Kid Rock hopes to change the economics of the concert business with tickets priced at just $20, reports John Jurgensen in The Wall Street Journal (6/7/13). The cheap tickets are possible because, rather than "taking a big upfront fee from the promoter," Kid will simply share "ticket sales with Live Nation. In exchange, the promoter agreed to share revenue from food, drinks and parking." If fans buy their tickets at Walmart, they can also "avoid parking and service fees." The bet is that the cheap seats will spur spending on $20 T-Shirts and $4 beer.
Kid thinks that’s a pretty safe bet, noting: "my fans drink tons of beer." The jury is still out on whether the deal will pay off, but so far Kid Rock’s "ticket sales have spiked." Either way, Kid’s point is that ticket prices "are out of hand." He also admits his shows are a harder sell than they used to be: "At the end of the day, as an artist with an ego, I want to play to packed houses," he says. "And that’s very difficult to do for 95% of artists out there, especially if you’ve sustained a career for this long."
In another twist, Kid is reserving the first two rows "for fans who will be selected at random at the venues." He hopes this will help thwart scalpers as well as boost fan energy. "This is all like a really fun science experiment," he says. "I’m anticipating that people are going to be in really good spirits." His dream is that his model will change the business. "If I can come back to you around Christmas and say we made f— tons of money, that would be the happiest ending," he says, "because that really opens it up wide for everybody." If all goes well, he hints that next time around tickets might go for $15.
June 11, 2013 Comments
The past, present and future of Costco is all about keeping "prices low, volumes high, and … employees happy," reports Brad Stone in Bloomberg Businessweek (6/10/13). "This isn’t Harvard grad stuff," says chief executive Craig Jelinek. "We sell quality stuff at the best possible price. If you treat consumers with respect and treat employees with respect, good things are going to happen to you." Good things certainly have happened to Costco: "While competitors lost customers to the internet and weathered a wave of investor pessimism, Costco’s sales have grown 39 percent and its stock price has doubled since 2009."
Craig’s philosophy is simple: "We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty." This is why, during the depths of the recession, then-CEO Jim Sinegal "approved a $1.50-an-hour wage increase for hourly employees, spread out over three years." His reasoning was that Costco should give its employees more, not less, especially in bad times. Indeed, "Costco pays its hourly workers an average of $20.89 an hour, not including overtime." The US minimum wage currently is $7.25 per hour.
Keeping costs low means that "almost everything is marked up 14 percent or less over cost." Most of its profits – 80% — come from Costco’s $55 annual membership fee, which its happy customers renew "at a rate close to 90%." The low prices also make Costco less vulnerable to "showrooming," although "as the 17th most popular retail site in the US, its online popularity lags the success of its physical stores." This concerns some Costco executives, but Craig Jelinek simply chants his mantra: "As long as you continue to take care of the customer, take care of employees and keep your expenses in line," he says, "good things are going to happen to you."
June 10, 2013 Comments
Quirky plans to bring its “freewheeling brand of capitalist democracy” to retail, reports JJ Colao in Forbes (5/27/13). Quirky is a venture-capital backed enterprise that crowdsources product innovation. Its successes include Pivot Power, “a flexible power strip that bends to fit large three-prong plugs in each outlet,” and Crates, “modular plastic milk crates used as shelving.” One of its challenges is that “the company’s idea machine churns out far more stuff than the pipeline can handle.” So, Quirky founder and CEO Ben Kaufman, 26, plans to build his “own branded stores.”
As it happens, Ben’s mother, Mindy, is “a retail strategist.” The plan is to start with three stores “likely in New York, Los Angeles and Oklahoma City – perhaps next year.” Ben is still working out the details but “envisions a hands-on Sharper Image, where customers can either come in to pitch inventions or buy others.” Forrester analyst Sucharita Mulpuru isn’t so sure this is a great idea. “One of the scariest things about opening a store is that you get one shot,” she says. “It’s very difficult to pivot or change.”
In the meantime, Quirky continues to host weekly evaluation meetings at its Manhattan headquarters, where some 15 ideas are presented, gleaned from “the company’s 405,000-member online community of would-be inventors … Quirky will design, manufacture and sell” products receiving a simple majority of votes in the room, with revenues shared by the inventor, participating members of the community, those who contributed to the product’s creation, and, of course Quirky, which “makes a 20% to 60% margin on each item sold to retailers, as well as a $10 fee from those who submit ideas.”
June 10, 2013 Comments
Four fundamental behaviors open doors to shopper engagement. By Liz Crawford. In the world of store-back marketing, purchase barriers rule strategy. Store-back marketing puts the shopper’s in-store decision at the center of the campaign’s big idea. This requires a barriers-to-purchase approach: The message must overcome shopper barriers as they stand in the aisle. And there’s the rub: Today, they aren’t always standing in the aisle.
The store-back approach began to fray when Google introduced the "Zero Moment of Truth," or ZMOT. Google demonstrated that shoppers were engaged in shopping and decision-making before they entered the store, claiming that, "88 percent of US consumers now engage in the Zero Moment of Truth prior to making their final decision." Just as Google was coining ZMOT, a tidal wave of digital shopping tools began to flood the market. These included couponing sites like retailmenot.com, as well as price comparison tools like slifter.com and milo.com. Social shopping tools also popped up, like shopcade.com and pikaba.com. continue …
June 10, 2013 Comments
Jake Shimabukuro is reinventing the ukulele “as a vehicle for bravura instrumentals,” reports Matthew Gurewitsch in The Wall Street Journal (5/9/13). You may have seen Jake’s 2006 YouTube video (link)– one of YouTube’s first viral videos – in which Jake plays a jaw-dropping rendition of George Harrison’s “While My Guitar Gently Weeps.” Taped in Central Park, the performance was uploaded without Jake’s knowledge – at the time he didn’t know that YouTube existed. It has since clocked “nearly 12 million views, and still adds thousands daily.”
His style involves “power chords that cascade from the strings, sharp rhythmic patterns that richocet off the uke’s wooden body, fingers that fly faster than the eye can see.” Jake says he believes “the world would be a better place if more people played the ukulele … he lets schoolchildren know that the ukulele has helped keep him drug-free for life.” He compares music to learning karate, where you work your way up to a black belt, which he says is “only half the journey. The second half is purifying your soul to get back to being a white belt, where you know nothing.”
Jake’s repertoire ranges from “Beethoven’s Fur Elise to Queen’s Bohemian Rhapsody … and a growing catalog of his own material.” He has been perfecting his technique since his mom gave him a uke – known in his native Hawaii as the “jumping flea” – at the age of four. He says his uke has been his constant companion ever since, at first with lessons but eventually teaching himself. “I played five or six hours every day, every chance I had, even while watching TV. In bed I would lie on my back practicing until I fell asleep.” Jake’s latest record is called Grand Ukulele.
June 7, 2013 Comments
Joseph Bertolozzi is harvesting sounds from the Eiffel Tower "and using them as samples for an hour-long composition," reports Maia de la Baume in The New York Times (6/5/13). Joseph and his "team of seven," armed "with drum sticks, wooden dowels, Lucite mallets and rubber hammers" are climbing the tower, striking its "girders, spindles and handrails" and recording the results. "We see if the sounds have a pitch relation, like do re mi," he says. "The different dimensions of the Eiffel Tower give you different notes."
He explains that "if you have a big panel, it will vibrate slower and longer, so you’ll produce a deeper pitch, usually." Because of the "vertical shape of the tower" he says he is afforded "a great number of resources if you need high notes, middle notes, low notes." He does admit he was afraid that he might find nothing but B flats, but that hasn’t been a problem. This isn’t Joseph’s first attempt at a composition of this kind. A previous composition, Bridge Music, was composed of notes collected from a bridge near Poughkeepsie, NY. It "reached No. 18 on the Billboard classical crossover charts."
In preparation for this new composition, Tower Music, Joseph "listened to the works of French composers like Ravel and Poulenc, whose pieces have elements of café music and street sounds." An organist by training, he "also collects gongs." He says he got the idea of playing the Eiffel Tower "after his wife mimicked him striking a gong" by "banging" a poster of the Tower hanging on their bedroom wall. That was a decade ago. Joseph has since raised $40,000 for his project, which, when released, will "celebrate the tower’s 125th anniversary next year."
June 7, 2013 Comments
Walgreens is building a "net zero energy" store that "could become a tourist attraction," reports Bruce Japsen in The New York Times (6/5/13). The store, near the retailer’s Evanston, Illinois headquarters, "includes more than 800 solar panels on the roof, two 35-foot wind turbines and a geothermal energy system dug hundreds of feet beneath the store’s foundation." It is expected to "use about 200,000 kilowatt-hours of electricity over a year’s time while generating about 256,000 kilowatt-hours during the same period."
The store (image) is part of Walgreens’s "overall sustainability plan to reduce energy use by 20% by 2020 across all of its more than 8,000 stores, including Duane Reade stores in the New York area." It will cost about twice as much to build the store as "a typical new store," but Walgreens expects "to recoup extra costs from reductions in the store’s energy use, tax credits and rebates from utility companies." Any surplus energy can be sold to local utilities, for example.
Walgreens does not plan to build all its new stores "net zero" style, but it does plan to use "the net zero store as a laboratory to test successful energy reduction strategies that could be incorporated into new or older stores." Located "on the site of an old store that had been razed," it "is being built by recycling more than 85% of the demolished store’s materials like bricks, concrete and metal." It is expected to be open in time for Thanksgiving, 2013.
June 6, 2013 Comments
To Panera founder Ron Shaich, creating loyalty is about developing understanding, reports Annie Gasparro in The Wall Street Journal (6/5/13). "So many people’s loyalty programs are ‘buy 10 sandwiches, get the 11th one free’," says Ron. "That’s a discount program; that’s not a loyalty program. To me, the loyalty program is about being able to talk to you individually, and it’s about being able to get the information so I can understand what you’re doing individually. I’m not for discounting; I’m for learning."
Panera currently is spending "tens of millions of dollars" on such "learning." Its "loyalty program, launched in 2010, now has 14 million members and represents roughly 45% of customer transactions." Its loyalty program likely has more than a little to do with Panera’s performance, which has seen "a 28% increase in profit for fiscal 2012." Panera is meanwhile further cultivating consumer understanding with its Panera Cares stores, located in economically challenged neighborhoods, where diners pay what they can.
Panera is now testing a single pay-what-you-can item (turkey chili in a bread bowl) in its for-profit stores, and hopes to roll it out to all 1,700 of its outlets. Ron says the concept works because "20% of customers leave more than the suggested donation, 60% leave the suggested donation, and 20% leave what they can, but often significantly less." In terms of global expansion, Ron says he doesn’t believe "there is any such thing as a global strategy. There are only markets," he says. And, yes, Panera will expand into new markets, perhaps outside the US.
June 6, 2013 Comments
"The race to knit the ultimate high-performance sock is advancing at a blistering pace," reports Timothy W. Martin in The Wall Street Journal (6/1/13). Near the front of the pack is the Darn Tough Vermont sock, which apparently can be worn "for three weeks at a time without a single wash." Ric Cabot of Cabot Hoisery Mills, makers of the sock, says that even after three weeks "they basically smell like you just grabbed them off the rack." Darn Tough is made of "merino wool" and Ric attributes its qualities to "1,441 stitches per square inch."
"It’s what I call the math of the sock," says Ric. Hiker Liz Thomas is a fan, having "logged about 2,000 miles last year in 12 pairs of Darn Tough socks." "I’m not sure what’s going on at a microbial level," she says, "but from the sniffer test, I can say they’re working." However, hiker Joshua Stacy "says his Darn Tough socks bunched up, got wet, and gave him toe and heel blisters because they didn’t fit him snugly." He prefers "socks from Fits Sock Co. that feature a small toe cup and deep-heel pocket and slide easily onto his feet."
Darn Tough and Fits are among "more than 100 companies – mostly in the US – competing (in) … the market for $25-a-pair socks.” Their challenge is considerable: "A pair of feet has 250,000 sweat glands” that can generate "up to 30 gallons (of moisture) a year." Just ten years ago, fewer than 10 companies were pursuing high-performance socks. Thomas Lee of Goodhew socks says it’s a growth market because Americans waste too much money on cheap socks that need regular replacement, and cites "a backlash" against "the disposability of consumer products."
June 5, 2013 Comments
Kermit Oliver, a long-time postal worker in Waco, Texas, "has designed more than a dozen Hermes scarves," reports Christina Binkley in The Wall Street Journal (5/23/13). Indeed, all of Hermes’s scarves "are designed by a far-flung array of freelance artists." Virginie Jamin, another of about 50 Hermes scarf designers, is otherwise a "children’s book illustrator." Christine Duvigneau of Hermes discovered her at a book signing and liked her "naïve" style. Virginie has since designed a scarf known as "Les Cannes," (The Canes), which is now also "used as a print for Hermes clothes."
Virginie’s inspiration was "a framed collection of antique canes" she "spied in the company’s private museum." The museum is "an eccentric, decades-old collection of art and historical objects that occupies several rooms behind (the retailer’s) flagship store. Beginning as the personal collection of the Hermes family, it contains silver cups, belt buckles, Victorian children’s toys, blankets from Turkmenistan and antique books, among other items." A "parasol in a cluttered corner," noticed by artist Pierre-Marie Agin, became the basis of his best-selling scarf, L’Ombrelle Magique.
Pierre-Marie placed the parasol at the center of a fairy-tale pattern depicting "a lonely prince who carries a feathered parasol and meets a hermit who lives in a chestnut tree." The parasol turns into "a princess whose skirt is made of pheasant feathers." Only two rules govern designs: no "sax" and no "violins." It can take up to a year to finalize a design and then "about 18 months" to produce it. Even though the designs ultimately are collaborations between Hermes and the designers, the designers retain the intellectual property, with the artists paid a royalty on sales.
June 5, 2013 Comments