Supermarket Future? Not Plastics!

The New York Times: “A supermarket in the Netherlands wants to make it easier on the planet and easier for its customers to avoid adding to the mountains of plastic waste generated every day … the supermarket, Ekoplaza, an upmarket chain, introduced what it billed as the world’s first plastic-free aisle in a store in Amsterdam. There, shoppers found groceries, snacks and other sundries — but not an ounce of plastic. The items are packaged in compostable materials or in glass, metal or cardboard.”

“Sian Sutherland, co-founder of A Plastic Planet, an advocacy group that has pushed the concept, said the initiative was ‘a landmark moment for the global fight against plastic pollution.’ The plastic-free aisle contains about 700 items, including meats, sauces, cereals, yogurt and chocolate. The opening of the supermarket aisle comes as the idea of banning plastic, or at least making more of it recyclable, gains supporters around the world.”

“In the Netherlands, free plastic bags were banned two years ago, after a European Union directive was passed in 2015 to phase them out. At the time, the country of about 17 million used around three billion bags each year, most of which ended up in the trash. Ekoplaza has promised to expand the plastic-free idea to all of its 74 stores by the end of the year.” Ms. Sutherland comments: “There is absolutely no logic in wrapping something as fleeting as food in something as indestructible as plastic.”


Alexa Challenges Brand Loyalty

The Wall Street Journal: “For decades, the makers of packaged-food, personal and home-care brands have bought shelf space at retailers like Walmart Inc. and Costco Wholesale Corp. that guarantee them nationwide exposure. They have poured billions into branding to make their products instantly recognizable. Selling on websites offers some of those same advantages: Brands can pay for placement on a webpage and display their packaging and logos. Voice shopping, which currently offers customers just one or two product options, could chip away at that tried-and-tested model.”

“In a test conducted in October, Bain & Co. found that for customers making a first-time purchase without specifying a brand, over half of the time Alexa’s first recommendation was a product from the ‘Amazon’s Choice’ algorithm, which implies a well-rated, well-priced item that ships with Prime. Bain also found that in categories in which Amazon has a private brand, 17% of the time Alexa recommends the private-label product first even though such products make up just 2% of volume sold.”

“For now, brands can’t pay Amazon to offer their products to customers in response to a generic request for a product, like detergent or paper towels …Without that paid-search option, P&G has been tinkering with ways to get noticed by shoppers using voice assistants, such as a Tide-branded Alexa app that doles out advice on how to clean over 200 stains but doesn’t suggest Tide products … Unilever, owner of Hellmann’s mayonnaise and Domestos toilet cleaner, has developed Alexa apps that give free recipes and cleaning tips that may or may not incorporate Unilever brands. Unilever sees the apps as a way to market its products by offering customers useful information when they need it most.”


Inman Makes Bricks Fashionable in China

The Wall Street Journal: “In the prospectus for its mammoth 2014 stock listing, Alibaba Group Holding highlighted online-only women’s fashion brand Inman as a success story in China’s e-commerce world … Since mid-2015, Inman founder Fang Jianhua has gone in a surprising direction. He’s abandoned the online-only model to open physical stores. To date, Inman has opened 450 stores, mostly in China’s smaller cities. Last year, while Inman’s online sales rose about 39%, its offline business, which is newer and smaller, grew 300%, to 330 million yuan ($52 million), and reached 35% of total revenue. Mr. Fang expects the online-offline breakdown to be 40%-60% in the future.”

“In changing strategy, Inman had spotted several long-term problems. Online sales growth for brands such as Inman is slowing as China’s e-commerce market becomes more competitive, with megabrands such as Uniqlo, Vero Moda and Gap making big online drives. Meanwhile, the costs of online advertising are rising as are the challenges of standing out in a crowded field.”

“In 2015, Mr. Fang figured it would cost less to reach customers in smaller cities through a physical store than via an online store. Given its years of insight into its millions of customers, Mr. Fang thought Inman could manage its supply chain and stores better than purely brick-and-mortar competitors. For example, women in China’s cold, northeastern rust belt aren’t big fans of Inman’s understated cotton and linen clothes, so no need for stores there.” He comments: “The question is not whether a fashion brand needs to be both online and offline. The question is how big you want to be in the two worlds.”


Building Belonging: Community & Customers

Fast Company: “The Rapha Cycle Club (RCC), a membership organization grown around Rapha’s cycle apparel business. The RCC has all the hallmarks of traditional community groups: rituals, local organizers, chapters and clubhouses around the world, symbols, shared identity, and social activities. There’s also a code of conduct that creates the conditions for respect and decency between diverse members … This is not the light ‘community’ that brands often speak of when referring to their customers or social media following–this is real, in-person commitment and engagement. And this is not a sideshow to Rapha’s business. It’s core to its business strategy–its spaces are clubhouses not stores, and people are members not customers.”

“Thinking beyond ‘customers,’ ‘fans,’ or ‘followers,’ the next frontier for great brands is stepping into the cultural need and market opportunity for deeper, real-world person-to-person connection … Those companies that help us forge meaningful connections will win deep loyalty. And this needs to go beyond premium brands. If belonging can be built around apparel and technology companies, surely it can also be built around learning, parenthood, food, and health.”

“Although there are some examples of highly engaged communities being developed via technology (e.g., Peloton riders), when it comes to belonging, real connection will most likely come from in-person interaction in real life. But having physical space is not enough: Brands should create spaces, experiences, products, and services that deliberately foster the conditions for diverse people coming together in respectful environments for shared experiences.”


Fast Fun: The New Fashion in Toys

The Wall Street Journal: “Hasbro Inc., Mattel Inc. and other companies are rushing to collapse production times and capitalize on fast-moving trends such as slime-making kits, and viral videos that can spawn new games and toys. The goal is to spot ideas and get products in stores in a matter of months instead of the following Christmas. Toy companies need rapid turnaround times if they are to profit from these trends, which spike and dissipate quickly. Copycats, usually smaller manufacturers, also can quickly crowd the market.”

“In a sense, the companies are lifting from the playbooks of fast-fashion retailers such as Zara and Forever 21, which can churn out new coats in just 25 days … Mattel has carved out a team of fewer than 10 executives, including toy designers and manufacturing experts, to develop toys that match up with larger trends in the industry. Mattel Chief Executive Margo Georgiadis said in an interview Friday that she gave the team three months and a ‘next to nothing’ budget to create a few ideas to pitch at a January toy fair. Those items, including a plush toy, are expected to be sold later this year.”

“Hasbro last year established a similar team, called ‘Quick Strike,’ hoping to turn social-media trends into marketable products. The maker of Monopoly and Nerf guns has come up with several games inspired by viral videos.”


Nordstrom Doubles Down on Bricks

The Wall Street Journal: “Many retailers, beset by online competition and shifting consumer tastes, are slashing costs and closing hundreds of stores. Nordstrom Inc. is doing the opposite … It is revamping some of its 122 department stores and spending more than $500 million to gain a toehold in Manhattan. It has snapped up e-commerce companies including flash-sale website HauteLook and subscription service Trunk Club. And it has launched new concepts, including a store in Los Angeles called Nordstrom Local that doesn’t stock any clothes. So far, those efforts have failed to pay off in rising profits.”

“Nordstrom says it is different from its peers. It has fewer locations than rivals, and most are in the nation’s top malls, which continue to draw shoppers … While other department stores are retrenching, Nordstrom has shown a willingness to take risks. It is jumping into the competitive New York City market with a men’s store opening in April followed by a women’s store next year … At a store in Irvine, Calif., Nordstrom recently completed a test of a showroom that carried samples of 19 brands such as Rag & Bone and Veronica Beard in every size and color; they could be tried on but had to be ordered online. For shoppers, it solved the problem of visiting a store only to find their size sold out.”

“Other changes meant to appeal to customers are smaller. In November, the company unlocked the fitting rooms in its department stores … Although theft has increased slightly since Nordstrom made the change, executives say, the retailer is sticking with the new policy. ‘Analysts don’t like it,’ Jamie Nordstrom said. ‘But I’m thinking about the next 50 years, not the next quarter’.”


Word of the Day: Convenience

Tim Wu: “Convenience is the most underestimated and least understood force in the world today … In the developed nations of the 21st century, convenience — that is, more efficient and easier ways of doing personal tasks — has emerged as perhaps the most powerful force shaping our individual lives and our economies. This is particularly true in America, where, despite all the paeans to freedom and individuality, one sometimes wonders whether convenience is in fact the supreme value.”

“Convenience has the ability to make other options unthinkable. Once you have used a washing machine, laundering clothes by hand seems irrational, even if it might be cheaper. After you have experienced streaming television, waiting to see a show at a prescribed hour seems silly, even a little undignified. To resist convenience — not to own a cellphone, not to use Google — has come to require a special kind of dedication that is often taken for eccentricity, if not fanaticism.”

“For all its influence as a shaper of individual decisions, the greater power of convenience may arise from decisions made in aggregate, where it is doing so much to structure the modern economy. Particularly in tech-related industries, the battle for convenience is the battle for industry dominance … The easier it is to use Amazon, the more powerful Amazon becomes — and thus the easier it becomes to use Amazon. Convenience and monopoly seem to be natural bedfellows.”


Is Gucci Today’s Most Innovative Brand?

From a Wall Street Journal interview with Imran Amed, founder of Business of Fashion: “Without a doubt, the single most innovative brand of the moment is Gucci … Gucci has completely overhauled their e-commerce strategy and changed the way they communicate about the brand. They’ve embraced new channels like Instagram but also done beautiful events and interesting advertising campaigns.”

“They’re not doing any discounting on their main runway collection … We’ve kind of trained the consumer to wait for things to go on sale. Gucci’s stopped that. Fifty percent of their customers are millennials. Millennials are the drivers of success for the fashion industry now. Without engaging them, you can’t really operate a successful business today. Gucci has found ways of engaging with that consumer.”


Efficiency Is No Cure for Phony Baloney

The Wall Street Journal: “Over the past 2½ years, thousands of workers lost their jobs, and iconic Kraft buildings, including the original Oscar Mayer headquarters in Madison, Wis., have been shuttered and sold. The cost-cutting project is now wrapping up, giving Kraft Heinz Co. the highest operating profit margin among its peers in the U.S. food industry.”

Troy Shannan, Kraft Heinz’s head of North America supply chain, comments: “We look at pretty much any opportunity we have to drive efficiency. And we use the savings from those efficiencies to reinvest in our brands and our businesses and back into our supply chain.”

“Still, Kraft Heinz is grappling with a problem that can’t be solved by increasing efficiency: U.S. sales of cold cuts and other processed meats slipped to $21.3 billion last year, from $21.9 billion in 2015. Oscar Mayer’s market share dropped to 17.5% from 18% five years ago, according to Euromonitor. Natural and organic brands, as well as small labels buying from local farms, have nibbled away at sales. ‘Consumers are looking for something they think is handmade or looks handmade,’ said Chris Fuller, a consultant to meat processors.”


Bad Apples Spoil Bean’s Return Policy

Business Wire: “It used to be that customers could bring back items bought at L.L. Bean’s stores and online any time they felt it didn’t live up to their expectations. The guarantee covered the item’s full lifetime. Now, the policy extends for one year only. After that, customers can only return an item if it proves defective. In another change to the policy, customers will also now need to provide a proof of purchase for a return or exchange.”

“L.L. Bean relayed the news to customers in the form of an emailed letter from Shawn O. Gorman, the company’s executive chairman and great-grandson of founder L.L. Bean. In the letter, Gorman wrote that it was people who took advantage of the generous return policy that forced the company’s hand.”

He wrote: “Increasingly, a small, but growing number of customers has been interpreting our guarantee well beyond its original intent. Some view it as a lifetime product replacement program, expecting refunds for heavily worn products used over many years. Others seek refunds for products that have been purchased through third parties, such as at yard sales. Based on these experiences, we have updated our policy.”