By Dana Telsey, Chief Strategist & Co-Founder of The Telsey Consumer Fund, and CEO & Chief Research Officer of Telsey Advisory Group (Member FINRA/SIPC)
“Reinvent” seems to be the word of the week. It is being used in every conversation and meeting we have had lately. As one C-level executive recently commented, “the past is over, whatever business you are in, it is all different and figuring out ways to reinvent how to generate and grow sales, how to do business is not just a nice to do, but is essential.”
Reinvention is typically comprised of multiple strategic initiatives, often requiring investment that results in short-term profit pressure. Moreover, there is some level of execution risk, and the changes typically require new talent/skillsets. And, there is always concern about a loss of focus on the base business. Given that each initiative is new, it is often challenging to quantify success early on and the timing of returns. Yet, it is essential to implement change or risk irrelevancy.
Demographics is a big reason for the need for reinvention. Baby boomers (born between 1946-1964) peaked in number in 1999 at 78.8MM and are expected to decline to 72MM by the end of 2019, while Gen Xers (born between 1965-1980) are estimated to have peaked at the end of 2018 at 65.8MM. Millennials (born between 1981-1996) are expected to reach 73MM at the end of 2019, and peak in 2036 at 76.2MM. Therefore, the whole equation of how Millennials and Gen Z (born after 1996) make purchasing decisions and what they look for in a consumer brand is also shifting. Typically, generations have similar characteristics and behave in a similar manner. But today, personalization has become increasingly important, requiring better tools to enable differentiation at the individual level. Therefore, the scope of reinvention requires much more intense analysis and insight. Individual preferences can be studied and learned in order to maximize the success potential of reinvention.
Here are just a few forms of reinvention:
Hiring Creative Talent to Update the Brand or Concept
– Reed Krakoff appointed chief artistic officer of Tiffany effective February 2017
– Alessandro Michele appointed creative director of Gucci (a div. of Kering) in 2015
– Stuart Vevers appointed executive creative director of Coach (a div. of TPR) in 2013
Offering Experiences that Create Memories
– Quality restaurant at RH
– Classes at Lululemon
– The genius bar at Apple
– Climbing the vessel (honeycomb structure) and finger painting on the wall at Hudson Yards
Connecting Digitally to Bring Customers to the Physical Space
– Digital stylist lounge at Neiman Marcus
– Buy Online Pick Up In Store
– Nordstrom Local – a convenient store for service experiences including onsite alterations and tailoring, buy online and pick up in store, curbside pick up and same-day delivery.
The author is Dana Telsey, Chief Strategist & Co-Founder of The Telsey Consumer Fund, and CEO & Chief Research Officer of Telsey Advisory Group (Member FINRA/SIPC). Dana Telsey is a well know consumer sector industry expert with over 30 years of experience researching companies in the space. She is a regular guest analyst on CNBC and CNN and is often quoted in publications including Women’s Wear Daily. She is a sought-after keynote speaker and panelist at industry events where she is known for her deep expertise and passion for the consumer space. For more information please consult: https://www.telseygroup.com/. Ms. Telsey can be reached at DTelsey@telseygroup.com
Telsey Advisory Group (TAG) is a registered broker dealer offering equity research, trading and investment banking services. This material is not an offer to sell or the solicitation of an offer to buy any security. This publication is being furnished to you for informational purposes only and on the condition that it will not form the basis for any investment decision.