Hollar: The First Online Dollar Store

Fast Company: Hollar is “the first online dollar store … reimagining the physical stores as a digital discount haven where the majority of inventory costs $2 and nothing goes for more than $10. Tens of thousands of products are available, ranging from necessities to impulse buys … Hollar stocks brands you recognize (Huggies, Jergens, Febreze, Pop-Tarts) and ones you probably don’t (Zing, Num Noms, Bolis Ice Pops). Via the site and app, you can buy a $3 cellphone case alongside $1 dishwasher soap and $1.50 baby bibs.”

“Hollar experienced double-digit month-over-month sales in the last year and hit its first million-dollar month in April 2016, just five months after launch, with the average purchase totaling $30 … Hollar’s typical customer is female, a mom between the ages of 25-34. And, unlike the target client of most retail startups, she is not an affluent resident of the country’s coasts. She lives in suburban and rural areas, with a middle-to-low household income.”

“A similarity to Pinterest has proved appealing to millennial moms, who make up a full 85% of Hollar’s customers and are usually in the market for deals in the top categories of toys and home goods … There’s no question that the country’s widespread move to mobile has added to Hollar’s success. While one in five American households still doesn’t have a home computer, nearly all own a smartphone—and they do everything on it.”

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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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How Best Buy Engages Shoppers

The Wall Street Journal: “Best Buy, the electronics giant left for dead a few years ago, is bucking America’s retail slump by turning its cavernous stores from a potential drag on its business into a way to fend off Amazon.com Inc.”

“To fend off digital competition, Best Buy gave up efforts to charge consumers more in stores than online. It promised in 2013 to match online competitors’ prices and brought its prices in line with Amazon’s—a move that has paid dividends now that shoppers can instantly check prices on their smartphones … The price guarantee made a loyal shopper out of Anton Robinson, a 34-year-old lawyer in New York City. He buys his music equipment from Best Buy because he prefers to test products in person and doesn’t have to compare prices.”

“Best Buy also found a way to get more out of its giant stores. The company eliminated much of the floorspace once dedicated to DVDs and other media and has given it to brands such as Samsung, Verizon and Microsoft , which both pay rent and provide staff with expertise … Best Buy plans a nationwide rollout of in-home advisory services, in which consultants will visit consumers to field technology questions. Says CEO Hubert Joly: “Having these conversations in the home unlocks all sorts of discussions with the customers. There’s some needs that people never talk about in the stores.”

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‘Amazon Charts’ Re-Define ‘Best Seller’

The New York Times: Amazon now tracks “not only the top-selling digital and print books on Amazon, but the ones that customers spend the most time reading … With its lists, Amazon aims to redefine the notion of a best seller, expanding it to include books that are ‘borrowed’ from its e-book subscription service, and ones that are streamed on Audible. As a result, the lists give increased visibility to books that might not typically appear on other best-seller lists.”

“All of Amazon’s acquisitions and new features are having a cumulative effect, allowing the company to draw on its vast customer base and troves of data to discover what is popular, and return that information to customers, creating a lucrative feedback loop … Crowdsourcing and data mining are also driving the company’s approach to its bookstores, which act as showcases for books popular with customers on the site. While the stores have traditional categories, like fiction, nonfiction and travel, the most eye-catching shelves feature categories culled from Amazon’s customer data.”

“The first thing customers see when they walk into the store is a large display table, labeled Highly Rated, which includes books with an average rating of 4.8 stars or higher on a scale of 5 … Another display case, labeled Page-Turners, features books that people finish reading on their Kindle in fewer than three days … Another section features the most ‘wished for’ books from Amazon’s website … The books are all displayed face out. Under each book is a card with the average customer rating, the number of reviews and a featured review from an Amazon reader. Displaying the full cover of each book mimics the visual look of Amazon’s website, and might lure customers to unfamiliar titles.”

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Algorithmic Retail: Beyond Dynamic Pricing

The Wall Street Journal: “Advances in A.I. are allowing retail and wholesale firms to move beyond ‘dynamic pricing’ software, which has for years helped set prices for fast-moving goods, like airline tickets or flat-screen televisions. Older pricing software often used simple rules, such as always keeping prices lower than a competitor.”

“These new systems crunch mountains of historical and real-time data to predict how customers and competitors will react to any price change under different scenarios, giving them an almost superhuman insight into market dynamics. Programmed to meet a certain goal—such as boosting sales—the algorithms constantly update tactics after learning from experience … The software learns when raising prices drives away customers and when it doesn’t, leading to lower prices at times when price-sensitive customers are likely.”

“Algorithms can also figure out what products are usually purchased together, allowing them to optimize the price of a whole shopping cart. If customers tend to be sensitive to milk prices, but less so to cereal prices, the software might beat a competitor’s price on milk, and make up margin on cereal.”

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Two Buck Chuck: What Makes it So Cheap?

Business Insider: “Trader Joe’s wine is remarkably cheap. A bottle of the grocery store’s most popular wine brand, Charles Shaw (aka Two Buck Chuck, made by Bronco Wine) sells for less than $3.” What makes it so inexpensive? #1: “Most of the company’s vineyards are located in California’s San Joaquin Valley, where the cost of land is much cheaper than the more prestigious Sonoma or Napa Valley … Higher average temperatures in San Joaquin Valley can over-ripen grapes, which is a main contributor to the price difference between the regions.”

#2: “The company ferments wine with oak chips, which are cheaper than barrels.” #3: “The company uses … a mold of cork pieces glued together with a ‘real cork veneer at the bottom’.” #4: “Making wine in huge quantities keeps production costs low … The company uses machines to harvest the grapes, which helps keep labor costs low, but also increases the chances that bad grapes end up in the wine … Critics argue that mass production is also how animal matter can end up in your wine glass. But to be fair, there’s a chance of that happening with most agricultural products.”

#5: “Bronco cuts shipping costs by using lightweight bottles and cheap cartons … The lighter glass reduces the weight of a case of wine by several pounds, meaning Bronco can ship more wine at a time. Bronco also lowered the cost of its shipping cartons by a few pennies by replacing the white paper it was using with a light brown paper.”

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Redbro Chickens: Slow Growth, Better Taste

The New York Times: “Perdue Farms, one of the country’s largest chicken producers, has been raising what are known as slow-growth chickens side by side with the breeds that have made the company so successful. The new birds, a variety known as Redbro, take 25 percent longer, on average, to mature than their conventional cousins, and so are more expensive to raise.”

“Perdue is trying to find just the right slow-growth breed, and it has a strong incentive: A fast-growing cohort of companies that buy vast quantities of poultry, including Whole Foods Market and Panera Bread, are demanding meat from slow-growth chickens, contending that giving birds more time to grow before slaughter will give them a healthier, happier life — and produce better-tasting meat.”

“Consumers would … have to accept some trade-offs: While the new chickens have a fuller flavor, their meat tends to be distributed differently over the body, with more generous thighs and smaller breasts than the chicken most Americans are used to … In marketing slow-growth chickens, Perdue and others will have to make consumers understand why they are paying a higher price … the suggested retail price of a Sonoma Red (from Perdue’s Petaluma Poultry) that weighs four pounds is $16.”

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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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