Lord & Taylor’s New ‘Flagship’: Walmart.com

The New York Times: “Lord & Taylor is teaming up with Walmart to create an online store on Walmart.com that will offer about 125 fashion brands, including Tommy Bahama, La La Anthony, H Halston and Effy. Billed by both companies as a ‘premium’ shopping destination, the new online store reflects Lord & Taylor’s desire to reach a wider audience and Walmart’s hope to attract a different type of customer.”

“For Walmart, the partnership is the latest attempt to reach a more urbane shopper. As part of that effort, Walmart has made a string of acquisitions over the past year, purchasing the clothing sites Bonobos and Modcloth and starting its own bedding and mattress line, sold exclusively online.”

“The Lord & Taylor online store on Walmart.com is expected to open in the coming weeks. Lord & Taylor will be responsible for shipping the clothing to customer’s homes. It will continue to sell the same brands in its stores and on its own website at the same prices as it does on Walmart.com … Lord & Taylor executives referred to their site on the Walmart website as a new kind of ‘flagship’ store.”

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Stadium Goods: Getting Kicks From Luxury

The New York Times</strong>: “To walk into the 3,000-square-foot Stadium Goods store in SoHo is to be confronted by rows and rows of pristine, shrink-wrapped athletic footwear. Look closely and you might be a little stunned by the price tags. On a recent afternoon, for instance, a pair of white Nike Jordan 1’s by the fashion designer Virgil Abloh (Off-White, Louis Vuitton) originally priced at $190, was selling for $2,750 … Nearby was a rare pair of Adidas PW Human Race NMD TR, designed by the musician Pharrell Williams. Price tag: $12,350.”

“Sneaker fanatics have been around for decades, with swaps and buys largely happening on eBay or as personal transactions. But it’s only in the last few years that the reseller market has accelerated and gone sharply upscale. John McPheters, who co-founded Stadium Goods with Jed Stiller, says the shift has been driven by ‘men who are now learning from childhood how to treat fashion as a sport — the way that women have always treated fashion’.”

“The partners believe the future of sneaker retail will be a hybrid model combining traditional channels and aftermarket selling. ‘We’re a microcosm of what’s hot,’ Mr. Stiller said, noting that in the sneaker world what’s trending is not necessarily the newest item. ‘Where a lot of retailers are dependent on what brands are releasing at the moment, we’re not. Ninety-five percent of our stock are styles that are no longer on the market’.”

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Ohm: The Mantra of Deli

The New York Times: “You could spend your life walking past the Ohm Deli Corporation in Williamsburg, Brooklyn, and not pay it any mind. It’s just a deli. Maybe it has the brand of salsa you like. So do three other places in the neighborhood. Or you could step inside and find a man named Rick Patel, who has owned and run Ohm for 25 years, and a group of regulars who come for a social cohesion sometimes lost in the swirl of change in the neighborhood.”

“Ramsay de Give moved to Williamsburg 10 years ago and made the deli a part of his daily circuit: greeting Mr. Patel, getting to know some of the regulars, scoring a carton of eggs when he needed it … At the right time of day, he could count on seeing a crowd gathered around the television, yelling at the Lotto numbers. Of such scenes are neighborhoods built.”

“Four or five years ago he started hanging out in the deli on New Year’s Eve, and encountered ‘an intense sense of community I’ve never seen before,’ he said … New, fancier shops and restaurants popped up or changed hands almost weekly, but Ohm did not change … If anything, Mr. de Give said, it just got firmer in its character. ‘I wanted to capture the tedium of being open from 7 a.m. to midnight, 365 days a year,’ he said.”

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H&M Stores Buy Into Big Data

The Wall Street Journal: “H&M, like most retailers, relies on a team of designers to figure out what shoppers want to buy. Now, it’s using algorithms to analyze store receipts, returns and loyalty-card data to better align supply and demand, with the goal of reducing markdowns. As a result, some stores have started carrying more fashion and fewer basics such as T-shirts and leggings … H&M’s strategy of using granular data to tailor merchandise in each store to local tastes, rather than take a cookie-cutter approach that groups stores by location or size, is largely untested in the retail industry, consultants say.”

“The H&M store in Stockholm’s swanky residential Östermalm neighborhood hints at how data can help. The store used to focus on basics for men, women and children, with managers assuming that was what local customers wanted. But by analyzing purchases and returns in a more granular way, H&M found most of the store’s customers were women, and fashion-focused items like floral skirts in pastel colors for spring, along with higher-priced items, sold unexpectedly well.”

“With the help of about 200 data scientists, analysts and engineers—internal staff and external contractors—H&M also is using analytics to look back on purchasing patterns for every item in each of its stores. The data pool includes information collected from five billion visits last year to its stores and websites, along with what it buys or scrapes from external sources … The chain uses algorithms to take into account factors such as currency fluctuations and the cost of raw materials, to ensure goods are priced right when they arrive in stores.” Nils Vinge of H&M comments: “The algorithms work around the clock and adjust continuously to the customers’ ever-changing behavior and expectations.”

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Are Shoppers ‘Primed’ For Price Hikes?

The Washington Post: “Hard-wired into the DNA of companies of all kinds is a fear of losing customers with even the slightest uptick in prices. Netflix watchers and McDonald’s eaters appeared undeterred by the rise in subscription and menu costs over the past seven months, with both companies reporting strong sales growth in the first quarter … Amazon may be the next big test of whether consumers who are already stretching their pocketbooks will open them even wider.”

“The retail giant announced … that the price of a Prime membership will increase 20 percent, to $119 per year.” Ryan Hamilton, an associate professor of marketing at Emory University’s Goizueta Business School, comments: “In general, people are sensitive to losses, and price increases count as losses psychologically. The broader perspective, though, is that people tend to be willing to pay for what they perceive as value.”

“Brian Wansink, professor and director of the Cornell University Food and Brand Lab, noted that in deciding when to raise prices, companies have to time the rollout carefully. Make the announcement too abruptly and viral anxiety might cause customers to drop off. A safer bet is often to announce weeks ahead of when the change will go into effect. At that point, customers are less likely to fixate on a hit to the wallet that’s still weeks away.” He elaborates: “But if it’s [done] the day it happens, there’s this huge outcry. It can start framing in their minds that they are getting ripped off. The outcry is not going to happen if the soft launch in done months ahead of time.”

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Foot Locker Opens Up & Goes Local

Quartz: “Foot Locker announced in March that it would close more than 100 US stores this year, and stories attributing the news to a ‘retail apocalypse’ quickly followed. The company’s CEO, Dick Johnson, has some thoughts on those headlines: They totally missed the point … More important, according to Johnson, are the new stores Foot Locker is opening. Yes, there will be fewer of them, but they’ll offer better experiences for shoppers.”

“One thing they’re doing is tailoring stores to specific markets by working with local artists and influencers. They’re also considering services you can’t get online, whether that means putting a barber shop in the back, or having a sneaker cleaner come in once a week so folks can get their shoes freshened up.” Johnson comments: “The real headline wasn’t that we’re closing 100 doors. It’s that we’re opening 40 and they’re going to be really special places for our consumer to come and engage with our brand.”

“It’s true that many brands are closing stores because they’re struggling. But having fewer, better stores can also be a sign of a business planning for the future. To that point, Johnson also emphasized Foot Locker’s preparation for an increasingly digital world. One of the company’s biggest investments, he said, is in ways to analyze and use data.”

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Jif Jaf: Zen & The Art of Oreos

Quartz: “When Oreos came to China in 1996, consumers were nonplussed. The chocolate sandwich cookies … were far too sweet for the Chinese palate. By 2005, Kraft Foods was losing money on every Oreo sold. The company regrouped, introducing a lighter Oreo, a rectangular Oreo, and chocolate-covered wafer sticks. At the Kraft Foods biscuit research lab in Suzhou, food scientists experimented with dozens of other varieties, among them an Oreo that replaced the traditional filling with a glob of gum. (That version never made it to shelves).”

“Kraft spun off Oreo and other snacks brands into a new company, Mondelez International, in 2012, and itself merged with Heinz in 2015. Now, Kraft Heinz is taking the lessons learned from 1990s Oreos to Jif Jaf, a chocolate-sandwich cookie the company is releasing in China. Filling flavors include a traditional chocolate, but also matcha tea, chili, and cheese.”

“Unlike Oreo, each Jif Jaf character has its own personality, part of a brand-development effort led by creative agency Jones Knowles Ritchie (JKR). The matcha character is calm and zen-like, chili is a thrill-seeker, and cheese is a ladies’ man.”

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7-Eleven: When Convenience Is Not Enough

The Wall Street Journal: “For 7-Eleven, Big Gulps and Slurpees are no longer enough. The convenience-store pioneer is falling behind rivals that are gleaning more sales from healthier snacks and freshly cooked meals … The company’s executives said they are working to come up with better foods to sell in their 9,700 North American stores. ‘Simply being open longer than the competitor … is not enough,’ said Raj Kapoor, referring to the stores’ extended hours. Mr. Kapoor, a 23-year veteran of 7-Eleven, is head of fresh food and proprietary beverages.”

“The effort to freshen up 7-Eleven’s business has run into resistance from the chain’s franchisees. Eight out of 10 7-Eleven stores are owned by franchisees, most of whom own fewer than five stores. Many say it is too expensive to maintain new equipment like ovens, and that 7-Eleven needs to pay to remodel their stores if they want them to sell more fresh and hot food. ‘Our stores don’t look like we are in the food business,’ said Hashim Sayed, who sold his store in Chicago back to 7-Eleven this week after 25 years as a franchisee.”

“7-Eleven says it has been addressing the shift in tastes for several years. But competitors have done more to sell fresh—and more profitable—foods, analysts said. Regional convenience chains Wawa Inc. and Sheetz Inc. make custom salads and hot meals at on-site kitchens. Iowa-based Casey’s General Stores Inc. is now one of the largest sellers of pizza in the U.S. CVS Health Corp. has reorganized its drugstores to display healthy food more prominently.”

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E-urope: Amazon Struggles With Apparel

The Wall Street Journal: “Amazon.com Inc. might look like it’s taking over the world. But it hasn’t conquered Europe. Two decades after the internet behemoth’s first international foray into the region, it’s still working to gain traction selling apparel and footwear. That weakness in a major, growing market illustrates Amazon’s challenge as it expands abroad and tries to replicate its U.S. dominance of e-commerce.”

“To explain Amazon’s struggles in conquering apparel in Europe, retail executives and analysts point to an absence of top fashion brands, a website they say isn’t conducive to browsing for clothes and a fragmented market full of plucky competitors.”

“They say Amazon is like a chaotic, online department store where there is little control over brand presentation. By contrast, Zalando, ASOS and other specialty apparel sites are like an upscale online mall where brands are given more control and presentation is sleek, retail executives say … Amazon’s philosophy is that a large customer base attracts brands, while executives at Zalando and other competitors try to attract brands that will bring customers, said Barbara E. Kahn, professor at the University of Pennsylvania’s Wharton School of Business.”

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Short Staff + Long Lines = Retail Meltdown

The Wall Street Journal: “Over the past 12 months, 86% of U.S. consumers say they have left a store due to long lines, according to a survey conducted by Adyen, a credit-card processor and payment system. That has resulted in $37.7 billion in lost sales for retailers, Adyen estimates.”

“Retailers typically set staffing as a percent of sales, but a growing body of research suggests it should be based on foot traffic. The problem is twofold: Many retailers don’t track traffic and even if they do, they are reluctant to add labor, which is already among their biggest costs.”

“After installing cameras last year, Cycle Gear Inc., a 130-store chain that sells motorcycle apparel and accessories, noticed sales dipped during the afternoon at its Orlando, Fla., store even though it was packed with shoppers. ‘That told us the salespeople were overwhelmed,’ said Rodger O’Keefe, a vice president. ‘We added two more salespeople during those hours, and sales have been up since then’.”

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