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.

  • Amazon returns + more things

    Hidden cameras and secret trackers reveal where Amazon returns end up | CBC News – interesting aspect of Amazon’s business model. It does make me wonder how much of a drag is returns on Amazon’s business? Retail returns are usually running at 10 percent of products bought. With e-tailing; this rate is thought to be as high as 40 percent according to the programme. That sounds like an extremely high rate of returns. Back when I was in college 25 percent was quoted as a returns rate for catalogue businesses.

    Inside Palantir, Silicon Valley’s Most Secretive Unicorn – “Where you get into trouble is when the software gets so complicated that you have to send people in to manage it,” said one former CIA official who is complimentary of Palantir. “The moment you introduce an expensive IT engineer into the process, you’ve cut your profits.” Palantir, it turns out, has run headlong into the problem plaguing many tech firms engaged in the quest for total information awareness: Real-world data is often too messy and complex for computers to translate without lots of help from humans – to be fair enterprise software companies have always sold a good deal of smoke and mirrors in terms of over-exaggerated claims – sounds a lot like IBM’s Watson in this respect

    Apple’s New 5G IPhones May Be Left on the Shelf | Yahoo! Finance – 5G lacks a killer app for consumers

    Exposure to TV ads up 15% during height of lockdown – Even children were watching more broadcast TV and exposed to a greater volume of advertising in the weeks following the lockdown in March.

    Alibaba Group – investors day presentations – some interesting insight into Chinese e-tailing, retailing and internationalisation of these models

    Blockbuster Chinese games said to boycott Huawei and Xiaomi app stores over revenue tax | South China Morning Post – two Chinese gaming startups, Lilith Games and miHoYo, said they won’t sell their would-be autumn hits via app stores pre-installed on smartphones made by Huawei and Xiaomi. Instead, they’ve opted for stores charging smaller fees or none at all—including Apple’s App Store, which levies the same 30% charge in China as it does everywhere else. While the duo didn’t say outright they were unhappy about the 50% rule set by the Chinese Android stores, many gamers and developers see them as the good guys stepping up against tech’s behemoths

    How to Monitor Facebook Pages – Meltwater Help Center – now allows users to monitor Facebook pages that they’re in charge of. The limit is 50 specific Facebook pages. It pulls out the Facebook analytics data into a Meltwater interface

    European Semiconductor Sales Drop, Global Sales Rise – EE Times Europe – not surprising given the disruptions to manufacturing

    Google Chrome remains China’s most popular web browser, even with Google search and other apps blocked | South China Morning Post – consumer backlash against some domestic browsers can be attributed to their aggressive user acquisition tactics, such as being deliberately difficult to uninstall. But he said that a shift in consumer tastes might also play a role. When Chinese internet companies first started designing websites and applications in the late 90s, the minimalist aesthetic was unpopular, he said a friend told him at the time. “Chinese consumers wanted stores where all the merchandise was crammed onto the shelves at maximum capacity, with narrow aisles where people were just bumping into one another,” he said. “It felt like plenitude.” “Those early design preferences endured for a surprisingly long time online, and I think there’s still a much higher tolerance for it than we’d see in the US or other Western countries,” he added. “I think as consumers get more sophisticated, though, they’re looking for a retail experience that doesn’t feel like a fire sale all the time.”

    Opinion: How Can Luxury Brands Successfully Price In The Post-COVID World? – In these challenging times of lockdowns and demand contraction, luxury brands have increased – even more than usual – the prices of their bestselling products to offset part of the compression of margins due to the pandemic. Take for instance, Chanel which earlier this year confirmed it had brought the prices up of its iconic handbags (11.12, 2.55, Boy, Gabrielle) ranging between 5 and 17 percent in euros and Louis Vuitton which also raised the prices of some of its products in March and May. It is not a surprise that brands like Chanel, Louis Vuitton, Hermès and Dior, whose handbags are products that are considered iconic and perceived by consumers as investment pieces, can be more bold in increasing prices to protect their margin. But not all companies have such strong brand positioning and therefore cannot raise their prices so easily.

    Bulgari CEO Jean-Christophe Babin: “Millennials Don’t Want Formal Luxury.” | Luxury Society – I suspect that this is across age cohorts but the blend of streetwear and luxury is a key sign of it

    Is online advertising subprime? Contagious – interesting thought experiment

    South Korean Activists Accuse China of Using Huawei to Hack Their Election | Daily Beast – of course Samsung is looking to pick up 5G smartphone and infrastructure sales from Huawei….

    New info about Facebook-Instagram deal delays antitrust report: source | CNBC – it will be interesting to see what comes out

    Axios China – Top German official hushed up report on China’s influence – not terribly surprising when you read books like Hidden Hand. More China related posts here.

    The end of the American internet — Benedict Evans – more precisely. The end of Americans being the dominant users and culture on the internet

    Brussels drafts rules to force Big Tech to share data | Financial Times – grab the popcorn

    State of AI Report 2020 – interesting report on the hype

    The great uncoupling: one supply chain for China, one for everywhere else | Financial Times – Untangling supply chains that have built up over a generation is a complex and difficult task and the multinational companies which sell into the Chinese market will stay and even expand. But if companies that once used the mainland to make goods for export do decide to depart in significant numbers, it will represent a major reversal of five decades of economic integration between the US and China

  • Rival device makers on Amazon + more

    Amazon Restricts How Rival Device Makers Buy Ads on Its Site – WSJ – interesting that his is confirmed by both according to Amazon employees and executives at rival companies and advertising firms. Would rival device makers have an antitrust case? It would be harder for Amazon to argue that it doesn’t have a monopoly position in retail. More on Amazon here.

    China’s Sina Agrees to Go Private in Deal Valued at $2.6 Billion – Bloomberg – will probably list on a home stock market like Shanghai, Shenzhen or Hong Kong

    Oxford moves to protect students from China’s Hong Kong security law | The Guardian – one can see this is a direct reaction to Hong Kong’s national security law and also as a reaction to Chinese influence operations on campuses across the western world

    Will The Chinese-Owned French Luxury Brand Baccarat Survive? | Jing Daily – combination of bad management and circumstances. It is interesting that the owner Coco Chu has disappeared

    Mark Riston: It’s time for ‘share of search’ to replace ‘share of voice’ – Peckham’s Formula posits that when you launch a brand you should set its advertising budget based on your desired share of market. Specifically, your initial share of voice should be 1.5 times the desired market share you want to achieve by the end of the brand’s second year.

    Older People Have Become Younger – Neuroscience News – in terms of their mental faculties

    Netflix called out for “Three-Body” author Liu Cixin’s Xinjiang remark — Quartz – Mulan seems to have become a verb in US media in a similar way to ‘it’s all gone Pete Tong’ in late 1980s vernacular English. Although originally ‘gone Pete Tong’ meant that something had gone commercial and mainstream – in effect a sellout, which was a bad thing in the 1990s, when credibility was everything. Netflix might be able to see dramas into China a la the BBC and Sherlock; but I can’t see it being allowed to be a platform. China already has QQVideo iQiyi and PPTV

  • Hair Growth Helmet + more things

    LG Launches Hair Growth Helmet to Combat Hair Loss | HYPEBAE – this looks totally legit. NOT. Yes, the FDA has certified other hair growth helmet treatments, but that was to indicate that they wouldn’t harm you or interfere with medications. It doesn’t validate the hair growth helmet actually working. But on the other hand lasers in the helmet….. More beauty category related content here.

    Why loneliness fuels populism | Financial Times – depicting loneliness solely in terms of how connected we feel to our friends, neighbours and colleagues risks occluding its other potent forms. Loneliness is political as well as personal, economic as well as social. It is also about feeling disconnected from our fellow citizens and political leaders, and detached from our work and our employer.

    “Buy British”: The viability of a nationalist commercial policy | VOX, CEPR Policy Portal – attempts by successive UK governments in the 1970s and early 1980s to initiate such import substitution policies were fraught with economic and legal difficulties. Indeed, accelerating globalisation and the rapid growth of imports in intermediate products for assembly into ‘British’ goods raise significant problems in defining a ‘national’ product – and the growth of tradable services (such as insurance, education and healthcare) presents an even more intractable problem

    Arkady Bukh: Man in the Middle | CyberScoop – go-to lawyer for hackers

    China bans Australian academics in apparent tit-for-tat retaliation | South China Morning Post – this has followed soon after a good report by Alex Joske and book by Clive Hamilton on China’s influence activities abroad

    Facebook removes fake accounts with links to China and Philippines | The Guardian – Facebook says it has removed hundreds of coordinated fake accounts with links to individuals in China and in the Filipino military that were interfering in the politics of the Philippines and the US – not very surprising. More details in the South China Morning Post – How a Chinese network of fake Facebook accounts influenced online debate on South China Sea, US politics | South China Morning Post 

    Ebay ex-CEO, PR head shared texts about taking down critics: DOJ – Business Insider – probably one of the most disturbing and bizarre things that I’ve read in a while

    China has the upper hand in corporate proxy wars with US | Financial Times – Mr Trump gave Mr Xi what he wanted on ZTE — a reprieve in the form of a new US commerce department settlement that allowed it to stay in business — and mistakenly assumed that this concession would smooth over the other matters. China quickly pocketed the ZTE present but continued to withhold approval of the Qualcomm-NXP deal. When the trade talks later started to unravel, Mr Xi let Qualcomm-NXP languish in regulatory limbo, where it eventually died. – Trump gave a concession too early

    How a local messaging app defeated WhatsApp in Vietnam – messaging app Zalo has been taking the country by storm for nearly a decade now. Zalo’s got a pretty firm grip on Vietnamese consumers. And now that it’s integrated mobile payment service ZaloPay into its messaging app, there’s plenty of potential for it to expand beyond being just a means of communication.

    The landlords are back – The families of China’s pre-Communist elite remain privileged | China | The Economist – The old elite began to suffer almost as soon as the Communist Party won the Chinese civil war in 1949. China’s new rulers quickly set about seizing land from people in the countryside, redistributing it among the landless, confiscating private businesses and executing many rural landlords and people who had worked for the overthrown Nationalist regime

    Listen to an unheard Steve Jobs NeXT keynote from 1988 – “But why it matters is that those explorations and that fun were in the end quite significant. It’s always useful to look back and to realize that even though the tech itself might seem quite primitive today, the people were already sophisticated. We know a lot more facts, and we can do more things, but I’m not sure we have gotten that much wiser.”

  • Easy growth trap + more things

    Luxury Brands Must Avoid This Easy Growth Trap | Jing Daily – China has been reporting significant growth rates in the luxury sector recently, and many global luxury brands have been counting on China to be their silver lining. However, this recent growth has, to a large extent, been driven by repatriation (meaning sales that customers would otherwise have made during overseas travels). With travel routes to Europe and the US closed, Chinese luxury customers have been shopping domestically, which has driven the luxury demand inside Mainland China. Yet, this strong increase in demand in China could not offset the drastic decline in demand in both Europe and the US, at least during the second quarter of 2020. As such, many brands across categories like luxury cars, high-end jewelry, watches, and luxury fashion are sitting on enormous inventories and are looking at empty stores – Jing Daily were warning of the easy growth trap in discounting but their description of the market at the moment is very interesting. I suspect that the luxury sector is already well aware of this. The have seen department stores fall into the easy growth trap. Luxury brands have historically gone to extreme lengths to avoid the easy growth trap. Reputedly, during the last recession Rolex is alleged to have bought excess products from its dealers and the grey market to recycle, rather than discount. More on luxury and retailing.

    AI in Marketing: Myths vs. Reality – Techerati – Johnny Bentwood articulates a more reasonable assessment of AI. Badging everything ‘AI’ wonder technology is the easy growth trap of the tech sector. We’ve been here before

    Teens are turning themselves into Gucci models on TikTok | Dazed – Luxury is interesting because here brands really have meaning. The Gucci brand has history and meaning that comes from their behaviours and their products – rather than merely from how they have spent their ad budget in the past. Their Northern Soul homage in 2017 is just one example of the brand’s authenticity, energy and creative eye. For Gucci, it’s vital their brand continues to be culturally relevant, so they need to participate in TikTok. First, their #AccidentalInfluencer Grans in fur coats (with 8m views) showed they understood the grammar of TikTok and then the #GucciModel Challenge invites – no, demands – people play along. As Gucci makes fun of themselves they convey strong messages and have 26m views already. One thing I particularly like is how they use the audio by Lachlan Watson, star of the Netflix hit ‘Chilling Adventures of Sabrina’. This is the antithesis of the glossy spreads Gucci and others place in the top magazines and balances their marketing with authenticity which suits TikTok so well – Simon over at Great TikTok creative

    ‘It’s Ridiculous.’ Underfunded FTC and DOJ Can’t Keep Fighting the Tech Giants Like This – Big Technology 

    China’s middle-class dream of a second home in Malaysia dashed by coronavirus and geopolitical tensions | South China Morning Post – “Most of these Chinese individual investors are not prepared – financially or psychologically – for the risks of overseas investment,” Zhao said. “They have experienced only economic growth and a booming property market on the mainland for decades, and they lack the funds and risk awareness to deal with the downside [of the economic cycle].” – the belt and road initiative isn’t all plain sailing

    ‘Funnel juggling’ is the answer to marketing effectiveness – Marketing Week – For the long work, in most Uber countries there are a series of brand campaigns that push the emotional benefits of travel. Inevitably and rather cleverly the focus is on the top of the benefit ladder; or, in Uber’s case, the end of the journey, when it delivers you to your destination and the emotional benefit that awaits. In the US, for example, the brand uses TV, outdoor and digital media to associate Uber with these moments. It’s mass-market, it’s emotional, it’s brand-focused and it asks nothing of the consumer other than to see Uber as more than a ride-sharing service. 

    I have no idea what the split in Uber’s marketing spend actually is but I will bet about half of the money in any country also goes on the short of it.

    Gucci’s Gaming Garments | Gartner for Marketing – Chinese princelings….

    Cinnabon in the Oven | Gartner for Marketers – processed foods are the new eating out

    Public Image Decline of South Korean Churches – The PeninsulaThe Peninsula – Pastors in South Korea claim that church-linked COVID-19 outbreaks have tainted the public image of churches in the country. Most recently, a church in Seoul emerged as the source of the country’s second largest infection cluster following a spike in cases associated with a religious sect in Daegu earlier this year. A 2015 Gallup Korea poll finds that more South Koreans, particularly those in their twenties and thirties, are moving away from religion.

    Hallyu Con 2020 | KCCUK – virtual festival on October 4th

    Ageism Is Not Just A Disease—It Is The New Business Model For Top Ad Agencies – the original statement inadvertently let the cat out of the bag about agencies’ cost cutting at the expense of clients: they are now inhabited by junior talent, inexpensive and inexperienced. And this is the main reasons for the decline of the advertising industry. The holding companies like WPP were formed in the eighties, and they started consolidating the industry by gobbling up independent agencies. To do so, they needed to issue debt and the industry mortgaged itself to bankers. Madison Avenue went from focusing on the clients’ business to focusing on their balance sheet. And that meant getting rid of “cost”: talented experienced people in their forties and fifties and replacing them with cheaper labor.

    GBA hurt by Cold War, pandemic and protests EJINSIGHT – ejinsight.com – Greater Bay Area (cities and Hong Kong around the Pearl River delta) that China envisages as kind of like Judge Dredd’s Mega City One

    Video encoders using Huawei chips have backdoors and bad bugs – and Chinese giant says it’s not to blame • The Register 

    Hard to pardon: why Tenet’s muffled dialogue is a very modern problem | Tenet | The Guardian – “Think about it: the first few Star Wars [films], we heard them all. We heard all the lines. Listen to Apocalypse Now – you hear everything.” Price agrees: “If you watch old movies, you might hear some sound effects here and there but now they go nuts: somebody’s walking across the room in a leather jacket, you hear the zippers clink and the creak of the leather and every footstep is right in your face.” When television became commonplace in the mid-20th century and challenged cinema’s dominion, cinema needed to distinguish itself; it needed to prove that it could justify people leaving the comfort of their homes. It did so partly by becoming bigger and louder. In an era – and a pandemic – in which home streaming dominates, cinema may be forced to pull out the stops once more. “I think we’re bombarded,” Paul Markey, a projectionist at the Irish Film Institute, says of modern films. “The more expensive movies have got, the more of a bombardment they become on your senses.”

    ‘The Devil All The Time’ Costume Designer On Its Style | Esquire – the world has never fallen out of love with American workwear; no split, no wandering eye. The only thing that has changed is who wears it. The plaid-clad men of The Devil All The Time wear clothes that are as tough and hardscrabble as their lives. Their ancestors still flock to the same brands – think Dickies, Levi’s and Carhartt – only now it’s because they’ve collaborated with Off-White. Still, context is context, but the fact that these classics still work is testament to their longevity, both in design and build – the timelessness of American workwear

  • Dark stores and coercive diplomacy

    I came across a couple of interesting terms recently: dark stores and coercive diplomacy.

    Dark stores

    Gartner for Marketing (formerly L2 Inc.) were talking about a new development at Amazon’s Whole Foods subsidiary. It was what Gartner called digital dark stores. The first one has been established in Industry City to serve much of Brooklyn, New York.

    Amazon themselves called it a ‘permanent online-only store‘ on their blog.

    So whats the difference between dark stores and the ‘last mile’ warehouses that Amazon uses for fulfilment in places like London?

    • Looking at the limited amount of photos available, this doesn’t feel warehouse-like. There wasn’t obvious automation in the pictures. Instead it feels like a supermarket that’s well stocked, but lacking price tags and shopper marketing accoutrements. Gartner describe it as ‘technically a grocery store’, which implies that there might be zoning or planning regulations that they might be working around
    • It is only for the Whole Foods brand; rather than fulfilling Amazon Fresh and Amazon Prime Now items

    This isn’t just an Amazon thing. Gartner points out that American supermarket brands Kroger and Giant Eagle have also embraced the order-only store model. More at Gartner for Marketing here.

    Coercive diplomacy

    The Australian Strategic Policy Institute published a report on September 1, 2020 called The Chinese Communist Party’s coercive diplomacy. It was written by Fergus Hanson, Emilia Currey and Tracy Beattie. Hanson, Currey and Beattie analysed ten years of Chinese government diplomacy. In there words:

    The Chinese Communist Party (CCP) is increasingly deploying coercive diplomacy against foreign governments and companies. Coercive diplomacy isn’t well understood, and countries and companies have struggled to develop an effective toolkit to push back against and resist it.

    The Chinese Communist Party (CCP) is increasingly deploying coercive diplomacy against foreign governments and companies. Coercive diplomacy isn’t well understood, and countries and companies have struggled to develop an effective toolkit to push back against and resist it.

    This report tracks the CCP’s use of coercive diplomacy over the past 10 years, recording 152 cases of coercive diplomacy affecting 27 countries as well as the European Union. The data shows that there’s been a sharp escalation in these tactics since 2018. The regions and countries that recorded the most instances of coercive diplomacy over the last decade include Europe, North America, Australia, New Zealand and East Asia.

    There seems to be an escalation of economic and non-economic measures deployed. Economic measures would include:

    • Trade sanctions – such as the recent ban on German pork products. This was rolled out just a few days in advance of a trade negotiation meeting between China and the European Union
    • Investment restrictions in strategic industries such as the ‘agreement‘ that Yahoo!, Softbank and Alibaba had over Alipay (which included what would now be Ant Group). Strategic industries like state security is notoriously (and deliberately) ill-defined in China
    • Tourism bans
    • Popular boycotts such as Korean corporate Lotte being driven out of China and the 2012 anti-Japan protests where the public smashed Japanese stores, attacked factories and burned Japanese cars

    Coercive pressure is also applied at below state level on businesses. It may also be applied on individuals, based on the data leak provided from Zhenhua Data seems to imply.

    Non economic measures include:

    • Arbitrary detention. The best example of this would be Michael Kovrig and Michael Spavor detained as part of China’s dispute with Canada. Another example might be Australian citizen Karm Gilespie. China didn’t admit it had detained him for over six years, until they announced his death sentence in the summer
    • Restrictions on official travel
    • State-issued threats which are usually issued on a regular basis as part of wolf warrior diplomacy. (Wolf Warrior is a set of two films with a Chinese action hero, a la Rambo – but with less humour).

    Some of the imputus for coercive diplomacy might come from the Chinese Communist Party’s continued rancour over Qing dynasty-era unequal treaties. More China related content here and more on retailing here.