Well, doan that just shock ya blind!!! Morning Newsbeat passed on this gem:

Advertising Age reports on how, despite the fact that McDonald’s has been seeing steady sales and profits increases, the company continues to deal with brand perception issues that are not “keeping pace with sales. According to people close to the company, its internal tracking system finds that McDonald’s consistently ranks near the bottom in quality perception when compared with rivals.

“The company is working to close the gap, these people said, by addressing issues related to perceptions about its food’s quality, sourcing and nutritional value; sustainability practices, including suppliers’ treatment of animals; service; and condition of stores.”

Heather Oldani, McDonald’s director-U.S. communications, says that “there is an opportunity for us to answer some of the questions that customers may have, that influencers may have, about our menu, our commitments to the community and in the areas of sustainability — things that frankly we haven’t been as vocal about … in the past.”

• a prominent, sizable-enough location (hopefully a high-traffic location);
• friendly, confident product-savvy greeters/ staffers;
• easily available, nicely produced brochures or takeaways
• shiny products- to see, touch & feel that are, now or soon, commercially available
• image-building aspirational concepts: to test market reaction & build brand image (via hand-made auto concepts literally sculpted from clay)

How did the exhibitors fare? All the brands devoted sufficient space to their exhibits. After that, the verdict varies.

Staffing: I encountered courteous, engaging. knowledgeable staffers for Kia, Dodge, Chev and Suzuki; otherwise, a disappointment. The Acura folks – few that they were- lacked enthusiasm & energy, hiding in a booth at the back. Ford staffers were so busy chatting amongst themselves that standing adjacent to them, waiting to be acknowledged, was fruitless. Same with Buick’s staffers. Mercedes staff? No where to be found. Nor for BMW or Cadillac. And brands using technology to reduce exhibit staff workload &/or enhance the ‘consumer experience’? Well, in my view, the tech-centred exhibitors- Ford & Acura- got a Thumbs-down.

• Ford: we’ve got video games, but our cars are locked, and our staffers are disinterested.
• Acura: the NSX concept is cool isn’t it? Wanna Poster of it? No it’s only a concept; we don’t sell it. Info on the cars we sell? Sorry, I’m busy with the posters; see if you can find one of the finger-smudged glass touchscreen stations & log in & letter by letter enter your name and address etc. Maybe eventually you’ll get something by mail. The new NSX concept is cool, though, isn’t it?

In contrast, the ‘high-touch’ exhibitors (those who believe that trained, courteous humans can sell) made a great impression. I wasn’t even seriously looking at Chevs or Suzuki’s, yet folks representing them were so engaging & product-savvy, that my view of those brands improved.

Brochures. Refined brochures were easily available from Dodge, Kia, Hyundai & Buick, but many companies didn’t bother to put any out, or hid them well. You could get free posters of the Acura NSX concept, but the only Acura commercial product info was a 8.5″ x 11″ mini-leaflet that looked cheap & pathetic. Premium brand indeed.

What about Product? Most companies did have most of their models on view. In fact, BMW and Mercedes let folks clamber in, out & ‘play’ ( I drive stick, so I cringe when I see folks play with a manual shifter in a parked car!). High marks to BMW for displaying a full cutaway engine- cool! Kia had many versions of the same models out, making it easy to look, see, touch.

In contrast, Cadillac seemed ashamed of their vehicles, putting them under weak lighting, and showing no entry-level Caddy. It’s OK to show some aspirational models, but if Cadillac aims to rebuild appeal to young professionals, it needs to show a representative entry-level vehicle or two, not take cars base priced at $40k and kit all them up to >$75k. That’s simply poor decision-making & utter self-absorption. And Ford? Ford seemed chiefly concerned with attracting youngsters to their exhibit’s video-virtual driving competition. Their focus on Ford products? Well, they’ve a fine looking new Fusion out very soon, but none at floor level – you couldn’t peak in, or sit in one- that’s a real miss. Even some of their Focus sports models were locked up tight- what’s up with that?!?

So, somewhat reluctantly, my Gold Medal goes to The Dodge Dart – presented the way a product should be presented. Terrific high-traffic booth location. Polished to the max. Viewable on a central rotating platform AND on grade level, so you could look, touch, etc. Refined looking brochures with info on every available model. Friendly staffers at the FRONT of the exhibit, handing out brochures. So, why the misgivings? Because Dodge resorted to old-school mic’ed up actor & actress on a rotating podium kitsch. Yep, the ole’ scripted role play of a gorgeous smart girl & ditzy dumb bedazzled guy. Yeah, yeah, I guess it is supposed to be a metaphor for how a new buyer is stopped dead in (his) tracks, rendered mindless by an obsession to possess that beautiful new thing. But c’mon, isn’t that a bit 50-years-ago?

Prototypes & Cues: Since I take The Long View, I can’t sign off without mentioning possible go-forward auto prototypes & styling cues.

Prototypes- the BMW Vision Connect, Acura NSX, Mazda Shinari & Kia GT were oogled; onlookers were either drooling or taking endless pic’s – a good sign these may get a greenlight in some way, shape or form. The Cadillac Urban & Corvette Stingray concepts? Not so much.

Brand Styling cues- Metallic creases & angular muscular haunches typify the styling of the Acura NSX, Cadillac Urban Luxury Concept, Corvette Stingray, etc. Fluid curves & raw animal sinew characterize the Kia GT, Hyundai Blue, Mazda Shinari concepts. Two very different directions. Other popular cues? Aston Martins new & old are inspiring mimicry. The redesigned G350 Lexus evokes cues of a 1960′s Aston Martin- Nice! The new Ford Fusion literally steals the front grill from the modern Aston (and- admit it- you could do worse!).

What’s up with my list of urban-sized, low, sleek, sporty, sufficiently powerful 4 seaters? The Elantra and BMW 135 seem too tiny to be practical 4 seaters for me. It’s down to a Kia Optima, Acura ILX 2.4, Dodge Dart 2.4, or possibly the bit-biggish Buick Regal Turbo or Ford Fusion. Volvo’s S60 is gorgeous but, in my opinion, overpriced. Still, I may just wait for a forthcoming Chev Cruze special sport model, just because the Auto Show staffer was such a fine rep.

Steven Litt

http://www.moneylifeskills.com/index.html

http://www.transithub.ca/

Despite a hectic schedule, Neil made time to come speak to the couple dozen students in Seneca’s select MKM (grad student) business program. A treat for the students, since Neil let them benefit from his recent experiences. Lessons from the trenches, including surprises & candid perspectives on what life is like as an entrepreneur. Then Neil fielded many insightful student questions- a great sign, since entrepreneurial experience is very relevant to students, who may have 3 or 4 different careers in their life, or ‘go entrepreneurial’ at some point, or be expected to show ‘intrapreneurship’ (creativity & initiative inside an existing organization).

It was another example of how important & educational it is to see the business world from different perspectives. The realities of adjusting & refining a business model on the fly, seeking objective input from peers & mentors, building & maintaining networks, keeping expectations realistic, knowing that an entrepreneur’s freedom can be both rewarding and challenging. Also evident? How he, as a an entrepreneur, believes in himself & sees the potential, sees the upsides ie the ‘Can Do’ / ‘Possible’ outcomes, rather than the ‘Can’t Do’ /’Impossible’ mindset.

An issue of great discussion was the role of social media in Neil’s businesses. It was obvious to students how relevant social media is to TransitHub, a knowingly Maven-centric (Key Influencer Friendly), Viral-friendly business platform, with its user-created content, reviews, recommendations, etc.

Even more intriguing is the dilemma of the role of social media for his Money Life Skills business, a classic B2C ‘prospect generating’ business. eg

How much content should Neil publish (blog, tweet, viral video, etc) to add consumers to his ‘prospect’ funnel?

What might be the conversion rate of each form of social media (how many prospects turn into actual customers)?

Which media forms (tweets, blogs, viral videos, etc) best fit the content & frequency desired by Neil’s target? Ie

• If frequent, simple updates are relevant to a target audience, then tweet away (and Neil does do that already);
• If more thorough content is needed and perhaps infrequently, blogs may be better; and
• If the content benefits from AV treatment, perhaps Neil should produce viral videos.

• [ I didn't mention Facebook or Google Plus fan groups; in my opinion, risky, unrefined & maybe not quite ready for prime time' for B2C use. Some pro's have started to use them, but I recommend 'proceed with caution'. They might do you more harm than good.]

Fortunately for Neil, he’s savvy with all social media tools (last year he covered the Berkshire Iowa meeting using real-time tweets, blogs, posts & articles for Walletpop). And he knows his material & can create content himself. This lets Neil overcomes 2 big obstacles most entrepreneurial firms face embracing social media. But even Neil faces a dilemma- the time tradeoff. How much TIME should Neil invest in social media? For his type of business, social media is still in its ‘early days’. There seems no proven business model to follow to the ‘t’ – so experimentation is needed, and experimenting with social media takes time to do right (eg Compare that to basic Search Word optimization or Adword tests, which are downright fast & easy!).

Can facebook be a suitable business building platform? Of course! A friend who is a PR pro by day, co-owner of a new counterculture cafe by night, did a fine job ‘tiptoeing the line’ between online facebook community updates- ie news, quirky stories, neat pics, to reinforce the personality of the cafe, right from its grand opening through subsequent events. Not too intrusive, not too sell-y. Her updates are informative, interesting, humorous, involving. But keep in mind- it’s a quirky independent cafe- inherently ‘community-friendly’. It has, and needs, a ‘personality’ – its interior look, music, events, local causes, neighbourhood commitments, etc. And since she’s a professional writer, her updates are informative, fun, personality-infused.

Back to the dilemma of social media: since I tell clients & students to revere the ’5th P’ (Pubic Input), how do I use social media?

I listen, post this blog, and await your Comments. And I do so without any set of metrics or expectations. For now.

Social Media – truly a work-in-progress.

Even Neil said social media provides him some surprises. Like learning how many other financial professionals follow his tweets & blogs. He feels honoured, but uncertain. Are these fellow professionals taking a free ride? What do they do with his insights? Someone more cynical than Neil might ask: are they simply stealing content, and perhaps even portraying his ideas as their own?

And me? I started this blog to give client prospects examples of the thinking of Spitfire Global- long term, strategic, creative, irreverent- A thinking style shared by co-founder Craig Bundrant and I. Then the blog expanded to give info to Seneca students & a larger business network. More recently, its followers started including media staff & journalists, hence 2 requests for TV interviews (of which I accepted one, a CTV News At Noon live interview a month ago, on Research In Motion, a favorite topic of mine). Even more recently, blog followers started to include U.S. college academics, various high school teachers, hockey team-mates and even some folks who went on a genealogy search, and pop in occasionally to check that I don’t stain our shared surname.

And how’s the blog doing at generating clients? Well, err, maybe not so terrific at generating direct leads. But social media is in early days, so I probably need to refine & adjust my use of these tools again in the near future.

More than likely, I’ll deconstruct & rebuild my social media efforts on the fly.

And I’ll trust that the leap of faith I make in this – as in any other venture- will end well.

As would any typical entrepreneur.

Steven Litt

Case in Point: Apple taking heat on China labor practices. Apple did finally recently agree to open their secret production facilities to inspections etc over allegations of alleged worker exploitation (and suicides), yet they’re still taking ‘viral heat’. Microsoft is leveraging that vulnerability, accelerating Microsoft retail store openings. Samsung/ Android has taken aim at i-phone with a defacto “Whos’ Cool Now?” ad imagery. Last week, news broke that Apple is considering selling through Sam’s Warehouse outlets- huh? Will Tim Cook’s era start with a greedy distribution push, lacking thought of brand image fit? (don’t get me wrong; Sam’s outlets are great for selling rank & file middle quality goods to not-too-particular middle class shoppers. Is that how apple consumers picture themselves?)

Netflix went from hero to zero in an instant, after botched pricing changes and an ill-conceived interview to explain the new policy; the vitriol online against them continues months after its CEO’s ‘apology that wasn’t an apology’ to common folk, from a vacation spot avec elaborate cocktail & designer shades costing more than most ‘netflix’ subscribers ‘net’ in a week (so infamous that it spawned an SNL skit). If a brand ever rolled out a the red carpet for competitors (come on down- Google streaming video service & apple i-tv!) it was netflix.

Other brands killed by sin? BP- the proud traffic-generating icon that lured loyalists across the US, was tarred & feathered for the Gulf Spill; the brand shifted from asset to anchor overnight. Gas station after station burnt out air wrench bits removing BP signs as fast as they could.

It seems that brands- even global brands- can be killed faster than ever- though, truth be told, the above actions are more suicide than homicide; death by greed, death by stupidity & insensitivity; death by incompetence.

On the bright side, it’s possible that resurrecting nostalgic brands may be easier & more powerful than ever:

• Marilyn is hot!
• Grace (Kelly) has never been more regal (or valuable)
• Audrey Hepburn is everywhere you look.
• Warhol is back
• Michael Jackson music sales hit #1 after he passed. Amy Winehouse as well.

Another impact of an active pubic (the 5th P of marketing) on Brand Value? Cross-media, cross-category brands can now be built faster than ever before.

• Twilight went from book to movie to decor to clothing line in a nanosecond (and it was neither an original nor a even a well written book, by all accounts)
• Lady Gaga is a branding machine, selling everything

ie when you’re hot, you’re hot – and a well managed growth brand can skyrocket in value across nations, media & categories in no time.

Seems that branding is changing- a brand remains ‘a set of customer expectations’, but the pace at which expectations can be spoiled, rekindled or built, is moving at viral-speed.

The lesson? Get savvy on branding principles fast. Measure (audit) your brand equity & perceptions often! Dig into the results fast & furious. And for goodness sake, think through how you behave as a company or brand. As to whether you think the consumer will learn what you’re doing or not- just ASSUME they’ll learn of it. Consumers are too smart; leaks too hard to contain; activist groups too active; web communities too communal, to let malfeasance go unpublished & unpunished. Ask a Middle Eastern or North African dictator; you can’t hide.

A student recently asked where I think this will go next; here’s my theory. I think consumers might make 3 groups of marketers suffer:

1. Pharma companies: a legacy of sample manipulation & statistical fraud in clinical studies, false promises of vaccine need & efficacy, wink-wink, nudge-nudge encouraging physicians to prescribe off-label, etc. A secretive industry with a history of such misbehaviour; the sinners of the Rx industry may be due for some consumer justice.

2. ‘Faux brands’ will be found out & punished by shoppers who walk with their wallets. It may not happen fast, but it’ll happen. If you’re uncertain what’s meant by ‘faux brands’, think: expectations built on a past that no longer is remotely true, or myth that awaits busting. Ben & Jerry’s counterculture ice cream – by Unilever??? Dove ‘confident women’ campaigns, by a company that markets skin-lightening cream in India?

3. “Not-For-Profits” that take a charitable sounding name, then solicit donations of cash, clothes, or goods in kind. I know of ‘not-for-profits’ that pay their CEO’s millions- Execs who then have the temerity to brag of ‘doing good’ while attending social functions, before they make stylish early exits in Bentleys bought with charity money.

The only safe path? Get ethical now. Today’s consumers are sharper, more connected, more vocal & powerful. It’s on you, if they make you suffer for your sins. To illustrate how perceptive & unforgiving today’s public is- fyi some notable recent transgressors that haven’t gone unpunished:

• Wrath: actors or models who have public hissy-fits or rants, destroying their ‘brand’ value- Naomi, Mel, et al.
• Greed: oil companies that drill or move oil in eco-sensitive areas without proper precautions (BP, Exxon); premium brands that expand too fast and become common overnight (Krispy Kreme)
• Sloth & Gluttony: film distributors whose CEO’s don’t bother to go to a press room or company HQ to apologize for blunders- instead doing a ‘bistro cocktail apology’ (netflix). Firms whose managers obnoxiously party on passenger flights, as company shares lose altitude faster than a skydiver without a chute (RIM)
• Pride: entities so sure of themselves they start lecturing others (Apple, Gov’t of Canada, and obviously, myself). Companies so sure they’re invincible & can win battles solo on multiple fronts (no subcontracting or partners needed!) that they lose all their battles (RIM).
• Lust & Envy: crown corporations (Canada Post, Ornge, Ontario Hydro, Royal Canadian  Mint, CMHC) where senior Execs demand the salary/benefits of Private Sector CEO’s, without the insecurity, or pesky job competitions, or accountability, of free market Exec’s.

Time for some soul-cleansing? Then awaken, think fresh, and live like it’s a ‘brand’ new day.

Steven Litt

In a good way. After all, you just gotta love dogs- the way they sense your moods (better than a  spouse), the way they just know what you need (better than a spouse), the way they entertain, know how to have fun, stay carefree (OK, OK, stop with the spouse comparisons, already!).

Seriously, it’s a dog’s life out there. I previously blogged on a decades-long trend: the humanizaton of pets, but there remain times it’s useful to see how relentless the trend has been. A couple news updates make it evident:

A dog TV station has started. No not just a DVD or two; this is a full 24 hour network, splitting time between

• calming, restful programming,
• exercise & play-related content; and of course
• training & education (how to behave in a car, etc).

Other news nuggets that may give you paws:

• a woman in Hong Kong has just launched a dog yoga class.
• America is celebrating the Pawscars; eg the scene stealer award went to Uggie of The Artist.
• the Canadian entrepreneurs behind Woofstock have hit Dragon’s Den for backers to expand that show globally.
• The Westminster Dog show is on; its winners are stars (and major earners). This year’s 135th anniversary is a media event; one of USA Network’s highest rated shows and a NYC tourist draw attracting press from 20 nations & millions of web streaming visitors from from 170 countries (though I still feel its competitors take themselves too seriously; I prefer Chris Guest’s rendition, ‘Best In Show’).

Think of a category that exists for children or seniors (the 2 groups whom we sandwich generation folks love to care for) and chances are pretty  it exists for dogs. Feeling entrepreneurial? You better hurry- some of the best ‘humanization of pets’ emerging business ideas are already taken!

• Dog Health Insurance? Many providers already – check the signage the next time you’re in a Vet office
• Dog CD’s, DVD’s & Shows (check- see above- in fact there’s enough content now to run a 24-7 network)
• Dog Chiropractic- my brother drove his beloved lab 40 minutes each way, to several appointments a month
• Dog Anti Allergy Products – from dog beds to foods, they’re out there
• Dog safety gear – vehicle car safety harnesses, collars that light up, and even flotation vests
• Dog daycare- lots of it!
• Dog mobility devices- step ups (onto the bed etc) for senior dogs
• Dog Transport- they landed ahead of you- there’s already an airline specially designed to transport dogs
• Dog designer wear- Ed Hardy. Gucci, Ralph Lauren- they’re all stylin’ the canine way

How far might it go? Don’t sell it short- Dogs are now unapologetically beloved family members (due in part to many advantages they offer versus human companions, as per the opening paragraph!). So, as long as they continue to not let us down, we humans are determined to do whatever we can, to thank them for being the most awesome companions ever.

Happy Valentine’s Day to all the Fine Canines Out There

Much Love

The (Mere) Human Race

Building a business is often thought of as a young person’s game. Perfect for an idealist, a fresh thinker. Someone unconcerned about sacrificing creature comforts or perhaps family commitments. You take on high risk- risk whether the plan is viable, the cash flow works out, the market responds to what’s offered, and so on. Low odds of success, but if you do hit a home run, it’s a winner in terms of control & finances.

Buying a business is of course less risky than building one. It averts the pesky risks of things that may go awry in an operation’s startup, in proving the market demand, etc, if you buy a company with a proven track record. It still requires an extensive investment of time to find and inspect (kick the tires) of various imperfect, for-sale businesses. It requires due diligence, and a leap of faith to estimate the correct valuation (a multiple of revenue? of EBITDA? what multiple, exactly?). And it requires one to have a vision to carry a company forward.

Buying a Franchise is ostensibly a safer bet. A proven business model. Head office support. Rigid rules to follow, that some folks find comforting. Many roles & obligations are outsourced (growth plans, advertising, marketing, sales, product line updates, etc) to a franchisor head office. Buying a franchise is often right for a middle aged, mid/late career professional, who will trade off a chunk of savings to gain a low risk money maker. Its downsides? Less control than with an independent business, less upside potential, and a too-frequent risk of contract fine print that enriches head office at your expense eg being required to buy upstream inventory, merchandising & operational tools at a hefty head office markup.

So if you’re going through this decision dilemma now, consider multiple factors:

• how closely the market already offers the solution you have in mind
• whether you want to execute someone else’s vision, or your own
• how much you expect a franchise’s brand awareness/ trust is worth
• how carefully you will read a franchise contract
• how much risk you’re ready & willing to accept;
• how much cash you can raise or put up;
• how much control you want: control from the ground up (build it), ongoing full control (buy it), or limited one-outlet control (franchise);
• how comfortable you are managing multiple functions

That’s just a starter list. But I think you can see how your own personality, wants, needs, strengths, weaknesses, desires & resources imply that there is no one best choice. There is only the best choice for any given individual at a certain moment in their life.

Steven Litt

Let’s recap the job sectors that dominate Ontario’s economy: auto, agriculture, banking, government services, telecoms, arts & entertainment, retail, home sales & construction.

Any economy has’ driver’ employment sectors, and ‘lagger’ job sectors; the Greater Toronto Area (GTA) region of Ontario is no exception.

The GTA region’s job ‘driver’ sectors?

Appropriately enough: the Auto & Auto parts industries- huge (Ontario makes more auto’s than Michigan) and protected by the Auto Pact, but gradually losing jobs to the Southeast USA and Mexico, and always vulnerable to soft sales of models made here (Camaro, Civic, etc).

Agriculture, is a ‘driver’ sector, and thankfully for the economy (but not for local consumers) much of it is protected by artificial market barriers (dairy, poultry, etc).

As for the ‘Lagger’ job sectors – ones that typically feed off (and follow swings in) the health of the ‘Driver’ sectors- the GTA’s include:

Arts & Entertainment – helped by sponsorships & spending by protected or subsidized industries (ads for the public sector, telecoms, egg /milk marketing boards, chartered banks; client entertaining at stage/ sports events, etc)

Retail, of course.

And Housing & Construction. But …..wait, hold the phone! Yes, in theory Housing should be a “Lagger’ industry, and folks should buy a home or a bigger home after they get a better job, etc. Not in the GTA, where housing demand doesn’t wait for the health of the other sectors. GTA housing has become a  ‘job driver’ building on a wave of real estate fervor. It’s a party topic; ever-escalating home prices, how much money home buyers have ‘made’ (at least, on paper), the temptation to buy ever-bigger or buy multiple homes, the magic of leverage. It has become a job/ spending driver- contractors & real estate agents buy luxury cars, new phones & pricey dinners; unskilled construction jobs fetch $25 an hr

So… no biggie, right? So what if the cart is before the horse in the GTA for plenty of folks. For entire industries, in fact, that back their bet.

But… what would happen if the housing sector saw softening home prices & jobs?

Construction would pull back- affecting laborer prospects, real estate commissions, lawyer commissions, etc.

The retail, dining industries, etc would take an immediate hit

Everyday ‘home owers’ would feel less confident as consumers, then spend less.

Even protected sectors – telecom, banks, and possibly even civil service departments, would need to cut staff.

So how likely is that to happen? Toronto continues to be a hot immigration destination, and new residents are one factor driving up property values.

But….Ontario households are at record debtloads; debt that’s, on average >1.5X household annual income. That level is comparable to the US households before the sub-prime crisis. Of course, Canada forbids US-style 40 year mortgages, but we do have 30 year mortgages, and ’95% of price’ mortgages. The GTA’s Big Banks are even lending line-of-credit & promotion kickbacks to borrowers, towards a mere 5% down payment (can you say “leveraged”, boys & girls?).

So what. After all, property values will only ever escalate, right?  It’s true we’re in uncharted territory- the GTA’sd current real estate value up-cycle has lasted over a decade. “Just graduated” folks in their early twenties are encouraged by banks to buy “Can’t miss” properties; people who weren’t even teenagers the last time GTA property values fell.

Call me a pessimist, but it feels like a fragile scenario. Because if home borrowers get in trouble, the leisure, recreation & retail industries will shrink, the tax base will shrink, the civil service will need to make cuts.  If panic-selling of homes occurs, even our (protected) banks will take a haircut in their oh-so profitable mortgage businesses. They’ll have to cut back jobs, though perhaps not as badly as in the USA. Picture a big, spreading vortex of trouble.

So… are GTA houses overvalued? Hard to say. I’m sick of hearing how homes in Toronto are still cheaper than homes in NYC- I’ve been to NYC,  and Toronto is no NYC. I’m renting for now, staying on the sidelines. My bet is that GTA home prices will fall 10% or more in the next couple years.

And what if GTA house prices do fall? If the reduction is 5% or less, I agree there won’t be much of an impact. But if the drop is 10% or more, many home borrowers will owe more than they own- and may make a (rational) decision to walk away from home ownership- leaving the Big Banks as reluctant homeowners. Causing ripples of spending reduction throughout the GTA’s other job sectors. Ask our American friends how that story turns out.

If that occurs, students & workers alike may find that oil, gas, potash, beef & grain aren’t such unattractive job sectors, after all.

Steven Litt

• Danier usually has a 25% Off or 33% Off sale first, then a couple weeks later a more aggressive 50% Off sale, chiefly applying to ‘odds & sods’ ie end-of-lines, odd sizes. This year, Danier has gone direct to 50% Off
• this flyer is out in early February; that seems pretty early by my recollection ie 6 wks into a 3 month long winter

In other news, Canadian Tire, THE place for winter home & outdoor & auto gear, posted awful quarterly results. And they plain-out blame the unseasonally warm weather. For those of you freezing in Europe’s brisk snap, North America seems to be the poster child for Global Warming. Ontario has posted its warmest winter in 20 years. Many days this ‘winter’ I’ve seen folks in T-shirts outside- I kid you not.

So…what’s the bother?

The bother is that in seasonal climates, businesses inevitably have to do their own ‘forecast’ and plan their own seasonal behaviour. No avoiding it. And each climate oddity & trend creates imbalances & inefficiencies, by tossing most sales forecasts into the dumpbin, for countless products & services.

Services such as Snow removal, winter vehicle maintenance, rust proofing, etc

Products: Sand, road salt, shovels, windshield brushes, boots, hats, mittens, parkas. Winter tires & antifreeze fluid. Skates & toboggans.

Recreation: Winter leisure facilities (skiing, trail-riding, etc). Winter carnivals, getaways & snowbird services.

Next time you see seasonal products or services, and wonder why they’re priced a bit high, remember: setting up business in those lines is risky. Taking on the inventory of seasonal items is risky. Smart retailers mix in seasonal items as a certain % of their product or sales line, but don’t bet the farm on a seasonal items. That’s why Danier increasingly carries warm weather fashion items, handbags, and so on. It’s why Canadian Tire carries year-round automotive items & housewares, and they rotate their seasonal (auto/ sports/gift) items with great savvy.

But to bet the farm on a seasonal line, and have 1 bad season? Ouch. So went White Rose gardening centers. Belly up, some years back.

Carrying seasonal items is a viable opportunity, but my advice is:

Get those margins when you can.

Manage inventories carefully. Have suppliers take the inventory risk wherever possible (Coppertone sunscreen was sold to Drugstores as a ‘guaranteed sale’- if it didn’t sell when summer’s sun shone, the supplier took it back).

Maximize the  sales potential of ‘normally seasonal’ weather days immediately eg when a Giftware or Dollar store staffer moves umbrellas to a checkout location on a rainy day, or mittens on a cold day, that’s being resourceful & smart!

Build a weather-diversified portfolio of sales items, to offset the risk in case of unusual weather.

Like a winter in Ontario, when folks walk about in T-shirts.

Staying warm in my ‘winter T-shirt’

Steven Litt

Sharp embraced Vertical Integration & Scale; they built their own a mega-facility for LCD screens. A huge capital cost & high overhead. So they require big volume to amortize costs, but their timing was awful- the screen market has softened & now they must retool to the facility to build smaller screens (how small? laptop size? or tablet size?)

Sony squeezed suppliers- ‘streamlining & muscling out costs- until there were no more costs to muscle out

Panasonic diversified, but now finds it self battling competitors on multiple fronts eg Duracell, Eveready & RayoVac won’t cede the battery market easily.

I respect Sharp, Sony & Panasonic for recognizing their current strategies were doomed. With Korean & Taiwanese firms quickly copying their new products, undercutting them on price, and closing in fast on quality [ just as the Japanese firms themselves did to North American & European firms a couple decades ago] ‘business as usual’ just isn’t an option.

That’s something that was lost on Blockbuster and Kodak (R.I.P.).

So I salute the big 3 for their powers of observation, and their willingness to make big changes.

A ‘deer in the headlights’ strategy rarely wins (are you listening, R.I.M.?).

Even P&G  (conservative shop that it is):

• moved early to foreign markets (often partnering with foreign firms that knew the home market);
• finally learned to create genuinely net-new products in house (eg Swiffer)
• has now embraced ‘democratizing’ Product Development -inviting inventors’ ideas; and
• is testing radical merchandising ideas -Virtual Stores, “Men’s Beauty aisles”, etc.

I even respect P&G for its ‘once-a-decade’ major expansion efforts- not all of which have succeeded:

• a laughable effort at become a Pharma player, followed by a humble withdrawal,
• the smartly timed sell-off of Food brands (Duncan Hynes etc), then Snacks (Pringles), where P&G lacked its accustomed critical mass & expected “Category Captain’ retail role [P&G doesn't 'do' underdog]
• buying Maybelline & radically expanding Olay, pushing into high-end Womens’ cosmetics & skin creams; and
• a blockbuster acquisition, Gillette, instantly making them #1 in Men’s toiletries, just as Male beauty items become socially acceptable for the masses.

If even P&G takes enough chances to screw up, how risk-taking is your organization?

Perhaps being risk-averse is to be expected if one is a retailer. Retailer have thin margins; surely they can’t afford big risks, can they? Well…. maybe they can. In the past few years…

• WalMart tried & then largely abandoned an ecological products effort
• WalMart attempted the customer-hating, bottom-line-draining supplier consolidation gamble, ‘Project Impact’
• WalMart launched tests of reduced selection, reduced footprint dollar-type stores in urban areas
• WalMart recently vertically integrated into captive brand Health products (a new ‘Great For You’ brand umbrella).

McDonalds is not know for risk taking, but it’s now massively investing in new (‘grown up’) store designs, decor & fixtures. McD’s has also finally upgraded its coffee quality (though how it could have possibly downgraded its coffee would have really been a real challenge).

Canadian Tire tried added groceries in some test stores, then abandoned that effort.

Loblaws’ grocery stores added the ‘Joe Fresh’ clothing line (aided by Joe Mimram, Club Monaco’s founder), then added ‘flagship’ clothing-only outlets in high fashion NY/ NJ locations, from the Hamptons to Manhattan.

Starbucks is trying to improve its night-time appeal, testing alcoholic drinks -an interesting move, since Starbucks has always been about the self indulgent break ie the ‘Starbucks experience’, and hanging in an upscale urban hipster community; it’s definitely NOT about the coffee.

So ….

Retail strategies are changing. To better romance & service consumers. To reach them in new ways, locations, times of day, etc.

Supplier strategies are changing. To acquire power verticals. To acquire critical mass, or to exit when they lack it. To squeeze costs out. To find a direct line of access to consumers, etc

The only thing worse than trying a ill-sounding strategy, is to try nothing at all.

How much of your budget is devoted to trying something truly different? perhaps bold or even -  risky?

Yes you may fail, but think of how much you might learn.

More than if you sit transfixed like a deer in the headlights, or a zombie passenger in a station as the train leaves.

That’s a ‘Kodak moment’ to be sure.

Steven Litt

The ‘Post’ Posting: DISCLAIMER: NO INSIDE INFO WAS INVOLVED: I realize I wrote & posted on Feb 9 how P&G sold off its Pringles snack business, though it wasn’t until Feb 15 that such a sale was announced. There was nothing illicit about how I arrived at that conclusion- P&G is so strategic that such a move was simply inevitable to me. So, although my career started at P&G, that was a millennium ago, and I have no ‘current’ contacts that I tapped for that insight (nor, thankfully, have I traded P&G stock!). I do apologize, though, for stating it in the past tense, on Feb 9, when it wasn’t yet a finished deed (See? Studying strategy can occasionally make you seem smart, when you note patterns of behavior, and the dominoes lining up!)

Starbucks has partnered with an India-based firm to open 50 outlets in India; and

Imax has gone Bollywood- in a shared venture with India’s SPI Group, to open another 4 Imax screens in the world’s foremost movie-loving nation (India ranks #1 in the world for movie attendance)

Why the push on rapid global brand expansion now? Because consumers are increasingly world-aware, especially upscale consumers. TV programming, the internet, lower cost travel & increased business travel have exposed more upscale or professional folks to other nation’s aspirational brands. The value of a brand that’s powerful in one part of the world, can be quickly taken advantage of in another part of the world, if handled well.

But that’s the key, isn’t it? Such an expansion must be handled well. It can be expanded with patience, class & niche audience cultivation, as E.D. Smith did when importing HP Sauce & positioning it, not as layman’s ketchup as it’s viewed in its home UK market, but as a premium exotioc food complement.  Or as Diesel jeans (thanks, Michael!) being positioned differently in Italy (as an approachable brand) vs North America (a premium brand).

When brands go abroad without local partners, ignorance of local market conditions can hurt- badly. Canadian Tire failed famously in a stateside foray. Krispy Kreme messed up a perfect chance to be ‘special’ when it went from select fresh bakery outlets, to gas station sales, in its first few months North of the US border.

So what does Starbucks gain by partnering in India? It has more than enough cash to open 50 outlets by itself, after all.

1. Regulatory/ Legal Leverage: Some nations have domestic content rules; many have complex regulations that domestic players better understand and have a better chance of navigating or renegotiating. In Starbucks case, if they need a regulatory ‘exception’ for eg extended hours, or to add drive-thru’s, Starbucks’ solo request for an exception might be seen as a foreign firm acting arrogantly & insensitively (a big foreign bully). But guess who Starbucks selected as a partner? Tata. Yep the firm that owns a huge chunk of India’s infrastructure, in countless different industries. Tata would have just a wee bit of leverage in the local regulatory world, wouldn’t they?

2. Cultural Expertise: India is a nation of a billion people, various languages, a caste system heritage (that few Westerner understand) and many other complex longstanding cultural traditions. By leveraging the savvy of ‘Tata Beverages’ in-nation staff, Starbucks reduces the risk of a cultural faux pas. I doubt there will be another “Chev Nova” Latin American launch involved with this partnership (recall that Chev discovered, too late, that ‘Nova’ means ‘does not go’ in Spanish).

3. Local Supplier Access/ Leverage: wherever possible, global food service giants such as McDonalds take abroad their leading suppliers (such as McCains as their preferred potato supplier for fries). But this isn’t always wise or economically feasible. By twinning with Tata, imagine the possibilities. Starbucks miniscule 50 outlets would barely justify a supplier giving them an appointment- but the prospect of a supplier gaining a good footing with Tata in India … that’s another matter altogether.

4. Values Congruence/ Enhancement: North Americans know that Starbucks has an ethical reputation (fair trade, Shared Planet initiative, etc) yet consumers in India may be unaware of that equity. Tata’s tagline is “Leadership with Trust”- my understanding is that they do have the respect & trust of consumers in India (though I’m unsure I’d personally associate trust with their vaunted $2,000 automobile!). Note: This is a tricky area; choosing a partner of ‘like values’ is essential to having harmony among the front-line staff and of avoiding Public Relations fiascos.

So there you go- there are other key benefits to partnering, such as splitting the financial startup costs & the risk, but the above 4 benefits are, in my view, even more relevant. After all, Starbucks could have got financing internally, or through a bank or investor group.

The next time you pursue a global co-venture (fyi Spitfire Global is assessing one right now), consider the partner’s talents, values & ethics. I recommend that you seek a win-win agreement with a partner you respect, who has local market savvy & success. Often that’s far more relevant than how fat their wallet happens to be.

Steven Litt