retail news in context, analysis with attitude

Published on: June 1, 2015

by Kevin Coupe

The New York Times reports this morning that George Zimmer, the founder of Men's Wearhouse who was best-known to the public as the TV spokesman for the chain, and who was ousted from his leadership role at the company several years ago, has come up with a new men's clothing business.

Called zTailors, the company is designed to connect tailors who are willing to make house calls with consumers who need their wardrobes refitted ... and it is described by Zimmer as like "Uber for tailors."

Zimmer says that the new enterprise "has the potential to transform millions of ill-fitting garments into like-new items. Its app and website allow customers to schedule a tailor to come to their homes or offices, where they will measure and refit suits, shirts, jackets and dresses for a set price. The altered items are then returned in a few days."

zTailors is designed to be both a resource for consumers and a boon for tailors, who, he says, should be able to as much as double their annual income by hooking into a system that is slated to eventually be national in scope. (Zimmer, who is largely funding the business himself, gets a 35 percent cut of the tailoring fees.)

“In the closets of Americans," Zimmer tells the Times, "there is billions of dollars’ worth of apparel that has accumulated over the years,” he said. “It doesn’t all appear on the good side of the closet. It doesn’t all fit. That’s either because it has shrunk, or you have grown.”

Here's what interests me about zTailors, other than the fact that as someone who has gained and lost a lot of weight over the years. The Times notes there is no real competition in the "tailors who make house calls" business.

But the Times misses this important point - that every tailor who does not make house calls and does not become part of zTailors is the competition ... and has the potential of being disrupted to some degree.

Give you an example. When my father-in-law passed away, he had a closet full of suits from Paul Stuart that almost fit my son, Brian. Almost. So we took all those suits into a local tailor and spent a not-inconsiderable amount of money have them tailored so they'd fit him. (It was actually a small amount of money compared to the value of the suits. I was almost a little sorry that not of them fit me, but then again, in my business, I have almost no use for suits. I own one.)

But had zTailors existed, we might never have taken those suits into town, but rather might've gone online and arranged for a house call. That log-on may have gone to my local guy, but it might not have.

Here's the thing. I'll bet that until this morning, my local tailor never would've dreamed that he'd be facing Uber-like competition. If he's not reading the New York Times or MNB, he still may not.

That's the reality of doing business in 2015 and beyond. No matter what you do and where you do it, there always is the possibility of somebody coming out of the woodwork to challenge you.

It is an Eye-Opener.

Published on: June 1, 2015

Continuing tumult in the olive oil business, as Time magazine reports about how "the National Consumers League tested 11 different olive oils purchased at various supermarkets, and found that six of them, despite being labeled 'extra virgin,' weren’t extra virgin at all.

Of course, the story says that this is consistent with other studies that have cast doubt on the accuracy of olive oil labels: In 2011, for example, "the University of California at Davis found that about 69% of the olive oil sold in the United States is adulterated."

However, Time also notes that the study wasn't exactly a "study," that it was more random than "scientific," and that the companies involved argue that the testing methods were not reliable. (The NCL says it will go back and do further testing.)

Interestingly, the NCL would not identify the six that failed its test, but did say which five did: California Olive Ranch Extra Virgin Olive Oil, Colavita Extra Virgin Olive Oil, Trader Joe’s Extra Virgin California Estate Olive Oil, Trader Joe’s 100% Italian Organic Extra Virgin Olive Oil, and Lucini Premium Select Extra Virgin Olive Oil>.

Published on: June 1, 2015

The Washington Post has a piece by Steve Case, the founder some 30 years ago of America Online, that looks at the latest iteration of the internet, which he describes as the 'third wave."

"The third wave of the Internet is about to break," Case writes. "The opportunity is now shifting to integrating it into everyday life, in increasingly seamless and ubiquitous ways. These third-wave companies will take on some of the economy’s largest sectors: health care, education, transportation, energy, financial services, food and government services. These third-wave sectors — all now ripe for disruption — represent more than half of the U.S. economy."

You can - and should - read the entire piece here.

Published on: June 1, 2015

The Wall Street Journal reports that Nordstrom has introduced a new application called TextStyle that allows "shoppers buy shoes, clothes and other products suggested via text messages from in-store sales associates ... Using TextStyle, a salesperson can chat and share images with customers who opt in to the service. Customers can buy a product immediately by texting a unique code to Nordstrom, without having to type personal and financial information already on file. The service is part of a push to use technology to preserve the close relationships Nordstrom sales associates cultivate with individual customers, said CIO Dan Little."

As innovative as the application is, TextStyle also reflects a new approach to technology on the part of the retailer.

According to the story, "The app is the first new product to market after Nordstrom upended its approach to innovation earlier this year. As Nordstrom has hired senior executives in sales and other areas who have a mix of technology and customer service backgrounds, its central lab is now playing a smaller role." Little says that cultivating "Tech expertise outside of IT makes innovation more viable throughout the company."

Published on: June 1, 2015

Shazam, perhaps best known for its music identification mobile application that allows people to identify and even order music they hear in a variety of locations, said last week that it has developed an app for visual recognition.

The company said that "users with the latest version of Shazam installed on their mobile phones can simply open the app and tap the new camera icon to start the visual experience. Whenever they wave their phone over any item with the Shazam camera logo on it or a QR Code, they’ll instantly get taken to custom mobile experiences including interactive content, special offers, and ability to purchase items or share them with others."

Target is among the companies establishing a partnership with Shazam "to make print and TV ads shoppable through your phone. By Shazaming these images, guests will be able to engage with additional content and shop featured products by linking to target.com."

Shazam says that among the things it brings to the table is a customer base of more than 100 million monthly active users.

Published on: June 1, 2015

• The Seattle Times reports that Costco has decided not to raise chicken prices in its club stores, despite increased wholesale poultry costs related to an avian flu epidemic that has wiped out some 40 million chickens and turkeys.

In an earnings call with analysts last week, CFO Richard Galanti offered some perspective on the company's philosophy.

"“We’ll have to see,” he said. “I can only tell you what history has shown us: When others were raising their chicken prices from $4.99 to $5.99, we were willing to eat, if you will, $30 to $40 million a year in gross margin by keeping it at $4.99. That’s what we do for a living."

The Times notes that "it’s what keeps people coming into the warehouse, where they can be tempted by that 72-inch TV. Costco sold 76 million rotisserie chickens in fiscal year 2014 — nearly one for every one of its 78.7 million cardholders."


• Investors Business Daily writes that while Whole Foods, Sprouts and Kroger are the names most often cited when discussions take place about burgeoning competition in the organic food business, "membership warehouse Costco might have stealthily pulled ahead in organic sales.

"Costco's organic food sales are at a run rate of $4 billion, according to BMO Capital Markets analyst Kelly Bania, up from about $3 billion just six to nine months ago and 'possibly now already eclipsing' industry leader Whole Foods' estimated $3.6 billion."

Bania also writes that "as the gap between the age of the average Costco member and average American is already narrowing, its growing organic presence could attract the all-important younger shoppers and support 'an outlook for Costco to connect with an increasingly important consumer group — millennials — where we believe Costco remains underpenetrated currently'."


• Finally, my old friend Fred Horowitz - who is the CEO and founder of AP Deauville, which manufacturers value-priced personal care brands - wrote a blog post the other day suggesting that Jet, the new online retailer founded by Marc Lore - who also founded Quidsi and then sold it to Amazon - could be a disruptive force to Costco.

"Financed with $200 million before opening, Jet’s market is the mass consumer that cares about value and will sacrifice convenience. All of Jet’s profit and overhead is covered by the annual membership fee. They pass through product at cost to the consumer. Buy more than $35 and shipping is free," Fred writes, noting that the general consensus is that its target consumer will be less affluent than Amazon's ... and potentially much the same target consumer as Costco's.

You can Fred's entire post here.

Published on: June 1, 2015

• Xconomy reports that Wisconsin-based Woodman's Markets will begin offering online shopping this month using software developed by GrocerKey. It is the first chain to adopt the system, which thus far only has been tested in a single-store pilot.

Published on: June 1, 2015

• The San Antonio Business Journal reports that "Walmart and the Walmart Foundation donated $500,000 to organizations that are assisting with flood relief efforts in Texas and Oklahoma ... In Henderson and San Marcos, Walmart donated and delivered 75,000 bottles of water to families. In Houston, Wimberley and San Marcos, the company sent shipments of cleaning products, diapers, work gloves and other household supplies to support flood relief efforts."

Published on: June 1, 2015

• The Associated Press reports that Dollar Tree "has agreed to sell 330 of its stores to the private equity firm Sycamore Partners in order to get regulatory approval for its $8.5 billion purchase of Family Dollar." Terms of the deal have not yet been disclosed.

Published on: June 1, 2015

• Ahold announced that Paul Kneeland, the former director of produce and floral operations at Roche Bros. and most recently vice president of produce, floral, seafood and meat at Kings Food Markets, is joining a new Ahold division called Fresh Markets LLC as vice president of fresh merchandising.

Published on: June 1, 2015

I was enthusiastic the other day about the decision by Price Chopper to sponsor a Pandora radio station - House of BBQ, which I happen to love - which allows it to gain a different sort of visibility to existing and potential customers. My only quibble was that it seemed a little un-targeted - since I was getting the station and don't have a Price Chopper anywhere near me.

One MNB user offered the following explanation:

Kevin, Pandora allows the advertiser to target geographically.

When individuals open a Pandora account, they are required to provide their birth year, zip code and gender to create an account. So advertisers can easily target an age, geographic area and gender.

Of course, whether the listener pays attention to an ad is an entirely different question, but that's true for any radio station as well as all media.  I have several clients who use Pandora, and we now include Pandora on our list of responses to the question "where do you recall hearing their advertising."

Good. Though, to be fair, I'm still getting the station and don't have a Price Chopper anywhere near me. (But maybe I'll get lucky and this presages a decision by Price Chopper to move deeper into Connecticut....?)




Regarding the new Sesame Street cookbook for kids, one MNB user wrote:

I do wonder if it would be a bit confusing for kids to see animal characters encouraging them to eat… animals.   Or maybe they left Big Bird out and kept in only the inedible monsters.

I think only adults ponder this stuff.




I got an email from MNB user about the decision by one employer to commit to paying college tuitions for all the children of employees who have helped him start the company:

Will be curious to hear more details on this, but my immediate reaction is what is his plan for employees without kids?  How will their reaction be to this and if nothing is offered to them does it actually become demotivating?

Forgive me, but it seems to me that this email is illustrative of one of the things that is wrong with America. (Okay, I may be painting with a broad brush here, but hear me out...)

If I were an employee without children at a company where they offered this kind of benefit, I think there would be something seriously wrong with me if I found this benefit to be "demotivating," or if I wondered when I'm going to get mine.

I'd like to think that I'd believe that this policy says something really positive about the place where I work, that it reflects a willingness to invest in employees rather than treat them as costs, and that the health and sustainability of a company has to be measured in big ideas, not small-minded thinking.

From MNB reader Jeanette Coulson:

It’s interesting that companies are offering this again.  It was a standard perk for a long time for employees of colleges or hospitals connected to an R&D department of a college but several did away with it to ‘save’ money a few years back.  I know there are still some smaller colleges who offer it,  not sure about hospitals but based on the cost of tuition,  this would be a very big benefit to not consider it when determining who you work for.

I think it’s awesome!

Me, too. I'd like to think that companies may start doing these forward-looking things again as they look to differentiate themselves in the marketplace as premium and preferred employers.

It has been interesting to read some of the political coverage recently and see that the cost of college may become a point of contention in the coming presidential contest. I know that there are some who seem to believe that everybody ought to have the right to a free college education, and I suppose that it is worth developing a higher education system where that option is available.

But it also seems to me that one of the things that we ought to do - and can do, immediately - is make it possible for any American to write off the cost of a college education (and graduate school) on their taxes, and also write off the interest and principal on college loans. This would open up higher education possibilities for a lot of people, and stop the vicious cycle in which we find ourselves, in which people get out of college with such crushing debt that they are unable to buy houses, invest, raise families, and do all the other things that help drive the economy.




Regarding the apparent trend moving away from "big food," one MNB user wrote:

I think the change away from mass produced food has been stimulated by increased information about the chemicals involved, the Long lists of ingredients with unpronounceable names on many mass produced foods, the chagrin we experience when we try to find "real" ingredients we expect in foods (just try to fine a oil and vinegar salad dressing with Olive Oil in it), but mostly because we all seem to know someone with an autoimmune disorder which no one seems to know the causes of at this point.

I am in my sixties, and I never heard of autoimmune diseases until about twenty years ago.  Now I know numerous folks who suffer from a variety of them.  And after the cigarette fiasco, who trusts a major company when they tout the safety of their products?

To use the Latin proverb I often quote here, "Trust, like the soul, never returns once it goes."

This is something that more businesses need to think about as they make critical ethical decisions.




And, on another subject, from MNB reader Tom Herman:

I know I pick on you probably too much, but you seem to hit on my pet peeves.  One is setting up an imaginary straw man and then coming in as the only adult in the room to smack it down.  It goes something like this, “some Democrats say that government is the only solution to our problems”, I say that there is a place for a lighter approach from government by empowering the people through choices and freedom.  It sounds so reasonable, but the fact is no one has ever heard a Democratic leader say that.  This trick is used by Obama as an art form.  “Some say the only solution to Iran is war”, for example.  No one has said that.  You did it yourself in the paragraph below.  I read a lot of information on the minimum wage and haven’t heard that standard line being used against the minimum wage.  You may have heard the straw man, but not the actual quote.  Still love ya though!
 
Some will say that better paid employees do not necessarily translate into more motivated and productive employees. (This is a standard line used to argue against an increased minimum wage.) That's true ... but creating a dedicated, motivated and productive workforce doesn't stop with a bigger paycheck ... it just starts there. Employees want to feel they have some skin in the game, that their opinions are valued, and even that they have a sense of ownership.

Point taken. And I'm not a big fan of straw men, either.

But ... the thing is, I've gotten emails from people who have questioned my frequent assertion that better paid, better appreciated employees will result in more motivated and productive employees. They think I'm smoking something, that the responsibility of businesses is to get as much out of their employees for as little compensation as possible. In short, they think I'm a flamin' liberal for suggesting any such thing.

Well, they can think anything they want. But in the George Bailey-Henry Potter debate, I'll go with George Bailey. Every time.

That's no straw man. It is, in fact, a debate that probably dates back to the beginning of employer-employee relationships.

And I still love you too.