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Wednesday, February 15, 2017

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Kate's Take: The Social Media Opportunity Gap

by Kate McMahon

Thomas Edison - the very definition of disruption long before the term was fashionable - once wrote: “Opportunity is missed by most people because it is dressed in overalls and looks like work.”

The same could be said for retailers who are missing the opportunity to engage with their customers on a variety of social media platforms, and risk losing market share to savvy competitors who are doing just that.

A new report from the Retail Feedback Group details the “wide gap” between shoppers using social media and connecting with their supermarket. In fact, while 87% of supermarket shoppers in the study reported following one or more social media site, just 25% indicated they are friends with or connected to their primary grocery store. That 62% differential struck me as a wide gap, indeed. The shopper feedback experts agreed.

“It is imperative for retailers to close the social media opportunity gap given the influence that our social media networks have on decisions we make everyday like trying a different store or a new item,” Brian Numainville, a principal at RFG, told me, just before he presented the study’s findings yesterday at the National Grocers Association (NGA) convention in Las Vegas.

I think there are several takeaways in this report that should be mandatory reading for the marketing teams at retailers large and small. Among them:

• Only 47% of the shoppers surveyed knew that their primary store had an app or mobile-enabled site, indicating retailers need to boost awareness about the digital tools available.

• Almost half of the supermarket shoppers said they were very willing to make a new recipe or meal and 32% were willing to purchase a new food item based on social network suggestions.

• Shoppers who do interact with their primary store are most likely to check the digital circular (65%), followed by researching special promotions (48%) and building grocery lists.

The report also noted that members of various generations use social media differently – with Baby Boomers tilting toward Facebook and Millennials using YouTube, Instagram, Pinterest and Snapchat more heavily. Given that Millennials are interacting on digital platforms at a higher rate (66%) compared to Boomers (47%), that’s where I would be focusing my efforts and investment.

Beyond the percentages, it’s clear that social media should be an integral part of any retailer’s strategic business plan. And the most effective measurement of its success is engagement – creating a relationship with the customer that transcends the physical store and digital platform.

And not missing an opportunity because it is dressed in overalls and looks like work.


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

Wegmans Hit By Boycott Threats From Anti-Trump Consumers

The Washington Post reports that Wegmans is facing the threat of a boycott by consumers who want it to remove Trump Winery products from the 10 stores that it operates in Virginia.

"Over the weekend," the story says, "about 300 members of the Prince William County chapter of the National Organization for Women made plans to pressure Wegmans to stop carrying products from the Charlottesville winery." Wegmans "sells 237 Virginia wines from 58 wineries at its local stores. Among those wines are five varieties from the Trump Winery, including Trump Blanc de Blanc and Trump Winery Chardonnay. According to Jo Natale, vice president of media relations for Wegmans, the company has been selling wines from the Charlottesville winery since 2008, before it was owned by Donald Trump - and long before he campaigned for the White House."

Natale explained Wegmans' position and intentions this way: "“Our role as a retailer is to offer choice to our customers ... Individual shoppers who feel strongly about an issue can demonstrate their convictions by refusing to buy a product. When enough people do the same, and sales of a product drop precipitously, we stop selling that product in favor of one that’s in greater demand.”

Wegmans is just the latest company to find itself at the center of a political tempest because of real or perceived connections to President Donald Trump or his family businesses. Other businesses that have found themselves navigating uncertain and unexpected waters have included New Balance, Under Armour, LL Bean and Nordstrom.

KC's View: The latest company, but certainly not the last.

It is hard to know what Wegmans should do in this case, or will do. It is fine to say that the wine will be removed if sales drop below a certain point, but as the Post points out, the National Organization for Women (NOW) is an influential, 50-year-old nonprofit with more than 500,000 contributing members, and a lot more people who are sympathetic to its causes. An organized boycott, along with protests at Wegmans stores, could force its hand.

But, of course, if it were to remove the wines because of political pressure, that'll only awaken the ire of Trump supporters who could engineer their own boycotts and protests.

Like I said, these are waters that are both uncertain and unexpected.

There are other companies that easily could find themselves in the same position - Trump wines are carried by retailers that include Giant, Harris Teeter, Safeway, Kroger and Whole Foods.

I have been arguing for a few weeks now that, in fact, these issues should not be unexpected. I absolutely believe that pretty much every company should be looking at their exposure to political controversy because of products carried or not carried, and that they should be asking themselves, "What do we do tomorrow if President Trump mentions our company in a Tweet?"

This is a business question, not a political question. It doesn't matter how you feel about the Trump administration and its policies. But there are certain realities.

One of them is that in this toxic political climate, consumers take aim at you because of Trump products on your shelves.

The other is that President Trump posts a Tweet about you, which creates a situation in which half your customers are thrilled, and the other half decides never to darken your door again.

It is possible, I suppose, that some of these controversies will diminish over time. But then again, the first month of the Trump administration suggests that this is not the case - political divisions seem more pronounced than ever.

However one feels about Trump and his policies, it seems clear that we are living in a time of political upheaval and passion, and perhaps uniquely, a time when politics and business are intersecting to particularly violent affect. Everybody has to be prepared.

Editorial continues after a word from our sponsor...

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Wednesday Morning Eye-Opener: Prime Numbers

by Kevin Coupe

In 2016, Amazon Prime and other Amazon subscription services generated $6.4 billion in sales ... up from $4.5 billion in 2015, and $2.8 billion in 2014. While that is just a slice of the company's total retail sales - retail and third part sales combined for more than $110 billion in sales in 2016 - the growth suggests that Amazon is being successful in its efforts to grow Prime and subscriptions as a way of expanding its ecosystem.

Bloomberg writes that this is "the first time ever" that Amazon "has released figures detailing how much money it brings in through its Prime membership program and other subscription services."

The story goes on:

"Assuming around 90 percent of Amazon's subscription revenue comes from the $99 annual membership fee, Morgan Stanley estimates there are about 65 million paying Prime members.

"Net sales from Amazon Prime and other subscriptions are still growing by more than 40 percent annually, a dozen years after Amazon launched the membership program. That's a good sign for Amazon's future prospects, especially considering the majority of Prime members are still in the U.S. And some analysts estimate Prime subscribers buy twice as much on Amazon as people who aren't part of the shopping club."

You can read more about the revelations here. It is an Eye-Opener.

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Court Upholds NYC Rule Requiring Salt Warnings By Chain Restaurants

The New York Daily News reports that "a state appeals court has upheld a controversial city rule requiring chain restaurants to post menu warnings on high-salt items. The regulation, which has been litigated extensively since its adoption in fall 2015, mandates that any eatery with more than 15 U.S. locations place a salt shaker image next to any item with over 2,300 mg of sodium — the maximum recommended daily limit. Each violation costs $200."

The Associated Press writes that this is just "the latest in a series of novel nutritional moves by the nation's biggest city, and it comes as health advocates, federal regulators and some in the food industry are trying to get Americans to cut down on salt. Experts say most Americans consume too much of it, raising their risks of high blood pressure and heart problems."

The National Restaurant Association (NRA) had fought the rule in the courts, and said after the ruling that it was still considering its options, arguing that it is "arbitrary and capricious" as well as "onerous."

KC's View: I understand why the NRA thinks this is an onerous regulation. But capricious and arbitrary? Not so much ... because it seems clear that salt intake creates enormous health problems, and that many people have no idea now much salt is in their foods. I like the idea of this label, because it allows me to make an informed decision.

Nothing onerous in that for me.

Study: The Overlooked, Under-Rewarded Baby Boomer Generation

A new study says that Baby Boomers, "often retailers’ most affluent audience, aren’t loyal customers because they feel overlooked and under-rewarded."

The report maintains that "most retailers focus their year-round online and mobile marketing efforts on Millennials by appealing to their frugal, post-financial crisis mindset and multi-device-connected lifestyle. However, brands are missing out on a key generation – Baby Boomers – as 84% have a smartphone that they use for various aspects of the shopping journey and 79% are willing to indulge on purchases for their family. This age group controls 70% of the US’s disposable income, demonstrating how important it is that they are paid equal attention to beyond the in-store experience."

However, as many as 93 percent of Baby Boomers "aren’t fully loyal to their favorite brands because they feel overlooked and not adequately rewarded," which means that retailers and brands "are losing out on a major financial opportunity with this generation and increasing the likelihood that these customers will stray to competitors.

"In order to create valuable, enduring relationships with Boomers, it is imperative that retailers target online and mobile marketing efforts towards them and create tailored loyalty strategies that fit with this generation’s needs and expectations."

The study suggests that what Baby Boomers are looking for includes some measure of customized recognition and personalized rewards, relevant communications and recommendations, and some level of tangible responsiveness to consumer concerns.

The ICLP report was commissioned by Survey Sampling International (SSI).

KC's View: Gee, I'm a little surprised by this. I thought it was only millennials who feel overlooked and under-rewarded. Turns out that they learned it from their parents...

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Apple Gets Into Private Label Video Content Business

The New York Times reports that Apple is finally moving to tread the same path as Netflix and Amazon by producing original video content that will be made available via its Apple Music subscription service.

In other words, its own version of private label.

According to the story, Apple has unveiled plans for two unscripted shows - “Carpool Karaoke,” described as "a spinoff of James Corden’s running sketch on 'The Late Late Show', and “Planet of the Apps,” a reality TV series "about iPhone app developers competing to build the next great app."

"Carpool Karaoke" is scheduled to debut in April.

While Eddy Cue, Apple’s senior vice president for software and services, says that there are limits to Apple's ambitions for original programming, the Times writes that "Apple does intend to use original video to help distinguish Apple Music, which began in June 2015 and has attracted than 20 million subscribers, from competitors like Spotify.

“We’re trying to do things that are unique and cultural,” says Cue.

Jimmy Iovine, who runs Apple Music, says that the company also is working on scripted programming that just takes a little longer than so-called reality shows.

KC's View: It is all about the differentiated products and services. It doesn't matter what the company is or what it sells - success is attained in the areas where they are different, not similar.

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Worth Reading: What Drives Amazon's Innovation Culture

Fast Company has named Amazon the world's most innovative company for 2017, and it has a quote from Jeff Bezos that illustrates what drives the company:

"Our customers are loyal to us right up until the second somebody offers them a better service. And I love that. it’s super-motivating for us."

In other words, it is good to get up in the morning like your hair is on fire.

So to speak.

Good piece. Great company. You can read more about it here.

By the way, there's another great quote from Bezos that illustrates what Amazon is all about:

"I have the best job in the world because I get to work in the future."

Read the story.

FastNewsBeat

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

Atlanta magazine reports that in May, one Whole Foods restaurant in the city will feature a new "fast-casual Brazilian restaurant. Tentatively titled the Roast, the restaurant will be the first of its kind for the company."

According to the story, "The Roast will seat about 48 people and feature digital ordering kiosks. There will be a separate bar menu available only in the evening, with beer, wine, and soda on tap, as well as spirits and cocktails. Diners are invited to stay for a while, play billiards, and listen to a DJ set."

I have to be honest. This sounds a whole lot more appealing to Millennials than the 365 by Whole Foods concept, which supposedly is designed to target that generation. But maybe it is a reflection of how Whole Foods is trying to figure out this equation from a variety of directions.


• The Seattle Times writes that "Starbucks, seeing the success of its ice cream menu offerings at the Seattle Roastery, will start serving ice cream at more than 100 store locations ... Starting Wednesday, the 'Roastery Affogato menu' — based on the Italian espresso-poured-over-ice cream dessert and tested first at the Seattle Roastery — will begin rolling out in Starbucks stores that include Reserve bars."

The story goes on to say that "These ice cream menu test runs are an example of how Starbucks’ Seattle roastery is serving as a innovation pipeline for the company ... Starbucks plans to see how well customers respond to the menu before deciding whether to expand it elsewhere."


• The National Grocers Association (NGA) yesterday revealed this year’s top winners of its Creative Choice Awards in the Marketing and Merchandising categories. Over 300 entries were judged based on the criteria of creativity, clarity and effectiveness by a panel of industry experts.

Outstanding Merchandiser was awarded to Festival Foods for its “Eat Well Ad campaign entry, which used a team of registered dietitians to develop a quarterly Eat Well ad that encompassed affordable and healthy recipes.

The title of Outstanding Marketer was awarded to Broulim’s Video Campaign “Hear from Customers Like You.” Broulim's hired a film crew "to visit the homes of five Broulim's Online customers, and produced various customer testimonial spots and interview highlight videos featuring the personal stories of the benefits and convenience of online grocery shopping were produced for the store. Broulim's then launched a video marketing campaign to engage their communities, relay the convenience of grocery shopping online, and to get their audience excited about trying the service."

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From MorningNewsBeat, September 15, 2016:

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Now back to regularly scheduled editorial...

Your Views

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From The MNB Sports Desk

There was something I should've written about in this space yesterday, but did not. So let me rectify the matter, albeit a little late, by turning the space over to MNB reader Mike Griswold, who gives us not just the sports report, but also the business lessons ...

It must be because you are traveling, but I was a bit disappointed you didn’t mention the 100 game win streak by the UCONN Women’s basketball team. While I hate to say never, I feel comfortable saying we won’t see another streak like this in men’s or women’s basketball again. I also think there are several business lessons for us to consider:

• Culture while hard to describe, plays a huge role in an organizations success. There is a “UCONN way” of doing things, how to practice, how to prepare, how to play, that is embedded in the DNA of the program and passed along over the years. Seniors educate freshman on the way to do things and keep the culture alive.

• Leading organizations find ways to “reload” when talent departs. UCONN lost 3 seniors who went 1,2,3 in the WNBA draft. They lost one of the best players in women’s basketball history in Breanna Stewart yet here they are ranked number one again. The freshman and sophomores from last year, are now the leaders of this year’s team.

• Lastly, leaders create an environment where people can compete, and be challenged. Other colleges have access to the same players as UCONN. UCONN had no pre-season All-American candidates. People go to UCONN to experience the culture, be challenged, held accountable, and improve so that they are better when they leave, than when they arrived.

All great stuff. Couldn't said it better myself. Thanks.

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