a sliding door, creating an enclosed suite. The four suites cost the same as the 12 other business-class seats and usually get booked first.”

JetBlue EVP Marty St. George comments: “The biggest complaint is the single seat sells so fast.” Meanwhile, Mint’s success has forced other airlines to lower their business-class fares.

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