Amazon, Alexa, and The Black Plague of Retail

One of my good friends, Kevin Coupe of Morning Newsbeat, scored one of the best interviews of the new year. In his conversation with Tom Furphy, a former Amazon executive, he drills deep into Amazon’s secret sauce as well as its implications for the rest of us who are living through the “black plague in retail”. From overall retail to the impact of Alexa, it’s a great conversation, or as Kevin would say, “An Eye Opener” and you won’t find it in the Wall Street Journal or the NY Times. You can listen to the interview here: The Innovation Conversation

 

Big Brands Fight Small Batch in 2018

If you can’t beat them join them (or buy them) is the mantra of the largest consumer product companies for the upcoming year. With minimal entry costs due to the low costs of digital media, combined with easy to find quality contract manufacturing, little brands have spent the past few years getting big fast and causing real pain to the largest companies. With consumers in the mood to spend up for (perceived) quality, it’s easier than ever to get consumer trial for a new brand because price is not the driving consumer focus.

The Wall Street Journal started 2018 with a great piece on Unilever and how they’ve adjusted their global branding to meet the challenges of these fast paced “ankle biters”. As someone who was once called an ankle biter by a dear wall street friend (oxymoron), I can think of no better compliment or sign that larger companies never see the train in the tunnel until it’s too late.

We who disrupt are not ankle biters. We are going right for the jugular of their business models, but it takes time for those companies to feel the cut until it’s too late. Read the WSJ piece here: Outfoxed by Small – Batch Upstarts, Unilever Decides to Imitate Them, as a great primer on one of the key battles that will be fought in 2018.

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.

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”.

Squeezed by Tweets and Better Livin’

Post Great Recession logic would dictate that in an improving economy customers trade up in all categories from Marshall’s to Kohl’s and from Power Stick to Axe. Yet our products, along with retailers obsessed with value such as Dollar General,  Marshalls and TJ Max, are thriving.  This begs the question of why?

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