Sunday, January 20, 2013

Two Buck Chuck goes to $2.49 in California, but I doubt it will get 20% better

A price you won't see again, even in California.
The Mayan Apocalypse prediction was a flop, but shortly afterward, we did get evidence that the end of the world is near. Yes, Trader Joe's has finally raised the price of its famous 'Two-Buck Chuck'. Yes, Charles Shaw wines will henceforth sell for $2.49 in all California Trader Joe's stores.

We called it 'Two Buck Chuck', but Charles Shaw wines always sold for $2.99 at my store here in Kansas City. Pricing varies based on state-by-state liquor taxes and transportation costs. According to NBC, the highest price was $3.78 in TJ's stores in Ohio.

Still, Trader Joe's was desperate to hold the original $1.99 price as long as possible in California. I'm sure they squeezed Fred Franzia as hard as he squeezed his grapes, in order to control that cost.

Honestly, I had trouble recommending it at any price. All batch processed wines vary, and while I occasionally tasted a Charles Shaw wine and thought it was decent at the price, I more often found it undrinkable. There are more than a few people who call it 'Two Buck Upchuck', but I think that's a cheap shot. (I did occasionally cook with it, and you can usually use it as the basis for a decent sangria.)

We sold several $5-$10 wines that were easily twice as good as our $2.99 Charles Shaw stuff. I always advised customers to buy something twice as good and drink half as much of it.

However, if you're really desperate for the cheapest possible booze, buy one bottle and taste it. If you like it, immediately buy a case or two. If you don't like it, try again in a month. It really varies quite a lot from batch to batch.

In the meantime, if you want to remember the good old days, when Two Buck Chuck was really less than two bucks, you can read a great article about industrial winemaker Fred Franzia and the creation of Charles Shaw wines here, in the digital archives of New Yorker magazine.

It remains to be seen whether Trader Joe's abandonment of the $1.99 price point will release other discount winemakers, like Barefoot, to raise their prices, too.


According to the unusually loquacious Alison Mochizuki, spokeswoman for Trader Joe’s:

We work hard to have every item in the store at an intersection of quality and price that highlights outstanding value. In general, our retail prices change only when our costs change.
We’ve held a $1.99 retail price for 11 years. Quite a bit has happened during those years and the move to $2.49 allows us to offer the same quality that has made the wine famous the world over.

Thursday, January 10, 2013

News Flash: Trader Joe's has an official Twitter account

The Mayans may have been wrong about the end of the world, but something almost as earthshaking did happen just a week after the solstice. Trader Joe's launched an official Twitter feed. After years of being cited as an example of brands that flourished while ignoring social media (as well as just about any other kind of advertising or PR), TraderJoesUSA started tweeting. If it's not an official Trader Joe's feed, it's got me fooled.

Will Trader Joe's actually start communicating (more than trite recipes on the web site and too-clever-by-half soliloquies in the Fearless Flyer)? So far, it's only issued 27 tweets, and they all seem pretty innocuous, so it's too early to get excited.

It's not, however, too early to follow them. To do so, go here.

UPDATE -- It's not an official site. Sorry.

Sunday, January 6, 2013

Is Lululemon founder Chip Wilson the world's most unlikely retail billionaire?

The other day I accompanied Mary on a shopping trip to Lululemon, the upscale yoga-wear retailer. Traditionalists may be disappointed to learn that 'upscale yoga' is not an oxymoron, although I know what Patanjali would say about $135 sweatpants. 

I always keep an eye on Lululemon, for a variety of reasons. One is the shocking valuation commanded by the stock. Its market capitalization is about $10 billion. In case you have trouble with simple math, that works out to well over $50 million per store. I also followed the brand's attempts to patent certain features of its trousers that make womens' butts look firmer and more shapely. 

(For the record, I believe that the creators of Lululemon trousers deserve a fabulous award for their outstanding work in this field. They've done, for posteriors, what Playtex' lift-and-separate bra did for breasts 40 years ago. Perhaps the Nobel Prize commission could institute a new category. Seriously, the trousers are that good. But, I'm not sure that a functional piece of clothing should be patentable. There's the notion of 'prior art'. But, I digress...)

Anyway, I'm guessing that investors, seeing how great womens' butts look in Lululemon think, as I do, "I want a piece of that."

Another emotional connection I have to the company is, Lululemon's roots, if you dig deep enough, go back to Calgary, Alberta, Canada. My retail roots go back to that place and time, too. Decades ago, I was the Creative Director at Mark's Work Wearhouse's ad agency and, later & briefly, the company's VP of Marketing. Those stores, now known simply as 'Mark's' were created by a friend and mentor, Mark Blumes. Blumes was a legend in Canadian retail, and certainly the most important Calgarian in the world of retail. Until, that is, Lululemon was created by Dennis 'Chip' Wilson, who was also a Calgarian. 

That brings me to the most important link I have to Lululemon: I've actually spent many, many hours cooped up in a small, basement room with Wilson.

In the late '70s, I spent a couple of hours a day working out in the weight room at the University of Calgary. For much of that time, totaling several hundred hours at least, I worked out in close proximity to Chip. This was before Arnold Schwarzenegger made pumping iron a thing; weight training was a subculture. The gym was small enough that every regular knew every other regular.

Understatement: That was also long before he found his way onto the Forbes 'billionaire' list.

Chip hung out in the U of C gym because he was a football player -- he played for the Dinosaurs, our college team and (If I recall correctly) entertained the fantasy of trying out for the Calgary Stampeders as a walk-on. He was brash and, even then, a larger than life character albeit one straight out of central casting: a self-styled Big Man On Campus. I once overheard him describing what he liked about playing football as, "I like to hit."

He wasn't CFL material; I'm pretty sure that he never did walk on at the Stampeders camp. Instead, he got a job as a 'land man' in the oil business. That was what you did, after wasting four years at university. In the hierarchy of the oil patch, there are geologists who actually find oil at the top, there are engineers who figure out how to extract and refine it below them, and there are land men who arm-wrestle farmers into locating a drill rig on their land. The essential skillset of a good land man consisted of a firm handshake and the ability to consume large quantities of alcohol at lunch, while still creating a simulacrum of work later in the afternoon.

I want to take you back to Calgary in the late '70s or early '80s, before the 1988 Olympic Winter Games transformed it into a modern, cosmopolitan city. It had already sprouted a first crop of glass skyscrapers downtown, but the vibe was anything but urbane; it was a roughneck-cowboy town with, like, one place to buy a cappuccino. 

A few blocks of Eighth Avenue, downtown, had been turned into a pedestrian mall. On warm summer days, the buildings disgorged office workers at lunchtime, and the mall was crowded. For a while, it developed into a funky outdoor street market, and people set up tables selling all manner of shit; candles, cheap leather sandals, you name it. By 1:30 in the afternoon, the office drones had gone back upstairs, and the mall was left to a few scruffy hustlers and panhandlers who'd hitchhiked in off the reserve.

One summer day, I was shouldering my way through the lunch crowd and came across Chip Wilson, who was wearing suit pants and black leather shoes, but had stripped from the waist up. That was the kind of thing he'd do, I guess. Get out of the office wearing a suit that didn't suit him, and, feeling the warm sun, decide to cop a tan. What surprised me was, he actually had a little market table on the mall, and was selling garish, baggy shorts. When I asked him where he was getting them, he told me, "I make them."

Now, we made our own stuff at Mark's Work Wearhouse, too of course. So I clarified my question. I meant, Yeah you're getting them made, but where? That's when I realized that by 'I make them' he meant, he actually sewed them himself.

Chip was not exactly a surfer dude; we were a thousand miles from the nearest surf break. But the Canadian prairies were, paradoxically, a good place for windsurfing. And as the story goes, one day he was looking for some board shorts and couldn't find any (or, any in his large size) so he borrowed a sewing machine from his mom and, after getting rudimentary instruction in its use, made his own shorts.

This was already enough to make me raise my eyebrows. If I had to pick the last person in Calgary who'd take up sewing as a hobby, I would have picked Chip Wilson. That said, he was making board shorts. It was a sort of vicarious way to be Californian, in a let's-go-surfing-then-drink-beer-around-the-bonfire way. This was not some new-age guy getting in touch with his feminine side. And if I'd suggested that, next, he'd take up yoga, he would have punched me in the face.

Anyway, in pretty short order he quit his day job, and formed a business called West Beach, which catered to the windsurfing/skateboarding scene in the summer, and sold snowboard clothes in the winter. It made sense for that business to move to the west coast, and after Chip Wilson decamped for Vancouver, he pretty much fell off my radar. 

Years later, I saw my first Lululemon store -- I think it was in Santa Monica. By then, I was living in Encinitas, California. SoCal had more yoga studios than gas stations. And while lots of yoga studios had a little rack of clothing for sale, I realized right away that Lululemon had tapped into a large and growing market. 

By then, yoga had largely been decoupled from its ascetic roots, so while I recognized the irony of high-end, expensive yoga clothes, I knew that irony would be lost on Lululemon's Lexus-driving, lotus-eating customer base. The whole thing was fascinating to me, and I asked the clerk about the store. I just about crapped when she told me the name of the founder: Chip Wilson.

Talk about cognitive dissonance. On the one hand I thought, Chip Wilson, clothing, retail; it had to be the same guy. On the other hand, if you could travel back in time to 1980, and search the entire planet to find the person least likely to start a hip women's clothing company, with a yoga theme and shopping bags printed with new age sayings... 

Honestly, you could search the whole planet and you might very well say, I've found him, I've found the least likely guy on earth, to do that: Chip Wilson.

Chip, of course, has since sold a stake in Lululemon, with the result that he's a billionaire. He's still the Chairman of the Board. He looks exactly like he did in 1980, except older. But I guess he must be a pretty different guy. I know I will never, ever, see a Lululemon logo without pondering the extreme unlikeliness of Chip Wilson. How the hell did he, of all people, end up being him?

There's a great scene in the Coen brothers' film Burn After Reading, in which the actor J.K. Simmons plays a CIA bigwig (named 'J.K. Simmons'). The film has a hilariously convoluted plot, at the end of which Simmons is given almost the final word. "I guess all we can do is learn from it," Simmons sighs, "But I sure wish I knew what we were supposed to learn."

Maybe it's that you'll find your greatness doing something you never would have imagined.

Wednesday, January 2, 2013

Is this the most epic private label brand fail ever?

Although there's no direct connection between Aldi stores here in the U.S. and Trader Joe's (the two chains are owned by two different branches of the Albrecht family, in Germany) regular readers will know that I am a fan of Aldi, too.

There's lots to love about this hardscrabble supermarket concept, and some great values to be had here.

But, oh my God, do they ever have some epic fails. Aldi's clearly been cutting costs in their in-house branding and packaging group, and must have fired their last writer. What other explanation could you possibly come up with for this epic brand fail?

Yes, Aldi's take on a Monster Energy or Red Bull-style energy drink is called... Gridlock.

Can you imagine a worse image for an energy drink? (Suggestion: 'Blackout'.) Or, for that matter, can you imagine anything worse than being stuck in actual gridlock, while hopped up on this shit?