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23/06/09 - An Eye to the Future

 

On a recent short trip to the US I read in the newspapers that minus 30% was the new up in business these days and it is amazing how many of the companies I have spoken to since have used exactly that 30% figure as the statement of where they stand short of 2008.  What this means is that nearly all have stopped recruiting, some have had to make people redundant, some are on short time and those short of cash are in trouble.  Those with strong balance sheets will also have taken action to conserve cash but have also got an eye to what the future will be like. 

A simple glance at the auto industry and what is happening in the USA makes it clear that the future is not going to be like the past, not just going to be a getting up, dusting down and going on as before.  At the moment we are seeing stabilisation in the industry although some ownerships are yet to be settled and some closures yet to be announced. Also we are seeing that the Chinese market is still growing but with smaller cars, and the Chinese have started to get better at making them.  The Tata Nano looks like being a great success and marketing papers are already being writing about it from an innovation and marketing standpoint.  Fuel costs have been rising again with big implications for some of the bigger luxury saloons.  If three quarters of BMWs have leather but 99% of the Series 7 consider the implication of reduced sales of Series and growth in the highly economic Series 1 and 3. And who will win the battle now for the future growth in the Chinese, Asian, Indian, and African markets?  All change.

Similarly with luxury goods. The weak will go and the leveraged have been busy refinancing - and quite a few big naems are heavily leveraged. Coach looked at the US and slowed if not stopped its expansion there, but decided to keep on going in China. They were correct.  India also looks good for growth in luxury goods.  The more I talk to Asian colleagues the more I see that they understand the rules of quality and marketing, so don't assume that growth in Asia will all be for American and European brands.  They will have their place certainly but expect western brand names under new ownership or with new configurations to do just as well.  Helped by the fact that India still refuses 100% foreign ownership in some sectors which continues to keep the likes of IKEA away.

But now is a time for cobblers to stick to their lasts. Extending a brand into handbags by wandering off to the Far East and getting a few styles made with your logo on just won't wash anymore. A walk down Oxford Street will show you that.  It's not 30%, not even 50% off - it is like a bazaar in Istanbul. Indeed that's where I would send some of the goods for the daily planeloads of tourists from Vladivostok to buy and take home. Right now the only busy handbag stores in Oxford Street are Louis Vuitton.  And Mulberry is OK with its good products and low cost structure.

So while times are difficult they are not proving impossible, and for those with vision can be a time to lay down foundations for an exciting future.

 

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13/05/09 - Of Boots and Buses

 

Of Boots and Buses

The Lake District is a special place. It has been so for many centuries with its mountains, lakes and dreadful weather dominating all that man can to do it. More recently that "specialness" has taken a slightly new turn as the boomer generation has moved into retirement. For this group the Lakes constitute a favoured destination, and never more than in these "stacation" days (holidaying in the UK).

Another holiday term being thrown about these days is "nostalgia nano" which is not meant to refer to the new nano iPod preloaded with early 20^th century music but rather to short breaks taken for nostalgic reasons. It is not just the childhood memories and life without TV and mobile phones but old fashioned shops and most of all buses. Just observe how the 60s, bus passes in hand, are leaving the cars in the hotels and guest houses and using the truly excellent bus service to get to and from their planned walks in the hills. Here in Borrowdale where we are staying in Rosthwaite at the little Royal Oak Hotel there are piles of leaflets giving timetables and walking suggestions for all the routes.  And the buses are all busy.

What is more what comes with buses and walkers is a very high proportion of all leather hiking boots. I suppose a mix of the aforesaid nostalgia and an older, more traditional group of walkers makes this inevitable. But a chat with the salesman in the Cotswold store in Keswick indicated that for durability and effectiveness in the hills the leather boot is still preferred against fabric which may shave a few grams off the weight but gives little other back in benefit. The arrival of fabric combined with various membranes does give a light weight waterproof which is fine for a number of conditions and does seem to be the predominant type you see when walking in the US or tramping in New Zealand.

But there is no doubt that if you want durability and protection, if you are a true value for money consumer, then leather is the correct way to go. But tanners still do need to work on weight and softness as boots in leather must offer comfort straight out of the box for modern consumers, old and young, who expect instant gratification and are nervous when told they need to "break in" their new footwear.  There is no need for a walking boot leather to be heavy; we have enough technology to make light weight strong leather for such purposes, and indeed it is about time the industry refocused on technical leathers once again in a proper way.

Accepting these points a new pair of leather boots is certainly one of those items that fit in our frugal world. They are an investment rather than expenditure, something that will remind you of a good decision every time you put them on.  In the Lakes the purchase experience is also a good one as all the shop staff are well trained. Take the George Fisher store with its interesting little Abraham's Tea-room. Their boot fitting service is excellent and as with most stores out comes the Brannock Device for shoe fitting from the start.  Since 1927 this has been the preferred device for shoe fitting and the only change we are seeing is the additional use of footbeds for checking from time to time. It is interesting to watch the comfort the Brannock gives to the customer.

PS By the way for those of you who are fascinated to know if the CEO of Zappos really reads all those Tweets from more than 400,000 who he follows here is his answer: "I read all the tweets but there is another account, @zappos_service, that responds to some of them"  Zappos.com CEO -Tony / zappos  I take this to mean that he has a few staff to help him.

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30/04/09 - Tony is getting Zapped 411,146 times a day

Tony Hsieh the CEO of the rapidly growing and really interesting Internet store Zappos.com is busy on Twitter as is most of his staff. He uses it as a marketing tool and engages his audience with many entertaining Tweets. It's an internal tool for him too and used as such for internal communications with great skill. Not surprising then that he is followed by well over 500,000 people. On the other hand he is following 411,146 at the last count.  My question is - who is reading these Tweets he is receiving? If every one of them Tweets twice a week it is impossible but many of these people are Tweeting many times a day. It makes the days when we were getting worried about e-mail overload, with 50-100 messages a day, look like a relaxation in the park. 

In my modest way I follow about 150 people and already I reckon it is an impossible task. I am aided as the last few weeks I have been recuperating from an operation on my back so have had time to lie in my bed with an iTouch.  But what happens when you go off on a trip. Land after a five hour flight to find near 1000 messages - impossible.

And the messages have changed too.  Initially it was getting your message in 140 words but now most messages are links to web pages, podcasts or YouTube.  Interesting enough, but even more time consuming.  And some celebrities are hiring staff to do it, making it even more irksome. So it is not surprising that we are being told that 60% of those who sign up drop off after a month.  Yet that does not mean you can ignore it since like My Space even if it declines a bit it will remain a huge and target audience for marketers. And Twitter is not yet mature. It has a lot of evolution still to come. And even more it seems like Nielsen were less than thorough in their process as they ignored many of the feeder applications, like the superb TweetDeck, which I have just started using after advice from a LinkedIn Group.

If you are a user or are thinking of getting started then Lucy Kellaway http://tinyurl.com/cgv5wb is something you must read.  Some people use the iTouch for entertainment, some for information and some for communication.  Twitter is like that, and you need to think out what you are saying, for whom and why: and the same for those you follow. This is an evolving tool, but clearly a powerful which all marketers need to get to grips with. If you have any doubt, just look up Domino Pizza. Then make sure you have a well thought out social network policy.

I sent Tony a direct message asking him how he manages but have not had a reply yet; too busy reading the other 411,145 messages!

 

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09/04/09 - APLF show in Hong Kong offers leather trade some encouragement

Spring in Hong Kong

APLF was again a successful show, although with the world economic meltdown continuing expectations were not too high. They were high, though, for the centenary of leather Corium Club event and there is no doubt that this was the must attend event of the fair and enjoyed by all.  Holding to its tradition of balanced informality and leaving time for those who want to make their dinner appointment the party added a small fashion show from the UON Fashion School, demonstrating that leather in Northampton has become properly integrated into across campus thinking rather than an elite ivory tower declining in the sunset of leaky wooden drums. And of course this latter aspect is now very much history and the updated tannery is already working much better for teaching and training with its sleek modern stainless steel and polypropylene drums.

The fair itself was not celebrating 100 years but still a mighty 25, during which the trade and the show has changed a great deal. The Fair remains dynamic and vibrant, but has new additions alongside with MM&T, Prime Source, Fashion Access and the popular seminars. In discussing the last 25 years some interesting figures were presented on the changes in trade over the period:

More People:

1984 - the global population was approx 4.5 billion

2007 - the global population was approx 6.6 billion

More Shoes:

1984 - global footwear production approx 8 billion pairs

2007 - global footwear production approx 15 - 16 billion pairs

More Finished Leather:

1984 - top producers of bovine finished leather were India, Argentina, Brazil, France & Pakistan

2007 - top producers of finished leather (all sorts) in order were China, Italy, Brazil, Russia, Korea & India

More Raw Material:

1984 - 12.5 billion ft2

2007 - 23 billion ft2

More Raw Material - More Locations:

1984 - approx 40% from the developing world

2007 - approx 60% from the developing world

No one pretends that the 25^th APLF was a huge turning point for the leather trade but as we wait for reports there is no doubt that we are learning to live with the issues and starting to see some positives.  The leather industry was badly caught out by the speed of the decline with hide dealers and chemical companies being hit very fast at the end of last year as tanneries stopped buying and indeed tried to start returning goods. Difficult for chemical companies who almost universally had just managed to raise prices after many years of trying to recover some of the costs of rising raw material and energy costs, and also for those hide producers who had given up their salting capability and had no where to put unsalable raw hides.  And regardless of trade everyone wanted to reduce inventory.

Most of the things I said in Chennai in February (download or read my talk from the link on the front page at www.mikeredwood.com) seem to be working out; not least the $1 trillion reduction in US consumer spending as the US consumer returns to saving before spending rather than borrowing to spend.  Yet there are pointers to some security and growth.  Hides are trading again, people are buying small indulgences which increasingly involve leather, and a return to more formal clothing suited to the economic times has helped the footwear industry. Yes, we accept  that some of the hides being traded are being bought for speculative purposes and not on the baisis of actual orders and also we note that the lower grades are hard to move.  I think this latter is no bad thing as we need to find an alternate use to leather for some low grade material.

Two other points to note.

- March auto sales in China ar 5% up on 2008

- Prof Tony Covington has been awarded the 2009 Merit Award for the leather industry 2009.  Well deserved and many congratulations.

 

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07/04/09 - word cloud of the future of the leather industry

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I have no idea if this will work but the above shouild either show you or link you to a wordle of my talk in Chennai. Done by www.wordle.net     Imagine it is the first leather industry wordle.  to see it properly it might be best to search for it using Mike Redwood at the wordle web site.  Hope this is  interesting.

You can read the text via the link on the front page

 

 

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