Low-Income Households: The Most to Lose, The Least Capable of Change in the Face of Global Warming

One of the biggest concerns for the current American public is taking action against climate change. In recent years, more people have reported feeling the effects of climate change firsthand than ever before. Around six-in-ten Americans claim that climate change is affecting their local community in either a great deal or at some capacity. This is due in part to increasing global temperatures and rising sea levels effecting both inland and coastal communities.

Those most at risk are often low-income communities. Cheaper housing can be found in high-risk areas such as flood or fire zones as well as in decaying, older housing that can be equally or if not dangerous in a natural disaster. The latter is due to the fact that older housing is often not outfitted with updated building codes that implement fire-proof or flood-mitigating infrastructure. Even the streets themselves may be incapable of handling efficient transport of emergency services. The more likely a firetruck is to get stuck in a congested street, the more likely the building in an old urban district is to face irreparable damage or even get burned down. 

It’s no contest that failing to address climate change early has contributed to an increasingly burdensome cost on mitigation efforts. Firefighters are subject to increasingly longer overtime hours, FEMA applications in flood zones have skyrocketed, and local governments, including California and Texas state governments, are looking to buy out housing in high-risk areas to prevent further housing in those regions. The costs are also looking to increase in the next few years. 

Many Americans are electing preventative measures to combat climate change. This includes choosing eco-friendly brands who are changing manufacturing practices to reduce carbon emissions to conserving resources including energy and other utilities. This conservation of utilities is also a cost-saving benefit to many households. However, there is a glaring issue in terms of the infrastructure of utilities provided for by both public and private companies that negatively affect low-income households‘ ability to participate in eco-friendly activity and economic conservation: infrastructure. 

In a study that analyzed socioeconomic status and energy consumption, New York University urban planning researchers Constantine E. Kontokosta and Bartosz Bonczak and the University of Pennsylvania urban planning professor Vincent J. Reina found that the highest consumption was found in both the lowest and highest income neighborhoods in the study. 

While the consumption levels for the higher-income bracket is attributed to an average increased use through more appliances, electronics and other behavioral choices, the same could not be said for the low-income bracket’s use. 

Public Housing Projects in NYC.

As stated before, much of low-income housing is often found in regions with aging buildings that fail to upgrade its infrastructural components to fit current standards found in new housing. As a result, new technology that provides more efficient systems in conveying utilities is never implemented. No matter how hard these households attempt to conserve resources on a behavioral level, they ultimately end up using and paying more because of their outdated systems. 

The same can be said for subsidized housing units, where often the cheapest option for utility conveyance is placed in rather the most efficient. This leads to small short-term costs at the expense of the developer, but large long-term costs at the expense of the resident, who must outfit the monthly utility bills. 

This places an extra burden on low-income households, who already pay an increasingly larger  portion of their income on utility bills overallup to 20 percent of their wages as opposed to wealthy families who pay between 1.5 and 3 percent of their income. Thus, this infrastructural issue is both at a significant cost of low-income communities as well as the environment.

Energy Cost Burden in relation to minority populations, an aspect of the 2019 study on energy consumption on metropolitan regions.

Currently, there is little incentive for private housing units to provide upgrades to their aging structures without placing the expense on their tenants. On the other hand, public housing is beginning to see promise in the form of legislation—particularly the Green New Deal. 

The ambitious bill proposes seven different grant programs to completely replace the energy systems of public housing nationwide within 10 years. The replacements would either consist of renewable or sustainably carbon-neutral systems, addressing the issue of aging infrastructure as well as carbon-emission reduction. 

While the initiative shows promise, the bill is still in contention in Congress and has yet to be enacted. If we wish to see both alleviation of the burden and stress of low-income living in the nation as well as protecting the most vulnerable population from climate change, more investment on sustainable infrastructure and utilities needs to be made. 

Goodbye Black Friday

With more shopping moving online, Black Friday is dying at a rapid rate. 

Clint Grant | The Dallas Morning News

“I think the traditionalists will have a hard time stomaching that Black Friday is dying,” Josh Elman, a consumer and retail analyst with Nasdaq Advisory Services, told Business Insider. “But I think at the end of the day, the whole idea and concept of Black Friday deals in store will diminish over time.”

He continued, “Ultimately, consumers really want convenience, and they want to get their item and get out of the store quickly. They don’t want to wait in long lines. They don’t want to wait for a store to open anymore.”

Frederic J. Brown | Getty Images

According to the National Retail Federation, 99 million people said they shopped in stores on Thanksgiving weekend last year. This was a 3 million drop from the year before, and according to Elman, this number will only continue to fall. 

Meanwhile, 108 million people shopped online on Thanksgiving weekend the same year. This was a five million increase from the year before. 

Other than the shift to e-commerce over in-store purchases, another issue arises. People are becoming used to having deals available all year round. 

Tory Ho | Getty Images 

There is no longer a single day – the day after Thanksgiving – that retailers offer amazing deals. These deals are now spread out throughout the holiday season and the rest of the year, and they now appear online and in stores. 

However, Black Friday still helps to kick off a critical period for retailers. But, Elman mentions that the holiday season start date is inching earlier and earlier since companies are desperate to survive the “retail apocalypse.”

Offering Black Friday-like sales before Thanksgiving may assist retailers in boosting their business compared to rivals, but it also dilutes the importance of Black Friday as a single day for destination shopping, which affects the entire retail market.

“It’s a little sad. But it’s just a sign of the times,” Elman stated. “It’s really the paradigm shift that’s occurring. I think retailers understand what’s transpiring, and ultimately are doing everything in their power to meet customers’ needs.”

Sources

LVMH Just Bought Itself a Little Blue Box

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.

Why does Taylor Swift want to own her masters?

By Sarah Montgomery

Taylor Swift’s music has changed in more ways than one. The country-turned-pop singer’s catalog of music recently changed hands, from Scott Borchetta to Scooter Braun.

Taylor Swift
Photo courtesy Taylor Swift’s Instagram account

Borchetta sold Big Machine Records to Braun, a manager for many big-name artists , for $330 million dollars. As part of that deal, Braun acquired the music rights to everything the label owns. Five of Swift’s six albums are now his property. 

Swift was offered the opportunity to buy back her masters (music industry jargon for the first recording of any song)—with a major catch. Under Big Machine, she would have been able to buy back each album with a new one in exchange. In essence, she would have had to sell away her future to buy back her past. She refused, leaving her old art with Big Machine, and moved to Republic Records in 2018.

Swift was one of the biggest artists under Big Machine, which houses lesser-known stars like Thomas Rhett and Lady Antebellum. Allegedly, Borchetta had been looking for a buyer for years. If he had let Swift buy back her music, he would not have gotten nearly as much money as he did in his deal with Braun.  

In most cases, this would not be newsworthy. Many artists don’t have ownership over their own work; it is an accepted reality in the music industry. 

The big deal is that Swift vehemently hates Braun. She has called him a bully, going so far as to say “my musical legacy is about to lie in the hands of someone who tried to dismantle it.” She specifically cites an instance in which he and two of his clients, Justin Bieber and Kanye West (with whom she has legendary drama), got on a FaceTime call and posted a photo of it with a caption that taunted her. She also points out that West used a lookalike of her naked body in a music video, which she amounts to finding Braun complicit in revenge porn. 

Justin Bieber, Kanye West, and Scooter Braun on FaceTime.
Photo courtesy Taylor Swift’s Tumblr Account

Swift does not have many options to better her situation. She plans to re-record the old songs, which she is contractually allowed to do in November 2020. This will devalue her entire catalog, as there will be two copies of one product. Alternatively, according to the 1976 Copyright Revision Act, artists can reclaim ownership after 35 years.

The most she can do is pressure Braun to let her buy back her masters, which is why her social media campaign against him may prove useful. That being said, Swift is worth about $320 million. It’s possible that even if she had the opportunity to buy back her masters, she would not be able to afford it. 

Swift is already feeling the repercussion of a wrathful custodian. Financially, it is in Braun’s best interest to license Swift’s music. But he, a man worth $400 million, could theoretically shoulder a few losses to punish her for lashing out.

Swift, at the 2019 American Music Awards, wearing a jumpsuit emblazoned with the names of albums she recorded under Big Machine. She won Artist of the Decade.
Photo courtesy Getty Images

Her team announced that the record label is not letting her use her old music or performance footage for a few major projects, notably a Netflix documentary and the Alibaba “Double Eleven” event she performed at. She just barely got permission to use her music for a performance at the American Music Awards. Considering the majority of money artists make comes from touring and concert sales, this next year could very well be a financial dry spell for Swift. 

Record labels hold an unbelievable amount of power in the music industry. Whoever owns the masters will always control and benefit from any use or licensing of those songs. For this reason, many artists are going independent these days or are strictly negotiating ownership rights. With the rising popularity of direct-to-consumer distribution platforms, such as Sound Cloud and Youtube, being independent has never been easier.

On the other hand, there are a lot of perks for signing with a label—a massive advance (read: money), access to a strong industry network and other benefits that vary by contract. The most important thing for many artists is that labels will often handle the entire business side, from marketing to brand management. So labels will take a gamble, financially backing and professionally supporting you now—at the cost of owning your music and the majority of your future earnings. 

Braun and client Arian Grande.
Photo courtesy One Love Manchester

Because contracts are usually very private, the financial arrangement between Big Machine and Swift is not entirely clear. Let’s imagine that, through subscription costs or advertising revenue, consumers are ultimately paying Spotify $1.00 per stream to listen to “You Belong With Me.” Typically, about 70 cents of that dollar goes to the rights holder, in this case being Big Machine. If the label were to pay the artist 15% of their share, that would amount to just 10.5 cents to Swift. And remember, that’s just an estimation; labels have total discretion of how much they will pay artists. 

Courtney E. Smith, a writer for Refinery29, notes that labels tend to have shady accounting practices, so trust is an essential aspect of any artist-record label relationship. Braun may drastically reduce her payout from the company for her work or maybe even not pay her at all. As it is now, Swift already claims that the label owes her $8 million in unpaid royalties. 


Swift, who signed with Big Machine at age 15, is using this all as a cautionary tale to up-and-coming artists. “Hopefully, young artists or kids with musical dreams will read this and learn about how to better protect themselves in negotiation,” Swift writes. “You deserve to own the art you make.”

The End of “Let’s Order In”

There is currently a paradox that confronts the restaurant industry. On the one hand, restaurant companies consider the rise of delivery as an increasingly important source of growth. On the other, GrubHub Inc. just announced disappointing quarterly results and said that food delivery is only a means to an end, unlikely to ever be profitable on its own. There is a considerable amount of risk associated with this conclusion from GrubHub toward the broader restaurant industry. 

Jennifer Marston/The Spoon

The GrubHub Phenomenon

Restaurants have based much of their recent growth on consumer deliveries and rely heavily on only four companies – GrubHub, DoorDash Inc., Postmates Inc., and Uber Eats. Combined, these four companies have a 95% share of the market, which makes GrubHub’s latest quarter seem even more ominous. In a letter to investors, GrubHub stated that it did not believe “that a company can generate significant profits on just the logistics component of the business.”  In other words, delivery will always be a low-margin business, so profits cannot significantly be derived from conducting only deliveries.  

More specific to GrubHub, the company found that new customers tend to order fewer deliveries than earlier users. Customers are losing their brand loyalty and are more willing to switch to rival services, which may be due to an increase in competitors in the online food delivery industry. Lastly, those rival services now offer delivery from a wider range of restaurants than GrubHub. This all resulted in a net income of $1 million for GrubHub versus $22.7 million in the same quarter a year before. 

The Daily Rail

In defense of these results, GrubHub has argued that its value to restaurants lies in its potential as an online advertising partner and that delivery services are just a vehicle for generating ad sales. Therefore, GrubHub is profitable, but meal delivery just isn’t where the money is. However, where does that leave DoorDash and Postmates, both of which are unprofitable and have a combined valuation of $15 billion? Both companies must now strive to accept the initial public offerings each received this year since no one would want to bother putting more money into these unprofitable companies when investors can buy shares for much less in GrubHub. 

Uber Eats is a slightly different case than DoorDash and Postmates because of its parent company, Uber Technologies Inc. However, Uber is a huge money loser, and its shares have declined by almost 30% since the company went public in May and investors are looking for signs of profitability. Therefore, despite having a parent company, Uber Eats is in a similar predicament as DoorDash and Postmates.

A Painful 2020 for the Restaurant Industry

If food-delivery services start cutting back because of its lack of profitability, then this will affect the restaurant industry tremendously in 2020. For example, in a conference call to discuss its latest quarterly results, Cheesecake Factory Inc. said that off-premise sales now comprise 16% of revenue with delivery being 35% of that amount. Cheesecake Factory uses DoorDash for its deliveries. This means that restaurants are currently dependent on companies with a significant amount of risk associated with it.

So, if GrubHub continues to hurt its own stock, then there is a high chance that the restaurants it works with will be hit as well in 2020.

Ridester

Sources

Barbie Knows How to Run a Business

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:

Women, the new Apple Card, and credit discrimination

By Sarah Montgomery

“The @AppleCard is such a fucking sexist program. My wife and I filed joint tax returns, live in a community-property state, and have been married for a long time. Yet Apple’s black box algorithm thinks I deserve 20x the credit limit she does. No appeals work,” tweeted user @dhh. 

The man behind the Twitter handle is David Heinemeier Hansson, a software developer with a large social media following. When he and his wife, Jamie, applied for the new Apple Card, he received a much higher credit limit, even though his wife has a better credit score and they share assets. 

Steve Wozniak, a co-founder and current employee of Apple, said that he and his wife face a similarly unfair discrepancy in creditworthiness in terms of the credit card.

The Apple Card, which came out in August, was developed by Apple and Goldman Sachs. According to a support page, the applicant’s credit score, credit report and income level are entered into an algorithm that decidess creditworthiness. 

In response to the media attention that Hansson’s tweet garnered, the New York State Department of Financial Services announced that it will be investigating the algorithm that Apple and Goldman Sachs use.

Courtesy of Apple

How can artificial intelligence share human biases? According to a CNN Business article, artificial intelligence “can quickly learn about a simple concept, but it is dependent on the data that us humans feed it, for better or worse.” 

Gender discrimination in the finance world is nothing new. Only in 1974, not even 50 years ago, did Congress pass the Equal Credit Opportunity Act (ECOA). The act requires that banks, credit card companies, and other lenders make credit equally available to all creditworthy customers. It also outlaws discrimination based on several personal characteristics—sex being one of them— and thus lenders can only decide creditworthiness on income, expenses, debts, and credit history, amongst other limited pieces of information. 

“[I]f you weren’t a white male you were likely to be treated like a potential problem, not a potential customer [by lenders].”

Billy Fay of debt.org

Until ECOA was implemented, women were not allowed to apply for credit. All credit had to be obtained through husbands or fathers, even if the woman in question was gainfully employed. Though the legislation was a major push in the right direction, the National Consumer Law Center argues that unfair credit discrimination is alive and well, particularly against women.

Following up on his original tweet, Hannson writes: “I’m surprised that they even let her apply for a credit card without the signed approval of her spouse? I mean, can you really trust women with a credit card these days??!”

And the Wall came tumbling down…

West German citizens gather at a newly created opening in the Berlin Wall at Potsdamer Platz in November 1989. DoD photo.  

November 2019 marks the 30th anniversary of the fall of the Berlin Wall. From 1961 to 1989, the Berlin Wall separated West Berlin from East Berlin. Standing approximately 12 feet high and 27 miles long, one of the reasons the Wall was created was to keep East Germans from fleeing to the west.

The fall of the Berlin Wall on Nov. 9, 1989 meant that East Germans were free to travel and to work outside of their country for the first time in decades. A New York Times article written three days before the Wall fell about the economic impact the fall could have on Europe mentions that “since East Germans can automatically obtain citizenship in West Germany, they also become citizens of the European Community, free to travel and seek jobs, housing, and eventually welfare benefits in any of the other 11 member countries.” 

Within a year of the fall of the wall, East Germany and West Germany reunited into one whole Germany. That new Germany was generally economically stable with a stable currency. The European Community morphed into the European Union, which Germany is heavily associated with. The country’s general economic strength typically means that the European Central Bank’s “one size fits all” interest rates only fit Germany.

A Pew Research Center study found that while Germany is generally viewed positively in Europe, views of Germany are tied to the EU as a whole. Essentially, if you like the EU, you generally like Germany. Since the global financial crisis, that’s less likely to be the case. In Italy, unfavorable views of Germany increased by 27 percentage points between 2007 and 2017. 

But Greece is where the real hate is at, with a little over three-quarters of Greeks having an unfavorable view of their fellow EU member. “The country is several years into an austerity program imposed by the EU and backed by Merkel’s government,” the study reminds. 

There’s another group of people that aren’t too fond of Germany right now: the Germans. More specifically, people from the eastern German states. It’s been 30 years since the Berlin Wall and 29 years since the German Reunification, and they are still living with the consequences. According to Marketplace, many state-owned companies were sold off to the private sector post-unification and many others collapsed because they could not compete in a market economy. 

When the Berlin Wall fell, many things changed for the better – residents of East Germany could see loved ones on the other side of the border again, could participate in democratic elections, and could travel freely. The economics of the matter is different. It has fostered a feeling of discontent amongst the former East Germans, who say they feel like they have been treated like second class citizens.

According to a recent opinion poll, only 38 percent of Easterners regard the unification as a success – perhaps due to the feeling that it was not a reunification of two Germany’s but the absorption of the East into the West. Jörg Roesler, an economist, said that although western taxpayers spent $2 trillion to improve infrastructure and a social safety net in the former East Germany, it was wasted. Roesler believes what Eastern companies needed was protection. He told Marketplace that if they had been protected for up to five years, a generation would not have been unemployed and “made to feel worthless.”

The dissatisfaction of the former East Germans isn’t just resentment over something that happened 30 years ago. Eastern Germans are still being effected. A Pew Research Center study on how the economic conditions of East and West Germany changed over time found that unemployment in the former East Germany is higher than in the former West Germany by around 2 percent. Although the economic gap between the two regions has become narrower recently, former East Germans make less money than former West Germans. 

“People in the former East Germany earned 86% the after-tax income of their West German counterparts in 2017,” said the study. “That percentage has changed little in recent years, but is far higher than in 1991, when per-capita disposable income in the former East was only 61% of that in the former West.”

The physical Berlin Wall may have fallen 30 years ago, but its economic and psychological shadows live on.

SOURCES

Gen Z says: Buy Less, Wear More

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

TikTok: The Beginning of China’s Digital Influence

Source: Wired

Although China has found major success in global hardware markets, they have yet left any major footprints in the digital space. Many anticipated that Chinese digital giants, such as Alibaba, Tencent, Baidu, and JD, would take over the tech world. Yet, their efforts have been disappointing and their results left many believing that China’s ability to crossover into the digital market would not occur. That is, until now.

In 2018, the most downloaded apps in the U.S. included Facebook, Instagram, YouTube, Snapchat, and unknowingly for many, TikTok. TikTok became one of the most downloaded apps in the App Store for Apple users, and the Google Play Store for Android users.

Source: TechCruch

What is TikTok?

TikTok is a video sharing platform that started with short music videos but has now expanded to include content that relates to cooking, travel, fashion, and so on. Videos on TikTok can be no longer than 15 seconds, but in those 15 seconds, content creators can add music and special effects through the use of the app’s simple tools. Because of TikTok’s easy-to-use functions, virtually anyone can become a content creator on TikTok. However, the most popular TikTok videos that have crossed over into Instagram and YouTube are high on entertainment value and set trends that many other creators on TikTok follow.

Although TikTok comes from China, it is not owned by one of the Chinese tech giants. Despite massive investments in video platforms, Chinese tech giants, such as Alibaba, Tencent, and Baidu, were never able to dominate this area of the digital realm. TikTok, known in China as Douyin, was launched in 2016 by ByteDance, a Beijing-based tech company traditionally focused on news. Its news app, Toutiao, uses advanced AI algorithms that learn user preferences, then provides customized news feeds. ByteDance uses the same algorithms to provide relevant video feeds to TikTok users.

By the start of 2017, Douyin had become China’s most popular mobile video app. In November of the same year, ByteDance spent $1 billion to acquire a competing video sharing site called Musical.ly. While Musical.ly was also founded in China, most of its users were based in the U.S. The combined global reach of TikTok and Musical.ly created a powerful combination that has generated China’s footprint in the digital market and a hopeful outlook on China’s digital future.

Source: Facebook

Competition Looms

By the end of 2018, TikTok had more than half a billion active users, around 40% of them outside of China. Therefore, it is no surprise that Chinese tech giants have been closely studying TikTok’s successful approach of simple design, active promotion, and its utilization of trends in order to succeed in global markets.

Tencent is already trying to enter the short-video streaming industry by investing in Kuaishou, TikTok’s main local competitor, and reportedly giving out subsidies to promote its own platform Weishi. Those in the U.S. are also taking note, with Facebook quietly launching a TikTok competitor app called Lasso in November 2018. 

Source: Android Police

Lasso has been downloaded by an estimated 70,000 U.S. users since launching in November 2018. This pales in comparison to TikTok’s 39.6 million U.S. users that downloaded the app in the same time frame. Although U.S. users make up a large portion of TikTok’s downloads, there is an undeniable presence TikTok has among the teens of the world with 500 million active users worldwide.

Source: Oberlo

The Trajectory of TikTok

It is clear that TikTok’s growth is unheard of in the Chinese digital market and in the global space. However, ByteDance, the company behind TikTok, cannot become complacent with TikTok’s current place in the market, especially if it wants TikTok to build its position as the first globally successful “made in China” app.

The implications of TikTok’s success spans beyond materialistic accomplishments. It shows the global market that China has the ability to become major players in the digital realm, even without the backing of one of its tech giants. Therefore, combining large investments with TikTok’s successful strategic approach may lead to a “made in China” app market that competes with its global hardware markets.

Sources