New Product Introductions, Marketing Campaigns Call for Understanding Online and Physical Retail Realities
BROOKLYN, NY; March 3, 2020—Created for Karen Raugust and my “10 Keys To Success in A Changing Retail Landscape” session at NYTF, these slides can serve as an outline for just about any product introduction or marketing campaign, toy or otherwise. Let us know if we can help you ask the right questions and flesh out the outline when working on your next project.
NEW YORK, NY; February 5, 2020—In: Cannabis and CBD products, including specialty packaging companies catering to that market. Out: Reusable straws, at least from a fancy design standpoint, now that they’re commodified. And here are my finds for new products well suited for licensing, and others ripe for expanding existing licensed offerings.
NEW YORK, NY; August 13, 2019—How can you differentiate one reusable straw from other reusable straws? Let me count the ways based on eight among many on display at NY Now and the National Stationery Show at the Javits Center here this week.
Materials: Stainless steel, silicone, titanium, paper, glass.
Style: Floral/beach/animal motif, solid color, pattern, laser-etched images.
Type: Fixed, retractable, bendable, 2-piece (so you can separate for easier cleaning).
Utility: Lunch kit, home use, travel.
Accessories (yes, accessories for your reusable straw): Cleaning brush; carrying case; multiple diameters for sodas, shakes, and sip/stir; replacement parts (I haven’t figured that out yet).
Environmental link: At least two of the eight I examined donate a portion of proceeds to environmental and/or animal charities.
Even the sales rep for one of the manufacturers I spoke with sees humor in the notion that straws are a “hot product” this year. “Who would have thought?” she asked.
Seattle, the state of California, Starbucks, Disney theme parks, Royal Caribbean cruise ships, Hyatt, Hilton, Marriott, American Airlines, McDonald’s in the UK, and others are banning single-use plastic straws. And while many are simply forgoing straws altogether — typically with exceptions for those with disabilities who need them — manufacturers are clearly counting on individuals rather than restaurants and other beverage purveyors to pick up the slack.
Exactly how long people will care let alone use their brushes to clean their straws, I don’t know. How diligent are most people about flossing? But I have my guesses. In the meantime, is there an opportunistic play for licensors with children’s properties?
Retail Radicals: Prescriptions from the Trenches for Revitalizing Physical and Online Selling (and Renting!)
NEW YORK, NY; August 8, 2019—The themes articulated through nine very different presentations at The Robin [Lewis] Report’s 10th annual Retail Radicals forum at Columbia University were consistent to a fault, with overlapping examples (often humorously so), and a common outlook despite the presenters coming from divergent sectors of the retail industry.
- Detrimental impact of reporting comp sales figures;
- Pressure for unrealistic quarterly growth to satisfy The Street;
- Reliance on spreadsheets rather than shopper realities;
- Delivering “local wonder;”
- Growing value of peronalization/customization;
- Decline of the most basic customer service;
- Integration of online-offline shopping;
- “Experiential” shopping.
None of these are new, but in an environment (which no one needed to emphasize to this audience, and no one did!) where store closings compound hourly, the need for more-than-cosmetic change is accelerated, and the perspectives of the speakers, and how they supported their points of view, provided multiple lenses through which to build toward the future. And while The Robin Report, and this event, are focused primarily on apparel and accessories retailing, the insights of the day apply across all sectors.
A Dose of Desperation
Witness the success of online apparel rental companies, represented at the conference, in separate presentations, by CaaStle’s Christine Hunsicker and Rent the Runway’s Gabby Cohen. CaaStle provides subscription model apparel rental infrastructure for retailers including Ann Taylor, NY&Co, Vince, and others. Rent the Runway aggregates apparel and accessories through purchase or consignment from multiple sources and rents items on an occasion or subscription basis.
“With new business models you need a little desperation,” says CaaStle’s Hunsicker, in order to prod senior management at traditional retailers (or anywhere else) to take chances. Similarly, Paul Charron, former CEO of Liz Claiborne, speaks of the “challenge of disrupting without usurping the prerogative of the CEO.”
On the difference between bricks and mortar selling and online rental: “Everything rents; 6%-7% of your [rental] customer base will have your worst-selling garments in their closet,” says Hunsicker. “The most important consideration for the renter: ‘Do I like the photo enough to have it?’”
By Hunsicker’s count, CaaStle’s retailers will sell 2.4 items to the average customer a month — but the rental customer will go through 108 garments over 12 months.
“Customers are our mini-warehouses,” she adds. “If we’re doing our job right, only about 15% of our inventory is in our warehouse at any one time.”
To retain customers, a retailer’s online rental operation needs to add “at least 50 new SKUs a month.” Ann Taylor, she says, introduces 150 new SKUs to its stores and rental system a month. But she also distinguishes between an Ann Taylor, which uses rental to add new, younger customers to its client base, while a retailer such as NY&Co, at least initially, sought only to monetize existing inventory that hadn’t sold through in its physical stores.
The ultimate business question: How long it takes to earn back the cost of acquiring customers. The goal, for Hunsicker, was 12 months. Netflix, she says, takes 20 months. “For traditional transaction brands [going to rental] it’s been two months” for CaaStle clients (CaaStle is only about a year old).
What of rent-to-buy? “It’s price dependent; 25%-30% of revenue from consumers is buy. At Ann Taylor, where the base monthly rental fee is $95, buy is a 30% kicker.”
With CaaStle, the retailer retains ownership of the inventory while CaaStle warehouses and services (processes orders, dry cleans, etc.). This differs from Rent the Runway, which usually owns its inventory, but, as mentioned, sometimes works on a consignment basis.
CaaStle is adding its first men’s brand this month with Scotch & Soda. “Men are more open to new business models,” Hunsicker says, “but it’s one chance [the clothes need to fit/look good] or they’re out.” Two more men’s brands are in the offing.
At Rent the Runway, Cohen says the company is building a drop box network for returning items, which would speed turns. So far Rent has installed about 25 at WeWork locations and at seven Nordstrom stores. Earlier in the afternoon, Columbia University professor and past C-level retailing executive (Sears, Lord & Taylor, Gap, others) Mark Cohen derided the announcement that Kohl’s is installing Amazon returns centers in hopes of building foot traffic.
Rent is also adding offerings that people “don’t need to keep or store,” such as kids’ apparel (they outgrow quickly) and skis.
Integrating Retail Into Lifestyle
Successful physical fashion retailing is “not about racks and racks and racks of apparel,” says Kevin Roche, of retail design firm Woods Bagot and a nine-year veteran of design for LVMH.
Roche sees continued “integration of office, living, retail, entertainment, sports” in uniquely designed spaces, and a need to incorporate “tons of technology and touch screens” in bricks and mortar stores.
Luxury retailers, in particular, he says, should trim the number of their physical outlets. “There should be 5-8 Nieman-Marcuses,” he says, while large-scale redesigns should be more judicious. “You can spend $300 million to redesign a flagship like Macy’s, but that won’t impact your other 584 stores.” It’s different, he notes, if you’re Harrod’s and you have only one store.
Is Smaller Better?
What of smaller-footprint outlets ala Target and Nordstrom’s efforts? “Walmart closed 114 Express stores in 2018,” notes Columbia’s Cohen. “The customer may live in the neighborhood [and see it as a neighborhood store] but they still expect 200,000 square feet of merchandise,” says Columbia’s Cohen. Also from Cohen:
- “The off-price growth streak is over.”
- “Walmart has foolishly entered a race [with Amazon] that it cannot win. Amazon is a market place, not a store. Like it or not, Walmart is a store.”
- “Acquisitions add to a company’s efforts [to grow] as ceramic tiles do to a mosaic.”
If you have the opportunity to hear Mark Cohen in person, do so. While he is very entertaining, his store-by-store critiques are uncompromising, and I can barely touch on his prepared remarks let alone the adlibbed asides. Ultimately asked by an audience member who does retail well, he didn’t miss a beat responding “Costco,” then adding, as he thought, Amazon, Zara, and “Feldman Housewares on the Upper East Side, near where I live. You go in and ask for what you need and the woman at the register tells you what aisle it’s in or that they don’t have it and you’re better off ordering online. Mom and pop hardware stores have an incredible array of merchandise and offer the best customer service anywhere.” To which everyone nodded in agreement.
Slides below are courtesy of Mark Cohen:
The eye-opener for many, judging by the gasps as her slides went up, was Alibaba’s Candice Huang. Consider:
- Alibaba’s Singles Day sales event on 11-11 (all “1’s” for a shopping day designed for singles) generated $30.8 billion in sales in one day compared to total U.S. online sales of $24.2 billion over the five-day Thanksgiving holiday (Thursday through Monday).
- The platform boasts 700 million active monthly users who, if they stay with Alibaba for five years, place an average 23 orders across 132 categories and spend $1800 annually through the platform.
- With all the focus on China’s growing middle class, Huang says Alibaba has 100,000 users spending $159,000 each annually, though no one asked if that includes small businesses that might be making bulk purchases (think of the dollies of food items purchased at Costco by small restaurants and food carts and trucks).
- 59% of users are under 29. (Rent the Runway’s Cohen says median age for its customers is also 29.CaaStle’s Hunsicker says its sites’ core customers are 28-45.)
- Among Alibaba’s sites, Huang describes Taobao as a “superapp” from which customers can do general retail shopping as well as book travel, live entertainment, and other services — analogous to the shift at malls to offering more entertainment options in addition to traditional shopping.
Quote of the day:
- “’Focus group’ is a dirty word.” — Alexander Genov, head of consumer research for Zappos.
Note: Slide up top courtesy Christopher Timmins, Intel, which presented the The Robin Report conference along with sponsor SAP.
NEW YORK; JULY 12, 2019—It’s been a few years since I attended the Specialty Food Association’s Fancy Food Show. I’d forgotten how you have to pace yourself on sampling, and that this show is overwhelming in the best sense. Here’s the skinny…
Is cauliflower the new kale? Peekaboo has cauliflower “hidden” (their word) in its organic chocolate ice cream (other flavor combos: mint chocolate chunk-spinach, vanilla-zucchini, strawberry-carrot, cotton candy-beets); Nolita has tater-tot-y Cauli-Bites; and From the Ground Up offers cauliflower chips, pretzels, crackers and stalks. Caulipower has been making cauliflower-crust pizzas for more than two years. How long ’til the kids catch on? And we are not alone on this: Fullgreen in the UK makes shelf stable Cauli Rice.
Coconut is still ascending. While many of these products have been available for a few years, there seemed to be a critical mass now: Cheeseland’s Kokos Coconut Cheese; Anita’s Coconut Yogurt; Coconut Collaborative yogurts and dessert pots (chocolate and salted caramel chocolate); W&M’s coconut chips in original, caramelized, and unsweetened, added to other varieties in its line; and more variations on coconut water than I could keep track of.
Is plant-based cheese cheese? Good Planet says its coconut oil-based food is dairy-free cheese. Tofu-based “cheese” products have also been around for a while. Yet because Velveeta is made of both whey and milk protein, Kraft has to label it “Pasteurized Prepared Cheese Product.” The USDA website says that cheese is a dairy product. And Wikipedia declares, “Cheese is a dairy product derived from milk that is produced in a wide range of flavors, textures, and forms by coagulation of the milk protein casein. It comprises proteins and fat from milk, usually the milk of cows, buffalo, goats, or sheep.” So why are these other options called “cheese”? Plant-based, generally, is on the upswing, at least in the number of offerings.
Sous vide, which seems played out in the consumer kitchen, is making a play for refrigerated and frozen food cases. Butcher’s has sous vide chicken vacuum packed for refrigeration; this was so new it’s not on the website yet, which is devoted to parent company Roli Roti’s Bay Area food truck business.
Long-time confectioner Maud Borup has added “drink bombs” — they work like colored, flavored Alka Seltzer — to its lineup. Given the popularity of bath bombs, can a version with a toy embedded be far behind?
Personal favorite licensed line: Flavors of Ernest Hemingway BBQ sauces, cocktail mixes, marinades, spices. Wife and husband team (many exhibitors are family and often multi-generation operations) that’s been a condiments licensee of the estate for about two years, with a major growth spurt over the last two months.
Coming on strong, so to speak: Coffees infused with alcohol, but with no alcohol content. Typically, as I understand it, the alcohol burns off in the roasting process, or the beans are finished in bourbon (or burgundy or other) barrels. World of Coffee has Jack Daniel’s Old No. 7 Brand licensed from Brown-Forman as well as Maison Camus (licensed French cognac brand). Burke Brands licenses Don Pablo. Other licensed brands include Kahlua, Oak & Bond, and Jim Beam. (At Licensing Expo a few weeks prior to the Fancy Food show, a Brazilian company was demonstrating a process for making alcohol-infused coffee pods.)
If you really want to talk “infusion,” though, think about the burgeoning CBD and hemp markets, not to mention cannabis. Sure, there were CBD- and hemp-infused products at the Fancy Food Show. But when CBD hits its stride — and there are many reasons that could be a while — the Javits Center won’t be anywhere near large enough to host the SFA’s Fancy Food Show any more. (For more on CBD- and beer-infused products at the Fancy Food Show, see Licensing International’s Inside Licensing.)
Quote of the show: “Put a unicorn on anything and it will sell,” says Maud Borup’s Vanna Olson. Indeed, Peekaboo is promising a unicorn flavor ice cream, though the “infused” veggie hasn’t been announced yet.
NEW YORK, NY; SEPT 18, 2018—“Thinkers” value quality, reliability and longevity over lifestyle. “Achievers have a ‘me first, my family-first attitude’” and see money as defining success. “Innovators” are skeptical of advertising and are “number one into authenticity.”
What’s it all mean in marketing terms? Luxury market analyst Pam Danziger takes a deep dive analyzing the psychological makeup of Jeep brands with Strategic Business Insights’ (SBI) Patricia Breman. Using SBI’s eight-prong VALS Types (psychographic characteristics) Danziger and Breman examine ownership vs. aspiration to buy, but the analytic style would be well applied to just about any brand.
BROOKLYN, NY; February 11, 2018—One of the best inadvertent case studies of a licensing program I can recall ostensibly centers on the imminent Broadway opening of Jimmy Buffett’s musical “Escape to Margaritaville.” But the guts of the piece are about “the Margaritaville® Mesquite BBQ Rub:” how Buffett the millionaire maintains the “authenticity” of his heavily licensed laid back lifestyle brand.
“This is America, and poor-quality licensed products are our birthright,” writes Taffy Brodesser-Akner in the Sunday New York Times.
“But Mr. Buffett won’t give you that. . . . He protects your experience of the lifestyle he sells in a way that someone living that lifestyle should be incapable of. . . .This is no longer a business. This is a cause.”
When did that metamorphosis occur for the ’70s singer/songwriter/leader of the Parrotheads? “Probably it was around the first time he put the Margaritaville name on a salt shaker-shaped pool raft labeled ‘Lost Shaker of Salt.’ Or went all-in on a brand partnership to sell a $499.99 Tahiti™ Frozen Concoction Maker®. Or when he signed off on the emblazonment of ‘I’m the Woman to Blame’ across a Tervis tumbler.”
There’s much more, from why he took over his own licensing (“because he could do it better than the people who were ripping him off with concert T-shirts that spelled his name as Buffet.”), and myriad ways “he could make sure that even when he left town [after a concert his fans] could still have the island getaway they so longed for.”
A must read.
Attending Toy Fair? Karen Raugust and I will be addressing the question, “Are You Ready For Licensing?” Sunday February 18, 3:30-4:30 p.m. as part of the Toy Association’s Licensing Content Connection seminars (free to registrants). Hope to see you there, or contact me at email@example.com to meet at another time.