Tuesday, April 29, 2008

Use your tax rebate to fund cheap Chinese?

Here are two pieces of news from this week: One, the federal government has started sending out those tax rebate checks, designed to ease anxieties and checkbooks and spur the economy. Two, the mainstream media has suddenly noticed that with the dollar heading downward, the days of cheap Chinese imports may be heading to a close.

About your tax rebate: TNS Retail Forward did a quick survey to see how people were planning on using that refund. Although most people said they’d be putting it into savings, not surprisingly, the wealthier consumers were much more likely to say they’d be making a high end purchase (jewelry, computer, HDTV). Those already feeling the sting in their pocketbooks said they’d be most likely to pay a credit card bill, or buy groceries and gasoline. Some hopeful stock analysts are prognosticating that the timing of the rebates in early summer may translate into increased vacation spending (keep those Disney stocks up!), though more realistically, Kathleen Pender of the San Francisco Chronicle looked at all of the recent surveys, (scientific and not) and found that, overwhelmingly, people say they’re going to try and pay off their debts.

But dancing to the second story: the news about global labor suggests it might be a better value not to be spending your rebate on what is commonly known as “cheap Chinese” – and I don’t mean pork dumplings and chow fun noodles (Mmmmm)...

Apparently the media has suddenly noticed that the days of inexpensive manufacturing and exporting from China are coming to an end. While some bemoan this as a great loss, cutting short what felt like an endless supply of cheap workers and goods, perhaps it might make more sense to recognize that historically, economically those conditions were short lived and illusory anyway. Morally, in the long run, it's not such a bad thing. And for all the die-hard capitalists out there: wouldn’t it make more sense if all global workers all made enough to spend their surplus on a few luxury items? Sure it might mean having to wait a while for the audience to develop, and there are bound to be some rough patches along the way, but the payoff comes in the form of billions of people with spending money in their pockets.

Alexandra Harney’s new book The China Price does a great job laying out the relationships that make such a situation inevitable. First, the supply of "surplus" labor (rural Chinese who move to urban areas and work in factories) is less than predicted. In fact, the government has been making a stab at bolstering rural economies and farmers in order to limit unrestricted urban growth and reduce the impact on their domestic food supply chain. Second, campaigns to expose the sweatshop conditions in many Chinese factories have been more successful of late – Apple, Nike, and even Wal-Mart have been shamed into promising better oversight and more social responsibility.

But here’s how they come together: In an era where people on both ends of the globe are feeling their earnings dribble out and barely cover their basic expenses, Wal-Mart and other retail manufacturers might want to distance themselves from the relationship between low cost and low wage. Better to blame the high cost of oil now rather than wait a few years and try and explain how they ran out of cheap labor to exploit.

So what's supposed to happen when a country with lots of cheap labor gets less attractive, whether due to government intervention, a rise in wages, or simply less workers? Up until now, multinational companies with a taste for cheap labor have been content to simply find a new country. As GM CEO Jack Walsh once famously said, "Ideally you'd have every plant you own on a barge,” ready to move if any national government tried to impose restraints on the factories' operations, or if workers demanded better wages and working conditions.

Thus it’s no surprise that corporations are already looking elsewhere, prepping a new country to be the barge . Indeed, even Chinese manufacturers are trying to head it off by investing in low cost labor in nearby Vietnam, where wages are as much as 30% cheaper than China and the countries have similar communist policymaking. In 2006, Chinese investment in Vietnam totaled $312 million. You can see the future in the present, with the changing composition of Vietnam’s exports – no longer rice and coffee, but furniture for Pottery Barn, textiles for Wal-Mart, and footwear for Nike.

Unfortunately, we're at a point in time where simply shifting labor resources can have a potentially disastrous effect on seemingly unrelated things. For example, have you heard about Wal-Mart, Costco and others having to limit purchases of rice these past few weeks? Rice is one of those commodities that many countries were resistant to import, especially in Asia, where particular breeds are more heavily prized than others, and the crop is central to national identity. If Vietnam -- traditionally a rice exporter -- switches over to sneakers and t shirts now, imagine how the food crisis could look in a few years.

But no country is a barge and no population is free of history, needs, and desires. Vietnam may have a large “supply” of young workers in the 20 – 30 age range, but they are also generally literate and healthy, having the benefit of more standardized education and steady food supplies, but it's still only a fraction of the size of China's population. And despite hardline governments in both places, the Vietnamese have a recent history of successful labor protests, which suggests that it will be much harder to keep wages down on this particular floating barge.

My probably not-very-popular advice about your tax rebate? Save some, spend what you must, and donate a little to those who don't benefit from the current situation.

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Eating Chinese, Shopping Italian, Paying Global

Whole Foods "Groceraunt" Pushes Variety to the Limit

Many people (myself included) have a love-hate relationship with Whole Foods. The premier natural foods supermarket does what it does all too well: from the minute you walk into any of the stores to the time you go through the checkout line, you are surrounded by beautiful food in an environment that doesn’t beat you over the head with the fact that it’s a mega-market. But there’s a bit of self-righteous overzealousness in the air, especially as they vacillate between promoting big scale global organics alongside a newly popular "eat local" dictum. It's hard to stay morally pristine when food prices – especially for organics – are rising.

Back in the 1990s, when my local Whole Foods was still a small chain call
ed Bread and Circus, we would often go there for special cheese sampling events, a smoothie from the juice bar, or sushi-to-go. Once we even took friends and had a rather tipsy pre-Thanksgiving all-day tasting of organic turkey, wine, appetizers, desserts, and condiments. When WF took over, they did away with the juice bar and expanded the hot foods section. We got in the habit of stopping before long driving trips, stocking up the cooler with specialty sandwiches, hummus, fresh fruit, cookies, and drinks. Our current Whole Foods competes mightily with a local supermarket, Giant Eagle's Market District, each offering weekly dinners you can take right out the door and serve to your family or guests.

The newest Whole Foods in Scottsdale Arizona takes the ready-to-eat offerings up two or three notches, and comes up with a new word for the approach: "groceraunt." Some folks think this will be a great new term, though for me it brings to mind my grey haired Aunt Iris wearing a grocer’s apron. But even Aunt Iris -- a great cook, mind you -- could never offer so many options, including huge, wide-screen LCD TVs, televising cooking lessons and a station where staff will grill or smoke your fresh meats and vegetables for you. Dinner at my aunt’s house also did not include a Tapas bars, wine and cheese tasting, or seasonal draft beers, all of which the new store offers. Capping things off, The Scottsdale concept store has a pizza making spot, Latin and Asian hot foods bars, and a café with baked goods and coffee.

Given what they’re putting together, I can’t help thinking we’ve already got a name for this: food court. Oh, you say, it’s in a grocery store so it’s different. But people have been shopping and eating in supermarkets like this for at least two decades (and before that, especially if you live in a city and shop in local, neighborhood stores rather than malls!). For people who don’t like fast food, the ability to grab a container of berries from the produce section, bread from the bakery, and then prepared foods is a way of life, not a big surprise.

I’m just amazed that so few of these places have adde
d wireless -- Wegman’s is one of the few that does. Here in Pittsburgh, Giant Eagle has increased its organic and prepared foods, but also gone in the other direction: GE Express are smaller, well placed grocery stores with a reduced set of supermarket offerings, lots of meals-to-go, and a small wireless café, all connected to a discount gas station.

Indeed, the new concept WF will probably do very well in upscale locations like Scottsdale -- areas with many professionals who work 24/7 and have lots of disposable income. But I hope it’s not a general strategy, tipping the balance towards “bigger and more” rather than “specialized and better.” With transportation costs soaring and world-wide concern over key food crops (rice shortages, stalk rust on wheat, subsidized corn production for biofuel, and high priced dairy), all grocers are going to have to reign in some of their expansion.

In one way, WF’s gamble may pay off big, since their clientele have always been willing to pay more for perceived health and prestige benefits. But getting bigger won’t do much for their "Whole Paycheck" nickname, which will only be amplified as prices for organic and conventional foods go up with energy costs.

What’s great about this concept is what’s great about Whole Foods in the first place: good food, good quality and lots of choices. But there must be some limit to the variety that such chains can offer (or that consumers demand). Perhaps I am rejecting both my American consumer and market researcher hats when I say too much variety is simply too much. It all sounds good – but does it really benefit anybody? And will it remain a necessity when producers and consumers are going to have to begin balancing the costs with the growing demand for organic and natural foods? Whole Foods already has the structure and philosophy in place to sell in line with a more local and seasonal approach. The Groceraunt, in its first incarnation, seems to be going in the wrong direction. Still. I’d rather see more of these than fast food restaurants popping up at department stores, malls, and rest stops, but I expect that even a significant growth for the former isn't going to have much of an impact on growth of the latter.

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Thursday, April 24, 2008

What's in Santa's Sleigh?: Mobile Search Advertising and Color Barcodes

Ever seen the original version of Miracle on 34th Street? One of the best scenes is when Kris Kringle, taking a toy request from a child in Macy's, tells a distraught mother that she can get the toy at Gimbels, Macy's big competitor. The marketing executives take it three steps further, compiling a local merchandise directory so that sales associates can send customers to the right store if Macy's doesn't have what they're looking for. The hope, in this case, is that customers will be so impressed by the good will and helpful information at Macy’s that they will come back more frequently and spend more money there (as one happy mother exclaims).

I don't know if Macy's ever did try in the real world the strategy that worked so well for them in the movies, but I've yet to come across something similar today. In my mind the closest thing we have in the digital era is Priceline, but even with William Shatner batting for consumers, it's still missing a hefty dose of benevolence.

But perhaps a new contender is coming up on the horizon. In particular, Amazon recently announced a modern version of this Miracle approach called TextIt, a new service where customers browsing in a real retail bookstore can use their cellphones to scan the barcode on a book or other item, get its information and price, and order it directly through Amazon (if available). Not exactly the kind of goodwill gesture that Santa Claus might endorse, but one that many digital merchandisers are counting on as a competitive edge. Adweek highlights recent research predictions that mobile search advertising will have phenomenal growth in the next five years. The foundation for these prognostications is the speed at which companies are trying to develop their software for mobile phones. Better photo quality on cell phones and more standardized barcodes are the key concerns, and both are actively being addressed by multiple vendors. As if to seal the future deal with a kiss, Microsoft announced today that it had patented a color barcode licensed by the International Standard Audiovisual Number International Agency.

The beauty of the color barcode, aside from its visual design appeal, is adaptability. According to Microsoft's press release , though they can be physically smaller these multi-colored codes can be read from more places, like televisions, posters, advertisements, CDs, and computers. As a simple example, imagine seeing a print ad for a movie posted at the train station. While you’re waiting to commute in to work, you can use your phone to scan the barcode on the poster, watch a trailer for the movie and find nearby theaters and playing times without having to type in phone numbers or a ton of additional information.

As I mentioned in a prior post, some analysts have even predicted that the cell phone will be the death of modern advertising, which will have to morph into something else. Consumers are more involved in tracking and debating the value and significance of various products than ever before. Indeed, perfume blogs have garnered such consumer power that they have upended a lucrative and previously unfettered industry, leaving marketers and manufacturers with great distaste for the intrusion. Even so, the balance of digital power tends to remain with manufacturers.

While the new tracking media has great potential, it still has a number of problems. Barcodes and cell phone technology have made more inroads in Southeast Asia, but critics cite multiple standards and lack of consumer awareness and education. Microsoft hopes to use its gigantic reach to address the first problem. As for the second, consumer use is not as advanced as technological desire partly because people are unaware of the capabilities. Let’s face it: so much technology, especially the mobile digital kind, spreads when it’s picked up by the magic demographic – young users with some disposable income and a desire to be on the cultural cutting edge. But these users also move on quickly if the application doesn’t have an interesting or innovative purpose (see this great chart on the quick boredom with Twitter). Even with a recent trend towards thrift in the younger demographics, comparison shopping and bargain hunting are still more in the worldview of an older demographic.

Developers might need to think more broadly right away, rather than waiting for people to figure out new uses on their own. It's not like companies are going to hold our hands and point in the direction of their competitors until everyone gets up to speed. I have a feeling it’s going to be a while before Microsoft hands consumers a color barcoded guidebook to getting what they want. Perhaps we're better off believing in Santa.

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Tuesday, April 22, 2008

Teens turn to thrift as jobs vanish and prices rise

I tried to think of a better headline, but the one from USA Today is pretty complete. Quite simply, fewer teens have the high-paying jobs and access to cheap transportation in order to still be able to afford that $150 Coach wristlet handbag or $100 designer jeans anymore, and that spells big trouble for retailers who count on a steady stream of free-spending minors in order to turn a profit. Instead of bemoaning the end of an era (and let's face it, most of 'em probably didn't even realize that such easy access to cash isn't actually normal), some brands and media are instead trying to capitalize on being frugal.

That's right, my friends. Thrift is in.

For example:

Last week, Ellegirl.com, the teen offshoot of Elle magazine, launched a new video fixture called Self-Made Girl, which shows teens how to make clothes and accessories. The first video offers tips on how to create a prom clutch.

"It's a little tacky in the economic unrest to tote a big logo bag," said Holly Siegel, the site's senior editor. She said it's no longer about teens "one-upping each other," but rather where they can get it cheap.

Victoria Bradley, a 16-year-old from Springfield, Mo., says the $80 she earns each month from baby-sitting is being eaten up by more expensive school lunches, late-night snacks with friends and stylish clothes.

Now, she says, she and her friends head for the thrift store or just browse at the mall.

"I used to be able to buy a T-shirt and jeans every couple of months," Victoria said, adding some of her friends are even "making their own clothes or altering their old ones to fit or look better."

Victoria's mother, Michelle Bradley, said she and her husband cut back spending on themselves last year, and early this year also started paring back "frivolous" buying for their three girls.

Now, I'm a consumer, and while I do tend to live pretty simply I admittedly enjoy some creature comforts. So I'm certainly not going to get on a pedestal and talk about the timely demise of conspicuous consumption or anything like that. The fact is, economic slowdown isn't usually good for anyone, even if it does knock some of the wind out of annoying nouveau riche and get people to pile a bit less debt onto their already overburdened credit cards.

As expected, some of the big brands are already starting to feel the effects of the belt tightening, with American Eagle and Tween Brands Inc. (who operate Limited Too) already posting lower profits and revising their forecasts downward. The good news is that those who can provide more affordable luxuries stand to win a bigger slice of the remaining money out there, and perhaps a new crop of customers that they might not have otherwise had access to. Aeropostale and H&M are typically put into this category, but thrift stores and second-hand clothing stores are feeling significant growth, and that's only going to continue if the glow surrounding thrift continues to wear down the stigma of shopping for used clothes.

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Friday, April 18, 2008

Don't start the creativity revolution, I mean recession, without me

In their continuing coverage of the “R” word the New York Times recently ran a story about how marketing campaigns are responding to economic fears. What does selling look like during a recession? New advertisements focus on value for the dollar, saving money, and living cheaply while still living well. Surprising stuff, given the ad industry’s historical love of excess. Despite growing economic divides since the 1980s, the push for new goods and newly defined luxuries-as-necessities, it’s interesting to see marketing that’s, well, trying to be honest.

At the same time, there’s something quite depressing about the thought that advertisers are only creative when there’s nothing to be sold. Perhaps. Or perhaps, like any profession in the 24/7 economy, the daily pressure to produce at such a pace sucks all the fun out of advertising. It’s no surprise that some of the most innovative and interesting ads come from companies or groups who are not trying to secure a seat on the stock market. Look to socially responsible and green-focused campaigns for more innovating approaches to advertising. Companies that create socially conscious short films and movies circulated via YouTube and email are able to bridge the gap between selling something and recognizing that for some consumers in a tight economy, less is more. The best messages combine self-interest and altruism. People generally choose organic foods first for their own health benefits, but are then grateful to think they are contributing to the health of the planet. They also care more about the larger society in times of hardship and crisis. Selling value in a tight economy could also be about selling social good.

When consumer purchasing is corralled by tight budgets, advertisers need to re-think their purpose. Some argue that because of all the new digital media (especially cell phones), advertising as we know it is on its way out. Another argument might be that today’s conditions require new approaches, such as a better focus on information and communication rather than imprinting brands and their implied identity boosts.

Honesty, after all, is actually a great design feature.

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Thursday, April 17, 2008

Tommy experiments with a new kind of retail TV

While much has been made of major brands launching (or at least testing) in-store TV networks, Tommy Hilfiger has decided to take a different direction and launch their own branded content channel -- on the Internet. Now obviously Internet video channels are nothing new, and in fact some consumer products companies have been trying their hand at branded video channels for a while (does Bud.tv ring a bell? No? Yeah, that's been the big problem). But according to this little blurb at PROMO Magazine, "Tommy Hilfiger has launched TommyTV in collaboration with Sony BMG to present live concert performances online from the ongoing Hilfiger Sessions series along with archived footage of past performances."

Of course, a bunch of live performances isn't going to gather a huge and loyal audience. No, for that the company has decided to turn up the mix, with, "exclusive artist interviews and backstage footage from intimate concert settings around the world." Additionally, "Hilfiger Auditions section will let aspiring musical artists upload videos of themselves and compete for a shot at stardom on a platform intended to draw music industry executives and casual Web surfers." While user-generated content isn't a 100% sure-fire way to grab and hold an audience or build a fanbase, you can't deny that it worked for YouTube, and gained a huge following when user-generated commercials were run during the 2007 Superbowl. And in fact, the company has been savvy enough to partner with the big user-generated video sites, noting that, "TommyTV branded channels on YouTube and Joost will feature concert clips to draw surfers to the Web site. Clips will also be accessible on MySpace and Facebook. Sony BMG’s myplay music network will feature pre-roll videos and banner ads intended to push traffic to TommyTV.com."

On the one hand, it shouldn't be rocket science to create a modestly successful video website. Populate it with enough A-grade content that can't be found elsewhere, foster growth via user submissions and the usual bevy of social media technologies, and all the while promote the brand on other channels and in other media. But I don't quite understand what the company hopes to gain for their effort. Tommy's image has changed significantly in the few decades that it has existed, as has its target audience. That having been said, it doesn't strike me that having a video channel - even a reasonably successful one (and let's face it, that's the best they can possibly hope for) will do much to spread their message, build their brand image, or attract new potential customers.

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Friday, April 11, 2008

It's just not as funny in email...

A recent study by researchers at NYU and the University of Chicago found that people routinely overestimate the success of their ability to communicate over email. In particular, sarcasm was a big miss. Overconfidence and egocentrism are the main culprits.

Well, gee, I’m not surprised (and yes, that IS a hint of sarcasm you read in my words). Once again, it’s really great when business school research confirms what people already know. After all, given their conclusions, it sounds like people in business, marketing, even education might need a reminder. But right now, as you read this, there are probably fifty newly minted education doctoral students whose dissertations focused on the difficulties that eighth graders encounter when trying to decipher textbooks, classic novels, or their history homework. Despite their love of the image, sometimes the world of business and advertising forgets that reading and communicating are skills.

If you take a look at what the advertising industry says are some of the top advertising slogans of the past ten years, you’d be surprised at what you find. Interestingly, many of them also have rather memorable icons to go with them (the Geico lizard, for example). What the study does point out is that we communicate better when we have images, nonverbal cues, gestures, and intonation helping us out. Or, better yet, a recognizable universe of cultural ideas that we share. Communication is always imperfect, but it works better if we have some clues in common.

It’s the same in the world of food. For researchers, despite advances in chemistry and molecular science, taste is incredibly difficult to pin down. And while I may wax on and on about the most amazing chocolate I had in Montreal last week and even bring you a piece to try, what you taste and what I taste is only imperfectly shared. It works better if we both have lots of shared images (chocolate bars! bonbons! truffles!), experiences (remember eating that molten chocolate cake in Boston!), and cultural stories (Mr Hershey, I presume?) about chocolate (it’s supposed to be sweet, dessert, indulgent, not laced with hot pepper, and definitely not as a sauce over the fish. Okay, well, maybe. You try it first.). And some chocolate creations (poop shaped, perhaps? ) are never ever funny. Knowing about taste in food is actually something we develop - based on the people we meet and the places we go -- as much as we think we’re born with it.

What’s important about this for the new forms of media is that communication isn’t as straightforward as you think it might be. No matter what kind of technology you have, words are important. The most important finding in this study has to do with the presumed state of mind of the communicator. Egocentrism is widely available in our culture, especially among those who think it’s their job, their mandate, and their calling to create the commercial messages that shape our landscape.

What the email research tells us is that marketing folks need to make a much greater effort – develop some skills, shall we say -- understanding the visual worlds of people who don’t look, think, eat, or email like them. Digital and new media have a world of tools way beyond emoticons at their disposal. The trick is using them for something everyone might understand.

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Thursday, April 10, 2008

Brave New World revisited: Blissful ignorance, like Soma for consumer regrets

“The warm, the richly colored, the infinitely friendly world of soma-holiday. How kind, how good-looking, how delightfully amusing every one was! "
- Aldoux Huxley

We all know someone like this, be it a friend, a co-worker, a sister, in-law, or favorite cousin: At a restaurant with this person, whatever they order, it’s going to get sent back to the kitchen.

My special someone like this – let’s call her Heidi – always, always, always wants her steak done differently, her fish without sauce, and her sandwich without mayonnaise, even if she ordered it that way in the first place. She could find a dirty spot on lettuce that has been put through an industrial dishwasher. And then there’s Heidi’s partner, Stan, who likes to buy things at Costco, bring them home, and then take a few weeks to decide if he really likes them. He put a flat screen television on his American Express card a few months ago, watched the Super Bowl, decided it was too small, and back it went. Picky eaters, buyer’s remorse, indecisiveness, rejection, and regret are anathema to manufacturers and marketers alike. Wouldn’t it be great if you pre-empt or eliminate this, without perhaps, lacing the water supply with mood-enhancing drugs?

It might not be necessary, according to a study done by professor of marketing Dhananjay Nayakankuppam at IU, which found that people don’t want to know too much negative information about their purchases. The study used three fairly typical experiments on consumer choice: two consumer tests on chocolate and hand lotion, and then a video rating experiment.

Researchers dubbed their finding the “Blissful Ignorance Effect,” but they might as well have called it, “the Marketer’s Dream Study” because it’s so keyed in to what the marketing world wants to hear about its clients – less is more and the image is all.

But if you look closely, the key point is this: “once people commit to buying or consuming something, there is a kind of wishful thinking that happens and they want to like what they’ve bought.” I wonder: is that such a complex insight that needed a funded study? Give me some chocolate and unless it tastes like cardboard (or is shaped like something hideous), it’d take a cataclysmic event to get me to regret eating it. I mean really, chocolate?!!! What is there to regret? Nayakankuppam says, “We want to be happy with our decisions.,” and points to people’s emotional attachment to their purchases. But it’s false reasoning (or wishful thinking!) to apply those insights backwards to the original decision-making process and suggest people don’t need the information in the first place.

What marketers often fail to consider is that all material things – especially consumable goods – have a biography and history. Marketers focus on brand loyalty a lot, but the truth is, it’s much more complex, especially when products are relentlessly and continually altered and labeled “new.” The unending quest for newness has to be countered by something, perhaps either regret or blinders, just so people have a chance to move on! Case in point: I’ve just barely begun to enjoy my latest cell phone or my laptop and there’s a better version of it out there. Yes, technology changes fast. But does that mean I don’t want information about it? Certainly not AFTER I bought it.

What is lacking in this study is context. After all, if people professed to be unhappy with their purchases, would that be better? Are consumer experiences really divided only into angry regret and blissful ignorance? One key question the UI researchers neglected was whether they’d go back and buy the same product again.

Consumers have the unenviable conundrum of having both too much and too little information. From chocolate to hand lotion to DVD players, how much does any of us really know about the exact process by which they are made (ask and I’ll be happy to tell you all about chocolate)? The only time it’s transparent is when there’s a problem (lead paint) or the production process is part of what’s being sold (the market for green or sustainably-produced goods, for example). So much information that comes with advertising is not useful or not clearly authoritative. Ignoring bad feelings or second thoughts after a purchase is probably a great safety mechanism for our overloaded brains. Simplicity is good, but not because consumers are whacked out on soma, but because they’re bored with too much useless info and a lot of pressure to move on to another purchase before they’ve had much time to enjoy the one they’ve got!

Now eat your soma, I mean chocolate, and be happy.

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Wal-Mart learning from P&G in India

Back in August of last year the Wall Street Journal had an interesting and insightful article about the predominant shopping styles in India, and in particular how many preferred the "controlled chaos" of traditional markets and stalls to the sometimes antiseptic Western approach to the task.

While it's still a bit too early to point out lots of success stories from big Western chains finding their way in the subcontinent, the biggest of them all -- Wal-Mart -- has already decided that they're going to have to enlist some pretty serious help if they want to stand a chance in the fiercely-competitive retail landscape. That's why, according to this article from The Economic Times, they're studying longtime-partner P&G's data on the Indian market while revising their own strategy:
Globally, the relationship between [Wal-Mart and P&G] goes well beyond a vendor-retailer relationship and P&G has offered to share its understanding of the Indian market to help Wal-Mart in building efficiencies in supply chain and merchandising for its cash-and-carry business.

Senior officials at P&G told ET that its India unit has shipped its first consignment of personal-care products to Bharti-Wal Mart, a joint venture for the cash-and-carry and logistics initiatives.

While the joint venture will focus on B2B business, the Bharti group plans to launch small-format retail stores shortly. The officials said P&G India is helping Wal-Mart understand the nuances of doing business in India. Wal-Mart’s India exposure has been so far restricted to sourcing from the country for its global operations.
Considering that something like 95% of all trade falls outside of what's considered "organized retail" in India, it's clear that even Wal-Mart would have a pretty hard time trying to move into the market with their large- or super-sized stores. Taking a page from Indian retail entrepreneur Kishore Biyani's playbook, a focus on hyperlocal markets might be the best way for the retailer to establish a foothold with the core population in that country.

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Monday, April 07, 2008

Burger King asks: would you like IM with that?

So the guys over at Three Minds @ Organic posted this picture and asked, "Shouldn't the answer be about customization of your hamburger online, not spending more time online?" And I started to wonder... Is this really a bad thing? Granted, I'm probably too connected for my own good, but I'd be willing to bet that there's a large and growing population that wants to have the option to get connected everywhere they go, and that includes fast food establishments.

To Organic's point, Burger King's first and main goal must be to produce quality (?!) food at a quick pace. If they can't pull that off, no amount of connectivity is going to help them keep their customer base happy. However, customizing your whopper online? Really? Where's the value in that? To me, BK's offer to provide web services seems much more valuable than allowing me to pull up a saved order over the web.

In a world where differentiation is becoming more difficult at the low-end, I think BK's approach makes a lot of sense: their core offering stays the same, their core audience remains unalientated, the process most critical to their business, ordering, remains simple and standard, and they maybe pick up some extra margin on the low-cost, easy-to-swap-if-they-dont-work, and partner-centric digital services that tweens, teens and twentysomethings already expect, and more are coming to use.

All that having been said, how long before the old fast food cliché becomes "would you like advanced digital and/or web services with that?" It doesn't seem to roll off the tongue quite so easily :)


Books or screens: why not both?

The rise of the digital age has been hailed as the death knell for books. But books don’t seem to want to go away that easily, do they? The idea that "book people" and "media people" are inherently different seems embedded in our collective consciousness, yet in the real worlds of commerce and letters, the business of books is closely tied to the business of digital media, as a recent article from ISMI reminds us..

Some people won’t date folks who don’t share their literary tastes. With two rooms of overflowing floor-to-ceiling bookshelves, I can relate: everyone in my house is a reader. But we’re also pretty heavy on the digital side, too, with daily use of computers, digital cameras, and mobile devices. The angry war between print and screen is not what it’s cracked up to be, and Borders is counting on that with the introduction of its new media blitz stores that offer genealogy services, movie and music downloading, audible books, and even a publish-your-own option, all topped with a generous helping of well trained staff to help you navigate the digital toys.

Borders was one of the few early mega bookstores to break through my hatred of the breed. I first discovered them around ten years ago while visiting family, on a day when my older relatives probably needed a break from the Parent-and-Toddler show. Local bookstores are my natural habitat, but not all of them are suitable for a two year old. Well before Barnes & Noble invested in couches and cappuccino, here was a store with a carpeted (!!) children’s section, benches and little tables, and my favorite part, a café with highchairs, coffee, and chocolate pastries: the Big Three Essentials to anyone with small children.

I admit I’m a book geek, but taking just one look at the promotional videos for the new Borders store I’m already salivating at the prospect of digital and print media, all in one spot. I’m not big on finding the ancestors at the genealogy site, but I would definitely take whole classrooms full of kids to publish their own books, photo essays, and soundtracks. Sure, I can make my own great media productions from my setup at home. But it’s much more fun when you’ve got all those resources, knowledgeable help, and some other folks doing the same thing right next to you, and of course not everyone will have the same access to technology from home.

Before Starbucks became an empire, CEO Howard Shultz admitted to enjoying Ray Oldenberg’s The Great Good Place, a book which takes a bunch of intellectual ideas about social geography and makes a lucid plea for new spaces for public life. Life in my little college town has all those features right nearby. But most people, especially suburbanites, live in areas where that kind of space doesn’t exist. The new Borders store, while not technically public, anticipates how digital media are already an extremely important part of people’s social and public experience, and seeks to make the Borders destination a central hub for our new print-cum-digital generation.

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Thursday, April 03, 2008

Still shopping in the Paleolithic age

So a new study from the Wharton School at the University of Pennsylvania suggests what we all think we know: men and women are different kinds of shoppers. The study claims men shop with a purpose (hunting?) while women treat shopping as a total experience (gathering?). Not surprising really, especially when you consider that women do the vast majority of shopping for themselves, their family members, their friends and relatives, and the household itself. Of course women say they spend more time and thought in stores – they have to!

This kind of study makes me put on my Certified Gender Research Scientist hat and squint hard: on the surface, what you see is what you get. But look a little deeper and the gender knot unravels. What do we know in the world of gender studies that market researchers and MBAs do not?

Indeed, there’s always something that feels like truth in stereotypes. That's how they emerge in the first place, as a handful of superficial observations that eventually morph into a blanket over a whole group. I know plenty of men who zip into stores, get what they need, and get out. But then there are those other guys who take forever picking out a new jacket or a pair of running shoes. Heck, sometimes it’s the same guy – it just depends on what he’s shopping for. So, why does the stereotype exist – and why did the men interviewed about their shopping habits spew back what the researchers wanted to hear?

We’ve known since the 1970s that there are two kinds of gender effects in survey research. First, if the researchers are looking for differences between men and women, they will find them. It’s incredibly rare for gender research to turn up findings that oppose what the researcher set out to find (and this is not true for other kinds of research, so it’s something about our deep seated beliefs about the differences between men and women). Second, there's an effect that comes from this great concept called 'social desirability.' Here's one guy's version: "There's such cultural phobia about looking feminine, most men won't admit to liking shopping even if they do. Men are allowed to talk about buying cars, appliances, technology, and sports equipment. And maybe wine or beer." You want to appear manly? Then don't admit to non-manly behaviors -- especially in a co-ed focus group.

It’s too bad the "primitive psychology" angle was so attractive to the Wharton researchers (like others before them!). As any anthropologist will tell you, hunter-gatherer myths tend to play better in today’s ads than in the historical record. The Paleolithic analogy distracts from the truly interesting findings about sales staff: both men and women cared a lot about individualized service and problem solving by store clerks. Thus the study’s most interesting conclusion was ultimately its least surprising one as well:

"Retailers need to step up and deliver more sophisticated, segmented service… There's no such thing as customer homogeneity. We're not a homogeneous bunch at all. Yet as organizations, we end up treating customers as one big happy family. You've got all sorts of demographic and psychographic forces at play."
Even while concluding that consumption is deeply segmented, the authors still focused on gender differences as an easy approach to "solving" the segmentation conundrum. Unfortunately the slight differences noted by the researchers could tempt overzealous retailers into using sexist psychological sales tactics (wittingly or not). But imagine what could happen if these arguments started showing up as guidelines in corporate sales training manuals…

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