Customer Needs, Market Opportunities

In the competitive jungles of capitalism, businesses are constantly shrinking, growing, dying, and being born. But one thing remains constant: a business's purpose remains to satisfy the needs of its customers. A business that fails to do so won't remain in business very long. 

We'd like to highlight two pieces in this week's edition pertaining to customer needs and market opportunities to illustrate how keeping a pulse on the market can be the difference between life and death for a business. 

Under Armour, while still a formidable apparel company, has not exhibited the explosive growth recently that it once did. In classic "innovator's dilemma" fashion, it missed a large opportunity in "athleisure" because it didn't pick up on growing customer needs until it was too late:

“The fashion cycle moved away from them. They stayed true to their muse, performance footwear and apparel,” said Matt Powell, an analyst with the NPD Group. “But that’s just not where the business is. Right now, it’s all about fashion and athleisure.”

And instead of investing in an adjacent area of expertise - 'athleisure' performance apparel - it attempted feats outside its core competencies:

"But interviews with several current and former Under Armour employees as well as competitors, advisers to athletes, and financial analysts also point to a company that tried to do too much too fast. It expanded into sports in which it had little expertise and failed to articulate a strategy for its expensive tech acquisitions. It eschewed the athleisure trend, which has buoyed sales at Nike and Adidas, and struggled to translate its brand to an international audience."

Glossier's founder, Emily Weiss, on the other hand, realized that the next generation of millennials weren't taking their cues for style from established brands, but were instead exploring new styles on social media. She saw a market opportunity in the form of simple, direct-to-consumer beauty products in the age of Instagram. 

"When Instagram took off, the trend only grew stronger, yet Weiss recalls beauty companies telling her they weren’t planning to hire a social media editor at all. She pauses, incredulous: “Can you imagine?”

Rather than continue to play interpreter between old brands and new audiences, she decided the time was right to build a new beauty company from scratch that would lean into this changing dynamic. It would be digital-first, operate a direct-to-consumer (DTC) model, and emphasise communication with its customers, even involving them in the creation of its products."

In addition, Glossier's product was different from the typical heavy makeups in the market and satisfied a growing desire for a cleaner, minimalist look:

"Around the time Glossier launched, its pared-back “skin first, makeup second” approach tapped into a trend, concurrent with a new wave of popular online feminism focused on female empowerment, that saw people move away from the idea of using makeup to cover up perceived imperfections and towards a fresher, cleaner finish."

As a business owner or entrepreneur, keeping a close connection to customer needs must remain core to your company's strategy for long-term durability. 

How Under Armour lost its edge (New York Times)
+ "There is no one cause of Under Armour’s struggles. Some factors, like the bankruptcies of the retail giants Sports Authority and Sport Chalet in 2016, were out of the company’s control. But interviews with several current and former Under Armour employees as well as competitors, advisers to athletes, and financial analysts also point to a company that tried to do too much too fast."

How Glossier turned itself into a billion-dollar beauty brand (Wired)
+ "From the start, Glossier has operated as a direct-to-consumer brand, meaning you can’t buy its products elsewhere. Aside from a few limited experiments, such as a temporary fragrance shop in some outlets of the US chain Nordstrom, it does not have a presence in department stores or beauty retailers, and online sales are conducted through its own e-commerce site at Glossier.com."

How a reality TV producer became a rainmaker to the $300 billion Saudi Arabia fund (Wall Street Journal)
+ "In Los Angeles, she worked for a movie producer and later helped produce “Keeping Up with the Kardashians.” Ms. DiBello has spoken publicly about her friendship with Kim Kardashian and work on the show, and in Harper’s Bazaar Arabia wrote that Ms. Kardashian is one of her “best friends.” After working on a Dubai film festival in 2005, Ms. DiBello had started spending time in the Gulf, she wrote in Harper’s Bazaar Arabia. A story about her last year in a Gulf publication said she had been going to Saudi Arabia since 2014."

Family builds $3.8 billion fortune, one pint of blood at a time (Bloomberg)
+ This is the story of the Grifols family, the plasma business magnates.

A parking space is selling for $100,000 in San Francisco (Business Insider)
+ "This parking spot in San Francisco's South Beach neighborhood has been listed since mid-December, and the price isn't necessarily outlandish. Realtor Bill Williams told SFGate that another space in the same garage sold for $90,000 in November."

How private equity buried Payless (New York Times)
+ Finance driven investing works until debt becomes too big a burden to bear. At Permanent Equity, our focus has always been and will always be to maintain sustainable practices both in financing and operations of a company.

Benedict Evan's annual technology presentation - ecommerce, mobile, media, and their effects on society (Benedict Evans)
+ Benedict Evans presents annually at Davos and this year's presentation highlighted how a mature technology industry's effects on society will most likely become more and more regulated over time. 

The Amazon effect is causing us to drown in trademarks (New York Times)
+ "These “pseudo-brands,” as some Amazon sellers call them, represent a large and growing portion of the company’s business. These thousands of new product lines, launched onto Amazon by third party sellers with minimal conventional marketing, stocking the site with disparate categories of goods, many evaporating as quickly as they appeared, are challenging what it means to be a brand."

What it takes to be a CEO in the 2020s (The Economist)
+ "Few subjects attract more voodoo analysis than management. Even so, studies suggest that the quality of an American firm’s leadership explains about 15% of the variance in profitability. But boards and headhunters struggle to identify who will do a good job (see Briefing). Perhaps as a result, they tend to make conservative choices. About 80% of ceos come from within the company and over half are engineers or have mbas. Most are white and male, although that is changing slowly."

Writing in a business context (Jerry Neumann)
+ This is a short, concise memo on writing clearly and persuasively in a business context.

How the laptop ruined our work-life balance (The Atlantic)
+ "The first iPhones sold 10 million units. Google launched its first Android phone, setting up the key rivalry that still animates the American smartphone market more than a decade later. As those world-changing devices made their way into the hands of millions of curious people, another mobile gadget quietly rose to the top of its market. Some disagreement exists over whether 2007 or 2008 was the first year that laptops outsold desktops in the general market, but 2008 was the first year that American employers bought more laptops than desktops."

Corporate headhunters are more powerful than ever (The Economist)
+ "The bosses of 311 of America’s 3,600 listed firms left their jobs in 2019—the highest share on record. Someone needs to find their replacements."

One man's quest to bring the DeLorean back to life (The Hustle)
+ "In a workshop in Humble, Texas, Stephen Wynne is attempting to revive one of history’s most beloved and beleaguered cars."

China pledged to build a hospital in 10 days and its close (New York Times)
+ As the world watched in awe, China pulled off an impressive feat of coordination, construction, and project management by building a functioning hospital in little more than 10 days.

We'd love your help.

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