business news in context, analysis with attitude

Published on: May 5, 2014

by Kevin Coupe

Is there a more awful experience than moving?

(I ask this as someone who last moved 30 years ago. But I'm told by friends and family members that it can be a soul-sucking, debilitating and stress-inducing experience.)

There is an interesting piece in Fast Company about a new moving business designed to disrupt more traditional businesses … NextMover, which, the story says, "aims to ease these pains as a convenient, vetted marketplace for 'your friend with a truck' - essentially a Lyft for moving that connects movers in need of help with truck owners looking for extra work."

According to the story, "Truck owners, whose vehicles can range from pickups to larger commercial trucks, sign up and go through a vetting process that includes interviews, a background check, and vehicle inspection, before they're activated in the service. Consumers then visit the site and can choose among truck owners depending on their budget and needs, and can also see bios and user ratings …There are, of course, limitations to moving with NextMover. It only works for local moves, and is less ideal for people with large houses who truly need full-size moving trucks and comprehensive service."

What is Eye-Opening about this story is the comment from NetMover's founder/president/CEO, Alexander Kehaya, who tells FastCompany, "Our original hypothesis was that the low cost would be the biggest value proposition for our customers. On the average we are about 50% cheaper than similar services. But it turns out that's really third on the totem pole. The convenience and the community aspect are the things that people consistently tell us when we show them our website and talk about what we do. When I ask people, 'How would this benefit you?' they say, 'It's convenient, and it's somebody from my community that comes to help me move.'"

That's instructive. Because it speaks to the importance of community in every business, and how consumers will respond to companies that they perceive as being locally focused, even locally owned.

Different companies will come at the local factor from different angles, based on size, economics, culture and temperament. But finding a local key to consumers' hearts and minds, especially at a time of mergers and acquisitions, can be an important differential - and Eye-Opening - advantage.

Published on: May 5, 2014

The Boston Business Journal reports that Roche Bros., which generally has served the city's suburbs with e-grocery ordering and delivery, is expanding to a number of Boston neighborhoods - including Beacon Hill, the North End, Fenway, the Back Bay, the South End and South Boston - with the possibility of expanding even more if consumer response warrants.

Roche has 19 stores, but only one within the city limits.

According to the story, "This new service is being launched in anticipation of Roche’s own brick-and-mortar foothold in the downtown - a Roche store that will open next year in the redevelopment of the Filene’s block at Washington and Summer streets. This new delivery option will help Roche build customer awareness of its brand before the Downtown Crossing store opens, especially for recent transplants and college graduates who have never stepped foot in a Roche market. The orders will still be filled at a Roche store, as they are for other communities."

And, the story says, "It’s also a way for Roche to strike back at its biggest competitor in the online ordering space —Stop & Shop affiliate Peapod. Roche was also an upstart in the battle against Peapod back in 2005 when Roche first rolled out its delivery service."

Published on: May 5, 2014

GeekWire reports that Groupon is introducing a new e-grocery program called Groupon Basics, described as "a service that allows customers to order certain household essentials in 'warehouse sizes' and have those items delivered."

Unlike Amazon, which offers tens of thousands of grocery items through its Prime, Subscribe & Save and Prime Pantry services, Groupon only is offering 108 items at the moment, though it says it plans to expand that selection.

"If Prime Pantry and Basics catch on, it could be a significant threat to bulk retailers like Costco and Sam’s Club, which require shoppers pay an annual fee in order to pick up warehouse goods at bargain prices," GeekWire writes. "Just because of their sheer size, warehouse stores aren’t available in every neighborhood. That means these services could be a major competitor for people who find a drive to Costco hard to justify." And, the story says, it seems likely that Groupon might try to poach employees from either Amazon or Costco.

Published on: May 5, 2014

GE Capital over the weekend released the results of a national survey of c-suite executives from medium sized companies in the food and beverage industry, concluding that respondents are generally upbeat about the future, "with nearly three quarters (71 percent) predicting revenue growth over the next year and only 2 percent experiencing a decrease in their new order pipeline compared to this time last year."

The executives all work for companies generating between $10 million and $1 billion in annual sales.

Some specifics from the survey:

• "Food and beverage executives saw their firms’ performance improve over the past year at a higher rate (72 percent) than those in the broader middle market (60 percent)." These same firms "exhibited revenue growth last year at a slightly higher rate (68 percent) than the broader middle market (64 percent)." In addition, 71 percent of the industry executives "expect their company’s revenues to increase this year compared to last year, compared to only 59 percent of middle market executives generally."

• "The vast majority of executives think the food and beverage industry will grow or stay roughly the same size next year, with only 4 percent expecting a decrease, this compares to 14 percent of middle market executives’ views on their respective sectors."

• "Employment is robust in the food and beverage space with over half of executives (55 percent) forecasting increased employment over the next year and notably fewer firms in the sector decreasing employment over the past year (5 percent) than in the broader middle market (13 percent)."

• "Mergers and Acquisitions will be driven by opportunities to create efficiencies through consolidation according to a third (33 percent) of food and beverage executives, this compares to only 16 percent of middle market executives generally."

Published on: May 5, 2014

In Canada, Loblaw Cos. announced on Friday that it will begin using traceability technology to " to guarantee origins and improve eating quality of Loblaw’s cut from Canada AAA Western Beef. The product is being launched in 77 Real Canadian Superstore® locations in Alberta, Manitoba, British Columbia and Saskatchewan." The program is an extension of a program announced a year ago in which Loblaw began using traceability technology for beef sold in its Ontario stores.

"Loblaw sees traceability of its meats as increasingly important as consumers seek more information on how and where their meat is produced," said Sal Baio, Loblaw senior vice president, in a prepared statement. "DNA information is gathered along the production chain, enabling us to identify the origin for any cut of Canada AAA Western Beef. This not only assures customers that this beef is sourced in Western Canada and raised according to our strict protocols, but also helps capture data to drive quality improvement."

The traceability technology is being provided by IndentiGen.

Published on: May 5, 2014

• In Toronto, the Globe and Mail reports that "by later this year, grocer Loblaw Cos. Ltd. will launch a test e-commerce site that will include fresh food, with a 'click and collect' operation that will allow consumers to order groceries from its website and then pick them up at the stores after employees have packed the goods."

The story says that Loblaw seems focused on competing with both Amazon and Walmart's e-grocery businesses in Canada.

Published on: May 5, 2014

• WinCo Foods said that it is ready to begin shipping from a new 900,000 square foot distribution center in Phoenix that will initially service 19 stores in Arizona, Southern Nevada and Southern California, though the stores represent a little more than half the facility's capacity.


• USA Today reports that Coca-Cola has decided to eliminate brominated vegetable oil from its line of Powerade sports drinks, a move similar to one made by PepsiCo's Gatorade brand last year. While brominated vegetable oil has been used as a stabilizer in the drinks, it also has been criticized because it has been "linked to a flame retardant and is not approved for use in Japan or the European Union."

And, the story goes on, "the decision by Coca-Cola to remove brominated vegetable oil from Powerade is just the latest evidence that food makers are coming under pressure for the ingredients they use. While companies stand by the safety of their products, some are making changes in response to the movement toward foods that people believe are natural."


• AFP reports that "Carrefour, the world's second largest retailer, is working on a plan to exit India, media reports said Saturday, amid political uncertainty about the future of multi-brand retail in the South Asian giant … Indian newspapers quoted unnamed sources in the France-based company as saying Carrefour had been working on an exit strategy for two weeks."

Published on: May 5, 2014

• Advertising Age reports that Wendy Clark "will take on the role of president-sparkling and strategic marketing, Coca-Cola North America, effective June 1. Meanwhile, Katie Bayne, who had been president-North America Brands and is the former CMO of Coca-Cola North America, will take on the job vacated by Ms. Clark, senior VP-global sparkling brand center. Ms. Bayne will report to Joe Tripodi, chief marketing and commercial officer. Ms. Clark will report to Sandy Douglas, global chief customer officer and president of Coca-Cola North America."

According to the story, "Ms. Clark will bring much needed stability and creativity to Coca-Cola's North American marketing operations, which have lost several key execs in the last year. Pio Schunker, who had been one of the company's top creatives in North America, departed last August. Alison Lewis, Coca-Cola's head marketer in North America, left for Johnson & Johnson in October."

Published on: May 5, 2014

Efrem Zimbalist Jr., the star of two highly popular television series - "77 Sunset Strip" (1958-1964) and "The FBI" (1965-1974) - has passed away at age 95. In his later years, he found success doing voiceover work, most notably as Bruce Wayne's butler, Alfred Pennyworth, in a number of animated series and films.

Published on: May 5, 2014

Commenting on a story about the Kroger-Harris teeter integration, I commented:

The thing that makes Kroger exceptional is that there seems to be a lack of ego at the top … I think it is absolutely true that they don;t care where good ideas come from. Many companies, when they make an acquisition, focus on pushing policies down, rather than absorbing and learning, which is what should make an acquisition worth making.

One MNB reader responded:

I remember back when Albertsons acquired Jewel. I was consulting for both companies at the time, and got a kick out of watching the dance between the executives as Albertsons attempted to indoctrinate Jewel into the “Albertsons way of doing business." At the time, Jewel owned Chicago. Safeway had already diluted Dominick’s status in the market, and Jewel’s numbers were stellar.

After a period of contentious visits from the “Team from Boise,” one of the senior execs at Jewel told me, “ They can come back here and tell me how to run the business when their numbers look like our numbers. Until then, they can ……..”

Another MNB user wrote:

Kevin, I totally agree with your observation.

I spent one year with Kroger when Fred Meyer Inc (Food 4 Less, Smith’s, QFC, Ralph’s, etc.) merged with Kroger. I saw (and experienced) exactly what you describe.

I have been in the grocery business for nearly 50 years and have been through nine consolidations – big and small. I have watched Kroger and been very impressed by their conservative philosophy and their sound management.

The word “ego” is exactly the issue. I saw Albertsons take over Lucky in California and destroy it by changing the name.

And, from another reader:

During the first year of the Supervalu/Albertsons acquisition the retail divisions were empowered, but little change was pushed.  Both companies exchanged ideas and tried to identify best practices.  After 9 months, the stock price had almost doubled to $49.  Year 2, management at the headquarters thought they had the answers, stopped understanding what the key success factors were that made each division successful, and started pushing change and consolidation from the top.  That resulted in falling same store sales, a new CEO who consolidated more power at the top, surrounded himself with people who agreed with him on all issues and stopped listening to the field, and then ultimately a stock price of $2.50 and the sale of the company.

Supervalu should have known better, the acquisition of Rich Foods in 2000 was very successful, because as you say, the company exchanged best practices, took the time to get to know each other, and kept listening to good ideas, no matter where they came from.  David Dillon and Kroger have it RIGHT!




We had a piece last week about a poll saying that social media seems not to be replacing face-to-face social experiences, which led one MNB reader to write:

My first thought at your piece this morning is to wonder whether the definition of family has changed enough in the last 15 years so that what people are affirming with “a family dinner five times a week” today actually is different than it was 15 years ago.  My second thought is about the trends - all small but in the same direction.  Perhaps that comments on how resistant some institutions are to change, rather than that they are not changing. Usually in business, a downward trend of the same magnitude would be unwelcome (e.g. if market share went from 60% to 58%, or sales went down 4%), and an indication of serious action required to correct the situation before it got worse.

Perhaps the changes show neither, but reflect randomness in the data. or the sampling error that all surveys are subject to.  To me, part of looking at the world with eyes open is considering different perspectives, which you also regularly encourage.  Keep going.

Published on: May 5, 2014

California Chrome won the Kentucky Derby over the weekend, pulling away down the stretch to win by 1 3/4 lengths.

ESPN writes that "in a sport dominated by wealthy owners and regally bred horses from Kentucky's bluegrass country, this was a victory for the little guys. Owners Perry Martin and Steve Coburn bred an $8,000 mare to a $2,500 stallion to produce the winner of the world's most famous race with their one-horse stable."

Published on: May 5, 2014

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Published on: May 5, 2014

Target Corp. announced this morning that CEO/chairman Gregg Steinhafel has been replaced, effective immediately. The removal of the 35-year company veteran follows the massive data breach over the 2013 holiday season that put the credit and debit card information of tens of millions of customers at risk, and in the official statement, Target noted that he "held himself personally accountable and pledged that Target would emerge a better company."

The company said that CFO John Mulligan will take over Steinhafel's CEO duties on an interim basis while a search is conducted. Roxanne Austin, a member of the board, will serve as chairman on an interim basis.

The Wall Street Journal story notes that "the embarrassing computer attack and weak sales at a critical time shined a harsher light on other stumbles under Mr. Steinhafel's six years as CEO, including a money losing expansion into Canada and a persistent weakness in traffic as shoppers moved online. Mr. Steinhafel's resignation leaves a void at the top of one of the largest U.S. retailers at a time of deep change in shopping habits, a weak economic recovery, especially among low-income shoppers, and questions over whether internal failures at Target made it an easy target for the data thieves."

USA Today reports that some analysts suggest that Steinhafel should have been let go at the beginning of the year, and that "this reflects the very slow-moving nature that is inherent of Target's culture."

Steinhafel reportedly will serve as a consultant to Target during the transition.