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Monday, January 16, 2017

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Monday Morning Eye-Opener: The Ring Is Dead

by Kevin Coupe

The big tent is coming down.

After more than 140 years of performances, Ringling Bros. and Barnum & Bailey announced that it is shutting down after final performances this May. CEO Kenneth Feld " cited declining ticket sales, which dropped even more drastically after elephants were phased out from the shows last year," the New York Times writes.

About 400 people will close their jobs when the circus goes out of business.

The Times goes on to note that "Ringling has been targeted by activists who say forcing animals to perform is cruel and unnecessary, leading to the removal of the elephants, among the most popular features of the performances. The company sent its animals to live on a conservation farm in Florida."

Now, I have to be honest here. I always liked the circus. I took my kids to the circus when they were young. But Mrs. Content Guy, being far more sensitive and intelligent and I, never liked the idea; when I mentioned that Ringling Bros. was going out of business, her response was that it was about time. (Though she feels bad about the people who will lose their jobs.)

The thing is, it was time. The world has changed dramatically in 14 decades, and the way we view animals has evolved ... and that's a good thing.

It is an Eye-Opening lesson, I think. There probably was a time when it seemed unthinkable that such an institution would go out of business. But it never is unthinkable. And if you're not in touch with what is acceptable and appropriate today - as opposed to yesterday - then it means that it is a pretty good bet that you're going to be irrelevant.

Because even the "biggest show on earth" has to come to an end.

Walmart's Realigns Jet-Fueled Online Strategy

The Wall Street Journal reports on how Walmart is juggling its leadership roles, on top of the 1,000 corporate job cuts it is making at headquarters, as a way of bringing together in-store and online responsibilities in a way that creates synergies.

According to the story, "Tony Rogers, Wal-Mart’s chief marketing officer, will also lead online and digital marketing efforts, including for Jet.com."

The story goes on: "Jeremy King, head of the WalmartLabs engineering team, is being promoted to U.S. chief technology officer ... Michael Bender, chief operating officer for e-commerce, will leave the company, Chief Executive Doug McMillon told staff in a memo Friday. Scott Hilton, chief revenue officer for Jet.com, will become chief revenue officer for all e-commerce operations. Jamie Iannone, chief executive of SamsClub.com, will take on responsibility for all of the warehouse chain’s technology efforts, including in stores."

McMillon also said in the memo that Walmart is hiring Clay Johnson, an executive at General Electric Co. ’s power business, as its new enterprise chief information officer, responsible for "lowering our costs, getting the benefits of scale, associate experience and cyber security."

Bloomberg reports that "A new incubation and strategic partnerships division will be led by Seth Beal, who will focus on identifying areas that have the most growth potential."

In addition, it is reported that "Liza Landsman was promoted to president of Jet.com from her prior position as chief customer officer" and that "Jordan Sweetnam is now the retailer's vice president of customer experience, product, focusing on products, shoppers, and faster execution across the board for the retailer. Sweetnam was formerly the vice president of global product for Walmart eCommerce."

The Journal provides the context for these decisions: "Wal-Mart purchased Jet.com Inc. for $3.3 billion in September, quickly placing (Mark) Lore, Jet’s founder, at the head of its e-commerce operations. By November Mr. Lore had already made some management changes, naming Jet co-founder Nate Faust to lead fulfillment operations for Jet.com and Walmart.com. Friday’s changes mark a more complete reworking of Wal-Mart’s e-commerce leadership structure."

Re/code offers the following analysis: "If Walmart is going to better compete with Amazon, its stores are going to have to become a real advantage — not unwanted baggage." And it quotes this line from the McMillon memo as being important in terms of the company's strategy: "We were starting to see our stores and eCommerce teams solving many of the same problems and now we can remove what might’ve become more duplication in the future."'

Lore put it this way, according to the Bloomberg story: “We’ve talked a lot about becoming a more customer-centric organization. Our strategy is about offering more choice, competitive prices - particularly on food and consumables - and operating on the strength of the world’s most efficient e-commerce supply chain ... We’re on a mission to reshape e-commerce and create a best-in-class shopping experience that empowers customers to save money in completely new ways."

Bloomberg writes that "Wal-Mart is under increasing pressure as Amazon pushes deeper into the grocery business. Big-box retailers have traditionally used food to draw shoppers into stores, with hopes that they buy electronics, clothing and other goods with higher-profit margins. But now Amazon may pick off more of those customers. The online giant is even targeting food-stamp recipients under a pilot program to begin this summer. Wal-Mart is responding to the threat with its Jet.com Fresh service, offering delivery of fresh food without a membership fee."

CNBC also provides a little history: "When traditional brick-and-mortar retailers began launching websites years ago, leadership teams were often separate. But as the world has changed and many consumers shop both online and in-store, more retailers are moving to integrate teams from two separate operational divisions, to one. While it sounds like a simple concept, it can be difficult to execute. Some argue it's necessary integration pain, and Wal-Mart is later to the game than other retailers."

KC's View: While in the beginning Walmart took the position that it was going to run its own website and Jet as separate entities, at least from the consumer point of view, I've never felt that this was an entirely workable - or even desirable - premise.

Of all the analysis quoted above, I think Re/code gets it right:

"If Walmart is going to better compete with Amazon, its stores are going to have to become a real advantage — not unwanted baggage."

But I'd take it a step further and suggest that the in-store folks at Walmart need not to think of online as unwanted competition.

Inevitably, at a retailer that has been around as long as Walmart and with a culture that is so ingrained, there are going to be tensions. Breaking down the leadership walls around these areas is critically important, though I have to think that there could be some additional cultural strains created by Jet folks taking on leadership roles in a company they only joined less than a year ago.

It seems to me - and Walmart folks should feel free to correct me if they think I'm wrong - that it is important that everyone within Walmart, no matter where they work, see all these moves simply as a beginning. They cannot see it as the end ... because if they do, it will be.

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The Reasons Walmart Is Jet-Fueling Its Online Strategies

There were two Amazon-related stories over the weekend that illustrated why Walmart is making the kinds of move sit is making:

Business Insider reports that Amazon has disclosed via regulatory filings that it intends "to test experimental wireless communications technology, including mobile devices and fixed-base stations, in rural Washington and Seattle." While the purpose of the tests is not specified, the story says that "they hint at a new type of technology or wireless service, noting that the project would involve prototypes designed to support 'innovative communications capabilities and functionalities'."

The naming of Neil Woodward, a former astronaut who joined Amazon in 2008, as the apparent lead on the project, also is said to be "intriguing." Woodward "is now a senior manager for Prime Air, the team in charge of Amazon's drone-delivery effort." His role in the test "suggests the tests could involve some kind of communications system to control Amazon's delivery drones. But the details in the filings could also point to a wireless service designed to work with mobile handsets, such as Amazon's Kindle tablets, or perhaps the Echo home speakers that Amazon sells."


Business Insider also reports that Amazon "is about to tap into one of America's biggest clothing trends by launching its own athleisure brand, making it a competitor to Lululemon, Gap's Athleta, Under Armour, Nike, and other top sportswear brands." It also ramps up Amazon's ability to compete with "department stores like Macy's, Nordstrom, and JCPenney, which have been battling years of declining shopper traffic to malls."

Some context: According to the story, "Amazon was already expected to surpass Macy's to become the biggest apparel seller in the US this year, according to a 58-page report published by Cowen & Co. in October. 
The company's clothing and accessory sales are expected to grow nearly 30% next year, to $28 billion, according to the Cowen analysts. Macy's apparel sales, by comparison, are expected to drop 4%, to $22 billion, in the period."

Some more context: "Amazon currently claims about 6.6% of the market. That share is expected to increase to 8.2% by next year and further expand to 16.2% within five years, according to Cowen analysts."

KC's View: This may be stretching metaphors a bit, but may I suggest that while Walmart is trying to get all its ducks in a row, Amazon is setting lots of ducks free, sending them off in all sorts of directions, and yet tracking them to see what it can learn and how it can grow.

The pitched battle between these two behemoths is going to be fascinating, and will dictate the shape of the retail landscape for years to come.

I was saying to a friend of mine yesterday that what makes this even more interesting is that some people see Amazon as the Death Star, and others see it as part of the Rebel Alliance. It all depends on where you are sitting.

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Survey: The Evolving Global E-commerce Market

Nielsen is out with a new survey looking at the global e-commerce, concluding that more than 93 percent of respondents said they've shopped online, "perhaps not surprising, given that the findings are based on internet-connected consumers." Still, the survey says, the number is significant because "not only does it speak to how pervasive online shopping is among the growing online population, but it also provides an insightful view into purchase behaviors that will only accelerate as internet penetration grows."

The survey goes on: "More than half of global respondents in the online study say they’ve purchased fashion products (58%) or travel products or services (55%) online, and half say they’ve purchased books, music or stationery ... nearly four in 10 global respondents (38%) say they’ve purchased personal care and beauty products online, and about one-fourth say they’ve ordered meal kit or restaurant delivery services (27%) or packaged grocery food (24%) online."

And, "about one-fourth say they’ve ordered meal kit or restaurant delivery services (27%) or packaged grocery food (24%) online." While the numbers are a lot smaller for fresh foods - just nine percent of US respondents say they've bought fresh foods online - the survey suggests that "as grocery delivery services expand and improve, and quality assurance is guaranteed, the allure of purchasing fresh groceries will expand."

KC's View: To me, this is a no brainer. The numbers simply have to grow. It is inconceivable to me that they will not. And I think that anyone who believes the opposite is just kidding themselves ... not because it means that they are disagreeing with me, but because they are ignoring our recent history.

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D-I-Y Retailer Cuts Jobs, Puts Emphasis On Customer-Facing Roles

The Wall Street Journal reports that that D-I-Y retailer Lowe's is going to eliminate some 3,000 jobs, or about one percent of its workforce, and will shift many employees from "back-of-house responsibilities and activities to customer-facing ones," and will deploy them in a way that positions them "to help answer shoppers’ questions about products or home-improvement projects."

The moves come as Lowe's deals with "weaker-than-expected store traffic" and looks for ways to "adapt to shifting shopping habits ... Lowe’s is still trying to navigate a retail market where consumers increasingly turn to the internet rather than physical stores to buy materials and research projects. It is using video cameras and other technology to help it analyze store traffic and adjust its staffing to match customer needs."

KC's View: It just seems to me that any retailer who needs to reallocate employees to work in customer-facing positions is almost too late to the party. If I had to identify a single problem that many troubled bricks-and-mortar retailers share it would be that they've put more emphasis on logistics and operations, and not sales and marketing. They always should've had engaged, visible people on the sales floor who who help and interact with shoppers.

It could be too late to get religion on this one.

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The Prognostications Of Two Retail CEOs

The Street has a piece about a presentation by Macy's chairman/CEO Terry Lundgren at the National Retail Federation (NRF) show in New York City, in which he said that the one thing that will not change about in-store retailing, no matter how e-commerce grows, will be "the need for salespeople in the store to convert what shoppers do show up to actual spenders. [The need for] great salesmanship will not change, I don't see it ever going away."

Of course, Lundgren made the comment in the wake of Macy's decision to close 68 stores by early spring, 100 stores over the next few years, and "displace" some 10,000 people as a result.

And, Benzinga has a story about retailing-centric predictions made by Walmart CEO Doug McMillon in a blog posting, noting that he "is of the view that in the future customers will be more empowered than ever to drive the change they want, as they get more control over their shopping experience through technologies such as Internet, mobile and analytics.

"Customers seeking to buy everyday items such as laundry detergent, paper, etc. could turn toward a combination of stores, e-commerce, pick-up, delivery and supported by artificial intelligence," he says. "For customer desires, customers prefer exploring stores or make use of technologies such as virtual reality."

McMillon also argues that "customers may want to access all that is available for their counterparts elsewhere, given that the whole world has now become a global village and what everyone does is visible to all." And, he says that "retailers can survive only if their business creates shared value that benefits shareholders and society. This, according to McMillon, would need new levels of cooperation and collaboration between retailers and NGOs, governments and educational institutions."

KC's View: I don't go to Macy's a lot, but I guess I have to wonder exactly how many great salespeople they have working in their stores. My experience is that they're moderately competent at ringing up sales, but actually selling? Not so much.

I absolutely agree with McMillon, except that I'd go a step farther. It isn't that customers just want more control over the shopping experience. They already have it ... and they're walking away from retailers that don't accept and acknowledge it, because they are viewing these retailers are irrelevant and on the road to obsolescence.

Are You Attending NRF 2017 Today?

The annual National Retail Federation (NRF) "Big Show" is taking place this week, at New York City's Jacob Javits Convention Center ... and I'm planning to spend some time there today.

If there are any MNB readers who'd like to get together, I'll be camping out from 1:30-3 pm at the MyWebGrocer booth, #612 ... I'll have some copies of my books to give away, and I'm always happy to catch up with members of the MNB community.

Hope to see you there...

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From Webstop...

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FastNewsBeat

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

• The Associated Press reports that the National Retail Federation (NRF) is working with chains that include Walmart, Home Depot and the Home Shopping Network (HSN) to launch "a program to help people develop the skills to land entry-level jobs and advance in a retail career." According to the story, more than 20 retailers "have pledged general support for the Rise Up program being launched Sunday. It's part of a broader credential plan that would help workers move up that may include training for store supervisors and in specific areas like retail analytics."

The story goes on to report that "the program offers 30 to 40 hours of classroom training or 15 hours of online training, and will be administered through nonprofit groups and public education partners. The overall cost is $50, but many students will be able to get subsidies. The retailers involved are encouraging local nonprofits or high schools to start using it. Some might fund groups in areas where they're having a hard time hiring skilled workers. Some may use it to replace or supplement their own training."


Columbia Business First reports that Ohio-based retailer The Andersons Inc. has announced the closing of its four retail stores, ending a 65-year run and resulting in the layoff of more than 1,000 people.

According to the story, "The company said its retail division has lost more than $20 million over the past eight years, including write-downs on the value of the business. It's closed three stores in that time."

I am unfamiliar with this company, but the closing were brought to my attention by an MNB reader, who told me that "the privately owned Anderson stores were interesting.  Hardware, appliances, home improvement, garden center, gourmet food (cheese, deli etc.), butcher shop/seafood, baked goods, produce, huge wine and beer selections and many things I probably overlooked mentioning.  They had many items you could not find anywhere else ... As they say, just a sign of the times.  This retail business was just a small part of the Anderson's operations, but it did not appear to me that they neglected it.


• The Houston Business Journal has a story about how that city is seeing enormous retail development, with "4.98 million square feet of retail space built and opened in 2017," including 21 new grocery stores.

Among the expected openings: six new Kroger Marketplace stores, three new H-E-B stores and one more of its Joe V's Smart Shop units, 10 new Aldi stores, one new Walmart Neighborhood Market and three new Walmart supercenters, two new Super Targets, one new Costco and six new Total Wine units.

Yikes. It is a good thing, with all this physical retail development, that Houston has been walled off from the e-commerce revolution. Oh. Wait a minute...

Executive Suite


• In Canada, the Financial Post reports that Michael Medline, the former CEO of Canadian Tire, has been named CEO of Sobeys and its parent, Empire Co., which are hoping for a turnaround.

According to the story, "Medline’s appointment as CEO follows the ouster of grocery veteran Marc Poulin from his position as Empire CEO in the same month Medline made his exit from Canadian Tire last year. Poulin left the grocery retailer after a botched integration of the Western Canadian Safeway chain close to three years after its $5.9 billion purchase and after Empire reported a staggering $2.13 billion net loss for fiscal 2016."


• Kellogg Co. has announced that Fareed Khan, formerly CFO of US Foods Holding Co., will join the company as chief financial officer, succeeding Ron Dissinger, who stepped down from the role at the end of 2016.

Your Views: Thus Endeth The Lesson

On Friday, I wrote a piece that contrasted Staples' stated desire to create a voice-enabled Easy Button system that would differentiate it from the competition with the sad reality of shopping in an actual Staples store, where it took more than a half hour to get someone to help me when I wanted to buy a new desk chair, and then more than a half hour to get someone to find it after it had been built and I went back to pick it up. Next time, I wrote, I'll going to Amazon...which, I added, are six words that no retailer should want to hear.

MNB reader Jerome Schindler wrote:

You say "Next time, I'll go to Amazon. (Which are, by the way, six words that no retailer ever should want to hear.)"

A dollar to a donut you are going to have to assemble that chair from Amazon.

I am a person with a T-Shirt that along with an illustration of a screw driver says "I am mechanically inclined - I screw everything up".
I am also a very frugal person that does not like to pay for assembly.

I have purchased a number of items requiring some assembly from Staples over the years.  I will say that most were not that difficult to assemble. The instructions were usually great. 

That said, I agree that Staples' customer service has certainly slipped in the past few years.  But they do have some good bargains.


It is fair to say that I got a good bargain. It was a $150 chair marked down to $35...which makes me think that not only did they irritate me, but they didn't make any money on me.

My experience on this may be unusual, in that I never was going to spend a ton of money on a new desk chair. My feeling is that it only has to last until we move to Oregon, because I'm not taking it with me.

MNB reader Gary Loehr wrote:

No excuse for the lack of service from Staples, but to be fair Amazon does not solve for the two reasons that you went to Staples to buy the chair in the first place.

One, you wanted someone to put it together for you. Two, I assume that you wanted to sit in the chairs to see which ones were most comfortable.  Amazon does not currently provide either of these two services.  Reviews help, but comfort is not the same for everyone.

I don’t find your experience with Staples much different from mine.  Office supply may be a business that is ripe for someone to come in and really compete.  The current players miss the mark in a lot of areas.


And MNB reader Jeff Gartner wrote:

Kevin, just read your new office chair adventure. You concluded "Next time, I'll go to Amazon."

Perhaps it's because I live in the office furniture capital of the US … Grand Rapids, MI … and have done work for Steelcase, Herman Miller, Haworth (the 3 leaders) along with other smaller firms, but they're a so much better value option than Amazon for not only chairs but other office furniture as well. (I'm now sitting in a really nice ergonomic Steelcase Leap chair, in Coach black leather so it looks as good as it feels.)

You would get a much better quality office chair from their local dealer. And most of their dealers have special offers on refurbished products that are almost as good as new. Perhaps your immediate town doesn't have one of their dealers, but NYC and Boston certainly do, and I'm sure they would have delivered it. Fully assembled too at no extra charge.


I'll look them up when I move to Oregon.

MNB reader Andy Becker wrote:

In reference to your chair experience at Staples, this is the key that retailers are just not getting. If they want to compete, it IS a verb as you point out, you have to provide something to the customer that amazon can not. Many retailers are simply not providing anything other than a product available for purchase right now instead of waiting. I'd rather wait two days than put up with a frustrating experience trying to buy something.

And MNB reader Michael J. Eardley wrote:

Unfortunately, I think I can one up you on the Staples story.

I was home in San Antonio over Christmas and the Garage door opener had broken. A very simple repair of one small part that I thought I could handle.

Being a long-time retailer I went to two hardware stores along with Home Depot and Lowes. I asked the Lowes clerk why no one carried the switch.

He answered, “You know it’s a lot easier to just go online than coming here.”

I said, “You know, unfortunately you are right”

Went home, 5 mins later had my order placed and Amazon delivered it the next day.


As Jimmy Malone said in The Untouchables, "Thus endeth the lesson."




On the subject of some labor issues being experienced by Instacart, MNB reader Tom Murphy wrote:

Just reminding you that these delivery folks are NOT the face of Instacart, they are the face of the retailer!  And there may be fewer smiles on these faces…which cannot be good for the retailer.  Reminds me of some entry-level cashiers at a large chain who spent more time talking about last night’s hot date than scanning and bagging my groceries.  Take your pay to low, and the quality of your customer experience can only go downhill…a real death spiral!

You don't have to remind me. But I do think that some of the retailers that decided Instacart was the answer to their prayers do need to be reminded.




And finally, responding to my review last Friday of Michael Connelly's new novel, "The Wrong Side of Goodbye," MNB reader Jesse Sowell wrote:

You said: “Connelly's books always have been strong on both plot and characterization, but the best part of them always have been the ride - through the neighborhoods and mean streets of Los Angeles, and through the psyche of his driven, principled, flawed protagonist.”

I say: you captured it perfectly. Big fan. Discovered Bosch 12 years ago when I moved from South Orange County up to LA proper. Reading the books was a great introduction to the city, not just geographically and culturally, but spiritually. And Bosch is such a complex, fascinating character.
 
Great work, Kevin. Keep it up.


Thanks. Other Bosch-related news - the third season of the Amazon series based on Connelly's books is likely to debut sometime in the next couple of months, and a fourth season already has been ordered.

Yippee.

From The MNB Sports Desk

In the National Football League Divisional Playoffs...

Seattle Seahawks 20
Atlanta Falcons 36

Houston Texans 16
New England Patriots 34

Green Bay Packers 34
Dallas Cowboys 31

Pittsburgh Steelers 18
Kansas City Chiefs 16

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