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.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Yes Plz: Locol Coffee Good & Cheap

The New York Times: “Is it possible for high-quality coffee to be inexpensive? At Locol, the self-described ‘revolutionary fast food’ chain opened last year by the chefs Roy Choi and Daniel Patterson, the answer is yes. Locol’s stated mission is to bring wholesome, affordable food to underserved neighborhoods … Obtained and roasted according to the same lofty standards found at … any of the small, innovative companies that have transformed the high end of the industry in the past decade, Locol’s coffee is clean and flavorful.”

“But unlike those shops, where a cup can cost $3 or more, Locol charges just $1 for a 12-ounce coffee, or $1.50 if you want milk and sugar. Rather than offer free condiments and pass on the cost to all customers, those who want milky, sweet coffee pay for their pleasures, while drinkers of black coffee get a break … Locol is rolling out a coffee brand called Yes Plz and plans to eventually open coffee windows and stand-alone shops in addition to supplying its three locations.”

Tony Konecny of Locol comments: “Coffee still thinks that mass appeal is a sign of selling out and inauthenticity, but everybody wears Levi’s. I think contemporary coffee has failed to find the consumers it should be finding.” He adds: “What we know about coffee sourcing, coffee roasting, coffee brewing, coffee service — there’s really no reason why you couldn’t make the coffee at every bodega taste good.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Tom Dixon, ‘Delaktig’ & The Future of Furniture

ikea-delaktig-modular-bed-tom-dixon-dezeen_2364_hero

The New York Times: With his design for an Ikea bed that is both durable and hackable, Tom Dixon is “trying to make a radical point: that Ikea, the Swedish furniture giant known for beds and dressers that are so inexpensive they are often perceived as being disposable, could manufacture a collection of affordable, heirloom-quality pieces to last a lifetime … Even more remarkable, the bed has built-in channels that allow it to be modified by users and customized with headboards, night stands and other non-Ikea add-ons”.

“Loosely inspired by D.I.Y. Ikea hacking sites and plug-and-play app culture, the transformable bed is part of a new Ikea concept called Delaktig, which will be unveiled at the Salone del Mobile design fair in Milan next week … Mr. Dixon also plans to make upscale components under his own brand, which may include marble side tables and headboards, Moroccan-style pillows, lamps and a kit for a curtained four-poster bed.” He comments: “The measure of success is if you manage to get a whole ecosystem around this platform. Then it takes on a life of its own.” Ikea aims to start selling Delaktig next February, and Mr. Dixon hopes it will have a starting price of about $400.”

“Despite its grand ambitions, when Delaktig is shown in Milan next week, it will be only one part of Mr. Dixon’s presentation … Mr. Dixon will offer film screenings, talks and a Johnnie Walker bar, and present his many creations in a series of shops, including a haberdashery with his first collection of pillows and throws, a chandelier store with his latest lighting collection, a perfumery of scented goods for the home and an antiques shop where his now classic designs will mix with other vintage goods.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

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.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Lidl Has Big Plans for the American Market

The Washington Post: “Lidl (pronounced lee-duhl) is a global grocery juggernaut, with 10,000 stores in 27 countries … Now, it is ready to descend on America … set to open 20 stores this summer in Virginia, North Carolina and South Carolina … Within 12 months of opening its first U.S. stores, it is slated to have 100 locations up and down the East Coast.”

US CEO Brendan Proctor comments: “A lot of the supermarkets are so large, it’s a challenge for people to go shopping. If I wanted to go in and get a bottle of ketchup — first of all, there are probably about 24 aisles in the store. I have to find what aisle it’s in. I get there, I find that there’s 50 types of ketchup. Who honestly needs 50 types of ketchup? So we can streamline that.” He adds: “What we’ve seen and heard is that a lot of customers feel they’re being forced to compromise. So they’re either getting okay quality at a cheap price or they’re getting good quality and having to pay very, very high prices.”

“Lidl will feature a large section dedicated to non-grocery items … as diverse as drills, yoga pants and garden lawn mowers in this part of the store, which is to feature a constantly rotating array of items that cycle in about every week. That could be an interesting way for Lidl to differentiate itself in the market, and it could introduce a T.J. Maxx-like ‘treasure hunt’ vibe to the stores.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Bike Shops: Does Progress Hurt Innovation?

The New York Times: “Some smaller bike companies have sold their bikes online for some time, but now the industry’s largest manufacturers are offering bikes directly to consumers via their web pages. All of this presents the possibility of better service and perhaps even lower prices for consumers. But it has also raised concerns for the future of the neighborhood bike shop.”

“Some of the problem lies with the big bike manufacturers … The biggest companies provide incentives for shops to carry their brands; generally, if 60 percent or more of a shop’s inventory is from a single top-selling brand, the store will get better terms on its credit … These shops can have a hard time making room for small, innovative companies that may interest more cyclists.”

“Even Raleigh bicycles, the fifth-best-selling brand in the United States, was shut out of many stores … Raleigh used to encourage shops to carry its bikes and accessories, but it recently dropped those incentives.” Chris Speyer, a Raleigh executive, comments: “It was not healthy for anyone anymore. It was more like the mortgage crisis than a proper retail relationship.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Nike Luxury: It Means Better Service

Business Insider: “For anyone who has recently bought Nike shoes or apparel, or walked into one of its latest stores, this won’t be news: Nike has slid upscale recently … The brand’s promotional efforts skew towards its newest and greatest inventions, as well as its more expensive offerings.”

“More recently, Nike has signaled a different approach to welcoming customers into its stores. Its new store in New York’s Soho neighborhood offers customers the opportunity to make one-on-one appointments with Nike staff … Customers can bring in all kinds of concerns for the staff to help with … The store also has areas where customers can test out its shoes and equipment in an ‘immersive experience.’ It represents a shift in how the company sees brick-and-mortar retail, and is being called a guide for future stores from the brand.”

“Nike clearly believes that an elevated price point also means elevated service, and it’s headed full speed in that direction. As Nike places a larger emphasis on its direct-to-consumer division, it’s also taking greater care of how it is perceived by customers, as well as how it interacts with those customers.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Costco Golf Balls: The New ‘Two-Buck Chuck’

The Wall Street Journal: Costco, the warehouse retail giant, first began selling golf balls last fall, under its Kirkland Signature brand that is affixed to a wide range of products and carries discount prices. Available for $29.99 for two dozen, the balls instantly ranked among the cheapest on the market … But what made the balls a hot item among fanatical golfers is the revelation that, by some accounts, they perform like rivals that sell for more than twice as much.”

“That idea sent shock waves through a billion-dollar industry, left Costco out of stock for weeks at a time and caused secondary-market prices for the ball to soar. Its popularity is threatening one of the sport’s long-held consumer beliefs: when it comes to the quality of golf balls, you generally get what you pay for.”

“The balls were made at a factory in South Korea by a company called Nassau Golf, which also manufactures balls for TaylorMade, one of the major equipment manufacturers … the company had an excess supply that it sold to Costco through a third-party trader … According to a Nassau executive based in Europe … both Nassau and TaylorMade, its biggest client, are unhappy with the rise of the $1.25 golf ball and that the company won’t sell excess supply in such large quantities again.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Crowd Cow: The New Digital Slaughterhouse

The New York Times: Crowd Cow is “an online service that sells whole cows from small ranchers, divided into manageable orders, usually about 10 to 12 pounds, and delivered to homes as frozen, vacuum-sealed cuts … Rather than putting its own brand on the meat it buys, Crowd Cow advertises the beef’s producers and allows them to tell the stories of their ranches on its website.”

“Joe Heitzeberg, the chief executive of Crowd Cow, which has sold nearly 200 cows online, founded the company with Ethan Lowry. He said their idea was to teach the consumer about the particulars of each ranch.” He explains: “We’re saying it’s like microbrews and wine. There are differences. We want you to understand the differences.”

“Most of the beef on Crowd Cow and similar websites is grass-fed, which research has shown has higher levels of healthful omega-3 fatty acids … While even large commercial cattle operations now sell grass-fed beef and many supermarkets stock it, some consumers prefer the beef they get from small producers online … Much of its beef comes in variety packs: A recent sale from Step by Step Farm in Curtis, Wash., featured a $69 package that included four eight-ounce flat iron steaks, two 10-ounce chuck steaks and two pounds of ground beef.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail