The Storefront Index

City Observatory: “The Storefront Index “measures the number and concentration of customer-facing businesses in the nation’s large metropolitan areas … by mapping the locations of hundreds of thousands of everyday businesses … and then identifying significant clusters of these businesses—places where each storefront business is no more than 100 meters from the next storefront.”

“The result is a series of maps, available for the nation’s 51 largest metropolitan areas, that show the location, size, and intensity of neighborhood business clusters down to the street level … The Storefront Index helps illuminate the differences in the vibrancy of the urban core in different metropolitan areas.”

For example: “In Portland, there are about 1,700 storefront businesses in a three-mile circle—with substantial concentrations downtown, and in the close-in residential neighborhoods nearby … New York and San Francisco have the densest concentrations of storefront businesses in their urban cores … Maps of the Storefront Index for the nation’s 51 largest metropolitan areas are available online here. You can drill down to specific neighborhoods to examine the pattern of commercial clustering at the street level.”

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Shakespeare & Co: Amazon Isn’t Its Problem

Wall Street Journal: “Soon after Dane Neller bought Manhattan bookseller Shakespeare & Co. last May, he shut the doors and built the bookstore where he wanted to shop … After Mr. Neller got done tinkering … the store, on Manhattan’s Upper East Side, had a distinctly different look. Space inside the store dedicated to books has been cut by nearly 40% to 1,200 square feet.”

“Mr. Neller … is also chief executive of a company that makes a desk-sized device called the Espresso Book Machine, which prints new paperbacks in five minutes or less. An $85,000 unit is featured prominently at Shakespeare & Co. ‘It’s the secret sauce,’ says Mr. Neller. ‘The machine enables a bookstore to have a much smaller footprint’.”

He “says book sales from September through the end of March are up 10% compared with the same period when the store was under different ownership” and “attributes the gains to better-chosen titles, increased store traffic attracted by the store’s new cafe and the Espresso machine … ‘Amazon isn’t my problem,’ he says. ‘My customer is here because they care about more than price. They want to be greeted, they want a sense of community, and they have a craving for culture’.”

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Tractor Supply: It Has What Amazon Does Not

Forbes: “The typical Tractor Supply customer owns land, keeps pets, raises chickens and drives a pickup … Tractor Supply has approached retail’s cardinal rule of ‘Know Your Customer’ as both mission statement and math problem, and in the process has become an (albeit unlikely) lifestyle brand, famed for an in-store experience so satisfying that its rustic-chic brick-and-mortar operations are well fortified against the onslaught of consumers who want to buy everything on their smartphones.”

“Tractor Supply has 1,500 locations spread across 49 states; the company plans to open around 115 stores in 2016 and about 120 stores per year after that until 2,500 are in operation, mostly in rural or exurban areas … Roughly 15% of store merchandise is tailored to each ‘hyperlocalized’ market: One Kentucky store may cater to equestrians while another mere miles away carries products for life in coal country … the average 16,000-square-foot Tractor Supply store is manned by a team of 12 to 15 local ‘lifestylers’–the type of people who would shop at Tractor Supply even if they didn’t work there.”

The store’s “exclusive lines ensure that customers can’t find an item cheaper on Amazon … Not that Amazon is a big concern. Less than 1% of Tractor Supply’s revenue comes from e-commerce, and increasing that number isn’t a top priority. Physical stores and a deep connection to the countryside remain at the company’s core.”

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Upgrade Downgrade: Bad News for Apple’s iPhone

The Wall Street Journal: “The death of the two-year cellphone contract has broken many Americans from a habit of routinely upgrading their smartphones … Citigroup estimates the phone-replacement cycle will stretch to 29 months for the first half of 2016, up from 28 months in the fourth quarter of 2015 and the typical range of 24 to 26 months seen during the two prior years.”

“Since the early days of Apple Inc.’s iPhone, most customers have avoided paying for the full price for the latest model. But the success of AT&T Inc. and Verizon Communications Inc. since 2013 in shifting customers into plans that force them to pay the full price for devices—and separate that cost from monthly service fees—has consumers holding on to their devices longer.”

“Analysts see the longer device life as positive for the carriers because it could lead to fewer service cancellations or defections in the competitive industry … The longer upgrade cycle lowers equipment revenue for the telecom companies, but Verizon’s Chief Financial Officer Fran Shammo argued last month that the top-line shift is painless … The shift isn’t as benign for Apple. BTIG analyst Walter Piecyk recently cut 10 million units out of his fiscal 2016 and 2017 iPhone estimates because of shifting upgrade rates in the U.S.”

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Cutting The Cord: Not Just for the Poor Anymore

The Washington Post: “Low-income Americans are still one of the biggest demographics to rely solely on their phones to go online.” However, “even people with higher incomes are ditching their wired Internet access at similar or even faster rates compared with people who don’t earn as much.”

“In 2013, 8 percent of households making $50,000 to $75,000 a year were mobile-only. Fast-forward a couple of years, and that figure now stands at 18 percent. Seventeen percent of households making $75,000 to $100,000 are mobile-only now, compared with 8 percent two years ago. And 15 percent of households earning more than $100,000 are mobile-only, vs. 6 percent in 2013. Stepping back a bit, as many as 1 in 5 U.S. households are now mobile-only, compared with 1 in 10 in 2013. That’s a doubling in just two years.”

“This suggests that having only one form of Internet access instead of two may no longer be explained simply as the result of financial hardship — as might be the case for lower-income Americans — but could be the product of a conscious choice, at least for wealthier people, who are deciding that having both is unnecessary.”

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Conversational Commerce: Meet The Chatbots

The Washington Post: “While a Web browser might once have been our front door to the Internet and apps often play that role today, experts say that bots could soon become our primary digital gateway … The case for a bot-centric future goes like this: Smartphone users have proved they are only willing to download and spend time in a limited number of apps. So companies might be better off trying to connect with consumers in the apps where they are already spending plenty of time. And proponents say that a bot can potentially provide greater convenience than apps and Web searches because it can understand natural speech patterns.”

“Because bots are designed for one-to-one conversation, they may ultimately find their most logical home in messaging apps, which are seeing explosive growth in users and are the digital-communication channel of choice for Generation Z … It is against that backdrop that big retailers and Silicon Valley are racing to develop ways to use bots within messaging apps to deliver customer service or to enable browsing and buying … In retail industry jargon, this is coming to be known as “conversational commerce,” and brands are betting on it because of some distinct advantages it could provide in connecting with shoppers.”

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Fake Farms Fool Tesco Shoppers

The Wall Street Journal: UK grocery chain Tesco is launching “76 new food lines,” branded with the names of “seven fictitious farms. Critics say the British-sounding monikers obscure the fact that the products come from a variety of farms, including ones overseas. Blueberries under the Rosedene Farms brand come from Spain, for example, while apples under the same brand hail from South Africa.”

“The British efforts are part of a global trend among supermarket chains and food makers as customers increasingly seek food that appears fresh, lacks artificial ingredients and is locally sourced.” Says Tesco CEO Dave Lewis: “We’ve been very open about the fact that this is creation—we’re creating and launching these brands.”

“Not all of British retail’s farms are fictional. High-end supermarket chain Waitrose on Friday began streaming live footage in train stations across the country from a farm it owns in Hampshire. Passersby will be greeted with footage of beehives, rapeseed and more from dawn to dusk.” Waitrose “said it aimed to let customers see firsthand where their food comes from. ‘Rather than telling customers what we do, we’ve decided to show them in an open and honest way,’ said Rupert Thomas, Waitrose’s marketing director.”

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Late & Great: Giorgio’s Fred Hayman

The New York Times: The late Fred Hayman “was the banquet and catering manager at the Beverly Hilton in 1961 when he invested several thousand dollars to become the silent partner in Giorgio, a struggling women’s clothing store off Rodeo Drive … The location was nothing special.”

“They saw the street, in their dreams, as a rival to Bond Street in London or Fifth Avenue in New York. Mr. Hayman showcased top designers new to the West Coast … He created a sunny, eye-catching exterior with awnings in bright yellow and white and a clubby interior with a pool table and an oak bar, with free drinks, so men could relax while their wives or girlfriends shopped.”

“Drawing on his hotel experience, he lavished the attentions of a concierge on his customers. He sent handwritten thank-you notes, set up a valet parking service and delivered packages to his best customers in a 1952 Rolls-Royce. By the mid-1970s the A-list clients were pouring in … spending tens of thousands of dollars in one go. Some patrons arrived with an extra limousine to haul away their purchases.”

“It was incredible how the money just flowed in,” Mr. Hayman told The New York Times in 1991. “You really didn’t have to sell. You’d just stand there and the customer would say, ‘I’ll have that and that and that and that.’” Fred Hayman was 90.

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New-Breed Pop-Ups Rejuvenate Retail Fun

The New York Times: “Entrepreneurs … are helping revitalize pop-up stores, a decades-old retail concept. More party than hard sell, this new breed of pop-ups is becoming increasingly innovative and fun — far more than the seasonal pop-ups that once prevailed. And they are also increasingly profitable, experts say, since consumers crave these new experiences.”

“Using pop-ups does, of course, still help entrepreneurs stay nimble and lean. They do not need to sign long leases, stash away much cash or carry big credit lines. For their part, consumers can meet the designers and touch and feel their works, which cannot be done online. In the process, brands can be built more quickly, sales can be increased and new products can be tested.”

“Events are, well, popping up in garages, around pools and even in locked storage spaces. Some retailers are even doing 3-D pop-up printed jewelry, say experts. And one artist opened a gallery in a giant Christmas tree.”

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Whole Foods 365: It’s All About Efficiency

The Washington Post: We’re inching closer to the launch of 365 by Whole Foods Market, a new, lower-priced grocery store that the organics giant is betting will help pull it out of a rough patch … The first 365 store is slated to open May 25 in the Silver Lake neighborhood of Los Angeles … Jeff Turnas, president of 365 … said in an interview that he and his team have ‘looked and turned over every stone to find efficiencies.’ That includes, for example, trying to lay out stores in a way that reduces the time it takes for a worker to get from the stockroom to the shelves.”

“Even the product assortment in these smaller format outposts is designed in part with an eye toward greater efficiency … with a center-aisle grocery item like olive oil, Turnas said, they tried to narrow the offerings … prepared food bars will be ‘a little more get-it-yourself, self-serve’ than those in a traditional Whole Foods … There will also be a kiosk called TeaBot built by a company of the same name that allows shoppers to create customized tea blends that are served up hot to the user in less than 30 seconds.”

“365 is also building its stores around a program called Friends of 365, in which it will turn over a small section of its square footage to like-minded retailers to make shopping more of an experience … Speculation has been running wild about what kinds of retailers might be included … Turnas said they’ve received video pitches or other inquiries from at least one tattoo parlor, more than one marijuana dispensary, and a pet grooming business. The thought process for choosing the Friends will vary from location to location.”

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