Five Below Performs Well Above Expectations

The Wall Street Journal: Five Below, “which sells everything from Spalding basketballs to Bluetooth headphones and yoga mats for $5 or less, might be the most successful retailer you’ve never heard of. By the end of this year, Five Below’s store count will have nearly quadrupled to 750 locations since its 2012 initial public offering … Five Below uses a formula that has largely insulated it from competition from Amazon.com Inc. The chain keeps prices low by creating products from scratch with hundreds of suppliers around the world and sells them in an environment where children want to hang out. Its own e-commerce sales are so negligible the company doesn’t break them out; shipping often costs more than the entire purchase.”

“At 8,000 square feet, its stores are relatively small, making it easy to wander the mazelike floor plan grouped around eight categories: sports, technology, party, candy, style, create, room and now—the latter filled with seasonal products such as Halloween costumes or Christmas decorations … Shelving is no higher than 5 feet, creating a comfortable space for preteens and teenagers who have outgrown traditional toy stores and are Five Below’s core customers. They are encouraged to bounce the basketballs, test-drive radio-controlled cars and participate in slime-making contests—anything that will help them spend their allowance money.”

“Five Below also has items for grown-ups, including cucumber face-masks, yoga mats, storage bins, greeting cards and vintage candy from Mike and Ike fruit-flavored chews to Goetze’s Caramel Creams. Unlike other bargain stores like Dollar Tree or Family Dollar that focus on necessities such as laundry detergent and toothpaste, Five Below is the place to come to find things you didn’t know you wanted, such as squeezable foam toys called ‘squishies’ that have gone viral on YouTube .. It also is testing ‘Ten Below’ sections in four stores that offer items such as wireless home speakers and skateboards for $10 or less.”

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Wannamaker’s Temple: Retail as Religion

The Wall Street Journal: The John Wanamaker Department Store was one of America’s first great temples of consumption … In “Wanamaker’s Temple,” Nicole C. Kirk argues that Wanamaker’s was more than a successful business enterprise, it was also a successful ministry. She notes that John Wanamaker, a Presbyterian, was as committed to evangelism and the social gospel as he was to selling silks and satins. As she writes: “Wanamaker saw his retail empire not as separate from religion but as an instrument of it, as a means for achieving moral reform in business, in the city, and in individuals’ lives.”

“Born into a working-class South Philadelphia family in 1838, Wanamaker began his career as a clerk in a men’s clothing store owned by a friend of his grandfather’s. By accident, he walked into a prayer meeting and heard a hat maker explaining that religion was part of his trade. Wanamaker was soon swept up in the Businessmen’s Revival, a Protestant prayer movement.”

?The store was filled with innovations: electric arc lamps, elevators, pneumatic tubes to move money and receipts. And it was infused with Wanamaker’s religiosity. In full-age newspaper ads, six days a week, he assured potential customers of his high-quality merchandise, his honest treatment of customers and his fairness to employees. ‘It was more than image making, although it was that as well,’ Ms. Kirk writes. ‘Wanamaker saw it as a part of his business mission—to make business a Christian enterprise and profitable’.”

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Hospitals ‘Tiptoe’ into Grocery Business

The Wall Street Journal: “Invoking the mantra that food is medicine, hospitals across the country are taking measures to prevent and treat illness through diet. To nudge patients into eating well at home, they have opened food pantries that offer nutrition counseling and healthful fare. They are growing their own produce, adding farmers to the payroll and hosting greenmarkets. A few are even tiptoeing into the grocery business.”

“ProMedica, a not-for-profit health system headquartered in Toledo, Ohio … set up two food pantries, where patients can receive nutritional guidance and free groceries. ProMedica opened a grocery store a few miles from one hospital, in an area that had been bereft of healthful food. Called Market on the Green, the store is open to the public, not just ProMedica patients.”

“Most grocery-store checkout counters are a gauntlet of candy. At Market on the Green, cashiers are surrounded by produce, while candy bars are tucked down an aisle. Whole-grain cereal is shelved at eye level, sugar-laden cereal can be found on harder-to-reach shelves … The store is a nonprofit enterprise (and) tries to steer shoppers with prices, putting smaller markups on healthful fare. For instance … whole-grain chips cost less than regular ones. Chocolate milk is ‘priced high’ to encourage children to drink skim milk.”

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The Doughnut That Ate Dublin

The Washington Post: “It looked like closing time at the county fair or the week before Christmas at the mall: cars just sitting there, bumper to bumper, waiting their turn to inch along. Dozens of vehicles lined up and down the aisles of the parking lot, honking as if every single driver in front of them was staring at their cellphone while stopped at a green light. It sounded like the traffic jam of the century. But, in fact, it was the Krispy Kreme drive-through at 1:30 a.m. in Dublin — the first to open in the country.”

“Neighbors complained to local government and Krispy Kreme executives that the noise from the doughnut drive-through had kept them awake for days, they told the Irish Times.After just one week, Krispy Kreme had to shut down Dublin’s 24-hour drive-through … Krispy Kreme has been around in the United States since 1937 and has more than 300 locations nationwide. It’s been called a ‘cult’ favorite in the past, inspiring ‘pilgrims’ to ‘pile into the car and drive for hours just to have a couple of Hot Nows,’ as Pittsburgh Post-Gazette writer Marlene Parrish wrote in 2001.”

“But Ireland’s reception appeared to be in a league of its own … As of Friday morning, the Irish Times reported a wait time of 30 minutes for the doughnuts, with metal barriers set up to control the queue like those found at a theme park.”

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Merchants of Honor: Dirty Lemon Trusts its Customers

Anne Kadet: “At the Drug Store, a new shop in Manhattan carrying a single line of soft drinks, the prices are so high—$10 for a 16-ounce bottle—you might be tempted to steal one. And that would be easy enough. At this store, there is no cashier. Not even a payment kiosk. It runs on the honor system. The company behind this store is Dirty Lemon Beverages, a local beverage maker that sells what it markets as health-enhancing drinks directly to customers through text messaging.”

“Chief Executive Officer Zak Normandin says he decided to operate his first store on the honor system because it is the most convenient way to serve customers. ‘No one likes standing in line,’ he said. The Drug Store is a tiny storefront on Church Street in Tribeca, a few blocks south of busy Canal Street. The high-ceilinged space, decorated with old-fashioned black-and-white tile, features a three-door refrigerator case and a 5-foot plant. A digital display mounted on the wall says ‘Grab a bottle and txt us’ followed by the store’s phone number.”

“Mr. Normandin says he isn’t worried about shoplifting at the Drug Store. The shop has cameras and heat sensors to track foot traffic. He said there have been no reports of theft at the store since its opening on Sept. 13.”

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Retailers Aim To ‘Swipe’ Rewards Cards

The Wall Street Journal: “Consumers have become addicted to credit cards with generous rewards programs. Retailers are trying to cut them off. Large merchants including Amazon.com Inc., Target Corp. and Home Depot Inc. are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants.”

“The retailers are trying to end the card networks’ ‘honor all cards’ rule, which requires merchants that accept Visa- or Mastercard-branded credit cards to take all of them. If merchants could pick and choose among Visa or Mastercard credit cards, those with the highest merchant fees—and most generous rewards—likely would be on the chopping block.”

“Some 92% of all U.S. credit-card purchase volume is currently charged on rewards credit cards, up from 86% in 2013 and 67% in 2008, according to estimates from Mercator Advisory Group Inc., a payments research and consulting firm. Yet merchants say the most generous rewards credit cards with the highest fees are cutting into their profits … ‘swipe’ fees vary widely, but are higher on rewards credit cards—sometimes around 3% of the cardholder’s purchase price.”

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Seltzer Hackers Pop SodaStream’s Bubble

The Wall Street Journal: “SodaStream’s popular countertop machines helped lower the cost of sparkling water by allowing users to make their own. For a hard-core group of fizzy-water fans, it’s still not cheap enough … In an effort to save more on each pour, these customers are hacking into their SodaStream machines by attaching their own canisters of carbon dioxide, often purchased at welding-supply or paintball stores … These gambits allow the hackers to avoid the roughly $15 fee the company charges for refill gas canisters—which fit into the back of the machine and can carbonate 60 1-liter bottles of water.”

“The practice of SodaStream hacking has become so popular that a small cottage industry has sprung up to support it. Vendors sell special adapters to support unofficial carbon dioxide canisters on the SodaStream, while others offer to refill the SodaStream canisters in ads on Craigslist and Facebook … In one popular video, the poster points to a 5-pound aluminum carbon dioxide tank and says, ‘You can steal these from landfills pretty much anywhere’… Israel-based SodaStream International Ltd. discourages the hacking and said tampering with the gas canisters violates its terms of service. It added it isn’t responsible for any ‘bodily harm that could be caused by misuse’.”

“Deviant Ollam, 42, of Seattle, said he bought a special adapter that allows him to attach a 20-pound carbon dioxide tank directly to his SodaStream machine … He said he purchased ‘food grade’ carbon dioxide from his local gas-supply store, which some SodaStream customers consider to be safer than the grade of carbon dioxide welders use. For him, the appeal is less about saving a few cents than using his wits to get ahead. His family is drinking far more sparkling water than they did before, just because they can, he said. ‘Why drink regular water again when you can have the ‘I’m sticking it to the man’ feeling?’ Mr. Ollam said.”

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RH Negative: A Restoration of Excess

The New York Times: “On the second Saturday in September, the new RH Gallery opened its doors to the Meatpacking District, looking just as you’d expect: a glowering, 90,000-square-foot landscape of poured concrete flecked with bronze, stone and glass, through which sails a flotilla of enormous gray velvet and white linen sofas … Welcome to the latest iteration of what began as Restoration Hardware, a chain of home goods that in recent years has become best-known less for dependable fixtures than its cumbersome catalog mailings, once reaching 17 pounds.”

“This is RH’s 85th store, and its biggest. It is architecturally quite lovely, the low-slung, hundred-year-old brick building erupting into a tough, industrial-looking glass and steel three-story structure with a rooftop garden and restaurant … It opened the same week the parent company of Henri Bendel announced the closing of all its stores, marking both another death spasm of a certain kind of retail experience, and the unlikely success of a brand that has placed the same Belgian linen sofas, French caned beds and reproduction African objects in houses across the country.”

“The new RH store was seven years in the making. It opened with a flashy party that had caviar bars and dewy-faced models, Martha Stewart and Ryan Seacrest.”

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Bar Moxy Debuts Soft-Serve Vending Machine

The Wall Street Journal: “Make way for soft-serve vending machines … Bar Moxy, an all-day dining and drinking spot located in Midtown’s Moxy Times Square hotel, is unveiling such a machine this week—the first of its kind in New York City, according to the hospitality company Tao Group, which manages the hotel’s food and beverage operations.”

“The vending machine, which accepts credit cards, cash and Apple Pay, offers two flavors: vanilla with a spicy boost from Mike’s Hot Honey, a chile-infused sweetener, and dairy-free chocolate … The technology for dispensing soft-serve from a vending machine is fairly straightforward: Users make their selections from a video display, then wait less than a minute for the order to be processed and delivered through a small opening at the front of the machine. A spoon pops out of another opening.”

“Tao Group managing partner Matt Strauss won’t say how much the company spent for the ice-cream machine. But Rich Koehl, vice president of Stoelting Foodservice, the device’s Wisconsin-based manufacturer, said its list price is $68,000 .. Tao Group must sell a few hundred servings each month to cover costs, including for the ice cream, which it makes using its own recipe, Mr. Strauss said. The machine’s real value, he added, could come from the buzz it generates, potentially driving more customer traffic to Bar Moxy as a result.”

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How Patagonia Patches Together Loyalty

The Washington Post: “’If it’s broke, fix it!’ is a Patagonia company motto, and the company takes the motto seriously. It has operated a recycling and repair program, Worn Wear, in various permutations since 2005. In its Reno, Nev., service center, Patagonia operates the country’s largest outdoor gear-repair shop. During the 2017 fiscal year, it made 50,295 clothing repairs.”

“Fourteen employees are deployed to replace zippers, which accounted for 30,000 of last year’s repairs … Stores send up to 600 items a week. Others are mailed directly by customers. The company receives items that have been chewed by dogs (dogs have a thing about the plastic snaps at the back of ball caps, it turns out), faded by sunlight, burned by campfires and ripped by sharp rocks or sticks. Even after years of wear, garments get fixed, no questions asked. Items have been returned that are nearly a half-century old, dating to the infancy of the company founded by Yvon Chouinard in the mid-1970s.”

“Patagonia also has a small fleet of repair rigs that travel to dozens of college campuses and ski resorts, advertising these excursions much like band tours. Patagonia staffers offer to make free repairs (even to non-Patagonia items) and teach students and skiers how to make their own fixes. In addition to putting on learn-to-sew clinics, staffers organize events where students learn how to repair an item and then get to keep it for free. They also promote campus clothing swaps … If items returned by customers are too damaged to be resold, they are designated for reuse. Patagonia works with several entrepreneurs who ‘upcycle’ old garments into purses, scarves or other items.”

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