Five Below Performs Well Above Expectations

The Wall Street Journal: Five Below, “which sells everything from Spalding basketballs to Bluetooth headphones and yoga mats for $5 or less, might be the most successful retailer you’ve never heard of. By the end of this year, Five Below’s store count will have nearly quadrupled to 750 locations since its 2012 initial public offering … Five Below uses a formula that has largely insulated it from competition from Amazon.com Inc. The chain keeps prices low by creating products from scratch with hundreds of suppliers around the world and sells them in an environment where children want to hang out. Its own e-commerce sales are so negligible the company doesn’t break them out; shipping often costs more than the entire purchase.”

“At 8,000 square feet, its stores are relatively small, making it easy to wander the mazelike floor plan grouped around eight categories: sports, technology, party, candy, style, create, room and now—the latter filled with seasonal products such as Halloween costumes or Christmas decorations … Shelving is no higher than 5 feet, creating a comfortable space for preteens and teenagers who have outgrown traditional toy stores and are Five Below’s core customers. They are encouraged to bounce the basketballs, test-drive radio-controlled cars and participate in slime-making contests—anything that will help them spend their allowance money.”

“Five Below also has items for grown-ups, including cucumber face-masks, yoga mats, storage bins, greeting cards and vintage candy from Mike and Ike fruit-flavored chews to Goetze’s Caramel Creams. Unlike other bargain stores like Dollar Tree or Family Dollar that focus on necessities such as laundry detergent and toothpaste, Five Below is the place to come to find things you didn’t know you wanted, such as squeezable foam toys called ‘squishies’ that have gone viral on YouTube .. It also is testing ‘Ten Below’ sections in four stores that offer items such as wireless home speakers and skateboards for $10 or less.”

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Retailers Aim To ‘Swipe’ Rewards Cards

The Wall Street Journal: “Consumers have become addicted to credit cards with generous rewards programs. Retailers are trying to cut them off. Large merchants including Amazon.com Inc., Target Corp. and Home Depot Inc. are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants.”

“The retailers are trying to end the card networks’ ‘honor all cards’ rule, which requires merchants that accept Visa- or Mastercard-branded credit cards to take all of them. If merchants could pick and choose among Visa or Mastercard credit cards, those with the highest merchant fees—and most generous rewards—likely would be on the chopping block.”

“Some 92% of all U.S. credit-card purchase volume is currently charged on rewards credit cards, up from 86% in 2013 and 67% in 2008, according to estimates from Mercator Advisory Group Inc., a payments research and consulting firm. Yet merchants say the most generous rewards credit cards with the highest fees are cutting into their profits … ‘swipe’ fees vary widely, but are higher on rewards credit cards—sometimes around 3% of the cardholder’s purchase price.”

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America’s Most Exciting Bank

The Wall Street Journal: “To Michael Daly, who runs Berkshire Hills Bancorp Inc., BHLB -1.22% banking is too often blasé. So Mr. Daly has adapted an unconventional rulebook meant to energize and empower his 1,900 employees. Suits are not allowed. Rock music must be played at every meeting. And ziplines are an acceptable form of transportation: Mr. Daly once arrived at an employee town hall on one, slinging $100 bills to the crowd below … In an industry built on numbers, Mr. Daly believes in emotions and that employees who feel good will do good work. He started calling his company ‘America’s Most Exciting Bank’ years ago, because workers told him they wanted jobs they enjoyed.”

“Since he became chief executive in 2002, the bank has grown to $11.5 billion in assets as of the first quarter, from about $1 billion. During acquisitions and their accompanying job cuts, Mr. Daly hands out his cellphone number freely and encourages employees whose jobs are on the line to ‘come get in my face.’ The ones that do call often prove worth keeping. ‘You would be shocked at how many high performers we find through that,’ he says.”

“Mr. Daly often hires from outside the banking industry, valuing scrappiness over pedigree. He likes to tell the story of two customers that he struck up a conversation with at a branch in Albany, N.Y. He liked their energy, and hired them away from the clothing store where they worked to do customer service for the bank … For all his swagger, Mr. Daly also likes to play the part of a small-town banker. He said he sends a couple hundred handwritten notes to employees every month, and replies to just as many employee emails.”

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Greek Tragedy: The ‘F’ Word is Feta Cheese

The Wall Street Journal: “U.S. cheese makers are in a sticky situation. They can’t call many of their popular cheeses by their common names anymore when selling them in many markets outside the U.S. The Sartori Co. cheese factory in Plymouth, Wis., has been making Asiago, Parmesan and other popular cheeses according to European recipes for decades and recently began exporting them. Last year, for export versions of those two cheeses, Sartori had to trademark new names, leading to the birth of Sartiago and Sarmesan.”

“The rules are a problem not just for producers trading with Europe, but also for those within the EU. With use of the term feta now restricted to the cheese from Greece, producers in other countries who have been making a similar cheese for decades have had to think up new names. ‘It’s the F-word we can’t say,’ said Theis Brøgger, a representative of Danish co-operative Arla Foods, one of the world’s largest dairy processors. Arla has adopted the name ‘white cheese’ or ‘salad cheese’ in Europe and other places where the rules apply. For consumers who still don’t understand, ‘we make sure that there is a large photo of the cheese on the outside,’ Mr. Brøgger said, adding that sales are growing.”

“Some cheese executives think a better way to get around the EU restrictions is to develop more original U.S. cheese recipes. Developing new local products, cheese makers ‘can pay tribute to the region where the cheese is being made or the town or the soil,’ said Heather Engwall, director of marketing at Emmi Roth” which “makes a bright-orange cheese called Prairie Sunset … Still, it is hard to create new names that relay a cheese’s qualities as efficiently as the established European name. Ms. Engwall said customers often ask, ‘What sort of cheese is it?'”

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Oh No: Not Necco Wafers!

The Wall Street Journal: “Necco wafers have been around since before the Civil War—and plenty of detractors would argue they taste like it, too. The flavors have been described as ‘tropical drywall,’ ‘plaster surprise,’ and ‘attic citrus.’ One Twitter commentator calls it a candy that ‘only a psychopath would like.’ And yet, like anything appreciated only after it is gone, Neccos are suddenly having a moment … Last month, the New England Confectionery Co.—creators of the iconic wafer since 1847 and the oldest continually operated candy maker in the U.S.—served notice to its hometown of Revere, Mass., that it would close operations in May if it didn’t find a new owner.”

“People have a complicated relationship with the Necco wafer. It’s a nostalgic candy people love to hate, which brings back happy childhood memories of a chalky crunch … Yet they are in high demand now … Since the news spread, customers of Economy Candy in New York have been in disbelief. There has been an increase in sales both in the store and online, says owner Mitchell Cohen. Customers who normally buy one or two Necco rolls are now buying the whole box or a case ‘to stash away,’ he says.”

“A group of sixth-grade Oregon students wrote letters to Revere Mayor Brian Arrigo in support of Necco wafers and Sweethearts. ‘If NECCO goes out of business our class will be devastated,’ read one letter suggesting launching a social-media campaign with the hashtag #SaveNecco. Mr. Arrigo says he is disheartened over the potential loss of the iconic candy, but wasn’t surprised about the national surge in demand. ‘Who knows, Necco wafers might make a comeback the way Twinkies did a few years ago,’ he says.”

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Coffee & Laundry: A New Social Fabric

The New York Times: “On a bustling Hong Kong street lined with dried seafood stores, where baskets of sea cucumber vie for space with scallops and abalone, one shop stands out. Amid the pungent smells of dried fish and shrimp, the scents of brewed coffee and freshly laundered clothes come wafting out of the aptly named Coffee & Laundry. The shop — half laundromat and half cafe — offers customers a variety of drinks and pastries along with 10 self-service washing machines and dryers.”

“Washing their own clothes at a laundromat is a new experience for Hong Kong residents. The first self-service laundromat is believed to have opened only in 2014. Since then, the number has taken off; more than 180 laundromats had appeared by the beginning of this year, according to one estimate.”

“On a recent evening after work, Michael Bolger, 27, sat reading a dog-eared book while waiting for his clothes at Coffee & Laundry.” He comments: “It’s nice to just sit and read in a place that’s not your apartment. It’s kind of therapeutic, sitting here and watching the washing machines.”

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Talking in Code: Dress Appropriately

Quartz: CEO Mary Barra’s “management philosophy is epitomized by GM’s workplace dress code—which is equally brief, and also an antidote to the restrictive, wallet-draining policies at many large corporations. It reads, in full: Dress appropriately.”

She explains: “What I realized is that you really need to make sure your managers are empowered—because if they cannot handle ‘dress appropriately,’ what other decisions can they handle? And I realized that often, if you have a lot of overly prescriptive policies and procedures, people will live down to them … But if you let people own policies themselves—especially at the first level of people supervision—it helps develop them.”

“By simply stating ‘dress appropriately,’ Barra does exactly what she asks of other leaders: She avoids assumptions, instead choosing to trust her employees’ judgment—and has found the experience remarkably liberating.”

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Retail Equation: Returns from Hell

The Wall Street Journal: “Every time shoppers return purchases to Best Buy Co. they are tracked by a company that has the power to override the store’s touted policy and refuse to refund their money. That is because the electronics giant is one of several chains that have hired a service called Retail Equation to score customers’ shopping behavior and impose limits on the amount of merchandise they can return.”

“When a consumer makes a return, details about his or her identity and shopping visit are transmitted to Retail Equation, which then generates a ‘risk score.’ If the score exceeds the threshold specific to the retailer, a salesperson informs the consumer that future returns will be denied and then directs them to Retail Equation to request a return activity report or file a dispute.”

“It isn’t easy for shoppers to learn their standing before receiving a warning. Retailers typically don’t publicize their relationship with Retail Equation. And even if a customer tracks down his or her return report, it doesn’t include purchase history or other information used to generate a score. The report also doesn’t disclose the actual score or the thresholds for getting barred.”

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Vexillology: Fun With Flags

The Wall Street Journal: “Defenders of the Milwaukee city flag love its picturesque collage of factories, Lake Michigan, a church, giant barley stalk, clock tower, steamship, sports stadium, Indian chief and genie’s lamp. Haters point to the same things … The North American Vexillological Association, which tracks flags, ranked Milwaukee’s 147th worst out of 150 cities surveyed. Only three were worse: Rapid City, S.D., Huntington, W.Va., and Pocatello, Idaho … Stung by the criticisms, Milwaukee set out to overhaul a municipal symbol that many residents learned about only after it became the target of ridicule.”

“Graphic designer Steve Kodis is ready to plant the ‘People’s Flag of Milwaukee,’ a gold and navy banner with a white orb and three blue lines, an image of the sun rising over Lake Michigan meant to symbolize the city’s rising economy.Two years ago, it was the top vote-getter in a contest to chose a new symbol for the city. It won the most votes out of 1,006 entries … Supporters of the original Milwaukee flag aren’t, well, flagging … Tyler Maas, co-founder of a Milwaukee news blog, is more than a little attached to the old flag. ‘It’s not this perfect thing’ but it reflects the city’s industrial past, Mr. Maas said on tape as a tattoo artist etched its image into his skin. In a recent email, Mr. Maas said he stands by the flag. ‘No regrets at all. I love the tattoo’.”

“Milwaukee, for now, flies two flags. The city has yet to take official action on replacing its old banner. Advocates for new flag and the original are lobbying the City Council … The original flag still flies over some businesses downtown and at least one college campus. The alternate Milwaukee flag has spread all over town—it now hangs in shops and restaurants, and flies over some gas stations. The new flag’s image is emblazoned on bottles of a new IPA released by the Milwaukee Brewing Co.”

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How Levi’s Perfects Imperfections

The Wall Street Journal: “Levi Strauss & Co., plans to use lasers to create the holes, fraying and fading that give trendy jeans their worn look, a previously labor-intensive process that required garment workers to brush the fabric with sandpaper, rotary tools and chemicals. A laser can finish a pair of jeans in 90 seconds, compared with up to 20 minutes for hand-finishing. The new technology will cut the production and distribution cycle in half, enabling the San Francisco-based company to better match supply with demand. The goal: reducing end-of-season markdowns.”

“The lasers, which etch off layers of fiber, reduce the number of steps in denim manufacturing to three from as many as 20 … Levi Strauss expects that almost all of Levi’s jeans will be made using the laser technology by 2020, a company spokeswoman said.”

“The company partnered with Jeanologia, a Spanish technology company, to upgrade its existing laser technology, which will be rolled out by its suppliers in coming years. It also developed software that allows its designers to create the holes, whiskers and other detailing on a computer and send a digital prototype to factories with the push of a button. With the automated system, the finishing is done after the denim is washed, which allows Levi Strauss to make last-minute style changes. Once the jeans go into production, they can arrive in warehouses in three months, down from six months.”

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