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Ian Henderson’s Blog Marketing Insights

A Refreshing Spending Spree

The post pandemic spending spree is officially underway.  What a refreshing thing to hear.  After all, I think we all have grown tired of the complications that have come about as a result of Covid-19.  A few items that have been sold at higher rates recently are champagne and shaving kits.  One question that immediately came to my mind was why these products have seen a spike in sales recently.  Shortly after pondering this question, it all began to make sense.  Champagne is a drink that is commonly purchased when people are planning to meet up with friends and family.  With restrictions decreasing, people now have the ability to interact socially more often.  With social gatherings increasing, it makes perfect sense that this alcoholic beverage has seen an drastic increase in sales.  With people beginning to interact with others more often, it makes perfect sense as to why shaving kits are selling at higher rates.  When the country was essentially on lockdown, many people did not see much reason to keep up with their physical appearance as much as they had previously.  Additionally, many men viewed the lockdown as a time to experiment with their facial hair.  Because of this, many men grew out their facial hair and did not have need for shaving kits.  With places beginning to open up, many people have recognized the need to adjust their physical appearance.  One way in which many people try to do so is by shaving.  This is a large reason why shaving kits are experiencing high sales at the moment.  According to SyleSage’s Elizabeth Shobert, “People are making plans.”  She went on to say “there was just nothing to buy stuff for - aside from comfort gear like sweats and what you would wear when you’re working out on you Peleton this year.”  Her words on this topic were very accurate, and they served to remind us that people had no need to buy products that would boost one’s physical appearance during a time when human interactions were limited.  With more people being vaccinated each day, we can expect sales of products like champagne and shaving kits to continue to rise.  According to the Commerce Department, sales in retail rose by a total of 9.8% in March.  One big reason for this spike in sales was that many consumers were granted with a $1,400 stimulus check.  With shoppers beginning to spend more money, some of their tendencies have remained the same while others have changed quite drastically.  From February to March, sporting goods stores saw their sales increase by 23.5%.  This was the largest increase out of all industries.  In March, clothing stores also saw an increase in sales as their sales improved by 18.3%.  This is further evidence of the point I made earlier about consumers being more focused on their physical appearance with Covid-19 restrictions decreasing.  According to Marshal Cohen, the chief industry analyst for market researcher NPD Group, the type of merchandise that people elect to buy serves to represent “how we’re going to spend in the short term, as we navigate our way out of this whole mess.”  He goes on to add that this is a good indicator of the “consumer’s psyche.  To no surprise, sales of skirts and dresses have risen dramatically.  In March of 2020, the average monthly sold out rate for skirts was 11%.  A year later, the average monthly sold out rate rose by 10% to 21%.  According to Jeff Gennette, dress sales have also been on the rise.  He goes on to allude to the fact that people now have proms, weddings and more special event to dress up for.  Sales of denim jeans have soared recently.  Jay Schottenstein, CEO of American Eagle Outfitters said “we’re still in the pandemic, but when it goes away, we could be looking at the “Roaring 20’s.”  This author of this article does an excellent job discussing some of the products that are beginning to see a rise in sales as a result of the pandemic slowing down.

https://www.youtube.com/watch?v=LnYqGJGn11U

FOMO In the Workplace?

FOMO, which is an acronym for fear of missing out, is a term commonly used by people when debating whether or not to attend a social event.  Often times, individuals might be in the mood to relax as opposed to attending a social event, however fear of missing out causes them to go to the social gathering.  While I have never heard this acronym referenced in when the topic of discussion was work, this author of this article does a fantastic job of making the title make sense.  According to Andy Cohen the CEO of Genseler (the world’s largest architecture firm by revenue), FOMO will cause employees to suit up and drive to work when face to face interactions are allowed.  He adds that people will elect to drive into work “at least for a couple days a week.”  He adds that “Information shared in person contains rich layers of nuance and context that simply cannot be conveyed through a computer screen.  People want and need face to face interaction to excel at their jobs.”  I am of the belief that working face to face is crucial to maximizing the potential success of a company.  The Genseler Research Institute annual conducts a survey to figure out how workers divide their time between four different activities: focus, collaboration, socializing, and learning.  In recent years collaboration has decreased drastically.  In 2019, collaboration was at 43%, however this number decreased by 16% just one year later.  This study also showed that the companies that are the most success are the most collaborative.  Only 19% of people want to work at home full-time.  Working at home is draining for individuals of all ages, however it has the greatest impact on young workers.  After reading this article, a certain question came to mind.  I would like members of the audience to think about teams and groups that they have been apart of.  Were you most effective when collaboration was high?  I know that any successful team that I have ever been apart of has excelled in communication and collaboration.  So while Zoom is a great tool, I believe that we must not lose sight of the fact that face to face interaction is an integral aspect of collaboration.

https://www.youtube.com/watch?v=UvPYqeV3l8I

Covid-19 Has No Limits on the Businesses it can Impact

At one point, running shoes were worn strictly to go for run, and basketball shoes were only worn while playing basketball, but the times have changed quite drastically.  It is now common to see such footwear on runways.  The times have really changed!  In the most recent year, Nike’s footwear sales reached $23.3 billion.  Nike has built its brand by mastering the art of many marketing tactics.  One of their greatest advantages is their ability to reach endorsement deals with prominent athletes who will draw consumers to the brand.  For example, LeBron James, widely known as the best basketball player in the world, is the face of Nike. But the brand does not stop here.  I believe that Nike’s most prominent athletes do an excellent job of recruiting other stars to join the company.  Something that many people do not know is that Nke started off as an enterprise licensing Japanese running shoes company for the American market.  In the 1070s, Nike gained more notoriety in the US through iconic silhouettes.  According to the author of this article, the sneaker market is “constantly moving between innovation and nostalgia.”  It is crucial for shoe brands have an understanding of what shoes their consumers desire.  Failure to get an idea of the wants and needs of consumers is a recipe for disaster.  As successful as shoe brands like Nike, Adidas and Puma have been, they were still negatively effected by the pandemic.  In each of the aforementioned companies, footwear sales declined in 2020 for the first time in years.  To   This just goes to show that no brand is immune to complications caused by Covid-19.  I often find myself wondering what Nike does that allows the company to dominate the sportwear industry the way it does.  I also have a question for the audience.  Do you guys feel like companies that are at the top of different industries share similarities? For example, Netflix dominates the streaming industry and Nike dominates the footwear industry.  Obviously, these companies are selling vastly different product and services, however they may run similarly in terms of their strategies and goals as an organization.  Despite a minor sales drop in 2020, I can confidently say that this company will flourish in years to come.  After all, it’s very difficult to bet against a company like Nike.

https://www.youtube.com/watch?v=vclauwjChRU

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Ian Henderson’s Blog: Marketing Insights

Vans owner VF Corp to buy streetwear brand Supreme for $2.1 billion

On Monday, VF Corp announced that it would purchase the popular streetwear apparel company Supreme for a gaudy price of $2.1 billion.  This continues a trend of Vans expanding their brand by adding other popular ones.  Notable brands that they have added in the past include: The North Face and Timberland.  As described in this article, Supreme is a brand that is particularly popular among “hypebeasts.”  In case you were wondering, this is a term for fans of the streetwear style.  In premarket trading, shares of VF Corp rose by a whopping 10 percent, bringing them up to $77.24.  The Carlyle Group and New York-based private equity firm Goode Partners are selling their stakes in Supreme, which was founded by James Jebbia, an American-British businessman in 1994.  The fact that Supreme was found over 25 years ago may come as a surprise to many, as it’s popularity has improved exponentially in recent years.  VF Corp’s recent acquisition of Supreme comes during a time where the business has set out goals to improve its e-commerce business, due to the Covid-19 pandemic, which has caused a major reduction in in-person shopping.  This acquisition will surely help to do so, and a large reason why is that many Supreme advocates comes from a generation that is very accustomed to online shopping.  There were many statistics that stood out in this article, but one in particular stood out amongst the rest.  Supreme gets north of 60 percent of its revenue from online business.  This bodes well for Vans improving its e-commerce.  While the deal to acquire Vans has yet to become official, it is estimated that this deals will contribute over $500 million in revenue and adjusted earnings per share out of 20 cents in the fiscal year 2022.  During a time where e-commerce is becoming increasingly important, Vans made a proactive decision to add a brand that not only has a great reputation, but will also appeal to many consumers in Generation Z.  This is important because many members of this generation has become very fond of using e-commerce.  I think it’s pretty safe to say that if things go according to plan, Supreme will be a stellar addition for Vans.  

Amazon Fresh Opens Second Store in California

In late October, Amazon Fresh opened its second store in California.  This comes just a couple weeks after the new grocery store debuted in Woodland Fields, California.  This supermarket is open everyday from 7 a.m. to 10 p.m.  During this unprecedented time, the first hour that the store is opened is reserved to high-risk customers.  In terms of size, the supermarket is 40,000 square feet.  To distinguish themselves from the competition, they offer excellent prices to consumers.  At this supermarket, consumers can purchase a 12-pack of Coca-Cola for just $2.69.  On the Kahn Matrix, their prices would be well above fair value.  By adding exclusive brands such as, Duke’s Mayo, Ellenos Yogurt, and Boston Chowda, this store will be able to bring in more wealthy consumers.  This is important, as they will already be able to bring in consumers who are desperate to find good sales.  In our current society, many retailers are ramping up their e-commerce presence.  With that being said, Amazon already has a strong e-commerce presence, therefore they have shifted their attention toward strengthening their brick and mortar presence.  Before opening to the public, both new supermarkets served as a dark store and was used to fulfill online grocery order.  This is a prime example of Amazon utilizing the store to their benefit before it even opened.  This is one of the many reasons why Amazon Fresh excels at being a frictionless store.  The Fresh format combines a conventional supermarket experience.  Some of the main items in stock include: produce, meat, seafood, and prepared foods that are made fresh daily.  Amazon has recently taken measure to try and alleviate some of the issues caused by food scarcity, Amazon Fresh has donated over 180,000 pounds of surplus food to local food banks.  They began doing this when the Irvine stored was being used as a dark store.  180,000 of surplus food is the equivalent of 150,000 meals.  It is safe to say that Amazon is making a positive impact on many communities in California.