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We Need (And Already Have) Better Economic Indicators

Today, I asked Kathleen, my sensible dental hygienist, how the “dentist business” was going.

I honestly didn’t expect the answer I got — I assumed that folks’ teeth would be one of those “recession proof” things. At least regular check ups and cleanings.

Not the case: “It’s been different… worst recession I can remember,” she said.

According to her, my region’s dentists and their office staff are reporting “not even getting their co-pays”.

That’s not good — and for a multitude of obvious reasons — but here’s a different way to think of it:

For all the official economic stats out there, and specifically the “leading economic indicators“, those stats like the “Average weekly jobless claims for unemployment insurance” and the “The University of Michigan Consumer Sentiment Index” that supposedly represent the trajectory of the economy, there’s probably not one that is as straight forward and tangible as the nascent one implied by my anecdote: are the folks in your town skimping on basic health maintenance?

I think it’s fair to say that it might be time to think about changing that phrase, “All politics is local”, to “All economics Is local”.

If we want folks to understand the state of the economy, why start with national, abstract measurements? Why not anchor it to the folks in your town?

Actually, I’ve been meaning to write about this concept for a while… Way back in 2009, I noticed that when I went to the bank I’d see a lot more people than normal with their change baskets at the counting machines — dumping change, waiting patiently, dumping more, waiting and then finally taking the paper print out to the counter.

I had the fleeting thought back then that it would be really interesting to see the data regarding the usage of those machines?

My thesis: you could gauge the anxiety or budget stress families were having in a region by measuring the frequency and volume of change redemption across banks.

Who ever thought the change in the couch could give you so much insight?

 

 

 

 

Lululemon’s Secret Sauce Is Pedestrian–But Intuitive and Damn Refreshing!

Here are a few excerpts from a recent Wall Street Journal article on Lululemon and its seemingly anachronistic methods of product design, customer insight and brand management.

  • Unlike most retailers, Lululemon doesn’t use software to gather customer data, doesn’t build lots of new stores, doesn’t offer generous discounts and purposely stocks less inventory than it can keep on its shelves.
  • When it comes to making decisions, Lulu has gone back to basics. It doesn’t use focus groups, website visits or the industry staple—customer-relationship management software, which tracks purchases.
  • Instead, Ms. Day spends hours each week in Lulu stores observing how customers shop, listening to their complaints, and then using the feedback to tweak product and stores. “Big data gives you a false sense of security,” says Ms. Day, who spent 20 years at Starbucks Corp., overseeing retail operations in North America and around the world.
  • Lulu also trains its workers to eavesdrop, placing the clothes-folding tables on the sales floor near the fitting rooms rather than in a back room so that workers can overhear complaints. Nearby, a large chalkboard lets customers write suggestions or complaints that are sent back to headquarters.
  • While a large part of Lulu’s strategy is getting the product right, an equally important part is keeping it scarce. The goal is to sell gear at full price and to condition customers to buy when they see an item rather than wait. “Our guest knows that there’s a limited supply, and it creates these fanatical shoppers,” says Ms. Day.
  • Lulu also sells 95% of its gear at full price, says Chief Financial Officer John Currie.
  • The company never puts its core items on sale, and it has a very strict return policy: no products accepted after 14 days, and all must be unwashed and unworn, with original tags.