Just in time for March Madness, Sneaker Wars has just come out, recounting the modest origins of the now-multinational multi-billion-dollar sports shoe industry. I just happened to catch the book review in this morning's WSJ. The story begins with the Dassler brothers' little Bavarian shoe factory, started during the thick of WWII. Fraternal rivalry caused the brothers Adi and Rudi to part company in the late 1940s, when Rudi walked across the river to the other side of town--the medieval town of Herzogenaurach--to set up a competing factory. Adi Dassler's shoe became, of course, Adidas. Rudi developed the Puma brand. Together, the rivaling brothers and their rival brands came to dominate the world sports shoe industry for decades. Adi and Rudi pioneered what are today's standard marketing strategies for sporting goods and other consumer goods, giving away free shoes to athletes and later paying stars to wear the logo.
It's a treat for me to read about the history of Adidas. Anyone who played grade-school basketball in the 70s remembers the dominant basketball shoes--Converse All-Stars and the Adidas Superstar, with the latter gradually overtaking the former both in the pros and in the school yard. According to Wikipedia, three quarters of all NBA players in the mid-70s were wearing the Superstar. I remember well getting my first pair. They were navy felt with white stripes (I know, I know . . . but remember, this was the 70s). I was a mediocre basketball player at best, but at least the shoes looked cool.
The sports shoe industry took a big jolt in the mid-80s, when Phil Knight signed Michael Jordon for Nike and launched the Air Jordan, which became the best-selling basketball shoe ever. Nike has dominated the U.S. market ever since, though Adidas and Puma appear to be making comebacks. You can read about Adidas' recent comeback efforts with its signing of David Beckham in the Prologue to Sneaker Wars.
Have you been following the controversy over the Consumer Product Safety Commission? In the wake of various reports of toxic toys, Congress wants to give the CPSC more money and more authority, but acting head Nancy Nord is not interested. In an October 24 letter to the Senate Commerce Committee, Nord wrote that the new powers "could have the unintended consequence of hampering, rather than furthering, consumer product safety." In an interview on The Early Show last week, Nord said, "I want to be hiring more safety inspectors and scientists and compliance officers, I don't want to be hiring lawyers."
Nord's point is that increasing civil penalties might encourage manufacturers to assume a more adversarial stance with respect to the CPSC, reducing cooperation, diverting resources to enforcement actions, and lessening consumer safety. House Speaker Nancy Pelosi is having none of it and has called for Nord's resignation. Many others have joined the chorus, including John Edwards. And guess what? Nord suddenly is guilty of ethical lapses, according to Pelosi's colleagues in the House.
But what about Nancy Nord's theory of regulation: more inspectors, fewer lawyers? Is is a plausible approach? Perhaps, though the anecdotes about toxic toys coming out of this controversy are not good, and the Bush administration has no credibility when it comes to charges of complicity with industry. So instead of a real debate about regulatory policy, we are left with bumper sticker soundbites.
Having followed the company's goings-on over the past few months (here and here), I finally got a pair of Crocs a few weeks ago. I guess my little vote of confidence didn't do much good. Last Wednesday, Crocs stock lost 36% of its value, slicing about $2.2 BB off its market cap. Ouch! (again). Crocs had reported that its inventories had quadrupled from a year ago, and it failed to increase its quarterly earnings forecast as it had consistently done in the past. Traders apparently read this as a sign of slowing growth. Sales have grown from $24,000 in 2002 to an expected $820-$830 MM this year. Before Wednesday's bath, Crocs stock had soared to six times its initial offer price from February 2006. Wednesday night, Crocs' board approved a program to buy back as many as a million shares of its common stock (out of 82 million outstanding).
Careful. Crocs bite.
[Clip art licensed from the Clip Art Gallery on DiscoverySchool.com.]
Wal-Mart has decided to exit from Germany, eight years after entering the market. German retailers beat Wal-Mart with low prices. From the W$J:
After Wal-Mart acquired two small, struggling German retail chains eight years ago, it ran up against several problems. It found itself being underpriced by local retailers called hard discounters, such as Aldi. German shoppers flock to these stores, which sell a limited selection -- often 850 to 1,000 items, compared with 100,000 at Wal-Mart -- and stock mainly their own store brands.
Some 80% of German consumers are about 20 minutes from an Aldi, according to Nestle's research. The hard discounters account for about 40% of the German retail market, compared with Wal-Mart's share of less than 2%, analysts say.
German shoppers are accustomed to buying merchandise strictly based on price, German retail consultants say. They are willing to buy laundry detergent at one store and then go to another to get a better price on paper towels. That behavior is called "basket splitting." It is the antithesis of what American shoppers like: one-stop shopping. A big plank of Wal-Mart's strategy in the U.S. and elsewhere is getting shoppers to turn to it for an increasingly wide array of goods.
According to the article, this is not the only international problem for Wal-Mart. It's worth a read.
The debate over the merits of Walmart is hardly new (it's been done here at the Glom as well). But I ran across a good email debate over at Slate entitled "Is Walmart good for the American working class?" The debate is between economist Jason Furman and author-activist Barbara Ehrenreich, who worked as a new hire at Walmart as part of the research for her book Nickel and Dimed, which portrays life as a low-wage worker in the US. Of particular interest, they fight about the empirical data--both its quality and meaning.
Worth a read.
Retailers are hoping for a huge Saturday before Christmas. Reports on holiday shopping are mixed. WaPo is rosy, NYT is glum, and W$J is cautious. I was out shopping today, and customers were surprisingly scarce. Maybe people had already completed their shopping online? Online shopping got another boost this year, rising 24% from last year. I am too much of a shopping procrastinator for that. Maybe next year.
After Black Friday we discussed the reselling of "doorbusters" from Best Buy. Earlier today I passed the local Best Buy at about 3 pm, and six or seven young men were sitting in lawn chairs just outside the front door. They were waiting for the "second launch" of Microsoft's Xbox. According to this WaPo article, they could save themselves the trouble by winning an auction on Craigslist or eBay at about double the retail price.
And, of course, the Xbox "shortage" is said to be part of Microsoft's marketing strategy. Tim Hartford, writing at Slate, asks the obvious question: "Why don't companies raise prices when supply is short and demand is frenzied?" His speculations are worth reading.
By the way, temperatures in Madison today were in the single digits, and tonight's low is expected to reach -2 degrees Fahrenheit. With the wind chill, that will feel more like -10 or -15. I hope those camping shoppers are limber enough to pull out their wallets by tomorrow morning.
Online purchases last week were up substantially over last year, but the big test comes today: Cyber Monday. According to the comScore, online sales on Black Friday were up 22% over 2004. (See W$J for more on this.) Why the expected increase on Monday? Because people will have access to high-speed internet connections at work. This is from WaPo:
Industry experts say consumers spend their weekends window shopping, talking to friends, and getting ideas about what they need and want. Then they head back to work, where they have high-speed Internet connections and tempting moments of downtime. Many workers say they put in such long hours at the office, it's the only time they can shop online. At home, there's just too much to do.
ComScore reports that 58% of online purchases are made by people at work, with the heaviest hours in the mid-morning (10:00-11:00 am) and just after lunch (1:00-2:00 pm). Meanwhile, a Shop.org survey found the following:
[M]ore than one third of consumers (37%), or 51.7 million people, said they will use Internet access at work to browse or buy gifts online this holiday season. The survey found that more than half of young adults 18-24 (51%) and nearly half of those 25-34 (49%) will be shopping online during work hours. The survey also found that men (42%) are more likely than women (32%) to shop at the office.
I didn't find any surveys reporting the time spent shopping online, but check out the WaPo article, where two people claim that online shopping consumes only 10 minutes. If they are telling the truth, they should win some sort of award for most efficient online purchasers. Should employers worry about productivity? Here is a "workplace expert" from USA Today:
"There's a blurred line between work and personal life," he says. "Employees take work home and check their BlackBerrys while commuting." While "there will be some productivity lapses in the traditional sense," he says, they likely won't be significant. "When employees fall behind, they tend to make up a lap later."
Or how about this from Miguel Gamiño Jr., president and CEO of Varay Systems, an El Paso technology services company: "Shopping online takes less time than going to a store physically, so in the end it can help productivity."
All of this sounds like collective delusion to me, though I am hardly a role model for productive computer use.
UPDATE: If you subscribe to the W$J, you might find this "Holiday-Sales News Tracker" of interest. This concept: "Updated regularly with the latest holiday-sales figures, how individual retailers are doing and other developments." Nice feature.