business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: June 22, 2015

    by Kevin Coupe

    Point of personal privilege.

    This has nothing specifically to do with business, though, I suppose everything that affects the communities that retailers serve has something to do with business.

    In this case, I want to refer to the events in Charleston, South Carolina, that have unfolded over the past week or so. I've been in the car for much of the past week, driving from the east coast to Portland, Oregon ... and as it happens, I've spent a fair amount of time listening to various stations reporting about what has happened there.

    Much of it has been upsetting on all sorts of levels, but here's where I come out on this thing.

    I was raised in a religious tradition, and I remember that one of the things we were taught was that "three things will last forever - faith, hope, and love - and the greatest of these is love."

    And as I've listened to the families of the people who were so viciously murdered in what clearly was an act of hate and domestic terrorism, they've talked about forgiveness with a passion that seems so purely rooted in faith and hope and, yes, most of all, love.

    I find it to be extraordinary, and so totally foreign to what I'm sure I'd be feeling if I were in such a position. But of course, I'd never be in that position, because my family and I are not automatically the subjects of suspicion or derision or hate by some because of the color of our skin.

    I cannot imagine what that must be like.

    The past five days or so have been Eye-Openers, and have clearly drawn a line between what is good and what is evil. And if there is any sort of good news from this, it is that hate does not seem to be winning.

    Love does.
    KC's View:

    Published on: June 22, 2015

    Kroger announced last week that its Denver-based King Soopers division has begun using technology acquired when it bought the Vitacost nutrition and healthy living e-commerce site to create a new natural and organic e-commerce site called Live Naturally.

    The site can be found here.

    According to the announcement, "Open to King Soopers customers who live in and around the Denver metro area, and offering more than 36,000 natural and organic products, provides the convenience of online shopping for a variety of healthy living products – while virtually extending the product selection and creating an endless aisle experience for King Soopers customers. Every product is free from more than 101 artificial ingredients and preservatives that many customers prefer be left out of products ... The company said it will test and learn in the Denver market before replicating the experience in other markets."
    KC's View:
    This is the next step in Kroger's slow evolution of an omnichannel model, but it also demonstrates the company's strategic approach. It is learning from Vitacost and Harris Teeter, and moving deliberately.

    I've been mildly skeptical of this approach, believing it to be too slow, but one MNB reader wrote to me the other day, saying:

    Kroger may be slow to the draw when it comes to e-commerce, though they are embracing the digital media platform in the NW with both their Fred Meyer and QFC stores. Their customer rewards/loyalty program is doing what many are not, particularly through the digital platform. I wouldn’t be surprised that when they come out with e-commerce it will be leaps and bounds ahead of many others, particularly with expected integration of the digitals. This may be an example of the tortoise and hare…

    Maybe. And you're right - Kroger's customer data does give it an advantage. Though Amazon has amassed a fair amount of data, too, that gives it a distinct advantage going forward.

    Published on: June 22, 2015

    National Public Radio's The Salt has a story about how California-based Raley's is "taking a swing at the food waste problem by trying to get customers to embrace the differences" between "cosmetically perfect fruits and vegetables" and variations that are less pleasing to the eye but may taste just as good.

    The story notes that "the Natural Resources Defense Council estimates that depending on the crop, anywhere from 1 to 30 percent of food grown by farmers doesn't get to the grocery store. And, as we've reported, food is wasted at every step in the supply chain — during transportation and processing and once it gets to our refrigerators."

    Efforts to institutionalize the saving and distribution of less-than-perfect produce have grown, with the key being the willingness of producers to co-pack: "As the workers slice and harvest the crop, they pack the premium heads in boxes headed to grocery stores. They separate out the less-than-perfect seconds and paThey separate out the less-than-perfect seconds and pack them in crates destined for the food banks. It's a simple process, but it's tough to recruit more farmers to join in. Only three out of 25 broccoli and cauliflower growers in California participate."

    Enter a new venture called Imperfect Produce, which has as its mission growing acceptance of imperfect produce up and down the supply chain. "Imperfect has just inked a deal with high-end chain Raley's, which has more than 100 stores in California and Nevada. The chain says it will launch a pilot program, 'Real Good' produce, in 10 Northern California stores in mid-July.

    "Raley's Megan Burritt says she's working on in-store education. When customers are picking up a funky-looking double cherry or an apple that may look like a reject, she wants them to see it in a new way."
    KC's View:
    She's right. This only works if there is a consumer education component, because this product is competing with items that are being specifically marketed as perfect and beautiful.

    Published on: June 22, 2015

    CNN reports that rock icon Neil Young has a new album coming out called "The Monsanto Years," which serves as "a biting attack on the seed giant -- as well as other big corporations."

    According to the story, the title track refers to "the poison tide of Monsanto" and is a scathing indictment of GMOs. There's another song that attacks Starbucks, for much the same reason. CNN notes that "the singer announced last November that he would no longer drink Starbucks lattes because the company, along with Monsanto, was part of the Grocery Manufacturers Association trade group" that is suing to overturn a Vermont law that requires GMO labeling.

    There's also a third song on the album that attacks Walmart's labor practices, and another song that is about the Supreme Court's Citizens United ruling, which reduced restrictions on campaign donations by corporations.

    Monsanto has responded to Young's criticisms by saying it is misunderstood, and Starbucks has said that it actually disagrees with the FGMA position on GMO labeling.
    KC's View:
    If membership in GMA is the standard by which Neil Young decides whether or not to consume a product, he must be going through some major dietary changes.

    I'm probably going to have to buy this album, and not just because I generally agree with him on GMO labeling (though it'd be better if he got his facts right) and I certainly agree with him on campaign finance laws.

    No, I just want to see how he rhymes "Citizens United."

    Published on: June 22, 2015

    The New York Times has a good piece worth reading about "the millennial mania that is overtaking all manner of businesses, and seems to be getting more obsessive by the day. Not since the baby boomers came of age has a generation been the target of such fixation.

    "But this has a 21st-century style of urgency — with 24/7 micropandering, psychographic analysis, a high-priced shadow industry of consultants and study after study. (A few from recent days: how luxury brands can connect with millennials; what millennials think about restaurant loyalty programs; and which emotions most influence the purchasing decisions of millennials. Answer: anxiety and empowerment.)"

    The Times notes that "some analysts and consumers have begun to ask, what about the rest of us? After all, the millennial generation has less wealth and more debt than other generations did at the same age, thanks to student loans and the lingering effects of the deep recession."

    But it really comes down to this: "Businesses are terrified that if they don’t snare them now, they’ll miss the chance."

    You can read the entire story here.
    KC's View:

    Published on: June 22, 2015

    GeekWire reports that Amazon "has made a behind-the-scenes change to one of its most important technological formulas, with big implications for the millions of customers who rely on Amazon customer reviews to decide which stuff to buy — and for the companies hoping to sell lots of stuff to those millions of customers.

    "With the help of a new machine-learning algorithm, Amazon will give greater weight to newer, more helpful and verified customer reviews (written comments) and ratings (the 5-star system) when determining top reviews to display, and when calculating a product’s overall rating. Previously the company used an unweighted average to calculate ratings."

    24/7 Wall Street has a piece noting that in May, Amazon "posted 182 million unique visitors, fourth among all sites in the United States. Wal-Mart Stores Inc., the world’s largest retailer, had an online unique audience of 86 million."

    This disparity in figures, the analysis suggests shows "the relative failure Wal-Mart has had as it tries to leverage its $485 billion in global annual revenue and 11,000 stores into an Internet presence that comes close to Amazon’s. Wal-Mart management knows as well as anyone that brick-and-mortar retail has passed its best years and cannot carry the price of employees and the costs of physical stores indefinitely. It is part of a world in which cars will not need drivers and groceries will be delivered by drones. Unfortunately, Wal-Mart’s current online revenue is barely $20 billion, or about 5% of the retailer’s total sales."
    KC's View:
    I was with this story right up until it said that "brick-and-mortar retail has passed its best years." I just think that's an outlandishly absurd thing to say ... because we simply don't know that.

    I certainly would never argue that. It is enough to say that brick-and-mortar is facing a new kind of competition that will prove irresistible to some customers some of the time, and could take a bit out of brick-and-mortar sales. How big that bite will be is hard to calculate, and to some extent it depends on how traditional stores react, adapt, and even use online to bait the hook for the physical store.

    But past its best years? I'm not at all sure that's true.

    Published on: June 22, 2015

    The Chicago Tribune reports that several of the city's retailers "preparing for the citywide ban on the thin plastic bags bemoaned for cluttering landfills and littering parks, streets and waterways said they plan to offer customers reusable plastic bags that comply with the city ordinance, and don't plan to charge a fee."

    Environmentalists are not happy.

    Walmart, for example, "has been testing its new ordinance-compliant plastic bags at two of its Chicago stores, and plans to roll them out to its 12 city locations by the end of June. The response so far has been positive, the company said."

    And at Target, "shoppers will be given reusable plastic bags at checkout and the company does not plan to charge a fee, a spokeswoman said. To promote reuse, Target will continue giving a 5-cent discount for every reusable bag shoppers use at its stores, as it has done since 2009."

    And at Jewel, "which goes through about 6,000 plastic bags daily in a typical store, shoppers will be able to choose between paper and a new reusable plastic bag at no extra charge. Those bags are a bit smaller than the reusable plastic bags currently available for purchase at Jewel for 10 cents."

    Some environmentalists say that these moves by retailers defeat the purpose of the ordinance, which they hoped would cut back on the number of bags going into landfills. Just making the bags sturdier to meet the letter of the law defeats the purpose, they believe, and the next step will be pushing for stricter rules that would require a fee paid by the shopper for every bag used.
    KC's View:

    Published on: June 22, 2015

    • The Boston Globe reports that Office Depot shareholders have approved the office supply chain’s $6.3 billion acquisition by rival Staples, which they hope will make them more competitive in a marketplace where they are being battered by the likes of Amazon and Walmart.

    The merger still requires approval from federal antitrust authorities, which the companies hope will come by the end of the year.

    • Nielsen is out with a study saying that "in developed markets, retail sales are concentrated in large supermarkets and hypermarkets, accounting for 61% of personal care, 62% of food and beverage and 79% of household care category sales. In the food and beverage category, convenience stores are also a sizable player, accounting for 20% of sales. Similarly, in personal care, 22% of sales come from drug stores."
    KC's View:

    Published on: June 22, 2015

    ...will return.
    KC's View:

    Published on: June 22, 2015

    Jordan Spieth won his second straight major tournament victory over the weekend, with a total of five under par to take the US Open at the Chambers Bay Golf Course in University Place, Washington.
    KC's View: