business news in context, analysis with attitude

Published on: October 27, 2015

by Michael Sansolo

Senator Lindsey Graham (R-South Carolina) faces a problem common to many businesses: Things don’t always make sense.

Graham is an experienced legislator with a track record and reputation on numerous important topics including foreign policy. Yet, as you might be aware, while he’s running to be the Republican Party’s Presidential nominee, he’s making little headway.

In a year when outsiders seem to be in vogue, Graham and others like him are losing badly to candidates who might not have gotten even a passing look in other years.

But things don’t always make sense and most assuredly aren’t always fair. It happens in politics, and it happens in business. That’s why best-laid plans are both essential and useless at the same time.

Great plans are essential because no business should charge forward without a clear sense of where they want to go. There should be hard questions asked about why any consumer would want a specific product, store or service and why exactly your company is best positioned to sell it. And those plans only work if the company executes them like crazy.

Of course, those plans are also useless because things are always going to change. Unexpected developments should always be expected in the form of competitors or even a sudden shocking shift in consumer tastes (as Sen. Graham, Wisconsin Governor Scott Walker and others are finding out in the current election cycle). You have to recognize the changes, shift where appropriate and, again, execute like crazy.

We’ve had a lot of articles about best-laid plans going awry here lately. Consider the apparent retrenchment of Walmart’s Neighborhood Markets, which surely seemed a great plan for getting stores into smaller spaces. Or what about McDonald’s ongoing struggles to connect with shifting consumer tastes for fast food. (We’ll ignore the fates of Haggen, Fresh & Easy, and A&P in this context, since their problems seem far more extensive than just shifting consumer tastes.)

The bottom line is that there are no simple solutions. There’s no way to know whether Amazon.com will be a major food competitor in 10 years or if some other form of e-commerce solution will supplant it. We have no idea if the local food trends Kevin wrote about yesterday will be lasting or trivial in a few years.

Likewise, we can’t tell when consumers will break out of the frugal mindset that’s taken hold since 2008 or, worse yet, how they’ll react when the economy softens again, as some signals from around the world. suggest.

In some respects, politicians are lucky. They can drop out and run in another year. Businesses aren’t given an off year. They need find a way to keep correcting their courses, change with the times and competition, and stay sharply focused on shifting consumer trends even as they shift on a daily, weekly or whatever basis.

In a television interview Monday, Graham bemoaned his terrible poll numbers by saying, “How am I losing to these people?”

From his point of view, it’s a great question.

And it’s one every business also should ask itself constantly about every competitor you have. Then, quickly, you need to focus on how to turn that picture around because even the best-laid plans need constant course corrections.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Published on: October 27, 2015

by Kevin Coupe

Over the past few years, the overwhelming trend in retail has been to not just compete aggressively on Black Friday, the day after Thanksgiving, but to open earlier and earlier on Thanksgiving, as well. The idea is that the earlier you open, the more competitive it will make you during the end-of-year holiday shopping season.

Outdoor retailer REI is taking a different approach. Not only is it staying closed on Thanksgiving, but REI also has decided to close all of its stores on Black Friday.

Here's what Jerry Stritzke, President and CEO of REI, says about the decision:

“REI is closing on Black Friday. You read that correctly. On November 27, we’ll be closing all 143 of our stores and paying our employees to head outside.

"Here’s why we’re doing it. For 76 years, our co-op has been dedicated to one thing and one thing only: a life outdoors. We believe that being outside makes our lives better. And Black Friday is the perfect time to remind ourselves of this essential truth.

"We’re a different kind of company—and while the rest of the world is fighting it out in the aisles, we’ll be spending our day a little differently. We’re choosing to opt outside, and want you to come with us."

REI merchandise will be available to people who can't take 'no' for an answer - its website will be online, staffed, reportedly, by a skeleton crew.

It is a fascinating decision, and while on first blush it may seem counter-intuitive for a retailer to be closed on the busiest shopping day of the year, I think it seems entirely in character ... and a great way for REI to reinforce its essential authenticity - it is not about the stuff it sells, but the lifestyle that it represents.

That's an important message, and I think that its core customer base is one that will treasure this decision. Some may see it as inconvenient, but I think its core shopper will decide to shop there on Saturday, Sunday, or some other day.

"You've got to stand for something, or you'll fall for anything," John Mellencamp sings. It is a tune that REI seems to take very seriously, and it is an Eye-Opener.

Published on: October 27, 2015

Reuters reports that Walmart is asking the Federal Aviation Administration (FAA) for permission "to test drones for home delivery, curbside pickup and checking warehouse inventories."

The story notes that this can be seen as "a sign it plans to go head-to-head with Amazon in using drones to fill and deliver online orders."

According to the story, Walmart "has for several months been conducting indoor tests of small unmanned aircraft systems – the term regulators use for drones - and is now seeking for the first time to test the machines outdoors. It plans to use drones manufactured by China's SZ DJI Technology Co Ltd."

Reuters goes on: "The move comes as Amazon.com Inc, Google and other companies test drones in the expectation that the FAA will soon establish rules for their widespread commercial use ... Commercial drone use is currently illegal, though companies can apply for exemptions ... The FAA will review Wal-Mart's petition to determine whether it is similar enough to earlier successful applications to be fast-tracked, or whether it would set a precedent for exemptions, requiring regulators to conduct a detailed risk analysis and seek public comment."

Amazon has said it is prepared to start delivering via drone as soon as its gets the regulatory go-ahead. Walmart says that it also is ready to move quickly once approvals are received.

Walmart, the story says, wants "to test drones for its grocery pickup service, which it has recently expanded to 23 markets with plans to add another 20 markets next year. The test flights would confirm whether a drone could deliver a package to a pick-up point in the parking lot of a store, the application says. Wal-Mart also said it wants to test home delivery in small residential neighborhoods after obtaining permission from those living in the flight path. The test would see if a drone could be deployed from a truck 'to safely deliver a package at a home and then return safely to the same,' the application says.

Published on: October 27, 2015

NBC News has a piece about how the new World Health Organization (WHO) report saying that red meat - including beef, pork and lamb - probably cause cancer, in addition to processed meats that it also has said are carcinogenic.

"Many studies show the links, both in populations of people and in tests that show how eating these foods can cause cancer," according to WHO's International Agency for Research on Cancer (IARC), which released the report in Lancet, a medical journal.

The story quotes Susan Gapstur of the American Cancer Society as saying that "the conclusion that processed meat (e.g., hot dogs, bacon, sausage, deli meats, etc.) causes cancer and that red meat (e.g., beef, pork, lamb) is a probable cause of cancer may come as a surprise to a public that for years has relied heavily on red and processed meats as a part of its diet ... In fact, classifying processed meat as carcinogenic and red meat as probably carcinogenic to humans is not unexpected. Indeed, based on earlier scientific studies, including findings from the American Cancer Society's Cancer Prevention Study II, the American Cancer Society has recommended limiting consumption of red and processed meat specifically since 2002."

In fact, MN took note last July of a Quartz story predicting the issuance of this WHO report.

The American Institute for Cancer Research (AICR) says that the report is consistent with its own longtime advice: "For years AICR has been recommending that individuals reduce the amount of beef, pork, lamb and other red meats in their diets and avoid processed meats like bacon, sausage and hot dogs," AICR's Susan Higginbotham, a registered dietician, said in a statement.

Fox News reports that "the North American Meat Institute said that the research that looked at more than 800 studies on cancer and consumption of red meat or processed meat 'defies common sense' and ignored numerous studies showing no link between meat and cancer: 'Scientific evidence shows cancer is a complex disease not caused by single foods and that a balanced diet and healthy lifestyle choices are essential to good health,' writes Barry Carpenter, president of the lobbying group.

And Shalene McNeil, executive director of human nutrition at the National Cattlemen's Beef Association, tells , "We simply don’t think the evidence support any causal link between any red meat and any type of cancer."

Published on: October 27, 2015

The New Yorker has a detailed piece questioning whether the nation's fast food chains will successfully be able to shift to healthier food.

An excerpt:

"Ten years ago, no American would have regarded a bowl of vegetable scraps dressed with lime-cilantro or spicy pesto vinaigrette as fast food. Many people wouldn’t have considered it food at all. But millions of diners, fuelled by concerns about their health and the state of the environment - and propelled by a general distaste for industrially produced and highly processed food - have begun to shun the ubiquitous chains that have long shaped the American culinary character."

The story goes on:

"Speed and convenience matter as much as ever to American diners. But increasingly people also demand the information that places like Sweetgreen offer. They want to know what they are eating and how it was made; they prefer to watch as their food is prepared, see the ingredients, and have a sense of where it all came from. And they are willing to pay more for what they perceive to be healthier fare. Most of these restaurants, where meals generally cost between eight and fifteen dollars, rely on a few ingredients, stress the quality of their food, and often treat the farms that supply their vegetables with the kind of reverence once reserved for fine wineries."

The premise of the story is that it will be extremely difficult for healthier fare to replace traditional fast food fare, in part because what it takes to produce healthy food works against the basic tenets that go into the fast food business.

It is a thoughtful piece of writing, as New Yorker articles always are, and you can read it in its entirety here.

Published on: October 27, 2015

• The Associated Press reports that FedEx is predicting that "shipments from Black Friday through Christmas Eve will rise 12.4 percent over last year to 317 million pieces," a prognostication that the story notes is even more bullish than that of the National Retail Federation (NRF), which predicts that "online sales in November and December will rise by between 6 percent and 8 percent over late 2014."

FedEx also says that "to handle the crush, it is hiring more than 55,000 seasonal workers and investing in automation and expansion."


• European Supermarkets reports that "Ahold has partnered with start-up accelerator Startupbootcamp in a move to boost innovation in retail technology. As part of the three-year deal, Ahold will provide support to new start-ups on the Startupbootcamp eCommerce programme."

The story says that "ten retail start-ups have already been selected for the first phase of the programme companies selected for Startupbootcamp. Ahold will put forward mentors from Albert Heijn and Bol.com to the companies, based in the Netherlands, the UK, the Czech Republic, Greece, Portugal and Israel."

Published on: October 27, 2015

• MarketWatch reports that in the UK, discounter Aldi says it is raising the minimum wage for all its employees beyond the national minimum wage hike being imposed by the government.

The retailer said that its UK employees will have a wage floor of $12.96 per hour as of next year, with London employees going to a minimum of $14.50 an hour.

The British government has said it wants to raise wages to the equivalent of $13.82 - by 2020.

MarketWatch notes that "In September, both Lidl and Morrisons said they would raise hourly wages in excess of the national living wage.


• The New York Post reports that "Kellogg Co. is in late-stage talks with snack maker Diamond Foods about acquiring the $1 billion company ... A price would be more than $1.5 billion. The story notes that "Diamond, whose stable of brands includes Kettle potato chips, Emerald nuts and Pop Secret popcorn, put itself on the block earlier this year and last week asked for final bids."

Kellogg and Diamond are not commenting on the reports.


• The Wall Street Journal reports that "Lord & Taylor, one of the nation’s oldest department stores, plans to start an off-price chain for its namesake brand, the latest entrant into what is already a crowded space.  Macy’s Inc. recently launched its own off-price stores, called Macy’s Backstage, and  Nordstrom Inc.,  Saks and Neiman Marcus Group are rushing to expand their off-price formats.

"The first Find @ Lord & Taylor store, as the new chain will be called, is expected to open on Nov. 19 in Paramus, N.J., in a 30,000 square-foot space that once housed a Loehmann’s. As many as six additional stores are scheduled to open next year."


• The Los Angeles Times reports that "Target Corp. is opening two smaller-format stores in Los Angeles, part of an expansion in urban markets across the country ... By year's end, Target plans to have opened nine urban-focused stores, compared with six traditional, big box locations."

The story notes that "Target's urban-oriented locations were previously known as CityTarget and TargetExpress, but the company is in the process of rebranding those locations as simply Target."


• The Chicago Business Journal reports that Mariano's Fresh Market is opening its largest city store yet today, an 83,000 square foot, two-story unit that "anchors a massive Lincoln Park neighborhood project at the intersection of Clybourn Avenue and Halsted Street. The NewCity development is nearly 1 million square feet in total, with roughly 370,000 square feet of retail space, 199 residential rental units, 20,000 square feet of medical office space, a 1,000-car parking garage and a 1-acre landscaped plaza."

The store is Roundy's-owned Mariano's 34th store.

Published on: October 27, 2015

• The National Grocers Association (NGA) announced that Greg Ferrara, its vice president of public affairs, has been named one of Association TRENDS 2015 "Leading Association Lobbyists," for what it calls "his successful advocacy efforts to protect the independent supermarket industry from onerous and costly federal regulations."

Published on: October 27, 2015

...will return.

Published on: October 27, 2015

In Monday Night Football, the Arizona Cardinals defeated the Baltimore Ravens 26-18.