Published on: January 31, 2020
Got the following email from an MNB fave, Julie Lyle:
I enjoyed your commentary and agree that CPG companies are facing tough challenges today, as they have been too far removed from consumers for decades. To be fair, big brands have been beholden to their retailer intermediaries who "own" the customer relationship (especially in the consumable sectors). These retailers are often not forthcoming with shopper insights - or they themselves have not mastered a holistic view of their buyer personas and shopper journeys.
As retailers accelerate growth of their own private label brands, which are often knockoffs of their CPG partner products, the CPG companies find themselves in a tough position. They are sandwiched between competing with their own distributors as well as competing with digitally-enabled upstarts like Harry's and so many others. It's time for CPG companies to find innovative ways to form meaningful relationships directly with consumers, and thereby capture the insights they need for product innovation, promotional efficacy, increased speed-to-market, and more.
Which could lead to something often discussed but not acted upon - a concerted effort to disintermediate traditional retail.
We had a piece the other day about the financial issues faced by many young people, which leaves them without the disposable income that helps to drive economic growth. One MNB reader responded:
Great discussion piece. I see many of the Democratic candidates offering to wipe away student debt as part of their campaign giveaways. Others have responded with how is that fair to all those students and/or parents that have sacrificed and saved to pay off their loans as they committed when they took out the loans. We hear about the multitudes of students remaining living at home years after their graduation because they can’t afford to pay rent. And a large % of renting today because they can’t seem to save enough for the down-payment.
Rather than target wiping out student debt why aren’t these candidates looking to solve the housing crisis. How about offering no down-payment loans for starter homes and reduced interest rate for the 1st five years. How about creating affordable housing options like modular homes which have to be cheaper than some of the rents that are being charged in urban locations. My first condo was subsidized by our local bank offering 4% interest rates for the 1st 10 years when rates were as high as 14%. I found a way through my local bank to buy early on in my career when I had different barriers - exorbitant interest rates.
Responding to the comments here about the inevitability of a recession and the challenges retailers will face, MNB reader Matt Nitzberg wrote:
Whenever the next recession comes, retailers who have been paying close attention to customer (shopper) data will be much better prepared to manage the belt-tightening that will inevitably accompany it. In the ~10 years since we shook off the worst of the last recession, these retailers have developed 3 advantages:
• They've developed a much deeper understanding of their price-sensitive shoppers as well as shoppers who have become more sensitive over time.
• They are 10 years further along in understanding which shoppers respond to which activations (by channel, content, incentive, etc.).
• They've used the data to help create a more stratified approach to private label brands, which are likely to capture market share from national brands as shoppers trade down on price points while retaining their aspirations for high quality products.
On a different subject, I got the following note from an MNB reader:
I applaud Kellogg’s for there move to ban the use of glyphosate in the production of grain for use in their products. However in my opinion they should do it immediately and not wait until 2026. This product is dangerous and is purported to be cancer causing.
The list of countries banning the use of this product is long and growing longer each year. Most of the Glyphosate restrictions or bans throughout the world were introduced following the 2015 IARC report on Glyphosate. The IARC report concluded that Glyphosate is a “probable human carcinogen.” With this knowledge why are American companies allowing farmers to spray their crops with this product? As far as the comment from the National Association of Wheat Growers that this product is safe and that if totally eradicated “producers would stop producing” is ridiculous.
Wake up folks !!!! This is serious. Get this product out of our food chain now. Why is most of Europe and many other countries taking action and the US is doing nothing. Its time to stop the use of Glyphosates in this country in the production of our foodstuffs.
Regarding what retailers can learn from the independent bookstore resurgence, one MNB reader wrote:
Often times the Independent Book store is really the “beating heart” of the community. I offer you Bookshop Santa Cruz which is a family owned Book store that has been serving the community for nearly 50 years.
In 1989 when the Loma Prieta Earthquake hit Santa Cruz the original building was destroyed along with much of Pacific Ave which is the “Main St.” Bookshop Santa Cruz had one opportunity to retrieve the books that were hidden in the rubble of the building. They reached out to the community and dozens of volunteers brought their trucks, red wagons and the like to save the books for the tent that they operated out of until the facility was rebuilt. The support from the Santa Cruz community has never wavered. I suspect that many other communities have similar stories!
And, responding to our story about the new Atari-themed hotel chain, MNB reader Scott Nelson wrote:
What’s next, a Pokemon themed hotel? That would be a worse hell. Pikachu, Pikachu, Pikachu …
In the words of my ancestors…Oy.