Shop Talk by Tim Manners

08:37 am | 0 recommendations | Be the first to comment

Saturn v. Uranus

The news on this morning's doorstep is that, all of a sudden, Saturn is the poster child for just about everything that's gone wrong with General Motors. 

Reason is, Saturn apparently was the one thing General Motors got right in the last 20 years ... and somehow managed to get it wrong anyway.

Way back in 1990, Saturn created such excitement, and the truth is it didn't take much.  The cars were affordable and reasonably well-built.  Some liked the designs, although others felt the cars were unexciting.

What made the difference was the shopping experience, and the radical idea that you shouldn't have to dicker for a decent set of wheels. The price was the price. 

So radical was this very simple and obvious idea that it was a key reason Saturn earned real-deal cult status among its customers. There was a time when Saturn drivers would honk and wave at each other (oh, we happy few) and drive all the way to Tennessee for so-called annual "Homecoming" parties.

In 1994, some 44,000 Saturn owners showed up at one of these parties! It was all downhill from there, though, and Saturn stopped hosting the events in 2004.  And now General Motors intends to either kill Saturn or sell it, perhaps to China.

I have a better idea: Re-badge Saturn as "Uranus," with the slogan, "You Bet Uranus."  The marketing possibilities are as endless as GM's stupidity.

10:06 am | 1 recommendation | Be the first to comment

Playing Checkers: What the Meltdown Means For Store Brands

Not since Richard Nixon imposed wage-price controls in 1971 have brand marketers faced a point as pivotal as the one they face today.

It was Nixon’s failed attempt to control inflation by freezing wages and prices that led to the trade promotions that forever altered the relationship between retailers and brand marketers.

As soon as the controls were lifted, marketers wanted to make sure they would never be hogtied like that again. So, they artificially inflated their prices and started dealing back the difference as discounts to retailers.

Thus began the power shift from brands to retailers, a shift that could now assume a whole new dimension in light of what could be the most severe economic crisis in our lifetimes.

It’s no secret that the substandard “private labels” of yesterday are today often just as good or better than the national brands they copy. The recession is a killer incentive program for shoppers to give these store brands a try. Once they do, will they ever return to the national brands?

One can’t help but wonder whether we might someday look back on the economic meltdown of 2008 as the moment when retailers finally sealed the deal with shoppers for their brand loyalties.

So far, some brand marketers are responding with downsized packages, cheaper ingredients and deeper discounts. However, as Nestlé and others have shown, even economically-stretched shoppers will pay a premium for brand experiences that meet their needs in fresh, innovative, and yes, relevant ways.

So, what will it be? Checkers? Or Chess?

10:23 am | 1 recommendation | 1 comment

What Nestle Knows

Friday's Wall Street Journal included a remarkable story about Nestle.  In part it was remarkable because Nestle isn't necessarily a company that gets a lot of press, much less the kind of press that could fairly be classified as of the "man bites dog" variety.

The news is that, smack dab in the middle of economic calamity, Nestle is not only raising its prices but also increasing its sales and profits.   According to the Journal, Nestle has increased “the average price of its food and drinks 5.9 percent this year,” while increasing its sales 3.4 percent. Nestle also “expects organic growth — which includes increases in volume and prices — to stand around 8 percent, improving a previous guidance for around 7.4 percent.”

Now, Nestle isn’t raising prices just for the heck of it — the hikes are thanks to “jumps in commodity prices, including for oil, sugar and cocoa. But now that the commodity costs are starting to fall, Nestle said it doesn’t plan big price reductions, a move that analysts say should lead to higher profit margins.”

Emboldened by its success, Nestle “plans to launch a new line of expensive chocolates in France and Switzerland,” next month.

What does Nestle know that apparent few other companies understand?  Here's what Nestle CEO Paul Bulcke said:  “People go for value ... It is not always a question of price.”  For Nestle, that means its NaturNes brand of baby food “boasts that it cooks the ingredients separately, an appeal to parents worried about sterilization,” for example.

It's a simple concept, actually.  It's called putting your customers first by serving their needs.  Strange as that may sound amid the current climate of corporate greed and corruption, it is still the most basic rule of business success because when you make products that actually perform better, people are happy to pay a premium for them in good times or bad. 

This certainly is serving Nestle well at a time when so many other brands are scrambling to stay afloat by offering various and sundry discounts, promotions and quick-fix sales incentives.

It would be heartening if more companies realized that their first responsibility is to their customers, to help them solve problems and live happier lives.  It's  not about some feel-good marketing overlay; it's about making sure your brand has a meaningful place in the real lives of real people.  And that's really what relevance is all about.

07:03 am | 1 recommendation | 1 comment

Procter & Taylor

Last week, we saw a  glimmer of hope that the promise of "retail strategy" may at long last rising above the level of a cruel contradiction in terms. I'm talking about the new strategic alliance between Procter & Gamble and Ann Taylor.

If you haven't heard about it, Procter & Gamble is collaborating with Ann Taylor to launch new versions of its Tide and Downy brands. What's striking about this is that P&G is choosing to launch a new brand through collaboration with a retail channel that does not sell its product. Rather, it is collaborating with a retailer that helps reinforce its message and build its image.

As reported in the New York Times, Ann Taylor chief marketing officer Robert Luzzi acknowledges that the alliance between a detergent and a fashion brand is "not typical" but uses the "R" word to explain the thinking, saying, " ... We decided that the partnership at this time was incredibly relevant for our clients in this pretty tough economy ... we want to deliver value for our clients."

P&G's Kash Shaikh agrees, noting, "Women spend $1,500 a year on dry cleaning and 65 percent of those clothes are actually machine washable." The P&G promise is that its new Tide Total Care and Downy Total Care products will "cut down on dry cleaning bills by helping clothes look new for a longer time."

Specifically, the P&G claim is that the new products "keep clothes looking new for up to 30 washes." The company reportedly spent "years of research into "preserving the shape and color of clothes after repeated washes."

Ann Taylor Loft will offer "free samples and coupons to customers who buy machine washable clothes." Stores will also have posters and "an eight-page magazine" offering "tips on how to keep clothes looking fresh (hint: they require Tide or Downy Total Care."

This is a promising development indeed. For almost 20 years now, we've chattered about the potential for retailers and brands to work together on a strategic basis as marketers. We've called the idea co-marketing, collaborative marketing and most recently shopper marketing.

Usually the talk quickly devolves into some tactical shadow of the original idea. We play checkers when the marketplace is crying out for chess.

This may not be "checkmate" for Procter & Gamble, but it certainly is a smart move.

11:08 am | 2 recommendations | Be the first to comment

Fig Newmans

Paul Newman will be remembered for many things -- acting, philanthropy, race-car driving.  I will always think of him as an incredibly astute marketing guy.

About ten years ago, I was lucky enough to visit the Newman's Own offices in Westport, Conn., and interview its president, Tom Indoe (interview here).  After the interview, Tom gave me a tour of the place, including Paul's office.  He wasn't there at the time, so my fondest memory is simply a small sign tacked to the wall that read:

“You can get straight A’s in marketing and still flunk ordinary life.” ~ Paul Newman to Lee Iacocca after his Ford Pinto caught fire.

As far as I'm concerned, that says it all, and with the great sense of humor that is the signature of the Newman's Own brand. This was, after all, only salad dressing.  But Paul understood that people might buy his brand once because it had his name on it and  might buy it twice because all profits went to charity.  But they would only become loyal, long-term customers if it were a really good product.  And it is.

Just as important, Newman's Own never deviated from the core idea that every one of its products was either created or inspired by the man himself.  Paul Newman made certain of that by personally approving every single one of the brand's new products, of which there are now more than 150.

That legacy is now largely in the hands of Paul's daughter, Nell, who in 1993 convinced her dad to launch a line of organic food items. In a New York Times article, Nell confirmed that he didn't plan to help revolutionize the market for organic products:  “He did know that it was a big thing, but I don’t know that he realized he changed snacking in America in terms of natural foods,” said Nell, adding,  “He probably would have laughed at that."

According to the Times, Newman's Own "pioneered the use of sustainable, organic palm fruit oil.  That led to the first trans-fat free microwave popcorn and to a filling for Newman-O's that was creamy without trans fat."  His Fig Newmans actually built the market for organic fig paste.

As Nell pointed out: “Everything had to be something that my father, who was born in 1925, would look at, recognize and eat ... We wanted people of his generation to say, that really tastes good — and then say, oh, it’s organic.”

And, oh, it's also raised more than $250 million for various charities (must-see video here).

Now, that's "change" we can believe in. 

08:59 am | 1 recommendation | Be the first to comment

Wal-Mart Moms

Wal-Mart is out with a fascinating presidential election poll of its female shoppers (a.k.a. Wal-Mart Moms) that reveals as much about Wal-Mart's fortunes as it does about Obama's and McCain's.

The poll of five battleground states finds Sen. Obama leading in three (Virginia, Nevada, Colorado) and Sen. McCain in the other two (Ohio and Florida), albeit by slim margins all around.  

Obama's strength is surprising because Wal-Mart defines "Wal-Mart Moms" as "more socially conservative women who typically don't have a college degree, who are feeling the economic pinch and are shopping for its lower prices." Clearly, this sounds more like a description of a McCain supporter than an Obama backer.

So what's going on?  Have these "socially-conservative women" gone liberal all of a sudden? Obviously not.  What's happened is that as the economy has softened, the profile of the Wal-Mart shopper has changed.  Apparently, more "college-educated, socially-liberal women" are now shopping at Wal-Mart because they are also "feeling the economic pinch and shopping for its lower prices."

This could be a momentary aberration that will correct the instant people are feeling better about the economy.  Granted, that may not be anytime soon, but the point is that it also presents a huge opportunity for Wal-Mart to expand its base over the long-term.

Wal-Mart does appear to be attempting to capitalize on the situation by going "green" in a big way and offering $4 prescriptions, for example. This can't hurt, but Wal-Mart may be missing its greatest opportunity to win over women (and everybody else) for a long time to come.  

What Wal-Mart needs to do, quite simply, is improve the shopping experience to a point where people don't shop there because they need to, but because they like to. Easier said than done, but Wal-Mart can look no further than to Best Buy, where a woman named Julie Gilbert is making Best Buy a great place for women to shop by becoming a great place for women to work.  This is paying off for Best Buy big-time.

As Dori Molitor notes in the current issue of The Hub magazine: "The immediate impact on Best Buy's business is evident in its $2 billion of market-share growth from female shoppers between 2005 and 2007." 

You can read all about Julie Gilbert and Best Buy here.  It's a truly amazing story and a must-read for anyone who wants to understand how keen insights into women can drive phenomenal growth.

10:09 am | 2 recommendations | Be the first to comment

FAO Schwarz

A tour of the FAO Schwarz flagship store in NYC should be mandatory for everyone who wants to understand the relevance of really good retail.

When last we left FAO, we left it for dead.  Every single one of its stores was closed, and it was in Chapter 11 bankruptcy.  Seems like yesterday but that was five years ago.  FAO had made the fatal mistake of attempting to compete with Wal-Mart and Toys R US on price and, worse, its merchandise mix had turned pedestrian.

If you're lucky enough to visit FAO Schwartz today, you'll see retail as retail should be done.  You're greeted by a singing doorman, who looks like he just stepped off the set of the Nutcracker.  A few steps away, you've got the now-famous Myachi guys, doing amazing tricks with beanbags.  

Step inside the Harry Potter boutique and it's like you've stepped into Hogwarts.  The young wizard behind the counter takes one look at you and you're convinced that you actually have. Little kids are dancing with delight on the famous giant keyboard. And, yes, the fellow with the boomerang airplanes is still there, throwing his little toy plane at the crowd and watching us duck as it pulls a u-ey and returns to him.

The place is teeming with people but somehow it doesn't feel crowded.  Staffers in blue shirts seem to be at every turn, ready to help and answer questions. You've really got to see it to believe it -- I've just barely scratched the surface here.

What matters is, FAO Schwarz has done what every great brand does when it loses its way.  It has re-ignited what made FAO great to begin with. The coolest part of the story is that FAO is about to expand exponentially, but it's going to do it right.  This time, it will open its stores as small boutiques, inside some 600-700 Macy's department stores nationwide.

FAO Schwartz is a profile in relevance if I ever did see one.

07:44 am | 2 recommendations | Be the first to comment

Relevant Responses

Earlier this week, I asked members of the Relevance Group on Facebook (see link at the bottom of the page) as well as subscribers of my newsletter to pick a brand that they feel is most relevant to them and explain why. (Here's a link to my newsletter: "Cool News of the Day").

We promised a signed copy of my forthcoming book, "Relevance: Making Stuff That Matters" to 28 people, picked at random. Not surprisingly, many people chose Apple as their most relevant brand.  However, what was surprising was the diversity of the responses from those who didn't pick Apple.  Also interesting is that so many of the chosen brands were not exactly household names, or the usual suspects.  

But perhaps most revealing was simply the highly personal nature of the responses.  That strikes me as one of those things that should be obvious, but isn't until it's pointed out. Relevance is a relative concept and a highly personal matter.  It's worth thinking about.

One last thing -- we provided two ways to respond -- either via SurveyMonkey or via a "wall" post on Facebook.  There were nearly twice as many responses on Facebook versus SurveyMonkey!

I've included links to both sets of responses, but as you know you have to belong to Facebook to access Facebook.  If you don't belong, I urge you to join the fun!

http://www.facebook.com/group.php?gid=27406960979

http://reveries.com/reverb/research/relevance/

10:08 am | 2 recommendations | Be the first to comment

Sigrid Olsen

The news that Liz Claiborne has closed all 54 Sigrid Olsen stores is sad indeed for Sigrid and the boomer women for whom her fashions were designed.  But it was also a setback for those who see retail as less of a tactical tool of sales and distribution, and more a strategic medium for marketing a lifestyle.

Sigrid Olsen stores were something special. As Claire Wilson reported in the November 19, 2006 edition of the New York Times, to walk through the front door of Sigrid Olsen’s  fashion boutique in SoHo was to walk through the back door of her own home in Hamilton, Massachusetts.

“I want my customers to feel as comfortable in my store as they would be visiting their best friend’s home,” Sigrid explained. “I want them to feel as though they’ve entered a work in progress, as most homes are.” The space, designed by Pompei A.D., consisted of “a loose configuration of roomlike settings.” For example, fitting rooms surrounded a “luxurious bedroom suite.” The cash desk was in the kitchen (because the kitchen is where everybody congregates).

Because Sigrid began her career as an artist, the space was accented with artifacts including “an easel, a stool and some well-used paintbrushes.” Some of her artwork graced the walls and the coffee table in the “living-seating area” was “strewn with design magazines and art books.”

As Sigrid explained: “Just like my house … but without the fireplace." But the idea, said Ron Pompei, the designer, was not so much a celebration of Sigrid’s lifestyle as it was an open door to the shopper’s own sense of self, and artistry. “Rather than ask customers to take on the value of the brand … we created a retail space that encourages them to express themselves in new ways,” said Ron.

He added: “We try to create a landscape where people will meander, make a circle, discover the stairs and look for more … Sigrid is saying to the customer, ‘You are a complex woman, with many different aspects to your life’.”  Ron also color-coded the different rooms: “The different blocks of color … is a signal that you turned a page,” he explained.

Unfortunately for Sigrid -- and for anyone who admires great retail -- she is in a kind of contractual purgatory. While Liz Claiborne has shut down Sigrid's label, it still retains the rights to it and suggests it may revive it at some point. Naturally, that frustrates Sigrid, but she’s not giving up: “Being a child of the 60s, I still have that idealist in me that I think I can pull it all together and give people an uplifting, positive message … and still be an entrepreneur and a capitalist at the same time.”

10:06 am | 1 recommendation | Be the first to comment

Economy Candy

Economy Candy, on New York's Lower East Side, is not a huge store, but it creates a huge impression. It is actually rather narrow, although it is long and the ceiling is high. It feels like a warehouse and a small shop all in one shot.

But what makes Economy Candy memorable is its religious focus on just one thing: Candy, candy and more candy. From the highest-end chocolate bars to the cheapest gumballs. It's hard to imagine that Economy Candy omits any kind of candy known to humankind -- including some brands that you would have thought had been extinct for decades. They just pile 'em high and watch 'em fly.

True to its name, Economy Candy prides itself on its low prices. But it is this singular focus on just one thing, and taking it to its insanely wonderful extreme, that makes Economy Candy so special. Starbucks would do well to a look at Economy Candy as it considers how to get back to where it once belonged.

Two other things are worth noting about Economy Candy. One is that it is so obviously family run. It's been that way since 1937. The young guy at the register calls out to his dad, and a customer asks him, "Where's your mom today?" It gives off a great, friendly, heartfelt vibe.

The other thing about Economy Candy is the smell, which can be described in just one word: Sugar.

Oh, and one more thing. On a Sunday afternoon, the place was jammed with customers. Retail as media, indeed.

You can visit Economy Candy online here.