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The Weekly Consensus

Ideas, observations, and news on the consumer products and retail industries
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The Weekly Consensus – February 13, 2017 (Volume 9, Number 7)

The Big Story
After A Fashion
Maeghan Thompson


New York Fashion Week (NYFW) has kicked into high gear once again bringing a warm welcome to the winter cold that grips New York City.  Celebrities and journalists from across the world have front-row seats to see American designers present their collections.

Since the very first Fashion Week in 1943 which was called “Press Week,” held at the Plaza Hotel, there have been many changes.  Press Week was organized by Eleanor Lambert, press director of the American fashion industry’s first promotional organization, the New York Dress Institute.  Press Week’s purpose was to draw attention away from French fashion during World War II when industry insiders were unable to travel to Paris. Lambert worked with American designers to produce full collections and Press Week eventually became what we know today as Fashion Week, leading to the rise in prominence of American designers.

This year’s NYFW has approximately 150 shows that will launch collections down runways or stage them in studio spaces.  Since the advent of Fashion Week celebrities have become street wear designers and social media platforms have enabled passionate followers who would be otherwise unable to watch shows remotely and in real time.

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The Weekly Consensus – February 6, 2017 (Volume 9, Number 6)

The Big Story
Will Free Two-Day Shipping Give Walmart An Edge Over Amazon?
By George Anderson, RetailWire

Has Walmart finally found a way to gain an e-commerce advantage in its competition with The world’s largest retailer announced on January 31 that it will now offer free two-day shipping with no annual fee for orders placed on

The free two-day shipping options requires a $35 minimum purchase and covers more than two million items sold on the site.

Marc Lore, president and CEO of Walmart U.S. eCommerce, wrote in a blog post, “These items make up the vast majority of what customers buy online. In today’s world of e-commerce, two-day free shipping is table stakes. It no longer makes sense to charge for it. We believe this is the most compelling all-around value proposition for customers looking for low prices, a broad assortment and quick shipping.”

With the new program going into effect, Walmart is discontinuing its ShippingPass program, which offered free two-day shipping for a $49 annual fee. Members in the program will receive a refund from Walmart.

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The Weekly Consensus – January 30, 2017 (Volume 9, Volume 5)

The Big Story
Super or Not?
Billy Busko


$5.5 million for 30 seconds.  Is it worth it?

This Sunday the Atlanta Falcons and the New England Patriots will face off in Super Bowl LI (that’s 51 to non-Romans).  However, not all eyes will be on the game as the Super Bowl commercials have become a large part of this spectator event.  In fact, a Huffington Post/You Gov study shows that 26% of viewers consider the commercials to be the best part of the program.

The first Super Bowl was played in 1967, and a 30 second commercial cost $42,000, or about $300,000 in today’s dollars.  According to Variety, Fox Broadcasting is charging marketers between $5 and $5.5 million this year.  This cost does not take into account the two teams actually taking the field in Houston as Fox sold 90% of the advertising time by December.  For some perspective, a similar spot for the 2016 Oscars cost $2 million, and Game 7 of this year’s historic World Series between the Cubs and the Indians fetched $500,000.  And how many commercials are presented during a Super Bowl game?  Last year, there were 62 advisements excluding the “free” ads run by the NFL and the network (45 ran for 30 seconds, while 17 ran for a full minute and cost twice as much).

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The Weekly Consensus – January 23, 2017 (Volume 9, Number 4)

The Big Story
Shopping Mauled
Mark Lenz

Another holiday selling season has come and gone.  Total retail sales for the season were up 4.1% according to the services that track such things. According to Visa’s Retail Spending Monitor, e-commerce spending increased by 19% and represented nearly a quarter of holiday season sales.  Do the math, and it becomes clearer why physical stores had lackluster year-over-year performance, resulting in a torrent of disappointing sales announcements and new store closure notices from Macy’s, Sears, The Limited and others.

The conundrum for brick and mortar retailers, especially department stores, is that they have so much invested in store designs developed before the digital shopping era.  One recent retail survey indicated that while consumers still make most of their purchases in brick-and-mortar stores, four in ten claimed shopping in ­store is a chore and a third said they would rather be at home washing the dishes.

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The Weekly Consensus – January 16, 2017 (Volume 9, Number 3)

The Big Story
Beauty Kontest
Betsy White

From the groundbreaking introduction of Sephora to the US in 1998 to the debut of subscription box services Birchbox and Ipsy, born in 2010 and 2011, respectively, the cosmetics and skin care business has experienced a sea change from the days of buying your makeup from the beauty advisor at the local department store or going the more economical route and picking up your mascara at the drug store.  The variety and number of options available for you (yes, you guys too) to buy your beauty regimen products has grown exponentially, driven in large part by social media and ecommerce, which in turn has enabled new and independent brands to enter the marketplace.

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The Weekly Consensus – January 9, 2017 (Volume 9, Number 2)

The Big Story
What’s In A Name?
Douglas Stebbins

We all know a great brand when we see it.  Whether it is Apple, Coca-Cola or Goldman Sachs, a great brand is one that, in the mind of consumers, stands for something.  What is the key to creating a great brand?  While there is no step-by-step recipe to creating a great band, I think we can all agree that, whatever the case, the ingredients include a lot of money, a fair amount of time, lots of energy and more than a little luck.  From an business owner’s standpoint, trying to create a lasting tradename from scratch can be daunting, and far from certain.  That is why, when contemplating a “build or buy” decision, many choose to buy (or license) a brand rather than build one.

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The Weekly Consensus – January 2, 2017 (Volume 9, Number 1)

The Big Story
Made in the USA, Or Else
Marshall Schleifman

The details are scant.  The odds are unknown.  The stakes are high.

As the page turns to 2017, the far-and-away biggest concern for the Consumer & Retail sector should be the proposal being floated by the incoming Trump administration and Republican-controlled Congress for a so-called “border adjustment tax” (BAT) intended to encourage domestic manufacturing (and associated jobs) and discourage buying from overseas.  In the proposed BAT system, companies would no longer be able to deduct the cost of their imported goods while deductibility for domestically produced goods would remain.  Simply put, imported products would become more expensive than they are today.

The industry widely recognized as most vulnerable to a BAT is Consumer & Retail, where companies would have to charge more (or profit less) for clothing, housewares, electronics and other goods that are predominantly made abroad.  In fact, 97% of apparel and 98% of footwear sold in the U.S. is imported.  President-elect Trump’s rhetoric about on-shoring has focused thus far on heavy industries such as Carrier air conditioners and Ford autos.  However, many product segments that also would be affected by a BAT are truly import-dependent because they rely on low-skilled labor more suited to developing economies than on jobs that can sustain American families.  In response to President-elect Trump’s proposal, the American Apparel and Footwear Association stated: “The apparel and footwear industry has been global for more than a generation and is reliant on global supply chains to provide the products that American consumers want to buy.  This change to the tax code would have an outsized adverse impact on our industry.”

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The Weekly Consensus – December 19, 2016 (Volume 8, Number 48)

The Big Story
RetailWire Discussion: Zara Succeeds With Speed
By George Anderson, RetailWire

Consumers today, particularly younger ones, are notoriously fickle when it comes to their fashion purchases. Items that were flying off the racks a few weeks ago may already be heading for markdowns. That’s what makes a new Wall Street Journal story on the fast-fashion chain Zara so fascinating. The paper tracked the development of a new coat being sold by the chain, which went from prototype design to store racks in 25 days.

“The reason for Inditex’s success is short lead times: the ability to offer designs to the customer that other retailers do not yet have,” Société Générale analyst Anne Critchlow said of Zara’s parent company. Ms. Critchlow told the Journal that being first to market with new designs also enables Zara to charge more than its slower moving competitors.

Being fast to market, however, is not necessarily a guarantee of success. There were reports this summer of chains, including Forever 21, H&M and Uniqlo, slowing expansion plans to align operations with marketplace realities.

Old Navy, which sped up its supply chain and achieved four consecutive years of sales growth through the end of 2015, has struggled since former president Stefan Larrson left to join Ralph Lauren in October of last year. In November, the chain reported a decline of two percent in comparable store sales.

The need for speed has not been lost on department stores either. As the Journal reports, J.C. Penney adjusted its supply chain to cut the time to get clothing to stores from 10 months to eight. While an improvement, it’s nowhere near the bar set by Zara.

Penney, for its part, has claimed that it is having success in attracting Millennial women. The chain, whose average customer is 51 years old, according to Kantar Retail data, has said that its “emerging customer base” is comprised largely of younger women. This group accounts for 45 percent of its revenues. The chain, according to a CNBC report, points to its own fast-fashion brand, Belle & Sky, along with Sephora shops inside its stores as factors in attracting new and younger shoppers.

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The Weekly Consensus – December 12, 2016 (Volume 8, Number 47)

The Big Story
Going, Going, Go!
Maeghan Thompson

As we move deeper into the time of year when the lines at checkout counters in retail stores are about as long and confused as they ever get, Amazon has revealed its solution to the problem at a brick-and-mortar grocery store concept in Seattle called Amazon Go.  The 1,800-square foot store offers a variety of fresh meals, pre-made snacks and meal kits.  The meal kits include everything necessary to cook a meal in approximately 30 minutes.  The store also has the simple grocery staples such as milk, bread and cheese.  (As of now the store is only open for Amazon employees and anticipates to open to the public in early 2017.)

Amazon Go eliminates checkout lines using a new mobile app that is automatically linked to an existing Amazon account.  Sensors in the Amazon Go store track which items customers take off the shelves and put into their carts, and also any items that get put back.  Once the customer has finished shopping, they simply walk out the door – the sensors automatically charge the linked Amazon account for the items.

This new technology eliminates waiting in long checkout lines, waiting for the person in front of you to hand the cashier coupons and waiting for them to figure out how to insert their new chip card.  It also eliminates the cashier and bagger and changes the degree of human interaction with what store employees remain employed.

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The Weekly Consensus – December 5, 2016 (Volume 8, Number 46)

The Big Story
Reintegrating Shopping into Everyday Life
Michael A. O’Hara

Last Tuesday (Nov. 29), Eataly opened its fourth U.S. unit at the Prudential Shopping Center in Boston’s Back Bay district.  Spanning three floors and 45,000 feet, Eataly is a combination fresh food retailer, upscale grocer, wine cellar, cooking school, espresso shop and restaurant.  The mammoth gastronomic “experience” replaced the Prudential’s more traditional food court, previously consisting of a shared seating area ringed by burrito, pizza, Chinese food, burger and sandwich shops.

Eataly as a “destination” experience epitomizes a general trend in the use of mall space, and a look at Eataly’s neighbors at the Pru drives home the point.  Where to the left of the old food court was an upscale junior women’s fashion retailer, the new Eataly is adjacent to Tesla, the electric car maker, which now operates 24 “stores” in malls.  To the left of Tesla is not a cosmetics company, but rather Microsoft (who now has over 100 “stores”).  One presumes that neither Tesla nor Microsoft took these expensive mall spaces solely to sell merchandise, but rather to interact with customers – a mix of marketing and retailing.  In the age of the DVR, a physical storefront commands attention big brands may not be able to get from traditional marketing media.

The smart people who run malls study their competition closely, and they know that they need to combat the convenience of their collective enemy – the internet — with their own strength: the ability to offer the consumer the experience of using all five senses.  They also know that if the customer can just as easily acquire an item from Amazon as they can in the mall, the traditional retailer may not be able to justify high mall rents.  That retailer may elect to operate fewer stores, or it simply may not be able to survive.

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