Wednesday, June 6, 2018

More Problems for Retail

The retail sector is vital to the health of the U.S. economy, and we felt the myriad of problems plaguing the sector would generate more attention in 2018, and unfortunately, we've been see more of those problems in the media.

One of the key issues not getting attention in prior years, we felt, was the impact that store closing would have on the real estate sector. Back in April, Bloomberg Business validated our prediction with an article titled, "The Retail Real Estate Glut Is Getting Worse:  Stores have announced the closing of 77 million square feet of shopping space so far this year."

The article included a chart of the combined square footage lost from store closings going back to 2008, and the trend is bad. In just four months (when the article was published), 2018 has eclipsed full-year results for every year except 2017 and 2008. Keep in mind: 2008 saw a financial collapse of Lehman Brothers and other big finance -- so a significant year. 

And yet. the difference between a full year in 2008 and four months in 2018 us less than 11 million square feet. We're certainly on track to surpass 2008's total and could eclipse 2017, which is only 28 million higher than April's losses.

The idea that all stores are going to go away, due to Amazonification, is not likely to happen in the near term. After all, even Amazon, Warby Parker and others have been opening brick-and-mortar store locations. 

That said, the premise that the underlying value of real estate holdings may be more valuable than the retail chain itself may no longer be true -- or no longer true to the same extent, in an era of so-called zombie malls.

The reason: lease values, which are dropping to keep current clients or to entice new ones, are having a downward pressure on the valuation of retail's real estate portfolios. That serves as a disincentive for investors to put less pressure on retail stores to shut shutter more stores.

Another problem, according to the Wall St. Journal: "Retail’s Other Problem: Too Few Clerks in the StoreMacy’s, J.C. Penney and others have cut jobs even more than they have closed stores" Even while operating the same number of stores, Macy's has, according to the Journal, "shed 52,000 workers since 2008.

What that means is if you thought service at retail locations has dropped over the past 10 years, you're actually right! While some of that may reflect new ways consumers shop as well as new store concepts, which are typically smaller or operate with more layers of tech, lower headcount will make it difficult for customers to find a level of service they expect.

“If brick-and-mortar retailers can’t compete on price in an online environment, the only thing that allows them to survive is to provide a positive in-store experience,” said Stuart Appelbaum, president of a retail union.

And that may cause more people to abandon other bricks-and-mortar locations, furthering the downward spiral of one of the largest U.S. industries. 

We certainly hope that this doesn't come to pass.  Let us know what you think.

Wednesday, May 30, 2018

More Validation of Our Prediction of a TechLash

Back in 2017, we predicted that there would be much closer scrutiny of big tech companies in 2018, and we continue to see that every month. Zuckerberg continues to testify every few weeks, whether here in the U.S. or in the E.U.

Here's a Wall St. Journal article,  "In ‘Founder Friendly’ Era, Star Tech Entrepreneurs Grab Power, Huge Pay: Silicon Valley financiers are losing leverage to star entrepreneurs."

While this article doesn't address Congressional oversight, it does put startups under a different spotlight, one that might not have occurred two years ago.

The question for us, as always, is how does this affect how the media covers big tech. Again, we think the media will continue to keep a closer eye on big tech than it used to just two or three years ago.

Tuesday, April 3, 2018

Practical Jokes on April Fools Have Impractical Results: 5 Tips on When Not to Use Humor to Humanize Your Brand

We're not big fans of April Fools jokes. Especially now when credibility and corporate culture are currently battle ground issues for news, media and marketing.

We get that April Fools pranks can be seen as a way to humanize a person or company not otherwise associated with a sense of humor. But that can be a strong reason not to engage in a prank.

Three years ago, we wrote a blog about an April Fools prank on Good Morning America that we thought undermined the credibility of ABC News and of George Stephanopoulos

This year's candidate for worst practical joke: Elon Musk. 





This was followed by two other related tweets.

None of them funny given last week's news about a significant recall of 123,000 Model S cars that generated headlines like:

The recall is necessary to fix a power steering bolt, which seems like a fairly important issue to address. And also follows, as the Wall St. Journal noted, "as the electric-vehicle maker grapples with the aftermath of a fatal car crash." The Journal also pointed out that Tesla has about $10 billion in debt.

So the question we'd ask is, "Is this the right time for a CEO of a publicly held company to post a fake Tweet that Tesla is filing for bankruptcy protection?
Our answer is pretty simple: No. This is not a good time. Even, or perhaps, especially, on April Fools -- if only because it sends a message that the bad news doesn't matter.

There is never a good time, really, for a CEO to post as a joke that the company is declaring bankruptcy, followed by a photo of that CEO allegedly drunk.

The result: a 5 percent drop of its share price on Monday, the first day of trading since the faux-bankruptcy Tweets (one of which mentioned a last-ditch Easter egg sale to bring in cash to stave of bankruptcy). Worse, it continues a streak from Sept. 2017 that has seen Tesla lose 36 percent of its share price.

The lessons here include:
  1. Respect your corporate brand.
  2. Humor can humanize a brand but make sure it's the right kind of humor.
  3. It may be a good idea to humanize your brand but make sure the humor works with your brand and your corporate culture.
  4. Don't joke around when you've had bad news because that makes it seem like you're not taking the bad news seriously.
  5. If you've had to issue a substantial recall and $10 billion in debt, don't joke about bankruptcy -- especially if you're the CEO of a publicly held company.
We assume Tesla's PR had nothing to do with the Tweet prank prior to Musk publishing it. But they have a lot to clean up now. That's an unforced error the company didn't need.


Monday, March 26, 2018

Conservatives Validate Our Prediction about a Big Tech Backlash, According to the New York Times

We know, a lot of our blog articles this year have been touting that our predictions have come true. While we are planning a number of articles that go beyond acknowledging our predictions have been validated, we do think it provides context when we see how the trends actually hit.

At the end of 2017, we said: 
There will be a debate about whether or not and how to regulate Facebook, Google and Twitter. The concern is about the power of their algorithms to determine what we see, especially regarding political ads and the veracity of the news delivered to each of us. The three major platforms have not disclosed specifics but have committed to working to increase transparency and prevent completely false and irresponsible content from being perceived as real news. The underlying questions are: "Has big tech gotten too powerful?" and "Can the major players truly clamp down on the false narratives spread on their platform?" and "How can Congress find a way to regulate them to prevent it from happening in the future?" Expect Congress to continue to hold hearings on the subject – just don’t expect any agreement on the answers before 2018’s midterm elections. (Net neutrality, another issue that also involves big tech, will be an additional source of debate and contention.)
We've already seen a lot of media coverage and Congressional hearings about the unchecked power of algorithms, and the havoc they can wreak. (I feel like I'm writing about a supervillain in a Marvel movie.)

We've seen a big tech backlash from the usual sources but now we're seeing it from otherwise free-market conservatives. Check out this New York Times article: "New Foils for the Right: Google and Facebook" (print headline: "Conservatives Find New Foil in Culture Wars: Silicon Valley" -- still not sure why The Times and other outlets don't let you search using the print headline but that's a topic for another blog post).

The article uses a soon-to-released documentary, "The Creepy Line" that looks at possible censorship of right-wing views as part of the ongoing culture wars.

Right now, with the left saying Google, Facebook and Twitter aren't doing to enough to prevent cyberbullying and misinformation and now the right saying those big tech companies are being too aggressive in sidelining views from the right -- big tech is between a rock and a hard place. 

It's hard to fend off attacks from both sides. Do too much, and one side complains. Back off a bit, and the other side now complains.

From our perspective, the real problem is there's never going to be a solution that fully satisfies critics on both sides. It will be a challenge for big tech to head things off with internal tweaks to their algorithms if only because the outside world (us) won't really see the impact of those tweaks. And Congress has shown itself unable to figure out a solution it can impose.

So.

We expect this to be a big issue that doesn't really go away. It certainly won't go away during the build-up to the 2018 midterm elections. And it won't go away Nov. 7, 2018, the day after the midterm elections when cable reporters start talking about the 2020 elections.

Wednesday, March 21, 2018

3 Top Tech Trends for 2018

For CommPro.biz, a dynamic B2B publisher serving communications professionals, I wrote three articles this year on trends. The first focused on Boston-based trends. The second on media trends. The third, below, discusses media trends.

The article is available below and on the CommPro.biz site, was published Feb. 21, 2018.


Although technology was once limited to geeks, today we all use technology without necessarily appreciating that the coolest tech we use may not be in our smartphones. As we have for nearly two decades, here is a list of top three tech trends that we expect to have an impact in 2018. In our experience, it can be useful to understand tech trends that will get covered by the media so that our clients can anticipate and develop story angles to leverage the media’s interest.
  1. Artificial Intelligence and robotics will continue to be “hot.” I. and robotics are “hot” technologies, increasingly connected. We expect to continue to see scare stories about a “robocalypse” in which A.I.-enabled robots replace human workers but we also expect articles that debunk the scare stories.
  2. Millennials’ impact will change how companies market products and services. In 2018, marketers will increasingly realize they need to change how they reach the 4.8 million 26-year-olds, and the millions of others currently 25, 27 and 24 as they encounter life-defining moments they call “adulting.” Millennials’ preferences and needs have already spawned new apps and services to deal with these responsibilities and choices. We also expect a trend that began in 2017 to continue: companies will continue to develop educational content, that as described by the Wall St. Journal, teaches “such basic skills as to mow the lawn, use a tape measure, mop a floor, hammer a nail and pick a paint color.” We also expect millennial preferences to become the default choice; for example, doorbells may become vestigial as millennials text, not ring, when they arrive at a friend’s house.
  3. Smart-Home automation gains acceptance but still is a niche offering. Smart homes are preferred in some markets but not everyone wants them. That said, smart home tech and appliances are getting easier to find, install and deploy. One driver is intelligent personal assistants like Amazon Alexa and Google Home but another is counter-intuitive: with a growing population of seniors aging in their homes, their adult children may insist on installing tech that can help them check in on their parents, adjust heating and air conditioning (already possible with Nest and other devices), turn on lights and get help via apps that their parents may not have figured out. Internet of Things (IoT) will likely fade because “smart home” is a more user-friendly term that’s easier to market.


Friday, March 16, 2018

More Bad News About Retailpocalypse: Death of Toys R Us

While other market indicators are strong -- such as the U.S. added 313,000 jobs in February -- that's not the case for retail, where there's bad news in several directions.

This week, Toys "R" Us announced that it will close all of more than 700 stores in the U.S. Here's the link to the Wall St. Journal article. The store closings will affect 33,000 employees.

But the implications go beyond those lost jobs. (And, by the way, even as the country adds jobs, it doesn't mean that the soon-to-be-unemployed will be able to land a new job quickly or without disruption.)

For example, 700 malls will now have big-box retail space they will need to rent out. Worse, unrented stores can lead to others deciding to close or move their stores. Today, Signet Jewelers, which owns Kay Jewelers, Zales, and Jared, announced it will close more than 200 stores. Instead, they will open new ones away from shopping malls.

The closings of Toys R Us and Signet stores puts more pressure on mall operators to find new tenant that mix well with the current set of tenants (i.e., not compete). Getting the right mix of stores to bring in traffic to the mall is more an art than a science. So mall operators need to find the right types of retailers that can use the kind of space being vacated by Toys R Us and Signet. And some of the remaining stores may decide to leave that particular mall. 

Meanwhile, the closing of the Toys R Us chain will also affect toy makers. Check out this Wall St. Journal article: "Toy Makers Stare at $11 Billion Hole With Death of Toys ‘R’ Us." So there's a negative impact that goes beyond the loss of retail jobs but could also lead to job losses at toy makers.

Unfortunately, we expect more news about the retailpocalypse this year. What we're still not seeing is a lot about the impact beyond job loss and impact on creditors. The media may start paying attention as the bad news in retail sector adds up. 

Wednesday, March 14, 2018

Our Prediction about Corporate Boycotts -- by Other Companies -- Has Been Validated

One of our of more important predictions for ongoing trends in 2018 is was no. 11
Corporate boycotts & consumer boycotts will continue. These are boycotts by companies in order to demonstrate distance from controversial programs and personalities. We also expect boycotts of companies that are boycotting those controversial people and programs.
We've seen that to continue to be true in 2018, even more so than in 2017 when we first made that prediction.

In the wake of the tragic Parkland shooting, a number of big brand names have broken ties with the NRA. We've also seen a minor backlash to corporate boycotts -- like the reaction in Georgia to canceling a tax credit to Delta, whose HQ is in Georgia. Although Delta says the cancelation of a discount for NRA members was coincidental, Delta is not backing down.

The reason -- and the reason this is significant, as I told two college students who were interviewing me as part of a class project -- is that corporate values are more important than ever, thanks to social media. We expect more from the companies we purchase goods and services from.

That means brands need to look at making statements on controversial political matters -- something they would never have done a decade ago. More than that, they need to find the right tone and expression for that statement. It needs to fit the brand.

While the media worlds, including journalism and public relations -- endure significant upheaval (which includes, notably, a news cycle that churns so fast that stories like a porn star's suit against a U.S. president isn't even the top story), one thing is clear. And it's good news for PR practitioners.

PR has changed a lot over the past decade or so, but brands still need people who can tell stories that help shape brands. The best people positioned to do this are PR people who can tell a story via traditional media and social media (it has to be across both channels).