Sign up for the MNB Wake Up Call!

From The MNB Archives

Article Search:

Thursday, August 03, 2017

  • Change Font Sizes:
  • A
  • A
  • A
  • A

FaceTime with the Content Guy: Rockin' It

A Note from the Content Guy: Normally, FaceTime commentaries are available as both text or video, but occasionally ... as in this case, when there actually is musical accompaniment that is important to the message ... we forgo the text version. I hope you enjoy it ... and, to see past FaceTime commentaries, go to the MNB Channel on YouTube.

Thursday Morning Eye-Opener: Beyond Analysis Paralysis

A guest column by Todd Ruberg

Content Guy's Note: I don't run a lot of guest columns here, mostly because most of the people who offer to write them just want to sell something. But a conversation with my friend Todd Ruberg focused on "analysis paralysis," which is something that I believe is an enormous problem for both retailers and suppliers; Amazon's speed should have the same impact on companies' rate of change as Walmart's efficiency model had on the way its competitors worked on supply chain issues. (If it doesn't, they're probably screwed.) Anyway, based on that conversation, I asked Todd if we could run some of his thoughts here on MNB, and he graciously agreed. So, enjoy.

The pace of disruptive change in our industry is head spinning:  Just in the last weeks we have seen Amazon’s offer to acquire Whole Foods, Walmart’s acquisition of Bonobos, and more news of Lidl and Aldi expansion. It’s so fast, in fact, that whatever I say today may already be outdated tomorrow.

While the pace of change may have increased, the fact of change actually is an old story. Over the course of my thirty-five years in the CPG Industry and as a business development leader for a major CPG company, I watched the growth of Walmart, the emergence of the Club and Dollar channels, the decline of print ad & promotion effectiveness, the consolidation of the big food channel retailers, and the emergence of online shopping. And I could go on.

If change is inevitable, and disruption is the only thing that really is predictable, the real challenge is being proactive and reacting in ways that help businesses continue healthy growth year after year. And that means going beyond research (which remains critical) and finding ways to turn findings into profit, and market change into growth.

It means getting beyond Analysis Paralysis.

Every industry has its challenges. For the CPG sector, it’s changing consumer preferences and demographics disrupting the traditional brand building tactics. Changes in the consumer path-to-purchase and the rapid increase in eCommerce retailing require new capabilities and trade programs in order for brands to succeed.

All this is happening at a time with a slowdown in consumption growth, putting pressure on costs and spending, when new investment choices in rapid technology advances seem necessary. Meanwhile, in the marketplace there is retail consolidation, accelerating store closures, new “channels” with online and mobile, and new competitors (especially Amazon) emerging and growing fast.  All driven by a consumer/shopper who wants access to brands and information “anytime, anywhere, anyhow” – and expects retailers and brands to deliver on these changing expectations.

How are the industry players responding to these new conditions? Traditional players see growth stagnating, margins under pressure, and an unclear path on how to best re-strategize successfully.

For some retailers, it’s been “wait and see.” Most now are working on their own response to mobile and eCommerce growth, but margin pressures continue, exacerbated by the need to invest in technology, pricing of goods in an environment driven by algorithmic pricing, and deflating commodity pricing.

For CPG companies, it has been predominantly tightening their belts through “zero based budgeting” exercises, focusing on the “ROI” of spending as their growth stalls. They are caught in the challenge of both brick & mortar and eCommerce retailers looking for best price and differentiation, fearing that this challenge will drive a “race to the bottom” price environment that ultimately will place further pressure on their trade spending and margins.

All this has led to a contentious environment between retailers and their suppliers, as they each look at their own bottom lines, and introduce new initiatives to transfer value that is viewed as “zero sum” in this slow growth world.

There is no one-size-fits-all solution. But there is an adaptable model we can all use to grow in today’s marketplace and to future protect our business - an approach called Enterprise Value Creation.

The realities and challenges of this marketplace require CPG to be capable of more than just developing a brand and marketing it with retailers. With so much change and pressure on retailers, for a CPG to stay relevant, and be a valued partner, it must be “capable” of driving growth – creating value across the entire enterprise. This means shopper targeting and acquisition along the full Path to Purchase, supply chain efficiencies, superior online and in-store retail execution, category design, and more. And, a sales force capable of tailoring those capabilities to a specific retailer through joint business plans.

The CPGs (big and small) growing and scoring the highest marks from retailers on their ability to create value tend to have some things in common.

First, they have a keen understanding of the shopper they share with each retailer, with “actionable” insights on in-store and online shopping, including tactics to build that shopper’s loyalty and basket size.

They also understand how those shopper insights could become a “conceptual platform” used to articulate with their retail partners – Why is this category important? How can it be leveraged to build a retailer’s overall sales and shopper equity? And how can the insights be turned into profitable growth for both parties?

They all have value-creating capabilities across the total enterprise, including the ability to look carefully at their own costs and spending, from their organization costs, to their trade funds or retail, and then reallocate for the best return within or outside of that retail partner (ensuring new investments are not always incremental).

They're able to bring innovation and merchandising ideas to life across multiple channels, fitting up to that retailer model and their unique shoppers. They can incentivize the most efficient and effective logistics and best business practices.

And ultimately, they can provide the resources and sales abilities to build sustainable and profitable customer based Joint Business Plans.

This is no time for indecision, for Analysis Paralysis. The change and disruption in the industry will only accelerate.  There will likely be players that simply won’t survive. There will also be players that use the disruption to urgently drive change, survive and thrive.

Those players will be the ones that critically and honestly assess their capability opportunities, and get to work building up those most important to win.


Todd Ruberg is a partner with Simpactful, a CPG/Retail consultancy firm built with a team of experienced line leaders from both CPG and Retail firms. This article is based on a new white paper from the group, which you can read in its entirety here.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From MyWebGrocer...

Now back to regularly scheduled editorial...

Walmart Continues To Slowly Expand Online Grocery Ordering

The Orange County Register reports that Walmart plans to roll out its online grocery pickup service in 26 stores in California, bringing the total number in the state to 36.

According to the story, "The 26 stores in California join more than 800 Walmarts across the country that offer curbside pickup of groceries. Walmart has been slowly rolling out the program in various markets as part of a larger strategy to provide more grocery options."

Here's the reality with which Walmart is grappling, according to the Register:

"(Walmart) is expanding its curbside pickup program as Amazon continues to dominate the e-commerce market. Amazon, which recently bought Whole Foods Market for $13.4 billion, accounted for 33 percent of U.S. online sales last year, according to the research firm Euromonitor. Wal-Mart is in second place ahead of eBay, with 7.8 percent. Roughly 31 million households have an Amazon Prime membership or have access to one, according to market research firm NPD Group. Roughly 52 percent of online grocery shoppers are Amazon Prime members, NPD said."

KC's View: I continue to believe that while Walmart is making moves with click-and-collect, it would be better served by making "the big swing," - rather than 800 offering curbside pickup, it should be aiming to have three times that, and by the end of the year.

And then, it ought to buy Instacart.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From ProLogic Retail Services...



Now back to regularly scheduled editorial...

Researchers Suggests Echo May Be All Ears

The Telegraph reports that researchers with the MWR security consultancy are saying that they've found a flaw in the operating system built into Amazon's Echo voice-activated computer device, one that can "turn the Echo speaker into a 'wiretap' that sends all recordings to a hacker's computer in a security flaw that will confirm consumers' fears about the 'always on' listening device. The vulnerability could let cyber criminals listen to microphone recordings, see an owner's Amazon credentials, steal sensitive information, and takeover the device."

According to the story, "The hardware vulnerability is found in ports used to debug the device, which are hidden underneath a flap on the base of the speaker. Hackers could attach a malicious storage card to these without the user knowing that would give them access to the operating system of the Echo.

"From here, they could infiltrate the user's Amazon account, the apps on the speaker, and the system that is always listens for the wake word, normally 'Alexa.' The latter would allow them to hear all conversations that happen in the vicinity of the speaker ... The hack requires physical access to the Echo, but it is very difficult to see when a device has been tampered with. "

The Telegraph reports on Amazon's response to the revelation: ""To help ensure the latest safeguards are in place, as a general rule, we recommend customers purchase Amazon devices from Amazon or a trusted retailer and that they keep their software up-to-date."

KC's View: Well, I must admit that I find the Amazon response to be a little less than confidence-inducing. While the story makes clear that this really only is a problem with early versions of the Echo, and then likely only when one has bought it from someplace other than Amazon, it isn't as reassuring as I'd like it to be.

The story also mentions, by the way, that the MWR researchers say that "customers should mute their devices when they are not in use and to avoid placing the Echo in a public place, such as a hotel room or office." Which strikes me as somewhat limiting, especially in terms of what Amazon's ambitions probably are.

Editorial continues after a word from our sponsor...

Industry Drumbeat

From Webstop...

Now back to regularly scheduled editorial...

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From ReposiTrak...




Now back to regularly scheduled editorial...

Worth Reading & Watching: After A Fashion

The Wall Street Journal has a terrific piece about Amazon's new Echo Look, which includes a camera that can help consumers make wardrobe decisions by taking photos and videos of them wearing various outfits, and then, accessing computerized algorithms created with advice from fashionistas, recommending one outfit over another.

The Journal decided to test the Look's capabilities ... so two of its editors tried on a bunch of outfits, and then got the Look and a bunch of fashion designers to make recommendations, and then measured them against each other.

It is a fun piece ... and the reader gets to play along and see how he/she ranks when compared to the Look.

You can check it out here.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Samuel J. Associates...

Your Best Weapon To Fight In The Revolution.

People.

Great people.

It's that simple. And that complex.

The world of retail changes every day. Sometimes incredibly fast and with incredible significance, as when the world's biggest e-commerce company buys the world's premier organic food retailer ... a move that potentially creates enormous pressure on competitors.

There is no time to dither, no room to equivocate.

The industry's best companies need people with a desire to lead, the ability to envision the implications of a changing business climate, and the inclination to move quickly to address these new challenges.

In a world where automation and robots seem to gain greater relevance with every passing day, Samuel J. Associates knows that the best people - the right people - are the ultimate differential advantage to companies looking to be relevant, nimble and vibrant, with sustainable business models.

Samuel J. knows those people. Samuel J Associates knows those companies. We put them together, we help businesses move the needle, and we have the track record to prove it.

Click here to learn more.

Now back to regularly scheduled editorial...

Change At The Top At Mondelez

Crain's Chicago Business reports that CEO Irene Rosenfeld has announced her decision to step down as CEO this November, and then remain as chairman until retiring in March 2018.

She will be succeeded by Dirk Van de Put, currently the CEO of McCain Foods.

The New York Times writes that Rosenfeld steps down "after an 11-year tenure punctuated by battles with activist investors, stagnant sales growth and the changing demands of increasingly health-conscious snackers."

The Times also notes that Rosenfeld was "one of the few female top executives in corporate America," and "led Mondelez through some of its biggest transitions, including a split from Kraft Foods in 2012. Her departure leaves fewer than 30 women at the helm of companies listed on the Standard & Poor’s 500."

E-conomy Beat

• Amazon yesterday conducted its first Jobs Day, which, the New York Times writes, "was a vivid illustration of the ascendance of Amazon, the online retail company that, to a far greater extent than others in the tech industry, has a seemingly insatiable need for human labor to fuel its explosive growth."

Amazon reportedly is trying to fill 50,000 jobs around the country, 40,000 of them full-time positions. While Amazon is "recruiting thousands of people with engineering and business degrees for high-paying jobs," most of the jobs are in "what the company calls its 'fulfillment network' - the armies of people who pick and pack orders in warehouses and unload and drive delivery trucks, and who take home considerably smaller incomes."

FastNewsBeat

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

• The Washington Post reports on how in Washington, DC, there "appears to be a resurgence of small-scale groceries catering to neighborhood residents — in stark contrast to the trend of disappearing mom-and-pop stores in small towns across the country. Even as more openings are in the pipeline for large retail chains such as Whole Foods and Wegmans, the smaller neighborhood stores are making their mark. By one count, at least six have opened since 2015, and more are in the works."

According to the Post, "The new corner groceries are part of a broader back-to-the-city movement in parts of the country, said Brett Theodos, a senior research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute. That trend, Theodos said, is driving demand for a 'job-rich, transit-rich environment' and 'the meeting together of commercial and residential sectors in a way that feels very authentic and vibrant',"


Food Logistics reports that "UPS is expanding its ability to ship alcohol, wine and beer around the world," allowing direct-to-consumer shipping that allows shoppers and manufacturers to essentially disintermediate traditional retailers."

Would a "Yippie!" be out place here? Because antiquated rules and turf-conscious distributors that combine to prevent consumers from having access to lots of product strike me as ripe for elimination.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From the National Grocers Association...


Now back to regularly scheduled editorial...

Executive Suite

• The United Fresh Produce Association announced that it has hired Mollie Van Lieu as Senior Director of Nutrition Policy, succeeding the retiring Lorelei DiSogra.

United said that Van Lieu is currently Senior Associate, Government Relations at The Pew Charitable Trusts, where she led federal government advocacy for the Kids’ Safe and Healthful Foods Project; before that, she was Senior Education Policy Strategist for the National PTA.

Your Views: A Definition, & A Challenge

MNB reader John Rand had some thoughts about yesterday's column by Kate McMahon, in which she wrote about the popularity of cauliflower rice, and mentioned that "the USA Rice lobbying group is displeased, saying 'only rice is rice' and it may ask the US Food and Drug Administration (FDA) to look into the matter of chopped vegetables co-opting the rice designation:"

Not to make too much of it but there is a long standing  dictionary definition of “rice” as a verb, “to rice” which is defined as “forcing something through a sieve or ricer”. This an ancient cooking practice and was common with potatoes when I was a kid, which admittedly removes the low-carb value that seems to be an attraction of cauliflower rice and also highlights my personal  inability to adapt to the modern world by forgetting everything more than  a few years past. Most home cooks had a “ricer” in the cupboard in years gone by.
 
I wish the rice industry luck with trying to prevent the use of the word “rice” as though it was a protected term.





Responding to our stories about Walmart's ongoing staff cuts, MNB reader Robert Dyer wrote:

Walmart’s trimming of the workforce has been a frequent activity this past year, as they work to adjust their workforce to their changing business.  It would also appear that they are working to trim their SG&A ratio, which current sits at a 10-year high of 21%.  This is a far cry from 18.54% 10 years ago and an even lower number in the years before.

Fortunately, margins and revenue have never been stronger, driven by lower COGS and lower retail prices.  They are reacting quickly to eCommerce threats, dollar store expansion, and Aldi/Lidl format expansion.  As a former retail industry consultant, I worked with retailers on competitive strategy, focused on Walmart, with an emphasis on lowering their SG&A to a ratio closer to Walmart.  It was a hard sell, as entrenched organization structures and supporting inefficient business processes are difficult to re-engineer successfully.  I do not see the same reactions to these competitive threats from traditional retailers …





We had a story this week about how the nation is way overstored with supermarkets, and one MNB reader observed:

You've been saying this for years KC, and you were absolutely on target!

Kind of you to notice. Though to be fair, even a broken clock is right twice a day. I had to hit one sometime.




On another subject, from MNB reader Christopher Gibbons:

You have made your views on Chipotle and their food safety issues an ongoing topic in your blog. You have stated you they have lost your trust and you will never eat there again. You have your reasons for this and it is certainly your prerogative.
However, you should know that many people do not share your concerns and will continue to patronize the company, despite all of the negative press they have received over the past two years.

At the grocery store that I manage, we have quarterly lunches where we let our staff pick the meal. We will put up 3-4 options and employees will vote. Recently, some of our younger staff asked if we could ever have Chipotle. I was hesitant as I knew their food safety issues were well documented and there might be a large number of our staff that would share these concerns. Our store management team discussed this, and while some of us were uncomfortable, we decided to put it as an option. At the next luncheon, the choices were Jimmy John's, Old Chicago pizza, Big Bowl Chinese Express and Chipotle. Chipotle won hands down. It wasn't even close. They catered the meal and it was excellent. The staff loved it and we got more compliments on this than any other meal we have had. Now the staff are asking if we can have it again.

So Chipotle's brand still resonates very strongly with many people, especially millennials. They will likely be fine, whether you or I ever set foot in their store again. We are not their target demographic.


I wouldn't argue with this. In fact, I've said that my kids feel that way ,,, though I've tried to dissuade them from their enthusiasm.




Regarding a survey we took note of that said Whole Foods customers most want cashier-less checkouts if Amazon completes its takeover of the company, one MNB reader wrote:

If Whole Foods would offer just a couple self serve lanes I might be more willing to shop there. Years of sanctimonious checkout clerks helped to drive me away.




In a story headlined "Yet More Proof That Stupidity Is Alive & Well In America," we took note yesterday of a USA Today report that more than 100,000 Twitter users have reposted maps on that site that purport to show that Outback Steakhouse is a front for a Satanic cult.

The proof: The Outback locations in a number of cities can be shown to be connected by lines that form a pentagram, which sometimes is associated with Satanism and occultism.

The company has responded to the rumors by saying it has no plans to promulgate devil worship, though it does plan to continue "to bring bold steaks and Bloomin’ Onions to our guests!”

MNB reader Gary Loehr wrote:

This is clearly a plan by that clever Chick-fil-A cow to save her fellow cows and get us to eat more chicken.  Is she an agent for the Prince of Darkness?  I can’t say for sure, but she does seem to be promoting animal sacrifice rituals. The only way to know for sure is to check for sign of the three 6’s on her udders.

No udder way?

MNB reader Howard Schneider wrote:

The note re: 100,000 Americans believing that Outback Steakhouse promulgates Satan worship makes me consider the opportunity for a savvy company to form a new restaurant group comprising all those establishments that are fronts for evil conspiracies. Start with Outback, add Comet Ping Pong…who knows what lurks behind Red Robin or IHOP?

Hey, maybe those rats at Chipotle weren't a sign of bad sanitation. Maybe they actually were responding to Beelzebub's call...

From another reader:

P&G went through the same thing for a lot of years with the curls in the “man in the moon’s” beard that looked like 666.  They finally ended up changing it, straightening out those curls.  Also pretty ridiculous.  Wish people would focus on important stuff.  There’s plenty.

And, from another MNB reader:

When I saw “Yet More Proof That Stupidity Is Alive & Well In America,” I immediately thought the article was going to be about how well Kid Rock is polling in his run for US Senate.

Nope. That would actually be off-topic for me. And "stupidity" would probably be the wrong noun.




And finally, a deeply philosophical question from MNB reader Steve Lehto:

When will I hear from you “you cannot be all things to all people” as it concerns Amazon?

A fair point. I sense a challenge.

I must concede that at the moment I don't think I have a deeply philosophical answer. It is entirely possible that Amazon could stretch its appeal too far. One of the differences between it and virtually every other retailer is that it doesn't have walls, and can exploit the vast universe of the internet in a way that few other companies have or can.

Actually, let me suggest a semi-deep philosophical argument. (If I type long enough, eventually...hopefully...I actually can come up with clear writing.)

Maybe Amazon isn't trying to be all things to all people. Maybe, because Amazon has a unique understanding of the internet and a remarkable ability to turn that understanding into strategy and tactics, it actually is able to be something specific and different and relevant to each and every person.

Y'think?

Finally, a word from our sponsor...

Industry Drumbeat

"GOOD IS NOT GOOD WHEN BETTER IS EXPECTED"

In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see Main Street through a constantly evolving technological, demographic, competitive and cultural prism.  These issues all combine to create an environment in which traditional thinking, fundamental execution, and just-good-enough strategies and tactics likely will pave a path to irrelevance;  Coupe lays out a road map for the future that focuses on differential advantages and disruptive mindsets, using real-world examples that can be adopted and executed by enterprising and innovative leaders.

"Kevin inspired our management team with his insights about the food industry and his enthusiasm. We've had the best come in to address our group, and Kevin Coupe was rated right up there.  He had our team on the edge of their chairs!" - Stew Leonard, Jr., CEO, Stew Leonard's

Constantly updated to reflect the news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed by Coupe’s 30+ years of writing and reporting about the best in the business, "Good Is Not Good When Better Is Expected" will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand.

Want to make your next event unique, engaging, illuminating and entertaining?  Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

PWS 51