business news in context, analysis with attitude

Published on: October 29, 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, I'm Kevin Coupe and this is FaceTime with the Content Guy ... coming to you this week from Portland, Oregon.

As you all know, I love any opportunity to come to Portland, but this time was something special - it was my privilege to be asked to serve as master of ceremonies at the annual City of Hope charity gala, held to raise money to fund anti-cancer research.

I've had the opportunity to spend some time at City of Hope's Duarte, California, campus and talk with some of the amazing researchers there. I was, to be honest, blown away by what I learned and saw there ... not just by talking to researchers, but by the simple moments. The connections between patients and caregivers. Seeing families finding time and space in which they can bond even in the most dire of circumstances. Or people finding peace looking out at the mountains or wandering through the gardens.

If you've never had the opportunity to see City of Hope in action, I recommend it. These are people of integrity and enormous intellect who provide strength, character, persistence and compassion every step of the way to fuel patients' hearts and minds and souls for the battle of their lives.

As impressive in its own way is the fact that hundreds of food industry people came together here tonight in support of this amazing place. This was not business as usual ... it was people focusing on a bigger picture. And there was no better evidence of this than the fact that one auction was conducted by two executives, side by side - one from Haggen, and one from Albertsons.

Brought a tear to my eye.

Great event. Great organization. I was thrilled to be part of it.

That's what's on my mind ... and, as always, I want to hear what's on your mind.

Published on: October 29, 2015

by Kevin Coupe

One advertising campaign that seems to be ubiquitous during the baseball playoffs has been for DirecTV, which has featured quarterbacks Peyton Manning and Tony Romo doing their versions of the well-regarded Rob Lowe commercials for the same product. (They are on almost as often as erectile dysfunction ads, which have grown completely tiresome.)

In the Lowe commercials, you may remember, he would portray himself as being totally cool, and another version of himself that was less so - a conspiracy-minded paranoid, a guy still living with high school delusions, etc... The pitch was simple - the cool guy has DirecTV, the less cool guy has cable.

I really liked the Lowe commercials, but I find the Manning and Romo commercials to be a little offensive. And I think there's good reason for that.

In the Lowe commercials, the lesser versions of the actor were defined by their behavior - they acted in ways that were loser-ish. But in the Manning and Romo commercials, the "lesser" versions of the quarterbacks are defined by just being different - one has a high voice, one has skinny legs, one likes to make pottery and bake.

It seems to me that guys with high voices or skinny legs or who like to make pottery are not by definition "losers" - they're just not quarterbacks. Granted, we live in a society that celebrates quarterbacks and mocks guys with high voices, but the more I see these commercials, the more I think they're sending a really lousy message ... that if you're not this one thing, you're a loser. Or, somehow, lesser.

This may be seen by some as a semantic difference, and some may argue that I'm being overly picky or politically correct. But I don't think so ... and I do think that companies ought to be more conscious about even the subliminal messages they send.

To me, the commercials have been Eye-Openers.

Published on: October 29, 2015

Shelley Broader, who brought her executive experience at two Delhaize banners and the Michael's arts and crafts chain to both Sam's Club and Walmart's EMEA (Europe, Middle East, Sub-Saharan Africa and Canada) region, will become the ew president/CEO of Florida-based Chico's FAS.

She succeeds the retiring David Dyer, who will become vice chair of the board.

Chico's FAS is described as "an omni-channel retailer of women's private branded, sophisticated, casual-to-dressy clothing, intimates, accessories, and other non-clothing items." The company has 1,548 stores in the U.S. and Canada, operating under banners that include Chico's, White House | Black Market, Soma, and Boston Proper.

Before moving to Walmart's EMEA region, Broader was president and CEO of Walmart Canada, chief merchandising officer for Wal-Mart Canada, and senior vice president for Sam's Club, Wal-Mart's membership-warehouse format in the U.S. Previous to that, she was president and chief operating officer of Michael's, was president/CEO of Delhaize's Sweetbay Supermarkets chain, and had a number of executive positions at its Hannaford chain.

Published on: October 29, 2015

The Jacksonville Business Journal reports that Shipt - the grocery delivery service that has gotten a lot of attention recently because of its relationship with Publix - currently is working to open in one new city a week.

According to the story, "Shipt selects its next location based on the amount of emails, tweets and phone calls they get asking for them to bring their service to a certain city. It's how the Birmingham, Alabama-based company has wound up in some unusual cities for a startup, like Phoenix and Sarasota, Florida."

The story says that while Shipt does business exclusively with Publix in markets where the company operates, it will work with other food retailers in markets in which Publix does not have stores.

The business model works this way: "Shipt members pay a $99 per year membership fee (although the company is offering Jacksonville a reduced rate of $49 per year leading up to Oct. 28's launch) and orders their Publix items via the Shipt app. For purchases of $35 or more, delivery is free. The customer selects a window of delivery, and keeps in contact with their shopper in the event one of the goods a customer is requesting is out of stock."

Published on: October 29, 2015

The New Yorker (which seems to be pretty focused on food lately) has a piece about seaweed.

"Seaweed," the story says, "which requires neither fresh water nor fertilizer, is one of the world’s most sustainable and nutritious crops. It absorbs dissolved nitrogen, phosphorous, and carbon dioxide directly from the sea - its footprint is negative - and proliferates at a terrific rate." According to some, it represents a great hope for "good, restorative ocean farming," not to mention being more tasty than far more trendy items like kale. Plus, at a time when some are worried about the oceans being over-fished, seaweed could be one of the few surviving crops.

(Ironically, there was piece the other day on a website called Inhabitat about a new variety of seaweed bacon that is supposed to be amazingly tasty.)

You can read The New Yorker story here.

Published on: October 29, 2015

The NPD Group is out with a new study saying that "quick and convenient food from c-stores and supermarkets has incrementally added customers to the fast food/foodservice market ... Further, the number of fast food purchases made at retail outlets per customer in the March 2015 through June 2015 period is over six visits higher than those made to QSRs in an average 4-week period."

According to the story, "The majority of consumers are using multiple channels, retail outlets and QSRs, when purchasing prepared meals and snacks. Less than one-quarter of QSR customers are going only to a traditional QSR outlet in a four-week period.  Most QSR customers are using all available retail channels to meet their quick service meal requirements. Those who are exclusive traditional QSR customers are more likely to dine in at the restaurant than customers who use multiple channels for quick service."

“Consumers use QSRs, convenience, and grocery stores interchangeably for fast food, particularly when they find the same quality and variety,” says Bonnie Riggs, NPD restaurant industry analyst. “The lines between retail foodservice and QSRs are blurring for consumers, and these channel s are competing for visits from consumers looking for a quick meal or snack.” 

Published on: October 29, 2015

• Newsday reports that a federal bankruptcy court has approved the sale of four stores owned by the Great Atlantic & Pacific Tea Co. (A&P) - operated under the Waldbaum's and Pathmark banners on Long Island - to family-owned Best Yet Market, for a total of $8.5 million.


• Virginia Business reports that Germany-based discounter Lidl has broken ground on a new US regional office and distribution center in Virginia's Spotsylvania County, a $125 million facility located on an 82-acre site. The story notes that "Lidl will soon open the company’s U.S. headquarters in Arlington County. In total, Lidl is investing more than $200 million in its operations in Virginia and has pledged to create a total of 700 new jobs in the state by 2018."

In other words, Lidl is coming.


• The Denver Post reports that Alfalfa's - a reinvention of the chain that first began operations in the eighties and eventually sold to Whole Foods - plans to open a third store "in or near Denver."

The new Alfalfa's opened its first store in Boulder in 2011 and a second store n Louisville in 2014.

The story notes that privately held Alfalfa's recently raised $3.7 million designed to help it clean up its balance sheet and fund the opening of a new "natural" foods store.


• The Washington Post reports that the US Senate has passed "a cybersecurity bill that would give companies legal immunity for sharing data with the federal government, over the protests of some lawmakers and consumer advocates who say that the legislation does not adequately protect Americans’ privacy." The bill now has to be reconciled with the version of the bill passed by the House of Representatives; the bipartisan legislation is certain to be signed into law by President Obama.


• The Orlando Sentinel reports that "Winn-Dixie Stores is changing the sales strategy at its supermarkets by permanently discounting high-volume staples ... About 1,500 items in all are getting discounts, on average about 20 percent. A typical Winn-Dixie carries about 30,000 products."

The story notes that Winn-Dixie said "that customer surveys have prompted the 518-store grocery chain to lower prices permanently on items such as toilet paper, cereal, mayonnaise and others."

Published on: October 29, 2015

• Unified Grocers announced that Michael F. Henn has been hired as the company's new Executive Vice President/Chief Financial Officer, succeeding Richard J. Martin, who is retiring. Henn most recently was Managing Director of R.E. Stangeland Enterprises.

Published on: October 29, 2015

On the subject of growing consumer preferences for "local," one MNB user wrote:

My view is, when asked, a consumer will tout their willingness to pay more for “local” when in reality “more” is subjective and often it’s simply wanting to look open minded when answering the question when in reality it’s about cost. Much like a retailer proclaiming their interest in innovation, but unwilling to pay more for that innovation.

From another reader:

You mean like one of our local competitors who label their salad bar fixings as ‘local’ because the warehouse they get them from is local? 

Local-washing. It’s a thing.




Regarding the marketing of A&P's "intellectual property" and private brands, one MNB user wrote:

You’re kidding me…the intellect left A&P years ago!

From MNB reader Robert Dyer:

The only A&P brand that had any strength was Eight o'Clock coffee, which they sold off to Tata Global Beverages in 2006.




Responding to Michael Sansolo's column about the importance of both having a plan and being able to pivot when circumstances change, one MNB user wrote:

Your message is an important one and cannot be stated too many times.  I see retailers and brands struggling to evaluate, rationalize and execute the necessary changes to their offerings fast enough to keep up the the speed of consumer options and changing preferences.   In my view, there is a need for a C-level executive that exclusively focuses on rapid short term evaluation and deployment of fundamental changes to the business, all in the context of knowing, (as you state), that no one has an absolutely clear view of where all of this might be going.  Unprecedented challenging times!




We reported this week about Walmart asking for permission to test delivery drones, a plan that seemed modeled on similar plans at Amazon, one MNB user wrote:

Re: the latest Wal-Mart follower move, Amazon remains a step ahead; I think Wal-Mart’s getting desperate, b/c they realize they’re in a multiple-front squeeze play.

Wal-Marts face more & more rapidly shifting fast-fashion trends, a game at which H&M, Uniqlo, Zara, etc are superior to their slow moving predecessor clothing chains.

Wal-Mart Supercenters in CPG/Food items face a more focused (post-Canada) Target, a proven effective Costco, and superbly managed dollar stores, some of whose (less selection-focused) customers they must win over, given their latest ‘reduced sku’ approach (let’s mercifully forget their dreaded 'Project Impact’).

WalMart Supercenters are unlikely to be able to remove freshness or selection-focused customers/occasions from skilled Grocers (Wegmans, Kroger et al). WalMart has yet to aggressively pursue the Grocery chain’s newfound money pool - $margin from ReadyToEat prepared meals (even though, IMO, WalMart could have killer negotiating strength with the big FastFood brands).

WalMart’s core competence remains mid-sized towns & suburbia; they’ve not cracked urban or small town opportunities w/ Neighborhood Markets, though NM may be a future purchase pickup point. This is how I predict Loblaws will use Shoppers Drug* Marts (*don't let the name mislead; they’ve got fridge & freezer sections, sell fresh bread, etc). SDM’s are small footprint outlets with fast In&Out parking lots &/or close to transit, plus they’re located in (gap-filling) urban core & small towns, which allows more consumers a convenient pickup option. 

Why can’t Neighborhood Markets fill that role for Wal-Mart? Why doesn’t WalMart refocus on urban, easy pickup, online?

Cheaper outlets to build & staff; seems a win-win-win; conquer small markets, urban markets AND take a bite out of Amazon.

Reason seems to be just plain old inertia; IMO, large-format WaMart outlets may be headed for a Sears-like future.

Drones won’t fix that- and mass air delivery of goods is probably a long way off.

Also regarding Walmart, MNB reader Mark Heckman wrote:

With e-commerce gaining share of customer at a much more rapid pace, building new bricks and mortar stores for most any retailer today has too be a careful consideration.  For Walmart, the Neighborhood Market concept has been a marginal performer given the often saturated market conditions of food retailers.  Therefore, I am not surprised in this news.   In my mind, e-commerce and perishables are good investment for Walmart, but these initiatives are not even a close second in terms of the return on investment they would see if they crack the code on inventory management, sku variety, and out-of-stocks.  If Walmart doesn’t see significant improvement in how they manage inventory, they will have many tough investor calls to come.



We continue to get email about the meat-may-cause-cancer story.

MNB reader Jeff Folloder wrote:

I'm writing this from the perspective of a cancer survivor in remission and a passionate, educated patient advocate.  We are learning that cancer is not a black and white issue.  It is almost always a shades of gray journey with no two journeys being identical.  The days of one size fits all cancer treatment are waning and personalized, custom-tailored treatments are enjoying ever greater success.  Because of the shades of gray.  It's not leukemia... It's 1000's of variations of leukemia.  And 1000's (or more) genetic variations on those different leukemia types.  Same for breast cancer, brain cancer, prostate cancer, melanoma... Each person is different and each person responds to different influences in different ways.

Sadly, that is not a convenient sound bite that engages the public and electrifies discussion.  The consumption of red meat may, indeed, increase the possibility of cancer occurrence in those who may be predisposed to that sensitivity.  Not everyone.  Not all the time.  In plain terms, it might be a risk factor for some and is worthy of consideration.  My oncologist encourages me to embrace life and strive for the highest quality of life I can have.  That means enjoying things in moderation, including red meat, alcohol, crème brûlée, and a host of many other things.  I do enjoy them.  And I do exercise and try to avoid the sun exposure.  And I always remember that being in the news or on the net does not make it necessarily true.

MNB reader Chuck Jolley wrote:

Full disclosure: I’m president of the Meat Industry Hall of Fame.  Now, about the Who/IARC  report:  Classifying processed meats, which might cause several thousand cases of cancer per year, with smoking, which does cause a million+ deaths per year, placed their report in the overly-sensationalistic column for me.  IARC also went against their long-standing practice of only issuing these reports when they have 100% consensus among their board members.  They spent 7 days of active discussion to reach a ‘bare’ majority.  It sounded to me like they needed to take more time to really delve into the data.




Responding to Kate McMahon's column about the disappointing transition from Food Emporium to Acme in her Connecticut town, MNB user Bryan Nichols wrote:

I don’t know what experience you have in the retail industry, but you can’t remodel a store in three weeks under the best of circumstances even if money is no object.  I have probably been involved in 500 new or updated stores, and to do it right can take many months.
 
The facility is secondary to proper merchandising and customer service.

To be clear, Kate was not being literal when she suggested that instead of being closed for three days, Acme should have closed the store for three weeks. And she wasn't even calling for a full-blown remodel ... Kate was saying that maybe they should have spent more time to change the antiquated lighting and fix the dilapidated floor and has a moldy smell that hasn't gone away.

I think she's absolutely right.

You're not wrong to say that proper merchandising and customer service can be a game changer ... but it is hard to even get customers to experience those things if the store doesn't present itself as actually being a modern supermarket. Just putting up a new sign doesn't cut it. Or, as a friend of mine who happens to be one of the smartest retailers I've ever met likes to say, "Good enough is never good enough."




And finally, on another subject, one MNB user wrote:

Kudos to REI and their management team for closing Black Friday.  I just ordered REI Gift Cards – via AMEX (trade in the points) to shop at REI!!!!
 
Thank you REI management for putting your employees and customers first!

Published on: October 29, 2015

In game two of the World Series, the Kansas City Royals routed the New York Mets 7-1, taking a 2-0 game lead in the best-of-seven series.