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Starbucks Decides Pickup-Only Stores Clash With Its Brand; Oreo and Reese’s Mash Up Their Treats; Malls With a Roof Get a Taste of the Comeback
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Good morning. Today, Brian Niccol declares mobile-order, to-go locations too “transactional” for Starbucks; food marketers form a team of rivals to chase Gen Z; and enclosed malls mount a comeback—too late for my teenage haunt.
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Starbucks CFO Cathy Smith said Tuesday that the company is investing more than $500 million to aid staffing in its U.S. company-operated stores in the next year. Photo: Godofredo A. Vásquez/AP
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Starbucks is moving away from operating stores that take only mobile orders for pickup because they don’t have the right vibes, part of a broader portfolio revamp, Owen Tucker-Smith and Heather Haddon write.
The company runs some 80 to 90 locations that don’t offer seating and are designed to get customers out quickly.
“We found this format to be overly transactional and lacking the warmth and human connection that defines our brand,” CEO Brian Niccol told investors on a Tuesday earnings call.
The chain has started work on a prototype “coffeehouse of the future” with 32 seats and a drive-through that it expects to open in its next fiscal year.
Work in progress: Niccol since last year has pushed Starbucks to offer more welcoming environments and invest in stores and worker training.
But the company said yesterday that same-store sales fell for the sixth consecutive quarter as a decline in orders offset higher average tickets.
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Big food companies are under pressure to boost sales as consumers recoil from higher grocery prices and calls grow for healthier food options. Illustration: Hershey/Mondelez
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Rival snack giants Hershey and Mondelez are combining two of their top-selling products, the Reese’s peanut butter cup and the Oreo cookie, as big food companies strive to boost sales, Jesse Newman reports.
Consumers have since been requesting Reese’s and Oreo mashups in social media and Reddit threads since a similar cookie product was tested in 2014, according to Hershey. The new products have been more than two years in the making, it said.
The products mark a departure from Hershey’s message a decade ago, when an ad campaign called Reese’s peanut butter cups too perfect to mess with.
The Reese’s Oreo Cup fits Gen Z's interest in brand collaborations, multiple textures and more complex flavors, according to Stacy Taffet, Hershey’s chief growth officer.
More food marketing: Kraft Heinz struck a multi-year sponsorship deal with Live Nation to become the official condiment and mac-and-cheese provider at 80 concert venues, part of a strategy to reach consumers as they eat outside the home. [TicketNews]
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73.6%
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Share of TV viewing that was ad-supported in the second quarter, up 1.2 points, according to Nielsen’s Ad Supported Gauge. Predictions that (initially) ad-free streaming services like Netflix would make it hard to reach consumers with TV commercials have fallen flat.
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A deal for four malls including Southgate Mall in Missoula, Mont., suggests that demand is picking up for even enclosed properties. Photo: Washington Prime Group
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Mall owner CBL Properties is buying four middle-market malls, the latest sign that the mall sector’s recovery is extending beyond luxury and high-end properties, Kate King reports.
The $178.9 million deal marks a rare portfolio transaction for the enclosed-mall industry, which has seen plummeting values and sluggish sales in recent years despite the broader retail sector’s resurgence. And America’s mall landscape is still contracting.
A dearth of new retail construction since the 2008 financial crisis, however, means that even some malls without Louis Vuitton or Apple stores are now seeing renewed interest from expanding retailers.
“The mall had become a four-letter word and everyone was running away from it,” said CBL Chief Executive Stephen Lebovitz. “We decided, that’s our product. Let’s embrace it.”
Too late for my mall: The hints of revival unfortunately come far too late to save my teenage haunt, Burlington Square Mall, which in 2017 was replaced by an ugly empty lot that over the years became widely known as “the Pit.” The first phase of a redevelopment will finally open next month.
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Hermes was considered one of the luxury companies with the most room to maneuver because of its more-affluent shoppers, who continue to splurge on luxuries. Photo: Manon Cruz/Reuters
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Sales at Birkin Bag maker Hermes accelerated in the second quarter despite the wider luxury slowdown. [WSJ]
A promised September show by a new creative director can’t come soon enough for Gucci after sales plunged 25% in the latest quarter. [Vogue Business]
TikTok is adding a community-notes feature called Footnotes to fight misinformation on its app. [NYT]
Australia said it will include YouTube in its upcoming social-media ban for young teenagers, reversing earlier indications that it would exempt the platform because of its educational content. [WSJ]
Shopping app LTK is introducing new features to make it more like social media. [Modern Retail]
How brands can prepare for AI’s e-commerce takeover. [Ad Age]
Advertiser commitments for women’s sports rose by a double-digit percentage in Disney’s just-concluded upfront talks, the company said. [Adweek]
Universal Studios added “Five Nights at Freddy’s” and WWE-themed haunted houses to its theme parks’ annual Halloween Horror Nights, which start Aug. 29 in Orlando. [Deadline]
A planned video and sound generation tool from Elon Musk’s Grok AI chatbot will include a “spicy” mode. [NBC News]
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