MERCHANDISING AND STRATEGY CHANGES
A glance at retailers that are restrategizing
Posted April 2008
McDonald’s — Are cheaper lattes taking the foam off Starbucks?
McDonald’s recently introduced premium roast coffee, lattes, cappuccinos and iced coffee. The new coffees helped it continue its steady growth of the past five years.
McDonald’s same-store sales in the U.S. rose 1.9 percent in January and, in Europe, sales jumped 8.2 percent. Some of that growth comes from millions of coffee drinkers who won’t pay $4 or more for a cup of coffee. These customers want quality coffee at prices below Starbucks’ and with drive-through convenience rather than in a coffee house.
McDonald’s is betting that many Americans won’t get out of their cars for their coffee fix. There are drive-throughs at nearly all of its 14,000 locations.
Starbucks has responded by testing sales of 8-ounce cups of drip coffee for $1 with free refills. McDonald’s sells 10-ounce cups of premium roast for about $1.07. Consumer Reports magazine said in March 2007 that its trained testers sampled basic black coffee from several companies. They found McDonald’s stronger blend was better than Starbucks, Burger King or Dunkin’ Donuts.
Quick service, good coffee, lower prices — sounds like Americans’ idea of value. But for those who want raspberry lattes with soy milk, Starbucks offers much more variety and has begun offering breakfast sandwiches and gourmet salads.
Wells Fargo goes mobile
Wells Fargo mobile added text-based cell phone account access for its consumer and small business customers last October. It already offered browser-based account access. This builds on its tradition of innovative banking — in 1995, it was the first financial institution to introduce access to banking accounts on the Internet.
Mobile banking is not expected to replace paper statements, according to Javelin Strategy & Research in California. Banks hope to improve customer loyalty by intertwining banking with your cell phone. Another reason to promote mobile banking is simply money — it provides a new advertising platform and is expected to save the bank money by reducing the number of calls to telephone call centers. (It’s estimated that each call to a center costs $14.)
Mobile banking was tried in the U.S. about eight years ago, but neither consumers nor phones were ready.
Big Dog, The Walking Company and Natural Comfort Footwear
The Walking Company, a subsidiary of Big Dog Holdings, Inc., closed its acquisition of all assets of Natural Comfort Footwear, Inc. in January. The Walking Company operates 190 stores in the U.S., and Big Dogs operates 108 stores.
In Washington, Walking Company has retail outlets at Bellevue Square, Columbia Center in Kennewick, Alderwood in Lynnwood, River Park Square in Spokane, Southcenter Mall in Tukwila, and Fourth Avenue and Northgate Mall in Seattle. Big Dogs are located at Centralia Factory Outlets, Factory Stores at North Bend and Seattle Premium Outlets. Natural Comfort shoes are found in premium outlets such as Nordstrom.
A new line, developed in partnership with Simple Shoes, a division of Deckers Outdoor Corp., is PlanetWalkers by Simple. These eco-friendly comfort footwear and accessories will be launched during the summer. They use eco-friendly materials and production techniques.