Wednesday, December 7, 2016

Airbnb in Talks to Buy China Rival Xiaozhu; Deal would give San Francisco boost in its effort to expand in China

Airbnb is a San Fransisco startup company that is looking to expand to China. China currently has a company that has mimicked what Airbnb does here in the states, called Xiaozhu, which is there largest competitors in china. China has been hard for companies to expand to due to much competition of homegrown imitators. Airbnb currently only has about 75000 home listing being offered and it is pushing to have over 100000 by the end of the year and 300000 within 2 years. China already has a major player in the home rental game, Tuigia which is worth in upwards of $1billion based out of Beijing. Airbnb is also finding other ways to boost revenue streams and before deciding to go public. Currently the company is worth roughly $30billion. This discussion of the price has not been released but talks of the purchase was reported by the Bloomberg News.

CMO Today: Amazon Readies Global Streaming Launch; Here's your morning roundup of the biggest marketing, advertising and media industry news and happenings.

Amazon will now start streaming videos to about 200 countries around the world. It current;y only streams to the US, UK and Germany. This will definitely boost its draearnings since they have been a little down lately. This will definitely change since thanks in the streaming world since Netflix is the largest international player. 
This is just the beginning on the reorganization that is happening over in the media section of Amazon. 
Aol will be laying off about 500 employees since it has recently increased its staff by 1500 due to acquisitions. Verizon the owner of AOL is currently trying to purchase Yahoo as well for an estimated 4.83 billion
Marriott Completes Acquisition of Starwood Hotels & Resorts; Complex merger process begins with three Starwood directors joining Marriott board, linking of guest loyalty programs

Marriott International Inc. bought out Starwood Hotels & Resorts Worldwide Inc. and the biggest benefit to us as consumers is that they will be joining their loyalty programs as well. The purchase was estimated to be $13 billion, which makes it now the worlds largest hotel company. There are a couple issues that come with this merger, like how do you differentiate the 30 different hotel brands together. Also how do you merge two different company cultures into one, or do you just leave it alone? Now since it will be the largest hotel company in the world it has the upper hand and can negotiate better terms with online travel agencies like Expedia. 

Image result for marriott buys starwood

More U.S. Factory Workers are saying I Quit

Maria Jose Sorto
More U.S. Factory workers are saying I Quit

Just last month, around 157,000 workers quit their job at a manufacturing plant. This is the highest level in more than eight years and it demonstrates a shift in the market. Besides the manufacturing and mining sector it seems jobs are steady, however, there is a great gap between the number of openings in the manufacturing sector and the number of people that actually get hired. The gap between quits and layoffs in the manufacturing sector specially have deepened and although many “hiring” signs can be seen around the country, the number of people leaving their jobs continues to increase. People usually leave their jobs when they believe there is a better job or opportunity available for them and in recent years the number of voluntary departures has greatly increased. There has been more job openings than hiring in the past two years as the economy recovered. Having less hires than openings means that the market has become much more demanding and that workers need to be more prepared for the job now. However, this can be bad because if a large number of workers are not as prepared as they should be it might mean that unemployment rates for this group will rise.

Wal-mart de Mexico to Invest $1.3 billion in Logistics

Maria Jose Sorto
Wal-Mart de Mexico To invest 1.3 Billion in Logistics
Dec. 7, 2016 3:08 p.m. ET

Wal-Mart de Mexico is Mexico’s biggest retailers and private sector employer and it has the largest number of stores outside the U.S. This week, the company announced it is planning to invest around $1.3 billion in order to expand their operations in the country. This expansion will happen over the course of three years by improving existing stores and building new stores. Wal-mart de Mexico is also planning on doubling its annual sales over the course of the next 10 years. This has come in a time where the market and specially Mexico are curious about what will happen with Mexican-US relations now that Donald Trump has been elected president. Some U.S. investments have been put on hold since the elections and investors are unsure whether investing in the country is a good idea.

This is important because this means a greater expansion for the Wal-Mart company in Mexico. It is also notable to see how people are afraid of the future and how changes on the North American Free Trade Agreement might affect investments in Mexico. This can mean that there will be less business done with Mexico and less interactions with the country.

Pop-Ups, the New Darling in Retail

Pop-Ups, the New Darling of Retail
December 4, 2016

Pop-Ups have become very popular in Manhattan and around the world. Manhattan’s retail market has softened over the years, and pop-up stores have given stores and landlords opportunities to take advantage of this. With pop-up stores, retailers are able to see how the market is and how consumer like their products and brands. For landlords, this gives them an opportunity to temporary rent their space while at the same time showing their property off to potential tenants such as brokers and retailers. Because of the rapid growth of online shopping, nowadays retail stores prefer shorter leases and contracts. These kind of stores give retailers the opportunity to ‘test the waters’ and see which areas of New York consumers are more likely to buy a product of a certain brand or which areas they are more popular in. It is also a great opportunity for new brands or example to promote their products. For small and new retailers, it is a great investment to open a brick and mortar location compared to opening an online shop. However, having a store it gives retailers the opportunity to show the customers their products directly and interact with the consumer. The costs of opening a store are very high and almost not affordable. In addition to the costs, attaching to a long-term lease means a liability for these companies. An example of this is the startup brand Neely and Chloe, an online shop managed by sisters Neely and Chloee who offer handbags, footwear and accessories through their website. In addition to their online store, they have a pop-up store in New York that gives them more flexibility and opportunity to further their brand. Retailers and real state experts agree that Pop-up shops have created a new opportunity for both retailers and landlords. 

Founders Have to Choose Between Growth and Keeping Control

Maria Jose Sorto
Founders Have to Choose Between Growth and Keeping Control
Updated Nov. 21, 2016 8:07 a.m. ET

To founders of startups they see their company as their baby, so taking care of it and having control is very important. However, this might be a problem because it usually results in lower valuation of the company. In a study done by Noam Wasserman, a former Harvard Business School professor, he demonstrated how a startup’s valuation can be greatly affected by how much control the founder has. Valuation of a start up after first two years falls by an average of 17.1% to 22% if the founder stays as chairman or chief executive. The study also showed that the longer the founder stayed in one of these positions, the more the valuation continued to fall. What happens is that after a startup has passed the beginning stage and it becomes a more complex company, founders need the help of outside investors and managers that can assist both financially and with skills the founder lacks.  However, having managers and investors involved means that the founder has to let go of some power and control. Investors, especially venture capitalists, want to have a voice and power in a company where they are investing their money and time. However, the founder is usually unwilling to give up this power and don’t focus on growth and financial success that investors concentrate on. It is a tough situation and decision for founders to make but they have to decide if they are willin to sacrifice some power in order to guarantee financial success.

Online Shopping Adds Muscle to Holiday Sales

Maria Jose Sorto
Online Shopping Adds Muscle to Holiday Sales
Nov. 29, 2016 3:32 p.m. ET

Holiday season has officially started and this can only mean one thing: Holiday shopping and gifts. With the increased use of mobile phones and Internet, companies have seen a dramatic boost in online shopping. This year, e-commerce accounted for 25% of consumer spending just during Black Friday and the two days before. According to First Data Corp., Last year e-commerce accounted for 18% which was almost double of the figures back in 2011.  Even though consumers buy online all year long, online shopping has become increasingly popular during the holiday season, which starts around Thanksgiving. During the Black Friday weekend, total retail spending increased only 9% from a year earlier. However, many brick and mortar stores now decide to not open during holidays such as Thanksgiving to give employees the opportunity to share with their families.
Mobile phones played an important role in online shopping because most traffic and online purchases were done through a mobile device. Compared to a 26% back in 2014, this year mobile phones accounted for 36% of Black Friday online sales. In addition to Black Friday weekend, Cyber Monday sales increased 12% from 2015. As to which category of products had the best sales during Thanksgiving and Black Friday, electronics and appliances take the prize with an increase of 27%. As users continue to rely on mobile devices for almost everything, it is almost a sure thing online shopping will only continue to increase as years go by.

Birthday at Burberry? Luxury Brands Adds Personal Service

Maria Jose Sorto
Birthday at Burberry? Luxury Brands Add Personal Services
Nov. 30, 2016 6:35 a.m.

Burberry Group PLC is one of the world’s most famous and luxurious designer brands. In the last couple of years the brand has focused their efforts in providing the customers with the most personalized and best quality service. These efforts include offering a glass of champagne to costumers while they shop to organizing private events and parties to which only the most exclusive customers and elite are invited. Burberry and other luxury retailers have started to build more personal relationships with existing customers to encourage them to go back to the stores and spend a little more each time. Whereas in the past luxury retailers had focused their efforts in expanding and opening stores around the globe, now, they are shifting to a different marketing approach in which they rather focus on existing stores and customers. There are many reasons on why luxury retailers have chose this approach, one of them is the impact corruption has had in Asia, the decline in tourist spending in Europe due to terrorism and the high cost of dollar for foreigners visiting the U.S. Sales growth for luxury goods has decreased dramatically and as a result the luxury industry growth has slowed down as well.

Luxury brands have also focused on data collecting from customers in order to provide better products and service. Brands like Hugo Boss and Burberry can look at past data about in-store and online purchases by accessing an iPad app. While in the past luxury retailers have set trends that customers can follow, now, the roles have been reversed and brands are taking a close look at what the customers want. Reports from these brands show that customers who receive a more tailored service are 20% more likely to return and around 35% willing to spend more. Luxury retail experts believe taking a more methodic and scientific approach to merchandising results in better outcome and higher revenues.

Under Armour Signs Deal to Supply MLB Uniforms

Tuesday, December 6, 2016

The Next Fashion Trend: Weather Forecasting

By Ray A. Smith

Over the years it seems that winter is taking longer and longer to arrive.  However, it does not seem that the clothing retailers have recognized this emerging trend as I still see sales to offload summer clothes and replace them with winter starting earlier each year.  This inability of the retail firms to predict the weather is actually costing them money as despite their best marketing plans and promotional pricing customers will simply not buy a product that they do not need.  Think of the supply chain, clothing is often ordered months in advance based on what the weather typically is at that time of year. However, temperatures are often different from what was predicted—milder-than-usual winters, cold springs or otherwise inconsistent weather—The result is that clothes that are all wrong for the climate stay on racks and get discounted, hurting sales. So what are the international clothing retailers to do? According to the article The Next Fashion Trend: Weather Forecasting retails have turned to big data to determine the optimal time to change clothing lines to align with the weather. Fashion schools are starting to add into their curriculum classes on advanced predictive analytics. FIT a renowned fashion school launched a new course called Predictive analytics for planning and forecasting in which they focus on case studies with weatherization.  The course is geared for students in retail and merchandising careers. Armed with advanced analytics companies like JC Penney and Macys are making smarter decisions regarding how they order products and when to stock their shelves.  All of this to ensure optimal sales are met for each season. 

Lego Restructures with Eye to Expansion

Updated Dec. 6, 2016 2:26 p.m. ET

Lego is a line of plastic construction toys that are manufactured by The Lego Group, a privately held company based in Billund, Denmark. The company's flagship product, Lego, consists of colorful interlocking plastic bricks accompanying an array of gears, figurines called mini-figures, and various other parts. Lego pieces can be assembled and connected in many ways, to construct objects; vehicles, buildings, and working robots. Anything constructed can then be taken apart again, and the pieces used to make other objects. Lego pieces of all varieties constitute a universal system. Despite variation in the design and the purposes of individual pieces over the years, each piece remains compatible in some way with existing pieces. Lego bricks from 1958 still interlock with those made in the current time, and Lego sets for young children are compatible with those made for teenagers. Six pieces of 2x4 bricks can be combined in 915,103,765 ways.

The Lego Group began manufacturing the interlocking toy bricks in 1949. Since then a global Lego subculture has developed. Supporting movies, games, competitions, and six Legoland amusement parks have been developed under the brand. As of July 2015, 600 billion Lego parts had been produced.

Lego's popularity is demonstrated by its wide representation and usage in many forms of cultural works, including books, films and art work. It has even been used in the classroom as a teaching tool. In the USA, Lego Education North America is a joint venture between Pitsco, Inc. and the educational division of the Lego Group.

The article discuss the recent shake-up the company’s ownership structure, elevating an executive widely credited for rescuing the toy maker from the brink of bankruptcy to manage all-things Lego and explore new business ventures.

The Kirk Kristiansen family said Lego A/S Chief Executive Jørgen Vig Knudstorp, who has transformed the venerable Danish company into a global toys-and-entertainment force, will step aside at year-end. In his new role, Mr. Knudstorp will lead an umbrella entity called the Lego Brand Group that will oversee the family’s 75% stake in the toy maker, as well as interests in the Legoland theme parks and in an education business promoting the use of Lego toys in schools. Chief Operations Officer Bali Padda, a Briton, is appointed CEO of the toy company—its first non-Dane boss since Lego’s foundation in 1932.

The shake-up comes as Lego faces challenges to maintain the explosive growth the company displayed in recent years in Europe and the U.S., while conquering new markets such as China and India. With 18,500 employees, Lego is in a two-horse race with Mattel Inc. of the U.S. for the No. 1 seat as the world’s largest toy company.

  1. "Lego History-About Us". Lego. Retrieved 4 December 2016.
  2.  "How a Lego Works". How Stuff Works. Retrieved 4 December 2016.
  3. “Lego Fun Facts". Brick Recycler. Retrieved 4 December 2016.
  4. "Lego Education (see footnote)". Retrieved 4 December 2016.

Fast Fashion: How a Zara Coat Went From Design to Fifth Avenue in 25 Days

Updated Dec. 6, 2016 11:03 a.m. ET

Talking about efficiency!

Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia. The company was founded in 1975 by Amancio Ortega and Rosalía Mera. It is the main brand of the Inditex group, the world's largest apparel retailer. The fashion group also owns brands such as Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe.

Zara stores have men's clothing and women's clothing, as well as children's clothing (Zara Kids). Zara's products are supplied based on consumer trends. It’s highly responsive supply chain ships new products to stores twice a week. After products are designed, they take ten to fifteen days to reach the stores. All of the clothing is processed through the distribution center in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours. Zara produces over 450 million items per year.

The company can design a new product and have finished goods in its stores in four to five weeks, compared to the six-month industry average, and launches around 12,000 new designs each year. It can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara monitors customers' fashion changes.

Interesting fact, Zara has a policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead.
Most of the products Zara sells are manufactured in proximity countries like Spain, Portugal, Turkey and Morocco. While some competitors outsource all production to Asia, Zara manufactures its most fashionable items—half of all its merchandise—at a dozen company-owned factories in Spain and Portugal and Turkey, particularly in Galicia and northern Portugal and Turkey. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia.
The company’s ability to respond quickly to customer taste has long been the subject of industry study. Now its American rivals are emulating some of the short cuts that have helped Inditex expand to more than 7,000 stores in 92 countries and earn €20.9 billion ($22.1 billion) in sales last year, double what it earned in 2008.

1.       "Global stretch". The Economist. March 10, 2011. Retrieved December 2, 2016.
2.       Hansen, Suzy (9 November 2012). "How Zara Grew Into the World's Largest Fashion Retailer". The New York Times. p. 2
3.       Burgen, Stephen. "Fashion chain Zara helps Inditex lift first quarter profits by 30%``". The Guardian. The Guardian. Retrieved 2 December 2016.
4.       “The Future of Fashion Retailing: The Zara Approach”. October 25, 2012. Greg Petro. Forbes. accessed December 2, 2016.

Monday, December 5, 2016

Risk of Deglobalization Hangs Over World Economy

Name: Brittany Lopez
Title of Article: Risk of Deglobalization Hangs Over World Economy

Time published: October 5, 2016 at 12:37pm ET

At the moment, the global economy is slowing down at an alarming rate. Since 2012, the global growth rate has been only 3% per year, which is half the preceding three decades. This is not only affecting developing countries, but also hitting developed countries as well. Unfortunately, the growing global economy has been the reason for rising living standards (because citizens of developed countries benefitted from lower prices and those in emerging markets benefitted from increased wages), so its decrease is a definite cause for concern. This decrease in global growth is due to a collapse in investment rather than trade. The IMF adds that, what is not a part of the lack of investments, is “largely explained by a reduction in the pace of trade liberalization and rising protectionism” (Nixon). This train of thought lends itself to the conclusion that the world is moving away from globalization.

This trend towards deglobalization would have an adverse effect across all markets, since so many countries are now dependent upon each other for trade in goods and services. If countries start shutting their doors, companies will have to restructure their business models since a large swath of their consumers will no longer have access to their products/goods. I don’t feel that deglobalization is a viable option since so many companies are global all over the world. Untangling that might take longer than fixing the growth rate.