The Brand Move Roundup – October 6, 2020
We’re tracking the notable brand moves & highlighting the companies who are tackling this challenge successfully.
In early March we began reporting daily on how brands were dealing with Covid-19. But it’s become clear that the current climate is one of near-perpetual disruption, so we decided to keep on telling the stories of inspiring brand leadership and strategy amid the latest crises in an anxious world. Our goal is to provide an up-to-the-minute source of information, inspiration and insight on brand moves as they happen.
Ikea will open its first second-hand store selling refurbished furniture in Sweden later this year, part of its effort to become a fully circular business by 2030. The store will open in the world’s first second-hand shopping centre in the town of Eskilstuna, called ReTuna. The Swedish company has previously said it would start renting and recycling furniture worldwide as part of an eco-friendly drive to address concerns its affordable, flat-pack business model leads to overconsumption and waste. “If we are going to reach our sustainability goals we need to challenge ourselves and test our ideas in practice,” Ikea Sweden’s sustainability director Jonas Carlehed said in a statement. The company aims to reduce its overall climate impact by 70 percent on average per product by 2030. The second-hand store, which is a test project that will be re-evaluated regularly, will be supplied with furniture and home furnishings from a nearby Ikea store that have been damaged and repaired. The company has already begun repairing and re-packaging products in every store that have been damaged in transit, as well as allowing customers to return products – including furniture – for resale or donation to charities.
PayPal and Just Capital are launching an initiative to encourage companies to rank employees’ financial security on par with other priorities. They are providing tools that managers can use to measure whether their employees might struggle to make ends meet. After PayPal spun out of eBay, Dan Schulman, PayPal’s C.E.O, conducted an internal pay audit, looking at how much cash workers had after essential living expenses and tax. PayPal already paid at or above market rates, so he assumed he would be able to show off positive results at an all-company meeting. But in fact, almost two-thirds of the company’s call-center and entry-level workers “were struggling to make ends meet at the end of the month,” Mr. Schulman said. It was a sign that “you can’t count on the market because the market isn’t working for a large segment of our population,” he said. They also argue fair pay is good for business – and shareholders. “What we have to do is get away from this mentality that I’ve got to keep my labor costs as low as I possibly can,” said Just Capital’s co-founder Paul Tudor Jones, “because the only purpose of a business is to make a profit à la Milton Friedman.” He and Mr. Schulman argue that higher pay boosts the economy and helps companies recruit, both important factors for long-term success. “So many great C.E.O.s,” Mr. Tudor Jones said, “spend a lot of their time philanthropically when, in actuality, the first place to start is under the own roof of your business.”
Mondelez is reallocating some funds originally allocated for travel, consulting and real estate to boost the snack maker’s marketing, and the company for the first time will spend the majority of its ad dollars on digital channels instead of on TV commercials. The owner of Oreos, Cadbury and Ritz crackers cut its marketing spending at the start of the coronavirus pandemic to bring down costs, but now it’s reversing course, trying to hold on to recent sales gains in North America and stimulate demand in other markets, Chief Financial Officer Luca Zaramella said, adding: “We want to invest more in our communication to consumers.” He declined to detail how much Mondelez will dedicate to online and television advertising, but said it would be “more than ever.” Mondelez booked $1.21 billion in advertising expenses in 2019, up from $1.17 billion in 2018, according to its latest annual report. The company in 2018 told investors it would increase spending on marketing through 2022. Sales in North America rose 17.3% in the second quarter from a year earlier to $2.02 billion. Revenue in developed markets overall grew in the second quarter from a year earlier, by 5.4%. By contrast, sales in emerging markets over the same period fell by 15.6%, Mondelez said in its latest earnings report. Mondelez generates the majority of its sales outside of the U.S.
Instagram has just announced the global expansion of its Instagram Shopping service across IGTV. The product, which lets you watch a video then check out with a few taps, offers creators and influencers a way to more directly monetize their user base on Instagram, while also giving brands a way to sell merchandise to their followers. Instagram said it would also soon begin testing shopping within its newer feature and TikTok rival, Reels. Instagram’s Explore section in 2018 gained a personalized Shopping channel filled with the things Instagram believed you’d want the most. It also expanded Shopping tags to Stories. Last year, it launched Checkout, a way to transact within the app when you saw something you wanted to buy. And just this summer, Instagram redesigned its dedicated Shop section, now powered by Facebook Pay. Now, Instagram users can view products and make purchases across IGTV, Instagram Live and Stories. On IGTV, users can either complete the purchase via the in-app checkout or they can visit the seller’s website to buy. However, the expectation is that many shoppers will choose to pay for their items without leaving the app, for convenience’s sake. This allows Instagram to collect selling fees on those purchases. At scale, this can produce a new revenue stream for the company — particularly now as consumers shop online more than ever, due to the coronavirus pandemic’s acceleration of e-commerce. In the future, Instagram says its shoppable IGTV videos will be made discoverable on Instagram Shop, as well.
Venmo, the mobile payment network owned by PayPal, has unveiled a digital-focused credit card, entering the fray of financial services providers looking to leverage smartphones. The Visa credit card, issued by Synchrony Financial, will be managed through Venmo’s smartphone app, but accompanied by a physical card printed with a QR code. The primary methods of making purchases will be via a credit-card number for online shopping or the physical card in stores. One of the card’s key differentiators is its rewards structure, which gives users 3% cash back for their top spending category each billing cycle, 2% for the next highest and 1% for all other purchases, said Venmo Senior Vice President Darrell Esch and Dennis Bauer, who leads the Venmo and PayPal partnership at Synchrony. The eight categories include bills and utilities, travel, groceries and dining and nightlife. The rewards are the same whether purchases are made online or with the physical card. PayPal also has been rolling out QR code scanning for credit-card purchases at some retailers, including CVS Health drugstores, as another payment method. The physical Venmo card’s QR code, however, will be reserved for card activation and for other Venmo users to send card customers a payment.