mind the gap: blog


Televisions and Black Friday: Like Peanut Butter and Jelly?

If you happened to hit the stores in the morning hours of Black Friday this year, you may have noticed that things seemed rather quiet.  In fact, after the scrum of Thursday evening, Friday’s shopping hours seemed downright civilized.  As photos and observations from gap intelligence analysts began filtering into gap HQ on Friday, I began to ask myself whether or not the “holiday” has the impact on TV sales that it once did.  This year, stacks of bargain TVs still remained on store floors well into the week following Black Friday weekend, indicating that sales of the low-priced units were not as high as the stores expected.  Despite these signs of unmet expectations, results after the fact indicate that TV sales did quite well over the weekend.  In one example, Target reported selling 1,800 TVs per minute during its first hour of sales on Thanksgiving night.

A look at in-print Black Friday TV ads gives us a hint about where manufacturers and retailers were placing their bets for the big event.

Screen Size

Manufacturers increased ad placements for TVs sized 50- to 59-inches this year, with 31% of all ads, a 4-point increase over 2013.  Screen sizes in the 60s and the 40s also increased, to 22% and 21%, respectively, while ads for the largest and smallest sizes decreased.  This tells us that manufacturers were expecting increased competition in the popular screen sizes between 40- and 69-inches this year, and that shoppers were hunting for bargains on primary, rather than secondary, TVs for their homes.

Screen_Size_20141208

Discount Amount

Great TV deals could be had across the TV market, but I wondered how those incentives stacked up against each other.  By looking at the average discount percent, I was able to determine that although Sony had the highest average discount by dollar amount ($564), it was actually sixth among manufacturers by average discount percent (28%).  Samsung, who had the third-highest average dollar discount of $538, had the highest overall average discount percentage with 35%.  In fact, Samsung so enthusiastically advertised its TVs for Black Friday that it accounted for 48% of all Black Friday print ads placed this year.

Percent_Discount_20141208_NEW

Resolution

Manufacturers and retailers expected a boom in 4K UHD TV sales this year, and Black Friday ad placements followed suit.  Ultra HDTV advertisements accounted for 10% of all ads in 2014, up from 4% in 2013.  In addition, these ads tended to be more prominent than those for run-of-the-mill 1080p HDTVs.

Resolution_20141208

Despite a slight decline in overall sales for the weekend, TVs still remained high on Black Friday shoppers’ lists.  Several surveys reported that low-priced TVs were the most sought-after deals this year, as they have been for several years running, beating out smartphones and tablets.  TVs are big ticket, durable goods and are products that many people still prefer to purchase in-store rather than online, two aspects that lend themselves to attractive Black Friday deals.  Will TVs survive Black Friday sprawl in the years to come?  Absolutely.  But we must prepare ourselves for intense competition over a longer period of time as the holiday shopping season expands to fill the space we grant it.

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Want a Refill?

Over the last seven years, ink refilling has gone through some ups and downs, and as this point, it remains questionable how popular the non-OEM option will remain long term. As the service became more popular several years ago, national and regional retailers began offering ink refilling to customers in-store as a low cost option. Retailers were heavily promoting the service and refill machine manufacturers were looking for other ways to expand. Some of the most prominent advertising came from retailers such as Ace Hardware locations and Walgreens with their free refill days, aimed at growing their customer base. Companies like Ink-O-Dem found success installing machines in locations in various states at at a number of major universities. Meanwhile, franchises specializing in refills were also popping up such as Cartridge World and 123 Inkjets. In 2006, a report by Lyra indicated that office supply stores and drugstores would be the primary stations for ink refilling compared to specialty franchises.

walgreens ink

In 2006, new retailers were beginning to install refill machines in the hopes of capturing more sales for ink supplies overall. Walgreens rolled out refill services in 1,500 stores across the US, while Longs Drugs, Ace Hardware, and Staples, and Office Depot also began offering refills. With the popular new alternative to OEMs hitting stores with lower-than-ever prices, customers paid attention. Promotions were implemented frequently driving customers to at least try the method with free refill days or $1 refill days from select retailers.

inkodem_machine2

Refills were attractive for a number of reasons and primarily appealed to customers that were searching for the lowest cost alternative to an OEM. There was a considerable amount of press out at the time claiming that ink was the most expensive liquid on the planet. Some articles would compare an ounce of ink to Chanel #9 or oil to prove the high cost. The ink industry was put on the defense with the feat of explaining what justified the high cost of ink. However, this would take time and refills and non-OEMs would take advantage of the negative press around OEMs.

pricing_trend_refills_12.04.2014

The growth of the refill market posed a challenge both to OEMs and remanufacturers. Remanufacturers, particularly those sold in the retail channel, claim to abide by quality standards and guarantee their products, while refills can be slightly less reliable. Store brands were arguably creating competition to their own private label remanufactured inks as store associates would offer refills as an OEM alternative.

In response, OEMs began investing more into defending their technology through Intellectual Property, as well as educating consumers. OEMs put out marketing messages defending their own products by explaining the technology behind ink cartridges and providing guarantees on high quality every single time. Many OEMs, particularly HP, commissioned studies to show that refills and non-OEM options were generally not as reliable in terms of quality as the genuine OEM product. Despite testing by the refill machine, the refill would often time not work, requiring additional interactions and efforts from the consumer to obtain the product that they need.

In the past year, Walgreens, OfficeMax, and most recently, Micro Center have removed their ink refill capabilities from stores. Walgreens, which was among the stronger players several years ago, likely saw a decline in business from refill machines. The service required personnel training and time from employees to actually do the refills, which may have proved less valuable and efficient over time. OfficeMax’s move to get out of the refill business is likely related to the Office Depot acquisition as the retailers begin to consolidate. It should be noted that both non-OEM brands for remanufactured inks are currently still available at stores. Micro Center, which is the most recent to exit the refill industry, offered a vast selection of refill capabilities for the major OEMs with the exception of Brother. It is likely that Micro Center was not generating enough business to justify the cost of operation and maintenance on the refill machine.

discount_refills_remans_12.04.2014

Prior to Micro Center’s exit from refilling, the average discount of a refill (channel-wide) compared to OEM pricing was approximately 46%. This is in relation to the non-OEM (remanufactured discount) of approximately 40%, which is not necessarily drastic enough to convince customers to take the time to refill their cartridges, which are less likely to be reliable. Interestingly, refills for Brother and Canon inks were actually higher than the average price of non-OEM remanufactured options throughout the channel, on average, moving the difference between remans and refills to favor remanufactured products. It should be noted that Fry’s Electronics and Costco maintain their refill services at this time.

With the changing prices and quality issues associated with refills, even more so than remanufactured products, it is not surprising that many regional and national retailers are getting out of the refill game. OEMs are beginning to offer more alternatives to their own cartridges including HP’s Economy inks (Staples), as well as the company’s Instant Ink program. Epson has also released its CISS products in the US market, posing competition to non-OEM alternatives. OEMs understand that they are going to have to listen to the customer and adapt their own products to appeal to the mainstream customer to combat third party competition. As for the prediction of drug stores and office suppliers owning the refill market, it appears at this point that specialty franchise locations may eventually be the only places to get refills in the future.

While a number of mainstream retailers offered the service in 2009, it should be noted that specialty franchises will likely be the only refill option remaining within the next several years.

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Office Depot Enjoys a Successful Honeymoon as Strategic Challenges Loom

November 5 marked the one year anniversary of the merger between Office Depot and OfficeMax.  Following this milestone and the company’s quarterly earnings report on November 4, both Office Depot insiders and industry watchers have expressed a surprising amount of optimism despite Office Depot’s challenges.

There are many reasons to view the merger of Office Depot and OfficeMax as a smart defensive maneuver, enabling the combined chain to more effectively compete with brick-and-mortar and online rivals. Office Depot has laid out an aggressive strategy to expand margins and grow its business, and has so far executed on cost cutting plans to the cheers of the market.

While the first 12 months as a merged company has provided an endless number of clear opportunities for progress and to tout early successes, the coming years will prove much more difficult. Facing countless competitive and secular headwinds, the retailer has to improve its core business execution, expand sales beyond its traditional customer base and sales channels, and reengineer its value proposition. One year into its merger, Office Depot’s recent honeymoon phase has nearly ended and pressure will only grow on its core business. As a larger and leaner company Office Depot is managing to survive at the moment, but if it underperforms in any of its strategic goals its already weak position in the market will only get worse.

Huge Successes and Fist Bumps

One-year into its merger, and despite a very long list of looming threats to its business, Office Depot’s CEO recently went out on a limb to describe its union with OfficeMax as a “huge success.” While this statement may be a bit premature, the company has good reason to be optimistic. Synergies in a merger of this size can generate a quick improvement in profitability, which in turn provides more resources to make strategic investments and can produce an appreciation of its market value. Meanwhile the company’s larger combined scale is very much a competitive improvement in a consolidating market.

Since it merged with OfficeMax in November 2013, Office Depot has made cost reductions a cornerstone of its near term strategy. This strategy has taken shape in the form of 400+ store closures through 2016, a plan to reduce store footprints, a focus on eliminating supply chain redundancies, divesting business abroad, trimming expenses such as advertising, and aligning its in-store and online operations, among other initiatives.

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So, has this strategy worked? Is the company as successful as it believes? Wall Street is certainly bullish on Office Depot’s new direction. The company’s shares have been on a tear, appreciating more than 300% since an August 2012 low. Expectations for Office Depot were set so low, pricing the chain at one of the lowest multiples among its peers, that any bit of positive news, however expected or forward looking, now seems to garner industry-wide praise (often from value investors) and likely a few fist bumps at Boca Raton HQ.  Just last week, Office Depot announced that its adjusted operating income in Q3 more than doubled to $126 million on planned cost reductions. But sales also dropped once again, this time down 4% as foot traffic continued a steady decline, and (logically!) Office Depot shares have since jumped about 25%.

Back to Reality

Having clocked one year since its merger became official, Office Depot’s grace period with its investors, customers, and employees is nearing an end. Despite a number of wins in recent months –increasingly optimistic cost savings forecasts, healthy margin expansion, restructurings and divestitures in the U.S. and abroad – there is no shortage of challenges facing Office Depot today. Many of its core products are in secular decline, customer purchasing habits are rapidly changing, and the chain’s competitors all have at least a few years head start in reinventing their own businesses.

As Office Depot steps forward into its second year as a combined company, the chain needs to move beyond its focus on business synergies and address the long list of difficult decisions that will shape how the company evolves to meet changes in the market. The summary below outlines some of the most urgent problems facing Office Depot in the months and years ahead:

Future Direction Uncertain – Office Depot continues to shy away from disclosing the details of its long-term growth strategy, a major portion of which is its “Unique Selling Proposition” or USP. Office Depot has provided almost no clarity into what this USP will look like, even though it’s the primary driver of the chain’s future differentiation in the office supply industry and will dictate future target segments. The USP will likely bring massive change to Office Depot, as it will determine who the company will target, through what channels, with what products, and at what price points. USP rollout isn’t planned to begin until late-2015 and into 2016, which is an eternity in the retail channel and likely too long for employees and customers to wait without more transparency into what the USP really is. Office Depot needs to communicate its USP as soon as possible and demonstrate that is can evolve beyond its worn-out office supply business model.

Lack of Innovation Engine – Can two underperforming office supply chains really combine to make one that is more competitive and innovative? The two merged companies’ underlying business models are nearly identical and Office Depot’s top leadership appears to have little experience in ecommerce or business services, which are two major components of Office Depot’s growth strategy. As it looks to dramatically reshape its business model, Office Depot needs to enlist the aid of outside experts that can help it navigate the strategic and tactical development of its ecommerce platform and services delivery.

Lagging Behind Competitors – If Office Depot’s strategy sounds familiar, it’s because a good portion of it is straight out of rival Staples’ playbook: store reductions, smaller stores, a redesigned in-store concept, online assortment growth, improved online storefront, expansion into adjacent product and service segments, omnichannel go-to-market, etc., etc. Facing unprecedented changes in the market, many retailers have been developing these initiatives for at least a few years, and in the case of Staples the chain has already executed many of these ambitious goals. While these are smart strategic goals for Office Depot too, the chain is at least a few years behind its brick and mortar competitors, underscoring the urgency needed to begin executing change. Any further delays will hurt the chain’s ability to maintain share and develop competencies in services and new product categories where it does not currently have a presence.

Slow Store Alignment – Here at gap intelligence, we pride ourselves on our comprehensive knowledge of the market, the players, and the 4Ps of marketing – what we like to call the forest, the trees, and the leaves. Understanding each element is crucial to providing our clients with timely and accurate market intelligence. A closer look at the leaves of this merger reveals that there’s still work to be done.

Office Depot’s latest earnings report states that the chain has already aligned its assortments, its SKU systems, its rewards programs, its in-store execution, and so on. Now, compare the assortment of an Office Depot to an OfficeMax (differences still exist), try to use an OfficeMax gift card at Office Depot (you can’t as of late-Oct.), or ask a store associate about how the merger will affect you as a customer (they typically don’t know). Despite the chain’s assurances, many tactical elements of the merger have not progressed as smoothly as promised and need to be addressed before it affects already dwindling store traffic and the confidence of the brands that sell there. If Office Depot cannot get the blocking and tackling of the office supply business correct then surely more ambitious goals are likely to fail – the chain must execute on store alignment immediately.

OD_price_changesDeclining Foot Traffic and Product ASPs – Office Depot shares a common problem with many other retailers: less customers are visiting its retail locations each quarter. And while Office Depot reported flat purchases per customer in Q3, its ability to maintain average order values in the future is in question. Like rival Staples, Office Depot is very exposed to product categories that are in secular decline, such as printers, toner/ink, PCs, and other office supplies. Previously important categories such as digital cameras have all but disappeared from shelves and likely have a very diminished impact on the chain’s sales.

The chart above paints a clear picture of a major problem in Office Depot’s current product mix. Average selling prices at Office Depot continue to decline across most hardware categories tracked by gap intelligence. Coupled with declining foot traffic, Office Depot will be hard pressed to generate retail sales growth with its current assortment. Investing in its online presence (in addition to B2B direct) is a natural route to pursue growth, but that too has its own challenges that include lower margins and a hostile competitive environment where customers have a low barrier to switching resellers. Differentiating itself online and generating profitable growth is surely one of the most challenging obstacles facing Office Depot today, an obstacle that is only compounded by the retailer’s late entry.

Time to Execute!

Again, the near term opportunity to execute on merger synergies is good reason for Office Depot to be optimistic. The combined company is stronger together and the market has validated this with a strong increase in share price and patience in the rollout of its long term strategy. But, streamlining operations and improving profitability is just the first piece of a much more uncertain strategy that will play out through 2017 and beyond.

The channel is experiencing change at an unprecedented rate and Office Depot’s competitors are becoming larger, more diversified, and more responsive to customer needs every day. For Office Depot, time is of the essence. The chain will benefit itself, its customers, and its vendors if its moves sooner rather than later to execute on its growth strategy.

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Vendors Target On-the-Go Professionals with Mobile Inkjet SFPs

As a declining number of users are printing at home, inkjet manufacturers are working to grow sales of inkjet devices by focusing their efforts on other new segments. While inkjet manufacturers have found an opportunity for growth in the business inkjet AiO segment, vendors are also focusing on the mobile inkjet SFP market to target on-the-go professionals who may benefit from a portable and lightweight mobile inkjet printer.

For more than one decade, Canon and HP have competed head-to-head for sales in the segment. However, competition has grown since Epson this week launched the WorkForce WF-100, the vendor’s first mobile inkjet SFP. Epson’s introduction of its WorkForce WF-100 and Canon’s recent refresh of its popular mobile inkjet SKU (PIXMA iP110), in addition to growth in the mobile workforce, suggests that there is at least steady demand for portable printers that likely appeals to a number of different user types.

MobileInkjetSFPAssortment

While mobile inkjet SFPs may not provide customers with the lowest printing costs or the fastest print speeds, the models do offer A4 printing in a compact design. With their portability and lightweight form factor, the models mostly target customers such as sales professionals, real estate agents, and delivery service people. Although the products may seem like a solution for on-the-go printing, a noteworthy limitation may be the low number of pages that can be printed per charge.

For customers who are looking to purchase a mobile inkjet SFP, models can be found in the retail channel where they maintain a very limited shelf presence, while the majority of purchases are made through B2B channels. Mobile inkjet placements currently account for 30% of the total inkjet SFP assortment at the OSS chains, and it is worth noting that the segment only accounts for 3% of total inkjet placements (SFP and AiO) at those retailers.

MobileInkjetSFPShelfPresenceOSSChains

While Epson’s entrance into the mobile inkjet SFP market shows that inkjet manufacturers still see an opportunity for growth in the segment, placements of the WorkForce WF-100 will have little effect on retail shelf. If the product gains placements at Office Depot / OfficeMax and Staples, mobile inkjet SFP shelf will grow to 7% of overall inkjet placements.  Looking forward, retailers and vendors may grow demand for the mobile inkjet SFP market through promotional activity. Over the last year, mobile inkjet SFP ads have accounted for roughly 37% of all inkjet SFP advertisements.

The mobile inkjet SFP segment is unique given that inkjet vendors sell these products in a niche market for customers who require on-the-go printing.  In contrast, the majority of inkjet SFP purchases are made based on low acquisition prices, as well as the minimal printing needs of these customers.

Given the growing number of remote and mobile workers, it is certainly possible that the segment may see growth in the near term. With that, inkjet manufacturers are expected to focus their efforts on the niche mobile inkjet SFP segment in a likely attempt to maintain sales in the declining inkjet SFP market.

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gappy Tumblr 5: How to be Zen

September 22nd marked gap intelligence’s second yoga challenge at Yoga Six in Point Loma. A handful of gappers have been committed gap-yogis ever since last October’s yoga challenge, including yours truly. While I was a skeptic of yoga in the beginning, I’ve learned to love it and all the health benefits that come from it; ranging from toning the body and increasing flexibility, to feeling mental clarity and relaxation even during the most stressful parts of the day.

I’ve officially been practicing yoga for a year, and I’ve found that my mentality is very different whether I’ve done yoga that day or not. Am I Zen? Or am I not Zen? Below are a compilation of some Zen and not-Zen reactions to certain events before I’ve done yoga versus after doing yoga:

Wrapping my head around a new project:
Before yoga: You want me to do what, exactly?

After yoga: Cool, I think I can come up with something…

On indulging my sweet tooth:
Before yoga: When did my clothes shrink?

After yoga: Hello, candy!

Feeling flexible:
Before: Touch my toes? Yeah, right.

After: I’m a stretchy machine!

On making mistakes:
Before: Oh no, I’m worthless.

After: What would Yoda say?

On feeling focused:
Before: Second coffee isn’t cutting it.

After: BOOM!

Dealing with the gap kitchen:
Before: Tripping on my way into the kitchen:

Before: Trying to figure out how the psychotic light switches work:

Before: Leaving food in the toaster oven and someone telling me the kitchen is starting to get smokey:

After: That kitchen can’t bring me down!

On people who take things off my desk:
Before: I NEED all 10 mugs on my desk!

After: Sharing is caring!

On dealing with surprises:
Before: My deadline is in 5 minutes? Surprise!

After: 5 minutes? No biggie.

On misunderstanding a formula:
Before: Just when I thought I’ve fixed a formula forever, then it totally blows up in my face the day before the end of the quarter:

After: Take a deep breath, kid.

On dealing with people asking about my sports team losing:
Before: Do I want to talk about why my team lost?

After: I got good sportsmanship in the bag.

Going to work:
Before: What? Did you say something? Still sleeping.

After:


My advice: Go to yoga once a day and you can learn to be totally Zen in every situation. Or at the very least go to get an amazing head massage:

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Decline of Digital Cameras in the OSS Channel

Digital cameras have it rough in the retail channel these days, as do retailers themselves in some regards, as both adapt to changes that connected technology brought to the way we take pictures, and the way in which we shop.  Across the retail landscape, the historically vast presence of digital cameras has waned in recent years as chains progressively deemphasize the category in favor of showcasing growth areas such as “connected home,” “mobile,” and “wearables.”

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Within the office super store (OSS) channel, the descent of digital camera placements has been ongoing, and as the chains themselves face challenges to maintain relevancy for shoppers, their urgency has accelerated the negative phenomenon that cameras face across the landscape.  Office suppliers now provide shoppers with only a slim selection of digital cameras, and have thus far provided no indication that a turnaround is in sight for the category.

OSSChan01b--20141030
OSS Channel: Digital Camera Placements

Since 2010, digital camera placements in the OSS channel have declined 80%.  Historically the channel was home to around 100 camera placements each month, but now that count is only around 20.  While this macro-trend is alarming, placements in the channel as of August 2014 show a 60% drop compared to just one year prior (21 vs. 52 in Aug 2013), which illustrates an acceleration to the descent.  A large reason for the category’s demise in the OSS channel is the fact that retailers historically favored low-priced novice-targeted SKUs, which have diminished in overall demand due to the popularity of smartphones.

OfficeMax, which once stocked close to 40 different camera models, was the first in the channel to test the prospect of a camera-less assortment by taking a complete hiatus from selling digital cameras during Summer 2012 (May, Jun, Jul, Aug).  When cameras returned in September of that year, they were represented by only 10 placements, and a shift to sales cards left OfficeMax shoppers without any tangible interaction with the gear.  Later, as Office Depot’s merger with OfficeMax moved toward completion, the latter retailer’s peg rack merchandising preferences spread onto Office Depot’s shelf, as it too shifted cameras off of an interactive gondola and onto sales cards.  Staples, which once showcased upwards of 40 digital cameras in its stores, has shown no interest in the category since adding its latest models in the Fall of 2013.  None of the new digital cameras brought to market in 2014 ever hit Staples stores, and the retailer’s Fall 2014 planogram removes the camera isle all together, giving a home to its boosted assortment of “fitness wearables” and “connected home” offerings.

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OSS Channel: Digital Camera Print Ads

The shrinking shelf space that OSS players are providing to digital cameras is, not surprisingly, directly mirrored within the channel’s print advertising activity.  Office Depot, OfficeMax, and Staples went from consistently producing combined quarterly ad totals between 150 and 200, to not advertising a single digital camera in 3Q14 (or 4Q14 to date).  Since 2010, the seasonal peaks in the OSS chains’ combined Q4 advertising have grown flatter with an average 16% decline each year, which illustrates a strategy shift away from using point-and-shoots as holiday gift items.

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OSS Channel: Digital Camera Brand Diversity

Once a diverse arena with opportunities for numerous brands, competition has gradually evaporated within the OSS channel, and shoppers are now met with virtually no variety in stores.  Cameras are clearly no longer a priority for OSS retailers, which is not terribly surprising noting the historically low sell-rates that they have generated outside of key promotional periods.

Kodak’s withdrawal from the digital camera market greatly affected the OSS channel, as its EasyShare portfolio was a staple of the channel’s marketing, and the lineup’s novice-targeted messaging aligned well with office stores’ less-tech-savvy clientele.  Well-timed seasonal SKUs previously-provided by FujiFilm helped that brand gain a wider foothold during the Spring of 2012 as a replacement for Kodak at Office Depot and Staples, although its presence would also diminish over time.  By Summer 2012, Sony had abandoned the OSS channel, followed by Olympus that Winter, which mainly left Canon and Nikon to compete.

For much of 2013 Canon and Nikon battled with an apples-to-apples array of offerings on Office Depot and OfficeMax’s shelf, and would amusingly trade volleys for Sunday ad space almost every other week at the two chains.  However, Nikon’s presence completely evaporated by the Summer of 2014, with the brand seemly not wanting to deal with the merging of Office Depot and OfficeMax.  Now that the merger has settled, Canon is retained as the lone digital camera brand likely as a result of its broad range of imaging and office products present at Office Depot and OfficeMax.

ODOMcameras20141030

Without any competition, Canon’s camera shelf at Office Depot and OfficeMax is somewhat stagnant, with no advertisements to drive shoppers in, and a laidback approach to the promotion of channel-wide instant savings.  Canon is uniquely positioned to be the “end-to-end” imaging solution for shoppers (capture-print), but has thus far not capitalized on this strategic position with any cross-category marketing.  Two cameras within Canon’s identical five-model array at Office Depot and OfficeMax boast built-in connectivity (WiFi & NFC), and would logically complement the manufacturer’s fleet of WiFi printers.  This would serve to strengthen awareness and drive customer loyalty over other competitors, a solid benefit to both brand and retailer in an increasingly omni-channel world.  Instead, the historically poor performance of digital cameras within the OSS channel seems to have led to very low motivations and expectations from the entities, and the camera isle remain off-the-beaten path at Office Depot and OfficeMax, simply bleeping along on life-support.

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Making a Difference One Trail at a Time

Purpose. Everyone thinks about what their purpose is whether for themselves or for their business.

I just read Roy Spence’s book It’s Not What You Sell, It’s What You Stand For and why businesses should be driven by purpose. When that purpose is strongly believed by the leader of a business and believed and supported by employees that purpose is manifested in one’s life in and out of work.

_sell-bookx

So the book got me thinking. Here at gap intelligence, we are a values-led company. We care about our clients, gappers, and our community. It is through my involvement with our 3Ts (Time, Talent, and Treasure) committee that I am able to live and breathe purpose; the purpose to help those in our community. gap intelligence’s involvement with the Emilio Nares Foundation (ENF), a local San Diego non-profit,  is the perfect partnership of two San Diego based entities driven to do good.2014-10-26_2048

As I was reading Mr. Spence’s book, I was inspired to join the Hike for ENF 2014 with the purpose of not only supporting the foundation and their mission but to put my own purpose into action; the need to help others. Plus, I missed hiking after a long sabbatical. So I dusted off my hiking boots and hit the trails to fundraise for a worthy cause.

DCIM100SPORT

Hike for ENF 2014 takes place on Catalina Island on November 15, 2014. The 27 mile hike is a fundraising event for the Emilio Nares Foundation that assists families with children battling cancer by providing much needed transportation for chemotherapy and hospital visits.

DCIM100SPORT

Each week with a dedicated group of training volunteers and hikers, we train and fundraise for two months and two weeks. These aren’t leisurely nature hikes and they don’t call it a challenge hike for nothing. The hikes gradually get more and more difficult as we head closer to the date. The support and encouragement of the trainers and the other hikers has made the experience a memorable one.

DCIM100SPORT

So my purpose here today is not only to tell you about the challenge hike and the great work ENF does, but also to inspire others to make a difference. For me, each trail is another step closer to getting kids battling cancer to their medical appointments and that’s a purpose worth trekking for.

hiking

If you are interested in supporting me in my challenge, please feel free to visit: https://www.classy.org/fundraise?fcid=343677 and to learn more about ENF, please visit www.enfhope.org

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We Bought Quixel Research

Occasionally I’ll get spam emails that I actually enjoy.  Today, for example, “Acquisition International” emailed me that our recent acquisition of Quixel Research was named “Deal of the Year.”  Acquisition International offered to broadcast our award on its website and send us a crystal trophy for as little as $5,000.  While the award is extremely flattering, I’ll simply notify readers of this blog about our award and post this picture:

Deal of the Year

We won “Deal of the Year”!

For the past 11 years, Quixel Research has been a market leader within the television, projector, and sound bar industries and focused its research on market sizing and forecasting.

We love Quixel Research for two reasons:

telescope

Forecasting & Market Sizing

gap intelligence loves data and we love explaining the “why” behind the data.  With Quixel, we are able to add another subject in our conversation with clients: what will happen in the future?  As we apply Quixel’s forecasting methodologies, we think that we can talk about the future in new and powerful ways.  We want to combine our advertising data with shipment information to help our clients understand the effectiveness of their promotion investments.  We want to predict retail shelf placements and how they impact future product shipments.  We want to forecast promotional incentives and tell you not only where the market is going, but how much it will cost to get there.

We have a lot of data to play with.

Similarly, we think that we can apply Quixel’s forecasting and market sizing methodologies to every category that we track at gap intelligence.  We see a bright future in delivering Quixel forecasts about the notebook & tablet markets, in addition to our printers, supplies, imaging, and home appliance categories.

I love the idea that gap intelligence will one day predict the future of the refrigerator industry.

Bit_Size_InsightsBite size Insights

We at gap intelligence love data.  Great Fantastic Data (GFD) is also very hard to collect, clean, prepare, and present on a daily and weekly basis.  Because of the pride that we take in our GFD, we want to make sure that our clients are presented with every bit of it in a single report.

While working with Quixel, we learned that massive amounts of data can be overwhelming to our clients, who are already time crunched and stressed out.  Quixel’s reports are simple Power Point decks that provide readers with “bite size” chunks of information and insights that are easy to digest.  A graph, three bullet point, and we’re done.

Some day in the not too distant future, you’ll see similar reports that cover gap intelligence’s traditional data and services.  We’ll add new summary reports, presented in a Power Point deck that provides bite size insights that are easy to consume, share, and take action on.

Quixel_Report

Graph: Best Buy’s Digital Camera Shelf Share Month-over-Month
Bullet Point One: Big Insight
Bullet Point Two: Another Big Insight
Bullet Point Three: What to expect in future

Next slide.

We are thrilled to have Quixel Research be part of the gap intelligence team and we are excited about what the future holds.   We can’t wait to have new conversations with you and use our data in even more powerful ways.

Stay tuned, because there is a lot of fun stuff on the way.

-gary
Acquisition International: Deal of the Year

quixel-gap-logo-v6

Posted in gapRaps, look who's talking | Leave a comment

The Aftermarket Takes a Stand… Together

OEMs have long been active at protecting the intellectual property of their laser cartridges, but the one that we’ve been hearing the most from recently is Canon. Just in the past two years, the vendor has initiated two cartridge-related lawsuits in both the U.S. ITC and U.S District Court for the Southern District of New York against more than 60 aftermarket cartridge supplies vendors and manufacturers. Last year, Canon came out of the lawsuit victorious, having successfully acquired a GEO, thus barring these companies from making, importing into, and selling the involved cartridges in the U.S. So far this year, less than half of the over 30 defendants involved in this year’s case have settled in either the ITC or district court case (or some in both), meaning that the conclusion of this year’s litigation will likely not be seen until 2015. It is believed that the result may be another GEO, as was indicated by the ITC earlier this year.

This year however, the ongoing litigation against third party cartridge vendors has resulted in a very notable reaction from the aftermarket. Several months ago, Canon announced that 9 defendants had defaulted in the 2014 U.S. ITC case, meaning they failed to respond to Canon’s initial complaints in the allotted amount of time. However, many of these defendants had already settled in the U.S. District Court case. Interestingly, a group of the remaining defendants (that have not yet settled and were not named as defaulting) banded together and responded to Canon’s allegations, asking the vendor to issue a statement explaining why the defendants that had already settled at the district court should not be found in default the U.S. ITC case. The group is reasoning that because of the vendor’s action, these companies are being presented as unresponsive and/or uncooperative, even though they have already reached settlements on one side of the case. This action is at least notable in that a group of companies that are direct competitors came together for a common cause in an effort to protect their reputations and industry.

2014-10-17_1544

Printer makers spend millions of dollars developing their technology and securing their patents and will put forth the resources to protect them. Supplies are a crucial part, and the most profitable part, of OEM revenues and when other companies start infringing their patents or introducing low quality clones for a fraction of the price of a legitimate cartridge, it can have negative implications. OEMs will, and should, protect themselves. Notably, Canon is on the lowest end of the spectrum with regard to the volume of third party cartridges available in the IT channel as tracked by gap intelligence. It is expected that this has a lot to do with the fact that Canon is one of the top patent holders, but also because the company very actively protects what is covered by those patents.

While settlements are good for both parties, it should be noted that when the defendants take this action, it’s difficult to know whether or not they had been infringing on patent rights, as they are essentially just agreeing that won’t do it moving forward. To make a case for any that haven’t infringed, these lawsuits are damaging to their reputations, because whether or not the infringement claims are true, they will be associated with the negative side of a patent infringement lawsuit. This in particular is causing a lot of concern among third party manufacturers because it can give a negative connotation to their industry as a whole. And although many of the companies named in these lawsuits are by no means small companies, they also don’t have the same amount of capital or legal resources that large OEMs have to endure a multi- year fight to clear their names.

To my knowledge, this is one of the first times that third party competitors have banded together to fight for the reputations of other competitors involved in the same case. Over the past year or so, there has been an increasing level of talk and response from the aftermarket, especially since the influx of non-infringing alternatives that hit the market shortly after Canon’s GEO was awarded last summer. The more companies that are engaged in patent infringement lawsuits, the more damaging effect it can have on their industry as a whole, so like the OEMs protecting their technology, the legitimate aftermarket is protecting its right to compete.

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Recycling Times Media was set to launch its PatentSmart website this week, providing remanufacturers with a centralized collection of OEM cartridge patents that they can use to stay on top of what is patented by the OEMs. With this, it seems that remanufacturers will have a much better and faster way to ensure that they won’t be infringing. Details about the site remain limited, but it could have the potential to change the way third party companies approach the development of new components and technologies, even if the effects aren’t immediate. At the very least, the recent actions from the aftermarket have demonstrated a shift in attitude from reactive to proactive, and I don’t think this is the last we’ve heard from this side of the industry.

Posted in gapIndustry, Uncategorized | Leave a comment

gap Babies (Part II) – There Must Be Something In the Water…and it’s traveled all the way to Uzbekistan

A little over a month ago, I wrote a blog about all of the gappers in gap’s San Diego office that have recently had babies, which was so much fun.   Now I am writing part II, to feature the two babies of our Uzbekistan counterparts!

AMALIYA:Amaliya1a
gapper parent: Timur
Baby’s Full Name: Amaliya Gabdrakipova
DOB: October 27th, 2012
Age: 2 years
Weight at Birth: 7.2lbs
Favorite Toy: iPad
Fun Fact and/or Funny Story: Amaliya always says “No” and doesn’t know the word “Yes”.   However, if she wants to communicate “Yes”, she nods her head up and down and says “No”.
Recently Reached Milestone: Abstract Watercolor Art (scribbles :) )
On average, how many diapers does baby go through per day: 0!  But used to be 8

Amaliya2a

 

 

 

 

 

 

 

 

TIMUR:Timur1a
gapper parent: Shavkat
Baby’s Full Name: Timur Samatov
DOB: February 8th, 2014
Age: 8 months
Weight at Birth: 9lb 1.7oz
Favorite Toy: Anything that has buttons (remotes, phone, laundry machine, fridge)
Fun Fact and/or Funny Story: Timur will stop doing whatever he is doing every time he hears the Kiesza – Hideaway song and will stand up and hold onto anything so he can dance.
Recently Reached Milestone: First tooth!
On average, how many diapers does baby go through per day: 8+
Anything else you’d like to share: Timur loves to make eyes at nurses, haha!

Timur2

 

 

 

 

 

 

 

 

Thanks to Timur and Shavkat for sharing this information about their babies with us.  Hopefully someday before too long we will get the opportunity to meet Amaliya and Timur!

Posted in look who's talking, mind the gap: blog | Leave a comment