Ged Carroll

Category: retailing | 零售 | 소매업 | 小売業

Looking back to when I started this blog, it would have been reasonable to expect an inevitable march of retailing from offline to online. Amazon was on a tear and search advertising volumes were increasing year on year. By the time I was at Yahoo! search advertising (focused on online retailing) counted for about half of all revenue for the company.

At that time Yahoo! had a Spotify-like subscription streaming music service that was viewed as a threat to Apple’s iTunes download only offering. When I worked there Yahoo Music was the number one online music site in terms of audience reach and total time spent by consumers on the site. Also display advertising was much bigger for brands than it is today and Yahoo! was guaranteed a good share of the online marketing spend from any movie launch at the time.

The reality of online retailing, was slower than our expectations. While COVID drove an increase in online retailing there has also been corresponding innovations in retailing as well.

Amongst the pioneers in this change have been luxury brands like Burberry and Nike, who brought digital into their stores to provide a superior customer experience.

Adidas brought manufacturing into its stores with its speedfactory experiment, allowing for fast time to market and customisation.

Supreme changed the cadence of retailing with the Thursday morning ‘drop’  which saw queues outside stores. Every Thursday became a launch day as far as their customers where concerned. The queue has moved from Apple’s annual cadence, to every week.

  • Luxe streetwear

    I started thinking about the latest developments in luxe streetwear after leafing through the FT to see the following advert marking the proposed purchase of Stone Island by Moncler. (Stone Island had already sold its parent brand CP Company and intellectual property back in 2015 to Hong Kong manufacturer Tristate Holdings Limited).

    https://flic.kr/p/2keGLRb
    R+R SpA – published in the Financial Times – a luxe streetwear merger

    It follows hot on the heels of Supreme being purchased by VF Corporation.

    Luxury disruption

    From the luxury market point of view their customer base over the past 30 years has done three things:

    • The customers have become younger. Luxury shopping is no longer dominated by dowager heiresses in Europe and the New World. Now the man purchasers of luxury are much younger and are second generation money. They’ve had money in their families for somewhere between 20 and 50 years. They are the scions of political leaders or business leaders. Money has allowed them access to the world’s best education institutions. They might have had etiquette classes, but they’re no more than two generations away from having known deprivation.
    • The customers are in a different place. Globalisation massively changed their customer base. First it was the Japanese middle classes who picked up a taste for luxury brands whilst travelling abroad. As the Asian tigers took off, you started to see luxury purchases being made in Singapore, Hong Kong, Korea and China. When the Soviet Union fell luxury consumption also sprang up in the East as some people had money to burn. Much of the luxury retail in traditional shopping areas like London and Paris are derived from tourists rather than local purchasers. A change in the luxury tax regime in China has seen more domestic luxury consumption. China is now looking to build Hainan into a domestic luxury shopping and holiday resort.
    • Luxury serves a different purpose. Luxury has traditionally reflected status. Goods of a superior nature that the ‘wrong sort’ of people would never be able to afford. Luxury then became a symbol that you’d made it. In Asian markets, particularly China, luxury became a tool. People gifted luxury products to make relationships work better. It also signified that you are the kind of successful business person that partners could trust. You started to see factory managers with Gucci man bags and premium golfwear to signal their success. Then when the scions of these business people and figures in authority were adults, luxury has become about premium self expression. It has been mixed up with streetwear in a manner reminiscent of the Buffalo Collective.

    So from the perspective of the luxury industry, they are feeling a massive amount of disruption going on. And that’s even before you get into digital transformation.

    It is this transformation of customer segments, geographies and use cases which is forcing the luxury industry to ‘go casual’ fit in a luxe streetwear space.

    Streetwear evolution

    The perspective from the streetwear side of the table is more exemplified by my favourite Thai English phrase: same-same, but different. Their market hasn’t been disrupted in the same way as luxury. It has got a lot bigger.

    https://flic.kr/p/Ra6SxF
    Growth in streetwear

    The internet has meant that streetwear culture has become global and trends catch on much faster. It has become more popular around the world and there are thriving secondary markets like StockX and GOAT.

    Streetwear has pushed into luxury pricing models led by Japanese brands; who brought a higher attention to detail to the market. It has continued the trend of innovation that companies like Stone Island started. This is best exemplified now by the likes of German label ACRONYM.

    From a design perspective right back to the origins of what we know as streetwear by the likes Shawn Stüssy or Harlem’s Dapper Dan co-opted luxury product language. In Dapper Dan’s case using fake fabrics and labels to make clothing. His customer base of African Americans from poor neighbourhoods whether early hip hop stars or criminals didn’t see the items that they wanted in boutiques. And even if they did, many of them didn’t feel welcome in the uptown boutiques.

    From Stüssy’s point of view it was the pop art ethos and DIY fanzine culture that infused his work. The reversed double S in a circle is an obvious reference to Chanel’s design language.

    Over the space of a decade Supreme went from being sued for aping Louis Vuitton’s design language to collaborating with them. Dapper Dan has recently been collaborating with Gucci.

    Does luxe streetwear lack ambition?

    Highsnobriety asked the question five years ago and concluded that no streetwear company had shown the serious ambition to become an umbrella brand the size of LVMH or Kering. Skiwear, skate wear and snow sports equipment are sectors that are a tenth of the size of streetwear. Yet they have seen consolidation into larger holding groups. These groups provided the financial cushion for these companies through the 2008 financial crisis.

    The closest that luxe streetwear has got to the holding group is likely to be New Guards Group. New Guards Group describes itself as a contemporary luxury fashion holding group. It owns Off-White, Opening Ceremony and Palm Angels. This in turn was bought out by luxury e-tailer Farfetch. Farfetch in turn has Richemont and Alibaba as minority shareholders.

    Surfwear is also described as having a generational strain. Dads keep wearing the gear. Kids no longer want to wear it. Given the commonality with the streetwear lifestyle. You could see similar things happening at even the largest of streetwear brands eventually. Some of the people wearing Supreme in the mid 1990s are still wearing it. The original international Stüssy Tribe are still going strong, repping streetwear in their 50s and 60s.

    Luxe streetwear brand A Bathing Ape has definitely seen better days, by the time Nigo sold the business to Hong Kong I.T. Group. The transitory nature of streetwear brands is littered with names that were formerly prominent like XLarge (that came back) or 90s icon Massimo.

    Stone Island and luxe streetwear

    Moncler get a technically proficient firm in Stone Island. It was built on a foundation of experimenting with materials. It is the only company able to garment dye polyester fabric for lightweight applications like summer jackets.

    The brand is widely respected and has collaborated with other innovators like Nike. It has been worn by Drake regularly that opened the brand up to hip hop fans. This has helped the brand widen its association beyond football hooligans and scally culture.

    More luxury related content here.

    More information

    Moncler to buy Stone Island in deal that values rival at €1.15bn | Financial Times

    VF snaps up streetwear line Supreme in $2bn deal | Financial Times

    Luxury brands set sights on Chinese tourists in Hainan as extended duty-free quotas and pandemic-free shopping attract travellers | South China Morning Post

    Dapper Dan’s collaboration with Gucci – focused on ‘hip hop style ready to wear and accessories featuring the GG logo

    Everything we know about the Supreme x Louis Vuitton collection | High Snobriety

    The umbrella brand: is streetwear ready for corporate takeover? | Highsnobriety

    Billabong’s demise is emblematic of a wider crisis in the surfwear industry | Guardian

    Silk or Synthetic | Financial Times

  • Bots in education + more things

    Bots Grade Your Kids’ Schoolwork—and They’re Often Wrong – WSJ – not surprising that Bots get grading wrong. A lot of ‘AI’ is math, it isn’t that far along from Business Intelligence systems of the 1990s. What would have been called fuzzy logic in the 1990s is now ‘AI’ bots; both of which rely on mathematics from the 1960s. ‘AI’ bots using Bayesian statistics rely on mathematics from the 18th century. ‘AI’ bots require a large amount of training. Bots don’t develop a ‘universal’ intelligence.

    Battery life: the race to find a storage solution for a green energy future | Financial Times – MIT’s Prof Sadoway believes that technologies need to be based on more abundant materials than those used in lithium-ion and vanadium batteries such as aluminium, sulphur, calcium and antimony. In 2005 he helped develop a liquid metal battery that uses calcium and antimony and a molten salt electrolyte. The company that developed it, Ambri, was backed from the beginning by Mr Gates, who invested in it after watching Mr Sadoway’s chemistry lectures online

    Xi’s aim to double China’s economy is a fantasy | Financial Times – challenged by demographics and politics

    ‘Humaning’ and the greatest marketing bullshit of all time – Marketing Week – Maslow built his model from qualitative research on the Native American inhabitants of the Blackfoot reservation who later pointed out that his whole theory was entirely incorrect when applied to their culture and identity. The hierarchy has subsequently been criticised on the basis of missing stages, putting stages in the wrong sequence and the fact stages change according to circumstance, culture and geography. So basically everything. But the dreaded hierarchy proved a hit with marketers who had no formal training but wanted something scientific-looking and faintly European-sounding to beef up their empty marketing plans. Its prevalence across every crap marketing plan (along with the equally redundant SWOT analysis) serves only one positive: to identify badly trained marketers and crappy marketers at 50 paces.

    Stop playing politics or face a ban, Nintendo warns Animal Crossing gamers | Hong Kong Free Press HKFP – I suspect that this is less about Hong Kong and more about the political chasm in the US

    Celebrity deepfake porn cases in Japan point to rise in sex-related cybercrime | South China Morning Post – the old law of the adult entertainment industry pioneering with technology a la film to VCRs and cable and online paywalls strikes again

    Scaling back – Why commercial ties between Taiwan and China are beginning to fray | Business | The Economist – “Little Taipei”, as Kunshan is known, illustrates a broader phenomenon. Exact estimates vary, but as many as 1.2m Taiwanese, or 5% of Taiwan’s population, are reckoned to live in China—many of them business folk. Taiwan Inc has not let fraught political relations with China, which views the island as part of its territory, get in the way of business. Taiwanese companies have invested $190bn in Chinese operations over the past three decades. Foxconn, a giant Taiwanese contract manufacturer of electronics for Apple and other gadget-makers, employs 1m workers in China, more than any other private enterprise in the country

    Grocery Drives Walmart Online Orders – Consumer Intelligence Research Partners, LLC – Among all US Walmart.com customers, CIRP estimates Walmart+ has 2.6 million-3.4 million members as of October 31, 2020, with 12%-15% of Walmart.com customers joining. US Walmart.com customers that shop for groceries at Walmart.com are two times more likely to report a Walmart+ membership. “Walmart launched the Walmart+ membership service in the quarter, and we estimate a range of membership that suggests about 3 million Walmart.com customers joined,” said Mike Levin, Partner and Co-Founder of CIRP. “At that level, it seems like a success, especially after only six weeks. Of course, grocery customers found it particularly attractive. Like Amazon Prime, Walmart+ is most valuable to regular Walmart.com shoppers, so it appealed to those grocery shoppers right away. And like Amazon’s experience with Prime, Walmart appears to want to build on that natural affinity to gain greater share of online shopping for those customers, and then to entice less frequent shoppers to grow their online shopping habits.” – groceries are over 30% of sales (food, household and pets 25%, clothing shoes & accessories 16%, same for pharma and electronics and office supplies were about 12%) (PDF)

    Muddy Waters accuses YY and Bigo of faking their revenues – Singapore-based analyst Ke Yan of DZT Research, told Bloomberg that the strategies discussed in the Muddy Waters report are aimed at boosting YY’s popularity among users instead of inflating revenue. Chen Da, executive director of Anlan Capital, offered Bloomberg a similar view. “You can’t really apply the research methods used to collect fraudulent evidence against real-economy or manufacturing firms to internet firms.” He added that their “business model does pay off and there is real cash flow brought in after the fakes ‘get the ball rolling’.” – sketchy growth hacking rather than fraud

    How the U.S. Military Buys Location Data from Ordinary Apps | Vice News – surprised if they didn’t. More related posts here.

    6 Points to Consider Before Betting the Farm on ‘All Made in China’ | EE Times – Some “three-nos” companies with “no experience, no technology, and no talents” have joined the IC industry. Some companies have insufficient knowledge of the law of IC development and blindly start projects. The risks of horizontal duplication of construction are apparent, and even the construction of individual projects is stagnant, and the factory buildings are empty, causing waste of resources. In this regard, Wei said that we must respect the law of industrial development and overcome the rapid development shooting for quick success. Since 2007, China’s wafer manufacturing capacity has increased rapidly in the world, far higher than other countries and regions. In 2019, China has 199 integrated circuit wafer manufacturing production lines (above 4 inches), of which there are 28 12-inch production lines and 35 8-inch production lines (including 1 pilot line). The enthusiasm for investment and construction of factories in various places is high, but a number of manufacturing projects are facing unfinished shutdowns. The blind impulse that violates the development law of the semiconductor industry is worthy of vigilance

  • Lamborghini social + more stuff

    Lamborghini rockets onto TikTok with 3 million views in two days – When you are marketing one of the worlds supercars TikTok may not spring to mind. With the entry level models at £150k upwards, Lamborghini may be more expected in the FT. But the Lambo is the car of choice for many influencers. David Dobrik famously gave one to his best friend and a Google search shows many Drop Shipping courses feature a Lamborghini as the badge of success. Although rumour has it that many hire the Lamborghini for the day to film. And bear in mind the market for ostentatious expensive cars skews young. Premiership footballers and pop stars spring to mind. (A recent Miles Davis documentary has him driving a Ferrari in the early 60s). So Lamborghini are big on social and having a TikTok page makes total sense – Simon Andrews on the Lamborghini TikTok channel content. Being bucketed with drop shippers, top flight footballers and influencers as a Lamborghini owner wouldn’t necessarily appeal to me – but each to their own

    What can Silicon Valley expect from Joe Biden? | Financial Times – Hours after the president-elect made his acceptance speech, his head of press, Bill Russo, retweeted a picture sent by Sacha Baron Cohen, the comedian and film-maker. The picture showed outgoing president Donald Trump meeting Facebook chief Mark Zuckerberg and commented: “One down, one to go.” Mr Russo added his own comment: “Hell yes.” It was the clearest sign that Mr Biden’s team share the antipathy towards Mr Zuckerberg and his fellow Silicon Valley titans that has built among Democrats over the past four years. – I wonder how this will play with the Silicon Valley titans who have bankrolled Kamala Harris’ political career?

    Tim Wu, who worked on technology issues in the Obama White House, said: “There has been a shift since the Obama administration, even among the people working in that administration, in the way they think about power in the tech world.

    China Academy of Art teaches students to ‘reinvent its heritage’ | Financial Times – interesting how this approach fits into Xi Jingping thought

    Interesting video that goes into using TikTok to convey serious media stories from the World Economic Forum

    Interesting adaption of materials – South Korean ‘sparrows’ try to cap surge of throwaway plastic 

    Alibaba’s Investment In Farfetch Cements Its Luxury Credentials | Jing Daily – this is interesting given Tmall’s luxury boutiques

    What To Expect On Singles’ Day 2020 | Forrester Research – Alibaba has officially announced that 2020’s Double 11 shopping festival will have two phases: The first one began on November 1, and the second will begin on November 11. The first stage focuses on new brands, new products, and global exclusive items. The second stage will resemble that of the regular Double 11 promotions of past years. This makes the first stage an additional growth driver to ensure a grander Double 11 event. JD.com also upped its game and planned a four-stage Double 11 promotion, lasting from October 21 to November 13. Promotion schemes have become more varied and complex, too, including time- or category-limited red packets, preorder (with a deposit) exclusive offerings, member-exclusive promotions, and installment payments – complex value proposition that probably wouldn’t work in a market like the UK

    Tokyo clinic mends stuffed toys and owners’ broken hearts | South China Morning Post – more Japan related posts here

    RISC-V core out-clocks Apple, SiFive; available as IP | EE News – ideal time to take the lead over ARM

    Deskilled and out of touch: the uncomfortable truth for creative strategy | WARC 

  • T Factory + more stuff

    Korea’s Largest Telecom has Partnered with Apple, Microsoft & Samsung in new kind of High-End Retail store called T Factory – Patently Apple – interesting tech department story T Factory by SK Telecom. T Factory seems to be much more ambitious than Hong Kong’s 1010 mobile carrier shops

    Ex-Morgan Stanley bankers make a splash in Hong Kong as new boutique firm adds Ant Group, Xpeng to list of clients | South China Morning Post – launched last year by two former senior Morgan Stanley bankers, Crawford Jamieson and Daniel Wetstein, and has since added top-notch companies including Alibaba Group Holding, Ant Group, and Xpeng among its clients. The firm offers corporate finance advice to companies and financial sponsors in the technology, health care and financial services sectors, backed by experience in completing US$500 billion worth of deals between them since late 1990s.

    Who will win the battle to replace Huawei in Europe? — Quartz
    https://qz.c – “Open-RAN is something in the future,” says Strand. “It is not an alternative to the equipment Nokia, Ericsson, Huawei, and ZTE are delivering today.”

    Comparison Shopping in the Age of Information Overload | INSEAD Knowledge – interesting research that is important for online shopping

    An XR partnership between Orange and Deutsche Telekom – Hello Future Orange – a bit happy clappy but shows some interesting ambition around the web of no web

    Google is bringing its own VPN to desktops and phones with $9.99 Google One subscription – The Verge – hmmm poacher turned gamekeeper?

    PlayStation CEO says VR won’t be a ‘meaningful’ part of gaming for years – The Verge – Sony PlayStation CEO Jim Ryan says virtual reality won’t be a meaningful part of interactive entertainment in the near future. Ryan indicated to The Washington Post that VR still has a long way to go, although he emphasized that Sony isn’t giving up on the medium. The statement suggests that an update to Sony’s PlayStation VR headset is years away.  “I think we’re more than a few minutes from the future of VR,” Ryan told the Post. “PlayStation believes in VR. Sony believes in VR, and we definitely believe at some point in the future, VR will represent a meaningful component of interactive entertainment. Will it be this year? No. Will it be next year? No. But will it come at some stage? We believe that.” – Interesting take. On one hand the hardware in Sony’s VR sets for the PlayStation doesn’t need to change due to displays, on the other hand the pause in take up seems to be software related. Does gaming have the kind of storytelling issues that VR cinema has?

    Facebook Is Up To 10 Million Active Advertisers, But Zuck Says He Fears For The Future Of Personalized Advertising | AdExchanger – headwinds coming in the form of an evolving regulatory landscape, continued uncertainty to do with transatlantic data transfers and coming platform changes, particularly on Apple’s iOS.

  • Vietnam boomtowns + more things

    Apple’s Shifting Supply Chain Creates Boomtowns in Rural Vietnam – Bloomberg – Vietnam is becoming the new China. While China has been impacted by problems of its own making, resulting in diversification of supply chains and trade disputes. This Vietnam build-out feels very much like build out in China during the late 1990s and the early 2000s after China joined the World Trade Organisation. Vietnam is now likely to experience double-digit growth. Hopefully Vietnam will climb up the value chain in a similar way to China. Vietnam is already a great place to develop software and applications. More Vietnam related posts here.

    Apple develops alternative to Google search | Financial Times – “Any reasonable search engine has to have 20bn-50bn pages in its active index,” Mr Ramaswamy said. When a user runs a query, the retrieval system must sift through vast troves of data then rank them in milliseconds. Some observers still dismiss the idea of Apple creating a complete search rival to Google. Dan Wang, associate professor of business at Columbia Business School, said it would be “extremely difficult” for Apple ever to catch up. “Google’s advantage comes from scale,” he said, as the endless user feedback helps to tune results and identify areas of improvement. “Google gets hundreds of millions of queries every minute from users all over the world — that’s an enormous advantage when it comes to data.” – Apple needs search for its app store, mapping services, media services and even on device. It doesn’t necessarily mean that Apple will do a ‘Google’

    Army of avatar robots readies to invade Japanese job market – Nikkei Asia – stocking shelves in a FamilyMart

    Apple develops alternative to Google search | Financial Times – explains Apple’s massive amount of overcapacity in their datacentre space for the past decade as they built around the world

    Chinese retailer Miniso beats Uniqlo and Muji at their game – Nikkei Asia – interesting profile of Miniso. What becomes apparent is how Luckin Coffee has poisoned the well with investors for Chinese retailing businesses

    Surveillance Startup Used Own Cameras to Harass Coworkers | Vice News – not terribly surprised that this was in their sales team. It fits right in with the sales cultures I have known

    25 Years In Speech Technology. …and I still don’t talk to my computer. | by Matthew Karas | Oct, 2020 | Medium – great essay on voice technology on computers (including smartphones)

    German spy chief Gerhard Schindler: China is poised to dominate the world | World | The Times – Gerhard Schindler, who led the Federal Intelligence Service (BND) from 2011 to 2016, said Germany needed to curb its “strategic dependence” on Beijing and ban Huawei from its 5G mobile phone network. He also warned that Angela Merkel’s liberal approach to the 2015 migrant crisis had left Germany with a “large reservoir” of young Muslim men susceptible to violence and jihadist ideology, and that the true scale of the danger was only now becoming clear.

    UK risks road rage with China in Africa – POLITICO – United States Assistant Secretary of State for African Affairs Tibor Nagy told a Congressional hearing in 2019 that Washington was “weaponizing” its African embassies “to confront China on a whole range of issues, most prominently a commercial one.” Westcott, from the Royal Africa Society, pointed out that Britain was so far aiming to maintain its own influence in Africa rather than reduce Chinese influence — but that it could take a more aggressive approach in future, for example attempting to outbid China for projects.

    How The Epoch Times Created a Giant Influence Machine – The New York Times – The Epoch Times was a small, low-budget newspaper with an anti-China slant that was handed out free on New York street corners. But in 2016 and 2017, the paper made two changes that transformed it into one of the country’s most powerful digital publishers. The changes also paved the way for the publication, which is affiliated with the secretive and relatively obscure Chinese spiritual movement Falun Gong, to become a leading purveyor of right-wing misinformation. First, it embraced President Trump, treating him as an ally in Falun Gong’s scorched-earth fight against China’s ruling Communist Party, which banned the group two decades ago – the enemy of my enemy is my friend. I see this as a failure of liberal politicians engaging with a plurality of opinions about China.

    The Belt and Road Strategy Has Backfired on Xi | Palladium Magazine – The Belt and Road is less a geoeconomic power play than a marketing strategy. Few of the myriad projects and investment schemes labeled ‘Belt and Road’ exist because of the initiative as such. Grand strategists in Beijing did not cause the tremendous outbound flows of money, men, and material that comprise Belt and Road, and they cannot direct it either. What statesmen like Xi Jinping do have power to influence is how these flows are understood and perceived by the world

    How Did China Beat Its Covid Crisis? | by Ian Johnson | The New York Review of Books – ambiguous lessons on handling COVID-19

    WeChat ban a catch-22 for Chinese Australians – The China Story – some members of the Chinese Australian community have created parallel chat groups on WhatsApp, Letstalk, Line or Telegram in case of a local WeChat ban. But they continue to be drawn back to WeChat as their main social media platform. Why do members of the Chinese diaspora choose to self-censor when they have many other options available? The answer may lie in platform affordances available in WeChat as well as techno-material features of the app that produce ‘habits’, engender ‘necessity’ and provide users with a sense of ‘vitality’.

    Inside Out: China’s Forgotten Domestic Politics – The China Story – China digging itself into a soft power hole

    Adobe’s new AI experiment syncs your dance moves perfectly to the beat | The Next Web – I was thinking about the effect that quantisation had on music software in the early 1990s which allowed for perfect beat synching (in theory, though MIDI and USB could throw that off slightly