When a company brings out a new product line, more than likely it is looking to tap into a demand channel in order to grow revenues, its consumer base or both. What we see with the new consumer staple brand, Smartly, that is being launched by Target is an attempt to catch the tailwind associated with our Middle-class Squeeze investing theme. That theme focuses on cash-strapped consumers that facing tepid wage gains or rising costs and pressured disposable income are changing where they buy the products they need and in some cases sacrificing well-known brands for more affordable prices. It’s what made the Dollar Shave Club such a thorn in the side of Proctor & Gamble’s Gillette razor and razor blade business.
With Target, odds are they are trying to use Smartly to lure cost-conscious shoppers back into their locations, hoping it can convert the traffic into buyers of other items. It sounds a lot like the loss leader strategies of yore, but even in those cases the question is will the traffic (if it comes) convert to buyers? The jury is out on that for now.
Target Corp. is wading into a new territory: $1 toiletries.
The Minneapolis-based retailer said it is planning to launch a new brand for consumer staples called Smartly with more than 70 products, including razors, toilet paper and dish soap, mostly priced under $2. The products will be offered at stores and online in mid-October.
Mark Tritton, Target’s chief merchandising officer, said the new line of consumer staples is an attempt to compete with generic brands at drugstores and discount chains. “It’s about showing people that I don’t have to go to Aldi or I don’t have to go to Dollar General to find what I’m looking for,” he said in an interview.
Meanwhile, the market for generic consumer staples has become more crowded. Last year, Brandless, a San Francisco-based startup, began selling staples such as fluoride-free toothpaste and dish soap, priced at $3. German grocer Aldi has also been opening more locations in the U.S. and gaining traction by selling a pared-down selection at rock-bottom prices.
The competition has forced players such as Walmart to revamp their brands. In 2016, the big-box chain scrapped a discount store brand in sparse blue packaging called Price First as part of a wider reworking of all its private-label products. The company now sells its lowest-priced groceries under Great Value and toiletries under Equate, with boxes and bottles more reminiscent of traditional brands.
Over the last few quarters, we’ve seen a growing number of streaming content services come to market to challenge the success had by Netflix and to a lesser extent Amazon’s Prime Video. And the new entrants are from over given the pending launch of Disney’s Disney Play, AT&T/Time Warner’s DC Universe, Walmart’s Vudu and of course the highly anticipated one from Apple. Core essentials include a wide array of original programming and a global reach, which is a twin focus at Netflix and increasingly Amazon.
It comes as little surprise then that Facebook is now expanding the reach of its Watch streaming video service to “everywhere” offering a global reach to its content partners and of course it advertising ones as well. The question is given the growing privacy concerns, will Watch help Facebook reinvigorate its stickiness in the US and other markets but drive average revenue per user outside of the US as well?
As we get the answer to that question, we continue to see a global content arms race that runs the risk of diluting the content offering as the streaming video service markets become increasingly crowded. If we’re right, it could be a repeat of cable TV channels, just not on your TV.
Facebook has announced the international rollout of Facebook Watch, its video destination for episodic content, which first launched in the U.S. a year ago this month. The social media giant said Wednesday that the VOD service would be “available everywhere” from Thursday, giving publishers and content creators a worldwide market for their videos.
“With the global launch of Watch, we are supporting publishers and creators globally in two critical areas: helping them to make money from their videos on Facebook and better understand how their content is performing,” the company said in a statement.
Watch launched in the U.S. in August 2017 with the goal of offering users a place on Facebook to discover shows and video creators and to start conversations with friends, other fans and even the creators themselves. The company said that, since the launch, it had made the experience more social, including making it easier to see which videos friends have liked or shared, and creating shows with audience participation at their core. In June, Facebook said it would launch a slate of new shows boasting interactive features such as polls and quizzes to fulfill the platform’s goal of fostering a sense of community between creators and users.
Taking Watch global would also create new opportunities for content creators as the service expanded its video Ad Breaks program to enable more partners to monetize their videos, the company said. The Ad Breaks service officially launches Thursday in the U.K., Ireland, Australia and New Zealand, in addition to the U.S. It will launch in another 21 countries in September, including France, Germany, Spain, Argentina, Colombia, El Salvador, Guatemala, and Thailand. Facebook said the service would support both English-language content and content in various local languages. Further countries and language will be added in the coming months.
The company said it had lowered the threshold for publishers and creators to be eligible to make money from their videos. Those creating three-minute videos that have 10,000 followers, generate more than 30,000 one-minute views within a two-month period, or meet Facebook’s monetization eligibility standards would qualify.
We can now add Ikea to the throes of companies that are targeting the growing middle-class in India. We’ve acknowledged for some time that market in India is one of the drivers behind our Rise of the New Middle Class investing theme, and the latest data from the International Monetary Fund finds India to be the world’s fastest-growing major economy in 2018. With a household furniture market that is expected to be worth $2.7 billion by 2022, odds are other companies like Walmart and Amazon will be attacking this market as they look to expand their presence in India.
Ikea has finally opened its first store in India on Thursday, targeting the country’s growing middle-class in an environment that Chief Executive Jesper Brodin has described as “more committed to progress.”
India presents businesses with one of the world’s largest consumer markets. Its 1.3 billion citizens means that it is the world’s second most populous country after China. But, gross domestic product (GDP) per capita remains less than a quarter that of its fellow Asian giant.
Nonetheless, India is expected by the International Monetary Fund (IMF) to be the world’s fastest-growing major economy in 2018. The country’s household furniture market is expected to be worth $2.7 billion by 2022, according to The Economist Intelligence Unit.
Indian consumers are unused to traveling to stores to buy self-assemble furniture, Reuters reported. Instead, furniture is usually delivered to customers fully built. To solve this problem, Ikea has set up a 150-strong in-house team to help customers put products together.
According to one analyst, Ikea’s latest venture into India is likely to be a success — and this is not just down to the country’s economic fundamentals. “With high real estate prices forcing more and more Indians to live in small apartments, Ikea’s minimalist and multi-purpose furniture will be expected to register strong demand,” Barsali Bhattacharyya, deputy lead companies analyst at The Economist Intelligence Unit, told CNBC via email Thursday.
Chicken and vegetarian variations of Ikea’s famous meatballs are sold in the Hyderabad store to account for India’s prevailing religious beliefs.