January 2003 - Springwise

The umbrella vending machine

Add this one to the ‘why didn’t I think of that’ category: Norwegian Paraplyselskapet AS has come up with a concept selling umbrellas from vending machines placed in areas with dense pedestrian traffic. The umbrella vending machine, appropriately called ‘Rainbuster’, accepts major credit cards and is already quite successful, with 7 machines in operation in Norway and 10 in the UK (in Reading and London, handled by Majic Mushroom Vending). Rainbuster also boasts a communications system that reports product stock, machine failure, possible forced entry etc. Besides making money from selling the umbrellas, revenues will also come from third-party advertising on the umbrellas themselves. No doubt an interesting franchise/partnering opportunity for entrepreneurs in rainy cities around the world, and a source of inspiration for vending machine enthusiasts!

Taking commodity marketing to a new level

Selling is an art, and so is building a brand. All this is no secret to Chiquita Brands International, the world’s number one producer, marketer, and distributor of bananas. Getting consumers to buy branded bananas is quite amazing. Getting them to buy single pieces of fruit in shiny, attractive packaging is taking commodity marketing to another level. Spotted in Shell gas stations in The Netherlands, these Chiquita ‘fruit-stands-revisited’ cannot help but inspire other producers of low-interest commodities!

Opportunities

The merchandise and clientele suggest that opening up Flight 001-like stores in major cities and international airports around the world should be a lucrative affair. San Francisco is already booked: Flight 001 set up shop there in June 2002. But that leaves London, Paris, Tokyo and Berlin travelers on hold for vintage Pan Am flight bags.

Winning retail concept caters to pre-flight/in-flight and arrival addicts

Travel will never stop being an inspiration to entrepreneurs: New York based Flight 001 has come up with a winning retailing concept that caters to pre-flight/in-flight and arrival addicts. Buy travel companions like books, backpacks, bags (new and vintage), compilation CDs, anti-fatigue eye masks, etc. and you’ll travel prepared and in style.

Opportunities

Time for other (appliance) manufacturers to get creative? Join forces with complementary brands? Eye the office market? Forget coffee makers and focus on other domestic appliances? How about a Hoover/P&G vacuum cleaner with built-in air freshener pads?

A highly successful alternative to traditional coffee makers

Huge corporations sometimes manage to be nimble enough to spot shifting demographics and behaviour before trend watchers run with them. Case in point: electronics giant Philips and global consumer goods manufacturer Sara Lee figured out that in most busy families the big, 12-cup, coffee-all-day machine was becoming obsolete. Not to mention the millions and millions who are living the single life and don’t even know what to do with traditional coffee makers anymore. Throw in a meteoric rise in upscale coffee’s popularity, and you have the perfect market for Philips and Sara Lee’s ‘Senseo’; a coffee machine that serves up just one or two tasty, fresh cups of creamy coffee, using sophisticated Senseo coffee ‘pads’ that come in various flavours. The machine is priced at 69 euros (roughly 69 USD), with coffee pads costing roughly 10-15 euro cents per piece. Consumers are slurping it up in a big way: Senseo sold 800,000 machines in Holland since its introduction in 2001, brewing more than 10 million cups a day, thereby capturing 10% of the entire coffee market. After a runaway success in the Benelux, Philips is now rolling out the Senseo coffee concept in France and Germany, and is in a hurry to prevent copy-cats from joining the party. (Which makes sense: when Philips and Sara Lee failed to get the coffee pads patented in Holland, a whole new business sprang up with retailers and other coffee producers now introducing their own pads for the Senseo.)

Opportunities

Pret A Manger currently has no plans for franchising its winning formula and doesn’t seem to be interested in other international JVs, but as this super-high growth area could easily spawn three or four global chains, why not do it yourself! 😉

Sandwiches as a new ‘it’ fast food

‘Pret A Manger’ (French for ”ready to eat”), the successful UK sandwich chain, may have become a household name in Britain, but the sandwich as a new ‘it’ fast food still has a promising land-grab ahead of it in the rest of the world. Though the company has been expanding abroad over the last two years, with currently thirteen outlets in New York, five in Hong Kong and one in Tokyo, smart entrepreneurs can still build on Pret A Manger’s success story. Some of the things which make Pret a Manger so successful (and made McDonald’s Corporation buy a 33% stake in the chain): Obsessive focus on super fresh, tasty sandwiches, with often organic ingredients. Wide range of other items, like coffee, cookies and brownies, salads, fresh juices, yoghurt pots, and (in winter) soups, to provide a complete breakfast/lunch/snack experience. Fun, Starbucks-like branding, culture and uniformity. Locations near or in office environments.

Opportunities

A new breed of gift certificates

In our November 2002 newsletter, we highlighted some promising pre-paid card initiatives. The town of Hudson, Ohio, US, came up with yet another innovative way of making use of these cards: the Hudson Gift Card, a pre-paid/debit card that is good in many shops in Hudson’s Main Street shopping district (source: The New York Times), and doubles as an entirely new breed of gift certificate. The card was developed by New Market Solutions, a systems integrator, specializing in ‘advanced card and identity applications’, in co-operation with the local Chamber of Commerce. The card’s dedicated website also offers pre-paid cards for kids, which may trigger the next innovation: pre-paid, coded pocket money that can’t be spent in the candy or liquor store, but will be accepted in the educational bookstore ;-). It’s no wonder Hudson’s Chamber of Commerce is eager to market gift certificates; this holiday season, gift certificate sales in the U.S. jumped 65% over the 2001 season (source: Boston Globe). Convenience makes them popular with consumers. Retailers love them for an entirely different reason: an estimated 10 – 40% of gift certificates are never redeemed, which means they can be booked as pure profit. Ka-ching! Needless to say, Springwise would not be surprised to soon see street, city, region or country specific pre-paid cards popping up in other parts of the world as well.

Opportunities

Thinking small, yet never losing brand focus, could open up entirely new markets for many of the world’s B2C and B2B manufacturers. And besides the instant extra revenues, building a brand-relationship with future big(ger) spenders should result in even greater revenues long term. Useful links Hindustan Lever

Selling branded goods in smaller doses and packages to low-income consumers

Here’s an interesting business question: if roughly two-thirds of the world’s population makes 1500 USD or less per year, why try to sell them expensive, big goods and services that were designed for consumers in the US, Europe or South East Asia who make twenty or more times as much ? Multinationals like Philips, Unilever, Coca-Cola and Motorola, who all eye a piece of a market overflowing with 4 billion aspiring consumers, have realized that a focus on low prices, small sizes, and simple-to-use products will pay off big time (source: Business Week). But smaller and cheaper doesn’t mean less branded or less cool. Sophisticated consumers from India to Brazil, especially in rural areas, demand top brands, albeit often in smaller and thus more affordable doses. Fast moving consumer goods giant Unilever acknowledged this market in an early stage, by coming up with branded, ‘size/usage adjusted’ products: In Brazil ‘Ala’, a brand detergent created specifically to meet the needs of low-income consumers who wanted an affordable yet effective product for laundry that is often washed by hand in river water. In India ‘Sunsil’ and ‘Lux’ shampoo sachets sold in units of 2-4 dollar cents, ‘Clinic All Clear’ anti-dandruff shampoo sachets at 2.5 rupees each, and 16 cent ‘Rexona’ deodorant sticks. In Tanzania ‘Key’ soap, sold in small units for a few dollar cents.

Opportunities

Kiosks that digitally print newspapers from around the world

Some ideas are nothing but solutions waiting for the right entrepreneur to get them going. That certainly applies to The Netherlands-based PEPC WORLDWIDE, a global distributor of digitally transmitted newspapers from newspaper publishers around the world. They have actually solved the problem of online newspapers not being much fun to read on planes, in the park, in bed or in bath, if you can get an online connection at all. How it works: PEPC (founded in 1999) has developed an interactive kiosk with a built-in printer that digitally prints the latest editions of newspapers from around the world, on-demand and within minutes. The kiosks are linked to PEPC’s private satellite network, meaning kiosks can be placed almost anywhere on earth. Having completed product development and testing by mid-2002, the last six months have been used for a roll-out of 112 digital kiosks in 47 countries world-wide, publishing 104 titles in 28 languages. The kiosks are popping up in hotel lobbies, airports, cruise ships, and business centers. The planned IPO for this year (2003) should accommodate a fast roll-out (PEPC is hoping to sell 1 million shares, priced at 14-16 USD), and, by increasing its scale of operations, a lower price per paper printed. The price currently hovers around 4-5 USD. Sounds like an interesting sales or investment opportunity, or a great partnering deal if you’re working for anything that is fit to print! What do you do if you’re a major hotel chain and a survey amongst frequent travelers shows that 63% of all respondents rank a good night’s sleep as the most important service a hotel can provide? And that 82% of all respondents have complaints about hotel beds in general? If you’re Westin Hotels & Resorts, you team up with mattress manufacturer Simmons and create the Heavenly Bed, which comes in all white, with a 10-layer mattress, three sheets, and five pillows. When it turns out your customers really like the bed, then SELL it to them. By turning its customer-pleasing innovation into sale item, Westin is now selling more than 100,000 USD worth of Heavenly Beds, per month. And with the introduction of the Heavenly Bath collection, including a dual showerhead (new research showed that almost 30% of respondents sometimes shower or bathe together with another person), Westin seems to have set the standard for a new breed of hotel shop, bringing the luxury of the hotel room to beds and bathrooms back home. Which then in itself will be a branded presence reminding customers to book with Westin next time they travel. Other major (or minor) hotel chains to follow suit? Restaurants? Airlines? Cruiseships?