McDonald’s Crocs are part of the strangest trend in business

Bloomberg Opinion — Christmas celebrations have long been a corporate event. Shopping malls are filled with eager gift shoppers, searching at department stores like Macy’s for perfumes or sweaters and at Best Buy for new laptops or smartphones. Porches overflowing with stacks of online orders from Amazon (AMZN) or Walmart (WMT) emblazoned with their logos. But increasingly, retailers don’t just want to be a place to shop during the holidays, they also want to be the gift you give.

Food and goods companies have come out with new products for the holidays, from $25 Panera macaroni and cheese pillows to $70 McDonald’s-branded Crocs. Driven in part by nostalgia and kitsch, companies want to seize any opportunity to align their name with cultural moments that make them more than just a place to grab a cup of soup or a McFlurry in the evening. They want to be seen as some kind of lifestyle brand.

At a time when industry observers are bracing for a pullback in consumer spending, food and goods companies are paving the way for incremental sales that also fix their brand in the public imagination, and increase their profits. chances of surviving any possible drop in spending.

It’s difficult to pinpoint exactly when fast-food chains and big-box retailers started getting into the brand-name game. But, of course, in recent years, the marketing of this type of products seems to have increased, which has caused some to sell out quickly. For example, Asian fusion restaurant chain PF Chang China Bistro’s Good Fortune pen and three-piece enamel pin set sold out almost as soon as they hit its website.

After Cincinnati Bengals wide receiver Ja’Marr Chase wore a $120 7-Eleven x King Ice pendant in October, it quickly sold out, a 7-Eleven spokesperson told me. Target’s “Barbie Skipper First Job Target Doll,” which comes with a cash register, shopping bag and basket of goods (all featuring the iconic red and white target logo), is the best-selling Barbie doll of the company. The retailer also has a branded toy shopping cart, which was its third best-selling toy during Black Friday week this year. Walmart can only hope that this cultural cache becomes a children’s toy.

That cultural cache, or what in the world of finance is called “goodwill,” can mean important benefits. McDonald’s, 7-Eleven and Target declined to reveal how profitable these product lines have been for them. But Kelly Pederson, who heads the retail practice at accounting and professional services firm PwC, told me that selling kitschy clothing and accessories is like making a profit on cheap advertising.

Not only does the retailer make $10 for a keychain or $50 for a hoodie, it also gets someone to wear its brand. Retailers who get into the branded clothing business only have to spend a portion of their marketing budget designing and sourcing knick-knacks and posting them on their website. It’s not a business that requires millions of dollars or months of consumer research.

Of course, the idea of ​​branded merchandise is not new. National restaurants and fast food chains, such as Hard Rock Cafe and Trader Joe’s, have a long history of reaching into closets and drawers for decades. They managed to create brands that suggested a type of person and a lifestyle more than a place to eat or shop.

Wearing a Hard Rock Cafe t-shirt in the early 2000s meant you were truly a rocker, and if you had one from a restaurant outside the US, it also meant you were well traveled. A canvas bag from Trader Joe’s suggests that you are a cultured and food-conscious person, but you don’t have a dime. By simply slinging one over your shoulder, you mark yourself as related to others who recognize the brand because they, too, are probably overeducated, underpaid, and big fans of Trader Joe’s “Everything But The Bagel” sesame seasoning mix.

That kind of influence is not taken for granted. Take fast-fashion chain Forever 21. In 2019, it had a brief stint of apparel collaborations with PepsiCo’s colossal household brands Flamin’ Hot Cheetos and the US Postal Service, leaving shoppers more confused than ever. inspired. Turns out, there wasn’t much demand among Forever 21 shoppers for Flamin’ Hot Cheetos crop tops or white hoodies printed with a USPS tracking receipt. A search for “USPS” on the store’s website shows no products available, and a search for “Cheetos” only shows one T-shirt for sale. Not even an international brand can sell poorly executed products.

As University of Pennsylvania Wharton Business School marketing professor Z. John Zhang pointed out to me, it’s all about the product. McDonald’s may have a hard time selling brand-name lipstick (who wants to put lipstick on before eating a Big Mac?). But a hoodie or Crocs marketed toward men and boys? Of course it could work. That said, PepsiCo could have more success with its vintage logo designs, and USPS could find more market for its framed Star Wars stamps.

Buyers have become more fickle in recent years as the Internet expands their range of options. In the US there has been a 14% decline in customer loyalty, from 79% last year to 68% this year, according to the SAP Emarsys Customer Loyalty Index. In such a competitive environment and with cautious shoppers, retail and restaurant businesses would do well to invest in everything they can to maintain their name with consumers. Of course, a t-shirt won’t save a company. But if you have the cache, it doesn’t hurt to try to take advantage of it.

This note does not necessarily reflect the opinion of the editorial board or of Bloomberg LP and its owners.