The Collab Economy & Levi’s Low-Rise Miss

SPEAKER_1 (0:00)

This episode is brought to you by Nordstrom.

John Crotteau (0:03)

For 125 years, Nordstrom has been part of your story. The stylist who found the perfect outfit for your big interview. The first pair of walking shoes for your one-year-old. The tomato soup you shared with your sister at the cafe.

Avani (0:15)

These are the moments that make Nordstrom Nordstrom.

John Crotteau (0:18)

Big or small, we're here for all of it. Celebrating 125 years with new moments still ahead.

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Discover it all in Nordstrom stores and at nordstrom.com.

John Crotteau (0:31)

Levi's can't seem to figure out what the kids want. We have the latest from their low-rise earnings.

Hanna Horvath (0:36)

And from Cinnabon-flavored lip balm to Shrek skateboards, we're breaking down the wild economics of the brand collab.

John Crotteau (0:41)

For Friday, October 9th, it's Brew Markets Daily. I'm John Crotteau.

Hanna Horvath (0:45)

And I'm Hanna Horvath. Let's get moving and grooving.

It is Friday, which means we are going to be chatting through some of the stories that caught our eye this week. John is going to talk denim in a second. And later in the show, we are going to head to the Analysts Disco. But first, I want to start off with a fun game. Poor John.

I'm going to name a few products, and I want you to tell me which ones you think are real. Okay. We have KFC-themed Crocs. We have Nike and Ben & Jerry's Chunky Dunky Sneakers, and Van Luen and Kraft Mac & Cheese Ice Cream.

John Crotteau (1:22)

Oh my gosh. I have no idea. I'm going to say that none of them are real.

Hanna Horvath (1:26)

They are all real.

There is also, in the world, Cinnabon lip gloss, Pringles and Caviar. I got sucked into the world of brand collabs a few weeks ago when I was reading an announcement for the new Duncan and LO. Bean collab, which, if you're curious, they released this Duncan Bird's Eye sweater and a tiny LL. Bean tote specifically designed to carry your Duncan coffee. It's quite cute, but for my story today, I want to talk about these weird brand collabs and why it feels like they're suddenly everywhere and why they even exist.

John Crotteau (1:54)

Yeah, I see them all the time, and I always wonder, does anyone care about this? Does putting the Duncan logo on an LL. Bean sweater really make someone buy more coffee?

Hanna Horvath (2:03)

Yeah, I'm right there with you. And it turns out actually sometimes, yes, it does. You know, attention has gotten unbelievably expensive in our current economy and incredibly fragmented. You know, we're all in these different platforms, we're scrolling past thousands of things, and it's really hard for a company to make you stop and notice an ad. So increasingly brands are trying to make something weird or scroll stopping enough for you to do the advertising for them, you know. They are banking on you, seeing that product announcement and then texting it to five people.

John Crotteau (2:30)

All right, somebody walk me through that, because if I'm a shareholder and the CEO says to me, hey, we're making a Dr. Pepper flavored snack pack gelatin cup. My immediate reaction is why?

Hanna Horvath (2:40)

That is a real thing, by the way.

But the goal of these collabs is not necessarily just to boost sales, at least not in a huge way. In fact, a lot of these collabs almost function like a sneaker drop with a very limited supply. So there's actually a cap on how much money you are going to make purely on sales. The real play here in a lot of cases is brand awareness and earned media. And when done correctly, that can save a company millions of dollars in their marketing budget. And there's a few reasons why it can work. Of course, first, there's that shock and awe factor. It gets people talking. Second, you have two brands that are combining their audiences. So in Duggan's case, they get access to that LL Bean consumer. LL Bean gets that Dunkin consumer. And both of them get to borrow a little bit about what each brand is representing culturally.

John Crotteau (3:24)

But in this instance, that one makes a little sense because there's an overlap. I'm thinking coffee, fall, New England.

Hanna Horvath (3:31)

Yeah, and that's probably the difference between a good collab and a bad collab where it's just two logos throwing their logos on each other. You know, the Duggan LL Bean thing is a little bit unique and strange enough that people are going to talk about it online, but there's still an idea underneath it, right? Like these are two New England brands that are built around like the fall fantasy.