Five Months Paid Parental Leave, How Luxury Brands Help Counterfeiters, and Craft Brewers’ Aging Customers

Get the Oxford Morning Report every day. Click here for a free subscription.

MARKETING

Founded in Austin by Rachel Youens, the FOMO Factory, the latest retail tenant opening in Houston’s Galleria mall, doesn’t sell products: “The interactive space—designed to instill a ‘fear of missing out’ and drum up internet buzz—is part of a new wave of experience-driven retailing that malls and department stores are embracing to lure shoppers in the age of Amazon.

“Youens started FOMO Factory last year, aiming to transport Gen X and Millennial adults back to their childhood through themed spaces, such as a birthday room that features a gigantic wooden birthday cake that can fit six people, a colorful cupcake wall and confetti on the floor. The pop-up shop, which transformed a dilapidated downtown Austin bar into an immersive art exhibit for five months, drew 17,000 visitors and more than 12,000 Instagram followers. … Tickets for a 90-minute journey through FOMO Factory cost $28 for adults, $23 for children. …

“‘It’s like escaping into a Pinterest board,’ Youens said. ‘It’s a chance to step out of the everyday and step into someplace beautiful.’”

RETAIL

Healthcare clinics are heading to storefronts, according to a report from Modern Healthcare. “The number of health care tenants in retail spaces has risen 47 percent over the past three years, and could double by 2022. ‘It’s the Walmart or Kmart that went out of business,’ Greg Hagood, senior managing director with SOLIC Capital, told Modern Healthcare. ‘You pull right up. The parking is easy. The patient is likely to come more often.’ The bottom line: Everybody involved seems to like this idea. And it’s not just pharmacies and walk-in clinics. Complex specialties like oncology are also looking to storefronts. Empty retail space is an attractive option for clinical practices that have gotten frustrated with the high overhead costs on hospital campuses. And a storefront is a good branding opportunity.”

INTELLECTUAL PROPERTY

The total trade in counterfeit products is estimated at around $4.5 trillion, and fake luxury merchandise accounts for 60 to 70 percent of thatbut do the luxury brands deserve some of the blame?Luxury firms’ failure to contain the growth in counterfeiting is rooted in a hollowing out of their brands. Many luxury brands have become symbols of status and privilege but not much else. The emphasis across the industry has been on signaling rather than delivering luxury; intangible over tangible product attributes; and the logo over all other markers of quality.

“This philosophy has been consistently applied to supply chains, manufacturing, and pricing: By relocating production to low-cost countries, luxury firms severed the centuries-old association of luxury goods with their historical places of origin. The outsourcing also led to relaxed control over supply chain, design, and manufacturing just as counterfeiters were putting unprecedented pressure on each of these processes. At the same time, in spite of the cost savings, luxury products’ sticker prices have risen dramatically.”

HUMAN RESOURCES

Sweetgreen employees now get five months of paid parental leave: “‘The goal with this was: how do we lead the conversation for the industry and think about not just retention, but also what matters to our employees?’ says co-founder and Chief Brand Officer Nathaniel Ru. Previously, Sweetgreen offered six weeks paid maternity leave as well as ‘baby bonding time’ for both parents that included one week leave per every six months the employees worked for the company.

“In researching a new policy, Ru says they found no real industry standard. ‘We saw things that were similar to six weeks, less than six weeks, more than six weeks. And we just wanted to almost start over and understand what’s most important to our team members and offer a program that’s just best in class,’ he says. He’s unaware of any other restaurant groups offering store employees as much as five months fully paid.”

Canada’s marijuana legalization has posed a challenge for companies trying to ensure workers aren’t high on the job. “Testing for cannabis is not as advanced as using a breathalyzer to gauge someone’s impairment from alcohol. A urine test for cannabis, for instance, can detect THC, but can’t necessarily judge a person’s level of impairment. ‘I think people maybe have been a bit misinformed believing that there is a completely accurate and reliable way to test for impairment with cannabis,’ said [CEO of Essential Energy Services Garnet] Amundson. … If there is an accident on a job site, a company is allowed to do post-incident drug testing. The urine sample may find traces of THC, but again, the test can’t judge the level of impairment. That’s why a company may not be able to say whether the worker was at fault because of cannabis or not, since there is no definitive proof that THC contributed to the accident.”

Silicon Valley is having problems finding qualified chief financial officers: “These fast-growing companies need more than the basics of financial management from their CFOs. ‘You want someone who is not just operational, but who is a company builder,’ said Eric Gundersen, chief executive of mapping company Mapbox Inc. …

“Mr. Gundersen wrote that an ideal CFO should be a ‘functional baller’: confident, entrepreneurial and intelligent, with experience of both public companies and startups. People who view their role in the C-suite as ‘adult supervision’ need not apply, he wrote, but if you’re a master communicator with ‘cross-functional empathy,’ this might be your gig. Especially if you welcome late-night calls from the boss and are ready to help Mr. Gundersen ‘grow the company and grow personally.’ Mr. Gundersen acknowledges he is asking a lot, but he doesn’t want to compromise. ‘Look,’ he said, ‘I’m using AI to live-map the entire world every day. Everything about this is ambitious.’”

FOOD AND BEVERAGE

Suddenly, aging Millennials are presenting craft breweries with a challenge: “‘In the early 2000s, the Millennial generation drove the growth of craft beer,’ Mr. Mitaro said. ‘As people get into their 30s, they think more about calories and health and wellness. It’s a different mind-set than when you’re in your 20s, so people are more apt to gravitate back toward lighter beer.’

“But rather than simply recreate the light beers they have long derided, many craft brewers want to emphasize their artisanal handiwork. Some beers, like Dogfish Head’s 95-calorie Slightly Mighty, are lighter, lower-alcohol versions of IPAs, which often contain 200-plus calories and ABVs above five percent, that still command respectable flavor. Others, like Harpoon Brewery’s Rec. League and Sufferfest’s gluten-removed Repeat, feature chia seeds, bee pollen or other ingredients that purport to have health benefits like reducing inflammation or lowering blood pressure. And some craft breweries are simply producing nonalcoholic beer.

“‘I think these perceived healthy beverages will become an increasing part of the portfolio of a lot of craft brewers,’ Mr. Mitaro said. ‘When you have 7,000 entrepreneurs all working for the benefit of their own company, you get a collective quick response that shakes out what works and what doesn’t.’”

The diners of New York City are disappearing: “Since 2014, 15 diners, many in stand-alone buildings, have been sold in New York, according to an analysis by Ariel Property Advisors, a commercial real estate brokerage. Queens had the most sales, with seven, followed by six in Brooklyn, two in the Bronx and one in Staten Island. There were no sales in Manhattan.

“But that does not account for the diners whose owners lost their leases. Riley Arthur, a photographer who has visited nearly every diner in the five boroughs, estimated that there are 419 left in New York City. In the three years since Ms. Arthur began photographing them for her Instagram page, 39 have closed—an average of 13 a year. In many cases, they didn’t close because of dwindling customers. ‘It’s just the other factors’—like rising rents and shrinking profit margins—that are insurmountable,’ she said. ‘You just can’t make up that difference selling eggs.’”

OXFORD STRATEGIC ADVISORY DEALS OF THE DAY  

Soundcloud, an online audio distribution platform has acquired Repost Network, a rights management and distribution company. “The purchase of Repost is seen as a complement to the streaming platform’s SoundCloud Premier direct monetization program and distribution tool, which allows artists to distribute their music to all the major streaming services and receive payouts directly through SoundCloud.”

Aurora Innovation, a self-driving car company has acquired Blackmore, a company that makes lidar (light detection and ranging) technology, a technology that helps cars “see” to help make autonomous vehicles safer. “The deal makes Aurora the latest in the industry to bulk up its in-house computer vision tech. Other industry players, which in Pittsburgh include Uber, Aptiv and Argo AI, have been gobbling up lidar companies like wildfire.”

CRYPTOCURRENCY

In the early days of cryptocurrency, one man decided to trade his bitcoin for pizza: “On May 22, 2010, [Laszlo ] Hanyecz traded 10,000 Bitcoin for some pizza in what is widely believed to be the first real-world transaction involving Bitcoin. Each year, on May 22, Bitcoin enthusiasts all over the world celebrate ‘Bitcoin Pizza Day’ to mark the event. Bitcoin then was worth less than a penny.

Hanyecz, a computer programmer who lives in Florida, told [Anderson] Cooper he made a number of other trades after the pizza. In all, he estimated that he spent 100,000 Bitcoin on a number of items, much of it on pizza. At the time of this interview, one Bitcoin was worth about $8,000. ‘That’s $800 million,’ Cooper says. ‘You spent about $800 million on pizza?’ Hanyecz replies, ‘Well, if you look at today’s exchange rate.’”

And that’s what’s ahead.

Please send comments and suggestions to mattg@oxfordcenter.com and lfeldman@oxfordcenter.com.

BECOME AN OXFORD MEMBER