retail

Creativity, Craftsmanship and a Sense of Humor = Standouts at NY Gift Shows

Suck It Up: Straws Are the ‘It’ Product at NY Now, National Stationery Show

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.

Background

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.

The themes:

  • 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).

Rent-to-Buy

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:

Alibaba’s Genie

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.

Tailor-Made for Licensing: Ira Mayer’s Three Must-See Products at NY Toy Fair

NEW YORK, NY; FEBRUARY 18, 2019—If it’s all about the elevator pitch, these three new products from three first-time exhibitors explain themselves instantly. As do licensed applications. All exemplify classic play value, each with a neat twist. Check them out in person before you leave Toy Fair, or online.

#1. The Door Fort, from Cortex Toys (booth #4245). Inventor Jesse Darr loved building forts as a kid — and now that he has his own child, remembers how his parents would be left with putting everything away once he went to bed. The Door Fort is his answer. Hangs on the door. Open the door, fold it out to three dimensions, Velcro to the door post. Voila!

One major license is already in the works. Easy to picture Darr’s generic Princess Castle as, say a Disney Princess castle, no? How about Thomas? Pretty much name your property. Contact: John Cowan, MD, CEO/Founder, Cortex.

#2. Cubcoats (booth #5974). It takes 13 seconds to demonstrate how a plush character pillow transforms into a machine-washable fleece hoodie — and back again (OK, back takes 16 seconds).

In addition to original designs, they have Mickey, Minnie, Minion, Marvel, and Troll versions, and they’ve just signed Nickelodeon. The product was exclusive to Nordstrom for fourth-quarter last year, but is now available for wider retail. This is beautifully executed. Contact: Brydie O’Neill, VP Product Development; Angela Michael, Business Development/Sales.

#3. VertiPlay Marble Run by Oribel (booth #4135). Yes, it’s another marble run, but with a literal twist: Base boards are wall-mounted and tracks posted on the base pieces. marble-run-vertical-photo.jpgIt’s even decorative, and  the tracks can be moved into different designs. This is so new it’s not on the website yet, but Singapore-based Oribel has offered other vertically-mounted toys for toddlers for several years. This is clearly for older kids in a bedroom or playroom. Contact: Smriti Modi, Growth Hacker (great title!).

Trend Surfing at February 2019 National Stationery, NY Now & Surtex Shows

Trending Up At NY Now Gift Show

Conference Report: Enough With Millennials — It’s Time For Retail Radicals to Embrace NOW’ers

NEW YORK, NY; August 2, 2018—If you’re not looking at the NOW’ers (aka Generation Z or the Post-Millennials), you’re already behind in the retail and marketing wars, says Kathy Sheehan, EVP/GM of GfK Consumer Trends, a market research organization.

And if you think that the only difference between NOW’ers and Millennials is that the NOW’ers are even more tech savvy, you’re totally going to miss the opportunities for reaching a currently 15-25 year-old cohort that comprises 26% of the population — greater than the Millennials or the Boomers.

Speaking yesterday at the Annual Retail Forum at Columbia Business School —Retail Radicals, presented by The Robin Report, Sheehan outlined the characteristics of this soon-to-be overarching market:

  • In the U.S., NOW will comprise 30% of the population by 2020, 47% of them non-white.
  • Globally — and Sheehan said the U.S. mirrors the global findings — 84% have at least one major stressor; 47% say they don’t have enough free time. Their #1 pressure: Themselves. #2: Money.
  • They are less likely than Millennials were at the same age to aspire to prestigious brands; 48% strongly agree they want “good value for the money.”
  • Security will be imperative — financial security, which manifests itself in NOW’ers’ thriftiness (compared to Millennials penchant for aspirational brands), and both online and physical security.
  • NOW’ers are more attuned to privacy than the members of any other generation, with Sheehan believing that will have major implications for the development of artificial intelligence (AI) applications.
  • Similar to Millennials, NOW’ers will continue to delay growing up life cycle events including moving out, marrying, and having kids.
  • Tech proficiency ranks only #6 among 18 perceptions of self among this group, though 68% believe they are tech savvy.
  • Convenience is important to them: 37% say they will pay more for products that make their lives easier.
  • “It’s possible they’ll never go into a physical store.” [That’s a contention every other speaker disagreed with in the course of the day-long event.]
  • Rising values for NOW: Creativity, internationalism, ambition, equality, knowledge, learning, thrift, and social tolerance. Declining values: Sex, being youthful, individuality. “Ten years ago everything was about customization and personalization. Not now, not for this group,” said Sheehan.

In a spirited Q&A, one audience member commented that social tolerance extends only to those they agree with, otherwise “they’ll shout you down.” (Sheehan was taken aback but acknowledged that this is “an age of extreme polarization.” Another questioner wanted to know if the GfK findings differentiated between urban and rural NOW’ers, suggesting that there would be differences. (The GfK data, some of which was first released about a year ago, is not broken down that way, but Sheehan noted that the similarities in major cities globally are striking.)

Observations from other speakers throughout the day:

  • Every retailer has the same 1 million online customers. A retailer won’t get all of them all the time. But getting beyond that million is very difficult.
  • We’re smart enough to know we don’t know where retail will be in 2 years.

David Strasser, SWaN and Legend Venture Partners

  • From an investment perspective, outstanding management with a mediocre idea is better than weak management with a great idea.

Jill Granoff, Eurazeo Brands

  • People want less shit, smaller homes so they can spend more on experiences. How do we service that consumer with real value and convenience?

Alex Brick, SWaN and Legend Venture Partners

  • People are getting tired of fast fashion.
  • Commenting on the downturn in apparel retailing: People bought too many clothes.

Millard “Mickey” Drexler, legendary retailer who founded Old Navy and variously led The Gap, J. Crew, and others

  • Some customers want convenience, others want value, and still others want curation.

David Katz, Randa Associates

  • Retail radicals that are models for others: Amazon, Costco, Apple, Casper, Best Buy.
  • Retail brands that have successfully reinvented themselves: Best Buy; TJX nameplates TJ Maxx, Marshalls and HomeGoods; Ikea; Zara.
  • Top 3 retailers in need of radical leadership: Walmart, Nordstrom, Macy’s.

Mark A. Cohen, consultant and professor.

  • Barriers to retail radicals’ success: leadership, culture, capital, and speed.

Robin Lewis, consultant, publisher of The Robin Report.

  • “There’s a panicked, freaking out search firm looking for a new CEO for Penney.”

Mark Bozek, LiveRocket

  • “If I were running Penney, I’d let it go. Same for K-mart and Sears. We have too many stores anyway.”

Paul Charron, former Chairman, Liz Claiborne