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Wednesday, December 07, 2016

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Kate's Take: What Do I Care How Much It May Storm

by Kate McMahon

What do Beyonce, Walmart, Red Sox slugger David Ortiz, a Shark Tank startup named Tipsy Elves and Lord and Taylor have in common?

All are cashing in on the ugly Christmas sweater craze this holiday season.

For the uninitiated, an ugly Christmas sweater can be garish, goofy, sentimental, retro, risqué – in short, anything but boring. According to the founders of National Ugly Christmas Sweater Day, celebrated on the third Friday of December, it’s all about shedding your corporate uniform and being festive from morning ‘til night.

Savvy entrepreneurs jumped on the bandwagon when Ugly Christmas Sweater theme parties became popular in the last decade and prices for kitschy apparel featuring candy canes, jolly Santas and jingle bells shot up on eBay. (I should know - my daughters were among the “lucky” bidders. I did not see the potential goldmine in the package, just the ugly sweater.)

Evan Mendelsohn did. He was a self-described “bored lawyer” in 2011 when he noticed a spike in online searches for ugly Christmas sweaters. He and a college buddy founded Tipsy Elves, nabbed $100,000 from Shark Tank two years later and the company has racked up some $20 million in sales.

Major retailers are now in on the action, and I find it interesting that Walmart is leading the pack. After seeing ugly Christmas sweater revenues climb for three years, Walmart this year increased its selection of holiday and novelty items by 40 percent. Noting that men were purchasing women’s sweaters in size large, there are now plenty of sizes for all. As Walmart apparel exec Deanah Baker told CNBC: “Customers just can't get enough of it, and the tackier the better. The more you can put on it the better it sells."

Lord and Taylor, the ultimate anti-tacky traditionalist, has partnered with Whoopi Goldberg this year for a collection of sweaters that retail for $139 – more than triple the average. According to Whoopi, her sweaters “aren’t ugly” - just fun.

Struggling JC Penney has dramatically expanded its assortment for 2016, after last year’s selection primarily for teens sold out early in the season.

Buoyed by the success of tacky sweaters last year, Target also decided to expand its offerings, and said it had purchased enough matching holiday pajama sets to dress a half a million families.

Among the celebs designing their own lines are Beyonce and Shaquille O’Neal. Note to Boston Red Sox fans: David “Big Papi” Ortiz’ limited edition sweater includes an expletive that makes it NSFW (Not Safe For Work) but proceeds go to his children’s charity.

Back to the retail front, I think the stores that moved quickly to capitalize on the trend will do well this season, and should already be thinking about where the category is headed next.

Ragstock, a Midwest chain that sells new and recycled clothing, is way ahead on that. Ragstock just launched a Swipe-A-Sweater app to make it easy for customers to surf its collection of 25,000 ugly Christmas sweaters. You answer a few quirky questions and the app chooses sweaters for you. Just like a dating app (I’m told), you can swipe right for yes, and left for no, until you find the new or vintage sweater that is just right.

I may just have to give it a try.

Comments? As always, send them to me at kate@morningnewsbeat.com .

Wednesday Morning Eye-Opener: Cashiered Out

by Kevin Coupe

Following up on this week's announcement by Amazon that early next year it will open a new 1,800 square foot convenience store called Amazon Go - allowing consumers to enter the store using a mobile application, choose the items they want, and then leave without having to go through a checkout lane - the New York Post argued that it has the potential to be an enormous job killer.

The Amazon Go store "threatens countless jobs at grocery stores, which are the leading employers of cashiers and had 856,850 on their payrolls in May 2015, according to the latest figures from the federal Bureau of Labor Statistics," the Post wrote.

Britt Beamer, president of research/consulting firm America’s Research Group, told the Post that he estimates that "Amazon’s cutting-edge technology had the potential to wipe out 75 percent of typical grocery-store staff. 'It’ll be a big job-killer,' Beamer said. 'It’ll eliminate the cashier, it’ll get rid of the baggers, it’ll eliminate the stock clerks. This could be big'."

The Post wrote that this is part of a broader effort by Amazon to get away from the use of actual people: "The opening of Amazon Go follows the company’s increasing use of warehouse robots and its heavily hyped scheme to deliver online purchases via a fleet of Prime Air drones, which Amazon predicts will one day “be as normal as seeing mail trucks on the road.

"It also comes amid growing concern over the impact of self-driving vehicle technology on the nation’s 3.5 million truckers, cabbies and other professional motorists."

Meanwhile, Forbes had a piece about how Albertsons is continuing to remove self-checkout lanes from its stores, following a path it started to go down several years ago. The story says that "Albertsons has said, since it first began eliminating self-checkout lanes in 2011, that it wanted to encourage more human contact with its employees."

And "Albertsons is not alone. CVS Health, IKEA and Big Y Foods have also removed self-checkout terminals due to customer service and other concerns, reports CardFellow.com. According to a survey by NCR Corp., which supplies many of these terminals, 43% of consumers who used self-checkout lanes still wanted an attendant to be available to help resolve issues.

"And for good reason. While roughly 75% of surveyed shoppers deemed self-checkout lanes as a time saver, according to Consumer Reports, the experience brings its irritations. Among them: 30% of survey respondents complained the systems did not work properly; 27% got peeved because the shopper ahead of him or her took too long.

"Then there is the real threat of lost loyalty. Reduced interactions with a store employee could easily result in an eroded sense of personal connection with the retailer or brand. This gets to emotion. Without it, it’s much easier to move one’s business elsewhere."

By the way ... there have been several stories out there quoting people who are trying desperately to minimize the impact of Amazon Go, with several articles taking the position that Walmart actually has a better idea - it is opening small stores that, in addition to offering gasoline and convenience items, also serve as delivery depots from which consumers can pick up products ordered online.

I'd be the last person to minimize the importance of what Walmart is testing in just a few markets - I think the concept could have legs, and I've been predicting here for years that we could see such installations in Walmart parking lots all over the country. But I'm not sure it rises to the level of being more innovative than Amazon Go, just because of the technological achievement involved. (But, of course, the final test - and arbiter of success - will be the degree to which consumers embrace both ideas and the degree to which the ideas can be rolled out.)

I do think a discussion of the impact of Amazon Go on jobs is worth having. The world inevitably was going to move in this direction, and it is better to embrace the moment than deny it or advocate moving backwards.

One thing that retailers have to do, I think is make sure that if they have checkout people, those employees have to invested in and advocates for the business. They have to make a difference ... and they have to know that how they behave and interact with customers makes a difference.

If you actually are going to have human employees in your stores, it makes sense that they provide a differential advantage. If they don't, then they may be damaging your business.

That's the way it is ... and it is an Eye-Opener.

Until, at least, we're able to come with a version of the "hosts" of "Westworld" to populate the retail environment.

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From the National Grocers Association...

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From Cobram Estate...

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How The New POTUS Will Impact Food Prices

The Washington Post has a story this morning suggesting that if President-elect Donald Trump is successful in cracking down on illegal immigration, it could result in deportations that could have "a particularly dramatic impact on agriculture."

Here's how the Post frames the story:

"Americans could see the cost of some fruits and vegetables soar. Undocumented workers account for 67 percent of people harvesting fruit, according to the Agriculture Department. They make up 61 percent of all employees on vegetable farms, and as many as half of all workers picking crops.

"Agricultural economists across the political spectrum say that there’s no way that workforce could be raptured up without reverberations throughout the food system — think farm bankruptcies, labor shortages and an eventual contraction of the broader economy. And even if you’re far from the agriculture industry, you could see $4 milk, low-quality oranges, and extortionately priced raspberries.

"The logic behind these dire predictions is pretty straightforward. If Trump were to begin deporting farmworkers or requiring that farms verify their work status, farmers would have three ways to fill in the labor gaps. They could hire legally authorized workers, who are vastly more expensive; switch away from crops that require human laborers to harvest them; or cut production, allowing fields to fallow and fruit to go unharvested."

Another potential irony: "To keep costs under control, Americans may end up being forced to buy more groceries from abroad, undermining Trump's effort to boost American industry."

KC's View: I've talked to enough people in the produce business to know that there is going to be a lot of heavy-duty lobbying from that sector to slow down the kinds of immigration changes that Trump has advocated. There is a very real fear that these changes could result in much higher food prices, and won't do anything to make the US food industry great again.

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From MyWebGrocer...


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Retailer Expands Parental Leave Program For Hourly US Workers

The Wall Street Journal reports that IKEA, the Swedish retailer, will offer employees in its US stores "up to four months of paid parental leave, becoming one of the few chain retailers to bring benefits usually reserved for salaried workers to an hourly workforce."

The story goes on: "IKEA has roughly 13,000 U.S. employees, and the benefits apply to all employees regardless of how many hours they work. Under the new program, which goes into effect Jan. 1, employees with at least one year of tenure will receive their full base pay for the first six weeks of leave, and half of their base pay for an additional six weeks. Employees who have been with IKEA for three or more years can receive full pay for eight weeks and half pay for eight weeks."

While the program will have a multi-million dollar cost, the company says that it believes the payoff will be "a more productive and longer-tenured workforce."

A final note from the story: "That is still a far cry from the 68 weeks of pay available to mothers and fathers in IKEA’s home country, where the government subsidizes benefits. But for the U.S., the only industrialized country with no national paid-leave policy, IKEA’s program is remarkably generous."

KC's View: This just reinforces a long-held MNB tenet - that employees, when treated well, can be a force for both efficiency and effectiveness. When not treated well, they can turn into a force for nothing that is very good.

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Worth Reading: Wrap & Rap

Bob Wheatley, CEO of healthy living agency Emergent, did a bog posting the other day that I think is worth reading ... in part because he quotes me in it, but also because he makes an important point in keeping with a longtime MNB tenet - that retailers have to move from just being sources of product and also become resources of information.

"Gone are the days when competition is based solely on location, price and assortment," he writes. "Retailers have an extraordinary opportunity to approach the customer relationship in a new way as educator, guide and coach ... The economics of food retail may have favored stores as product supply aggregators for decades. But the food world is changing in response to cultural shifts among consumers, whose tastes and interest in all things culinary continue to become more sophisticated."

Wheatley also offers a turn of phrase that I wish I'd come up with: The butcher at your local supermarket can be an order taker who wraps or a storyteller who raps.

Bingo. I love that.

The piece is worth reading ... and you can check it out here.

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From Samuel J. Associates...Better To Light A Candle Than Curse The Darkness...


From MorningNewsBeat, September 15, 2016:

A US Department of Labor report recently revealed that there were 5.2 million jobs available in the United States ... which was said to be the highest level of job availability since these specific numbers started being tracked back in 2000. This despite the fact that there remains considerable debate, much of it cacophonous, about national unemployment and under-employment.. The problem, one expert said, is that what we have in this country is "one of the biggest mismatches between skills and lack of qualified help available in the nation's history."


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ProLogic Retail Services Extends Shopper Loyalty Program at Lowes Foods

Winston-Salem, NC -- ProLogic Retail Services, the largest provider of loyalty marketing solutions to independent grocers, announced the extension of its contract with Lowes Foods, which operates close to100 full-service supermarkets in North Carolina, South Carolina and Virginia.

Through the Fresh Rewards program, ProLogic enables Lowes Foods to segment its shoppers, identifying its top shoppers and understanding their purchase patterns. With this information, ProLogic enables Lowes Foods to run targeted promotions that are specifically tailored to individual shoppers or groups of shoppers. These targeted promotions help Lowes Foods to retain its best shoppers and expand their purchases throughout the store.

"We are very pleased to extend our longtime partnership with ProLogic," said Tim Lowe, President of Lowes Foods. "ProLogic delivers great value to Lowes Foods with a powerful, flexible loyalty marketing platform that enables us to create and execute intelligent promotions. The Fresh Rewards program is a cornerstone of our relationship with our guests and has proven highly effective in helping us retain our top shoppers and increase their purchases."

For more information, click here. Or contact Lance Recker at lrecker@prologicretail.com or at 561-454-7646.

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Hearst Embraces Tech To Build Consumer Engagement

AdWeek has a story about how publishing company Hearst "has quietly launched a 10-person group called the Native and Emerging Technologies (or NET group) that's responsible for keeping the mega-publisher up to speed with the newest technologies, starting with voice-activated devices including Amazon Echo, Google Home and voice-based smartphone experiences. For instance, this week, the team launched an Amazon Echo Skill for Good Housekeeping."

"We're looking at this new wave of natural language interfaces as being a great source of content discovery and content interaction," says Phil Wiser, Hearst's chief technology officer. "We find all of that to be increasingly important as a way to engage consumers."

The focus on artificial intelligence, the story says, means that the NET group "is leaning on Hearst's data-science team to analyze and format content for new devices. As Wiser explained it, the team first aggregates audience data that can then be picked apart to create bits of content as well as personalized ads for new devices. In a lot of cases, that means cutting down Hearst's trove of service-based content down to the bare minimum needed to answer a simple audio question."

KC's View: It is critical for every company to have folks who are spending real time focusing on such issues. If they don't, they likely are on the slow (and sometimes not-so-slow) path to irrelevance.

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From iControl...

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E-conomy Beat

Internet Retailer reports that Target's third quarter online sales "increased 21% year over year and accounted for 3.5% of total sales. Fulfillment from stores and in-store pickup play a growing role in Target’s strategy, executives say."

According to the story, "The number of stores from which the retailer ships orders has more than doubled in the past year to more than 1,000, or at least 55%, of its 1,802 stores compared with 460 during the 2015 holiday shopping season, chief operating officer John Mulligan told analysts Wednesday on the retail chain’s third quarter fiscal 2016 earnings call."

The Internet Retailer story goes on: "Shipping online orders from stores isn’t the only way Target’s retail locations will play a role in fulfilling online orders, however. The retail chain is placing a greater emphasis on buy online, pick up in store service this holiday season, remodeling 80 of its stores so they have a designated online order pickup section at the front of the store. The retail chain also will have employees assigned specifically to fulfill online orders in 325 of its stores."

FastNewsBeat

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Boston Business Journal reports that Target has yet another "flexible format store" - less than one-third the size of its traditional stores, with a far more curated and customized selection - slated to open in the Boston market.

The Stoneham, Massachusetts, store will join one scheduled to open in Cambridge in March, and two small Target stores that already have been opened downtown, near Boston University and near Fenway Park.

The story notes that "Target is planning to open 27 flexible format stores in the next three years."


• The Associated Press reports that Chipotle co-CEO Steve Ells said this week that while the company seems to be regaining some popular mojo as it resolves the food safety issues that roiled the company's reputation, the company "obviously" has a long way to go.

According to the story, "Ells said that half of the burrito chain's more than 2,100 restaurants have less-than-excellent customer service and that the company is now training employees to clean dirty napkins off tables, make sure the soda fountain is organized and keep the glass on its front doors free of fingerprints. Ells said at a conference Tuesday that the company let customer service slip as it focused on adding new food safety protocols after an E. Coli outbreak last year sickened some customers. It is now turning to improving its customer service to try and win back customers."

Call me crazy, but if you're in the restaurant business, I think it ought to be in your wheelhouse to provide safe, tasty food and clean tables.

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Energize your Digital Circular

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Executive Suite

• The Cincinnati Enquirer reports that Kroger has named Yael Cosset, the company's chief commercial officer and the chief information officer at 84.51° (the company that used to be called dunnhumbyUSA), to be its new chief digital officer.

Cosset is succeeding Kevin Dougherty, who is retiring late next month.

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From the Western Association of Food Chains (WAFC)...


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RIP

Margaret Whitton, who is best known to movie audiences as the scheming owner of the hapless Cleveland Indians in Major League and Major League II - looking to sink the team's fortunes so she can move the franchise to Miami, has passed away from cancer. She was 67.

The New York Times notes that in real life, Whitton was an enormous baseball fan - she was a former New York Yankees season ticket holder, used to play softball in the Broadway Show League, and even was embroiled in a lawsuit over what she claimed was part-authorship of Bull Durham.

Your Views: Go Bag

Lots of reaction to the new Amazon Go store...

From one MNB reader:

Love the "idea", but hate to be a party-pooper. What about the old problem, shop lifting!

You can't make money if 10 or 20 percent "walks" out the door without paying.

Their test is with their own employees, the real world will be different.


I don't think that Amazon has laid out how it will deal with potential shoplifters ... but I think it would be enormously surprising if, embedded in all this technology, it hasn't figured out a way to reduce its exposure. It might help not to see the glass as half-empty.

MNB user Edward Zimmerman sees the glass as half-full:

I’ve read the tsunami of opinions since ... Amazon Go was announced. It’s remarkable that no one has pointed out the ELIMINATION of shoplifting – which, on its own, might pay for the new technology.

Bingo.

Speaking of being a party-pooper, let me share with you the thoughts of MNB reader Bruce Wesbury:

I, as well as others are growing tired of your Amazon 24/7 coverage. So here is what I do to make it more palatable. I have an app that changes all instances of Amazon to Walmart within your website. This way I can relive the growth of Walmart and the mistakes they have made and then know that every business is cyclical. At some point you will need another bone to chew.

When that bone comes along, I'll be happy to chew it.

And while I understand that some might think I pay too much attention to Amazon, the kind of innovative thinking in which I am most interested (but not exclusively interested in) happens to be happening with a fair amount of frequency at Amazon headquarters. And the moves they are making there are going to have an enormous impact on everybody else - including the companies that would prefer less attention be paid to Amazon.

Besides, I've always figured that it isn't my job to give you the information and analysis you want. Other folks can do that. I think it is my job to give you the information and analysis that I think you need.

MNB reader Tom Murphy wrote:

Interesting technology, where the concept is not new, but the technologies, use cases, and underlying operating models are different.  I am going to hazard a guess that there are three major groups of folks now thinking about this: 1) those who see a way to cut the cost of operating a retail outlet, 2) those who see a way to offer a differentiated customer experience and 3) (which applies to Amazon only) those who think about both of these and also adding to a captive ecosystem.

Just a couple of commercialization thoughts likely to be going through Amazon’s mind (actually, they are probably much further along than this!): a) how will this consumer data drive more Amazon Prime customers and Amazon Fresh customers; b) how much can I charge my competition to use this capability and fixed or transaction fee based; and the scariest is…c) I don’t know, but it likely has to do with some way to get the competition to dig their own graves.  And as you would say, “that is the eye-opener”!


Agreed. I think the potential to integrate Prime benefits into the Amazon Go experience offers enormous potential.

MNB reader Ben Ball wrote:

Props to Michael for pointing out that this is an idea born in the business discipline of solving consumers’ problems. And to calling out Mike Wright (and we could add others of his ilk) who saw this problem for what it was long ago. But the biggest “aha” in this should be that this is also how Bezos arrived at the concept of Amazon Go. It was not a proprietary technology looking for an application. It was a consumer problem to which Bezos applied proprietary technology. And that kind of thinking is what makes Amazon “go”.

Absolutely true.

MNB reader Dan Raftery wrote:

The technologies are different, but the promise is the same as the old Andersen Smart Store.

At least two big differences today: People (certainly not all) are more comfortable with what was previously considered "privacy invasion," so that roadblock should be easier to get around; and systems are exponentially advanced from the clunky hardware and software that used to be state of the art. AI has taken a while to grow into commercial usefulness and Amazon has been nurturing it along as well or better than anyone.

So, hats off to the industry brain-trust that conceived of and marketed the Smart Store and to Amazon for taking it to the next level with Amazon Go.


And, by the way, this is why people should pay attention when I post emails from MNB "fave" Glen Terbeek ... because he was one of the chief architects of Smart Store. Glen was seeing this stuff long before anyone else, and he remains, even in retirement, one of the smartest and most insightful people I know. (Check out his book, "The Agency Agenda," on Amazon.)

From MNB reader Jim Swoboda:

We, too, 20 plus years ago, envisioned the elimination of the check out process.

It’s so hard to believe that we are this far down the road and it has not been solved as of yet.  It amazes me that given the current self check out processes, weighing products to insure they are in the bag, closing the transaction and letting people go has not been taken another step.  Imagine scanning your items using an app on your smart phone which is interfacing with the stores POS database, keeping a running total for the customer to know where they are in their budget.

When the order is done, the cart passes over a scale and is weighed.  The cart is subtracted and the total weight of the order is compared to the calculated weight and if within a specific variance, the order completes to a pre-registered CC and out the door the shopper goes.  All possible with today’s technologies, not to mention several years ago.


From another reader:

OMG.  That sound you hear is a giant sucking sound coming from executives of major grocery retailers who just realized they have seen the future, and they're not in it!

AMAZON = GENUIS


MNB reader Joe Axford wrote:

One word - WOW!

Yup.

MNB reader Jim Huey wrote:

It’s hard to say from watching the commercial but if I understood right cameras tell a CPU if something is removed from a shelf and I’m guessing sensors know which app is closest? If this is the case I wonder what will happen if it is busy and I reach in front of someone else to get my item? Also wonder what happens when someone inevitably places an item back in the wrong place? I’m sure Amazon will figure this out if they haven’t already. My biggest question is when will there be one where I live? Can’t wait to learn more details.

And from MNB reader Rich Richardson:

Just waiting and watching to see how many of the 2K stores Jeff has announced will leverage this technology.

It would no doubt add a whole new meaning to “convenience store”…


We're all waiting and watching to see what happens next. Probably won't have to wait long.

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