Tuesday, December 29, 2009

Howard’s Inner Circle No. 4: A Proliferation of Pop-Up and Virtual Brick-and-Mortar Stores

Here today and gone tomorrow. A strange philosophy for a store, but that is the case. A number of retail chains and those introducing new products are doing it in a big way to generate increased sales and media coverage

This holiday season Toys ‘R’ Us opened “pop-up stores ” in eighty shopping malls and added temporary toy departments in its Babies ‘R’ Us stores. Target has been doing it for a number of years. It opens up holiday pop-ups for fifty days offering some of its best-selling holiday products. As the Washington Post reports, “Products are displayed in windows, and shoppers mark their selections on the clipboard menu before bringing the order to a register to check out -- much like at a cafeteria. All stock is pre-wrapped and picked up next to the registers.

“The merchandise includes a Keurig mini coffee brewer for $89.99, a Liv Girls doll for $19.99 and a Sigg water bottle for $21.99.”

These pop—ups are usually opened up in high traffic areas such as Times Square in New York City. However, last year Reebok launched a pop-up shop at an art gallery. My favorite one is a Subway sandwich shop physically attached to the Freedom Tower as it is being built in its World Trade Center location in New York City. According to the New York Post, the sandwich shop is “fitted into a shipping container-like structure fixed to one of the tower cranes, alongside a bathroom and construction offices for the project managers.

“The concession stand will rise with the tower, eventually stopping near the 105th floor -- at roughly the height of the old Twin Towers.”

I expect this pop-up store trend to continue and expand going beyond national chains and those with new products. With so much retail space available, commercial retail landlords will find this option attractive. There also will be cottage industries including suppliers selling or renting display units that can be easily set up and taken down in minutes. Because of the high unemployment, there will be a ready workforce. Also expect the entry of franchisors offering turnkey pop-up store operations.

So don’t be surprised if you see a calendar store from October to December and stores geared to particular holidays only open for a month or two. It won’t be just for Christmas as you will have Halloween stores and stores for holidays only celebrated by certain cultures. Add to this mix, bicycle rental stores in the summer, and state tourism agencies opening up stores in adjoining states for a month to encourage tourism.

These pop-ups are often mobile in the form of vans and other vehicles moved from place to place preceded by advance publicity. Some pop-ups are basically showcases for a retailor’s Web site with limited products to sample and assisted kiosks allowing easy ordering and shipment to the store for pick-up if desired.

Brick-and-mortar retailing is undergoing a remarkable and rapid transformation as online retailing takes hold. This pop-up trend is just one of the ways it can survive and benefit the national chains and the individual entrepreneurs, formerly known as “the mom and pop store owners” with which many of us grew up and loved.

© 2009

For additional reading on the subject, check out:
The above is from the fourth issue of my newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

Monday, December 21, 2009

Howard’s Inner Circle, No. 3: Two “Bicycle Condom” Business Models

Being unemployed and looking for revenue opportunities, I find potential ones in the weirdest places like standing in the rain waiting to meet someone in Hoboken, Jersey. It was by the PATH station, a commuter subway that goes to New York City. It was 5 P.M. and I was by a bike rack with fifty bikes locked up. Forty-nine bike seats were soaking wet, and one seat was bone dry as it had a plastic bag wrapped around it.

I pointed that fact out to an individual standing by me, whose name I later found out was Mike, and asked him why did he think only one biker protected his or her seat. His answer was, “It wasn’t raining this morning.” I asked a rider who was unlocking his bike and he gave me the same answer. By the way, the prediction was for rain in the afternoon.

I conferred further with Mike and asked him what he thought about the viability of selling plastic rain protectors for seats that could be stored under bicycle seats. They could be different colors and have logos from different teams, fashion houses, or retailers. Told Mike, I didn’t have a name for the product, and he suggested, ‘Bike Condom.”

Saw a brilliant partnership being formed with a 60/40 split of the profits. Just would have to draft a partnership agreement, write a business plan, check out the competition, hire a lawyer, find investors and financing, work out a deal with a manufacturer and a distributor, create a marketing and advertising campaign, develop packaging, and market test the product.

A quick Internet search found that the term “bike condom” was already taken as at http://www.treehugger.com/files/2009/01/bike-condoms-new-for-bike-sharing.php, there is the following statement: “In bike-sharing mecca Barcelona, there's a new way to make waste - put a pair of bike condoms onto the handles of the shared bike you are just about to take for a spin.” And at http://www.instructables.com/id/Bicycle_Seat_Condom, a rider tells us of a method to protect a seat from the rain, “During the Fall semester I started riding my bike to school and learned I hated riding in the rain after a seven hour class. I dreaded the idea of riding in the rain with a wet bike seat causing me to stand while pedaling. Luckily, being surrounded by Low density polyethylene (LDPE) cutoffs in the studio I began experimenting with vacuum forming this material to create a reusable bicycle seat cover that is durable, flexible, and waterproof.” My favorite bike seat cover was selling for $15 and made of durable urethane-coated ripstop nylon at http://www.rei.com/product/623806.

Looks like too much work and risk for Mike and me if we develop our own commercial “Bike Condom,” so let me offer an alternative business model in which we can immediately go to market today at no cost. We simply advise bike riders to stuff a plastic bag under the seat on their bicycle. So if there is a prediction or possibility of rain, they can wrap the plastic bag around the seat. If the rider must make a statement, he or she can use a plastic bag with a logo they like. And for those who decide to do so there is a charge, simply consider making a donation in any amount that you decide to charity or an individual that needs it more than you. With this second business model, Mike and I will still follow the same 60/40 split, but rather than sharing the profits, we hope to profit in a different way.
The above is from the third issue of my newsletter, Howard’s Inner Circle, which periodically appears on my blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

Monday, December 14, 2009

Howard’s Inner Circle, No. 2: Businesses Turning to the Independent Distributor Model

The greatest overhead expenses are often those associated with employees. This is why many companies are reducing severance benefits or eliminating matching contributions to 401(k) plans. Some are being more creative and instead minimizing the size of their workforces by utilizing so-called “independent distributors.”

I have recently seen this with an energy provider to businesses and personal residences as well as a company that sells video telephones. The attraction is savings on guaranteed salaries, payroll taxes, employees’ benefits, and many of the costs associated with supporting inside salespersons. These companies might provide some help on setting up a Web site by providing templates, but the ones I came in contact with didn’t even provide a uniform style for business cards for these independent distributors.

Businesses are doing a great job by promoting this new status, and rather than using the old term “commissions” speak of “residual income” and play up the fact that it is a new industry or a new product subject to exponential growth. In this tough economic environment, any source of potential income draws interest. Because younger individuals might not see the importance or availability of medical insurance and retirement plans benefits and have difficulty finding jobs, independent distributor opportunities have great appeal.

Companies like the fact that underperforming independent distributors won’t hurt their company’s bottom line as much as full-time underperforming employees and are likely to give up after awhile.

There are a number of downsides to relying on independent distributors including the expected government scrutiny asking if these individuals aren’t really employees and should be treated as such for payroll taxes purposes. “Look for an Obama administration to aggressively challenge independent contractor status.” is the prediction (at http://www.webcpa.com/prc_issues/2008_10/29348-1.html?pg=2) from Dean Zerbe, former senior counsel and tax counsel for the Senate Finance Committee and now national managing director for alliantgroup. Another potential disadvantage is the fact that an independent distributor might be working for more than one company at a time and place his or her maximum efforts and loyalty with the product or service that is generating the greatest revenue at the time.

This will be an interesting trend to watch and advisors to businesses especially lawyers and accountants are sure to benefit as they counsel the many businesses who might consider utilizing independent distributors, as well as defend those when federal and state agencies question this status.

The above is from the second issue of my newsletter, Howard’s Inner Circle, which periodically appears on my blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

Tuesday, December 8, 2009

Howard’s Inner Circle, No. 1: Polyglot Your Business Instantaneously

I bet most don’t know that everyone working in the pharmacy departments of the many CVS drugstores in New York City can understand Arabic, Armenian, Cantonese, French, German, Hindi, Hmong, Italian, Japanese, Khmer (Cambodian), Korean, Laotian, Mandarin, Polish, Portuguese, Russian, Spanish, Tagalog, Thai, and Vietnamese.

Unfortunately because of not sufficiently publicizing this fact, my guess is that most current and potential CVS customers aren’t aware of this. The primary way they would know is by seeing an 8-1/2” X 11” laminated paper posted on the cubicles where prescription consultations are conducted.

That paper reads at the top “Interpretation Service Available.” Below that title are 20 boxes for each of the above languages each with a hand with a pointed finger directed at 20 different foreign languages translations of “Point to your language. An interpreter will be called.” The Web site for the company, LanguageLine Services, which CVS utilizes is www.languageline.com. At this site you can see the many more languages available for translation and that an interpretation can be purchased on an as-needed basis. There are many other companies (e.g.,TransPerfect, www.transperfect.com/) out there that offer similar services.

Think of the marketing and business development advantages in offering this type of interpretation service. I have already spoken to someone at Staples and a number of managing partners of New York City accounting firms of the obvious advantages. Can you imagine if contractors and do-it-yourselfers knew at their Home Depot or Lowe’s they could converse via a third party with the expert staff at these stores in their own languages? Not-for-profits can benefit too. Although many hospitals have interpreters on staff, there usually are a limited number of languages available. Think of how many more citizens could utilize government services if they could converse in their language with government officials.

Most importantly, offering and publicizing this type of service promotes community among the various cultures that are part and parcel and make up our nation. With globalization’s continuing increasing impact, it is an imperative to be able to communicate in as many languages as possible. The belief that one language should be supreme to the exclusion of others really makes little economic sense. Hopefully, the expanded availability of reasonably-priced translation services will mean more companies, not-for-profits, and governments will understand and recognize it pays for these entities and their employees to become instant polyglots.
© 2009

The above is from the first issue of my newsletter, Howard’s Inner Circle, which periodically appears on my blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.