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Wednesday, September 13, 2017

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Kate’s Take: Silver Lining

by Kate McMahon

Retail entrepreneur Jessi Roberts knows only too well how storm waters can threaten the survival of a small business. So even as Hurricane Harvey was thrashing Texas last week, the Idaho-based founder of Cheekys Brand was marshaling a plan to help her “sister” boutique owners survive and rebuild after the killer storm.

Roberts reached out to her vendors, her wholesale clients in Texas and her customers as well as The Boutique Hub, a multi-faceted digital media community serving both consumers and boutique owners, to work together. The down-home force behind her “country girl” apparel and accessory business also ordered 10,000 blank tee-shirts to start printing hurricane relief tees to raise funds.

As of Monday, the joint effort has raised some $250,000 in cash, goods and services, including donations of jewelry and apparel so many of the impacted boutiques could reopen for business immediately.

The Federal Emergency Management Agency (FEMA) estimates that almost 40 percent of small businesses impacted by a hurricane or disaster will never re-open because the costs are too overwhelming.

Roberts said she felt it was important that small retailers get support – ranging from product to a box of business supplies – quickly so they could get back on track as soon as possible. “Most entrepreneurs want to be empowered. Giving them tools, and an opportunity to rebuild rather than a handout, is the best that I can offer.”

Roberts and her husband Justin started Cheekys in 2011 in New Plymouth, Idaho, population 1,400, as a tanning salon with some hats and jewelry in the front. The retail sold out instantly, and the tanning beds were soon sold to purchase more inventory.

Today the successful rural chic brand and its sassy signature tee-shirts are available in their flagship store, some 1,500 small retailers (including a handful of feed stores) across the country and a booming online business. Sales are expected to reach $10 million this year, with a typical tee-shirt selling online for $24.

Cheekys faced dangerous waters two years ago, when a storm caused flooding in their facilities and Roberts was stunned to learn the damage would not be covered by insurance. She credits the support and patience of their “community” of online customers, vendors and wholesalers for helping them recover from the hit and continue to grow.

In addition to business partners, enthusiastic backing for the Hurricane Harvey relief effort has come from Cheekys’ customers - who refer to themselves as “Cheekys Chicks” – and are very engaged with the moderately-priced brand, particularly through Facebook.

Once Harvey finished its path of destruction through Texas, all eyes turned toward Hurricane Irma in the Atlantic Ocean. So did the attentions of Roberts and Ashley Alderson, founder of The Boutique Hub, which works with about 8,000 boutiques, brands and vendors.

With the Harvey relief effort continuing, Roberts and Alderson are commencing a similar effort to help small retailers in Florida impacted by Irma, and eventually starting a non-profit foundation for similar crises. Said Alderson: “The second we got into this, we realized it’s not just Harvey. We realized there’s a need for us to do this in the long run. We want to get businesses up and running and rebuild the community for the long haul.”

For more information or to make a donation to the Hurricane Harvey relief efforts, click here or here.


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

Wednesday Morning Eye-Opener: Threat Assessment

by Kevin Coupe

Sometimes I get emails that are really Eye-Openers, working on a number of levels. Like this one, from an MNB reader:

Kevin, I think most in the MNB community are not aware of the extent to which companies are moving fast to implement AI.  Here’s (just) one example I’m involved with…  

Developing AI exam-scheduling tools for Eye Doc's offices  25,000 of them.

Eventually, we will automate the exam scheduling and reduce the office staff from 5 to 4.   Poof!  25,000 jobs gone.

The front desk receptionists will either get more skills and become opticians.  Or, find other jobs.

Today’s new hires will need special skills for the lowest level position in the doc's office.

Tomorrow’s young people (new hires) will need to bring even more skills to their first job.  EDUCATION, TRAINING, SKILL building.

Are our kids ready?  I know mine isn’t – and he doesn’t believe the “threat” of AI to his upcoming world.


Yikes.

That made me want to add a little Irish whiskey to my morning coffee.

There’s no question that AI is a threat. But we know it is coming, which means that we have the ability to prepare … and for our children to prepare by developing new skills and new attitudes toward their lives and careers.

People have a choice. Shape the future, or be shaped by it.

And thanks to the MNB reader who shared his Eye-Opening experience with us.

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Walmart To Reorganize, Streamline US Business Structure

Walmart said yesterday that it will reorganize and simplify its US store operations so that it can “react more quickly to changes and better communicate,” according to a story from Bloomberg.

While the company has not been specific yet, Bloomberg writes that the plan is to “consolidate its U.S. business to four divisions, down from six, each of which is managed by a senior vice president … The number of U.S. regions will be reduced from 44 to 36.”

According to the story, “The shake-up follows several rounds of job cuts at the retailer’s Bentonville, Arkansas, headquarters over the past two years. Chief Executive Officer Doug McMillon has been trimming expenses to help offset increased spending on e-commerce and employee wages.

“In simplifying its U.S. business, Wal-Mart said it’s returning to an approach it was using before another reorganization a few years ago.”

Walmart’s statement on the issue said, in part, “Our last field restructure was several years ago and our business has changed over that time. The structure we are putting in place will help improve communication and execution, streamline decision-making and help us accelerate our pace of change.”

KC's View: When I read the stories about Walmart’s reorganization, I had a couple of different reactions. One is that they’re absolutely right - that every company has to find ways to be faster and more nimble. And frankly, the bigger you are, the more important it is.

But I also found myself thinking about my old friend Glen Terbeek, who has forgotten more about the food and retailing business than I’ll ever know. Glen used to talk about how companies can actually be more effective by driving down the decision-making process to more granular levels. If Walmart has some 4,000 stores in the US, for example, he would argue that it ought to be broken down into pods of 10 or 15 or 20 that can be more responsive to local market needs.

I guess the question I have is whether streamlining and simplifying is the same as centralization … and if so, does it really serve the goal of making a company more nimble and responsive?

I don’t really have an answer to that question … though I do think that if I’m right, it would suggest that all these efforts could be for nought in the long run.

Just asking.

Report: Middle Class Income Up, Poverty Down, Inequality High

The Washington Post writes that “the incomes of middle-class Americans rose last year to the highest level ever recorded by the Census Bureau, as poverty declined and the scars of the past decade’s Great Recession seemed to finally fade.

“Median household income rose to $59,039 in 2016, a 3.2 percent increase from the previous year and the second consecutive year of healthy gains, the Census Bureau reported Tuesday. The nation’s poverty rate fell to 12.7 percent, returning nearly to what it was in 2007 before a financial crisis and deep recession walloped workers in ways that were still felt years later.”

However, the Post writes that “inequality remains high, with the top fifth of earners taking home more than half of all overall income, a record. And yawning racial disparities remain, with the median African American household earning only $39,490, compared with more than $65,000 for whites and over $81,000 for Asians.

The Post also notes that the report gave the Trump administration mixed grades, writing: “In Trump’s first seven months, the U.S. economy has added about 25,000 fewer jobs per month than it did during the last seven months of Barack Obama’s presidency. In a more positive sign, the gross domestic product grew at an annual rate of 3 percent in the second quarter of 2017, according to a federal report issued in late August.”

KC's View: I continue to believe that the inequality factor in all this is the faulty foundation that makes all the gains we make - no matter who is responsible (or in office when they happen, which is not the same thing, no matter what party you are in) - problematic.

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New 365 by Whole Foods To Open Tomorrow In Ohio

Whole Foods is scheduled to officially open its first “365 by Whole Foods” store in the midwest tomorrow with a 30,000 square foot unit in Akron, Ohio.

The “365” format was launched by Whole Foods before the acquisition of the company by Amazon. The Akron store is the sixth of the breed to be opened; the others are in California, Oregon, Washington, andTexas. Additional stores are scheduled to be opened in states that include Florida, Indiana, Virginia, New Jersey and New York.

“365” was originally conceived as a response to elements in traditional Whole Foods stores that were seen as an impediment to growth. The stores are positioned as being more attractive to millennials, with a better use of technology, and featuring lower prices that run counter to the company’s “whole paycheck” image.

KC's View: Amazon hasn’t said anything about the future of the 365 stores, though one imagines that they’ll be less relevant if Amazon is able to make the broader Whole Foods fleet less expensive and more accessible to a greater number of people. I tend to think that it makes sense to use the 365 format as a laboratory where they can test lots of different approaches and then, if successful, roll them out to the broader chain.

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Study: People Still Visit Supermarkets

The International Council of Shopping Centers (ICSC) is out with a “State of Grocery Shopping” survey, revealing that “99% of adults buy some or all of their groceries in-person” … and that “consumers visit physical stores personally because they seek immediate access to products (71 percent), the ability to select fresh meat, dairy and produce (70 percent), as well as see product options and select all other items in person ( 69 percent).”

According to the study, “When it comes to online grocery shopping, nearly three out of four consumers make purchases online (74 percent) and then pick up their order in store. Only one percent of consumers solely buy their groceries online and never go into a store to buy groceries.

“More than four out of ten consumers (44 percent) have their grocery purchases delivered to their home and over one-third (36 percent) have items shipped by mail or courier service to their home. Fifty-four percent of the high-end supermarket shopper who buys online has the retailer deliver the groceries to their home—the highest of any type of online grocery shopper.”

In looking at millennials’ shopping habits, the study found that “they shop at 5.9 different types of grocery stores, slightly above the average,” that “nearly one out of four Millennials (23 percent) shop three or more times a week for groceries,” that “even when ordering online, 81 percent of Millennials go to the store to pick-up their grocery order,” and that “ a significantly higher number of Millennials buy groceries from convenience stores (74 percent), Amazon/other pure online retailers (67 percent) and high-end supermarkets (66 percent).”

KC's View: Only people who are delusional will be surprised by some of these results. Let me say it again - physical, bricks-and-mortar retailing isn’t going away. It is going to change, there probably will be fewer of them, and there will be less room for mediocre, ill-defined stores that aren’t relevant and/or don’t resonate with shoppers.

More About Amazon’s Integration Of Whole Foods

Bloomberg reports on a study done by One Click Retail showing that in the wake of its $13.7 billion acquisition of Whole Foods, Amazon “immediately put about 2,000 items on its site from the Whole Foods 365 Everyday Value brand and sold out of almost all of the most-popular items … Web sales of Whole Foods branded products totaled about $500,000 in the first week, according to One Click Retail’s estimate.”

Spencer Millerberg, chief executive officer of One Click Retail, said that “more impressive was the speed at which Amazon began selling Whole Foods products online. Such an integration would have taken several months in a brick-and-mortar chain, he said,” adding that the real “question is whether Amazon can sustain the inventory, and use the stores to decrease delivery costs.”

KC's View: It is the speed thing that ought to scare traditional retailers … because that’s one of the core advantages Amazon brings to the party.

E-conomy Beat

Bloomberg reports that Amazon “is in the European Union’s cross hairs because its rapid expansion may have been fueled by tax measures that slashed its costs, according to the EU official spearheading a state-aid probe into the online giant.

“Gert-Jan Koopman, whose department at the European Commission was responsible for slapping Apple Inc. with a 13 billion-euro ($15.6 billion) tax repayment order last year, told a Brussels conference that the EU is targeting methods that are a menace to fair competition … Amazon and burger chain McDonald’s Corp. are tipped to be the next in line as the EU clamps down on tax deals it deems to be unfair. Both are under investigation for their fiscal arrangements with Luxembourg, which has gained a reputation for doling out special deals to big firms in the Grand-Duchy.”

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FastNewsBeat

Bloomberg reports that “Capital World Investors has sold its stake in Blue Apron Holdings Inc., a sign that investors are losing confidence in the beleaguered meal-kit delivery company that went public in late June.

“Capital World Investors, a division of Capital Group, has fully exited its position in Blue Apron, according to a Friday filing. The investment firm reported a 12.9 percent stake as of June 30, which had made it Blue Apron’s second largest investor, according to data compiled by Bloomberg.”


• The Associated Press reports that a second lawsuit has been filed that “accuses Poland Spring water of deceiving customers by putting the words ‘100 percent natural spring water’ on product labels. The federal class-action lawsuit in Maine targets corporate parent Nestle Waters North America, which is accused of bottling water from wells and municipal sources that don’t meet the federal definition of spring water.”

Nestle Waters North America called the new suit as being a copycat that is as without merit as the original that was filed last month.


Bloomberg reports that private equity firm Leonard Green & Partners may help the Nordstrom family’s efforts to bring its company private, providing about $1 billion in funding. According to the story, “The Nordstrom family first said it was considering a buyout in June. The idea is to continue its turnaround plan outside of the glare of public markets, giving them an opportunity to improve sales and test new concepts with less scrutiny.”

Executive Suite

• The Fresh Market announced that Larry Appel, the former Winn-Dixie senior executive who most recently was CEO of natural snack food company Skeeter Snacks, has been named its new president/CEO, effective immediately.

He succeeds Brian Nicholson, the company’s CFO, who has been interim CEO since the resignation of Rick Anicetti last June. Nicholson will remain with The Fresh Market as CFO.

Your Views: GMO Disclosures

The other day, MNB took note of a FoodDive story about a study released by the US Department of Agriculture (USDA) into likely issues related to a system in which the food industry would be transparent about GMO disclosures though the use of smartphones scanning QR codes.

According to the story, the report says that while 88 percent of consumers have at least some access to a smartphone, there was a broad lack of awareness that they could use the technology to access information, or even which applications on their smartphones they could use. In addition, few supermarkets seem to have the technology available to allow people without smartphones to get GMO information they may want, and may don’t even have WiFi technology.

According to the story, “This study was mandated as part of the GMO labeling law, which was signed by President Obama last year. One of the more controversial aspects of the law, which requires manufacturers to specifically label genetically modified ingredients, allows this label to be just an electronic or digital link on the package. Many opponents argued this electronic disclosure, which could be a smartphone-scannable QR code, was not sufficient. A provision was added that required this study to look into the label's challenges and issues.”

I commented:

I’m not sure that the rules are sufficient for now, but certainly the growth in smartphone usage means that they will be soon. But, I do think that responsible retailers and suppliers should be willing to invest in the educational effort necessary to make sure that people know where the info is and how to access it. That would be the responsible thing to do … it would be a hollow effort to make the information available but not do anything to publicize it.

One MNB reader was not impressed:

I will never get a smartphone..laptop and dumb phone sufficient..and not having GMO info available to me and others is discriminatory.

“Never” is a long time. There may come a day when dumb phones aren’t even sold anymore.

From MNB reader Jessica Duffy:

What a pain in the ass. Excuse me, but even if I had the additional app to scan the codes (like I don’t have enough apps as it is), who has the time to go through the grocery store scanning everything they buy? It’s hard enough to remember to check the date on the yogurts. It’s obfuscation – plain and simple.

And finally, this email from David Fikes, who is the Vice President, Communications & Consumer/Community Affairs, at the Food Marketing Institute (FMI):

In the MorningNewsBeat coverage of ‘USDA Study Focuses on GMO Disclosure,’ you quoted a section of the original Food Dive article, but your excerpt unfortunately omitted the  part of the article  in which FMI President and CEO Leslie Sarasin is quoted and addressed the very issue you commented on -  that “responsible retailers and suppliers should be willing to invest in the educational effort necessary to make sure that people know where the info is and how to access it. “   I think her statement in the article  regarding the food retail industry’s  plan to offer consumer education  “… in a concerted effort as soon as the final rule is issued and implementation begins” goes straight to the point you were making in your View.   Her full quote from the article is:

"Our findings concur there is a majority and increasing number of our members’ customers who are able and willing to use digital means to access detailed product information when they want that information," Food Marketing Institute President and CEO Leslie Sarasin said in a written statement. "Increasingly shoppers have the hardware and Wi-Fi or cellular access available to them to do so. Of course in the tradition of food retail’s strong history of customer service, we recognize the need to provide supplemental education to our customers about the information available to them and how to best use the QR Code. And, we are planning to do so in a concerted effort as soon as the final rule is issued and implementation begins.”


It was not my intention to dilute FMI’s position on this. I’m happy to provide this clarification.

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