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Tuesday, August 08, 2017

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Sansolo Speaks: Change Matters

by Michael Sansolo

There are two comments I hear constantly from business people these days on the state of their world, meaning the state of change.

It starts with the enormity of all the change hitting them. There’s competition, shifting consumer demands, technology, government and more. Just pause for a second and think of two articles Kevin had on MNB Monday.

One talked about the increased reliance on robots - not to replace workers, but rather because qualified and willing workers are becoming harder to find.

The second article mentioned Amazon’s recent hiring blitz, looking for 50,000 workers to staff the growing supply chain machine the company needs to fuel its own growth. Those articles, combined with the improving economy mean an entirely new competitive front is about to get a whole lot tougher: the battle for top labor.

But that isn’t it. On top of the enormity of change is the seemingly increasing pace of change. As if the relentless pressure wasn’t enough, everyone now has to cope with a new reality: things are moving way, way faster than ever.

The result of this is something we harp on constantly here at MNB (and hopefully something you hear everywhere.) Good enough no longer is just that. More than ever you need find a way to make the ordinary become extraordinary.

You need a reason to be chosen as the place where people want to do business and as well as the place where they want to be employed. Like it or not, that means whatever you are doing today is not going to be enough in a future that is coming faster than ever.

But what got me thinking about all this change was an article in the Lifestyle section of the Washington Post on possibly the one group of people that actually worried that there isn't enough change.

Panhandlers.

The Post article unearthed an emerging truth that shows just how different life is becoming. Panhandlers are struggling and not because people are being stingy or unfeeling. Rather, people simply aren’t carrying change. The problem is especially bad among millennials and only promises to get worse in the near future as cash becomes less and less important.

Some panhandlers told the Post they frequently hear passersby say they only have cards and would happily give some money, if the panhandler somehow had a device to swipe an electronic payment. (Not surprisingly, few panhandlers have those devices. Apparently there are folks developing an app for this problem…but you knew that would happen.)

Most likely - and hopefully - this isn’t your problem. But the reality is that life is changing. The small shift in people carrying no money and moving increasingly to digital payments is just one of many lifestyle changes taking place. In so many ways it isn’t far removed from any of the other ways that consumers are behaving in new and unexpected ways.

And those shifts are impacting every aspect of what were the lives we knew.


Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . 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.

Tuesday Morning Eye-Opener: Joke Reflex

by Kevin Coupe

For this morning's Eye Opener, I turn you over to the good folks at The Onion, who have, as they often do, produced a piece of satire that I think is very funny and that skirts perilously close to the truth.

The piece purports to be an article by Amazon founder/CEO Jeff Bezos, in which he offers advice to young entrepreneurs. "What many seem to want," "Bezos" writes, "is some sort of trick, some magic set of tools that will allow them to launch a thriving startup from scratch.

"Well, there’s no magic involved, but the keys to success are quite simple: Value your customers, hire well, find a market that isn’t being served, and realize that someday I will utterly crush you.

"That’s really all there is to it. Execute the basics correctly and you’ll be in great shape when I come along and rip away your dreams with one emotionless pen stroke."

There's much more, and you can read it here.

Enjoy.

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Walmart Rolls Out Scan-And-Go Technology In Dozens Of Stores

Business Insider reports that Walmart is introducing a new Scan-and-Go technology in “more than a dozen stores in Texas, Florida, South Dakota, Arkansas, Georgia, and Kentucky” that allows shoppers “to scan and pay for their items without checkout lanes, registers, or cashiers.”

All the system requires is a smartphone with the Walmart Scan-and-Go app installed. They scan product barcodes using the app and then, when finished shopping, “click a button to pay for their goods and show their digital receipt to a store greeter on their way out the door.”  According to the story, “For shoppers without smartphones, the retailer provides hand-held scanners. The stores also have options for customers who don't want to link up a credit card to their Scan & Go accounts.”

Business Insider points out that in some ways, this moves Walmart ahead in the no-checkout race against Amazon, which unveiled its plans for an Amazon Go store without checkouts late last year, but as yet has been unable to get the concept beyond its Seattle beta testing.

KC's View: The idea of scan-and-go is not new, but the idea that people can do it with smartphones takes it to a new level. This is just further evidence that Walmart is going to do its level best to counterpunch against Amazon, and even land a few kidney shots whenever it can.

Companies have to take this seriously, and figure out how to either offer the same sorts of services, or determine how to create an offering that successfully blunts what appears to be a pretty nice service.

Costco Rival Ups Its Automation Game

Fierce Retail reports that Boxed - an online bulk retailer positioned as a digital alternative to Costco and other membership warehouse stores - has introduced two “autonomous shopping tools, Smart StockUp and Concierge.”

The story says that Smart StockUp uses customer data to issue reminders to shoppers when they’re likely running out of products they’ve bought. Concierge, the story says, “takes the program one step farther” by actually shipping those products to consumers when the data suggests they will be running low.

Boxed is said to be marketing these innovations for the moment only to shoppers already on its site.

KC's View: Smart move … automation continues to be one of Amazon’s distinct differential advantages, and not enough retailers are seeking ways to compete with it. This despite the fact that automation sort of implies that once Amazon captures those sales, they’re almost certainly not going back.

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Grocers Fight Online Trend With In-Store Restaurants

On National Public Radio, The Salt has a story about how, “as online grocery shopping grows, many supermarkets are adding sit-down restaurants in a move to attract more millennials.”

Across the country, the story says, stores that include Whole Foods, Hy-Vee and Wegmans “have been offering sit-down dining and drink deals for years. The trend of adding full restaurants, sometimes called ‘groceraunts,’ falls in line with the uptick in prepared store meals, which has grown 30 percent since 2008 and driven $10 billion in sales last year, according to the NPD group.”

The trend takes advantage of two shifts - millennials who are moire likely than their elders to eat out, and fast casual restaurants that seem to have lost their cachet with many patrons.

KC's View: This isn’t exactly new news, but I would add one piece of commentary to it. This may be a sustainable strategy, but only if retailers focus on creating differentiated food that does not cater to the lowest common denominator. I’ve eaten a lot of supermarket meals in my career, and the vast majority of it hasn’t been all that great. It’s been just okay … and just okay isn’t good enough anymore.

Worth Reading: License To Spill

Interesting piece from Bloomberg about a company called Inscatech, described as “a global network of food spies … In demand by multinational retailers and food producers, Inscatech and its agents scour supply chains around the world hunting for evidence of food industry fraud and malpractice.”

One of the places where Inscatech does much of its work is China, which continues to be a “key growth area for fraudsters.”

Bloomberg writes, “While adulteration has been a bugbear of consumers since prehistoric wine was first diluted with saltwater, scandals in China over the past decade — from melamine-laced baby formula, to rat-meat dressed as lamb — have seen the planet’s largest food-producing and consuming nation become a hotbed of corrupted, counterfeit, and contaminated food.” Inscatech, the story says, “is developing molecular markers and genetic fingerprints to help authenticate natural products and sort genuine foodstuffs from the fakes. Another approach companies are pursuing uses digital technology to track and record the provenance of food from farm to plate.”

You can read the entire story here.

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Chicago Plastic Bag Tax Actually Changes Shopper Behavior

The Chicago Tribune reports that Chicago’s tax on disposable plastic bags - seven cents apiece, with five cents going to the government and two cents to the retailer - “is nudging Chicagoans to kick, or at least curtail, their use of the plastic sacks.” Six months after its imposition, the Tribune writes, “even Chicagoans irked by the idea of paying for something once handed out for free say the tax has encouraged them to plan ahead and avoid the disposable bags offered for a fee at checkout.

According to the story, “Tax collection data alone, because of the way the tax is collected and the variation in when retailers made their first payments, make it difficult to tell how consumers responded immediately after the disposable bag tax was introduced. But the amount the city has collected so far — nearly $3 million as of July 25 — is on pace to come in well below the $9.2 million the tax was expected to generate for city coffers this year. The city also had estimated retailers would garner $3.7 million from their portion of the tax, bringing the total collected to $12.9 million.”

Which would seem to suggest that Chicago residents are adapting.

On Second Thought

…where the Content Guy reconsiders previously stated positions…

A few weeks ago, when Starbucks announced that its general counsel, Lucy Helm, had been named Chief Partner Officer, I opined, in part:

If I were an employee and the company informed me that the new liaison/advocate was someone who until recently was the firm's lawyer ... well, let's just say that this wouldn't necessarily be the most reassuring news I'd ever gotten. That's not to make any sort of judgement about Lucy Helm ... for all I know, she indeed could be the perfect person for the job.

That may not have been intended as a judgement, but it certainly sounded like one.

Which is why I read with great interest a piece in the Seattle Times yesterday about Helm in which she comes across as friendly, warm and entirely accessible ... in short, perhaps the perfect person for the role at a time when “the company faces major challenges including slowing sales growth that has disappointed some Wall Street investors.”

The story makes the point that CEO Kevin Johnson “has reportedly made a push for baristas to form better emotional connections with customers — a move that angered some who say it puts a greater burden on already overworked baristas.”

What really impressed me about the piece is that Helm seems not particularly entranced with the idea of being a lawyer; she’s more interested in being a leader, and seems to understand that the company can only be as good as its people.

I may have gotten this wrong, and you can read the story yourself to see what you think of Helm and her philosophy.

When Diversity Slammed Into Intolerance

It has been interesting to read about the contretemps at Google, where a software engineer’s internal memo criticizing the company’s diversity efforts as misguided, and suggesting that women are biologically less able to perform certain technology-based roles than men, has gone public, creating new employee concerns about the climate there at a time when the company is dealing with a federal probe into whether it routinely pays women less than men.

It all got a lot more intense this morning with the report that James Damore, the software engineer who wrote the original memo, has been fired by Google.

Google CEO Sundar Pichai said in a company email that the company memo had violated the company’s code of conduct and crossed the line “by advancing harmful gender stereotypes in our workplace.” He added, ““The memo has clearly impacted our co-workers, some of whom are hurting and feel judged based on their gender. Our co-workers shouldn’t have to worry that each time they open their mouths to speak in a meeting, they have to prove that they are not like the memo states, being ‘agreeable’ rather than ‘assertive,’ showing a ‘lower stress tolerance,’ or being ‘neurotic.’”

Gizmodo, which originally made the memo public, characterized it this way:

“In the memo, which is the personal opinion of a male Google employee and is titled ‘Google’s Ideological Echo Chamber,’ the author argues that women are underrepresented in tech not because they face bias and discrimination in the workplace, but because of inherent psychological differences between men and women. ‘We need to stop assuming that gender gaps imply sexism,’ he writes, going on to argue that Google’s educational programs for young women may be misguided.”

In the memo itself, Damore wrote that Google’s left-leaning “political bias has equated the freedom from offense with psychological safety, but shaming into silence is the antithesis of psychological safety. This silencing has created an ideological echo chamber where some ideas are too sacred to be honestly discussed. The lack of discussion fosters the most extreme and authoritarian elements of this ideology.”

The author also argues that people on the left who deny biological differences based on gender are as bad as those on the right who deny climate science, and that there should be an effort to “de-moralize” the diversity issue - those who disagree with the company’s diversity policies should not be seen as immoral.

And it goes on and on.

Subsequently, Google’s newly appointed VP of diversity, Danielle Brown, offered a statement and rebuttal, saying, in part:

“Many of you have read an internal document shared by someone in our engineering organization, expressing views on the natural abilities and characteristics of different genders, as well as whether one can speak freely of these things at Google. And like many of you, I found that it advanced incorrect assumptions about gender … Diversity and inclusion are a fundamental part of our values and the culture we continue to cultivate. We are unequivocal in our belief that diversity and inclusion are critical to our success as a company, and we’ll continue to stand for that and be committed to it for the long haul … Part of building an open, inclusive environment means fostering a culture in which those with alternative views, including different political views, feel safe sharing their opinions. But that discourse needs to work alongside the principles of equal employment found in our Code of Conduct, policies, and anti-discrimination laws.”

However, that level of tolerance didn’t last long, and Damore now confirms his firing. He also tells the New York Times that he believes his firing is illegal and will be seeking a legal remedy.

KC's View: To be fair, Damore didn’t say that women couldn’t have any role in the tech business. He just suggested that they were best suited to giving birth to actual male engineers.

(Just kidding. Too soon?)

In the Axios story about the controversy, it is noted that “this comes just weeks after several male venture capitalists were accused of sexual harassment toward female tech entrepreneurs, and that was on top of allegations of gender discrimination at Uber. In the course of a summer, Silicon Valley's reputation has devolved from progressive meritocracy to sexist cesspool.”

The writer was, of course, being sarcastic … pointing out that “all of these incidents reveal a dirty secret about America's technology industry: It is comprised of people who live in America. As such, it is prone to many of the same cultural flaws inherent in other industries and communities. Sexism. Racism. Intolerance of dissenting views, let alone interest in debating for the sake of greater knowledge. It's something we forgot in our rush to venerate the new masters of the universe. Would we have even batted a collective eye if the Google memo had been written by someone working in Wall Street, or at a Fortune 500 manufacturer?”

It is, the Axios story says, just time for tech to have its moment “in this unwanted spotlight…”

I think that’s all true. I must admit that I have enormous trouble with the idea that some people are biologically better able to be engineers and scientists because of their gender…I think people have the right do think that way, but they do not have the right to block women from achieving what they want to achieve because of views that I would define as archaic.

Of course, it doesn’t really matter what I think. It matters, in this case, how Google is culturally constructed. And the powers that be there seem to view this guy’s opinions as archaic, too … hence his firing.

I have no idea whether the company’s actions are legal or not, though I must admit to looking forward to reading about how this case unfolds and writing about it from time to time. Google will argue that this is not retribution because of his politics or political incorrectness (which some will try to make it) as much as it is a necessary reaction to his apparent believe that anyone with a vagina cannot do his job as well as he can, simply because he has a penis. That’s not exactly a helpful attitude to hold in any workplace.

What if he had argued that African-Americans were biologically less capable of performing in certain tech jobs? Would that be a firing offense?

This almost certainly will create a fascinating conversation in the public square, not to mention workplaces around America, about diversity and tolerance.

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FastNewsBeat

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

• In Minnesota, the Star Tribune reports that “in the first six months of 2017, Best Buy spent $1.71 million lobbying, twice as much as it spent the entire year in 2016. Target Corp. spent $1.48 million lobbying from January through June 2017, only slightly less than it spent all of last year. The numbers, drawn from government records, show the Minnesota companies’ determination to kill a border adjustment tax on imports that House Republicans made a centerpiece of their Better Way tax reform plan.

The story also notes that the “National Retail Federation (NRF), which spent $7.3 million lobbying in the first six months of 2017, more than it did in all of 2016.”

The spending seem to have worked. As reported here on MNB and elsewhere, Congressional Republican leaders have said they will not pursue a border adjustment tax as they seek consensus around tax reform later this year.


• Natural Grocers by Vitamin Cottage announced that promoted by minimal same-store sales increases in recent quarters, announced that it will focus more on operational efficiency than new store growth. Kemper Isely, co-president of the company, released a statement saying that “looking ahead, we have moderated new unit growth to reflect the challenging competitive environment and have no additional new store openings planned for the fourth quarter of fiscal 2017.”


• The Houston Chronicle has a story about how real estate information company Attom Data Solutions has done a study and concluded that Houston “residents near a Trader Joe's saw an average home price appreciation of 67 percent in the last five years, compared with 52 percent for homeowners near a Whole Foods Market and 51 percent near an Aldi.”


Fortune reports that “Starbucks is shutting down rumors that the coffee giant will offer discounted beverages and foods to undocumented immigrants this month. The company is also going after fake Starbucks advertisements calling Aug. 11 ‘Dreamer Day.’ The false ads, which spread across Twitter, said undocumented individuals will receive 40% off any menu item on Aug. 11.”

These rumors no doubt are being spread by people who don’t know the difference between an undocumented immigrant and a refugee. The latter is a group that Starbucks has tried to help on an international basis, because it is, by definition, a group that has had to leave home to escape war or persecution.

Executive Suite

• Albertsons announced yesterday that Kevin Turner, former Microsoft COO, has been appointed Vice Chairman of the Board of Managers of AB Acquisition LLC., its direct parent, and Senior Advisor to the Chairman and Chief Executive Officer, Bob Miller.

The announcement notes that “Turner brings decades of retail and technology experience to his new role with the company, including roles at Walmart and Microsoft. His tenure at Walmart began as a cashier in 1985 and culminated in his appointment to CEO and President of SAM's Club and Executive Vice President of Walmart Stores, Inc., a position he served in from 2002 to 2005.”

RIP

Don Baylor, who held the dual distinctions of being the first African-American manager of the Chicago Cubs and having been hit by pitches 267 times during his playing career (fourth all-time), has passed away of multiple myeloma. He was 68.

Baylor played for 19 seasons with six teams - the Baltimore Orioles, Oakland Athletics, California/Los Angeles Angels, New York Yankees, Boston Red Sox and Minnesota Twins - and was the the 1979 American League Most Valuable Player, and got a World Series ring with the 1987 Twins.

Your Views: See No Evil

Yesterday we took note of a San Francisco Chronicle story about See's Candy and how it may be facing significant troubles because of its long reliance on mall stores … at a time when malls seem to be going out of fashion.

MNB reader Wayne Redfearn responded:

I’ve been a See’s Candy fan for the last 60 years, having grown up with them in Southern California. They manufacture great products at excellent prices, offer free samples and have very polite employees in clean, attractive stores. In addition they are located in airport kiosks, free standing units, shopping malls and have licensing agreements so their products can be sold in places like Costco. (You can purchase a coupon redeemable at See’s locations). Products can also be bought online. Better yet, they are owned by Berkshire Hathaway and are extremely well managed. I’m betting they will be nimble enough to adjust to changing market conditions and continue to be in shining star in the Berkshire portfolio of excellent companies.

MNB reader Howard Schneider wrote:

I have noticed See’s expanding to many airports in the U.S. (They were always a presence at LAX, the company’s home town.) That seems a very healthy response to the downturn in malls. “Go where the people are,” has always been a no-brainer strategy. For an old-school company, See’s airport strategy looks pretty smart to me.

And, on the broader subject of malls’ competitive problems, MNB reader Jackie Lembke wrote:

I like the concept of Malls being more lifestyle oriented than retail oriented. In general, Malls are built around as one or two story buildings with a central area for food courts. Big spaces with lots of real estate that are generating less and less traffic. If a developer rethinks the space, and with the right mix of stores and apartments you could have a self-contained community with everything from food stores, to gyms, to clothing stores. Your own neighborhood under one roof. It could work.

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