Victoria’s Secret: A Fallen Angel

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As frivolous middle schoolers, my friends and I used to throw watch parties for the Victoria’s Secret Fashion Show. The lingerie brand was all the rage, and VS Pink was our home. Now, the brand, especially VS Pink, is almost as cringy as Abercrombie. How do I know these sentiments apply to most others? I surveyed 20 girls between the ages of 18 and 22. A brand that used to be on top of the world is now on the outs with its young fan base, an angel fallen from grace.

The Golden Age

One day, Roy Raymond went shopping for a new set of lingerie for his wife and felt extremely uncomfortable. He didn’t want to feel like a pervert in a lingerie store. Somehow, Raymond, a Stanford graduate, had the brilliant idea to create a store where men could comfortably shop for women’s undergarments. It was complete with black leather couches, dark wood, and silk drapes. The store, catalogs, and even products were made with men in mind, not women. It’s no surprise that it didn’t go anywhere. 

Source: REUTERS/Toby Melville

Raymond might have unknowingly sent a bat signal, because Les Wexner came to his rescue. The owner of L brands saw something in Victoria’s Secret, so he acquired it for $1 million and completely rebranded. It became a bright, colorful, glamorous fantasy for women. Wexner created a 19th century English boudoir crowdsourced from every woman’s imagination, and made it affordable for all kinds of shoppers. 

From there, it was only uphill. The famous fashion show began in 1995, and when it aired online in 1999, its 1.5 million viewers crashed the site. Body by Victoria, the comfort bra line, made the brand the ultimate lingerie destination. In 1997, the term “Angels” became synonymous with the Victoria’s Secret when Helena Christensen and Tyra Banks modeled the “Angel’s Underwear Collection” in a TV advertisement. These models, along with Gisele Bündchen, Adriana Lima, and so many others can thank Victoria’s Secret for their claim to fame. 

With such a successful brand complete with it’s own celebrities and experiences, why not start PINK, a location for the teenage audiences. Victoria’s Secret and L Brands was taking the world by storm. Until they weren’t. For some angels, it’s difficult to maintain the rouse of perfection, but it’s almost as if Victoria didn’t even try. Honey, did it hurt when you fell from heaven?

Victoria’s Secret is Out, and it’s Not So Sexy

Victoria’s Secret Sport

What exactly lead to the Lingerie giant’s downfall? The answer is a collection of very, very bad occurrences. First, the brand failed to capitalize on the bralette and athleisure trend. By the time they came out with their line of sports bras, leggings, and other sporty wear, it was too late. When Victoria wasn’t looking, Lululemon and Nike stole her thunder. It happened again with the body positivity movement. Women began looking for comfortable, natural looks. The hot pink lace just wasn’t working anymore, but Victoria was too high on life (or profits, rather) to notice. Enter: Arie, Savage x Fenty, and the other brands who welcomed an army of women representing all shapes and sizes. Victoria lost her appeal, failing to understand the “new sexy.” More than that, she stumbled into a series of scandals. 

Savage x Fenty model diversity

The first came in 2011, when it was discovered that 13-year-old Clarisse Kambire was picking cotton in West Africa, sleeping on a plastic mud mat, threatened with violence, and subject to other horrible conditions. A detailed Bloomberg report found that this girl and her cotton eventually became Victoria’s Secret products. L Brands quickly released their Modern Slavery Transparency Statement to comit to ensuring that no forced or child labor is used during the creation of their products. This statement is still linked on the bottom of the Victoria’s Secret website. People were not pleased with this news, and it became a bit of a nightmare for L Brands. This constitutes scandal number 1. 

Scandal number 2? Victoria’s Secret’s unfortunate ties to Jeffery Epstein. Over a decade ago, Les Wexner considered Epstein “a most loyal friend” with “excellent judgment and unusually high standards.” Somehow, Epstein was placed in charge of all of Wexner’s finances and became very close to the Victoria’s Secret brand. The New York Times reported that Alicia Arden, a Californian model in 1997, was invited by a “scout” to a Santa Monica hotel room to audition for a Victoria’s Secret catalog. When she arrived, this “scout” tried to grab her and undress her, causing her to cry and flee. This man was Jefferey Epstein, and the New York Times claims that Wexner was alerted of Epstein’s recruiting rouse by two executives. Another incident involved Maria Farmer, an artist working in Les Wexner’s mansion. While she was there, she claims that she was sexually assaulted by Epstein. She fled and attempted to contact the authorities, but the Wexner staff refused to let her leave for 12 hours. With both of these incidents, it is assumed that Les Wexner supposedly protected Epstein’s reputation. Whatever the truth may be, any connection to Epstein is a detrimental one. 

Les Wexner’s Ohio Mansion

Then came Ed Razek’s big mouth. In a Vogue interview in 2018, Razek began to spiral into a defensive tornado. He went spoke about diversity and the criticism he receives every year around the time of for the VS Fashion Show. He claimed that they “attempted to do a television special for plus-sizes [in 2000]. No one had any interest in it, still don’t.” In this rant, he concocted his own question, “shouldn’t you have transsexuals in the show?” He responded to himself by saying no, the show is a fantasy for women and an entertainment special.

Ed Razek & Kelly Gale: Bloomberg via Getty Images

Problem number one, Razek referred to transgenders as transexuals. I wasn’t aware that this was problematic until I researched the term. Transgender youtuber, Gigi Gorgeous, posted an entire video attacking Razek’s statements, and Transgender model Carmen Carrera stated in an Instagram post, “I wish certain people would see beyond viewing me as just a “transsexual” I am way more than that, @victoriassecret. #EdRazek.” According to GLAAD, the Gay & Lesbian Alliance Against Defamation, “transexual” can be very offensive. It is an incomplete, narrow, and dated term originated by the medical and psychological communities.

The other issue with Razek’s statements is the implication that only the Victoria’s Secret Angels are the “ideal woman” or the “fantasy” that everyone should aspire to. This alienates plus size models, transgender models, and anyone else that doesnt fit the VS Angel measurements. The lingerie brand ThirdLove, known for its plus-sized inclusion, responded with a scathing open letter to Victoria’s Secret. Some of the comments in the letter include “your show may be a “fantasy” but we live in reality,” and “please stop insisting that inclusivity is a trend.” The letter continued with an explanation that ThirdLove is the antithesis of Victoria’s Secret, and stated “You may have been a woman’s first love, but we will be her last.”

One evening in 2017, my aunt told me that I should be a Victoria’s Secret model. At that time, there was a website where you could upload your headshot and measurements. If you did not meet the body size requirements, you would not be considered. Roughly, the measurements were a fairly large bust size, small waist, and a height of at least 5’8. Today, I attempted to find this same casting site again, but it has since been taken down. It’s clear that although Victoria’s Secret sources models from all over the world, they all have exactly the same body size. This alienates the majority of the human population, including my 5’5 self. As we’ve seen, Millennials and Gen Zers do not respond well to this “one size fits all” scenario. Brands like ThirdLove, Savage x Fenty, and Arie are taking Victoria’s Secret’s business because it resisted change for too long. 

Victoria Tries to Catch Up

The L Brands earnings report is abysmal. The stock has been sinking steadily for five years and Victoria’s Secret’s operating income is down in just a year from $211.6 million to -$31.8 million. Bath & Body Works is picking up the slack that Victoria’s Secret is creating, but it isn’t enough. VS sales are falling like no other, and L Brands has finally decided to take action. 

Two important things happened in August of this year. First, Ed Razek, CMO and President of L Brands, stepped down from his positions. In his letter to the company, Razek explained that he felt that it was time for him to retire, but I wouldn’t be surprised if he was pressured to leave. Les Wexner had a memo of his own which praised Razek but was also future-facing and focused on change. Another historical event took place in August: Victoria’s Secret hired its first transgender model, Valentina Sampaio. Is this pandering? It could be. Regardless, L Brands got rid of Razek and ushered in Sampaio, so at least they’re trying. 

Transgender model Valentina Sampaio

Victoria’s Secret also announced to investors that it will be closing stores across the nation, and on November 21st, the world learned that the annual VS Fashion Show has been cancelled. If the brand had continued with the show this year, they would’ve spent a fortune and hired a more diverse cast of models, which I doubt they are ready for. Victoria’s Secret casted Valentina Sampaio, but all of the marketing on their website and social media still lacks diversity and change. They’re taking baby steps, and it could be a long time before we see any leaps. 

What the Future Holds

So what’s in store for Victoria’s Secret? It’s hard to say if they will truly cater to the new generation’s wishes. From interviewing around campus, I’ve learned that many girls still own and purchase Victoria’s Secret products. My first training bra was from Justice, but I patiently waited for the moment when my mom would finally let me shop at Victoria’s Secret, the ultimate right of passage. The brand still holds sway in the hearts of young women, but if they want to continue their legacy, they must make themselves a brand that millennial mothers will want to pass on to their children. 

LVMH Just Bought Itself a Little Blue Box

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It’s almost impossible to feel anything but joy when seeing the robin’s-egg blue of a Tiffany & Co box. The Jewelry giant first solidified itself in my mind (and all of popular culture) as a young girl watching the film, Breakfast at Tiffany’s. Nowadays, the social media marketing nerd in me fangirls at the sight of Tiffany’s gloriously well-designed Instagram.

@tiffanyandco social media
Tiffany & Co Union Army Sword

But long before the film appearances and the social media mastery, Tiffany’s made a name for itself as an iconic American brand, beginning in the mid 1800’s. Charles Lewis Tiffany and John B. Young created a fine goods company that would go on to supply the Union army with swords in the American Civil War and redesign the Great Seal of the United States. Later, Tiffany’s would create the trophy for the first ever super bowl and the 1978 NBA championship trophy. Needless to say, Tiffany & Co created an extremely patriotic luxury brand and embedded itself into our nation’s history. It’s no wonder that LVMH, the French fashion house, means to acquire it.

For a while now, Tiffany sales have been declining. The most recent earnings report published in August saw more parentheses than not, with worldwide sales down 3% overall. Along with the earnings, the stock price has also been significantly lower (35%) on average when compared to 2018. Factors such as a weakening American market and dwindling levels of foreign tourist expenditures have left the jewelry legend in a bit of a bind. 

But have no fear, the sensation that is LVMH has come to save our American icon. On November 25th, LVMH published a statement on their website announcing that it will acquire Tiffany & Co for $135 per share, the transaction boasting an equity value of $16.2 billion. When talks of this acquisition began back in October, Tiffany’s stock dramatically rose by 30%.

Tiffany & Co’s stock surge

Investors trust LVMH to turn Tiffany & Co around due to their steadily rising watches and jewelry profits and their individual success with Bulgari. The French conglomerate acquired Bulgari in 2011, and their revenue has doubled since. Genius billionaire owner of LVMH, Bernard Arnault, plans to place a concentrated focus on Tiffany’s higher-end diamond collections over the more affordable silver pieces. He also wishes to support Tiffany’s existing strategies of appealing to millenials and launching new products. Tiffany’s will easily achieve these goals, now backed with LVMH’s $52 billion in annual revenue. 

Another benefit to this acquisition is that Tiffany’s will no longer be plagued with the responsibility of disclosing everything to investors. LVMH does not publish its individual brands’ profits, only the total numbers for each category (Wine & Spirits, Fashion & Leather Goods, Watches & Jewelry, etc.). This will allow Tiffany to spend on marketing and growth without worrying about investor pressures. Truly, this deal will benefit both parties, with Tiffany’s near-assured success and LVMH’s desirable growth into the American and jewelry markets. Both of their stocks are up since the acquisition announcement earlier today, boding well for these companies moving forward.

Even though I’m a major fan, I have never received a little blue box of my own. I urge everyone to tell their families (I know I will) to get on the Tiffany train now, while prices are somewhat reasonable. Because with the owner of Louis Vuitton getting his hands on it, there’s no telling where the brand will climb and how luxurious it will become.

Barbie Knows How to Run a Business

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Scrolling through my Instagram feed, I saw the hijabi, Olympian fencer Ibtihaj Muhammad partnering with the biggest brand from my childhood: Barbie. As a young girl, I never imagined a hijabi barbie, let alone one that wasn’t white and blonde. I decided to look further into what Muhammad was promoting. Together, Barbie and Airbnb created a life-sized Barbie Dream House, complete with an infinity pool, memorabilia-filled rooms, and fencing lessons from Muhammad herself.

Life-sized Barbie Dream House, available for rent on Airbnb.

The sixty-year-old Barbie brand is adapting to changing society and capitalizing on some of the biggest trends of this generation. With a growing focus on diversity, strategic partnerships, and a mastery of media, Barbie is more than just a toy, it’s an empire.

Barbie Bimbo is No More

Source: Rehab.com

Barbie’s history with diversity is a rocky one. The brand has received far too many hate messages about it’s severely ill-proportioned doll. As shown on the figure to the right, obtaining a “Barbie body” is quite literally impossible. In real life, her neck would not be able to support her head, her waist can fit half of a liver and a few inches of intestines, and she would be unable to walk with her child’s foot size of 3.

People complain about skinny, photoshopped models depicting unrealistic body expectations, but Barbie was the worst culprit, with 92% of impressionable, American girls looking to her impossible figure. As millennial women became mothers, they decided that Barbie was unacceptable for their children. Thus, according to this Times Article, Barbie sales dropped 20% between 2012 and 2014. The brand’s sales were overtaken both by Lego, encouraging girls to build, and Hasbro’s strong, independent “Elsa” doll dominating the market. Barbie knew it had to adapt to survive.

Barbie measurements compared to models and anorexics (Rehab.com)

How, you might ask? Barbie realized that diversity is selling in today’s society. Girls like me never used to see themselves reflected in toys, on television, or in power. But today, people like Nasim Pedrad, Jameela Jamil, and Congresswomen Ilhan Omar and Rashida Tlaib are dominating the news cycles. Kim Kardashian, Beyonce, and Rhianna are leading a movement to represent a more curvaceous body type. As a result, Barbie began to release dolls of different races, hair colors, and occupations. In 2016, Barbie made the biggest, most complex move of all: They introduced four new body types. 

Now, you can get Barbie in Tall, Petite, and Curvy, along with the original doll. There are 7 skin tones, 22 eye colors, and 27 hair styles, according to CNN. Most recently, Barbie released specially designed dolls that come with a wheelchair or prosthetic leg. The “Career Dolls” feature women as marine biologists, astrophysicists, and engineers. Gone are the moments like October in 1992 when the “Teen Talk” Barbie was made to say “math class is tough.” Women’s empowerment is the new chic, and Barbie is taking notes. 

Barbie Knows How to Make Friends

Ibtihaj Muhammad Barbie Doll

Mattel and Barbie have well-placed strategic partnerships. They came out with their “Role Models” campaign in 2015, featuring dolls created in the likeness of amazing women in politics, science, athletics, and so much more. Some role models are not famous, as is the case with Iwona Blecharczyk, a professional truck driver from Poland. But in choosing celebrities like Gabby Douglas, Ibtihaj Muhammad, and Naomi Osaka, Barbie is bringing a vast amount of positive media attention to their company. 

Ashley Graham Barbie Doll

In my opinion, their best celebrity partnership is Ashley Graham. As one of the leading activists in the body positivity movement, she is a social media sensation and famous supermodel. Her  9.4 million followers love her, and have propelled her into landing jobs with Vogue Magazine, Harper’s Bazaar, Glamour, and the coveted Sports Illustrated swimsuit cover. Adding Graham as a role model in 2016 helped launch Barbie’s body positivity line in the most millennial-centric way possible.

Barbie has learned to partner with more than just individuals. The aforementioned Airbnb partnership brought extensive media attention to both companies, and Airbnb donated to the Barbie Dream Gap Project, helping girls achieve greatness. This was truly a genius move, and one of the most creative marketing ploys I’ve seen in a long time. 

Barbie on Screen

Barbie is quite possibly the most technologically savvy doll there is. Her Instagram is worth following, with a colorful feed and engaging posts. Barbie wants you to interact with her by answering questions and sharing stories on Instagram. She posts about celebrities like BTS and provides exciting videos geared to younger teen audiences. One of the most recent posts was the “We’re Taking Over” music video.

The video features some of the most Insta-famous dancers from Dance Moms, Disney Channel, and other famous studios. The message is rooted in female empowerment, showing girls becoming president and other high profile leadership roles. While this video is too annoying for my 19-year-old senses to handle, it’s perfect for the age group they’re targeting. By using relatable influencers, a great message, and fun music, Barbie is bringing an exciting flavor to her Instagram profile, and you can watch the whole video via IGTV.

Barbie can also be found on the television screen. One day, I walked into my friends house and found her watching Barbie: Life in a Dreamhouse on Netflix. She said, “it’s kinda good.” My friend was not Barbie’s target audience, but there she was, interacting with the Barbie brand at eighteen. If someone searches “Barbie” on Netflix, he or she will find countless mini series and movies featuring the iconic doll. She doesn’t just dominate social media, she’s on your Netflix feed as well.

What’s the bottom line? Having a sixty-year-old brand plagued with controversy isn’t the end-all be-all. You can bounce back and assert yourself in the industry for years to come. It’s all about looking at your customers and determining exactly what will make the dollars flow into your pocket. Does a six-year-old care if Barbie partners with Ibtihaj Muhammad? No, but the mommy with the wallet most certainly will.

Sources:

Gen Z says: Buy Less, Wear More

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For every school dance I’ve ever had, the women in my family have helped to create a look screaming of class and elegance. But whenever I found the perfect dress, the Sax Fifth Avenue price tag was simply too steep for a junior prom. No individual in their right mind would send their daughter to a dance in a $14,000 dress. But those were the only dresses that exhibited some semblance of originality. It was an inner battle between being pragmatic about costs and being unique.

I am not the only one who experiences this cognitive dissonance. Generation Z’s consumption as a whole is characterized by expressions of individual identity and realistic decision-making. More and more, the individuals of my generation are turning away from spending for possession and are instead simply spending for access. Thrifting is making a comeback, rental is on the rise, and the sharing economy is taking over. Think of the streaming services dominating media consumption, or Uber and Lyft redefining transportation. This generation’s values are driving changes in almost every industry imaginable. The global economic sphere is shifting, and it’s all due to the fact that companies are learning to meet the needs of their present and future consumer base. 

Enter, Rent the Runway. 

Rent the Runway Drop-off Location

Rent the Runway was the perfect solution to my aforementioned dress dilemma. It is a service that allows one to rent high-fashion pieces for a limited amount of time. The sharing economy is entering the fashion world through services like these and changing the landscape. A study by McKinsey recently elucidated significant characteristics of Generation Z and their implications for companies today. Essentially, what we think and how businesses must adapt to stay afloat. Our main consumer habits reflect our preferences toward shared goods, singularity, and ethics. When inserting these qualities into the fashion framework, we can see where the shifts in the industry are and where they will be. 

Ownership is Down For Gen Z

McKinsey notes that my generation isn’t as focused on possession as the generations before us. The sharing economy has produced companies like Zipcar and Airbnb, and the trend is growing into the fashion industry. Young adults find little value in a single expenditure that only produces one item. Purchasing a subscription or participating in the sharing of goods and services seems more pragmatic and efficient. Additionally, many clothing items, especially luxury goods, see only one use. The formal dresses I purchased in high school have never again seen the light of day, simply taking up space in my closet back home.

So why are young people not keen on re-wearing big ticket clothing items? To put it simply, they don’t want to be seen wearing the same outfit more than once on social media. Polls from the The Hubbub Foundation, a British charitable organization, found that 1 in 6 individuals would not wear an outfit if it had already been featured on Instagram or Facebook. I even find myself pausing before posting photos with the same clothing combination, or at least attempting to wait before repeating a look. 

This is why fast fashion finds such a stronghold in society. Fast fashion produces the opportunity to cheaply purchase a clothing item and throw it away after a month of use. That way, no one has to repeat outfits. But fast fashion comes with its own consequences, both surface level and environmental implications. 

Gen Z Craves Singularity  

With everyone purchasing clothing from the likes of H&M, Forever 21, and Zara, it’s difficult to have a unique identity. There were three different girls at my senior prom wearing the exact same dress. The dress was cute in a traditional sense, but it was popular because it offered an alluring price tag. One of these individuals was a friend of mine, and I remember her fury. Few members of Gen Z wish to blend in with the pack. Rather, individuals want to stand out among their peers, be original and unique. It’s difficult to achieve this with traditional retail models, which is why practices such as renting and consignment are on the rise. 

Gucci Cat Eye sunglasses

These practices allow young people to seek out the pricier brands that they would otherwise sport. Renting and consignment open doors to the segment of the fashion industry normally closed off to those pragmatic spenders, allowing for increased opportunities for originality. Gucci’s brand is unique, and now it can be accessed by multiple social classes. The classic pair of Gucci Cat Eye sunglasses retails for $485, but you can rent them at 85% off, wear them for your week-long  staycation in San Clemente, and then send them back.

The same can go for unrivaled vintage items on the Real Real and other similar consignment sites. In 2019, It’s almost too easy to be unique, just ignore the Forever 21’s of the world. In 2019, It’s almost too easy to be unique, just ignore the Forever 21’s of the world.

Gen Z Has a Heart

With fast fashion, it’s difficult to be one-of-a-kind. But fast fashion poses a problem exponentially more severe: its threat to the environment. Purchasing vast amounts of cheap clothing and tossing it after a few uses is terrible for the planet. According to the Ellen Macarthur Foundation, textile production accounts for 1.2 billion tons of annual greenhouse gas emissions. To put that in perspective, that’s more than maritime shipping and international flights combined. Moreover, when these garments are washed, they release plastic microfibers that contribute to ocean pollution. Big names like Stella McCartney have called for change in the fashion industry, urging high and fast fashion alike to change the way they do business. This change will come in the form of rental and thrifting, and while it will help the environment, it will also be very lucrative. 

As represented in the graph above, Gen Z genuinely cares about the ethics of the companies they support. It’s the rise of the conscious consumer. A generation that grew up using the internet knows exactly how to access any and all information about the practices of brands and companies. If they find that a brand does not actually support a cause they claim to align with, or if some sector of their company is participating in socially or environmentally detrimental activities, they will lose business.

Recently, the fitness giant SoulCycle,  experienced black-lash after a member of its leadership planned to host a fundraising event for President Donald Trump’s campaign. As the president is widely seen as the embodiment of nationalism gone wrong, many young people raised their voices on social media against SoulCycle, claiming they would take action. A study compared sign-ups at various locations across the country before and after the news hit. There was an average decline of 12.8%, which is a very notable shift for a fitness company. 

Model Chrissy Teigen tweets for SoulCyle boycott.

On the other hand, if a brand is actively crusading for a cause that makes sense for them and improves some sector of society, they will generally see an influx of business. Urban Outfitters has come out with their own clothing rental service, Nuuly, for itself and its subsidiary brands (Free People and Anthropologie). Additionally, Bloomingdales has created their own rental segment of the company, My List, which allows customers to rent different pieces of clothing, also allowing them to purchase the product after the rental period. Like the others, RealReal, a luxury consignment company, promotes re-commerce and environmentally friendly methods of consumption. 

These brands are promoting a change in the fashion industry, and young people have and will take that into account when choosing where to spend their money. 

Luxury Retail’s Snootiness Needs to Go

(Gen Z alone will account for 40 percent of global consumers by 2020. (Mckinsey fashion thing)

Some luxury brands like Chanel and Louis Vuitton are showing resistance to the trends of rental and thrifting. They believe that these practices force their products to appear second-hand. But those who purchase them don’t find this to be true. They see it as giving something a second life. Wearing something with a rich history and remaking it as their own. It all depends on how you look at it, but what’s certain is that these luxury brands have an opportunity to expand their audience to the youth who crave originality and rarity. According to McKinsey’s State of Fashion Report, Gen Z will account  for 40 percent of global consumers by 2020.

Moreover, it doesn’t seem like high fashion has any choice but to change their businesses. Luxury stocks are down, and according to a Forbes article, Goldman Sachs and many other financial institutions are claiming that luxury sales growth is and will continue to slow. You can check this yourself and put actual numbers behind it. And the stock price might be a consequence of many different factors. You might want to look at annual sales of Gucci and LVMH as a proxy. 

Tiffany & Co Instagram Marketing, the example for all luxury brands

But digitization and joining in on the trends of tomorrow could help these brands maintain their dominance. Euromonitor claims that luxury sales grow online at a faster rate than physical retailing. Social media sites like Instagram have released features that allow users to purchase products  directly through the application, simply by clicking on an influencer or company’s post. Generation Z is relying on social media and the internet more, and the antiquated luxury brands must capitalize on this behavior to stay afloat. Tiffany & Co has used social media like no other luxury brand has. The company has truly taken advantage of social media marketing, and the luxury world must look to them as the example. At the conception of their business, the RealReal partnered with the infamous Kardashian family when the women released 200 pieces from their closets onto the consignment site. The traditional fashion landscape wouldn’t expect wealthy members of the elite to participate in thrifting behavior, but there the Kardashians were, supporting the brand. 

The RealReal’s stock is performing tremendously well. While it’s still in its early stages and slightly volatile, most fashion brands exhibit similar trends. The Nasdaq reports a relative strength index of 59.84, which means it’s solidly within the ideal 30-70. Every day, more and more Fashion companies are adding themselves to the lucrative field. Rent the Runway, one of the first luxury rental services, had so many orders they had to put their entire operation on hold to catch up. In the very near future, fast fashion will be obsolete and the industry will be sustainable and cost-effective. Gen Z has a message for you, and it’s to “Buy Less, Wear More.”

Sources

The BOOming Business of Halloween

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Looking around my living room, my heart floods with excitement as I regard my sparkly pumpkins, fall floral arrangements, and witchy decorations. I typically consider myself a conservative spender, but when it comes to All Hallows Eve, my body finds itself possessed by the demon of retail.

Source: Women’s Day
https://www.womansday.com/home/decorating/g1902/painted-pumpkins-ideas/?slide=18

And I’m not the only one. When I was young, my family had shallow pockets, yet my mother splurged on Disneyland tickets and expensive costumes every Halloween. My friends’ parents kept boxes upon boxes of Halloween decorations, adding to their collection every season from the likes of Micheals, Home Goods, Target, etc.

Buckets of funds are poured into products with hair-raising price tags, seasonal shops like Costume Castle reaping enormous benefits. Do I spend on multiple new costumes every year? Yes. Do I feel bad? Absolutely not. Why? It’s fueling the economy like B Positive fuels a vampire.

Spooktacular Spending in 2019

According to the National Retail Federation (NRF), Americans collectively are expected to spend about 8.8 billion dollars, simply on the spooky night in question. On average, each human (transparent ghouls excluded) will average $86.27 of Halloween spending, with 172 million people planning to participate in the festivities. In case you were wondering, that’s a haunting amount of consumers trick-or-treating themselves. 

The NRF also reported an interesting new trend. Social media has greatly affected consumer spending decisions. More and more people are looking to platforms such as Pinterest, Instagram, and Twitter for their next purchases. As individuals attempt to imitate celebrities, they tend to choose costumes with higher price tags. Gone are the days of homemade outfits that don’t offer impressive social media pictures. This is detrimental to our pockets, but beneficial for the Halloween business, with consumers predicted to spend $3.2 billion on costumes alone. 

Source: Harper’s Bazaar Arabia
https://www.harpersbazaararabia.com/people/the-a-list/the-best-celebrity-halloween-costumes

Broader Economic Effects (Ghoulish GDP)

Source: Lemon Tree Images

Like I said before, all of this spending is fueling the economy. Businesses like pumpkin patches and candy corporations are thriving, and many seasonal employees have an institution to work for. In 2018, spending records reached an all time high, and this year the robust numbers remain unchanged. This is extremely positive, because Consumer spending is the largest contributor to the nation’s GDP, driving the economy as a whole. 

While the holiday season is short-term, Halloween serves as a great little BOOm for the nation’s economy. So have a fangtastic celebration, and don’t feel guilty about all of those spooktacular splurges.

Source: https://llynstrong.com/event/happy-halloween/

Source:

Jordan, Thomas, et al. “Social Media Influencing near-Record Halloween Spending.” NRF, 25 Sept. 2019, nrf.com/media-center/press-releases/social-media-influencing-near-record-halloween-spending?utm_medium=Homepage%2BHero&utm_source=Website&utm_campaign=Halloween&utm_content=Release%2B9-25-2019.

The Juiciest Economic Indicator

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For the average person, economic indicators can be difficult to read. How can one look at the statistics released by Trading Economics and understand how the price of palm oil can affect his or her life?

In searching for a method of explanation for non-academics, I came across interesting publications. Business Insider detailed many unusual indicators, including “The First Date Indicator” and the “Plastic Surgery Indicator.” These seemed quite obvious to me. In tough times, individuals try to combat their loneliness and turn to dating. In times of prosperity and confidence, people allow themselves to splurge on plastic surgery. 

But one stood out among the rest and urged me to research further: The Big Mac Index created by The Economist. It was meatier than the rest, an asset that economists could actually utilize in their projections. It gives the common person an idea of how their currency holds up against the rest.

Artwork by Curtis Partridge

Essentially, this index looks at the global prices of McDonald’s Big Macs and compares them. It’s based on the Purchasing Power Parity (PPP) theory that a basket of goods should eventually cost the same in various countries. The values of these goods can indicate the exchange rates for currencies.

https://www.economist.com/news/2019/07/10/the-big-mac-index

By looking at Big Mac prices, one may be able to elucidate the status of an economy and possible under or overvaluations. While this index is not precise, it can provide some interesting data.

Where it Falls Short

Naturally, prices will be lower in poorer countries, as labor is cheaper. Additionally, places like India have dietary restrictions that would prevent a Big Mac from performing well. The model uses a poultry version of this product so that India can be included in the index, but it isn’t the same. Israel provides kosher beef, while Islamic countries provide halal beef, both of which would affect price and production.

Moreover, some places consider McDonalds a western novelty, while others see it in a more casual light. Because of this, McDonald’s creates different marketing strategies for different countries. They may push harder with a more effective approach in the U.S. than in Sri Lanka. Overall, while McDonald’s is a single corporation, it can have a very different meaning between nations.

How it Surpasses Expectations

When the Economist first created this index, it was meant to be more amusing than reliable. What began as a fun tool to judge misalignments between currencies started to be taken seriously. In response, The Economist added an adjustment of GDP per person, making it more accurate. 

https://www.economist.com/news/2019/07/10/the-big-mac-index

It is now referenced to explain PPP in academic articles and textbooks, according to The Economist. One researcher, Li Lian Ong, went as far as to say that he believed the Big Mac Index could have been used to predict the Asian currency crisis. While seemingly trivial, this indicator makes a great deal of sense. One can study the movement of exchange rates in the long run, while also studying their currency’s purchasing power in other countries. 

What it Tells Us Today

The Big Mac Index was created in 1986 and has since fizzled out. Most of the information on it comes from the early 2000’s and stops around 2011. Despite this, current data is still available.

The table to the right is the data reported by The Economist in July of 2018. The Key Takeaways are:

  • Cheap currencies are inching closer to the dollar.
  • Only three countries have higher priced Big Macs than the U.S. (Switzerland, Norway, and Sweden).
  • The Euro is undervalued, but considerably less than before.

Over & Underevaluations

https://www.economist.com/graphic-detail/2019/01/12/the-big-mac-index-shows-currencies-are-very-cheap-against-the-dollar

The above graphic illustrates that almost all currencies are undervalued when compared to the dollar, specifically countries with emerging economies. This makes the dollar seem very robust. But checking statistics dating back to the birth of the Big Mac Index in 1986, undervalued currencies typically grow within a ten year period.

Like all economic indicators, the Big Mac Index cannot accurately tell us what will happen in the coming years. It allows us to study the past, present, and potential futures. Some people are its biggest allies, while others are its biggest critics. Personally, I know it isn’t the most telling or reliable indicator, but I think it’s a delicious way to digest economic data.

Sources

  1. “Beefed-up Burgernomics.” The Economist, The Economist Newspaper, 30 July 2011, www.economist.com/finance-and-economics/2011/07/30/beefed-up-burgernomics.
  2. “The Big Mac Index Shows Currencies Are Very Cheap against the Dollar.” The Economist, The Economist Newspaper, 12 Jan. 2019, www.economist.com/graphic-detail/2019/01/12/the-big-mac-index-shows-currencies-are-very-cheap-against-the-dollar.
  3. “The Big Mac Index.” The Economist, The Economist Newspaper, 10 July 2019, www.economist.com/news/2019/07/10/the-big-mac-index.
  4. Boesler, Matthew. “The 41 Most Unusual Economic Indicators.” Business Insider, Business Insider, 11 Oct. 2013, www.businessinsider.com/unusual-economic-indicators-2013-10.
  5. Ong, L.I.. (2003). The Big Mac index: Applications of purchasing power parity. 10.1057/9780230512412. 
  6. “Our Big Mac Index Shows Fundamentals Now Matter More in Currency Markets.” The Economist, The Economist Newspaper, 20 Jan. 2018, www.economist.com/finance-and-economics/2018/01/20/our-big-mac-index-shows-fundamentals-now-matter-more-in-currency-markets.
  7. Pakko, Michael R., and Patricia S. Pollard. Burgernomics: A Big Mac Guide to Purchasing Power Parity. Nov. 2003, files.stlouisfed.org/files/htdocs/publications/review/03/11/pakko.pdf.