The Brand Move Roundup – June 2, 2020
We’re tracking the notable brand moves & highlighting the companies who are tackling this challenge successfully.
We started this series of brand updates on March 12, but the reaction has been so positive, and the crisis so fast-moving, that we’re going to move to a continuously updated rolling news format from now until it’s all over (hopefully soon). Keep checking back here for the latest updates on how brands are dealing with coronavirus.
Detroit watch brand Shinola originally designed The Champ Detrola model to commemorate the now-canceled 2020 Summer Olympics. However, as the brand says, “the athletes of 2020 have given way to a different kind of champion: nurses, mask-makers, essential workers, and so many others. The Champ Detrola is for them.” Shinola has pledged to donate all revenue from this watch to the Community Foundation for Southeast Michigan, a full-service philanthropic organization leading the way to positive change. The Foundation has a significant track record of leadership in important initiatives, from playing a major role during the city’s bankruptcy to now helping Detroit’s health care organizations fight COVID-19.
Within the United States, the world’s largest hotel brand Marriott is seeing occupancy rates rise, surpassing 20% among its open properties. “Crossing over 20% occupancy is a meaningful improvement from where we were before, but it is a long way from where we need to get to,” Marriott International president and CEO Arne Sorenson said. Sorenson said most of Marriott’s occupancy growth was from drive-to markets, which is in line with expectations that domestic local travel will return well before international travel.
Extended stay hotels have been less hard-hit than the rest of the hospitality industry, with some seeing occupancy rates in the 30% to 40% range. “The Residence Inn brand would be performing better than the Courtyard brand, and leisure markets are performing betters than the others,” Sorenson said. “It’s a steady move forward.” Meanwhile, in China, where all of Marriott’s 350 outlets have fully reopened, hotels and inns are crossing 40% occupancy rates as restaurants and businesses also begin to return. “It’s a big enough country where you can’t have those numbers without seeing [leisure] and business travel growing,” said Sorenson. “We are seeing steady improvement.” Like the United States, China is a domestic travel market, and its recovery could foreshadow where the U.S. market is headed.
Providers of ingredients are confronting a major crisis in the $3.4 trillion global food services industry. With demand evaporating almost overnight, suppliers have been forced to bin their produce or transform. Many now face the quandary of whether to hold out for a post-lockdown recovery or to move to a new business model, and perhaps even a new produce. “What you sell into restaurants is different to what you sell into grocers – there are premium cuts, there are expensive lobsters and all of that,” said Nicholas Fereday, a consumer goods senior analyst at Rabobank in New York. “Finding markets for that will be a challenge in the same volume, because it’s going to be a gradual return to restaurants.” Some restaurant owners are already testing ways to start opening their doors again but reduced table counts will make profitability hard in a sector already known for its sliver-thin margins. That will mean simplified menus with just core offerings, according to Will Beckett, the co-founder of steakhouse group Hawksmoor. “Things that miss out will either be high-wastage, low-sales dishes or things that involve complicated movement around the kitchen,” said Beckett, who expects to reduce his menu’s offering of fish and less popular main courses. “It doesn’t matter if we have four steaks or six steaks — there’s still only one person on the grill – but maybe anything that involves a second person standing in the larder section. That’s going to have to change.” Growers of staples like vegetables have had to rapidly alter their businesses too. Natoora, a fresh produce company, noted a drop in the sales of fresh peas. “People are less keen on podding them and restaurants had a massive appreciation for the pea in a pod and used to buy these by the box load,” said spokeswoman Poppy Royds. Sean O’Neill, founder of the Good Earth Growers group in Cornwall, England, saw 95% of his business supplying baby vegetables and salads to restaurants disappear overnight. That’s made him dig up and replant much of his crops with produce better suited to retail customers: out go the micro greens and edible flowers sought after by chefs, and in come larger conventional vegetables such as beetroots and carrots. Despite the upheaval, O’Neill is hopeful that the lockdown will lead to a change in consumer food habits, favoring organic producers like him. “There is a creative opportunity for transformation for all of us,” he said. “It’s going to be interesting what dishes and flavors emerge, what new collaborations, what new ideas come out of it.”
Foot Locker has long been a staple of the mall, with an estimated 80% of its stores being located in malls as of 2018. But with fewer people turning to malls do to their shopping, Foot Locker has been looking to move more of its stores out of enclosed shopping centers. Now, the coronavirus is accelerating those plans, CEO Dick Johnson said. Foot Locker’s strategy for the past two years has been to open more Power Stores, its name for its off-mall stores. These stores are four times the size of a typical Foot Locker store in the mall, and are meant to serve as community events centers in addition to stores. But right now, in-store events are out of the picture, and larger store formats could risk losing the company more money if customers aren’t showing up. So Johnson said that the company would also be looking into more “nomadic retail, or pop-up retail.”
Fashion and clothing companies are having to throw out their traditional playbooks as they get ready to launch new products this summer. Normally, summer is a time to run travel-themed marketing campaigns, and to get people to buy more by convincing them they need a new swimsuit or handbag for their upcoming vacation. Now, those campaigns have to be rethought as many shoppers are expected to stick close to home this summer. Additionally, it’s unclear just how willing customers will be to go to the store, as many shoppers are still concerned about contacting the coronavirus in places like retail shops. According to a May 5 survey of roughly 1,340 adults from financial services firm Bankrate, 43% of respondents said they expect to shop less at brick-and-mortar stores than they did before.
A new paper from King’s Business School has found that communicating safety in holiday-branding campaigns positively influences tourists’ intentions to visit. The researchers say that destinations, hotels and resorts would benefit from including explicit safety messaging in their advertising as lockdown lifts and the tourism industry re-open in many countries. The paper is the first to test safety messages in destination advertising and highlights the fact that whilst it is widely recognized that tourists prefer to visit safe destinations it is rare to see safety messages in promotional materials. Dr Fatima Wang, Lead investigator and Lecturer in Marketing at King’s Business School said:“Safety has become a paramount issue in today’s world and even more so in the aftermath of the Coronavirus. Our research was undertaken outside of the context of a health crisis and still found that safety messaging increased the likelihood of tourists booking a trip. With this in mind, marketers , tourist boards and city governments should consider breaking from the norm of keeping safety messages out of their advertising”. The research reveals that tourists who are risk-averse and also those who are confident in their own decision-making and travel planning were more likely to be influenced by safety messaging.
E-commerce has been embraced for all manner of goods and services – books, travel, groceries, electronics – but auto sales have resisted the trend. While consumers typically use the internet to browse and arm themselves with information, they have gone to dealers for most transactions. With the coronavirus and stay-at-home orders, that is changing. “Dealers are discovering they can sell cars online,” said Alan Haig, president of Haig Partners, an automotive retail consultant. “They are learning how to interact with customers outside the showroom.” In reporting its first-quarter earnings, General Motors said 750 of its dealers had signed up for its “Shop Click Drive” e-commerce system since the outbreak began. More than 85 percent of its dealers in the United States now use it, said G.M.’s chief executive, Mary T. Barra. AutoNation, a chain of more than 325 dealerships, also reported a jump in online-only sales in March and April. The company’s chief executive, Mike Jackson, said he believed online sales would continue increasing even as stay-at-home restrictions were eased. “This is what the industry has needed to do for a long time,” he said. “This is an inflection point, a strategic shift, and it’s not going back.”