Archive for December 11, 2014

A Page From McDonald’s Playbook: Is Less More?

 

McDonald’s is working to improve business, as competition gets tougher, consumers’ food preferences have shifted, and recent marketing attempts were not as successful as they would like.

On their most recent investor call, it was revealed that the company is planning to streamline their menu, offering less value meal options than they currently do. There was not a specific indication of which meals will be getting the ax, but they are currently testing a new menu system in select markets. As the bulk of sales are coming from a small set of value meals, and reducing the number of menu items may increase speed of service, this move makes sense.

Another avenue that they are working toward is a more customer focused experience, “Create Your Taste.” This platform will allow customers to customize their burgers and chicken sandwiches as a premium menu offering.

The video below offers some insight into this newest concept – it sounds like it will only be available in store (the drive through component may be added at a later time, but the implications seem to be a detriment, at least to me) and their hope is that the Millennials will embrace this new technology and increase the company’s foot traffic.

 

Will these new changes bring the results they want?

I think the streamlined menu will be helpful – less can be more. And, if these changes bring it “back to the basics” and increase speed of service, it can be very successful. Adding the “create your taste” component, however, makes me feel less hopeful.

In the video, it’s explained that while there will be a longer wait time to receive orders (approximately 5-7 minutes), customers won’t mind because they can sit at a table, listening to music or using their smartphone, while they wait. At least that’s the anticipated response from the company.

Personally, while I do hope its successful, I think that adding this “premium” component may initially attract interest and some foot traffic that is either new or from customers who haven’t visited McDonald’s in a long time, for the long term I think it’s going to become a stalemate.

I do think it’s interesting that McDonald’s is releasing these two changes at once since they seem to contradict each other – one touts increased speed of service and a more streamlined menu while the other offers way more options and a longer speed of service. They may find that one piece is a huge success and the other isn’t, or, because they are geared toward different customer sets, both come out as winners. Only time will tell.

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The Death of Black Friday

 

My 11 year old son asked me a few weeks ago if we could go shopping on Black Friday. He’s heard about it and was curious, thinking it would be “cool” to be shopping in the middle of the night.

 

Sadly, he was born a few years too late. Black Friday has died, as has a crazy holiday shopping tradition that my children will not know.

 

I’ll admit I’m not a shopper; I don’t enjoy browsing through the mall for hours on end. I’m more of a “get in and get what you need” kind of person. But, I did shop on Black Friday twice – I wanted to see what all the hype was about.

 

Even for us non-shoppers, there was something almost fun about standing outside in the cold at midnight or 1am, waiting for the store doors to open. For me, it wasn’t so much about the deals (well, it was a little bit), but more about the excitement of the start of the holiday season. Kind of like waiting to break out the Christmas music and decorations until the day after Thanksgiving, the “official” start to the season.

 

I saw my first Christmas tree on display, fully decorated this past September. Another tradition gone.

 

I get it – I really do. E-commerce and technology have ramped up the competition, and once a retailer thought to open a bit earlier on Black Friday – say midnight instead of 2am – it became a game changer. Retailers were out to one up each other, until we’ve reached the point of opening on Thanksgiving Day, starting at 5pm or 6pm. Walmart never closed – it was business as usual, with the door busters starting at 6pm.

 

While this trend has been moving toward the earlier opening hours, I was curious this year as to the customer response. Would they head out after Thanksgiving dinner, or wait to “celebrate” Black Friday how it used to be?

 

From unofficial reports, Black Thursday (or Gray Thursday as some are calling it), seemed to be a big success. From lines to crowded parking lots, customers seemed to respond by filling the stores. The customer has spoken, and this year clinched it – Black Thursday was born.

 

For those who didn’t want to leave the comfort of their homes, e-commerce deals were plentiful on Thanksgiving as well, and accounted for a large percentage of shopping on that day.

 

Fortune ran an article that got feedback from some of the top CEO’s to get their thoughts on Thanksgiving shopping. Both CEO’s from Target and Toys R Us reported that while customers were focused on the doorbusters, they also tended to shop for other items throughout the store – a big win in the retailers’ eyes. Brian Cornell, CEO of Target, visited one of the retail locations on Thursday to get an idea of how customers were shopping. He appeared pleased with what he saw:

 

“What I’ve been most interested in is what’s in the (customer) basket. You look at the people who you know came out for a specific, but then they’ve actually taken the time to shop other categories, which is really important. The fear here is seeing baskets or carts with one item.”

 

The National Retail Federation released its report on Sunday, and despite the buzz around shopping this weekend, they are reporting lower than average numbers this year. The report states that consumer shopping was down over the weekend, with 133.7 million consumers shopping in stores and online, which is a 5% decline. Spending was also down, at $50.9 billion vs $57.4 billion last year.

 

Some of the possible reasons cited include:

 

  • Sales started early: some of the big box retailers started sales right after Halloween, capturing consumer spend well before turkey was on the table.

 

  • Earlier openings: Black Friday was compromised by many retailers opening their doors shortly after dinner on Thanksgiving.

 

  • Economy is better, but not fantastic: while gas prices are at recent lows and spending seems to be up, consumers are still a bit hesitant. That, coupled with promised discounts all season long (think “Cyber week is coming” – what happened to Cyber Monday?), consumers may be waiting to spend, or spreading their purchases across a longer period of time.

 

While we have some time yet to see how holiday shopping 2014 will pan out, one thing is clear: Black Friday has officially passed away. There are some positives to this – there were little (if any) reports of grown adults resorting to violence over a big screen TV, and no one was trampled in the crowds – but the excitement of the start of the holiday season is not what it used to be.

 

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