Aldi Conquers With Cromwell Gin

Business Insider: “The £9.97 Oliver Cromwell London Dry Gin from Aldi won a gold medal at the International Wine and Spirits Competition (IWSC) this week. In doing so, the budget retailer’s gin beat bottles costing up to four times the price in the blind taste test.”

“A spokesperson at the International Spirits Challenge said: “The display of awards achieved by Aldi this year at the International Spirits Challenge was fantastic. They consistently showcased high quality products in the blind tastings, which demonstrates that you don’t have to compromise on price to enjoy great tasting drinks.”

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Consumer Culture & The Ikea Catalog

Quartz: “Beginning July 31, IKEA’s highly-anticipated catalogue will appear in millions of mailboxes around the world … This year, it took the Swedish company 18 months and a hundreds-strong army of photographers, art directors, copywriters, proofreaders, prop masters, carpenters, photo retouchers, programmers and CGI specialists to produce the catalog’s 1,400 pieces of art and 24,000 texts. While the text remain basically the same worldwide, IKEA’s team does go the extra mile to swap out subtle, tell-tale details in 72 different region-specific editions.”

“Knowing that kitchens in China are much smaller than the US for example, catalogue designers crop into a photograph and reposition elements in post-production, to illustrate a cozier cooking space … Last February, members of Israel’s ultra-Orthodox Jewish community received a 67-page, all-male product catalogue with challah boards, Shabbat candlesticks, tables set for the Sabbath meal, and Billy bookcases propped with volumes of the Talmud and Bible, the Jerusalem Post reports.”

“The annual catalogue is also a way for IKEA to set prices for their different markets, factoring in the cost of goods, transport, and tariffs and the foreign exchange rate … IKEA works with five paper suppliers and 31 printers around the world to produce the catalogue each year. In choosing the paper … they even consider how different markets perceive quality vis-a-vis the paper’s brightness and sheen. An Ikea exec comments: “People have a ‘magazine moment’ with a cup of tea, at home, touching the paper.”

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Exact Change: The Shekel Effect

Dan Ariely: “People are more inclined to buy items that are priced on the scale of familiar, low-denomination coins. When something costs the same as a coin, we can categorize the purchase as cheap and not think too much about it. But the moment something costs more than a single coin, we start thinking more carefully about whether or not we want to buy it.”

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How Big is the ‘Store Brand’ Threat?

The Wall Street Journal: “Supermarkets’ ‘private label’ goods have historically been less important in the U.S. than in other mature markets … But now the big European discounters are expanding in the U.S.Lidl launched on June 15 with six stores in North Carolina, just a few days after its key rival, Aldi, unveiled a five-year, $5 billion U.S. expansion plan. These expansion efforts themselves don’t need to succeed. The threat alone will hasten the shift of U.S. grocery toward private label.”

“The more upscale team of Amazon and Whole Foods will speed the push into private label. The tech giant has been plowing resources into its AmazonBasics range; the Whole Foods equivalent, 365 Everyday Value, anchors the grocer’s new, compact store format, 365. Ever attuned to millennial trends, Silicon Valley has even thrown up an online retailer called Brandless that sells $3 health-conscious, private-label goods.”

“Some companies look less exposed than others. Those with big overseas operations, such as Nestlé, Unilever UL or Mondelez, or must-have brands, like Kraft Heinz, stand a better chance of seeing off the new competition than those with U.S.-centric portfolios or lots of third or fourth-placed brands. Bernstein thinks Campbell’s, Conagra, General Mills, Kellogg and Smucker’s are all at risk.”

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Brandless: When The Brand is No Brand

Quartz: “E-commerce company Brandless launched last week, but it is already billing itself as the ‘Procter and Gamble of millennials.’ The startup sells a variety of Brandless-branded foods and household goods, supplied by its proprietary partner manufacturers, and all priced at $3 … The company promises to keep prices low by eliminating the BrandTax, a phrase it requested a trademark for last November, and which it defines as the ‘hidden costs you pay for a national brand.’ Its simple white labeling was designed by a team of product and marketing experts and food scientists.”

According to CEO Tina Sharkey: “The Brandless movement is the ‘democratization of goodness.’ It’s that everyone ‘deserves better, and better shouldn’t cost more.’ The $3 price point is designed to make it ‘very freeing when you shop on brandless.com.’ Brandless wants people to ‘live more and brand less,’ to ‘tell their own stories,’ and to drop the ‘false narratives’ sold by Madison Avenue. ”

“In the meantime Brandless is crafting its own narrative. On its website, the company claims the average person pays a 40% or greater BrandTax markup on products ‘of comparable quality as ours.’ This seems likely true of Brandless organic extra virgin olive oil ($3 for 8.5 oz, or about 35 cents an ounce) but perhaps less so for its organic taco seasoning mix ($3 for a pair of 1 oz packets).”

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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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Blind-Date Books: Novel Mysteries

The Wall Street Journal: “Booksellers across the country are enticing readers to take a chance on a surprise selected by store staff. To set up these ‘blind dates,’ the stores wrap the book to hide the cover and offer a few clues to give a sense of the hidden work’s genre and tone. ‘It’s been the most successful table we’ve ever put together,’ says Cari Quartuccio of the blind-date offerings at a location of Book Culture, where she is the store manager.”

“For customers, trusting the staff at their local store is part of the fun. The clues allow readers to select a gift for themselves. (And then, of course, immortalize unwrapping the mystery volume on Instagram.) At Book Culture, blind-date offerings are wrapped in brown paper and bear a note advising ‘Read me if you liked’ and a list of three books staff members think customers are likely to have read.”

“Book Culture’s Ms. Quartuccio says customers seldom are lukewarm about the notion of blind-date books. Fans often make repeat purchases, with some even buying stacks as gifts. Other customers are perplexed by the idea. Finally, she says, there are those ‘who get really upset when we won’t tell them the title of the book. Mystery isn’t for them, but they still want to take part in it’.”

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Hamburger Helpless: Packaged Goods Plight

The Wall Street Journal: “The plight of the packaged-goods companies is a classic business tale. An industry creates winning products, carves out strong market positions and enjoys reliable, sustained revenue—only to be too slow to adapt to changes that threaten those cash cows … Many big brands didn’t move fast enough to remove artificial ingredients and haven’t been able to shed the negative perception of processed food, said several food executives and others close to the industry.”

Meanwhile: “The web and social media gave smaller food companies a direct path to consumers’ hearts, minds and stomachs. They gained traction through blogs and Facebook with little marketing spending, selling food online via Amazon.com Inc. or their own websites long before they would have been able to get it in stores … Big brands can no longer control perceptions about food with television advertisements and shelf placement.”

“Kellogg Co., General Mills and others have directly invested in food startups through venture-capital funds that they say will give them insight as to how to respond better to evolving trends.”

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Amazongeddon: The New Supermarket Battleground

Quartz: “In southwest Ohio, the prices of staple foods are hitting the floor. A carton of eggs in Cincinnati supermarkets are going for as little as 39 cents. And gallon-sized jugs of milk are selling for less than a dollar. The American grocery store is about to become a battleground—and consumers will love it.”

“Shoppers in the UK certainly did. Established companies such as Tesco forfeited millions in sales to compete on price with German discount grocers Aldi and Lidl, who began opening more and more stores. Now, those discount brands have made it to the US, and have opened hundreds of stores across the country … These telltale signs of a brewing US grocery-store war are happening just as online retailer Amazon has decided it wants to shoehorn itself into the grocery business by acquiring health food grocery chain Whole Foods for $13.7 billion.”

“But disrupting groceries will be a lot different than shaking up publishing, which is how Amazon got its start. Unlike bookstores of the late 1990s, clawing away at market share by driving prices down is a game supermarket companies are already good at playing.”

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How TJ Maxx Defies Digital Gravity

The Wall Street Journal: “Traditional retailers are in crisis, damaged by rapidly shifting consumer tastes, technological change and cut-throat price competition. And then there’s TJX Co., which is defying gravity with the simple idea that under the right circumstances people still like to shop in stores … Central to TJX’s success are its merchants. The company employs more than 1,000 buyers who buy apparel and other goods from more than 18,000 suppliers around the world. Each buyer controls millions of dollars and has authority to cut deals on the spot, unlike most department stores, which can take weeks to review and approve orders.”

“Stores typically get deliveries several times a week. The schedule ensures a continuous stream of products to lure shoppers. And because TJX doesn’t purchase the full range of colors and styles, stores have one or two items in a particular color or size, giving customers an urgency to buy … Its stores have no walls between departments, so it can quickly reconfigure floor plans. Similar clothes from different labels can be found on the same rack.”

“One area where TJX trails other retailers is on the Internet … Some brands won’t let TJX sell their products online because they don’t want the items to be easily searchable at lower prices. For certain brands that allow online sales, shoppers have to click on items before they can see brand names. The restraints are similar to those in the physical world, where some companies do not allow TJX to advertise their brands. Advertising individual labels is not part of TJX’s marketing strategy.”

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