Beauty 360

CVS executives have developed a concept store called Beauty 360 which they believe will rival stores like Sephora and Ulta. The store has already launched adjacent to CVS locations so far. The store will be a seller of high end beauty products with brands like Laura Geller and Paula Dorf. CVS execs believe this provides the one-stop shop that many of its customers have desired as all the locations will be placed adjacent to CVS pharmacies. The questions many doubters have is how does CVS plan to succeed in a failing economy. Many women are cutting back their expenses and downsizing their purchases to mass brands like Maybelline and Revlon. CVS believes that the beauty business is recession proof.

I believe this may be a little far fetched for CVS. Though many women are not going to stop wearing makeup though there is a recession and the beauty business will continue to thrive I don't think this is the appropriate time for this concept store. Buying beauty products is personal to many women. The girl who goes to a drug store to get makeup and the one who gets it a specialty store expect different service. Many times at the specialty store they see the same skin care specialist who knows their skin, may suggest new products, and already knows the products she has come to buy. CVS has not given a convincing reason for these woman to leave their comfort zone. The only value they are offering is that they are located adjacent to CVS. I think CVS should think of promotions to boost their mass branded beauty products and leave the high end products to the current specialty stores.

Pottery Barn For Less

Pottery Barn, a retailer known for their high quality high priced furnishings, has introduced a new "Comfort Collection" for 999.00. This bargain is to reflect the tough economic time most consumers are having.

Some analysts believe this is a good move for the retailer and shows that they are able to adapt with changing times. Others wonder if it will negatively effect their brand image in the long run. To boost their sales they are also offering many customizations options for the collection and financing with 12 months no interest.

I believe this is a great idea. With the current housing crisis many young people are considering buying homes because they believe they will get a good deal. They will also be in the market for new furniture. They may go to Pottery Barn, finance their couch, pay it in full before the ninety days with no interest. I think the collection will be very enticing to some consumers.

This post is based on a Wall Street Journal article by Mary Ellen Lloyd.

Do YoU Tweet?

Well me either, but twitter is the newest phenomenon in internet social networking. A recent article in the New York Times Discussed the effects Twitter has had for traveling. Simple tweets like “Need a jury duty lunch recommendation for downtown Brooklyn, are getting massive replies and gaining lots of business for many small business owners. Individuals are getting advise for restaurants, bars, hotels, and small boutiques when on vacation.

Knowing this is happening businesses need to be focused on providing superior service and quality products to consumers. Bad news has always traveled fast but is now traveling faster than ever as strangers advise each other on their choices. One bad complaint can now reach hundreds of followers of one individual. It would also be wise for business owners to have twitter accounts so they may check others tweet to see how they feel about their establishment. Twitter is much cheaper than a study group, in fact its free.

Need A Snack?

As we have discussed in RCS 484, Frito Lays has a new ad campaign directed towards women. In a recent New York times article Stephanie Clifford investigated the need to advertise snacks to women as research has shown that women snack more than men. Though women snack more than men we are more prone to eat fruits and drink beverages than consume chips and candies.

Research has shown that women snack only 14% of the time on salty foods. Frito Lays has combated this fact with their commercials featuring healthy baked snacks target towards females. Using neuromarketing Frito Lays found that women are able to process more complex ads more readily than men. Frito Lays wanted women to snack on their foods without feeling guilty. From this they developed the "Only in a Woman's World" campaign.

This ad campaign features four women that are “fab, funny, fearlessly female,” according to Frito Lay. There webisodes are becoming a big hit. The question is whether these funny and quick witted advertisements will actually boosts sales for the company.

Blame it on Business Schools?!?!?

When you look at the key figures responsible for the current economic crisis the country is facing they all have one thing in common they have MBA's. The have all graduates with graduate degrees in business from some of the best business schools in the country. The New York Times article by Kelley Holland investigates whether the MBA programs are to blame for the inability of these executives with high education to adequately manage some of the country's largest corporations.

The experts are now claiming that the MBA programs are not giving the students enough real world experience. Instead in business school "students are taught to come up with hasty solutions to complicated problems". They then graduate with a narrow focus on the dollar and a lack of empathy or a moral conscious. Due to this they say that the students were unequipped to make the decisions that could have avoided this crisis.

Today many business schools are lacking a code of conduct. They are forgetting to emphasize the importance of ethics in business leadership. If the students were given more real-world experiences they could build a better understanding of the needs for these attributes. Students are mostly given rigorous business problems with which they respond with quick responses.

I don't totally agree that the business schools are to blame. Whenever there is a crisis it is human nature to try to look for a direction to point the finger. In the end the finger needs to be pointed directly at the individuals who had the power to prevent this crisis from occurring. The moral and ethical value that is needed in business is something that an individual develops long before entering graduate school. These individual were egotistical, narcissistic individuals who cared only about themselves. Now there are consequences for their behavior. I do believe that this economic crisis is a teaching moment, and should be discussed in the classroom.

Plastic Surgery During A Recession?

Though many are struggling during this difficult economic season there are some who are still going under the knife voluntarily, with no medical reason. This is only partially true an article in Time magazine explains that with the recession small ticket items at the plastic surgeon are becoming increasingly popular. Procedures like chemical peels, facials, and botox are high in demand while liposuction and augmentations are seeing a decline.

Another area that has seen a decline in this recession is people going to see there physicians. Over the Counter drugs have seen an incline in purchases due to the recession. Many Americans have resorted to self-medicating due to loss of jobs and cut backs on benefits. Vitamins and cleansing products like laxatives are doing extremely well.

With the rise in the interest to buy locally many small local breweries are seeing an increase in sales. Craft breweries sales are up by 11 percent while imported beers sales are down for the first time since 1991.

Mmmm... how comforting is a box of chocolates. Chocolate sales have also seen a rise since the decline in the economy. Chocolate is an easy way to indulge one's self without spending too much money. Hershey and Cadbury are the two companies doing the best.

Lottery sales have seen an increase with the decrease in the economy. With hope many believe they can get out of their unfortunate situations. Many argue that the lottery is an extra tax on the poor and shouldn't be encourage. I totally agree.

Exotic travel, like Africa and the Middle East, has seen an increase of 11 percent. Those who can afford to escape want to go somewhere far and remote. Traditional vacation locations like Europe and Asia have seen a decline of 3 percent. Probably because they look too much like America.

A Sad Valentine's

Retailers took a hurting this past Valentine's with sales projected to have dropped 14%. Small tickets items are the way that many lovers are showing their affection for this Valentine's according to an article in Times magazine. Author Sean Gregory states that most gifts will be candy and greeting cards, and 15% of consumers will be staying home for dinner. The usual gifts sent to close family members like siblings and mother's have been eliminated. Many jewelers were forced to sell things below cost. 1-800-FLOWERS sold a dozen roses for 24.99. Retailers like Bloomingdale's offered consumers gifts with purchase that could double as an extra Valentine's gift.

But On The Flip Side...

In Chapter 4 of our book we examine the positive results from allowing consumers to touch and examine merchandise before purchasing them. In the article "Picky, Picky: Consumers Tend to Reject 'Contaminated' Merchandise" the writer reviews a study done by Andrea Morales that explores the reality that consumers don't want to buy products that appear to have been touched by others. This is why we reach for the cereal box in the back of the stack.

This is a very true observation. For the experiment they had participants do a blind test where they went to the university bookstore where they would find an envelope with a task. The task for each participant was to find a specific shirt. When they asked the sales associate for the shirt the associate would inform them there was only one shirt left. The associate would then say the shirt is currently being tried on by another customer, tell the customer the shirt is on the return rack, or direct the customer to it on the rack. For the scenario where it was being tried on the person trying it on would return it to the associate and the associate would proceed to give the shirt to the participant to try on. The experiment proved that time and time again customers were not willing to make a purchase because they saw someone else touch their product.

To combat this issue Morales suggests several things for retailers to consider. One is that they merchandise their products so only a limited number of products are actually touched by browsers. Also cleaning clothing from dressing rooms as soon as possible and getting them on the floor. For returned merchandise they suggest putting on new tags to give the appearance that it has never been handle.

This study shows there is a big paradox for retailers to consider. They need to allow consumer to touch and browse the merchandise without there being any apparent contamination.

Do you AMEX?

In a recent article The New York Times' Rob Leiber exposes American Express of some questionable practices they have for monitoring the credit worthiness of its consumers. American Express has begun to monitor where people with "poor repayment" histories shop and decided to deny their cardholders usage in these establishments. Retailers where their customers have had a long history of not paying their bills may begin to lose business. The catch though is that American Express has refused to release a list of retailers where their cards are no longer going to be accepted. This would cause trouble for the creditor as the retailers would probably pull American Express service from their stores.

American Express has also begun to monitor the location and lender of its customers mortagages. If the lender is sub-prime or in bankruptcy they may reduce your credit line. This is unfair because due to the recent changes in the economy homeowners do not have say in who now owns their home.

For their small business credit line, American Express has decreased its credit line for business in certain industries. If the business is in a good industry like health care there are no changes, but if it real estate, construction, or finance the business may see a decrease in their credit line.

All of this may hurt one's credit score in a time where everyone's finances are stretched enough. Last year a subprime lender got into trouble for similar practices. The FTC acosted them for not exposing that they could lower customers credit line for patronizing certain establishments. American Express has denied that they judge customers based on the retailers they patron. They still proclaim that their measure to determine credit lines “has always been and still is the overall level of debt, relative to the card member’s financial resources."

I don't have an AMEX now, but it makes me doubt that I ever will.