Wednesday, August 26, 2009

Sara Lee’s bread is making less dough

Somebody doesn’t like Sara Lee. It almost seems unfair. After finally recovering from the low carb diet craze of the 90s, the company is feeling the squeeze from private label, especially in the bread aisle. Thanks to the recession, customers are shunning name brand loaves (and cakes) in favor of cheaper private label starches in order to stretch their grocery budget. Sara Lee must also compete with price-slashing name brand rivals.

Not to pick on Sara Lee – other packaged-food companies are getting pinched – but you have to wonder whether Sara Lee fully understands the customer motivations and behaviors played out at the shelf that might be causing sales to plunge. The company knows profits are down, but competitors Kraft and Kellogg are turning in respectable numbers as shoppers trade takeout for meals at home. Does Sara Lee know why buyers are reaching for the doughy store brand whole wheat instead of Sara Lee’s innovative Soft & Smooth loaf? Does the company understand on a volumetric basis those who have come to the store fully intending to buy the brand, but then bail in the swirl of the last three feet? And why they bail? Is it price, promotion, packaging or an intriguing blend of yes to all that? Or maybe is it some other lure or allure?

Sales are an important, obvious, but crude measure of how shoppers interact with brands. If companies hope to stop the slide toward private label, they need to be where the in-the-moment calculations of the shopper occur. They need to take hold of the in-aisle thinking of shoppers who buy the brand, don’t buy it, and most tellingly, the ones who intended to do so and then decided in favor of another.
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Wednesday, August 5, 2009

Gilly Hicks – We’re Not Sold

When it comes to Gilly Hicks, the lifestyle lingerie emporium aimed at teens and the newest brand in the Abercrombie stable, there’s one thing we can all agree on: the store itself is beautiful, luxurious, and sexy. The look of the space has won raves from fashion bloggers and stock analysts alike. The branding is brilliant, although entirely fictional: Abercrombie CEO Mike Jeffries concocted an elaborate Australian back story for the entirely American underwear brand (who knew “down under” had other meanings?) A portrait of “Gilly” hangs in the stores, to add a faux vintage feel to the shop. Gilly Hicks hopes to be younger and hipper than, but just as successful as, Victoria’s Secret.

The opening of Gilly Hicks has been controversial. Although Citigroup analyst Kimberly C. Greenberger praised the store’s “cute and sweetly sexy” image and said, “We believe Gilly Hicks could be a more wholesome alternative (to Victoria's Secret), and mothers would not mind taking their 15-year-olds to Gilly Hicks to shop,” an assortment of critics have attacked the whole notion of trying to sell sex to teens. Everything from the store’s racy ad campaign, featuring 7-foot-tall posters of naked men, to the website, which broadcasts a video showing women swimming topless, and the effort to sell sexy lingerie to teens has drawn complaints.

But the ultimate question, indeed, the only question is, will it sell? Gilly Hicks represents a huge per store investment, from the home-like front porch exterior to the dimly lit Ralph Lauren-on-steroids interior, with a huge amount of square footage dedicated to selling a tiny passel of products that would fit comfortably inside the closet of a New York City studio apartment. On the one hand, other companies have made big profits using edgy, sexy ads to sell to the teenage set. The other companies in Abercrombie’s stable, Abercrombie & Fitch, abercrombie, and Hollister, have deftly won over their target markets. Unfortunately for Abercrombie, we think it’s highly doubtful that Gilly Hicks is going to help the company bust out of a recession-fueled slump, despite the store’s gorgeous environment. Luxury undergarments for teens are not a natural sell in the best of times, and right now, the retailers that are thriving are mostly value brands aimed at the prudent. Add in the store’s sales crew – the young-side-of-20-something associates look as great as the store, but are without the years of experience in fitting bras and selling intimate wear – and it seems like an even bigger, and more expensive, misstep. What do you think?
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