This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.
Hi, I'm Kevin Coupe. This is FaceTime with the Content Guy.
One of my favorite phrases - and those of you who have been reading MNB for a long time probably are tired of it - is that retailers need to be a resource for information, not just a source of product.
That approach probably reflects my general approach to life. I'm a sucker for an educational experience. Always have been. It's the thing that probably gets me up each morning to do MNB - I get to learn stuff.
I think, as the world grows more complex, this is going to be increasingly important to all of us. We can't depend just on what we know to help us navigate through life. Whatever we do, wherever we are, we have to know more. Because there's just stuff out there that many of us never thought we'd have to wrap our heads around, but reality requires that we understand it.
Lately, I've found that my education has been coming from some pretty unorthodox places.
For example ...
There seems to be no question that the Bruce Jenner interview in which he announced that he is transgender and transitioning to female was an educational experience for anybody who watched or even parts of it. To be honest, I don't even watch reality television and I'm tired of the whole Kardashian three-ring circus, but at the very least, this put a face on something that most people don't understand. We learned stuff.
A couple of days later, there was a segment of "The Nightly Show" in which host Larry Wilmore interviewed a transgender person just for some basic definitions. Again, I learned a lot, and I thought it was tastefully done. (Far more so than the Pinocchio segment that preceded it ... but one has to remember that this is a comedy program.)
For anyone in the business community, I think these are important lessons to learn ... if only so you can understand at some level things about people who may be working for you, and who may be your customers. Even if it makes you uneasy, it is important to learn stuff about these trends. Just hearing or reading the word "transgender" can be scary, because it reflects an experience foreign to many of us. But when you see and hear someone who has gone through that experience, some of that mystery falls away. Hopefully, that's when people become more compassionate and tolerant.
By the way, speaking of comedy shows ... the other day I was watching a show on Comedy Central called "Inside Amy Schumer," and once again, I learned stuff. There was a very funny sketch about football and rape (I know this sounds inconceivable, but she hit the nail on the head), an interview with a different transgender person than the one interviewed by Larry Wilmore (maybe comedians are just able to ask questions the rest of us can't ask), and a great piece about how women are objectified until they reach a certain age, and then essentially marginalized. Again, you have to get through a lot of vulgarity and profanity and just plain filthy humor to get to some of these segments ... but I learned stuff, and learned how other people may see subjects and issues differently than I do.
That, I think, is the key. Another term I use a lot here on MNB is "epistemic closure," which is defined as assuming the world is the way you perceive it, or at least the way you want it to be.
I don't care who you are ... the world has grown so much more complex and diverse that none of us can completely comprehend it.
Smart business people, I think, will embrace the opportunity to learn, but also find opportunities, when appropriate, to teach.
I hope so. Because, as I say, I'm a sucker for a learning experience.
That's what's on my mind this Thursday morning. As always, I ant to hear what is on your mind.
Whole Foods, Macy's To Open New Discount Store Chains
As Phil Collins might have put, it, there appears to be "something in the air tonight..."
• Fortune reports that Whole Foods, responding to a quarterly report which suggested that growth at the company was slowing, has decided to launch a new chain of lower-priced stores that will be more accessible to consumer and could eventually be as large as the mother ship.
According to the story, the chain is "for people who can’t otherwise afford to buy its premium and organic food and will "offer a curated selection and have a simpler design to cater to people who want Whole Foods quality without paying Whole Food prices, particularly customers in their 20s and 30s."
"It will deliver a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great price,” co-CEO Walter Robb said in a statement. “We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand.”
The first of these new, as yet unnamed stores are slated to open next year, with a fast rollout planned once the concept has been tested and proved.
• The Washington Post reports that "Macy’s is launching a new fleet of discount stores that it hopes will help it better compete for bargain shoppers.
Four pilot stores, called Macy's Backstage, will open in New York next year, the company said, and the Post writes that they "will be similar to Nordstrom Rack or TJMaxx, offering a mix of clothing and home goods at 20 to 80 percent off their original prices."
"We believe we can deliver a whole new level of value to customers who appreciate fashion and love to hunt for a bargain," said Peter Sachse, Macy’s chief innovation and business development officer.
The Post goes on to write that "the launch of Macy’s Backstage is just one of several major strategic moves the department store chain has made so far this year. It scooped up beauty retailer Bluemercury for $210 million, its first acquisition in more than a decade. It also restructured its merchandising and marketing functions to better suit what’s known as omnichannel retailing, in which shoppers move seamlessly between in-store and online shopping."
Less so than Macy's, (which is following a path already walked by Nordstrom Rack), I think this is something about which Whole Foods needs to be very careful.
Will these new, lower-priced stores be in the same markets as Whole Foods stores? Different markets? How much overlap will there be in terms of products? When they carry identical SKUs, how will they justify higher prices in one store than in the other ... or will they have to lower the prices at Whole Foods, in which case, why create a whole new chain?
I understand the compulsion here, but it seems to me that this announcement must be making the folks at companies like Sprouts very happy, since it seems to concede that Whole Foods' efforts to lower its prices have not been successful, and signal that it will be getting into a side of the business at which it is not yet proven.
There's another line in "Something In The Air Tonight" that goes, "Well, if you told me you were drowning, I would not lend a hand." Which probably is how Sprouts is feeling.
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CVS To Reopen Baltimore Stores Burned During Recent Civil Unrest
The Washington Post reports that CVS Health has announced that it "will re-build two Baltimore stores that were burned during protests, including one that was referenced in a speech by President Obama."
Larry Merlo, president/CEO of the retailer, said that CVS has "a long history of serving inner city communities and we are 100 percent committed to serving our patients and customers in Baltimore.”
Merlo continued: “As we watched the events unfold in Baltimore over the past week or so, our hearts turned from pain to the promise of what is ahead. Our purpose as a company is helping people on their path to better health. There is no better way that we can fulfill that purpose than to reopen our doors and get back to serving the community. It is simply the right thing to do.”
CVS also said that store employees unable to work because of the civil unrest are being paid anyway for the days that were missed, and they are being given the opportunity to work in other CVS units until the stores are reopened.
No timeline for the reopenings has been set.
I assume this is good business. Regardless, it also strikes me as being the essence of good corporate citizenship. I'm not always the biggest CVS fan, but on this one, I applaud the company.
USA Today reports that Matthew Corrin, CEO of fast food chain Freshii - known for fresh salads, quinoa, whole grain wraps and pressed juices - has written a letter to McDonald's CEO Steve Easterbrook suggesting that the burger chain should "put a mini-Freshii unit inside just one McDonald's location -- and watch what happens."
Corrin promises in his letter that if Easterbrook takes him up on his offer, that McDonald's annual sales "will jump 30% and the store's annual profits will jump $250,000." And Corrin says, "I'll assume all the risk to prove my theory that fast food and fresh food can coexist, to the benefit of all."
McDonald's executives have not commented on the challenge.
There are probably all sorts of good reasons not to do this ... but I think McDonald's ought to throw caution to the wind and say, what the hell. Try it. See what happens.
You get points for being willing to experiment. Maybe you find out something about product mix and consumer preferences. And maybe it gives you a sense of direction for a future that seems less certain than it did not that long ago.
Remember what Joel Goodsen (Tom Cruise) says in Risky Business? (Essentially, he says that sometimes you have to throw caution to the wind ... though the phraseology is a lot more colorful.)
Well, originally in the movie the line is said by his friend Miles, who suggests that saying that line and taking that attitude "brings freedom. Freedom brings opportunity, opportunity makes your future."
Damned right. Easterbrook should call Corrin today.
Study: Study Points To $1.75 Trillion In Retail Inefficiencies
There's a new study out suggesting that "retailers worldwide lose a staggering $1.75 trillion annually due to the cost of overstocks, out-of-stocks and needless returns" - three components of what the study is a kind of "Ghost Economy haunting retail."
These inefficiencies, the study says, result in “monies left on the table and the loss of sales that otherwise would be available." And it says that a retailer "addressing the inefficiencies and data disconnects throughout their organization could mean the equivalent of adding $117 Million in revenue for every $1 Billion in retail sales — or an additional $2.9 Billion in revenue for a $25 Billion retailer."
FYI ... the annual inefficiencies break down to $642.6 billion in preventable returns, $634.1 billion in out-of-stocks, and $471.9 Billion each year in overstocks.
The research was performed by retail analyst firm IHL Group, and commissioned by OrderDynamics.
As Senator Everett Dirksen is reputed to have said, "A billion here, a billion there, pretty soon, you're talking real money." Though these numbers might've staggered him.
Obviously, if retailers are looking at these kinds of inefficiencies, they need to address them. My only caveat is that while they're working to be more efficient, they need to spend as much money, time and energy trying to be more effective.
Because efficiency and effectiveness are not the same thing.
• The Idaho Statesman reports that Boise-based WinCo Foods will open its 100th store this week, an 83,000 square foot unit in Lewisville, Texas.
WinCo currently employs about 15,000 people in eight states and operates five distribution centers.
• USA Today reports that "Wendy's plans to sell 640 restaurants in the U.S. and Canada to franchisees to generate cash and reduce expenses, the company said Wednesday. It will also sell its bakery operation, based in Zanesville, Ohio, this month.
"Going forward, we intend to buy and sell restaurants opportunistically to act as a catalyst for growth by further strengthening our franchisee base, driving new restaurant development and accelerating Image Activation adoption," CEO Emil Brolick said in a statement.
• Reuters reports that McDonald's plans to add kale to its breakfast bowls at nine Southern California restaurants. "The company, which is testing a variety of new foods as part of a vast turnaround effort, plans to offer breakfast bowls for about $4, one of which is made with turkey sausage, egg white, kale and spinach," the story says.
It was just last year that McDonald's said that it would never put kale on a burger.
Wait a minute. Does this mean that in this case, McDonald's actually is saying, "what the ..."
This is exactly why McDonald's needs to engage with Freshii.
• Ahold USA announced that as part of a restructuring of its support organization and changes it is making to simplify operations, speed up decision-making and support stores more effectively, it has named Nick Bertram (currently Senior Vice President of Store Strategy & Execution) to the role of Senior Vice President of Merchandising Strategy & Support.
It also has appointed Marissa Nelson (currently Senior Vice President of Merchandising Services & Support) to lead an expanded focus on healthy living across Ahold USA’s companies as Senior Vice President of Responsible Retailing & Healthy Living.
Steve Rowell, currently Senior Vice President and Deputy General Counsel, has been named Senior Vice President, Deputy General Counsel and Communications.
Ahold-owned Giant Food of Landover announced that Mark Adamcik, Regional Vice President of Operations, has been appointed Vice President of Sales and Merchandising, succeeding Dean Wilkinson, who will be leaving Giant Landover to become Senior Vice President of Store Strategy and Execution at Ahold USA.
In addition, Ahold-owned Giant/Martin's announced that John Ponnett is returning to the company as Senior Vice President of Operations; he served most recently as Vice President of Asset Protection at Ahold USA.
And, Ahold's Stop & Shop New England Division announced that Russ Greenlaw, Senior Vice President of Operations for Stop & Shop New England, will be leaving the Division to take on a new Special Projects role for Ahold USA.
Stacy Wiggins, who currently serves as Regional Vice President of Operations for Giant/Martin's, will succeed Greenlaw once he starts his new position.
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The Associated Press reports that investigators hired by the National Football League have released a 243-page report concluding that it was "more probable than not" that an equipment manager and locker room attendant for the New England Patriots deflated footballs before the AFC Championship game last January so that they would be easier for quarterback Tom Brady to throw, and that Brady probably had knowledge of their actions.
The report said there was no evidence that coach Bill Belichick or team management knew of the practice. NFL officials said they would take the report under advisement and would decide what kinds of penalties, if any, would be appropriate.
Brady, Belichick and team owner Robert Kraft had previously denied any deliberate cheating.
Investigators conceded that their conclusions were largely based on circumstantial evidence, as well as email and text messages they were able to obtain from the equipment manager and locker room attendant. Brady, the report says, refused to make documents and electronic communications available to the investigators.
“To say we are disappointed in its findings, which do not include any incontrovertible or hard evidence of deliberate deflation of footballs at the A.F.C. championship game, would be a gross understatement,” Kraft said in a prepared statement yesterday.
Brady did not comment on the report.
Do they have a smoking gun? No. But do the emails seem damning? Absolutely.
If there was one thing that was utterly predictable, it was that if any guilty parties were identified, it would be equipment managers and/or locker room attendants. It seems to me that the evidence also makes it clear that these guys didn't think much of Brady, and it also seems inconceivable that they would have done anything to the balls without his knowledge and at least tacit permission. If Brady were any sort of man and any sort of leader, he'd be standing with these low-level employees.
That's a good business lesson for any corporate executive, by the way. Take responsibility. Don't pass the buck to the low-level guys. That's gutless.
I think Brady needs to be suspended and fined. We'll find out just what kind of backbone NFL officials have when they make their decision.
One other thing ... in refusing to make his emails available to investigators, it would appear that Brady is taking public relations advice from the Hillary Clinton camp. Probably not a good idea.
Full disclosure. I'm a Jets fan. But that allegiance has no bearing on my opinion. Really.
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