The Big Story
RetailWire Discussion: Nike Campaign Tests ‘All Publicity Is Good Publicity’ Adage
George Anderson, RetailWire
Nike has courted controversy with its latest “Just Do It” campaign, which includes an ad featuring Colin Kaepernick, former quarterback of the San Francisco 49ers, who gained notoriety in 2016 when he refused to stand for the National Anthem in protest of the mistreatment of minorities in the U.S.
The new ad features a tight black and white shot of Mr. Kaepernick’s face with copy that reads: “Believe in something. Even if it means sacrificing everything.” The former quarterback has not found a job in the league since declaring for free agency in March 2017. Mr. Kaepernick has filed a legal complaint against the NFL alleging collusion among teams to keep him out of the league.
As word of Mr. Kaepernick’s inclusion in the new campaign got out, protests spread across social media with some calling for a boycott of the Nike brand. Others rose to the brand’s and Mr. Kaepernick’s defense. Whether consumers were for or against Nike, it’s clear that Mr. Kaepernick’s inclusion has led to increased media exposure — roughly $43 million worth, according to Apex Marketing Group.
Discussion Questions: Will Nike sales be hurt or helped as a result of including Colin Kaepernick in the brand’s new “Just Do It” campaign?
Comments from the RetailWire BrainTrust:
Well it is a bold move. In today’s rather crazy polarized environment it’s really hard to predict the outcome. Maybe it’s a numbers game. If the minority who don’t support this view stop shopping, and the greater number of customers who do support the view increase, chances are sales will increase. I suspect it has more to do with the next shoe that comes out and the athlete who wears it than this ad. Memory is pretty short term today.
Peter Charness, SVP Americas, TXT Retail, an Aptos Company
Any press is good press. Nike is picking a side and I don’t think that’s going to negatively affect them over the long run. Despite the backlash, the ad will only do good things for Nike, given the company’s younger demographics. About 60 percent of their business is outside the United States. It’s a calculated risk. Nike probably got approval on this decision from their board of directors. For every 25 people who aren’t going to buy Nike product another 50 are going to buy their products. A lot of the people that say they will boycott Nike, won’t. There will be a lot of tweets between now and the time they buy their next sports item. By that time, they will likely forget their stance and buy Nike products, just like they have in the past. Nike is probably the best marketing company in the business. This campaign has already blown up and will only increase their influence and brand loyalty with their key demographic.
Ken Morris, Principal, Boston Retail Partners
Where Nike should be concerned are the people who note that the choice to make this statement can appear quite self-serving — especially for a brand which is suffering some setbacks right now. Self-serving and “authenticity” don’t go together. But, I don’t hold with all the hype about Gen Z and authenticity. Product, for 95% of Gen Z, trumps all secondary values like environmental concerns or political concerns. So, in the end, I think Nike will be just fine. Should they have done this? Probably not. But it’s not going to be devastating the way the campaign’s opponents want. (That said, history shows us it’s NOT true that “there’s no such thing as bad publicity.” There’s bad publicity – except sometimes companies become smart in leveraging it to become not so bad.)
Doug Garnett, President, Protonik
From a publicity perspective this has certainly got a lot of attention — everyone is talking about Nike. Publicity is at the heart of this — we’re talking about an ad at the end of the day — but it’s more about Nike’s positioning as a brand. What does it stand for? What does it believe? Where does it want to be positioned? Being authentic, having a stance, is increasingly important for differentiating brands. While its position may be polarizing, Nike knows its audience — it will have thought about what this means to them and their values. They buy into Nike for a reason and this is another extension of that. The important thing is for Nike to make sure that it is true to this position or it quickly becomes an exercise in calculated PR over authenticity.
Cate Trotter, Head of Trends, Insider Trends
Headlines of the Week
Coca-Cola is buying the Costa Coffee chain from UK leisure group Whitbread in a £3.9bn deal that sets up the world’s biggest beverage maker to take on Starbucks, Nestlé and JAB Holdings in the global battle for coffee sales. Whitbread had previously announced it would spin off Costa, the second largest coffee shop worldwide, following pressure from activist investors. For Coca-Cola, the transaction represents a leap into the global coffee market, where it has little presence, allowing it to diversify away from fizzy and sugary drinks, which have declined in popularity among increasingly health-conscious consumers.
The Department of Justice is nearing an affirmative decision to CVS Health’s acquisition of Aetna, according to a Wall Street Journal report citing sources familiar with the matter. WSJ’s sources said the final approval could come in the next several weeks. The report noted that clearing the DOJ’s antitrust hurdles could require the companies to sell off assets having to do with Aetna’s Medicare offerings. WSJ said that WellCare Health Plans is one company in talks as a potential buyer of divested assets. A CVS Health spokesperson referred Drug Store News to comments an earnings call in early August, in which CVS Health president and CEO Larry Merlo noted that he was expecting the deal to close in the third or fourth quarter, and that divestitures had been part of the expected deal since it was announced.
Apparel & Footwear
With a new executive team in place, it’s back to basics this fall at Christopher & Banks stores.
While CEO Keri Jones said the retail chain has made “important progress” in its latest turnaround effort, and comparable sales were up for the second quarter, high store inventories impeded a higher margin. The company had concluded last year it needed to overhaul its inventory and make it more fashion-forward. Jones said on a conference call with analysts that while the strategy was paying off, the company was too aggressive with the volume of clothing. “It was not easy to shop and frankly made it much too difficult for her to create an outfit,” said Jones, who joined the company in February after a career at Target and Dick’s Sporting Goods. In addition, Jones said the Bon-Ton chain’s closure should add business to 55 of the chain’s 462 stores.
Canadian footwear group Aldo has signed a five-year partnership agreement with Kurt Geiger for the British footwear retailer to handle the running of its concessions in the UK and Ireland. From this month, Kurt Geiger will operate all of Aldo’s department store corners and plans to implement an “ambitious” strategy to expand the brand in the UK, including the opening of 50 additional locations over the next three years. Kurt Geiger’s chief executive Neil Clifford said that the deal represents an “exciting partnership between two very strong footwear brands,” and that the brand will be targeting concession partners across the UK and Ireland, including Selfridges, Fenwicks, Debenhams, House of Fraser, Voisins and Arnotts. Aldo’s standalone stores and e-commerce business will remain under Aldo control.
Athletic & Sporting Goods
Milwaukee private equity firm Mason Wells said it has acquired the New Jersey-based sporting goods company EastPoint Sports Ltd. Financial terms of the deal weren’t disclosed. EastPoint, founded in 2009 by Mike Nally, is a supplier of indoor and outdoor recreational sporting goods. EastPoint will be owned by Mason Wells, the Nally family, senior management, board members and Bounds Equity Partners. EastPoint develops, imports and markets recreational sporting goods sold through retail and e-commerce channels in North America. Product categories include tailgate games, lawn games, sport games, indoor game accessories and table games.
Compass Diversified Holdings, an owner of leading middle market businesses, announced that its subsidiary, Velocity Outdoor Inc., has acquired Ravin Crossbows, LLC for a purchase price of $94 million (excluding working capital, a potential earn-out payment of up to $25 million based on future financial performance and certain other adjustments upon closing). On August 6, 2018, Crosman Corporation announced the name change of its parent entity to Velocity Outdoor to reflect the diverse product portfolio within the corporate umbrella and to highlight its strengths in the broader hunting, shooting, and outdoor markets. Ravin joins the Velocity Outdoor portfolio of leading brands including Crosman and Benjamin Airguns, CenterPoint Archery and Optics, LaserMax, Copperhead, and GameFace Airsoft.
Cosmetics & Pharmacy
The Hut Group, the operator of cosmetics selling platforms such as lookfantastic.com and glossybox, has acquired skincare products maker Acheson & Acheson, as the British retailer aims for in-house production. Acheson & Acheson, founded in 1992 by Fiona and Kenneth Acheson, makes skincare and haircare products and also owns the skincare brand Ameliorate, which is sold at Selfridges, Boots, Harvey Nichols and Marks & Spencer. Ameliorate is included in the purchase and will subsequently be added to THG’s brand portfolio. The privately held companies did not disclose the value of the deal. Sky News reported the deal would be worth about 50 million pounds to 100 million pounds ($64.54 million-$129.07 million).
Discounters & Department Stores
Walmart has a new online delivery team — but they aren’t employees and they don’t work for a major delivery company. The discount giant announced Wednesday that it is testing a crowd-sourced delivery platform service, called Spark Delivery, to get online grocery orders to customers faster. Walmart is piloting the program through a partnership with Bringg, a delivery logistics technology platform. The service is currently being piloted in Nashville and New Orleans, and will debut in “a few more metro areas” this year, according to Walmart.
Bon-Ton, the bankrupt retailer that shut its stores last week after being in business for over 100 years, is poised to reopen now that a new owner has scooped up its brand.
A subsidiary of the tech company CSC Generation Holdings told USA TODAY that it has signed a deal giving it the rights to Bon-Ton and its subsidiary department store chains, Boston Store, Bergner’s, Carson’s, Elder Beerman, Herberger’s and Younkers. The agreement will need to get the green light from the Delaware Bankruptcy Court to become final.
Grocery & Restaurants
Campbell Soup Co said it plans to sell its international and fresh refrigerated-foods units and left open the possibility of putting the whole company up for sale, following a months-long review and pressure from hedge fund investors to sell itself outright. It is not clear if the plan will appease activist investor Dan Loeb, whose Third Point LLC hedge fund announced a 5.65 percent stake on Aug. 9 and immediately pressed for a sale of the entire company to a competitor as “the only justifiable outcome.”
Fast-food chain operator Yum China has rejected a $17.6 billion buyout offer from a consortium led by Chinese investment firm Hillhouse Capital Group, quashing what would have been one of Asia’s biggest deals this year, people with direct knowledge of the matter said. The consortium, which included regional investment house Baring Private Equity Asia, expressed an interest to offer $46 per share, or nearly 24 percent above Tuesday’s closing price, for the biggest fast-food chain in China, the people said. Global investment house KKR and Chinese sovereign wealth fund China Investment Corp were also part of the consortium, one of the people added.
ARC Group Inc., parent to the Dick’s Wings & Grill casual-dining brand, has agreed to acquire the four-unit Fat Patty’s concept for $12.3 million, the company said. Jacksonville, Fla.-based ARC, which agreed in June to buy the struggling 47-unit Phoenix, Ariz.-based Tilted Kilt Pub and Eatery concept, said the Fat Patty’s deal was expected to close on Friday, Aug. 31.
Home & Road
Made-to-order home brand The Inside said it has closed on $2.6 million in seed funding and has attracted several high-profile industry veterans as advisors and investors. The funding is co-led by Corigin Ventures and Lerer Hippeau. Existing investor Forerunner Ventures, alongside new investors BAM Ventures, and Canaan Ventures are participating. The company is also being supported by Susan Lyne, the former CEO of Martha Stewart; Maxwell Ryan, the founder of Apartment Therapy; Jerry Jao, the founder of Retention Science; Jenny Fleiss, the co-founder of Rent The Runway and JetBlack; and Alexa von Tobel, the founder and CEO of LearnVest. The Inside was co-founded by Christiane Lemieux, the founder of DwellStudio, which is now owned by Wayfair, and Britt Bunn. It sells on-trend and customizable home furnishings featuring exclusive designer fabrics and patterns.
Jewelry & Luxury
EBay on Wednesday said it is expanding its eBay Authenticate program to luxury watches, where thousands of high-end timepieces including Rolex, Patek Philippe, Omega, Audemars Piguet, Breitling and Panerai will be verified by professional authenticators, according to a press release emailed to Retail Dive. The authentication program was first unveiled last year, but was limited until now to luxury handbags.
Signet will open a new James Allen concept store in Washington, D.C., this fall, CEO Gina Drosos told analysts during an earnings call, according to a transcript from Seeking Alpha. “This store opens preholiday and will feature advances in digital technology and a millennial-inspired shopping experience,” she said during the Aug. 30 call, which followed the release of its second-quarter financial results. She didn’t offer further details, but Loopnet indicates the new store will occupy a space near M Street and Wisconsin Avenue in the Georgetown area.
Anyone who has ever done a back-of-the-envelope calculation of the US fine jewelry market in the past few years arrived at figures that were far below the official numbers published by the US government. The differences were so wide that the government figures were downright puzzling. Recently, the US government has revised ten years of market estimates, dating all the way back to January 2008, shaving off more than $16.5 billion in jewelry sales in 2017 alone. There is no need to be surprised at the revision, or by this radical reduction. The US government revises its jewelry figures every few years, usually downwards.
Office & Leisure
Build-A-Bear’s midsummer “pay your age” promotion was widely deemed a marketing blunder, but the company last week said the event rescued its second quarter sales and “delivered a meaningful profit, although it was not enough to offset the start of the quarter,” according to a statement from CEO Sharon Price John. The company also said it plans to open a store-within-a-store inside the new FAO Schwarz flagship in New York City’s Rockefeller Plaza, which is slated to open in November. The location — along with new stores at Navy Pier in Chicago, Pier 39 in San Francisco and Inner Harbor in Baltimore — is part of a “strategy of expanding into a variety of high-traffic tourist areas,” John said. Executives’ declaration of success for its “pay your age” day promotion runs counter to the assessment reached by most marketing experts and analysts, many of whom faulted the retailer for poor planning.
The recently-fired chief executive of Barnes & Noble is not going “gently into that good night.” And neither is the bookseller. Demos Parneros, who was terminated for “violations of the company’s policies,” has filed a lawsuit accusing Leonard Riggio, founder and chairman of Barnes & Noble, for engineering his “firing without cause” and for “falsely and irrevocably’ damaging his reputation. The bookseller announced Parneros’ termination in a July 3 press release statement in which it said the firing was not due to any disagreement regarding its financial reporting, policies or practices or any potential fraud, and that he would not receive severance pay. In his complaint, Parneros said Riggio had told him a day before the announcement that he would be “fired for cause for violating the sexual harassment policy,” citing his alleged “interactions with an executive assistant and purported mistreatment” of company CFO Allen Lindstrom, reported Reuters. Parneros said he has not violated company policies, and “always conducted himself in a professional manner.”
Technology & Internet
Instagram is working on a new standalone app dedicated to shopping, The Verge has learned. The app — which may be called IG Shopping — will let users browse collections of goods from merchants that they follow and purchase them directly within the app, according to two people familiar with the matter. Its development is still ongoing, and it could be canceled before it is released. But sources familiar with its development say Instagram believes it is well positioned to make a major expansion into e-commerce.
Finance & Economy
Long-awaited wage growth posted its biggest increase of the economic recovery in August while payroll gains beat expectations and the unemployment rate held near a generational low of 3.9 percent, according to a Bureau of Labor Statistics report Friday. Average hourly earnings rose 2.9 percent for the month on an annualized basis, while nonfarm payrolls grew by 201,000. The wage growth was the highest since April 2009.
U.S. consumer spending rose a solid 0.4 percent in July, the sixth straight month of healthy gains. A key gauge of inflation also posted its sharpest annual gain in six years and is likely to keep the Federal Reserve on track to continue raising interest rates gradually. The July spending gain, fueled by strong job growth and tax cuts, followed a similar 0.4 percent rise in June, the government said. Inflation, as measured by a barometer closely watched by the Fed, rose 2.3 percent for the 12 months that ended in July, the fastest year-over-year increase since 2012.