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From The MNB Archives
Tuesday, December 20, 2016
by Michael Sansolo
Here’s a comment that I bet many of you have said or heard recently about the evolution of business and the challenge of how to evolve to the e-commerce era.
“I still don’t know (what the future holds.) We’ve been a consumer-driven business. Our consumers wanted it. We weren’t convinced it made a lot of economic sense. When we started it nobody really knew what (it) would be.”
Here’s the thing: the “it” in this quote has nothing to do with selling books, clothing, groceries or any other product on line. Rather, “it” refers to the evolution taking place in how sports are viewed and the struggle to adapt to an entirely new business model. The entire quote comes from Bob Bowman, Major League Baseball’s president of business and media, in a recent Washington Post article.
Nonetheless, it sounds familiar.
In many ways, that struggle mirrors the very conversation happening in so many businesses today, with the great unknown issue being how to migrate to this new world and somehow turn a profit when all the rules seem to be disappearing or evolving moment by moment. Not surprisingly, it leaves us all overwhelmed.
The issues facing sports broadcasting are both incredibly similar and wildly different from those facing the food industry. The biggest difference, of course, is that sports broadcasters aren’t selling a physical product, which means they have no worries about last mile logistics or product selection costs.
However, they are incredibly similar in the reality that consumer habits - especially among younger adults - are rapidly changing thanks to e-commerce and that in turn is threatening a highly profitable and well-organized business model.
John Skipper, president of ESPN, told the Post, “We simply have to adjust to where people are watching sports and serve it there. I think the distinction of television and non-television is kind of a falsehood at this point.” Skipper acknowledged that today you can watch a game on a television, a computer, a phone or even a watch. “But you’re watching a game on a screen and that’s all we care about.”
In many ways, that’s the textbook definition of omnichannel thinking: getting and keeping the consumer no matter how they choose to interact with you.
But then there’s that business issue. After all, ESPN is in the business of attracting eyeballs and lately that’s become a problem. As the Post reported, ESPN has been losing subscribers by the millions annually and more than 600,000 this past October alone, although the network disputes some of those numbers.
Whatever the exact number, Skipper acknowledges that ESPN has a challenge. “We just have to figure out how to thrive within (this new) market.” Bowman of MLB adds, “I don’t think any of us know what the Holy Grail looks like. I think you’ll se a lot of experimentation.”
Obviously, most MNB readers are not in the same business, but this is exactly what you face going forward.
At this point I’d love to tell you the Post reported on how ESPN or MLB completely solved the problem, giving you a simple and easy model to consider going forward. I’d love to, but I can’t and I’m not sure anyone can.
The reality is that all of this is new, different and changing constantly. The essential elements of success from the past might or might not work in the future. In truth, no one really knows.
All we can do is keep experimenting and learning.
Michael Sansolo can be reached via email at firstname.lastname@example.org . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
by Kevin Coupe
GeekWire has a story about Starbucks plans to use artificial intelligence to take the customer experience in its stores to the next level.
"Imagine," the story says, "pulling into a Starbucks drive-thru and seeing not just your drink order but your name on the screen - along with the suggestions of what foods you might like with your drink, automatically generated by the weather, your buying history, and the choices that others with similar preferences have made ... Coming soon to a Starbucks drive-through near you — and to your smartwatch, and possibly to each store’s cash register — are serving suggestions generated by artificial intelligence."
The goal is to create "a cloud-based 'digital flywheel' intended to provide the same personalized customer experience worldwide."
These new initiatives come, GeekWire writes, "as longtime technology executive Kevin Johnson prepares to take over as Starbucks CEO from Howard Schultz next year, giving the company more tech experience at the top."
I just think this kind of stuff is totally cool ... and illustrative of the degree to which I think we're going to see AI playing a role in modern retailing.
But there is one thing that people and companies have to think about.
Artificial intelligence is designed to replicate and improve upon actual human intelligence. This means that you don't necessarily need computers to provide this kind of customer service. I've been in stores over the years where great employees have been able to provide this kind of intuitive and inquisitive service because they actually care, and because they are working in cultures that encourage caring.
So the Starbucks stuff is great. But it isn't the only way to achieve great.
To me, that's the Eye-Opener.
A new study from the Global Market Development Center (GMDC) suggests that "as consumers strive to live more healthful lifestyles" and change their purchasing habits to reflect these shifting priorities, "more than ever, consumers want - and expect - retailers and manufacturers to assist them on their health and wellness journey inside the store."
The study, reflected in a new white paper from GMDC, offers the following statistics:
• Consumers are exercising three days a week on average.
• 63 percent are trying to eat healthier, and 44 percent eat more at home.
• 45 percent read product labels to make healthier choices.
• 8 in 10 consumers are using vitamins and supplements to enhance their wellness.
• 48 percent of consumers shop local for natural/organic.
• 45.7 million consumers use their phone to search for health and wellness solutions.
• Baby Boomers spend 42 percent more on health and wellness than Millennials.
• 1 in 2 Americans are shifting from health care to self-care as a result of rising costs.
The GMDC research identifies what it calls "four barriers consumers face as they make purchasing decisions," and provides “next practice” solutions to create seamless trips in the pursuit of a healthy lifestyle. Retailers and manufacturers, the white paper suggests, need to focus on Convenience (making it easy for shoppers), Confusion (making it simpler), Commitment (making it specific and relevant to the shopper), and Cost (making the case for the value proposition).
“As consumers around the globe search for better, healthier and smarter solutions that fit their lifestyle, the motivation for brands and stores to meet these needs means modeling an experience they cannot achieve with e-com,” said GMDC's president/CEO, Patrick Spear.
I encourage every effort to not just be a source of product, but also be a resource for information. Which is really what this is all about.
The New York Times this morning reports that The Annals of Internal Medicine, described as "a prominent medical journal," has published "a scathing attack on global health advice to eat less sugar. Warnings to cut sugar, the study argued, are based on weak evidence and cannot be trusted."
However, that study "quickly elicited sharp criticism from public health experts because the authors have ties to the food and sugar industries ... Critics say the medical journal review is the latest in a series of efforts by the food industry to shape global nutrition advice by supporting prominent academics who question the role of junk food and sugary drinks in causing obesity, Type 2 diabetes and other health problems."
The Times writes that "the review was paid for by the International Life Sciences Institute, a scientific group that is based in Washington, D.C., and is funded by multinational food and agrochemical companies including Coca-Cola, General Mills, Hershey’s, Kellogg’s, Kraft Foods and Monsanto. One of the authors is a member of the scientific advisory board of Tate & Lyle, one of the world’s largest suppliers of high-fructose corn syrup."
You can read the entire Times piece here.
Gee. Why would anyone think that a group bought and paid for by companies in the food industry that sell sugary products might come up with a study with a bias toward sugar? I just cannot understand that level of cynicism...
I went to the website of The Annals of Internal Medicine, where I read an abstract of the study. Alas, I could not read the entire report because I am not a subscriber. (Not that I am likely to have been able to understand it had I been able to read it.) There is a mention that the primary funding source was the "Technical Committee on Dietary Carbohydrates of the North American branch of the International Life Sciences Institute."
To be fair, I cannot claim to have any understanding of the scientific methods used to reach such conclusions. The Times story suggests that there is debate over methodology as well as conclusions, and I'm not smart enough to come to an independent conclusion.
But I am smart enough to remember the old Upton Sinclair line about how "it's difficult to get a man to understand something if his salary depends upon his not understanding it." The inverse also is true - it is easy to get someone to accept something if his livelihood depends on accepting it.
Marion Nestle, the professor of nutrition, food studies and public health at New York University, tells the Times that "“this comes right out of the tobacco industry’s playbook: cast doubt on the science ... This is a classic example of how industry funding biases opinion. It’s shameful." And I agree, especially about the tobacco comparison - and in my view, food industry companies should be doing everything possible to avoid being lumped in with those folks, who, as I've often said in this space, eventually are going to find themselves in a special and hotter circle of hell.
And, by the way, the same goes for people and organizations that criticize such studies ... if they're bought and paid for by interested parties with a financial interest in the other side, they are equally suspect.
Here's what all these people have to do. Be transparent. In the first paragraph. And not hide behind names like "Technical Committee on Dietary Carbohydrates of the North American branch of the International Life Sciences Institute."
In Bedford, New Hampshire, the Portland Press Herald reports, Ahold Delhaize-owned Hannaford has opened what it is calling a “learning lab” store designed "to help the chain compete in an increasingly crowded market.."
According to the story, the store is the company's "most high-tech store, while also being a throwback to the olden days of high-touch customer service. Aided by computers, tablets and touch screens, the store’s employees will cut your produce any way you like, help you select the best cut of meat or the perfect bottle of wine, and prepare your entire meal to eat in the store’s café or take home and throw directly into a pot. They’ll even do your shopping for you ... Hannaford is placing greater emphasis on the items that cannot be purchased easily online, including fresh produce, meats, ready-made meals, wine and beer. At the 68,000-square-foot Bedford store, which opened in June, those sections are being blown out to the extreme and experimented upon with a variety of test products and services. Those that succeed will make their way into other locations. Hannaford has more than 180 stores in northern New England."
Mike Vail, Hannaford's president, makes the point that while "Hannaford isn’t abandoning supermarket staples such as brand-name canned and boxed foods ... those aisles are not where the company expects to see future revenue growth. Such items belong in what Vail calls the 'leaky bucket'."
“Nonperishable products," Vail says, "are much more susceptible to online purchases."
I think that Mike Vail's "leaky bucket" point is extremely important ... if you're going to bail out a sinking boat (not that I'd describe Hannaford that way), you do it with buckets that don't have holes in them. And that means focusing on the categories and services that cannot be replicated by online retailers.
The story makes the point that Hannaford isn't just doing its best to offer food-oriented services in store, but also to provide as much information about products as possible - where things are from, what the nutritional values are, how to cook them. This doesn't just create theater, but also imbues the shopping experience with tangible value. And, there's an Internet cafe, which is a good way of keeping people in-store longer.
This is all smart stuff ... as is the new Hannaford store in North Berwick, New Hampshire, which is less than one-third the size of the Bedford unit, which Hannaford is using to see how small it can go and still provide real and differential advantages to shoppers. This is the kind of stuff that retailers have to do if they are going to be successful.
From MorningNewsBeat, September 15, 2016:
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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 email@example.com or at 561-454-7646.
The Washington Post has a story about how the iconic Horn & Hardart Automat - which started in New York City in the early 20th century - is finding new life in a format called Eatsa, which now has outlets in Washington, DC, and New York City.
Automats, for those of you too young to remember (and that would be most of you), were a highly popular format that used vending machines to deliver simple foods and drinks. They actually started in Germany, and were popularized in the USA by Horn & Hardart; the last one closed in New York in 1991 (which was a lot later than I would've guessed).
According to the Post, Eatsa is a tech-driven take on the old concept:
"Eatsa strives for self-service. You begin the interaction by swiping your credit card on a touch screen kiosk. You then choose from a variety of (vegetarian) bowls and then build to your own liking by selecting extra ingredients like pinto beans or grilled corn. Of course there’s lots of nutritional information, like calories and carbohydrate levels, provided with each selection because this is 2016 and we need to know this stuff.
"After completing your order, you check the big board to find out your assigned window. Then you go get your food from a Horn & Hardart’s-like window compartment, except today it’s got a flashy video screen that entertains you with cool animation and fun colors before – presto! – your food magically appears behind it. A quick double-tap raises the door so you can get your grub."
I have fond memories of going to the Automat. I can remember as a little kid being taken to the Automat on the southeast corner of Third Avenue and 42nd Street by aunts and uncles who thought it was the coolest thing ever; it inevitably would be followed by a walk or cab ride over the Radio City Music Hall where we'd see a movie and Rockettes stage show. Good times.
But I'm not sure that the technology/automat combination will be enough to make this a success. It'll be a curiosity, but it'll only be a success if the food is good.
...with brief, occasional, italicized and sometimes gratuitous commentary…
• The Washington Post reports that several major retail chains - including The Disney Store, Aeropostale, and PacSun - are eliminating the use of "on-call scheduling," described as " a practice in which employees must be prepared to come in for a shift, but could find out at the last minute that they don’t have to report to work."
The reason? Well, it isn't because the companies' human resources departments suddenly had an attack of conscience, realizing that this wasn't fair to employees. No, it was because labor advocates drew enough attention to the practice that a group of state attorneys general started questioning the legality of the policy.
“On-call shifts are not a business necessity and should be a thing of the past. People should not have to keep the day open, arrange for child care, and give up other opportunities without being compensated for their time,” Eric T. Schneiderman, the New York attorney general, said in a statement. “I am pleased that these companies have stepped up to the plate and agreed to stop using this unfair method of scheduling.”
I'll go a step further. I think this is a reprehensible and unconscionable way to treat employees. I'm glad that government officials have stepped in to "persuade" companies that they need to go in a different direction. Though I wouldn't be surprised if some legislator somewhere decides to introduce a bill that would legalize such a practice.
• In Texas, Brookshire Brothers announced that Jerry Johnson will step down as president/CEO at the end of April 2017, to be succeeded by the company's current COO, John Alston, who has been with the company for 35 years. Johnson will continue as a member of the company board of directors.
The company notes that "under Johnson’s leadership, Brookshire Brothers grew from 69 supermarkets throughout East Texas and Western Louisiana to its current 114 stores, and from a family-owned company with 5,700 employees to becoming 100 percent employee-owned with nearly 7,000 employee-owners."
Got the following email from MNB reader Alan Finta:
Regarding the “Perfect Holiday Storm” for e-tailers…my house already has a “doozy” of a delivery situation that I have to imagine will be played out tens of thousands of times over the next couple weeks.
My wife ordered nine items online from a major national retailer. After a few days she received a UPS notification that the package had arrived, but it had not. Upon further review, she found it had been delivered to the local post office. The UPS email notification “confirmed” that the Post Office had delivered it to our home, but they had not (or it was stolen?). She went to the retailer’s website to review the order and found part of the order (3 items) was being delivered via UPS, the “second part” of the order was being delivered via Fed Ex (those six items arrived yesterday).
My wife then called UPS who told her that she must contact the retailer. She did, was initially told she needed to contact UPS, but then worked it out and posted a claim. Results TBD.
We’re not concerned about “getting it before Christmas” so it’s not a huge deal for us, but it is mind boggling to think of the logistics needed to deliver this one order across three different shipping companies (UPS, Fed Ex, and the Post Office). Lots of moving pieces, lots of room for error, lots of room for frustrated customers…
And another story, from another reader:
My wife and I tried using Walmart to purchase a train set for our son. She ordered the train set on line and was given a date to pick it up. I thought great finally Walmart got something right for once this seemed easy and simple the way I like it. Well the day came to pick up the train set. We had our two sleeping kids in the car so she told me to wait in the car and she would run into the store to grab it and be right out. 45 minutes later I had to take both kids into the store to look for her. I found her with the train set and helped her out to the car. It took the employees 40 minutes to locate our purchase is there back room. What was supposed to be simple and quick was not. Walmart's online offerings will do them no good if they can't fix their customer service. I should have bought it though Amazon. I also get a chuckle of the new Walmart commercials that show how smooth the checkout process is during the holidays. If only the stores could live up to the commercial.
Hell of an ideas for an ad campaign there, I think. Show a series of vignettes in which people have bad experiences ordering products online or in stores, with each one ending with the customer looking at the camera and saying, "I should've bought it on Amazon."
In Monday Night Football action, the Carolina Panthers defeated Washington 26-15.
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