Couch Ouch: The High Price of Free Delivery

The New York Times: “Most major furniture retailers will charge at least $130 to deliver a couch. But Wayfair will ship or deliver any purchases costing $49 or more for free, bringing large pieces of furniture into the entrance of your home. (Taking the item to a specific room or assembling it costs extra.) And if the order is damaged or if the customer simply doesn’t like the color, Wayfair says, it will take the item back.”

“To help customers wade through its virtual bazaar, Wayfair has some of its 1,000 software engineers constantly developing new features for its app. One allows consumers to snap a photo of an item, a couch or chair, that Wayfair then matches with products on its website. Another recently released feature produces a 3-D image of the Wayfair product, allowing consumers to see how a piece looks in a room and, perhaps more important, whether it will fit the room’s dimensions.”

“But the big question hovering over Wayfair is whether the company can ever make money by delivering bulk furniture virtually for free. The company is expected to lose nearly $200 million this year and has been a favorite of short sellers, betting that the company’s stock price will fall … Wayfair argues that the margins of its competitors, like Restoration Hardware or Williams-Sonoma, are higher because they are building extra profit into their pricing. A sofa from another company may start at $1,000, but Wayfair sells its sofas at an average price of $600, a spokeswoman said.”

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Terminal C: This Restaurant is Classified

The Wall Street Journal: “You’re a top-dollar flier. Would you fly an airline more if it secreted you into a speakeasy-like restaurant hidden in a back corner of the airport—and handed you the bill? United Airlines is betting you might. United and airport concessionaire OTG Experience have opened an invitation-only restaurant inside Newark Liberty International. To pump up the air of exclusivity, there are no signs for Classified: It’s behind an unmarked blue door in the back of another restaurant in Terminal C.”

“Classified can entice premium passengers to fly out of Newark rather than Kennedy or LaGuardia, says Praveen Sharma, United’s vice president of loyalty, merchandising and digital channels … The airline won’t say how it decides which customers get invitations. It’s not all about frequent-flier status or fare paid. Long layovers may increase your chances. CEOs and celebrities get invites. United officials can walk-in VIPs or even angry customers left stranded by flight problems … Try as it might to be swank, Classified remains an airport restaurant. The knives are plastic, per TSA regulations … Comments are mixed on frequent-flier forums like FlyerTalk. Some road warriors like it. Others find the food overpriced and the seemingly random invitations annoying.”

“United isn’t the only U.S. airline trying to make downtime at the airport more memorable. American now has Flagship First white-tablecloth restaurants open only to people who buy first-class tickets for international or New York-Los Angeles and New York-San Francisco flights.” Kurt Stache, American’s senior vice president for marketing, loyalty and sales, comments: “It’s for that small, small percentage of customers that generates a disproportionate amount of revenue.”

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Studio C: Stone Cold Comedy

The Wall Street Journal: “Studio C, a sketch comedy show out of Brigham Young University … has achieved sizable popularity on the internet, despite—or perhaps because of—its super-scrubbed brand of clean humor, such as a skit about a soccer goalie named Scott Sterling who accidentally, and agonizingly, blocks shots with his face. Working blue is out of the question for this comedy troupe. BYU, run by the Church of Jesus Christ of Latter-day Saints, has ranked as the nation’s most ‘Stone Cold Sober’ place of higher learning for 20 straight years, according to the Princeton Review.”

“Writers at Studio C, which launched in 2012 and began its new season this month, must avoid innuendo, cursing, politics—even the word ‘gosh,’ because it sounds too much like “God.” Flatulence jokes don’t stand a prayer of getting past the BYU television censors. The result: a burgeoning pop-culture phenomenon that has racked up more than 1 billion views on YouTube—about a third of the number of Saturday Night Live.”

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Disney Magic: Smells like … Johnny Depp?

Fast Company: “Disneyland’s Imagineers–the creative force behind Walt Disney Parks and Resorts–rely on a scent-emitting machine known as the Smellitzer (patented by Imagineer Bob McCarthy), which produces specific sweet, savory, or mundane smells to accompany various park attractions. Imagineers understand that smell is hardwired to our brain, specifically the area that handles emotions … So whether you’re shopping for a stuffed Donald Duck or clutching your safety bar on Space Mountain, you’ll get a whiff of whatever the Smellitzer crafted to make your experience complete. Even the wafts of popcorn along Main Street U.S.A. are by design.”

“For the 1983 park opening, the food and beverage team picked Japanese staples they thought would appeal to park-goers: rice, fish, and other items that required chopsticks. But after slow sales, the team realized it was the exact opposite: The Japanese didn’t come to the Happiest Place on Earth for what they could get at a local sushi shop. They sought the ultimate American experience. They wanted hot dogs, French fries, greasy finger foods, and sugary soda. They wanted sticky hands and food comas.”

“The French, they discovered, were not like the Japanese; Europeans had no interest in partaking of the “American experience.” So they stepped out of the park to eat more traditional French dishes (perhaps with a glass of wine), then returned to jump on the rides. Disney went on to restructure the Euro food offerings with street fare like sausages baked into French bread in lieu of hot dogs and brioche filled with Nutella instead of churros.”

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Danny Meyer & Enlightened Culture

Fast Company: “How do you persuade your waiters to forgo a 20% tip on each table they serve? Danny Meyer says they never wanted to hire people who would only have been nice to you if they assessed it out of the four tables in their section, you were the richest or you were the most generous.”

“By that he means building a culture where employees focus first on pleasing one another, creating a warm energy that in turn fuels the staff as it tends to patrons, the community, and suppliers. His restaurants offer employees a variety of rewards, from bonuses to birthday cakes. And employees in turn have discretion to give customers free extras, all creating a virtuous cycle of hospitality.”

“Meyer regularly tests his approach to see if it’s is working by asking members of the team to share their understanding and experience of the culture … He says these discussions happen at pre-service meetings and in employee town halls, and through multiple internal channels that employees can use to offer their honest feedback.”

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Crocs: A Divisive Shoe for Divided Times?

The Washington Post: “Crocs, perhaps the most polarizing shoe of our time, is making a comeback. The company’s signature foam clog fell out of favor a decade ago, but now it is a star reborn on Twitter and beyond: On the runway, in the pages of Vogue and on feet of people who feel a little funny about it but can no longer resist.”

“The turnaround is no accident, analysts say, but rather the result of four years of strategic changes, following a $200 million investment by private-equity giant Blackstone Group in 2013. Since then, Crocs has closed hundreds of under performing stores, done away with unpopular styles and shifted its focus back to its classic foam clog, which sells for about $35 and accounts for nearly half of the company’s sales.”

“Crocs now come covered in glitter and emblazoned with Minnie Mouse, Spider-Man and Batman. The company — which markets its shoes as slip-resistant and easy to clean — has also found a niche among medical and restaurant workers. Its Bistro line, for example, includes clogs covered with eggs and bacon, sushi and chili peppers … Company executives recently began noticing that people were buying a dozen pairs of clogs at a time, all in the same color. It turned out, they said, that high school and college sporting teams were buying them to wear before and after competitions. Many of those students had worn Crocs as children, and were now rediscovering them.”

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Costco: Membership Has Its Illusions

USA Today: “Costco markets itself as a warehouse club where, in exchange for a membership fee, consumers get access to a variety of food, merchandise and services at discounted prices. Of course, the company does offer those things, but that’s not really the chain’s business model. In many ways, Costco operates like a gym. It sells memberships knowing that many of its members won’t show up … in reality, it only needs customers to see the value of joining, not actually have them do any shopping.”

“The chain uses low prices to entice people to pay either $60 for its basic ‘Gold Star’ membership or $120 for an Executive membership, which gives members 2% cash back on eligible purchases until they earn $1,000 back. Either membership gets people in the door to the warehouse club, but Costco knows that only Executive members are likely to take significant advantage of its low prices.”

“In theory, that’s a danger for the chain, but just as consumers will pay $10 a month to maintain the illusion that they might visit Planet Fitness, they’re willing to do the same with the warehouse club. Costco offers the promise of spending less money, and for a large percentage of its audience, that’s enough to keep them hooked.”

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Wingtip Club: Like Costco For Millionaires

Business Insider: “Wingtip Club charges monthly dues and a one-time admission fee between $1,000 and $3,000, depending on the number of visits a member wants to make annually. It’s a pioneer among the handful of brands that pamper and offer places to socialize inside brick-and-mortar shops — a tactic to help them compete with popular online retail companies like Bonobos, Everlane, and Amazon.”

“Wingtip Club opened its first San Francisco store in 2008 and piloted the clubhouse at a barbershop nearby in 2010. The two concepts combined at the current address in 2012 … currently has about 900 members, with an average age of 45. Women make up about 11% of membership … A ‘visiting’ membership includes five visits per year and costs $25 in monthly dues and a one-time membership fee of $1,200. The more frequent ‘social’ membership allows six visits per quarter (24 times a year) and costs $125 in monthly dues and a one-time fee of $2,000.”

“All membership levels come with a 10% store discount.”

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Detroit Hires a Storyteller-in-Chief

The Guardian: Detroit Mayor Mike Duggan “has hit on a new way to remodel the narrative of a city beset by a history of decay, race riots and violence: hire an official ‘chief storyteller'”, Journalist Aaron Foley.

“The $75,000 position, believed to be the first of its kind in the US, was conceived to give Detroiters a way to connect and discuss issues that don’t get covered by the city’s traditional media, and part of a dedication … to create a ‘meaningful and impactful ways to give Detroiters and their neighborhoods a stronger voice’ … the stories, interviews and first-person accounts Foley and his small staff of reporters are producing will be focused on the present and the reality of living in the city, and will be featured on social media, the city’s cable channels and a new locally focused website, The Neighborhoods, which launched last week.”

“The two stories already up on the chief storyteller’s website include a piece about a visit to Boynton’s RollerCade, the first black-owned roller rink in the US, opened in 1954. In another entry, Foley surveys a Bangladeshi cricket ground in the disused Detroit library parking lot in what is now called Banglatown.”

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How Budget Airlines Change Markets

The New York Times: “Even as a wave of mergers has cut the number of major carriers to four and significantly reduced competition, lower-cost airlines continue to play a role in moderating ticket costs. While such airlines offer a no-frills passenger experience and charge plenty of fees for such luxuries as additional bags or extra legroom, they are able to stimulate new demand from occasional fliers with relatively cheap prices and even take passengers from the major carriers.”

“This dynamic is not new: In 1993, researchers at the Department of Transportation called the same trend the “Southwest effect,” named for Southwest Airlines, which grew rapidly thanks to basic, low-cost flights. A recent study by a University of Virginia professor and a consultant at the Campbell-Hill Aviation Group calculated that average one-way fares are $45 lower when Southwest serves a market with nonstop flights. Researchers have shown other low-cost carriers also push down fares.”

“Carriers like United and American do not compete with carriers like Frontier and Spirit on every type of passenger … But the low-cost carriers nonetheless force the big airlines to figure out a way to draw the most price-sensitive fliers in any given market — those who scour the internet for the cheapest tickets possible. Those customers make up a significant portion of travelers, meaning the major carrier cannot just ignore them.”

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