nickgerlich
Dr. Nick Gerlich
Nick Gerlich is Hickman Professor of Marketing at West Texas A&M University in Canyon TX. If he's not banging away at his keyboard you can find him:
a) riding his bike
b) shooting photos
c) exploring Route 66
d) #chasingneon
e) all of the above
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Road Does Not End
We have all heard the horror stories of navigational systems erroneously taking people down dead end roads, or, worse yet, along a road that ends in water. You probably even have some of your own stories. I remember only nine years ago when late one night, Apple Maps was supposedly taking me to a motel in suburban Las Vegas. Instead it took me far out into the desert to an empty field of creosote.It was the perfect set-up for a homicide, I tell you. That’s when I became a loyal Google Maps user.
In some regards, today’s final blog of the semester is much like that Road Ends sign we have seen before. Twelve weeks have come and gone, and it is time to hit the Save button one last time. I get to give my brain a rest, although I’m sure I will find ways to occupy it with other writing projects. And you get to focus on your final deliverables before moving on to other things.
It’s just that the road really does not end. It just means that I will no longer be your guide. Instead, you’re on your own, and you have to fill in the blank beyond that sign. It’s up to you to carve out the rest of the path, the one you will follow in life and career. It’s no small task, but I am confident that you will do a good job.
All I did was provide the pavement and guard rails, pointing you in the general direction. Along the way, I hope that you have discerned the need to remain ever vigilant in your quest of knowledge, and, more importantly, awareness of what is going on around you. Every topic we discussed in our blogs this term was rooted in something current, a happening, trend, or whatever going on beneath our noses.
Failure to be aware renders a person or company vulnerable. It’s all about trying to stay ahead of the curve, not behind it. We have had ring side seats to companies grabbing the bull by the horns, as well as those getting gored by them. The latter is not a good look, and probably could have been avoided with a little strategy.
Think back on some of the things we have observed on this journey. We have returned numerous times to the subject of AI, which is the biggest revolution of the current time. We do not fully understand all of the implications just yet, but we do know this: You can’t ignore it, and it’s not going away. Better to grab those horns.
We’ve had repeat appearances by the big guns of American business, Walmart and Amazon. It is hard for them not to keep popping up, especially when the two are in an innovation showdown. Capitalism really does bring out the best in everyone.
Another cast member has been social media, the collective force that upended the way companies advertise as well as get to know us. That’s code for “gathering information.” We have discussed privacy, state and federal legislation, and more, but we have also reflected on the social good and social evils it brought along for the ride.
The best part, as it is every semester, is that we are writing the text book for this course. I merely wrote the prologue. In your responses, you wrote the chapters. Each semester is unique, and this one has been no different.
I hope that I pushed you out of your comfort zone. I hope that I motivated you to consider new ideas, even ones that challenge your belief systems. I pray that I shook you up a little bit, enough that you needed to put yourself back together again. How you reassembled yourself is the product of this class, the new you ready for new challenges.
Here’s to you, my students! May you live long and prosper. May you go on to do great things, always remembering that how you live your life and how you treat people are far greater than the degrees you have earned. May you keep your ear to the ground, always listening for the changes that are coming. I hope you hear them coming before anyone else does.
And when your navigation system fails, know that you can boldly keep going, carving out a path with the tools you have obtained.
Dr “Roll With The Changes” Gerlich
Audio Blog
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0 To 5 Billion
Twenty-five years ago, the number was 0. No, it wasn’t the temperature, in either Fahrenheit or Celsius. It wasn’t the inflation rate or the interest rate. It wasn’t the number of EVs that had been sold.
Nope, it was the number of people on social media. It simply did not exist. But data released earlier this year show just how much of a force it has become, because there are now slightly more than five billion people worldwide on social media, or 62.3% of the world’s population. It may not be Ferrari-like acceleration, but it is still pretty impressive.
The typical user spends 2h23m per day on 6.7 platforms. Of course, your mileage may vary, but those are the averages. Among Android users, they spend 34 hours per month on TikTok and 28 hours per month on YouTube.
And you wonder where all of your time went.
Overall, Instagram takes top honors as favorite platform, toppling WhatsApp, a popular platform everywhere but the US. Overall, we spend 6h40m a day online doing one thing or another. Based on my weekly screen time report that pops onto my phone every Sunday morning, I am above average.
All of this time has to come out of other things, since we are still kind of locked in at 24 hours available each day. Television watching is in decline, losing another 17 minutes last year. I suspect it is also coming out of interpersonal time, productive time at work, and leisure activities. Sure, we might figure out how to juggle things (how many of you keep a social app open on your computer while at work?), but let’s face it: You’re probably not dedicating quality time to either.
And since marketers go where the eyeballs are, digital ad spend grew by 10% last year to $720 billion. Social media ad spending was $207 billion.
So what does this say about us as a people? A lot. It says that we have changed considerably in a quarter of a century, that no matter how much we may naysay social media specifically, or this digital lifestyle more generally, we have embraced it all nonetheless.
Social media has become the way that people connect and reconnect. Yes, some people use it as a substitute for F2F interactions. Like it or not, this is how we do it, and in the developed world, it has become the de facto means of communication. When was the last time you sent a greeting card of any kind, such as birthday, holidays, anniversary, etc.? Do you even call people these days? My calling log grows more sparse with each passing year. Do you no longer feel the need to attend reunions and similar social gatherings, because you already know what your old pals have been doing thanks to their posts?
We get our news online. We find our entertainment online. We shop online. We get our recipes online. There’s not much we don’t get online. And the implication to marketers is clear as the world approaches digital totality: you either join the tidal shift in redirected advertising dollars, or run the risk of completely losing relevance.
But as we continue the transition, we must be cognizant of the fact that old-school methods of advertising, notably mass communication on broadcast or print media vehicles, is probably a waste of time and money. A shotgun approach to advertising means spending massive sums to spray messages in the general direction of people, hoping that you actually reach some of the people you really want. We can do much better now with targeted advertising. It behooves us to understand the users of each platform, and then utilizing all of the tools available, go after specific people. The audience of many has been replaced by the audience of one.
I know that this creeps out some people, as we have discussed multiple times. But as we approach the end of this course, we need to step back and try to see the bigger picture. This is where we are. Digital marketing commands an ever growing portion of all marketing activities, and I suspect that, while old-school methods may never go away completely, it will be the gorilla in the living room.
Discussion topics like this may summon comparisons to Black Mirror, the Jetsons, The Matrix, and numerous other pop culture touchstones. Those may very well have been prophetic; we just didn’t realize it at the time. If you are uncomfortable with change, you’re in for a rough ride ahead. I don’t see this crazy train slowing down any time soon.
I do hope that my students will ponder these stats, but more importantly think about what it all means. Things have changed even in just the three months we have been journeying together. It may not feel like much, but when you turn to look over your shoulder, you can see just how far we have come, not just in 2024, but in the last 25 years.
That little speck you see in the distance is where we were. We can’t go back there, and to try is futile. Zero may have been quaint, but we’re at five billion now and growing. What you do with that reality is up to you.
Dr “The End Is Near” Gerlich
Audio Blog
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Discomfort Zone
One of the hazards of getting old is having to realize that marketers care less and less about you as a demographic. While it may be true that Baby Boomers hold 51% of the wealth, as I have said before, our major spending days are over. This becomes truer and truer the older you get, when travel is out of the question and you just don’t need anything else for your house or apartment.
I noticed a shift about five years ago when we were on our usual summer road trip. I had read about them before, but it was not until we made it to Deadwood South Dakota that we actually had the opportunity to stay at a Tru by Hilton. They are positioned as Millennial- and Gen-Z-friendly, usually on the slightly cheaper end of the Hilton rate spectrum.
We actually loved it, if only because it was different. The spacious commons with the check-in desk in the center, the generous breakfast offerings, the cozy work and play areas (think foosball) made it feel more like a dormitory. But then again, that was all by design, because the target audience was still pretty fresh out of university.
I also joked about the very modest, minimalist furnishings in the smaller-than-average room. “If IKEA were in the hotel business, this is what it would look like…but with no assembly required,” I said.
Yeah, old people are not the target for this. Most old people, that is. And Millennials and Gen-Zers represent the future, starting their careers, buying homes, taking trips, spending lots of money, developing brand preferences.
It’s a great concept, and other chains have similar young adult-oriented brands as well. It’s a great demo with a lot of upside potential, especially if you can attract them and then get them to be brand loyal. Who knows, maybe they will brand-up as their incomes grow, staying under the corporate umbrella, but climbing the ladder of brands with more amenities.
I guess that’s the thinking at Choice Hotels and their new campaign to attract Millennials and Gen-Zers, leaning heavily on TikTok as their campaign vehicle. The campaign uses influencer Jimmy Darts, and includes giving away a couple of vacations to Austin and Orlando, both hot spots for younger adults.
Interestingly, Choice is using its mid-tier brand (Comfort) and upscale Cambria Hotel, going counter to Hilton and the others with their IKEA-like brands. But Comfort does not have a brand in its fleet that comes close to those. It has several budget chains, a couple of chains offering longer stays and suites, several upscale brands, and then the middle-of-the road Comfort. Rather than create a new brand that appeals to young adult sensibilities, they’re going with what they’ve got.
Which is another way of saying I am not sure the execution is as great as the idea behind it. TikTok and Jimmy Darts are perfect, but the hotel properties are a little cludgy. It’s almost like the Levi’s of old trying to sell denim pants to women, but only having men’s versions available. Sometimes you have to adjust the product for a different audience.
Of the two brands they are promoting, the mid-tier line has the better chance of attracting the demo, but even then, it smacks of late-1900s and early-2000s motels their parents took them to on family vacations. Unless a young person or couple is in a higher income bracket, the Cambria is probably going to be out of the question, at least for now.
The statements from Choice’s CMO reflect a half-baked effort. It’s cooked to perfection on top, but still cold in the middle as they remain committed to their core brands. That’s fine, but only to a point. If your target demo has not previously been staying with you, there’s probably a reason. It might just be that those core brands don’t appeal to them. Hilton and the others recognized this. See above: Tru by Hilton.
I give a C+ to this campaign. It has some teeth, but there’s just not enough flesh to bite into. I wouldn’t buy this if I were 30 again. But that’s just my choice.
Dr “Without Reservations” Gerlich
Audio Blog
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From Manila, With Love
If you have been in a fast food joint in the last couple of years, you have probably noticed the shift away from human cashiers and ordering, replaced by touchscreen kiosks. They are easy to use, and assuming you don’t use your fingertips to touch those nasty germ-filled screens, make for a quick and seamless transaction. (Pro tip: Use your Proximal interphalangeal joint—that’s your big knuckle—on your index finger. You’re welcome.)
I’m pretty sure we all understand the reasons why restaurateurs have gone down this road. It saves labor, helps solve the problem of finding labor in the first place, and alleviates concerns of whether your employees will bother to show up.
But what about the people who still crave a little human interaction, or have trouble using the technology? Is there a middle ground?
Turns out there is, but not exactly how you thought it might work. Last weekend this newsy item went viral on X and then spread across the social and news graphs. SanSan, a small fast food chicken chain in New York City, has installed not just touchscreens, but also monitors that effectively allow for Zoom cashiers to pop in, ready to assist as needed and provide a thin layer of customer service. It’s just that the virtual cashiers are in the Philippines.
It’s a brilliant idea, to be honest. The minimum wage in the Philippines is $3.75 an hour, compared to New York City’s $16, and once you factor in all other labor expenses here in the States, like Workmen’s Comp, that Zoom cashier costs only about 10% as much as they would in NYC. Ding ding ding.
Naturally, there will be critics, in part because it is still less than personal compared to how we did things in the old days (meaning pre-COVID), and because they are outsourcing labor. The latter is a bone of contention that won’t go away, as long as there are global economies with workers willing and able to perform for much less than their US counterparts.
Lest you think that SanSan has completely stripped the process of American culture, customers are presented with the opportunity to tip the cashier on their screen, something that probably would not happen if you were in the Philippines. Tipping culture is alive and well, even onscreen.
This is not the first time that video cashiers have been used, and the Philippines is not the only labor source. Basically, wherever you have reliable internet and willing workers, this is a very real option. The digital era reveals itself in yet another way.
There is an upside, of course, and that is the face on the screen is connected to SanSan’s ordering system, and can help customers if they make mistakes or have special requests. Not everyone feels comfortable using the technology (I’m looking at old people, myself excluded).
Digital Natives (meaning Gen-Zers) will have no problem placing an order, because it is little different from everything else they have done online and with touchscreens. But for those whom find this all a little bit rattling, having someone to hold your hand and settle your anxieties is a good thing.
What’s next, though? If SanSan or any of the others need or want to trim even more labor costs, the next logical step is a digital assistant like Alexa or Siri. This will require a hefty commitment to AI, but at the same time may still fall short of the human touch who would easily know how to add extra soy sauce or not use fish sauce, for example.
I suspect, though, that this is where we are headed. We can also find some comfort in knowing that the digital naysayers are, sadly and yet quite literally, a dying breed. But know ye this truth as well: You too will get old one day—if you live long enough—and you may very well find yourself as the future grumpy old person who can’t or won’t adapt to whatever is the new thing then.
If I were in NYC, I’d stop by SanSan in a heartbeat, and even go out of the way to do so. I want to see this in the wild, not just in a news report. And if it’s not busy, I’d strike up a conversation with that cashier halfway around the world. There have to be some stories waiting to be told.
Dr “Hold The Mayo, Please” Gerlich
Audio Blog
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Notes To Ponder
They say that imitation is the sincerest form of flattery. If that’s the case, then in the social media arena, there has been a lot of flattery going on in recent years, and there’s no end in sight.
Back in the old days, when Facebook was squaring off with Twitter, and MySpace had already been relegated to the dustbin of digital history, it was all about how long your posts could be. Twitter limited users to 140 characters, while Facebook allowed 420, although if you posted a Facebook Note, you could go long-form if you wanted to. Think blog or endless rant.
Images then became the cause du jour, with Facebook leading the fray. Twitter was so streamlined in its early days that third-party apps popped up to handle all of the things that Twitter couldn’t or wouldn’t, which basically meant photo sites that provided users a link to a pic, as well as schedulers. I once scheduled a tweet to happen while I was getting a colonoscopy, but that’s probably TMI. I just wanted to see how it worked. (It worked just fine, and I was just fine also.)
Instagram came along in 2010, with the focus on the image first and foremost. Native filters, most of which were terrible by today’s standards, became all the rage, and the square format photos (a throwback nod to Polaroid, of course) set the app apart from everyone else. Facebook, threatened by this upstart, did what any smart company would do: They bought it in 2012.
Twitter then launched Periscope, a stand-alone app that allowed users to go live with video posts. These had to be done in portrait—meaning vertical—mode, which was prescient of what would come to pass a few years later. Facebook quickly copied it, but allowed for landscape—meaning horizontal—videos as well as portrait.
Moving along, SnapChat became popular with its disappearing stories. Instagram responded by adding a me-too version. Then TikTok gained traction here with their short-form videos, which Instagram quickly copied as Reels. They were then rolled into Facebook as well. And just last July, Meta, parent company of Facebook and Instagram, launched Threads, their Twitter—I mean X—rival, at a time when many X copycats were landing in the App Store. Threads has been the one with the most staying power, though.
But as much as TikTok has been in the headlines lately, it is Instagram with its two billion users, roughly 2X what TikTok has, that makes it the gold standard these days with all manner of imagery, from stills to stories to reels. They’ve got it going on.
And now comes rumors that TikTok is about to launch TikTok Notes, an odd name for a photo-intensive app that is designed to take on Instagram’s original intent. Never mind that TikTok’s future in the US is completely up in the air for now (and certainly dead in the water for state employees in 34 states). TikTok plans to duplicate posts from its users adding still photos, populating the new Notes app with initial content, and then hopes that it becomes a parallel channel for engagement.
Remember at this point that Instagram has managed to do it all in one, even though there has been much uproar over its algorithm deprecating still photos in favor of Reels. I felt that pain in the last year, because I prefer to focus my posts on stills. I neither have time nor interest in shooting lots of videos, as well as posting something less than polished.
So here we are now, with the looming possibility of yet another app and yet another time suck. I currently maintain steady streams on my Facebook, Insta, and Threads, and occasionally have dabbled in LinkedIn. But I have been terrible trying to keep my LinkedIn going, because I still see it as the site you use when you’re looking for a job. I’m not. I just don’t have enough bandwidth right now for a fourth app to maintain, much less even entertaining TikTok and its spawns.
At best, all this me-tooism is finding us slicing the pie into ever smaller pieces. That’s OK as long as you can find your tribe and have fun doing it, and the sites can make money. Furthermore, it helps bolster arguments against monopoly power that have been hurled at Meta. No, competition is still alive and well. It’s just I can’t contemplate too many competing platforms at the same time.
Besides, I would probably run out of photos and words to post.
Dr “I’ll Sit This One Out” Gerlich
Audio Blog
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And Ye Shall Marvel
Show me an effective digital campaign, and I will show you one that has high levels of user engagement. It’s one thing to pull all the levers and be everywhere, but it is quite another when you invite people into the campaign to reach for a little more.
And that is exactly what Coca-Cola is doing with their new Marvel joint promotion. It brings two powerhouse brands together to coincide with the late-July release of yet another Marvel movie. The promo includes special cans and bottles bearing Marvel super hero images, along with scannable QR codes. Once scanned, users are whisked away to AR content to supplement and support the messaging provided on the packaging.
There’s somewhat conflicting information online about exactly how many characters will appear, and where they will appear. It looks like Coca-Cola Classic and Coke Zero will share center stage, although I did read one story implying there could be more. Also, the number of characters ranges from “more than 30” to as high as 38.
That’s a lot of opportunities for engagement!
It’s also a page from an old playbook in the beverage industry, minus the QR and AR aspects. Starting back in the 80s, beverage makers started releasing sets of cans to coincide with a cross-promotion of another brand, or to promote something for which the beverage company had an exclusive affiliation, like the Olympics. As a long-time collector of beverage industry memorabilia, I can attest to how intense things can get trying to find every one of the items in a set. Because an incomplete set is just that: Incomplete. No bueno.
The current promotion will be in more than 50 countries, and already eBay is filled with cans from across the globe. Collectors alone will probably ensure the success of the campaign, but once you factor in the casual consumer just scanning the can they happened to get at the local c-store, this has the potential to be massive in impact. Maybe.
The movie doesn’t come out for another 3 1/2 months, and already supermarket shelves are filled with the initial shipments of Classic and Zero. The cardboard 12-pack packaging reinforces the campaign, and stands out nicely on shelves. Visual appeal is high.
The campaign comes at an important time for Coca-Cola, as well as all soft drink manufacturers, because consumption is down. Per capita consumption peaked around 2000, with about 50 gallons apiece. It has dropped steadily ever since, and now sits at just under 43 gallons per person. Stir in the Ozempic craze, and it is possible that food and beverage makers selling less-than-healthy products may continue to see sales declines.
But that decline started long before silver bullet products like Ozempic were ever available, meaning that changes in consumer behavior have been ongoing. I honestly could not tell you the last time I actually sipped a soft drink, although I still buy—and drain—cans I need for my collection. Can the current promotion reverse this downward spiral? That’s a tough call, because the trend line is clear. Coca-Cola needs it. Oh, and Disney, who owns Marvel, could also use a big boost at the box office. Misery loves company perhaps?
There’s another interesting aspect at play here as well. Quick! Show me a product that used a QR code before COVID. I’ll wait. I might be waiting a while, though, because I bet you can’t think of one. But show me a product available today whose packaging doesn’t contain a QR code, and I bet you would be equally hard-pressed. They became ubiquitous during the pandemic, and marketers and consumers alike finally realized their value.
I use the word “finally” because QR codes have actually been in existence since 1994, although they did not get a bump until about 2010. It’s just that there were still too few people with smartphones then to be able to scan them, and they landed with a thud. Worse yet, you had to download a QR-reader app. At least phone manufacturers finally figured out they could build that into their native camera app, and they could be used in myriad applications.
I saw them in China in 2019 as a payment gateway in restaurants. How many of you have paid your tab with a QR code here in the States? It is starting to gain traction, and I love it, if only because I do not have to surrender my card to a total stranger, who disappears with it for five to ten minutes.
As for marketing engagement, they are the best we’ve got these days. Not too many years ago the best we could do was invite people to visit a website. That took too many steps, though. A scannable code makes it easy, and I suspect that both parties to this promo are going to be exclaiming “Marvelous” before it is all over. One can hope.
Dr “Who’s Your Super Hero?” Gerlich
Audio Blog
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KISS And Make Up
You never forget your first time.I was a freshman at Anderson University, and final exams were starting the next week. In spite of a snow and ice storm, a group of my pals and I threw caution to the wind and loaded into a tiny Chevy Vega. We slid about 50 miles to Indianapolis for a little music. The date was Sunday 11th December 1977.
It was my first concert ever, and headlining the stage that night was KISS, the band that singlehandedly put Max Factor’s kids through college. Their full-face make-up, stage antics, fire-breathing, and thundering music had made them massively popular. We skidded all the way to Indy, but got there early enough to claim our standing spaces down in the seatless mosh pit. I was about 10 feet from the stage.
As a side note, the opening act was an unknown band from Australia, AC/DC. But that’s not the point of this story, even though it was memorable in that I can say I saw them with their original lead singer. The smell of the wacky weed was strong, and one need not actually fire up one to feel the effects.
Scheduling fate would have it that my Old Testament final exam was the next morning. I paid to every deity I could summon, avowing I would never do this again (ahem—that promise did not last very long), and that I would stay up all night studying if only we were granted traveling mercies after the show.
But then I realized I may as well enjoy what was before me. The potential damage was done. I was blown away when guitarist Angus Young hopped on the shoulders of singer Bon Scott, who then made it all the way to the upper deck of Market Square Arena, Angus continuing to riff. They were showing off the latest in wireless technology, something that we could hardly even begin to imagine back then.
And then KISS took the stage, Peter Criss banging those drums, Ace Frehly shredding that guitar, Paul Stanley beseeching us to rock and roll all night and party every day, and Gene Simmons thumping that bass while spewing stage blood.
Yeah, that was quite the visual. It probably helps explain why I have tinnitus today. Well, along with the 100 or more concerts I have gone to since then.
I told you that you never forget your first time. This was more than 46 years ago. Both KISS and AC/DC went on to superb careers, but it is KISS, thanks to the mastermind of Mr. Simmons, who most fully leveraged their rock star status. KISS branded itself on to more than 5000 products through the years, and now comes news that they have sold not just the publishing rights to their music, but the brand and all IP as well.
The price? Only $300 million.To be honest, I think that KISS left a LOT of money on the table, because all other rock stars selling their catalog these days did only that. KISS brings much more to the conversation, including the avatar initiative they announced not long ago, as well as the potential for AI-generated content that will see the band live on to eternity if their new owner so desires.
But still…how many other artists do you think could see their brand leveraged in such ways? Maybe Jimmy Buffett, but I see his brand being used more for resorts and restaurants, not digital products. KISS has been larger than life throughout their storied career; whether fans will flock to consume their product in digital form is all speculation at this point, I suspect that their new owner is planning on a windfall.
More than anything is the clear message that it is not just what someone produces, but also the persona(s) who produced it. Imagine your personal brand being so noteworthy as to fetch millions so that someone could market everything you ever did, but also what you never did. That’s powerful, and in the digital era, anything is possible.
Meanwhile, it is safe to say that the KISS Army lives on, even if Mr. Simmons and company are now officially 100% retired. And I will forever savor the memories I made that night.
Oh, you’re probably wondering about that exam. We got home at 3am, thanks to the treacherous roads. I stayed up the rest of the night studying, confidently marched into that exam at 11am, and aced it. God never fails, and I am grateful to say that neither did I.
Dr “Shout It Out Loud” Gerlich
Audio Blog
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Twenty-Four Hours To Go
I remember the first time I was exposed to a 24-hour diner. I was at university in Indiana, doing my undergrad. It was also about the same time I became friends with coffee. We’re still good friends.
My dorm mates and I would pile into someone’s car and head to the nearby Waffle House. Now that’s not the familiar Waffle Houses across the southland. No, this was an entirely different Indiana chain more akin to Denny’s. They welcomed us, if only to make the place look more crowded after midnight. Never the mind the fact that we weren’t spending much, and tipping even less.
I was probably exposed to this genre before university, but those kinds of things weren’t important to kids back then. But I fell in love with the notion, and found that I became energized about 1am. Bring on the lists to memorize, my caffeinated soul was ready to do some power studying.
After I moved downstate to Bloomington for grad school, it was newsworthy when the new Kroger store announced they were going to be open 24/7. This was great news for someone who doesn’t like crowds of shoppers. It’s almost Zen-like shopping at 3am, observing all the other zombie-eyed shoppers pushing their trolleys along.
I was hooked, and praise God, Walmart embraced the concept as well. There are 168 hours in the week, and I could pick any one of them to go shopping. That is, until everything came to a screeching halt in March 2020. I need not say more.
With practically everything shut down—depending on your state and locale, of course—the thought of being open eight hours, much less 24 hours, became moot. Curbside was a best-case scenario, if you were able to pivot to new ways of doing old things.
But once the pandemic subsided, and our hunger to return to the old normal began being sated, stores and restaurants were slow to return to 24/7. Even today, there are many businesses that not only have been reluctant to do so, but also have flat out decided they’re not going back.
And it signals what may well be a permanent scar, one among many inflicted by COVID. Consumer behaviors have changed. Available labor has declined. Costs of doing business have increased. It’s the perfect storm for an imperfect situation.
It’s sad, too, because a business that is closed thus has un-performing assets whenever the lights are out and the doors locked. It’s not as bad as it is for churches, many of whom are open for “business” only a few hours on one day of the week. You pay for the whole building as it stands, seven days a week, 24 hours a day. The same goes for real estate taxes and utilities. If you’re not making money, you’re losing it, and the bills go on.
Among the consumer changes are a desire to eat earlier, eat out less, drink less, and not stay out late doing the things we once did. That doesn’t mean we have given up on sporting events, movies, and concerts, though. It just means we do those things less, effectively accepting a little shorter leash on life. COVID taught us to get by on a lot less, and with inflation still among us, we are able to handle it better because we’ve already been down an austere path.
We also learned that we can order online a lot more than what we did pre-COVID. Delivery, whether by courier or third-party driver, became a new normal. Groceries on our doorstep meant that we didn’t have to go at all, even if we rather liked those nocturnal missions. Everything else also on our doorstep meant that all that “shopping-in-our-pajamas” we thought we were doing a lot in the olden days was multiplied many fold.
Maybe I am just getting older, too. While I am not yet one of those home-before-dark senior citizens, I do know that if I am up after 10pm, I am living large. As much as I liked grocery shopping after midnight (there’s an ear worm for those of you who know that old song), I am good with doing it in the afternoon these days.
While some chains, like the southern Waffle House, have returned to full 24/7 operations, others are nowhere near what they once did. I suspect that those days are gone forever, with the realization that maybe—just maybe—we were trying to do too much, even though the alternative is to mourn the hours not spent earning revenues.
Besides, we could all use a little more sleep, and removing the temptation to be out and about may be a gift in disguise. And you can still shop Amazon. You may very well have it on your doorstep by noon tomorrow.
Dr “I’m Good With 15/7” Gerlich
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Take My Money
Like the flu in winter spreading from person to person, it seems that all of the streaming services have the same bug: It’s time to increase prices. It starts with one—usually Netflix—testing the waters, and if there is little or no pushback, then the others get the same bug.
Of course, inflation is blamed for the need to do so, not to mention the screenwriters’ and actors’ strikes and subsequent agreements that are increasing costs for movies and shows.
But if everyone’s doing it, why not join the party?
And so we find Spotify raising its prices again, rolling out a $1-$2 monthly subscription price increase first in the UK, Australia, and Pakistan, and then later this year, in the US. Spotify also plans to add another pricing tier to entice budget-minded customers. Overall, though, Spotify claims the price increases are needed to be able to support its recent audiobook initiative. What gets lost in the current conversation is that Spotify raised prices $2 last year as well.
How long until Apple Music raises its prices? We can start taking bets now. I bet it won’t be long.
Even though regular price increases can become annoying, especially when we have numerous streaming subscriptions, they are still a bargain. If you offset your streaming subs by cutting the cord with your cable or satellite provider, the a la carte system is perfectly scalable to match budgets and interests.
Since audio streaming is just as competitive as video streaming, it means that the players must continually up their game, which translates into adding services and content. Podcasts, and now audiobooks, cost money, and someone has to pay for it. Spotify also plans to add a top-tier level which features higher quality audio than available on other plans.
Naturally, investors were pleased with the announcement, and Spotify shares jumped 8%. It may seem counter-intuitive, but investors generally like price increases, as well as layoffs and store closures…basically, anything that will ultimately pad the bottom line. Given that Spotify has never posted a profit since it went public in 2018, investors are hopeful this might be a push in the right direction.
Now consider the fact that we no longer need to purchase tangible media. All those CDs and DVDs you bought are obsolete and taking up space in your house, attic, or garage. I’m saving money even with all of my streaming subs, plus I get access to a content library that I could never begin to duplicate on my own.
There is an alternative to streaming audio, of course, and it is SXM Radio. They have a monopoly on satellite content, the result of the 2008 merger of XM Radio (founded in 2001) and Sirius (launched in 2002). SXM does not allow users to select specific content, only stations, while Spotify gives users complete control. I have both SXM and Spotify, and get my money’s worth out of both, but my usage depends on what I am doing and where I am going.
For example, I listen to podcasts on Spotify when I am on my daily walks, but SXM when driving locally. When on longer road trips, though, I listen to a mix of both, using Bluetooth to sync my phone to my van’s audio system. Unlimited data plans for cell phones make this possible. I have fading memories of lugging small crates of CDs on road trips, and do not miss those days at all.
The broader question for everyone in the room, from customers to providers, is how long these price increases can keep up until the customers revolt. It is not much different from going to Disney, which keeps raising prices. Folks complain, but they pay it anyway, because they feel like they are still getting value for their dollar.
How much value do you get from your subs, though? I realize these are very different experiences, Disney being a very temporary situation—a vacation—with streaming being daily consumables. Still, money is money, and we’re not exactly made of it. I never could get that tree to grow in my backyard. Two dollars every year adds up, and multiplies like rabbits across all of your subs.
With about a thousand hours a year listening to Spotify alone, I feel like I am getting more than my money’s worth. If I have to cut back somewhere, I’ll just tote my lunch to work a little more, eat out less, whatever it takes to keep the books balanced. The same goes for all of my other subs. As long as the value exceeds the cost, I’m good.
Just don’t share that flu bug with me.
Dr “Turn It Up” Gerlich
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99 And Counting
It is appointed to us all that one day we must die. It is the nature of things, the circle of life that ensures that we don’t over-populate this orb too soon. If you’re into stats and need a little proof, global population is at about 8 billion, but demographers estimate that 109 billion people have died over the last 192,000 years. Death has a pretty good track record.
The same is also true of companies, although with good management, they can have a longer life expectancy than that of humans. But there are those ever-present external forces that we discussed earlier this term that can bite you. It’s one thing when General Electric splits into three separate firms, much like Kellogg did not long ago. It is quite another when inflation completely ruins the price point at which you made the case (and name) for your business.
Strike up the band and start the funeral dirge, 99 Cents Only stores are closing up shop and going home. All 371 stores in California, Texas, Arizona, and Nevada will be liquidated, and 14,000 employees will be out of work.
The firm cited a litany of problems and challenges, including inflation first and foremost, but also changing consumer behavior and shrink. Oh, and while they’re blaming things, they threw in COVID because—well—everyone does. It’s convenient.
The chain was founded in 1982, with the stated objective of offering quality goods at junk product prices, which we see now can be a fool’s errand. When you put the price in your name, you’re asking for it.
Other chains in the genre have also faced headwinds of late, notably Dollar Tree, which also owns Family Dollar. Dollar Tree plans to close 1000 under-performing stores, as well as start offering some products with prices as high as $7. Dollar General is weathering the storm much better, with plans to open 800 stores. Still, with all of these chains bearing monetary references in their names, it can be tough sledding when all of the forces combine to wreak havoc.
While 99 Cents Only stores had conceded the point quite a few years ago that 99 cents wasn’t going to cut it as a maximum price, and thus began offering selected items at different higher prices, it was not enough to keep them afloat. After the latest round of inflation, there probably aren’t many shoppers out there who think they can get much of anything for a buck, there or anywhere else.
It is interesting to note the different locational strategies of the chains. Dollar Tree has focused on the suburbs, as has 99 Cents Only. Family Dollar typically goes into poorer neighborhoods, while Dollar General, which admittedly has stores in many types of locales, has focused on rural areas. It is clear that great care has gone into selecting locations for each of them.
In fact, Dollar General has faced a lot of criticism for creating “food deserts” wherever it opens stores, because it carries just enough food products to put a death squeeze on mom-and-pop groceries. I have spoken to rural residents who found themselves having to travel 30 miles or more to a full-service grocery store once a DG came to town and decimated the vulnerable small-town grocery that once kept the town fed.
In the grand scheme, 99 Cents Only stores are a minor competitor compared to Dollar General (with 19,643 stores) and Dollar Tree/Family Dollar (with 8202 stores). The big guys probably won’t even notice when the little guy leaves the room.
The broader takeaway is the risk of occupying a niche that is literally locked into a price point. Aside from a blip in 2008 when the market cratered and modest inflation occurred, it has been clear sailing since about 1982, when we were emerging from the previous round of serious inflation. Oh, and see above. That’s when 99 Cents Only stores opened. Good timing.
They probably could have opened a few years earlier, but with the sting of inflation still fresh in people’s minds, the timing was good. The question now is can the cheap price genre retool such that it can survive at much higher prices than what were offered in the past? There’s the legacy of using “dollar” in the chains’ names, which would be difficult to erase. But perhaps they can help us ease into the notion that it’s about bargains, not necessarily specific amounts of them or dollars.
Heck, even Five Below, which wisely gave itself a much wider berth by virtue of name, has had to reconsider things as it finds its merchandise mix affected by inflation. It’s tough being a bottom feeder.
RIP, 99 Cents Only stores. It was a bold move back in 1982, but in the end, the Grim Reaper came looking for you just as it will for all of us. Your tombstone can proudly proclaim, “At Least We Tried.” Yup. A dollar at a time, with a penny to spare.
Dr “Passing The Buck” Gerlich
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Jean Genie
It’s a crazy mixed-up world out there, and in constant flux. Just when you think you have things figured out, you discover just how wrong you are. What started as e-commerce morphed into omnichannel; what started as BAM evolved into omnichannel. And what started as traditional distribution through retail channels has spawned DTC—Direct To Consumer—through both online and BAM.
Yeah, it’s messed up, and more than ever when I am asked to prescribe sustainable paths for companies, I have to respond with a dodgy “It depends.”
Like with Levi’s, the time-honored brand of denim pants that is nearly generic at the product level, and relied on department stores to do all of its heavy lifting. But the future of department stores is up in the air these days, especially with Macy’s closing stores faster than they can alert the power company to turn off the lights. It has forced Levi’s to explore new channels.
So it did, pushing its website as well as launching its own stores. They have been so successful that its DTC efforts now account for 48% of sales. A year before, it was at 42%, and two years prior at about 38%. It has reclaimed all of the margin it once granted to other retailers for carrying its products, so the profit prospects are net positive. Customers also now have more choices.
But it also creates a potentially awkward situation for Levi’s, especially with regard to those struggling department stores. Suddenly the department stores find themselves in direct competition with a supplier, which seldom ends well. Even if Levi’s maintains full suggested list pricing so as not to undercut those retailers, it has the possibility of straining long-standing relationships.
Overall, Levi’s has been swimming in red ink, but the sea is getting shallower as DTC sales continue to grow. It expects things to improve once economic uncertainties subside, and discretionary purchases resume.
Given the uncertainties of department stores, which reflect a broader consumer behavior trend away from shopping at such establishments, growing its DTC presence gives Levi’s a lot more control. Well, at least for now. It is always possible that department stores could come back in vogue, although the forecast is not all that good right now. DTC sales are like having money in the bank to offset dips elsewhere.
Levi’s is targeting 55% of sales for its DTC component, but certainly won’t stand in the way if it were to go higher. I suspect that as consumers continue to feel comfortable shopping online for clothing, the share will indeed rise, and quite possibly far beyond the target.
There is an interesting history aspect to Levi’s regarding how it markets to women. While the brand was born in 1853 and targeted exclusively to men, it was not until 1934 when Levi’s started marketing jeans for women. Until that time, women were forced to deal with men’s sizing, which, as we know, is not conducive to fit and comfort for women.
The current shift to DTC also signals intensified efforts by Levi’s to offer more options to women, including skirts and dresses. They are repositioning themselves, and now the company ”…wants to be viewed as a denim lifestyle business, not just a blue jeans company.” Smart move.
It also didn’t hurt one bit that Beyoncé’s new country album has a duet with Post Malone titled “Levi’s Jeans.” That’s enough to send shoppers online or to the nearest Levi’s store in a heartbeat. Her name alone is power.
And if you will allow me to beat the drum of Change one more time, the writing is on the wall regarding Levi’s, and perhaps also for many other brands. How and where we buy these items is changing, and the shifting sands of retail mean only one thing: You have to go where the customers are. Good on Levi’s for heeding this call.
Dr “501 For Me, Please” Gerlich
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Pushing The Needle
You can’t blame a company for trying, for pushing the needle not just a little bit, but so much that it raises eyebrows. After all, these are the innovators among us, but we typically only assign that word when they have pushed that needle and been successful in finding a new way to do something. If they fail…well, it becomes fodder for business school class discussions.
Like today, since Amazon just pulled the plug on its Just Walk Out program that is available in some of its Amazon Fresh grocery stores. And to be on the safe side, I made sure my source material was not published two days ago on April Fools Day. In other words, this is no whopper. It’s legit news.
The premise behind JWO was that once shoppers entered one of the stores and opened an app, they could grab whatever they wanted, and simply walk out. Amazon relied on sensors and cameras to keep tabs on things, and inherently put a lot of trust in its shoppers, no doubt much more trust than the kind offered by Target, Walmart, and others with self-check kiosks.
But what was not apparent all along is the fact that Amazon relied on crews of video surveillance employees in India, who were in fact watching everything that shoppers did, and making sure the running tab was accurate. Even then, it would sometimes take hours of review before a final receipt could be issued, and charges placed on the customer’s credit card.
According to one report, one that Amazon denies, 700 out of 1000 transactions required review.
JWO launched in 2016, which now seems like eons ago. As for Amazon Fresh, of which there are only 40 stores in the chain, it debuted in 2007. About half of the Fresh stores have JWO technology. Instead, Amazon is rolling out—literally and metaphorically—Dash Carts, which allow for shoppers to scan and check out directly from their trolley. It is unclear how airport and stadium shops that have third-party vendors who license JWO technology will have to adapt, if at all.
The whole idea of JWO was to eliminate a layer of overhead by cutting out labor. It’s just that they moved it to India, where apparently labor costs are so cheap that, even after installing all of the in-store equipment and paying those human reviewers, it was still less than just having cashiers here in the States. I can’t imagine the new shopping carts costing much less, but here we are.
It’s easy to bash Amazon for ditching JWO, but the bottom line is this: They use their Fresh stores as a laboratory for retail operations, and if something works, they will likely deploy it elsewhere, like in their much larger Whole Foods chain. If it doesn’t work, then they kill it, and with JWO in only about 20 stores, it is a much less costly misstep than launching it on a much larger scale.
I understand all retailers’ desire to reduce labor costs, but the idea that someone half a world away from me is watching my every move is more than just a little creepy. It sounds Orwellian in application, and even though it’s not the government eavesdropping from a corner-mounted camera, it’s easily just as weird, and maybe even more so.
Stores have long relied on two-way mirrors for observing shoppers, because “shrink” as shoplifting is called has always been a problem. Many other stores also use security cameras to do likewise, meaning there are humans in a control room with their eyes glued to grainy black-and-white screens. But monitoring at what likely amounted to one-on-one surveillance is a harder pill to swallow.
Amazon’s new shopping carts still mean there is an element of trust involved, because the system still depends on shoppers manually scanning and checking out. It is little different from other scan-and-go systems in place, like at Costco and Sam’s Club. There is no perfect alternative, including the traditional check-out with a human cashier.
In Amazon’s quest to shape the future, the company, and by extension, all of us, now know how it won’t look. Like I said, you can’t blame a company for trying. But all the cameras and sensors in the world can’t guarantee that an idea will work. The needle broke on this one.
Dr “What’s In Your Cart?” Gerlich
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Try This On For Size
It’s funny how sometimes all you have to do is repackage something, and people will think it’s pretty cool now. It’s just that nothing has changed other than how the proposition was framed. For a variety of reasons, when the idea was hatched, it just wasn’t ready for prime time…yet.
Apparently, though, now that AI is a household word, virtual try-on is acceptable. In fact, a recent survey by Adobe showed that 71% of shoppers think that using AI to purchase clothing online could help them be assured of getting the right fit. Because AI is cool, right?
Walmart made significant inroads in 2022 with their purchase of Zeekit, a tech company that provides the software for a virtual fitting room, and subsequent launch of their Be Your Own Model application. Users have to upload some personal information—I know, a red flag for many before AI changed everything—as well as use the camera feature on their phones. But when the program launched in September that year, more than 270,000 items were available for virtual try-on.
It’s an idea that has been trying to find life for many more years, though. Converse used a virtual try-on application in 2012, and I recall reading of Dillard’s using fitting room mirrors outfitted with what was then cutting-edge programming to do the same thing, albeit actually in the store. Today, though, the technology has advanced far enough that this can be done from anywhere.
Whenever cameras and companies are involved, though, people start to get nervous. Privacy concerns become top-of-mind as they ponder what nefarious uses might happen should there be a data breach. First, Walmart could be hacked. Then there is the sobering reminder that anything we do in the Walmart app necessarily also involves our phone (which is made by Apple, Samsung, or Google), as well as our cell phone service provider. There are thus several points of contact.
And then there’s just the general data points, including height, weight, and so forth. We might be venturing into HIPAA territory here. Inferences can be made about a person’s fitness level, and by extension, their health, just by noting their clothing sizes, and especially if changes have occurred over time.
Still, now that the notion of virtual try-on has been repackaged as using AI—which it most certainly used all along—it’s suddenly a lot more palatable. How can that be?
As much as the world was shaking in its boots in November of 2022 when ChatGPT became available for the general public to use—and only two months after Walmart’s entry—we have started to warm to the idea. It is normal for people to recoil at the thought of a revolutionary new concept, even if that idea had already been going on for a long time. ChatGPT made it real and mainstream.
It’s still imperfect; we are but in the infancy of AI. Heck, last week I had an undergrad student concerned because Grammarly indicated their writing was of AI origin. It’s just that it wasn’t. Oh, and never mind that Grammarly uses AI, as they say in their ads. Go figure. An AI application said that AI had been used. The pot has called the kettle black.
I’m good with this, even though thus far Walmart has only promoted it with women’s clothing. If they were smart, they should push into men’s clothing, because we men are notorious for disliking clothes shopping in the first place, and definitely don’t want to be wasting time in fitting rooms.
For that matter, this helps solve other problems that women perceive to be real, which orbits around privacy concerns in fitting rooms. Are there secret cameras and Peeping Toms watching remotely? I know women who refuse to try on clothes in stores, and instead will buy a bunch they can try on at home, and then return the ones that don’t fit.
Lastly, there is the long-running criticism about online clothes shopping, which, of course, features concerns about fit, color, feel, and all those things. While the application can never convey the feel and true color adequately, at least the odds are much better that the garment will fit.
Just as AI is, generally speaking, the future of us all, so is virtual try-on. The Jetsons have come home to roost.
Dr “5’7”, 145” Gerlich
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Green Thumbs
You are never too old to be a company spokesperson. As odd as it may seem, as much as it goes against the grain of consensus that typically marginalizes people once they hit their 60s, it can and does still happen.
Like with the latest effort from Tractor Supply and its partnership with Martha Stewart. A new line of women’s apparel, the Martha Stewart Garden Apparel Line, will be available in 80 select store locations as well as online. The timing couldn’t be better, with Spring popping everywhere.
Who’s Martha Stewart you ask? The writer, television personality, and businesswoman will turn 83 this August, and while she is known far and wide for intoning her recommendations on home and hearth, she will probably best be remembered for an insider trading scandal two decades ago that sent her to prison. Well, it was a pretty soft sentence; she was released after five months. I bet the prison got tired of her wanting to turn it into a centerfold spread in her magazine.
Undeterred by a little negative publicity, and prognostications that her career was over, Stewart proved everyone wrong and simply resumed doing everything she was doing before the incident. Well, minus the insider trading.
I am perplexed, though, about Tractor Supply’s marketing effort. The apparel line only includes eight items, and as noted, will only be in 80 of their stores, which, for a chain that will hit 3000 units next year, is a mere drop in the watering can. Otherwise, the collection will appear online, and the target market is rural women who love gardening. Oh, and presumably older women, given the age of the spokesperson.
Now, I am not opposed to any company’s carefully selected target market, but this all seems like a half-hearted effort at best. Tractor Supply rules the roost when it comes to farm and ranch stores, its nearest real competitor being Rural King with only 135 stores. I am also somewhat skeptical about whether this segment is shopping online. If Stewart’s age is any indication, the targeted segment is probably 55-up, meaning older housewives and/or retirees.
That said, there is some evidence suggesting that older shoppers are getting with the program, balancing their earlier proclivities toward in-store shopping with e-commerce, and that primarily from their phones. Maybe Tractor Supply is on to this. It would be great to tap into an emerging vector of shopping potential before everyone else does.
Still, only eight different items in the entire line? That screams uncertainty on behalf of Tractor Supply, because it’s not much. I would be much more convinced if Tractor Supply simply said this is a big market test, instead of a bold new partnership. They have noted that women’s apparel is a growing segment for them, and it is worth exploring new options, even with baby steps.
I am impressed that Stewart has managed to overcome her reputational fall. When it happened, it was on the order of Sam Bankman-Fried today. I doubt that any company would want to touch SBF for a tie-in, but maybe in 25 years or so after he is a free man again, who knows? We shall see. It wouldn’t be the first time an ex-con was hired to sell products.
Meanwhile, Martha Stewart is like the Black Knight in that Monty Python scene I referenced earlier this semester. You can’t put her down, and if you come too close, she’ll bite you. I’ve got to give her credit for her survival instincts. She’s a smart woman, and if she can help push the needle at Tractor Supply, more power to her and them.
Dr “Said The Man With Two Black Thumbs” Gerlich
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Bowls And Lids
It’s funny/sad that I am returning to a company that I wrote about a year ago, and the story is even more grim now than it was then. Most of my students these days have little or no experience with this company and their products, primarily because it is a generational thing.
But just ask your parents and grandparents about our company du jour—Tupperware—and they will regale you with tales of cabinets full of mismatched bowls and lids, and in-home parties where these things were bought and sold. Maybe you inherited some from them, but more than likely, you have cheaper, competing brands in your kitchen.
Tupperware was introduced as a consumer brand in 1946 by Earl Tupper, who apparently liked his surname so much that he named the company and its product line after himself. In the 1950s, he started recruiting women to host Tupperware parties, usually at the home of a friend, who would then invite a gaggle of other friends to attend. The party coordinator would showcase all of the products in this very high-context environment, which then caused all of the women to open their purses.
It was part multilevel marketing scheme, part peer pressure. How could you say no when surrounded by all of those other women? It was sheer genius at the time, and Tupper promoted it as a form of female empowerment such that a woman could do this on a regular basis and provide income for her family. I think we can all agree that his intent here was good, even if it reinforced domestication of women. We can also agree that his method of direct marketing was very lucrative.
But Tupper continued to rely on in-home selling at a time when mass merchandising stores were spreading their reach across the nation, followed by e-commerce. The company was very slow to concede these points, having dug in its heels in the familiar soil of tradition. It started selling online in 1999 in an understated kind of way, and in Target stores in 2022, but the company still relies on the party method as if it were the gospel.
Somehow, Tupperware has managed to hang on, but the last year has found it on life support, unable to maintain liquidity. COVID dealt it a nice hand up, if only because people were cooking more at home and thus had leftovers to preserve, but those days are over. Between increasing costs of manufacturing, decreasing sales, and what the firm calls “significant attrition,” it looks like Tupperware is circling the drain.
Tupperware should have asked important questions years ago. Who has time or desire to host parties these days? Who wants to attend such gatherings? Who wants to buy storage containers this way and have to wait what is now an unacceptable amount of time to take possession, when there are any number of in-store and online alternatives available?
Yeah, it was quaint and very successful for a while, but it outlived its usefulness. We moved on, and Tupperware did not. They should have embraced e-commerce whole-heartedly, not just with lip service. And they should have forged reseller arrangements long before the recent one with Target. Yes, using middlemen cuts into margins, but you have the opportunity to sell much more. Imagine if they had partnered with Amazon 25 years ago. We probably wouldn’t be having this conversation.
I have many remembrances of Tupperware products. My mother also allowed herself to be used to host—I mean, she let her friend entice her with the promise of a gift item for hosting—a party in our house. My father, brother, and I had to leave the building.
It probably wasn’t worth all the effort, cleaning the house prior, preparing dainty little snacks, and cleaning up afterward, all for a couple of bowls and lids. And I’m pretty sure that Mom didn’t feel the empowerment vibe, because she wasn’t interested in being a Tupperware sales rep. Besides, as we have come to know with multilevel marketing companies, methods like this are probably a good way to lose friends.
I am not sure if I will be writing another blog about Tupperware this time next year. Things are looking far worse than just 12 months ago, and if it were possible, Tupperware needs to be designing a huge company-sized storage container to preserve itself.
Dr “Just Remember To Burp The Lid” Gerlich
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Here Comes The Sun
When opportunity knocks, it behooves you to answer the door, and answer it fast. Opportunity seldom knocks twice, and if you miss it, then it’s on you. And if you are a company, you best be ever mindful of what’s going on around you and who or what may be knocking, ready to seize the moment.
Like Frito Lay's SunChips and Moon Pie are doing right now, leaning into the upcoming total solar eclipse that will occur early afternoon of Monday 8th April. With brand names referencing celestial bodies, this is a no-brainer. But come Tuesday the 9th, the party will be over until 2044, when the next total solar eclipse is visible in the US.
SunChips is selling a limited edition Pineapple Habanero and Black Bean Spicy Gouda chip, and have partnered with astronaut Kellie Gerardi for the promotion. Moon Pie, reprising its effort from the 2017 eclipse, has gone all out with their boxed Survival Kit that includes four Moon Pies and two pairs of eclipse viewing glasses.
And as you might expect, both are pulling out all the stops on social media.
This is classic marketing opportunism, and it’s fun. No one is trying to capitalize on a bad thing, and all the other brands that do not have a celestial connection will have to sit this one out. Opportunity, in this case, came knocking for a select few, and only two answered the door.
Of course, there is some risk inherent, because all of that merchandise will be extremely dated on Tuesday. The shelf life is short, and while it might be possible that some collectors might clamor for unsold Moon Pie Survival Kit boxes if only because it is dated, I could see these things winding up at Big Lots and Ollie’s in a week or so.
Along the path of totality, hotels have been reserved for years. Even campgrounds are full up. But, as we know all too well, Mother Nature might not cooperate. We need clear skies for these kinds of things to happen, and the farther east and north you go along the arc of totality, the more those odds shrink, based on historic data.
As for Amarillo and Canyon, we will be at 87% totality, and of the cities on or near totality, have among the highest percentage of available sunlight year round (Lubbock and Midland are very similar too, all of us between 73% and 75%, and in the Top 15 of the nation). We might not have totality here, but the odds are more in our favor to see the event. Oh, and the event lasts only for about four minutes, so there’s little margin for error. Even Andy Warhol had 11 minutes more.
I am bummed that I have a campus class that morning at 9:30, and I can’t just cancel it for an eclipse. But…I could hop in my van at 10:45 and drive toward Dallas like a mad man, probably getting close to Vernon at the precise moment. I can reschedule office hours, because with the next total eclipse not happening for 20 years, I would be 85, and who knows what I’ll be able to do then.
Or just stay in Canyon and be happy with 87%. It will still make for some amazing photos. And while the special SunChip flavor doesn’t sound all that appealing to me, I would be happy to bring along some Moon Pies wherever I happen to be. The marketer in me is all too happy to throw some props to the companies answering opportunity. It’s a lesson we should all be remembering.
Dr “Everything Under The Sun Is In Tune” Gerlich
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Aiming Higher
“Show me a company trying to be all things to all people, and I’ll show you a company that is nothing to everyone.”
That’s one of my many maxims for daily living and business. I’m sure that if you looked hard enough, you might just find an exception to the rule. Generally speaking, though, it is very true, and it all boils down to the tenets of target marketing. Once you start using a shotgun approach, you have lots of misses among the hits, and often at great expense.
But that doesn’t stop companies from trying anyway, the latest of which is Walmart in its umpteenth attempt to lure higher income customers into the rest of the store. Walmart has been trying for years to do this, with clothing as well as electronics, all with less than admirable results. Maybe in buying Vizio they may the able to lure the wealthy with upscale TVs and other electronics, but we shall see.
Inflation may have found wealthier people flocking to Walmart to buy their groceries, and this has motivated Walmart to try again. At least this time the people they desire are already in the building. All they have to do now is get them to step across the aisle into non-grocery merchandise.
To bolster this effort, Walmart is remodeling 800 of its stores, improving lighting, constructing little boutique and highlighted areas, and even using mannequins. Oddly, at a time when Walmart has been making significant gains—finally—in its e-commerce business, it is investing in BAM. This is even more intriguing when you hear them say that they’re actually targeting wealthier Gen-Zers. And we already know where Gen-Zers are likely to shop. Online.
Wait a minute. Gen-Z didn’t start until 1997, meaning the oldest are turning 27 this year, and the youngest are 14. There can’t be all that many wealthy in this age bracket, not yet at least. Maybe they meant Millennials.
Regardless, it’s full steam ahead as Walmart adds on-trend clothing, higher class cosmetics, along with more esoteric food items. Basically, Walmart is trying to be something it never has been. And I have to wonder if, in the process of doing so, they might alienate their core clientele, the people they have been serving ever since Sam Walton opened his first store in 1962.
Walmart learned this lesson painfully not many years ago when it bought online high-fashion brands Bonobos, Moosejaw, and Modcloth. They were in over their heads, though, and wound up selling all of them. Although few people knew the connection to Walmart, that didn’t stop Walmart from fumbling the ball repeatedly.
As much as I agree with Walmart’s plans to freshen up some of its stores—many of their stores built in the 90s are looking pretty long in the tooth—I have my doubts that the ending will be any better this time. It’s kind of like searching for gold in a silver mine. The silver may not be worth as much, but in volume, it can—and does—serve as a good revenue source.
And as much as I agree that Walmart has completely nailed it by aiming at middle America and lower, I had to laugh when I read of the firm’s “history of studying consumer behavior to better grasp what luxury shoppers actually want.” I am pretty sure that what luxury shoppers want is a place to do so without the riff-raff nearby.
I suppose I fit the demo that Walmart seeks—upper-middle class—but I just don’t see myself buying clothes there. Well, OK. I confess to buying a pair of Wrangler casual pants last winter, after I read on a hiking page on Facebook that one particular line of pants was actually very good for hiking, and at about one-third the price of what you’d find at REI. But I only wear them on cool hikes, definitely not to the office. I will buy another pair or two, but as the people on that thread pointed out, they see this more as a shopping hack, not a fashion statement.
Good luck with this, Walmart. You’re really good at what you’ve been doing all along, but grasping at straws is not a good look when what you really need to do is sip from the cup of your prior success.
Dr “Sticking To Groceries” Gerlich
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