Sign up for the MNB Wake Up Call!

Monday, September 23, 2019

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

Monday Eye-Opener: Endless Battles & Multiple Battlefields

by Kevin Coupe

Fortune has an interesting piece about how Amazon - facing off against an aggressive and ambitious Walmart that just expanded its $98 annual subscription fee for grocery delivery to 1,400 markets, trying to undercut Amazon's $119 Prime membership fee - is expanding the availability of its service that offers free two-hour delivery from its Whole Foods stores.

"As it has done before," Fortune writes, "Amazon wants to change shopping habits—in this case getting consumers more comfortable buying perishable products like bananas and yogurt online. That’s crucial if Amazon is to take on Walmart in the $840 billion U.S. grocery market.

"Encouraged by what it calls 'very positive' customer feedback, the company has quickly extended the service to almost 30 cities, including Los Angeles, Houston, and Detroit."

But, the story points out, "Persuading shoppers to buy fresh food online isn’t Amazon’s sole challenge. Getting groceries to customers quickly is another. Offering two-hour delivery requires Amazon to show shoppers only products that are close to them, which isn’t easy because the 25-year-old website was designed to let anyone with an internet connection buy a product anywhere in the world."

And, Fortune provides the following context, noting that the entire industry "is grappling with how best to mesh physical and online grocery stores … Despite trying to upend the grocery market for more than a decade, Amazon remains a tiny player. Walmart and its Sam’s Club capture 25% of all grocery spending in the U.S., according to Morgan Stanley, compared with 2% for Amazon and Whole Foods. Walmart has more than 4,500 U.S. stores, about 10 times the number of Whole Foods locations.

"Meanwhile, competition is intensifying. Walmart and Target are both investing in delivery options as well as in-store pickup of online orders, all geared toward time-strapped customers looking to simplify their errands."

As often happens in these cases, I am reminded of something from "Star Trek" … an original series episode, "Let That Be Your Last Battlefield," in which a pair of aliens engage in an endless battle, each one convinced that he is superior - one because he is white on the right side of his body and black on the left, and the other because he is black on the right side of his body and white on the left. It was, as it happens, a fairly obvious - and even clumsy - way to address the kind of racial tensions that were evident in the US back in the late sixties … but also serves as a metaphor for the e-commerce battle being described by Fortune.

As I read this story, I could help but think of retailers not named Walmart or Amazon (or Kroger or Target or Albertsons or any of the other giants). What must they be thinking as they consider the various strategies and tactics being embraced by companies of considerable resources?

There is no room for indecision, and no time to be complacent. The war is ranging all around us, and every retailer - pretty much regardless of size - has to be engaged, Eyes Open, with defining their strategies and tactics so survival is at least possible.

This isn't to say that traditional retailing is dying … just that retailers not figuring out where they are in this continuum are, at the very least, flirting with obsolescence.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Webstop...

Now back to regularly scheduled editorial...

Why And How CEOs No Longer Are Staying Quiet On Things That Matter

Axios has a story making the case that, in fact, responding to pressure from employees and customers, CEOs are moving "beyond a monomaniacal focus on profits," and taking "specific action while politicians dither."

The story cites several examples beyond Walmart's decision to stop selling vaping products and Amazon's announcement that it is accelerating its efforts to comply with the Paris Climate Accords, to which the US government no longer is a signatory.

Among them: "Delta Airlines returns billions in profits to employees — this year, a bonus equal to 14% of their annual pay — and has grown since making this change. Every company can do this."

Or: "Stripe, the online payments platform, announced last month that it plans to spend at least $1 million a year to pay for direct removal of carbon dioxide from the atmosphere."

Or: "Bank of America last year stopped lending money to makers of military-style assault weapons."

The Axios story notes that "the new public assertiveness by corporations follows an earlier wave, after President Trump took office, of CEOs taking stands on immigration, climate, gender equality and other issues that their predecessors avoided." And, "The pressure on CEOs from employees, customers and communities seems to only be intensifying."

Apple CEO Tim Cook puts it this way: "Apple is about changing the world. It became clear to me some number of years ago that you don’t do that by staying quiet on things that matter."

Along the same lines, Bloomberg has a piece about Walmart CEO Doug McMillon - who just took over as president of the Business Roundtable, which recently opined that companies should not make shareholder value their number one priority - in which it describes him as "emblematic of a younger generation of business leaders who are more woke than their pusillanimous predecessors in the executive suite."

McMillon, the story says, "along with other next-generation business leaders … see an increased need to speak out on political and social issues that don’t slice into their bottom lines. Gridlock in Congress has prevented progress on issues that matter to millions of Americans, presenting an opportunity for CEOs to become advocates."

Under McMillon's leadership, Walmart has raised its own starting minimum wage (though not as much as some other companies) while encouraging a legislated increase in the federal minimum wage …. discontinued the sale of handgun and assault-style weapon ammunition … banned open-carry in its stores … been aggressive on environmental issues … and even spoken up about racial violence.

There is, of course, a risk: "His public appearances could start to draw protesters who disagree with his stances on guns, wages and other issues. Opponents of gun-control legislation have threatened to challenge Walmart’s new open-carry restrictions by provoking confrontations in stores. But as McMillon said when announcing the gun-policy changes, he’s ready for it: 'The status quo is unacceptable'."

KC's View: There is little question that many or even most of these executives would've been perfectly happy to run their companies in a world where they did not have to takes these kinds of positions. But forget for a moment frustration with the positions - or lack thereof - taken by politicians. One of the things that technology has given us is a consumer class that is far better informed than ever … and even more opinionated. It is interested in values as well as value, and in a world of enormous clutter and distraction, the right positions give companies a way to differentiate themselves.

Editorial continues after a word from our sponsor...

Industry Drumbeat

From GMDC's Retail Tomorrow...

Now back to regularly scheduled editorial...

Walmart's Jetblack Looks To Make E-commerce Less Transactional

The Observer has an interview with Jennifer Fleiss, who is running Jetblack, Walmart's concierge service in New York City, in which she talks about the goal of the startup.

The motivation behind Jetblack, she says, is "'I’m a busy mom with three kids and constantly needing to purchase everything from paper towels to kid birthday gifts to you know… clothing for myself to wear to work (or to workout).' It can be really time consuming and inefficient. It’s made shopping into a chore, to the point where I had people, like my husband and housekeeper, texting me about stuff that we needed for the household. Sometimes, I would text myself as a reminder. This customer behavior of texting-to-shop for any product you want, that’s what Jetblack came out of - both a passion and a need that I felt as the consumer."

The goal, though it may seem counterintuitive, actually is to make e-commerce less transactional.

Fleiss goes on: "We’ve sort of returned to the idea of customization and attention, with e-commerce coming full circle and borrowing from retail’s interaction-heavy strategy. Perhaps at the end of the day, shoppers want someone to explain how something works or make recommendations, not just get a product shipped to them in a box … with Jetblack, it’s a combination of agents and bots. We have agents behind the scenes who are leveraging a dashboard that we built, and the dashboard has a lot of automated tools. It has many types of filters that will automatically pop up, depending on who the customer is. So the moment we get someone’s text, we know who it is and have a pre-filter based for, say, their children’s age or other preferences … Eventually, we’ll become better and able to service more and more customers quickly."

KC's View: The Jetblack business model may make a lot of sense in certain markets, though I suspect that the economics may end up being challenging until a certain mass is achieved.

But, I must admit that I'm sort of amused by a Walmart executive talking so openly about texting back and forth with the housekeeper. Nothing wrong with that, but it certainly speaks volumes about how different Jetblack is from the company's core/traditional business. And I always wonder how long such non-core businesses can survive in the Walmart ecosystem.

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Mercatus...


Now back to regularly scheduled editorial...

Vintners Prepare For Terroir That Is Hot, Hot, Hot

The New York Times wrote this weekend about efforts by some researchers working in the "parched landscape" of Israel to figure out how to grow wine there. That knowledge, the story said, will become even more valuable in a world with more frequent droughts and heat waves."

In another, related story, the Times writes that it isn't just wine and that "among the most threatened crops in California," for example, "are cherries, pistachios and walnuts, which need a large number of chilly winter days. Warming will not be good for such crops.

According to the Times, the techniques the researchers are testing "on 30 varieties of grapes include the use of nets that provide shade, trellises that coax vines to grow in formations that limit sun exposure, sensors that measure soil humidity and thermal cameras that track how much sunlight grapes and leaves absorb … The work is gaining increased interest from European winemakers as summer heat waves and other climate shifts affect their vines. In July, temperatures hit 106 degrees in the French wine-growing region of Bordeaux — the hottest day on record. Heat records were broken elsewhere on the Continent, including in Germany, Belgium and the Netherlands. In recent years, scientists and vineyard owners from France, Italy, Slovenia and other parts of Europe have visited the researchers in the Negev. Experts hope Israel’s desert agriculture can provide valuable lessons about adapting crops to extreme and unpredictable weather."

The Times goes on: "In addition to viticulture, Israeli researchers are studying a range of techniques to grow other crops. The Ramat Negev Agro-Research Center has about 15 hectares — or 37 acres — of research plots and greenhouses where scientists cultivate wine grapes, date palms, olives and jojoba.

"In large greenhouses, researchers cultivate cucumbers, cherry tomatoes, eggplant and other vegetables, like an edible, crunchy grass called sarcocornia that thrives in saline conditions. Even strawberries are grown in long, suspended planters."

KC's View: I'm glad somebody is taking this stuff seriously. Because it doesn't get much more serious than climate change screwing up the world's wine industry.

Editorial continues after a word from our sponsor...

Industry Drumbeat

From GMDC...

Now back to regularly scheduled editorial...

New Toys R Us Owners Hope To Make New Concept An Adventure

CNBC has a story about how "Tru Kids, the new owner of the Toys R Us brand, is partnering with Candytopia as part of a plan to reinvigorate the toy store with interactive elements designed to bring in shoppers … Toys R Us Adventure will have more than a dozen interactive play rooms that include installations featuring the Toys R Us mascot, Geoffrey the Giraffe."

The Toys R Us Adventure locations - there will be two, in Atlanta and Chicago, open before the end of the year - will be in addition to the 10 Toys R Us stores expected to be opened next year. Those stores, "through a joint venture with B8ta … will offer an in-house technology platform to help brands create their own mini shops within the space."

Like the Candytopia format, the story says, "it will charge admission: $28 for adults, $20 for kids 4 through 12 and free for children under 4."

KC's View: Really? Now they want to charge people to go to a Toys R Us store? Back in the day, they couldn't pay me enough to go in one.

Okay, maybe that's a little cynical. Clearly new management is trying to rethink the brand and maybe even define it along new lines. I'll give them credit for that. A lot of retail needs to be more experiential, and that's what they're going for with this concept.

But … I still think this is a tough lift, and I'm not entirely sure that the Toys R Us brand name is an asset in this case. Sure, it is recognizable, but not necessarily in a good way. And if the Adventure format tanks, what will it tell them about the shelf life of the new retail stores?

Editorial continues after a word from our sponsor...

Corporate Drumbeat

From Samuel J. Associates...

"We're going to need a bigger boat"
That's the famous line from Jaws.

In a business context, having the right-sized boat means having the right
strategy, tactics, vision, technology, and most importantly, the right people.
At Samuel J. Associates, we know the people who know how to build boats that can last,
that can move in the right direction, and that can change speed and course when necessary
(and even before most people know they should).

We have a winning record of connecting great talent and innovative businesses... as well as
innovative talent with great businesses.

There are sharks in the water. Make sure you have the best boat possible.


Click here to find out more.

Now back to regularly scheduled editorial...

Worth Reading: The Old Keedoozle

Time has a story about a grocery format that probably is unfamiliar to many people - Keedoozle, described as "history's first fully automated grocery store."

Keedoozle was created by Clarence Saunders - also the guy who was behind Piggly Wiggly - and it went through various iterations before it (spoiler alert!) ultimately failed. But when you read it, you may find yourself wondering what Saunders, who died in 1953, would've come up with if he'd ever been acquainted with the internet.

You can read about it here.

KC's View: It was interesting to read this since someone the other day described an Amazon Go store to me as being akin to a big walk-in vending machine. (This person is a Go skeptic, to be sure.) But that also sort of sounds like a good description for Keedoozle.

E-conomy Beat

Business Insider reports that "Macy's is rolling out a free same-day delivery pilot program in 30 markets beginning on October 1 … The offer will be available for a limited time and allows shoppers to receive free same-day delivery on online orders placed before noon Monday through Saturday, as well as before 10 a.m. on Sunday."

The story points out that "Macy's effort comes on the heels of Amazon announcing free one-day shipping for Prime subscribers in April, and it mirrors similar efforts from competitors like Walmart, which launched its own free delivery program for orders of $35 or more in March."

FastNewsBeat

MarketWatch reports on Starbucks' plans to launch a new format, Starbucks Pickup, "that will be exclusively for Rewards members who use the mobile-order-and-pay option." The format, being tested in New York City, is said to resemble "the Starbucks Now express service store that launched in Beijing this summer."

Your Views

…will return.

Editorial continues after a word from our sponsor...

Industry Drumbeat

HOW TO BE A RETAIL PIRATE: Authentic, Relevant, Resonant, Rapid, Revolutionary (ARRRR!)

A NEW PRESENTATION BY KEVIN COUPE

Steve Jobs once said, “Better to be a pirate than join the navy.” In today’s cutthroat retail environment, that attitude needs to be at the core of every business’s strategic, tactical and operational approach - challenging the status quo, doing the unexpected, creating customer-centric business initiatives and then disrupting them internally … appealing to people’s hearts and heads and aspirations … acting with piratical verve and always moving forward. In this brand new, lighthearted, illuminating and uniquely pertinent presentation, filled with examples and anecdotes and lessons, MorningNewsBeat’s Kevin Coupe brings a passion for storytelling and a unique perspective on business that will entertain and energize audiences.’’

Here’s what Lori Stillman, Executive Vice President - Analytics, Insights and Intelligence, Advantage Solutions, has to say about a recent appearance:

"Kevin joined us as a moderator and facilitator for a two-day client executive event we hosted. His role in the success of the event went far beyond his time presenting and sharing his great wisdom and content. From the moment our planning process began and we selected Kevin as a key part of our program, he dove in and worked with our team to review session topics, ideate on programming and help ensure our overall event delivered on the goals we had established. His quick wit, deep industry knowledge and ability to synthesize conversations into key take-aways enabled us to hit a home run!”

And, from Joe Jurich, CTO of DUMAC Business Systems:

”Kevin recently participated in and spoke at our Annual User Conference.  Our group consisted of independent retailers, wholesalers, and software vendors – a pretty broad group to challenge in a single talk.  While his energy, humor, and movie analogies kept the audience engaged, his ability to challenge them to think differently about how they go to market is what really captured them!  Based on dinner conversations afterward, he appeared to have left everyone thinking of at least one new approach to their strategy!”

To book Kevin for your upcoming event, click here , or call him at 203-253-0291.


Now back to regularly scheduled editorial...

From The MNB Sports Desk

In Week Three of National Football League play…

Miami 6
Dallas 31

Cincinnati 17
Buffalo 21

Detroit 27
Philadelphia 24

NY Jets 14
New England 30

Atlanta 24
Indianapolis 27

Oakland 14
Minnesota 34

Baltimore 28
Kansas City 33

Denver 16
Green Bay 27

Carolina 38
Arizona 20

NY Giants 32
Tampa Bay 31

New Orleans 33
Seattle 27

Houston 27
LA Chargers 20

Pittsburgh 20
San Francisco 24

LA Rams 20
Cleveland 13

Inside LL Bean’s Disruptive Leadership Model: A Retail Tomorrow Podcast

This special podcast, recorded in front of a live audience at the recent Retail Tomorrow Immersion conference in Boston, goes inside the evolving world of LL Bean, the iconic catalog business that has engineered a dramatic and highly successful shift into omnichannel retailing through transformational leadership and a willingness to disrupt from within.

Our special guest is CEO Stephen Smith, the first outsider to ever run the company, who offered a unique perspective on how a legacy retailer - founded in 1912 - has been transformed into a model of 21st century marketing savvy.

The host: Kevin Coupe, MorningNewsBeat’s “Content Guy.”

You can listen to the podcast here , or on iTunes or GooglePlay.

This edition of the Retail Tomorrow podcast is brought to you by the Global Market Development Center (GMDC), connecting people & companies to opportunities for growth.

Pictured, left to right: Kevin Coupe, Stephen Smith





PWS 59