Category Archives: JB Research Company

Boxed-Retail Frenzy

Last week we published a blog about retail disruptors and included two boxed-apparel e-commerce success stories.  On June 20, Amazon announced that Prime Wardrobe, a boxed apparel product, is now available to all domestic Prime customers.  Users can order three fashion items or more with no upfront fee, send it  back after a week or pay for those they like.  Of course, there is no shipping fee for returns.

We are seeing the lights go on at online retail.  Women need to try things on, feel the material, look in a mirror before they decide to buy, and that hasn’t changed with e-commerce. It is predicted that 25% of e-commerce  retailers will offer this service by next year.

One huge issue with this type of service is  returns, which may greatly increase operating expense.  According to a new survey from Brightpearl, more than 85% of customers expect free returns.

Another huge cost to online retailers is the Supreme Court ruling on June 22 that states and localities may require the collection of sales taxes on all internet purchases.  This cost will be passed on the consumer, making goods purchased on the internet more expensive.  Price for an online item  is often critical for a purchase decision.

As I often say about these kinds of innovations, we shall see…………… For me and many of the women I know, shopping in a store fulfills the need for immediacy and the need to use all our senses,  our touch and sight  and smell before buying.

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Retail Disruptors / Retail Innovators

There is much chatter regarding technologies disrupting retail today. To me, a “disruptor” is a platform by which our lives are made easier and better. I always have my eye on the actual product and the in-store experience (which may or may not be enhanced by technological innovations.) The IoT will never replace the actual experience of being in a beautifully turned-out store, where we can touch, feel, smell and embrace our potential purchases. This Blog presents our view of the top retailers disrupting today. They include Stitch Fix, M.M. LaFleur, ModCloth, Rothy’s and Bespoke. All five of these have a big digital presence and four of them have a physical location.

Stitch Fix

Stitch Fix Head Quarters

Stitch Fix is an online fashion retailer whose concept came from the produce delivery business. Its founder understood that ordering a box of produce and paying only for what you like or decide to use could be applied to fashion. Stitch Fix is a personal styling, time saver, where complete outfits, including accessories are sent to the user on a fixed time schedule. The client can select what they want to keep and send the rest back.
The business model earns revenue from a $20 initial investment of a “styling fee”, which is applied to the purchase; and the mark-up on clothes, shoes and accessories purchased through the site. An average purchase includes five items estimated at a minimum total cost of $275, and the client receives a 25% discount for buying the entire outfit. The client is given three days to review the items and send them back in prepaid packing. The company did an IPO in 2017 and now has a current market cap value of $2.4 billion.

M.M. Lafleur

Since the sincerest form of flattery is imitation, a new retailer has entered the styling/box space, but with a new twist. M.M. Lafleur provides a stylist for business and “creative casual” with a more expensive offering than its doppelganger. Average price for a top is $110, and a dress about $250. The site is geared toward business women. The New York brand opened its first store in San Francisco on Grant Ave in 2018 and allows customers to select any item from their website for purchase individually. Other new stores are open or will be opening soon in Philadelphia, New York, Chicago and Washington, D.C.

Mod Cloth

ModCloth caters to Millennial women of all sizes and opened a store within their corporate building on Fillmore Street in San Francisco. The fashion retailer was sold to Jet in 2017 for about $50 million. Jet is a Walmart owned, Amazon-like online retailer with free shipping for purchases over $35. The fashion brand bills itself as a “quirky, trendy and vintage apparel site that caters to Millennials”.  A quick look at the offerings indicates a very affordable product, including a wedding dress for $120!

Rothy’s

Rothy’s is an interesting retailer that offers shoes made of totally recycled materials and 3D-knit.  The 600 square foot store on Fillmore Street in San Francisco was opened to conduct consumer research before offering a specific product to ecommerce worldwide. The space is covered by their recycled materials, and the walls are entirely magnetic.

Bespoke

Bespoke is a co-working space which debuted at Westfield San Francisco Center on the ground floor.  Approximately 80 companies work in the space, including retail-tech startups, venture capitalists and innovating teams from large brands. According to an article, “When Bespoke launched in Westfield San Francisco Centre on May 28, 2015, it was a first-of-its-kind ecosystem combining three components. While the individual components of Bespoke were tried and true (spaces for co-working, demos and events), never before had all three of these components been built to act in harmony, and never before had this type of an environment existed inside a shopping center. While the partners responsible for the launch of Bespoke – Westfield San Francisco Centre, Westfield Labs, Westfield Corporation and partner Forest City – all had great expectations for the success of the space, which is still attracting attention two years later”.

Finally, a word about the long term. Westfield’s Destination 2028 includes a vision of a retail environment with “hanging sensory gardens, artificial intelligence infused walkways in an environment designed to cater to every need of new generation shoppers”. This concept focuses on the growing importance customers place on experience, leisure, wellness and community.

This is all good news for us consumers, don’t you think?  Let us know your views on retail and the future by leaving your comments here.

 

JB Research is Moving

Blue-withglasses.jpg

 

Dear Friends, Colleagues and Clients,

We are thrilled to announce our move to the new office in Vallejo, California.  From now on, please address all correspondence to:

JB Research Company

2331 Lansdowne Place

Vallejo, CA 94591

(707) 563-8507 Office

(805) 798-1800 Cell

Young Adults

OUR MILLENNIALS

Some say Gen Y, or Millennials, are a lazy, over-parented, indulged cohort.  Being the mother of two Millennials, both parents, home-owners and extremely responsible young men, I tended to strongly disagree.  Are you sensing a “but” here?

I wanted to see if this is true statistically.  So I embarked on a study of current census data, and to my surprise and delight, the United States Census had already done this for me!  What I found is that there is striking statistical support for some of these beliefs.

Below is a summary table of some of the information collected and collated by the government.  What is most illuminating is that almost one third of this cohort lives with their parents, while only one quarter did a quarter century ago.  A huge number live in poverty, more than 13.5 million, while only 9.5  million lived under the same conditions in 1990.  This is not good news!

Young Adults Table

In 1990, 15% spoke a language other than English at home.  Now about one in four are brought up in a household in which English may not be spoken at home.  What we all know is true, these young people are 43% “minority,” whereas only 27% were in the “minority” in 1990.  This is a positive in our country, since we are all “minorities,” and we are all immigrants, but classifications have changed since we emigrated from Europe, Asia, Africa, Australia, and other continents.

One great finding is that 22% have earned a Bachelor’s Degree or higher, while only 17% had this level of advanced education in 1990. And remember, many of these people are on their way to earning a Bachelor’s degree because they are still in college.

Analyzing these data in graphic form illuminates these findings.

1.  Median earnings are waaaay down in the past quarter century!

Median Earnings.JPG

2.  This population segment is highly diverse.

Millenials Figure 2

3.  Asian Americans show about 60% of this cohort in college, while Blacks and Hispanics show increases in student enrollment, making up 30% of each of their population bases in this age range.

Millenials Figure 7

4.  We need more Millennials in the STEM fields!

Millenials Figure 8

5.  Student debt is a big problem for our college students.

Millenials Figure 9

6.  About half of college students are working, a bit less than in 1990 when that total was about 60%.

Millenials Figure 12

7.   Women are out-pacing men in Bachelor’s Degrees conferred and with some Graduate School.  It has been this way since 1994!

Millenials Figure 22

8.  As always, with this generation, the higher the level of education, the higher the average household income.

Millenials Figure 18

9.  And for older Millennials, long unemployment as a percentage of total unemployment is higher than ever, up from 15% in 1977 to over 40% in 2014.

Millenials Figure 21

10.  Millennials are marrying older.

Millenials Figure 26

11.  Educated Millennials are having kids later.

Millenials Figure 28

12.  And almost a third still live with parents.

Millenials Figure 29

My conclusions from these data is that Millennial issues stem more from  the Great Recession, and the fact that they are dogged by student debt rather than their lack of ambition.  They entered the workforce at a terrible economic point in our history.  As REAL wages increase, and the economy improves, they will quickly be absorbed into the grown-up population.

Tell me what you think.  I always love hearing from our readers!

THE POWER OF GLOBAL GENDER PARITY

I am just back from ICSC.  Besides much discussion of the demise or denial of the demise of  bricks and mortar shopping opportunities, I saw a presentation about this “Gender Parity” study completed by the McKinsey Global Institute (MGI).  Take a look!

Click Picture to Download Report

“Narrowing the global gender gap in work would not only be equitable in the broadest sense but could double the contribution of women to global GDP growth between 2014 and 2025. Delivering that impact, however, will require tackling gender equality in society.

“MGI has mapped 15 gender equality indicators for 95 countries and finds that 40 of them have high or extremely high levels of gender inequality on at least half of the indicators. The indicators fall into four categories: equality in work, essential services and enablers of economic opportunity, legal protection and political voice, and physical security and autonomy.  We consider a “full-potential” scenario in which women participate in the economy identically to men, and find that it would add up to $28 trillion, or 26 percent, to annual global GDP in 2025 compared with a business-as-usual scenario. This impact is roughly equivalent to the size of the combined US and Chinese economies today. We also analyzed an alternative “best-in-region” scenario in which all countries match the rate of improvement of the best-performing country in their region. This would add as much as $12 trillion in annual 2025 GDP, equivalent in size to the current GDP of Japan, Germany, and the United Kingdom combined, or twice the likely growth in global GDP contributed by female workers between 2014 and 2025 in a business-as-usual scenario.

“Both advanced and developing countries stand to gain. In 46 of the 95 countries analyzed, the best in-region outcome could increase annual GDP in 2025 by more than 10 percent over the business as-usual case, with the highest relative boost in India and Latin America.

“MGI’s new Gender Parity Score, or GPS, measures the distance each country has traveled toward gender parity, which is set at 1.00. The regional GPS is lowest in South Asia (excluding India) at 0.44 and highest in North America and Oceania at 0.74. Using the GPS, MGI has established a strong link between gender equality in society, attitudes and beliefs about the role of women, and gender equality in work. The latter is not achievable without the former two elements. We found virtually no countries with high gender equality in society but low gender equality in work. Economic development enables countries to close gender gaps, but progress in four areas in particular— education level, financial and digital inclusion, legal protection, and unpaid care work—could help accelerate progress.

“MGI has identified ten “impact zones” (issue-region combinations) where effective action would move more than 75 percent of women affected by gender inequality globally closer to parity. The global impact zones are blocked economic potential, time spent in unpaid care work, fewer legal rights, political underrepresentation, and violence against women, globally pervasive issues. The regional impact zones are low labor-force participation in quality jobs, low maternal and reproductive health, unequal education levels, financial and digital exclusion, and girl-child vulnerability, concentrated in certain regions of the world.

“Six types of intervention are necessary to bridge the gender gap: financial incentives and support; technology and infrastructure; the creation of economic opportunity; capability building; advocacy and shaping attitudes; and laws, policies, and regulations. We identify some 75 potential interventions that could be evaluated and tailored to suit the social and economic context of each impact zone and country.

“Tackling gender inequality will require change within businesses as well as new coalitions. The private sector will need to play a more active role in concert with governments and non-governmental organizations—and companies could benefit both directly and indirectly by taking action.”

http://www.mckinsey.com/global-themes/employment-and-growth/how-advancing-womens-equality-can-add-12-trillion-to-global-growth

 

ROGERS PLACE – EDMONTON, ALBERTA CA

The Edmonton Oilers are in the process of creating a two billion dollar (C) arena-led mixed-use entertainment project in downtown Edmonton, on a 20-acre site where an old casino once stood. We were fortunate enough to conduct all the market and financial feasibility studies for the project, which include a practice arena, retail/dining/entertainment, several hotels, office, casino, convention center, meeting spaces, housing, university, and cultural uses. In September 2016, the first phase of the project opened, presenting the arena and a glass-enclosed winter garden plaza.

One of the most contentious issues was who would pay for which part of the project since Alberta (and most of Canada) had no precedent for municipal participation in funding an expensive, state-of-the-art, mixed-use, sports-entertainment district.  Negotiation on these points went on from 2009 to 2013, when the City and the Katz organization came to a mutually agreed upon solution.

Besides testing the market and financial feasibility, we also completed a warranted investment analysis that quantified the shortfall in revenue to attain an industry-standard rate of return on the investment. The exercise was extremely complicated with the many uses being tested, the multiple ownership formats suggested, the non-profit elements blended together with the commercial elements, and the fact that there were no Tax Increment Financing instruments in place in the province.

rogers-placeFast forward seven years to 2016, and the new “Rogers Place” opened in September 2016 to great fanfare carrying a total construction cost of C$604,500,000. The specifics of the deal are precedent-setting in terms of public support for a private sports enterprise. Sources of funds are as follows:

  • City-Issued Debt:                              C$541,810,000 (90%)
  • Government Funds (Non-City): C$39,000,000 ( 6%)
  • Oilers Contribution:                         C$23,690,000 (4%)

Phase One terms are summarized as follows:

  • Owner: City of Edmonton
  • Lessee: Edmonton Oilers
  • Operator: Edmonton Oilers
  • Lease Term: 35 years (with three 10-year lease options)
  • Oilers –  Manage arena operations, receive all arena revenues & pay for arena operations/maintenance
  • Oilers operating revenues include naming rights and parking revenues

The Oilers received the right to levy a Ticket Surcharge (with a portion going towards debt service and capital reserve).  Other Key Terms are as follows:

  • Team will pay annual lease payment of approximately C$6.7 Million
  • Approximately C$6.1 Million per year in Ticket Surcharge fees will go towards debt service
  • City will pay the Oilers C$2 Million annually for 10 years to help market/promote the City
  • Total project also includes City amenities (winter garden, community ice rink, etc.)
  • City will have up to 28 days a year of free arena access for community events

The Annual Debt Service Payment of almost $32 million will be generated from the following sources:

  • City – Downtown Tax Increment: C$13,122,554
  • City – Other Public Sources:          C$5,275,399
  • Oilers Lease Payments:                   C$6,697,157
  • Ticket Surcharge Revenue:            C$6,074,629

With the attendance and revenue generated since opening, these targets are very likely to be reached.

Voila, a new model for building and financing a $600 million arena is born!

MILLENNIAL MOMS

Scrolling through the generations, we have finally come up with a new demographic cohort that has real influence, buying power, and hasn’t been studied to death.  This collection of diverse, affluent, educated women were born between 1980 and 1994, making them 22 to 36 years of age.  Of the almost 80 million of these consumers, about 9 million are moms, quick math, about 11 percent.  They also account for 90% of the new mothers in 2016, about 1.5 million.

So, what should we know about this important, influencer group?  Here are 10 facts to embrace for your retail and entertainment businesses to grab their attention and keep this business:

  1. These ladies are highly connected with their social media accounts.  They spend 17 hours per week with Facebook, Twitter and Pinterest.
  2. On that same not, 83% use video-sharing sites to keep connected with friends and family and to show off their adorable offspring!
  3. Less than half are stay-at-home moms, at 45%, (according to a BabyCenter.Com survey).  However 60% think a parent should stay home to care for children, compared to 55% of Baby Boomers.  Not too much of a difference with these two cohorts Millennials are teaching their kids to be open-minded and encouraging them to find ways to develop their own thinking skills and unique personality.
  4. Millennial parenting is all about experiences!!!!! This means they will play, shop, work and eat with these kids.  What an opportunity for our industry!
  5. Roughly 90 percent share information about a purchase they have made and services they have used.
  6. Millennials believe their careers do not mean 9 to 5 cubicle work.  They embrace working from home, cutting down on office costs and commute times.
  7. One in five moms survey by BabyCenter have started a blog with substantial followers and half report plans to start their own businesses.
  8. A Nielsen study shows that 62% of Millennials prefer living near amenities associated with urban centers, so maybe they aren’t all moving to the burbs!
  9. These moms are very health conscious.  They are switching fast food for more healthy, fresh local sourced food.
  10. They are not tied to one form of parenting including a “baby-wise parent”, “a metric parent”, or a “free-range parent”, or a “helicopter parent”.  For every type of parent there are meet-up groups, online forums, blogs or communities that offer support and advice.

Based on these trends, who is doing a good job in terms of marketing to these ladies?