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Pocket of Hope

Marketing chief Jaime Cohen Szulc unlocks true meaning for Levi’s. An exclusive Q&A interview by Tim Manners.

As far as Jaime Cohen Szulc is concerned, emerging media could be almost anything. It could be the Facebook “like”  buttons that Levi’s has added to every item in its online store.

It could be Gareth Hornberger, the @levisguy on Twitter. It could be Levi’s iPhone app or information about Fader/Fort, an indie-music festival.

But it could also be a Levi’s pop-up print workshop in San Francisco, stamping out decidedly non-digital posters, books and T-shirts. It could even be the economically depressed town of Braddock, Pennsylvania, which Levi’s is featuring in an old-media television advertising campaign ... read >>

Levi's Workshop

A pop-up retail workshop in San Francisco is part of Levi's "Go Forth - Ready To Work" marketing campaign (video), reports Laura Compton in the San Francisco Chronicle (7/4/10). The eight-week event involves outfitting a 3,000 square-foot retail space on Valencia Street into "a fully functional, albeit temporary, print shop filled with heavy equipment, salvaged work tables, type cases, ink and other essentials of an age-old art." (images).

Levi's Workshop San Francisco, as it is known, features various "local writers, artists and creative types," and "will produce a range of printed matter, such as books, posters, and T-Shirts." All proceeds from the sale of goods produced at the store will go to three local non-profit organizations: Women's Building, Southern Exposure and Plaza Adelante. Zach Augustine of Winston, a retail consulting firm, says the Levi's Workshop fills a gap left by budget cuts for arts and education.

"It's almost like you're going to school at some amazing fine art workshop presented in the old-school environment," he says. Mike Maher of Taylor Stitch, a local shirtmaking artisan who is participating in the Workshop, agrees: "The beauty of it is, they're giving people skills, educating them," he says. Other participants include Shepard Fairey, who will produce San Francisco Giants baseball cards, as well as Arline Klatt and Beth Lisick, who will host a release part for a letterpress book. Levi's plans to open a second Workshop in New York City this fall.

Kenyan Kmart

Atul Shah is following in the footsteps of Sam Walton by starting a retail chain inspired by Kmart -- in Kenya, report Will Connors and Sarah Childress in the Wall Street Journal (5/26/10). It was while visiting Florida in the 1980s that Atul, "a former mattress salesman, wandered into a Kmart and marveled at its cleanliness. He was so impressed at how the store sold food, household goods and furniture under one roof that he hung out there for hours a day for eight months."

After returning home to Kenya, he formed Nakumatt Holdings and opened "a small shop that offered food and some household wares. The shop was clean and had wide aisles for easy browsing, unlike the cramped stores that populated his home country. Each year he added a few more product lines, including furniture." He now has a total of 24 stores that "appeal to a middle-class that wants Kenyan-made products as well as imports from Europe, the U.S. and Asia. Revenue last year was about $350 million, up 76 percent from 2006."

Atul has opened "five new stores in just the past three months" and today Nakumatt "is the dominant supermarket in Kenya." Nakumatt is actually just one of a number of "home-grown companies ... expanding aggressively across the continent, eager to accommodate a growing middle-class among the billion-person population." Others include Spur Corp., a "348-restaurant chain" that "has opened in seven other African countries." Growth is however limited by "cumbersome trade tariffs" and because "the majority of people in African countries live well below the poverty line."

Androids

Holman W. Jenkins Jr. sees history repeating itself in Apple's gamble against Google (Wall Street Journal, 5/26/10). The history he sees repeating is the old battle between Apple and Microsoft over computer operating systems -- which he says Apple lost, only to be granted a reprieve with the advent of the web and the rise of handheld devices. But Holman thinks Apple is making the same mistake again, this time against Google, by "keeping software and hardware under tight control" in the handset business.

Similar to the Microsoft tussle, he believes Google, with its open and free Android platform, "will benefit from competition among multiple handset makers, producing lower prices and faster innovation, including a flurry of soon-to-arrive tablets and a variety of new devices aimed at niches (say, with a focus on navigation or texting)." Because Steve Jobs "insists on vetting all applications that run on his phones via the iTunes App store, you'll need an Android phone to capture the full benefit of openness to the web," says Holman.

He also thinks Google's ad-supported business model is easier than Apple's, which depends on "money from hardware sales ... telecom subscriber fees and infotainment purchases." He notes that Apple will have to come up with strategies for TV and search, too. Holman does concede that Google could suffer from its openness, which could result in "a crummy, fragmented, even disastrous user experience, with security leaks, viruses" and shoddy customer service. But all in all, he thinks Google has less at risk than Apple because "as long as it keeps its search box at the center of our digital lives, the ad gusher will continue to flow."

Tommy Hilfiger

As Tommy Hilfiger's star faded in America, it rose in Europe, which gave the brand a second chance back in America, reports Eric Wilson in the New York Times (5/16/10). Not long ago, things had gotten so bad for the Hilfiger label that "the company seriously considered selling his clothes at Walmart." When Macy's placed orders, it was for "stretch cotton poplin dress shirts ... because that's what was selling from other designers." But at the same time, Hilfiger's licensing business, headed by Fred Gehring (formerly of Ralph Lauren) began taking off in Europe.

This gave Hilfiger the proverbial second chance at a first impression, returning the label to its original image -- "bright, preppy clothes and premium prices, but none of the hype." The fashions were "sold in more than 4,000 small stores from Spain to Germany" and "grew to more than $1 billion at the same time sales in the United States were falling." However, Fred Gehring remained worried that "the designer's problems in America would eventually cross over to Europe," and engineered taking the company private.

Fred's next move was "a deal with Macy's to carry the line exclusively in exchange for more desirable placement in its stores and help with marketing." Macy's now says Hilfiger is one of its strongest-performing lines. Hilfiger has since "opened a new flagship store on Fifth Avenue ... And the business is now highly profitable, earning about $300 million annually, largely thanks to the European operation." It was acquired by Phillips-Van Heusen about two weeks ago for $3 billion, "nearly seven times what Phillips-Van Heusen paid for Calvin Klein in 2003."

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Walmart Formats

"A typical grocer carries 100 types of mustard ... We have just brown and yellow," says Save-A-Lot president Bill Shaner in a Wall Street Journal article by Miguel Bustillo and Timothy W. Martin (4/28/10). Save-A-Lot also has Walmart a bit worried apparently, as does Aldi, another grocer known for a streamlined, store-brand shopping experience. "Aldi literally ran Walmart out of continental Europe, and now they're taking the fight to Walmart in the U.S.," says Burt Flickinger, a retail consultant. It's true: Walmart "pulled out of Germany in 2006 after struggling to compete with Aldi and other discounters."

As it seeks to avoid similar struggles in the U.S., Walmart apparently is looking to its success in Mexico, where it "became that nation's largest merchant by operating seven store formats, most of which are smaller than its U.S. Supercenters. The head of Walmart's U.S. operations, Eduardo Castro-Wright, formerly ran Walmart de Mexico. Walmart already has "slowed its openings of U.S. Superstores ... from 131 in 2007 to 49 in 2009," but hasn't said much about its plans other than promising "innovative" and "more efficient" formats.

This includes smaller stores with "drive-through lanes where customers can pick up online purchases." So far, it has opened 152 Neighborhood Markets, which are smaller than its traditional stores but still consume "about 42,000 square feet." It has opened just four Marketside stores "after disappointing early performance," as well as a Hispanic format. Walmart isn't discussing its strategy, but some observers think they'll be just fine as the economy recovers and shoppers "feel the urge to return to Walmart and supermarkets for familiar brand names."

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Tomorrow Shoes

Blake Mycoskie of Toms Shoes fame says he never intended to wrap his brand equity in a charity, reports Christina Binkley in the Wall Street Journal (4/1/10). "I wasn't out to do good," he says. "I'm an entrepreneur." It's true: Before founding Toms Shoes, Blake occupied himself with a "drivers-ed company, a laundry firm and an attempt to create a reality-TV network" (he had been a contestant on "The Amazing Race"). He was bouncing around Buenos Aires, hankering after cheap polo lessons, when "he met wealthy urbanites who were donating used shoes in local villages."

As Blake explains: "It just hit me ... Instead of a charity with handouts, why not create a company where that's the whole purpose? I thought, you buy one pair of shoes today so we can give one tomorrow. We'll call them Tomorrow Shoes. No, we'll call them Toms Shoes for tomorrow." Over the past four years, Toms Shoes "has given away 600,000 pairs of shoes ... selling their counterparts at roughly $55 each." That works out to about $33 million in shoes. These days, Blake hangs with Bill Clinton and Toms "was recently ranked #6 on Fast Company magazine's list of most innovative retailers."

Next week, on April 8th, he's planning a promotion, "One Day Without Shoes," which challenges "people to go barefoot and feel what it's like to be among the world's shoeless." His goal is to get 300,000 people to participate -- so far he's got 70,000 signed up at onedaywithoutshoes dot-com. While this appears to be a one-off promotion, Toms does go "a step further than most in blurring the difference between brand and charity; the brand doesn't exist outside the charitable work. Its success shows that good works can be a powerful profit engine." Says Blake: "When you incorporate giving into your model, we're proving it to be good for business."

Mustang Mission

"The whole project was bootlegged," the late Donald Frey once told USA Today, describing how the legendary Mustang was developed at Ford, reports Douglas Martin in the New York Times (3/29/10). "There was no official approval of this thing," said Don, who died March 5th at 86. "We had to do it on a shoestring." The reason was that "Ford's new Edsel had just failed so spectacularly" and Henry Ford II was nervous about taking more risks. He turned down the project four times.

That didn't stop Don, who, in collaboration with Ford's then general-manager Lee Iacocca, set up Mustang planning sessions with a design and engineering team "in a motel at night and in a storage room by day." They "borrowed from other Ford vehicles, including a Falcon chassis," but "developed an identity all its own for a younger generation in search of new looks and experiences. It was designed to appeal to both men and women, had a dash of elegance copied from European sports cars, and featured a galloping steed in the middle of its grille (image) that buyers thought was, well, really cool."

Don was once quoted saying that he was inspired to design the Mustang after watching Chevy put bucket seats in its Corvair, re-badging it as the Monza and improving sales. But in another account, he said his inspiration was his children, who told him, "Dad, your cars stink. There's no pizzazz." Henry Ford finally approved the Mustang, but told Don he'd be fired if it failed, and deleted no expletives to make his point. When introduced at the New York's Worlds Fair on April 17, 1964, Ford thought it "would sell 80,000 Mustangs in its first year. It sold more than a million in its first two years."

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