The Obama factor: First family's favorite things translate into big sales
byOct 27th 2009 6:00AM
America's voyeuristic love affair with the rich and famous: what they're wearing, what they're driving and where they play, certainly isn't a new phenomenon. And the obsession is hardly limited to Hollywood -- just look at the First Family.
Since the early days of the campaign trail, the media has reported on plenty of intimate details about President Barack Obama, First Lady Michelle and daughters Sasha and Malia, that have fed the public's seemingly insatiable desire to learn more about the family. Not only have the Obama family's favorite things translated into media buzz, but for some companies they've translated into big, yet short-lived, bottom-line profits.
Just in case you missed it, here's a quick recap of a few items that got plenty of buzz.
"Any positive endorsement from a high-profile individual is advantageous to a company," says Tamara Francois, a senior account director at New York-based marketing firm Escalate, who has managed brand campaigns for companies including Coca-Cola (KO), Chevrolet and Glaceau/VitaminWater. "Their popularity and stamp of approval immediately adds value to their products because these are the people heavily influencing today's trends in society," she says.
When Michelle steps out in style, for example, it might be a good idea for retailers to brace for a sellout. Remember that $298 J. Crew (JCG) hand-beaded cream-colored cardigan she wore in April? It sold out on the company's web site that day. Two days later, eBay merchants put the sweater on sale for $600. It certainly wasn't the first (or last) time Michelle or her girls made a public appearance dressed in J. Crew apparel. When asked if Michelle Obama approached the company or they approached her, J. Crew CEO Millard Drexler said "It was actually an act of God" during an interview with CNBC Friday. "If you think about it both aesthetically and politically... it was incredibly smart for her not to go and pay -- especially during the last year -- high prices for designer merchandise," he says.
Since January (the same month Barack was inaugurated president), the chain's shares have exploded more than 200 percent. On Thursday, the company raised its earnings outlook for the third and fourth quarters, citing stronger-than-anticipated sales and margin trends. Yet, analysts are cautious about giving Michelle too much credit for helping to boost the brand, citing that the company has also aggressively cut costs this year. "Michelle Obama has been huge for them, but in reality normal people will pay for the clothing if it's the right perceived value." says research analyst Jennifer Black, president of retail and apparel research firm Jennifer Black & Associates, in a recent interview with Investor's Daily.
To the relief of J. Crew's competition, Michelle's eye for fashion extends beyond the preppy retailer. Last year, during an appearance on The View, Michelle wore a sleeveless $148 tank leaf print dress from White House | Black Market, a chain of stores owned by Chico's (CHS). When the dress sold out within two days, Francois wasn't surprised. "Short of giving a product away for free, I cannot think of any other marketing effort that would call consumers to action and completely clean out a store's shelves within 48 hours." After being restocked, the dress sold out again.
It's not just Michelle who is causing a stir. During a July 2008 fund-raising event in Seattle, candies nestled in a welcome basket full of goodies, made Barack melt. "Oh my, what were those? Those are phenomenal. I want more," he said, referring to Fran's Chocolates' smoked sea salt caramels wrapped in milk chocolate (Michelle prefers hers covered in dark chocolate.) Since then, the chocolatier has seen a significant increase in sales. Andrina Bigelow, CEO of the Seattle-based company, says even though she can't attribute the company's tremendous growth to one specific event, sales of salted caramel chocolates have risen 20 percent year-to-date. "I think that the press and awareness and recognition has helped to continue to drive growth on our salted caramels," she says.
However, not every company is rushing to highlight its Obama connection. "Politics is a polarizing subject and celebration of that type of endorsement is very likely to discourage a segment of consumers that help make that business profitable," says Francois.
As most analysts point out, however, the Obama effect on a company's bottom-line can only last so long. "All marketers know the benefits that can be gained by celebrity endorsements, whether or not that celebrity is the President, a movie star or entertainer. In most cases, though, these types of unpaid endorsements lead only to short-term gains," says Phil Rist, Executive Vice President of Strategic Initiatives for online market research firm BIGresearch.
But with the holiday season upon us, you can bet retailers are keeping a close eye on the Obama's Christmas list. Whatever toys White House darlings Sasha and Malia request from Santa this year, will likely cause riots in the aisles of Toys R Us.