Clarence Saunders & The ‘Piggly Wiggly’ Revolution

Jerry Cianciolo: ” … Self-service was a game-changer when Clarence Saunders opened the first Piggly Wiggly in Memphis, Tenn., 100 years ago this month … The 35-year-old Saunders set out to ‘ the demon of high prices’ … He reasoned that shoppers would gladly hand-select their own merchandise, and pay upfront, in exchange for lower prices and faster shopping. Coin-operated cafeterias had demonstrated as much with self-service sandwiches and desserts.”

“King Piggly Wiggly … stocked 1,000 products, four times the variety of a typical market. Customers entered through a turnstile and, basket in hand, followed a path through the aisles. Goods were neatly arranged with clearly marked prices, something heretofore unseen. There were even scales for shoppers to weigh sugar and other staples. The grand opening was a spectacle, featuring a beauty contest … Each woman entering the store received a flower and every child a balloon. A brass band played.”

“By 1923 … more than 1,200 Piggly Wiggly stores across dozens of states were doing $100 million annually (about $1.4 billion in today’s dollars). The company hit 2,600 stores by 1932 … Saunders didn’t integrate circuits or sequence the human genome. An observer once noted that coming up with a self-service grocery was ‘as simple as looking out the window or scratching your ear.’ Still, it was Saunders who gambled on the unconventional approach, doggedly spread self-service across the nation and shaped the grocery industry we know today.”

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Shoparazzi & The Kmart Shopping Experience

The Wall Street Journal: “Kmart … recently overhauled one of its stores in a Chicago suburb. The Des Plaines, Ill., outlet introduced a modest grocery section with meat and fresh produce … Lowered aisle heights allow customers to see new department signs from across the store, and the layout was made to look more spacious by widening the aisles. On a recent Saturday, a filled the store to take advantage of giveaways and to admire a face-lift that includes new paint, brighter lights, less clutter and the wider aisles.”

Dan Macaluso, a shopper, comments: “It’s amazing what cleaning the floors and turning the lights on can do … It suddenly looks like they want to be in business.” Kmart CMO Kelly Cook explains: “We’re starting here … In the next couple of weeks we’re really going to drill down to understand every single aspect.”

The branch is testing a free personal shopping program called Shoparazzi. Through it, customers can place an online order for pickup—even asking for items Kmart doesn’t stock but which a personal shopper could acquire … Tricia Perrotti, a Kmart spokeswoman, said the Des Plaines renovation is part of a plan to better align marketing and the store experience.”

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Why Did Lego Hinder Product Sales?

The Washington Post: “Business has been so brisk at the world’s most profitable toymaker that Lego last year did something unusual: It began looking for ways to discourage customers from buying its products. The Danish company scaled back its advertising efforts amid a 25 percent rise in annual sales … It simply couldn’t make enough toys to satiate demand in North America, and needed a break while it boosted capacity at its factories and increased its workforce by nearly 25 percent.”

“But executives at Lego are hoping to ramp up production in time for this year’s holiday season … The company is buildings its first factory in China, and is expanding existing plants in Mexico, Hungary and Denmark. Lego also hired 3,500 employees in the first half of the year, increasingly its workforce to 18,500.”

Lego CFO John Goodwin comments: “In the past decade we have seen LEGO sales growth in the double digits year after year. We are of course very excited about this development. [But] the high demand also puts a strain on our factories around the world.”

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Zalando: Fashion, Emotion & Ecommerce

The Economist: “One of Europe’s most interesting technology companies sells shoes and threads … Zalando has a Silicon Valley-inspired work environment, holding “f**k-up nights’ to celebrate failure and ‘hack weeks’ to cook up new ideas. It encourages its employees to abandon hierarchy and structure for what it calls ‘radical agility.’ It has a 1,350-strong, and rapidly growing, technology team. Among its other assets are its software, which it built itself, and its user-friendly apps (two-thirds of all traffic goes through mobile phones).”

“Zalando pays close attention to data. It gleans a wealth of numbers from the more-than-5m daily visits to its site, and some brands and retailers of the bricks-and-mortar sort give it access to their stock counts. Both sets of figures help improve the firm’s forecasting of fickle fashion trends, its use of targeted ads and the speed of its responses to shifts in weather patterns or fashion tastes. Through data-mining it can spot the trendsetters among its customers and stock up on what they buy. In future it wants to sell its insights to the rest of the industry.”

“Amazon is pursuing the more price-conscious shopper, whereas Zalando is after a higher-value, more brand-conscious segment. The company believes that for such customers, shopping for clothes, shoes and accessories is an emotional activity; shopping on Amazon is just a transaction.”

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Abercrombie & The Demographics of Fashion

Business Insider: “Abercrombie has been trying to save itself for a while now, reinventing its image and as a result becoming totally unrecognizable to the generation of kids who grew up shopping there in the late ’90s and early aughts. The goal was to appeal to older shoppers — 18 to 25 year olds, not teens … In theory, this was a smart idea … this would open the gates to a demographic with more spending money. The move would also help Abercrombie set itself apart from its more teen-friendly sister brand, Hollister … But the brand’s attempt to execute a turnaround is proving to be very difficult.”

Eric Beder of Wunderlich Securities comments: “While the shift to an older customer is a strategy for Abercrombie, we see limited reasons for older customers to shift back to a ‘teen’ brand and, frankly, there are better brands and lifestyles for the 20+ customer to focus on.”

Betty Chen, managing director of Mizuho Securities adds: “In the history of retail, it is very difficult when a brand tries to reposition itself anywhere along the age demographic. You can almost predict failure when you’re going older or younger.”

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Walmart: Neighborhood Markets Crush It

Business Insider: “There’s a retail business with 700 stores nationwide that has 22 straight quarters of positive comparable sales growth and 11 straight quarters with comps up 5% or more. It’s not Kroger or Costco, but a division of Walmart that has been quietly crushing the competition — the Neighborhood Market.”

“There are a number of reasons why Neighborhood Market has found success … Grocery now makes up the majority of WalMart’s U.S. segment, and it’s been its best performing one in recent years … Grocery is also one of the few retail categories that rivals like Amazon.com have struggled to penetrate … delivering perishables to your doorstep remains difficult and expensive.”

“Wal-Mart began its life catering to rural customers and has long struggled to penetrate markets … The Neighborhood Market concept, however, has given it the ability to open up in dense cities where real estate may not be suitable for a Supercenter … Wal-Mart’s Neighborhood Markets can also take advantage of food deserts in such environments, neighborhoods where residents have little access to fresh food.”

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Amazon: ‘Subscribe & Save’ or ‘Bait & Switch’?

The New York Times: What do subscriptions to a newspaper, magazine or Netflix account have in common? Once you sign up, you expect to pay the same rate every month. Yet that’s not the case at Amazon when you subscribe to its Subscribe & Save program, which automatically refills orders for household staples like instant coffee, napkins or trash bags.”

“Buried in the e-commerce company’s terms and conditions is that the Subscribe & Save discount is applied to the price of the item at the time that the order is placed. And on Amazon, prices change frequently — including sometimes rising.”

“In Amazon’s online forums, dozens of people posted about prices of Subscribe & Save items fluctuating, with some calling the program a ‘bait and switch’ subscription scheme. Amazon declined to comment. The company emails people 10 days before a recurring subscription delivery, when it informs customers of a new price of their item so they can change or skip the order. Any sticker shock, analysts said, may be the result of Amazon’s complex pricing system coming into conflict with consumer expectations of a traditional subscription.”

“Sucharita Mulpuru-Kodali, an analyst for Forrester Research who follows Amazon, said the retailer was probably pushing prices up to test how loyal customers are to products and how much more they are willing to pay for them. Yet the sharp price changes on Subscribe & Save items caught her by surprise.” She comments: “It doesn’t seem as customer-friendly as Amazon typically is. That’s what’s unusual.”

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Lowering The Bar: Soap Loses Lather

The Washington Post: “More than half of consumers — 55 percent — say bar soap is inconvenient when compared to liquid varieties, according to a new report by research firm Mintel. Among their chief complaints: Bar soaps leave residue in the shower, require a dish for storage, and aren’t as long-lasting as liquid options.

“An earlier study by Mintel found millennials are eschewing cereal for similar reasons. Roughly 40 percent of those surveyed by Mintel said ‘cereal was an inconvenient breakfast choice because they had to clean up after eating it,’ according to The New York Times. As a result, cereal sales have slipped by nearly 30 percent since 2000.”

“But when it comes to soap, the perception of cleanliness may also be a factor. Nearly half of those surveyed said they believe bar soaps are often covered in germs, a view that was more widely held among younger consumers than older ones.”

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Cool Beans: America’s New Favorite Snack?

Christian Science Monitor: “Once relegated to the canned food aisle and the far reaches of the salad bar, the bean suddenly is becoming a star. These days, it’s popping up in the most unexpected places: in pasta and chips, and even as a centerpiece of dishes at the world’s best restaurants. And it’s no wonder, considering beans are packed with protein and a plethora of other nutrients, say nutrition experts. They’re also inexpensive and among the most environmentally benign agricultural crops.”

“Last year in the United States, sales of pulses – which are the seeds of legumes that are used as food, including peas, beans, lentils, chickpeas and fava beans – grew by 8 percent. By comparison, sales of meat grew by 3 percent. Global demand is also rising, especially for foods with green or yellow split peas and coral-colored lentils, reports market researcher Mintel.”

“Pepsi has launched a bean chip under its Tostitos brand, as has General Mills, under its Food Should Taste Good brand. The Good Bean chips are now available at many conventional grocers, including Costco. Its sales doubled in 2015 and are expected to do the same this year, says the company. Even 7-Eleven has signed on to carry the chips.”

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