Top of the line: The price and profile of the new Allbirds sneaker are slightly higher

November 15, 2018

Consumers nationwide have been swept off their feet by Allbirds, the well-crafted, snuggly sneakers made from sustainable materials. And now the San Francisco-based direct-to-consumer startup—reportedly valued at more than $1 billion —has expanded its footwear line beyond its sneaker, loafer, and skipper silhouettes to offer a snappy new style.

Called the Tree Topper and priced at $115, it’s described by the company as “a refreshingly simple evolution of the classic hightop, perfect for cruising beneath the skyline.”

According to a report by Business Insider, the new sneaker is the first to incorporate all of the company’s sustainable materials—including its new “Sweetfoam” outer soles made out of EVA foam derived from sugar; its proprietary Merino wool blend padded insoles; and a stretchy, mesh knit upper fabric made from eucalyptus tree pulp. Even the laces are made of post-consumer recycled polyester derived from old plastic bottles.

The new sole foam was introduced in Allbirds’ limited-run flip-flop in August, and the company estimated that it would roll out to the rest of Allbirds’ line by the end of the year.

“The Tree Topper is a true representation of our approach to design and sustainability,” Jamie McLellan, Allbirds’ head of design, said in a prepared statement. “With just the right amount of nothing and comfort as a non-negotiable, the Tree Topper is a playful canvas for showcasing our three hero materials.”

Research contact: dgreen@businessinsider.com

Half retail pop-up, half laboratory: Mall owner debuts BrandBox

November 14, 2018

One of the nation’s biggest mall operators has come up with a way to fill empty storefronts—and it’s offering emerging brands plenty of perks to move in and do business for six to 12 months.

Santa Monica, California-based Macerich is launching a concept known as BrandBox at Tysons Corner Center just outside Washington, D.C., CNBC reported on November 12.

Under the BrandBox concept—half retail pop-up, half laboratory—the mall will house six brands, including luxury apparel retailer Naadam (founded in 2010) and upscale makeup company Winky Lux (founded in 2015).

Each brand will pay rent for its own mini store inside an 11,000-square-foot space, with new retailers funneling in and out each year, CNBC said.

For its part, Macerich will provide fixtures like shelving, data on foot traffic, radio-frequency identification tagging for inventory, marketing and even help finding staffing.

The rollout of BrandBox comes as more than 140 million square feet of retail space has been shuttered nationwide in malls and shopping centers already this year, according to real estate research group CoStar. Closures by Sears and Toys R Us are leaving a blank canvas at many malls for new uses like these so-called pint-sized and modern-day department stores.

Macerich plans to take BrandBox to its malls in Santa Monica, California; Philadelphia; and Scottsdale, Arizona, CNBC reported. In fact, the idea eventually is envisioned for all of its U.S. malls in some way. The company is considering adding multiple BrandBox locations inside some shopping centers, where there’s more demand for smaller retailers over department stores.

“I think what we’re learning as an industry is that we need to have modular space that can be reconfigured, “Macerich Chief Digital Officer Kevin McKenzie told CNBC. The physical walls within each BrandBox will be movable, he said. Sometimes two companies might fill the space; sometimes, seven.New York-based fashion house DKNY, an already established brand, also will be inside BrandBox at Tysons Corner Center at launch to test a new concept. McKenzie said the space can be a way for even traditional retailers to try out a new market before investing in establishing a permanent presence there.

Brands are appreciative of the real estate and the perks. “We view BrandBox as a safe environment to test our brand in a mall environment,” Matt Scanlan, CEO of Naadam, told CNBC. The technology Macerich is offering is a “major perk,” he said. “They have set us up with retail technologies and subscription software that are normally inefficient to install for a pop-up but can be transformative in terms of learnings.”

Macerich is the first major mall operator to announce plans to roll out a concept like this at a large scale, and one that’s been incubated from within the company. Rival Simon has been testing a rotating pop-up exhibit called “The Edit” at Roosevelt Field mall in Garden City, New York, but has yet to open other locations.

Research contact: @laurenthomasx3

In $550M transaction, Diageo unloads 19 ‘value’ brands to U.S. distiller Sazerac

November 13, 2018

London-based Diageo, the world’s largest distiller, is selling its portfolio of 19 value or “lower-end” brands—including Goldschläger schnapps and Seagram’s Canadian whiskey—to Metairie, Louisiana-based Sazerac for US$550 million in a transaction expected to close early in 2019.

The company has announced that it is pivoting toward premium brands and higher-growth products, The Financial Times reported on November 12.

“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders,” said CEO Ivan Menezes in a formal statement, adding, “This includes a disciplined approach to allocating resources and capital to ensure we maximize retu- growing premium and above brands in the U.S. spirits portfolio.”

Menezes said the brands included in the transaction would include Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschläger, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s, and John Begg.

According to FT, the United States— which accounts for about 45% of group profits—has been a problem spot for Diageo. The financial news daily said, “ the group’s significant exposure to the vodka ‘value’ brands, have caused Diageo’s U.S. sales to grow more slowly than the market. In its financial year 2018 to June, Diageo posted 3% organic sales growth in the US, compared with the 4% cent growth seen for the US spirits market overall.”

This is not the company’s first spirits sale aimed at greater profitability. Since 2015, Diageo has unloaded its wine business, as well as its beer brand Red Stripe.

The company said it would return net proceeds of about US$441 million to investors through share buybacks.

Sazerac is a privately owned company that, as of 2017, operated nine distilleries worldwide and ranked as the second largest spirit producer in the United States.

Research contact: @labboudles

Thai entrepreneur acquires Fortune magazine for $150M in cash

November 12, 2018

Just as “The Times They Are A-Changin’,” according to Bob Dylan’s iconic 1964 song; so, too, are the former TIME Inc. magazines. Purchased just one year ago by the Des Moines, Iowa-based Meredith Corporation—best-known for its flagship publication Better Homes & Gardens—the prestigious media group now is being sold off, title by title.

Following the purchase of TIME magazine by Marc and Lynn Benioff this September for $190 million in cash; Fortune magazine now is being acquired by Thai entrepreneur Chatchaval Jiaravanon for US$150 million in cash. The transaction is subject to regulatory approval and is expected to close this year.

According to a Meredith announcement, Jiaravanon will own Fortune as a personal private investment— independent of his role in his family business, C.P. Group, one of the world’s largest conglomerates, based in Bangkok.

He has said the he intends to increase investment in Fortune’s digital capabilities, geographic expansion, and editorial talent as part of a strategy to become the premium business content provider worldwide.

“Our vision is to establish Fortune as the world’s leading business media brand, with an always-on reach and global relevance,” said Jiaravanon. “The demand for high-quality business information is growing, and with further committed investment in technology and brilliant journalism, we believe the outlook for further profitable growth is excellent both for the publication and the events business.”

Jiaravanon is involved in C.P. Group’s technology, media and telecom businesses. He serves as a Board Member of True Corporation, a leading public company in Asia with more than $10 billion in assets, $4 billion in revenues, and 23,000 employees.

Fortune magazine was founded in 1930 at the outset of the Great Depression. In recent years, it has evolved from a traditional print publication into an international multiplatform, multimedia business. Its major franchises include the FORTUNE 500; 100 Best Companies to Work For; Most Powerful Women; World’s Most Admired Companies; 40 Under 40; Fastest-Growing Companies; and the Change the World list. Its wide range of annual conferences include FORTUNE Most Powerful Women; FORTUNE Brainstorm Tech; FORTUNE Brainstorm Health, the CEO Initiative; and the FORTUNE Global Forum.

As part of the transaction, Meredith will provide short-term business continuity services;  and has entered a multi-year agreement with Jiaravanon to provide services such as corporate sales, consumer marketing, subscription fulfillment, paper purchasing,  and printing.

Research contact: @MeredithCorp

Payment card chips fail to halt fraud, study finds

November 9, 2018

Of the more than 60 million payment cards that have been compromised or stolen within the past 12 months, chip-enabled cards represented a staggering 93%, according to results of a study released  recently by Gemini Advisory.

In 2015, the global financial industry began a massive migration to the EMV (Europay, MasterCard, Visa) standard in response to overwhelming levels of payment card fraud. The chip-enabled cards were supposed to provide end-to-end encryption during card-present transactions; and to prevent payment card counterfeiting.

However, the New York-based cyber consulting firm says—although most card issuers have adopted the standard—retailers and other merchants have failed to comply with the EMV implementation. 

Indeed, key findings of the study are alarming—among them:

With most large U.S. merchants fully transitioned to EMV, Gemini say that gas pump terminals and small/medium size businesses have become the victims of opportunity. Smaller businesses are only now beginning to understand the importance of EMV programs, as well as to provide a sufficient budget allocation toward them.

Because Gemini Advisory believes that criminal groups will always sway to the path of least resistance, the firm predicts that financially motivated threat groups such as Fin6  and Fin7 are likely to turn their resources toward small- to medium-size businesses with  between 10 to 50 locations.

The bottom line: Until EMV implementation is more widespread among U.S. merchants, Gemini Advisory recommends the usage of mobile payment systems such as Android Pay, Google Pay, and Apple Pay. Such payment systems are not susceptible to shimming devices or POS malware—making them the most secure payment method currently available.

Research contact: @geminiadvisory

 

Largest federal union hails pro-worker majority in the House

November 8, 2018

Government employees “can once again count on Congress to provide checks and balances on the White House,” said American Federation of Government Employees National President J. David Cox, Sr., on November 7—the day after the U.S. electorate voted in the midterm elections to shift the majority in the House of Representatives to Democratic legislators.

“For the last two years, the administration and its allies in Congress have run roughshod over the federal workers who keep this country running, and have launched a series of unprecedented attacks on our union in the process,” Cox commented in a formal statement.

“Now,” he said, “thanks to tremendous voter turnout and enthusiasm … no longer will the president and his Congressional allies have free rein to politicize the civil service and reduce civil service protections or union rights.

“We expect the 116th Congress to respect workers’ voices in the workplace, respect the collective bargaining process, and respect the important work federal employees do on behalf of the American people. And with narrow-majority Senate returning, there will be opportunities for bipartisan efforts.”

Elected to a third term in August, Cox has invested heavily since he first took national office in 2006 in growing union membership both within AFGE and among the labor movement as a whole. During the past 12 years, the AFGE has boosted its membership by more than 90,000 government employees—now representing 700,000 federal and D.C. government workers nationwide and overseas. Workers in virtually all functions of government at every federal agency depend upon AFGE for legal representation, legislative advocacy, technical expertise and informational services.

“We look forward to working with leaders on both sides of the aisle to protect union rights and protect federal pay and retirement.  We will also work with the bipartisan majority that opposes costly and unaccountable outsourcing of federal government work,” Cox said, noting, “Today is a win for America’s workforce, and we look forward to working with members of Congress the next two years on progressive change. This wouldn’t have happened without the hard work of our … members nationwide, and we know … they are celebrating the election of Congressional leaders who will stand by their side and fight for them in Washington.”

Research contact: comments @afge.org

Amazon plans to split HQ2 in two East Coast locations

November 7, 2018

After conducting a yearlong search for a site for its second headquarters, Amazon has switched gears and is now finalizing plans to manage a total of 50,000 employees in two East Coast locations, The New York Times reported on November 5.

The e-commerce company is nearing a deal to move to the Long Island City neighborhood of Queens—a location just across the East River from Manhattan— according to two sources briefed on the discussions, the Times said.

In addition, Amazon is also close to sealing a deal to move to Crystal City, an urban neighborhood in the southeastern corner of Arlington County, Virginia, south of downtown Washington, D.C; one of the sources said.

Amazon already has more employees in those two areas than anywhere else outside of Seattle, its home base, and the Bay Area.

Amazon executives met two weeks ago with New York Governor Andrew M. Cuomo (D), said one of the people briefed on the process, adding that the state had offered potentially hundreds of millions of dollars in subsidies. Executives met separately with New York City Mayor Bill de Blasio (D), a person briefed on that discussion said.

“I am doing everything I can,” Cuomo told the press corps, including the Times, when asked on November 5 about the state’s efforts to lure the company. “We have a great incentive package,” he said.

“I’ll change my name to Amazon Cuomo if that’s what it takes,” Cuomo said. “Because it would be a great economic boost.”

According to the Times, the need to hire tens of thousands of high-tech workers has been the driving force behind the search, leading many to expect it to land in a major East Coast metropolitan area. Many experts have pointed to Crystal City as a front-runner, because of its strong public transit, educated work force and proximity to Washington.

JBG Smith, a developer who owns much of the land in Crystal City, declined to comment, as did Arlington County officials.

Amazon declined to comment on whether it had made any final decisions. The Wall Street Journal earlier reported Amazon’s decision to pick two new locations instead of one.

Amazon announced plans for a second headquarters in September 2017, saying that the company was growing faster than it could hire in its hometown Seattle. The company said it would invest more than $5 billion over almost two decades in a second headquarters, hiring as many as 50,000 full-time employees that would earn more than $100,000 a year on average.

HQ2 would be “full equal to our current campus in Seattle,” the company said. If Amazon goes ahead with two new sites, it is unclear whether the company would refer to both of the locations as headquarters or if they would amount to large satellite offices.

Research contact: @KYWeise

Hen parties: Chick-fil-A tests catering and home deliveries

November 6, 2018

With a growing demand for food to-go, Chick-fil-A—the home of the Original Chicken Sandwich with two pickles on a toasted, buttered bun—is testing a new restaurant prototype. New locations that opened in Nashville and Louisville last month have no dining rooms; and, instead, focus on catering and delivery.

Customers in both cities now are able to place orders at any of the local Chick-fil-A restaurants, but the new locations will serve as hubs for catering and delivery.

One of the things that makes the Nashville hub so unique is the lack of a dining room or drive-thru. Roughly 4,200 square-feet of the restaurant’s 5,800 square-feet will be dedicated to kitchen space. That’s more than two times the size of a normal Chick-fil-A kitchen.

Using the regular Chick-fil-a menu, customers can place a single order for one sandwich and fries either by walking up to the front counter inside the restaurant, or through the DoorDash delivery service. They also can order catering to be delivered or picked up at the restaurant.

There’s just one catch: no cash. The new location will only accept credit/debit, making the Chick-fil-A Mobile App the easiest way to order.

Along with the new location in Nashville, a similar format will be built in Louisville. At 4,800 square feet in size, the new Chick-fil-A Louisville Catering and Delivery location also has no dining room or walk-up ordering; and is focusing solely on preparing catering and delivery orders for Chick-fil-A restaurants in the city’s East End.

“This is a tremendous opportunity to create a better experience for restaurant Team Members and customers alike,” said Bruce Smith, Operator of the new location. “Team Members can stay focused on making sure every customer has the best possible experience at our restaurants. It’s never been easier for customers who are picking up their catering orders.”

According to Thrillist, Chick-fil-A just keeps getting bigger. It’s on track to become the third-largest fast-food chain in America and for the third year in a row, it’s bheen named the nation’s favorite fast-food joint.

Research contact: @ChickfilANews

How China’s ‘Singles’ Day’ became biggest shopping event ever

November 5, 2018

Singles’ Day, celebrated on November 11, is now the world’s biggest online shopping event—so much so that a countdown clock on the website shows the days, hours, minutes and seconds until shoppers in China and worldwide can claim their discounts (some of them, up to 95%) from a variety of retailers.

In less than a decade since Singles Day was first celebrated in China in 2009, Alibaba Group Holding has turned a quirky celebration for unmarried young adults into a global extravaganza drawing in thousands of retailers and hundreds of millions of shoppers of all ages—hitched or otherwise, according to a November 1 report by Bloomberg.

Just how big is this shoppers’ holiday? More than twice as much merchandise is sold over the 24-hour period as during the entire five-day U.S. holiday-buying spree that begins on Thanksgiving, runs through Black Friday and ends on Cyber Monday. Every year has exceeded the one before, with last year’s sales climbing 39% to 168.2 billion yuan ($24.2 billion). That’s on par with the gross domestic product of some smaller European nations. Most of the buying was via Taobao and Tmall, Alibaba’s main shopping sites.

This year, the shopping experience has spread to other e-commerce operators and will include more brick-and-mortar stores than ever before, the organizers claim. But Bloomberg says there is one, big unknown: To what extent, if any, the brewing U.S.-China trade war will cut into Singles’ Day sales.

It remains to be seen whether a depressed Chinese stock market and higher import tariffs resulting from U.S.-China trade tensions will curb consumers’ enthusiasm. On the other hand, Alibaba has significantly boosted the brick-and-mortar element of Singles’ Day by accelerating its investments in malls, convenience stores and food delivery services — part of what it calls its “new retail” initiative.

Essentially, Bloomberg reports, any transaction made via payment service Alipay will count. The initiative involves equipping traditional retailers with new technology to manage inventory and to serve as distribution centers for online shoppers, as well as connecting mom-and-pop stores to its platform. There are also 200,000 so-called smart stores that seek to combine the online and offline retail experience

While the Chinese mainland continues to dominate sales, according to the Bloomberg report, Alibaba continues to make it more global. That means getting foreign brands involved in selling to the Chinese. It’s also working to promote its English-language websites.

Research contact: @luluyilun