business news in context, analysis with attitude

Published on: August 27, 2015

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here and this is FaceTime with the Content Guy.

There was a fascinating story the other day in the Wall Street Journal to which I'd like to draw your attention ... all about changing consumer consumption habits.

In this case, the thing they are consuming is words. More and more, they'e reading them on smart phones.

The Journal writes that "in a Nielsen survey of 2,000 people this past December, about 54% of e-book buyers said they used smartphones to read their books at least some of the time. That’s up from 24% in 2012, according to a separate study commissioned by Nielsen." And, "the number of people who read primarily on phones has risen to 14% in the first quarter of 2015 from 9% in 2012."

I don't know about you, but I find myself reading on my iPhone a lot - often on airport lines, or when sitting in an office somewhere with a few minutes to kill, and my iPhone is close at hand ... and I know that however far I get in the book, it'll synch up with my iPad's Kindle app so I'll go right to that spot in the book when I pick up the larger format reader. And I read newspaper and magazine articles on my iPhone all the time.

It may even get more convenient in the future. The Journal writes that "the rise of phone reading is pushing publishers to rethink the way books are designed, marketed and sold with smaller screens in mind ... To engage readers, publishers are now experimenting with ways to make the mobile-reading experience better ... They are customizing their marketing materials—email blasts, Facebook posts and websites—to be read on phones. And some are trying to catch people on the go, offering free access to e-books in airports, hotels and trains.

No wonder. The number of smartphone users is growing. A lot. "Some 64% of American adults now own a smartphone, up from 35% in the spring of 2011, according to the Pew Research Center," the Journal writes. And Forrester Research "projects that smartphone subscribers will number 80.8% of the U.S. population by 2019."

There are some who rail against this trend, suggesting that the move away from the printed word is somehow the end of western civilization as we know it. But words are words, sentences are sentences, thoughts are thoughts, and a book is no less a book if it appears on a iPhone or iPad screen.

And to answer your next question ... yes, we're working on a way to make MNB even more friendly for people who want to read it on a small screen. Because words are words, thoughts are thoughts, and we're rethinking the consumption experience, too.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: August 27, 2015

by Kevin Coupe

The Wall Street Journal reports this morning that Amazon is pulling back from its commitment to the technology hardware business.

"In recent weeks Amazon has dismissed dozens of engineers who worked on its Fire phone at Lab126, its secretive hardware-development center in Silicon Valley, according to people familiar with the matter.

"The layoffs were the first in the division’s 11-year history, these people said. But the precise toll on its roughly 3,000-person staff couldn’t be learned, in part because Amazon typically requires employees to sign a nondisclosure agreement in exchange for severance payments.

"The company also has scaled back or halted some of Lab126’s more ambitious projects - including a large-screen tablet - and reorganized the division, combining two hardware units there into one, people familiar with the matter said."

What's interesting about the story is that it suggests that Amazon's approach to hardware has been less focused than one might expect of the company - initiatives and roles were not always well-defined, resulting in products like the Fire Phone that ended up being bombs. The Journal notes that the "$180 Echo virtual assistant, a voice-activated speaker, has developed something of a cult following, if not yet mass appeal." And the company has been working on a number of products that would lead to a so-called "smart kitchen."

I don't think that retrenchment is the same thing as surrender, and I suspect that Amazon will continue to focus on creating a technological ecosystem that will use hardware to make it easier to acquire products ... which is pretty much always the endgame for all its hardware.

Let's not forget that Amazon's biggest hardware success has been a little thing called the Kindle - which virtually made e-reading mainstream. When Amazon hits a home run, it tends to be a grand slam. (Of course, when it strikes out, there are some who think the world is coming to an end.)

There's nothing wrong with stepping back and rethinking one's approach to any category ... the result, I suspect, could well be an Eye-Opener.

Published on: August 27, 2015

Reuters reports that as part of its broader effort to combat foodborne illness, the US Food and Drug Administration (FDA) is working "to map out the exact DNA sequence of strains of Listeria, Salmonella and other ... pathogens found in sick patients." As part of this effort, FDA is calling on manufacturers "to contribute samples of pathogens found during their own plant inspections. Some contamination is common in food plants. When it is found in the manufacturing facility, but not in food products, companies generally are required only to clean it up without recalling products.

"But eliminating pathogens is tough, and convincing companies to offer up potentially incriminating evidence has been a hard sell, according to interviews with public health officials, food manufacturers and experts on recalls."

This is important, the story says, because "the FDA is building a network of state and federal labs equipped to map out the exact DNA sequence of strains of Listeria, Salmonella and other foodborne pathogens found in sick patients. These sequences are then uploaded to a public database housed at the National Institutes of Health. The technology can not only differentiate a pathogen from multiple related species, but can also show slight mutations within the same strain.

"At the same time, the FDA has begun sequencing pathogens found during routine plant inspections and adding those to the database. One benefit of that, they say, is being able to quickly connect patients within an outbreak. Another is the potential to identify the source of an outbreak after just a few patients fall ill, shortening the time it takes to get tainted food off store shelves."

Published on: August 27, 2015

A coalition of more than 60 food trade associations - including the Food Marketing Institute (FMI), National Grocers Association (NGA), Grocery Manufacturers Association (GMA), and the American Frozen Food Institute (AFFI) - has written a letter urging the US Senate and House of Representatives to adequately fund the Food and Drug Administration (FDA) in the fiscal 2017 budget and not depend on taxes and fees assessed on industry.

The letter says, in part, “As consumers continue to cope with a period of prolonged economic recovery and food makers and retailers struggle with fluctuating commodity prices, the creation of new food taxes or regulatory fees would mean higher costs for food makers and lead to higher retail food prices for the most vulnerable consumers.”

Published on: August 27, 2015

Advertising Age reports that a new survey of chief marketing officers conducted by Duke University's Fuqua School of Business indicates that "marketers are allocating more of their budgets to social, mobile and marketing analytics, but they still face challenges using these capabilities and proving ROI."

According to the story, "Spending on digital marketing is expected to increase 12.2% over the next year, with some of the largest growth being seen in social, mobile and data analytics. Social media spending now makes up an average 10.7% of marketing budgets, and will grow to 14% of budgets over the next 12 months, according to the survey. In five years, social media spending will account for 23.8% of total marketing budgets."

However, "only 15% of CMOs said they have been able to prove the impact quantitatively of social media, while 43.5% said they have a good qualitative sense of the impact, but not quantitative impact. And 41.5% of marketers have not been able to show any impact yet from their social media efforts."

Published on: August 27, 2015

The New York Times had an interesting piece the other day about how new, small food companies "are flourishing, encroaching on market share and gaining national distribution as shoppers reach for products that tout themselves as novel, local, rarefied or containing better ingredients." While so-called "big food" companies continue to dominate the market, the story suggests that traditional brands "lost market share in 42 of 54 categories, from baby food to yogurt, over the last five years as new products gained."

Critically important to this trend, the Times writes, "are investors eager to finance new food businesses. Major Silicon Valley firms like Khosla Ventures have put money into such businesses, and Silicon Valley-style 'accelerators,' like AccelFoods and CircleUp, raise early-stage financing and offer management and administrative consulting to small food businesses."

It is worth reading, and you can do so here.

Published on: August 27, 2015

• Reuters reports that Walmart plans to begin offering its holiday layaway program two weeks earlier than last year, and will offer 20 percent more items as part of the program.

This means that holiday layaway will be available as of tomorrow - August 28 - with 40,000 SKUs eligible.

In a normal year, layaway can account for between 10 and 15 percent of holiday revenues at Walmart, but this year it could even be bigger because of licensed merchandise related to Star Wars: The Force Awakens, the first in a series of new films related to the iconic film franchise that is scheduled to be released this Christmas. Some 500 new Star Wars products are scheduled to be in stores as of September 4.


• The Wall Street Journal reports that Walmart has decided to "stop selling semiautomatic rifles, removing what have become politicized items from shelves for reasons the retailer says are purely business." The company said that it will eliminate AR-15s and other, similar weapons, and will carry more shotguns and other hunting weapons.

Spokesman Kory Lundberg said the decision was not about politics: “It’s about what customers are buying and what they’re not,” he said.

The Journal writes that the change "comes as such semiautomatic arms, described by opponents as assault weapons, remain a flash point in the national gun debate that is faced with yet another high-profile shooting. On Wednesday morning, two television reporters were killed while conducting an interview in Moneta, Va."

Published on: August 27, 2015

In the UK, the Independent has a story about Tesco CEO Dave Lewis, who is approaching his first anniversary as head of a company that was in "tatters" when he took the job last year.

Lewis, the story says, has been decisive in a number of areas, such as the decision to close down the company's longtime corporate headquarters and sell its ownership of the Dunnhumby data analysis business and its South Korea unit. He's also had to deal with a financial crisis, as it was discovered that Tesco had been under-reporting costs and over-reporting revenue; Tesco's "reliance on income from supplier payments for everything from marketing to shelf positioning was laid bare amid stagnating sales growth," the story says.

Even as Lewis works to streamline the chain's product selection and smooth supplier relationships, the story suggests, he also has the gorilla in the room to deal with - the growing market share being claimed by discounters Aldi and Lidl.

Published on: August 27, 2015

The New York Times this morning reports that Gap says it will stop the practice of on-call scheduling, which requires employees to be available for shifts without actually paying them for the time - a practice that make it impossible for part-timers to get second jobs, and that "regulators, workers’ rights groups and some academics say is detrimental to employees and their families."

The Times writes: "Facing public and regulatory pressure, some retailers, including Abercrombie & Fitch, Starbucks and Victoria’s Secret, have already begun phasing out the practice.

"Gap said its five brands — Athleta, Banana Republic, Gap, Intermix and Old Navy — had agreed to stop on-call scheduling by the beginning of next year and have committed to providing employees with at least 10 to 14 days’ notice, according to Wednesday’s announcement."

The story notes that "a recent study by the Economic Policy Institute, a liberal advocacy group, found that the children of parents who worked unpredictable schedules could have inferior cognitive abilities, in areas like verbal communication, and struggle with anxiety and depression."

Published on: August 27, 2015

• WCPO-TV News reports that Kroger "has added its North Bend Road store in White Oak as the fifth Tri-State location for ClickList, an online-ordering system that lets customers pick up their grocery orders at drive-in stalls without leaving their vehicles."

Kroger also is testing the service in eight Indianapolis stores; the goal, the company says, is to roll the service out to as many as 1,200 stores nationwide.

Published on: August 27, 2015

• The Buffalo News reports that "Wegmans Pharmacy has the highest overall customer-satisfaction rating in the country, according to J.D. Power’s latest study of pharmacies nationwide. The Rochester-based grocer scored 887 points on a 1,000-point scale that measured prescription ordering, cost competitiveness and non-pharmacist staff, as well as pharmacist and store experience. The list was created using surveys from nearly 15,000 customers during May and June."

The story says that "runners-up in the supermarket category were Florida-based Publix, with a score of 871; Texas-based H-E-B, with 866; and Cincinnati-based Kroger, with 861 ... Topping the chain drugstore list was Good Neighbor Pharmacy, a retailers’ cooperative of independently owned and operated drugstores, with 876 points. It was followed by California-based franchise Health Mart, with 871 points, and Ohio-based franchise the Medicine Shoppe, with 861 ... Rite Aid scored 840, followed by CVS, with 839, and Walgreens, with 835 ... In the mass merchant category, Target got the highest marks with 858 points, followed by Sam’s Club, with 847; Meijer, with 842; and Kmart with 840."

Published on: August 27, 2015

...will return.