Logos, Emojis and Shakespeare Meet Great Design

It’s Waterloo time for brands as the sea of private label obsessed retailers low ball their way across the globe leveraging technology and new distribution channels to blitzkrieg around the branded “Maginot Lines”.

Design is where brands can beat private label whose masters and commanders are less obsessed with design than with margins. So it was with pleasure that I heard Michael Bierut one of the best designers of our age is coming out with a new book titled Now You See It and Other Essays on Design. It’s a series of essays which can lead you to some of his other works which will inspire you to design higher.

In a hundred years there will not be a single private label brand displayed in the Museum of Modern Art. But hopefully one of yours (or our) brands will be featured. Read this terrific and witty interview about Bierut and I promise you’ll feel the potential for design. How can you not enjoy a writer who says, “My favorite cartoon character is Wile E. Coyote. He had this endless faith and brand loyalty and never thought to try the competition even though Acme products failed him time and time again.”

Free to download Bierut-designed emoji

Emoji by Michael Bierut

Innovation and Amazon? Size, As Well as Pizza, Matters!

To understand Amazon‘s success, I need to digress a bit. A few years ago I visited a leading mid-western department store retailer on a regular basis overseeing their work with a brand they licensed from me and my partner. At the first few meetings in 2008 there were 5 people in the room (three from the retailer) as we meandered through a “new” corporate headquarters filled with empty chairs and easy parking.

Within two years the meetings were with a team of over 25 people (we were still 2 people) and my partner was introducing members of the retailer’s team to each other after fighting to find a big enough and unused conference room, never mind finding a parking place. Other than killing our brand along with many others they licensed during that period, the handwriting of bad management was literally around the overcrowded table around which no one could move forward.

With that story in mind, one of the better “digestif” pieces about Amazon/Whole Foods is in Harvard Business Review. The analysis focuses on investment in R&D and its clear where this story will end. But there is a chart buried in the story that is amazing. It lists, by year, the new initiatives taken by Amazon and whether it was successful or not. Red means bad and blue means success. Blue outnumbers red, but not by as much as you’d think. What is “Blue and Red”, is how innovative Amazon is relative to all others. We all knew this, but the chart captures the epic pace of innovation.

As I said in an earlier post, this is the Waterloo moment for the grocery industry and all of supporting brands because of the private label angle. Scott Galloway of L2 has a chart that illustrates private label penetration at Whole Foods vs Amazon Fresh. Brands must innovate and fast.

So what is the HBR secret innovation sauce analysis? “Amazon CEO Jeff Bezos famously believes that if you can’t feed the team with two pizzas, it is too large”.  Thank God my competitors don’t even think of pizzas! There is clearly much more to innovation, but as they say, size matters.

Amazon Whole!

Its Game of Thrones time with the unfolding battle between Amazon, Aldi, Wal-Mart and the growing food oriented Dollar Stores. Kroger melting down and Amazon buying Whole Foods are just the tip of the coming “winter” in grocery retail. As if there were not enough potential for retailer margin impact, the stealth European giant Aldi is firmly committed to a private label only strategy which puts more pressure on brands.  If you thought food and household products were in a deflationary spiral, this slug fest at the bottom says it’s a long-term 3-5 year battle.

The WSJ had a story called “Pressure on US Grocers Rises”. Pressure is not the word. Final nail in coffin is better. For 30 years the grocery industry has ceded market share to Wal-Mart which was barely in food when it started! Aldi, the European low cost “Ryan Airways” of grocery, is planning to open 900 new stores with 5 billion dollars in the US market. Lidl is also ramping up and if you have not visited one of these stores you must. And Amazon is now taking a leadership position by overlaying their consumer technology and warehouse expertise onto a premium and well located chain of stores.

Between Aldi at the bottom and Amazon/Wholefoods at the top, this is the coupe d‘grace for the Grocery retail sector which is the worst managed retail segment in American retailing. With a dead man’s focus on slotting fees and illegal charge-backs, the Grocery chains long ago forgot how to be merchants and innovators. Except for a select few like the innovator Wegman’s, there is little to miss after they ceded almost half of the entire food market to Wal-Mart during the past 30 years.

There is another serious deflationary piece on top of all this. Amazon recently signaled it’s entering the fight to take market share at the lower end of the demographic market. With Prime household penetration at 50%, the next segment for growth is the 50% of American households below the median household income line. Of course with the Whole Foods acquisition, they just bought 431 “fresh distribution/pickup centers” and with the highest demographic customers in the market. Hi end/low end…Amazon wants it all. But let’s focus on the larger end, the lower demographics.

Most commentators, such as the WSJ, think that Amazon is aiming at Wal-Mart. Clearly they are, but there are two looming competitors that are sharper and tougher for Wal-Mart to battle in the lower end market; the above mentioned giants of the value segment, Lidl and Aldi.

The WSJ has a great chart of food stamp customers which illustrates the relationship between Amazon, Aldi, Wal-Mart and the dollar stores. This story, which may be the most significant one in years, if you sell the mass market, shows how Amazon wants that market and is making some incredible changes around payment systems for the un-banked, delivery for security challenged areas, and lowering the cost of Prime membership. This is the first time that I’ve seen an Amazon strategy that is capable of hurting the dollar stores and Wal-Mart all in the context of the massive Aldi and Lidl launches.

Amazon may have cracked the digital divide and entered, what has been to date, that last retail corner immune to the digital wave. It’s still too early to call the winner(s), but the household products and food industry are in for some serious deflation/price pressure. Wholefoods, with Amazon at the helm, will morph from “Whole Paycheck” into “Half Paycheck”. Far from value but they can easily double the sales by cutting pricing and passing through their better back end management. Food, like war, is a logistics battle and nobody other than Wal-Mart can compete with Amazon.

So if you are a brand owner, ramp up the marketing. As the old Chinese proverb says, “The more you sweat in peacetime, the less you bleed during war.” The only defense against price deflation is a strong brand.

Just Another Brick in the Mall?

America has the highest per-capita amount of retail real estate of anywhere in the world. And with the digital world crashing the world of brick and mortar, a lot of “b” and “c” malls need major changes in their customer bases.

According to some analysts, over 400 of the country’s 1100 malls may close in the next few years. Fortunately, Adam Smith (with some help from Henry Ford), is quietly riding to the rescue. The WSJ had a story titled “The Mall of the Future Will Have No Stores” about the re-purposing of a Michigan mall into a combo traditional mall by re-configuring one of the major retail anchor spaces into significant engineering design center for Ford Motor Co. for almost 2,000 of employees. The key to all of the re-purposing around the country has been to add either office space or residential into the retail mix.

Nothing like a market evaporation to bring out the creativity. My bet is we are entering a new golden age of Malls and far from the headline of the “Mall of the Future Will Have No Stores”. Or as Henry Ford said, “Failure is simply the opportunity to begin again, this time more intelligently”.

Aston Martin Hotel?

There is no better moment than realizing your brand is strong enough to move outside of its original category into an adjacent category or even make the epic move to a “lifestyle” brand.

The NYT had a great story that addressed the move of brands such as Aston Martin into the lifestyle category. Aston has licensed its name to a line of residential apartments in Miami, speedboats and sunglasses all derived from its “art of living” experiences which built upon the brand’s storied history. The key was finding partners who were as dedicated and knowledgeable about branding as Aston.

But the fun part of the article chronicles the bad moments when brands reach for a “bridge too far” or found the wrong partner. Colgate brand frozen dinner entrees, Zippo perfume and Harley Davidson cake decorating are worth learning about. Of course being the NYT, they could not “resist” throwing in a Trump licensing angle too.

The reality is that licensees who are sophisticated trustees of the brand’s adjacent

core values usually add value. The issue is when a large company sees the dangling image of guaranteed minimum royalties without taking a deep dive into brand management issues that come from choosing the wrong partner. As the article notes, “shoddy” work can be catastrophic for a brand not only in the extension, but in its core product.

The article quotes the brand expert Larry Light “Just plopping a brand logo onto a product… is a recipe for failure. Giving somebody the logo and then hoping the execution will live up to the brand promise-that’s a very risky strategy”.

Power Stick frozen entrees? Has a whiff of success, n’est pas?

We Were Featured in the New Yorker!

It’s not often I can comment on a well written industry relevant story where we are the main part of the story. Enjoy the read even if it finishes with a bit of the “New Yorker” echo chamber view of the world. The reality is that our part of the “highway” is always at risk from over regulation and unfair tax policies that challenge entrepreneurial companies disproportionately than our larger established competitors. But that’s the best part of the American highway…You can always move!

Read the Full New Yorker article written by Adam Davidson HERE.

 

 

 

Just Another Brick in the Wal…..

While Wal-Mart was busy getting hip buying Jet.com, Amazon was getting serious and just announced that it is offering air freight services to its sellers based in China. Think of this as the penultimate direct to consumer structure ever. Wal-Mart is still the king but this does not bode well.

The new battlefield is digital and like all battles it’s not the glorious stories on page one that mean victory. Similar to real wars, it’s superior logistics that win but to find this you have to dig into the WSJ story on page B4  with no photo announcing the new service.

This is a game changer for all who sell wholesale products. Imagine that today your factory in China now has a direct link to your customer’s home or business WITH EFFICIENT Amazon built end to end logistics. That’s a real “Jet”.

Automaticity – My Favorite Word of the Day Beats New and Improved?

How much of our time is spent thinking how to improve our company’s offerings? We update labels, fragrances, and even names of items on a regular basis. Are we wrong to obsess?

According to one of my heroes, the former P&G CEO A.G. Lafley, we are on dangerous ground.  In an intriguing Harvard Business Review article, he discusses why consumer innovations often “flame out”. His answer, based on recent advances in brain science, is that “…the mind loves automaticity more than just about anything else-certainly more than engaging in conscious consideration.”  Or in English, “Customers don’t want to spend the mental energy needed to choose between products.”

When innovating a product and brand, a progression from the past is always better than a break from the past. Poster child of how not to make this change is Instagram’s changed icon and how Facebook destroyed MySpace.  The article also has a very interesting sub section on small brands (could be us except we dominate our retail channels with two channel focused mega-brands). It’s titled, The Perverse Upside of Customer Disloyalty.  Basically, it says that the market for most product categories is large enough to support a small brand that consumers occasionally purchase when confused or not loyal to the leading brands. They try the fringe brands to which keeps them in the market, but not enough return to help them break through.

So don’t engage in automaticity and read the article!

You Are What You Eat! Food and Beauty Converge Beyond Supplements

In a perfectly headlined story called Beauty Bites, Women’s Wear Daily writes, “Beauty companies are marketing foods the same way they sell concoctions to boost skin radiance. The result is a new category: beauty foods.”  And it’s not just natural and organic products. Even Perricone is launching a “Hydrogen” water. The price points are extreme with items selling at $70 per unit, or in the case of the water, at $3.00 per can or $29 “bars”.  Burt’s Bees just launched a protein powder including one for “healthy radiance” at a $29 price point. Not exactly priced for mass, but stay tuned.

This is a taste of the future. It’s only a matter of time before a Dove Bar ice cream and a Dove face cream make similar claims. Many successful personal care brands will find they have easy extensions into performance oriented foods. So sip your detox tea and feel the glow from the inside out while you leverage that brand equity!

Mirror Mirror on the iPhone…

Housewares is not a consumer category that screams for technology, but sometimes a company breaks through with design that stands out for both form and function. Recently a company called Simple Human planted its flag in the housewares section. Their slogan is, “we design tools that help people become more efficient at home.”

With well thought out garbage cans, auto dispensing liquid soap machines, and the best personal makeup mirror in the market, they are the leader in blending technology with the every day tools of the kitchen and bathroom.  My favorite is their makeup mirror. With LED lighting that can be set via your phone to mimic lighting conditions of an office or a restaurant, a woman (excuse the transition) or a man, can see how their face looks under the varied light conditions of the day or evening.

Sadly I need something that does not exactly replicate the middle age face I’ve caught staring at me some mornings, but that may be a technology too far away!