September, 2017

Fruits of Thought

Fashion, Food And The Value Of Scarcity

The Los Angeles Times ran a fascinating article about Yeezys. For those not in the know, Yeezys is a brand of sneaker produced and marketed by Adidas with the design credited to rapper Kanye West. More specifically, the article was about the counterfeiting of Yeezys and how this kind of counterfeiting is becoming more pronounced in the digital age. 

It seems that a combination of easy visual communication online and more flexible manufacturing tools is improving the quality of counterfeit sneakers and, presumably, many other items. What seems to happen is that a manufacturer produces a batch of fakes, but, whereas in decades past, the fakes were never as good as the original — often flawed in many subtle ways — and that was it. Now consumers who are passionate about these goods communicate with the manufacturers, often via social media forums, and they advise the manufacturers how to make their shoes better replicas of the real thing.

So, the article tells the story of people who monitor this process closely and recounts how one fan was anxious to get a limited edition “Pirate Black” version of authentic Yeezys. But he was an assistant football coach at a high school and not willing or able to pay the $1,500 that resellers were getting on eBay for shoes that initially retailed for $200. So, he bought a counterfeit replica for $120. But, it also tells how he waited until the 10th batch was in production because he knew the shoes improved with each batch.

It is an interesting story for a lot of reasons. In the produce industry, we tend to focus on metrics of intrinsic value — nutrition, health, etc. — but this story shows how many people value style and fashion. It also speaks to how manufacturers can create value by ensuring scarcity. In other words, Adidas could easily manufacture more “Pirate Black” Yeezys, but the value is created precisely because Adidas makes it exclusive and hard to get.

One thinks about the implications of this for something like the Amazon/Whole Foods merger. All the value of Whole Foods is wrapped in its aspirational branding. It is not just the idea that the food might be healthy; there is plenty of healthy food sold at Wal-Mart. It is that being a Whole Foods shopper says something about you as a person. Maybe it makes you feel more ethical, friendlier to the environment, more alive with a healthy lifestyle, or maybe it makes others think of you in this elevated way.

In any case, Whole Foods’ famous "Whole Paycheck"moniker is a mixed bag. True, it is hard to get from others when purchasing at a certain retailer if you are perceived as being easily ripped off. It is just as true that being perceived as able to afford a Whole Foods  lifestyle, with the notion that this lifestyle costs more money because it is more valuable, is intrinsic to the success of Whole Foods. So, when Amazon looks to broaden the Whole Foods reach, it runs into a brick wall. The more Amazon does to make Whole Foods an accessible option for more people, the less people will value being associated with the Whole Foods brand.

Even the whole organics craze is fundamentally motivated by scarcity. Farmers are usually their own worst enemy, and if the returns on something are good one year, they increase plantings and the returns collapse the next year. But with organics and the three-year transition, farmers can’t rapidly increase production. It is popularly perceived that high organic prices are a major obstacle to getting consumers to consume more organics, but what we have is backward. What if the scarcity of organics and the concurrent higher price points are why consumers think organics are better? If organics were cheaper than conventional product, would consumers assume organics lack value?

Another big trend in produce is the development of proprietary varieties. Already quite prominent in berries, grapes and stone fruit, the combination of proprietary varieties with branding enables companies to both limit production and get value for the scarcity created.

And at the very core of the industry, many an old-timer will claim that the very ubiquity of items, available year-round, is a loser for the produce industry and deprives farmers of the boom of a new season after a period of absolute unavailability. And although there are counter arguments — it is easier to get produce on menus if it is available year-round and easier to hold retail space if it is used year-round — there is still something real to this point.

Food is not fashion. For the vast majority of the globe’s population, simply getting adequate calories is the challenge. We, however, are privileged to live in a highly affluent society where many purchasing decisions are driven by style or status, or a desire for affiliation. At production and at retail, more focus could be profitably paid to why many consumers so desperately want designer    sneakers that they will look for counterfeits or buy the real products through resale sites at big premiums. Perhaps we as an industry should wonder how we can insert the value of scarcity more into the marketing of all we do. pb