Artists & Fleas: The New Retail Acrobats

The Wall Street Journal: “These are tough times for brick-and-mortar retail. Stores are closing locations at a record pace, while chains including the Limited and American Apparel are going belly-up. New York City’s flea markets, holiday markets, farmers markets, night bazaars and art fairs, however, continue to draw big crowds. If it’s sold from a stall or a folding table, it seems, shoppers can’t get enough of it.”

“Artists & Fleas … is opening a new, 5,000 square-foot market on Friday at the prime retail intersection of Prince Street and Broadway in SoHo, the former home of an Armani Exchange. Co-founders Ronen Glimer and Amy Abrams say artisan markets are thriving because shoppers are hungry for unique goods, not to mention connection. They choose their merchants based not just on their wares, but personality. A key question: ‘Is this a fun person?’ On peak days, their Chelsea location attracts up to 10,000 shoppers. That in turn draws merchants willing to pay $65,000 a year for a 50-square-foot booth.”

Cynthia Rybakoff, a jewelry maker, comments: “We might as well be baleen whales scooping up krill. We don’t have to work that hard to bring people in … There is no advantage to having a storefront other than vanity.”

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Who’s Better Than Trader Joe’s?

Business Insider: “A regional chain that most Americans have never visited was just named the best overall grocery-store chain in the US. Wegmans was the US’s highest-rated grocery chain out of more than 20 that appeared in Market Force Information’s annual survey of the industry … This is the second year in a row in which Wegmans has earned the top spot — though this year, it was forced to share the crown with Publix … With a score of 77% satisfaction, Wegmans and Publix beat out Trader Joe’s, which had 76% satisfaction, and the Texas-based H-E-B, which rounded out the top four with 69% satisfaction.”

“Wegmans stores are larger than the average grocery store, emphasizing variety and fresh products … Many locations have cafés, pizzerias, sushi bars, and buffets, plus seating areas for 100 to 300 people where customers can eat their food … The chain is also known for its extensive beer section, with a large selection of craft brews. Some locations even have walk-in beer lockers. Many customers love Wegmans because of its customer service.”

“Wegmans serves as a superior employer in the grocery industry. The company offers healthcare coverage for workers as well as college scholarships, paying about $4.5 million in tuition assistance to employees each year. All of these factors combine to create an army of Wegmans fans, responsible for the grocery chain’s top ranking. In 2015, the company reported that 7,300 customers contacted Wegmans to report how much they enjoyed their shopping experience or the way employees treated them.”

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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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Shopping-Cart Psychology: To Return or Not?

Scientific American: “It seems like a basic courtesy to others: you get a cart at the supermarket, you use it to get your groceries and bring them to your vehicle, and then you return it for others to use. And yet, it’s not uncommon for many people to ignore the cart receptacle entirely and leave their carts next to their cars or parked haphazardly on medians. During peak hours, it can mean bedlam. Where does this disregard come from?”

“Social norms fall into two general categories. There are injunctive norms, which drive our responses based on our perception of how others will interpret our actions. This means that we’re inclined to act in certain ways if we think people will think well or think poorly of us. And there are descriptive norms, where our responses are driven by contextual clues. This means we’re apt to mimic behaviors of others—so what we see or hear or smell suggests the appropriate/accepted response or behavior that we should display.”

“The world will likely not end because we aren’t returning our shopping carts—that would be an amazing butterfly effect—but it’s an example of a quality of life issue we can control. That guy who didn’t return his cart may not be a complete jerk. He may just be using the example set by others so he can get home a little more quickly. But if everyone does that, then we’re shifting the balance of what is acceptable, which may have greater ramifications to the social order. We have a greater influence over seemingly mundane situations than we realize.”

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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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Fresh Squeeze: Packaged Goods Retreat at Retail

Wall Street Journal: “ShopRite and other grocery-store chains around the country are building new stores that have less space for traditional packaged foods in the center aisles and more for in-store restaurants and fresh meals shoppers can take home … That means less space for traditional packaged-food brands, which are also facing increased competition from store brands and smaller upstarts.”

“The shift in shopper preferences started several years ago, but its impact on big food makers is intensifying now because of added pressure from retailers. That has exacerbated what has been a drumbeat of bad news for packaged-goods companies grappling with American consumers’ sustained move toward natural, organic foods. A long stretch of falling food prices, fueled by excess supplies of staples like meat and dairy, have also lowered costs for consumers at supermarkets, giving them more reason to choose fresh food over boxed meals.”

“Some brands are seeking ways to get their products into the fresh and prepared foods section of the store … (however) retailers such as Wal-Mart Stores Inc. are pressuring big brands to lower their prices as a way to attract customers. Companies like Hershey and PepsiCo Inc. said they are working with retailers to be creative.” PepsiCo CEO Indra Nooyi comments: “That’s a conversation we’ve been having with some of the retailers, to say ‘how can we help you rethink the center store so that we can bring growth back … Our hope is that with the rejuvenation of the center store, our categories will grow, too.”

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Greats Sneakers Pop-Ups: All You Need is Wi-Fi

Wall Street Journal: “Greats, an online sneaker brand founded in 2013, plans to open at least 10 locations over the next two years by signing short-term leases ranging from three months to one year … The Brooklyn-based brand, which sells sneakers ranging from $50 to $200, manufactures most products in Italy and markets them directly to consumers online. It has tested three temporary stores since 2014, most recently a location in Williamsburg, Brooklyn, that was open for one year.”

“Greats is targeting locations between 700 to 1,000 square feet—about the size of a coffee shop—primarily in urban areas. One challenge for online brands is to ensure that new locations increase sales, rather than cannibalize existing business.” However: “Online apparel brands are finding that they don’t need much to set up a store. The evolution of point-of-sales technology means that transactions can now be made on phones and tablets. Some newer retailers don’t even keep much inventory.”

“Greats sells eight core styles of shoes in different colors and materials, making its business more mobile than that of a traditional retailer. At its new locations, the company plans to bring its own interior elements such as shelving, greenery and lighting.” Rachel Ulman of Greats comments: “You can do a lot within four walls. All we really need is some Wi-Fi.”

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Little Damage: Almond Charcoal Ice Cream!

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April Lavalle: “Little Damage Ice Cream Shop in Los Angeles, California is flipping the bird at all those ‘unicorn’-inspired sweet treats by creating a frozen confection that will take you to the dark side.Their pitch-black, almond-charcoal flavored soft serve ice cream is taking Instagram by storm, and it will definitely inject a little Halloween into your favorite summer treat.”

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Chop & Shop: Groceries Curate Shopper’s Meals

The Wall Street Journal: “Hy-Vee Inc., a chain of 244 Midwestern supermarkets, has begun a meal-preparation program that runs similarly to a book club. A group of five to 12 customers schedule a time to gather in a separate room in the store that may have large working tables, a stove and a dishwasher. Each group member selects one recipe. The group prepares and divides up the meals for everyone to take home … Store staff does all the chopping and cleanup. Customers can sip wine while assembling ingredients. Cost is about $10 a person plus the grocery bill, divided evenly among participants.”

“Schenectady, N.Y.-based PriceChopper/Market … has launched a choose-your-own-adventure case in the meat department. Customers start with a sauce … and select their meat, which is prepared and cut. Then, they are led to prepared and packaged vegetable mixes … Then, the starch: Packages of lime-cilantro rice or mashed sweet potatoes … Below are recipe cards with preparation suggestions … The recipes take 15 minutes to prepare … serve four and cost $20 to $25.”

“Coborn’s, a Minnesota chain of supermarkets, redesigned certain stores to include a “chop shop” area, where shoppers can bring produce to be chopped for them. It also eliminated long tables of fruits and vegetables in favor of farmers market style food displays. The deli department is now the “kitchen”, and the first thing shoppers see when they enter is employees making brick-oven pizzas.”

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