Minimalism: Retailers Unleash the Power of Scarcity

Quartz: “Shoppers are rewarding nimble digital-first brands, such as Everlane, which practices ‘radical transparency’ in product manufacturing and pricing. They clearly explain how the supply chain works to their customers and where margins are made. Another example is the seasonal Shoe Park in New York City, where customers trade their shoes at the door for a pair from the new collection … These new models are showing traditional retailers that a physical store should be an extension of the brand story, not a warehouse. In this way, the in-store experience isn’t dead; it’s just returning to its roots as retail theater.”

“Nike and Adidas have learned that creating an event around selling fewer shoes as ‘limited edition’ items means more revenue … Successfully selling a smaller line of products rather than letting a larger line linger into discount obscurity is the new way of doing business. Limited product availability also creates an experience for the consumer, as the process of securing the product becomes part of the item’s story and increases the buyer’s connection with it.”

“In order to create a more sustainable business model for modern merchandise, retailers need to unlock the power of scarcity. The model of throwing more stores, products, and discounts into the market with the hope that shoppers will keep buying is no longer working. Minimalism is here to stay. But rather then fight the trend, retailers can use it to their advantage and craft organizations that create more value, more loyalty, and ultimately more revenue.”

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Robo-Shop: Not an Automatic Win

The Economist: “The idea is that a combination of smart gadgets and predictive data analytics could decide exactly what goods are delivered when, to which household. The most advanced version might resemble Spotify, a music-streaming service, but for stuff. This future is inching closer, thanks to initiatives from Amazon, lots of startup firms and also from big consumer companies such as Procter & Gamble.”

“Buying experiments so far fall into two categories. The first is exploratory. A service helps a shopper try new things, choosing products on his or her behalf … The second category of automated consumption is more functional. A service automates the purchase of an item that is bought frequently … If a shopper automates the delivery of a particular item, the theory is that he is likely to be more loyal.”

“But neither Amazon nor the big product brands should celebrate a new era of shopping just yet … One problem may be the e-commerce giant’s prices, which fluctuate often. Another report … found that far more British consumers would prefer a smart device that ordered the cheapest item in a category to one that summoned up the same brand each time. That suggests that automated shopping, as it expands, might make life harder for big brands, not prop them up.”

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REI-mania: Flagship Store Was Beatles Arena

The Washington Post: “The vaulted, concrete-domed Uline Arena in Northeast Washington” is now the “East Coast’s largest REI store, a popular outdoor specialty chain that hopes to become a destination in the nation’s capital … Ice distributor Miguel Uline opened the eponymous arena in 1941 as a hockey rink and repurposed it into housing for service members during World War II. After the war, it was restored as a hockey and basketball arena … it was 1964 when the arena … made its biggest headline: The Beatles performed their first U.S. concert there shortly after their famed ‘Ed Sullivan Show’ appearance.”

‘Throughout the 1990s, the arena served as a trash-transfer station until Douglas Development purchased the property in 2004 … The 51,000-square-foot REI store now joins a changing NoMa landscape filled with luxury condos, office buildings and retail shops.” Norman Jemal of Douglas Development comments: “This is transformative. We looked at it as a game-changer for the community. You’re talking about a lot of history here. A lot of Washington, D.C., here. It touched a lot of people.”

“As an ode to the arena’s history, columns throughout the store are covered with concert posters of the Beatles, go-go bands and artists who performed there. One wall contains rows of seats from the original basketball arena … The store has event rooms, a courtyard and a La Colombe Coffee cafe. The National Park Service also has a kiosk inside, where an employee from the federal agency will be on hand to recommend outdoor travel destinations to customers.”

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Grocers Trust Their Gut When Buying Stock

The Washington Post: “Blue Yonder, a retail tech company, surveyed 750 grocery managers and directors in the U.S., U.K., Germany and France … The most disturbing metric: 48 percent said they use a ‘gut feeling’ when making inventory decisions … The study also found a quarter of grocers feel they are not delivering at the speed that their customers require–not a great sign in an age where customers are becoming more and more demanding for speed and convenience and would have little patience for stores running out of stock.”

“Losing customers is one risk of not automating. But there are other costs. For example, according to Blue Yonder’s research report 4 million tons of food is wasted each year by the grocery industry in the U.K. alone. That translates into a big cost in what is historically a low-margin business.”

“Adding even more pressure to the typical small grocer is this week’s rumors that Amazon it is entering the brick-and-mortar grocery business. You can bet the managers at Amazon will not be making their inventory decisions based on a ‘gut feel.’ They’ll be using data and automation. Lots of it.”

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The Temple of the Muses

Literary Hub: “Today, few people are likely to remember James Lackington (1746-1815) and his once-famous London bookshop, The Temple of the Muses, but if, as a customer, you’ve ever bought a remaindered book at deep discount, or wandered thoughtfully through the over-stocked shelves of a cavernous bookstore, or spent an afternoon lounging in the reading area of a bookshop (without buying anything!) then you’ve already experienced some of the ways that Lackington revolutionized bookselling in the late 18th century.”

“The Temple of the Muses, which was one of the first modern bookstores, was a mammoth enterprise, by far the largest bookstore in England, boasting an inventory of over 500,000 volumes, annual sales of 100,000 books, and yearly revenues of £5,000 (roughly $700,000 today) … Lackington wanted to find a way to make books more affordable and accessible while still turning a profit, and with this in mind, he set about revolutionizing the book trade in at least four ways. His first innovation was to eliminate a staple of 18th-century commercial life: credit. He ran a cash-only business.”

“His second innovation had to do with his handling of remainder sales … Lackington bought huge lots—sometimes entire libraries—and then drastically reduced the prices of all the books in order to sell them at high volume … Lackington’s third innovation will be familiar to anyone today who loves a bargain: he convinced his customers that they were getting a deal by refusing to haggle over prices … He named the shop The Temple of the Muses, and above the entrance a plaque boldly announced: Cheapest Bookstore in the World. The Temple of the Muses became a tourist attraction, and this was Lackington’s fourth innovation: the sheer size of his bookstore—a spectacle that dwarfed all other bookshops of the time—made it a destination in itself.”

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Abercrombie & Fitch Tries ‘Inclusion’

The Wall Street Journal: “Abercrombie & Fitch, once the mean girl at the mall, wants shoppers to know it has grown up. The brand that drew teen fans to its stores with shirtless male models, dim lights and heavy perfume is cleaning up its image amid a sharp drop in sales. With a new marketing campaign, and a redesigned logo and website … Abercrombie hopes millennials who knew the brand in high school will give it another chance.”

“What was cool in Abercrombie’s heyday is decidedly out of fashion now. Today’s teens embrace diversity and reject anything that resembles bullying … like a teen culling her Instagram posts after a breakup, Abercrombie is deleting all existing pictures on its website and social-media channels.”

“New pictures will feature brighter lighting, looser styling and a more optimistic mood … Abercrombie plans a new store prototype for 2017; meanwhile, it’s making changes at existing locations … Shoppers can expect more variety within the brand’s jeans, jackets and sweaters” … Abercrombie’s Fran Horowitz comments: “We are a positive, inclusive brand, with a nice sensibility, very different from what they encountered in the past.”

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Data Gymnastics & The Workout Experience

The Wall Street Journal: “As competition grows, more clubs are using data analysis, consultants and Wi-Fi-connected equipment to quantify what’s happening on a fitness floor … In general, many gyms have too much expensive equipment like cross-trainer machines, and not enough cheap equipment like dumbbells and stretching mats … That’s partly because equipment makers advise gym owners on layouts, and partly because many gym owners believe a room filled with the latest equipment helps sell memberships.”

“One common error is paying too little attention to members’ sight lines in the gym … Cardio equipment is used more often when it faces weightlifting areas than when it faces away from them … That’s especially true for women, who say treadmills are their favorite piece of gym equipment. (Treadmills are No. 2 for men, behind dumbbells).”

“Results of (the) analysis are sometimes counterintuitive. According to usage data, members of one luxury gym preferred treadmills facing people working out on the gym floor to treadmills facing windows with scenic views … The data also shows that people who log into a cardio machine work out 33% longer than those who don’t log in. People who use a machine’s video-on-demand service also work out 15% longer than those who don’t.”

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Brilliant Books: How Local Goes Global

The New York Times: “When Peter Makin opened Brilliant Books five years ago, he quickly realized his business wouldn’t survive in this remote locale if his only customers were local buyers … he believed that online buyers would flock to Brilliant Books if they experienced the same customer service that shoppers in his physical store do … He began offering free shipping … and hired a full-time social media manager, who promotes the store and has used Twitter and Facebook to talk to readers who would never find themselves near Traverse City.”

“One of his most successful ways of getting repeat business is his store’s version of a book-of-the-month program, which makes personalized recommendations for each of its nearly 2,000 subscribers every 30 days. Rather than use an online form to track preferences, Brilliant sends each new subscriber a customer card to fill out by hand and mail back. Employees then scan the card into the system so that when it is book-selection time, they can see what the customers said they liked and how they said it.”

“Once the selections are made, the back-end system orders books from the publishers and prints postage and address labels. After the books arrive, the staff mails personalized packages. The investment is paying off: Sales are up 14 percent this year, and Mr. Makin anticipates that 30 percent of Brilliant’s sales will come from online orders — doubling last year’s total. Facebook customers buy more nonfiction titles, while Twitter conversations generate more sales of young adult and children’s books.”

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Innovation & The Theory of Jobs To Be Done

The Wall Street Journal: “Businesses succeed when they help people do certain jobs. They fail when they lose sight of what that job is … Jobs are defined by the customers who hire companies to do them. The jobs are … expressed in verbs and nouns, not adjectives and adverbs. Some of the most successful companies in the world … are those whose very names have become synonymous with the job they help you do, such as Google, Uber, Xerox and TurboTax.”

“By contrast, ‘I need to have a chocolate milkshake that is in a twelve-ounce disposable container’ is a preference that confines both the customer and beverage provider to the milkshake category … The job customers ‘hire’ the breakfast milkshake for is … ‘I need something that will keep me occupied with what’s happening on the road while I drive. And also, I’d like this to fill me up so that I’m not hungry during a 10:00 a.m. meeting’ … Putting it that way forces drive-through owners to think much more broadly about what’s for breakfast.”

The Theory of Jobs to Be Done, as presented in Competing Against Luck by Clayton Christensen, et. al., recommends “creating internal processes that flex according to the needs of the job to be done, not the needs of the organization. When you buy something on Amazon, it will tell you something along the lines of: ‘If you order within the next 2 hours and 32 minutes, you’ll receive your product Tuesday.’ That isn’t Amazon simply trying to keep you posted. It’s a way to force the company’s internal processes to stay focused on what matters to the customer—the basic, all-too-easily forgotten job that customers need done.”

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